SOPAF – Enhancing capital value

Financial statements as at 31 December 2008 approved by the Board of Directors

Financial statements as at 31 December 2008 approved by the Board of Directors:

Net profit: EUR 35.2 million (EUR 20.1 million as at 31 December 2007)
Shareholder’s Equity: EUR 139.1 million (EUR 131 million as at 31 December 2007)
Net financial position: EUR 130 million (EUR 188 million as at 31 December 2007)
Consolidated net profit*: EUR 3.6 million (EUR 35.8 million as at 31 December 2007)
Group shareholders’ equity: EUR 146.3 million (EUR 174.9 million as at 31 December 2007)
Consolidated net financial position: EUR 146.9 million (EUR 151.6 million as at 31 December 2007)
Proposal approved for the distribution of a EUR 0.005 dividend per share, corresponding to approximately EUR 2.1 million in total

Milan, 30 March 2009 – At the meeting held today, the Sopaf S.p.A. Board of Directors approved the draft Sopaf S.p.A. financial statements, the consolidated financial statements as at 31 December 2008 and the annual Corporate Governance report.

Parent company results

The positive income components totalled EUR 60.9 million (EUR 60.6 million in 2007) and include EUR 33.7 million capital gains from the disposal of investments (EUR 54.9 million in the previous year).
The operating profit, which specifically takes into account EUR 18.3 million write-down of investments (EUR 13.4 million in 2007), was positive at EUR 27.4 million (EUR 29.9 million as at 31 December 2007).
Net financial income amounted to EUR 13.6 million (charges of EUR 9.1 million in the previous year).
Profit before tax was EUR 41 million compared with EUR 20.8 million in 2007.
The net profit for the year, which takes into account EUR 5.8 million income taxes (EUR 0.8 million in 2007), totalled EUR 35.2 million (EUR 20.1 million as at 31 December 2007).
Sopaf S.p.A. closed the year with shareholders’ equity of EUR 139.1 million (EUR 131 million as at 31 December 2007).

Proposed allocation of retained earnings

The Board of Directors resolved to propose that the Shareholders’ Meeting allocates a dividend of EUR 0.005 per share.

Consolidated results for 2008*

Revenues and other income for the year totalled EUR 29.6 million (EUR 6.2 million in 2007) and include management commissions generated by the product companies of approximately EUR 4.3 million.
The negative income components include costs of EUR 22.6 million (EUR 26.6 million in 2007).
The operating profit for the year, including provisions and amortisation/depreciation of EUR 2.4 million and EUR 1.4 million losses from disposal of non-current assets (in 2007 EUR 14.4 million gains and EUR 63.7 million specifically from disposal of the investment in Omniapartecipazioni /Immsi), was a positive EUR 3.2 million (EUR 28.9 million as at 31 December 2007).
The result before interest and tax, including EUR 10.2 million losses from the pro-quota results of investments carried by the equity method (EUR 10.2 million gains in the previous year), was negative by EUR 7.1 million, compared with a positive EUR 39.1 million in 2007.
Net financial income amounted to EUR 17.9 million (charges of EUR 3.4 million in the previous year).
Profit before tax was EUR 10.8 million compared with EUR 35.7 million in 2007.
Group net profit for the year, which takes into account EUR 6 million income taxes (EUR 0.1 million in 2007), totalled EUR 3.6 million (EUR 35.8 million as at 31 December 2007). The minority interest losses amounted to EUR 0.3 million (EUR 0.2 million in 2007).
Total shareholders’ equity as at 31 December 2008 was EUR 150.9 million (EUR 182.0 million as at 31 December 2007), of which EUR 4.5 million minority interests (EUR 7.2 million as at the end of the previous year). Group shareholders’ equity totalled EUR 146.3 million (EUR 174.9 million as at 31 December 2007).
The total Group assets as at 31 December 2008 amounted to EUR 371.4 million, recording a decrease on the EUR 396.6 million as at 31 December 2007, due to disposals and to fair value adjustments on a number of investments.
The net financial position of the Group as at 31 December 2008 reduced to EUR 146.9 million compared to the EUR 151.6 million as at the end of the previous year. This decrease is attributable to the combined effect of an improvement in the net financial position of the parent company and an increase in Fondo Tergeste borrowings by approximately EUR 19 million for a property purchase.

Main events of the year

On 11 January 2008, Sopaf S.p.A. and Aviva Italia Holding S.p.A. completed the acquisition of 100% of Aviva Previdenza S.p.A. share capital from Finoa S.r.l.. Sopaf S.p.A. acquired 45% for a total of EUR 15.4 million.
On 27 February 2008, the establishment of Sopaf & Partners RE-Investment S.r.l. was finalised, in which Sopaf S.p.A. has a 40% investment. The company will perform investment and disinvestment activities in the real estate sector.
On 12 March 2008 Sopaf completed the acquisition of 15.94% of Sun System S.p.A. share capital for EUR 2.5 million, by subscription to a reserved share capital increase.
On 27 March 2008 the boards of directors of Sopaf Capital Management SGR SpA (SCM) and Private Wealth Management SGR SpA (PWM) resolved on the merger by incorporation of PWM into SCM, which will allow the Group to streamline its speculative equity fund business under a single product company.
On 31 March 2008, Sopaf SpA sold units of a fund (acquired in October 2007) to third party investors, achieving capital gains of EUR 2 million.
In March and July 2008, Sopaf S.p.A. fully subscribed to its own USD 10 million commitment in the private equity fund, Infrastructure and Growth Capital Fund, managed by Abraaj Capital.
On 29 April 2008 the BNI shareholders’ meeting resolved to reduce company share capital by EUR 26 million to EUR 16 million as part cover of the residual 2007 losses, at the same time implementing a share capital increase against payment of EUR 20 million (EUR 6 million of which being the share premium), subscribed by the current shareholders on 21 August 2008. The Sopaf Group outlay for the share capital increase was EUR 8.9 million.
On 13 June 2008, the buy back programme, resolved by the Sopaf SpA shareholders' meeting of 27 November 2007, was completed. As at 30 June 2008 the Group's treasury shares totalled 5,200,000 for an overall investment of Euro 2.36 million.
Again on 13 June 2008, Sopaf announced the exercise of its right of withdrawal from Management&Capitali S.p.A. in which it held 19,397,468 shares. On 1 October 2008, Management&Capitali reimbursed shareholders that had exercised this right. As a result the Group recorded a loss of EUR 3 million.
On 30 June 2008, Sopaf finalised the disposal of lease agreements on the property at Foro Bonaparte 24/Via Mercato 5 in Milan to FASC Immobiliare S.r.l. for a total of EUR 23.2 million. This transaction generated capital gains of approximately EUR 16 million.
During the year, Sopaf subscribed to a further share capital increase of Sfera Srl for EUR 0.4 million, the purpose of the increase being to fund the construction of a photovoltaic system in Apulia, due to enter into production at the end of the financial year.
On 31 July 2008, as part of Sopaf’s rationalisation strategy for industrial investments launched in 2007, the Sopaf Group sold four industrial investments (28.9% in AFT S.p.A. – half the Group's direct and indirect holding, 28.4% in Green Bit S.p.A., 26.5% in Sila Holding Industriale S.p.A. and 24.7% in Res Finco AG) to a newly-established foreign fund, the "Vintage Fund". The initial fund investors are Paul Capital Partners IX, L.P. (a US private equity fund) and Sopaf S.p.A. with a 5% investment in the Fund for a total of approximately EUR 2.5 million. On 6 August the Vintage Fund conferred management delegation upon Sopaf Capital Management SGR, and management commissions relating to this delegation will amount to EUR 1.5 million for 2008.
During July and August 2008, Sopaf S.p.A. subscribed to new units in a real estate fund for a total EUR 7.5 million.
On 6 August 2008 the board of directors of China Opportunity SA Sicar registered its share capital increase, subscribed and paid-up for a total of EUR 14.8 million.
On 22 August and 15 September 2008, Sopaf informed Delta SpA of the exercise of its right of withdrawal from Delta SpA by 16,967,900 shares, pursuant to art. 2437 subsection 1 paragraph a) and art. 2497-quater subsection 1 paragraph c) of the Italian Civil Code, following approval by the company’s extraordinary shareholders’ meeting on 6 August 2008 to adopt a new text for the articles of association, modifying the corporate purpose to allow the company to perform activities of a banking group parent. During the extraordinary shareholders’ meeting of 6 August 2008, the Delta SpA directors denied recognition of the right of withdrawal for dissenting shareholders, claiming that modification of the corporate purpose was of insufficient relevance to give rise to such right.
On 30 September 2008 Sopaf S.p.A. finalised an asset swap transaction with a leading foreign bank as counterparty which for Sopaf involved the recognition of revenues linked to the allocation of dividends/extraordinary income to a real estate fund, in exchange for a fixed rate payment.
In September 2008, Sopaf S.p.A. bought and sold 209 units of said fund, realising capital gains of EUR 881,000.
On 8 October 2008, Sopaf S.p.A. finalised a contract for the acquisition of 51% of Polis Fondi SGR p.A. share capital from a number of cooperative banks for a total of EUR 9.5 million. The acquisition was subject to obtaining the necessary approval from the Supervisory Authorities regarding (i) acquisition of the investment and (ii) regulatory amendments to Fondo Polis concerning the introduction of a Consulting Committee.
On 16 October 2008 the Sopaf S.p.A. Board of Directors launched a new disposal plan with regard to certain Group assets considered to be no longer strategic.
On 30 December 2008, jointly with other BNI members, Sopaf paid a further EUR 6.8 million to the bank as a payment on account for the future share capital increase.
On 31 December 2008, subscription was completed to the share capital increase of Essere S.p.A. of up to EUR 2 million. Following subscription to this increase, Sopaf held 92% of Essere share capital.
During December 2008, Sopaf signed deferred delivery contracts with a number of institutional investors with regard to units of funds. The value of these contracts, based on IAS accounting procedures, led to the recognition of a fair value of approximately EUR 27 million to the income statement.

Significant events after 31 December 2008

On 23 February 2009, Sopaf finalised an agreement with a leading institutional investor for the disposal of fund units for a total of EUR 30 million.
On 26 February 2009, Sopaf and the other shareholders, which on 8 October 2008 had signed an acquisition agreement for 51% of Polis Fondi SGR p.A. share capital for a total of EUR 9.5 million, confirmed extension of the agreement to 30 June 2009 so that, should the suspensive condition not be met (approval by the Fondo Polis shareholders' meeting of certain regulatory amendments to the fund following the introduction of a consulting committee) the vendors, in a joint communication, may unilaterally waive the above-mentioned suspensive condition.
On 9 March 2009, Sopaf received a formal offer from a third party investor to acquire the investment in Life Science Capital S.p.A. for a total of EUR 7.1 million, which was accepted by Sopaf on 13 March 2009.
On 17 March 2009, as called by the Board of Directors of Polis Fondi SGR, the Polis Extraordinary Shareholders' Meeting failed to reach the required quorum for approval of the regulatory amendments proposed by the SGR, and therefore Sopaf is currently waiting for the vendors, as sanctioned in the aforementioned extension agreed on 26 February, to jointly announce their waiver of the suspensive condition to the disposal agreement for 51% of Polis SGR.

Business outlook

The critical economic situation makes any accurate forecast difficult with regard to the outlook for 2009.
It can be reasonably expected that we will again see a strong level of volatility and instability in the financial markets, situations that fuel further uncertainty in terms of the time needed for a definite recovery of the leading global economies.

In such circumstances, the Sopaf Group will focus:

1. on all initiatives that allow implementation of the new industrial plan of Banca Network Investimenti, given its expected impact on the company balance sheet assets.

2. on initiatives regarding the valuation of Sopaf assets (increased monitoring of strategic investments) and investment transactions that may be implemented as market opportunities arise;

3. on the plan to gradually reduce non-strategic assets.

Corporate Governance Report

The Sopaf Board of Directors approved the Corporate Governance report, which will be published along with the financial statements.

Calling of the Shareholders’ Meeting

The previously published corporate events calendar has changed in that the Ordinary Shareholders’ Meeting is now due to be held on first call at the registered office, Foro Buonaparte 24, Milan, on 29 April 2009 at 11:00 hours, and in second call at Residenza Liberty, Corso Vercelli 57, Milan on 30 April 2009 at 17:30 hours. In addition to approval of the financial statements as at 31 December 2008, the agenda of the Ordinary Shareholders’ Meeting includes the appointment of the Board of Statutory Auditors and Chairman of the Board of Statutory Auditors, and related fees.

* Compared to the reference period the scope of consolidation has changed in terms of both investment portfolio and the different consolidation criteria for certain associated companies.

The executive responsible for the preparation of corporate accounting documents (Alberto Ciaperoni) hereby declares, pursuant to art. 154-bis subsection 2 of the Consolidated Law on Finance, that the accounting disclosures made in this press release correspond with the entries in accounting documents, books and records.

***

For further information

Alberto Ciaperoni
Sopaf S.p.A.
Tel: +39 02 72142424
e-mail: investor.relations@sopafgroup.it

Attached are the consolidated and Parent Company summary income statement, balance sheet and cash flow statements as at 31 December 2008. The figures included in the summary statements have not yet been certified by the independent auditors or verified by the Board of Statutory Auditors.