Consolidating accounts group

changed year-end date from February 28 to December 31 of each.

The following accounting policies have been applied in the financial statements as of December 31, 2011.

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The main accounting principles and standards applied in preparation of the consolidated financial statements and of the Group aggregate financial disclosures are set forth below.

These Consolidated Financial Statements have been drawn on the going concern assumption, as the Directors have verified the inexistence of financial, performance or other indicators that could give rise to doubts as to the Group’s ability to meet its obligations in the foreseeable future.

According to this method, the consideration transferred to a business combination is measured at fair value calculated as the aggregate of the acquisition-date fair value of the assets transferred and liabilities assumed by the Group and of the equity instruments issued in exchange for the control of the acquired entity. As a result, the total consideration transferred in connection with the business combination amounted to Euro 146,501 thousand, which is obtained by adding up the Closing Purchase Price of Euro 123,681 thousand, the price adjustment of Euro 2,373 thousand and the indebtedness of the Systèmes Moteurs Group for the amount of Euro 20,447 thousand repaid to previous shareholders.

The acquisition-related costs of the transaction are generally booked to the income statement at the time they are incurred. The Systèmes Moteurs Group is one of the world's largest producers of air intake and engine cooling systems. Such consideration was paid using available credit lines and cash and cash equivalents.

The fair value valuation process for “Plant and equipment” and the other “Intangible assets” has not been completed yet.

Potential liabilities arising out of product warranty risks were booked at Euro 1,430 thousand (which account for the claims submitted by certain customers as of December 31, 2011).

Business combinations made prior to January 1, 2010 were recognised in accordance with the previous version of IFRS 3. Goodwill is supported by the favourable outlook in terms of revenues and financial performance of the Systèmes Moteurs Group, as outlined in the strategic plan for 2012-2015 and confirmed by the results achieved so far.

The following table reports the provisional (*) Fair Value measuring of these items is provisional in December 31, 2011 (**) As in the Consolidated Cash Flows Satement.

The same amount was released in the income statement as of December 31, 2011, under item “Other non-operating expenses (income)” after the relating products were sold.

The fair value valuation of land and buildings is final.

On the acquisition-date, the identifiable assets acquired and the liabilities assumed are recognised at their acquisition-date fair value; the following items represent exception to the above and are valued according to their reference principle: Goodwill is measured as the surplus between the sum of the consideration transferred to the business combination, the value of non-controlling interests and the fair value of the previously-held equity interest in the acquiree with respect to the fair value of the net assets transferred and liabilities assumed as at the acquisition-date. Supplier to the major world car manufacturers, the group has seven production plants (three of which are in France while the others are in Canada, Mexico, Romania and India), two research, development and innovation centres (in France and the United States) and is currently building a new production site in China. Acquisition-related cost directly connected with the transaction reflecting the fees of consultants who assisted the Holding Company Sogefi S.p. with the legal, financial and tax due diligence amounted to Euro 4,391 thousand and were charged to item "Other non-operating expenses (income)" of the income statement.

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