19. Equity

19.1 Equity attributable to the equity holders of the company

Share capital amounts to Euros 1,555,934 thousand at December 31, 2007 and consists of 5,233,142,003 ordinary shares and 134,764,429 savings shares, all with a par value of Euros 0.29 per share and normal dividend rights.

On December 12, 2007, the special shareholders’ meeting approved the reduction of share capital from Euros 2,789,950 thousand to Euros 1,555,934 thousand by reducing the par value of the ordinary and savings shares from Euros 0.52 to Euros 0.29 for each share and proportionally reimbursing the ordinary and savings shareholders a total amount of Euros 826,254 thousand, equal to Euros 0.154 for each ordinary or savings share, and appropriating Euros 407,762 thousand to the available reserve (share premium reserve).

The changes in share capital are detailed below:

Number
of ordinary
shares

(thousands) *

Number
of savings
shares

(thousands)

Ordinary
shares

(in thousands of Euros)

Savings
shares

(in thousands of Euros)

Total

(in thousands of Euros)

Balance at 12/31/2006

5,230,524

134,764

2,719,873

70,077

2,789,950

Changes

-

(1,203,021)

(30,995)

(1,234,016)

Balance at 12/31/2007

5,230,524

134,764

1,516,852

39,082

1,555,934

* net of 2,617,500 treasury shares in portfolio

Changes in equity are as follows:

(in millions of Euros)

attributable to the equity holders of the company

  

Share capital

Share premium
reserve

Legal reserve

Reserve
for translation
differences

Other reserves/
Retained earnings

Total attributable
to equity holders
of company

Minority interest

Total

Balance at 12/31/2005

2,763

759

82

266

1,335

5,205

409

5,614

Income and expenses recognized directly in equity

-

-

-

(79)

(20)

(99)

(16)

(115)

Loss for the year

-

-

-

(1,167)

(1,167)

118

(1,049)

Appropriation of income as per resolution of 4/21/2006:

-

-

-

-

-

-

-

-

- legal reserve

-

-

7

-

(7)

-

-

-

- dividends payment

-

-

-

-

(114)

(114)

-

(114)

Other dividends paid to third parties

-

-

-

-

-

-

(49)

(49)

Exercise of warrants 2003-2006

27

-

-

-

-

27

-

27

Movements in Pirelli & C. Real Estate S.p.A. treasury shares

-

-

-

-

25

25

23

48

Pirelli Tyre stake of minority interest sold by private placement

-

-

-

-

-

-

295

295

PRE stock options exercised in the period

-

-

-

-

2

2

29

31

Acquisition of minority interest

-

-

-

-

-

-

(7)

(7)

Minority interest share capital increase

-

-

-

-

-

-

7

7

Other

-

-

-

-

1

1

(2)

(1)

Balance at 12/31/2006

2,790

759

89

187

55

3,880

807

4,687

Income and expenses recognized directly in equity

-

-

-

(68)

(152)

(220)

7

(213)

Income for the year

-

-

-

-

165

165

159

324

Appropriation of income as per resolution of 4/23/2007:

-

-

-

-

-

-

-

-

- absorption of loss

-

(748)

-

-

748

-

-

-

- dividends payment

-

-

-

-

-

-

-

-

Other dividends paid to third parties

-

-

-

-

-

-

(74)

(74)

Reduction of share capital

(1,234)

408

-

-

-

(826)

-

(826)

Movements in Pirelli & C. Real Estate S.p.A. treasury shares

-

-

-

-

(30)

(30)

(24)

(54)

Purchase of Pirelli & C. Real Estate S.p.A. shares

-

-

-

-

-

-

(24)

(24)

PRE stock options exercised in the period

-

-

-

-

5

5

3

8

Acquisition of minority interest

-

-

-

-

-

-

(26)

(26)

Other

-

-

-

-

6

6

(4)

2

Balance at 12/31/2007

1,556

419

89

119

797

2,980

824

3,804

19.2 Equity attributable to the minority interest

The minority interest in equity went from Euros 806,966 thousand at December 31, 2006 to Euros 823,840 thousand at December 31, 2007. The change is mainly due to the balance between the income for 2007, the distribution of income for the prior year and the impact of the translation of foreign currency financial statements to Euros.

The major percentages of investments held by minority interests are as follows:

(in thousands of Euros)

12/31/2007

12/31/2006

Shared Service Center S.c.r.l. (Italy)

-

50.00%

Drahtcord Saar Gmbh & Co. K.G.

50.00%

50.00%

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

49.00%

  

Celikord A.S. (Turkey)

49.00%

49.00%

Pirelli & C. Ambiente S.p.A. (Italy)

49.00%

49.00%

Euro Driver Car S.L. (Spain)

48.85%

49.00%

Pirelli & C. Real Estate S.p.A. (Italy)

44.64%

49.42%

Pirelli Tyre S.p.A. (Italy)

38.94%

38.94%

Turk Pirelli Lastikleri A.S. (Turkey)

30.41%

34.41%

Driver Italia S.p.A. (Italy)

26.93%

26.93%

Pirelli Tyre Co. Ltd (China)

25.00%

40.00%

S.C. Cord Romania S.R.L (Romania)

20.00%

20.00%

Alexandria Tire Co. S.A.E. (Egypt)

10.90%

10.90%

Pirelli de Venezuela C.A. (Venezuela)

3.78%

3.78%