CMC bilancio 2004 GB.indd by liuqingyan

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									Countries of operation




Algeria
China
Mozambique
South Africa
Sudan
Swaziland
Salerno – Reggio
Calabria A3 Motorway;
Campania – Basilicata
(Italy)
                              GED Srl
                              Precast


 CMC Immobiliare SpA
     Real Estate


                              SIC SpA
                         Building Materials




Domestic Operations    Overseas Operations




                                              5
    Company directory
    Italy                               Mozambique
                                        C.M.C. Maputo Branch
    REGISTERED OFFICE                   COMPANHIA IMOBILIARIA
    AND BUSINESS ADDRESS:               MOCAMBICANA LDA
    48100 RAVENNA - Via Trieste n. 76   CMC AFRICA AUSTRAL LDA
    Tel. +39 0544- 428111               PROFURO INTERNACIONAL LDA
    Fax +39 0544-428554                 SULBRITA LDA
    E-mail: cmc.cmc@cmcra.com           Avenida da Namaacha Km. 6
                                        MATOLA
    ROME OFFICE:                        Tel. 1/780357
    00187 ROME - Via ABRUZZI, 3         Fax 1/780335
    Tel. +39 06-42020425                E-mail: info@cmcaa.co.mz
    Fax +39 06-42390728
    E-mail: cmcroma@tin.it              Republic of South Africa
                                        SIDE INVESTMENTS (Pty) Ltd
                                        P.O. Box 128 – Kelvin 2054
    France                              Unit 3 Eastborough Business Park
    CMC DI RAVENNA FRANCE Sarl          Olympia Street
    34 Boulevard Haussmann              Marlboro SANDTON
    PARIS                               Tel. 11/2622777
    Tel. 26/944393                      Fax 11/2622779
    Fax 26/944396                       E-mail: sideinv@netralink.com

    Algeria                             DUNROSE INVESTMENTS (Pty) Ltd.
    CMC RAVENNA EURL                    MORESIDE INVESTMENTS (Pty) Ltd
    Lotissement El Feth n.12            SIDE BAR MANUFACTURING (Pty) Ltd
    Sable Rouges – El Biar              10 Winter Street,
    ALGER                               Industrial Area
    Tel. 21/790828                      P.P. Box 586
    Fax 21/790828230013                 BARBERTON, 1300 R.S.A.
    E-mail: cmc_algerie@hotmail.com     Tel. 11/2622777
                                        Fax 11/2622779
    Libya
    CMC Libyan Branch                   Sudan
    Dat Al Imad                         CMC di Ravenna Co. Ltd.
    Tower 5 – Floor 4                   Plot No. 2 Block No. 8
    TRIPOLI                             West Blue Nile Front
    Tel. 21/3350732-34                  KHARTOUM
    Fax 21/3350739                      Tel. 11/492722
                                        Fax 11/492723
    Eritrea                             E-mail: cmcltd@sudanmail.net
    CMC Eritrea Branch
    P.O. Box 1131                       Swaziland
    ASMARA                              CMC Railway Joint Venture (Pty) Ltd.
    Tel. 1/202596                       CMC Ravenna (Pty) Ltd.
    Fax 1/202598                        Allister Miller Street
                                        Embassy House
                                        MBABANE
                                        E-mail: cmcswazi@realnet.co.sz




6
People’s Republic of China (P.R.C.)
CMC Beijing Representative Office
RM 2707 Block A,Huayuan Office
Building
n. 28 Bei Xiao Yun Road,
Dong San Huan
Chaoyang District,
BEIJING
Tel. 10/64653788-64605873
Fax 10/64644761
E-mail: cmcbrn@public3.bta.net.cn

CMC Company
Kunming Zhangjiuhe River
The Building of the Labour Employment
Bureau
Luquan County, P.O. Box 16,
KUNMING
Yunnan Province
Tel. 871/8998968
Fax 871/8998964
E-mail: cmccomp@public.km.yn.cn

Philippines
CP – CBK HYDROPOWER
CONSORTIUM
Bldg. II Brgy. Lewin
Lumban, Laguna
Tel. 49/8083030
Fax 49/8084911

Malaysia
CMC di Ravenna Malaysia Sdn Bhd
Mont Kiara Palma
Majestic Tower Unit 17-2-4
Jalan Kiara
KUALA LUMPUR
Tel. 3/23001877
Fax 3/23001844

Singapore
CMC di Ravenna Pte Ltd
10 Hoe Chiang Road,
16 – 02 Keppel Towers
SINGAPORE




                                        7
Cesena Ring Road;
Emilia Romagna (Italy)
Capabilities
CMC Group has a proud record of delivering world class infrastructural projects to the
market, with the following specialisations:

Transport
   Roads, motorways
   Tunnels, bridges and viaducts
   Railways and urban light railways
   Airports

Water and irrigation works
 Dams
 Hydroelectric plants
 Tunnels
 Aqueducts
 Irrigation channels

Ecology and the environment
  Water treatment and sanitation services
  Sewage systems
  Treatment of toxic waste

Building projects
  Civil and public buildings (hospitals and clinics, schools, sport structures, correctional
  facilities)
  Executive and service buildings (hypermarkets, shopping malls, post offices)
  Hotels and resorts
  Industrial plants (power stations, silos)
  Maintenance and refurbishment

Water control and marine works
 Coastal protection, piers and jetties, dredging

Integrated territorial development projects




                                                                                               9
Contents
Board of directors and committees                 15
Performance Review                                16

Chairperson’s Statement and Directors’ Report
  Highlights of the year                          17
  World Economy Outlook                           18
  Financial review                                22
  Net Equity and Shareholders loans               27
  Project order book                              29
  Major current contracts                         30
  Human resources                                 31
  Other concerns                                  31
  Intercompany and related party operations       33
  Shareholders’ policy                            33
  Dividends                                       34
  Subsequent events                               34
  Year 2005 outlook                               34
  Conclusions                                     35

Consolidated Financial statements
  Balance Sheet and Profit and Loss Account        38
  Notes to the consolidated financial statements   45
  Attachments                                     73
  Auditors’report                                 81




                                                       11
     COOPERATIVA MURATORI
& CEMENTISTI CMC DI RAVENNA
Milan – Bologna
High Speed Railway;
Lombardy – Emilia
Romagna (Italy)
Board of directors and committees
Board of Directors (*)
Chairperson                      Massimo Matteucci
Deputy                           Fulvio Bartolini
Non-executive directors          Marco Bulgarelli
                                 Lorenzo Cottignoli
                                 Valerio Giuliani
                                 Riccardo Gualtieri
                                 Guido Leoni
                                 Tamara Magalotti
                                 Sergio Mazzotti
                                 Oreste Parrucci
                                 Roberto Ravaioli

Statutory Auditors (*)
Chairperson                      Benito Venturi
Auditors                         Gian Luca Bandini
                                 Pietro Mieti

Independent Auditors (°)
Deloitte & Touche S.p.A

Audit Committee ex art. 6 Legislative Decree 231/2001
Chairperson            Tamara Magalotti
Members                Lorenzo Cottignoli
                       Benito Venturi

Chief Executive Officer
Vittorio Morigi

Management Committee
Deputy C.E.O.
Mauro Ceccoli

Business Development
Dario Foschini

Chief Financial Officer
Roberto Macrì

Human Resources
Manlio Malatesta

Domestic Operations
Mauro Ceccoli

Overseas Operations
Fausto Faustetti

Staff Assistant
Marco Abbondanza




(*) in office until the approval of the 2004 financial statements
(°) in office for the 2002 – 2004 three year term


COOPERATIVA MURATORI & CEMENTISTI CMC DI RAVENNA                  15
Performance review

 (in millions of Euro)        2003      2004
 Turnover                    410,2     502,3
 Operating income             25,5      19,4
 Income before taxes          12,6      13,4
 Net income                   10,0       8,5

 Shareholder loans            11,8      12,1
 Consolidated net equity      56,1      60,3
 Net debt                    (56,7)    (66,4)

 Order book                  1.287     1.197
 Number of Shareholders        356       360
 Number of Employees         5.396     5.652

 Cash Flow                   39,1%    41,1%
 Net income to turnover       2,4%     1,7%
 Return on equity (R.O.E.)   17,9%    14,1%
 Net debt to equity           1,0 .    1,1 .
 Net debt to turnover        13,8%    13,2%

Order book

 (in millions of Euro)                                  2003      2004
 Overseas:
 Southern Africa                                        85,6      66,9
 P.R.C.                                                 32,9      33,1
 Sudan                                                  66,8      57,3
 Algeria                                                91,1     127,8
 Total Overseas                                        276,4     285,1

 Italy:
 Salerno – Reggio Calabria Motorway and Venice Link     445,2     466,9
 High Speed Railway                                     324,2     288,8
 Others                                                 241,2     156,1
 Total Italy                                          1.010,6     911,8
 Total                                                1.287,0   1.196,9




16                                        COOPERATIVA MURATORI & CEMENTISTI CMC DI RAVENNA
Chairperson’s statement and directors’ report
Dear Shareholders and Guests,
Thank you everybody for being here to attend this Annual General Meeting, convened to
approve the 2004 Annual Report of our Company, Cooperativa Muratori & Cementisti –
CMC di Ravenna.
We wish to thank especially the representatives of the Economic, Political and Social
Institutions here present: this confirms their great attention to our Company, and the
present and future link existing between us and these Institutions, a link aimed at the
continuous development of both CMC and the local economy.
The 2004 results confirm budget expectations with a turnover exceeding € 500 million and
income before taxes at € 13.5 million, even though some slowdowns in overseas projects
affected the overall performance, as detailed later.
Overseas total turnover at slightly below € 100 million, instead of the forecasted € 130
million (€ 96 million in 2003), had a negative impact on the overall Group performance,
since the break-even point of the Division is still around this latter amount.
With an order book standing at € 1.2 billion increased to € 1.4 billion at the end of May,
net debt under control and a history of recurring positive results, all allow us to look to the
next years with an optimistic attitude, considering the ongoing marketing activities and the
overall trend of major current projects.


Highlights of the year
  Consolidated turnover for 2004 was € 502.3 million (€ 410 million in 2003), with a €
  92.1 million increase over the previous year.
  Construction business turnover reached € 428 million, with a € 60 million increase
  over 2003 (16.1%) backed by the further development of Domestic Operations and the
  entrance in full operational stage of the “Salerno – Reggio Calabria Motorway” project.
  Revenues coming from High Speed Train contracts and Overseas Operations remain as
  in 2003.
  Consolidated Income before taxes at € 13.4 million reflects the improvement of
  Construction Business profit, with € 9.6 million (€ 8.5 million in 2003) that compensated
  the decrease of profitability of other business’.
  € 41.1 million free cash flow kept net debt under budget and close to prior year.
  Order Book at € 1.2 billion, exceeding forecast with acquisition at € 412 million vs. a
  € 326 budget, allowed the best allocation of both human and financial resources.
  Major contracts awarded in 2004 were:
  - The A4 Motorway Venice bypass. The project value is € 530 million, and CMC’s 12%
     interest amounts to € 63 million;
  - Civil works at the US Navy Base of Sigonella (Sicily) for € 50 million;
  - Various civil works in both the Port of Ravenna and the Romagna region;
  - Variation orders to the Bologna – Milan High Speed Train contract for € 105 million
     (CMC’s interest). The major extension regards the construction of three bridges over
     the A1 Motorway in Reggio Emilia. The central cable stayed bridge has a 221 metre
     span and is 60 metres high;
  - The Mbabane bypass in Swaziland, in joint venture with WBHO of South Africa.
     CMC’s 40% interest amounts to € 29.4 million;
  - Civil works in Mozambique for € 30 million;
  - Civil works in Algeria for nearly € 100 million, including the provisional award of the
     El Kala port € 24 million contract, still subject to the final approval by the Algerian
     Government;
  - The construction of an industrial building in Shanghai valued around € 7 million.
  CMC entered a joint venture led by Impregilo and participated in by Condotte and
  Grassetto of Italy, Sacyr Vallehermoso of Spain, IHI-lishikawajima Harima Heavy Industries
  of Japan and Cowi of Denmark to tender for the Messina Strait Bridge. This € 4.4 billion
  project potentially represents the largest contract ever tendered for in Italy.
  Permanent workforce decreased from 504 to 493 units.

COOPERATIVA MURATORI & CEMENTISTI CMC DI RAVENNA                                            17
     On June 25, 2005 the General Meeting admitted 17 new shareholders.
     In 2004 CMC’s interest in Simar Srl and our remaining assets located in Maratea were
     disposed.
     In the last month of October, the annual “Corporate Social Involvement Report” of the
     CMC Group was presented. The goal of this report is to make CMC’s commitments with
     all its Stakeholders both understandable and clear.
     The 2004 report is in the making, and will be presented at a special event in the coming
     months.
     This year an analysis of our approach to both welfare and environmental issues will be
     added to the usual economic and financial figures and information.
     The major piece of news is represented by the survey among shareholders and the
     permanent workforce aimed at obtaining a deeper knowledge of our human resources and
     a better understanding of their opinion about corporate governance, organisation etc.
     The Shareholders’ meeting held on September 26, 2004 changed the name of the
     Company from “Cooperativa Muratori & Cementisti – C.M.C. di Ravenna Soc. Coop. a
     r.l.” to “Cooperativa Muratori & Cementisti – C.M.C. di Ravenna”.

The 2004 results and 2005 forecast confirm that our Company is competitive in all the
market sub sectors, especially in the top qualification of major infrastructural projects.
The awarding of the first tender released under the new set of laws which goes under the
name of “General Contractor” and the result of the first year of operation have showed
the market that we are actually one of the few Italian Contractors able to carry out projects
of this magnitude.
This leads to the formation of new alliances, and forces the Contractors to face not only
technical issues, but also financial and organizational matters.
A giant cultural leap is now needed: this is the challenge to win to remain at the top in the
future.
In this context, we believe that our Company is in pole position for most of the major
infrastructural projects under preparation, for example The Messina Strait Bridge, the E 55
Motorway, the Rome Underground C Line etc.
We also hope that Legacoop, our Trade Association, will show the steering ability to define
strategies in compliance with the complexity of the market and the expectations of the
cooperative contractors really interested in playing a pivotal role in this context.


World economy outlook
Last year the World Economy continued improving, with a GDP growth of 5%, representing
the best result since 1984.
In the second half of 2004, the USA slowed down, along with Japan and China, mainly
because of the steep rising of oil prices due to both increased demand and political instability
of producing countries.
The USA and Asia are still hauling world growth, and 2005 forecast is around 4.3%.
Eurozone countries are slowly awakening, but growth remains weak and closely linked to
Germany, that represents by itself one third of the whole area.
The US dollar is becoming stronger, after the sharp fall of 2004 last quarter, dragged by the
rise of interest rates and improved economic conditions.

Italy and the European Union
In 2003 Eurozone GDP grew by only 0.5%, and this confirmed the stagnation of the
European economy.
2004 recorded a forward leap, up to 2.0% vs the 1.8% forecast.
In 2005 GDP increase is expected around 2.2%, confirmed by first quarter +0.5%, backed
by Germany’s +1%.
In Italy the actual 2004 growth accounted to a 1.2%, compared to 2003’s +0.4%.
Unfortunately the Istat (Italian Institute for Statistics) first quarter report of 2005 is not
encouraging: with a -0.2% the Country is “technically” in recession.
Revised 2005 forecast is now for a zero growth, considering the supervening impossibility

18                                          COOPERATIVA MURATORI & CEMENTISTI CMC DI RAVENNA
of reaching the planned +1.2%.
The Italian economy environment is even becoming less competitive, compared to other
western Countries: for IMD of Geneva, Italy is ranked the last in the European Union.
Major gaps from leading Countries come from infrastructures, labour market, tax rules and
financial systems.
On the Italian Construction Market, demand is rising, drawn by the “Legge Obiettivo”.
The order books are growing for the first time after the “High Speed Railway“ contracts
that kept the industry alive in the 90’s, even though the goal of awarding 40% of budget
amount is still far from being reached.
The Ministry of Infrastructure states that € 32 billion projects out of € 125 billion
programmed, corresponding to 25% of forecasted amount, have been tendered, but the
Court of Auditors in its most recent report on the state of realisation of this programme
points out the following:
   Financial institutions and insurance companies are not available to run the characteristic
   risks of these major contracts, then the most innovative financial instruments are not
   able to compete with traditional and more expensive ones.
   The introduction of “Government Commissioner” for strategic projects is not giving the
   expected benefits.
   The timing of these huge projects is usually affected by long delays, making the project
   obsolete even before completion.
The financing of the largest projects remains the big issue: the last National Budget allowed
€ 2.7 billion out of € 7.2 billion requested by the Ministry of Infrastructure, and how
to cover the balance remains an open question. The most obvious answer is a further
postponement in the realization of works.
Contractors are regularly suffering the delayed payments of Anas (Italian Agency for Public
Roads).
Some good news is the revising of the “Merloni Law” in terms of price escalation, allowing
the refund of rises exceeding 10%.
The timing of these huge projects still remains an unresolved issue. At least a year elapses
between the approval of the final design and the tender. Ten to twelve months are then
needed for the order to commence, and this timing is always tainted by claims of the losing
bidders.
However, the infrastructure market is going through a positive cycle: in the last five years
investments increased by 19.2%.
But the question now is: “Three years after the birth of the Legge Obiettivo, and considering
the operating and financial load that is put on Contractor’s shoulders, are competitors still
able to accept this challenge?“
The top ten Groups are without doubt stronger than five years ago, but can they carry
this financial weight without the support of financial institutions prone to share the
entrepreneurial risk as well?
The 30% prefinanced by the contractor (subsequently reduced to 20%), and the required
guarantees are a very hard burden to carry, especially since the most infamous financial crisis
of listed companies, like Parmalat, etc. have brought about a widespread credit “crunch”.
A further increase of ordinary bank financing facilities is not a viable option, and this could
spoil the feasibility of certain projects, since Banks and Insurance companies do not seem
to be ready to share the performance risk with the contractors.
Financial institutions are requested to innovate their risk management policies, and provide
credit in a way consistent with the magnitude and the characteristics of the projects, never
seen before in this country.
In this context, a key role has to be played by Infrastrutture spa, Cassa Depositi e Prestiti
and the Banking Foundations.
The large infrastructural project sector is where CMC is focusing its attention for the next
three years, looking for partnerships with both foreign and domestic parties.
We are qualified as a General Contractor for contracts up to € 700 million, an amount
coherent with our present organisation, goals and risk management policy.
Our key strategy is to reduce the number of contracts, to extend their timing, and to make
the best use of human resources, cash flows and fixed assets.


COOPERATIVA MURATORI & CEMENTISTI CMC DI RAVENNA                                           19
Overseas

ASIA
Political transition was completed in 2003, and now the fourth–generation leaders continue
on working to consolidate their hold on power, encouraging a more sustainable growth,
promoting rural economy and the private sector.
Of the Asian Countries, only China has been able to achieve in recent years, growth rates
higher than 9%.
The next challenges awaiting the Chinese economy are, among others, the battle against
corruption, the setting of an efficient legislative framework and the harmonization of
trading rules.
Another key factor remains the Yuan–Dollar exchange rate, still fixed at 8.27.
The United States keep on pushing for the devaluation to decrease their trade deficit with
China, but the Government is afraid of a financial crisis, should the national banking system
have to face a volatile currency market.
Financial experts all agree on the next end of the fixed exchange rate, but the timing
remains uncertain.
The Country is investing heavily in infrastructures, especially in water control and
transportation projects, but Chinese contractors are now able to satisfy most of this
domestic demand.
However, major projects for power stations and water control are creating a niche market
with a demand for highly technological solutions such as the mechanised tunnel boring
where CMC has been working in the Country for the past fifteen years and has acquired a
strong competitive advantage.
In this context of high speed economic growth, the Country is not eligible any more for
International Aid; large scale contracts are then financed with national funds, favouring
domestic contractors.
Except for China, Asian infrastructure market is not showing any sign of recovery:
accordingly we have already demobilized our Kuala Lumpur office and the shutdown of
our Bejing branch will follow in the next months.
Marketing activities for the area will be then run directly from Headquarters, waiting for
the rising of new opportunities.

MOZAMBIQUE
Following the end of the Civil War in 1992, the Country has become one of Africa’s
most successful examples of post–conflict reconstruction and development, continuing
generating a steady 7% - 8% GDP growth, drawn by the aluminium smelting and gas
industries.
Last December Armando Guebuza won the Presidential Election, succeeding to outgoing
President Chissano and confirming Frelimo as the ruling party.
International donors, such as the I.M.F. and the World Bank have recently reconfirmed their
backing of the Country development plans, aimed at improving the exploitaton of coal
mines and sugar cane plantations.
The Construction market continues to rise by 15-20% per year, and notwithstanding
the competition of Portuguese and South African companies, still presents ample
opportunities.

SOUTHERN AFRICA
Unfortunately the situation in other Southern African Countries is not as positive as in
Mozambique.
Excluding Swaziland and to some extent Angola, a highly uncertain economic and political
situation remains.
In Malawi there are some opportunities through financing from donors, even though low
economic development and poor availability of funds limit opportunities for a few road and
water control projects.
Zimbabwe does not seem to be able to overcome its long political crisis, sharpened by the
re-election of President Mugabe.
In Angola, a country full of natural resources, such as oil and diamonds, a durable peace

20                                        COOPERATIVA MURATORI & CEMENTISTI CMC DI RAVENNA
has taken hold and GDP growth over 10% is expected on the back of strong oil price.
In the R.S.A., we could be involved in underground projects with tunnel boring machines.

MEDITERRANEAN
International sanctions to Libya have been lifted, and the Country is commencing some
great infrastructural projects.
Libyan politics now plays a major role in the region. Italy is a key counterpart and the main
foreign trading partner, due to good diplomatic relationships, notwithstanding some issues
dating back to the colonial era yet to be settled.
The Libyan Government is also interested in investing in other African Countries, and looks
to Italian Contractors as a preferred option.
In Algeria the main question mark relates to internal politics.
In the last few years Muslim, terrorism has been limited to the countryside and in the
aftermaths of the September 11 events, the Algerian Government has gained more
international credibility.
Though the Government is not able to completely quell terrorism, the present situation
seems to allow the recommencement of construction activities in the Country.
The Government needs to hasten social and economic development, and considerable
funds are available thanks to high oil prices and international financing.
Growth rates of 7% - 8% are expected in the next years, with a 4-5% inflation and a stable
local currency in relation to the USD .
Major investments are planned in water control, road and railway projects.

BALKANS
The Economy is developing in the region, but growth is very different from country to
country. The critical moment will follow the recent entry into the European Union of the
new Member States, whose GDP is expected to rise twice as much as those of the fifteen
former members.
CMC is looking at several projects for either transportation or water treatment, but they
are not expected to come to tender in the short term.

Competitors
The domestic marketplace is presently characterized by a selection caused by:
   The “General Contractor” regulation;
   The bankruptcy of competitors;
   The credit crunch following the crack of a few major listed Corporations.
Regarding the first issue, the contractors who at present are able to bid for the largest tenders
are five (including CMC). Along with these five entities, three engineering companies and
four “permanent Joint Ventures” are qualified in this class, as well.
In recent years, the crisis of a few of the Top 10 contractors has emerged: this is due mainly
to the final after-effects of the market crash of the mid 90’s.
Lately, even Impregilo, the National leading Contractor, has been under financial strain
affecting the market from both a financial and a competitive point of view.
Unfortunately in the present bull market, where growth rates and tender rules of financing
require an even stronger support from banks, what is commonly called a credit “crunch”
is being created.
Bank of Italy Officials have detected a widespread shrinkage of credit lines, and have called
the financial institutions to be more confident, and sustain the Industry in such a sensitive
time.
The above mentioned factors are then leading to a further selection and concentration of
competitors, raising a few considerations about the Italian contractors:
   Domestic Top 10’s own a 5% market share, amounting to € 6 billion;
   The largest Italian contractor, with a € 2.9 billion turnover, is ranked between 25th and
   30th overall in Europe;
   Turnover of the 3 Top European contractors is € 15–18 billion.
What are the expectations after the big players win a large project? Following the law of
supply and demand, will prices start to rise?
What plans do the European contractors have?

COOPERATIVA MURATORI & CEMENTISTI CMC DI RAVENNA                                             21
Will the “sit and wait” attitude of most of the foreign competitors, who believed the Italian
market of little interest because of the low profitability, red tape, etc. quickly change,
should the conditions really become different?
Considering both the financial and operating power of European contractors, it is obvious
that their potential entrance into the Italian market would have a tremendous impact on
the status quo.


Financial review
Consolidated income statement is as follows (in millions of Euro):



                                   1999          2000        2001        2002        2003        2004
 Turnover                          311,7        340,1       337,6       341,7       410,2       502,3
 Income before taxes                 5,3           7,4         8,3         9,8        12,6        13,4
 Minority interest and taxes        (3,0)        (3,7)       (4,5)       (2,7)       (2,6)       (4,9)
 Net Income                          2,3           3,7         3,8         7,1        10,0         8,5
 Depreciation and amortisation      25,1          32,3        27,3        22,9        29,1        32,6
 Cash flow                           27,4          36,0        31,1        30,0        39,1        41,1


Turnover shows a considerable increase (+22.5%), due to domestic operations (+ 20.5%)
while overseas activity remains stable.
Profit and margin confirm the positive trend of recent years.
As reported below, the construction business showed opposing trends in Italy and
Overseas.
On the domestic side, the strong turnover increase improved profitability, compared with
the 2003 results.
Overseas Operations record a minor loss: the 2004 budget was of a full recovery, but
unforeseen events affected the main project of the Khartoum 5 star hotel.
Other Concerns contributed to consolidated income before taxes for nearly € 2.0 million,
(€ 4.0 million in 2003 mainly backed by the disposal of Piazzale Lodi estate by FDA).
Considering the construction business only, the comparison with previous years in millions
of Euro is the following:



                                        1999        2000        2001        2002        2003        2004
 Turnover                              283,5       302,1       307,1       308,0       368,8       428,3
 E.B.I.T.                                 9,8         8,7       10,0         13,0        13,8        15,6
 Financial expenses                     (5,6)       (6,6)       (6,7)       (5,6)       (5,3)       (6,0)
 Income before extraordinary items        4,2         2,1         3.3         7,4         8,5         9,6
 Extraordinary charges/income             0,7         2,8         2,0           -           -           -
 Income before taxes                      4,9         4,9         5,3         7,4         8,5         9,6




22                                          COOPERATIVA MURATORI & CEMENTISTI CMC DI RAVENNA
                                Domestic Operations results are as follows (in millions of Euro):



                                                                     1999    2000         2001        2002      2003      2004
                                 Turnover                           142,5 170,7          187,9       222,5     272,3     328,1
                                 Cost of sales                     (130,6) (148,1)      (167,8)     (203,7)   (251,9)   (304,0)
                                 Operating income                     11,9    22,6         20,1        18,8      20,4      24,1
                                 Overhead expenses                   (6,0)   (6,5)        (5,9)       (7,5)     (8,0)     (8,1)
                                 E.B.I.T.                              5,9    16,1         14,2        11,3      12,4      16,0
                                 Financial expenses                  (3,5)   (3,2)        (3,5)       (3,6)     (4,0)     (4,5)
                                 Income before extraordinary items     2,4    12,9         10,7         7,7       8,4      11,5
                                 Extraordinary charges/income          0,3       -            -           -         -         -
                                 Income before taxes                   2,7    12,9         10,7         7,7       8,4      11,5


                                In 2004 both the turnover (+ 20.5%) and income before taxes (+ 36.9%) showed a sharp
                                increase.
                                Turnover rose by € 56.0 million, of which € 10.0 million came from the National
                                Construction Department, € 42.0 million from the SA-RC A3 Motorway and the Venice
                                bypass contracts, and € 4.0 million from “High Speed Railway” contracts.
                                Actual revenues were € 25.0 million under budget, because of the six month delay in the
                                beginning of the A3 SA-RC Motorway project, due to the late delivery of job sites and the
                                adoption of traffic restrictions different from those contractually established.
                                On the basis of these Employer’s decisions the Contractor claimed for the recovery of
                                damages caused by the extension of times and the disruption of the contractual work
                                schedule.
                                CMC’s share of revenues from the Cavet Consortium (High Speed Bologna–Florence
                                Railway) amounted to € 38.3 million (€ 44.0 in 2003). The actual amount was € 5.7
                                million below budget since some variation orders and other contractual issues still pending
                                with the Employer slowed both the production and its certification.
                                All these matters are under discussion and an amicable settlement is expected within
                                2005.
                                The Cavet Consortium has a pending prosecution for alleged environmental offences
                                commited by its executives and directors.




          Bologna – Florence
A1 Motorway, Emilia Romagna
                      (Italy)


                                COOPERATIVA MURATORI & CEMENTISTI CMC DI RAVENNA                                                  23
The Prosecutor asked for the judicial attachment of the defendants’estate to cover the
procedure expenses and the potential fine.
The Board of Directors of Cavet resolved on December 21, 2004, to guarantee the Court
on behalf of the defendants.
As a consequence, the Prosecutor and the Judge agreed the “periculum in mora” was
ceased, and actually no seizure injunction has been delivered by the Court.
In broad terms, profitability of Domestic Operations was positively affected by what above
mentioned, except for Cavet where the full recovery of margin is assured by the expected
outcome of the future settlement of pending litigation.
Overhead increased as budgeted, in consideration of the organization’s strengthening
required to face the planned growth of the next few years.
Financial charges rose as foreseen, due to “Rodano” and “SA-RC” contracts entering full
production stage.
The Overseas Operations breakdown is as follows (in millions of Euro):



                                          1999       2000       2001     2002      2003      2004
 Turnover                                126,1      131,4      119,2      85,5      96,5    100,2
 Cost of sales                         (117,9)    (133,7)    (118,1)    (79,2)    (90,3)    (95,6)
 Operating income                           8,2      (2,3)        1,1       6,3       6,2       4,6
 Overhead expenses                        (4,3)      (5,1)      (5,3)    (4,6)     (4,8)     (5,0)
 E.B.I.T.                                   3,9      (7,4)      (4,2)       1,7       1,4    (0,4)
 Financial expenses                       (2,0)      (3,4)      (3,2)     (2,0)     (1,3)     (1,5)
 Income before extraordinary items          1,9    (10,8)       (7,4)    (0,3)        0,1    (1,9)
 Extraordinary charges/income               0,4        2,8        2,0         -         -         -
 Income before taxes                        2,3      (8,0)      (5,4)    (0,3)        0,1    (1,9)


Compared to the previous year, Overseas Operations achieved a slight increase in revenues,
(+ 3.8%), that was, however well below the budget target of € 131.0 million.
This under performance was mainly due to the Khartoum 5 star hotel project, where
production was delayed because of problems with subcontractors, and with the Employer
and his consultants, regarding design matters.
These disputes are under negotiation with a possible settlement foreseen by the end of
the year.
Operations in Algeria did not expand in 2004 as planned, but this was covered by Southern
Africa, which confirms its main role in our overseas business.
Overseas actual results can not be considered really satisfactory, but we strongly believe
that the next three years will see the permanent return of this branch to profitability.
As regards the “Porce II” hydroelectric project (Colombia), the settlement scenario that is
emerging confirms the provision accrued in previous years.
The Directors’ capability to assess the risk of ongoing litigations, and accordingly account
for the related provision, was confirmed in 2004 by the amicable settlement of the CPCC
(Philippines) arbitration, for an amount lower than that accrued in previous years.
As a conclusion, the Directors believe that with a 13% net increase of profit, our Core
Business is in good shape, notwithstanding that noted before regarding Overseas
Operations.
The Group financial net debt amounting to 13.21% of turnover, and nearly equal to net
equity, is rightly balanced either in general terms or when compared to competitors.




24                                        COOPERATIVA MURATORI & CEMENTISTI CMC DI RAVENNA
                     Net debt at the end of the year, including shareholder loans, was as follows (in millions of
                     Euro):



                                                  1999      2000       2001        2002      2003      2004
                       Italy                     (59,8)    (56,0)     (60,2)      (57,1)    (78,2)    (73,9)
                       Overseas                  (14,9)    (27,6)     (24,2)        (1,3)       6,0     (5,0)
                                                 (74,7)    (83,6)     (84,4)      (58,4)    (72,2)    (78,9)
                       Cavet                       16,6      28,8       24,3        12,1        8,6       9,8
                       Maxilotto SA-RC                 -         -          -           -         -     (2,1)
                       National J.V.               (5,2)     (4,6)      (6,0)       (2,6)     (3,5)     (0,1)
                       Rodano/Cepav                    -         -        0,2       (9,1)     (7,1)   (13,0)
                                                 (63,3)    (59,4)     (65,9)      (58,0)    (74,2)    (84,3)
                       Property development      (11,2)      (7,6)      (5,5)       (1,9)      0,5        5,1
                       Other concerns              (3,8)     (3,4)      (3,2)       (2,8)     (2,7)     (2,0)
                                                 (78,3)    (70,4)     (74,6)      (62,7)    (76,4)    (81,2)


                     The 2004 financial budget forecast a sharp increase backed by revenues about 12.5%
                     higher than prior years.
                     Actual turnover lower than budget kept financial needs below expectations by € 27 million,
                     holding net balance at end of year close to 2003’s.
                     In this context, a natural peak of our financial position is sometimes due to contractual
                     constraint, like the payment of certificates of € 20 million minimum amount provided by
                     the A3 SA-RC Motorway contract.
                     Financial net debt with banks and other financial institutions were the following (in millions
                     of Euro):



                              1995    1996    1997     1998    1999   2000   2001   2002   2003     2004
 Bank loans                 (125,9) (116,9) (105,2) (105,5)   (94,6) (94,6) (96,1) (70,3) (81,4) (114,2)
 Other loans                   (1,6)   (4,2)   (3,6)    (2,5)  (2,7)  (1,9)  (2,0) (12,1) (10,4)  (18,2)
 Cash on hand and at banks      5,4     8,0   40,0     28,6    44,1   45,6   46,3   43,0   35,1     66,0
 Net debt                   (122,1) (113,1)  (68,8)   (79,4)  (53,2) (50,9) (51,8) (39,4) (56,7)   (66,4)
 Group turnover              266,5   253,8   259,6   296,8    311,7  340,1  337,6  341,7  410,2   502,3
 Net debt to turnover
 ratio                     45,82% 44,58% 26,52% 26,76% 17,05% 14,98% 15,34% 11,53% 13,84% 13,21%

Net debts to turnover ratio

 (%)

 50       45,82    44,58
 45
 40
 35
 30                           26,52      26,76
 25
 20                                                17,05
                                                                          15,34
                                                              14,98                               13,84
 15                                                                                                             13,21
                                                                                       11,53
 10
 5
          1995     1996       1997       1998      1999       2000        2001         2002       2003          2004


                     These figures show the continuous improvement of the Group’s financial position, seeing
                     as in 1995 net debts were € 122 million, representing 45.82% of turnover.
                     This comparison is obviously incomplete, since these past years have seen a significant

                     COOPERATIVA MURATORI & CEMENTISTI CMC DI RAVENNA                                                   25
change in the consolidation area. However, this trend confirms that the Group has greatly
reduced its debts, via either free cash flows or the disposal of assets.
Breakdown of cash on hand and at banks was the following (in millions of Euro):



                              2003     2004
 c/o CMC
 - Euro                        5,9     29,5
 - USD                         2,5      6,3
 - Yen                         2,1      4,8
 - Others                      3,0      0,4
                              13,5     41,0
 c/o Joint Venture:
 - c/o J.V.                    7,5      7,7
 - c/o CMC                     8,2      8,7
                              15,7     16,4
 Collateral securities         3,6      2,8
 Subsidiaries and other
 Group Companies               2,3      5,8
 Total                        35,1     66,0


The availability of liquidity despite gross borrowing reflects the nature of the Group’s
activities and the specific forms of financing arranged. In particular, CMC operates via
joint ventures, which hold the liquidity deriving from advances paid by Employers. The
timing and condition for the transfer of funds to the J.V. partners depends on the financial
requirements of the contracts concerned.
As the following chart shows, the “Net Debt to Net Equity Ratio” had a positive trend
throughout the decade, hovering around the one mark for the last three years, and
confirming the Group’s financial health:




                                                                                              Five star hotel & shopping mall
                                                                                              in Khartoum (Sudan)


26                                       COOPERATIVA MURATORI & CEMENTISTI CMC DI RAVENNA
                                   1995     1996        1997      1998          1999           2000     2001           2002    2003     2004
 Net equity                         41,5     24,5        31,6      32,2          35,4           39,6     48,3           51,8    56,1     60,3
 Net debt to Net equity Ratio        2,9      4,6         2,2       2,5           1,5            1,3      1,1            0,8     1,0      1,1

Net debt to net equity ratio


 5,0                   4,6
 4,5
 4,0
 3,5
 3,0        2,9
                                                  2,5
 2,5                                 2,2
 2,0
                                                            1,5
 1,5                                                                      1,3
                                                                                         1,1                       1,0         1,1
 1,0                                                                                                   0,8
 0,5

           1995       1996          1997         1998      1999       2000              2001           2002       2003         2004



                         Net equity and shareholder loans
                         In the last years both net equity and shareholder loans, representing the Group characteristic
                         sources of self-financing, had the following trend (in millions of Euro):



                                                        1997      1998           1999          2000      2001          2002     2003    2004
                             Net equity                 31,6      32,2           35,4          39,6      48,3          51,8     56,1    60,3
                             Shareholder loans           7,9        7,2            8,6           9,0     10,1          10,8     11,8    12,1
                             Total                      39,5       39,4           44,0          48,6      58,4          62,6     67,9    72,4


                         The abovementioned amounts had over past years a growth of 90.8% and 53.2%
                         respectively; this trend confirms the Group capacity for self-financing, both through
                         capitalization and shareholders’ financial backing.

Return on Equity in last years had the following trend


 20                                                                                                             17,9
 18
 16                                                                                            13,7                            14,1
 14
 12
                                                          9,3
 10                                                                        7,8
 8                                         6,4
                             5,3
 6
 4
 2
 0
           1997          1998              1999          2000             2001                 2002             2003           2004




                         COOPERATIVA MURATORI & CEMENTISTI CMC DI RAVENNA                                                                   27
This trend has allowed the payback of loans and share capital as follows (including both
share revaluation and dividends) :



                                                     1997      1998      1999     2000         2001     2002         2003          2004
 Active employees                                        -     1,7%      2,1%     4,1%         5,7%     4,4% (*)     4,5% (*)      4,0% (*)
 Retired employees                                       -     1,7%      2,1%     4,1%         5,7%     4,4%         4,5%          4,0%
 Financial shareholders                                  -     1,7%      4,1%     6,1%         7,7%     6,4%         6,5%          6,0%
 Preference shareholders                                 -         -     2,5%     3,5%         5,0%     4,0%         4,0%          4,0%
 Shareholders’ loan (annual average)                 5,8%      4,6%      4,0%     5,0%         4,0%     4,0%         3,1%          2,8%
 12 month treasury bills AVG yield                   6,3%      4,4%      3,3%     4,2%         4,4%     3,4%         2,2%          2,2%
(*) excluding bonus dividends

Return on Capital Stock


 (%)
                                                             7,7

                                                                                 6,4                    6,5
                                       6,1                                                                                  6,0
                                                      5,7

                                                                   4,4     4,4                    4,5
               4,1               4,1          4,2                                                                     4,0
                      3,3                                                                3,4

         2,1                                                                                                   2,2                 2,2




               1999                    2000                 2001                 2002                   2003                2004

     Active employees       Financial shareholders   12 month treasury bills AVG yield


As reported above, the return on shareholders financing and share capital, compared to
treasury bills yield has been absolutely profitable, in particular for the financial shareholders
who represent the characteristic source of financial backing of the Group.




Property development in Maputo
(Mozambique)




28                                                   COOPERATIVA MURATORI & CEMENTISTI CMC DI RAVENNA
Order book
At the end of 2004, the order book was at around € 1.3 billion; acquisition of the year
amounted to € 412 million (€ 249 in Italy and € 163 overseas).
The Order book breakdown is the following (in millions of Euro):



                                       2003    2004
 Overseas
 Southern Africa                       85,6     66,9
 P.R.C.                                32,9     33,1
 Sudan                                 66,8     57,3
 Algeria                               91,1    127,8
 Total Overseas                       276,4    285,1

 Italy
 Others                               241,2    156,1
 Salerno-Reggio Calabria Motorway     445,2    466,9
 High Speed Railway                   324,2    288,8
 Total Italy                        1.010,6    911,8

 Total                              1.287,0 1.196,9

Order book as of 31/12/2004


    Large scale projects 39,1%                                           Italy 13,0%




                                                                     High Speed Railway
    Overseas 23,8%                                                           24,1%



Italy: in 2004 major acquisition were the Venice Motorway bypass (€ 63 million), Civil
Works in the Sigonella U.S. Navy Base (€ 60 million) and variation orders to High Speed
Railway projects (€ 105 million).
These acquisitions largely compensated the disposal of our stake in the contract for the
realization of the Bologna railway link.
Main goals for next year relate to either large public tenders, such as the Messina Strait
Bridge, the Rome Underground, the Brenner Pass tunnel etc., or private investments in
shopping malls and industrial parks.
In early 2005 € 140 million in new contracts have already been acquired, among which the
Turin – Lyon railway Venaus pilot tunnel, the Catania General Market, and a further stretch
of the Milan Underground.
Today, the Order Book is at around € 1.0 billion (€ 900 million at the end of the year).
Overseas: the 2004 budget mark of € 163 million was hit. The Order Book at the end
of the year does not include the Constantine Bypass Contract, cancelled by the Algerian
Government after having been provisionally awarded.
The Order book amount is considered enough to realise the target turnover for 2004.
Medium term goals are to strengthen our presence in both Northern and Southern Africa.
Our business strategy in Asia and China is under re-consideration, due to the further and
further restraint faced by Western Contractors.
Order Book is consistent with the 2005 budget, considering that during last months, € 100
million in new contracts has been won (€ 52 million in Southern Africa, € 41 million in

COOPERATIVA MURATORI & CEMENTISTI CMC DI RAVENNA                                        29
Algeria and the balance in Asia). As of today, Overseas order book is about € 342 million
(€ 285 million at the end of the year).


Major current contracts

                                                 Contract Value       CMC’s      Stage of
                                                     € / million    Interest   completion
 ITALY
 High speed Railway Bologna – Florence                     3.980     11,3%            78%
 High speed Railway Bologna – Milan                          700     46,4%            49%
 Roma – Pantano Railway                                      136     14,5%            64%
 U.S. Navy base – Civil works Mega III                        78    100,0%            90%
 Reggio Calabria Correctional Centre                          40     50,0%            60%
 L. da Vinci Airport – Rome                                   60    100,0%           100%
 Cesena Ring Road – Lot 2                                     55     60,0%            55%
 Lugo 2000 – Residential Centre                                6     50,0%           100%
 Route 870                                                    50    100,0%           100%
 Milan Underground – Line 3                                   30     51,0%            90%
 Ravenna Port Quays                                           13    100,0%           100%
 Bologna – Florence A1 Motorway                              119     52,0%            75%
 Ex Ciba factory Shopping Mall (Milan)                        30    100,0%           100%
 Turin – Milan Railway                                        31     100%            100%
 Macrolotto Prato – Urbanisation                              11     85,0%            85%
 Ravenna Hospital – Onco Hematology Ward                       6     60,0%            41%
 Salerno – Reggio Calabria Motorway                          445    100,0%             8%
 Port of Cesenatico – Vincian Gates                            8    100,0%            85%
 A4 Motorway Venice bypass                                   530     12,0%             3%
 U.S. Navy Sigonella base – Civil works                       61    100,0%               -
 Turin – Lyon Venaus pilot tunnel                             84     44,0%               -
 Catania General Market                                       39    100,0%               -
 Milan Underground Rho – Pero Station                         61    100,0%               -

 OVERSEAS
 Sudan
 Five star hotel and shopping mall in Khartoum                96    100,0%            37%
 Mozambique
 Mussacama – Colume Road Rehabilitation                       30    100,0%            80%
 Massingir Dam Rehabilitation                                 33    100,0%            37%
 Rio Ligonhia Rehabilitation                                  25    100,0%               -
 EN 1 Road Rehabilitation                                     26    100,0%            33%
 China
 Tunnel boring – Kunming water diversion                      62    100,0%            54%
 Swaziland
 Mbabane & Manzini Sewage                                     20    100,0%           100%
 Mbabane bypass                                               50     40,0%             7%
 Algeria
 R.C.C. dam – Koudiat Acerdoune                             104      40,0%            24%
 El Affroun Motorway                                         51     100,0%               -
 Taksebt Tunnel                                              41     100,0%               -




30                                          COOPERATIVA MURATORI & CEMENTISTI CMC DI RAVENNA
                                Human resources
                                Workforce employed at year end was the following:



                                            Blue Collar                   White Collar                         Total
                                                                         and Executives
                                    31/12/2003       31/12/2004     31/12/2003 31/12/2004            31/12/2003   31/12/2004
     Permanent                             215              207            289          286                 504          493
     Resident                            4.316            4.477            576          682               4.892        5.159
     Total                               4.531            4.684            865          968               5.396        5.652


                                Permanent workforce net decrease of eleven units is due to year end retirements.
                                Resident workforce includes all the employees involved in contracts where CMC acts as
                                either a single or the leader contractor.
                                Major changes are mainly to the commencement of the SA-RC project.


                                Other concerns
                                Property development
                                A summary of property development financials is the following (in millions of Euro):



                                                          1999     2000   2001     2002       2003     2004
                                 CMC IMMOBILIARE
                                 Turnover                  11,1     5,4     6,5     3,3        4,4       2,0
                                 Net income (loss)         (1,0)    0,6     0,8     0,1        0,1         -
                                 Net Equity                 0,3     0,9     1,7     1,7        1,7       1,7

                                 FDA
                                 Net income (loss)             -      -       -     1,8        1,5       0,5




          Bologna – Florence
A1 Motorway, Emilia Romagna
                      (Italy)


                                COOPERATIVA MURATORI & CEMENTISTI CMC DI RAVENNA                                           31
Cmc Immobiliare, completed the disposal of its properties, originally spun-off from the
parent company in 1997.
Furthermore CMC Immobiliare is the special purpose company for the development of the
Docks Area in Ravenna. In view of this, land and buildings were purchased from the parent
company.
In 2004 FDA realised a further significant gain selling a portion of its estate in the centre
of Milan.

Building materials
SIC – Società Adriatica Impianti e Cave SpA, had the following results (in millions of Euro):



                        1999          2000   2001   2002     2003     2004
 Turnover               12,4          14,9   16,7   14,5     18,5     16,0
 Net income (loss)        0,1          0,1    0,6    0,2      0,1      0,2
 Net equity               4,1          4,2    4,8    5,0      5,1      5,3


In recent years the Construction Business in the Ravenna area slumped, and accordingly SIC
decreased its turnover in 2004.

Prefabrication sector
GED S.r.l. results were as follows (in millions of Euro):



                        1999          2000   2001   2002     2003     2004
 Turnover               15,8          18,2   24,5   24,2      25,4    29,5
 Net income (loss)       (0,2)         0,1    0,5    0,6    1,1 (*)    1,0
 Net equity               9,1          9,2    9,7    8,5       9,2    10,2
(*) net of law 350/2003 revaluation


In 2004, results were positive, in both turnover and profit terms, especially in the concrete
beam sector that should benefit further development in the next years.




                                                                                                   Road rehabilitation
                                                                                                   (Mozambique)


32                                              COOPERATIVA MURATORI & CEMENTISTI CMC DI RAVENNA
Intercompany and related party operations
Relations between Group companies, both in terms of the vertical integration of production
and with regard to the provision of services, are settled on arms’ length terms.
In particular:
   Sales and purchases at prices applicable between independent operators;
   Rentals at property market prices;
   Interest at rates applied by banks.
Such transactions mainly comprise:
   Services provided by the Corporate structure:
   Technical and organisational support;
   Financial, regarding the sourcing of loans and the issue of guarantees needed to perform
   work;
   Administrative, tax, corporate and insurance services.
Commercial relations, regarding the purchase of machinery, spare parts, raw materials and
other materials required for contracts;
Relations connected with contracts awarded by contracting companies to GED and SIC for
the supply of precast components and building materials.
On the basis of information received from Group companies, there have not been any
unusual transactions.
The Parent Company’s balances as of 31 December 2004 can be found at the end of the
Notes.


Shareholders policy
In 2004 shareholder number and share capital stock experienced the following changes (in
millions of Euro):



                                     2003                          2004
                               nr    Share Capital            nr   Share Capital
 active employees             356             7,8            360            8,6
 retired employees            770             0,5            759            0,6
 financial shareholders          3             8,2              3            8,5
 preference shareholders       24             2,3             24            2,3
 Total                      1.153            18,8          1.146           20,0


In comparison with last year, there has not been any major change in the shareholding
structure.
2004 did not see many applications, but CMC continued to reinforce its policy of backing
new shareholders’ admissions, as ruled by our Articles of Association and updated to
comply with Legislation Decree 6/2003.
Capital stock in 2004 increased from € 18.8 million to € 20.0, mainly backed by employed
shareholders.
Average capital hold per shareholder increased from € 22,021 to € 24,059.
The Directors confirmed in 2004 as well the reinforcement of Capital Stock as one of
Group’s major goals, recommending a € 1.0 million bonus dividend to be capitalized.
At the end of 2004, the full amount of € 2.3 million preferred shares matured; the
Directors decided to not re-issue preferred shares, even considering that main shareholders
Federcoop has agreed to underwrite € 2.1 million in ordinary shares.
Active employer number is almost stable; the slight increase of four people is the net
balance between seventeen new shareholders and thirteen either retired or who left the
Group.
Two main goals realized in 2004 were the amendment of the Articles of Incorporation and
by-laws to comply with the Law Decree 6/2003, and the preparation of the “Corporate
Social Involvement Report”.

COOPERATIVA MURATORI & CEMENTISTI CMC DI RAVENNA                                        33
Dividends
The Directors recommend a final dividend as follows:
  3%, amounting to € 157 thousand, to the “Cooperative Development Mutual Fund”,
  as provided by art. 53 of the Articles of Incorporation;
  2%, amounting to € 352 thousand, to revaluate ordinary and preference shares fully
  paid, as provided by the art. 31 of Law no. 59/92;
  2% and 4% as earnings for ordinary and preference shares respectively, amounting to
  € 615 thousand;
  the balance, for € 3,147 thousand, to be accrued as Legal Reserve, as stated by Law No.
  904/77, and for € 952 thousand to “Other Reserves”, having been already taxed;
  the Directors recommend as well € 980 thousand of bonus dividend bound to Capital
  free increase.


Subsequent events
The following are major post balance sheet events that occurred in the first months of
2005:
  New contracts have been awarded for over € 250 million.
  Order backlog is now at € 1.4 billion (€ 1.0 billion in Italy and € 400 million overseas).
  Major new contracts are:
  - The Turin – Lyon railway pilot tunnel: the project value is € 84.3 million, CMC’s 44%
     interest amounts to € 38.7 million;
  - The Catania General Market for € 39.4 million;
  - The Milan Underground Rho – Pero station for € 60.8 million;
  - Civil works in Mozambique for nearly € 52 million;
  - 11.35 km of 2.5 m tunnels in Algeria in the “Taksebt Water Transfer Project”. Our
     Employer is SNC Lavalin of Canada, General Contractor appointed by A.N.B. (Algerian
     Water Agency).
  The General Meeting approved on February 26, for the 2005 – 2007 Three Year Plan.


Year 2005 outlook
The 2005 – 2007 Plan represents an evolution and update from the previous one; guidelines
for the next three years are as follows:
   to further concentrate on our core business, especially in the large infrastructure sector,
   reaching for a € 550 –600 million turnover (€ 150 overseas);
   to operate as General Contractor and ranked among Italy’s Top 5;
   to acquire profitable contracts, coherent with our technical skills, in order to keep the
   order backlog to € 1.0 billion;
   to further consolidate domestic operations, acquiring over the next three years at last
   € 750 million of large scale projects;
   to maintain the “overhead to revenues” ratio at its current level;
   to control and rationalise financial policies;
   to continuously improve human resource quality, since our talented people provide the
   springboard for our future growth.
Attaining these goals will have far reaching effects on the Company results in the next
three years and in certain cases beyond.
Consolidated turnover in 2005 is expected to be over € 550 million, with € 12-13 million
in profit before taxes: these goals are confirmed by 2005 first quarter actual figures.
Our capability to perform as planned is greatly influenced by having 90% of budget
production in backlog at the beginning of the year.
The Directors state that the “Sensitive personal information code of protection” will be
issued as provided by the Law Decree 196/2003.



34                                         COOPERATIVA MURATORI & CEMENTISTI CMC DI RAVENNA
Conclusions
Dear Shareholders and Guests,
The 2004 positive results have confirmed the trend of recent years.
The net income realized allowed us to adequately compensate both the capital invested
and the professional commitment of our shareholders.
We are very proud of this performance, obtained within a still difficult marketplace,
characterised by high risk and low profit.
Social and political tensions, economic stagnation and the recurring financial crises of great
companies make it difficult, if not impossible, to plan for the future with any degree of
accuracy.
A continuous effort is therefore needed to maintain the present level of profitability and
efficiency that we have fought so hard to reach in recent years.
In 2004 the Group grew considerably, but what makes us really proud is that the first
project reserved to General Contractors has been awarded to CMC.
This confirms our place in the top echelons of the market, and corroborates both the good
performance of the Management and the correctness of our strategy.
The 2005 – 2007 Three Year Plan sets out ambitious goals that we believe we will realize,
benefiting fron an adequate network of alliances and partnerships, and strengthening the
Group financial structure.
The year 2004 has gone by - we must therefore cease looking back on our good results
and instead look forward to continually improving ourselves, which will be a difficult task
indeed, considering the usual caveat of the construction market.




                                                       Ceramiche di Faenza factory – extension
                                                       works; Emilia Romagna (Italy)




COOPERATIVA MURATORI & CEMENTISTI CMC DI RAVENNA                                                 35
       CONSOLIDATED
FINANCIAL STATEMENTS
Balance Sheet Assets

                                                                               2004                            2003
 A) RECEIVABLE FROM SHAREHOLDERS
    FOR PAYMENTS DUE
    I) Subscribed capital not paid up                                        85.951                          75.615
    II) Called up subscribed capital                                              -                               -
 Totale crediti v/soci                                                       85.951                          75.615

 B) FIXED ASSETS
     I) Intangible fixed assets
          1) plant and expansion costs                                      457.745                         432.707
          2) research, development and advertising costs                          -                               -
          3) industrial patent rights
             intellectual property rights                                   616.966                         413.710
          4) concessions, licences, trade-marks
             and similar rights                                              22.828                           38.475
          5) goodwill                                                       152.512                          305.024
          6) fixed assets in progress and advances                           768.586                          707.973
          7) others                                                      23.011.554                       26.548.901
             a) core-business multi-year charges           23.002.736                       25.970.025
             b) other multi-year charges                        8.818                          578.876
 Total intangible fixed assets                                            25.030.191                       28.446.790
     II) Tangible fixed assets
          1) land and buildings                                          43.430.943                       36.584.285
          2) plant and machinery                                         47.730.923                       50.745.607
          3) industrial and commercial equipment                         18.055.114                       17.182.288
          4) other assets                                                 2.183.977                        1.477.744
          5) fixed assets in progress and advances                         5.197.600                        4.262.810
 Total tangible fixed assets                                             116.598.557                      110.252.734
     III) Financial assets
          1) investments in                                              11.220.554                        7.422.637
             a) non-consolidated subsidiary companies         281.606                          156.561
             b) associated companies                        2.533.331                        4.684.069
             c) other companies                             8.911.487                        3.087.877
                 - investments write off                     -505.870                         -505.870
          2) receivables from                                            12.362.604                       11.663.346
             a) non-consolidated subsidiary companies       6.144.881                        5.925.640
                 1) due within 12 months                    6.144.881                        5.925.640
                 2) due after 12 months                             -                                -
             b) associated companies                                      3.524.952                        2.457.752
                 1) due within 12 months                    3.327.955                        2.457.752
                 2) due after 12 months                       196.997                                -
             c) parent companies                                                  -                                -
             d) others                                                    2.692.771                        3.279.954
                 1) due within 12 months                    1.498.746                        2.016.349
                 2) due after 12 months                     1.194.025                        1.263.605
                 3) other securuties                              104                              751
                 4) treasury shares                                 -                                -
 Total financial fixed assets                                              23.583.262                       19.086.734
 Total fixed assets                                                      165.212.010                      157.786.258




38                                                             CONSOLIDATED FINANCIAL STATEMENTS
                                                                        2004                        2003
C) CURRENT ASSETS
    I) Inventories
         1) raw materials and consumables                          15.369.177                  18.507.013
         2) work in progress
            and semi-finished products                                 872.656                   4.187.867
         3) contracts in progress                                 116.988.150                  96.565.770
         4) finished products and goods                             12.017.433                  13.237.104
         5) advances                                               11.636.015                   4.886.156
Total inventories                                                 156.883.431                 137.383.910
    II) Receivables from
         1) clients                                               127.678.962                 118.193.897
            a) due within 12 months                 118.070.353                 111.104.830
            b) due after 12 months                    9.608.609                   7.089.067
         2) non-consolidated subsidiary companies                   8.368.163                   9.391.267
            a) due within 12 months                   2.481.207                   5.523.585
            b) due after 12 months                    5.886.956                   3.867.682
         3) associated companies                                    8.078.846                  21.783.606
            a) due within 12 months                   6.782.255                  20.289.281
            b) due after 12 months                    1.296.591                   1.494.325
         4) parent companies                                                -                           -
         4 bis) taxes                                              17.304.811                  20.298.495
            a) due within 12 months                  16.792.038                  20.298.495
            b) due after 12 months                      512.773                           -
         4 ter) pre-paid taxes                                      2.659.230                   2.760.627
            a) due within 12 months                   2.624.186                   2.760.627
            b) due after 12 months                       35.044                           -
         5) others                                                 21.794.615                  21.854.241
            a) due within 12 months                  20.856.569                  20.145.470
            b) due after 12 months                      938.046                   1.708.771
Total receivables                                                 185.884.627                 194.282.133
    III) Financial assets
         1) investments in subsidiary companies                            -                            -
         2) investments in associated companies                            -                            -
         3) other investments                                          2.582                            -
         4) treasury shares                                                -                            -
         5) other securuties                                         808.441                            -
Total financial assets                                                811.023                            -
    IV) Liquid assets
         1) bank and postal accounts                               64.003.327                  34.590.275
         2) cheques                                                   207.229                      69.044
         3) cash on hand                                              940.170                     456.529
Total liquid assets                                                65.150.726                  35.115.848
Total Current Assets                                              408.729.807                 366.781.891
D) ACCRUED INCOME
   AND DEFERRED LIABILITIES                                         6.901.380                   6.725.884


TOTAL ASSETS                                        580.929.148                 531.369.648




                        CONSOLIDATED FINANCIAL STATEMENTS                                               39
Balance Sheet Liabilities

                                                                         2004                            2003
 A) SHAREHOLDERS’ EQUITY
    I) Capital                                                     20.045.029                       18.782.966
          1) Share capital                           17.728.479                       16.466.416
          2) Preferred Shares (A.P.C.)                2.316.550                        2.316.550
    II) Paid-in capital                                                     -                                -
    III) Revaluation reserve                                                -                                -
    IV) Legal reserve                                              22.277.907                       21.153.254
    V) Reserve for treasury stock                                           -                                -
    VI) Statutory reserves                                                  -                                -
    VII) Other reserves                                             8.374.788                          198.955
          1) extraordinary reserve                      318.175                          164.576
          2) consolidation reserve                    3.117.884                        3.342.385
          3) conversion reserve                      -4.265.832                       -3.308.006
          4) retained earnings reserve                9.204.561                                -
    VIII) Retained earnings                                                 -                                -
    IX) Profit (loss) for the year                                   8.504.968                       10.033.494
    X) Minority interest                                            1.068.234                        5.920.591
 Total Shareholders’ Equity                                        60.270.926                       56.089.260

 B) RESERVES FOR RISKS AND CHARGES
    1) for pension payment and similar obligation                           -                                -
    2) for taxes                                                      301.913                           96.712
    3) other                                                       29.108.428                       28.660.483
         a) contractual risks                        22.439.464                       21.399.719
         b) overseas operations                       3.795.958                        3.795.958
         c) other risks and charges                   2.873.006                        3.464.806
 Total funds for risks and charges                                 29.410.341                       28.757.195

 C) SEVERANCE INDEMNITY                                            11.114.411                        9.927.697

 D) PAYABLES
    1) debentures                                                           -                                -
    2) convertible debentures                                               -                                -
    3) shareholders loans                                          12.078.627                       11.844.043
       a) due within 12 months                        2.415.725                        2.368.809
       b) due after 12 months                         9.662.902                        9.475.234
    4) banks                                                      114.218.136                       81.394.647
       a) due within 12 months                       60.575.836                       56.808.407
       b) due after 12 months                        53.642.300                       24.586.240
    5) other loans                                                 18.206.170                       10.470.146
       a) due within 12 months                       10.635.267                        9.298.656
       b) due after 12 months                         7.570.903                        1.171.490
    6) advances                                                     4.367.917                       17.874.692
       a) due within 12 months                        4.367.917                       17.874.692
       b) due after 12 months                                 -                                -
    7) suppliers                                                  189.348.165                      164.926.605
       a) due within 12 months                      177.701.970                      150.323.460
       b) due after 12 months                        11.646.195                       14.603.145
    8) payables represented
       by credit instruments                                                 -                               -
    9) payables to non-consolidated
       subsidiary companies                                        10.208.001                       14.114.382
       a) due within 12 months                        3.625.676                        4.651.356
       b) due after 12 months                         6.582.325                        9.463.026



40                                                       CONSOLIDATED FINANCIAL STATEMENTS
                                                                      2004                       2003
   10) payables to associated companies                         14.216.300                 21.720.388
        a) due within 12 months                   12.521.685                 20.995.599
        b) due after 12 months                     1.694.615                    724.789
   11) payables to parent companies                                      -                          -
   12) tax payables                                             14.918.421                 10.610.379
        a) due within 12 months                   14.918.421                 10.554.169
        b) due after 12 months                             -                     56.210
   13) payables to social security
        and welfare institutions                                 3.661.920                  3.242.655
        a) due within 12 months                    3.661.920                  3.242.655
        b) due after 12 months                             -                          -
   14) other                                                    28.071.706                 18.063.358
        a) due within 12 months                   22.566.791                 15.075.390
        b) due after 12 months                     5.504.915                  2.987.968
   15) advance payments from clients
        and customers                                           68.650.674                 80.315.388
        a) due within 12 months                   20.529.695                 42.551.525
        b) due after 12 months                    48.120.979                 37.763.863
Total payables                                                 477.946.037                434.576.683

E) ACCRUED LIABILITIES
   AND DEFERRED INCOME                                           2.187.433                  2.018.813

TOTAL LIABILITIES                                              580.929.148                531.369.648

Memorandum accounts

                                                                     2004                       2003
Guarantees in favour of
- Subsidiary companies                                           2.341.699                  4.820.692
- Associated companies                                           8.104.851                  9.027.953
- Other companies                                              215.365.659                216.804.224
- Third parties                                                424.562.221                531.645.844
Mortgages in favour of third parties                             2.680.350                  6.661.829
Third party bonds in our favour                                          -                          -
Third party real security in our favour                         36.599.719                 45.061.912
Third parties assets                                                     -                          -
Other commitments and risks                                     46.824.231                 56.699.773
Factoring with recourse                                         53.696.539                 13.981.364
Receivable from third parties in bankruptcy proceedings          2.220.022                  2.220.022




                      CONSOLIDATED FINANCIAL STATEMENTS                                             41
Profit and Loss Account

                                                                                2004                               2003
 A) VALUE OF PRODUCTION
    1) revenues from sales and services                                  456.188.239                        375.344.796
    2) variations in inventories of work in progress,
         semi-finished and finished products                                -5.804.259                         -5.786.021
    3) variations in contracts in progress                                37.929.774                          8.608.543
    4) increases in fixed assets for internal work                          2.678.744                          2.142.283
    5) other income and proceeds                                          11.311.257                         29.883.892
         a) capitalisation of items for deferred use        5.928.860                        11.404.894
         b) use of funds                                    4.400.000                         4.887.855
         c) sundry proceeds                                   982.397                        13.591.143
 Total value of production                                               502.303.755                        410.193.493

 B) PRODUCTION COSTS
     6) raw materials, consumables and goods                             -134.772.679                        -99.860.053
     7) services                                                         -212.484.854                       -176.227.993
     8) lease and hire                                                    -12.985.699                        -11.495.322
     9) personnel                                                         -73.556.128                        -63.653.611
         a) wages and salaries                             -53.694.126                      -46.194.090
         b) social security contributions                  -16.794.760                      -14.424.974
         c) severance indemnity                             -2.970.219                       -2.638.483
         d) pension payments and similar                             -                          -29.854
         e) other costs                                        -97.023                         -366.210
     10) depreciation and amortization                                    -32.623.791                        -30.306.735
         a) intangible fixed assets                         -11.958.529                      -10.912.989
         b) tangible fixed assets                           -19.743.715                      -18.200.828
         c) other fixed asset writeoffs                               -                                -
         d) writedowns of receivables included
            in current assets                                -921.547                        -1.192.918
     11) variations in inventories of raw materials,
         consumables and goods                                             -2.186.450                         11.205.764
     12) provisions for risks                                                 -53.180                         -1.657.186
     13) other provisions                                                     -71.183                           -236.657
     14) other operating costs                                            -14.097.047                        -12.464.212
 Total production costs                                                  -482.831.011                       -384.696.005
 Difference between value
 and cost of production (A-B)                                             19.472.744                         25.497.488

 C) FINANCIAL INCOME AND CHARGES
    15) income from investments                                               50.291                            317.128
        a) in subsidiary companies                                  -                                 -
        b) in associated companies                                  -                           286.381
        c) in other companies                                  50.291                            30.747
    16) other financial income                                              3.655.052                          3.008.170
        a) from receivables entered in the fixed assets                         4.682                              1.053
           1) from non-consolidated subsidiary
               companies                                            -                                   -
           2) from associated companies                             -                                   -
           3) from parent companies                                 -                                   -
           5) from others                                       4.682                               1.053
        b) from securities entered in the fixed assets
           that do not costitute investments                                        -                                  -
        c) from securities entered in the current assets
           that do not costitute investments                                   3.866                             34.486
        d) other income                                                    3.646.504                          2.972.631



42                                                              CONSOLIDATED FINANCIAL STATEMENTS
                                                                           2004                        2003
           1) from non-consolidated
              subsidiary companies                          32.529                     41.946
           2) from associated companies                    118.161                    150.785
           3) from parent companies                              -                          -
           4) interest on arrears                                -                    146.046
           5) from others                                3.495.814                  2.633.854
   17) interest and other financial charges                            -7.854.764                  -7.583.477
        a) from non-consolidated subsidiary
           companies                                              -                    -10.996
        b) from associated companies                              -                          -
        c) from parent companies                                  -                          -
        d) from others                                   -7.854.764                 -7.426.435
        e) prov.for bad debts for interest on arrears             -                   -146.046
   17 bis) exchange profits and losses                                 -3.521.577                  -1.585.097
        a) exchange profits                               14.704.173                  4.669.127
        b) exchange losses                              -18.225.750                 -6.254.224
Total (15+16-17)                                                      -7.670.998                  -5.843.276

D) ADJUSTMENTS TO VALUE OF FINANCIAL ASSETS
   18) revaluation                                                      208.240                   2.404.428
        a) of investments                                 206.564                   2.400.019
        b) of financial fixed assets
           that do not constitute investments               1.676                       4.409
        c) of securities entered in the current assets
           that do not costitute investments                    -                            -
   19) devaluation                                                    -1.279.814                 -11.584.604
        a) of investments                              -1.279.814                  -11.584.604
        b) of financial fixed assets
           that do not constitute investments                   -                            -
        c) of securities entered in the current assets
           that do not costitute investments                    -                            -
Total adjustments (18-19)                                             -1.071.574                  -9.180.176

E) EXTRAORDINARY INCOME AND CHARGES
   20) income                                                         4.408.866                   3.458.836
        a) capital gains from sales                         58.621                    488.374
        b) other extraordinary income                    4.350.245                  2.065.087
        c) use of funds                                          -                    905.375
   21) charges                                                        -1.786.115                  -1.298.422
        a) capital losses from sales                        -13.021                     -6.286
        b) taxation for previous years                     -583.669                   -247.982
        c) other extraordinary charges                   -1.189.425                 -1.044.154
Total extraordinary items (20-21)                                     2.622.751                   2.160.414

Income before tax (A-B+C+D+E)                           13.352.923                 12.634.450
   22) income tax                                                     -4.820.997                  -2.599.522
       a) current taxes                                  -4.564.702                 -3.514.715
       b) pre-paid taxes                                          -                    915.193
       c) deferred taxes                                   -256.295                          -
   23) income (loss) before minority interest                         8.531.926                  10.034.928
   24) minority interest                                                -26.958                      -1.434
   25) Consolidated net income                                        8.504.968                  10.033.494




                         CONSOLIDATED FINANCIAL STATEMENTS                                                 43
Notes to the consolidated financial statements
as of december 31, 2004
(in thousands of Euro)

(Translation from the Original issued in Italy, from the Italian into the English language
solely for the convenience of international readers)


Structure and content
of the consolidated financial statements
The CMC Group Consolidated Financial Statements as of December 31, 2004 are
stated in accordance with the standards introduced by Decree Law No. 127/91 with the
implementation of the VII EU Directive and consist of the balance sheet, the profit and loss
account and the present notes.
Legal standards are integrated and interpreted, where necessary, in accordance with the
accounting principles of the Italian Institute of Chartered Accountants and, where silent, of
the International Accounting Standards Board.
These notes provide the analysis, explanation and, in some cases, a supplement to figures
and contain all information required by Law. Moreover, the Attachments contain all
complementary information needed in order to provide a true and fair view.
Profit and loss account and balance sheet are stated in Euro, without decimal numbers, in
accordance with the Law, while these notes are in thousands of Euro.
The Directors’ Report includes comments on the year 2004 operations and subsequent
events.
Group accounts include CMC’s statutory accounts and those of its subsidiary undertakings
as of December 31, 2004.
Where the accounting policies of joint ventures and associates are not in compliance with
the Group, adjustments are made on consolidation in order to present the Group accounts
on a uniform basis according to the Companies Act (Italian Civil Code).
Major adjustments relate to depreciation rates and the policy of conversion of foreign
currencies.


Consolidation principles
Major consolidation principles are as follows:
   the book value of interest in companies consolidated line-by-line is written off against
   the relative shareholders’ equity with the undertaking of their assets, liabilities, costs and
   incomes as a whole, irrespective of the value of the investment;
   any difference between the purchase cost and the shareholders’ equity is allocated, where
   possible, to assets and liabilities up to, but not exceeding, their current value. Any residual
   value is booked as “Consolidation difference” and systematically depreciated on a straight-
   line basis over the expected recovery period, while positive differences are booked in the
   “Consolidation reserve” as shareholders’ equity. In these financial statements, there are
   no differences allocated to assets and/or liabilities or to Consolidation difference, given
   that at the time of the first consolidation only positive amounts arose;
   major intercompany profit and loss not yet realised with third parties is written off net of
   any fiscal effect, as are the intercompany payables and receivables;
   minority interest in equity and net income are booked as a specific item.
The Companies and Joint Ventures that operate in the construction industry that are jointly
controlled with other partners are consolidated using the partial consolidation method
provided by art. 37 of Decree Law 127/91. The main policies adopted for the application
of this method are as follows:
   consolidated accounts show only the percentage of assets, liabilities, profit and loss
   owned by the Group. The value of the investment is written off against the share of the
   Group interest, excluding any minority interest.

CONSOLIDATED FINANCIAL STATEMENTS                                                              45
   intercompany profit and loss is proportionally written off, and all other consolidation
   adjustments are made on a partial basis;
   in case of offset of intercompany receivables and payables, the amount pertaining to
   third parties is duly reclassified;
   any consolidation difference receives a treatment similar to that described for the line-
   by-line consolidation.
Investments in associated companies that do not operate in the construction industry and
in subsidiaries being wound up or not yet operating are valued with the Equity method, as
per art. 36 of Decree Law 127/91.
Other investments are booked at cost.


Conversion of financial statements in euro
Accounts are converted into Euro at end of year exchange rates, given that the companies
are substantially independent from an operational point of view.
This method is also used to convert the profit and loss account due to the technical
constraints imposed by the use of “multi-currency” accounting systems.
Accounts of foreign branches, being independently managed and adopting “Multi–
currency” accounting, are also converted at year-end exchange rates. The net effect arising
from the translation of both branches and subsidiary accounts is booked to the equity
reserve for currency conversion.




                                                                                               Salerno – Reggio Calabria
                                                                                               A3 Motorway;
                                                                                               Campania – Basilicata (Italy)


46                                                       CONSOLIDATED FINANCIAL STATEMENTS
The following exchange rates are used:



 Currency              Code Exchange 2004            Exchange rate
                                      Euro                    2003
 US Dollar             USD            1,36                    1,26
 South African Rand    ZAR            7,69                    8,33
 Mozambican Metical    MZM       25.212,50               28.998,40
 Chinese Renmimbi Yuan CNY           11,28                   10,46
 Eritrean Nakfa        NFA           18,39                   12,06
 Philippines Peso      PHP           76,74                   70,10
 Colombian Peso        COP        3.222,04                3.617,92
 Sudanese Dinar        SDD          347,73                  334,64
 Malaysian Ringitt     MYR            5,18                    4,80
 Swaziland Lilangeni   SZL            7,69                    8,33
 Algerian Dinar        DZD           97,57                   89,33
 Singapore Dollar      SGD            2,23                    2,15



Consolidation area
As of December 31 2004, the consolidation area includes the following companies:

Line-by-line Consolidation

 Company                                                   Headquarters           %
 C.M.C.DI RAVENNA (Ultimate parent)                        Ravenna            100,00
 CMC AFRICA AUSTRAL Lda                                    Mozambique         100,00
 CMC DI RAVENNA FRANCE Sarl                                France             100,00
 CMC DI RAVENNA CO. Ltd                                    Sudan              100,00
 CMC RAVENNA (Pty) Ltd                                     Swaziland          100,00
 CMC IMMOBILIARE S.p.A.                                    Ravenna            100,00
 COMPANHIA IMOBILIARIA MOCAMBICANA Lda                     Mozambique         100,00
 EMIR S.p.A.                                               Pesaro              43,61
 S.B.C. S.c.r.l.                                           Ravenna            100,00
 SIDE INVESTMENTS (Pty) Ltd                                South Africa       100,00
 SOCIETÀ ADRIATICA IMPIANTI E CAVE - S.I.C. S.p.A.         Ravenna             85,50
 SULBRITA Lda                                              Mozambique         100,00

Partial Consolidation

 Company                                                   Headquarters               %
 CMC di Ravenna WHBO J.V. Massingir                        Mozambique              60,00
 CONSORZIO C.A.V.E.T.                                      Bologna                 11,27
 DERGANO S.c.r.l.                                          Ravenna                 51,00
 FDA S.r.l.                                                Milan                   20,00
 G.E.D. S.r.l.                                             Cesena                  49,56
 LA QUERCIA 2 S.c.r.l.                                     Ravenna                 52,00
 LE VIGNE S.c.r.l.                                         Ravenna                 60,00
 MACRODUE 2002 S.c.r.l.                                    Ravenna                 85,00
 OPERA 2 S.c.r.l.                                          Ravenna                 50,00
 RODANO CONSORTILE S.c.r.l.                                Milan                   46,43
 RUGULA S.c.r.l.                                           Ravenna                 50,00
 SISTEMA 2 S.c.r.l.                                        Ravenna                 37,00




CONSOLIDATED FINANCIAL STATEMENTS                                                      47
Consolidated with the equity method

 Company                                                Headquarters                    %
 CMC DI RAVENNA Eurl                                    Algeria                     100,00
 CMC DI RAVENNA MALAYSIA Sdn Bhd                        Malaysia                    100,00
 CMC DI RAVENNA Pte Ltd                                 Singapore                   100,00
 CMC RAILWAY J.V. (Pty) Ltd                             Swaziland                   100,00
 DUNROSE INVESTMENTS (Pty) Ltd                          South Africa                100,00
 GROUP FIVE - CMC Batch Plant J.V.                      Mauritius - Mozambique       50,00
 IMOTUR Lda                                             Mozambique                   50,00
 MORESIDE INVESTMENTS (Pty) Ltd                         South Africa                100,00
 OPERA S.c.r.l. being wound up                          Ravenna                      55,00
 PROFURO INTERNATIONAL Lda                              Mozambique                   48,05
 RENATO SERRA 61 S.r.l.                                 Ravenna                      40,00
 SIDEBAR MANUFACTURING (Pty) Ltd                        South Africa                100,00
 SOCIETÀ GESTIONE PARTECIPAZIONI S.r.l.                 Ravenna                     100,00


Notwithstanding the provisions of art. 37, paragraph 1 of Decree Law 127/91 and on the
basis of the option granted by art. 29, paragraph 1 of said Decree, the 11.269% take in
Consorzio C.A.V.E.T. and the 20% stake in FDA S.r.l., are consolidated with the partial
consolidation method, considering that the shareholders, by specific agreement, exercise
joint control.
This allows a better representation of the Group accounts, taking into consideration the
relevance of operations carried out through these entities.
Variations in the consolidation area compared to 2003 are as follows:

Companies consolidated line-by-line
Variation in interest stake:
  Companhia Imobiliaria Mocambicana Lda from 51.00% to 100.00%;
  SBC S.c.r.l. from 88,00% to 100.00% (previously partially consolidated).
Excluded from line-by-line-consolidation and consolidated with the Equity Method not
having material amounts:
  CMC DI RAVENNA MALAYSIA Sdn Bhd
  CMC RAILWAY J.V. (Pty) Ltd
  SOCIETA GESTIONE PARTECIPAZIONI S.r.l.
Excluded, being finally disposed
  S.I.MAR. S.r.l

Partially consolidated
Excluded from the consolidation area and valued at cost as it no longer operates:
   CP CBK Consortium
Excluded from partial consolidation and consolidated with the Equity Method not having
material amounts:
   OPERA S.c.r.l.
Included as incorporated in 2004 or entered into operations:
   CMC di Ravenna WHBO J.V. Massingir
   DERGANO S.c.r.l.
   FDA S.r.l.
   OPERA 2 S.c.r.l.

Companies consolidated with the equity method
Excluded being finally liquidated:
  AMMOS S.r.l.
  ANDROMEDA S.r.l.
  IMMOBILIARE PORTA ROMANA S.r.l.
Excluded from the consolidation area and valued at cost as it no longer operates:
  CMC RUMDEL J.V.


48                                                      CONSOLIDATED FINANCIAL STATEMENTS
Subsidiary and associated companies valued at cost:

No longer operating

 Company                                                   Headquarters                  %
 AUTOSTRADA SARC 3 S.c.r.l.                                Ravenna                    55,00
 CE.DIR S.c.r.l. being wound up                            Ravenna                    86,00
 CMC - BESIX Geie being wound up                           Ravenna - Egypt            50,00
 CMC RUMDEL J.V.                                           Mozambique                 50,00
 CO.L.I.S.PA. S.c.r.l. being wound up                      Ravenna                    29,76
 CON.CAPUA S.c.r.l. being wound up                         Ravenna                    50,00
 Cons. C.G.L.                                              Ravenna                    25,00
 Cons. PORCE II                                            Colombia                   25,00
 Cons. TRE FONTANE NORD being wound up                     Rome                       33,33
 Consorzio C.I.R.C.                                        Milan                      25,00
 Consorzio COFESAR                                         Rome                       30,00
 Consorzio ITALO TAIWANESE J.V                             Milan - Taiwan             25,00
 COOPNEWTON S.c.r.l. being wound up                        Rome                       40,00
 CP CASECNAN Consortium                                    Ravenna - Philippines      50,00
 CP CBK Consortium                                         Ravenna - Philippines      50,00
 ESINO S.c.r.l. being wound up                             Ravenna                   100,00
 GHILINA S.c.r.l. being wound up                           Ravenna                    99,00
 ITACA S.c.r.l.                                            Ravenna                    34,60
 LODIGIANI - CMC Malaysia Sdn Bhd                          Malaysia                   50,00
 LUGO 2000 S.c.r.l.                                        Ravenna                    50,00
 MACRODUE S.c.r.l. being wound up                          Ravenna                    60,00
 MINERVINO ALTO S.c.r.l. being wound up                    Milan                      43,30
 NORD EST ROMA S.c.r.l. being wound up                     Ravenna                   100,00
 PIZZAROTTI CMC S.e.p.                                     France                     50,00
 PORTO DI PANTELLERIA S.c.r.l. being wound up              Ravenna                    45,00
 PORTONE S.c.r.l.                                          Ravenna                    70,00
 TAVOLICCI S.c.r.l. being wound up                         Ravenna                    75,00
 TRECI S.c.r.l. being wound up                             Ravenna                    55,00

Not having commenced operations

 Company                                                   Headquarters                   %
 Consorzio R.C.P.S. Nuova Romea                            Milan                       26,30


Also kept at cost is the 96.08% interest stake in the share capital of C.S.C. - Coop. Servizi
Cultura., since being a co-operative, the Group does not hold the majority of votes in the
general meeting.
Should these investments have been accounted for with the equity method no material
effects world have arisen on the Consolidated Financial Statements as of December 31,
2004


Accounting policies
The following are the major accounting policies applied:

Intangible fixed assets
Intangible fixed assets are stated at purchase or transfer cost, including additional charges
directly allocated or according to costs directly incurred.
Values are shown net of the relative amortization.
Plant and expansion costs, advertising, patent rights and use of intellectual property rights,
concessions, licences and trade-mark rights are amortized on a straight line basis over five
years.

CONSOLIDATED FINANCIAL STATEMENTS                                                          49
Multi-year charges relative to projects, such as start-up, site plant, study and design, and
contractual bonds are capitalised as incurred and depreciated according to the stage of
completion of the relative project.
Bid costs are capitalised as incurred, as intangible fixed assets in progress, until the award
of the contracts is virtually certain.
Research and development costs are charged as incurred.
Goodwill is amortized over five years.
In the event that, irrespective of depreciation already charged, a permanent impairment
is deemed to have taken place, the value of the asset is accordingly written down. If, in
subsequent years, the conditions for devaluation are no longer present, the original value
is restated, net of depreciation.

Tangible fixed assets
Tangible fixed assets are stated at purchase or transfer cost, including additional charges
and directly allocated costs, increased as a result of revaluation in accordance with specific
Laws. The values are net of the relative depreciation. In the event that, irrespective of the
depreciation already charged, a permanent impairment is deemed to have taken place, the
value of the asset is accordingly written down. If, in subsequent years, the conditions for
devaluation are no longer present, the original value is restated, net of depreciation.
Maintenance and repair costs are fully charged as incurred. Costs of modernisation/
upgrading and improvement that extend the economic lifetime of an asset are directly
charged and depreciated at the rates applicable to that asset.
The increase in tangible fixed assets for internal work is valued on the basis of the actual
cost of materials, internal workforce and operating expenses.
Additional charges, such as transport, freight, insurance and customs relative to the transfer
of machinery are capitalised as “Core-business multi-year charges” and depreciated
according to the stage of completion of the respective project.
Considering their high degree of depreciation, fixed assets with a unit cost under € 500
are fully charged as incurred.
Assets are depreciated on a straight-line basis, at rates that are considered as being
representative of the remaining economic lifetime, as follows:



 Land and buildings                              Industrial and commercial equipment
 - Industrial buildings                3,0%      - Diggers and power loaders         20,0%
 Plant and machinery                             - Vehicles for transport            20,0%
 - Light construction                 12,5%      - Motor vehicles                    25,0%
 - Generic plant                      10,0%      - Office furniture and equipment     12,0%
 - Specific plant and machinery        15,0%      - Electromechanical office equipment 20,0%
 - Metal piles and formworks          25,0%      - Hardware                          20,0%
 - Sundry equipment                   40,0%


                                              Rates are reduced to 50% in the first financial
                                              year of the asset becoming operational.

                                              Investments
                                              Investments in associated companies that
                                              do not operate in the construction industry
                                              and in subsidiaries being wound up or not
                                              operating are valued using the equity method,
                                              except as indicated above in the paragraph
                                              “Consolidation Area”. The amount booked
                                              equals the corresponding fraction of the
                                              shareholders’ equity resulting from the last
                                              financial statements stated in compliance
                                              with the Civil Code, subtracting the dividends
Massingir Dam (Mozambique)                    and booking the adjustments required by the

50                                                         CONSOLIDATED FINANCIAL STATEMENTS
accounting principles on consolidated financial statements.
Investments in other companies are valued at cost. The amount booked depends on the
purchase or underwriting price.
The cost is reduced in case of permanent impairment if the companies have incurred
losses and the profits that could eventually recover the said losses are not expected in the
immediate future. The original value is restated in subsequent fiscal years if the conditions
for devaluation are no longer present.
Other financial fixed assets, consisting of receivables, are booked at face value, which is
considered representative of the estimated realisable value.

Inventories
Stock is valued at the lower value between the weighted average purchase or production
cost (including additional charges and directly allocated costs) and the corresponding
market value.
Property developments are valued on the basis of the costs incurred, represented by the
land purchase price and the relative additional charges and construction costs.
Contracts in progress with a duration exceeding one year are valued according to the cost to
cost method. Profit is brought to account on the percentage of completion basis, determined
by comparing the costs effectively incurred against the total expected amount.
The progress certificate approved by the Employer is recognized as income for the year.
Closing inventories are represented by the work performed between the date of the last
certificate and the balance sheet date.
Contracts in progress that have to be completed within one year are booked following the
“complete contract” method; revenues are recognized only upon completion of the contract,
whilst the closing inventories are valued on the basis of the costs actually incurred.
Requests for additional revenues are booked for in accordance with the principle of
prudence.
Therefore, repayment of extra contract costs incurred or the further revenue required are
booked as deferred costs or revenues, for an amount whose probability and quantification
are reasonably certain. In light of this, reasonable certainty is normally achieved when the
claim has been collected before the financial statements approval date and/or the claim
is subject to litigation and the Employer has substantially acknowledged the Contractor’s
rights, and only the definition of the actual amount is pending, or there are authoritative
third party opinions (lawyers, consultants, etc.) which lead the Directors to believe that the
disputes will be settled in favour of the Company.

Receivables
Receivables are booked at face value and adjusted to the estimated net realisable value by
means of the provision for bad and doubtful debts and for interest in arrears.

Accrued and deferred income and liabilities
These items include cost and revenue common to several fiscal years, entered for the
purpose of accrual basis accounting.

Funds for risks and charges
The funds for risks and charges are provided to cover losses or debts, whether certain or
probable, for which the amount or the timing cannot be established at the end of the fiscal year.
The amounts accrued reflect the best possible estimate based on the information available.
Potential risks are reported in the Notes only, without any provisions.
Special funds are accrued for domestic and overseas contractual risks.

Severance indemnity
Severance indemnity reflects the effective sum payable to employees, in accordance with
the laws in force and the collective labour agreements applicable, net of any advance
payments made.

Payables
Payables are booked at face value.

CONSOLIDATED FINANCIAL STATEMENTS                                                            51
Hedge accounting
Contracts hedging interest rate risk are accounted at fair value, considering the amounts
became due and paid to banks.
These contracts, for both amount and timing, are linked to the Group net average
borrowings, either present or foreseen for the next years.

Foreign currency transactions
Foreign currency transactions are booked at the exchange rates ruling on the date of
transaction.
The exchange differences realized from the foreign currency credits collection or debts
payment are included in the net financial result.
Foreign currency accounts, existing at year end, are converted into Euro at year-end exchange
rates.
Profit and loss that arise from the conversion of the foreign currency short term items
existing at year end are changed as financial profit/loss and the net income, if any, is
accrued to a proper reserve, not payable to shareholders until the actual realization.
The net profit, arising from exchange rates adjustment at year end, is charged to income
and, if not offset by a loss, accrued to a non payable reserve (as requested by art.2426 of
the Civil Code).

Financial reporting in hyper inflationary Economies
Accounts of the Mozambican companies CMC Africa Austral Lda, C.I.M. Lda and Sulbrita
Lda have been restated as provided by the I.A.S. n. 29, as follows:
   Fixed assets are restated and the effect is accrued in an equity reserve;
   Monetary items are not restated, because they are locally expressed in terms of the
   monetary unit at year end;
   Income statement items are not adjusted but converted at year-end exchange rates.

Costs and revenues
The costs and revenues are entered observing the principle of prudence and on accrual
basis.

Income tax
Income taxes are booked according to the estimated taxable income, in compliance with
the laws in force, considering any applicable tax credit and relief. Pre-paid and deferred
taxes, are booked in case of timing differences.
In particular, pre-paid taxes are accounted for only to the extent that the related taxation
effect is expected to reverse.

Memorandum accounts
Entered at face value, considering commitments and risks existing at the end of the year.

Financial leases
Leasing agreements that substantially transfer to the Group all benefits and risks of
ownership of an asset are treated as if the asset had been purchased outright as stated by
the I.A.S. nr. 17.
These assets are classified as fixed assets and the capital element of the leasing commitments
is shown as obligations under financial leases.
The lease rentals are treated as consisting of capital and interest elements. The capital
element is applied to reduce the outstanding obligations and the interest element is
charged against profit so as to give a constant periodic rate of charge on the remaining
balance at each accounting period. Assets held under financial leases are depreciated over
their useful life.

Expression of values
For greater clarity, all values in the Notes and the Attachments are expressed in thousands
of Euro.


52                                                        CONSOLIDATED FINANCIAL STATEMENTS
                       Translation from original issued in Italian
                       Financial statements have been translated into English from the original version in Italian.
                       These have been prepared in accordance with the Italian Law applicable to financial
                       statements, interpreted and integrated in accordance with the accounting principles
                       established by the Italian Institute of Chartered Accountants and, where silent, of the
                       International Accounting Standards Board. Certain accounting principles applied by the
                       Company that conform with generally accepted accounting principles in Italy may not
                       conform with the generally accepted accounting principles in other countries

                       Reconciliation with shareholders’ equity and net income
                       of the ultimate parent company



                                                                                 Net income   Shareholders’ Equity
                                                                                    2004    as of December 31, 2004
Balances resulting from CMC di Ravenna Statutory financial statements
as of December 31, 2004                                                               5.223                  51.357
Effect arising from valuation of consolidated companies with the equity method        1.392                   3.490
Effect arising from application of I.A.S. n. 17 to the leasing contracts              1.890                   4.356
Group shareholders’ equity and net income                                             8.505                  59.203
Minority interest                                                                        27                   1.068
Total                                                                                 8.532                  60.271




                       CONSOLIDATED FINANCIAL STATEMENTS                                                          53
Comments on major items: Assets
Receivable from shareholders for payments due
The balance relates to ordinary shares underwritten and as yet not fully paid.

Fixed assets
Information required by Law for intangible and tangible fixed assets is shown in the
attachments.

Intangible fixed assets
Plant and expansion costs include expenses for the incorporation of Group Companies.
The “Industrial patent rights and use of intellectual property” represents the purchase cost
of software.
The change in the year is mainly due to to the conclusion with C.S.C. Italia S.p.A of
some projects for the development of software application programs.The ultimate parent
company in the year has also renewed with C.S.C. Italia S.p.A. the I.T. outsourcing contract
until December 31 2007.
Fixed assets in progress and advances consist of both the costs incurred for projects acquired
but not yet commenced and the tender expenses for contracts awarded or when the award
is virtually certain.
The “Core-Business Multi-year Charges” consists of the following:



                                2004      2003
 Site mobilisation            21.281    22.383
 Quarry exploitation rights      858       964
 Studies and design              479     1.643
 Contractual insurance           162       246
 Sale of time-shares               -       267
 Other                           223       467
 Total                        23.003    25.970


Variations for the year in “Site mobilisation” item are mainly due to capitalisation of the
costs related to the Milan–Bologna High Speed Railway (€ 3.4 million), Rio Ligonhia (€ 0.9
million), and other minor contracts (€ 3.1 million).

Tangible fixed assets
Changes in the year are mainly due to variation of the consolidation area and depreciation,
along with purchase of new machinery and equipment as follows:



 Southern Africa                9.836
 Algeria                        1.228
 Sudan                            227
 National Joint Ventures        2.484
 CMC and other subsidiaries     2.576
 Total                         16.351




54                                                         CONSOLIDATED FINANCIAL STATEMENTS
Revaluated assets are as follows:



                                            L.576/75     L.72/83   L.413/91   Total
 Ravenna, Via Trieste Headquarters              108        1.033        639   1.780
 Operations centre                                 -       1.549        706   2.255
 Rome guest house                                  -           -        242     242
 S. Arcangelo (Rimini) industrial complex          1         111        151     263
 Total                                          109        2.693      1.738   4.540


As of December 31, 2004 said reevaluations were depreciated in the amount of € 2.3
million.

Financial assets
Investments
This item consists of:



                                              2004     2003
 Non consolidated subsidiary companies         282       157
 Associated companies                        2.533     4.684
 Other companies                             8.911     3.088
                                            11.726     7.929
 Provision for permanent impairment          (506)     (506)
 Total                                      11.220     7.423


Investments in non-consolidated subsidiaries and associated companies are as follows:

Subsidiaries

                                                                   2004       2003        %
 AUTOSTRADA SARC 3 S.c.r.l.                                          14         14     55,00
 CE.DIR. S.c.r.l. being wound up                                      9          9     86,00
 CMC DI RAVENNA Pte Ltd- Singapore (****)                            22          -    100,00
 CMC DI RAVENNA RAVENNA Eurl (*)                                      -         13    100,00
 CMC DI RAVENNA Sdn Bhd MALAYSIA (**)                                 -          -    100,00
 CMC RAILWAY J.V. Pty Ltd (**)                                       78          -    100,00
 CONSORZIO Nuova Darsena                                              7          -     51,60
 COSTRUZIONE E/45 S.c.r.l. being wound up (***)                       -         25     55,00
 DERGANO S.c.r.l. (**)                                                -         13     51,00
 DUNROSE INVESTMENT (Pty) Ltd                                         -          -    100,00
 ESINO S.c.r.l. being wound up                                       10         10    100,00
 GHILINA S.c.r.l. being wound up                                     10         10     99,90
 MACRODUE S.c.r.l. being wound up                                    15         15     60,00
 MORESIDE INVESTMENT (Pty) Ltd                                        -          -    100,00
 NORD EST ROMA S.c.r.l. being wound up                                1          1    100,00
 OPERA S.c.r.l. being wound up (**)                                  14          -     55,00
 PORTONE S.c.r.l.                                                    18         18     70,00
 SOCIETÀ GESTIONE PARTECIPAZIONI S.r.l (**)                          50          -    100,00
 SIDEBAR MANUFACTURING (Pty) Ltd                                      -          -    100,00
 TAVOLICCI S.c.r.l. being wound up                                   20         20     75,00
 TRECI S.c.r.l. being wound up (*)                                   14          9     55,00
 Total                                                              282        157


Changes in the year are due to the final liquidation of some companies, the consolidation
area variation, the payment of CMC di Ravenna Pte Ltd Singapore share capital and the

CONSOLIDATED FINANCIAL STATEMENTS                                                          55
underwriting of investment in Consorzio Nuova Darsena for the 51.60% of the share
capital.

Associated

                                                               2004     2003         %
 AMMOS S.c.r.l. being wound up (***)                              -         2     30,92
 BAGNAROLA S.r.l.                                                13         -     12,40
 BOLOGNA PONENTE S.c.r.l.(*****)                                  -        25     50,00
 CMC BESIX Geie being wound up (****)                            22        12     50,00
 CMC – CCC J.V. (***)                                             -         4     50,00
 CMC KAMUZU DAM RAISING J.V. (***)                                -        39     50,00
 CMC RUMDEL J.V.(**)                                              1         -     50,00
 CO.L.I.S.PA. S.c.r.l. being wound up                             7         7     29,76
 CON.CAPUA. S.c.r.l. being wound up                              13        13     50,00
 Consorzio C.G.L.                                                13        13     25,00
 Consorzio C.I.R.C.                                              13        13     25,00
 Consorzio COFESAR                                               15        15     30,00
 Consorzio ITALO TAIWANESE J.V.                                   1         1     25,00
 Consorzio PORCE II                                               -         -     24,99
 Consorzio R.C.P.S. NUOVA ROMEA                                   5         5     26,30
 Consorzio TRE FONTANE NORD being wound up                        5         5     33,33
 COOPNEWTON S.c.r.l. being wound up                               4         4     40,00
 CP CASECNAN Consortium                                          25        25     50,00
 CP CBK Consortium                                                -         -     50,00
 GROUP FIVE - CMC BATCH PLANT j.V. (*)                        1.444       260     50,00
 IMMOBILIARE PORTA ROMANA S.r.l. being wound up (***)             -     3.418     20,00
 IMOTUR Lda (*)                                                 461       326     50,00
 ITACA S.c.r.l.                                                   4         4     34,60
 LODIGIANI - CMC (Malaysia) Sdn Bhd (*)                           -         -     50,00
 LUGO 2000 S.c.r.l.                                              13        13     50,00
 MINERVINO ALTO S.c.r.l. being wound up                          20        20     43,30
 PIZZAROTTI CMC S.E.P.(*)                                         -         1     50,00
 PORTO DI PANTELLERIA S.c.r.l. being wound up                    12        12     45,00
 PROFURO INTERNATIONAL Lda (*)                                   60        53     48,05
 RENATO SERRA 61 S.r.l. (*)                                     382       394     40,00
 WAN LONG J.V. (***)                                              -         -     42,00
 Total                                                        2.533     4.684


Variations compared with the prior year are due to:
(*) the effect of valuation with the equity method and write off for impairment
(**) variation in the consolidation area
(***) final liquidation
(****) payment of share capital.
(*****) disposal

Immobilare Porta Romana was wound up in 2004, with the attribution
to its shareholders of the investment held in FDA S.r.l. (partially
consolidated Company) for a market value of € 19.6 million (Group’s
share capital is 20% with a value of € 3.9 million).The affiliated
Company GED S.r.l. has underwritten 25% of share capital of Bagnarola
S.r.l. (Group’s share capital is 12.4%)




                                                                                  US Navy Sigonella base civil works; Sicily (Italy)


56                                                      CONSOLIDATED FINANCIAL STATEMENTS
Details of investments in other companies are as follows:

Other Companies

                                                                      %    2004    2003
 AGENZIA POLO CERAMICO Soc. Coop.a.r.l.                             0,23       -       -
 ALISEI S.r.l.                                                      4,00       2       2
 AMMOS S.r.l.                                                      16,66       4       -
 ARES Soc.cons.p.a.                                                 5,00      84       -
 ASMARA PALACE INVESTMENTS Ltd                                     10,00       -     108
 ASS. LIBICO – ITALIANA                                             0,33       9       9
 CASSA DI RISPARMIO DI RAVENNA S.p.A.                               0,03      81      81
 CELCOOP Soc. Coop. r. l. in winding up by Court                    1,79       -       -
 CO.VE.CO. (Consorzio Veneto Cooperativo) S.c.r.l.                  3,84      11      11
 COMPAGNIA DEI LAVORIERI S.p.A.                                    17,00       -     170
 COMPAGNIA FINANZIARIA INDUSTRIALE S.r.l.                           0,70       6       6
 Cons. CO.RI.RE.                                                    9,00       7       7
 Cons. COOP. FINANZIARIO PER LO SVILUPPO                            0,01       1       1
 Cons. COOP. STRADE (Cons. Interprov. fra Coop. di Prod. e Lav.)   10,64       -       -
 Cons. COOP.DI COSTRUZIONI - CCC                                    1,82     262     238
 Cons. COOP.DI PRODUZIONE E LAVORO - CONSCOOP                       2,86      71      71
 Cons. LA MISTICA I                                                 4,55       1       1
 Cons. MANTOV. COOP. DI PRODUZ. E LAV. “VIRGILIO”                   0,15       -       -
 Cons. Naz. delle Coop. di Costruz. - CO.NA.CO.                     3,97       -       1
 Cons. PROMETEO                                                     6,40      10      10
 Cons. RAVENNATE COOP. DI PRODUZIONE E LAVORO                       7,92      30      30
 Cons. T.E.A.M.                                                    11,25       5       5
 Cons. TOSCANA GESTIONI - C.T.G. Soc. cons. r. l. being wound up    0,50       -       -
 Cons. TOSCANO COSTRUZIONI - C.T.C. Soc. Coop. r. l.                7,83      21      21
 Cons. VAL DI FORO                                                 10,54       1       1
 Cons. VENICE LINK                                                 12,00       -       -
 COOP. CULTURALE “LUIGI LUZZATI” Soc. Coop. r. l.                  30,16      28      28
 COOP. SERVIZI CULTURA                                             95,56     575     575
 COOP STRADE                                                       11,91       -       -
 COOP. TERREMERSE Soc. Coop. r. l.                                  1,33       3       3
 DELTA 2000 Soc. Cons. r. l.                                        0,19       -       -
 FEDERAZIONE DELLE COOP.DELLA PROV.DI RAVENNA                       9,30     467     476
 FEDERCOOP “NULLO BALDINI” Soc. Coop. r. l.                         3,84      53      52
 FINCOOPER                                                          0,93     175     175
 HERA S.p.A.                                                        0,01      92      92
 I.C.I.E. Soc. Coop. r. l.                                          3,41      21      21
 I.GE.I. (Inps Gestione Immobiliare) S.p.A. being wound up          9,60     744     744
 IMMOBILIARE RIMINESE MALATESTA S.r.l.                              0,44       8      10
 NOMISMA – Società di Studi Economici - S.p.A.                      0,21      11      11
 PASSANTE DI MESTRE Soc.cons.p.a                                   12,00   6.000       -
 PLATANO Scnc                                                      16,67       5       5
 POLIS TRENTO Soc. Cons. r. l. being wound up                       4,90       -       -
 QUA.S.CO. Soc. Cons. r. l.                                         0,23       -       -
 S.A.G.A. Soc. Cons. r. l.                                          0,10       -       -
 S.C.S. CONSULTING S.p.A.                                           0,44      23      23
 SISTEMA PERMANENTE DI SERVIZI (S.P.S.) S.p.A. being wound up      11,20       -       -
 SOPED S.p.A.                                                       1,63     100     100
 Total                                                                     8.911   3.088


Year on year changes are due to the underwriting of Passante di Mestre capital stock for
€ 6 million, the disposal of the investment in Asmara Palace Investments Ltd and the final
winding up of Compagnia dei Lavorieri S.p.A .


CONSOLIDATED FINANCIAL STATEMENTS                                                      57
Financial receivables
Financial receivables consist of the following:



                            2004         2003
 Subsidiary companies      6.145        5.925
 Associated companies      3.525        2.458
 Other                     2.693        3.280
 Total                    12.363       11.663


Details of the receivables / payables to/from subsidiaries and associated companies are
shown in the Attachments.
Details of Other Receivables are as follows:



                                                   2004   2003
 Loans to non-consolidated Group companies        1.496   1.933
 Receivables from tax authorities                    32     182
 Interest in associations and/or public bodies       70      70
 Guarantee deposits                                 266     214
 Other                                              829     881
 Total                                            2.693   3.280


Loans to non-consolidated companies include the interest-free facility to CCC Bologna
(€ 1.3 million), repaid in 2004 for € 470 thousand.

Inventories
Detail of inventories is as follows:



                                                     2004    2003
 Raw materials                                     15.369  18.507
 Work in progress and semi-finished products           873   4.188
 Contracts in progress                            116.988  96.566
 Finished products and goods                       12.017  13.237
 Contractual advance payments                      11.636   4.886
 Total                                            156.883 137.384


Raw materials change is linked to the ordinary management of stock, mainly in both the
Kunming and SA-RC projects.
Work in progress decreased because of the final deeds of the property development “Lugo
2000”.




58                                                         CONSOLIDATED FINANCIAL STATEMENTS
                                   Contracts in progress are broken down as follows:



         Employer                                      Description                                                2004     2003
         T.A.V. (Italian Railway)                      High Speed Bologna-Milan Railway                         26.153   16.860
         T.A.V. (Italian Railway)                      High Speed Bologna-Florence Railway                      18.703   22.698
         LA.FI.CO. (Libyan Arab Foreign Investment)    Five star hotel and shopping mall in Khartoum – Sudan    14.709   17.349
         ANE - Mozambique                              Road rehabilitation                                       8.900    1.936
         ANAS Rome                                     Maxi Contract Salerno-Reggio Calabria                     8.461        -
         Rodano J.V.                                   Supply of concrete beams, metal work
                                                       and building materials                                    5.377    5.652
         Kunming Zhagjiuhe R.W.D.                      Hydraulic tunnels                                         5.317    1.872
         Agence National des Barrages . Algeria        Koudiat Acerdoune Dam                                     3.588    2.302
         Milan Exhibition Centre Authority             Portello pavilions                                        2.582    2.582
         Passante di Mestre Scpa                       Variant motorway                                          1.826        -
         Sicily Region Authority                       Water project “Basso Verdura”                             1.395    1.395
         Ravenna port Authority                        Ex Cabot Quay                                             1.220        -
         Autostrade Spa                                Way Sasso Marconi-Barberino                               1.170        -
         Massingir                                     Massingir dam                                               829        -
         FDA Srl                                       Property Development in Milan                               200        -
         U.S. Navy Sigonella Base                      Mega III Project                                              -    2.053
         T.A.V. (Italian Railway)                      Bologna Railway Link                                          -    1.481
         COOP Lombardia                                Ex Ciba factory shopping mall                                 -    1.471
         Others                                        -                                                        16.558   18.915
         Total                                                                                                 116.988   96.566


                                   In 2004 and in previous years the Group booked requests for additional payments not
                                   as yet approved by the Employers, in the “Contract in progress” and “Receivables from
                                   clients” items, on the basis of what is stated in the “Accounting policies” section.




Port of Ravenna: Piombone quay.
                 Ravenna (Italy)


                                   CONSOLIDATED FINANCIAL STATEMENTS                                                          59
Receivables
Receivables breakdown is as follows:



                                                                  2004       2003
 From client
 - for work and supplies                                       128.716    120.601
 - (minus) provision for bad and doubtful debts                 (2.653)    (2.633)
 - for interest in arrears                                        7.426      6.511
 - (minus) provision for doubtful interest in arrears           (5.810)    (6.285)
                                                               127.679    118.194

 From subsidiary companies                                        8.368     9.391

 From associated companies                                        8.079    21.784

 Tax receivables                                                17.305     20.298

 Prepaid tax                                                      2.659     2.761

 From others
 - advances to suppliers and sub-contractors                    11.272      5.815
 - amounts owed by J.V. partners partially consolidated          1.261        195
 - social security                                                 891        351
 - from employees                                                  832        809
 - credit notes                                                    212         89
 - fixed-term deposits                                              159        146
 - others                                                        7.168     14.449
                                                                21.795     21.854

 Total                                                         185.885    194.282


At year-end, Group’s receivables for € 53.7 million factored with recourse have not yet
expired. This amount is booked in the memorandum accounts.
Tax receivables mainly include VAT from both National and Foreign authorities .
The amount owed by J.V. partners partially consolidated is related to CMC di Ravenna
WBHO J.V. for about € 1.1 million.




                                            Portello Shopping Mall;
                                            Milan (Italy)


60                                                                CONSOLIDATED FINANCIAL STATEMENTS
Details of receivables and debts for prepaid and deferred tax are as follows:



                                                   31.12.2004                          31.12.2003
                                        Timing         Fiscal Rate          Timing         Fiscal Rate
                                         differ.      effect    %            differ.      effect    %
 Pre-paid taxes
 - taxed                                 6.048       2.253    37,25%          6.048      2.253   37,25%
 - investment depreciation accruals        506         167    33,00%            506        167   33,00%
 - accrual for extraordinary risks         401         132    33,00%            401        132   33,00%
 - investments devaluation                 904         298    33,00%          1.246        411   33,00%
 - deductible contributions by cash        232          86    37,25%            232         86   37,25%
 - maintenances and repair
   expenses (5%)                           138          52 37,25%               196         73   37,25%
 - entertainment expenses 37,25%            53          20 37,25%               101         37   37,25%
 - entertainment expenses 33,00%           258          85 33,00%               134         45   33,00%
 - entertainment expenses 4,25%             15           1 4,25%                  8          -    4,25%
 - loss carried forward                      -           -                      635        209   33,00%
                                         8.555       3.094                    9.507      3.413

 Deferred taxes
 - 2002 capital gain                    (1.168)      (435) 37,25%           (1.752)      (653) 37,25%
                                        (1.168)      (435)                  (1.752)      (653)

 Pre-paid (deferred) taxes               7.387       2.659                    7.755      2.760


Profit and loss effect is as follows:



                                 31.12.2003        Profit and      31.12.2004
                                                   loss effect
 Pre-paid taxes
 - investments devaluation               411            (113)              298
 - maintenance 5%                         73              (21)              52
 - entertainment expenses                 82              (24)             106
 - loss carried forward                  209            (209)                -
                                         775            (319)              456
 Deferred taxes
 - 2002 capital gain                    (653)             218             (435)
                                        (653)             218             (435)
 Profit and loss                                         (101)


Receivables breakdown per world region, as requested by art. n.2427 of the Civil Code, is
as follows:



                                Italy    Africa        Asia      Europe     U.S.A.     Others   Total
 Clients                      72.094    40.530        6.762       5.864     2.429           - 127.679
 From Subsidiaries             7.769       599            -           -          -          -   8.368
 From associated               6.908     1.138           33           -          -          -   8.079
 Tax receivables              13.021     4.165            6           -          -       113 17.305
 Prepaid taxes                 2.659          -           -           -          -          -   2.659
 Others                       14.454     7.289           52           -          -          - 21.795
 Total                       116.905    53.721        6.853       5.864     2.429        113 185.885


Receivables are shown net of bad and doubtful debt provision

CONSOLIDATED FINANCIAL STATEMENTS                                                                     61
Liquid assets
For further information on cash management and liquid assets, please refer to the “Financial
Review” chapter included in the Directors’ Report.
The change in the year is analysed in the attached cash flow statement.

Accrued income and deferred liabilities
Details of this item are as follows:



                         2004     2003
 Accrued income:
 - interest                61      320

 Deferred liabilities:
 - insurance charges     2.140   2.884
 - rent and leases       1.436   1.464
 - guarantee charges       362     307
 - hire                    196     403
 - others                2.706   1.348
 Total                   6.901   6.726


Deferred insurance charges include € 1.0 million of the Salerno-Reggio Calabria Motorway
C.A.R. policy premium.




                                                                                               Ravenna Hospital
                                                                                               Onco-hematology ward;
                                                                                               Ravenna (Italy)


62                                                       CONSOLIDATED FINANCIAL STATEMENTS
Comments on major items: Liabilities
Shareholders’ equity
Changes in shareholders’ equity for the year are reported in the Attachments. The main
variation is due to the allocation of the 2003 net income.
The share capital consists of 354,194 shares, each with a par value of € 50, plus
approximately € 19 thousand for fractions of shares for revaluation.
Changes in the shareholders of the company in 2004 were as follows:



                            Active          Retired          Backing     Total
                      shareholders     shareholders     shareholders
 As at.31.12.2003             356               770                3     1.129
 New shareholders               17                 -               -        17
 Resignations                   (8)             (16)               -       (24)
 Retirements                    (5)                5               -          -
 As at 31.12.2004             360               759                3     1.122


In accordance with the provision of art. 54 of the Articles of Incorporation, the Legal Reserve
is indivisible and is not susceptible to be distributed.
The “Extraordinary Reserve” includes a portion of CMC’s taxed retained earnings, as
provided by the Tax Reform of Cooperatives for the 2002 – 2003 interim period.
The “Currency Conversion Reserve” includes the differences in the shareholders’ equity of
consolidated companies and overseas branches, due to fluctuations in exchange rates at
year-end.
The “Consolidation Reserve” refers to the difference between the shareholders’ equity of
the consolidated companies and the book value at the date of the first consolidation.

Funds for risks and charges



                             2004       2003
 Taxes                        302         96
 Contractual risks         22.439     21.400
 Overseas operations        3.796      3.796
 Other risks and charges    2.873      3.465
 Total                     29.410     28.757


The funds for contractual risks and overseas operations are accrued to cover possible future
contract losses.
The change in the year is the net balance of the 2004 provision and utilization, along with
the variation of the consolidation area.
The Ultimate Parent company is involved in several cases of litigation regarding its core
business. The Directors, with the support of their legal Counsel, consider the fund for other
risks and charges fairly valued and adeguate to cover the charges that will actually arise
from the the final ruling on the said litigation.
In 2004, an amicable settlement was reached with CE Casecnan, owner of said, project
and the dispute with the Employer of the Porce II contract is expected to be finalised within
2005.
In both cases, the expected costs had been accrued in previous years.




CONSOLIDATED FINANCIAL STATEMENTS                                                           63
Severance indemnity
Changes for the year are as follows:



 Balance as at 31/12/2003       9.928
 Provisions                     2.970
 Paid out                     (1.784)
 Balance as at 31/12/2004     11.114


Payables
Shareholders’ loans account



                 Balance as of 31.12.2004           Balance as of
 Under 12 months Over 12 months      Total            31.12.2003
          2.416            9.663 12.079                   11.844


In accordance with instructions of the Bank of Italy, the following information is provided:
   shareholders’ loan as of December 31, 2004 is € 12.1 million and interest for € 328
   thousand was charged to income in the year;
   net equity to shareholders’ loan ratio is over 4
The Company complies with all the rules regarding loans from the Shareholders of
Cooperative Companies set by the C.I.C.R. (Government Department for Credit and
Savings)

Payables to banks



                 Balance as of 31.12.2004           Balance as of
 Under 12 months Over 12 months      Total            31.12.2003
         60.576           53.642 114.218                  81.394


Changes in the year are analyzed in the attached Cash Flow Statement.
The balance includes long-term loans as follows:



 Lender                                     Under         Over       Total    Total
                                        12 months    12 months       2004     2003
 Mortage loans
 - CARISBO (1998-2008)                      1.268         3.542      4.810    6.001
 Syndicate loan:
 - BANCA ANTONVENETA (2003-2008)                -       15.900      15.900    8.000
 - CENTROBANCA (2002-2006)                  6.200        6.200      12.400   15.500
 - EFIBANCA (2004-2008)                         -       28.000      28.000        -
 Total                                      7.468       53.642      61.110   29.501


Loan repayments in 2004 were € 1.2 million.
The “CARISBO” loan is secured by mortgages on lands and buildings for a total of € 22.7
million. Long-term portion payables do not include any amount due over five years.




64                                                        CONSOLIDATED FINANCIAL STATEMENTS
Other Loans
Breakdown is as follows:



                               2004        2003
 Serfactoring                15.984       7.735
 Coop. Servizi Cultura        1.400       1.400
 Simest                         822       1.057
 Others                           -         278
 Total                       18.206      10.470


Interest is charged on these loans on arm’s length basis.
The Serfactoring loan relates to the High Speed Bologna–Milan Railway project, while the
Simest loan is for business development in Mozambique.
Simest is an institution controlled by the Italian Ministry of Industry.

Advance payments
This amount includes the difference between advance payments from Employers and
works certified.
The comment of this item is duly explained in the “Accounting Policy” and “Inventory”
paragraphs of these Notes.

Payables to affiliated companies
The breakdown for both subsidiaries and associated companies is reported in the
Attachments.

Taxes
This amount mainly includes employees’ taxes withdrawn on a pay-as-you-earn basis, and
effectively paid to the Receiver of Revenues in January 2005.
The Mozambican VAT balance of € 5.2 million is shown gross of a € 2.5 million credit
included in the tax receivables

Other payables
Other payables breakdown is as follows:



                                               2004    2003
 Amount owed to J.V. partners                11.591    5.114
 Employees                                    6.457    4.570
 Share capital underwritten, to be paid up    5.021      520
 Clients for advance payments                   108      568
 Others                                       4.895    7.291
 Total                                       28.072   18.063


Amounts payable to J.V. partners are the result of partial consolidation and mainly relates
to overseas projects. Changes in the year are due to the partial consolidation of CMC di
Ravenna WHBO J.V. and Dergano S.c.r.l.
The increase of the employees debt is coherent with that of payroll expenses.
The item “Share capital underwritten, to be paid up” mainly relates to Passante di Mestre
S.c.p.a.
The item “Others” mainly includes amounts payable to former partners in wound up J.V.




CONSOLIDATED FINANCIAL STATEMENTS                                                       65
Advance payments from Employers
Breakdown is as follows:



                                                   2004     2003
 T.A.V. (Italian Railway) Milan - Bologna        13.071   18.373
 T.A.V. (Italian Railway) Bologna - Florence     11.361   14.494
 LA.FI.CO (Libyan Arab Foreign Investment)       11.783   11.661
 Kunming Zhangjiuhe River Project (P.R. China)    8.339    8.534
 Agence Nationale des Barrages (Algeria)          7.958    7.699
 Mozambique ARA-SUL                               2.584        -
 Consorzio CAV.TO.MI.                             1.311    2.843
 Sicily Region Authority                          1.221    1.221
 Foggia Provincial Authority                      1.114    1.114
 Swaziland Water Resources                        1.785    3.811
 A.N.E. - Adm. Nac. de Estradas (Mozambique)      5.136    3.227
 Coop. Lombardia                                      -    3.603
 Others                                           2.988    3.735
 Total                                           68.651   80.315


These amounts refer to advance payments on work yet to be completed.
Major changes, as shown above, are due to new contracts in Mozambique.

Accrued liabilities and deferred income
The breakdown is as follows:



                             2004     2003
 Accrued Liabilities:
 - rent                        146      94
 - guarantee charges           134     202
 - insurance charges           209     189
 - interest charges            862     470
 - other accrued liabilities   701     621
 Deferred Income:
 - others                      135     443
 Total                       2.187   2.019


Memorandum accounts
Nearly all commitments for guarantees obtained and guarantees provided to Group
companies relate to performance bonds, advance payments and the release of retention
money.The most important includes guarantees for Cavet (High Speed Bologna-Florence
Railway) and Cepav Uno (High Speed Bologna-Milan Railway).
There are also guarantees issued by third parties with advance payments from us, written
off receivables from bankrupt companies and the face value of recourse factoring
Memorandum accounts besides include commitments on derivative instruments relating to
“Interest rate swap” and “Currency swap”.
At the end of the year the following swap contracts were effective to hedge the fluctuation
of:
   Interest rates for € 41.2 million of face value;
   USD and YEN exchange rates for € 4.4 million.
Should the Group have accounted for the face value of said contracts, no material effect
would have arisen on the Financial Statements as of December 31, 2004.




66                                                        CONSOLIDATED FINANCIAL STATEMENTS
    Five star hotel
& shopping mall in
Khartoum (Sudan)
Comments on major items: Profit and loss account
Revenue from sales and services is as follows:



                           2004        2003
 Contract payment       401.952     332.282
 Sundry services         11.730      10.232
 Sale of materials       30.490      22.880
 Sale of real estate     12.016       9.951
 Total                  456.188     375.345


The increase in “Sale of real estate” is mainly due to the consolidation of the company
FDA Srl .
Revenue includes overseas projects for € 70.3 million, broken down as follows:



        2004        2003
 Africa 74%         73%
 Asia   26%         27%
 Total 100%        100%


Increase in fixed assets for internal work is as follows:



                            2004    2003
 Industrial buildings        284   1.090
 Plant and machinery       2.394   1.052
 Total                     2.678   2.142


Extraordinary maintenance of machinery here accounted mainly relates to our operations
in Southern Africa.
Other income and proceeds are as follows:



                                            2004     2003
 Capitalisation of items for deferred use 5.929    11.405
 Utilization of funds                      4.400    4.888
 Sundry proceeds                             982   13.591
 Total                                    11.311   29.884


The “Capitalisation of items for deferred use” mainly refers to pre–operative and
mobilization costs capitalised in the Intangible fixed assets and depreciated according to
the stage of completion of the projects.




68                                                          CONSOLIDATED FINANCIAL STATEMENTS
                      “Service costs” breakdown is as follows:



                                                                   2004      2003
                       Sub-contracts                            145.128    107.132
                       Transport                                 12.537     13.491
                       Consultants, lawyers and notary public     7.726      6.073
                       Lease and hire                             3.513      2.490
                       Utilities                                  4.090      2.924
                       Studies and design                         4.616      3.350
                       Maintenance and repairs                    2.835      2.243
                       Other services                            32.040     38.525
                       Total                                    212.485    176.228


                      The increase of sub-contracts costs is mainly due to the High Speed Railway projects and to
                      the Salerno-Reggio Calabria A3 Motorway contract.

                      Sundry operating charges
                      This item consists of the following:



                                                                           2004       2003
                       Insurance and custom duties                         5.858      3.653
                       Sundry taxes                                        1.935      1.817
                       Social activities                                   1.006        886
                       Losses on disposal of machinery and equipment         357        299
                       Others                                              4.941      5.809
                       Total                                              14.097     12.464




  Port of Ravenna:
Porto Corsini quay.
    Ravenna (Italy)


                      CONSOLIDATED FINANCIAL STATEMENTS                                                       69
Financial income and charges
This item consists of the following:



                               2004        2003
 Other financial income
 - bank interest                 177         187
 - interest from clients       3.115       2.028
 - others                        204         419
 Total                         3.496       2.634

 Other financial expenses
 - bank interest             (3.334)   (2.579)
 - loans                       (213)     (289)
 - shareholders loans          (328)     (348)
 - other loans               (1.104)   (1.356)
 - other bank expenses         (440)     (866)
 - bonds                     (1.672)   (1.520)
 - others                      (764)     (468)
 Total                       (7.855)   (7.426)


Devaluation of investments
This item includes the effect of the permanent impairment of some investments in associate
companies, that are consolidated neither line-by-line nor partially.



                                    2004
 WAN LONG J.V.                       678
 CONSORZIO CAVET                     298
 CP CBK CONSORTIUM                   152
 OTHERS                              152
 Total                             1.280


These losses had been mainly accrued in previous years and are offset by the utilization of
funds.




                                        Bologna – Florence
                                        A1 Motorway, Emilia Romagna
                                        (Italy)


70                                                           CONSOLIDATED FINANCIAL STATEMENTS
Extraordinary Income and Charges
This item consists of the following:



                                                                2004              2003
 Income
 - capital gains                                                  59               489
 - other:
   - recovery of damages                            2.013                406
   - contingent assets and non-existent liabilities   484                800
   - various                                        1.853                859
                                                               4.350             2.065
 - utilization of funds                                            -               905
 Total income                                                  4.409             3.459

 Charges
 - capital losses                                               (13)               (6)
 - taxes for previous year                                     (584)             (248)
 - other:
   - contingent liabilities and non-existent assets   (985)             (464)
   - other extraordinary charges                      (204)             (580)
                                                              (1.189)           (1.044)
 Total charges                                                (1.786)           (1.298)
 Total                                                          2.623             2.161


Minority interest
Summary of this item is as follows:



                  2004      2003
 EMIR S.p.A.         14         3
 SIC S.p.A.        (41)       (9)
 C.I.M. Lda           -         5
 Total             (27)       (1)


Directors’ and Statutory auditors’ fees
The Directors of CMC did not receive any compensation to serve as members of the
Board.
Statutory Auditors’ fees for 2004 were € 36.8 thousand.




CONSOLIDATED FINANCIAL STATEMENTS                                                         71
Attachments

  VARIATIONS IN THE INTANGIBLE FIXED ASSET ACCOUNT


  VARIATIONS IN THE TANGIBLE FIXED ASSETS


  LIST OF NON CONSOLIDATED SUBSIDIARY

  AND ASSOCIATED COMPANIES


  AMOUNTS RECEIVABLE FROM / PAYABLE TO NON CONSOLIDATED

  SUBSIDIARY AND ASSOCIATED COMPANIES


  CASH FLOW STATEMENT


  CHANGE IN SHAREHOLDERS’ EQUITY




CONSOLIDATED FINANCIAL STATEMENTS                         73
Variations in the intangible fixed asset accounts

                                                 31/12/2003                        Movements 2004                        31/12/2004
                                    Historical      Total        Net      Consolid.      Net Deprec.        Historical       Total       Net
                                         cost     deprec.      book           Area additions                     cost      deprec.     book
                                                               value      variation                                                    value
 Plant and expansion costs                963       (530)        433            407      120      (502)         1.428        (970)       458
 Research and development costs             -           -          -               -       -          -             -            -         -
 Industrial patent rights               4.871     (4.457)        414             (3)     491      (285)         5.352      (4.735)       617
 Concessions, licences
 and trade-marks                          237       (199)        38               1       14       (30)           254        (231)        23
 Goodwill                               2.888     (2.583)       305               -        -      (153)         2.888      (2.736)       152
 Fixed assets in progress
 and advances                             708        -           708               -     489    (429)          1.577    (809)            768
 Core-business multi-year charges      67.196 (41.226)        25.970            217    7.369 (10.553)         58.198 (35.195)         23.003
 Other                                  1.392    (813)           579           (568)       4       (6)            16       (7)             9
 Total                                 78.255 (49.808)        28.447             54    8.487 (11.958)         69.713 (44.683)         25.030

Variations in the tangible fixed assets

                                   31/12/2003                              Movements 2004                    31/12/2004
                          Historical    Total   Net              Consolid.    Net Deprec. Deprec. Historical     Total    Net
                               cost  deprec. book                    Areaadditions                     cost deprec.     book
                                              value              variation                                              value
 Land and building          40.603   (4.019) 36.584                 5.728 3.497     (413) (1.965)   49.641 (6.210) 43.431
 Plant and machinery        86.379 (35.633) 50.746                (3.607) 16.351 (4.388) (11.371)   92.843 (45.112) 47.731
 Industrial and
 commercial equipment 41.179 (23.997) 17.182                           (596)   7.247     (226)    (5.552)    41.781 (23.726)          18.055
 Other assets             6.363   (4.885) 1.478                        (408)   2.012       (42)     (856)     8.011 (5.827)            2.184
 Fixed assets in progress
 and advances             4.263         - 4.263                          686 5.036 (4.787)         -          5.198        -   5.198
 Total                  178.787 (68.534)110.253                        1.803 34.143 (9.856) (19.744)        197.474 (80.875) 116.599




74                                                                       CONSOLIDATED FINANCIAL STATEMENTS
List of non consolidated subsidiary and associated companies

 Company                                          Headquarters       %    Share Capital   Net Equity
 Subsidiary companies
 AUTOSTRADA SARC 3 S.c.r.l.                       Ravenna         55,00             26             58
 CE.DIR. S.c.r.l. being wound up                  Ravenna         86,00             10           (38)
 CMC DI RAVENNA Eurl                              Algeria        100,00             31           (59)
 CMC DI RAVENNA Malaysia Sdn Bhd                  Malaysia       100,00            132         (532)
 CMC DI RAVENNA Pte Ltd                           Singapore      100,00             22             22
 CMC RAILWAY J.V. (Pty) Ltd                       Swaziland      100,00              -             78
 CONSORZIO NUOVA DARSENA                          Ravenna         51,60             13             13
 DUNROSE INVESTMENTS (Pty) Ltd                    South africa   100,00             14             (1)
 ESINO S.c.r.l. being wound up                    Ravenna        100,00             10               3
 GHILINA S.c.r.l. being wound up                  Ravenna         99,99             10             10
 MACRODUE S.c.r.l. being wound up                 Ravenna         60,00             26             26
 MORESIDE INVESTMENTS (Pty) Ltd                   South africa   100,00             14           (10)
 NORD EST ROMA S.c.r.l. being wound up            Ravenna        100,00             15              1
 OPERA S.c.r.l. being wound up                    Ravenna         55,00             26             26
 PORTONE S.c.r.l.                                 Ravenna         70,00             26             26
 SIDEBAR MANUFACTURING (Pty) Ltd                  South africa   100,00             14           (56)
 SOCIETÀ GESTIONE PARTECIPAZIONI S.r.l            Ravenna        100,00             50             50
 TAVOLICCI S.c.r.l. being wound up                Ravenna         75,00             26           (81)
 TRECI S.c.r.l. being wound up                    Ravenna         55,00             25             17

 Associated companies
 BAGNAROLA S.r.l.                                 Cesena          12,50            100              95
 CMC BESIX Geie being wound up                    Ravenna         50,00             51              44
 CMC RUMDEL J.V.                                  Mozambique      50,00              1               1
 CO.L.I.S.PA. S.c.r.l. being wound up             Ravenna         29,76             21             22
 CON.CAPUA. S.c.r.l. being wound up               Ravenna         50,00             26            (75)
 Consorzio C.G.L.                                 Ravenna         25,00             52              52
 Consorzio C.I.R.C.                               Milan           25,00             52              52
 Consorzio COFESAR                                Rome            30,00             52              52
 Consorzio ITALO TAIWANESE J.V.                   Rome            25,00              5               5
 Consorzio PORCE II                               Colombia        25,00              -         1.806
 Consorzio RCPS Nuova Romea                       Milan           26,30             20              20
 Consorzio TRE FONTANE NORD being wound up        Rome            33,33             15            (21)
 COOPNEWTON S.c.r.l. being wound up               Rome            40,00             10              10
 CP CASECNAN CONSORTIUM                           Ravenna         50,00             51          (166)
 CP CBK HYDROPOWER                                Ravenna         50,00             51        (1079)
 GROUP FIVE – CMC BATCH PLANT J.V.                Mozambique      50,00              -         2.889
 IMOTUR LDA                                       Mozambique      50,00            170            468
 ITACA S.c.r.l.                                   Ravenna         34,60             10              10
 LODIGIANI – CMC Malaysia Sdn Bhd                 Malaysia        50,00             14              14
 LUGO 2000 S.c.r.l.                               Ravenna         50,00             26              26
 MINERVINO ALTO S.c.r.l. being wound up           Milan           43,30             46              46
 PIZZAROTTI - CMC S.e.p.                          France          50,00             10              10
 PORTO DI PANTELLERIA S.c.r.l. being wound up     Ravenna         45,00             26              26
 PROFURO INTERTNATIONAL Lda                       Mozambique      48,05            354            124
 RENATO SERRA 61 S.r.l.                           Ravenna         40,00          1.000            979




                       CONSOLIDATED FINANCIAL STATEMENTS                                            75
Amounts receivable from / payable to subsidiary and associated companies

 Subsidiaries company                             Financial          Trade     Payables            2004              2003
                                                receivables    receivables                  Net balance      Net balance
 Autostrada Sarc 3 Scrl                                   -            127         (994)           (867)            (826)
 Cedir Scrl being wound up                                -            244              -            244              240
 Cmc di Ravenna Eurl                                      -              -           (71)            (71)              16
 Cmc di Ravenna Malaysia Sdn Bhd                        344              -         (397)             (53)                -
 Cmc di Ravenna Pte Ltd (Singapore)                       -              -              -               -              18
 Cmc di Ravenna Railway Swaziland J.V.(Pty) Ltd         209            458         (173)             494                 -
 Costruzione E/45 Scrl being wound up                     -              -              -               -           1.247
 Dergano Scrl                                             -              -              -               -         (1.969)
 Dunrose Investments (Pty) Ltd                          116              -              -            116              108
 Esino Scrl being wound up                                             164         (108)               56             227
 Ghilina Scrl being wound up                              -          5.737       (4.723)          1.014               749
 Le Vigne Scrl                                            -              -              -               -              95
 Macrodue Scrl being wound up                             -              -              -               -              24
 Moreside Investments (Pty) Ltd                         217              -              -            217              201
 Nampevo Gurue J.V.                                       -            278              -            278                 -
 Nord Est Roma Scrl being wound up                        -              -              -               -              (3)
 Portone Scrl                                             -             45           (64)            (19)           (451)
 Sbc Scrl                                                 -              -              -               -           (599)
 Sidebar Manufacturing (Pty) Ltd                      1.112             87              -         1.199               680
 Tavolicci Scrl being wound up                        3.712          1.081       (3.510)          1.283            1.282
 Treci Scrl being wound up                                -              -              -               -              77
 Others                                                 435            147         (168)            414                87
 Total                                                6.145          8.368     (10.208)           4.305             1.203




                                                                                                    Salerno – Reggio Calabria
                                                                                                    A3 Motorway;
                                                                                                    Campania – Basilicata (Italy)


76                                                            CONSOLIDATED FINANCIAL STATEMENTS
Amounts receivable from / payable to subsidiary and associated companies

 Associated company                            Financial           Trade   Payables            2004            2003
                                             receivables     receivables                Net balance    Net balance
 Bologna Ponente Scrl                                  -              96            -             96             695
 CMC Besix Geie being wound up                         -              11            -             11              44
 CMC Ccc j.v. (Malawi)                                 -               -            -              -           (116)
 CMC Kamuzu Dam j.v. (Malawi)                          -               -            -              -             496
 CMC Rumdel j.v.                                       -              41            -             41           (328)
 Colispa Scrl being wound up                           -             354         (49)            305            122
 Cons. Circ                                            -             909       (696)             213            369
 Cons. Cofesar                                         -               2       (292)           (290)          (245)
 Cons Cgl                                              -               -            -              -              16
 Cons. Italo Taiwanese j.v.                            -              41            -             41              41
 Consorzio Rcps Nuova Romea                            -                            -              0               5
 Cp Casecnan Consortium                            2.737          3.605      (9.240)         (2.898)         1.161
 Cp Cbk Consortium                                    73          1.291        (423)             941            319
 Coopnewton Scrl being wound up                        -              -             -              -               4
 Ged Srl                                               -              -             -              -             183
 Group Five CMC Batch Plant J.V.                       -              -      (1.448)         (1.448)          (176)
 Immobiliare Porta Romana Srl / Fda                    -              -             -              -             101
 Itaca Scrl                                            -            125      (1.264)         (1.139)          (909)
 Imotur Lda                                            -              -             -              -            217
 Lodigiani Cmc Sdn Bhd                               163             33             -            196            196
 Lugo 2000 Scrl                                        -            203        (332)           (129)          (214)
 Madeiras Preciosas de Mocambique                      -            303             -            303               -
 Pizzarotti Cmc Sep                                    -              -             -              -              37
 Porto di Pantelleria Scrl being wound up              -              -             -              -              60
 Profuro International Lda                             -            756          (18)            738            865
 Renato Serra 61 Srl                                   -             33        (160)           (127)          (280)
 Rodano Consortile Scrl                                -              -             -              -          1.161
 Rugula Scrl                                           -              -             -              -              44
 Sistema Scrl                                          -              -             -              -               5
 Wan Long j.v.                                         -              -             -              -        (1.272)
 Others                                              552            276        (294)             534            (79)
 Total                                             3.525          8.079    (14.216)          (2.612)          2.522




                         CONSOLIDATED FINANCIAL STATEMENTS                                                         77
Cash flow statement

 A. NET DEBT AS OF JANUARY 1, 2004
 - cash on hand and at banks                                                                        35.116
 - banks loans                                                                                     (81.395)
 - other loans                                                                                     (10.470)
                                                                                                              (56.749)

 B. CASH FLOWS GENERATED BY OPERATIONS
 - profit (loss) for the year                                                                         8.505
 - depreciation                                                                                     31.703
 - net variation in the provision for severance indemnity                                            1.186
 - revaluation/devaluation of financial assets                                                        1.072
 - Profit (loss) for activities of the year before variations in the working capital                 42.466

 - decrease (increase) in inventories for contracts in progress, net of advance payments           (20.422)
 - decrease (increase) in other working capital amounts                                               7.587
                                                                                                   (12.835)    29.631

 C. CASH FLOWS FROM (TO) INVESTMENT
 - net change in intangible fixed assets                                                             (8.541)
 - net change in tangible fixed assets                                                              (26.090)
 - net change in financial fixed assets                                                               (5.568)
                                                                                                              (40.199)

 D. CHANGES IN THE SHAREHOLDERS’ EQUITY
 - share capital, net                                                                                1.262
 - paid dividends                                                                                     (645)
 - increase (decrease) of Shareholders’ loan                                                           234
                                                                                                                  851

 E. CASH FLOW FOR THE YEAR (B + C + D)                                                                         (9.717)

 F. NET DEBT AS OF DECEMBER 31, 2004 (A + E )                                                                 (66.466)
 - bonds                                                                                             808
 - cash on hand and at banks                                                                      65.150
 - bank loans                                                                                  (114.218)
 - other loans                                                                                   (18.206)




78                                                             CONSOLIDATED FINANCIAL STATEMENTS
Changes in shareholders’ equity

                                          Share        Legal     Other     Net Profit    Minority     Group
                                         Capital      Reserve   Reserves                Interest    Net Equity
 BALANCE AT THE BEGINNING
 OF THE YEAR                              18.783       21.153       199       10.033       5.921        56.089
 Share capital
 - underwritten                                64                                                          64
 - cancelled                                (172)                                                        (172)

 Allocation of 2003
 net profit of CMC:
 - share capital                             399                                (399)                         -
 - other                                     971                                (971)                         -
 - legal reserve                                        1.125                 (1.125)                         -
 - extraordinary reserve                                            153         (153)                         -
 - dividends                                                                    (575)                    (575)
 - mutual fund                                                                   (70)                      (70)

 Net change in minority interest                                                          (4.853)       (4.853)

 Net change in consolidation
 reserve                                                         12.288       (6.740)                    5.548

 Translation adjustment                                          (4.265)                                (4.265)

 Net profit                                                                     8.505                     8.505

 BALANCE AT YEAR END                      20.045       22.278     8.375        8.505       1.068        60.271




                           CONSOLIDATED FINANCIAL STATEMENTS                                                  79
Koudiat Acerdoune Dam
(Algeria)
CONSOLIDATED FINANCIAL STATEMENTS   81
82   CONSOLIDATED FINANCIAL STATEMENTS
Port of Ravenna:
civil works (Italy)
        Cover:
SA-RC A3 Motorway (Italy)

       Pictures by:
Marco Onofri, Fabrizio Zani

Graphics and Co-ordination:
   TUTTIFRUTTI, Ravenna

          Layout:
   Full Service, Ravenna

         Printing:
     Grafiche Morandi

								
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