Consolidated Quarterly Report at 30 September 2015

CIA Compagnia Immobiliare Azionaria SpA Via G. Borgazzi 2 – 20122 Milan Tel. +39 02 5821-9347 – Fax +39 02 5831-7376 Share Capital € 922,952.60 – Economic & Administrative Index no. 1700623 – Tax Code and VAT no. 03765170968

Directors and officers

Board of Directors Chairman

Angelo Riccardi

Vice Chairman Managing Director Managing Director

Paolo Panerai Luca Nicolò Panerai Marco Fanfani

Directors

Maurizio Carfagna Giovanni Battista Cattaneo della Volta Nicoletta Costa Novaro Maria Grazia Vassallo Andrea Morante Beatrice Panerai Vincenzo Manes Umberto Vitiello

Board of Statutory Auditors Chairman Serving Auditors

Mario Medici Laura Restelli Vincenzo Truppa

Alternate Auditors

Luciano Barbucci Vieri Chimenti

Auditing Firm PKF Italia Spa

The three-year mandates of the Board of Directors and the Board of Statutory Auditors, appointed at the Shareholders' Meeting held on 30 April 2015, will expire at the Shareholders' Meeting that approves the 2017 financial statements.

The mandate of the auditing firm will expire at the Shareholders’ Meeting held to approve the 2021 financial statements.

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Compagnia Immobiliare Azionaria S.p.A. and subsidiaries Registered offices at Via G. Borgazzi 2, Milan Consolidated Quarterly Report at 30 September 2015

The quarterly report has been prepared on a consolidated basis, as required by current legislation.

Principal market trends and performance during the period ended 30 September 2015 Summary of key economic data: •

consolidated revenues totalled 5.18 million euro, compared with 4.83 million euro in the corresponding period of the prior year;

•

consolidated operating costs amounted to 3.89 million euro, compared with 2.39 million euro in the first nine months of 2014;

•

gross operating profit amounted to 1.29 million euro, compared with 2.44 million euro in the corresponding period of the prior year;

•

the consolidated statement of comprehensive income of CIA for the period ended 30 September 2015 reports a net profit of 0.10 million euro, consistent with the results for the period ended 30 September 2014. The comprehensive profit attributable to the Group for the third quarter of 2015, 0.67 million euro, compares with the broad break-even situation achieved in the third quarter of 2014.

The Group's reference market and principal activities are analysed below: •

Italian property market The property market has confirmed the growth prospects identified during the first half of the year, with transactions rising by 6.2% on an annualised basis (source: Istat). Good news on the mortgage front too, with growth of 23%. The improvement is most marked in the residential sector, with growth essentially throughout the peninsula as a whole: with respect to the national average, the best performance was identified in the North-East (+10.8%) and the Islands (+8.0%), while slacker growth was observed in the North-West (+5.9%), Central Italy (+4.1%) and the South (+2.9%). Residential property transactions grew by 8% in the metropolitan cities, compared with 5.4% in the small towns. This recovery in the property market has been accompanied by further price reductions: home prices have fallen by 3.3% on average, comprising a 2.0% decrease for new homes and a 3.8% decline for existing homes. There has been a marked rise in bank mortgages, loans and other secured debt (+23.1% compared with the same period in 2014). This performance was not however solely due to the recovery of the property market. Indeed, the key factor was a rise in the renegotiation of existing home loans. The reduction in the reference interest rates used by the banking system has in fact encouraged mortgage holders to consider replacing their loan with another arranged on more advantageous terms. Page 3

Against this background, work has continued to enhance and release the capital gains locked up in the Group's property bank. The considerations and projections for the residential property market do not apply to the office sector, which contracted by 8% on average. The growing number of vacancies, the increased taxation of property and the country's economic performance have combined to impede the recovery of this sector, as confirmed by the data presented by leading analysts. Following an increase, the time required to find tenants has stabilised at around 11-12 months; the discount on requested rentals averages 20-25% and the average yield is currently less than 5%. In a market exposed to volatility and uncertainties, the Group's investment in office properties generates essentially stable yields, despite the temporary reduction experienced in the current year, given the binding, long-term contracts signed and the associated operational activities. •

Italian wine market During the third quarter, the Italian wine market confirmed the growth experienced during the first six months of the year: export sales rose by 5.2% in value terms, but fell 2.4% in volume terms, while the adverse trend in the domestic market was reversed with a 1.8% increase in the value of sales and a 1.2% rise in volume. Italy produced 48.9 million hectolitres of wine in 2015 (source: European Commission), overtaking France with 46.6 million and well ahead of Spain with 36.6 million. Production at Feudi del Pisciotto was also greater than in 2014, rising 8.6% to 280 tonnes of grapes. Wine output for 2015 is expected to total 240,000 bottles.

•

Development and investment activities a. in Sicily, work is almost finished on a restaurant, a cookery school and small spa within the complex owned by Feudi del Pisciotto. This will complete the current round of investment in the Wine Relais, following the earlier opening of hospitality services (10 rooms and suites with every comfort, created in the habitable part of the island's largest eighteenth-century Palmento or winery). b. Planning is now in progress for the construction of additional rooms and suites in a portion of the ancient fortified farm, extending over more than 2,600 square metres, with a view to expanding the facilities available to the Wine Relais; c. work is commencing on the Island of Levanzo (Sicily) to develop the property owned by Agricola Florio Srl, with a view to balancing the rural identity of the area with its importance for tourism, by making decisions that reflect the values of Rural Tourism. The first phase of the project is planned to restore and redeploy about 400 square metres of buildings, with the construction of attractive, fully appointed dwellings that fit in well with their natural surroundings and the local architecture.

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KEY ECONOMIC DATA FOR THE PERIOD The consolidated results for the period are discussed below: •

consolidated revenues for the period to 30 September 2015 amounted to 5.18 million euro, compared with 4.83 million euro in the same period of 2014. This change comprises a series of positive and adverse elements. In particular, on the positive side (contributing 1.26 million euro), a number of property units developed by Diana Bis were sold and there was an increase in the revenues generated by the Wine Relais. Conversely, rental income fell during the period (-588 thousand euro), due to the temporary rent reductions allowed to tenants in line with general market conditions, and the revenues from wine sales made by Feudi del Pisciotto also contracted. Revenues for the period are analysed as follows: € (thousands)

Rental revenues

30/09/2014

30/09/2015 Change %

2,536

1,948

(23.2)

Facility management revenues

535

548

2.4

Wine sale revenues

862

575

(-33.3)

Other vineyard and Wine Relais revenues

425

483

13.6

80

1,260

n.a.

393

361

(8.1)

4,831

5,175

7.1

Property sale revenues Other revenues Total

In addition to the revenues generated by the Wine Relais, revenues from wine-growing activities include the period portion of the capital grant received under a Sicily Region decree (Mis.4.09 of Sicily ROP 2000/2006), the change in finished and semi-finished product inventories and the crop forecasts, that is to say, the costs of labour and planting incurred for the new harvest that was completed during October. Other revenues include the capital gain recognised during the period on the disposal of the investment in Donnafugata Resort, whose final disposal price resulted in an additional gain of 0.2 million euro with respect to that already recorded in the prior year. They also comprise income from non-core business activities, including 85 thousand euro from the provision of services to LC International LLC, an affiliate. •

Consolidated operating costs amounted to 3.89 million euro, compared with 2.39 million euro in the first nine months of 2014. In this regard: -

purchases totalled 1.92 thousand euro compared with 0.46 thousand euro in the period to 30 September 2014. This increase principally reflects the cost of sales of the property units sold during the first half of the year by Diana Bis Srl;

-

service costs amounted to 1.19 million euro (1.30 million euro in the first nine months of 2014) and included building management costs, the wine-making activities of Feudi del Pisciotto and Azienda Agricola Tenuta del Pisciotto, and the cost of the services provided by Class Editori Spa, a related party, for the provision of technical, administrative and IT consulting services; Page 5

-

-

payroll costs totalled 0.45 million euro in relation to the three employees and casual labourers who worked for Feudi del Pisciotto and Azienda Agricola del Pisciotto. The average number of employees during the period is shown in the following table: 30/09/2014

31/12/2014

30/09/2015

Executives

1.0

1.0

1.0

Clerical staff

2.0

2.0

2.0

Total

3.0

3.0

3.0

other operating costs totalled 0.34 million euro, in line with the corresponding period in the prior year, and primarily included registration taxes, IMU (property) taxes, the remuneration of directors and officers, and out-of-period expenses.

•

Net non-recurring income amounted to 2.60 million euro, compared with 0.69 million euro in the comparative period of last year. This increase was due to the release of provisions totalling 2.78 million euro that were recorded in the prior year in relation to the capital gain recognised on the disposal of the investment in Donnafugata Resort. As discussed below, the disposal proceeds have now been collected following the settlement reached with the counterpart.

•

Depreciation, amortisation and write-downs amounted to 4.83 million euro, compared with 1.27 million euro in the period to 30 September 2014. This increase was due to the write-down recorded by Infrastrutture America Srl of the indirect investment held in Airgest Spa, owner of Trapani airport, by 3.31 million euro. This charge was determined following an independent appraisal of the airport's value carried out using the comparable transactions method (public offer for shares in Società aeroporti Toscana Galileo Galilei, public offer for shares in Società aeroporti di Firenze Spa).

•

Net financial charges totalled 1.73 million euro (1.76 million euro in the period to 30 September 2014).

FINANCIAL POSITION The financial position at 30 September 2015 reflects consolidated borrowing of 47.1 million euro, as analysed below: € (thousands) Securities Net long-term borrowing Net short-term borrowing/liquid funds

31/12/2014

30/06/2015

30/09/2015

--

--

--

(40,742)

(40,693)

(40,676)

(6,970)

(6,451)

(6,402)

(7,006)

(6,543)

(6,568)

36

92

166

(47,712)

(47,144)

(47,078)

of which: Financial payables Liquid funds and financial receivables

Net financial position: net borrowing/liquid funds

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Comment on the net financial position The net financial position reflects a slight increase in net borrowing from third parties, from 47.7 million euro at 31 December 2014 to 47.08 million euro at 30 September 2015. This change was principally due to the repayment of loans following the sale of property units during the period. During December 2014, applications were presented to benefit from ABI suspensions in relation to certain loans granted to CIA. These suspensions, agreed by the banks, involve the deferral of principal repayments by 12 months and extension of the final expiry dates by the same period. A request made to reschedule the loan to Diana Bis was also agreed by the lending bank, with the suspension of principal repayments for two years, without changing the final expiry date. The Group's indebtedness was incurred to finance the holdings of securities and property, the value of which, even if measured with prudence, far exceeds the amounts borrowed.

ACCOUNTING POLICIES AND MEASUREMENT CRITERIA The accounting policies adopted for the preparation of the consolidated quarterly financial information are unchanged with respect to those applied for the preparation of the 2014 consolidated financial statements. This consolidated quarterly report has been prepared under the historical cost convention, except for the measurement of any AFS financial instruments held at their fair value. Comparative information is also presented in accordance with the IFRS. The quarterly report at 30 September 2015 has been prepared in compliance with art. 154 ter of Decree 195/2007 and the Issuers' Regulation issued by Consob pursuant to art. 82 of Consob Regulation no. 11971/1999 (as amended), as well as with annex 3D to that Regulation. Complete information, concerning both the consolidated financial statements of the Group and the separate financial statements of CIA S.p.A., was published as part of the annual financial statements at 31 December 2014 and the 2015 half-year report, to which reference should be made.

SCOPE OF CONSOLIDATION The scope of consolidation includes CIA Spa and the companies which it controls, given the power to determine their financial and management policies in order to obtain benefits from their activities. Subsidiaries are consolidated from the date when control is effectively transferred to the Group and cease to be consolidated from the date when such control is transferred outside the Group. Subsidiaries are consolidated on a line-by-line basis. Information on the financial position and performance of subsidiaries and associates was used to prepare the consolidated data. Such information, prepared by the individual Group companies at the reporting date, was suitably reclassified and adjusted to reflect uniform application of the accounting policies adopted by the Group. All intercompany balances and transactions have been eliminated from the quarterly report, together with any unrealised gains and losses arising on transactions with Group companies. Page 7

Inactive subsidiaries have been consolidated using the equity method. Their influence on the results of the Group is not, in any case, significant. Investments in associates, over which the Group exercises significant influence, are measured at equity as established in IAS 28. Profits or losses attributable to the Group are recognised in the consolidated financial statements from the date when such significant influence begins and until the date when it ceases. The scope of consolidation at 30 September 2015 is presented below:

Consolidation on a line-by-line basis In addition to Compagnia Immobiliare Azionaria Spa, the following subsidiaries have been consolidated on a line-by-line basis: Percentage Ownership - Az. Agricola Tenuta del Pisciotto Sarl

100.00 %

- Resort del Pisciotto Srl

100.00 %

- Feudi del Pisciotto Srl

100.00 %

- Diana Bis Srl

100.00 %

- Infrastrutture America Srl - Agricola Florio Srl Società Agricola (formerly Isola Longa Turismo Rurale) - Resort & Golf Società Consortile a.r.l.*

51.00 % 100.00 % 71.43 %

* Consolidated line-by-line since it is held 28.57% by Resort del Pisciotto, 14.29% by Az. Agricola Tenuta del Pisciotto, 14.29% by Agricola Florio and 14.29% directly by CIA Spa.

Equity method The following associates of Compagnia Immobiliare Azionaria Spa have been measured using the equity method: Percentage Ownership - Donnafugata Resort Srl

0.28 %

- LC International LLC

20.40 %

- Società Infrastrutture Sicilia Srl*

25.50 %

- Isola Longa Srl

50.00 %

* 50% held by Infrastrutture America. The scope of consolidation has not changed since 31 December 2014. Page 8

SIGNIFICANT EVENTS DURING OUTLOOK FOR OPERATIONS

THE

CURRENT

QUARTER

AND

In relation to the dispute that rose with the Spanish NH Hotel group following its breach of contract upon exercise of the put option for the sale of a 15% interest in Donnafugata Resort Srl, the parties have reached a full and final settlement that has resulted in the collection of 5.17 million euro. This has enabled CIA to recognise a substantial capital gain with respect to the related carrying amount of about 3 million euro. At the time of the settlement and related payment, the counterpart withdrew all the appeals made with the consequent confirmation of the two arbitration awards and the Milan Court ruling in relation to the requested annulment and/or termination of the mandate granted to Prof. Guatri, an expert valuer.

Outlook for the future The macroeconomic situation means that the prospects for economic growth remain uncertain, especially in Italy. Nevertheless, there are some encouraging signs of recovery and the outlook for the operations of the Group remains good. This reflects the stability of the returns from the property investments made, expectations linked to the property transactions in progress and the further expansion of the commercial operations of Feudi del Pisciotto.

For the Board of Directors The Chairman Angelo Riccardi

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Consolidated statement of comprehensive income for the period ended 30 September 2015 30 September 2014

30 September 2015

4,127

4,484

704

691

4,831

5,175

(2,394)

(3,889)

2,437

1,286

690

2,595

(1,273)

(4,827)

1,854

(946)

(1,765)

(1,728)

89

(2,674)

5

1,603

Result attributable to owners of the parent

94

(1,071)

Actuarial income/(charges) not recorded in income statement (IAS 19)

(1)

3

--

1,147

Total components of comprehensive income, net of tax effect

(1)

1,150

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO THE GROUP

93

79

(thousands of euro)

Revenues from sales Other operating income Total revenues

Operating costs Gross operating margin – EBITDA

Net non-core income (charges) Depreciation, amortisation and write-downs

Operating result - EBIT

Net financial income (charges)

Net result

(Profit)/Loss attributable to non-controlling interests

Remeasurement of the value of land

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Consolidated statement of comprehensive income for the third quarter of 2015 III Quarter 2014

III Quarter 2015

1,509

1,031

214

376

Total revenues

1,723

1,407

Operating costs

(804)

(735)

919

672

99

2,647

(393)

(3,696)

625

(377)

(626)

(553)

(1)

(930)

(Profit)/Loss attributable to non-controlling interests

2

1,604

Result attributable to owners of the parent

1

674

Actuarial income/(charges) not recorded in income statement (IAS 19)

--

--

Remeasurement of the value of land

--

--

Total components of comprehensive income, net of tax effect

--

--

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO THE GROUP

1

674

(thousands of euro)

Revenues from sales Other operating income

Gross operating margin – EBITDA

Net non-core income (charges) Depreciation, amortisation and write-downs

Operating result - EBIT

Net financial income (charges)

Net result

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STATEMENT PURSUANT TO ART. 154-BIS, PARA. 2, OF DECREE NO. 58 OF 24 FEBRUARY 1998

The undersigned Walter Villa, as the Executive responsible for preparing the corporate accounting documents of Compagnia Immobiliare Azionaria S.p.A., hereby confirms pursuant to art. 154-bis, para. 2, of the Consolidated Finance Law that the accounting information included in the quarterly report at 30 September 2015 of Compagnia Immobiliare Azionaria S.p.A. agrees with the documentary records, books and accounting entries.

The Responsible Executive Walter Villa

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