Toto SpA - Financial Statements...

( Translation from the Italian original which remai ns the definitive version )

Toto Spa Costruzioni Generali

2014 Financial Statements

TOTO S.p.A. COSTRUZIONI GENERALI

Minutes of the ordinary shareholders' meeting Page 1

Company Registration 02208250692

Rea (Economic Administrative Index)no. 160647


Joint-stock company with sole shareholder managed and coordinated by TOTO HOLDING S.P.A.

Registered office in VIALE ABRUZZO 410 - 66100 CHIETI (CH) Share capital € 50,000,000.00 fully paid up

Minutes of the ordinary shareholders' meeting

The ordinary shareholders' meeting of TOTO S.p.A. COSTRUZIONI GENERALI was held on 28 April 2015 at 5.35 p.m. at the offices of the company in VIALE ABRUZZO 410, CHIETI to discuss and resolve on the following

agenda

1. Financial statements at 31 December 2014 and Directors' Report thereon: resolutions and related

decisions. Report of the Board of Statutory Auditors and report of the independent auditors. 2. Appointment of the Board of Directors and its Chairman for the three-year period 2015 - 2017 and

calculation of the related fees. 3. Appointment of the Board of Statutory Auditors and its Chairman for the three-year period 2015 - 2017

and calculation of the related fees. 4. AOB The following people were physically present in the place and at the time indicated: Alfonso Toto Chairman of the Board of Directors Valentina Toto Director Paolo Toto Director Giovanni Smargiassi Chairman of the Board of Statutory Auditors Vito Giuseppe Ramundo Standing Auditor Francesco Cancelli Standing Auditor as well as the Sole shareholder, representing the entire share capital directly or by proxy. Pursuant to the By-laws, Mr. Alfonso Toto, the Chairman of the Board of Directors takes the chair. Those present request Mr. Giovanni Cagna to act as secretary, renouncing the appointment of scrutineers. After having been appointed, the Chairman acknowledges that the shareholders' meeting has been duly called since the entire Board of Directors and the Sole shareholder are present, representing the entire share capital. The items of the agenda are addressed. The Chairman asks if anyone intended to declare themselves as not informed about the issues on the agenda. Having obtained the consent to discuss the issue, the Chairman declares the meeting as ready to resolve. The Chairman asks the participants to communicate the existence of situations that obstructed the right to vote and no one responded.



In reference to the first agenda item , the Chairman distributes the following copies to those present: • financial statements at 31 December 2014;

• Directors’ Report on the financial statements at 31 December 2014;

• Report of the Board of Statutory Auditors on the financial statements at 31 December 2014;

• Report of the independent auditors on the financial statements at 31 December 2014.

The Chairman of the Board of Statutory Auditors, Mr. Giovanni Smargiassi reads the Report of the Board of Statutory Auditors on the financial statements at 31 December 2014. Once discussion of the various issues begins, the Chairman provides the requested clarifications. Furthermore, the Chairman, in expressing the shareholders' request to obtain the allocation of dividendd, presents the possibility to distribute part of the net profit for the year and part of the existing income-related reserves. He notes that the proposed transaction does not impact the company's financial position. Finally, he notes that the company has achieved positive financial results with an improvement on 2013 and that the company recognised available reserves comprised of prior year profits. After asking again whether there are situations that may obstruct the right to vote, the Chairman puts the first agenda item up for vote. After in-depth discussion, the shareholders unanimously

resolve

- to acknowledge the Report of the Board of Statutory Auditors on the financial statements at 31 December 2014 and the report of the independent auditors on the financial statements at the same date (Annexes A – B);

- to approve the financial statements, which were not prepared in the XBRL format, and the Directors'

Report for 2014, which shows a net profit of € 5,015,786, (Annex C);

- to allocate 5% (€ 250,789) of the net profit for 2014 to the legal reserve; - to allocate € 15,364 of the net profit for 2014 to cover prior year losses; - to allocate € 249,633 of the net profit for 2014 to the extraordinary reserve; - to allocate € 4,500,000 of the net profit for 2014 and € 5,000,000 of the extraordinary reserve to the

distribution of dividends totalling € 9,500,000, granting the shareholders € 19 for each of the 500,000 shares, of a nominal amount of € 100 each;

- to establish that the above dividends be paid as of 1 June 2015; - to grant wide authority to the Chairman of the Board of Directors for all connected legal fulfilments.

Moving on to the second item on the agenda, the Chairman notes that the term of office of the current Board of Directors expires with the approval of the financial statements at 31 December 2014. Therefore, the Board of Directors must be renewed. Upon the proposal of the sole shareholder Toto Holding S.p.A., the shareholders unanimously

resolve



1. pursuant to article 20 of the By-laws, to set at three the number of directors;

2. to grant the Board of Directors, as a whole, an annual fixed remuneration, gross of withholding taxes, of € 500,000 (Euro five hundred thousand), in addition to an emolument including the end-of-office entitlement at the end of the three-year term of office, equal to € 100,000 (Euro one hundred), allowing the Board of Directors to allocate these amounts among its members with specific roles.

3. to appoint the new Board of Directors, made up of the following people, who will remain in force until

the approval of the financial statements at 31 December 2017:

- Alfonso TOTO, born in Chieti, on 8/01/77, tax code TTO LNS 77A08 C632G, domiciled for the purpose of his office at viale Abruzzo 410, Chieti;

- Paolo TOTO , born in Chieti on 15/01/65 Tax Code TTO PLA 65A15 C632T, domiciled for the purpose of his office at viale Abruzzo 410, Chieti;

- Valentina TOTO, born in Guardiagrele (CH) on 30/12/75, tax code TTO VNT 75T70 E243M, domiciled for the purpose of her office at viale Abruzzo 410.

Mr. Alfonso TOTO is also appointed Chairman of the Board of Directors. The above-mentioned Directors accept the position and represent that there are no reasons of ineligibility or disqualification pursuant to article 2382 of the Italian Civil Code. The shareholders request that in the next meeting of the Board of Directors, the Directors allocate the powers and the tasks within the Board in accordance with the allocation criteria for fees mentioned earlier. With respect to the third item on the agenda, since the term of office of the Board of Statutory Auditors has expired, the Chairman notes that a new Board of Statutory Auditors is to be renewed. After a short discussion, the Chairman puts the third agenda item up for vote. After a discussion, the shareholders unanimously

resolve

to appoint the following people as members of the Board of Statutory Auditors: - Giovanni SMARGIASSI, born in Vasto (CH) on 26/03/43, tax code SMR GNN 43C26 E372Y, domiciled for

the purpose of his office in Vasto (CH), via Genova Rulli 7, Chairman; - Vito Giuseppe RAMUNDO, born in Lavello (PZ) on 29/05/62, tax code RMN VGS 62E29 E493Q,

domiciled for the purpose of his office in Pescara, via Firenze 10, Standing Auditor; - Francesco CANCELLI, born in Chieti on 27/09/63, tax code CNC FNC 63P27 C632L, domiciled for the

purpose of his office in Chieti, via Baroncini 32, Standing Auditor ; - Lucio RAIMONDI, born in Chieti on 12/04/57, tax code RMN LCU 57D12 C632W, domiciled for the

purpose of his office in Chieti (CH), via Filippo Rega 4, Alternate Auditor - Giovanni D’AQUINO, born in Chieti on 17/07/61, tax code DQN GNN 61L17 C632P, domiciled for the

purpose of his office in Pescara, via Elettra 92 Alternate Auditor who will remain in force until the approval of the financial statements at 31 December 2017. All members of the Board of Statutory Auditors are registered with the relevant register. The annual fees for the entire Board of Statutory Auditors total € 93,000.00. There being no other business, the meeting is adjourned at 6.25 p.m., after reading and unanimously approving these minutes. The Secretary The Chairman Giovanni Cagna Alfonso Toto


Directors' report on the financial statements at 31 December 2014 Page 1

Company Registration 02208250692 REA (Economic Administrative Index)no. 160647


Joint-stock company with sole shareholder managed and coordinated by Toto Holding S.p.A.

Registered office in Viale Abruzzo 410 - 66100 Chieti Scalo (CH) Share capital € 50,000,000.00 fully paid-up

Directors' report on the financial statements at 31 December 2014



BOARD OF DIRECTORS In office until the approval of the 2014 financial statements Chairman and Managing Director: Alfonso Toto Director: Paolo Toto Director: Valentina Toto BOARD OF STATUTORY AUDITORS In office until the approval of the 2014 financial statements Chairman: Giovanni Smargiassi Statutory Auditor: Francesco Cancelli Statutory Auditor: Vito Ramundo Alternate Auditor: Lucio Raimondi Alternate Auditor: Giovanni D’Aquino INDEPENDENT AUDITORS KPMG S.p.A.



Dear Shareholders,

2014 ended positively. Net profit equals € 5,015,786 after amortisation and depreciation of € 7,183,385 and current and deferred taxes totalling € 5,485,480.

Operating conditions and business development

The company operates in the large infrastructure construction sector and is among the top 20 general building companies in Italy, and the leading one in Abruzzo. Its main business involves the construction of large transport infrastructure. The company's target market is the domestic one, for which TOTO carries out projects for the main public and private customers, such as ANAS, Autostrade per l’Italia, ITALFERR, Strada dei Parchi S.p.A. and other organisations.

Operating performance

General conditions In the first few months of the year, the economy in the Eurozone was characterised by more pronounced weakness than expected, due, in particular, to an unexpectedly modest growth in both investments and exports. Conversely, several internal and external factors supported a modest expansion in the last few months of 2014 which is likely to extend to 2015.

In Italy, with respect to public accounts, 2014 was once again an extremely negative year for all economic indicators. According to figures published by ISTAT (the Italian National Institute of Statistics), GDP fell by 0.4% to below 2000 levels, debt reached an all-time high of 132% of GDP and the tax burden has increased to 43.5%. The ratio between public deficit and GDP is the only positive element which remained below the 3% European threshold. However, EU forecasts for the Italian economy in 2015 confirm the signs of recovery noted in the last few months of the year: GDP is set to increase by approximately 0.6%, reaching 1.3% in 2016. Exports will rise faster than imports, generating an increase in the current account surplus to 2.6% of GDP in 2015. With respect to production, the industrial sector and constructions reflect different trends for 2014. Industrial volumes decreased for the third year in a row (-0.8%), though at a slower pace compared to the past two years; conversely, the index of construction production remained extremely variable and recorded a considerable decrease (-6.9%) year-on-year. Target sector For the seventh year in a row, 2014 was marked by a dramatic crisis which hit both the public and the private sector. Between 2008 and 2014 the construction sector lost 32% of investments. Specifically, the public sector fell by more than 48% and by 54% between 2005 and 2014. The impact on employment was extremely serious, with the loss of over half a million jobs. However, with respect to public works, in 2014, after years of considerable decreases, the number and amount of invitations to tender increased: +30% on 2013 and +18% on 2013, respectively.

Our company is facing the continuing economic crisis by carefully managing operations by controlling and containing costs and constantly monitoring margins.

Significant events of the year In June, following the conclusion of negotiations to obtain payment of the claims related to the Lots 6/7 Contract, acting on behalf of Autostrade per l’Italia, the customer entered into an agreement with the contractor whereby it committed to pay the Joint Venture, as it did, € 60 million as advance for litigation. By signing this agreement, the Joint Venture did not waive



any claim related to the litigation. Indeed, it was agreed that the Joint Venture will retain the right to continue all the legal procedures it will deem necessary for the recognition and payment of the greater amounts due. The same agreement also covers Variation appraisal no. 3 whereby the customer assigned the contractor additional works worth € 118 million. In October, the company reached an agreement with ANAS, settling the dispute over the arbitration award for the calculation of the claims pertaining to ANAS S.p.A. contract “Autostrada Salerno - Reggio Calabria - Lot 3 from km 44+100 to km 47+800 (Contursi). Under the agreement, € 22 million was collected in relation to a receivable from ANAS following the arbitration award in favour of the company, which ANAS had unreasonably challenged.

In November, the company collected the residual receivable of € 1.6 million accrued in respect of the Milan – Naples motorway: Valico by-pass Lot 3 (Marzabotto) contract following the favourable outcome of the civil lawsuit commenced by the company before the Rome Court against Autostrade per l’Italia. During the year, the company won three new contracts totalling € 300 million, increasing and diversifying its order book.

With a view to increasing its order book, the company also took measures to safeguard its position as shareholder of DIRPA S.c.a.r.l. (currently under extraordinary administration) and aimed at obtaining control of this company which holds the contract as general contractor of the “Quadrilatero Marche – Umbria, maxi-lot 2” contract, worth over € 500 million. The share capital of DIRPA S.c.a.r.l. is currently owned as follows: - Consorzio Stabile Operae: 99.98%; - Consorzio Stabile Ergon: 0.01%; - Toto S.p.A.: 0.01%. The consortium fund of Consorzio Stabile Operae is in turn owned as follows: - Impresa S.p.A. (under extraordinary administration) (47.06 %); - Satrel S.p.A. (under composition with creditors) (42.94 %); - SAF S.p.A. (under extraordinary administration) (10 %). Dirpa S.c.a.r.l. was put under extraordinary administration based on the fact that this company is controlled by Impresa S.p.A.. Indeed, the same Official Receiver was appointed for both procedures. However, it is not possible to say that control is exercised over DIRPA. Moreover, following the inclusion of Impresa S.p.A. and its subsidiary SAF S.p.A. in the extraordinary administration procedure, Consorzio Operae should automatically have been wound up and thus excluded from the shareholding structure of DIRPA, increasing the investment percentage of the other shareholders. Furthermore, following the inclusin of DIRPA S.c.a.r.l. in the extraordinary administration procedure, the Official Receiver of both separate procedures did not take any real action to safeguard the assets of DIRPA S.c.a.r.l.; indeed, it accepted Impresa S.p.A.'s failure to comply with the relevant work contracts. Consequently, in order to safeguard the company's interests, an extraordinary appeal was filed with the President of the Italian Republic against DIRPA S.c.a.r.l. under extraordinary administration together with an appeal pursuant to article 65 of the Prodi law bis against the Official Receiver's management of the Dirpa procedure. At the same time, negotiations commenced with the extraordinary administration in order to reach an out-of-court settlement and enable the company to obtain full control of the project and reach the objective of selling the asset.

Order book At 31 December 2014, the company's order book amounts to € 574 million, ensuring the continuity of operations over the next few years.



The breakdown of the order book by customer in €/thousand is as follows:

New contracts included in the book: The company's book rose 11% on the previous year following the positive effect of the activities launched, both in commercial terms with the participation in tenders and with respect to the identification of engineering solutions for contracts in progress (shoring of the Sparvo tunnel, lots 6/7) and through the market acquisition of business units, such as the ANAS La Spezia contract. The following contracts were obtained:

� ASPI: Valico by-pass - Lots 6 and 7: shoring of the Sparvo tunnel and other minor works, totalling € 118 million;

� ANAS: Executive design and execution of the variation to S.S. 1 Aurelia: access roads to the La Spezia harbour, totalling € 125 million. The contract was obtained through the acquisition of the business units of Imprese Co.E.Stra. S.p.A. (the agent), L’Avvenire 1921 Società Cooperativa and S.E.C.O.L. S.p.A., which form the joint venture to which the contract was originally awarded.

� Consorzio per le Autostrade Siciliane: Executive design and static adaptation works of the Ritiro by-pass of the A20 ME-PA, totalling € 43.5 million.

-

200

400

600

800

1.000

2009 2010 2011 2012 2013 2014

588655

519

630

517

574

PORTAFOGLIO LAVORI A FINE ESERCIZIO

Committente Importo %

Italferr 257 45%ANAS 143 25%Autostrade per l'Italia 115 20%Cons. Autostrade Siciliane 44 8%Strada dei Parchi 16 3%

Totale 574 100%



Furthermore, in March 2015, the company topped the list for the awarding of a contract in Poland worth approximately € 100 million for the construction of 16 Km of the new S5 freeway in the Poznan-Breslavia section. Again in March, the company reached an agreement for the construction of a 16 MW wind park in the municipality of Mongrassano (CS), Calabria. The project provides for the construction of eight wind towers with an individual nominal capacity of 2 MW. The Single Authorisation is held by the Customer GAMESA (Spain) on behalf of which TOTO will act as EPC Contractor. The contract is worth approximately € 23 million. The company's order book amounts to approximately € 700 million, including these two contracts which are being formalised.

Developments during the year

The reclassified profit and loss account for 2014 is provided below compared with that of the previous year.

2014 2013 Change Net revenues 177,121,359 236,780,426 (59,659,067)165(Net revenues) % 100% 100% External costs 128,791,115 173,628,695 (44.837.580) Added value 48,330,244 63,151,731 (14.821.487) Cost of labour 26,590,418 38,666,953 (12.076.535) Gross operating profit (EBITDA) 21,739,829 24,484,778 (2.744.952) (EBITDA) % 12.3% 10.3% (11.2)% Amort./ deprec., write-downs and other provisions 7,202,795 13,143,048 (5.940.253) Other income 502,923 2,685,075 (2.182.152) Operating profit (EBIT) 15,039,954 14,026,805 1,013,149 (EBIT)% 8.5% 5.9% 7.2% Net financial charges (4.428.390) (5.183.723) 755,335 Operating Profit 10,611,564 8,843,082 1,768,482 Net extraordinary expense (110.298) (1.096.425) 986,127 Profit before taxes (EBT)

10,501,266 7,746,657

2,754,609 (EBT)% 5.9% 3.3% 35.6% Income tax 5,485,480 4,730,493 754,987 Net profit for the year 5,015,786 3,016,164 1,999,622

EBITDA amounts to € 21.7 million, down on 2013 (€ 24.5 million) by approximately € 2.7 million, but up in percentage terms (2014: 12.3%; 2013: 10.3%); EBIT of €15.0 million (8.5%) is up on the € 14 million (5.9%) for 2013.

Production revenues

Production revenues fell by approximately € 60 million on the previous year. This considerable decrease is due to: the completion of the Roma Est slip road contract; the temporary lower contribution of the Lots 6/7 contract to revenues and the delay in the beginning of the new contracts in the order book.

The breakdown of this item is as follows:

Directors' report on the financial statements at

Turnover from sales and services

Change in contract work in progress

Total revenues

Other revenues and income

Production revenues

Production cost The main operating costs are shown below:

Raw materials Services Total raw materials and services Personnel Use of third party assets

The combined “costs for raw materials and services” fell considerably on 2013, down by approximately € 47 million. The decrease is due to the Personnel expenses Personnel expenses decreased by 31.2% on 2013 following the proportional reduction in the company's revenues for the year. The table below details the workforce and expenses by category, the analysis of which illustrates the changes in the various cost components that resulted in the reduction.

-

100

200

300

2010

157



2014 2013

Turnover from sales and services 200,137,835 278,624,554

contract work in progress (23,016,476) (41,844,127)

177,121,359 236,780,427

Other revenues and income 502,923 2,685,075

Production revenues 177,624,282 239,465,502

Production cost

The main operating costs are shown below:

2014 201323,139,100 54,772,98993,057,154 108,508,170

Total raw materials and services 116,196,254 163,281,15926,590,418 38,666,953

Use of third party assets 3,432,590 5,046,969

The combined “costs for raw materials and services” fell considerably on 2013, down by € 47 million. The decrease is due to the reduction in revenues

Personnel expenses

Personnel expenses decreased by 31.2% on 2013 following the proportional reduction in the company's revenues for the year. The table below details the workforce and expenses by category, the analysis of which illustrates the changes in the various cost components that resulted in the reduction.

2011 2012 2013 2014

178

247 242 248

Production revenues for the five-year period


Change

278,624,554

(78,486,719)

(41,844,127) 18,827,651

236,780,427 (59,659,068)

2,685,075 (2,182,152)

239,465,502 (61,841,220)

2013 Change 54,772,989 (31,633,889)

108,508,170 (15,451,016) 163,281,159 (47,084,905) 38,666,953 (12,076,535) 5,046,969 (1,614,379)

The combined “costs for raw materials and services” fell considerably on 2013, down by reduction in revenues.

Personnel expenses decreased by 31.2% on 2013 following the proportional reduction in the

The table below details the workforce and expenses by category, the analysis of which illustrates the changes in the various cost components that resulted in the reduction.

2014

178

year period



Financial position The breakdown of the company’s net financial position is shown below.

2014

2013

Difference

Bank deposits 9,225,596

1,799,191

7,426,405

Cash-in-hand and cash equivalents 13,577

16,200

(2,623)

Liquid funds and own shares 9,239,173

1,815,390

7,423,782

Current financial assets 604,573

604,409

164

Bank loans and borrowings (due within one year) (35,988,352)

(41,401,769)

5,413,416

Current portion of loans (6,027,599)

(4,177,323)

(1,850,276)

Current financial liabilities (42,015,951)

(45,579,092)

3,563,140

Net current financial position (32,172,206)

(43,159,293)

10,987,087

Bank loans and borrowings (due after one year) (9,334,021)

(15,362,860)

6,028,839

Non-current portion of loans (28,889,743)

(35,309,686)

6,419,943

Financial receivables from group companies 61,752,231

30,482,997

31,269,234

Financial receivables from others 2,842,841

3,005,436

(162,595)

Non-current net financial position 26,371,308

(17,184,113)

43,555,421

Net financial position (5,800,898)

(60,343,406)

54,542,508

The net financial position at 31 December 2014 equal to € 5.8 million shows, compared to the previous year, an increase of € 54.5 million, caused by a significant improvement in the

Descrizione 2014 2013 var. var. %

Costo Dir/Imp 14.335,2 16.235,4 (1.900,1) (11,7)di cui Sede 7.898,1 7.216,7 681,4 9,4

Costo Operai 12.255,2 22.431,6 (10.176,4) (45,4)Totale Costo 26.590,4 38.667,0 (12.076,5) (31,2)

Teste Medie Dir/Imp 158,9 190,5 (31,6) (16,6)Teste Medie Operai 239,5 396,4 (156,9) (39,6)Teste Medie Totali 398,4 586,9 (188,5) (32,1)

Costo Medio Dir/Imp 90,2 85,2 5,0 5,8Costo Medio Operai 51,2 56,6 (5,4) (9,6)Costo Medio Totale 66,7 64,4 2,4 3,7

Ore Lavorate Operai 409.258 772.044 (362.786,0) (47,0)Costo orario Operai 29,9 29,1 0,9 3,1



current (approximately € 11.0 million) and the non-current net financial position (€ 43.6 million).

Bank loans and borrowings, broken down below, decreased by approximately € 16 million following the repayment of principal related to advances for “Claims”, loans and financing.

Operations Pursuant to article 2428, it is noted that the company's business is carried out at the Chieti office and in the Rome office, in addition to in the other secondary offices set up at the main work sites in operation in the municipalities of Castiglione dei Pepoli (Bologna), Rome, Manoppello (Pescara), Cefalù (PA) and Eboli (SA) and in the other minor work sites considered as business units. The two branches set up in the United Arab Emirates of Dubai and Abu Dhabi are also operative. During 2014, the company's operations were primarily carried out on a domestic level. Information on the main contracts under way and completed during the year is given below.

MAIN CONTRACTS UNDER WAY

Milan-Naples motorway upgrade - Lots 6 and 7 Customer: Autostrade per L’Italia S.p.A. Description: Upgrading of the Apennine section between Sasso Marconi and Barberino del Mugello – La Quercia - Badia Nuova section - Lots 6 and 7 Contractual amount: €. € 510,584,462 (following the 3rd variation appraisal) Contracting companies: Joint Venture Vianini S.p.A. - Toto S.p.A. – Profacta S.r.l.

The tender involves the design and execution of upgrading of the Apennine section between Sasso Marconi and Barberino del Mugello on the La Quercia - Badia Nuova section of the Milan-Naples Motorway. Production in 2014 amounted to approximately € 61 million. 79% of the work had been completed at 31 December 2014. During the first half of the year, after the crumbling that involved the two bores of the Sparvo tunnel after finishing their excavation and lining work using the TBM – EPB boring machine, negotiations started between the Joint Venture and ASPI to assess the future decisions. At the end of these negotiations, a private deed was signed on 26 June 2014 between the Joint Venture and ASPI, agreeing upon the following, among other items: 1. to discuss the design solution for the works to be carried out, necessary to reinforce the two bores of the Sparvo tunnel. 2. after completing the development of the executive design in accordance with the above design solution, with the specific addendum described below, ASPI would entrust the Joint Venture with the shoring of the Sparvo tunnel and additional works that were not previously covered by the contract. These works are necessary to complete the lot for opening to traffic.

Descrizione 31/12/2014 31/12/2013 Variazioni

C/c ordinari 4.356.996 6.313.068 (1.956.072) C/anticipi "SIL/SAL" 25.211.414 24.777.692 433.722 C/anticipi "Claims" - 3.891.066 (3.891.066) Mutui su Aree e Fabbricati 15.361.620 19.540.543 (4.178.923) Finanziamenti Beni Strum.li 35.309.686 41.729.269 (6.419.583)

Totale debito verso banche 80.239.716 96.251.638 (16.011.922)



3. the above addendum would extend both the contractual term for the completion of work as well as the term for the early completion of the work, for which there is an additional fee for early completion, and to define new partial terms for the payment of advances for the additional fee. 4. The Joint Venture has agreed to draw up and deliver the executive designs related to the work specified in points 1 and 2 to ASPI and once ASPI has approved these designs, it will assign the relative work to the Joint Venture with specific addendum to the contract (which also will acknowledge the agreements specified above in points 2 and 3), with an advance payment to the Joint Venture of 10% of the amount of the new work. 5. Payment to the Joint Venture of an advance related to the claims recognised, as described later on. In fulfilment of that agreed upon in the private deed signed on 26 June 2014, the Joint Venture delivered the designs for the new work to ASPI. ASPI approved the projects and, with the addendum dated 29 September 2014: 1. ASPI assigned to the Joint Venture the execution of the shoring that has become necessary after the crumbling that occurred in the Sparvo tunnel as well as additional work necessary in order to complete the lot so it can be opened to traffic; 2. ASPI extended the contractual term for the completion of work as well as the term for the early completion of the work, for which there is an additional fee for early completion, and defines new partial terms for the payment of advances for the additional fee. 3. as a result of the above, the contractual amount (net of rebate and including the fee for the design and the charges for safety) is increased from € 392,706,215 to € 510,584,462; 4. the advance due to the Joint Venture in connection with the new works amounts to € 11,744,900; 5. ASPI committed to indemnify and hold harmless the Joint Venture from any damage (including landslides, worsening of the causes that led to the crumbling of the concrete in the section of the tunnel under pressure which is unacceptable under the relevant Technical Standards, or any other reason), to the Sparvo tunnel, unless the future damage is attributable to the Contractor's failure to comply with the new project adopted by the means of the above addendum. With respect to the above additional fee, at the date of preparation of this report, the two new milestones introduced by the above addendum (completion of the Northern and Southern bores of the Val di Sambro tunnel in accordance with the relevant deadlines), were reached, generating an additional € 20 million for the Joint Venture for early termination of works. In the past, the Joint Venture has recognised several claims for a total amount of € 655,701,936.84, updated to date of the most recent progress report issued, no. 41 for works included up to 31 January 2015. The obstacles caused by the Customer prevented the commencement of the procedures aimed at reaching an amicable agreement (article 240 of Legislative decree no. 163/2006) to settle the claims. Consequently, the Joint Venture decided to safeguard its rights and opted for different alternatives. Therefore, in the first few months of 2013, it requested that the Court of Rome carry out a Preventive Technical Assessment pursuant to article 696 bis of the Code of Civil Procedure, in order to verify the various facts and situations which occurred during the performance of works, which are detrimental to the Joint Venture and calculate the amount to be paid in respect of the recognised claims. The Court accepted in full the Joint Venture's request and allowed all its questions, quashing the exceptions and objections of the Customer Autostrade per l’Italia S.p.A. (“ASPI”) which said that the procedure was inadmissible. Consequently, the Court ordered the Preventive Technical Assessment (R.G.N. 12103/2013), appointing Mr. Gianfranco Belli, Mr. Fernando Ciotti and Mr. Roberto Graciotti, all based in Rome, as experts. The claims examined in the Preventive Technical Assessment total € 433,450,125.78, as per the most recent progress report no. 28 dated 30 November 2012. During the Preventive Technical Assessment, and with the intention of interrupting it, ASPI said it was open to a settlement. To this end, some meetings were held among its



technicians and representatives and those of the Joint Venture. During these meetings, the Parties agreed to focus the negotiations on the most technical claims (additional fees, etc. for charges related to safety, work, price adjustment and fees and similar), with an amount (redress) of approximately € 100 million, and that the claims related to indirect charges, sub-production and other (equal to a residual amount of approximately € 333 million) be assessed by the above Court-appointed experts. Upon completion of the negotiations, with a deed dated 26 June 2014, ASPI committed to pay the Joint Venture an advance of € 60 million related to the relief sought. The amount was paid in the days immediately afterwards. It was established that the agreement and the payment of the above amount would not have entailed the Joint Venture's waiver to claim the greater amounts of the claims, hence the waiver to the above Preventive Technical Assessment. This was also set out in the above deed.

On 20 February, the Court-appointed experts handed the parties' advisors their first appraisal, on which their observations and deductions will be submitted within the next 60 days. Once the 60-day period has elapsed, the Court-appointed experts will file the definitive Appraisal. In their appraisal, the Court-appointed experts, acknowledging the Joint Venture's reasons, declared having ascertained that, because of the weaknesses of the project underlying the tender compared to the real situation of the location, the Joint Venture was forced to perform works that were completely different from those set out in their tender offer and, consequently, was before a case of aliud pro alio. Consequently, according to the Court-appointed experts, the contractual conditions cannot be applied and it is proposed that the Joint Venture be remunerated similarly to “day work”, and, therefore, that the actual costs incurred in relation to the tender be reimbursed.

Sparvo tunnel.

During the first half of 2014, operations at the Sparvo tunnel were almost entirely suspended in order to perform the many extensive test campaigns and monitoring activities necessary to define the project for the structural reinforcement with metallic shoring of the two tunnel bores, with the Northern bore and the Southern bore extending for approximately 400 metres and 330 metres, respectively.

Once prepared, the project was approved with the third Variation appraisal with Addendum, and the activities to prepare the tunnel sections subject to shoring commenced, while resuming by-pass excavation. During the year, the cut-and-cover tunnels at the two Bologna and Florence entrances were completed, while works for the final completion of the two entrances in accordance with the new project provisions continued.

Val di Sambro tunnel

The excavation and coating of the two bores were completed, including the sections awarded under the third variation appraisal:

- excavation of the Northern bore was completed on 1 September; - excavation of the Southern bore was completed on 18 September.

Furthermore, during the year, the excavation and coating of all the tunnel by-passes were completed and the plant engineering and hydraulic preparation activities were commenced. The cut-and-cover tunnels on the Florence side were completed and finishing work on the entrances started.

Earth movement, Storage areas



Works outside the Val di Sambro and Sparvo tunnels continued regularly in accordance with work site schedules. Specifically, the works related to the AD6 storage area were completed together with the construction of the motorway embankments. Furthermore, all works in the areas freed from interferences were completed. Finally, the metal deck of the A-1 motorway overpass was assembled. Works at the AD5 storage areas were interrupted in order to prepare a new final project necessary to resolve the issues affecting the final arrangement of the ophiolites of excavated earth and rocks characterised by concentrations of BTEX which exceed the limits set by Legislative decree no. 152/06 and subsequent amendments and integrations. Palermo - Messina railway section - Cefalù contract (PA) Customer: ITALFERR S.p.A. Description: doubling of the Cefalù – Ogliastrillo – Castelbuono railway section Contractual amount: € 347,505,711 Contracting company: Joint Venture Toto S.p.A. – Italiana Costruzioni S.p.A. – Armafer S.r.l. – E.S.I.M. S.r.l. – Alpitel S.p.A. Percentage of investment: 74.11% Contractual amount: €. € 257,536,483

The contract involves the executive plan and construction of the 12.3 km Cefalù (Ogliastrillo) - Castelbuono railway section, along the Palermo - Messina railway line, and is an integral part of the Italian railway infrastructure modernisation and development programme.

During the year, the executive design of the lot and its analysis with the Customer were completed. On 16 January 2014, the executive design was delivered to the customer which approved it, after a long technical preliminary investigation, on 25 November 2014, together with the signing of the first Addendum, which sets the total contractual amount to € 347,505,711.33 and the timeframe for the execution of works at 2,050 days. Works were delivered on 10 December 2014.

The company will be involved in constructing three tunnels, which will affect almost the entire new railway line: the first, called “Cefalù , 6,700 metres long and double-arched, will be constructed using mechanised digging technology, using one TBM (Tunnel Boring Machine) with a diameter of 9.90 metres; the second, called “S.Ambrogio” , 4,000 metres long and single-arched, will be constructed using mechanised digging techniques, using one TBM with a diameter of 12 metres; the third, called “Malpertugio” , 120 metres long, will be constructed using traditional digging techniques.

The work also comprises the two viaducts called "Carbone 1” and “Carbone 2” with mixed steel/concrete deck, the work and services provided for the superstructure and the installations for Electrical Traction, Signalling, Control and Command, Telecommunications, Light and Power Points.

A24/25 Motorway - Awarding of the design and constr uction of the Roma Est slip roads Customer: Strada dei Parchi S.p.A. Description: Creation of an A24 motorway slip road system from the Portonaccio junction to the Roma Est station. Executive design and works Contractual amount following the second Variation appraisal: €. 209,775,840 Contracting company: Toto S.p.A.



The contract awarded by the operator Strada dei Parchi S.p.A. involves the executive plan and construction of the urban section of the A24/A25 motorway, from the Portonaccio intersection to the Roma Est station. In addition to extending both the east and west carriageways by over 14 km, the project also boasts several new facilities (28 in total), including the new intersection on the GRA (great ring road), two new steel viaducts over the Aniene river and the new Via di Salone and Tor Cervara intersections. Production in 2014 amounted to € 16,776,000. Total progress of the work is approximately 99%. The activities carried out in 2014 mainly related to those set out in the second variation appraisal and to the works to complete the lot.

A/24 - A/25 Motorway – Improvement to the seismic c apacity of various viaducts Customer: Strada dei Parchi S.p.A. Description: Improvement of seismic capacity and restoration of damaged concrete on the Palude, Campane and Sant’Onofrio viaducts of the A/24 and the Cerchio and Collarmele viaducts of the A/25 Contractual amount: € 28,913,836 (following variation appraisal) Contracting company: Toto S.p.A. Production in 2014 amounted to approximately € 3.5 million and the work was completed in October. The work is part of the programme to bring the seismic capacity of the viaducts in line with new safety regulations and was begun by Strada dei Parchi following the earthquake in 2009 and therefore is aimed at bringing the structures of the viaducts along the layout of the motorway in line with the new provisions. They substantially involve removing the piers and pier caps of the surface layer of damaged concrete using hydroblasting, then laying reinforced armature and replastering them with special highly-resistant cement-based mortar.

A/24 - A/25 Motorway – Carestia tunnel modernisatio n and restoration contract Customer: Strada dei Parchi S.p.A. Description: Modernisation and restoration of the west bore of the Carestia tunnel. Contractual amount: €. € 7,250,437 Contracting company: Toto S.p.A. Production during the year amounted to € 2.9 million and led to the completion of the work. The project involves the removal of the damaged definitive concrete lining, waterproofing of the milled surfaces using a sprayed polymer coating, addition of reinforced armature and casting of a new 40 cm layer of reinforced concrete. A/24 – A/25 Motorway - San Sisto viaduct contract Customer: Strada dei Parchi S.p.A. Description: Work for the improvement of seismic capacity of the San Sisto viaduct - l’Aquila. Contractual amount: €. € 9,061,160 Contracting company: Toto S.p.A.



Production during the year amounted to € 5.5 million. 58% of the work had been completed at 31 December 2014. This contract involves recovering the damaged concrete and structural reinforcement. Ponte Albanito S.r.l. – Wind park Customer: Ponte Albanito S.r.l. Description: construction of a 22.8 MW wind park Contractual amount: € 31,220,000 Contracting company: Toto S.p.A. Percentage of work: 100% Production during the year amounted to € 6.5 million. 100% of the work had been completed at 31 December 2014. The work started in May 2013 and was completed in June 2014. The contract involves constructing a new 22.8 MW wind park, comprising eight wind turbine towers each with a capacity of 2.85 MW each. It also includes the construction of a cable duct, approximately 25 km in length, to carry the energy produced to the Terna power station, and a medium-to-high voltage power transformer substation.

ACQUIRED CONTRACTS IN THE SET-UP STAGE Variation to the S.S. 1 Aurelia Lot 3 – La Spezia c ontract Customer: ANAS Description: Executive design and execution of the variation to S.S. 1 Aurelia; access roads to the La Spezia harbour Contractual amount: €. € 107,489,959 Contractual amount inclusive of the variation appraisal being formalised: € 125 million Contracting company: Toto S.p.A. Percentage of investment: 100%

The contract was obtained through the acquisition of the business units of the three companies that formed the Joint Venture. The latter had only performed a minimum percentage of work. The contract refers to Lot 3 of the variation to S.S. 1 Aurelia at La Spezia, between Felettino and the La Spezia – S. Stefano motorway link. The variance is part of the project related to the access roads to the La Spezia harbour as the backbone of the road system of the area. It is a ring-road around the city which runs from the Felettino area, in the Northern/Western part of the city, to the Stagnoni area, on the East side of the city, where it connects with the Motorway link, avoiding the urban centre. The definitive project was approved with CIPE (Interministerial Committee on Economic Programming) resolution no. 60 of 2 April 2008. The work carried out in 2014 involved: • Building yard set up, with partial field restoration, reactivation of shacks, utilities and

base contracts; • Safety of the Fornaci 1 (GN04) and Fornaci 4 (GN06) tunnels, draining the water that

had filled them up to the side walls, threatening the nearby local road network; • Reactivation of sub-contracts and supply contracts; • Topographical controls; • Accounting controls and, more in general, of tender documentation; • Study and design of a variance with respect to the original design.

Business development

The company has a public works qualification certification (SOA), issued by Protos Soa S.p.A., applicable to various fields of work and with unlimited amounts.



The certificate issued on 26 November 2014 by the certification body is valid until 6 November 2016 and includes 23 fields of work, 9 of which for general work (4 with unlimited contractual amounts) and 14 for specialist work (3 with unlimited contractual amounts). The company is also a certified class "I" General Contractor. The certificate, issued on 12 March 2015, is valid until 6 November 2016 and will enable the company to participate independently in tenders for amounts of up to € 350 million.

The company's objectives for the upcoming years are primarily to work in the domestic market for third-party customers as a general contractor for complex infrastructural projects with a high technological content and as an EPC contractor for companies in the Renexia Group (renewable energy) and for Strada dei Parchi (A24-A25 motorway concession). Furthermore, also on the basis of the proven experience gained in the mechanised drilling of tunnels, to continue working as a specialist in the TBM Tunnelling sector, not only as a direct contractor but also for main third-party contractors within the scope of so-called large scale projects (underground systems and water tunnels) in Italy and abroad. In terms of commercial strategy, more emphasis will be placed on commercial partnerships with other Italian and international players in order to increase its share of the domestic market, acquire new customers, open new markets, share the country risk as well as the project related risk. The objective is to reach a critical mass that makes it possible to compete better in the markets of reference, both on a stand-alone basis for projects up to € 400 million as well as in equal JVs for projects with amounts that exceed that value. The two branches in Dubai and Abu Dhabi continue their activities of searching for new work that could be interesting within the markets of reference and in the nearby Oman. The company is also developing its commercial activities in Eastern Europe, specifically Poland and the Balkans. At the date of preparation of this report, the company was eligible to participate in the following foreign tenders: Poland – European Bank for Reconstruction and Devel opment financing:

- Construction of the WLacz ring road on national road 10 - expected amount € 100 million;

- Construction of the North Approach Road to the Bridge on the Sava river - expected amount approximately € 100 million;

- Construction of the Koszalin & Sianow ring road on the S6 freeway along the S11 section from the Police junction to the Koszalin West junction - expected amount approximately € 100 million;

- Extension of the Warsaw-Białystok national road 8 to become a freeway, Wyszków - Podlaskie Voivodeship border section, Wyszków 1a section - Poręba junction – expected amount approximately € 100 million;

- Extension of the Warsaw-Białystok national road 8 to become a freeway, Wyszków - Podlaskie Voivodeship border section, Poręba junction 1b section – expected amount approximately € 100 million;

- Construction of the S7 Kraków - Rabka Zdrój freeway, section Skomielna Biała - Chabówka, and construction of the new section of state road 47, section rabka Zdrój – Chabówka; expected amount approximately € 100 million;

- Construction of the Kraków - rabka Zdrój S7 freeway, Lubień - Naprawa section, from km 713+580 to km 721+170.00; expected amount approximately € 100 million;

- Extension of state road no. 8 Warszawa - Białsytok and adjustment to become a freeway; Wyszków section - Podlaskie regional border, section II: Ostrów Mazowiecka ring road - Podlaskie regional border from km 553+145.50 to km 562+542.07; expected amount approximately € 80 million;



Bosnia Herzegovina – European Bank for Reconstructi on and Development financing:

- Construction of the motorway on the Corridor Vc, Počitelj-Bijača section, Počitelj-

Zvirovići sub-section. LOT 1: Počitelj-ponte Počitelj junction (from km 0+000.00 to km 4+404.00) - expected amount approximately € 50 million;

- Construction of the motorway on the Corridor Vc, Počitelj-Bijača section, Počitelj-Zvirovići sub-section, LOT 2: Počitelj-Zvirovići bridge (from km 4+404.00 to km 11+075.00) - expected amount € 40 million.

On the date this report was drawn up, the company is awaiting news on the outcome of the following tenders in Italy for which it has submitted bids: ANAS: S.S. 260 PICENTE - Dorsale Amatrice-Montereale -L'Aquila - Lot IV from the Marana to the Cavallari junctions. Adjustment to section C2 of DM 5/11/2001 – gross amount of approximately € 61 million; ANAS: North/South path S. Stefano di Camastra - Gela S.S. 117 "Centrale Sicula" - Modernisation and upgrading of the section from km 19+000 and km 23+200. Lot B2 - Completion works – amount of approximately € 57 million.

Research and development

During the year, the company incurred no costs for research and development activities. Quality – Safety – Environment In 2014, Toto S.p.A. determinedly pursued the consolidation and continuous improvement targets of the Quality, Environment and Safety Integrated Management System which, since 2010, has been certificated by the TÜV Rheinland Group, the largest and most authoritative certification body in the world, in compliance with the international standards of reference UNI EN ISO 9001:2008, UNI EN ISO 14001:2004 and BS OHSAS 18001:2007.

In November 2014, the TÜV Rhineland Group carried out – at the company’s office and work sites – a periodic inspection to renew the Quality and Monitoring Management System Certificate and that for the Safety and the Environment and check compliance with the reference standards and issued and approved the validity of the company’s certificates.

The company’s Quality, Environment and Safety Integrated Management System consists of all processes connected and related to the company’s core business and falling within the scope of the following: “Design and construction of civil engineering works and infrastructure, such as tunnels, viaducts, bridges, motorways, roads, civil and industrial buildings, energy production systems and complementary and specialised works such as special structural works, barriers and road protections”.

The continuous improvement of the Integrated Management System and the maintenance of the certificates are the result of the company's constant commitment towards achieving customer satisfaction and quality constructions, protection of the environment and prevention of pollution, the safety and health of workers and the prevention of accidents and occupational diseases, compliance with current legislation and other requirements to which the company subscribes, the use of sector best practices and research for technological innovation and the continuous improvement of services and of the company’s management system.

In 2014, Toto S.p.A. also maintained the FPC System (“Factory Production Control”) certification of the control of factory production of ready-mixed concrete plants produced at the company installed at sites.



With regard to hygiene, health and safety issues, a training plan financed by Fondo Impresa was launched which, through nationally recognised standards, in 2014 – and also in 2015 - enabled the company to develop the knowledge and skills necessary to ensure that each worker can effectively interpret and play the role of “agent/carrier of security”.

Information on main subsidiaries ALITEC S.p.A. The company is the owner of an industrial complex located in Chieti Scalo, which has been unused for many years and covers a total area of 165,000 m2, where ALITEC S.p.A. is involved in a project involving the construction of a multifunctional complex for commercial, residential (for students), cultural, entertainment and well-being uses.

AMBRA S.r.l. Construction company established in 2004, in which Toto holds an investment of 98.5%, that has constructed a building complex located in Chieti Scalo called “Agorà". The work was completed during the first few months of 2009 and overall, 197 building units were constructed. Ambra, with the support of the RE division of the parent, is selling the building units that have not yet been sold.

Investments

The investments of the year primarily referred to the revamping of machinery and equipment to be used to start contracts, the so-called preliminary work and the building yard set up related to said contracts which mark the start-up of a project.

Related party transactions (parents, associates and related companies)

Parents

Company Loan assets

Trade receivables

Other payables

Payables/Accrued expenses

Revenues Costs

Toto Holding 52,956,882 12,155 945,406 3,627 1,102,452 982,716

Total 52,956,882 12,155 945,406 3,627 1,102,452 982,716

Subsidiaries

Company Loan assets

Trade receivables

Other debtors Payables Revenues Costs

IMC S.r.l. 771,387 6,666

4,590 4,973

Ambra 193,958 103,427

258 36,675 15,005

Toto S.p.A. in ass. with Taddei

Sc

42,228

276,099 176,876

Parchi Scarl

304,850

63,338 2,600 1,014

Alitec S.p.A. 5,349,375 1,472,260

184,045 115,000



Total 6,314,719 1,929,432 0 68,186 504,391 307,895

Related companies

Company Loan assets

Trade receivables

Prepayments Trade payables Revenues Costs

Infraengineering S.r.l.

821,582

1,552,369 576,087 1,553,395 Strada dei Parchi S.p.A. 2,107,731 13,910,526

1,646,420 35,499,432 0 Toto Real Estate

6,409,068 1,379 378,032 1,251,237 591,960 Rail One S.p.A.

102,278

516 37,518 358 Parchi Global Services S.p.A.

71,709

615,538 61,954 257,306 Renexia S.p.A.

240,597

325 113,079 170 InterSun S.r.l.

5,100

1,400 0 Ponte Albanito S.r.l.

582,666

65,426 7,091,618 215,187

Aviagricola

83,951

20,057 0

Total 2,107,731 22,227,475 1,379 4,258,626 44,652,383 2,618,376

Associates

Company Loan assets

Trade receivables

Loans and borrowings

Trade payables Revenues Costs

San Benedetto Val di Sambro Scarl

972,290 2,700 35,375,184 99,858,877 51,113,596 Intermodale S.r.l.

6,165,504

Arabona Scarl

17,735

313,105

103,449 Novigal Scarl

2,484

Galleria di Tenda 372,900 741,791 2,625 1,212,511 98,013 8,419

Total 372,900 7,897,319 5,325 36,903,284 99,956,889 51,225,464

Related parties

Company Loan assets

Trade receivables

Other debtors Payables Revenues Costs

Real estate projects 1,204,566 1,587,419

41,119 31,310

Total 1,204,566 1,587,419 0 0 41,119 31,310

These transactions, which do not include any atypical and/or unusual activities, are governed at normal market conditions. Further information on the activities of subsidiaries and associates is provided in the Notes to the financial statements. Own shares and shares/quotas in parents The company does not possess nor has it possessed over the course of the year, either directly or indirectly, own shares or shares in parents.



Organisational Model pursuant to Legislative decree no. 231/2001 In November 2011, by resolution of the Board of Directors, the company adopted the "Organisational and Management Model" provided for by art. 6 of Legislative decree no. 231/2001 (available on the company website in the section Investors – Code of Conduct and Organisational Model). The Model is aimed at preventing specific offences such as: • Offences against Public Authorities • Company law offences • Terrorist offences or crimes to subvert the democratic order • Offences involving counterfeit money, in legal tender and in revenue stamps • Offences against individuals in breach of safety regulations • Handling stolen goods, money laundering and the use of money, goods or profit from illegal activities • Offences committed in breach of authors’ rights • Offences involving inciting someone not to make statements or to make false

statements to the Judicial Authorities • Offences against industry and commerce and on the subject of industrial property • IT offences and unlawful handling of data • Organised crime • Environmental crimes • Use of illegal workers The Model was also supplemented by the provisions of Law no. 123/07 which extend the company's liability to culpable homicide crimes and grievous and very grievous bodily harm, committed in breach of the regulations on accident prevention and worker health and safety and the New Consolidated Law on Health and Safety at Work - Legislative decree no. 81/08. With the same Board resolution the "Code of Ethics" was adopted (available on the company website in the section Investors – Code of Ethics and Organisation Model). This sets out the commitments and ethical responsibilities in conducting company affairs and activities by the directors, employees, collaborators and co-workers of Toto S.p.A. and the companies it controls. With the same Board resolution the Supervisory Body was also set up, consisting of three members with the skills and professionalism needed to fill the role, which, in accordance with art. 6 of Legislative decree no. 231/2001 and in order to ensure the effectiveness and constant implementation of the Organisational and Control Model and the Code of Conduct, the body has been vested with autonomous powers of initiative and control which should be exercised by those fulfilling the requirements of autonomy and independence, professionalism, continuity of action and adequate spending powers. In accordance with its regulations, the Supervisory Body is periodically informed by the Board of Directors on the activities carried out, reports received, corrective measures and improvements to the organisational model. Significant events after the reporting date • In March, the company was provisionally awarded a contract in Poland for the construction of 16 Km of the new S5 highway in the Poznan-Breslavia section. The total amount of the contract is approximately € 100 million. • Again in March, the company reached an agreement for the construction of a 16 MW wind park in the municipality of Mongrassano (CS), Calabria. The project provides for the construction of eight wind towers with an individual nominal capacity of 2 MW. The Single Authorisation is held by the Customer GAMESA (Spain) on behalf of which TOTO will act as



EPC Contractor. The contract is worth approximately € 23 million.

• With respect to the ANAS Galleria di Tenda contract, the company, also considering the modest investment in the joint venture (35%) reached an agreement with Grandi Lavori Fincosit S.p.A. to exit the Contract.

• With respect to the ANAS “La Spezia” contract recently acquired by Toto following the acquisition of the business units of the companies comprising the Joint Venture which won the contract, the Rome court-appointed expert before which the Joint Venture had begun a Preventive Technical Assessment to assess the issues which took place during the contract and the claims recorded in the progress report no. 5 for work up to 6 March 2013 (redress of € 38,785,064.74), filed its report on 3 March, stating that:

1. The Customer ANAS S.p.A. did not apply the necessary technical variation and

integration appraisal due to the many issues and situations which occurred during the performance of work, and which prevented the regular performance thereof;

2. the irregular performance of work and the considerable delay in their execution was due to events which were not attributable to the joint venture;

3. the amount to be paid to the joint venture in relation to the claims recognised up to progress report no. 5 is € 7,391,544.61. In calculating this amount, the Court-appointed expert confirmed that the Joint Venture has no responsibility for the delay of the works. Furthermore, the stoves and the other facts that prevented the prosecution of work in the Felettino I, Felettino III and Pellizzarda tunnels are due to geological uncertainties. These assessments, where confirmed in the Court-appointed expert's final report, despite relating to a period prior to Toto's take over in the contract, were also useful: indeed, in addition to the company's right to collect a portion of the total amount to be paid in relation to claims, pursuant to the agreements with the selling companies, the conclusions reached by the Court-appointed expert implicitly support the company's right to obtain an extension of the contractual period of time following the prior delays, and compensation for the damage suffered given the inability to correctly perform the works until the Customer ANAS S.p.A. has applied the necessary variation appraisal.

• As described in detail in the section on contracts in progress, with respect to the Contract Lots 6/7, on 20 February, the Court-appointed experts handed the parties' advisors their first appraisal, on which their observations and deductions will be submitted within the next 60 days. Once the 60-day period has elapsed, the Court-appointed experts will file the definitive Appraisal. Meanwhile, the companies' respective lawyers will continue to work towards an out-of-court settlement. In January, following the sale of the quotas of Ponte Albanito S.r.l. and the related availability of cash flows, the parent Toto Holding significantly decreased (by approximately € 12 million) the financial receivable from the company. Furthermore, the expected dividend distribution will further decrease the receivable by € 9.5 million. Business outlook The company's turnover for 2015 is expected at approximately € 240 million, with six active contracts in Italy and one abroad. Also due to the considerable size of the order book, the company can also suitably select projects in which it will participate in 2015, favouring those of greatest value and those that are the most technologically advanced.



The commercial target is to acquire new orders during the year that are at least equal to the revenues expected for 2015. The company will focus its commercial efforts on both the domestic market, which remains the reference market, and promising foreign markets. Also for 2015, it is believed that the profitability of the orders will also be in line with the company's historical trend and the sector benchmark for comparable players.

Information on risk management, financial instrumen ts and guarantees

Liquidity risk Toto S.p.A. pays special attention to managing the resources generated or absorbed by operating and/or investing activities and to the characteristics of payables in terms of due and renewal dates in order to ensure cash flow is managed effectively. A series of policies and processes have therefore been accelerated targeted towards optimising the dynamics of financial resources, with the purpose of managing and mitigating liquidity risk. In particular, special attention is paid to:

• Monitoring the level of liquidity available • Optimising credit lines • Monitoring future liquidity

Exchange rate risk Toto S.p.A. primarily operates in Italy: transactions are therefore for the most part in euros. The euro is also the currency for external sources of financing to support and develop the company's industrial activities. The company’s financial performance is therefore not subject to market risk resulting from exchange rate fluctuations. Derivatives The company has five outstanding interest rate hedging contracts to cover a portion of its bank debt. Further information is provided in the notes to the financial statements. Credit risk The company's customers are companies with high credit ratings. Government and public bodies, solvent by nature, or companies belonging to the Group. Credit risks, which means the exposure of the company to potential losses deriving from non-fulfilment by its customers of their obligations, should therefore be considered insignificant. Guarantees and sureties For information on guarantees and sureties, reference should be made to the section on memorandum accounts in the explanatory notes. Allocation of the net profit for the year Dear Shareholders:



We propose that you: - discuss and approve the directors' report and the financial statements at 31 December

2014 which show a net profit of € 5,015,786;

- allocate 5% (€ 250,789) of the net profit for 2014 to the legal reserve;

- allocate € 15,364 of the net profit for 2014 to cover prior year losses;

- allocate € 249,633 of the net profit for 2014 to the extraordinary reserve;

- allocate € 4,500,000 of the net profit for 2014 and € 5,000,000 of the extraordinary

reserve to the distribution of dividends totalling € 9,500,000, granting the shareholders € 19 for each of the 500,000 shares, of a nominal amount of € 100 each;

- decide that the above dividends be paid as of 1 June 2015.

Chieti, 27 March 2015

Chairman of the Board of Directors Alfonso Toto


Financial statements at 31 December 2014 Page 1

Companies Register 02208250692

Rea (Economic Administrative Index)160647


Managed and coordinated by TOTO Holding S.p.A. Single-member company

Registered office in Viale Abruzzo 410 - 66100 CHIETI (CH) Share capital € 50,000,000.00 fully paid-up

Financial statements at 31 December 2014

Balance sheet - assets 31/12/2014 31/12/2013

A) Share capital proceeds to be received (of which: called up) B) Fixed assets I. Intangible fixed assets 1) Start-up and capital costs 616,391 823,854

2) Research, development and advertising costs 8,000 12,000

3) Industrial patents and intellectual property rights 61,075 141,874

4) Concessions, licences, trademarks and similar rights 55,341 58,800

5) Goodwill 3,579,235 6) Assets under development and payments on account 1,031,000 1.191,214

7) Other 65,856 136,911

5,416,898 2,364,653

II. Tangible fixed assets 1) Land and buildings 20,404,829 20,834,917

2) Plant and machinery 43,681,114 48,333,431

3) Industrial and commercial equipment 143,196 456,258

4) Other assets 1,946,680 2,789,496

5) Assets under construction and payments on account 1,187,210 1,206,014

67,363,029 73,620,116

III. Financial fixed assets 1) Investments: a) subsidiaries 49,806,976 49,807,141

b) associates 4,052,312 4,052,312

c) parents d) other 7,413,246 7,413,246

61,272,534 61,272,699

2) Financial receivables a) from subsidiaries - due within one year 6,314,719 6,154,361

- due after one year

6,314,719 6,154,361

b) from associates



- due within one year 372,900 276,200


372,900 276,200

c) from parents - due within one year 52,956,882 22,345,326

- due after one year 52,956,882 22,345,326

d) from others - due within one year 4,950,572 4,712,546


4,950,572 4,712,546

- 64,595,073 33,488,433

3) Other securities 4) Own shares (total nominal amount)

- 125,867,607 94,761,132

Total fixed assets 198,647,534 170,745,901

C) Current assets I. Inventory 1) Raw materials, consumables and supplies 6,573,388 8,954,357

2) Work in progress and semi-finished products 3) Contract work in progress 59,654,495 82,670,971

4) Finished goods 4,418,840 4,418,840

5) Payments on account 2,112,807 3,584,779

72,759,530 99,628,947

II. Receivables 1) Trade receivables - due within one year 9,667,282 35,480,793


9,667,282 35,480,793

2) From subsidiaries - due within one year 1,929,432 5,037,866


1,929,432 5,037,866

3) From associates - due within one year 7,897,319 13,079,156


7,897,319 13,079,156

4) From parents - due within one year 12,155 17,889


12,155 17,889

4-bis) Tax receivables - due within one year 2,123,673 1,285,682


2,123,673 1,285,682

4-ter) Deferred tax assets - due within one year 632,310 488,220




632,310 488,220

5) From others - due within one year 25,926,339 14,975,707


25,926,339 14,975,707

48,188,510 70,365,313

III. Current financial assets

1) Investments in subsidiaries 2) Investments in associates 3) Investments in parents 4) Other investments 575,164 575,000

5)Own shares (total nominal amount)

6)Other securities 29,409 29,409

604,573 604,409

IV. Liquid funds 1) Bank and postal accounts 9,225,596 1,799,191

2) Cheques on hand 3) Cash-in-hand and cash equivalents 13,577 16,200

9,239,173 1,815,391

Total current assets 130,791,786 172,414,060

D) Prepayments and accrued income - discounts on loans

- miscellaneous 6,451,898 2,809,071

6,451,989 2,809,071

Total assets 335,891,309 345,969,032

Balance sheet - liabilities 31/12/2014 31/12/2013 A) Net equity I. Share capital

50,000,000 50,000,000

II. Share premium reserve

20,699,616 20,699,616

IV. Legal reserve

303,128 152,320

VII. Other reserves Extraordinary or optional reserve 5,759,438 2,894,082

Euro rounding difference 1

5,759,438 2,894,083

VIII. Net profit (loss) carried forward

(15,364) (15,364)

IX. Net profit for the year 5,015,786 3,016,164

Total net equity 81,762,604 76,746,819



B) Provisions for risks and charges 2) Tax provision, including deferred tax liabilities

5,887

3) Other provisions 3,446,343 4,417,122

Total provisions for risks and charges 3,452,230 4,417,122

C) Employees' leaving entitlement 981,736 1,398,148

D) Payables 4) Bank loans and borrowings - due within one year 42,015,952 45,579,092


80,239,716 96,251,638

6) Payments on account - due within one year 3,569,956 10,195,042


3,569,956 10,195,042

7) Trade payables - due within one year 50,117,367 75,774,122


50,117,367 75,774,122

9) Payables to subsidiaries - due within one year 68,186 3,827,844


68,186 3,827,844

10) Payables to associates - due within one year 36,908,609 29,762,694


36,908,609 29,762,694

11) Payables to parents - due within one year 945,406 682,992


945,406 682,992

12) Tax payables - due within one year 44,227,368 31,796,726


63,721,089 35,626,829

13) Social security charges payable

- due within one year 1,283,042 2,161,889


1,283,042 2,161,889

14) Other payables - due within one year 10,184,809 8,937,073

- due after one year 1,455,467

11,640,276 8,937,073

Total payables 248,493,647 263,220,123



E) Accrued expenses and deferred income - premiums on loans

- miscellaneous 1,201,092 186,820

1,201,092 186,820

Total liabilities 335,891,309 345,969,032

Memorandum and contingency accounts 31/12/2014 31/12/2013

4) Other memorandum and contingency accounts 747,058,176 659,386,883

Total memorandum and contingency accounts 747,058,176 659,386,883

Profit and loss account 2014 2013

A) Production revenues 1) Turnover from sales and services

200,137,835 278,624,554

2) Change in work in progress, semi-finished products and finished goods

3) Change in contract work in progress

(23.016.476) (41.844.127)

4) Internal work capitalised

5) Other revenues and income: - miscellaneous 502,923 2,685,075

- grants related to income - grants related to assets (current portion)

502,923 2,685,075

Total production revenues 177,624,282 239,465,502

B) Production cost 6) Raw materials, consumables, supplies and goods

23,139,100 54,772,989

7) Services

93,057,154 108,508,170

8) Use of third party assets

3,432,590 5,046,969

9) Personnel expenses a) Wages and salaries 18,394,734 26,204,867 b) Social security contributions 6,977,583 10,603,232 c) Employees' leaving entitlement 1,078,416 1,804,140 d) Pension and similar costs e) Other costs 139,685 54,714 26,590,418 38,666,953 10) Amortisation, depreciation and write-downs a) Amortisation of intangible fixed assets

362,503 384,929

b) Depreciation of tangible fixed assets

6,820,882 12,245,079

c) Other write-downs of fixed assets



d) Write-downs of current receivables and liquid funds

400,000

7,183,385 13,030,008

11) Change in raw materials, consumables, supplies and goods

2,380,969 1,676,843

12) Provisions for risks

19,410 113,040

13) Other provisions

14) Other operating costs 6,781,302 4,619,884

Total production cost 162,584,328 226,434,856

Operating profit (A -B) 15,039,954 13,030,646

C) Financial income and charges 15) Income from investments: - in subsidiaries 1,350 - in associates

- other

1,350

16) Other financial income: a) From financial receivables classified as fixed assets - from subsidiaries 187,441 155,210

- from associates - from parents 954,395 419,711

- from others 462,260

b) from securities classified as fixed assets c) from securities classified as current assets 389,533 615

d) other income: - from subsidiaries - from associates - from parents - from others 641,349 232,874

2,172,718 1,270,670

- 2,172,718 1,272,020

17) Interest and other financial charges: - to subsidiaries - to associates - to parents - other 6,596,792 6,421,208

6,596,792 6,421,208

17-bis) Net exchange rate losses (4.316) (34.535)

Net financial charges (4.428.390) (5.183.723)

D) Adjustments to financial assets 18) Write-backs: a) investments



b) financial fixed assets

c) securities classified as current assets

19) Write-downs: a) investments b) financial fixed assets c) securities classified as current assets

Total adjustments

E) Extraordinary income and expense 20) Extraordinary income: - gains on sale of assets 112,973

- other income 1,825,896 1,255,278

1,938,869 1,255,278

21) Extraordinary expense: - losses on sale of assets - taxes relative to prior years - other expense 2,049,167 1,355,544

2,049,167 1,355,544

Net extraordinary expense (110.298) (100.266)

Profit before taxes (A -B±C±D±E) 10,501,266 7,746,657 22) Current and deferred taxes a) Current taxes 5,623,683 4,825,956 b) Deferred tax expense 5,887 (93,134) c) Deferred tax income (144,090) (2,329)

d) Income (expense) from participation in the tax consolidation/transparency scheme

5,485,480 4,730,493 23) Net profit for the year 5,015,786 3,016,164

Chairman of the Board of Directors Alfonso Toto


Notes to the financial statements at 31 December 2014 Page 1


REA (Economic Administrative Index) no. 160647


Managed and coordinated by TOTO HOLDING S.p.A. Single-member company

Registered office in Viale Abruzzo 410 - 66100 CHIETI (CH) Share capital € 50,000,000.00 fully paid-up

Notes to the financial statements at 31 December 20 14

Foreword Toto S.p.A. Costruzioni Generali ("Toto S.p.A.") is the company of the Toto group which directly and indirectly - through its subsidiaries and associates – designs and constructs infrastructure and residential and industrial buildings. Business activities On the Italian market, Toto S.p.A. Costruzioni Generali is one of the top building firms specialised in the design and construction of large-scale transport infrastructure. At the reporting date, the company had an order book of approximately € 621 million. Preparation criteria The following financial statements comply with articles 2423 et seq. of the Italian Civil Code, as shown by these notes prepared pursuant to article 2427 of the Italian Civil Code and which form an integral part of the financial statements in accordance with and pursuant to article 2423. These financial statements have been prepared using the measurement criteria set out in article 2426 of the Italian Civil Code, which were supplemented and integrated by the accounting standards issued by the Italian Accounting Profession (Consigli Nazionali dei Dottori Commercialisti e dei Ragionieri), as amended by the OIC (the Italian Accounting Standard Setter) as well as by the document issued directly by the OIC. The OIC standards have been recently revised and updated. The changes introduced apply starting from the financial statements at 31 December 2014. Therefore, these financial statements have been prepared taking into account these changes. For information about the effects of the application of the new OIC standards, reference should be made to the section ‘Application of the new OIC standards’ of these notes. These financial statements comprise: a balance sheet, a profit and loss account and these notes. Each balance sheet and profit and loss account caption is accompanied by prior year corresponding figures. When captions cannot be compared, prior year figures have been adjusted, including a comment thereon, where necessary. For the purposes of a better presentation of the company's financial position and results of operations, these notes also include a cash flow statement which shows the reasons behind the increases and the decreases in liquid funds during the year. The cash flow statement has been prepared with prior year corresponding figures in accordance with the indirect method and using the format required by OIC 10. The balance sheet and the profit and loss account have been prepared in units of euros. For information about the company's business, transactions with subsidiaries, associates, parents and other related parties and about the significant events after the reporting date, reference should be made to the Directors' Report which accompanies these financial statements.



Group membership Pursuant to article 2497 and subsequent articles of the Italian Civil Code, it is noted that the company is managed and coordinated by Toto Holding S.p.A.. In accordance with current law, the company made use of the option not to prepare the group’s consolidated financial statements, despite holding controlling interests directly in the following companies: Alitec S.p.A., IMC S.r.l., Parchi Scarl, Ambra S.r.l., since the consolidated financial statements are drawn up by the parent Toto Holding S.p.A.. The following table provides key figures from the most recent financial statements approved by the aforesaid company which is responsible for management and coordination.

2013 2012

BALANCE SHEET

ASSETS

A) Subscribed capital unpaid B) Fixed assets 455,562,477 508,490,517

C) Current assets 18,580,333 20,080,664

D) Prepayments and accrued income 79,010 92,350

Total assets 474,221,820 528,663,531

LIABILITIES: A) Net equity: 298,651,725 370,649,131

Share capital 100,000,000 100,000,000

Reserves 271,236,305 271,236,305

Net profit (loss) carried forward (587,174) 0

Net profit (loss) for the year (71,997,406) (587,174)

B) Provisions for risks and charges 31,821,046 31,821,046

C) Employees' leaving entitlement 180,157 142,007 D) Payables 143,554,430 126,049,469 E) Accrued expensed and deferred income 14,462 1,878 Total liabilities 474,221,820 528,663,531 PROFIT AND LOSS ACCOUNT A) Production revenues 4,263,058 3,439,811 B) Production costs 12,285,632 8,949,344 C) Financial income and charges 395,765 6,730,395 D) Adjustments to financial assets (67,313,576) (3,851,954) E) Extraordinary income and expense (677,105) (288,000) Income taxes for the year (3,620,084) (2,331,918) Net profit (loss) for the year (71,997,406) (587,174)

Basis of presentation Financial statements captions have been measured in accordance with the general principles of prudence and on an accruals basis, assuming the company will continue as a going concern and taking into account the economic function of the asset or liability concerned. In accordance with the principle of prudence, assets and liabilities are measured separately to avoid offsetting losses which should have been recognised against unrealised profits not to be recognised. Specifically, profits are recognised only if realised by the reporting date. Conversely, the risks and losses pertaining to the year are



recognised even when they become known after the reporting date. In accordance with the accruals-based accounting, the effect of transactions is recognised in the year to which the transactions relate, regardless of when collections and payments take place. For the purposes of financial statements comparability, the measurement criteria applied are unchanged from those of the previous year, except for that set out in the section ‘Application of the new OIC standards’. During the year, no exceptional circumstances took place which required application of the waivers permitted by article 2423.4 of the Italian Civil Code, since they prevent the true and fair presentation of the company's financial position and results of operations. Furthermore, during the year, no assets were revalued in accordance with special revaluation laws. The preparation of financial statements requires the calculation of estimates which affect reported assets and liabilities and related disclosure. Actual results may differ from these estimates. These estimates are regularly reviewed and the effects of such changes, except for those arising from incorrect estimates, are recognised in the profit and loss account of the relevant year, when the changes only affect said year, and also in subsequent years when they affect both the current and subsequent years. Application of the new OIC standards In financial statements at 31 December 2014, the company changed the criterion applied to recognise pre-operating costs. This change was necessary following the OIC's approval, during the year, of new accounting standards applicable to the financial statements at 31 December 2014. The recognition criterion was changed in accordance with OIC document no. 29 and that set out in OIC document no. 23, both published on 5 August 2014. Under the new standard, subject to compliance with specific conditions, pre-operating costs are included under contract costs and considered in the calculation of the contract profit margin based on the progress of works. Consequently, they are no longer capitalised and amortised. This change has been applied and recognised in these financial statements. The related effects have been recognised in accordance with the new standard which was applied on a retrospective basis. Retrospective application also affected the facts and operations which took place in the years prior to the application of the above change, as if the new standard had always been applied. Therefore, pursuant to article 2423.ter of the Italian Civil Code, in order to compare these financial statements to those of the previous year, 2013 financial statements captions have been adjusted. The adoption and application of the accounting standard which changed the recognition criteria applicable to some prior year financial statements captions had no effects on the net profit for the year or net equity. For additional information about the above change, reference should be made to that set out later on in these notes. Measurement criteria Foreign branches The operations of the foreign branches have been recognised in the financial statements of the parent using the “foreign currency/euro” exchange rate ruling on the date the operation was performed. At the reporting date, foreign currency receivables and payables were translated using the “foreign currency/euro” exchange rate in place at 31 December 2014, taking any conversion differences to the profit and loss account. Tangible fixed assets were recognised using the exchange rate ruling on the date the operation was performed, except in the case of a persistent unfavourable trend of the reference exchange rate. Fixed assets Intangible fixed assets



These are recognised at the historical purchase cost and are shown net of accumulated amortisation, which is directly charged to the individual items. Start-up and capital costs and research and development costs of a long-term nature are recognised under assets with the approval of the Board of Statutory Auditors and are amortised over five years. Costs for the use of intellectual property rights are capitalised and amortised over three years. Concessions, licences, trademarks and similar rights are amortised over 20 years. Goodwill is recognised under assets only when acquired against consideration. Its amount can be calculated and it is originally comprised of charges and costs of a long-term nature which ensure future economic benefits and meet the principle of cost recoverability. This caption is amortised over not more than five years on a straight-line basis over the term of the works acquired as part of the acquisition of a business unit. If, regardless of the amortisation already charged, an impairment loss exists, the asset is written down accordingly. If in following years the reasons for the write-down no longer apply, the original amount is reinstated adjusted by amortisation only. Tangible fixed assets These are recognised at purchase cost and adjusted by the corresponding accumulated depreciation. The carrying amount takes into account ancillary charges and costs incurred for using the asset, less any material trade or cash discounts. The depreciation charges, taken to the profit and loss account, are calculated according to the use and the expected useful life of the assets. The following depreciation rates are believed to reflect the effective useful life of the assets, and are unchanged from the previous year. They are halved in the year in which the asset comes into use.

Rates

Industrial buildings 3.00%

Light constructions 12.50%

General plant and sundry equipment 10.00%

Operator machinery and specific plant

Specific plant (Martina TBM boring machine)

15.00%

5.88%

Ordinary office equipment and furniture 12.00%

Electrical and electronic equipment 20.00%

Cars 25.00%

Lorries 20.00%

Self-propelled excavators 20.00%

Operator machinery and specific plant include the “Martina TBM boring machine”. Since at 31 December 2013, this asset was being used in work sites for excavation activities, it was amortised based on the ratio excavated meters/total excavation production capacity in accordance with OIC 16. Starting from 2014, although the asset was not used given the completion of excavation activities, in accordance with the new accounting standards, the company has continued to amortise it using a 5.88% depreciation rate which reflects the asset's residual life of 17 years, calculated on the residual value at 31 December 2013, net of the estimated realisable value at the end of the useful life (OIC 16). If, regardless of the depreciation already charged, an impairment loss is identified, the asset is written down accordingly. If in following years the reasons for the write-down no longer apply, the original value is reinstated



adjusted by depreciation only. Tangible fixed assets under finance leases are recognised under assets when the repurchase right is exercised, if any. During the lease term, lease payments are recognised in the profit and loss account in the relevant years and the financial commitment to make such residual payments is recognised in the memorandum and contingency accounts when it is not included under payables. These notes describe the effects on net equity and the profit for the year which would have arisen had the company applied the so-called “financial method” (IAS 17). Financial fixed assets Investments, debt securities and own shares held on a long-term basis following management's decision and the company's effective ability to held them for a long time are classified under financial fixed assets. Otherwise, they are recognised under current assets. The transfer from fixed assets to current assets, or vice-versa, is recognised using measurement criteria that are specific to the original portfolio. Receivables are classified under financial fixed assets and current assets based on their allocation criterion with respect to ordinary business activities, hence, regardless of their due date. Financial receivables are classified under financial fixed assets, while trade receivables under current assets. The measurement criterion applied to receivables is described below. Investments Investments in subsidiaries and associates, recognised under financial fixed assets, are measured at purchase or subscription cost. Other investments are recognised at purchase or subscription cost. Investments classified as fixed assets represent the company's long-term, strategic investments. Investments recognised at purchase cost which have undergone an impairment loss have been written down. With respect to other investments, if the cost of the investment exceeds the relevant portion of net equity, no write down is recognised since the higher carrying amount is justified by the gains and goodwill of subsidiaries and associates. Inventory Raw and ancillary materials are recognised at purchase cost or at their realisable value (or replacement value) based on market trends, whichever is lower. Purchase cost is equal to the latest price which reflects the average weighted cost. Despite the binding agreement between the parties and the company's ability to reliably estimate the contract profit/loss, contract work in progress is recognised based on the progress of works (or the percentage of completion), whereby costs, revenues and margins are recognised based on the work performed. The percentage of completion is obtained by applying the physical measurement method. Measurement reflects the best estimate of works at the reporting date. The assumptions underlying measurements are periodically updated. Any financial effects are recognised in the year the update takes place. Contract revenues include: the contractually-agreed consideration, formalised variations to works, price adjustments, claims requested and incentives, to the extent that it is reasonably certain that they can be measured reliably. In accordance with OIC document no. 23 of 5 August 2014, pre-operating costs have been recognised under inventory. These costs are considered in the contract profit margin based on the progress of works. Price adjustments are stated in accordance with article 1.550 of Law no. 311/04 (2005 Finance Act) and the subsequent decrees of the Ministry of Infrastructure and Transport of 30 June 2005, 11 October 2006, 2



January 2008 and 9 May 2009, which provided for annual price variations on the main materials used in the construction sector. Additional fees have been recognised in accordance with the principle of prudence; consequently, the repayment of the greater costs incurred or the greater consideration are included under contract revenues only to the extent of the amounts which can be reasonably identified and calculated. Claims are measured considering the estimates prepared by the specific company areas (based on the type of each claim, including assessments of the legal grounds and financial capacity) and the fact that for certain tenders an initial claim definition procedure has already been concluded. The reasons behind the “Claims” valuations are therefore similar to those established in previous arbitration procedures. The most significant claims relate to updates, which are measured using the same criteria as those previously applied by the Board of Arbitrators and the Commission, as the case may be, in the above proceedings. Receivables They reflect the rights to receive liquid funds from customers or other third parties and are measured at their estimated realisable value. The nominal amount of receivables is adjusted to reflect bad debts, invoice adjustments, discounts and rebates and other reasons for a reduced use. With respect to bad debts, the nominal amount of receivables is adjusted through the provision for debt debts which reflects the possibility that the debtor fails to fully meet its contractual commitments. The provision for bad debts is estimated by analysing individual receivables, calculating the expected loss for each irregularity already identified or reasonably expected and by estimating, based on experience and any other useful element, the additional losses that may affect the receivables outstanding at the reporting date. Securities Securities recognised under current assets are recognised at purchase cost or their realisable value based on market trends, whichever is lower. Liquid funds They are measured at their estimated realisable value, which is the same as their nominal amount. Prepayments and accrued income, accrued expenses an d deferred income These are determined on an accruals basis. For long-term prepayments and accrued income, accrued expenses and deferred income, the conditions which led to them being initially recognised have been checked and changes made as necessary. Provisions for risks and charges Provisions for risks and charges comprise specific liabilities of a certain or probable nature, whose due date or amount is not known. Specifically, the provisions for risks reflect specific and probable liabilities with estimated amounts, while the provisions for charges reflect specific and certain liabilities, with estimated amounts or due dates, related to commitments in place at the reporting date, but which will take place in subsequent years. Accruals to the provisions for risks and charges are recognised in the profit and loss account under the captions to which the transaction refers, classifying costs by nature. The amount of accruals reflects the best estimate of costs, including legal fees, at each reporting date and is not discounted. When a change in amounts is identified, the accrual reflects the best estimate between the highest and lowest limits of such change range. Provisions are subsequently used directly and only for those costs and liabilities for which they were originally accrued. Any positive or negative differences with respect to the charges actually incurred are recognised in the profit and loss account in line with the original accrual.



Employees' leaving entitlement This represents the actual amounts due to employees upon termination of work, pursuant to article 2120 of the Italian Civil Code and considering the changes introduced by Law no. 296 of 27 December 2006. It reflects the total amounts accrued considering any form of ongoing remuneration, net of advances paid and partial advances in accordance with collective or individual employment agreements or company agreements for which no reimbursement is requested. The related liability is equal to the amount that would be due to employees should their employment terminate at the reporting date. The provision does not include the amounts accrued from 1 January 2007 allocated to supplementary pension schemes under Legislative decree no. 252 of 5 December 2005 (or transferred to the INPS - Italian Social Security Institute - treasury fund). Payables These are recognised at their nominal amount, adjusted in the event of returns or invoicing adjustments. Foreign currency transactions, assets and liabiliti es Receivables and payables originally expressed in foreign currencies, recognised at the exchange rates in force on the date they arose, are adjusted to the exchange rates applicable at the reporting date. In particular, current assets and liabilities and financial receivables recognised under fixed assets are recognised at the spot exchange rate applicable at the reporting date. Translation gains and losses are taken to the profit and loss account under caption 17 bis Exchange gains and losses. Fixed assets in foreign currency are instead recognised at the exchange rate in force at the time of their purchase or at the lower closing rate only if negative changes have resulted in an impairment loss on such assets. Guarantees, commitments, third party assets and ris ks

Guarantees, commitments and third party assets are shown in the memorandum and contingency accounts at their contractual value. Risks for which a liability is probable are described in the notes and allocated to the provision for risks in accordance with the criteria of adequacy. Risks for which a liability is only possible are described in the notes, but no amount is allocated to the provision for risks in accordance with the applicable accounting standards. Remote risks have not been taken into account. Revenue recognition Revenues from contract work in progress are recognised on a percentage of completion basis, as shown in the work progress reports (SALs) certified by the contracting bodies. Income tax Taxes are provided for on an accruals basis. Therefore, they reflect accruals for taxes paid or to be paid during the year, calculated in accordance with applicable rates and laws. Deferred tax assets pertaining to the year are recognised only in the case of temporary differences when it is reasonably certain that there will be a lower tax charge in the future. They are recognised in order to reflect the future tax benefits that result from the temporary differences between the carrying amounts of reported assets and the corresponding amounts considered in order to determine the current taxes, as well as any tax losses carried forward. Deferred tax assets are recognised in compliance with the principle of prudence, if it is reasonably certain that, in the years in which the temporary deducible differences that led to their recognition reverse, the company will report a taxable profit equal to at least the amount of the differences that will be offset. They are determined based on the tax rate defined for the income tax for the years in which the temporary differences will be offset. The effect of the change of the tax rates for said taxes is recognised in the year in which the related legal provisions are approved. In the balance sheet, deferred tax assets are recognised



under “Deferred tax assets”. In the profit and loss account, the deferred tax assets and liabilities are recognised under "Current and deferred taxes”. From 2009 the company, as consolidated company, has opted to participate in the national tax consolidation scheme – which allows for IRES (corporate income tax) to be calculated according to a taxable basis corresponding to the total of positive and negative taxable amounts of the individual participating companies – together with the company Toto Holding S.p.A., the latter acting as the parent. Financial relationships between the parent and the subsidiary, in addition to their mutual responsibilities and obligations, are set out in the Consolidation Regulations for the companies in the Group which was signed on 16 June 2009, as subsequently amended and integrated. Prepaid IRES (corporate income tax) is calculated based on the temporary differences between the amounts of assets and liabilities determined according to statutory criteria and the corresponding tax values solely with reference to the company. Current and prepaid IRAP (regional tax on production) are calculated exclusively with reference to the company. Significant events after the reporting date These events which alter the conditions already in place at the reporting date and which require changes to the carrying amounts of assets and liabilities, in accordance with the relevant accounting standards, are recognised reflecting the effect of these events on the financial position and results of operations at the reporting date. The events which alter situations already in place at the reporting date, but which do not alter financial statements figures, under the relevant accounting standard, as they pertain to the subsequent year, are not recognised but disclosed in the notes, where necessary, for a better understanding of the company's position. These events are reflected in the financial statements provided that they occur before the date of the draft financial statements, unless when between such date and that for the shareholders' approval of the financial statements events occur such to require that the draft financial statements be changed. Workforce The company's average workforce, broken down by category, underwent the following changes compared to the previous year.

Personnel 31/12/2014 31/12/2013 Change Managers 22 22 White collar workers and middle-management

122 148 (26)

Blue collars 228 389 (161) Other 16 6 10 388 565 (177)

The employment contract applied for white and blue collar workers is the Collective National Employment Contract for employees of construction firms and similar businesses of 19 April 2010, updated by the agreement of 1 July 2014. The agreement applied for managers is the Collective National Employment Contract for managers of companies that produce goods and services of 25 November 2009, updated by the agreement of 30 December 2014. Assets



B) Fixed assets I. Intangible fixed assets

31/12/2014 31/12/2013 Change 5,416,898 2,364,653 3,052,245

Total change in intangible fixed assets

Carrying amount at 31/12/2013

Reclass. purs. to art. 2423-ter

Italian Civ. Code

31/12/2013 balance, post

reclassif.

Increases of the year

Amortisation of the

year

Decreases and rounding


Start-up and capital costs

823,854 823,854 207,463 616,391

Research, development and advertising costs

12,000 12,000 4,000 8,000

Industrial patents 141,874 141,874 13,850 94,648 (1) 61,075 Concessions, licences and trademarks

58,800 58,800 3,459 55,341

Goodwill 3,579,235 3,579,235 Assets under development and payments on account

4,068,197 (2,876,983) 1,191,214 (160,214) 1,031,000

Other 1,043,494 (906,583) 136,911 52,933 (18,122) 65,856 6,148,219 (3,783,566) 2,364,653 3,593,085 362,503 (178,337) 5,416,898

Transfers from one caption to another As described in the section “Application of the new OIC standards”, pursuant to article 2423.ter of the Italian Civil Code, in order to compare these financial statements with those of the prior year, the 2013 balance (€ 3,783,566) related to pre-operating costs was reclassified to current assets. Previous revaluations, amortisation and write-downs The historical cost at the start of the year is broken down as follows.

Historical cost

Accumulated amortisation

Reclass. purs. to art. 2423-ter

Italian Civ. Code

Write -downs Carrying amount

Start-up and capital costs 1,042,318 218,464 823,854 Research, development and advertising costs

20,000 8,000

12,000

Industrial patents 908,168 766,294 141,874 Concessions, licences and trademarks

69,176 10,376

58,800

Assets under development and payments on account

4,068,197

(2,876,983) 1,191,214

Other 25,441,577 24,398,083 (906,583) 136,911 31,549,436 25,401,217

(3,783,566) 2,364,653

Breakdown of start-up and capital costs, research a nd development costs and advertising costs Start-up and capital costs and research and development costs, recognised with the approval of the Board of Statutory Auditors, are broken down below together with the reasons for their recognition.



Start-up and capital costs


Increase of the year

Decrease of the year

Amortisation of the year


Incorporation costs 6,000 3,000 3,000 Costs for new offices 817,854 204,463 613,391

823,854 207,463 616,391 Costs for new offices refers to the costs incurred to set-up the Dubai and Abu Dhabi branches. They are amortised over five years. Research and development costs






Increase in production 12,000 4,000 8,000 12,000 4,000 8,000

The balance consists of costs incurred by the company for purchasing a certification as a general contractor. They are reasonably associated with a useful life that spans over several years and are systematically amortised over their residual income generating potential. Industrial patents and intellectual property rights



Rounding Amortisation of the year


Software 141,874 13,850 (1) 94,648 61,075 141,874 13,850 (1) 94,648 61,075

The balance refers to software licences purchased and used during the year as part of business activities (Autocad, Oracle, MS Office, etc.). Goodwill






Business unit acquisition 3,579,235 3,579,235 3,579,235 3,579,235

The increase of the year refers to the acquisition of the business units of Imprese Co.E.Stra. S.p.A. (€ 2,040,200) and L’Avvenire 1921 (€ 1,539,035), which form part of the Joint Venture which, together with S.E.C.O.L. S.p.A., won the ANAS contract for the executive design and execution of the variation to S.S. 1 Aurelia: access roads to the La Spezia harbour, totalling € 125 million. Amortisation will be charged on a straight-line basis over not more than five years starting from 2015. Indeed, acquisition of the last business unit was completed at the end of 2014, based on the term of the works obtained as part of the business unit acquisition.



Goodwill was recognised with the approval of the Board of Statutory Auditors. At the date of preparation of these notes, the following conditions were met: − it was acquired against consideration as it derives from the acquisition of a business unit; − its amount can be calculated as it is included in the agreed consideration; − it is originally comprised of charges and costs of a long-term nature which ensure future economic benefits; − the principle of cost recoverability is met. Assets under development and payments on account This caption amounts to € 1,031,000 and refers to the costs incurred for a traffic feasibility study and preparation of the preliminary project regarding the road conditions of a road section. Other

Carrying amount

at31/12/2013

Increase (decrease)

Reclass. purs. to art. 2423- ter

Italian Civ. Code


Carrying amount at

31/12/2014

Leasehold improvements 136,912 (18,123) 52,933 65,856 Pre-operating costs 906,582 1 (906,583) 0

1,043,494 (18,122) (906,583) 52,933 65,856 These costs are amortised over the period of future usefulness of the expenses incurred or the residual lease term, whichever is shorter. II. Tangible fixed assets

31/12/2014 31/12/2013 Change 67,363,029 73,620,116 (6,257,087)

Land and buildings

Historical cost 24,682,952 Accumulated depreciation (3,848,035) 31/12/2013 20,834,917 of which: land 4,587,110 Increases of the year 117,042 Decreases of the year (16,052) Depreciation of the year (531,078) 31/12/2014 20,404,829 of which: land 4,587,110

The increases of the year are entirely related to light constructions to be used in work sites. As a guarantee for the loans granted by the banks to the company, mortgages were placed on land and buildings owned by the company, for a total of € 90,000,000. Plant and machinery

Historical cost 83,259,962 Accumulated depreciation (34,926,531) 31/12/2013 48,333,431 Increases of the year 336,370



Decreases of the year (91,835) Depreciation of the year (4,896,852) 31/12/2014 43,681,114

The balance refers to machinery and equipment used at the company's work sites. These include: demolisher hammers, air pads for handling systems, self-lifting platforms, conveyor belts, tunnel boring machines, etc.. Depreciation also applies to the Martina TBM boring machine for a total of € 1,912,333. This plant, which is currently unused as excavation of the tunnels of the “Valico by-pass” - Lots 6/7 contract has been completed, was depreciated using a 5.88% rate which reflects a residual useful life of 17 years, calculated over the residual carrying amount at 31 December 2013, net of the estimated residual amount at the end of the asset's useful life, as set out in the introduction to these notes. Industrial and commercial equipment

Amount Historical cost 5,039,093 Accumulated depreciation (4,582,835) 31/12/2013 456,258 Increases of the year 74,581 Decreases of the year (9,209) Depreciation of the year (378,434) 31/12/2014 143,196

Other assets

Historical cost 10,883,536 Accumulated depreciation (8,094,040) 31/12/2013 2,789,496 Increases of the year 242,516 Decreases of the year (89,618) Transfers (reclassification) 18,804 Depreciation of the year (1,014,518) 31/12/2014 1,946,680

Assets under construction and payments on account

Amount 31/12/2013 1,206,014 Transfer to asset (18,804) 31/12/2014 1,187,210

III. Financial fixed assets

31/12/2014 31/12/2013 Change 125,867,607 94,761,132 31,106,475

Investments



31/12/2013 Increase Decrease 31/12/2014 Subsidiaries 49,807,141 165 49,806,976 Associates 4,052,312 4,052,312 Other companies 7,413,246 7,413,246 61,272,699 165 61,272,534

The decrease is due to the investment in the Moldovan ICS whose sale was approved. Consequently, the investment was reclassified to current financial assets. Subsidiaries

City or foreign country

Share/quota capital

Net equity

Net profit/ Loss

% of invest. Carrying amount

ALITEC S.p.A. CHIETI 45,000,000 43,088,129 (234,783) 95.54 42,993,820 I.M.C. S.r.l. CHIETI 12,000 8,268 (34,320) 51 6,120 PARCHI SCARL CHIETI 10,000 10,000 19.36 1,936 AMBRA S.r.l. CHIETI 6,900,000 6,260,962 (299,306) 98.55 6,800,000 TOTO S.p.A. IN ASSOCIATION WITH TADDEI S.p.A. SCARL

CHIETI 10,000 10,000 51 5,100

1) ALITEC S.p.A.

The business purpose of the company is the construction and management of properties. Alitec S.p.A. is the owner of an industrial complex totalling 165,000 square metres, where it is involved in a project to construct a multifunctional complex for management, commercial, residential, cultural, entertainment and well-being uses. The carrying amount of the investment in Alitec S.p.A. is primarily justified by that of the industrial complex which it owns. The improvement of the area, as indicated above, will allow full recoverability of the recognised amounts. Net equity and the net loss for the year refer to the financial statements at 31 December 2014, which are undergoing approval.

2) I.M.C. S.r.l.

Investment acquired in 2005 for a share of 51% in the share capital. I.M.C. S.r.l. operates in the road barrier production and installation sector. The company, in a joint venture with Toto S.p.A. Costruzioni Generali, is the contractor for the replacement of the road traffic safety barriers of the A/24 – A/25 Motorways. Contracting body: Strada dei Parchi S.p.A. The carrying amount of the investment is equal to its purchase cost. Net equity and the result for the year refer to the financial statements at 31 December 2014, which are undergoing approval.

3) PARCHI SCARL

Consortium company set up by IMC S.r.l. (80.64%) and Toto S.p.A. Costruzioni Generali (19.36%) after the entire management of the “works necessary for replacing the traffic safety barriers of Motorways A/24 – A/25” was awarded to the joint venture. Contracting body: Strada dei Parchi S.p.A.

4) AMBRA S.r.l.

The company was established on 23 September 2004 with the purpose of purchasing, building, restructuring,



selling and managing all types of buildings. On 30 September 2013, Toto S.p.A. Costruzioni Generali subscribed the quota capital increase resolved by Ambra S.r.l. quotaholders, becoming the company's majority quotaholder. The quota capital increase was carried out by offsetting Toto S.p.A. Costruzioni Generali's receivables up to € 6,800,000. The carrying amount of the investment is equal to the percentage of the company's net equity held when quota capital was subscribed. The enhancement of the company's property will make it possible to recover the investment in the future. Net equity and the result for the year refer to the financial statements at 31 December 2014, which are undergoing approval.

5) TOTO S.p.A. IN ASSOCIATION WITH TADDEI S.p.A. SC ARL

The company, set up by Toto S.p.A. and Taddei S.p.A., has been awarded two contracts for the “M2 Chisinau-Soroca Redevelopment Works” assigned by the “Ministry of Transport and Road Infrastructure” of the Republic of Moldavia. Works, which were completed in 2014, amount to approximately € 19,5 million. The carrying amount of the investment is equal to the ownership share in the company on the date of its incorporation. Associates

City or foreign country

Share/quota capital

Net equity

Net profit/ Loss

% held Carrying amount

ARABONA SCARL CHIETI 100,000 100,000 49.9 49,900 SAN BENEDETTO VAL DI SAMBRO SCARL

ROME 10,000 10,000 3.6 3,600

NOVIGAL SCARL BARI 10,000 10,000 33 3,312 INTERMODALE S.r.l. CHIETI 8,000,000 6,753,031 (504,899) 49.9 3,992,000 GALLERIA DI TENDA SCARL

ROME 10,000 10,000 35 3,500

1) ARABONA SCARL

A non-profit consortium company set up on 23 January 2009 to complete the Val Pescara Multimodal Freight Terminal located in Manoppello (PE). Toto S.p.A. Costruzioni Generali holds 49.90% of the company’s share capital.

2) SAN BENEDETTO VAL DI SAMBRO SCARL

A non-profit consortium company set up on 23 July 2007 under article 23 bis of Law no. 584/77 between Vianini S.p.A. (54%), Toto S.p.A. Costruzioni Generali (36%) and Profacta S.p.A. (10%) after the integrated tender (under art. 19.b of Law no. 109/94) was awarded to the joint venture formed between these three companies involving the “Upgrading of the Apennine stretch between Sasso Marconi and Barberino del Mugello – La Quercia Badia Nuova Section – Lots 6 and 7” – Contracting body Autostrade per l’Italia S.p.A.. The carrying amount of the investment is equal to its purchase cost.

3) NOVIGAL SCARL

A non-profit consortium company set up under article 96 of Presidential decree no. 554 of 21 December 1999 between Dec S.p.A. (67%) and Toto S.p.A. (33%) after the Municipality of Potenza awarded the joint venture formed between these two companies the contract involving the construction of the “Galitello Complex Road Junction” in the same Municipality.



4) INTERMODALE S.r.l.

The company was established on 8 April 2008 as a special purpose vehicle pursuant to article 156 of Legislative decree no. 163/2003. Its business purpose is the execution of the agreement entered into by the Abruzzo region and the Joint Venture Dino Di Vincenzo & C. S.p.A. and Toto S.p.A. Costruzioni Generali on 10 January 2008. The agreement provides for, among other things, the design, construction, management and maintenance of the completion of the Val Pescara Multimodal Freight Terminal located in Manoppello (PE) and the financial and functional management and maintenance of work already carried out by Interporto Val Pescara S.p.A. Toto S.p.A. holds 49.90% of the company’s quota capital. Net equity and the result for the year refer to the financial statements at 31 December 2014, which are undergoing approval. The greater amount of the investment compared to the portion of net equity held is deemed recoverable based on the future income expectations set out in the Financial Plan, under review, of the above agreement.

5) GALLERIA DI TENDA SCARL

A non-profit consortium company set up on 19 September 2012 by Grandi Lavori Fincosit S.p.A. (65%) and Toto S.p.A. Costruzioni Generali (35%) following the awarding to the joint venture of the contract related to the state highway S.S. 20, in Colle di Tenda, which provides for the construction of a new 3.3 km tunnel using traditional digging techniques and widening the existing side tunnel. Financial receivables

31/12/2013 Increase Decrease 31/12/2014 Subsidiaries 6,154,361 160,358 6,314,719 Associates 276,200 96,700 372,900 Parents 22,345,326 47,887,793 17,276,237 52,956,882 Others 4,712,546 1,025,407 787,381 4,950,572 33,488,433 49,170,258 18,063,618 64,595,073

Financial receivables from subsidiaries

They refer to interest-bearing loans in favour of subsidiaries. These include the receivable due from Alitec S.p.A. of € 5,349,719.

Financial receivables from associates

The balance refers to the advances granted to Galleria di Tenda Scarl. Financial receivables from parents

The balance refers to interest-bearing loans granted to Toto Holding S.p.A.. As described in the Directors' Report, this loan was partially repaid in the next twelve months (approximately € 12 million) given the parent's availability of cash flows generated by the sale of Ponte Albanito. Again, as reported in the Directors' Report, the expected dividend distribution will further decrease the receivable by € 9.5 million.

Financial receivables from others



This caption, which is down € 787,381 on the previous year following the repayment of the loan granted to Libra S.r.l., refers to an interest-bearing loan (€ 1,638,275) granted to the related party (Iniziative Immobiliari Sas) entered into at standard market conditions (up by € 624,786 on the previous year), the balance of the capitalisation contracts agreed with Generali Italia S.p.A. (preliminary to the surety policies related to works at some work sites) and the interest-bearing loan (€2,107,110) to the related party Strada dei Parchi (up by € 400,621 on the previous year). The breakdown of financial receivables at 31 December 2014 by geographical area is shown in the table below:

Crediti per Area

Geografica

Subsidiaries Associates Parents Other companies

Total

Italy 6,314,719 372,900 52,956,882 4,950,572 64,595,073 Total 6,314,719 372,900 52,956,882 4,950,572 64,595,073

C) Current assets I. Inventory

31/12/2014 31/12/2013 Change 72,759,530 99,628,947 (26,869,417)

This caption breaks down as follows:

31/12/2013 Reclass. purs. to art. 2423-ter

Italian Civ. Code

31/12/2013 balance, post

reclassif.

Increase Decrease 31/12/2014

Raw materials 8,954,357 8,954,357 2,380,969 6,573,388 Contract work in progress 78,887,405 3,783,566 82,670,971 34,934,050 57,950,526 59,654,495 Finished goods 4,418,840 4,418,840 4,418,840 Payments on account 3,584,779 3,584,779 1,471,972 2,112,807 95,845,381 3,783,566 99,628,947 34,934,050 61,803,467 72,759,530

Raw materials, consumables and supplies: the balance refers to inventory of raw materials that will be used in production. It decreased by a net € 2,380,969 on the previous year. Contract work in progress : this caption decreased by a net € 23,016,476 compared to the previous year and includes work carried out pending the issue of the payment certificate (€ 3,262,978), in addition to the increase in fees for price adjustments (totalling € 1,173,901) and in fees requested from customers for claims (€ 48,500,000). The latter decreased by a net € 25,800,000, being the decrease in the caption of a total € 57,800,000, of which € 56,800,000 collected during the year, and the recognition of new claims accrued during the year worth € 32,000,000. Contract work in progress includes the pre-operating costs recognised in accordance with OIC document no. 23 of 5 August 2014 for a total of € 6,717,616. The balance comprises the opening balance of these costs (€ 3,783,566) which, in the 2013 financial statements were recognised under intangible fixed assets, and the calculation of the costs incurred to start-up contracts in 2014 (€ 2,934,050). Pre-operating costs are considered contract costs and form part of the net profit (loss) for the year based on the progress of work, calculated using the percentage of completion method with the physical measurement method.



Claims are measured considering the estimates prepared by the specific company areas (based on the type of each claim, including assessments of the legal grounds and financial capacity) and the fact that for certain tenders an initial claim definition procedure has already been concluded. The reasons behind the “Claims” valuations are therefore similar to those established in previous arbitration procedures. The Directors consider that the disputes underway will have a positive outcome and therefore that these amounts will be recoverable, also taking into account the assessments and opinions issued by an independent professional. Finished goods: the caption, unchanged from the previous year, includes the carrying amount of real estate units to be sold located in Chieti, via Colonnetta 239/247. Payments on account decreased by € 1,471,972 on the previous year and include the amounts paid to suppliers for the purchase of goods. II. Receivables

31/12/2014 31/12/2013 Change 48,188,510 70,365,313 (22,176,803)

Due within one year

Due after one year

Due after 5 years

Total

Trade receivables 9,667,282 9,667,282 From subsidiaries 1,929,432 1,929,432 From associates 7,897,319 7,897,319 From parents 12,155 12,155 Tax receivables 2,123,673 2,123,673 Deferred tax assets 632,310 632,310 From others 25,926,339 25,926,339 48,188,510 48,188,510

Trade receivables: they decreased by € 25,813,511 following the amounts collected in 2014, specifically the amount due from ANAS of € 22,000,000. Their nominal amount is adjusted to their estimated realisable value through the provisions for bad debts which underwent the following changes during the year:

Description Total 31/12/2013 1,135,259 Utilisation of the year (100,000) 31/12/2014 1,035,259

Due from subsidiaries : this caption decreased by € 3,108,404 and is mainly comprised of the trade receivable from Alitec S.p.A. (€ 1,472,260) and the trade receivable from Parchi Scarl (€ 304,850). From associates: this caption decreased by € 5,181,837 and mainly includes trade receivables from Intermodale S.r.l. (€ 6,165,504), trade receivables from San Benedetto Val di Sambro Scarl (€ 972,290) and trade receivables from Galleria di Tenda Scarl (€ 741,791). Due from parents: this caption includes trade receivables from the parent Toto Holding S.p.A.. Tax receivables: this caption rose by € 837,991 on the previous year and is mainly comprised of the VAT credit of € 1,039,593 and other tax credits to be reimbursed.



Deferred tax assets: this caption rose by € 144,090. The receivables included in the table are broken down in the note to income taxes. From others : this caption rose by € 10,950,632 on the previous year. In this caption, receivables from others - related parties include the amounts due from employees for loans and advances, receivables for guarantee deposits and trade receivables from related companies of € 22,227,475 , which break down as follows:

Strada dei Parchi S.p.A. Toto Real Estate S.p.A. Infraengineering S.r.l. Ponte Albanito S.r.l. Renexia S.p.A.

Amount 13,910,526 6,409,068

821,582 582,666 240,597

Rail One S.p.A. 102,278 Azienda Aviagricola Abruzzese S.r.l. 83,951

Parchi Global Service S.p.A. 71,709 InterSun S.r.l. 5,100 Balance at 31/12/2014 22,227,475

The nominal amount of receivables due from others is adjusted to their estimated realisable value through the provisions for bad debts which underwent the following changes during the year:

Amount 31/12/2013 803,683 Utilisation of the year 0 31/12/2014 803,683

The breakdown of receivables at 31 December 2014 by geographical area is shown in the table below.

Trade receivables

Subsidiaries Associates Parents From others Total

Italy 9,667,282 1,929,432 7,897,319 12,155 25,926,339 45,432,527 Total 9,667,282 1,929,432 7,897,319 12,155 25,926,339 45,432,527

III. Current financial assets

31/12/2014 31/12/2013 Change 604,573 604,409 164

31/12/2013 Increase Decrease 31/12/2014 Other investments 575,000 164 575,164 Other securities 29,409 29,409 604,409 164 604,573

Other investments: this caption includes the carrying amount of the investment in RTR Monteboli S.p.A., which will be sold soon after the fulfilment of the formal and bureaucratic requirements necessary for the sale contract, which includes obtaining the final testing of the photovoltaic park located in the Municipality of Eboli.



The investment, which is set to be sold in 2015, is currently given as a guarantee with Monte dei Paschi di Siena. The increase is due to the investment in the Moldovan ICS which was sold in February 2015. Other securities: The balance in the table consists of securities and investments intended to be held for a short period of time. IV. Liquid funds

31/12/2014 31/12/2013 Change 9,239,173 1,815,391 7,423,782

Description 31/12/2014 31/12/2013 Bank and postal accounts 9,225,596 1,799,191 Cash in hand and cash equivalents

13,577 16,200

9,239,173 1,815,391 The balance represents liquid funds and cash equivalents at the reporting date. Bank and postal accounts include term deposits amounting to € 4,737,239. These include the term deposit (€ 506,790) given as collateral for a surety of the same amount issued by Cassa di Risparmio di Chieti S.p.A., a term deposit (€1,560,934) given as collateral for a surety of the same amount issued by BCC, two term deposits with BPM (€ 2,089,955) given as collateral for sureties to participate in foreign tenders and term deposits with DEXIA S.p.A. related to contractual charges with the customer Strada dei Parchi (€ 569,822). D) Prepayments and accrued income

31/12/2014 31/12/2013 Change 6,451,989 2,809,071 3,642,918

This caption reflects income and expenses pertaining to previous or future years with respect to the related payment or collection. These are recorded regardless of the date of payment of the respective income and expenses, which relate to two or more years and can be spread out over time. At 31 December 2014, there were no prepayments or accrued income due after more than five years. The breakdown of this caption is as follows:

Amount Insurance premiums 4,295,973 Rent and leases 49,006 Prepaid lease instalments 247,350 Commissions on sureties 108,362 Financial charges 547,533 Lease of the Secol business unit - La Spezia contract 1,014,411 Others of a non-material amount 189,354 6,451,989

Prepaid insurance premiums mainly refer to contracts of a long-term nature for the “RFI Cefalù” contract in the start-up stage. The lease of the Secol business unit, entered into in December 2014, refers to the portion of costs pertaining to 2015.



Liabilities A) Net equity

31/12/2014 31/12/2013 Change 81,762,604 76,746,819 5,015,785

31/12/2013 Increase Decrease 31/12/2014 Share capital 50,000,000 50,000,000 Share premium reserve 20,699,616 20,699,616 Legal reserve 152,320 150,808 303,128 Extraordinary or optional reserve 2,894,082 2,865,356 5,759,438 Euro rounding difference 1 1 0 Net profit (loss) carried forward (15,364) (15,364) Net profit (loss) for the year 3,016,164 5,015,786 3,016,164 5,015,786 Total 76,746,819 8,031,950 3,016,065 81,763,604

Details of the changes in net equity are shown in the table below.

Share capital

Share premium reserve

Round. Legal reserve

Extraordinary reserve

Net profit (loss)

carried forward

Result for the period

Total

Prior year opening balance 50,000,00050,000,00050,000,00050,000,000 20,699,61620,699,61620,699,61620,699,616 0000 27,82327,82327,82327,823 528,645528,645528,645528,645 (15,364)(15,364)(15,364)(15,364) 2,489,9342,489,9342,489,9342,489,934 73,730,65473,730,65473,730,65473,730,654 Allocation of profit for the year

- legal reserve 124,497 (124,497) - extraordinary reserve 2,365,437 (2,365,437) Euro rounding difference

Net profit (loss) for the previous year 1 3,016,164 3,016,165 Prior year closing balancePrior year closing balancePrior year closing balancePrior year closing balance

50,000,00050,000,00050,000,00050,000,000 20,699,61620,699,61620,699,61620,699,616 1111 152,320152,320152,320152,320 2,894,0822,894,0822,894,0822,894,082 (15,364)(15,364)(15,364)(15,364) 3,016,1643,016,1643,016,1643,016,164 76,746,81976,746,81976,746,81976,746,819 Allocation of profit (loss) for the year - legal reserve

150,808

(150,808)

- extraordinary reserve

2,865,356

(2.865.356)

Euro rounding difference

-1

-1 Net profit (loss) for the year

5,015,786 5,015,786 Closing balance of the yearClosing balance of the yearClosing balance of the yearClosing balance of the year 50,000,00050,000,00050,000,00050,000,000 20,699,61620,699,61620,699,61620,699,616 0000 303,128303,128303,128303,128 5,759,4385,759,4385,759,4385,759,438 (15,364)(15,364)(15,364)(15,364) 5,015,015,015,015,7865,7865,7865,786 81,7681,7681,7681,762,6042,6042,6042,604

The breakdown of share capital is as follows.

Shares Number Nominal amount in euro

Ordinary shares 500,000 100 Total 50,000,000



Net equity captions are broken down as follows by origin, possible use, distribution and use in the previous three years.

Amount Possible use (*)

Available portion

Actual use in the past three years To

cover losses

Actual use in the past three years

For other reasons Share capital 50,000,000 B Share premium reserve 20,699,616 A, B, C Legal reserve 303,128 B Other reserves 5,759,438 A, B, C Net profit (loss) carried forward

(15,364) A, B, C

(*) A: share capital increase; B: loss coverage; C: dividends In accordance with OIC 28 on Net equity, the following additional information is provided:

� No monetary or fair value revaluation reserves are included in the share capital.

� There are no reserves or other provisions which if distributed would form part of the taxable income of the company or shareholders.

B) Provisions for risks and charges

31/12/2014 31/12/2013 Change 3,452,230 4,417,122 (964,892)

31/12/2013 Increase Decrease 31/12/2014 Tax provision, including deferred tax liabilities

5,887 5,887

Other 4,417,122 19,410 990,189 3,446,343 4,417,122 25,297 990,189 3,452,230

The provision for deferred tax liabilities refers to taxes (IRES (corporate income tax) 27.5%) and reflects the decrease in unrealised exchange rate gains (€ 21,408). Other provisions include amounts set aside for charges for ten-year post-completion policies and work site disposal charges. The decrease refers to the downward revision of costs for policies, following the better conditions offered by the insurance market, compared to the original accrual, and the decreases in accruals recognised in prior years which are no longer necessary. C) Employees' leaving entitlement (Ref. Art. 2427, para. 1, No. 4, Italian Civil Code)

31/12/2014 31/12/2013 Change 981,736 1,398,148 (416,412)

The change is broken down as follows.



Change 31/12/2013 Increase

Decrease

31/12/2014

Employees' leaving entitlement, changes during the year

1,398,148 1,078,416 1,494,828 981,736

The provision represents the actual amount due to employees in accordance with law and current employment contracts, taking into account all forms of remuneration of an ongoing nature. The provision corresponds to all the individual indemnities accrued up until 31 December 2006 by employees on the reporting date, net of any advances paid, and amounts to what would be due to employees should their employment have terminated on that date. The provision does not include the indemnities accrued from 1 January 2007 allocated to supplementary pension schemes under Legislative decree no. 252 of 5 December 2005 (or transferred to the INPS (Italian Social Security Institute) treasury fund). D) Payables

31/12/2014 31/12/2013 Change 248,493,647 263,220,123 (14,726,476)

Payables are stated at their nominal amount and are broken down as follows:

Due within one year

Due after one year

Due after five years

Total

Bank loans and borrowings 42,015,952 35,013,793 3,209,971 80,239,716 Payments on account 3,569,956 3,569,956 Trade payables 50,117,367 50,117,367 Payables to subsidiaries 68,186 68,186 Payables to associates 36,908,609 36,908,609 Payables to parents 945,406 945,406 Tax payables 44,227,368 19,493,721 63,721,089 Social security charges payable 1,283,042 1,283,042 Other payables 10,184,809 1,455,467 11,640,276 189,320,695 55,962,981 3,209,971 248,493,647

Bank loans and borrowings Bank loans and borrowings are down € 16,011,922 compared to the previous year and include loans payable and the actual principal, interest and ancillary charges incurred and due. This caption is broken down as follows:

Descrizione 31/12/2014 31/12/2013 Variazioni

C/c ordinari 4.356.996 6.313.068 (1.956.072) C/anticipi "SIL/SAL" 25.211.414 24.777.692 433.722 C/anticipi "Claims" - 3.891.066 (3.891.066) Mutui su Aree e Fabbricati 15.361.620 19.540.543 (4.178.923) Finanziamenti Beni Strum.li 35.309.686 41.729.269 (6.419.583)

Totale debito verso banche 80.239.716 96.251.638 (16.011.922)



Loans and financing consist of:

� the amount due to WESTLB AG – Milan Branch deriving from the Loan Agreement totalling € 52 million for the purchase of the TBM boring machine used for the Valico bypass – Lots 6/7 contract awarded by ASPI. At the reporting date, € 17,829,921 was repaid;

� loans and financing were contracted with the following banks: Banca Popolare dell’Emilia Romagna,

Cassa di Risparmio di Chieti and Cassa di Risparmio di Pescara. At the reporting date, the balance is € 15,361,620. These loans are secured by collateral on real property owned by the company.

Payments on account This caption decreased by € 6,625,087 on the previous year and includes the advances received from customers for the supply of goods and services still to be performed; it includes the payments on account from the customer Autostrade per l'Italia S.p.A. (€ 3,537,213). Trade payables They decreased by € 25,656,755 on the previous year and are recognised net of trade discounts, while cash discounts are recognised upon payment. The nominal amount of these payables has been adjusted to reflect returns or rebates (invoicing adjustments) by the amount agreed upon with the other party. Payables to subsidiaries This caption is down € 3,759,659 on the previous year and mainly includes the payable due to the subsidiary Parchi Scarl (€ 63,338). Payables to associates This caption rose € 7,145,915 on the previous year. It can be analysed as follows:

Amount San Benedetto Val di Sambro Scarl for trade transactions 35,375,184 San Benedetto Val di Sambro Novigal Scarl for share capital to be paid 2,700 Arabona Scarl for commercial transactions 313,105 Galleria di Tenda Scarl for commercial transactions 1,212,511 Galleria di Tenda Scarl for share capital to be paid 2,625 Novigal Scarl for share capital to be paid 2,484 Balance at 31/12/2014 36,908,609

Payables to parents They rose by € 262,414 on the previous year and refer to the amount to be paid to the parent Toto Holding in relation to the IRES (corporate income tax) for 2014, being the parent in the national tax consolidation scheme. Tax payables They rose € 28,094,260. The balance indicates the liabilities for certain and specific taxes. This caption includes



� the IRAP (regional tax on production) payable amounting to € 2,138,252.

� the VAT payable of € 54,709,710 of which € 26,184,722 related to 2013 and to be paid in 20 quarterly instalments. The first instalment was paid in October 2014 following the payment reminder sent by the Tax Authorities in September 2014;

� Withholdings for employees' and freelancers' income in 2014 totalling € 5,368,744;

� Penalties and interest for the late payment of taxes and dues for € 1,504,383.

Social security charges payable

Social security charges payable decreased by € 878,847 on the previous year and include the amounts payable to social security institutions (INPS, INAIL, Previndai, special construction workers funds and supplementary social security institutes) for contributions incurred during the year.

Among others, this caption includes:

� INPS contributions for employees, collaborators and professionals working on an occasional basis for

€ 798,560;

� INAIL contributions totalling € 258,814;

� PREVINDAI contributions totalling € 113,968;

� special construction workers funds totalling € 81,911. Other payables

This caption amounts to € 2,703,203. € 11,640,276 is mainly comprised of:

� Amounts due to employees for monthly pay, 14-month pay, accrued holiday and leave pay accrued at 31 December 2014 and still payable totalling € 3,426,382. The payable related to the December 2014 pay was paid in January 2015.

� Payables to CO.E.STRA S.p.A. (€ 1,560,934) and Avvenire 1921 (€ 1,350,000) for the purchase of the respective business units related to the contract awarded by ANAS and related to the Executive design and execution of the variation to S.S. 1 Aurelia: access roads to the La Spezia harbour. These payables, of € 1,455,467, are due after one year.

� Payables to related companies totalling € 4,258,626 , the balance of which at 31 December 2014 was as follows:

Amount Strada dei Parchi S.p.A. Infraengineering S.r.l.

1,646,420 1,552,369

Parchi Global Service S.p.A. Toto Real Estate S.r.l. Ponte Albanito S.r.l.

615,538 378,032

65,426 Rail One S.p.A. 516 Renexia S.p.A. 325 4,258,626

The breakdown of Payables at 31 December 2014 by geographical area is shown in the table below.



Trade payables

Due to subsidiaries

Due to associates

Due to parents Due to others Total

Italy 47,741,948 68,186 36,908,609 945,406 11,640,276 97,304,425 Romania 194,504 194,504 Germany 278,437 278,437 Bulgaria 20,000 20,000 United Kingdom 102,648 102,648 Denmark 990,383 990,383 France 31,094 31,094 Czech Republic 28,413 28,413 Poland 4,044 4,044 Lebanon 39,097 39,097 Switzerland 626,905 626,905 Honk Kong 12,492 12,492 United Arab Emirates

12,402 12,402

Armenia 35,000 35,000 Total 50,117,367 68,186 36,908,609 945,406 11,640,276 99,679,844

E) Accrued expenses and deferred income

31/12/2014 31/12/2013 Change 1,201,092 186,820 1,014,272

These are adjusting entries for the year calculated on an accruals basis. At 31 December 2014, there were no accrued expenses and deferred income due after more than five years. The breakdown of this caption is as follows:

Amount Deferred income for insurance policies 1,002,514 Deferred income for insurance sureties 37,234 Accrued bank interest 89,051 Others of a non-material amount 72,293 1,201,092

Deferred income for insurance policies includes costs related to insurance policies, fully entered into by the company which is the agent of the Joint Venture to which the “RFI Cefalù” contract was awarded, and to be recharged to the other members of the Joint Venture. Memorandum and contingency accounts

31/12/2014 31/12/2013 Change 747,058,176 659,386,883 (87,671,293)

Details of the caption are as follows:

31/12/2013 Increase Decrease 31/12/2014 Commitments assumed by the company 404,536,809 253,964,582 143,628,838 514,872,552 Other memorandum and contingency accounts 254,850,074 33,225,214 55,889,664 232,185,624 659,386,883 287,189,796 199,518,502 747,058,176



The balance under Commitments assumed by the company reflects the residual lease payments to be made (€1,966,311) and the contractual commitments related to goods or services still to be performed (OIC 23.28) of € 512,906,241.

The breakdown of Other memorandum and contingency accounts, which includes insurance and bank sureties issued in favour of contracting bodies, is as follows:

� Insurance and bank sureties provided to customers as a guarantee

for the satisfactory performance of the work totalling € 137,812,834.

� Insurance sureties provided to customers as release of guarantee withholdings on work totalling € 13,897,222.

� Insurance sureties provided to customers as a guarantee for

advances received for work totalling € 29,244,900.

� Insurance and bank sureties provided as a guarantee for various contractual commitments totalling € 5,895,313.

� Guarantees issued in the interest of group companies for payment

obligations totalling € 45,335,355. Profit and loss account A) Production revenues

2014 2013 Change 177,624,282 239,465,502 (61,841,220)

2014 2013 Change Turnover from sales and services 200,137,835 278,624,554 (78,466,719) Change in contract work in progress (23,016,476) (41,844,127) 18,827,651 Other revenues and income 502,923 2,685,075 (2,182,152) 177,624,282 239,465,502 (61,841,220)

The change is strictly related to that set out in the Directors' Report. Revenues from sales and services are broken down as follows: Revenues by category of business

Category 2014 2013 Change Services 200,137,835 278,624,554 (78,486,719) Other 502,923 2,685,075 (2,182,152) 200,640,758 281,309,629 (80,668,871)

Revenues by geographical area

Area Sales Services Total Italy 200,364,659 200,364,659



Moldova 276,099 276,099 200,640,758 200,640,758

B) Production cost

2014 2013 Change 162,584,328 226,434,856 (63,850,528)

2014 2013 Change Raw materials, supplies and goods 23,139,100 54,772,989 (31,633,889) Services 93,057,154 108,508,170 (15,451,016) Use of third party assets 3,432,590 5,046,969 (1,614,379) Wages and salaries 18,394,734 26,204,867 (7,810,133) Social security contributions 6,977,583 10,603,232 (3,625,649) Employees' leaving entitlement 1,078,416 1,804,140 (725,724) Other costs 139,685 54,714 84,971 Amortisation of intangible fixed assets 362,503 384,929 (22,426) Depreciation of tangible fixed assets 6,820,882 12,245,079 (5,424,197) Write-downs of current receivables 400,000 (400,000) Change in raw materials 2,380,969 1,676,843 704,126 Provisions for risks 19,410 113,040 (93,630) Other operating costs 6,781,302 4,619,884 2,161,418 162,584,328 226,434,856 (63,850,528)

Raw materials, supplies and goods These costs are closely linked to that set out in the Directors’ Report and to point A (Production value) of the profit and loss account. The most indicative items that make up the balance include:

� costs for construction materials for € 11,928,130 (cement, aggregates, admixtures, iron and prefabricated and manufactured items, etc.);

� fuel and lubricants, € 3,466,611;

� spare parts, € 1,063,576;

� electric and metal materials, € 6,313,776.

Services They amount to € 93,057,154. The most indicative items that make up the balance include:

� external processing and services, € 28,762,397;

� rentals, € 2,315,154;

� electricity, € 1,281,498;

� insurance, € 3,091,964;

� costs recharged by consortium companies, € 52,444,340;



Use of third party assets

The balance is € 3,432,590. Specifically, these costs relate to lease payments for assets under finance lease with repurchase right (€ 2,279,323) and to costs for property leases and rentals (€ 1,056,030). Personnel expenses This caption includes all personnel expenses, including promotions, changes of category, paid holidays accrued but not taken and provisions required by law and collective employment contracts. Depreciation of tangible fixed assets Depreciation was calculated based on the useful life of the asset and its use during production. Depreciation also applies to the TBM boring machine for a total of € 1,912,333. This plant, which is currently unused as excavation of the tunnels of the “Valico by-pass” - Lots 6/7 has been completed, was depreciated using a 5.88% rate which reflects a residual useful life of 17 years, calculated over the residual carrying amount at 31 December 2013, net of the estimated residual amount at the end of the asset's useful life, as set out in the introduction to these notes. Other operating costs This caption refers mostly to costs for losses on receivables not covered by a specific provision (€ 4,213,853) and penalties due to the late payment of taxes and dues (€ 1,755,410) C) Financial income and charges

2014 2013 Change (4,428,390) (5,183,723) 755,333

Financial income and charges

2014 2013 Change From investments 1,350 (1,350) From financial receivables classified as fixed assets

1,141,836 1,037,181 104,655

From securities classified as current assets

389,533 615 388,918

Other income 641,349 232,874 408,475 (Interest and other financial charges) (6,596,792) (6,421,208) (175,584) Exchange gains (losses) (4,316) (34,535) 30,219 (4,428,390) (5,183,723) 755,333

Other financial income

Parents Subsidiaries Associates Other Total Bank and post office interest 15,889 15,889 Interest on loans 954,395 187,441 529,266 1,651,102 Other income 485,727 485,727 954,395 187,441 1,030,882 2,172,718

Interest on loans refers to interest accrued on loans granted to the parent Toto Holding S.p.A. (€ 934,395), the



subsidiary Alitec S.p.A. (€ 181,018) and others, including the related company Strada dei Parchi S.p.A. (€ 316,047). Interest and other financial charges

Parents Subsidiaries Associates Other Total Bank interest 2,320,235 2,320,235 Interest on trade payables 774,220 774,220 Interest on medium-term credit 542,477 542,477 Discounts or financial charges 1,702,648 1,702,648 Interest on loans Other financial transactions

552,361 704,851

552,361 704,851

6,596,792 6,596,792 E) Extraordinary income and expense

2014 2013 Change (110,298) (100,265) (10,033)

2014 Previous year 2013

Reduction in the rate for diesel duties, previous years Gains from disposals Release of provision for future risks and charges

343,461 112,973 990,189

Repayment of prior year excise duty on diesel fuel.

94,670

Non-existent trade payables 48,360 Non-existent trade creditors 465,984 Non-existent employees payable 51,347 Non-existent employees payable 96,461 Miscellaneous 392,539 Miscellaneous 598,164 Total income 1,938,869 Total income 1,255,279 Penalties for the late payment of taxes (1,221,327) Penalties for the late payment of taxes Charging of fees for previous years (580,369) Charging of fees for previous years (368,906) Social security charges (127,757) Social security charges (158,528) Miscellaneous (119,714) Miscellaneous (828,110) Total charges (2,049,167) Total charges (1,355,544) (100,298) (100,265) Penalties for the late payment of taxes amount to € 1,221,327 and relate to the greater penalties arising from the different rate (10% instead of the previously recognised 3.75%) to be paid to the Tax authorities following the authorisation to pay 2013 VAT in instalments. Income tax for the year

2014 2013 Change 5,485,480 4,730,493 754,987

Taxes 2014 2013 Change Current taxes: 5,623,683 4,825,956 797,727 IRES (corporate income tax) 3,866,119 2,874,213 991,906 IRAP (regional tax on production)

1,757,564 1,951,743 (194,179)

Deferred (prepaid) taxes (138,203) (95,463) (42,740) IRES (corporate income tax) (138,446) (95,706) (42,740) IRAP (regional tax on production)

243 243

5,485,480 4,730,493 754,987



Taxes pertaining to the year were recognised.

The IRES (corporate income tax) payable is recognised under Payables to the parent, net of advances and withholdings. The reconciliation between the tax charge shown in the financial statements and the theoretical tax charge is provided below. Reconciliation between tax charges shown in the fin ancial statements and theoretical tax charge (IRES)

Amount Taxes

Profit before taxes 10,501,266 Theoretical tax charge (%) 27.5 2,887,848 Temporary differences deductible in subsequent year s: 0 Unpaid interest expense 523,472 Unrealised exchange rate gains (21,408) 502,064 Differences that will not carry over to subsequent years 0 0 Undeductible costs for means of transport 979,071 Undeductible prior year expense 671,551 Undeductible taxes 187,212 Other increases 3,222,275 IRAP (regional tax on production) tax paid in the year (10%) (81,859) IRES (corporate income tax) on IRAP (regional tax on production) for personnel expenses paid during the year

(368,100)

Other decreases (1,554,864) Taxable basis 14,058,616 Current income taxes for the year 3,866,119

Calculation of IRAP (regional tax on production) ta xable basis

Amount Taxes

Difference between production revenues and cost 41,649,782 Costs irrelevant for IRAP purposes 9,296,488 INAIL contributions (918,175) Deduction for employees (9,546,896) Share of foreign production (216,898) Revenues irrelevant for IRAP purposes (93,912) Taxable IRAP 40,170,389 Current IRAP for the year 1,757,564

The information required under article 2427.1.14 of the Italian Civil Code on deferred taxes is as follows: Deferred / prepaid taxes They reflect the accrual to the tax provision (€ 5,887). Deferred taxes have been calculated using the global allocation criterion, considering total temporary differences, based on the average rates in effect when such temporary differences will reverse \based on the effective rate of the last year. Prepaid taxes are recognised since it is reasonably certain that the company will report a taxable profit in future years equal to or more than the amount of deductible temporary differences on which they were calculated.



The main temporary differences which resulted in the recognition of deferred tax assets and liabilities are stated in the table below together with their effects. Recognition of deferred and prepaid taxes and relat ed effects:

2014 2013 Temporary

differences Tax effect Temporary

differences Tax effect

Prepaid taxes: 2011 maintenance expenses deferred

12,745 3,505 12,745 3,505

Amortisation of goodwill 5,289 1,697 5,289 1,697 Recovery of previous years’ maintenance expenses

Disposal charges for work sites 2012 35,460 9,752 35,460 9,752 Disposal charges for work sites 2013 Disposal charges for work sites 2014 (19,410)

(5,338)

(113,040)

(31,086)

Unpaid interest on arrears (523,472) (143,955) 50,192 13,803 Total (524,848) (144,090) 9,354 2,329 Deferred taxes: Unrealised exchange rate gains 21,408 5,887 Interest on arrears receivable (uncollected)

(338,669) (93,134)

Total 21,408 5,887 (338,669) (93,134) Net deferred (prepaid) taxes (138,203) (95,463)

Finance leases In accordance with the instructions provided in the document "OIC 1 - The main effects of the corporate law reform on the preparation of financial statements", information is provided in the table below on the effects on Net equity and the Profit and Loss Account which would have occurred had 133 finance leases been recognised using the financial method instead of the liability method whereby lease payments are taken to the profit and loss account.

Assets a) Contracts in progress Assets under finance lease at the end of the previous year, net of depreciation 7,531,649 + Assets under financial lease acquired during the year 24,500 - Assets under financial lease redeemed during the year (424,913) - Depreciation of the year (3,201,646) - Reversal of provision for redeemed assets 13,388 Assets under financial lease at the end of the year, net of depreciation 3,942,978 b) Assets redeemed Higher total value of assets redeemed, determined in accordance with the financial method, compared to year-end carrying amount

(315,383)

c) Liabilities Finance lease payments at the end of the previous year 3,877,032 + Residual payments arising during the year 22,050 - Reductions due to repayment of principal (1,932,771) Finance lease payments at the end of the year 1,966,311 d) Total gross effect at the end of the year (a+b -c) 1,661,284 e) Net tax effect 536,927 f) Effect on Net equity at the end of the year (d -e) 1,124,357 The effect on the profit and loss account can be broken down as follows: Reversal of finance lease payments 1,639,421 Reversal of lease down payment 311,004 Recognition of financial charges on financial leases (119,401) Recognition of accumulated depreciation (3,201,646) Effect on profit before taxes (1,370,622) Recognition of the tax effect 422,711 Net effect of recognition of leases with the financ ial method on the profit for the year (927,911)



Information on financial instruments issued by the company The company did not issue any financial instruments. Information on the fair value of derivatives. The fair value and information on the amount and nature of each category of derivatives of the company are provided below, broken down by class taking into account aspects such as the characteristics of the instruments and their intended use.

1) Contract: INTEREST RATE SWAP − Type of derivative contract: unlisted financial derivative (Interest Rate

Swap); − Contract start date: 17/07/2009 − Contract end date: 30/06/2015 − Purpose: hedging; − Notional amount: € 10,000,000 − Underlying financial risk: interest rate risk; − Market to market value of the derivative contract: € (35,687) − Liability hedged: bank debt

2) Contract: INTEREST RATE SWAP

− Type of derivative contract: unlisted financial derivative (Interest Rate Swap);

− Contract start date: 17/07/2009 − Contract end date: 30/06/2015 − Purpose: hedging; − Notional amount: € 20,000,000 − Underlying financial risk: interest rate risk; − Market to market value of the derivative contract: € (47,247) − Liability hedged: bank debt

3) Contract: INTEREST RATE SWAP − Type of derivative contract: unlisted financial derivative (Interest Rate

Swap); − Contract start date: 31/12/2009 − Contract end date: 31/12/2015 − Purpose: hedging; − Notional amount: € 20,000,000 − Underlying financial risk: interest rate risk; − Market to market value of the derivative contract: € (126,102) − Liability hedged: bank debt

4) Contract: INTEREST RATE SWAP

− Type of derivative contract: unlisted financial derivative (Interest Rate Swap);

− Contract start date: 30/12/2011 − Contract end date: 30/12/2019 − Purpose: hedging; − Notional amount: € 8,859,375 − Underlying financial risk: interest rate risk; − Market to market value of the derivative contract: € (671,945) − Liability hedged: bank debt

5) Contract: OPTION



− Type of derivative contract: CAP option; − Contract start date: 30/12/2011 − Contract end date: 30/12/2019 − Purpose: hedging; − Notional amount: € 20,671,875 − Underlying financial risk: interest rate risk; − Market to market value of the derivative contract: € (203,589) − Liability hedged: bank debt

Information regarding green certificates Pursuant to OIC n. 7 Green certificates, the following information is provided: on the reporting date, the company did not possess any green certificates. Information regarding greenhouse gas emissions Pursuant to OIC 8, with respect to greenhouse gas emissions, the company had no grey certificates at the reporting date. Information on related party transactions Details of the transactions with related parties (subsidiaries, associates, parents and related companies) during the year are provided in the Directors’ Report. The transactions with each related party are carried out at normal market conditions. Information about off-balance sheet transactions No such transactions were carried out. Information on independent auditors’ fees As required by law the fees pertaining to the year for services provided by the audit company and its network of companies are stated below:

� Fees due for the legally-required audit of financial statements: € 40,000

� Fees for other services: € 15,000. Other information As required by the law, the total fees due to directors and the board of statutory auditors are stated below.

Position Fee Directors 459,333 Board of Statutory Auditors 85,129

Cash flow statement



As required by OIC 10, the cash flow statement is shown below in thousands of euros.

2014 2013

A. Cash flows from operating activities (indirect method)

Net profit (loss) for the year 5,015.8 3,016.2

Income tax 5,485.5 4,730.5

Interest expense/(interest income) 4,424.1 5,150.5

(Dividends) 0.0 (1.4)

(Gains)/losses on the sale of assets (113.0) 1. Profit for the year before income taxes, interest , dividends and gains/losses on sales 14,812.4

12,895.8

Accruals to provisions 1,097.8 1,926.8

Amortisation/depreciation 7,183.4 21,508.8

Impairment losses 0.0

Other adjustments for non-monetary elements 0.0 151.5 Total adjustments for non-monetary elements 8,281.2 23,587.1

2. Cash flows before changes in net working capital 23,093.6 36,483.0

Decrease/(increase) in inventory 26,869.4 39,269.8

Decrease/(increase) in trade receivables 25,813.5 (19,667,2)

Increase/(decrease) in trade payables (25,656,8) (7,085,4)

Decrease/(increase) in prepayments and accrued income (3,642,9) 2,434.3

Increase/(decrease) in accrued expenses and deferred income 1,014.3 (145.2)

Other changes in net working capital 21,257.4 18,687.0 Total changes in net working capital 45,655.0 33,493.2

3. Cash flows after changes in net working capital 68,748.5 69,976.2

Interest received/(paid) (5,032.2) (5,150.5)

(Income tax paid) (3,735.8) (4,415.3)

Dividends received 1.4

(Utilisation of provisions) (1,387.2) (2,405.9) Total other adjustments (10,176.1) (11,970.4)

4. Cash flows after other changes 58,572.4 58,004.5

Cash flows from operating activities (A) 58,572.4 58,004.5

B. Cash flows from investing activities

Tangible fixed assets (450.8) (2,458.7)

(Investments) (563.8) (2,484.6)

Divestments realisation price 113.0 25.8

Intangible fixed assets (590.2)

(Investments) (1,701.1)

Divestments realisation price 1,110.9 Financial fixed assets (Investments)

(31,106.5) (31,106.5)

(10,288.7) (46,365.3)

Divestments realisation price 36,076.6

Current financial assets (0.2) 3,934.6



(Investments) (0.2)

Divestments realisation price 3,934.6

Acquisition or sale of subsidiaries or business units, net of liquid funds (3,579.2) 0.0

Cash flows used in investing activities (B) (35,136.7) (9,402.9)

C. Cash flows from financing activities

Third party funds 0.0

Increase (decrease) in short-term bank loans and borrowings (3,563.1) (44,075.5)

Loans taken out 0.0

Increase (decrease) in long-term bank loans and borrowings (12,448.8) (10,596.9)

Own funds 0.0

Share capital increase against consideration 0.0

Sale (purchase) of treasury shares 0.0

Dividends (and interim dividends) paid 0.0

Cash flows used in financing activities (C) (16,011.9) (54,672.4)

Increase (decrease) in liquid funds (A +/- B +/- C) 7,423.8 (6,070.8)

Closing liquid funds 9,239.2 1,815.4

Opening liquid funds 1,815.4 7,886.2

Increase/(decrease) in liquid funds 7,423.8

(6,070.8) These financial statements, consisting of the Balance Sheet, Profit and Loss Account and these Notes, give a true and fair view of the financial position and results of operations for the year and are consistent with the accounting records. Chairman of the Board of Directors Alfonso Toto

TOTO S.p.A. COSTRUZIONI GENERALI.

Report of the Board of Statutory Auditors to the shareholders' meeting Page 1


REA (Economic Administrative Index) no. 160647

TOTO S.P.A. COSTRUZIONI GENERALI

Joint-stock company with sole shareholder managed a nd coordinated by Toto Holding Spa

Registered office in VIALE ABRUZZO 410 - 66013 CHIETI SCALO (CH) Share capital € 50,000,000 fully paid-up.

Report of the Board of Statutory Auditors to the sh areholders'

meeting pursuant to article 2429 of the Italian Ci vil Code

FINANCIAL STATEMENTS AT 31 DECEMBER 2014 Dear Shareholders, During the year ended 31 December 2014, we carried out the supervisory activities required by the law and the by-laws, while the legally-required audit was carried out by the independent auditors Kpmg S.p.A., as per the engagement for the three-year period 2014/2016 conferred by the shareholders in their meeting of 9 May 2014. After checking the draft financial statements and the directors' report and following the institutional activities carried out during the year, we note the following:

- we participated in the meetings of the board of directors and the shareholders' meetings which were carried out in accordance with the law and the by-laws;

- we monitored, to the extent of our responsibility, the adequacy of the company's administrative and organisational structure and its internal control systems;

- pursuant to article 2409 septies of the Italian Civil Code, we met with the independent auditors KPMG S.p.A., engaged to carry out the legally-required audit, and exchanged data and information necessary for the performance of the relevant tasks;

- we met with the company's directors and some managers. We did not note any atypical or unusual transactions, including those carried out with related parties. We did not receive any complaints or reports pursuant to article 2408 of the Italian Civil Code. During the year, we did not issue any opinions in accordance with the law. We have approved the recognition of long-term start-up and capital costs amounting to € 616,391, research, development and advertising costs of € 8,000 and goodwill of € 3,579,235. During our supervisory and control activities we did not note any significant matters to be disclosed herein.



Today KPMG issued their report pursuant to article 14 of Legislative decree no. 39/2010, stating that the financial statements at 31 December 2014 give a true and fair view of the company's financial position and results of operations. The report includes an emphasis of matter paragraph, to which we expressly refer, on the recognition of additional claims and/or damages under contract work in progress of approximately € 48.5 million, the option not to prepare consolidated financial statements and the inclusion of the highlights of the most recent financial statements of the company that carries out management and coordination activities in the notes to the financial statements. With respect to the above claims, the related delays in the collection of the amounts related to charges already incurred by the company and the related impacts on the company's financial position led to the untimely fulfilment of some tax obligations. The financial statements show a net profit for the year of € 5,015,786 summarised as follows. BALANCE SHEET:

- Assets € 335,891,309 - Liabilities € 254,128,705 - Net equity (excluding net profit for the year) € 81,762,604 - Net profit (loss) for the year € 5,015,786

- Commitments, risks and other memorandum and contingency accounts € 747,058,176 INCOME STATEMENT:

Production revenues (non-financial revenues)

€ 177,624,282

Production costs (non-financial costs) € (162,584,328) Operating profit € 15,039,954 Financial income and charges € (4,428,390) Adjustments to financial assets € === Extraordinary income and expense € (110,298) Profit before taxes € 10,501,266 Taxes for the year € (5,485,480) Net profit (Loss) for the year € 5,015,786

We checked the measurement criteria adopted in preparing the financial statements to establish whether they comply with law and business conditions. We did not identify any critical issue. In preparing the financial statements, the directors did not waive any of the laws under article 2423.4 of the Italian Civil Code. In their report, they adequately described the main transactions carried out, including those with related parties. Based on the above, we have no objections to the approval of the financial statements at 31 December 2014.



CHIETI, 28 April 2015 The Board of Statutory Auditors GIOVANNI SMARGIASSI Chairman ______________________ FRANCESCO CANCELLI Standing auditor ______________________ VITO GIUSEPPE RAMUNDO Standing Auditor ______________________

KPMG S.p.A. Revisione e organizzazione contabile Piazza Duca d'Aosta, 34 65100 PESCARA PE

Telefono Telefax e-mail PEC

+39 085 4219989 +39 085 33093 [email protected] [email protected]

Report of the auditors in accordance with article 14 of Legislative decree no. 39 of 27 January 2010

To the Shareholders of Toto S.p.A. Costruzioni Generali

We have audited the financial statements of Toto S.p.A. Costruzioni Generali as at and for the year ended 31 December 2014. The company’s directors are responsible for drawing up these financial statements in accordance with the Italian regulations governing their preparation. Our responsibility is to express an opinion on these financial statements based on our audit.

2 We conducted our audit in accordance with the auditing standards issued by the Italian Accounting Profession and recommended by Consob, the Italian Commission for Listed Companies and the Stock Exchange. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and are, as a whole, reliable. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by directors. We believe that our audit provides a reasonable basis for our opinion.

Reference should be made to the report dated 15 April 2014 for our opinion on the prior year financial statements, which included the corresponding figures presented for comparative purposes as required by the law.

3 In our opinion, the financial statements of Toto S.p.A. Costruzioni Generali as at and for the year ended 31 December 2014 comply with the Italian regulations governing their preparation. Therefore, they are clearly stated and give a true and fair view of the financial position and results of operations of the company as at and for the year ended 31 December 2014.

4 We draw your attention to the information provided by the directors in the notes to the financial statements and in their report:

4.1 A significant portion of the company’s claims and requests for damages from certain customers, totalling approximately € 48.5 million, including approximately € 32 million recognised in 2014, has been recognised under contract work in progress, since it relates to amounts under arbitration proceedings and transactions being settled at the balance sheet date. On the basis of past experience and the valuations of an independent professional, the directors believe that the above claims and requests are not greater than the amount that will be definitively awarded and paid to the company.

KPMG S.p.A., è una società per az10m d1 dmtto italiana e fa pane del network KPMG di entità indipendenti aff1hate a KPMG lntarnat1onal Cooperative ("KPMG lnternationa!"L entità di dintto svizzero.

Ancona Aosta Bari Bergamo Bologna Bolzano Brescia Catania Como Firenze Genova Lecce Milano Napoli Novara Padova Palermo Parma Perugia Pescara Roma Tonno Treviso Trieste Varese Verona

Soetà per aztonì Capitale sociale Euro 8.835.600,00 1.v. Reg1st10 Imprese Milano e Codice Fiscale N. 00709600169 A. E.A MUano N. 512867 Part IVA 00709600159 VAT number IT00709600159 Sede legale: Via V1ltor P1sarn, 25 20124 Milano Ml ITALIA

Toto S.p.A. Costruzioni Generali

Relazione della società di revisione 31 dicembre 2014

4.2 Despite significant controlling interests, the company has availed itself of the legal exemption from preparation of consolidated financial statements which will be prepared by its parent.

4.3 As required by the law, the company disclosed the key figures from the latest financial statements of the company that manages and coordinates it in the notes to its own financial statements. Our opinion on the financial statements of Toto S.p.A. Costruzioni Generali does not extend to such data.

5 The directors of Toto Costruzioni Generali S.p.A. are responsible for the preparation of a directors’ report on the financial statements in accordance with the applicable laws. Our responsibility is to express an opinion on the consistency of the directors’ report with the financial statements to which it refers, as required by the law. For this purpose, we have performed the procedures required by the Italian Standard on Auditing 001 issued by the Italian Accounting Profession and recommended by Consob. In our opinion, the directors’ report is consistent with the financial statements of Toto S.p.A. Costruzioni Generali as at and for the year ended 31 December 2014.

Pescara, 28 April 2015�KPMG

S.p.A.

Alfonso Suppa Director of audit

2

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