ANNUAL REPORT 2006

Unfortunately, the main objective of the acquisition of Garboli now looks even farther away after the cancellations of the agreements issued by the “Ente Ferrovie dello Stato SpA” during 1991 to TAV SpA and of the related transactions agreed between TAV SpA and the General Contractors in connection with the high speed railway portions not yet commenced, amongst which there is also the Milan-Verona portion of the works.
The government, unable to fulfil its contractual obligations relating to the financing of these strategic works, has decided to cancel the contracts with specific legislative decrees and precisely with law nr. 40 published in the “Gazzetta Ufficiale” on 2nd April 2007.
Consorzio Cepav 2, a consortium in which both our company and the subsidiary Garboli SpA holds an investment, for a total investment amounting to 24% at Group level, has commenced a series of judicial initiatives aimed at protecting its rights; in particular and for the second time, the consortium has activated the arbitration clause with the objective of ascertaining the right to the maintenance in force of the contract. The Arbitration Committees are being constituted since the parties have each nominated their respective arbitrators.
Consorzio Cepav 2 has also notified to RFI SpA, TAV SpA and the Ministry of Transport and the Presidency of the Council of Ministers a series of recourses with the “TAR” of the Lazio region with the aim of obtaining the annulment subsequent to suspension of the provisions established by the Ministry of Transport and RFI SpA in accordance with law n. 40 of 2nd April 2007. With the same recourse, but in a subordinated manner, a request was made for the cancellation of the revocation, subsequent to the possible proposition of the request for the prejudicial pronouncement of the High Court of Justice of the European Community in accordance with article 234 of the EEC Agreement, that is to say, subsequent to presentation to the Constitutional High Court of the constitutional illegitimacy issue in accordance with art. 23 law 11th March n. 87.
Without wanting to enter into the technical and legal details, the Board of Directors has carefully evaluated the implications of the said legislative procedure, compared with the total values entered into the assets item as regards the High Speed Milan-Verona contract, both as regards goodwill as well as the surplus values originally paid in connection with work in progress relating to the project work.