Other financial assets

11. Other financial assets

Other financial assets amount to Euros 958,272 thousand compared to Euros 1,006,898 thousand at December 31, 2006.

The movements during the year are as follows:

(in thousands of Euros)

12/31/2007

12/31/2006

Beginning balance

1,006,898

1,032,317

Increase

107,939

251,139

Decrease

(24,173)

(161,889)

Impairments

(34,137)

(13,376)

(Gains) losses transferred to the income statement upon disposal or when there is an impairment loss, previously recognized in equity

1,019

(126,797)

Changes in fair value

(91,842)

23,842

Reclassifications

-

1,206

Reimbursement of shares

(7,374)

-

Other

(58)

456

958,272

1,006,898

of which:

- financial assets measured at fair value through equity

926,362

1,006,898

- financial assets measured at fair value through income statement

31,910

-

At December 31, 2007, financial assets, which change in fair value is recognized in equity, are as follows:

(in thousands of Euros)

12/31/2007

12/31/2006

Book value

Fair value

Fair value

Listed securties

Telecom Italia S.p.A.

387,172

387,172

417,767

Mediobanca S.p.A.

90,246

210,990

266,997

RCS Mediagroup S.p.A.

128,205

112,786

133,634

Fin. Priv. S.r.l. (az. Mediobanca)

14,458

28,172

35,462

Avanex Corporation

25,757

19,213

-

Vittoria Capital N.V. (az. Vittoria Assicurazione)

5,677

10,320

9,743

Altre società

5,831

5,831

17,798

657,346

774,484

881,401

Unlisted securties

Alcatel Submarine S.A.

44,805

44,805

44,805

Gruppo Banca Leonardo S.p.A.

8,197

8,197

4,598

Istituto Europeo di Oncologia S.r.l.

4,039

6,024

5,555

Tlcom I LP

4,840

5,249

7,068

FC Internazionale S.p.A.

3,033

3,033

3,033

Equinox Investment Company S.c.p.A.

1,264

1,264

8,499

Altre Gruppo PRE

6,526

6,526

1,111

Altre società

5,570

5,570

4,754

78,274

80,668

79,423

Closed-end property investments funds

Olinda Fondo Shops

33,491

30,964

12,835

Berenice Fondo Uffici

14,004

18,182

14,741

Cloe Fondo Uffici

7,846

12,195

9,673

Tecla Fondo Uffici

5,395

7,630

6,870

Armilla

2,000

2,115

1,828

Fondo Abitare Sociale 1

127

124

127

62,863

71,210

46,074

798,483

926,362

1,006,898

Financial assets, which change in fair value recognized in the income statement under “Gains (losses) from changes in fair value of financial assets”, is equal to Euros 31,910 thousand, refer to shares corresponding to 13.15 percent of the Cloe Fondo Uffici – a reserved unlisted closed-end real estate investment fund purchased by Pirelli Real Estate Netherlands B.V..

The designation of such shares at initial recognition as financial assets at fair value through profit or loss reflects the purpose of the acquisition of the shares which are expected to become part of a common investment platform for buildings intended for office use.

The increase refers mainly to the purchase of Avanex shares (Euros 33,427 thousand), RCS Mediagroup S.p.A. shares (Euros 10,907 thousand), Olinda Fondo Shops shares (Euros 21,465 thousand) and Cloe Fondo Uffici shares (Euros 32,544 thousand).

In addition to the increase, there was the decrease that refers mainly to the sale of shares of Telecom Italia S.p.A. shares (Euros 12,582 thousand), Intek S.p.A. (Euros 6,800 thousand) and KME Group S.p.A. (Euros 1,793 thousand).

Impairments are largely refered to shares of Telecom Italia S.p.A. (Euros 21,929 thousand), Avanex (Euros 7,670 thousand), Equinox (Euros 3,362 thousand) and Euroqube (Euros 850 thousand).

Net losses transferred to the income statement, previously recognized in equity, principally refer to the writedown of Telecom Italia S.p.A. shares.

Changes in fair value chiefly regard the shares of Mediobanca S.p.A. (negative for Euros 56,007 thousand), RCS Mediagroup S.p.A. (negative for Euros 31,755 thousand) and Equinox (negative for Euros 3,109 thousand).

For listed securities and closed-end real estate investment funds, the fair value corresponds to the stock market price at December 31, 2007.

For unlisted securities and closed-end real estate investment funds, the fair value has been estimated using appropriate estimation techniques.