Servicios Tecnológicos.

Raw materials, auxiliaries and goods

1999 2000

Newsprint 216,644 244,498

Printing material 18,941 21,280

Other consumables 7,128 8,613

Promotional material 11,859 13,343

Multimedia products for resale 18,576 17,176

e-commerce goods 1,039 6,217

Other goods 4,452 15,811

Total 278,639 326,938

Newsprint purchases increase by lire 27,854 million (up 12.8%) due mainly to the higher number of pages and copies of la Repubblicaand L’Espresso, in a context in which prices registered a moderate increase (up 2%). To hedge part of the risk of increases in the price of paper, the Group concluded a number of “paper swap” contracts through which it fixed for three years the price of 50% of paper supplied for magazines and 30% of paper for newspapers. The cost for the year amounted to lire 3,580 million. Starting in January 2001, losses on swap contracts have turned into gains, due to the increase in the price of paper. Printing material purchases increase also by 12% due to the higher number of pages and the wider use of color, in addition to price increases following the appreciation of the dollar.

Other consumables include the purchase of books and newspapers, stationary and other materials. The increase of lire 1,485 million (up 21%) is due primarily to Internet compa- nies (lire 785 million) and higher consumption by Elemedia (up lire 257 million), due to the higher number of working stations.

Promotional material purchases increase by lire 1,484 million due to the higher number of CD ROMs distributed withla Repubblica’s promotional initiatives, and to prizes offe- red with the Radio DeeJay “18 years old in 2000” contest launched by Elemedia.

Multimedia products for resale decline by lire 1,400 million due mainly to the change in the mix of products distributed with L’Espresso, with a lower number of videotapes and higher number of CDs, whose unit cost is considerably lower.

E-commerce goods purchases refer mainly to I.F.E., distributor of products bearing the Esperya and Zivago trademarks. The increase is due to higher activity levels.

of such goods have been sold to Kataweb, giving rise to the mentioned increase in assets due to self development.

Services received

1999 2000

Printing and other work carried out by third parties 165,786 180,376

Publishers’ fees 39,994 43,358

Transports 49,906 54,025

Agents and agencies fees 57,848 60,878

Advertising and promotional services 75,382 112,255

Photographs and editorial services 76,530 83,716

Traveling expenses 17,958 22,063

News agencies 13,706 14,517

Postage, telephone and data transmission 25,371 27,146

Maintenance 12,884 14,503

Utilities 9,913 11,228

Services and technical assistance for Internet sites 851 17,899

Sundry services 63,464 102,779

Total 609,593 744,743

Printing costs increased by lire 14,590 million (up 8.8%), due mainly to the effect of la Repubblica’s new printing sites located in Sidney – that started operation at the end of 1999 – and Buenos Aires, in addition to the new pages contained in the newspaper and in supplement D - la Repubblica delle Donne.

To face strong demand for advertising space during the year, the printing capacity of la Repubblica’s national edition has been increased several times from 64 pages in 1999. On March 23, 2000 it was increased to 72 pages, and on September 28 it was increased further to 80 pages. In line with such growth, color printing capacity has been increased from 16 to 20 pages, using the pre-printing technique.

Publishers’ fees increase by lire 3,364 million, due to higher advertising revenues registe- red by other parties’ newspapers and Internet sites for which A. Manzoni & C. is the advertising concessionaire.

Transport costs increased by lire 4,119 million, mainly due to the higher weight of forei- gn distribution, la Repubblica’s promotional activities and costs relating to the logistics of e-commerce activities (lire 1,081 million).

Agents and agencies fees increase by lire 3,030 million due to the increase in advertising sales.

Advertising and promotional expenses increase by lire 36,873 million. Promotional activity in the Internet area increased significantly in the year (up about lire 40 billion).

in addition to promotion for the launch of L’Espresso’s new multimedia initiatives (up lire 7 billion). Radio station’s promotional activities declined (down lire 2.5 billion) after a period of strong activity in the previous year.

The increase in the printing capacity of Rotosud allowed to shift back to the Group the printing of a good portion of la Repubblica’s promotional pamphlets, whose cost thus decreased by lire 8 billion.

Photographs and editorial services increased by lire 7,186 million. Radio station profes- sional contributions increased due to the widening of the program range. la Repubblica’s and L’Espresso’s professional contributions increased also due to higher editorial content in the Internet area and the production of content for the new sites.

Postage, telephone and data transmission expenses grew by lire 1,775 million due to the increase in postage expenses for the delivery of publications to subscribers.

Maintenance and utilities costs increased overall by lire 2,934 million due to electricity tariff increases and the higher number of high frequency posts installed in 2000 at subsi- diary Elemedia.

Services and technical assistance for Internet sites increased by lire 17,048 million due to higher Internet activities of companies already consolidated in 1999, in addition to the acquisition of new companies operating in the web solutions area.

Other services increase by lire 39,315 million due primarily to new Internet companies (about lire 26 billion).

The item includes, among other things, consulting, subscriptions management, investiga- tions and research, insurance, auditing and certification costs, in addition to receivable collection and cleaning costs.

Leases and rentals

1999 2000

Reproduction and copyrights (SIAE and others) 30,422 43,452

Rentals 20,292 22,741

Leases 15,061 12,733

Other costs 6,434 13,600

Total 72,209 92,526

Copyright costs relate to royalties paid for the publication of la Repubblica’s and

L’Espresso’s inserts, radio rights and reproduction rights for Internet sites’ contents. The increase of lire 13,030 million is due mainly to la Repubblica’s (about lire 9 billion) and

advertising revenues (about lire 1 billion), and rights paid by Internet companies (about lire 2 billion).

Rentals increased by lire 2,449 million due to the higher number of radio posts of subsi- diary Elemedia (lire 710 million), offices of Internet companies (lire 850 million) in addi- tion to adjustments due to inflation.

Leases decline by lire 2,328 million due to the completion of the purchase of a building located in Milan, via de Alessandri, by the la RepubblicaDivision, in addition to the ter- mination of the contract for the lease of rotary presses from Rotosud.

Other costs include motor vehicle leasing costs, the lease of satellites for radio broadca- sting, Internet connection fees and the rental of office equipment. The increase of lire 7,166 million is due mainly to Internet connections and costs relating to Kataweb’s search engine, in addition to costs relating to the transfer of motor vehicle management outside the Group.

Personnel costs

The cost of personnel, amounting to lire 449,763 million, increased by lire 38,980 million, up 9.5% over the previous year (lire 410,783 million). Cost increases are due mainly to the growth in personnel in the Internet area (about lire 31 billion), in addition to the increase following the renewal of collective labor contracts and company labor agreements.

Depreciation and write-downs

Depreciation and write-downs amount to lire 131,064 million (lire 92,610 million at December 31, 1999). Intangible and tangible asset depreciation and write-downs for the year is shown in Attachments 1 and 2.

1999 2000

Amortization of intangible assets 41,167 53,799

Depreciation of tangible assets 43,005 54,693

Write-down of intangible assets 33 16,425

Write-down of current assets 8,405 6,147

Total 92,610 131,064

Amortization of intangible assets increases by lire 12,632 million due to the higher number of frequencies owned by Elemedia (lire 4,159 million) and the depreciation char- ge on the goodwill of Internet web solutions companies acquired.

Depreciation of tangible assets increases by lire 11,668 million due to full depreciation on investments in color printing capacity in the local newspaper area.

nomic outlook for the sector.

Write-down of current assets increases by lire 2,258 million due to lower losses recor- ded in the year.

Change in raw materials and merchandise inventories

Raw materials and merchandise inventories decline in 2000 by lire 8,580 million due to the net effect of an increase in paper stocks in view of price increases and higher invento- ries of merchandise in the e-commerce area.

Accruals to risk provision

Accruals to risk provision amount in 2000 to lire 14,826 million (lire 6,427 million in 1999) and include mainly accruals made against risks relating to tax, legal and social security disputes, in addition to those relating to the renewal of the journalism profession contract.

Sundry operating costs

1999 2000

Taxes and duties payable 2,090 2,366

Public relations and gift expenses 1,811 1,959

Membership fees 1,753 1,560

Transactions and reimbursements 1,973 3,752

Other charges 3,087 2,802

Extraordinary losses 4,734 3,779

Total 15,448 16,218

C – FINANCIAL INCOME AND CHARGES