Estimación del riesgo

is € 205,443,391.40, divided in 395,083,445 shares of € 0.52 each.

The share capital is divided as follows: :: Holding Gruppo Marchi spa 47.54%, :: Mediobanca spa 22.12 %,

:: Société de Participation Financière Italmobiliare sa 11.68%, :: Assicurazioni Generali spa 11.68%,

:: Capitalia Merchant spa 3.83%, :: Aletti Merchant spa 2.28%,

:: Palladio Industrie Grafiche Cartotecniche spa 0.76%, :: Minority interests 0.11%.

Burgo Group spa is not subject to management or coordination by other companies or entities.

The subsidiaries have indicated that Burgo Group spa is the entity that exercises management and coordination over them pursuant to article 2497 bis of the Italian Civil Code.

The Parent Company sets the Group’s management and strategic guidelines, prepares and adjusts the internal control model and code of ethics, sets general policies governing the

management of finance, production, human resources, procurement, and communications. Treasury, corporate affairs, and internal audit services are also managed centrally.

Subsidiaries continue to operate autonomously and may focus their resources on their core businesses, drawing on the Parent Company’s resources for specialised activities and achieving consequent economies of scale.

The Articles of Association of Burgo Group spa have adopted the “traditional” corporate governance model, which calls for: a Board of Directors, Shareholders’ Meeting, Board of Statutory Auditors. Auditing is assigned to an independent auditing firm.

Under the Articles of Association, the Board of Directors consists of 5-10 members.

The Meeting of the company’s shareholders held on 23 April 2004 set the number of members of the Board at 10; their term of office is set to expire when the financial statements for the year ended on 31 December 2006 are approved.

The Board is composed of 2 executive directors (the Chairman and Chief Executive Officer), 6 non-executive directors and 2 independent directors pursuant to the Governance Code of Borsa Italiana spa.

The Board of Directors is the body granted the broadest powers of ordinary and extraordinary administration, and is charged with guiding company management by establishing the model for the delegation of powers, delegating and revoking powers, as well as examining and approving strategic, business and financial plans prepared by the delegated bodies, the group’s corporate structure, transactions involving conflicts of interest for delegated bodies, and transactions with a significant impact on the company’s statement of income, balance sheet, or cash flow figures, especially as concerns related-party transactions.

Pursuant to the provisions of article 2365 of the Italian Civil Code, the Board of Directors is also authorised to pass resolutions establishing or eliminating secondary offices, reducing share capital when shareholders withdraw, amending the Articles of Association in the light of regulatory provisions, transferring the head office

to another municipality in Italy, incorporating fully-owned or

90%-owned subsidiaries, and spinning off company assets, under the circumstances specified in article 2506 ter of the Italian Civil Code.

The Board passes resolutions by simple majority vote, except under the circumstances in which article XIX of the Articles of Association calls for a qualified majority of seven-tenths of the directors in office.

As established by the Articles of Association, signing authority and power of representation fall to the Chairman and the Deputy Chairman.

he Chairman also collaborates with the Chief Executive Officer in setting the Company’s strategy, overseeing management performance, especially in terms of financial issues, and supervises transactions inherent in and pertaining to the listing of the

Company’s shares, if required.

The Board of Directors has also granted the Chairman certain operating powers for company management, particularly concerning finance.

The Board has granted the Chief Executive Officer the broadest powers of ordinary and extraordinary administration, except for those powers which by law and article XIX of the Articles of Association are expressly reserved to the Shareholders’ Meeting and the Board, and those powers expressly granted to the Chairman of the Board of Directors.

The Chairman and the Chief Executive Officer report to the Board, at least once every 120 days, on the activity conducted in furtherance of their powers and the most significant transactions undertaken by the parent company or subsidiaries, as well as on transactions in which the latter have an interest, whether directly or on behalf of third parties.

In 2006, the Board of Directors of Burgo Group spa met five times.

In preparation for the meetings of the Board

of Directors, the Chairman announces the business on the agenda and provides the directors and statutory auditors with documents and information required to ensure effective participation in the Board’s work.

The Shareholders’ Meeting has granted annual compensation of € 30,000 for each Director of the Board.

Proposals concerning the compensation of directors to whom powers have been granted are formulated by non-executive directors: the Board decides on these proposals after having acquired the opinion of the Board of Statutory Auditors pursuant to article 2389 of the Italian Civil Code.

The Board of Directors is charged with assessing the adequacy of the company’s organisational, administrative and accounting system, as well as assessing the company’s general performance on the basis of the reports filed by the delegated bodies.

In this context, the Board of Directors has approved and repeatedly updated the internal control system, which calls for constant monitoring spread throughout all levels of the organization, with the aim of guiding the company towards achieving management and financial targets, while complying with applicable law and regulations.

This control is founded on each participant’s responsibility for his or her individual role and management’s collective responsibility in its specific functional positions.

The Board has therefore appointed an Internal Auditor, who is charged with drawing on specific inspections to assess

the adequacy and efficacy of the existing Internal Control System and informing the Board of Directors and Board of Statutory

Auditors of the results that have been obtained, which are then to be set out formally in specific monthly reports.

The control system described above is concentrated in the Internal Audit Department, a function that has been included in the Burgo Group’s organisational structure since 1986, and which reports to the Chairman of the Board of Directors in full autonomy from company operating processes.

At each meeting of the Board of Directors, the Chairman reports on the internal control activities that have been conducted. In 2006, the Board of Directors approved a plan for internal control activity in 2007.

The Board of Statutory Auditors consists of three regular and two substitute members, whose term of office is set to expire when the financial statements for the year ended on 31 December 2006 are approved.

proteCtIon oF prIVACY