Annual report for the year ended 31 December 2007

Annual report for the year ended 31 December 2007

Annual report for the year ended 31 December 2007 1

ACTELIOS S.p.A. Share capital Euro 67,680,000 fully paid Registered and fiscal address 20121 Milan Corso Venezia, 16 REA Milan no. 1675378 Milan Companies Register no. 03457730962 VAT and tax code no. 03457730962

1 Notice of annual general meeting 5 2 Company officers 6 3 Group structure 7 4 Financial highlights 8 5 Directors report 5.1 Group operating and financial review 5.1.1 Actelios group profile 11 5.1.2 Performance 11 5.1.3 Performance of subsidiaries 12 5.1.4 Performance of associates 19 5.1.5 Review of business in 2007 20 5.1.6 Employees 23 5.1.7 Environment, health and safety 23 5.1.8 Research and development activities 24 5.1.9 Risk factors and litigation 24 5.1.10 Significant events after the balance sheet date 25 5.1.11 Future developments and going concern 25 5.2 Operating and financial review of Actelios SpA 5.2.1 Financial highlights 26 5.2.2 Performance and review of business in 2007 26 5.2.3 Employees 26 5.2.4 Capital expenditure 26 5.2.5 Directors, statutory auditors, general managers and their interests 27 5.2.6 Related party transactions 27 5.2.7 Holding of own shares or parent company shares 27 5.2.8 Purchase and sale of own shares or parent company shares 27 5.2.9 Share schemes 27 5.2.10 Proposed distribution of profit for the year 28 5.3 Corporate governance 5.3.1 Corporate governance structure of the company 29 5.3.2 Implementation of the Code of Self Discipline 33 5.3.3 Attachments 41 6 Consolidated financial statements 6.1 Balance sheet 45 6.2 Income statement 46 6.3 Cash flow statement 47 6.4 Statement of changes in equity 48 6.5 Notes to the consolidated financial statements 49 6.6 Additional disclosures regarding financial instruments in accordance with IFRS7 74 7 Supplementary information consolidated financial statements 7.1 List of investments in subsidiaries and associates 89 3

8 Actelios SpA financial statements 8.1 Balance sheet 93 8.2 Income statement 94 8.3 Cash flow statement 95 8.4 Statement of changes in equity 96 8.5 Notes to the financial statements 97 8.6 Additional disclosures regarding financial instruments in accordance with IFRS7 118 9 Supplementary information - Actelios SpA 9.1 List of direct and indirect investments in subsidiaries and associates 125 9.2 Summary of significant financial data of subsidiaries and associates 126 10 Certifications on consolidated and parent company financial statements in accordance with article 81-ter of Consob Regulation n. 11971of 14 May 1999 and subsequent amendments 129 11 Report of the board of statutory auditors to the annual general meeting 133 12 Independent auditors reports 141 4

1 Notice of annual general meeting The shareholders are invited to attend the annual general meeting to be held at the Circolo della Stampa in Milan, CorsoVenezia 16, at 12.00 p.m. on 29 April 2008 in first call and, where necessary, at the same time and address on 2 May 2008 in second call, in order to discuss the following: Agenda 1) The separate parent company financial statements for the year ended 31 December 2007; directors report, independent auditors report, board of statutory auditors report: approval, related resolutions and resulting matters; 2) Presentation of the consolidated financial statements for the year ended 31 December 2007; directors report and independent auditors report; 3) Appointment of the board of directors for the three year period 2008-2010 subject to determination of the number of members and the related emoluments; 4) Appointment of the board of statutory auditors for the three year period 2008-2010 subject to determination of the related emoluments. Shareholders may attend the annual general meeting where notice from the authorised intermediary, in compliance with article 2370 of the Italian Civil Code, was received by the company at least two days prior to the date established in first call. Shareholders will note that the company financial statements and the consolidated financial statements for the year ended 31 December 2007, the directors report, the report of the board of statutory auditors, the 2007 report on corporate governance, the report of the board of directors illustrating the matters on the agenda, will be available to the public at the company s registered offices in Milan, Corso Venezia 16, and from Borsa Italiana SpA from 11 April 2008 and, as soon as they are available, the independent auditors reports will be provided through the same channels detailed above and within the required timeframe. All documentation will also be available from 11 April 2008 on the company website at www.acteiios.it. Appointment of the board of directors takes place in accordance with article 17 of the company s articles of association and in the manner detailed therein, on the basis of lists submitted by the shareholders in which the candidates must be listed in progressive order; the lists of candidates, signed by the shareholders who presented them, must be filed at the company s registered offices at least 15 days prior to the first call of the annual general meeting. Lists may be submitted by those shareholders who individually, or jointly with other shareholders, hold at least 2.5% of share capital. The additional requisites for the preparation and submission of the lists and the voting rules are set out in article 17 of the articles of association, the current version of which is available to the shareholders from the registered offices or may be consulted on the company website at www.actelios.it. Finally, it is reminded that appointment of the board of statutory auditors is carried out, in accordance with article 24 of the articles of association and regulations and legislation and as a result in observance of the terms of article 148 of the Consolidated Finance Act and article 144-sexies of Consob regulation 11971 of 14 May 1999 and subsequent amendments, based on the lists submitted by the shareholders who can demonstrate on presentation of the lists that they hold the required minimum number of shares as determined by article 147 ter of Legislative Decree 58 of 24 February 1998, which amounts to 2.5 % of share capital. Milan, 17 March 2008 The Chairman Federico Falck Notice of the annual general meeting was published in the Il Sole 24 Ore of 28 March 2008. 5

2 Company officers Board of directors Federico Falck Achille Colombo Paride De Masi Roberto Tellarini Marco Agostini Enrico Falck Giuseppe Gatti Bruno Isabella Ferruccio Marchi Umberto Rosa Chairman Deputy chairman Deputy chairman Managing director Director Director Director Director Director Director Statutory auditors Roberto Bracchetti Aldo Bisioli Nicola Vito Notarnicola Fabio Artoni Giampiero Maci Chairman Statutory auditor Statutory auditor Substitute statutory auditor Substitute statutory auditor Independent auditors PricewaterhouseCoopers SpA Company powers conferred on the directors are illustrated in paragraph 5.3 of the section on corporate governance. 6

3 Group structure ACTELIOS SpA 100% 50% 100% 85% 60% 49% Elettroambiente SpA Powercrop Srl Ecosesto SpA Prima Srl Ambiente 2000 Srl Frullo Energia Ambiente Srl 84.90% 49% Tifeo Energia Ambiente ScpA Ambiente 3000 Srl 80.90% Platani Energia Ambiente ScpA Palermo Energia Ambiente ScpA 23.27% Termini Imerese Energia Ambiente Srl 24% Immobiliare Samanta Srl 100% Consolidated line-by-line Consolidated by proportional method Valued at cost 7

4 Financial highlights (Euro thousands) 2007 2006 2005 Revenue 90,625 95,818 81,939 Gross profit 35,010 34,346 25,526 Operating profit 25,507 23,735 18,989 Profit for the year 14,927 14,243 4,552 Profit for the year attributable to group equity holders 13,766 12,756 3,588 Earnings per share (Euro) 0.203 0.188 0.159 - Net financial (assets)/liabilities (185,832) (196,474) 54,027 - Non-recourse financing 92,570 95,306 107,570 Total net financial position (asset) (93,262) (101,168) 161,597 Total equity 346,328 339,511 78,640 Equity attributable to group equity holders 342,273 335,486 75,528 Equity holders equity per share (Euro) 5.057 4.957 3.348 Capital expenditure 29,870 30,160 40,466 Gross profit /revenue 38.6% 35.8% 31.2% Operating profit /revenue 28.1% 24.8% 23.2% Profit for the year/total equity 4.3% 4.2% 5.8% Net financial position/total equity (0.27) (0.30) 2.05 Total number of group employees 142 143 144 8

5 Directors report

Dear Shareholders, The parent company s separate financial statements and the consolidated financial statements for the year ended 31 December 2007 have been prepared in accordance with International Financial Reporting Standards (IFRS). These standards were adopted in 2005 for the first time in relation to the consolidated financial statements and in 2006 for the parent company s separate financial statements. 5.1 Group operating and financial review 5.1.1 Actelios group profile The group operates in the renewable energy market. In particular, the group strategy is developed through the management and operation of power plants that are already operational, the installation of plants in the start-up phase and the development of new projects, either directly or through joint ventures, with leading industrial enterprises. As the group has acquired know-how relating to plant operations, applying state-of-the-art operation and maintenance methods, it is able to complement its plant ownership activities with the above specialisation and provide a global range of services in this market. 5.1.2 Performance The financial performance of the group is summarised below: (Euro thousands) 31.12.2007 31.12.2006 Revenue 90,625 95,818 Cost of sales (55,615) (61,472) Gross profit 35,010 34,346 Operating profit 25,507 23,735 Profit for the year 14,927 14,243 Profit attributable to group equity holders 13,766 12,756 Invested capital net of provisions 253,066 238,343 Total equity 346,328 339,511 Net financial position (asset) (93,262) (101,168) of which Project Financing 92,570 95,306 Capital expenditure 29,870 30,160 Group employees at year-end (no.) 142 143 Ordinary shares (no.) 67,680,000 67,680,000 Revenue decreased by Euro 5,193 thousand compared to 2006, principally due to the lower CIP6 tariffs compared to 2006 and the halt at the plant in Trezzo sull Adda following the blockage of one of the production lines between the first and second quarters of 2007. Furthermore, revenue in the previous year had benefited from an adjustment of Euro 1,642 thousand relating to sales of electrical energy in 2005 that were covered by the CIP6 regime. 11

Gross profit on the other hand increased by Euro 664 thousand and represents 38.6% (2006 35.8%) when expressed as a percentage of revenue. Revenue for the year by segment compared to 2006 may be analysed as follows: (Euro thousands) 2007 % 2006 % Sale of electrical energy 63,223 70 67,340 70 Waste treatment and disposal 23,128 25 23,339 24 Operation of waste to energy (WTE) plants 4,274 5 5,139 6 Total 90,625 99 95,818 101 Operating profit increased by Euro 1,772 thousand compared to 2006 and is equal to 28.1% of revenue (2006-24.8%). Profit for the year, which amounted to Euro 14,927 thousand, represents an increase of Euro 684 thousand compared to 2006. The result comprises net finance income of Euro 2,531 thousand (2006 Euro 524 thousand) largely as a result of the liquidity generated from the share capital increase of the parent company Actelios SpA that took place in 2006. The net financial position was a total asset of Euro 93,262 thousand and presented a decrease of Euro 7,905 thousand on the balance at 31 December 2006. The net financial position comprises non-recourse borrowings of Euro 92,570 thousand at 31 December 2007. Capital expenditure in the period, which amounted to Euro 29,870 thousand, represents the group s investment in the projects in Sicily, the two photovoltaic plants in Rende and Trezzo sull Adda, and improvements to operating plants. Employees decreased by one in number compared to the total at 31 December 2006, while employee costs were substantially in line with the previous year with a reduction of Euro 227 thousand. 5.1.3 Performance of subsidiaries The performance of subsidiaries and associates included in the 2007 scope of consolidation may be summarised as follows: Ecosesto SpA The company, which is wholly owned by Actelios SpA, owns a biomass electrical energy plant and also operates in other environmental management activities. In addition, the company owns two photovoltaic plants that generate electrical energy: one located in Rende, which commenced operations in July, and the other situated in Trezzo sull Adda that commenced activities in October. The profit for the year amounted to Euro 1,183 thousand against revenue of Euro 26,094 thousand. The result is largely due to the good performance of 12

the biomass plant in Rende. The net financial position of the company was a net indebtedness of Euro 11,821 thousand, while capital expenditure in the period amounted to Euro 6,239 thousand and mainly related to the photovoltaic plants. Prima Srl Prima Srl, 85% owned by Actelios SpA, owns the WTE plant in Trezzo sull Adda. Prima Srl recorded revenue of Euro 40,445 thousand and a profit for the year of Euro 7,199 thousand in 2007. Capital expenditure carried out in the course of the year amounted to Euro 2,667 thousand. The net financial position was a net indebtedness of Euro 32,801 thousand and comprised cash and cash equivalents of Euro 21,702 thousand that are subject to restrictions imposed by the project financing projects, bank borrowings relating to project financing of Euro 47,291 thousand at 31 December 2007, net of Euro 2,209 thousand resulting from application of the amortised cost method to the cost of raising finance, a loan of Euro 6,335 thousand granted by Actelios SpA and other shareholders loans amounting to Euro 1,118 thousand. Furthermore, the net financial position includes Euro 241 thousand of finance income relating to the fair value measurement of derivative instruments entered into to hedge project financing contracts (interest rate swaps IRS to fix variable rates). Ambiente 2000 Srl This company, which is 100% owned by Actelios SpA, is responsible for the management of the WTE plants in Fusina (VE) and Trezzo sull Adda (MI) on the basis of previously acquired contracts. Profit for the year in 2007 amounted to Euro 929 thousand against revenue of Euro 11,109 thousand. The net financial position was a net asset of Euro 1,094 thousand. Elettroambiente SpA The company, 100% owned by Actelios SpA, is the majority shareholder of two groups of enterprises that are joined in two consortiums: Tifeo Energia Ambiente ScpA and Platani Energia Ambiente ScpA. The companies each own an industrial project aimed at the construction and operation of an integrated waste treatment and electrical energy power system, with installed capacities of 50MW and 30 MW respectively, which benefit from the CIP 6/92 tariffs. In 2007 Elettroambiente SpA recorded a loss of Euro 152 thousand and revenue of Euro 2,190 thousand, which largely relate to owner s engineering services provided to the subsidiary consortium enterprises owned by Elettroambiente. The net financial position was a net indebtedness of Euro 34,987 thousand. Platani Energia Ambiente ScpA Platani Energia Ambiente ScpA, which is 80.9% owned by Elettroambiente SpA, operates with the exclusive aim of implementing a project to utilise the residual portion of urban waste, net of recycled waste, through 13

the development of integrated systems in the district councils of Sicily that are part of the Ambiti Territoriali Ottimali (a consortium of district councils working together on waste management, hereinafter ATO ). For this purpose, on 17 June 2003 an agreement was signed with the President of the Sicily Region Delegated Commissioner for the emergency waste situation (hereinafter the Commissioner ), whereby the company, using WTE technology, will treat and utilise the residual portion of urban waste, net of recycled waste, produced in the district councils of Sicily that are located in the provinces of Agrigento, Caltanissetta, Trapani sector 2 and Palermo sector 4, which constitute the Agrigento System, and that are part of the ATO. The company continued the start-up activities and closed the 2007 financial year with a loss of Euro 287 thousand and no revenue. Capital expenditure in the course of the year amounted to Euro 5,814 thousand and the net financial position was a total indebtedness of Euro 15,275 thousand. Tifeo Energia Ambiente ScpA Tifeo Energia Ambiente ScpA, which is 84.9% owned by Elettroambiente SpA, operates with the exclusive aim of implementing a project to utilise the residual portion of urban waste, net of recycled waste, through the development of integrated systems in the district councils of Sicily that are part of the ATO. For this purpose, on 17 June 2003 an agreement was signed with the Commissioner for the emergency waste situation, whereby the company, using WTE technology, will treat and utilise the residual portion of urban waste, net of recycled waste, produced in the district councils of Sicily that are located in the provinces of Catania, Siracusa, Enna and Ragusa, which constitute the Augusta System, and that are part of the ATO. The company continued with the start-up activities and closed the 2007 financial year with a loss of Euro 405 thousand and no revenue. In the course of the financial year capital expenditure amounted to Euro 4,824 thousand and the net financial position was a net indebtedness of Euro 19,506 thousand. The progress of the projects in Sicily is detailed below. PLATANI project 1. Authorisation process Following issue of Intergovernmental Decree GAB/DEC/28/2007 on 21 February 2007, the Authorisations granted under Presidential Decree 203 were suspended until 15 April 2007. Platani Energia Ambiente resolved on 26 February 2007 to file an appeal with the Lazio Regional Administrative Court opposing the suspension Decree in merit of both the violation of the service of process rule and the numerous profiles of unlawfulness of merit (amongst which lack of motivation and diversion of justice) and objecting that the matter lies outside the area of competence of the Minister of the Environment also regarding the preliminary proceedings and procedures relating to the Integrated Environmental Authorisation ( AIA ), whose responsibilities are purely regional (as also claimed by the Region of Sicily that also filed an appeal against the said Intergovernmental Decree objecting to, amongst other matters, competence). On 4 April 2007 the Lazio Regional Administrative Court annulled suspension of the Intergovernmental Decrees issued under Presidential Decree 203, consequently they resumed legal effect from this date. On 10 July 2007 the State Council rejected the appeals filed by the Ministers of the Environment, Health and Economic Development against the above-mentioned ruling of the Lazio Regional Administrative Court, thus closing the interim order relating to the Intergovernmental Decrees. Platani Energia Ambiente filed petitions on 23 March 2007 in order to obtain the AIA in relation to the plants belonging to the Casteltermini/Campofranco plant engineering complex. The Regional Council for the Territory and the Environment confirmed commencement of proceedings on 6 February 2008 and the company published the relevant public notices on 20 February 2008. It is expected that the AIA will be granted before the end of 2008. 14

2. Vigilance and Control Body (VCB) The VCB continued the analysis work on pre-construction environmental monitoring based on the documentation provided by Platani Energia Ambiente and the URS. This work has almost been finalised and is included in a single report that groups together all data collated for the periods 2005, 2006 and 2007. The Public Health Committee is preparing its own report that is also based on the data of the environmental monitoring; this public document will be issued in the course of 2008. The VCB has approved the final project amendments presented to, and authorised under, Ordinance no. 362 of 22 April 2005; formal recognition of these amendments was issued by the Department of Waste and Water Protection on 27 September 2007. The VCB, together with Sicilpower, the contract holder for the fourth group relating to the provinces of Catania and Messina, issued an updated version of the Mutual Aid Plan in order to reflect changes in legislation, which was signed on 18 October 2007. 3. Casteltermini/Campofranco sites Subsequent to issuance of suspension Decree GAB/DEC/28/2007 dated 21 February 2007, preparatory work on the site, which was almost 90% complete, was suspended. The decree of assignation from the State relating to the portion of land adjacent to the Platani river bed was obtained and was published in the Official Gazzette no. 104 of 7 May 2007. 4. Project financing In the course of 2007 the financing contract was not signed largely as a result of the administrative and political problems that arose concerning the continued application of the CIP6 tariffs in respect of activities relating to the generation of electrical energy from waste that are not yet operative. Platani Energia Ambiente received written assurance from the Sicily Region confirming its firm intention to uphold the commitments regarding application of the CIP6 tariffs that were undertaken on signing of the Convention. In the 2008 Regional Budget, the Sicily Region has set aside three years of CIP 6 contributions in favour of the plants for the treatment and utilisation, through waste to energy, of the residual portion of urban waste after recycling produced in the town councils of the Sicily Region. Platani Energia Ambiente is confident of the successful outcome of the industrial plan and on 8 January 2008 the four mandated lead arranger banks (MLA s), together with other Italian and international financial institutions that agreed to participate in the syndication, confirmed their full and continued support for the projects and their interest in financing them. On this premise, extension of the mandate to the end of the 2008 was signed with the four MLA s. 5. Commercial contracts Final signature of the commercial contracts is linked to definition of the timing of development work. At the same time a new supplementary act must be drawn up with the Sicily Region in order to redefine the timing of development of the plants and to update the waste contribution rates taking into consideration the delay factors that are not attributable to Platani Energia Ambiente and the final project amendments that arose from authorising provisions. 6. Plant development In compliance with the provisions of Ordinance no. 635 dated 31 May 2006, Platani Energia Ambiente announced commencement of works on 13 July 2006. However, work was suspended following issue of the above-mentioned Intergovernmental Decree. Following the successful outcome of the legal action and while awaiting confirmation from the Minister for Economic Development regarding the granting of the CIP6 tariffs, Platani Energia Ambiente decided to continue with all activities relating to the development of the plants. 15

TIFEO project 1. Authorisation process Following issue of Intergovernmental Decree GAB/DEC/26/2007 on 23 February 2007, the Authorisations granted under Presidential Decree 203 were suspended until 15 April 2007. Tifeo Energia Ambiente resolved on 26 February 2007 to file an appeal with the Lazio Regional Administrative Court opposing the suspension Decree in merit of both the violation of the service of process rule and the numerous profiles of unlawfulness of merit (amongst which lack of motivation and diversion of justice) and objecting that the matter lies outside the area of competence of the Minister of the Environment also regarding the preliminary proceedings and procedures relating to the Integrated Environmental Authorisation ( AIA ), whose responsibilities are purely regional (as also claimed by the Region of Sicily that also filed an appeal against the said Intergovernmental Decree objecting to, amongst other matters, competence). On 4 April 2007 the Lazio Regional Administrative Court annulled suspension of the Intergovernmental Decrees issued under Presidential Decree 203, consequently they resumed legal effect from this date. On 10 July 2007 the State Council rejected the appeals filed by the Ministers of the Environment, Health and Economic Development against the above-mentioned ruling of the Lazio Regional Administrative Court, thus closing the interim order relating to the Intergovernmental Decrees. Tifeo Energia Ambiente filed petitions on 30 March 2007 in order to obtain the AIA in relation to the plants belonging to the plant engineering complex. The first Works Meeting was scheduled to take place on 19 March 2008. It is expected that the AIA will be granted before the end of 2008. 2. Vigilance and Control Body (VCB) The VCB continued the analysis work on pre-construction environmental monitoring based on the documentation provided by Platani Energia Ambiente and the URS. This work has almost been finalised and is included in a single report that groups together all data collated for the periods 2005, 2006 and 2007. The Public Health Committee is preparing its own report that is also based on the data of the environmental monitoring; this public document will be issued in the course of 2008. The VCB has approved the final project amendments presented to, and authorised under, Ordinance no. 1688 of 30 December 2004; formal recognition of these amendments was issued by the Department of Waste and Water Protection on 27 September 2007. The VCB, together with Sicilpower, the contract holder for the fourth group relating to the provinces of Catania and Messina, issued an updated version of the Mutual Aid Plan in order to reflect changes in legislation, which was signed on 18 October 2007. 3. Augusta and Lentini Grotte San Giorgio sites Enel Produzione is still carrying out drainage work on the site. This has resulted in extensive delays in handing over the site. Elettroambiente SpA, the direct parent company of Tifeo Energia Ambiente, immediately informed the Department of Waste and Water Protection, requesting assistance in order to expedite work. Elettroambiente SpA has not exercised the right to acquire the business of Enel Produzione relating to the thermal power plant that also includes the land to be transferred to Tifeo Energia Ambiente on which the WTE plant will be constructed. Negotiations are under way, due to pressure by Enel Produzione, to reach an agreement that guarantees to Elettroambiente, and in turn Tifeo Energia Ambiente, legal access to the drained site. Enel Produzione has contested the requirement to make the site available. On the contrary, the company upholds that this obligation subsists and is fully effective. Elettroambiente SpA, which holds this right also in the interests of Tifeo Energia Ambiente, has commenced all actions necessary to confirm this right and has asked the Department of Waste and Water Protection to intervene through expropriation of the area as it is of public interest. 16

The first part of the Stabilised Organic Fraction of the landfill that serves the IPT plant of Augusta Ogliastro has been completed at the Lentini Grotte S. Giorgio site. 4. Project financing In the course of 2007 the financing contract was not signed largely as a result of the administrative and political problems that arose concerning the continued application of the CIP6 tariffs in respect of activities relating to the generation of electrical energy from waste that are not yet operative. Tifeo Energia Ambiente received written assurance from the Sicily Region confirming its firm intention to uphold the commitments regarding application of the CIP6 tariffs that were undertaken on signing of the Convention. In the 2008 Regional Budget, the Sicily Region has set aside three years of CIP 6 contributions in favour of the plants for the treatment and utilisation, through waste to energy, of the residual portion of urban waste after recycling produced in the town councils of the Sicily Region. Tifeo Energia Ambiente is confident of the successful outcome of the industrial plan and on 8 January 2008 the four MLA s, together with other Italian and international financial institutions that agreed to participate in the syndication, confirmed their full and continued support for the projects and their interest in financing them. On this premise, extension of the mandate to the end of the 2008 was signed with the four MLA s. 5. Commercial contracts Final signature of the commercial contracts is linked to definition of the timing of development work. At the same time a new supplementary act must be drawn up with the Sicily Region in order to redefine the timing of development of the plants and to update the waste contribution rates taking into consideration the delay factors that are not attributable to Tifeo Energia Ambiente and the final project amendments that arose from authorising provisions. 6. Plant development In compliance with the provisions of Ordinance no. 636 dated 31 May 2006, Tifeo Energia Ambiente announced commencement of works on 12 July 2006. However, work was suspended following issue of the above-mentioned Intergovernmental Decree. Following the successful outcome of the legal action and while awaiting confirmation from the Minister for Economic Development regarding the granting of the CIP6 tariffs, Tifeo Energia Ambiente decided to continue with all activities relating to the development of the plants. PALERMO project 1. Authorisation process Following issue of Intergovernmental Decree GAB/DEC/30/2007 on 23 February 2007, the Authorisations granted under Presidential Decree 203 were suspended until 15 April 2007. Tifeo Energia Ambiente resolved on 26 February 2007 to file an appeal with the Lazio Regional Administrative Court opposing the suspension Decree in merit of both the violation of the service of process rule and the numerous profiles of unlawfulness of merit (amongst which lack of motivation and diversion of justice) and objecting that the matter lies outside the area of competence of the Minister of the Environment also regarding the preliminary proceedings and procedures relating to the Integrated Environmental Authorisation ( AIA ), whose responsibilities are purely regional (as also claimed by the Region of Sicily that also filed an appeal against the said Intergovernmental Decree objecting to, amongst other matters, competence). On 4 April 2007 the Lazio Regional Administrative Court annulled suspension of the Intergovernmental Decrees issued under Presidential Decree 203, consequently they resumed legal effect from this date. On 10 July 2007 the State Council rejected the appeals filed by the Ministers of the Environment, Health and Economic Development against the above-mentioned ruling of the Lazio Regional Administrative Court, thus closing the interim order relating to the Intergovernmental Decrees. 17

Palermo Energia Ambiente filed petitions on 23 March 2007 and 2 May 2007 in order to obtain the AIA in relation to the Bellolampo plant engineering complex. The Regional Council for the Territory and Environment confirmed commencement of proceedings on 26 June 2007 and the company published the relevant public notices on 2 July 2007. The preliminary proceedings commenced with two Works Meetings that took place in September 2007 and February 2008. The final Works Meeting is still to be scheduled. It is expected that the AIA will be granted in the first half of 2008. 2. Vigilance and Control Body (VCB) The VCB continued the analysis work on pre-construction environmental monitoring based on the documentation provided by Platani Energia Ambiente and the URS. This work has almost been finalised and is included in a single report that groups together all data collated for the periods 2005, 2006 and 2007. The Public Health Committee is preparing its own report that is also based on the data of the environmental monitoring; this public document will be issued in the course of 2008. The VCB has approved the final project amendments presented to, and authorised under, Ordinance no. 1455 of 29 November 2004; formal recognition of these amendments was issued by the Department of Waste and Water Protection on 27 September 2007. The VCB, together with Sicilpower, the contract holder for the fourth group relating to the provinces of Catania and Messina, issued an updated version of the Mutual Aid Plan in order to reflect changes in legislation, which was signed on 18 October 2007. 3. Bellolampo site Subsequent to issuance of suspension Decree GAB/DEC/30/2007 dated 23 February 2007, preparatory work on the site, which was almost 90% complete, was suspended. On 17 November 2007 the Public Prosecutor of the Palermo Court issued a precautionary distraint on the construction site due to the presumed non-compliance with the terms of Authorisation Ordinance no. 1455 dated 29 November 2004. Palermo Energia Ambiente immediately filed an appeal with the Palermo Review Court and on 14 December 2007 it upheld the appeal and rejected the Public Prosecutor s claim. The site was physically released on 18 December 2007. The motives presented by the Review Court confirmed Palermo Energia Ambiente s correct and transparent management in complying with all of the provisions of the Authorisation Ordinance. The company awaits issue of the Decree of Assignment from the State of the previous army shooting range in order to be able to sign the ground lease over all of the area on which the IPT and WTE plants are to be constructed. 4. Project financing In the course of 2007 the financing contract was not signed largely as a result of the administrative and political problems that arose concerning the continued application of the CIP6 tariffs in respect of activities relating to the generation of electrical energy from waste that are not yet operative. Palermo Energia Ambiente received written assurance from the Sicily Region confirming its firm intention to uphold the commitments regarding application of the CIP6 tariffs that were undertaken on signing of the Convention. In the 2008 Regional Budget, the Sicily Region has set aside three years of CIP 6 contributions in favour of the plants for the treatment and utilisation, through waste to energy, of the residual portion of urban waste after recycling produced in the town councils of the Sicily Region. Palermo Energia Ambiente is confident of the successful outcome of the industrial plan and on 8 January 2008 the four MLA s, together with other Italian and international financial institutions that agreed to participate in the syndication, confirmed their full and continued support for the projects and their interest in financing them. On this premise, extension of the mandate to the end of the 2008 was signed with the four MLA s. 18

5. Commercial contracts Final signature of the commercial contracts is linked to definition of the timing of development work. At the same time a new supplementary act must be drawn up with the Sicily Region in order to redefine the timing of development of the plants and to update the waste contribution rates taking into consideration the delay factors that are not attributable to Palermo Energia Ambiente and the final project amendments that arose from authorising provisions. 6. Plant development In compliance with the provisions of Ordinance no. 632 dated 31 May 2006, Palermo Energia Ambiente announced commencement of works on 15 July 2006. However, work was suspended following the above-mentioned Intergovernmental Decree. Following the successful outcome of the legal action and while awaiting confirmation from the Minister for Economic Development regarding the granting of the CIP6 tariffs, Palermo Energia Ambiente decided to continue with all activities relating to the development of the plants. Status of litigation of the three projects in Sicily With regard to litigation relating to the three projects in Sicily, these are still significant in volume, however based on the favourable outcomes achieved in 2007 and the current status of litigation and legal opinion, they do not reasonably present tangible risks to the continuation of these initiatives. In the course of 2008, the hearings for the summary sentences will be held at the Lazio Regional Administrative Court. 5.1.4 Performance of associates Frullo Energia Ambiente Srl This company, which was set up as a joint venture between Hera SpA (51%) and Actelios SpA (49%), owns the WTE plant in Granarolo dell Emilia (Bologna), which has installed capacity of 22 MW that falls within the CIP6/92 tariffs. Frullo Energia Ambiente Srl recorded revenue of Euro 48,145 thousand and profit for the year of Euro 12,218 thousand. Capital expenditure during the year amounted to Euro 15,912 thousand. The net financial position, a total indebtedness of Euro 67,982 thousand, comprises cash and cash equivalents of Euro 33,310 thousand, non-recourse borrowings of Euro 92,407 thousand, net of Euro 2,620 thousand arising from application of the amortised cost method to the cost of raising project financing and Euro 8,400 thousand of shareholders loans. The net financial position comprises Euro 485 thousand relating to the fair value measurement of derivative instruments to hedge the non-recourse borrowings (interest rate swaps - IRS to hedge interest rate risk and fix variable rates). 19

Ambiente 3000 Srl This company, set up as a joint venture between Hera SpA (51%) and Actelios SpA (49%), is responsible for the operation and maintenance of the WTE plant owned by Frullo Energia Ambiente Srl in Granarolo dell Emilia. The 2007 financial year closed with a profit for the year of Euro 368 thousand and revenue of Euro 12,755 thousand. The net financial position was a total asset of Euro 3,741 thousand. Palermo Energia Ambiente ScpA The company, which is 23.273% owned by Actelios SpA, was set up to achieve the objectives of the consortium shareholders with the exclusive aim of implementing a project to utilise the residual portion of urban waste, net of recycled waste, through the development of integrated systems in the district councils of Sicily that are part of the ATO. For this purpose, on 17 June 2003 an agreement was signed with the President of the Sicily Region Delegated Commissioner for waste emergency, whereby the company, using WTE, will treat and utilise the residual portion of urban waste, net of recycled waste, produced in the district councils of Sicily belonging to the ATO in the provinces of Palermo and Trapani that form the Palermo system. The company continued its start-up activities and closed the 2007 financial year with a loss of Euro 695 thousand with no corresponding revenue. Capital expenditure during the year totalled Euro 7,017 thousand and the net financial position was a total indebtedness of Euro 24,131 thousand. Powercrop Srl This company, which was set up on 13 December 2006 as a joint venture between Seci Impianti Srl (50%) and Actelios SpA (50%), is responsible for the redevelopment of four sugar refineries into plants that produce electrical energy from biomass and vegetable oils. As this relates to a startup business the company closed 2007 with a loss of Euro 1,071 thousand. Capital expenditure in the period amounted to Euro 428 thousand and the net financial position was a net asset of Euro 676 thousand. High turnout at the Powercrop Srl stand at the Fiera di Verona. 5.1.5 Review of business in 2007 On 26 February a blockage took place at the WTE plant in Trezzo sull Adda that resulted in the halt of the second production line. The two production lines at the WTE plant in Trezzo sull Adda resumed normal operations at the end of April following maintenance work carried out to remove the blockage. As a consequence of this event, the stoppage for scheduled maintenance due to take place in August was reduced in order to recover, at least in part, lost production in the months of March and April. Prima Srl charged Euro 2,065 thousand to the provision for doubtful accounts to cover the potential risk relating to the possible non-recovery of the total overdue balance owed by Biotech Srl. Moreover, Prima Srl exercised the bank guarantee of Euro 500 thousand to cover the loss, which was released by the bank in December. 20

With regard to the projects in Sicily, on 2 February 2007 a government bill was introduced that aims to exclude from the CIP6/92 tariff regime authorised plants that are not yet operative. However, the bill allows exceptions to this exclusion to be granted by the Minister for Economic Development together with the Minister of the Environment. The project companies in Sicily have received written assurance from the Sicily Region regarding its firm intention to uphold the commitments, undertaken on signing of the Convention, relating to the application of the CIP6/92 tariffs. The companies involved in the projects in Sicily suspended construction activities on the WTE plants in February 2007. In the period from August to November 2006, the Minister of the Environment called a number of intergovernmental works meetings that were also attended by representatives of the Sicily Region, in order to discuss the authorisations issued under Presidential Decree 203/88. The outcome of these meetings was the issue of Intergovernmental Decree GAB/DEC/30/2007 that ordered the suspension until 15 April 2007 of the authorisations issued under Presidential Decree 203/88, which had been obtained following issue of previous Intergovernmental Decrees. The suspension Decree ordered the suspension of the authorisations issued under Presidential Decree 203/88 until finalisation of the issue proceedings by the Integrated Environmental Authorisation (AIA), which were required to take place within sixty days from the date of commencement of proceedings by the IPPC Commission and must have commenced by 15 February 2007. In the event of non-compliance with these deadlines, and by 15 April 2007 at the latest, the authorisations would resume full validity. On 17 March 2007 the Lazio Regional Administrative Court upheld the appeal filed by the project companies in Sicily and adopted temporary precautionary measures that resulted in suspension of the above Intergovernmental Decree. In the panel hearing of 4 April 2007 the Lazio Regional Administrative Court admitted the claims filed by the project companies and declared suspension of the Intergovernmental Decree. Furthermore, regarding the projects in Sicily, on 12 June a meeting was held in Palazzo Chigi (Italian parliament) to discuss the subject of waste treatment and recycling in Sicily. The meeting chaired by the Italian Prime Minister was attended by the Ministers of the Environment and Health and the President of the Sicily Region. The outcome of this meeting may be summarised as follows: - Support for the development of the WTE plant was confirmed; - Reduction of emissions compared to the levels stipulated in the tender conditions; - Signing of the legality protocol; - Commitment by the Sicily Region to increase significantly recycling activities. On 13 July the State Council overruled the appeals filed by the Minister of the Environment and the Protection of the Seas, the Minister of Health and the Minister for Economic Development, against the decisions of the Lazio Regional Administrative Court that had resulted in the suspension, following appeals submitted by the interested companies, of the intergovernmental decrees suspending the authorisations for emissions into the atmosphere that had been granted to the project companies, Palermo Energia Ambiente, Platani Energia Ambiente and Tifeo Energia Ambiente. The salient points of the appeal judge s decision are twofold. Firstly: the decision of the Lazio Regional Administrative Court is fully upheld to the effect that the local administrations have no jurisdiction regarding the issue of integrated environmental authorisations for plants belonging to integrated systems. Secondly: the appeal judges confirmed that the authorisations issued to the companies resumed full validity from 15 April 2007, as the issue procedures for the integrated environmental authorisations had not been finalised. This concluded the long and complex matter relating to the intergovernmental decree suspending the emissions authorisations. This process commenced in September 2006 without any prior warning to the interested companies, which had only been made aware of the situation on 14 February 2007 when the suspension decrees were notified and the procedures aimed at issuing the integrated environmental authorisation were ordered to begin. 21

On 19 July a new Euro 100 million loan in the form of project financing, was entered into on behalf of Frullo Energia Ambiente Srl to replace the previous loan.the new non-recourse loan has a 12 year maturity and, in contrast to the previous loan, represents an improvement in the agreed terms, interest rates, financial covenants and maturity and, in particular, allows the cash currently tied to the project financing to be freed in order to repay the shareholders loans. On 26 July, ahead of schedule, the photovoltaic plant in Rende commenced operations, while the plant in Trezzo (the largest facade photovoltaic plant in Northern Italy) began activities in October. In August one of the members of the CSA Consortium, who had been assigned the construction contracts for the WTE plants in Sicily, announced that they wish to resolve the contracts. Negotiations are being finalised with a new partner. On 19 September, following cancellation of AEEG resolution no. 249/06, as ordered by the Lombardy Regional Administrative Court, the Italian National Grid announced that owners of power plants that operate under the CIP6 convention may proceed to invoice the adjustment on the amounts relating to the period January August 2007 based on the updated tariffs issued by the CCSE (Italian Electricity Sector Price Adjuster) and, commencing September 2007, to value the energy sold to the Italian National Grid under the terms of the Convention at the updated tariffs. With regard to the CIP6 tariff regime, in early October the Italian Energy Authority filed an appeal with the State Council against the decision of the Lombardy Regional Administrative Court, in order to reinstate the provisions of decree no. 249/06 issued by the Authority in relation to the calculation of the avoided cost of combustibles. The State Council upheld the appeal of the Authority that resulted in the revision of the tariff invoiced to the Italian National Grid for 2007. On 11 October, the dispute between Ambiente 2000 Srl and EALL Energia Ambiente Litorale Laziale Srl was settled under the terms of which EALL Srl paid Euro 1,600 thousand to cover the damages suffered by Ambiente 2000 Srl in respect of the non-fulfilment of the Operation and Maintenance contract signed by the parties on 31 January 2001. In October Frullo Energia Ambiente Srl agreed to settle with TM.E SpA Termomeccanica Ecologia, the constructor of the WTE plant in Granarolo dell Emilia. The agreement attributed a higher value to the plant (Euro 15,721 thousand). Subsequent to this settlement, at the end of the year the GSE paid approximately Euro 12 million that had been frozen by the court on the constructor s request, while the project financing banks released the restricted funds in March 2008. With regard to the projects in Sicily, at the end of 2007 the existing Mandated Lead Arrangers (MLA s) (Unicredit, Royal Bank of Scotland, Banca Intesa and Cassa Depositi e Prestiti) of more than Euro 1.1 billion of project financing that was syndicated in the summer of 2006, together with domestic and international financial institutions who are party to the syndicate, confirmed their continued support for the projects and their interest in financing it. On this premise, the mandate was extended to the end of 2008. While awaiting confirmation from the Minister for Economic Development regarding concession of the CIP6 tariffs in relation to the projects in Sicily, it was decided that construction work should continue on the plants. On 22 December 2007 Actelios SpA acquired the entire share capital of Immobiliare Samanta Srl, the name and purpose of which is to be amended following which it will become the holding company of the photovoltaic energy business. Finally, with regard to Powercrop Srl, development activities on the five biomass from dedicated culture projects continued: the production reconversion agreements and the industrial agreements with the Agricultural Associations were finalised in December. 22

5.1.6 Employees The number of group employees at the year end was 142 and comprised: (Number) 31.12.2007 31.12.2006 Change Managers 17 15 2 White-collar staff 66 67 (1) Blue-collar staff 59 61 (2) 1 Total employees in consolidated entities 142 143 (1) 2 Employees in non-consolidated entities 3 Total employees (1+2) 142 143 (1) As Frullo Energia Ambiente Srl and Ambiente 3000 Srl are consolidated applying the proportional method, the numbers above include the 49% proportional share of the employees of these companies that total 1 manager, 18 white-collar staff and 27 blue-collar staff. 5.1.7 Environment, health and safety During the year the group continued its commitment to meet adequate environmental, safety and quality standards that are consistent with the mission statement through: - Ongoing improvements in the integration of company management procedures relating to quality, environment and safety, by taking advantage of synergies in these areas; - Periodic training of employees in relation to health and safety in the workplace and increasing awareness regarding the protection and safeguarding of the environment while carrying out their work. In particular, in relation to the principal group operating subsidiaries, the situation at 31 December 2007 was as follows: Company Management system Location ACTELIOS SpA Quality Management system UNI EN ISO 9001:2000 for services - Head office provided to group companies: Human resources, Administration and Finance, Supply, Quality, Environment and Safety. Environmental management system (UNI EN ISO 14001:2004) ECOSESTO SpA Certified Integrated Quality and Environment system - Head office (Reference regulations: UNI EN ISO 9000:2000) - Biomass plant in Rende - Vieste landfill - Biomass plant Environmental management system UNI EN ISO 14001:2004 in Rende AMBIENTE 2000 Srl Integrated Quality, Environment and Safety system - WTE plant in (Reference regulations: UNI EN ISO 9000:2000; Trezzo sull Adda UNI EN ISO 14001:2004 and OHSAS 18001) PRIMA Srl Environmental management system (UNI EN ISO 14001:2004). - WTE plant in EMAS II registration no. IT 672 Trezzo sull Adda With regard to accidents, no employees of the Actelios group were involved in accidents in 2007. Consequently, accident frequency and criticality rates were nil. 23

5.1.8 Research and development activities Actelios and the Ev-K2-CNR Committee have developed a complex applied research project named EARTH, with the purpose of contributing to safeguarding the environment in high altitude areas. This is a prototype piece of equipment for the thermal treatment of waste from alpine expeditions that is designed to operate in extreme weather conditions where the thin air and total absence of electrical energy result in the requirement to find state of the art technological solutions. The machine, which was presented to the press last year, was sent to Pakistan in order to be installed close to K2 as part of the Karakourum Trust project. In addition, analyses relating to new technology in the field of renewable energy have commenced and with regard to Powercrop Srl experimental activities were performed in the agro-energy field. 5.1.9 Risk factors and litigation Ecosesto SpA With regard to the litigation in progress with Syntea SpA, the Court in Milan issued a sentence in favour of Ecosesto SpA on 22 June 2007. The other party has filed an appeal opposing this sentence. Prima Srl With regard to the arbitration proceedings in course with Protecma, in the hearing that took place on 21 December 2006, the Sole Arbitrator had invited the parties to reach a definitive mutual solution in respect of the amounts to be awarded to each other on account of the legal judgements that had already been expressed on the disputes. The parties filed explanation memorials of their respective positions in relation to the partial award and their rebuttals. In the hearing that took place in front of the Sole Arbitrator on 9 March 2007, the parties declared that the conditions to arrive at an out of court settlement of the dispute did not exist. The Sole Arbitrator read the explanations and the requests to be made to the CTU (technical consultant) and determined that the expert work should commence on 22 March 2007 and granted the technical expert until 30 June 2007 to finish his work. The parties agreed to a six month extension to the date set to file the arbitration award, which is now due to take place by 2 January 2008. The expert work continues. In the ordinance dated 30 June 2007, the Sole Arbitrator ordered the date by which the expert conclusions should be filed to be extended to 31 October 2007. On 30 October 2007 the technical consultant requested a further extension to 10 January 2008. The Sole Arbitrator upheld the request and extended the filing date for the technical consultant s report to 10 January 2008 (subsequently put back to 21 January 2008 in the ordinance dated 31 December 2007) and at the same time asked Chambers to delay final pronouncement of the arbitration award to 3 July 2008. In provision no. 1485/12 that came into force on 14 November 2007, the Arbitration Council extended the filing date of the arbitration award to 2 July 2008. In the ordinance dated 20 June 2008 the Sole Arbitrator Prof. Spada extended the time limit granted to the CTU Prof. Biardi for the purpose of filing the additional technical report to 11 February 2008. Prof. Biardi filed the additional technical report on 6 February 2008. This rejects all of the new requests filed by the parties and determines, referring the definition of all related legal disputes to the Sole Arbitrator, a range in relation to some of the amounts that Prima Srl will be asked to repay. An Arbitration Council hearing will be set in which the briefs will be submitted and discussed orally. 24

5.1.10 Significant events after the balance sheet date On 22 January 2008, the State Council upheld the appeal filed by the Electricity and Gas Authority, which resulted in the revision of the rate invoiced to the GSE (Italian National Grid) for the whole of 2007. In February Actelios SpA paid a deposit of Euro 1,231 thousand in relation to the acquisition from the Solon group of projects for the development of photovoltaic plants in Puglia with total installed capacity of 6 MW and that will result in total capital expenditure exceeding Euro 27,000 thousand. An alternator broke down at the WTE plant in Granarolo dell Emilia on 5 March 2008. This resulted in the stoppage of the turbine group with a resulting loss in electrical energy generation. Frullo Energia Ambiente has already identified the solution, which is currently being put into action and will minimise the impact on the 2008 results. 5.1.11 Future developments and going concern Based on the 2007 results, which confirmed an improvement in the profitability of the operating plants, despite a fall in revenue, it is expected that the operating performance of the plants already up and running, will remain largely unchanged in 2008. The 2008 result will be affected by development costs and the start-up of new projects, both in respect of the dedicated culture biomass plants owned by Powercrop Srl, and the photovoltaic plants. In particular, with regard to the projects in Sicily, all activities performed to date and the decision to continue with construction work, demonstrate the strong commitment of the Actelios group to take all necessary actions to finalise these initiatives despite the current uncertainties surrounding this situation. At a strategic level the Actelios group is focusing on a wider business scenario, which foresees the development of projects in the photovoltaic, biomass, biogas and other innovative initiatives in the field of electrical energy production from renewable sources. The net financial position is expected to benefit from the significant cash generated by operating plants. However, the level of investment required to construct the above-mentioned plants will continue to impact the net financial position of the Actelios group. 25

5.2 Operating and financial review of Actelios SpA 5.2.1 Financial highlights (Euro thousands) 31.12.2007 31.12.2006 Revenue 54 488 Cost of sales (453) Gross profit 54 35 Operating profit/(loss) (6,803) (6,696) Profit for the year 15,941 10,197 Invested capital net of provisions 95,531 83,938 Total equity 338,845 329,887 Net financial position - asset 243,314 245,949 Capital expenditure 117 28 Employees (no.) 30 27 Ordinary shares (no.) 67,680,000 67,680,000 5.2.2 Results and review of business in 2007 The 2007 financial year closed with a profit for the year of Euro 15,941 thousand, after recording amortisation of Euro 40 thousand and income taxes of Euro 2,134 thousand. The results have increased significantly compared to the previous year largely as a result of net finance income of Euro 11,593 thousand (2006 - net finance income Euro 7,660 thousand) and income from equity investments that is Euro 3,904 thousand higher than 2006. Total dividends recorded in 2007 amount to Euro 13,285 thousand and relate to Prima Srl (Euro 7,650 thousand) and Frullo Energia Ambiente Srl (Euro 5,635 thousand). The net financial position, a total asset of Euro 243,314 thousand, is slightly lower than the net asset of Euro 245,949 thousand at 31 December 2006. 5.2.3 Employees The total number of company employees at 31 December 2007 was 30, comprising 11 managers and 19 white-collar staff, representing an increase of 3 compared to the total at 31 December 2006. 5.2.4 Capital expenditure Capital expenditure totalled Euro 117 thousand and relates to the purchase of software during the year ended 31 December 2007 for Euro 40 thousand, and expenditure on vehicles, furnishings and personal computers for a total of Euro 77 thousand. 26

5.2.5 Directors, statutory auditors, general managers and their interests Company No. shares held No. shares No. shares No. shares held at 01.01.2007 purchased sold at 31.12.2007 Paride De Masi through Italgest Energia SpA Actelios SpA 3,059,320 3,059,320 Marco Agostini 41,000 19,000 60,000 Enrico Falck Actelios SpA 8,000 8,000 The information in the table above was provided by the relevant parties. 5.2.6 Related party transactions Actelios SpA carries out arms length transactions of both a trade and financial nature with its parent company, subsidiaries and associates. These transactions allow for group synergies to be achieved through the use of common services and knowhow and the application of common financial policies. In particular, the transactions relate to specific activities, details of which are provided in the notes to the financial statements and include: - Treasury management, raising finance and issuing guarantees; - Administrative and professional services; - Management of common services. Transactions detailed previously in this report should also be taken into consideration. Group companies may also avail of the possibility to use the consolidated tax regime with the holding company Falck SpA. 5.2.7 Holding of own shares or parent company shares In accordance with article 2428, sub-section 2, point 3 of the Italian Civil Code, the company declares that at 31 December 2007 it had no holdings in its own or its parent company shares. 5.2.8 Purchase and sale of own shares or parent company shares In accordance with article 2428, sub-section 2, point 4 of the Italian Civil Code, the company declares that during the year ended 31 December 2007 it did not purchase or sell holdings in its own or its parent company shares. 5.2.9 Share schemes The company does not currently operate employee benefit schemes through the implementation of stock option plans. 27

5.2.10 Proposed distribution of profit for the year Dear Shareholders, the financial statements for the year ended 31 December 2007 closed with a profit for the year of Euro 15,940,908. We propose to distribute this profit as follows: (Euro) 5% to the legal reserve 797,045 Euro 15 cents to each of the 67,680,000 ordinary sharholders 10,152,000 Retained earnings 4,991,863 Total 2007 profit for the year 15,940,908 Where in agreement, we invite you to approve the 2007 Annual Report comprising the balance sheet, income statement, cash flow statement, statement of changes in equity and notes to the financial statements. On behalf of the board of directors The Chairman Federico Falck Milan, 17 March 2008 28

5.3 Corporate governance Introduction Actelios SpA complies and conforms to the Code of Self Discipline for listed companies, which was issued by Borsa Italiana SpA in 2002.The board of directors of Actelios SpA passed resolution on 27 July 2007 whereby the recommendations of this Code of Self Discipline have been implemented, with the exception of the recommendation to establish a nomination committee. This report on corporate governance is divided into three sections: the first contains a general description of the corporate governance structure adopted; the second analyses and illustrates in more detail the implementation of the requirements of the Code of Self Discipline; the third provides summary details in table format. Finally, please note that company documentation mentioned in this report is available on the company s website www.actelios.it, in the section The Company. 5.3.1 Corporate governance structure The corporate governance structure comprises the administration and control department and the body of shareholders. In accordance with current legislation, the control of the accounting records is assigned to a firm of independent auditors. Carlo Magnani was nominated Dirigente Preposto (Compliance Officer) responsible for preparation of the company s accounting information as required by Law 262/05 by the board of directors on 24 September 2007. During 2007, the company passed further updates to the Organisation and Operations Manual prepared in accordance with Legislative Decree 231/01 in order to better reflect the current organisation structure and to incorporate changes in legislation, and at the same time amended the Code of Internal Dealing. Further changes were made to the Organisation and Operations Manual in February 2008 for similar reasons. Actelios SpA is not subjected to managerial or co-ordination activities either by companies or entities, taking into consideration both opinions expressed by external legal advisors and the operating characteristics of the company. In accordance with article 2497 bis of the Italian Civil Code, Actelios SpA performs managerial and co-ordination activities on behalf of the following group companies: Ecosesto SpA, Elettroambiente SpA, Platani Energia Ambiente ScpA, Prima Srl, and Tifeo Energia Ambiente ScpA. 5.3.1.1 Corporate bodies and respective roles Board of directors The board of directors plays a central role in the corporate governance structure as it is vested with all powers required for the ordinary and extraordinary management of the company (article 20 of the articles of association). The board is responsible for outlining strategic and organisational plans, the review and approval of strategic, industrial and financial plans, the granting and cancellation of proxies, the review and approval of significant financial transactions, in particular in respect of related party transactions. Article 17 of the articles of association establishes that the board of directors consists of between 5 and 15 members who may remain in office for three years and, in the event that appointment is not carried out by the shareholders, the members will elect a chairman, one or more deputy chairmen and managing directors and shall assign executive powers and the related limits. 29

The members of the board of directors who were appointed during the annual general meeting held on 27 April 2005 are as follows: Name Federico Falck Achille Colombo Paride De Masi Roberto Tellarini Marco Agostini Enrico Falck Giuseppe Gatti Bruno Isabella Ferruccio Marchi Umberto Rosa Office Chairman Deputy chairman Deputy chairman Managing director Director Director Director Director Director Director The board of directors, together with the board of statutory auditors, receives complete information on a quarterly basis in accordance with article 150 of Legislative Decree 58/98 from the managing director regarding the activities performed by him during the period in relation to the powers vested in him. The board of directors may also delegate its powers to an executive committee where this exists. An executive committee has not yet been set up. The board of directors has set up, in accordance with the Code of Self Discipline, a remuneration committee and an internal controls committee that provide consultancy and advisory services, and has appointed an investor relator. Board of statutory auditors The board of statutory auditors oversees compliance with laws and the company s articles of association, the correct application of administrative procedures and, in particular, the effectiveness of the internal control system and the organisational, administrative and accounting structure and that this structure functions correctly. The members of the board of statutory auditors are appointed for a three year period and may be reappointed. All members of the board of statutory auditors must possess the requisites of reputation and independence established by law. The board of statutory auditors currently comprises three permanent members and two substitutes who are all members of the Albo dei Revisori Contabili (the Italian register of approved statutory auditors). Appointment of the members is based on lists submitted by the shareholders who at the time of submission hold a minimum of one fortieth of share capital (minimum shareholding is determined in accordance with article 147 ter of Legislative Decree no. 58 dated 24 February 1998). The minority shareholders have the right to appoint one permanent member and one substitute member of the board of statutory auditors (article 24 of the articles of association). The permanent members of the board of statutory auditors who were reappointed in the annual general meeting that took place on 27 April 2005 are as follows: Name Roberto Bracchetti Aldo Bisioli Nicola Vito Notarnicola Office Chairman Statutory auditor Statutory auditor The emoluments of the members of the board of statutory auditors were decided in the shareholders meeting, during which it was decided that for the first mandate (2005-2007) the fees for the two permanent members will equal the minimum prescribed in professional standard tables, while the chairman will receive double this amount. 30

The meetings of the board of statutory auditors may also take place by audio-videoconference and/or by teleconference on condition that all of those entitled to participate are able to be identified, that they may intervene in discussions in real time and that they are informed sufficiently in advance. Shareholders meetings The annual general meeting (AGM) is the body which represents all of the shareholders and passes ordinary resolutions in relation to: the approval of the annual report, the appointment or removal of the members of the board of directors, the appointment of the members of the board of statutory auditors, the emoluments of the directors and statutory auditors, the appointment for the control of the accounting records, and directors and statutory auditors responsibilities. In extraordinary meetings the shareholders may approve share capital increases, excluding or limiting pre-emption rights when it is in the company s interest to do so and within the limit of 10% of existing share capital. The shareholders convene at least once a year in order to approve the annual report. Those shareholders in respect of whom notice from the intermediary was received at least two days prior to the first call, in accordance with article 2370 of the Italian Civil Code, may attend the shareholders meeting. Shares may not be withdrawn prior to the meeting taking place and any shareholder who has the right to attend the meeting may be represented by proxy. The meeting is chaired by the chairman of the board of directors or in his absence the deputy chairman. Ordinary and extraordinary meetings are considered to have been called correctly and have the ability to approve in the first, second and third calls when the numbers and majorities required by law are met. In accordance with Italian stock exchange recommendations, on 27 April 2005, the Rules of the Shareholders Meetings were approved during the annual general meeting. These were updated in the extraordinary shareholders meeting that took place on 21 June 2007. The shareholders met twice in 2007: on 27 April 2007 to approve the annual report for the year ended 31 December 2006 and on 21 June 2007 in order to amend the articles of association and the shareholders rules. Control of accounting records The control of the accounting records is carried out in accordance with law by a firm of independent auditors that is registered with Consob. The annual general meeting of 27 April 2005, following consultation with the board of statutory auditors, assigned this engagement to PricewaterhouseCoopers SpA. The shareholders meeting of 27 April 2007 agreed to extend this appointment up to the approval of the 2010 annual report following the changes introduced by Legislative Decree 303/2006 that extended the duration of audit appointments from 6 to 9 years. Compliance officer Carlo Magnani was nominated Dirigente Preposto (Compliance Officer) responsible for the preparation of all the company s accounting information, as required by Law 262/05, on 24 September 2007. The Compliance Officer gained the relevant experience through managerial roles carried out in the areas of administration, finance and control. 5.3.1.2 Share capital Share capital amounts to Euro 67,680,000.00 and consists entirely of ordinary shares. Significant shareholders at 31 December 2007 were: - Falck SpA - 68.72% of share capital; - Italgest Energia SpA - 4.52% of share capital; - GLG Partners LP - 4.99% of share capital; The remaining shares are held by shareholders who own less than 2% of share capital. 31

An agreement exists between Falck SpA and Italgest Energia SpA, which was made public in accordance with article 122 of the Consolidated Finance Act, and relates among other things to the call option held by Falck SpA whereby it may acquire the shares currently held by Italgest Energia SpA, applying the terms and conditions stipulated in the agreement. 5.3.1.3 Organisation and Operations Manual in accordance with Legislative Decree 231/01 Further changes were made to the Organisation and Operations Manual (hereinafter the Manual ), following the resolution passed by the board of directors on 14 February 2007, in order to comply with the regulations introduced by Legislative Decree 231/01 that extended the scope of application of this legislation to areas relating to safety and money laundering. Consequently, the Fourth Special Section relating to crimes against persons through violation of the accident prevention regulations pursuant to the provisions of article 9 of Law no. 123 of 3 August 2007; and the Fifth Special Section regarding crimes against the net worth through fraud further to article 63 of Legislative Decree no. 231 of 21 November 2007, were added. The Manual reflects the Italian Stock Exchange listing requirements and guidelines on this area. A board, known as the Compliance Officer, consisting of an independent director, a statutory auditor of Actelios SpA and a group internal auditor, which has independent supervisory, control and decision making powers, has been set up to ensure implementation of the Organisation and Operations Manual of Actelios SpA. The internal control committee constantly checks the effectiveness of procedures in relation to company requirements, and proposes changes where necessary in order to align them with the current corporate environment. All of the companies in the Actelios group have adopted the same Organisation and Operations Manual as Actelios SpA and the necessary work is currently under way in order to reflect the further amendments that were made in February 2008, subject to adjustments to take into consideration the different corporate cultures and any specific requirements. 5.3.1.4 Company procedures The company procedures were updated and amended in order to reflect adoption of the Organisation and Operations Manual with particular emphasis placed on the requirements of Legislative Decree 231/01. 5.3.1.5 Code of Conduct The Code of Conduct sets out the rules that are fundamental to maintaining ethical conduct and the general principles relating to all corporate governance tools, which should reflect the principles of the code. The regulations set out in the code are not restricted to employees. Employees are in fact obliged to ensure that the rules established in the Code of Conduct are adhered to by all independent parties who work with or have any form of dealings with the company. This extension of the rules takes on particular importance following introduction of the regulations arising from Legislative Decree 231/01. An implementation committee was set up in relation to the Code of Conduct with the purpose of promoting and ensuring comprehension and implementation of the Code of Conduct and to resolve queries regarding interpretation of the regulations therein. The committee currently consists of six members: Name Federico Falck Achille Colombo Mario Molteni Angelo Alfieri Carlo Magnani Carlo Sinatra Office Chairman of Falck SpA and Actelios SpA Committee Chairman Managing Director of Falck SpA and Deputy Chairman of Actelios SpA External representative Human Resources Director of Falck SpA Administration, Finance and Control Director of Falck SpA Legal and Company Affairs Director of Falck SpA Committee Secretary 32

The implementation committee for the Code of Conduct and corporate governance met on 21 March 2007 identifying actions to be taken in 2007 with regard to furthering the level of implementation of the principles of governance and internal training activities, both of which were carried out. 5.3.1.6 Code of Internal Dealing Law 62/05, which encompasses in Italian law the EU Directives on market abuse (Directive 2003/6/EC of the European Parliament and Council dated 28 January 2003; Directive 2003/124/EC of the Commission dated 22 December 2003; Directive 2004/72/CE of the Commission dated 29 April 2004), substituted article 114 of Legislative Decree 58/98. Consob, in turn, issued resolution 15232 dated 29 November 2005 that forms part of the Listing Rules issued under resolution 11971 in 1999, which dictates the implementation rules in relation to the above regulatory requirements. Subsequently, Actelios SpA passed resolution on 12 May 2006 to adopt the new Code of Internal Dealing, defined the Procedure ex articles 114 and 115 bis of Legislative Decree 58/98 and according to the provisions of chapter VII sections I and II of the Listing Rules. The Code of Internal Dealing represents the instrument that guarantees maximum transparency and uniformity of market information in relation to financial operations on the share capital of Actelios SpA undertaken by Relevant Parties, defined as those who have access to significant information regarding the company and the group and as a result possess wider knowledge of the strategies adopted by the company. The rules set out in the Code of Internal Dealing, to be adopted by Actelios SpA and all of its subsidiaries, are compulsory and may not be broken and, as a result, disciplinary action will be taken in the event of noncompliance. As required by article 2 of Section II of the Code of Internal Dealing, the register that details the persons who, as a result of their working or professional activities or the tasks performed, either permanently or occasionally, have access to privileged information was updated on a regular basis. 5.3.2 Implementation of the Code of Self Discipline 5.3.2.1 Board of directors The board of directors is appointed for a three year period, is vested with the widest range of powers required to perform the ordinary and extraordinary company managerial activities and meets at least once every three months. The current board of directors includes the following three external representatives: Name Bruno Isabella Giuseppe Gatti Umberto Rosa The board apportions the emoluments to each director and, in line with the articles of association and based on the proposals of the remuneration committee, on 29 July 2005 defined, in their absence, the emoluments to be paid to the deputy chairman Achille Colombo and to the managing director Roberto Tellarini, in relation to the particular office held and the powers vested in them. The emoluments of the deputy chairman Paride de Masi were defined in the resolution passed on 22 March 2006, following recommendations made by the remuneration committee. The board of directors mandate will expire on approval of the annual report for the year ended 31 December 2007. 33

5.3.2.2 Duties and powers The board of directors examines and approves strategic, industrial and financial plans; delegates and withdraws powers to/from top management; determines, following examination of the proposals of the relevant committee and having consulted with the board of statutory auditors, the remuneration of those directors who hold specific offices and apportions the total emoluments among the individual board members; oversees the general operating performance, with particular attention to potential conflicts of interest, related party transactions, and those transactions that may be significant in economic and financial terms; examines the adequacy of the organisational and general administrative structure of the company and the group as determined by the managing directors; reports to the shareholders in the AGM. The managing director prepares a report in writing to the board of directors and board of statutory auditors at least once every quarter, detailing operations carried out, general performance, future developments and transactions of significant economic and financial impact and transactions that may result in potential conflicts of interest. In addition, the deputy chairman Achille Colombo has been assigned extraordinary and ordinary administrative powers; the deputy chairman Paride De Masi has been assigned ordinary administrative powers in respect of research and development; the managing director Roberto Tellarini has been assigned ordinary administrative powers regarding the co-ordination of company management with a limit of Euro 5 million in relation to powers that have a financial impact. In accordance with the company s articles of association, legal representation of the company is vested in the chairman, deputy chairmen and managing director within the limits of the respective powers. In the course of 2007, the board of directors met 7 times with the following attendance by directors and statutory auditors: Meeting Directors attendance Statutory auditors attendance 13 February 2007 7/10 3/3 16 March 2007 10/10 3/3 8 May 2007 10/10 3/3 21 June 2007 8/10 3/3 27 July 2007 8/10 3/3 24 September 2007 10/10 3/3 29 October 2007 9/10 3/3 The activities of the board of directors are co-ordinated by the chairman who is responsible for the correct application of corporate governance within the board s activities. The chairman co-ordinates and presides over board meetings and ensures that the interested parties receive in advance all information necessary in order that they may participate effectively, with the exception of matters considered urgent or confidential. 34

5.3.2.3 Composition of the board of directors The board of directors comprises the following 10 directors of which 3 are executive and 3 are independent directors: Name Office Federico Falck Chairman and legal representative Achille Colombo Deputy chairman and legal representative Executive Paride De Masi Deputy chairman and legal representative Executive Roberto Tellarini Managing director and legal representative Executive Marco Agostini Director Bruno Isabella Director Independent Enrico Falck Director Giuseppe Gatti Director Independent Ferruccio Marchi Director Umberto Rosa Director Independent The independence of directors is carefully evaluated by verifying the absence of significant financial interests, that no controlling equity interests or interests that may exercise significant influence are held and that the requisites set out by law are in place. As required for informative purposes, the roles held by the directors in other companies are as follows: Federico Falck Chairman Chairman of the board of directors of: and legal representative - Falck SpA - Riesfactoring SpA - Itla-Redaelli Tecna Laminati SpA - Sodalitas, Association for the development of Companies in Social Activities Deputy chairman of Delna SpA Director of: - Banca Popolare di Sondrio SpA - Falck Acciai-CNS SpA - Italcementi SpA - Cassa di Risparmio di Parma e Piacenza S.p.A. Member of council and executive committee of Assolombarda Council member of Assonime Achille Colombo Deputy chairman Managing director of Falck SpA and legal representative Director of: - Falck Energy S.A. - Italian Lao Group Co. Ltd Chairman of AGR Ventures Pte. Ltd. Chairman of Falck Financial Services Member of the: - World Economic Forum - World Business Council for Sustainable Development (EBCSD) - Aspen Club Paride De Masi Deputy chairman Chairman of the board of directors of: - Italgest Energia SpA - Italgest Energia Prima SpA - Italgest Wind Srl - E.T.A. SpA Managing director: - Italgest Holding Srl 35

Roberto Tellarini Managing director Chairman of the board of directors of: and legal representative - Frullo Energia Ambiente Srl Deputy chairman of Ecosesto SpA Member of the board of directors of: - Elettroambiente SpA - Palermo Energia Ambiente ScpA - Powercrop Srl Bruno Isabella Director Chairman of the board of directors of: - Sirap-Gema SpA - Sirap-Gema Insulation Systems Srl - Amprica SpA - Sab Autoservizi Srl - Mondi Packaging Italia SpA Chairman of the Steering Committee of: - Petruzalek Gmbh Director of: - Falck SpA - Ccb Comp. Des Ciments Belges Umberto Rosa Director Chairman of the board of directors of: - Snia SpA - Nerviano Medical Science Srl - Air Liquide Italia SpA Director of: - Amplifon SpA - Finlombarda SGR Enrico Falck Director Director of Falck SpA Giuseppe Gatti Director Chairman of Erg Power & Gas SpA Chairman of Enertad SpA Chairman of Iride Mercato SpA Director of Erg SpA Marco Agostini Director - Ferruccio Marchi Director Managing director of: - Marchi Industriale SpA - Giofin Srl Director of: - Falck SpA - Achimar SpA - Castello della Pia Srl - Castel di Pietra Srl - Essemar SpA 5.3.2.4 Committees Nominations committee The company has not set up a nominations committee as the nominations are presented by the majority or controlling shareholders who perform a prior selection process on the candidates. Remuneration committee This was set up on 25 February 2002 with the purpose of formulating proposals regarding remuneration and potential stock option schemes to be assigned to directors with a specific role and, in agreement with the managing director, potential stock option schemes for group management. This committee was reappoin- 36

ted on 27 April 2005. To date the company has not set up any stock option schemes. The members of the committee are: Name Bruno Isabella Umberto Rosa Enrico Falck Office Chairman The committee did not meet in 2007. Internal control committee The internal control committee was set up on 25 February 2002 to put forward proposals and provide consultancy services, including; assisting the board of directors to ensure the correct functioning of the internal controls system, in verifying the application of appropriate accounting principles in preparing the consolidated financial statements together with the administration department, and in evaluating the proposals put forward by the independent auditors. The committee was reappointed on 27 April 2005 with the following members, all of whom are independent, non-executive directors: Name Umberto Rosa Bruno Isabella Giuseppe Gatti Office Chairman The board of statutory auditors, the officer in charge of internal controls and the silent participator (Uditore - Salvatore De Vitis) are invited to attend the committee meetings. The chairman may also request the directors and statutory auditors of the company and its subsidiaries, representatives of the independent auditors and external consultants to attend. The committee met 5 times in 2007 and, in addition to the committee members, the meetings were also attended by the full board of statutory auditors, the officer in charge of internal controls and the department heads. A number of matters were discussed, with particular emphasis on the work plan set out by the officer in charge of internal controls and implementation of the Organisation and Operations Manual that conforms with Legislative Decree 231/01. The new regulations of the internal control committee were approved in May 2007. 5.3.2.5 Company procedures and roles Internal procedures of the board of directors and the committees The company has not adopted specific internal procedures regarding the board of directors but does however guarantee that all of the necessary documentation and information are provided sufficiently in advance of meetings. The chairman may invite the department heads and staff to board meetings in order to comment further on the matters on the agenda. Appointment of directors and statutory auditors The board of directors of Actelios SpA is appointed by the AGM based on lists submitted by the shareholders, made public in accordance with law, in which the candidates must be listed in order by number; the lists of candidates, signed by the shareholders who submitted them, must be filed at company headquarters at least fifteen days prior to the date set for the first call of the AGM. 37

The shareholders who hold the right to appoint directors are those who, either individually or jointly with other shareholders, hold at least one fortieth of share capital or the lower percentage determined by law, and are required to prove the number of shares held by two working days prior to the first call of the AGM; the list must provide details of the identity of the shareholders who presented it and the relevant shareholding. The shareholders who, individually or jointly, in total represent less than 10% of voting share capital may only submit 3 candidates per list. Submitted lists that do not conform to the above terms are rejected. No shareholder may submit or jointly submit, either by means of a third party or trust company, more than one list; the shareholders that are subject to common control under article 2359 of the Italian Civil Code or those who take part in a syndicate vote may submit, or jointly submit, one list only. Each shareholder may vote for one list only. Each candidate may be included in only one list otherwise they will be considered not eligible. The declarations in which each candidate accepts the nomination and bears witness to the fact that there are no reasons why they should be considered ineligible or incompatible with the requirements of law and that they possess the requirements prescribed by law and the rules of the members of the board of directors, are filed with each list within the above-mentioned time limits together with a curriculum vitae detailing personal and professional characteristics and administration and control roles held in other companies and their ability to be considered an independent director in conformance with law or regulations. Any incomplete or incorrect information relating to the individual candidates will result in cancellation of this name from the list to be voted on. In order to obtain the appointment of the candidates presented, the lists submitted and voted on must attain at least half the percentage of votes of those required by the article governing submission of the lists; where this is not achieved the related lists will not be taken into consideration. Election of the members of the board of directors proceeds as follows: a), the total number of directors to be appointed less one is selected based on the progressive order in which they are included in the list that received the highest number of votes in the AGM; b) the remaining director to be appointed is the first name on the list that obtained the second highest number of votes in the AGM, and that is not linked in any way, even indirectly, with the shareholders that submitted or voted for the list that obtained the highest number of votes, and he must possess the professional and reputation requisites prescribed by regulations in force. Where these requisites are not met appointment will be declined. In the event that only one list is submitted or put forward for voting, all of the directors will be chosen from this list. Where no lists are submitted or the number of directors appointed is less than the number required by the AGM, the AGM must be called again in order to appoint the full board of directors. Where, due to resignation or any other reason, the board is short of one or more directors, the provisions of article 2386 of the Italian Civil Code must be followed. With regard to the appointment of the board of statutory auditors, the provisions of law and regulations are applied. The minority shareholders may appoint one permanent auditor and one substitute auditor. In the event that there are equal votes between the minority shareholder lists, the oldest candidates for permanent auditor and substitute auditor will be appointed respectively. The shareholders who intend to submit a list of candidates must hold, at the time the lists are submitted, the minimum amount determined in accordance with article 147 ter of Legislative Decree 58 of 24 February 1998. At least one of the permanent auditors and one of the substitute auditors are chosen from the Registro dei Revisori Contabili (the Italian register of approved statutory auditors) who are required to have practiced as auditors for not less than three years. The statutory auditors who do not meet the above requirement are chosen from those who have gained experience for at least a consecutive three year period in: 38

- a managerial role in administration, finance and control in a listed company with a share capital of not less than Euro two million; - a professional role or as a university lecturer in law, economics and financial subjects that are closely related to the business of the company; - a managerial role in state entities or in public administration authorities that operate in the areas of credit, finance, insurance, property as well as in the energy, industrial, environmental, commercial and information technology sectors and that perform activities closely related to those carried out by the company in similar areas, either directly or through subsidiaries. These rules reflect the new regulatory requirements of Law 262/05 and Legislative Decree 303/06. Supervisory board In compliance with both article 6.1. paragraph b) of Legislative Decree 231/01 and the procedures required by the provisions of the above-mentioned legislation, following the resolution passed on 27 April 2005, the supervisory board was appointed and the current members are: Name Office Umberto Rosa Chairman Roberto Bracchetti Gianluca Gemma (who replaced Gianni Bailo in March 2007) Gianluca Gemma also acts as the board secretary. The supervisory board met 5 times in the course of 2007. The half-year report was presented to the board of directors in the meeting held on 24 September 2007, while the annual report was reviewed in the meeting that took place on 14 February 2008. Internal control system As set out in the Code of Self Discipline, the company appointed an officer in charge of internal controls who does not report to any members of operations management and reports to the internal control committee, the board of statutory auditors and the directors responsible for this function. Gianluca Gemma was appointed to this role on 24 September 2007. Investor Relator In accordance with the Code of Self Discipline, the company appointed Giorgio Botta as Investor Relator on 1 June 2007, replacing Hans Rudolf Schenk. Dirigente Preposto (Compliance Officer) responsible for the preparation of company accounting information in compliance with Law 262/05 On 24 September 2007 Carlo Magnani was appointed Dirigente Preposto (Compliance Officer) responsible for the preparation of the company accounting information in compliance with Law 262/05. 5.3.2.6 Board of statutory auditors The appointment of the board of statutory auditors takes place in compliance with codified and statutory regulations. The current board of statutory auditors term of office ends on the date of approval of the annual report for the year ended 31 December 2007 and comprises the following members: Name Roberto Bracchetti Aldo Bisioli Nicola Vito Notarnicola Office Chairman Statutory auditor Statutory auditor 39

Other appointments held by the above statutory auditors are listed in the table below: Roberto Bracchetti Chairman of the board Chairman of the board of statutory auditors of: of statutory auditors - Alsco Italia Srl - Borgo Antico Srl - Cantoni ITC SpA - Durkopp Adler Italia Srl - Ecosesto SpA - Fidim Srl - Speed SpA - Frullo Energia Ambiente SpA - Pirelli & C. Ambiente SpA - Pirelli & C. Ambiente Renewables Energy Srl - Pirelli & C. Ambiente Site Remediation SpA - Pirelli & C. Real Estate SpA - Pirelli & C. Opportunities SGR SpA - Pirelli & C. Real Estate SGR SpA - Prima Srl - Ratti SpA - Rottapharm SpA - RRL Immobiliare SpA - SIM SpA - Sir.Tess SpA - Spencer Stuart Italia Srl Statutory auditor of: - ABB SpA - Alstom SpA - Alstom Power Italia SpA - Coface Assicurazioni SpA - Coface Factoring Italia SpA - Coface Service SpA - Energia Holding SpA - Energia Italiana SpA - Energia Molise SpA - Esse SpA - Iniziative Immobiliari Srl - Iniziative Retail Srl - La Rinascente Srl - Luceplast SpA - Mediolanum Farmaceutici SpA - Pirelli Tyre SpA - Sorgenia SpA - Tamerice Immobiliare Srl - Tiglio I Srl - Upim Srl Aldo Bisioli Statutory auditor Chairman of the board of statutory auditors of RC Group SpA Statutory auditor of: - Finanziaria Immobiliare d Este Srl - Alicudi SpA - Colorado Film Production Srl - Sugarmusic SpA - Ferriera Sider Scal SpA - Finanziaria Immobiliare D Este Srl - Gianni Crespi Foderami SpA - Hydroservice SpA - Idea Rocca SpA - Iven SpA - Marghera Portuale - Medacta Italia Srl - Plastotecnica SpA Nicola Vito Notarnicola Statutory auditor Chairman of the board of statutory auditors of: - Findast SpA - PAV.I. Srl 40

5.3.3 Attachments The following tables are provided as attachments to this report: - membership of the board of directors and committees - board of statutory auditors - other provisions of the Code of Self Discipline Membership of the board of directors and committees Board of Directors Internal Remune- Non Independ- Attendance Other Control ration Office Member Executive Executive ent % appoint. N. Committee Committee Chairman Federico Falck X 100 5 Deputy chairman Achille Colombo X 100 2 Deputy chairman Paride De Masi X 90 Managing director Roberto Tellarini X 100 Director Bruno Isabella X X 90 1 X X Director Enrico Falck X 80 1 X Director Giuseppe Gatti X X 90 4 X Director Ferruccio Marchi X 100 Director Umberto Rosa X X 90 3 X X Director Marco Agostini X 90 Number of meetings held Board of directors 7 Internal control committee 5 Remuneration committee 0 Board of statutory auditors Office Member % attendance Other appointments no. Chairman Roberto Bracchetti 100 2 Statutory auditor Aldo Bisioli 100 0 Statutory auditor Nicola Vito Notarnicola 100 0 Number of meetings held 6 Quorum required for minority shareholders to submit nomination lists 1/40 of share capital 41

Other provisions of the Code of Self Discipline YES NO Reason for departing from recommendation Delegation procedure and related party transactions The board of directors (BOD) has assigned powers establishing: a) limits X b) method of operating X c) timing of reporting X It is practice to provide information during every board meeting The BOD has maintained the task of examining and approving significant economic and financial transactions (including related party transactions)? X The BOD has defined guidelines and criteria for identifying significant transactions? X Powers are already assigned with limits The guidelines and criteria are detailed in the attached report? X The BOD has defined specific procedures to examine and approve related party transactions? X The approval procedure for related party transactions is set out in the attached report? X Procedures applied for the most recent appointment of directors and statutory auditors The nomination for the role of director was deposited at least 10 days prior to the meeting? X Nomination to the role of director included sufficient information? X Nomination to the role of director included documentation supporting the independence of the candidates? X Presentation of the nominees for the office of statutory auditor took place at least 10 days prior to the meeting? X Nomination to office of statutory auditor included the relevant supporting information? X Shareholders' meetings The company approved the procedural rules regarding shareholders' meetings? X These were adopted in the shareholders' meeting of 27 April 2005 and modified on 21 June 2007 The nominees operate independently of department heads? X Is there a department assigned to internal controls X Investor relator The company has nominated an investor relator (IR)? X Investor relations department and references of IR. X Giorgio Botta Sesto San Giovanni, Via Alberto Falck 4/16 tel 02-24333338 -fax 02-24791214 42

6 Consolidated financial statements for the year ended 31 December 2007

6.1 Consolidated balance sheet 31.12.2007 31.12.2006 Note of which of which (Euro thousands) related parties related parties Assets A Non-current assets 1 Property, plant and equipment (1) 68,752 68,377 2 Intangible assets (2) 223,403 208,473 3 Financial assets (3) 53 78 4 Medium/long-term financial receivables (4) 241 2,102 5 Deferred income tax assets (7) 9,152 8,425 6 Other receivables (6) 627 4,708 Total 302,228 292,163 B Current assets 1 Inventories (8) 4,630 4,914 2 Trade receivables (5) 28,602 10,347 36,284 10,027 3 Other receivables (6) 9,500 122 3,406 106 4 Financial assets (4) 7,308 22 4,141 1,371 5 Investments 6 Cash and cash equivalents (9) 199,943 214,210 Total 249,983 262,955 C Non-current assets held for sale Total assets 552,211 555,118 Liabilities D Equity 1 Ordinary shares 67,680 67,680 2 Reserves 252,733 250,008 3 Retained earnings 8,094 5,042 4 Profit for the year 13,766 12,756 Capital and reserves attributable to group equity holders (10) 342,273 335,486 5 Minority interest in equity 4,055 4,025 Total equity (10) 346,328 339,511 E Non-current liabilities 1 Medium/long-term financial liabilities (13) 89,790 98,790 2 Other non-current liabilities (15) 305 60 3 Deferred income tax liabilities 4 Provisions for other liabilities and charges (11) 2,483 3,121 5 Staff leaving indemnity (12) 2,089 1,917 Total 94,667 103,888 F Current liabilities 1 Trade payables (14) 50,362 4,774 53,600 7,246 2 Other payables (15) 36,415 25,564 37,623 20,682 3 Short-term financial liabilities (13) 24,439 1,648 20,496 1,317 4 Provisions for other liabilities and charges Total 111,216 111,719 G Liabilities attributable to non-current assets held for sale Total liabilities 552,211 555,118 Related party transactions are disclosed on page 67. 45

6.2 Consolidated income statement 31.12.2007 31.12.2006 Note of which of which (Euro thousands) related parties related parties A Revenue (16) 90,625 150 95,818 231 Direct labour costs (17) (6,128) (6,106) Direct costs (a) (18) (49,487) (55,366) (248) B Cost of sales (55,615) (61,472) C Gross profit 35,010 34,346 Other income (19) 4,264 82 2,358 2 Other employee costs (17) (4,185) (4,434) Administrative expenses (20) (9,582) (2,872) (8,535) (3,011) D Operating profit 25,507 23,735 Finance income - net (21) 2,531 6,013 524 2,465 Investment income (22) (185) E Profit before income tax 28,038 24,074 Income tax expense (23) (13,111) (9,831) F Profit for the year 14,927 14,243 G Profit attributable to minority interest (1,161) (1,487) H Profit attributable to group equity holders 13,766 12,756 (a) Direct costs: in 2006 comprised non-recurring costs of Euro 7,833 thousand relating to the impairment write-off of the goodwill on the plant in Rende. There were no non-recurring income or costs in 2007. Related party transactions are disclosed on page 72. 46

6.3 Consolidated cash flow statement 31.12.2007 31.12.2006 Note of which of which (Euro thousands) related parties related parties Cash flows from operating activities Profit for the year 14,927 14,243 Adjusted for: Amortisation and impairment of intangible assets 497 8,349 Depreciation and impairment of property, plant and equipment 13,865 13,525 Staff leaving indemnity provision 461 428 Fair value of financial assets (50) Finance income (8,234) (5,675) (8,235) (2,692) Finance costs 7,711 93 7,711 226 Dividends received Share of profit of investments valued at equity Gain on sale of intangibles Profit on disposal of property, plant and equipment Profit on sale of investments 191 Other changes 45 (4) Income tax expense (income statement) 13,111 9,831 Operating profit before changes in net working capital and provisions 42,383 (5,582) 45,989 (2,466) Change in inventories 284 (2,135) Change in trade receivables 7,682 (2,547) Change in trade payables (3,239) 12,331 Change in other receivables/payables (11,873) (1,849) Net change in provisions (638) 368 Change in employee payables - staff leaving indemnity paid during year (289) (283) Cash generated from operating activities 34,310 51,874 (2,466) Interest paid (6,724) (93) (6,416) (226) Tax paid (6,507) (4,396) Net cash generated from operating activities (1) 21,079 (93) 41,062 (2,692) Cash flows from investing activities Dividends received Proceeds from sale of property, plant and equipment 48 24 Proceeds from sale of intangible assets Proceeds from investment activities Purchases of intangible assets (872) (1,134) Purchases of property, plant and equipment (28,843) (29,204) Acquisition of investments (15) Sale of investments 229 Change in scope of consolidation (114) Interest received 7,417 5,675 6,380 2,692 Net cash used in investing activities (2) (22,265) (23,819) 2,692 Cash flows from financing activities Dividends paid (6,769) (4,651) (750) Proceeds from issue of ordinary share capital increase and capital contribution 219 245,774 177,172 Proceeds from borrowings Borrowings granted (1,043) (2,267) New borrowings 49,995 1,323 Repayments of borrowings (55,511) (15,253) Net cash (used in)/from financing activities (3) (13,109) 228,827 Net (decrease)/increase in cash and cash equivalents and bank overdrafts(1+2+3) (14,295) 246,070 Cash and cash equivalents and bank overdrafts at 1 January 214,258 (31,812) Cash and cash equivalents and bank overdrafts at 31 December (9) 199,963 214,258 47

6.4 Consolidated statement of changes in equity (Euro thousands) Share Reserves Profit Capital and Minority Total capital for the year reserves interest equity attributable to in equity group equity holders At 31.12.2005 22,560 49,380 3,588 75,528 3,112 78,640 Appropriation of 2005 profit 3,588 (3,588) Share capital increase 45,120 205,361 250,481 250,481 Expenses on share capital increase (3,277) (3,277) (3,277) Capital contribution from Platani/Tifeo shareholders 176 176 Dividends (750) (750) Other movements (2) (2) (2) Profit for the year to 31 December 2006 12,756 12,756 1,487 14,243 At 31.12.2006 67,680 255,050 12,756 335,486 4,025 339,511 Appropriation of 2006 profit 5,988 (12,756) (6,768) (6,768) Capital contribution from Platani/Tifeo shareholders Dividends (1,148) (1,148) Other movements (211) (211) 17 (194) Profit for the year to 31 December 2007 13,766 13,766 1,161 14,927 At 31.12.2007 67,680 260,827 13,766 342,273 4,055 346,328 48

6.5 Notes to the consolidated financial statements 6.5.1 Basis of preparation of the consolidated financial statements The consolidated financial statements for the year ended 31 December 2007 have been prepared in accordance with International Financial Reporting Standards (International Accounting Standards - IAS and International Financial Reporting Standards - IFRS), and the relevant interpretations (Standing Interpretations Committee SIC and International Financial Reporting Interpretations Committee IFRIC). The financial statements used for consolidation purposes are those presented by the board of directors for approval at the shareholders meetings of each company, reclassified and adjusted in line with International Financial Reporting Standards (IAS/IFRS) and group policy. IFRS7 Financial instruments: Disclosures has been applied from 2007. This did not give rise to changes in the valuation of the financial statements but rather on the disclosures as the standard requires extensive disclosures on the nature and management of credit, liquidity and market risks. With regard to the layout of the consolidated financial statements, the company has opted to present the following accounting statements:. Consolidated balance sheet The consolidated balance sheet is presented in sections with separate disclosure of assets and liabilities and equity. Assets and liabilities are classified in the consolidated financial statements as either current or non-current.. Consolidated income statement The consolidated income statement presents costs by function, also using the variable element of cost as a distinguishing factor. For a better understanding of the normal results of ordinary operating, financial and tax management activities, the income statement presents the following intermediate consolidated results: - gross profit; - operating profit; - profit before income tax; - profit for the period; - profit attributable to minority interest; - profit attributable to group equity holders. No segmental reporting has been presented as the information used by management to evaluate operating results and for decision making purposes in the individual business units, coincides with the economic and financial information of each legal entity.. Consolidated cash flow statement The consolidated cash flow statement presents an analysis by areas that generate cash flows as required by International Financial Reporting Standards.. Consolidated statement of changes in equity The consolidated statement of changes in equity is presented as required by International Financial Reporting Standards with separate disclosure of the profit for the period and each revenue, income, cost and expense not recorded in the income statement but charged directly to consolidated equity based on specific IAS/IFRS requirements. 6.5.2 Consolidated entities The Actelios group consists of 13 companies, of which 7 are consolidated on a line-by-line basis, 4 are consolidated applying the proportional method and 2 are valued at cost. Details of the companies included in the scope of consolidation at 31 December 2007 are disclosed in the supplementary information (paragraph 9.1). The consolidated financial statements include the financial statements of the parent company Actelios SpA and all of the entities in which the former holds, either directly or indirectly, majority voting rights. 49

6.5.3 Changes in the scope of consolidation Powercrop Srl, which was previously valued at cost, is now consolidated applying the proportional method. Actelios SpA acquired the entire share capital of Samanta Immobiliare Srl on 22 December 2007 and for 2007 this has been valued at cost as it is not considered material for the purpose of presenting a true and fair view. From the following financial year this investment will become the holding company of the entities involved in photovoltaic electrical energy generation. GSA Scarl (in liquidation) is no longer included in the companies valued at cost as the final liquidation accounts were filed in October 2007. 6.5.4 Principles of consolidation The companies included within the scope of consolidation applying the line-by-line method are those controlled by the parent company also through indirect holdings. The companies on which the parent company exercises control together with other third parties are consolidated applying the proportional method. Associated companies are accounted for under the equity method. The financial statements of the companies included within the scope of consolidation have been adjusted, where necessary, to bring them into line with group accounting policies that conform to IAS/IFRS. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which the parent company gains control and up to the date on which this control ceases. All significant intercompany balances and transactions are eliminated. Profits arising on transactions between consolidated entities, or with companies accounted for under the equity method, which are included within assets at the year-end as they are not yet realised, are eliminated if significant. The book value of consolidated investments is eliminated against the related share of equity inclusive of any fair value adjustments on acquisition. The resulting difference is treated as goodwill and is accounted for in accordance with IFRS 3. The minority interest in total equity and profit for the period of consolidated entities are disclosed under separate headings in the consolidated balance sheet and income statement. Differences between acquisition cost and net equity at current fair values at the acquisition date are, where possible, allocated to specific assets and liabilities of the acquired company. In the event that the residual difference relates to a higher purchase price paid for goodwill this is recorded within intangible assets and subjected to an impairment test on an annual basis. Where the remaining difference is negative the amount is charged against equity. The percentage ownership used for companies consolidated either line-by-line or proportionally is the statutory amount considering also indirect holdings. Dividends received by the parent company or other consolidated companies from investments included within the scope of consolidation are reversed in the consolidated income statement. 6.5.5 Accounting policies The valuation and measurement of the financial information for the year ended 31 December 2007 have been based on the IAS/IFRS currently in force and the related interpretations as set out in the documents issued to date by the International Financial Reporting Interpretations Committee (IFRIC) and the Standing Interpretations Committee (SIC). The consolidated financial statements are prepared in Euro and all values are rounded to thousands of Euro except where otherwise indicated. The consolidated financial statements are prepared under the historical cost convention, with the exception of derivative instruments and available-for-sale financial assets, which are measured at market value (fair value). Non-current assets and tangible fixed assets held for sale are recorded at the lower of net book value and market value. Preparation of the consolidated financial statements in accordance with IFRS requires management to make estimates, valuations and assumptions based on historical results and experience that could influence the accounting value of a number of assets and liabilities, costs and revenues and disclosures relating to contingent assets and liabilities at the date of the financial statements. Estimates and assumptions principally relate to the realisable value of intangible assets, the definition of the useful life of property, plant and equipment, the recoverability of receivables, the recognition and/or valuation of provisions and the valuation of receivable balances arising on the sale of electrical energy. These estimates and assumptions are reviewed periodically and, in particular, at the end of each financial period. The accounting policies detailed below were applied to the current financial year and comparative amounts for the prior year. 50

The principal accounting policies and valuation methods adopted in the preparation of these consolidated financial statements are set out below: Intangible assets An intangible asset is recorded only when it is identifiable, controllable, is expected to generate economic benefits in future periods and the cost may be reliably measured. Intangible assets are recorded at cost including directly attributable expenses and are amortised systematically over the estimated useful economic life. Intangible assets with a finite useful life are classified at cost net of accumulated amortisation and any permanent losses in value. Amortisation is based on the estimated useful life and commences when the asset is available for use. Intangible assets with an indefinite useful life and those not available for use are tested for impairment. This test consists in a comparison between future expected cash flows from the intangible asset and the net book value. The method of discounted operating cash flows is applied based on projections included in future business plans approved by company management. Costs relating to the acquisition of CIP 6/92 rights are amortised over the related benefit period. Goodwill principally relates to the differences arising on first time consolidation, between the book value of the investments and the corresponding share of equity of the consolidated companies, adjusted in order to take into consideration both significant intercompany transactions and the fair values of the identifiable assets and liabilities of the acquired company. Goodwill that did not originate from consolidation differences relates to the purchase price paid by Frullo Energia Ambiente Srl following acquisition of a business. Goodwill is subjected to an impairment test, at least on an annual basis, in order to identify permanent reductions in value. In order to perform the impairment test correctly, goodwill has been allocated to each of the cash generating units (CGU) that benefit from the acquisition. Within the Actelios group, the CGU s identified are the various cash-flow generating projects: Trezzo, Rende, Frullo, Tifeo, and Platani. Remaining intangibles comprise costs relating to the automation and mechanisation of a number of information systems. Property, plant and equipment Actelios SpA opted for the cost method in preparing the first IAS/IFRS financial statements, as prescribed by IFRS 1. As a result, with regard to property, plant and equipment, the company has preferred not to adopt the fair value approach. Property, plant and equipment is recorded at acquisition or production cost including directly attributable costs. Property, plant and equipment is valued at cost, net of depreciation and accumulated permanent losses in value, with the exception of land, which is not depreciated and is valued at cost less accumulated losses in value. In the event that significant components of an item of property, plant and equipment have differing useful lives, each component is attributed a separate useful life for depreciation purposes (component approach). The depreciation rates applied represent the expected useful life of the assets. The rates applied to the various asset categories are as follows: (%) Industrial buildings light construction 3-4 - 10 General and specific plant 5-12 - 15-20 Heavy plant and operating machinery 9-10 Equipment 10-12 20-25 - 30 Office machinery and equipment 12-20 Vehicles 20-25 These rates are applied based on months of actual use with regard to assets that come into use during the year. Ordinary maintenance costs are charged to expenses in the year in which they are incurred. Maintenance costs that increase the future economic benefits derived from the assets are capitalised on the related asset and depreciated over the asset s residual useful life. Borrowing costs for the construction of a plant or its acquisition are capitalised up until the moment in which the asset may be used in the production process. Impairment of assets In the presence of circumstances that potentially indicate a loss in value, impairment tests are conducted on tangible and intangible assets, by estimating the recoverable amount of the asset and comparing it with the related net book value. In the event that the recoverable value is lower than the carrying value an impairment loss is recorded in the income statement. Where there is an indication that an impairment loss recognised in a previous accounting period is no longer required, the carrying value is restated to the new estimated recoverable value which may not exceed the carrying value that would have been recognised had the original impairment not occurred. The reversal is also recorded in the income statement. 51

Investments and securities Investments in subsidiaries and associates Investments in subsidiaries excluded from the scope of consolidation are valued at cost when the effect of their consolidation would not have a significant impact on the consolidated financial position and on the consolidated profit for the period. Investments in associates in which the Actelios group holds more than 20% (or 10% if listed) are valued applying the equity method. Investments in other companies and other securities In accordance with IAS 39 and 32, investments in companies that are neither subsidiaries nor associates are measured at fair value through profit or loss with the exception of those circumstances in which market price or fair value cannot be determined: in which case the cost method is applied. Gains and losses arising on adjustments to value are recognised as a specific reserve within equity. Where impairment losses in value exist or in the event of disposal of the related asset, the gains and losses recorded in equity up until this point are charged to the income statement. Investments held for sale are valued at fair value with any adjustment recognised in the income statement. Cost is reduced for any impairment losses in value in the event that investments have recorded losses and no profits are foreseeable in the near future to recover these losses; the original value may be restated in subsequent accounting periods in the event that the circumstances that gave rise to the write-down no longer exist. Joint-ventures Holdings in joint-ventures are consolidated applying the proportional method whereby the consolidated financial statements reflect line-by-line the relevant share of the assets, liabilities, profits and losses of the entity in which the company has invested. Financial assets Classification In accordance with IAS 39 and IAS 32, financial assets are classified into the following four categories: 1. Financial assets at fair value through profit or loss ; 2. Held-to-maturity investments; 3. Loans and receivables; 4. Available-for-sale financial assets. The classification depends on the reason for which the investment was initially purchased and is subsequently held and management is required to determine the initial classification at the time they are first recorded updating this at each financial year end. A description of the principal characteristics of each asset category detailed above may be summarised as follows: Financial assets at fair value through profit or loss This category has two sub-categories: 1. Financial assets held for trading; 2. Financial assets designated to the fair value category at inception. This category includes all financial investments, except for equity instruments that are unquoted, for which a fair value may be reliably measured. Financial instruments, with the exception of hedge instruments, are included in this category and their fair value recorded in the income statement. All assets within this category are classified as current if they are held for trading purposes or where disposal is expected within 12 months from the year end. Designation of a financial instrument to this category is irrevocable and may take place only on inception. Held-to-maturity investments Held-to-maturity investments are financial assets with fixed or determinable payments and fixed maturity, which the group intends to hold to maturity (e.g. underwritten debentures). Evaluation of the intent and ability to hold the asset to maturity must be made following initial acquisition and at each subsequent balance sheet date. In the event of sale before maturity (of a significant amount and not in exceptional circumstances) of held-to-maturity securities, all such investments are reclassified as available-for-sale and measured at fair value. 52

Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted on an active market and which the group does not intend to trade. These are included in current assets with the exception of the portion expiring more than 12 months after the balance sheet date, which is classified in non-current assets. Loans and receivables are classified within the financial statements under the headings financial receivables and other receivables. Available-for-sale financial assets All non-derivative instruments that are not classified in another category are designated as available-for-sale financial assets. These are classified as non-current assets unless management intends to dispose of them within 12 months of the balance sheet date. Accounting treatment Financial assets at fair value through profit or loss held for trading (category 1) and available-for-sale financial assets (category 4) are recorded at fair value including costs directly attributable to acquisition. Gains or losses relating to financial assets held for trading are recognised immediately in the income statement. Gains or losses relating to financial assets available for sale are recorded within a separate heading in equity until they are sold or otherwise disposed of, or until circumstances indicate they may be impaired. Where any of these events takes place, all gains or losses recognised to date and recorded in equity are reclassified to the income statement. The fair value represents the amount at which an asset may be exchanged or a liability settled in an arm s length transaction between knowledgeable, willing parties. As a result it is assumed that the entity is a going concern and that neither party needs to liquidate its assets through transactions applying unfavourable terms. In the case of securities traded on an active market, the fair value is determined with reference to the bid price at the end of trading at the balance sheet date. In the event that a market valuation is not available for the investment, the fair value is determined either based on the current market value of another substantially similar financial instrument or applying appropriate valuation techniques (discounted cash flows - DCF). Where the fair value may not be reliably determined, the financial asset is valued at cost with disclosure in the notes to the financial statements regarding the type of asset and explanation of the accounting treatment. Held-to-maturity investments (category 2) and loans and receivables (category 3) are recorded at cost representing the fair value of the initial consideration exchanged and are subsequently valued applying the amortised cost method utilising the effective interest rate and taking into consideration any discounts or premiums received at the date of acquisition in order to record them over the entire period of ownership up to maturity. Gains and losses are recognised in the income statement either when the investment reaches maturity or where circumstances indicate that it has suffered an impairment loss, in the same way they are identified during the normal amortisation period foreseen by the amortised cost method. Investments in financial assets may be derecognised, only when the contractual rights to receive cash flows from the investments have expired (e.g. final payment of underwritten bonds) or when the group transfers the financial asset together with all of the related risks and rewards. Inventories Finished goods are stated at the lower of purchase cost and net realisable value. Purchase cost is determined using the weighted average cost method. Obsolete and slow moving inventory is valued based on possible future use or realisation. With regard to contract work in progress that spans more than one accounting period, valuation is based on income earned to date with reasonable certainty, determined by comparing actual costs to date with the total expected costs to completion. Receivables Receivables are initially recorded at the fair value of the amount to be received, which for this category normally relates to the nominal value indicated on the invoice, adjusted where necessary to the expected recoverable amount through recognition of a provision for doubtful accounts. Subsequently, where the required conditions exist, receivables are valued applying the amortised cost method. Cash and cash equivalents Cash and cash equivalents include cash on hand and short term bank balances. Non-current assets held for sale and discontinued operations Non-current assets held for sale and discontinued operations include those assets (or groups of assets) due to be disposed of and 53

for which the accounting value will be recovered principally through sale rather than future use. Non-current assets held for sale are valued at the lower of their carrying amount and fair value less costs to sell. In accordance with IFRS, information relating to discontinued operations is presented in two specific headings in the balance sheet: non-current assets held for sale and liabilities attributable to non-current assets held for sale; and in a specific heading in the income statement; net profit/(loss) of discontinued operations or non-current assets held for sale. Provisions Provisions are recognised when a present obligation (legal or constructive) exists as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount may be made. No provision is made for risks in relation to which the recognition of a liability is only possible. In this case the risk is disclosed in the relevant note on contingencies and commitments and no provision is made. Provisions may be analysed as follows: Litigation This provision includes the charge for future costs relating to legal proceedings. Investments Provision is made to recognise potential permanent losses in the carrying value of non-consolidated subsidiaries. Environmental This provision is set up to meet future requirements in relation to the redevelopment of landfills in accordance with the obligations undertaken on receipt of permission from the relevant authorities. The provision is based on estimates prepared by specialist enterprises. Sundry provisions This provision includes all other future liabilities not included above, which are reasonably quantifiable but for which the date of occurrence is uncertain. Staff leaving indemnity (TFR) Post employment defined benefits and other long-term employee benefits, are subjected to actuarial valuation. The liability recognised in the balance sheet is the present value of the group obligations. Actuarial gains and losses are recognised in the income statement. Valuation of the liability is performed by independent actuaries. Pursuant to Finance Act 296 of 27 December 2006, only the liability relating to the TFR held within the company has been valued for the purpose of IAS 19 as future provisions are paid to a separate entity. Consequently, in respect of future payments the company is not subject to the reporting requirements relating to the future benefits payable during employment. Trade payables Trade payables with normal trading terms, are recorded at nominal value. Borrowings and financial liabilities Borrowings are recognised initially at fair value, net of transaction costs incurred. Subsequently, borrowings are stated at amortised cost. The finance costs are determined using the effective interest method. Other financial liabilities comprise derivative instruments entered into in order to hedge interest rate risk. The derivative instruments not accounted for using hedge accounting and in accordance with IAS 39 are recognised at fair value through profit or loss. The company adopted IAS 39 from 1 January 2005. Current tax liabilities The provision for income taxes is based on the estimated taxable income for the period for each individual company, taking into consideration tax credits and losses brought forward and utilised in the period. Accruals, prepayments and deferrals Accruals, prepayments and deferrals are determined applying the accruals concept. Share capital Ordinary shares are classified within share capital at nominal value. Incremental costs directly attributable to capital transactions by the parent company are recorded as a deduction in equity. 54

Foreign currency translation The functional currency of the group is the Euro and is the currency in which the consolidated financial statements are prepared and presented. Foreign currency transactions are recorded at the exchange rate existing at the date of the transaction. Receivables and payables are translated at the closing rate at the balance sheet date. Exchange gains or losses arising on translation are recognised in the income statement in the period in which they arise. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction. Non-monetary items measured at fair value are translated using the exchange rate at the date when the fair value was determined. Revenue recognition Revenue is recorded net of returns, discounts and rebates, as well as direct taxes on the sale of goods or provision of services. Revenue from product sales Revenue from the sale of products is recognised on the transfer of ownership, which normally takes place on delivery or despatch of the goods. Revenue from services Revenue from services is recognised once the service has been rendered. Interest Finance income is accounted for applying the accruals concept. Dividends Dividends are recognised when the right to receipt of the dividend is established, which normally corresponds with the approval of distribution in the shareholders meeting. Other income Other income comprises amounts that do not relate to the core business of the group and, in accordance with IAS 1 which has been applied from 1 January 2005, they are classified in ordinary activities and where significant in value are disclosed separately in the notes to the financial statements. Costs Costs are recognised net of returns, discounts, bonuses and premiums, as well as direct taxes relating to the purchase of goods and services. Taxation including deferred income tax Income tax is calculated and provided for based on estimated taxable income for the year and applying existing tax legislation. Deferred income taxes are calculated applying the liability method on all temporary differences between the tax bases of assets and liabilities and the financial reporting values at the balance sheet date. Deferred income tax assets are recognised only when future taxable income, sufficient to utilise these assets, is reasonably foreseeable. The balance of deferred income tax assets is reviewed at each balance sheet date and a valuation allowance is provided in the event that it is no longer probable that sufficient future taxable profits will be available to offset all or part of the tax credit. Deferred income tax assets and liabilities are measured at the enacted tax rates that will be in effect in the periods in which the assets are realised or the liability is settled and are classified in non-current assets and liabilities respectively. 6.5.6 Financial risk management The financial instruments of the group, other than derivatives, comprise bank loans, demand and short-term bank deposits. Similar instruments are employed in financing the group operating activities. The group uses derivative financial instruments, principally interest rate swaps. The group s aim is to manage the interest rate risk on group transactions and the various forms of financing. The group s debt financing expose it to a variety of financial risks that include interest rate, liquidity and credit risk. 55

Interest rate risk The group s exposure to market risks in respect of variations in interest rates principally relate to the long-term obligations entered into by the group, using a mix of fixed and variable interest rates. In order to manage this mix effectively, the group purchases interest rate swaps under which it agrees to exchange, at specific levels, the difference between fixed interest rates and variable rates calculated on a pre-determined notional capital amount. The swaps are designated to hedge the underlying obligations. Credit risk The group only trades with reliable and reputable customers. Credit risk relates to the other financial activities of the group that include cash and cash equivalents, available-for-sale financial assets and a number of derivative instruments, and present a maximum risk equal to the book value of these assets. Liquidity risk The objective of the group is to achieve a balance between maintaining available funds and flexibility through the use of loans and bank overdrafts. 6.5.7 Balance sheet content and movements Assets Non-current assets 1 Intangible assets Movements during the year were as follows: At Acquisitions Capital.n Change in Disposals Other Impair- Amorti- At 31.12.2006 and reclass.n scope of move- ment sation 31.12.2007 (Euro thousands) consol.n ments losses 1.1 Industrial patent rights 33 40 (21) 52 1.2 Concessions, licences, trademarks and similar 1,625 (476) 1,149 1.3 Goodwill 66,719 66,719 1.4 Other intangibles 1.5 Assets under construction and advances 832 832 Total 68,377 872 (497) 68,752 Goodwill principally consists of the differences arising on first time consolidation between the book value of the investments and the corresponding share of net equity of the consolidated companies that is attributable to the group. In addition, this heading includes the purchased goodwill arising on the acquisition of a business line by Frullo Energia Ambiente Srl (Euro 1,519 thousand). Since 1 January 2005, goodwill has not been amortised but is subjected to an annual impairment test. The goodwill resulting from business combinations has been allocated to separate cash generating units (CGU) in order to identify any reduction in value. The cash generating units identified are: - Prima Srl (WTE plant in Trezzo sull Adda) - Frullo Energia Ambiente Srl (WTE plant in Granarolo dell Emilia) - Platani Energia Ambiente ScpA (WTE plant in Casteltermini) - Tifeo Energia Ambiente ScpA (WTE plant in Augusta) - Palermo Energia Ambiente ScpA (WTE plant in Bellolampo) 56

An impairment test on goodwill was performed at 31 December 2007 following the procedures required by IAS 36. In particular, the recoverable amount of the individual cash generating units was determined based on the value in use, which is calculated using the projection of cash flows over a period of time corresponding to the expected useful life of each individual project and a weighted average cost of capital (WACC) of 7.1%. This test fully supported the goodwill values recorded in the financial statements and as a result no impairment loss has been recognised. Goodwill at 31 December 2007 comprised: (Euro thousands) Carrying value al 31.12.2007 Frullo Energia Ambiente Srl 1,519 Platani Energia Ambiente ScpA 16,095 Palermo Energia Ambiente ScpA 651 Prima Srl 15,252 Tifeo Energia Ambiente ScpA 33,202 Total 66,719 2 Property, plant and equipment Movements during the year were as follows: At Additions Capital.n Change in Disposals Impair- Deprec- At 31.12.2006 and scope of ment iation 31.12.2007 reclass.n consol.n losses (Euro thousands) (A) Gross value 2.1 Land 15,037 15,037 2.2 Buildings 4,937 1,046 77 6,060 2.3 Plant and machinery 86,054 12,475 1,150 (100) 99,579 2.4 Industrial and office equipment 669 90 (5) 754 2.5 Other assets 1,635 167 (23) 1,779 2.6 Assets operated under concession 93,455 1,020 94,475 2.7 Assets under construction and adv. 55,195 14,200 (1,227) (155) 68,013 Total gross value 256,982 28,998 (155) (128) 285,697 Accumulated depreciation 2.1 Land 2.2 Buildings (3,773) (79) (3,852) 2.3 Plant and machinery (22,329) 57 (8,021) (30,293) 2.4 Industrial and office equipment (244) (88) (332) 2.5 Other assets (1,363) 23 (119) (1,459) 2.6 Assets under construction and adv. (20,800) (5,558) (26,358) Total depreciation (48,509) 80 (13,865) (62,294) Net book amounts 2.1 Land 15,037 15,037 2.2 Buildings 1,164 1,046 77 (79) 2,208 2.2 Plant and machinery 63,725 12,475 1,150 (43) (8,021) 69,286 2.3 Industrial and office equipment 425 90 (5) (88) 422 2.4 Other assets 272 167 (119) 320 2.5 Assets operated under concession 72,655 1,020 (5,558) 68,117 2.6 Assets under construction and adv. 55,195 14,200 (1,227) (155) 68,013 Total net book amounts 208,473 28,998 (155) (48) (13,865) 223,403 57

A) Additions - comprise: (Euro thousands) Capital expenditure on WTE project in Granarolo dell'emilia 7,644 Capital expenditure on WTE project in Casteltermini 5,814 Photovoltaic plant in Rende 5,064 Capital expenditure on WTE project in Augusta 4,824 Improvements on WTE plant in Trezzo sull'adda 2,667 Capital expenditure on WTE project in Palermo 1,633 Biomass plant in Rende 579 Photovoltaic plant in Trezzo sull'adda 509 Other 264 Total 28,998 Finance costs allocated during the year to property, plant and equipment amount to Euro 308 thousand and relate to third party shareholders loans on the plants under construction in Sicily. Property, plant and equipment at 31 December 2007 does not include amounts relating to revaluations carried out in accordance with local monetary revaluation legislation or arising from economic revaluations. 3 Investments Investments at 31 December 2007 may be analysed as follows: (Euro thousands) 31.12.2007 31.12.2006 Change Subsidiaries 15 15 Associates 34 74 (40) Other entities 4 4 Securities Total 53 78 (25) Equity investments Subsidiaries valued at cost This relates to the investment acquired on 22 December 2007 in Immobiliare Samanta Srl. The name and purpose of this company will be changed in order for it to become the holding company of the photovoltaic energy business. This investment has been valued at cost as it is not considered material for the purpose of presenting a true and fair view. Associated companies valued at cost (Euro thousands) 31.12.2007 31.12.2006 Change Powercrop Srl 50 (50) Termini Imerese Energia Ambiente Srl 34 24 10 Total 34 74 (40) The increase is due to the contribution made by Actelios SpA to cover the losses recorded by Termini Imerese Energia Ambiente Srl. The decrease relates to the investment in Powercrop Srl that is no longer valued at cost but has been consolidated applying the proportional method as it is a joint venture. Other entities valued at cost The only investment included in this heading is Riesfactoring SpA, the value of which has not changed since 31 December 2006. 58

4 Financial receivables Financial receivables at 31 December 2007 may be analysed as follows: 31.12.2007 31.12.2006 Change Total Non- Current Total Non- Current Total Non- Current (Euro thousands) current current current Amounts owed by third parties 7,527 241 7,286 4,872 2,102 2,770 2,655 (1,861) 4,516 Amounts owed by subsidiaries Amounts owed by associates 6 6 (6) (6) Amounts owed by parent company 22 22 1,365 1,365 (1,343) (1,343) Amounts owed by other group companies Guarantee deposits Total 7,549 241 7,308 6,243 2,102 4,141 1,306 (1,861) 3,167 5 Trade receivables Trade receivables at 31 December 2007 consisted of the following: 31.12.2007 31.12.2006 Change Total Non- Current Total Non- Current Total Non- Current (Euro thousands) current current current Trade receivables 28,510 28,510 36,081 36,081 (7,571) (7,571) Amounts owed by subsidiaries Amounts owed by associates Amounts owed by parent company 63 63 203 203 (140) (140) Amounts owed by other group companies 29 29 29 29 Total 28,602 28,602 36,284 36,284 (7,682) (7,682) An analysis of trade receivables by geographical area is not considered necessary as almost all customers are located in Italy. Trade receivables are disclosed net of the provision for doubtful accounts of Euro 2,065 thousand at 31 December 2007, recorded in order to adjust them to fair value. Trade receivables include the balance of Euro 10,259 thousand owed by Italgest Servizi SpA, a related party of Actelios SpA. 6 Other receivables Other receivables at 31 December 2007 consisted of the following: 31.12.2007 31.12.2006 Change Total Non- Current Total Non- Current Total Non- Current (Euro thousands) current current current Amounts owed by third parties 1,208 1 1,207 933 2 931 275 (1) 276 Amounts owed by subsidiaries Amounts owed by associates Amounts owed by parent company 122 122 106 106 16 16 Amounts owed by other group companies Advances 205 205 140 140 65 65 Tax credits 6,072 6,072 4,389 4,076 313 1,683 (4,076) 5,759 Guarantee deposits 626 626 630 630 (4) (4) Accrued income and prepayments 1,894 1,894 1,916 1,916 (22) (22) Total 10,127 627 9,500 8,114 4,708 3,406 2,013 (4,081) 6,094 59

Amounts owed by third parties principally relates to the insurance repayment due to Ambiente 2000 Srl following damages suffered at the plant in Trezzo sull Adda (Euro 1,049 thousand). Amounts owed by the parent company relate to group VAT due from Falck SpA. Current tax credits relate to VAT due to Palermo Energia Ambiente ScpA (Euro 869 thousand), Platani Energia Ambiente ScpA (Euro 1,658 thousand) and Tifeo Energia Ambiente ScpA (Euro 2,800 thousand), while the balance relates to recoverable IRAP (trade income tax). Accrued income and prepayments at the year-end amounted to Euro 1,894 thousand and largely relate to the one off advance on the ground lease for the land to be used by Tifeo for the construction of the WTE plant, maintenance prepayments and deferred charges on expenses relating to guarantees, insurance and royalties payable. 7 Deferred income tax assets Deferred income tax assets may be analysed as follows: 31.12.2007 31.12.2006 Temporary Deferred income Temporary Deferred income (Euro thousands) difference tax asset difference tax asset Intangible assets 6,599 2,072 7,138 2,659 Property, plant and equipment 9,263 3,022 4,317 1,608 Provisions 2,470 725 2,682 940 Inventory provisions 111 41 Provision for doubtful accounts 2,015 554 148 49 Tax losses carried forward 1,518 417 554 183 Share capital increase expenses 2,934 807 3,913 1,291 Amounts due to employees 1,993 548 1,478 488 Financial instruments (3) (1) 814 269 Amortised cost method 3,584 986 2,591 855 Other 65 22 117 42 Total 9,152 8,425 Deferred income tax assets and liabilities, generated on the differences between the tax bases of assets and liabilities and the IFRS financial reporting values, are only offset when there is a legal enforceable right of offset and when they relate to the same fiscal authority. Deferred income tax assets on tax losses carried forward are recognised as they are considered recoverable and may be carried forward without time limit as they were generated by the companies involved in the projects in Sicily during the first three years of operation. At 31 December 2007 the deferred income tax assets calculated in previous financial years have been adjusted applying the new rates that will come into force in 2008. Movements in the deferred tax account were as follows: (Euro thousands) At 31 December 2006 8,425 Movements through the income statement 942 Recorded against total equity (215) Other movements At 31 December 2007 9,152 60

B Current assets 8 Inventories Inventories at 31 December 2007 consisted of the following: (Euro thousands) 31.12.2007 31.12.2006 Change Raw materials and consumables 2,434 2,748 (314) Semi-finished goods Work in progress 2,196 2,166 30 Finished goods Advances Total 4,630 4,914 (284) Work in progress is disclosed gross of advances received, which are disclosed in liabilities. 9 Cash and cash equivalents (Euro thousands) 31.12.2007 31.12.2006 Change Short-term bank and post office deposits 10 214,201 (214,191) Cash in hand 199,933 9 199,924 Total 199,943 214,210 (14,267) Cash and cash equivalents may be detailed as follows: (Euro thousands) 31.12.2007 31.12.2006 Change Cash at bank and in hand 199,943 214,210 (14,267) Bank overdrafts Invoice advances Group current accounts 20 48 (28) Total cash and cash equivalents 199,963 214,258 (14,295) Cash at bank and in hand largely relates to the current accounts of Actelios SpA (Euro 158,800 thousand), Prima Srl (Euro 21,702 thousand) and Frullo Energia Ambiente Srl (Euro 16,320 thousand). The current account balances of Prima Srl are subject to the restrictions imposed by the project financing contracts. 61

Liabilities D Equity 10 Share capital Share capital consists of 67,680,000 issued and fully paid ordinary shares, with a nominal value of Euro 1 each. No changes took place in the number of shares during 2007. Movements in equity during 2006 and 2007 were as follows: Other reserves Share Share Monetary Legal Reserves De-merger Reserve for Consolid.n Retained Profit Group Minority Total capital premium reval.n reserve ex art.54-55 reserve expenses reserve earnings for the share of interest account reserve Pres. on share year equity Decree capital (Euro thousands) 917/86 increase At 31.12.2005 22,560 35,467 1,003 179 4,076 3,936 1,455 3,264 3,588 75,528 3,112 78,640 Appropriation of 2005 profit of parent company to reserves Appropriation of group profit to reserves 93 1,588 1,907 (3,588) Share capital increase 45,120 205,361 (3,277) 247,204 247,204 Change in scope of consolidation Dividends distributed (750) (750) Other movements (2) (2) (2) Capital contribution Platani/Tifeo 176 176 Profit for the year 12,756 12,756 1,487 14,243 At 31.12.2006 67,680 240,828 1,003 272 4,076 3,936 (3,277) 3,041 5,171 12,756 335,486 4,025 339,511 Other reserves Share Share Monetary Legal Reserves De-merger Reserve for Consolid.n Retained Profit Group Minority Total capital premium reval.n reserve ex art.54-55 reserve expenses reserve earnings for the share of interest account reserve Pres. on share year equity Decree capital (Euro thousands) 917/86 increase At 31.12.2006 67,680 240,828 1,003 272 4,076 3,936 (3,277) 3,041 5,171 12,756 335,486 4,025 339,511 Appropriation of 2006 profit of parent company to reserves 507 2,557 2,924 (12,756) (6,768) (6,768) Appropriation of group profit to reserves Change in scope of consolidation Dividends distributed (1,350) (1,350) Other movements (215) 4 (211) 219 8 Capital contribution Platani/Tifeo Profit for the year 13,766 13,766 1,161 14,927 At 31.12.2007 67,680 240,828 1,003 779 4,076 3,936 (3,492) 5,602 8,095 13,766 342,273 4,055 346,328 62

Earnings per share Basic earnings per share, which are equivalent to diluted earnings, is calculated by dividing the profit for the year attributable to the ordinary shareholders of the parent company by the weighted average number of ordinary shares in issue during the year, based on the following information: 31.12.2007 31.12.2006 Weighted average number of ordinary shares (number) 67,680,000 61,870,027 Earnings attributable to the ordinary shareholders of the parent company (Euro thousands) 13,776 12,756 Basic earnings per share (Euro per share) 0.20 0.21 31.12.2007 31.12.2006 Number of ordinary shares at the year-end (number of shares) 67,680,000 67,680,000 Earnings attributable to the ordinary shareholders of the parent company (Euro thousands) 13,776 12,756 Earnings per share (Euro per share) 0.20 0.19 Reconciliation of capital and reserves attributable to group equity holders and profit for the year The consolidation reserve includes the differences arising from the elimination of the book value of consolidated investments against the related share of net equity. As a result the other equity headings correspond to the amounts disclosed in the parent company financial statements. The reconciliation of capital and reserves attributable to equity holders of the group and the profit for the year ended 31 December 2007 may be summarised as follows: Share capital Profit Capital and and reserves for the year reserves attr. to group (Euro thousands) equity holders Actelios SpA financial statements 322,904 15,941 338,845 - Difference between adjusted net equity of consolidated entities and book value of the related investments (3,894) 12,351 8,457 - Reversal of dividends from consolidated companies 13,285 (13,285) - Profits realised on sale of assets between group companies, net of depreciation, inventories and other minor amounts (3,788) (1,241) (5,029) Consolidated profit for the year and capital and reserves attributable to group equity holders 328,507 13,766 342,273 63

11 Provisions for other liabilities and charges Change At in scope of Charged Credited Reclass.n At (Euro thousands) 31.12.2006 consolidation 31.12.2007 Provisions for pensions and similar obligations Provisions for taxation - Current - Deferred income taxes Total tax provisions Other provisions - litigation 600 600 - investments - environmental 495 (180) 315 - restructuring - sundry provisions 2,026 1,368 (1,807) (19) 1,568 Total other provisions 3,121 1,368 (1,987) (19) 2,483 Total 3,121 1,368 (1,987) (19) 2,483 All provisions are non-current. The environmental provision relates to the costs that Ecosesto SpA is required to incur at the end of utilising the landfills in order to restore environmental conditions. The litigation provision has been recognised in order to cover probable liabilities that may arise on current legal proceedings. Sundry provisions include the provision prudently recognised by Prima Srl in respect of costs relating to the arbitration proceedings with Protecma Srl and the provision set up by Frullo Energia Ambiente Srl for costs to be incurred to make the old WTE plant safe. Sundry provisions also include the estimated cost of extraordinary maintenance to be carried out on the plant in Fusina (VE), the costs to be incurred by Ecosesto SpA for decommissioning the briquette plant and the provision made by Actelios SpA to cover probable liabilities in respect of current legal proceedings. 12 Staff leaving indemnity At Charges Transfers/ Utilised/ At (Euro thousands) 31.12.2006 new consol.n paid 31.12.2007 Managers 391 144 10 (88) 457 White-collar staff and special cat.s 852 164 180 (112) 1,084 Blue-collar staff 674 153 (182) (97) 548 Total 1,917 461 8 (297) 2,089 The Trattamento di Fine Rapporto, TFR (staff leaving indemnity provision), was subjected to an actuarial valuation by an independent expert. The resulting calculation did not differ significantly from the amount provided under Italian GAAP and as a result the group did not record any adjustments. The financial actuarial assumptions utilised to calculate the estimated cost in 2007 are as follows: (%) 31.12.2007 31.12.2006 Change Annual discounting rate 5.45% 4.60% 0.85% Annual inflation rate 2.00% 2.00% 0.00% Annual total pay increase rate 3.00% 3.00% 0.00% Annual TFR increase rate 3.00% 3.00% 0.00% 64

13 Financial liabilities Financial liabilities at 31 December 2007 consisted of the following: 31.12.2007 31.12.2006 Change Total Non- Current Total Non- Current Total Non- Current (Euro thousands) current current current Due to third parties 19,773 10,684 9,089 21,849 15,905 5,944 (2,076) (5,221) 3,145 Due to subsidiaries Due to associates Due to parent company 1,648 1,648 1,317 1,317 331 331 Due to other group companies Project financing 92,570 78,868 13,702 95,306 82,071 13,235 (2,736) (3,203) 467 Derivative financial instruments 238 238 814 814 (576) (576) Total 114,229 89,790 24,439 119,286 98,790 20,496 (5,057) (9,000) 3,943 Liabilities supported by real guarantees relate to the project financing of Prima Srl, secured by pledges on the shares of the company, and the non-recourse borrowings of Frullo Energia Ambiente Srl, which is guaranteed by a mortgage and special privileges on the plant s assets. The effective interest rates on non-recourse borrowings following application of the amortised cost method to the costs of raising this finance are as follows: - project financing Prima Srl 6.80% - non-recourse borrowings Frullo Energia Ambiente Srl 5.67% The difference between the nominal value and the fair value on these borrowings derives from application of the amortised cost method to the expenses incurred in raising this finance. In order to hedge the interest rate risk on project financing, the subsidiary Prima Srl has entered into interest rate swap contracts (IRS) amounting to a total notional value of Euro 37,688 thousand, with the purpose of rendering variable rates fixed at conditions that are substantially in line with market rates. The fair value of these IRS contracts is positive Euro 241 thousand. Frullo Energia Ambiente Srl has taken out IRS contracts with a total notional value of Euro 21,729 thousand to hedge project financing, again with the purpose of rendering variable rates fixed at conditions that are substantially in line with market rates. The fair value of these IRS contracts is negative Euro 238 thousand. At 31 December 2007 the Actelios group held the following IRS contracts: Description of IRS Contract Contract Notional Fixed Fair value (Euro thousands) start-date expiry date value rate Frullo IRS Intesa 25/9/2002 31/12/2017 22,172 4.68% (245) Frullo IRS Unicredit 25/9/2002 31/12/2017 22,172 4.68% (240) Prima IRS Double Fixed 23/7/2004 31/12/2013 18,834 2.73% 29 Prima IRS Cancellable 23/7/2004 31/12/2013 18,834 3.90% 212 The values relating to the IRS of Frullo disclosed in the above table represent the total values while the consolidated financial statements include only the proportional share of 49%. 65

14 Trade payables Trade payables at 31 December 2007 compared to the previous financial year-end may be analysed as follows: 31.12.2007 31.12.2006 Change Total Non- Current Total Non- Current Total Non- Current (Euro thousands) current current current Trade payables 45,588 45,588 46,354 46,354 (766) (766) Amounts due to subsidiaries Amounts due to associates Amounts due to parent company 2,718 2,718 2,901 2,901 (183) (183) Amounts due to other group companies 2,056 2,056 4,345 4,345 (2,289) (2,289) Total 50,362 50,362 53,600 53,600 (3,238) (3,238) An analysis by geographical area is not considered necessary as almost all of the trade payables are due to Italian suppliers. 15 Other payables Other payables at 31 December 2007 compared to 31 December 2006 consisted of the following: 31.12.2007 31.12.2006 Change Total Non- Current Total Non- Current Total Non- Current (Euro thousands) current current current Amounts due to third party creditors 30,387 30,387 36,362 36,362 (5,975) (5,975) Amounts due to subsidiaries Amounts due to associates 17 17 54 54 (37) (37) Amounts due to parent company 5,547 5,547 628 628 4,919 4,919 Amounts due to other group companies Accruals and deferred income 769 305 464 639 60 579 130 245 (115) Total 36,720 305 36,415 37,683 60 37,623 (963) 245 (1,208) Third party creditors may be detailed as follows: (Euro thousands) 31.12.2007 31.12.2006 Amounts due for acquisition of Elettroambiente SpA 20,000 20,000 Amounts due to Legnochimica 620 Dividends to be distributed by Prima Srl 1,350 Dividends to be distributed by Frullo Energia Ambiente Srl 5,021 Environmental contribution 928 825 Holiday pay 533 466 IRES (corporation tax) of Frullo Energia Ambiente due to Hera 2,371 Other amounts due to employees (Mbo) 2,131 1,680 Advances 2,113 Tax payables 6,351 Social security payables 418 409 Other 6 1,527 Total 30,387 36,362 The amounts due for the acquisition of Elettroambiente SpA are payable to Italgest Energia SpA, a related party of Actelios SpA. 66

Commitments and contingencies Guarantees issued at 31 December 2007 amounted to Euro 63,322 thousand. Guarantees relating to subsidiary undertakings principally consist of performance bonds to guarantee completion of work in progress and to participate in contract bids, for a total of Euro 52,333 thousand, guarantees given to the VAT authorities in relation to requests for repayment of VAT receivables for Euro 9,726 thousand and other guarantees of Euro 1,263 thousand. Personal guarantees issued, which amount to Euro 49,900 thousand, are largely in line with the previous year (2006 - Euro 49,841 thousand). Related party transactions Trade receivables Trade payables (Euro thousands) 31.12.2007 31.12.2006 Change 31.12.2007 31.12.2006 Change Parent company Falck SpA 63 203 (140) 2,718 2,901 (183) Total parent company 63 203 (140) 2,718 2,901 (183) Other group companies Falck Financial Services Sa 61 140 (79) Falck Renewables Italia Srl 29 29 4 4 Riesfactoring SpA 1,991 4,205 (2,214) Total other group companies 29 29 2,056 4,345 (2,289) Other related parties Italgest Servizi Srl 10,255 9,824 431 Total other related parties 10,255 9,824 431 Total 10,347 10,027 320 4,774 7,246 (2,472) % incidence on balance sheet heading 36.2% 27.6% 9.5% 13.5% Financial receivables Financial payables (Euro thousands) 31.12.2007 31.12.2006 Change 31.12.2007 31.12.2006 Change Parent company Falck SpA 22 1,365 (1,343) 1,648 1,317 331 Total parent company 22 1,365 (1,343) 1,648 1,317 331 Associates Gsa Scarl (in liquidation) 6 6 Total associates 6 6 Total 22 1,371 (1,337) 1,648 1,317 331 % incidence on balance sheet heading 0.3% 33.1% 6.7% 6.4% Other receivables Others payables (Euro thousands) 31.12.2007 31.12.2006 Change 31.12.2007 31.12.2006 Change Parent company Falck SpA 122 106 16 5,547 628 4,919 Total parent company 122 106 16 5,547 628 4,919 Associates Termini Imerese Energia Ambiente ScpA 17 16 1 Powercrop Srl 38 (38) Total associates 17 54 (37) Other related parties Italgest Energia SpA 20,000 20,000 Total other related parties 20,000 20,000 Total 122 106 16 25,564 20,682 4,882 % incidence on balance sheet heading 1.3% 3.1% 70.2% 55.0% 67

The net financial position is disclosed below in accordance with Consob (the Italian Stock Exchange Commission) communication DEM/6064293 of 28 July 2006. Net financial position (Euro thousands) 31.12.2007 31.12.2006 Change Short-term third party financial liabilities (22,792) (19,179) (3,613) Short-term group financial liabilities (1,648) (1,317) (331) Short-term third party financial receivables 7,286 2,770 4,516 Short-term group financial receivables 22 1,371 (1,349) Other securities Cash and cash equivalents 199,943 214,210 (14,267) Short-term net financial position 182,811 197,855 (15,044) Medium/long-term third party financial liabilities (89,790) (98,790) 9,000 Medium/long-term group financial liabilities Medium/long-term third party financial receivables 241 2,103 (1,862) Medium/long-term group financial receivables Other securities Medium/long-term net financial position (89,549) (96,687) 7,138 Total net financial position 93,262 101,168 (7,906) - of which project financing (92,570) (95,306) 2,736 6.5.8 Income statement content and movements 16 Revenue Revenue consisted of the following: (Euro thousands) 31.12.2007 31.12.2006 Change Revenue from sales of goods 63,223 67,340 (4,117) Revenue from provision of services 27,402 28,478 (1,076) Total 90,625 95,818 (5,193) Revenue arising from the sale of goods, compared to the previous year, may be attributed to the following business segments: (Euro thousands) 31.12.2007 31.12.2006 Change Sale of electrical energy 62,325 66,350 (4,025) Sale of thermal energy 898 990 (92) Total 63,223 67,340 (4,117) Revenue arising from the provision of services, compared to 2006, is attributable to the following business segments: (Euro thousands) 31.12.2007 31.12.2006 Change Waste treatment and disposal 23,128 23,339 (211) Operation and maintenance 4,274 5,139 (865) Total 27,402 28,478 (1,076) Revenue is generated almost entirely in Italy. 68

17 Employee costs Employee costs may be analysed as follows: (Euro thousands) 31.12.2007 31.12.2006 Change Cost of production employees 6,128 6,106 22 Cost of administrative staff 4,185 4,434 (249) Total 10,313 10,540 (227) Total employee costs analysed by nature of expense are as follows: (Euro thousands) 31.12.2007 31.12.2006 Change Wages and salaries 7,351 7,523 (172) Social security costs 2,428 2,526 (98) Staff leaving indemnity (TFR) 461 426 35 Other costs 73 65 8 Total 10,313 10,540 (227) The average number of group employees was as follows: (Number) 31.12.2007 31.12.2006 Managers 15 14 White-collar staff 68 67 Blue-collar staff 68 63 Total average number of employees 151 144 As Frullo Energia Ambiente Srl and Ambiente 3000 Srl are consolidated applying the proportional method, the numbers above include the 49% proportional share of the employees of these companies that total 1 manager, 18 white-collar staff and 29 bluecollar staff. 18 Direct costs Direct costs decreased by Euro 5,879 thousand compared to 2006. The principal movements relate to the cost of materials (- Euro 1,000 thousand) and the amortisation and impairment of intangibles (- Euro 7,834 thousand). Increases were recorded in the cost of services (+ Euro 2,829 thousand), the change in inventories (+Euro 1,454 thousand) and charges to operating provisions (+ Euro 1,828 thousand). (Euro thousands) 31.12.2007 31.12.2006 Change Materials 13,289 14,289 (1,000) Services 21,213 18,384 2,829 Other costs 6,001 6,516 (515) Change in inventories 284 (1,170) 1,454 Charges to/(utilisation of) operating provisions 1,651 (177) 1,828 Amortisation and impairment of intangibles 480 8,314 (7,834) Depreciation and impairment of property, plant and equipment 13,822 13,471 351 Employee costs capitalised on assets under construction (7,253) (4,261) (2,992) Total 49,487 55,366 (5,879) 69

19 Other income Other income consisted of the following: (Euro thousands) 31.12.2007 31.12.2006 Change Income from operating activities 957 341 616 Income from non-operating activities 3,307 2,017 1,290 Total 4,264 2,358 1,906 Income from operating activities may be further detailed as follows: (Euro thousands) 31.12.2007 31.12.2006 Change Income from services provided to other group companies 545 270 275 Recharged expenses 261 261 Other 151 71 80 Total 957 341 616 Income from non-operating activities may be further detailed as follows: (Euro thousands) 31.12.2007 31.12.2006 Change Income relating to other accounting periods 1,184 1,598 (414) Gains on disposal of property, plant and equipment 4 2 2 Gains on disposal of investments Damages compensation 1,600 1,600 Utilisation of provisions Insurance compensation 500 500 Other 19 417 (398) Total 3,307 2,017 1,290 Income relating to other accounting periods principally relates to costs overcharged by Frullo Energia Ambiente Srl in 2006 (Euro 690 thousand) and the excess provision charged by Actelios SpA in respect of the variable element of remuneration due to management (Euro 215 thousand). The damages compensation of Euro 1,600 thousand relates to the settlement agreed between Ambiente 2000 and EALL Srl, as compensation for the damages suffered by Ambiente 2000 Srl regarding breach of the Operation and Maintenance contract entered into by the parties on 31 January 2001. 20 Administrative expenses Administrative expenses may be analysed as follows: (Euro thousands) 31.12.2007 31.12.2006 Change Consumables 134 140 (6) Services 7,457 6,399 1,058 Other costs 1,157 1,169 (12) Non-operating expenses 854 454 400 Amortisation and impairment of intangible assets 17 35 (18) Depreciation and impairment of property, plant and eq.pt 43 53 (10) Charges to/(utilisation of) provisions (80) 285 (365) Total 9,582 8,535 1,047 The total expenses have decreased by Euro 1,047 thousand compared to 31 December 2006, which is largely due to lower services costs. 70

21 Finance income - net Finance income and costs may be analysed as follows: (Euro thousands) 31.12.2007 31.12.2006 Change Finance costs (7,753) (7,810) 57 Finance income 9,976 8,235 1,741 Interest capitalised on assets under construction 308 99 209 Total 2,531 524 2,007 Finance costs consisted of the following: (Euro thousands) 31.12.2007 31.12.2006 Change Payable to parent company (1) (178) 177 Payable to others (7,752) (7,632) (120) Total (7,753) (7,810) 57 Finance costs for 2007 and 2006 may be further analysed as follows: 31.12.2007 Debenture Bank Others Total (Euro thousands) loans loans Payable to parent company 1 1 Payable to others 7,744 7,744 Total 7,744 1 7,745 31.12.2006 Debenture Bank Others Total (Euro thousands) loans loans Payable to parent company 178 178 Payable to others 7,629 3 7,632 Total 7,629 181 7,810 Finance income for the year ended 31 December 2007 increased compared to the amount recorded in 2006: (Euro thousands) 31.12.2007 31.12.2006 Change Interest and commission - parent company 5,676 2,694 2,982 Interest and commission - banks 3,859 5,511 (1,652) Other 441 30 411 Total 9,976 8,235 1,741 22 Investment income No investment income was recorded in 2007. 71

23 Income tax expense (Euro thousands) 31.12.2007 31.12.2006 Change Current tax 14,053 13,659 394 Deferred tax (credit) (942) (3,828) 2,886 Total 13,111 9,831 3,280 Current taxes are based on the estimated taxable income for the period calculated in accordance with current tax legislation. Total taxes differ from the theoretical amount that results from applying the tax rate to the consolidated group profit. The corresponding reconciliation is detailed below. (Euro thousands) 31.12.2007 31.12.2006 Profit before taxation 28,038 24,074 Taxes calculated applying tax rate to group profit (10,624) (9,071) Profits not subject to tax 17 340 Expenses not deductible for tax purposes (1,361) (1,466) Utilisation of tax losses carried forward 366 Adjustment of deferred income tax assets for rate change (1,143) Tax losses for which no deferred income tax was recognised Total income tax (13,111) (9,831) Related party transactions Revenue Revenue Other Direct Admin. Finance Finance Income from sale from income costs expenses costs income from (Euro thousands) of goods services investments Parent company Falck SpA 150 82 2,811 94 5,676 Total parent company 150 82 2,811 94 5,676 Group companies Falck Financial Services Sa 61 Total group companies 61 Other related parties Italgest Servizi Srl 431 Total other related parties 431 Total 150 82 2,872 94 6,107 % incidence on income statement heading 0.2% 1.9% 30.0% 1.2% 61.2% 24 Significant non-recurring events and transactions In accordance with Consob communication DEM/6064293 of 28 July 2006, the only significant non-recurring transactions that took place in the Actelios group in the course of 2007 related to the charge of Euro 2,065 thousand made to the provision for doubtful accounts and the settlement of Euro 1,600 thousand in respect of the legal dispute with EALL Srl (please refer to point 5.1.5 of the Directors Report). 25 Uncharacteristic and uncommon transactions In accordance with Consob communication DEM/6064293 of 28 July 2006, in the course of 2007 the Actelios group did not carry out any uncharacteristic and/or uncommon transactions, as defined in the above communication. 72

26 Auditors remuneration Company Audit Control of (Euro) annual report and half-year accounting records Actelios SpA 112,050 9,128 Ambiente 2000 Srl 6,670 4,772 Ambiente 3000 Srl 7,572 6,328 Ecosesto SpA 14,087 4,460 Elettroambiente SpA 7,380 3,560 Frullo Energia Ambiente Srl 5,767 3,266 Palermo Energia Ambiente ScpA 10,182 5,091 Platani Energia Ambiente ScpA 10,287 4,984 Powercrop Srl 8,900 5,100 Prima Srl 7,007 4,808 Tifeo Energia Ambiente ScpA 10,287 4,984 Total 200,189 56,481 73

6.6 Additional disclosures on financial instruments in accordance with IFRS7 This note sets out the additional disclosures relating to financial assets and liabilities in accordance with IFRS 7. This disclosure respects the order of the IFRS. Where the information requested was not considered significant the related paragraph was omitted. The note is presented in two sections. The first sets out the detailed information regarding financial assets and liabilities, in particular regarding their classification in conformance with IAS 39, the impact on the income statement for the year and their fair value. The second section presents the information regarding the risks attributable to the financial assets and liabilities, in particular credit risk, liquidity risk and market risk. This includes both qualitative and quantitative information that is analysed into points (e.g. 1.) and sub-points (e.g. 1.2). The detailed quantitative information is provided for 31 December 2007 and where significant at 31 December 2006. A summary of the principal disclosures is presented as follows. The Actelios group holds significant liquid financial assets that result in a positive net financial position. The financial assets and liabilities are almost entirely measured at cost and amortised cost in the financial statements, with the exception of certain derivative instruments on interest rates that, although undertaken to hedge exposure, are not measured in accordance with hedge accounting. The main impact of the derivative instruments on the income statement does not arise from changes in the value of the principal financial assets and liabilities recorded on the balance sheet, but from the interest income and expense and the changes in value of the derivate financial instruments. Credit and liquidity risk are not considered to be significant. In particular, credit risk exposure is extremely limited. On one hand the high concentration of commercial receivables due from a few counterparties is strongly mitigated by the corresponding credit rating. On the other, more than 83% of cash and cash equivalents are held with primary banks and financial institutions. Liquidity risk is also considered to be low and less than 20% of financial liabilities at 31 December 2007 are due within one year. The only market risk considered to be significant is interest risk as almost all group borrowings are at variable rates. This exposure is limited by the natural offsetting of liquid assets and financial liabilities. Although a formal risk management policy has not been defined, the Actelios group adopts consolidated internal procedures in the management of the credit, liquidity and market risks on financial assets and liabilities. Section I: Supplementary disclosures on financial assets/liabilities 1. Balance sheet 1.1 Categories of financial assets and liabilities The tables below illustrate the carrying values at 31 December 2007 and 31 December 2006 of the financial assets and liabilities classified in accordance with IAS 39. In order to reconcile with the balance sheet totals the penultimate column sets out the values of the assets and liabilities that are not included in the scope of IFRS7. At 31 December 2007 the total financial assets of the Actelios group amounted to Euro 240,201 thousand and financial liabilities totalled Euro 185,212 thousand, against a total balance sheet amount of Euro 552,521 thousand. The financial assets and liabilities are almost entirely measured at cost and amortised cost. The principal financial assets comprise cash and cash equivalents while the main financial liabilities relate to borrowings and trade payables. The financial impact of financial assets and liabilities measured at fair value through profit or loss is not significant and consists of derivative financial instruments. 74

31.12.2007 Fair value Amortised cost Fair value through against equity profit or loss or cost Total Loans Financial Financial FA/FL FA/FL FA FA/FL A/L not Balance and receiv. assets liabilities designation held for available- within within sheet bls held-to- at amortised on initial trading for-sale scope scope total (Euro thousands) maturity cost recognition of IFRS7 of IFRS7 Assets Property, plant and equipment and intangibles 292,155 292,155 Financial investments 53 53 53 Financial receivables 7,308 241 7,549 7,549 Inventories 4,630 4,630 Trade receivables 28,602 28,602 28,602 Deferred income tax assets 9,152 9,152 Other receivables 3,429 625 4,054 6,383 10,437 Cash and cash equivalents 199,943 199,943 199,943 Total 239,282 625 241 53 240,201 312,320 552,521 Liabilities Total equity 346,328 346,328 Financial payables 113,992 238 114,230 114,230 Trade payables 50,362 50,362 50,362 Other payables 20,000 20,000 17,030 37,030 Provisions for other liabilities and charges 2,483 2,483 Staff leaving indemnity 2,088 2,088 Total 184,354 238 184,592 367,929 552,521 31.12.2006 Fair value Amortised cost Fair value through against equity profit or loss or cost Total Loans Financial Financial FA/FL FA/FL FA FA/FL A/L not Balance and receiv. assets liabilities designation held for available- within within sheet bls held-to- at amortised on initial trading for-sale scope scope total (Euro thousands) maturity cost recognition of IFRS7 of IFRS7 Assets Property, plant and equipment and intangibles 276,850 276,850 Financial investments 78 78 78 Financial receivables 6,243 6,243 6,243 Inventories 4,914 4,914 Trade receivables 36,284 36,284 36,284 Deferred income tax assets 8,425 8,425 Other receivables 630 630 7,484 8,114 Cash and cash equivalents 214,210 214,210 214,210 Total 256,737 630 78 257,445 297,673 555,118 Liabilities Total equity 339,511 339,511 Financial payables 118,472 814 119,286 119,286 Trade payables 53,600 53,600 53,600 Other payables 20,620 20,620 17,063 37,683 Provisions for other liabilities and charges 3,121 3,121 Staff leaving indemnity 1,917 1,917 Total 192,692 814 193,506 361,612 555,118 75

1.2 Collateral financial assets charged as security for liabilities and collateral accepted as security for assets Financial assets charged as security for liabilities comprise the pledge on the shares of Prima Srl and Frullo Energia Ambiente Srl owned by Actelios SpA for a nominal value of Euro 4,615 thousand and Euro 8,398 thousand respectively. The principal terms of the pledge contracts do not grant the possibility to sell the pledged shares as these companies do not have an active market. The pledge on the shares of Frullo Energia Ambiente Srl was cancelled on 16 January 2008. 1.3 Allowance account for credit losses In the course of 2007 the receivable due from Biotech Sistemi SpA was written-off. Details of this transaction are as follows. (Euro thousands) Trade receivable 2,565 Guarantee claimed 500 Outstanding balance 2,065 Provision for doubtful accounts 2,065 Trade receivable net of provision for doubtful accounts 0 2. Income statement and total equity 2.1 Impact of financial assets and liabilities on the income statement and total equity The table below illustrates the items of income, expense, gains or losses generated in financial years 2007 and 2006 from the financial assets/liabilities reclassified according to IAS 39. The only amount relates to the increase in value of derivative financial instruments. 31.12.2007 Gains/(losses) Gains/(losses) Gains/(losses) through profit reversed from equity recorded (Euro thousands) or loss to profit or loss against equity Total FA at fair value through profit or loss FA held for sale FL at fair value through profit or loss 817 817 FL held for sale FA available-for-sale FA held-to-maturity Loans and receivables FL at amortised cost Total 817 817 The total of Euro 817 thousand represents the fair value of the hedging contracts entered into to cover interest rate risk. 31.12.2006 Gains/(losses) Gains/(losses) Gains/(losses) through profit reversed from equity recorded (Euro thousands) or loss to profit or loss against equity Total FA at fair value through profit or loss FA held for sale FL at fair value through profit or loss 1,856 1,856 FL held for sale FA available-for-sale FA held-to-maturity Loans and receivables FL at amortised cost Total 1,856 1,856 76

The total of Euro 1,856 thousand represents the fair value of the hedging contracts entered into to cover interest rate risk. The table below illustrates total interest income/expense (calculated using the effective interest rate method) and the fee income/expense generated by financial assets/liabilities not at fair value through profit or loss and the fee income/expense arising from trust and other fiduciary activities in 2007 and 2006. 31.12.2007 (Euro thousands) Interest income (expense) Fee income (expense) Total FA not at fair value through profit or loss 9,159 9,159 FL not at fair value through profit or loss (4,018) (4,018) Trust and other fiduciary activities (3,735) (3,735) Other (not within scope of IFRS7) 308 308 Total 5,449 (3,735) 1,714 31.12.2006 (Euro thousands) Interest income (expense) Fee income (expense) Total FA not at fair value through profit or loss 6,379 6,379 FL not at fair value through profit or loss (7,741) (7,741) Trust and other fiduciary activities (68) (68) Other (not within scope of IFRS7) 99 99 Total (1,263) (68) (1,331) The reconciliations of the above amounts with net finance income recorded in the 2007 and 2006 income statements are as follows. (Euro thousands) 31.12.2007 Gains/losses through profit or loss 817 Total interest income/expense 5,449 Fee income/expense (3,735) Total 2,531 Net finance income per income statement 2,531 (Euro thousands) 31.12.2006 Gains/losses through profit or loss 1,856 Total interest income/expense (1,264) Fee income/expense (68) Total 524 Net finance income per income statement 524 2.2 Allowance account for credit losses In 2007 a charge of Euro 2,065 thousand was made to the provision for doubtful accounts (see point 1.3). 3 Further additional disclosures 3.1 Accounting policies The accounting policies adopted for the recognition and measurement of financial assets and liabilities are presented in the notes to the consolidated financial statements in paragraph 6.5.5 Accounting policies. 3.2 Fair value The tables below disclose the fair value of the financial assets/liabilities and the related carrying amount at 31 December 2007 and 31 December 2006. The carrying amount of the financial assets/liabilities valued at cost and amortised cost (see point 1.1) 77

is a reasonable estimate of fair value as these relate to either short-term or variable rate financial assets and liabilities or medium/long-term financial liabilities that, based on sample calculations, did not give rise to significant differences. The fair value of derivative financial instruments at the balance sheet date is the discounted future cash flows given the Euro curve at 31 December and its related forward rates. 31.12.2007 (Euro thousands) Carrying amount Fair value Financial assets Securities and investments 53 53 Financial receivables 7,549 7,549 Trade receivables 28,602 28,602 Other receivables 4,054 4,054 Cash and cash equivalents 199,943 199,943 Total 240,201 240,201 Financial liabilities Financial payables 114,230 114,230 Trade payables 50,362 50,362 Other payables 20,620 20,620 Total 185,212 185,212 31.12.2006 (Euro thousands) Carrying amount Fair value Financial assets Securities and investments 78 78 Financial receivables 6,243 6,243 Trade receivables 36,284 36,284 Other receivables 630 630 Cash and cash equivalents 214,210 214,210 Total 257,445 257,445 Financial liabilities Financial payables 119,286 119,286 Trade payables 53,600 53,600 Other payables 20,620 20,620 Total 193,506 193,506 78

Analysis of financial liabilities at 31 December 2007 and 31 December 2006 by instrument and conditions. 31.12.2007 Interest rate Fair Carrying Current Non-current (Euro thousands) (%) value amount portion portion Efibanca loan Euribor 6 m + spread 4,067 1,678 2,389 Efibanca loan EIB + 1% Banca Popolare Sondrio loan Euribor 3 m + spread 8,620 1,149 7,471 Loan Euribor 3 m + spread 1,118 1,118 Due to other financial institutions Euribor 6 m + spread 2,099 2,099 Loans for projects in Sicily Euribor 3 m + spread 3,871 3,871 Other loans Euribor 3 m + spread 1,648 1,648 Total loans 21,423 8,346 13,077 Project financing Prima Srl Euribor 6 m + spread 47,291 10,125 37,166 Project financing Frullo Srl Euribor 6 m + spread 45,278 3,577 41,701 Total amounts due for project financing 92,569 13,702 78,867 IRS Prima Srl IRS Frullo Energia Ambiente Srl 238 238 Total derivate financial instruments 238 238 Total financial liabilities 114,230 22,048 92,182 31.12.2006 Interest rate Fair Carrying Current Non-current (Euro thousands) (%) value amount portion portion Efibanca loan Euribor 6 m + spread 4,132 1,033 3,099 Efibanca loan EIB + 1% 1,615 646 969 Banca Popolare Sondrio loan Euribor 3 m + spread 9,729 1,109 8,620 Loan Euribor 3 m + spread 1,118 1,118 Due to other financial institutions Euribor 6 m + spread 2,099 2,099 Loans for projects in Sicily Euribor 3 m + spread 3,155 3,155 Other loans Euribor 3 m + spread 1,317 1,317 Total loans 23,165 7,260 15,905 Project financing Prima Srl Euribor 6 m + spread 55,147 8,625 46,522 Project financing Frullo Srl Euribor 6 m + spread 40,159 4,610 35,549 Total amounts due for project financing 95,306 13,235 82,071 IRS Prima Srl 147 147 IRS Frullo Energia Ambiente Srl 667 667 Total derivate financial instruments 814 814 Total financial liabilities 119,285 20,495 98,790 79

Analysis of financial receivables due from third parties at 31 December 2007 and 31 December 2006 by instrument and conditions. 31.12.2007 Interest rate Fair Carrying Current Non-current (Euro thousands) (%) value amount portion portion Palermo Energia Ambiente ScpA Euribor + spread 5,181 5,181 5,181 Frullo Energia Ambiente Srl Euribor+ spread 2,099 2,099 2,099 Derivative instruments 241 241 241 Other loans 6 6 6 Total receivables 7,527 7,527 7,286 241 31.12.2006 Interest rate Fair Carrying Current Non-current (Euro thousands) (%) value amount portion portion Palermo Energia Ambiente ScpA Euribor + spread 753 753 753 Frullo Energia Ambiente Srl Euribor+ spread 4,116 4,116 2,017 2,099 Other loans 3 3 3 Total receivables 4,872 4,872 2,770 2,102 Part II: Risks arising from financial instruments 1. Credit risk 1.1 Qualitative disclosures Credit risk represents both potential losses from non-settlement of receivables and the risk as counterparty to the negotiation of other financial activities. The credit risk exposure of the Actelios group is very limited in respect of both commercial customers and financial counterparties. Firstly due to the nature of the commercial customers: almost two thirds of amounts due from third parties (not related parties) is owed by the Italian national electrical energy supplier (Enel), and almost one third is due from public authorities, in particular town councils responsible for waste management as established by decree by the related provinces. The degree of concentration of these customers is medium-high however they have a high credit rating. The credit risk attributable to the counterparties with which the derivative financial instruments are negotiated is also limited as the derivatives are negotiated with primary financial institutions. A summary quantitative indication of the maximum exposure to credit risk is the carrying amount of the financial assets, expressed gross of derivatives with a positive fair value and net of any guarantees. 1.2 Quantitative disclosures At 31 December 2007 the maximum credit risk exposure amounted to Euro 240,148 thousand and comprised: 31.12.2007 (Euro thousands) Gross Provision Net Financial receivables 7,549 7,549 Trade receivables 30,667 (2,065) 28,602 Other receivables 4,054 4,054 Cash and cash equivalents 199,943 199,943 Total 242,213 (2,065) 240,148 80

At 31 December 2006 the maximum credit risk exposure amounted to Euro 257,367 thousand and comprised: 31.12.2006 (Euro thousands) Gross Provision Net Financial receivables 6,243 6,243 Trade receivables 36,284 36,284 Other receivables 630 630 Cash and cash equivalents 214,210 214,210 Total 257,367 257,367 An analysis of trade receivables at 31 December 2007 and 31 December 2006 by class of customer with the corresponding percentage of total receivables is set out below. This provides a summary indication of the concentration of commercial credit risk. 31.12.2007 Class of customer Total exposure % exposure by class (Euro thousands) of customer Italian National Grid (GSE - Enel) 8,214 29% Public authorities (town councils) 6,307 22% Other entitites 3,735 13% Other entities (related parties) 10,346 36% Total trade receivables 28,602 100% 31.12.2006 Class of customer Total exposure % exposure by class (Euro thousands) of customer Italian National Grid (GSE - Enel) 14,916 41% Public authorities (town councils) 7,828 22% Other entitites 3,514 10% Other entities (related parties) 10,026 28% Total trade receivables 36,284 100% The ageing of trade receivables by class of customer, analysed by the overdue periods used internally to monitor receivables, as at 31 December 2007 and 31 December 2006 is set out below. Balances not yet overdue at 31 December 2007 and 31 December 2006 are also presented. 31.12.2007 Total Overdue Total Not yet (Euro thousands) exposure > 120 91-120 61-90 31-60 0-30 overdue due Italian National Grid (GSE - Enel) 8,214 30 30 8,184 Public authorities (town councils) 6,307 137 16 32 112 1,636 1,933 4,374 Other entities 3,735 1,703 514 238 2,455 1,280 Other entities (related parties) 10,346 10,254 10,254 92 Total trade receivables 28,602 1,840 16 32 626 12,158 14,672 13,930 31.12.2006 Total Overdue Total Not yet (Euro thousands) exposure > 120 91-120 61-90 31-60 0-30 overdue due Italian National Grid (GSE - Enel) 14,916 1 1,279 1,280 13,636 Public authorities (town councils) 7,828 104 471 403 370 1,296 2,644 5,184 Other entities 3,514 1,905 56 446 282 2,689 825 Other entities (related parties) 10,026 9,823 9,823 203 Total trade receivables 36,284 2,010 471 459 816 12,680 16,436 19,848 81

2. Liquidity risk 2.1 Qualitative disclosures Liquidity risk is summarised in the tables below that illustrate the financial liabilities grouped by maturity date. The Actelios group holds significant liquidity balances and 30% of revocable credit facilities are in general undrawn. As a result the group has high cash reserves and liquidity potential. Moreover, the Actelios group has a group treasury department that does not use a cash pooling system but carries out netting of opposing balances through the use of specific intercompany correspondence accounts. Finally, the Actelios group prepares an update of the cash flow and the cash budget on a monthly basis, in which the actual data for the period are supported by a summary evaluation and commentary. 2.2 Quantitative disclosures Financial liabilities are analysed by contractual maturity across four time bands. The analysis has been concentrated on bank borrowings and shareholders loans, the latter has been disclosed separately as the maturity dates are not defined based on individual contractual agreements and the repayments are generally subordinated to bank borrowings. Given that a number of subsidiaries (Frullo Energia Ambiente Srl and Prima Srl) have recently been refinanced or are about to be refinanced, the principle of subordination in respect of the bank borrowings is considered to be discharged or about to be discharged, consequently it is estimated that shareholders loans will be repaid in accordance with the timeframe set out in the table below. Analysis of financial liabilities (principal amounts: amounts due by contractual maturity) 31.12.2007 (Euro thousands) < 12 months 1-2 years 2-5 years > 5 years Total Bank borrowings 6,405 8,035 16,928 27,870 59,238 Project financing 10,125 9,750 25,125 4,500 49,500 Trade payables 50,362 50,362 Total 66,892 17,785 42,053 32,370 159,100 Analysis of financial liabilities (principal amounts: amounts due by estimated maturity) 31.12.2007 (Euro thousands) < 12 months 1-2 years 2-5 years > 5 years Total Shareholders' loans 5,518 3,217 8,735 Other payables 20,000 20,000 Total 5,518 23,217 28,735 Analysis of financial liabilities (principal amounts: amounts due by contractual maturity) 31.12.2006 (Euro thousands) < 12 months 1-2 years 2-5 years > 5 years Total Bank borrowings 2,787 2,828 6,094 3,765 15,474 Project financing 13,235 15,723 47,913 22,908 99,779 Trade payables 53,600 53,600 Other payables 620 620 Total 70,242 18,551 54,007 26,673 169,473 Analysis of financial liabilities (principal amounts: amounts due by estimated maturity) 31.12.2006 (Euro thousands) < 12 months 1-2 years 2-5 years > 5 years Total Shareholders' loans 4,473 3,218 7,691 Other payables 20,000 20,000 Total 4,473 23,218 27,691 82

In order to provide a better detail of the financial commitments including derivatives illustrated in the table above, a calculation was made of interest due to be paid for each maturity period shown. As contractual interest rates on the above borrowing instruments are all variable, quarterly or six-monthly, and strictly linked to Euribor rates, this calculation was made taking into consideration the implicit rates of the swap rate curve correlated with Euribor rates at 31 December 2007. Calculation of the quarterly and six-monthly interest was simplified by assuming that the payment periods for each instrument had the same start and end date. With regard to interest payable, the estimated value of the differentials relating to derivative financial instruments held at 31 December 2007 was calculated and are disclosed in the IRS differentials line in the table below. The estimated differentials were calculated applying the implicit forward rates in the swap curve at 31 December 2007. In this case a detailed analysis of each derivative instrument held was performed. Analysis of financial liabilities (estimated flows on contractual basis: interest expense plus IRS differentials) 31.12.2007 (Euro thousands) < 12 months 1-2 years 2-5 years > 5 years Total IRS differentials 48 48 Bank borrowings 3,120 2,548 5,693 5,294 16,655 Project financing 2,784 2,048 2,847 188 7,867 Total 5,904 4,644 8,540 5,482 24,570 Analysis of financial liabilities (estimated flows on contractual basis: interest expense plus IRS differentials) 31.12.2007 (Euro thousands) < 12 months 1-2 years 2-5 years > 5 years Total Shareholders' loans 273 68 341 Total 273 68 341 3. Market risks 3.1 Interest rate risk 3.1.1 Qualitative disclosures The Actelios group manages interest rate risk centrally. Although it does not define in advance the maximum variable rate debt exposure, it does practice consolidated procedures aimed at monitoring risk and that avoid undertaking transactions of a speculative nature. The type and suitability of hedge instrument is evaluated for each specific case in consideration of the amount of exposure and current financial market conditions. The Actelios group uses derivative financial instruments to hedge interest rates and in particular enters into interest rate swaps (IRS) with the exclusive aim of hedging. Moreover, the derivatives held at the year-end were acquired in order to allow the debt structure to meet the covenants requested by the financial institutions in relation to the project financing. In particular, the borrowings at variable rates for these contracts are matched with opposing IRS that partially convert the borrowings from variable to fixed rates. Although these operations are entered into to hedge interest rates, hedge accounting is not applied to these derivative financial instruments. Consequently, the fair value differences on the derivatives follow the general rule applied to trading derivatives and are charged directly to the income statement with a direct effect on the profit for the year. A sensitivity analysis was performed on the interest rate risk exposure of Actelios applying the guidelines provided in paragraph 40 of IFRS 7 and the examples illustrated in Implementation Guide (IG) 35. A brief description of the methodology used to perform the sensitivity analysis and the results obtained is provided below. The effect on profit for the year was determined applying a different yield curve to that used at the reporting date. For Actelios this means recalculating the fair value of the derivative instruments and charging directly to the income statement the difference between the simulated fair value and the value at the year-end. This provides both the portfolio risk on derivatives held at the balance sheet date and the related effect on the profit for the year. The actual effect on profit for the year of a different scenario for interest rates also depends on the average financial assets and liabilities for the period that mature interest. The example provided in IG35 of IFRS7 refers to the effect on the actual financial statements originating from a different interest rate that was manifested during the year. Once the finance income and expen- 83

ses relating to a new scenario have been noted it is easy to verify, measuring the difference between these and the actual income/expense, the effect of a new interest rate scenario on the income statement. The sensitivity analysis assumed two scenarios, a decrease and an increase in interest rates. Changes in interest rates for each scenario have been applied: 1) to the yield curve at the reporting date, assuming a parallel shift in the yield curve; 2) to the average interest rate applied in the course of the year to variable rate borrowings; 3) to the average interest rate earned during the year on variable rate financial assets; 4) to the interest rates used to determine the differentials paid/received during the year on derivative financial instruments. The change on an annual basis of the Euro interest rates was determined to be 50 basis points. This change is supported by the implicit rate of one year futures against the six-month Euribor rate. This rate was negative at 31 December 2007 and very close to 50 basis points. This confirms the reasonableness of using a 50 basis points change in the sensitivity analysis and at the same time confirms the scenario in which an interest rate reduction is more probable. As already noted the change in fair value of each derivative instrument held at 31 December 2007, together with the related impact on profit for the year, was calculated for each scenario. The impact on profit arising from the changes to finance income and expense was also calculated for each scenario. The tables below illustrate the outcome of these analyses. An increase of 50 basis points would have resulted in a positive impact on profit of approximately 5.70%, while a decrease of 50 basis points would have determined a negative impact on profit for the year of approximately 5.89%. 3.1.2 Quantitative disclosures Scenario Euribor + 50bp Derivatives impact Scenario I - Euribor rate + 50bp Accounting Base Scenario Change Change Change % (Euro thousands) treatment value value FV BS IS of EBT (*) Interest Rate Swap Frullo No Hedge Accounting (242) (42) 200 0 200 0.71 Interest Rate Swap Prima (double fixed) No Hedge Accounting 28 163 135 0 135 0.48 Interest Rate Swap Prima (cancellable) No Hedge Accounting 224 389 165 0 165 0.59 Total 10 510 500 0 500 1.79 Total impact Scenario I - Euribor rate + 50bp (Euro thousands) Change BS Change IS % of EBT Impact of change in fair value of derivatives 0 500 1.79 Impact on finance costs 0 (629) (2.24) Impact on finance income 0 839 2.99 Impact on IRS 0 889 3.17 Total 0 1,599 5.70 Note: (*) EBT (earnings before tax) at 31 December 2007 84

Scenario Euribor - 50bp Derivatives impact Scenario II - Euribor rate + 50bp Accounting Base Scenario Change Change Change % (Euro thousands) treatment value value FV BS IS of EBT (*) Interest Rate Swap Frullo No Hedge Accounting (242) (504) (263) 0 (263) 0.94 Interest Rate Swap Prima (double fixed) No Hedge Accounting 28 (129) (157) 0 (157) 0.56 Interest Rate Swap Prima (cancellable) No Hedge Accounting 224 56 (169) 0 (169) 0.60 Total 10 (577) (589) 0 (589) (2.10) Total impact Scenario II - Euribor rate + 50bp (Euro thousands) Change BS Change IS % of EBT Impact of change in fair value of derivatives 0 (589) (2.10) Impact on finance costs 0 620 2.21 Impact on finance income 0 (971) (3.46) Impact on IRS 0 (712) (2.54) Total 0 (1,652) (5.89) Note: (*) EBT (earnings before tax) at 31 December 2007 85

7 Supplementary information to consolidated financial statements

7.1 List of investments in subsidiaries and associates Companies consolidated applying line-by-line method % Indirect holding Registered Currency Share Direct office capital holding % Subsidiary Actelios SpA Milan Euro 67,680,000 Ambiente 2000 Srl Milan Euro 103,000 60.000 Ecosesto SpA Milan Euro 5,120,000 100.000 Elettroambiente SpA Sesto San Giovanni (Mi) Euro 245,350 100.000 Platani Energia Ambiente ScpA Palermo Euro 120,000 80.900 Elettroambiente SpA Prima Srl Sesto San Giovanni (Mi) Euro 5,430,000 85.000 Tifeo Energia Ambiente ScpA Palermo Euro 120,000 84.900 Elettroambiente SpA Companies consolidated applying proportional method % Indirect holding Registered Currency Share Direct office capital holding % Subsidiary Ambiente 3000 Srl Bologna Euro 100,000 49.000 Palermo Energia Ambiente ScpA Palermo Euro 120,000 23.272 Frullo Energia Ambiente Srl Bologna Euro 17,139,100 49.000 Powercrop Srl Sesto San Giovanni (Mi) Euro 100,000 50.000 Other investments in subsidiaries and associates valued at cost % Indirect holding Registered Currency Share Direct office capital holding % Subsidiary Gsa Scarl (in liquidation) Milan Euro 10,000 50.000 Ecosesto SpA Immobiliare Samanta Srl Milan Euro 10,200 100.000 Termini Imerese Energia Ambiente Srl Termini Imerese (Pa) Euro 100,000 24.000 89

8 Actelios SpA company financial statements for the year ended 31 December 2007

8.1 Actelios SpA balance sheet 31.12.2007 31.12.2006 Note of which of which (Euro thousands) related parties related parties Assets A Non-current assets 1 Property, plant and equipment (1) 38 13 2 Intangible assets (2) 113 60 3 Financial assets (3) 96,941 96,116 4 Medium/long-term financial receivables (4) 6,335 6,335 10,451 10,451 5 Deferred income tax assets (7) 1,520 1,977 6 Other receivables (6) Total 104,947 108,617 B Current assets 1 Inventories (8) 96 96 2 Trade receivables (5) 6,970 6,966 5,601 5,374 3 Other receivables (6) 17,503 17,494 10,557 10,547 4 Financial assets (4) 79,386 79,386 58,383 58,383 5 Investments 6 Cash and cash equivalents (9) 158,800 182,006 Total 262,755 256,643 C Non-current assets held for sale Total assets 367,702 365,260 Liabilities D Equity 1 Ordinary shares 67,680 67,680 2 Reserves 247,130 246,838 3 Retained earnings 8,094 5,172 4 Profit for the year 15,941 10,197 Capital and reserves attributable to company equity holders (10) 338,845 329,887 5 Minority interest in equity Total equity (10) 338,845 329,887 E Non-current liabilities 1 Medium/long-term financial liabilities (13) 2 Other non-current liabilities (15) 3 Deferred income tax liabilities 4 Provisions for other liabilities and charges (11) 600 600 5 Staff leaving indemnity (12) 521 486 Total 1,121 1,086 F Current liabilities 1 Trade payables (14) 2,479 432 2,894 1,522 2 Other payables (15) 24,050 21,257 26,502 20,694 3 Short-term financial liabilities (13) 1,207 1,207 4,891 4,891 4 Provisions for other liabilities and charges Total 27,736 34,287 G Liabilities attributable to non-current assets held for sale Total liabilities 367,702 365,260 Related party transactions are disclosed on page 110. 93

8.2 Actelios SpA income statement 31.12.2007 31.12.2006 Note of which of which (Euro thousands) related parties related parties A Revenue (16) 54 488 Direct labour costs (17) Direct costs (18) (453) B Cost of sales 0 (453) C Gross profit 54 35 Other income (19) 3,018 2,851 3,052 2,477 Other employee costs (17) (3,918) (4,205) Administrative expenses (20) (5,957) (2,122) (5,578) (2,171) D Operating profit (6,803) (6,696) Finance income - net (21) 11,593 10,458 7,660 5,212 Investment income (22) 13,285 13,285 9,381 9,381 E Profit before income tax 18,075 10,345 Income tax expense (23) (2,134) (148) F Profit for the year 15,941 10,197 Earnings per share (Euro per share) (10) 0.24 0.16 Related party transactions are disclosed on page 115. 94

8.3 Actelios SpA cash flow statement 31.12.2007 31.12.2006 Note of which of which (Euro thousands) related parties related parties Cash flows from operating activities Profit for the year 15,941 10,197 Adjusted for: Amortisation and impairment of intangible assets 15 32 Depreciation and impairment of property, plant and equipment 25 25 Staff leaving indemnity provision 165 136 Fair value of financial assets Finance income (11,593) (10,413) (7,918) (5,457) Finance costs 123 105 258 239 Dividends received (13,285) (13,285) (9,381) (9,381) Share of profit of investments valued at equity Gain on sale of intangibles Profit on disposal of property, plant and equipment Profit on sale of investments Other cash flows (1) Income tax (income statement) 2,134 148 Operating loss before changes in net working capital and provisions (6,475) (6,504) Change in inventories 364 Change in trade receivables (1,370) (462) Change in trade payables (416) 530 Change in other receivables/payables 2,262 2,913 Net change in provisions 600 Change in employee payables - staff leaving indemnity paid during year (130) (85) Cash used in operating activities (6,129) (2,644) Interest paid (123) (258) (239) Tax paid (265) (2,012) Net cash used in operating activities (1) (6,517) (4,914) Cash flows from investing activities Dividends received 5,172 Proceeds from sale of property, plant and equipment Proceeds from sale of intangible assets Proceeds from investment activities Purchases of intangible assets (40) (27) Purchases of property, plant and equipment (78) (1,125) Acquisition of investments (825) Sale of investments Interest received 11,593 7,918 5,457 Net cash generated from investing activities (2) 10,650 11,938 Cash flows from financing activities Dividends paid (6,768) (6,768) Proceeds from issue of ordinary share capital increase and capital injections 245,590 177,172 Proceeds from borrowings Borrowings granted (16,936) (16,936) (20,043) New borrowings Repayments of borrowings Net cash (used in)/from financing activities (3) (23,704) 225,547 Net (decrease)/increase in cash and cash equivalents and bank overdrafts(1+2+3) (19,571) 232,571 Cash and cash equivalents and bank overdrafts at 1 January 177,164 (55,407) Cash and cash equivalents and bank overdrafts at 31 December (9) 157,593 177,164 95

8.4 Actelios SpA statement of changes in equity (Euro thousands) Share Reserves Profit Capital and Minority Total capital for the year reserves interest equity attributable to in equity company equity holders At 31.12.2005 22,560 48,055 1,871 72,486 72,486 Appropriation of 2005 profit 1,871 (1,871) Share capital increase 45,120 205,361 250,481 250,481 Expenses on share capital increase (3,277) (3,277) (3,277) Profit for the year to 31 December 2006 10,197 10,197 10,197 At 31.12.2006 67,680 252,010 10,197 329,887 329,887 Appropriation of 2006 profit 3,429 (10,197) (6,768) (6,768) Share capital increase (215) (215) (215) Profit for the year to 31 December 2007 15,941 15,941 15,941 At 31.12.2007 67,680 255,224 15,941 338,845 338,845 96

8.5 Notes to the financial statements of Actelios SpA 8.5.1 Accounting policies The valuation and measurement of financial information for the year ended 31 December 2007 have been based on the IAS/IFRS currently in force and their related interpretations as set out in the documents issued to date by the International Financial Reporting Interpretations Committee (IFRIC) and the Standing Interpretations Committee (SIC). The separate company financial statements are prepared in Euro and all values are rounded to thousands of Euro except where otherwise indicated. The financial statements have been prepared applying the historical cost convention, with the exception of derivative instruments and financial assets available for sale, valuation of which is based on the market value (fair value) principle. Non-current assets and tangible fixed assets held for sale are recorded at the lower of book and market value. The accounting policies detailed below were applied to the current financial year, comparative amounts for the prior year and in the preparation of the opening IFRS financial statements at 1 January 2005 representing the date of transition to IFRS. All adjustments arising from the first time adoption of IAS/IFRS have been recorded in total equity. In addition, on first time adoption of IFRS, as prescribed by IFRS 1, the standards IFRS 3, IAS 32 and IAS 39 were adopted from 1 January 2005. As a result, commencing this date, amortisation of goodwill has no longer been accounted for and derivate financial instruments are valued at fair value without retrospective application. The principal accounting policies and valuation methods adopted in the preparation of the separate company financial statements are set out below: Intangibles An intangible asset is recorded only when it is identifiable, controllable, is expected to benefit future periods and the cost may be reliably measured. Intangible assets are recorded at cost including directly attributable expenses and are amortised systematically over their estimated useful economic life. Intangible assets, having a finite useful life, are classified at cost net of accumulated amortisation and any permanent losses in value. Amortisation is based on the estimated useful life and commences when the asset is available for use. Costs relating to the acquisition of CIP 6/92 rights are amortised over the related benefit period. Remaining intangibles comprise costs relating to the start-up of projects and automation and mechanisation of a number of information systems. Property, plant and equipment Actelios SpA opted for the cost method in preparing the first IAS/IFRS financial statements, as prescribed by IFRS 1. As a result, with regard to property, plant and equipment, the company has preferred not to adopt the fair value approach. Property, plant and equipment is recorded at acquisition or production cost including directly attributable costs. Property, plant and equipment is valued at cost, net of depreciation and accumulated permanent losses in value, with the exception of land, which is not depreciated and is valued at cost less accumulated losses in value. In the event that significant components of an item of property, plant and equipment have differing useful lives, each component is attributed a separate useful life for depreciation purposes (component depreciation). The depreciation rates applied represent the expected useful life of the assets. The rates applied to the various asset categories are as follows: (%) Industrial buildings light construction 3-4 - 10 General and specific plant 5-12- 15-20 Heavy plant and operating machinery 9-10 Equipment 10-12 - 20-25 - 30 Office machinery and equipment 12-20 Vehicles 20-25 These rates are applied based on months of actual use with regard to assets that come into use during the year. Ordinary maintenance costs are charged to expenses in the year in which they are incurred. 97

Maintenance costs that increase the future economic benefits derived from the assets are capitalised on the related asset and depreciated over the asset s residual useful life. Borrowing costs for the construction of a plant or its acquisition are capitalised up until the moment in which the asset may be used in the production process. Impairment of assets In the presence of circumstances that potentially indicate a loss in value, impairment tests are conducted on tangible and intangible assets, by estimating the recoverable amount of the asset and comparing it with the related net book value. In the event that the recoverable value is lower than the carrying value an impairment loss is recorded in the income statement. When there is an indication that an impairment loss recognised in a previous accounting period is no longer required, the carrying value is restated to the new estimated recoverable value which may not exceed the carrying value that would have been recognised had the original impairment not occurred. The reversal is also recorded in the income statement. Investments and securities Investments in subsidiaries and associates Investments in subsidiaries excluded from the scope of consolidation are valued at cost. The book value is written down to reflect permanent losses in value in the event that the investments are in a loss-making situation and no profits are foreseeable in the near future to cover the sustained losses; the original value is restated in future financial periods in the event that the reasons for the write down no longer exist. Investments in other companies and other investments In accordance with IAS 39 and 32, investments in companies that are neither subsidiaries nor associates are valued at fair value with the exception of those circumstances in which market price or fair value cannot be determined: in this event the cost method is applied. The book value is written down to reflect permanent losses in value in the event that investments are in a loss-making situation and no profits are foreseeable in the near future to cover the sustained losses; the original value is restated in future financial periods in the event that the circumstances that give rise to the write-down no longer exist. Financial assets Classification In accordance with IAS 39 and IAS 32, financial assets are classified into the following four categories: 1. Financial assets at fair value through profit or loss ; 2. Held-to-maturity investments; 3. Loans and receivables; 4. Available-for-sale financial assets. The classification depends on the reason for which the investment was initially purchased and is subsequently held and management is required to determine the initial classification at the time they are first recorded updating this at each financial year end. A description of the principal characteristics of each asset category detailed above may be summarised as follows: Financial assets at fair value through profit or loss This category has two sub-categories: 1. Financial assets held for trading; 2. Financial assets designated to the fair value category at inception. This category includes all financial investments, except for equity instruments that are unquoted, for which a fair value may be reliably measured. Financial instruments, with the exception of hedge instruments, are included in this category and their fair value recorded in the income statement. All assets within this category are classified as current if they are held for trading purposes or where disposal is expected within 12 months from the year end. Designation of a financial instrument to this category is irrevocable and may take place only on inception. Held-to-maturity investments Held-to-maturity investments are financial assets with fixed or determinable payments and fixed maturity, which the group intends to hold to maturity (e.g. underwritten debentures). 98

Evaluation of the intent and ability to hold the asset to maturity must be made following initial acquisition and at each subsequent balance sheet date. In the event of sale before maturity (of a significant amount and not in exceptional circumstances) of held-to-maturity securities, all such investments are reclassified as available-for-sale and measured at fair value. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted on an active market and which the group does not intend to trade. These are included in current assets with the exception of the portion expiring more than 12 months after the balance sheet date, which is classified in non-current assets. Loans and receivables are classified within the financial statements under the headings financial receivables and other receivables. Available-for-sale financial assets All non-derivative instruments that are not classified in another category are designated as available-for-sale financial assets. These are classified as non-current assets unless management intends to dispose of them within 12 months of the balance sheet date. Accounting treatment Financial assets at fair value through profit or loss held for trading (category 1) and available-for-sale financial assets (category 4) are recorded at fair value including costs directly attributable to acquisition. Gains or losses relating to financial assets held for trading are recognised immediately in the income statement. Gains or losses relating to financial assets available for sale are recorded within a separate heading in equity until they are sold or otherwise disposed of, or until circumstances indicate they may be impaired. Where any of these events takes place, all gains or losses recognised to date and recorded in equity are reclassified to the income statement. The fair value represents the amount at which an asset may be exchanged or a liability settled in an arm s length transaction between knowledgeable, willing parties. As a result it is assumed that the entity is a going concern and that neither party needs to liquidate its assets through transactions applying unfavourable terms. In the case of securities traded on an active market, the fair value is determined with reference to the bid price at the end of trading at the balance sheet date. In the event that a market valuation is not available for the investment, the fair value is determined either based on the current market value of another substantially similar financial instrument or applying appropriate valuation techniques (discounted cash flows - DCF). Where the fair value may not be reliably determined, the financial asset is valued at cost with disclosure in the notes to the financial statements regarding the type of asset and explanation of the accounting treatment. Held-to-maturity investments (category 2) and loans and receivables (category 3) are recorded at cost representing the fair value of the initial consideration exchanged and are subsequently valued applying the amortised cost method utilising the effective interest rate and taking into consideration any discounts or premiums received at the date of acquisition in order to record them over the entire period of ownership up to maturity. Gains and losses are recognised in the income statement either when the investment reaches maturity or where circumstances indicate that it has suffered an impairment loss, in the same way they are identified during the normal amortisation period foreseen by the amortised cost method. Investments in financial assets may be derecognised, only when the contractual rights to receive cash flows from the investments have expired (e.g. final payment of underwritten bonds) or when the group transfers the financial asset together with all of the related risks and rewards. Inventories Finished goods are stated at the lower of purchase cost and net realisable value. Purchase cost is determined using the weighted average cost method. Obsolete and slow moving inventory is valued based on possible future use or realisation. With regard to contract work in progress that spans more than one accounting period, valuation is based on income matured to date with reasonable certainty, determined by comparing actual costs to date with the total expected costs to completion. Receivables Receivables are initially recorded at the fair value of the amount to be received, which for this category normally relates to the nominal value indicated on the invoice, adjusted where necessary to the expected recoverable amount through recognition of a provision for doubtful accounts. Subsequently, where the required conditions exist, receivables are valued applying the amortised cost method. Cash and cash equivalents Cash and cash equivalents include cash on hand and short term bank balances. 99

Non-current assets held for sale and discontinued operations Non-current assets held for sale and discontinued operations include those assets (or groups of assets) due to be disposed of and for which the accounting value will be recovered principally through sale rather than future use. Non-current assets held for sale are valued at the lower of their carrying amount and fair value less costs to sell. In accordance with IFRS, information relating to discontinued operations is presented in two specific headings in the balance sheet: non-current assets held for sale and liabilities attributable to non-current assets held for sale; and in a specific heading in the income statement; net profit/(loss) of discontinued operations or non-current assets held for sale. Provisions Provisions are recognised when a present obligation (legal or constructive) exists as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount may be made. No provision is made for risks in relation to which the recognition of a liability is only possible. In this case the risk is disclosed in the relevant note on contingencies and commitments and no provision is made. Provisions may be analysed as follows: Litigation This provision includes the charge for future costs relating to legal proceedings. Investments Provision is made to recognise potential permanent losses in the carrying value of non-consolidated subsidiaries. Environmental This provision is set up to meet future requirements in relation to the redevelopment of landfills in accordance with the obligations undertaken on receipt of permission from the relevant authorities. The provision is based on estimates prepared by specialist enterprises. Sundry provisions This provision includes all other future liabilities not included above, which are reasonably quantifiable but for which the date of occurrence is uncertain. Staff leaving indemnity (TFR) Post employment defined benefits and other long-term employee benefits, are subjected to actuarial valuation. The liability recognised in the balance sheet is the present value of the group obligations. Actuarial gains and losses are recognised in the income statement. Valuation of the liability is performed by independent actuaries. Trade payables Trade payables with normal trading terms, are recorded at nominal value. Borrowings and financial liabilities Borrowings are recognised initially at fair value, net of transaction costs incurred. Subsequently, borrowings are stated at amortised cost. The finance costs are determined using the effective interest method. Other financial liabilities comprise derivative instruments entered into in order to hedge interest rate risk. The derivative instruments are accounted for using hedge accounting in accordance with IAS 39 and are recognised at fair value through profit or loss. The company adopted IAS 39 from 1 January 2005. Current tax liabilities The provision for income taxes is based on the estimated taxable income for the period for each individual company, taking into consideration tax credits and losses brought forward and utilised in the period. Accruals, prepayments and deferrals Accruals, prepayments and deferrals are determined applying the accruals concept. Share capital Ordinary shares are classified within share capital at nominal value. Incremental costs directly attributable to capital transactions by the parent company are shown in equity as a deduction. 100

Foreign currency translation The functional currency of the group is the Euro and is the currency in which the consolidated financial statements are prepared and presented. Foreign currency transactions are recorded at the exchange rate existing at the date of the transaction. Receivables and payables are translated at the closing rate at the balance sheet date. Exchange gains or losses arising on translation are recognised in the income statement in the period in which they arise. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction. Non-monetary items measured at fair value are translated using the exchange rate at the date when the fair value was determined. Revenue recognition Revenue is recorded net of returns, discounts and rebates, as well as direct taxes on the sale of goods or provision of services. Revenue from product sales Revenue from the sale of products is recognised on the transfer of ownership, which normally takes place on delivery or despatch of the goods. Revenue from services Revenue from services is recognised once the service has been rendered. Interest Finance income is accounted for applying the accruals concept. Dividends Dividends are recognised when the right to receipt of the dividend is established, which normally corresponds with the approval of distribution in the shareholders meeting. Other income Other income comprises amounts that do not relate to the core business of the group and, in accordance with IAS 1 which has been applied from 1 January 2005, they are classified in ordinary activities and where significant in value are disclosed separately in the notes to the financial statements. Costs Costs are recognised net of returns, discounts, bonuses and premiums, as well as direct taxes relating to the purchase of goods and services. Taxation including deferred income tax Income tax is calculated and provided for based on estimated taxable income for the year and applying existing tax legislation. Deferred income taxes are calculated applying the liability method on all temporary differences between the tax bases of assets and liabilities and the financial reporting values at the balance sheet date. Deferred income tax assets are recognised only when future taxable income, sufficient to utilise these assets, is reasonably foreseeable. The balance of deferred income tax assets is reviewed at each balance sheet date and a valuation allowance is provided in the event that it is no longer probable that sufficient future taxable profits will be available to offset all or part of the tax credit. Deferred income tax assets and liabilities are measured at the enacted tax rates that will be in effect in the periods in which the assets are realised or the liability is settled and are classified in non-current assets and liabilities respectively. 101

8.5.2 Balance sheet content and movements Assets Non-current assets 1 Intangible assets Movements during the year were as follows: At Acquisitions Capital.n Change in Disposals Other Impair- Amorti- At 31.12.2006 and reclass.n scope of move- ment sation 31.12.2007 (Euro thousands) consol.n ments 1.1 Industrial patent rights 1.2 Concessions, licences, trademarks and similar 13 40 (15) 38 1.3 Goodwill 1.4 Other intangibles 1.5 Assets under construction and advance payments Total 13 40 (15) 38 The increase is due to new software acquired during the year. 2 Property, plant and equipment Movements during the year were as follows: At Additions Capital.n Change in Disposals Impair- Deprec- At 31.12.2006 and scope of ment iation 31.12.2007 reclass.n consol.n losses (Euro thousands) (A) Gross value 2.1 Land and buildings 2.2 Plant and machinery 2.3 Industrial and office equipment 2.4 Other assets 158 77 (21) 214 2.5 Assets operated under concession 2.6 Assets under construction and adv. Total gross value 158 77 (21) 214 Accumulated depreciation 2.1 Land and buildings 2.2 Plant and machinery 2.3 Industrial and office equipment 2.4 Other assets (98) 21 (25) (102) 2.5 Assets operated under concession Total depreciation (98) 21 (25) (102) Net book amounts 2.1 Land and buildings 2.2 Plant and machinery 2.3 Industrial and office equipment 2.4 Other assets 60 77 (25) 112 2.5 Assets operated under concession 2.6 Assets under construction and adv. Total net book amounts 60 77 (25) 112 102

A) Additions - comprise: (Euro thousands) Motor vehicles 60 Personal computers 10 Furniture and fittings 7 Total 77 3 Investments The total at 31 December 2007 may be analysed as follows: (Euro thousands) 31.12.2007 31.12.2006 Change Subsidiaries 86,232 86,217 15 Associates 10,705 9,895 810 Other entities 4 4 Securities Total 96,941 96,116 825 The increase in subsidiary investments relates to the acquisition at the year-end of the entire share capital of Immobiliare Samanta Srl, the name and purpose of which will change in order to become the holding company of the photovoltaic energy production business. The increase in associates relates to capital contributions made to Powercrop Srl for Euro 800 thousand and Termini Imerese Energia Ambiente Srl for Euro 10 thousand. The higher book value of investments compared to the related share of shareholders equity does not require recognition of an impairment loss given the future profits that are expected to be realised on the projects. 4 Financial receivables Financial receivables at 31 December 2007 may be analysed as follows: 31.12.2007 31.12.2006 Change Total Non- Current Total Non- Current Total Non- Current (Euro thousands) current current current Amounts owed by third parties Amounts owed by subsidiaries 74,831 6,335 68,496 59,344 6,335 53,009 15,487 15,487 Amounts owed by associates 10,868 10,868 9,442 4,116 5,326 1,426 (4,116) 5,542 Amounts owed by parent company 22 22 48 48 (26) (26) Amounts owed by other group companies Guarantee deposits Total 85,721 6,335 79,386 68,834 10,451 58,383 16,887 (4,116) 21,003 Non-current receivables due from subsidiaries relate to the loan granted to Prima Srl, while the current portion relates to the current accounts between group companies. Amounts owed by associates comprise Euro 4,116 thousand due from Frullo Energia Ambiente Srl and Euro 6,752 thousand due from Palermo Energia Ambiente ScpA. 103

5 Trade receivables Trade receivables at 31 December 2007 consisted of the following: 31.12.2007 31.12.2006 Change Total Non- Current Total Non- Current Total Non- Current (Euro thousands) current current current Trade receivables 3,035 3,035 3,107 3,107 (72) (72) Amounts owed by subsidiaries 1,914 1,914 1,476 1,476 438 438 Amounts owed by associates 1,974 1,974 1,018 1,018 956 956 Amounts owed by parent company 18 18 18 18 Amounts owed by other group companies 29 29 29 29 Total 6,970 6,970 5,601 5,601 1,369 1,369 The company does not have a provision for doubtful accounts. The company does not have significant receivables due from non-domestic customers that require disclosure. 6 Other receivables Other receivables at 31 December 2007 comprised: 31.12.2007 31.12.2006 Change Total Non- Current Total Non- Current Total Non- Current (Euro thousands) current current current Amounts owed by third parties Amounts owed by subsidiaries 7,650 7,650 6,338 6,338 1,312 1,312 Amounts owed by associates 9,844 9,844 4,209 4,209 5,635 5,635 Amounts owed by parent company Amounts owed by other group companies Tax credits Accrued income and prepayments 9 9 10 10 (1) (1) Total 17,503 17,503 10,557 10,557 6,946 6,946 Amounts owed by subsidiaries and associates are in respect of the dividends declared by the shareholders but not yet paid by Prima Srl and Frullo Energia Ambiente Srl. 7 Deferred income tax assets Deferred income tax assets may be analysed as follows: 31.12.2007 31.12.2006 Temporary Deferred income Temporary Deferred income (Euro thousands) difference Rate tax asset difference Rate tax asset Other provisions 600 27.50% 165 600 33.00% 198 Employee bonuses 1,993 27.50% 548 1,477 33.00% 487 Reserve for share capital increase expenses 2,935 27.50% 807 3,913 33.00% 1,291 Total 1,520 1,977 At 31 December 2007 the deferred income taxes calculated in previous financial years have been adjusted applying the new tax rates that will come into force in 2008. 104

B Current assets 8 Inventories Inventories at 31 December 2007 may be analysed as follows: (Euro thousands) 31.12.2007 31.12.2006 Change Raw materials and consumables Semi-finished goods Work in progress 96 96 Finished goods Advances Total 96 96 Work in progress relates to a contract to provide consultancy services for a waste recycling plant in Iran and the balance did not change during the year. 9 Cash and cash equivalents (Euro thousands) 31.12.2007 31.12.2006 Change Short-term bank and post office deposits 158,800 182,006 (23,206) Cash in hand Total 158,800 182,006 (23,206) Cash and cash equivalents may be further detailed as follows: (Euro thousands) 31.12.2007 31.12.2006 Change Cash at bank and in hand 158,800 182,006 (23,206) Bank overdrafts Invoice advances Group current accounts (1,207) (4,842) 3,635 Total cash and cash equivalents 157,593 177,164 (19,571) 105

Liabilities D Equity 10 Share capital Share capital consists of 67,680,000 issued and fully paid ordinary shares, with a nominal value of Euro 1 each. In the course of the year the number of shares did not change. Total equity may be analysed as follows: Summary of utilisation Total Possible Share in three previous financial years (Euro thousands) utilisation available To cover losses Other reasons Share capital 67,680 Capital reserves Share premium 240,828 A-B 240,828 Reserve for share capital increase expenses (3,492) (3,492) Revaluation reserves ex Law 72/83 1,003 A-B 1,003 Reserve ex art.54 Pres. Decree 597/73 3,423 A-B 3,423 Reserve ex art.55 Pres. Decree 597/73 653 A-B 653 Demerger surplus 3,936 A-B 3,936 Earnings reserves Legal reserve 779 B 779 Profit carried forward 8,094 A-B-C 8,094 Total 322,904 255,224 Key: A: share capital increase B: to cover losses C: distributed to shareholders Movements in equity during 2006 and 2007 were as follows: At Appropriation Profit for Share capital Other At (Euro thousands) 31.12.2005 of result the year increase movements 31.12.2006 Share capital 22,560 45,120 67,680 Share premium 35,467 205,361 240,828 Revaluation reserve 1,003 1,003 Legal reserve 179 93 272 Reserve for own shares (3,277) (3,277) Statutory reserve Other reserves - ex art. 54 Pres. Decree 597/73 3,424 3,424 - ex art. 55 Pres. Decree 597/73 653 653 - demerger surplus 3,936 3,936 Retained earnings 3,393 1,778 5,171 Profit for the year 1,871 (1,871) 10,197 10,197 Total 72,486 10,197 250,481 (3,277) 329,887 106

At Appropriation Profit for Share capital Other At (Euro thousands) 31.12.2006 of result the year increase movements 31.12.2007 Share capital 67,680 67,680 Share premium 240,828 240,828 Revaluation reserve 1,003 1,003 Legal reserve 272 507 779 Reserve for own shares (3,277) (215) (3,492) Statutory reserve Other reserves - ex art. 54 Pres. Decree 597/73 3,424 3,424 - ex art. 55 Pres. Decree 597/73 653 653 - demerger surplus 3,936 3,936 Retained earnings 5,171 2,922 8,093 Profit for the year 10,197 (10,197) 15,941 15,941 Total 329,887 (6,768) 15,941 (215) 338,845 Earnings per share Basic earnings per share, which are equivalent to diluted earnings, have been calculated by dividing the profit for the year attributable to the ordinary shareholders of the parent company by the weighted average number of ordinary shares in issue during the year, based on the following information: 31.12.2007 31.12.2006 Weighted average number of ordinary shares (number of shares) 67,680,000 61,870,027 Earnings attributable to the ordinary shareholders of the parent company (Euro thousands) 15,941 10,197 Basic earnings per share (Euro per share) 0.24 0.16 31.12.2007 31.12.2006 Number of ordinary shares (number of shares) 67,680,000 67,680,000 Earnings attributable to the ordinary shareholders of the parent company (Euro thousands) 15,941 10,197 Earnings per share (Euro per share) 0.24 0.15 11 Provisions for other liabilities and charges At Change in scope Charge Utilised Reclassified At (Euro thousands) 31.12.2006 of consol.n 31.12.2007 Provisions for pensions and similar obligations Provisions for taxation - Current - Deferred tax Total tax provisions Other provisions - litigation - investments - environmental - restructuring - sundry provisions 600 600 Total other provisions 600 600 Total 600 600 Sundry provisions consist of the amount charged in the previous year in order to cover probable liabilities relating to existing legal disputes and has not changed during the year. 107

12 Staff leaving indemnity (TFR) At Charges Transfers/ Utilised/ At (Euro thousands) 31.12.2006 new consol.n paid 31.12.2007 Managers 277 108 (68) 317 White-collar staff and special categ.s 209 56 12 (73) 204 Blue-collar staff Total 486 164 12 (141) 521 The Trattamento di Fine Rapporto (TFR) (staff leaving indemnity provision), was subjected to an actuarial calculation by an independent expert. Given that the resulting calculation did not differ significantly from the amount determined in accordance with Italian Generally Accepted Accounting Principles (Italian GAAP), no adjustment was recorded. The financial actuarial assumptions utilised to calculate the estimated cost in 2007 are as follows: (%) 31.12.2007 31.12.2006 Change Annual discounting rate 5.45% 4.60% 0.85% Annual inflation rate 2.00% 2.00% 0.00% Annual total pay increase rate 3.00% 3.00% 0.00% Annual TFR increase rate 3.00% 3.00% 0.00% 13 Financial liabilities Financial liabilities at 31 December 2007 consisted of the following: 31.12.2007 31.12.2006 Change Total Non- Current Total Non- Current Total Non- Current (Euro thousands) current current current Amounts owed by third parties Amounts owed by subsidiaries 1,207 1,207 4,891 4,891 (3,684) (3,684) Amounts owed by associates Amounts owed by parent company Amounts owed by other group companies Project financing Derivative financial instruments Total 1,207 1,207 4,891 4,891 (3,684) (3,684) Amounts owed by subsidiaries relate to the current accounts with subsidiary companies, of which Euro 502 thousand relates to Ecosesto SpA and Euro 705 thousand to the balance with Ambiente 2000 Srl. 108

14 Trade payables Trade payables at 31 December 2007 compared to the previous year are as follows: 31.12.2007 31.12.2006 Change Total Non- Current Total Non- Current Total Non- Current (Euro thousands) current current current Trade payables 2,047 2,047 1,372 1,372 675 675 Amounts due to subsidiaries 4 4 3 3 1 1 Amounts due to associates Amounts due to parent company 368 368 1,384 1,384 (1,016) (1,016) Amounts due to other group companies 60 60 135 135 (75) (75) Total 2,479 2,479 2,894 2,894 (415) (415) The company does not have significant trade payables with non-domestic customers that require disclosure. 15 Other payables Other payables at 31 December 2007 compared to 31 December 2006 are as follows: 31.12.2007 31.12.2006 Change Total Non- Current Total Non- Current Total Non- Current (Euro thousands) current current current Amounts due to third party creditors 22,793 22,793 25,808 25,808 (3,015) (3,015) Amounts due to subsidiaries 508 508 (508) (508) Amounts due to associates 17 17 54 54 (37) (37) Amounts due to parent company 1,240 1,550 132 132 1,108 1,108 Amounts due to other group companies Accruals and deferred income Total 24,050 24,360 26,502 26,502 (2,452) (2,452) Third party creditors may be detailed as follows: (Euro thousands) 31.12.2007 31.12.2006 Amounts due for acquisition of Elettroambiente SpA 20,000 20,000 Tax payable 175 3,927 Other amounts due to employees (Mbo) 1,993 1,477 Holiday pay 190 147 Social security payable 176 130 Advances 118 118 Other 141 9 Total 22,793 25,808 Commitments and contingencies Guarantees issued at 31 December 2007 amounted to Euro 1,182 thousand and comprised guarantees issued to thevat authorities in relation to repayment requests that amounted to Euro 1,135 thousand and other guarantees totalling Euro 47 thousand. Other personal guarantees amounted to Euro 49,355 thousand, representing an increase of Euro 4,457 thousand on 31 December 2006. 109

Related party transactions Trade receivables Trade payables (Euro thousands) 31.12.2007 31.12.2006 Change 31.12.2007 31.12.2006 Change Subsidiaries Ambiente 2000 Srl 230 349 (119) 2 3 (1) Ecosesto SpA 476 469 7 Elettroambiente SpA 12 14 (2) 2 2 Platani Energia Ambiente ScpA 188 45 143 Prima Srl 816 555 261 Tifeo Energia Ambiente ScpA 193 44 149 Total subsidiaries 1,915 1,476 439 4 3 1 Associates Ambiente 3000 Srl 21 21 Frullo Energia Ambiente Srl 177 163 14 Palermo Energia Ambiente ScpA 1,426 834 592 Powercrop Srl 349 349 Total associates 1,973 1,018 606 Parent company Falck SpA 18 18 368 1,384 (1,016) Total parent company 18 18 368 1,384 (1,016) Group companies Falck Financial Services Sa 60 135 (75) Falck Renewables Italia Srl 29 29 Total group companies 29 29 60 135 (75) Other related parties Italgest Servizi Srl 3,031 2,880 151 Total other related parties 3,031 2,880 151 Total 6,966 5,374 1,243 432 1,522 (1,090) % incidence on balance sheet heading 99.9% 95.9% 17.4% 52.6% Financial receivables Financial payables (Euro thousands) 31.12.2007 31.12.2006 Change 31.12.2007 31.12.2006 Change Subsidiaries Ambiente 2000 Srl 705 450 255 Ecosesto SpA 502 4,441 (3,939) Elettroambiente SpA 68,496 53,009 15,487 Prima Srl 6,335 6,335 Total subsidiaries 74,831 59,344 15,487 1,207 4,891 (3,684) Associates Frullo Energia Ambiente Srl 4,116 4,116 Palermo Energia Ambiente ScpA 6,752 5,326 1,426 Total associates 10,868 9,442 1,426 Parent company Falck SpA 22 48 (26) Total parent company 22 48 (26) Total 85,721 68,834 16,887 1,207 4,891 (3,684) % incidence on balance sheet heading 100% 100% 100% 100% 110

Other receivables Others payables (Euro thousands) 31.12.2007 31.12.2006 Change 31.12.2007 31.12.2006 Change Subsidiaries Elettroambiente SpA 182 (182) Platani Energia Ambiente ScpA 154 (154) Prima Srl 7,650 6,338 1,312 Tifeo Energia Ambiente ScpA 172 (172) Total subsidiaries 7,650 6,338 1,312 508 (508) Associates Frullo Energia Ambiente Srl 9,844 4,209 5,635 Powercrop Srl 37 (37) Termini Imerese Energia Ambiente Srl 17 17 Total associates 9,844 4,209 5,635 17 54 (37) Parent company Falck SpA 1,240 132 1,108 Total parent company 1,240 132 1,108 Other related parties Italgest Energia SpA 20,000 20,000 Total other related parties 20,000 20,000 Total 17,494 10,547 6,947 21,257 20,694 563 % incidence on balance sheet heading 99.9% 99.9% 88.4% 78.1% 8.5.3 Income statement content and movements 16 Revenue Revenue consisted of the following: (Euro thousands) 31.12.2007 31.12.2006 Change Revenue from sales of goods Revenue from provision of services 54 488 (434) Total 54 488 (434) Revenue was realised entirely in Belgium on the Car Fluff project that is promoted and financed by the European Union. 17 Employee costs Employee costs may be analysed as follows: (Euro thousands) 31.12.2007 31.12.2006 Change Cost of production employees Cost of administrative staff 3,918 4,205 (287) Total 3,918 4,205 (287) 111

Total employee costs analysed by nature of expense are as follows: (Euro thousands) 31.12.2007 31.12.2006 Change Wages and salaries 2,842 3,035 (193) Social security costs 912 1,035 (123) Staff leaving indemnity (TFR) 164 135 29 Other costs Total 3,918 4,205 (287) The average number of employees was as follows: (Number) 31.12.2007 31.12.2006 Managers 10 9 White-collar staff 19 18 Blue-collar staff Total average number of employees 29 27 18 Direct costs (Euro thousands) 31.12.2007 31.12.2006 Change Materials Services 86 (86) Other costs 3 (3) Change in inventories 364 (364) Changes in/(utilisation of) operating provisions Amortisation and impairment of intangible assets Depreciation and impairment of property, plant and eq.pmt Employee costs capitalised on assets under construction Total 453 (453) No direct costs were incurred during the year. 19 Other income Other income may be analysed as follows: (Euro thousands) 31.12.2007 31.12.2006 Change Income from operating activities 2,853 2,478 375 Income from non-operating activities 165 574 (409) Total 3,018 3,052 (34) Income from operating activities may be further detailed as follows: (Euro thousands) 31.12.2007 31.12.2006 Change Income from services provided to other group companies 2,780 2,414 366 Recharged expenses Other 73 64 9 Total 2,853 2,478 375 112

Income from non-operating expenses may be further detailed as follows: (Euro thousands) 31.12.2007 31.12.2006 Change Income relating to other accounting periods 154 565 (411) Gains on disposal of property, plant and equipment 2 (2) Gains on disposal of investments Utilisation of provisions Insurance compensation Other 11 7 4 Total 165 574 (409) Income relating to other accounting periods largely relates to the excess provision charged in 2006 in respect of the variable element of remuneration due to management. 20 Administrative expenses Administrative expenses may be detailed as follows: (Euro thousands) 31.12.2007 31.12.2006 Change Consumables 107 114 (7) Services 4,979 4,262 717 Other costs 818 540 278 Non-operating expenses 13 5 8 Amortisation and impairment of intangible assets 15 33 (18) Depreciation and impairment of property, plant and equipment 25 24 1 Charges to/(utilisation of) provisions 600 (600) Total 5,957 5,578 379 21 Finance income - net Finance income and costs were as follows: (Euro thousands) 31.12.2007 31.12.2006 Change Finance costs (123) (258) 135 Finance income 11,716 7,918 3,798 Interest capitalised on assets under construction Total 11,593 7,660 3,933 Finance costs consisted of the following: (Euro thousands) 31.12.2007 31.12.2006 Change Payable to subsidiaries (104) (61) (43) Payable to parent company (1) (178) 177 Payable to others (18) (19) 1 Total (123) (258) 135 113

Finance costs for 2007 and 2006 may be further analysed as follows: 31.12.2007 Debenture Bank Others Total (Euro thousands) loans borrowings Payable to subsidiaries 104 104 Payable to parent company 1 1 Payable to others 11 7 18 Total 11 112 123 31.12.2006 Debenture Bank Others Total (Euro thousands) loans borrowings Payable to subsidiaries 61 61 Payable to parent company 178 178 Payable to others 19 19 Total 19 239 258 Finance income for the year ended 31 December 2007 was higher than the amount recorded in 2006: (Euro thousands) 31.12.2007 31.12.2006 Change Interest income and commission from subsidiaries 4,142 2,389 1,753 Interest income and commission from associates 595 370 225 Interest income and commission from parent company 5,676 2,692 2,984 Interest income and commission from banks 1,153 2,467 (1,314) Interest income and commission from others 150 150 Other Total 11,716 7,918 3,798 22 Investment income (Euro thousands) 31.12.2007 31.12.2006 Change Ecosesto SpA 922 (922) Frullo Energia Ambiente Srl 5,635 4,209 1,426 Prima Srl 7,650 4,250 3,400 Total 13,285 9,381 3,904 23 Income tax expense (Euro thousands) 31.12.2007 31.12.2006 Change Current tax (1,677) (511) (1,166) Deferred tax (457) 363 (820) Total (2,134) (148) (1,986) (Euro thousands) 31.12.2007 31.12.2006 Profit before taxation 18,075 10,345 Taxes calculated applying tax rate to profit (6,914) (3,957) Profits not subject to tax 4,919 3,540 Expenses not deductible for tax purposes (24) (88) Utilisation of tax losses carried forward 357 Adjustment of deferred income tax assets for rate change (115) Tax losses for which no deferred income tax was recognised Total income tax (2,134) (148) 114

Related party transactions Revenue Other Recharged Other Income Services Other Income Other Interest from sales operating expenses income relating to costs from equity financial and other and services income other investments income financial (Euro thousands) periods charges Subsidiaries Ambiente 2000 Srl 299 23 16 Ecosesto SpA 790 9 88 Elettroambiente SpA 10 3,651 Platani Energia Ambiente ScpA 158 Prima Srl 587 7,650 458 Tifeo Energia Ambiente ScpA 162 Total subsidiaries 2,006 7,650 4,141 104 Parent company Falck SpA 82 2,060 2 5,676 1 Total parent company 82 2,060 2 5,676 1 Associates Ambiente 3000 Srl 35 Frullo Energia Ambiente Srl 102 5,635 208 Palermo Energia Ambiente ScpA 175 387 Powercrop Srl 322 Total associates 634 5,635 595 Group companies Falck Financial Services Sa 60 Falck Renewables Italia Srl 129 Total group companies 129 60 Other related parties Italgest Servizi Srl 151 Total other related parties 151 Total 2,851 2,120 2 13,285 10,563 105 % incidence on income statement heading 94.5% 35.6% 100% 90.2% 85.4% 115

8.5.4 Other information Emoluments of directors, statutory auditors and managing directors In accordance with Consob Circular no. 11971 of 14 May 1999, details of all emoluments and fees, for all amounts paid to each party, including amounts from subsidiaries, are provided below: (Euro) Duration Emoluments Other Bonuses and Other Name Office of term benefits other incentives emoluments Federico Falck Chairman Actelios SpA Approval annual report 2007 20,000 Achille Colombo Deputy chairman Actelios SpA Approval annual report 2007 - Paride De Masi Deputy chairman Actelios SpA Approval annual report 2007 10,000 200,000 Roberto Tellarini Managing director Actelios SpA Approval annual report 2007 10,000 1,071,250 (*) 34,000 Deputy chairman Ecosesto SpA Approval annual report 2009 3,000 30,000 Director Elettroambiente SpA Approval annual report 2008 5,000 Chairman Approval annual Frullo Energia Ambiente Srl report 2008 25,000 Director Palermo Approval annual Energia Ambiente ScpA report 2008 24,000 Chairman Powercrop Srl Approval annual report 2009 - Marco Agostini Director Actelios SpA Approval annual report 2007 10,000 Enrico Falck Director Actelios SpA Approval annual report 2007 10,000 Remuneration committee Approval annual of Actelios SpA report 2007 5,000 Giuseppe Gatti Director Actelios SpA Approval annual report 2007 10,000 Internal control committee Approval annual of Actelios SpA report 2007 5,000 Bruno Isabella Director Actelios SpA Approval annual report 2007 10,000 Remuneration committee Approval annual of Actelios SpA report 2007 8,000 Internal control committee Approval annual of Actelios SpA report 2007 5,000 Ferruccio Marchi Director Actelios SpA Approval annual report 2007 10,000 Umberto Rosa Director Actelios SpA Approval annual report 2007 10,000 Remuneration committee Approval annual of Actelios SpA report 2007 5,000 Internal control committee Approval annual of Actelios SpA report 2007 8,000 Supervisory body Approval annual of Actelios SpA report 2007 8,000 (*) Relates to the three years 2005-2007 116

(Euro) Duration Emoluments Other Bonuses and Other Name Office of term benefits other incentives emoluments Roberto Bracchetti Chairman of the board of statutory Approval annual auditors Actelios SpA report 2007 61,975 Supervisory body Actelios SpA Approval annual report 2007 5,000 Chairman of the board of Approval annual statutory auditors Ecosesto SpA report 2008 7,643 Chairman of the board of Approval annual statutory auditors Prima Srl report 2007 9,974 Chairman of the board of statutory auditors Approval annual Frullo Energia Ambiente Srl report 2008 12,327 Aldo Bisioli Statutory auditor Actelios SpA Approval annual report 2007 41,317 Nicola Vito Notarnicola Statutory auditor Actelios SpA Approval annual report 2007 41,317 These financial statements present a true and fair view of the company s state of affairs, financial position and profit for the year and are in agreement with the accounting records. On behalf of the board of directors The Chairman Federico Falck 117

8.6 Additional disclosures on financial instruments in accordance with IFRS7 This note sets out the additional disclosures relating to financial assets and liabilities in accordance with IFRS 7. These disclosures are presented in the same order as they are set out in the IFRS and have been omitted where not considered significant. The note is presented in two sections. The first sets out the detailed information regarding financial assets and liabilities while the second presents the information regarding the risks attributable to the financial assets and liabilities, in particular credit risk, liquidity risk and market risk. This includes both qualitative and quantitative information that is analysed into points (e.g. 1.) and sub-points (e.g. 1.2). The detailed quantitative information is provided for 31 December 2007 and where significant at 31 December 2006. Before providing the detailed disclosures it is noted that Actelios holds significant liquid financial assets and at the same time has limited borrowings. This results in a strong positive net financial position. The financial assets and liabilities are almost entirely measured at cost and amortised cost in the financial statements. These did not give rise to profits or losses in 2006 or 2007. The only impact of the financial instruments on the income statement arises from the interest income and expense and this is limited given the low level of borrowings as mentioned above. Credit and liquidity risk are not considered to be significant. Credit risk exposure is limited as the majority of trade and financial receivables are from other group companies and not third parties. Liquidity risk is also considered to be low due to the low level of indebtedness and the high level of liquidity. Interest rate risk is low for the same reason; consequently a sensitivity analysis was not performed. Actelios adopts specific procedures to manage the credit, liquidity and market risk on financial assets and liabilities. These procedures have not been documented in a formal risk policy. Part I: Financial instruments 1. Balance sheet 1.1 Categories of financial assets and liabilities The tables below illustrate the carrying value at 31 December 2007 and 31 December 2006 of the financial assets and liabilities classified in accordance with IAS 39. In order to reconcile with the balance sheet totals the penultimate column sets out the values of the assets and liabilities that are not included within the scope of IFRS7. 118

31.12.2007 Fair value Amortised cost Fair value through against equity profit or loss or cost Total Loans Financial Financial FA/FL FA/FL FA FA/FL A/L not Balance and receiv. assets liabilities designation held for available- within within sheet bls held-to- at amortised on initial trading for-sale scope scope total (Euro thousands) maturity cost recognition of IFRS7 of IFRS7 Assets Property, plant and equipment and intangibles 151 151 Investments 54 54 96,887 96,941 Financial receivables 85,721 85,721 85,721 Inventories 96 96 Trade receivables 6,970 6,970 6,970 Deferred income tax assets 1,520 1,520 Other receivables 17,503 17,503 310 17,813 Cash and cash equivalents 158,800 158,800 158,800 Total 110,194 158,800 54 269,048 98,964 368,012 Liabilities Total equity 338,845 338,845 Financial liabilities 1,207 1,207 1,207 Trade payables 2,479 2,479 2,479 Other payables 23,875 23,875 485 24,360 Provisions for other liabilities and charges 600 600 Staff leaving indemnity 521 521 Total 27,561 27,561 340,451 368,012 31.12.2006 Fair value Amortised cost Fair value through against equity profit or loss or cost Total Loans Financial Financial FA/FL FA/FL FA FA/FL A/L not Balance and receiv. assets liabilities designation held for available- within within sheet bls held-to- at amortised on initial trading for-sale scope scope total (Euro thousands) maturity cost recognition of IFRS7 of IFRS7 Assets Property, plant and equipment and intangibles 73 73 Investments 78 78 96,038 96,116 Financial receivables 68,834 68,834 68,834 Inventories 96 96 Trade receivables 5,601 5,601 5,601 Deferred income tax assets 1,977 1,977 Other receivables 10,557 10,557 Cash and cash equivalents 182,006 182,006 182,006 Total 74,435 182,006 78 256,519 108,741 365,260 Liabilities Total equity 329,887 329,887 Financial liabilities 4,891 4,891 4,891 Trade payables 2,894 2,894 2,894 Other payables 26,502 26,502 Provisions for other liabilities and charges 600 600 Staff leaving indemnity 486 486 Total 7,785 7,785 357,475 365,260 119

1.2 Collateral Financial assets charged as security for liabilities and collateral accepted as security for assets Financial assets charged as security for liabilities comprise the pledge of the shares of Prima Srl and Frullo Energia Ambiente Srl that are owned by Actelios SpA and have a nominal value of Euro 4,615 thousand and Euro 8,398 thousand. The principal terms of the pledge contracts do not grant the possibility to sell the pledged shares as these companies do not have an active market. The pledge on the shares of Frullo Energia Ambiente Srl was cancelled on 16 January 2008. 2. Income statement and total equity 2.1 Income, expenses, profits or losses No profits or losses on financial assets and liabilities were recognised in 2007 and 2006. The table below illustrates total interest income/expense (calculated using the effective interest rate method) and the fee income/expense generated by financial assets/liabilities not at fair value through profit or loss and the fee income/expense arising from trust and other fiduciary activities in 2007 and 2006. 31.12.2007 (Euro thousands) Interest income (expense) Fee income (expense) Total FA not at fair value through profit or loss 11,715 11,715 FL not at fair value through profit or loss (105) (11) (116) FL at fair value through profit or loss Trust or other fiduciary activities Other (not within scope of IFRS7) (7) (7) Total 11,603 (11) 11,592 31.12.2006 (Euro thousands) Interest income (expense) Fee income (expense) Total FA not at fair value through profit or loss 7,918 7,918 FL not at fair value through profit or loss (240) (18) (258) FL at fair value through profit or loss Trust or other fiduciary activities Other (not within scope of IFRS7) Total 7,678 (18) 7,660 3. Further additional disclosures 3.1 Accounting policies The accounting policies adopted for the recognition and measurement of financial assets and liabilities are presented in the notes to the consolidated financial statements in paragraph 8.5 Accounting policies. 3.2 Fair value The tables below disclose the fair value of the financial assets/liabilities and the related carrying amount at 31 December 2007 and 31 December 2006. The carrying amount of the financial assets/liabilities valued at cost and amortised cost (see point 1.1) is a reasonable estimate of fair value, as these relate to either short-term or variable rate financial assets and liabilities. 120

31.12.2007 (Euro thousands) Carrying amount Fair value Financial assets Securities and investments 54 54 Financial receivables 85,721 85,721 Trade receivables 6,970 6,970 Other receivables 17,503 17,503 Cash and cash equivalents 158,800 158,800 Total 269,048 269,048 Financial liabilities Financial payables 1,207 1,207 Trade payables 2,479 2,479 Other payables 23,875 23,875 Total 27,561 27,561 31.12.2006 (Euro thousands) Carrying amount Fair value Financial assets Securities and investments 54 54 Financial receivables 68,834 68,834 Trade receivables 5,601 5,601 Cash and cash equivalents 182,006 182,006 Total 256,495 256,495 Financial liabilities Financial payables 4,891 4,891 Trade payables 2,894 2,894 Total 7,785 7,785 Analysis of financial receivables due from third parties at 31 December 2007 and 31 December 2006 by instrument and conditions. 31.12.2007 Interest rate Fair Carrying Current Non-current (Euro thousands) (%) value amount portion portion Loans due from subsidiaries (Prima Srl) Euribor + spread 6,335 6,335 6,335 Loans due from associates (Palermo Energia Ambiente ScpA, Frullo Energia Ambiente Srl) Euribor+ spread 10,868 10,868 10,868 Group correspondence accounts Euribor + spread 68,518 68,518 68,518 Total financial receivables 85,721 85,721 79,386 6,335 31.12.2006 Interest rate Fair Carrying Current Non-current (Euro thousands) (%) value amount portion portion Loans due from subsidiaries (Prima Srl) Euribor + spread 6,335 6,335 6,335 Loans due from associates (Palermo Energia Ambiente ScpA, Frullo Energia Ambiente Srl) Euribor+ spread 9,442 9,442 5,326 4,116 Group correspondence accounts Euribor + spread 53,056 53,056 53,056 Total financial receivables 68,833 68,833 58,382 10,451 4. Risks arising from financial instruments 4. 1 Credit risk Credit risk is not considered significant as the majority of the exposure consists of cash and cash equivalents. Moreover, financial and trade receivables are mainly due from other group companies. The credit risk exposure of Actelios is very limited. 121

The maximum credit risk exposure at 31 December 2007 amounted to Euro 268,994 thousand and consisted of the following: (Euro thousands) 31.12.2007 Financial receivables 85,721 Trade receivables 6,970 Other receivables 17,503 Cash and cash equivalents 158,800 Total 268,994 The maximum credit risk exposure at 31 December 2006 amounted to Euro 256,441 thousand and consisted of the following: (Euro thousands) 31.12.2006 Financial receivables 68,834 Trade receivables 5,601 Cash and cash equivalents 182,006 Total 256,441 4.2 Liquidity risk The liquidity risk of Actelios is not considered to be significant in consideration of the fact that the financial liabilities at 31 December 2006 and 31 December 2007 amounted to Euro 4,891 thousand and Euro 1,207 thousand respectively. These compare with total liabilities amounting to Euro 365,260 thousand and Euro 368,012 thousand respectively. Consequently, a detailed analysed of financial liabilities, for example by maturity, is not considered relevant. 4.3 Market risk 4.3.1 Interest rate risk Given the low level of borrowings, interest rate risk is not considered significant and relates almost entirely to financial assets. Moreover, Actelios does not enter into interest rate derivatives. Consequently, a sensitivity analysis was not carried out while the total financial assets and liabilities exposed to changes in interest rates are detailed below: (Euro thousands) 31.12.2007 Financial assets Financial receivables 85,721 Cash and cash equivalents 158,800 Total 244,521 Financial liabilities Financial liabilities (1,207) Total (1,207) Net exposure 243,314 (Euro thousands) 31.12.2006 Financial assets Financial receivables 68,834 Cash and cash equivalents 182,006 Total 250,840 Financial liabilities Financial liabilities (4,891) Total (4,891) Net exposure 245,949 122

9 Supplementary information to the financial statements of Actelios SpA

9.1 List of direct and indirect investments in subsidiaries and associates Share- Profit Direct Indirect Registered Currency Share capital holders' (loss) share- share- Book office equity holding holding value (Euro (Euro thousands) thousands) (%) (%) (Euro) Directly controlled subsidiaries Ambiente 2000 Srl Milan Euro 103,000 1,281 95 60.000 863,874 Ecosesto SpA Milan Euro 5,120,000 5,867 (2,389) 100.000 6,788,473 Elettroambiente SpA Sesto S. Giovanni (Mi) Euro 245,350 875 (464) 100.000 50,070,000 Prima Srl Sesto S. Giovanni (Mi) Euro 5,430,000 24,695 12,036 85.000 28,494,159 Immobiliare Samanta Srl Milano Euro 10,200 10 28 0.000 15,179 86,231,685 Indirectly controlled subsidiaries Platani Energia Ambiente ScpA Palermo Euro 120,000 1,400 (332) 80.900 Tifeo Energia Ambiente ScpA Palermo Euro 120,000 1,333 (479) 84.900 0 Associates Ambiente 3000 Srl Bologna Euro 100,000 281 174 49.000 73,500 Frullo Energia Ambiente Srl Bologna Euro 17,139,100 30,749 12,147 49.000 8,398,178 Gsa Scarl (in liquidation) Milan Euro 10,000 11 (2) 50.000 Palermo Energia Ambiente ScpA Palermo Euro 120,000 1,461 (619) 23.272 1,349,730 Powercrop Srl Sesto S.Giovanni (Mi) Euro 100,000 50.000 850,000 Termini Imerese Energia Ambiente Srl Termini Imerese (Pa) Euro 100,000 63 (8) 24.000 33,600 10,705,008 125

9.2 Summary of significant financial data of subsidiaries and associates Balance sheet Non- Current Shareholders' Non- Current Currency current assets equity current liabilities (Euro thousands) assets liabilities Directly controlled subsidiaries Ambiente 2000 Srl Euro 476 7,415 2,209 1,403 4,279 Ecosesto SpA Euro 21,145 8,042 7,051 11,456 10,680 Elettroambiente SpA Euro 4,639 66,056 723 55 69,917 Prima Srl Euro 79,325 30,616 22,894 47,523 39,524 Immobiliare Samanta Srl Euro 12 10 2 Indirectly controlled subsidiaries Platani Energia Ambiente ScpA Euro 29,719 2,164 1,333 30,550 Tifeo Energia Ambiente ScpA Euro 44,727 3,956 929 47,754 Associates Ambiente 3000 Srl Euro 410 8,016 649 1,084 6,693 Frullo Energia Ambiente Srl Euro 128,534 42,697 31,468 88,366 51,397 Palermo Energia Ambiente ScpA Euro 36,322 4,289 781 39,830 Powercrop Srl Euro 827 1,201 629 1,399 Termini Imerese Energia Ambiente Srl Euro 70 38 97 11 Income statement Cost of Gross Operating Profit Profit for Currency Revenue sales profit profit before the year (Euro thousands) tax Directly controlled subsidiaries Ambiente 2000 Srl Euro 11,109 (10,419) 690 1,758 1,765 929 Ecosesto SpA Euro 26,094 (21,087) 5,007 3,935 3,292 1,183 Elettroambiente SpA Euro 2,190 (1,098) 1,092 1,464 (57) (152) Prima Srl Euro 40,445 (24,264) 16,181 14,971 12,147 7,199 Immobiliare Samanta Srl Euro (1) 30 28 Indirectly controlled subsidiaries Platani Energia Ambiente ScpA Euro (402) (402) (287) Tifeo Energia Ambiente ScpA Euro (518) (520) (405) Associates Ambiente 3000 Srl Euro 12,755 (11,874) 881 673 756 368 Frullo Energia Ambiente Srl Euro 48,144 (24,281) 23,863 24,019 19,920 12,218 Palermo Energia Ambiente ScpA Euro (752) (765) (695) Powercrop Srl Euro 721 (1,036) (315) (1,486) (1,470) (1,071) Termini Imerese Energia Ambiente Srl Euro (6) (6) (6) 126

10 Certifications on the consolidated financial statements and parent company financial statements in accordance with article 81- ter of Consob regulation 11971 of 14 May 1999 and subsequent amendments

11 Report of the board of statutory auditors to the annual general meeting of shareholders

Report of the board of statutory auditors to the annual general meeting of shareholders of Actelios S.p.A. on 29 April 2008 in accordance with article 153 of Legislative Decree no. 58/1998 During the financial year ended 31 December 2007, we carried out the controls required by law, in accordance with the principles recommended by the Consigli Nazionali dei Dottori Commercialisti e dei Ragioneri (representative bodies of the Italian accounting professions) to which we refer in this report, which was prepared also taking into consideration the guidelines issued by Consob (the Italian stock exchange commission) in communication 1025564 of 6 April 2001 and ensuing amendments. Having regard to the manner in which we performed our institutional activities we confirm that: - we attended all of the meetings of the shareholders, the board of directors, the internal control committee and the remuneration committee that took place during the year and we obtained from the directors timely and adequate information regarding the activities performed, in accordance with regulatory and statutory requirements; - we obtained suitable knowledge in order to be able to perform our required duties regarding verification of the adequacy of the company's organisation structure and compliance with principles of correct administrative practice, through direct enquiries, the collation of information from officers responsible for the respective functions and exchange of information and data with the independent auditors and with the boards of statutory auditors of the subsidiary companies; - we controlled, collectively and on an individual basis, the internal control and accounting, administrative systems, with the objective of verifying their adequacy to support operational requirements, as well as their reliability in presenting transactions, by examining company documentation, obtaining information from the heads of the relevant departments, and analysing the results of the work carried out by the independent auditors; - we verified compliance with current legislation regarding the preparation, presentation and layout of both the company and consolidated financial statements, taking into consideration the fact that the company has prepared the separate company and the consolidated financial statements in conformance with International Financial Reporting Standards; - we verified that the directors report for 2007 conforms to legislation and is in agreement with the resolutions approved by the board of directors and with transactions presented in the company s and the consolidated financial statements. No observations were required to be made by the board of statutory auditors in relation to the half-year report of the company and the group. The quarterly and half-yearly reports were prepared and published in accordance with current legislation and regulations. In the course of our verifications, carried out in the manner described above, no significant matters emerged that required notification to the regulatory bodies. On the basis of our findings on the tests carried out and from information obtained, the decisions taken by the directors appear to comply with legislation and the company s articles of association, principles of correct administrative practice, are appropriate to and compatible with the company s size and net assets, and meet company requirements. The board of statutory auditors notes that in accordance with article 3.C.1 of the Code of Self Discipline and the evaluation criteria therein, on 17 March 2008 the board of directors successfully assessed the independence of its non-executive members; the board of statutory auditors concurs with this assessment. * * * The specific disclosures to be included in this report are set out below in the order prescribed in the above mentioned Consob communication of 6 April 2001. 1. We have obtained adequate information in respect of significant economic, financial and equity transactions undertaken by the company and its subsidiaries. In particular, the following transactions should be noted: - with regard to the projects in Sicily, in relation to which construction work on the WTE plants was suspended in February 2007 (due to suspension of the authorisations granted under Presidential Decree 203/88), it is noted that on 4 April 2007 the Lazio Regional Administrative Court upheld the appeals filed by the project companies and suspended the Intergovernmental Decree that had resulted in suspension of the above-mentioned authorisations while awaiting finalisation of the issue procedures by the Integrated Environmental Authorisation (Autorizzazione Integrata Ambientale). On 13 July 2007 the State Council rejected the appeals filed by the Ministers of the Environment, Health and Economic Development that opposed the rulings of the Lazio Regional Adminstrative Court. The salient points of the appeal judge s ruling, which resulted in finalisation of the issues regarding the suspension of the emis- 133

sions authorisations, are summarised in the directors report on the annual report for the year ended 31 December 2007. Following resolution of the above issues, the Lead Arranger banks in the project financing and the other financial institutions that had agreed to participate in the syndication, confirmed their support for the projects in Sicily and renewed interest in financing them. Furthermore, the mandate of the Lead Arranger banks was extended to the end of 2008. With regard to project financing, it is noted that in 2007 it was not possible to sign the financing contracts for these projects as a result of the administrative and political problems that arose concerning the continued application of the CIP6/92 tariffs in respect of activities relating to the generation of electrical energy from waste that are not yet operative. The project companies obtained written assurance from the Sicily Region confirming its intention to uphold the commitments regarding application of the CIP6/92 tariffs. It should also be noted that breach proceedings were brought forward by the European Commission (EC) under art. 226 of the EC Treaty regarding the violation of EC Directive 92/50 CE relating to public tenders; the Court of Justice in its sentence dated 18 July 2007 on case C-382/05 defined the conventions with the Sicily region as service tenders, contested omission of the notification requirements of articles 11, 15 and 17 of EC Directive 92/50, and condemned the Italian Republic for not complying with the obligations of the above directive. On 21 March the Regional Department for Waste and Water Protection in Sicily sent a memo to the project companies in which it invited them to proceed with construction work, confirming its intention however, given the above breach proceedings, to put the above sentence into effect as agreed with the EC, through a new call for services tenders while at the same time guaranteeing continuation of the activities under way and the interests of the project companies to ensure that they are not subject to unfair prejudice; - with regard to the associate Frullo Energia Ambiente S.r.l., which had entered into arbitration proceedings in order to resolve the disputes with TM.E S.p.A. Termomeccanica Ecologica relating to non-fulfilment of completion of the WTE plant in Granarolo dell Emilia, it is noted that in October 2007 the above companies signed a settlement details of which are provided in the directors report on the annual report for the year ended 31 December 2007; - in December 2007 the company acquired the entire share capital of Immobiliare Samanta S.r.l. for Euro 15,179 thousand. As noted in the minutes of the board of directors meeting that took place on 14 February 2008, following amendment of the company s name and purpose it will become the holding of the photovoltaic energy business; - with regard to Powercrop S.r.l., a joint venture set-up in December 2006 between Actelios S.p.A. and Seci Impianti S.r.l. of the Maccaferri Group, it is noted that the development activities relating to the biomass from dedicated culture projects continued, while the production reconversion agreements and the industrial agreements with the Agricultural Associations were finalised; - capital expenditure during the year amounted to Euro 29,870 thousand and represents the group s investment in the projects in Sicily, the two photovoltaic plants in Rende and Trezzo sull Adda and improvements to operating plants. Details of all of the above transactions are included in the directors report and the notes to the consolidated financial statements and the notes to the financial statements of Actelios S.p.A.. The information obtained allowed us to confirm that the above-mentioned transactions comply with legislation and the company s articles of association and we consider that they do not possess the characteristics that would result in the requirement on our part to provide specific comment on these transactions. 2. We have obtained information in respect of uncharacteristic and/or unusual transactions and on intra-group transactions and those carried out with related parties, in relation to which we provide the following observations. 2.1 With regard to uncharacteristic and/or unusual transactions carried out with related parties during the year we note the following. In June and July 2007 Actelios S.p.A. together with Italgest Servizi S.r.l. of the Italgest Energia S.p.A. Group, a shareholder of Actelios S.p.A., passed a third amendment to the contracts regarding the sale to Italgest Servizi of the CIP6/92 rights on 4 MW and the 40% shareholding in Energie Tecnologie Ambiente S.p.A., which related to delaying the payment of the agreed amounts (Euro 2,400 thousand and Euro 6,943 thousand respectively) from 30 June 2007 to the earliest of the following dates: a) 31 December 2007, b) signing of the project financing contracts by Tifeo Energia Ambiente S.c.p.A. and Platani Energia Ambiente S.c.p.A.. The amendment in question also provided for interest to accrue in the delay period at the rate of six-months Euribor plus a 1.75% spread. This payment was not made at 31 December 2007 and on 14 February 2008 the board of directors on request by Italgest Servizi S.r.l. put back the payment date to 30 April 2008. 134

2.2 The ordinary financial and trading transactions carried out intra-group or with related parties, are disclosed in the directors' report and in the notes to the company and the consolidated financial statements. In particular, these related to a number of specific transactions including treasury management, the provision of loans and guarantees, the provision of professional and other services, which are all made at arms length and are regulated by contractual agreements. 2.3 On 16 June 2007 Falck S.p.A. submitted a request to the Italian Inland Revenue relating to its Consolidated Taxation Regime ; it requested application for the period 2007-2009 of the Consolidated Taxation Regime to the entire Falck group. Actelios S.p.A. and the Actelios group, which in 2006 and the two previous years had submitted a separate Consolidated Tax Return, have been included in the scope of the single Group Consolidated Taxation Regime. The conditions by which the company s that take part in the regime are based on the principle of economic neutrality. The information obtained allowed us to confirm that the above transactions took place in accordance with legislation and the company s articles of association and that they were undertaken in the interests of the company and the group. 3. On the whole, the information provided by the directors in their report in accordance with article 2428 of the Italian Civil Code, in respect of uncharacteristic and/or unusual transactions and in respect of ordinary transactions, as detailed at point 2 above, may be considered sufficient to provide all of the information requested. 4. The independent auditors PricewaterhouseCoopers SpA issued on today s date audit opinions, in accordance with article 156 of the Consolidated Finance Text (TUF), on the individual company financial statements and the consolidated financial statements for the year ended 31 December 2007. The audit opinions did not contain qualifications or any emphasis of matter and they confirm that the above financial statements comply with the provisions relating to the preparation of financial statements, that they have been properly presented and that they give a true and fair view of the state of affairs and the profit for the year of the parent company Actelios SpA and the consolidated financial statements of the Actelios group as at and for the year ended 31 December 2007. 5. No claims have been filed to date under article 2408 of the Italian Civil Code. 6. No petitions have been filed to date. 7. We received information from the relevant company management on additional engagements assigned to the independent auditors PricewaterhouseCoopers S.p.A. in 2007. For the purpose of completeness we note that in relation to the audit of the entire Actelios group, comprising the statutory financial statements, consolidated financial statements, half-year report and accounting records control, total fees of Euro 256,670.00 were paid to PricewaterhouseCoopers SpA, including the ISTAT (index linked) increase and may be analysed as follows: Fees (Euro) Engagement Actelios S.p.A. 121,178 Audit of financial statements, periodic controls of accounting records, audit of consolidated financial statements, review of IFRS adjustments, audit of half-year report on parent and subsidiaries and 310 resolution Ambiente 2000 S.r.l. 11,442 Audit of financial statements and periodic controls of accounting records Elettroambiente S.p.A. 10,940 Audit of financial statements and periodic controls of accounting records Platani Energia Ambiente S.c.p.A. 15,271 Audit of financial statements and periodic controls of accounting records Tifeo Energia Ambiente S.c.p.A. 15,271 Audit of financial statements and periodic controls of accounting records Ecosesto S.p.A. 18,547 Audit of financial statements and periodic controls of accounting records Prima S.r.l. 11,815 Audit of financial statements and periodic controls of accounting records and 310 resolution Ambiente 3000 S.r.l. 13,900 Audit of financial statements FEA Frullo Energia Ambiente S.r.l. 9,033 Audit of financial statements and half-year report PEA Palermo Energia Ambiente S.c.p.A. 15,273 Audit of financial statements and periodic controls of accounting records Powercrop Srl 14,000 Audit of financial statements and periodic controls of accounting records Total 256,670 135

With regard to the appointment as independent auditors for the three-year period 2005-2007, it is noted that the AGM of 27 April 2007, following the proposal put forward by the board of statutory auditors, extended the appointment of Price- WaterhouseCoopers S.p.A. up to approval of the annual report for the year ending 31 December 2010. 8. No engagements were assigned to third parties that have relations of a continuous nature with the independent auditors. 9. In the course of financial year 2007, the board of statutory auditors issued only one opinion, in accordance with article 2389, comma 3, of the Italian Civil Code, in relation to the emoluments assigned to one director vested with particular powers. 10. The control activities described above were carried out in 2007 during 6 meetings of the board of statutory auditors, by attending 7 meetings of the board of directors and through attendance, either by the chairman of the board of statutory auditors and/or another auditor, at the 5 internal control meetings. The remuneration committee did not meet in 2007. 11. We have no particular observations to make regarding compliance with principles of correct administrative practice, which appear to have been applied consistently. 12. The board of statutory auditors has constantly updated its knowledge and verified the effectiveness of the company s organisation structure through information gathered from each area and meetings with the internal control officer and the independent auditors. In this regard, the Organisation and Operations Manual in accordance with Legislative Decree 231/01 was amended further following resolution passed by the board of directors on 14 February 2008, in order to comply with the regulations introduced that extended application of legislation to the areas of safety and money laundering. The current organisation structure would appear to be appropriate to this size of group and also meets the operating requirements of the group. 13. The board of statutory auditors verified the internal control system adopted by the company and evaluated its effectiveness through meetings held with the internal control officer and management and by attending the meetings of the internal control committee and the supervisory board, reinstated in accordance with Legislative Decree 231/01. In particular, it was noted that the internal control officer reports directly to the internal control committee, to the board of statutory auditors and the directors responsible for this area and carries out his work based on a six-monthly plan, prepared independently by the officer himself or taking into consideration areas identified by the control bodies and the independent auditors. In the course of 2007 the internal control committee focused attention on: the review of the new Code of Self Discipline of companies listed on the STAR segment that Actelios S.p.A. had decided to adopt by updating the existing code; the review of the matters relating to the internal controls officer; the evaluation of the project at group level relating to the introduction of the new Global Information System (ERP); the activities of the Sicily Projects ; and related party transactions. 14. We have no particular observations to report with regard to the adequacy of the administrative-accounting system and of its reliability to present fairly company transactions, also taking into consideration the centralisation of the administrative function of the subsidiaries by the parent company. It is noted that, in order to comply with Law 262/05 (law on savings) relating to the Dirigente Preposto (Compliance Officer), the company commenced a project to bring it into line with the legal requirements regarding preparation of company accounting records, with the aim of guaranteeing that full reliance may be placed on the certification on the financial statements and financial announcements. The company also appointed a Dirigente Preposto (Compliance Officer) responsible for the preparation of the accounting records. Finally, the company has decided to change over to Hedge Accounting in order to record the fair value of interest rate swap transactions. 15. An adequate flow of information between the parent company and subsidiaries (also in relation to the communications covered by article 114.2 of Legislative Decree no. 58/1998) is ensured through specific instructions sent to the subsidiaries by parent company management. 16. No significant matters arose that require specific mention either during the periodic meetings between the statutory auditors and the independent auditors, held in accordance with article 150.2 of Legislative Decree no. 58/1998, or from our examination of the quarterly report issued by the external auditors. 136

17. We have verified that the directors report includes a separate section on corporate governance, prepared in accordance with the instructions provided by Emittenti Titoli and Assonime, the association of Italian joint stock companies. As noted above, the company passed further amendments to the Organisation and Operations Manual in order to comply with the new requirements introduced by Legislative Decree 231/01 that extended the scope of application of this legislation to safety and money laundering. As noted above and documented in the minutes of the board of directors meeting of 27 July 2007, the company has adopted the new Code of Self Discipline for Italian listed companies issued by the Corporate Governance Committee of The Italian Stock Exchange in March 2006. Finally, it should be noted that the company is still listed on the STAR segment of the Italian stock exchange, to which it was admitted on 20 September 2004, and it is not subjected to any managerial or coordination activities, as defined by articles 2497 and ensuing articles of the Italian Civil Code, carried out by the parent company Falck S.p.A.. 18. Our work was carried out during the 2007 financial year under normal circumstances and from our work no omissions, censurable actions or other irregularities emerged that require disclosure. The board of statutory auditors also notes that no matters arose from the analysis of the information received in relation to the activities carried out by the boards of statutory auditors of the subsidiaries and from the representations made by the independent auditors in relation to the reports issued in respect of these subsidiaries. 19. In conclusion to the work performed during the financial year, we do not have any observations to report under article 153.2 of Legislative Decree no. 58/1998 in relation to the financial statements, their approval and on matters we are required to cover. In addition, we have no observations to make regarding the proposal of the board of directors regarding the appropriation of the profit for the year and the amount of the dividend to be distributed. Finally, we note that the three year term of office has expired in relation to both the board of directors and the board of statutory auditors, consequently as required by law the AGM is asked to reappoint these bodies. Thank you for having entrusted us with this role. Milan, 11 April 2008 The board of statutory auditors Roberto Bracchetti Aldo Bisioli Nicola Notarnicola 137

12 Independent auditors reports