CIR Compagnie Industriali Riunite : INTERIM FINANCIAL REPORT AS OF 30 SEPTEMBER 2018

INTERIM FINANCIAL REPORT

AS OF 30 SEPTEMBER 2018

COMPAGNIE INDUSTRIALI RIUNITE

COMPAGNIE INDUSTRIALI RIUNITE

Limited‐liability corporation ‐ Share capital € 397,146,183.50 ‐ Registered Office: Via Ciovassino, 1 - 20121 Milan ‐www.cirgroup.it

R.E.A. n. 1950112 - Milan Company Register / Fiscal Code / VAT no. 00519120018

Company subject to management and coordination by COFIDE - Gruppo De Benedetti S.p.A.

Office in Rome: Via del Tritone, 169 - 00187 Rome

CONTENTS

REPORT ON OPERATIONS

1.

KEY FIGURES................................................................................................................................ 03

• 2. PERFORMANCE OF THE GROUP ..................................................................................... 02

• 3. PERFORMANCE OF THE BUSINESS SEGMENTS ................................................................ 03

• 4. NON‐CORE INVESTMENTS ............................................................................................... 16

• 5. SIGNIFICANT EVENTS AND OUTLOOK .............................................................................. 17

• 6. OTHER INFORMATION ...................................................................................................... 17

CONSOLIDATED FINANCIAL STATEMENTS AT 30 SEPTEMBER 2018

• 1. STATEMENT OF FINANCIAL POSITION .............................................................................. 19

• 2. INCOME STATEMENT ....................................................................................................... 20

• 3. NET FINANCIAL INDEBTEDENESS ..................................................................................... 21

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

• 1. INTRODUCTION ................................................................................................................ 22

• 2. BASIS OF CONSOLIDATION ............................................................................................... 22

• 3. ACCOUNTING POLICIES .................................................................................................... 22

• 4. SHARE CAPITAL ................................................................................................................ 25

DECLARATION PURSUANT TO ART. 154 BIS, PARAGRAPH 2,

OF ITALIAN LEGISLATIVE DECREE NO. 58/1998.......................................................................... 27

This document is available on the website:http://www.cirgroup.it

REPORT ON OPERATIONS

1. Key figures

In the first half of 2018 the CIR group recordedrevenueof € 2,092.6 million, an increase of 3.2% on the same period of 2017 (€ 2,027.8 million). The KOS group's revenue increased by 11.9% and that of the GEDI group by 10.4%, thanks to integration of the ITEDI group, whereas the Sogefi group's revenue declined by 1.8% because of foreign exchange differences (at constant exchange rates, revenue rose by 3.3%).

Gross operating profitamounted to € 246.0 million, in line with the first nine months of last year (€ 247.0 million).

Operating profit (loss)came in at € 118.8 million, compared to € 121.6 million in the corresponding period of 2017.

Theconsolidated profit for the periodattributable to the owners of the parent amounted to € 34.0 million, compared to a loss of € 26.0 million in the first nine months of the previous year, due to the significant extraordinary tax charge incurred by GEDI.

The contribution made to CIR's profit by the industrial subsidiaries came to € 31.5 million, in line with € 32.0 million in the first nine months of 2017, prior to the above tax charge.

Sogefi reported a gross operating profit of € 153.1 million, down on the first nine months of 2017 (€ 161.9 million), due to the negative impact of exchange rates and an increase in steel prices, which affected the gross operating profit of theSuspensionsbusiness unit. The profit was € 23.1 million versus € 27.9 million for the corresponding period of the previous year.

Even though GEDI's main sector of activity continues to be affected by critical developments, it managed to increase its revenue by 10.4% compared to the same period last year, thanks to the integration with ITEDI ‐ as mentioned previously ‐ with a profit of € 7.8 million (€ 10.6 million prior to the extraordinary tax charge versus a loss of € 143.9 million in September 2017).

Lastly, KOS achieved a 11.9% increase in revenue, thanks to growth in all of its activities and the fact that all of the acquisitions made during 2017 contributed for the entire period. The gross operating profit increased by 18.9% to € 74.9 million and profit amounted to € 24.8 million (€ 19.0 million in the first nine months of 2017).

CIR (including its non‐industrial subsidiaries) contributed € 2.5 million of profit compared to € 12 million in the first nine months of 2017, due to lower net financial income.

• Report on operations

At 30 September 2018,net financial indebtednesswas € 354.4 million, compared to € 272.5 million at 31 December 2017 and € 131.9 million at 30 September 2017.

Total net financial indebtedness of the industrial subsidiaries at 30 September 2018 was € 674.7 million, up compared to the figure at 30 September 2017 (€ 459.4 million), because of GEDI's extraordinary tax charge (€ 175 million), acquisitions made by Sogefi (€ 16.7 million) and KOS (€ 36.7 million), as well as € 29.7 million of dividends paid by KOS.

The net financial position of the parent and its non‐industrial subsidiaries at 30 September 2018 was net cash of € 320.3 million, compared to € 343.0 million at 31 December 2017 and € 327.5 million at 30 September 2017. The difference in the first nine months of 2018 was caused mainly by the net outlay of € 24.8 million for the distribution of dividends and purchases of treasury shares for € 10.1 million, against a net cash inflow from operations of € 12.2 million.

Equity attributable to the owners of the parentat 30 September 2018 amounted to € 953.8 million compared to € 961.0 million at 31 December 2017, a net reduction of € 7.2 million. The increase is due to the profit for the year, while the decrease is due to the distribution of dividends and the purchase of treasury shares.

• Report on operations