030227_STAR

The companies listed on STAR, the stock market segment with high requirements, met with analysts and investors on 27th February at the 2nd Star Company Results, an event organised by Borsa Italiana/Italian Exchange which offers the companies and the financial community an opportunity to focus on the results achieved and the prospects for the future.

Almost two years after its launch, the STAR segment has established itself as an important showcase for enhancing the value of small and mid-caps.

It started on 2 April 2001 with 20 companies - today, it has 40 - and from that day it has showed constant growth. At the end of January 2003 it had a capitalisation of over €7 billion and a trading turnover of over €183 million.

The volatility of the STAR segment (7.6% in January) is more contained than that of Borsa (20.7%) and Nuovo Mercato (30.2%).

From 2002, the MIBSTAR index recorded a better performance than the other European small cap market indices (+16.2 compared to Deutsche Börse's Smax, +21.7 compared to the London Stock Exchange's FTSE Small Cap and +11.7 with respect to the Euronext Next Prime), and Borsa Italiana's MIB index.

"These results confirm the market's appreciation of our small and medium sized companies, which symbolise "made in Italy". They are often leaders in businesses and in a difficult economic cycle they have been able to distinguish themselves from both an industrial and financial point of view," commented Massimo Capuano, President and CEO of Borsa Italiana.

The 40 STAR companies have a free float higher than the percentage required by STAR rules - 35% for IPOs and 20% if already listed; in fact, 3 companies have a free float higher than 50%, 7 between 40% and 50%, 12 between 35% and 40%, 6 between 30% and 35% and 12 between 20% and 30% of capital.

In year 2002, 87% of the companies (*) gave out a dividend to their shareholders, with an average dividend yield of 3%. Thirty-four percent of the companies feature a positive average total shareholders return: one between 40% and 50%, one between 20% and 30%, 6 between 10% and 20% and 5 below 10%.

From the profitability point of view, the companies present an average percentage variation of EBIT compared to the previous year of -2.7%, a significant figure in the current economic trend.

In terms of stock performance, in 2002, 32% of the companies recorded a positive trend: among these were Manuli (+48%), Mirato (+22.7%), Sabaf (+15.1%), Banca Popolare di Intra and Ima (both +14.9%).

(*) excluding Astaldi and Fiera di Milano, listed during 2002

Sixty-eight percent of the 40 STAR companies' Board of Directors are composed of a majority of non-executive and/or independent directors and 58% have a higher number of independent members than the minimum required. On average, 1/3 of the members of STAR company Boards are independent directors.

As for independent members on internal control committees, 82% of the STAR companies have a number greater than 50%. On average, 3/4 of the members of a STAR company's internal control committee are independent.

Moreover, 35% of the companies have adopted more stringent criteria - in terms of thresholds and/or timeliness of communications - than those defined in Borsa Italiana's Code of Internal Dealing.

On 16 December 2002, the Borsa Italiana Shareholders Meeting approved several modifications to Market Rules - yet to be approved by CONSOB - in order to take into account additions made to the Code of Conduct regarding the composition and operation of internal control committees.

The new Rules for the STAR companies acknowledge the new criteria for the composition of the committee (a majority of independent directors) and eliminate the possibility of attributing competence in the matter to the Board of Directors.

In particular, the number of independent directors need to guarantee the establishment of the Committee and its regular operation has been increased by at least 2, 3 or 4 independent Directors depending on whether the number of members on the Board of Directors is, respectively, less than 8, from 9 to 14 and greater than 14.

In evaluating a committee's "independence", Borsa Italiana will consider the relationships - both direct and indirect - existing between directors and the company involved.

Moreover, Borsa Italiana has defined the notion of "important economic relationships," referring to both commercial relations and professional services: with respect to the former, it has tightened the current rules, considering a commercial relationship to be important if it exceeds 5% of the turnover of the supplier of beneficiary company. On the other hand, in regard to professional services, an important relationship is considered one that exceeds 5% of the director's income or, in any event, €200,000.

The time reference has been defined, limiting the context of the evaluation to activities carried out by the director during the year in progress and the prior fiscal year for previous economic relationships and to assignments carried out by the same during the last three fiscal years, for subordinated work relationships and the duties of executive director.

In evaluating "independence", the Code recommends also taking into account economic relationships or equity ownership that the director is engaged in indirectly.

For this reason, when evaluating a director's independence, Borsa Italiana will be looking at relationships between the director and:

• his family members, professional offices in which he is a partner, companies controlled, even indirectly, by him and his family and the companies for which these subjects are directors or managers;
• the company involved, its shareholders that, even indirectly, control it, the executive directors or the companies even indirectly controlled by such subjects.

To ensure the independence of directors, Borsa Italiana has restricted the scope of application by providing that an independent director cannot be:

• a spouse (or domestic partner), relative and the like to the second degree of executive directors or a shareholder with a controlling interest in the company;
• the spouse, domestic partner and/or first degree relative of subjects with the potential to influence company decisions.

This discipline will be directly applicable to companies that request admission to the STAR segment, while a grace period has been established - no later than the occasion of the stockholder's assembly to approve the financial statements during 2004 - for companies already listed in the STAR segment.

Milan, 27 February 2003