Blended Learning (BL)

different valuation and, therefore, the consequent effects on the statement

of financial position and the income statement

The differences arising from the application of EU-IFRS with respect to the Italian GAAPs, as well as the options adopted by the Company within the accounting options envisaged by EU-IFRS illustrated above, entail a reformulation of the accounting data prepared according to the previous Italian regulations governing financial statements with effects on the equity. Below is reported the reconciliation of the Company’s equity at 1 January 2009 and at 31 December 2009, as well as of the net result and of the other comprehensive income of the financial year ended 31 December 2009, between the position prepared on the basis of the Italian GAAPs and that prepared according to EU-IFRS

1 January 2009 FY 2009 31 December

2009

Note Share Capital _{and reserves}

Change in the share capital Other comprehensive income Profit for

the year Equity

(Values in thousands of Euro)

Equity according to previous Italian GAAPs

1,168,852 621,106 - 19,641 1,809,599

Reversal of research costs and other intangible

assets a (6,780) - - 2,429 (4,351)

Reversal of accumulated depreciation on land b 66,344 - - - 66,344 Application of the component approach c 29,075 - - 5,676 34,751 Impairment of property, plant and equipment d (380,644) - - 6,645 (373,999) Adjustment to derivative instruments e (77,204) - (69,593) 3,630 (143,167) Actuarial valuation of employee benefits plans f 163,375 - (28,619) (26,774) 107,982

Other adjustments g (32,487) - - (2,245) (34,732) Tax effects h (99,090) - 26,673 7,419 (64,998) Total adjustments (337,411) - (71,539) (3,220) (412,170)

Explanatory notes on the statement of reconciliation of equity at 1 January 2009 and at 31 December 2009 and of the net result and of the other comprehensive income for the financial year ended 31 December 2009

a. Reversal of research costs and other intangible assets

IAS 38 provides for more restrictive criteria for the recognition of an intangible asset in the accounts compared to the Italian GAAPs. Therefore, after having checked for compliance by capitalized costs with IAS 38, research costs and start-up and expansion costs were reversed. These costs should have been recognized in the income statement when incurred.

At 1 January 2009, the application of IAS 38 determined the reversal of research costs equal to Euro 6,456 thousand and start-up and expansion costs of Euro 324 thousand. The impact on the income statement for the financial year ended 31 December 2009 for lower amortization amounted to Euro 2,429 thousand.

b. Reversal of accumulated depreciation on land

According to the Italian GAAPs, in the years prior to 2009 land was depreciated together with the related buildings, while, according to IAS 16, the portion of cost attributed to land must not be depreciated as it has an unlimited useful life.

c. Application of the component approach

IAS 16 requires each component of a property, plant and equipment, whose cost is significant compared to the total cost of the fixed asset, to be recognized and depreciated separately. Within the transition process, the useful life has been redetermined for each component of the rolling stock fleet capable of being subject to an autonomous valuation of the useful life. This improvement has been made necessary mainly following the changed experience relating to the economic duration of some components of the rolling stock fleet. Specifically the rolling stock fleet itself has been divided into uniform components from the perspective of the type of rolling material.

d. Impairment of property, plant and equipment

The impairment of property, plant and equipment at 1 January 2009 related to the three CGUs represented by the National and International Passenger Transport, Regional Passenger Transport and Cargo Transport Divisions.

In accordance with the Company’s control model, the cross-company divisions (Technical Head Office, Industrial Purchasing, Engineering Head Office, Safety and System Quality and Staff) are directly attributed to the income statements of the CGUs National and International

appropriate drivers.

The recoverable value of the CGUs has been determined on the basis of the value in use obtained by discounting the expected cash flows as determined on the basis of the best information available at the time of the estimate and inferable from the business plan approved by the Board of Directors of the Company. The business plan reports projections relating to sales, investments, margins, as well as to the performance of the main monetary variables such as inflation and interest rates. In order to consider the effects of the implementing actions taken in the relevant period on the margins of the individual CGUs, the plan itself was extended for an additional period of 2 years (2012 – 2013).

For the years after the fifth year, a 2% growth rate was used in nominal terms for all CGUs. The value in use is calculated by discounting cash flows with rates (“WACC”) equal to 7.5% for the CGUs National and International Passenger Transport and Regional Passenger Transport, and is equal to 8.2% for the CGU Cargo Transport.

The analyses of each individual CGU within an operating segment conducted by the company management are based on the historical performance of the business and on the expected growth of the markets in which the Company is active. The average growth rates used are in line and do not exceed the forecasts for the markets in which the Company is active, while the discount rates reflect the specific risks of the individual operating segments.

The recoverable value, calculated as value in use, is less than the book value of the invested capital of the CGUs at 1 January 2009. At 1 January 2009 the net invested capital of the CGUs National and International Passenger Transport, Regional Passenger Transport and Cargo Transport, amounted to Euro 2,870 million, Euro 3,334 million and Euro 672 million, respectively, before write-downs arising from specific expert’s reports and the impairment test. The impact through profit and loss for the financial year ended 31 December 2009 for lower amortisation and depreciation amounted to Euro 6,645 thousand.

e. Recognition of derivative instruments

The adoption of EU-IFRS entailed the recognition of derivative instruments at market value (fair value). As at the Date of Transition the Company had in place 23 interest rate swaps (of which 4 short-term contracts) and 11 interest rate collars, for which the hedging relationship existed and could be demonstrated. Furthermore, at the Date of Transition derivative instruments qualified for hedge accounting according to IAS 39. As regards interest rate collar contracts only, it should be noted that only the intrinsic value has been designated as cash flow hedge.

The overall fair value of derivative instruments at 1 January 2009 was negative for Euro 77,204 thousand and was entered in the accounts against an entry under equity (cash flow hedge reserve), including the tax effect.

In the financial year ended 31 December 2009 the cash flow hedge reserve recorded changes for Euro 69,583 thousand, including the tax effect, while the income statement includes

f. Actuarial valuation of employee benefits plans

Severance Pay and Free Travel Card (Carta di Libera Circolazione, CLC)

According to the Italian GAAPs, the Company determined the severance pay liability in the application of the provisions of law, while no value was entered for the CLC. Instead, the rules under IAS 19 “Employee benefits” provide for the calculation, for each employee, of the present value of the liability according to the Projected Unit Credit Method. The amount of the severance pay and of the CLC liability is calculated on the basis of actuarial valuation assumptions and methods. The demographic, economic and financial variables assumed for the calculation are annually validated by an actuary. At each expiry date of the financial statements, actuarial profits and losses, which are defined as the difference between the book value of the liability and the present value of the company’s commitments at period-end, due to the change in the actuarial parameters described, are directly charged to equity.

The adjustment relating to the severance pay has a positive effect on equity of Euro 175,475 thousand and Euro 121,484 thousand at 1 January 2009 and 31 December 2009, respectively, and an effect on equity equal to a loss of Euro 27,399 thousand, including the related tax effect. The 2009 pre-tax result decreased by Euro 55,913 thousand for financial charges and increased for the reversal of the personnel cost relating to the revaluation of the TFR made according to the Italian GAAPs equal to Euro 29,320 thousand.

The adjustment relating to the CLC has a negative effect on equity equal to Euro 12,100 thousand and Euro 13,503 thousand at 1 January 2009 and 31 December 2009, respectively, and an effect on equity equal to a loss of Euro 1,220 thousand. The 2009 pre-tax result decreased by Euro 556 for financial charges and increased for the reversal of the personnel cost equal to Euro 548 thousand, partially offset by the charge accrued in the year on the CLC (service cost) equal to Euro 174 thousand.

g. Other adjustments

Additional adjustments have been recorded which had a negative effect of Euro 32,487 thousand on equity at the Date of Transition, with another negative effect of Euro 2,245 thousand on the 2009 result.

Below are commented the most significant adjustments: