Other businesses

Pirelli Ambiente S.p.A.

On December 28, 2007 the process of reorganizing business activities in the environment and sustainable mobility segments was finalized with the aim of forming two independent entities focusing respectively on renewable energy sources (Pirelli Ambiente) and technologies for reducing emissions (Pirelli Eco Technology). This was achieved by spinning-off the investment in Pirelli & C. Ambiente Eco Technology S.p.A. to the newly-established company Pirelli & C. Eco Technology S.p.A., with a 51 percent stake in the latter company also being held by Pirelli & C. S.p.A., the other 49 percent being held by Camfin S.p.A..

There follows a summary of the performance of the operating companies of the Ambiente Group and Pirelli & C. Eco Technology:

Pirelli & C. Ambiente Renewable Energy S.p.A.

The company ended the year 2007 with a loss of Euros 1.9 million compared to income of Euros 0.7 million in the prior year. It should be mentioned that the result for the year 2006 has been positively affected by a deal concluded in the United Kingdom which led to proceeds of Euros 2.9 million from the concession of patent rights.

Activities for producing the quality fuel (CDR-Q) were profitably conducted during the year through the associate I.D.E.A. Granda S.Cons.R.L., which recovered 20,913 tons of fuel compared to 19,673 tons in 2006.

In June, the company obtained authorization to operate the plant for another ten years.

Furthermore, on December 14, 2007, the company obtained certification from the accredited body RINA, for conformity with the UNI EN ISO 14001:2004 and UNI EN ISO 9001:2000 standards of its Environmental Management System and for Quality, in regards to its activity of ‘producing high-quality fuel (CDR-Q, a Pirelli patent) by treating the dry parts of municipal solid waste and recycling special non-toxic waste (tyres and chloride-free plastic)’.

In December 2007, a collaboration agreement was signed with ACEA (an important national operator) to develop new projects with the aim of recovering energy from municipal solid waste.

Pirelli & C. Ambiente Site Remediation S.p.A.

The company ended the year 2007 with a loss of Euros 0.2 million, in line with that of the prior year.

During the year the company continued its operations which involve the complete management of environmental problems mainly associated with the companies in the Pirelli Group (including the Pirelli RE Group joint ventures), with particular reference to activities of environmental due diligence, evaluation, design and management of demolition and reclamation activities conducted by specialized companies authorized to undertake work of this kind.

Solar Utility S.p.A.

The company was formed on July 24, 2007 with a share capital of Euros 4 million, 50 percent of which is held by Pirelli Ambiente and the remaining 50 percent by PK4 Holdings B.V. (a Dutch company headquartered in Amsterdam, wholly-owned by the Global Cleantech Capital fund).

Solar Utility will produce electrical energy from photovoltaic cells. The company will install and remain the owner of photovoltaic systems located in commercial and industrial buildings which will supply the owners or tenants with clean energy at a competitive price.

In line with its development plan, the company laid the foundations for its activities in 2007. This included defining its organizational structure and negotiating the procurement of photovoltaic modules for 2008.

On November 23, 2007, Solar Utility signed an agreement with the City of Alessano (Province of Lecce) with the aim of installing and operating photovoltaic systems in buildings and on land belonging to the City. The project will allow the City to achieve considerable savings, thanks to its size of the systems (1.1 MW) which will produce more than 1,600,000 kWh of clean electrical energy a year.

Pirelli & C. Eco Technology S.p.A.

As described earlier, Pirelli Ambiente S.p.A. spun-off the activities of Pirelli & C. Ambiente Eco Technology S.p.A. to this company, Pirelli & C. Eco Technology S.p.A., with the aim, from an organizational standpoint, of directing the latter’s activities towards its core business, namely sustainable mobility in the transport and automobile industry.

The year 2007 closed with a loss of Euros 4.5 million, compared to a loss of Euros 0.3 million in the prior year.

The higher loss can mainly be attributed to the costs incurred for the start-up of the factory that will manufacture anti-particulate filters, currently being built in Romania.

In such a fiercely competitive market, in Italy, sales of GecamTM emulsion fell from 88 million liters in 2006 to 80 million liters in 2007, a reduction of about 10 percent, whereas, in France, volumes increased from 23 million liters in 2006 to 25 million liters in 2007, equivalent to an increase of 10 percent.

During 2007, activity was further stepped up with regard to the development, fine-tuning and marketing of anti-particulate filters for diesel engines. Overall, 499 systems and 170 filters were sold, compared to 246 systems and 69 filters in the prior year, with overall sales of Euros 2.6 million (Euros 1 million in 2006).

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A photovoltaic plant.

In the last months of 2007, in the United Kingdom, the network was completed for the distribution of the Retrofit product in collaboration of Pirelli Tyres U.K. LTD.

During the same period, investigations began in the main markets of the European Union (United Kingdom, Germany and Holland), with the aim of developing activities in countries which have already taken action to restrict the number of vehicles causing the most pollution.

In 2007, an investment project was launched in Romania to build a plant to produce silicon carbide filters for original equipment. All the excavation and building work at the factory has been completed. The manufacturing systems for the first line of anti-particulate filters have been ordered and are being built. When completed, the factory will have a capacity of about 670 tons. Training days have been held for Romanian personnel at the production facility at Arese.

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Started up in 2007, the project for the production of silicon carbide filters in Romania.