Financial Risk Management EEMS

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Consolidated and Parent Company Financial Statements

at 31 December 2008 of EEMS Italia

This document has been translated into English for the convenience of readers outside Italy. The original Italian document should be considered the authoritative version.

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EEMS Group – Operations and Performance

Group structure

The EEMS Group at 31 December 2008 comprised the following companies:

EEMS Italia S.p.A.

Solsonica S.p.A.

Solsonica S.p.A. _{EEMS Singapore Pte Ltd}

(Singapore)

EEMS Singapore Pte Ltd (Singapore)

EEMS Asia Pte Ltd (Singapore)

EEMS China Pte Ltd (Singapore)

EEMS Suzhou Co Ltd (China)

EEMS Test Singapore Pte Ltd

(Singapore)

EEMS Test Singapore Pte Ltd (Singapore) EEMS Technology Suzhou Co Ltd (China) EEMS Technology Suzhou Co Ltd (China) 100% 100% 100% 100% 100% 100% 100% EEMS Italia S.p.A.

EEMS Italia S.p.A.

Solsonica S.p.A.

Solsonica S.p.A. _{EEMS Singapore Pte Ltd}

(Singapore)

EEMS Singapore Pte Ltd (Singapore)

EEMS Asia Pte Ltd (Singapore)

EEMS China Pte Ltd (Singapore)

EEMS Suzhou Co Ltd (China)

EEMS Test Singapore Pte Ltd

(Singapore)

EEMS Test Singapore Pte Ltd (Singapore) EEMS Technology Suzhou Co Ltd (China) EEMS Technology Suzhou Co Ltd (China) 100% 100% 100% 100% 100% 100% 100%

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Parent Company Board of Directors

The Company’s Board of Directors consists of the following five members:

Office Name Date and place of birth

Chairman Giovanni Battista Nunziante Salerno, 25 April 1930

Managing Director Vincenzo D’Antonio Orta di Atella, Naples (formerly Atella di Napoli), 11 April 1945

Director Giuseppe Farchione* Pescara, 5 July 1960

Director Guido Cottini Cuneo, 15 April 1942

Director Stefano Lunardi* Genoa, 23 December 1971 * Independent Director

The current Board of Directors was appointed by the Shareholders Meeting of 29 April 2008 and will remain in office until the approval of the 31 December 2010 Annual Report.

For the purposes of their office, the members of the Board of Directors are domiciled at the EEMS registered office located in Cittaducale (Rieti), Viale delle Scienze 5.

Board of Statutory Auditors

Pursuant to article 24 of the Company’s statutes, the Board of Statutory Auditors is composed of three Statutory Auditors in office and two alternate Statutory Auditors, appointed in such a way as to ensure that the minority shareholders can appoint one Statutory Auditor in office and one alternate Statutory Auditor. Their term of office lasts for three years and they may be re-elected.

The current Board of Statutory Auditors, who are in office until the approval of the 31 December 2010 Annual Report, was appointed by EEMS’s Shareholders Meeting of 29 April 2008. It consists of the following persons:

Office Name Date and place of birth

Chairman Vincenzo Donnamaria Rome, 4 October 1955

Statutory Auditor in office Felice De Lillo Senise (Potenza), 25 November 1963

Statutory Auditor in office Francesco Masci L’Aquila, 23 October 1955

Alternate Auditor Egidio Filetto Ottaviano (Naples), 1 July 1970

Alternate Auditor Massimo Pagani Guazzugli Bonaiuti Pesaro, 15 July 1946

For the purposes of their office, the members of the Board of Statutory Auditors are domiciled at EEMS’s registered office located in Cittaducale (Rieti), Viale delle Scienze 5.

Independent Auditors

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Nature of the business and activities

Memories business

The Group provides a full range of back-end services to our semiconductor manufacturing customers, including all the final phases of the assembly, packaging, testing and finishing of DRAM and Flash memory semiconductors and DRAM modules. All these activities are performed thanks to continual investment in state of the art equipment and technology, which is rendered efficient by manufacturing processes which complete the Company’s high technical capacity.

In this situation, our research and development staff assists in developing modifications to our semiconductor packages to accommodate the continually evolving designs in the market.

The range of services offered by the Company includes: • Assembly and final testing of packages;

• Assembly and final testing of memory modules and cards;

• Qualification, reliability control and breakdown analysis services; • Packages, modules and cards design;

• Writing, correlation and adjustment of testing software programmes.

Production of photovoltaic cells and panels

Solsonica was established as the result of the EEMS Group’s strategy to diversify its products into a new high potential area such as the photovoltaic market.

Capitalising on its industrial background built up over 30 years of experience in the highly competitive, technology-intensive, semiconductors market, Solsonica set the ground in 2008 to stand out as a leading player in the PV industry on a national and worldwide basis.

The production of photovoltaic cells is done through processing silicon wafers. The modules are produced through the use of cells manufactured in the Cittaducale plant or else purchased on the open market.

The Group as a going concern

The present financial statements have been prepared from the perspective of the Group as a going concern. However, the Group is subject to market, financial and liquidity risks which give rise to a number of significant doubts which are fully described in the notes to the financial statements dealing with the application of the going-concern concept.

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Significant events in

2008

Semiconductors Division

Restructuring of production operations at the Cittaducale plant

The Board of Directors of EEMS Italia S.p.A. on 19 June 2008 examined the situation regarding production activities at the Italian operating facility also in the light of the overall trend in the memories market.

The persistence of the structural crisis affecting the worldwide memories market, the continual drop in average sales prices and the decision of our principal customer to cancel all orders from the Italian factory as from the third quarter of 2008 removed the economic basis for proceeding with activities in the memories division in Italy. On the other hand, the cost structure at the Asian subsidiaries allows us to maintain adequate margins although they are less profitable than in the past.

In consequence, the Board of Directors decided to concentrate activities at the Cittaducale (Rieti) plant on the manufacture of photovoltaic cells and panels run by the subsidiary Solsonica S.p.A. and accordingly decided to take the necessary steps, in accordance with the law, to close production in the memories sector at the plant. This decision entailed taking on obligations and made it necessary to provide for extraordinary restructuring costs which have been reflected in the Group financial statements at 31 December 2008.

On 5 August 2008 EEMS Italia S.p.A. ratified at the Labour Ministry an agreement with the unions for placing redundant employees under extraordinary redundancy arrangements and laying off under mobility arrangements about 119 employees in the sector within June 2010.

Photovoltaic Division

During 2008, production at the subsidiary Solsonica was boosted by the installation of the first assembly line for photovoltaic modules and a start was made on the sale of the first line of products, the Solsonica range 610 modules with ratings of between 200 and 240 watts.

Completion was also reached on the installation, preproduction and testing of the photovoltaic cell lines which went into production in the first quarter of 2009.

An agreement was signed in 2008 with a leading operator in the photovoltaic business. The agreement covers a total value of around 40 million euros. The first deliveries were made in July.

In October Solsonica S.p.A. made a further sales agreement with TerniEnergia, a company operating in the field of renewable energy sources which is among the leading players in Italy in the photovoltaic sector, for the sale of photovoltaic modules up to a maximum of 29 MW for the 2009-2011 triennium, with an obligation which has already been signed for a total amount of about 35 million euros.

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Comments on the Group’s financial position and results

Financial summary and indicators

(in thousands of euros) 2008 2007 2006

Total operating revenues 154,090 157,168 144,657 Operating result before depreciation and amortisation and

writeback/writedown of non-current assets 26,037 50,065 47,241 Operating result (45,091) 7,561 9,265 Net result for the year (35,164) 12,080 7,756

Total assets 274,742 279,372 256,851 Total liabilities 146,568 122,173 102,967 Equity 128,174 157,199 153,884

Cash flow from operating activities 30,570 26,835 37,508 Cash flow from financing activities 31,422 27,786 27,554 Cash flow per investing activities (56,792) (62,608) (102,948)

Number of shares 42,502,845 42,505,345 42,133,300 Number of employees 1,952 1,913 1,462 * Operating result before depreciation and amortisation and writeback/writedown of non-current assets

The EEMS Group results for year 2008 were heavily impacted by the effects of the worldwide economic and financial crisis which caused a significant reduction in demand for our products. One of our historical customers, Qimonda, incurred losses which brought it into insolvency. This situation led to indirect losses also for EEMS which had gradually to reduce its operations at the Cittaducale plant, and block production as far as semiconductor memories were concerned.

This decision led to significant restructuring costs although, to a significant extent, these have not yet entailed cash spending. They arose because we had to write down all the equipment used on producing memories and which, in the present market conditions, will have no future use, and also other marginal costs for the cancellation of supply contracts and costs relating to employees on the payroll. To complete the information, it should be stressed that the writedowns are based on estimates and it therefore cannot be excluded that there might be some future financial recoveries.

The industrial reconstruction interrupted a negative trend which had seen the parent company EEMS Italia S.p.A. incurring significant pre-tax losses during the past two years (about 6.6 million euros in 2006 and about 11.5 million euros in 2007). Already as from the fourth quarter of 2008 the parent company has essentially borne current costs on running its corporate activities with expected positive fallouts for its two types of business: the photovoltaic in Italy and semiconductors in Asia.

Qimonda’s being declared insolvent in January 2009 also made it necessary for reasons of prudence to write down certain assets (accounts receivable and, to a marginal extent, inventories) which were directly connected to the services provided to this customer. More specifically, the trade receivables from Qimonda were entirely written off on the basis of a prudent estimate of the recoverable amount

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satisfy the multi-year agreement with the customer Qimonda, the impairment test carried out led to a value adjustment of about 6.3 million euros.

For a correct reading of results it is therefore necessary to separate unusual components from ordinary ones. The following statement shows the main financial indicators before and after non-recurrent costs.

Statement showing reconciliation between financial position and results excluding

the effect of non-recurrent (pre-impairment) items

(in thousands of euros) Operating

result 2008 Operating result 2007 EBITDA* 2008 EBITDA* 2007 Amounts per consolidated financial statements (45,091) 7,561 26,037 50,065 Writedown of machinery and plant – Italy 23,889 --- --- ---

Writedown of machinery and plant – Asia 6,182 --- --- ---

Writedown of receivables and inventories 6,366 --- 6,366 ---

Restructuring costs – Italy 4,610 --- 4,610 ---

Other extraordinary costs – Italy 1,620 --- 1,620 ---

Pre-impairment amounts (2,424) 7,561 38,633 50,065

* Operating result before depreciation and amortisation and writeback/writedown of non-current assets

Total revenues and other operational income of the Group in 2008 was 154,090 thousand euros, down about 2% on 2007. The contribution made to Group revenues by the subsidiary Solsonica in its first year of activity was about 19.1 million euros even though production started only in April. However, the reduction in production in the memories sector in Italy performed up to July determined an overall reduction in turnover, as already indicated in the section dealing with significant events in the year ended 31 December 2008. The Group’s gross operating margin (EBITDA) in 2008 was affected by the writedown of receivables from the customer Qimonda for about 6.4 million euros. Costs provided for the resignation incentive programme following the cessation of activities at the Cittaducale plant amount to about 4.6 million euros. Lastly, costs related to the conversion of production space to house the photovoltaic business amount to about 1.6 million euros.

Before such extraordinary charges, EBITDA would have been about 38.6 million euros, down about 23% on the preceding year.

Before such extraordinary charges, the negative operating result (EBIT) of about 45 million euros would have been negative for about 2.4 million euros compared with a positive operating result of 7.5 million euros in 2007. It should be stated that, in addition to the above-mentioned extraordinary restructuring costs, the Group sustained writedowns for about 24 million euros at the Cittaducale plant and about 6 million euros at the Asian subsidiaries.

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2008 2007 Earnings indicators: ROE (24.6)% 7.8% ROI (16.3)% 2.8% ROS (29.3)% 4.8% Solvency indicators: Treasury margin 0.71 1.23 Solvency quotient 0.81 1.38

Financial data by business sector

Business sector

(in thousands of euros) 2008 2007 2008 2007 2008 2007 2008 2007

Semiconductors - Asia 129,460 108,103 41,204 43,799 38,057 71,670 1,630 1,493 Semiconductors - Italy 24,145 54,329 (8,594) 9,330 1,473 1,192 317 417 Photovoltaic 19,122 1 (2,141) (833) 14,053 5,677 5 3 Intercompany eliminations (18,637) (5,265) (4,432) (2,231) (6,939) (11,772) -

-Total - EEMS Group 154,090 157,168 26,037 50,065 46,644 66,767 1,952 1,913

Capital investment Number of employees Ebitda Revenues

* Operating result before depreciation and amortisation and writeback/writedown of non-current assets

Semiconductors – Asia

Billings made by the Asia semiconductors division (net of intercompany eliminations) rose during 2008 by about 10% over the preceding year, even though the improvement if measured in dollars would have been about 17%. In this connection, the euro/US$ exchange rate averaged 1.37 in 2007 whereas in 2008 it was 1.47, dropping about 7%.

The considerable level of capital investment during 2007 and 2008, also as a result of the launching of the second factory in China (EEMS Technology), had the effect of reducing margins which were hit by higher depreciation charges and the burden of operational leasing costs.

Photovoltaic

During 2008 the Company earned revenues for about 19.1 million euros. Margins obviously felt the effect of the costs for launching activities which will be recovered and absorbed with the expected growth in volumes.

Capital investment related mainly to the acquisition of machinery for the production of cells and modules.

With regard to the present number of employees, it should be remembered that the subsidiary Solsonica operates through employees temporarily seconded by the parent company. On the basis of agreements reached with the unions these persons will be progressively engaged directly by Solsonica S.p.A.

Semiconductors – Italy

The parent company’s result was marked by the above-mentioned restructuring costs relating to the cessation of production. This decision, as already referred to, became necessary as the result of the drastic fall in orders (affecting only the Italian plant) from the major customer involved. Revenues passed from about 54 million euros in 2007 to about 24 million euros in 2008.

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holdings in companies engaged in the semiconductors business (located entirely in Asia) and the photovoltaic business, the latter being handled by the Cittaducale plant which is owned by EEMS Italia.

Non-financial indicators

Customer satisfaction

Considering the present type of business and clientele, this indicator is not relevant.

Efficiency in production

Semiconductors: the Group’s productivity indicator, measured as the ratio of revenues to number of employees, is about 78.9 thousand euros ( 82.2 thousand euros in the preceding year);

Photovoltaic: the data is not significant.

Reconciliation between results for the year and equity as per the parent

company financial statements of EEMS Italia S.p.A and the consolidated

financial statements at 31 December 2008 and 2007

The following statement shows the reconciliation between the results for the year and equity as appearing in the parent company financial statements of EEMS Italia S.p.A and in the consolidated financial statements at 31 December 2008, pursuant to Consob Communication n° DEM/6064293 of 28 July 2006.

(in thousands of euros) Equity at

31.12.2008 Changes to equity in the year Results for year 2008 Equity at 31.12.2007 Equity and results for the year appearing in parent company

financial statements of EEMS Italia S.p.A. 106,924 582 (31,249) 137,592

Share capital contributed by minority interests - - - -

Results of consolidated subsidiaries 36,700 - 456 36,243

Elimination of effects of intercompany transactions* (11,035) - (4,371) (6,664) Reserve for difference on translation of foreign currency

financial statements (4,283) 5,689 - (9,972)

Other (132) (132) - -

Equity and results for the year appearing in

consolidated financial statements 128,174 6,139 (35,164) 157,199 * Relating mainly to the elimination of the effects of intercompany sales of machinery.

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Shares held by key managers

The table below gives the information to be disclosed on shares held at 31 December 2008 by key managers as required under article 79 of the regulation “Regolamento Emittenti”.

Name Position Investee

company Number of shares at start of year Number of shares acquired Number of shares sold Number of shares at end of year Vincenzo D’Antonio Managing Director - EEMS Italia S.P.A.

EEMS Italia SpA 2,504,700 - - 2,504,700

Blasetti Benedetto

Operations Manager - EEMS Italia S.P.A.

EEMS Italia SpA 358,750 - - 358,750

Francesco Fois

Administration and Finance Manager - EEMS Italia S.P.A.

EEMS Italia SpA 11,230 2,360 - 13,638

Albert Ng Aik Khoon

Managing Director - EEMS Asia Pte Ltd

EEMS Italia SpA 208,100 - 60,529 147,571

Yean Hung Chok

Operations Manager - EEMS Asia Pte Ltd

EEMS Italia SpA 135,515 - 74,491 61,024

Capital Expenditures

The table below gives information on the major items of investment in fixed and intangible assets made by the Company in the years ended 31 December 2008 and 2007.

(in thousands of euros) 2008 2007

Investment in: Fixed assets 46,644 66,767 Comprising: Leased assets 95 - Corporate-owned assets 46,549 66,767 Intangible assets 2,366 3,558 Total 49,010 70,325

During 2008 the Group made capital investment, net of intercompany sales mainly made by EEMS Italia to EEMS Suzhou which were eliminated on consolidation, of Euro 46,644 thousand, principally in the factories of the Asian subsidiaries. This amount also includes the expenditure necessary to starting up the photovoltaic business, for Euro 14,053 thousand.

Expenditure on intangible assets for the year ended 31 December 2008, amounting to Euro 2,366 thousand, relates mainly (for about Euro 2,308 thousand) to the rights obtained by Solsonica within the

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Vitelic Inc. which are both described in the notes to the consolidated financial statements.

Global semiconductors market

The semiconductors market is very sensitive to macroeconomic trends in that they are very closely related to widely consumed products such as, for example, computers, notebooks, cellular phones, TV sets, recorders, players and cars. It therefore follows that the economic and financial crisis is causing a reduction in consumption and hence a reduction in the end equipment which uses semiconductors. It is very difficult in the present economic crisis to estimate the impact this will have on the semiconductors industry. This time, market analysts do not have a general consensus and their forecasts show a notable range of oscillation: a reduction going from 10% to 20% for year 2009 with a possible inversion of the trend forecast by the more optimistic for the second half of 2009, and by the more cautious, for 2010.

One thing is certain and that is that the start of the year has been very difficult. Also European producers such as Infineon and Stm have taken significant action to contain costs, making just as significant temporary reductions in production capacity.

EEMS’s business developed partly in the Mix Signal segment with its own production in Singapore and partly in the DRAM sector with its factories located in China. The fact that EEMS focused in back-end production services (defined as OSAT – Outsourcing Service Assembly & Test) differentiates it from IDM businesses (Integrated Device Manufacturers) such as Stm and Infineon in that EEMS deals only with production services related to a part of the chain value.

Demand and price trends

In the specific sector of memories, the sequence of events has been historically very different from that for semiconductors, being marked by very intensive cycles of imbalance between supply and demand. The DRAM sector has for a long time been in a serious state of over-capacity which started as from the end of 2007 and has probably reached or is reaching a point of balance with demand just in these present months.

From the chart presented below it can be seen that there certainly has been an inversion of trend in the DRAM cycle, which will develop shortly into a situation where scarcity of supply will tend to increase prices. This situation will allow DRAM producers to reduce and subsequently eliminate their losses and again enter a profits stage.

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DRAM and NAND: Trend in supply compared with Trend in demand (source: Citi Research – Feb. 09)

In effect, in the following chart it can be seen that between the months of December and January there was a rebound in prices, albeit small, proving that the reductions in capacity and inventories are having their effect, being reflected in price recovery.

DDR2: Price trend (source: Dramexchange)

The proof that operators have taken all the necessary corrective action to reduce production capacity and align it to demand is also clear from the steep fall in capital spending which has passed rapidly from a peak of over 30 billion dollars in 2007 to slightly over 7 billion dollars forecast for 2009.

It is reasonable to assume in the light of the above that such capital investment will be almost exclusively dedicated to technological improvements rather than to further increases in capacity. This development would be consistent with what is forecast for the next demand and supply cycle (see the above DRAM over(under) supply chart) which in fact indicates that the coming cycle will be the longest and deepest recorded with regard to scarcity of demand.

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Investment (source: WSTS, SEC Company Data – Feb. 09)

Investment in technology will mainly be dedicated to the transition to 45-55 channel-size nanometres. Technology Roadmap (source: Company Data, compiled by CIR – Feb. 09)

This improved technology, which is already in place, will allow DRAM producers to achieve significant cost reductions, and will lead to a recovery in margins and the manufacture of more highly performant products at more competitive prices. It is reasonable to expect that there will be a volume increase which in turn will be absorbed by higher demand. Typically, demand expressed in bits is growing about 50% per year.

Technological change should provoke a significant increase in volumes as from 2009 up to 2012 for about 15.6% per year.

In absolute terms, volume is forecast to rise from 14.4 billion pieces in 2008 to 24.7 million pieces in 2012, up 72%.

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typically subdivided between IDM internal operations and a portion which is outsourced. This growth is forecast to continue in the future in that the IDMs will concentrate their investment mainly in their activities in the upstream area of the value chain, such as product planning and wafer processing technology.

Estimated deliveries 2007-2012 (source: Gartner, Samsung – Q3, 2008)

Global photovoltaic market

The increase in energy costs, the ever-growing attention being paid to environmental impact and the heavy dependence on foreign supplies are making it increasingly more necessary to find alternative sources to the traditional ones which, in the light of the above, do not appear to be able to answer the growing worldwide demand for electric power.

Among renewable sources, the photovoltaic solution seems to be the one with the best prospects for development. In effect, over recent years the photovoltaic industry, in terms of installed capacity at world level, has been growing at an average annual rate of over 30%.

Global cumulative PV capacity

0 1 2 3 4 5 6 7 8 9 10 Gw 1,428 1,762 2,201 2,795 3,847 5,167 6,770 9,162 2000 2001 2002 2003 2004 2005 2006 2007 CAGR 2000 – 2007: 30.4% Installed world capacity (GW)

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Future scenarios which take account, inter alia, of economic and industrial policies aimed at contrasting climate change and creating new development opportunities in industrialised nations, make it possible to foresee further growth in the photovoltaic industry over the coming years.

Cumulative capacity (GW) vs Market Value (B €) forecast up to 2030

0 100 200 300 400 500 600 700 800 900 1000 G W 0 50 100 150 200 250 B € Gw 9,2 21,6 211 912 B € 13 24 94 204 2007 2010 2020 2030

Source: Epia (European Photovoltaic Industry Association)

In Europe the photovoltaic market experienced enormous growth over recent years in terms of installed capacity. With regard to short-term prospects, growth should continue at a steady rate for countries such as Spain, France and Italy itself, which join Germany as drivers in the Old Continent. In addition, other countries bordering the Mediterranean are adopting incentive policies which should bring about further development in Europe.

Total capacity (GW) and market value (€ billion) up to 2030

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Source: EuPD Research – Italian chart (Translation key: Altri paesi – Other countries; Spagna – Spain; Installato annuo – Annual installed capacity; Accumulato – Cumulative; Capacità accumulata – Cumulative capacity)

Growing demand in the European market, which up to now has not been supported by a local production chain of adequate dimensions, has been satisfied by supplies coming from Asian producers, with the sole exception of Germany which over recent years has established itself as a significant producer in the photovoltaic sector.

Source: Navigant Consulting

This said, it is considered of the utmost importance that Europe develop a production capacity which can meet the demand in growth.

Among the industrialised countries, Italy is considered to be one with high potential in the developing market.

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Installed and cumulative capacity in Italy 2005-2008* (MW)

Source: EPIA, GSE * Figures updated to 1 November 2008

According to the reported data, at 1 November 2008 there were in operation over 10,000 new plants for a total capacity of 133 MW, nearly double that for the whole of 2007.

With the new incentive system (“Conto Energia”) going into full rhythm, increasing public appreciation of sustainable energy and the favourable level of solar radiation, the Italian market has become one of the most interesting for the development of photovoltaic products, creating the basis for the birth of a national photovoltaic manufacturing industry.

Research and development

Our research and development department is an important element in maintaining a close relationship with customers. The department, which operates at the Asian plants, not only continually develops new test packages and technologies to supply customers with increasingly competitive and efficient solutions, but also develops modifications to the existing packages in use to adapt them to the specific characteristics of chips which are constantly evolving.

The research and development department also provides a prototyping service to enable customers to integrate activities for the development of new chips and those relating to the packages themselves, thus permitting a general shortening in overall development periods and a higher level of reliability in the manufacture the final product.

Research and development costs incurred by the Group are wholly charged off to profit and loss in the period incurred. During the year ended 31 December 2008 R&D costs amounted to Euro 551 thousand. This amount does not include other costs not directly incurred by the R&D department but which relate to this activity. 4 5 5 9 70 133 22 26 31 36 45 115 248 0 50 100 150 200 250 300 2002 2003 2004 2005 2006 2007 2008*

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planned and developed: the Solsonica 610, 608 and 612. In addition, new manufacturing processes were finalised with particular attention being paid to output levels and the achievement of set quality targets. Studies are being carried out at present on alternative technologies to the use of silicon, such as CIGS and Mg-Si, to identify potential business development areas.

Management and Control Organisational Model

pursuant to Legislative Decree n° 231/01

The Management and Control Organisational Model was introduced in February 2006 in accordance with Legislative Decree n° 231/01, which also included the regulatory changes introduced by Legislative Decree n° 61/102.

The Management and Control Organisational Model adopted consists of a body of rules, tools and modes of conduct aimed at equipping the Company with a system reasonably suited to identifying and preventing serious criminal behaviour as defined by Legislative Decree n° 231/2001, whether implemented by the Company itself or by parties under its management and supervision. The types of offences recently introduced are in the course of regulatory definition. The Supervisory Body, established in conformity with the regulatory requirements, implements the action plan for monitoring and evaluating the adequacy of the Management and Control Organisational Model adopted. It meets periodically to evaluate the checks performed and to examine the information flows transmitted by the corporate departments.

Report on corporate governance and ownership

Information on the system of corporate governance, company ownership and adherence to the codes of conduct is available on the Company’s Internet site: www.eems.com.

Treatment of personal data

Article 34 of Legislative Decree n° 196 of 30 June 2003 provides that, in the case of the electronic processing of personal data, specific security measures must be adopted, according to what is set forth in the technical regulations set out in Appendix B of the law, which include, under letter g, the maintenance of an updated Security Planning Document (SPD).

The SPD is a document in which, on the basis of a study made of risks, job distributions and responsibilities within the departments handling data processing, a description is given of the technical and organisational measures which have been taken to ensure, as required by law, that such data is being protected from the viewpoint of correct maintenance and handling.

In compliance with Legislative Decree n° 196/03, EEMS Italia has revised and updated the SPD that had previously been prepared pursuant to the law.

Related parties and intercompany transactions

The Group has no dealings with related parties other than subsidiaries. Intercompany transactions are governed by market conditions.

A

typical and/or

unusual operations

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Financial risk management

EEMS is exposed to financial risk connected with its operations, particularly in the following areas: - market risk (interest rate risk, foreign currency risk and price risk)

- liquidity risk - credit risk

- cash flow variation risk

The Group monitors in a timely manner each of the abovementioned financial risks to minimize their impact, also through the use of hedge derivative instruments in the case of foreign exchange risks. The responsibility for setting the guidelines for Group policy in terms of risk management policies and the creation a risk management system for the Group belongs to the Board of Directors. The Finance and Control Department is in charge of the application and monitoring of these guidelines.

For further information see Note 28 –Financial risk management.

Other risks and uncertainties

Taking account of the potential causes that can give rise to other risks and uncertainties, such situations can be distinguished between those from internal and external sources.

TYPE COMMENT AND PREVENTIVE ACTION

INTERNAL

Effectiveness/efficiency of processes

Immaterial risk

- The Group operates on the basis of processes which are technologically complex but there are no material uncertainties.

Delegation - The delegation system is to a fair extent concentrated in a limited number of key persons.

- Corporate management has an average experience in the sector of over 20 years. Should the professional relationship of a number of management members turn out to be lacking at the same time, this could have a negative effect on Group results.

Human resources Immaterial risk

- Staff competence is appropriate..

- Taking account of the nature of our operations, staff training is effected through on-the-job-training.

- The parent company is an important corporate institution in the geographical area where it is located.

- The work climate and relations with the unions are not hostile, neither in Italy nor in Asia

Integrity Immaterial risk

- Cases of fraud are rare and of small amount Security Immaterial risk

- The Group adopts security standards which are appropriate and consistent with regulations in the countries where it operates.

- The Company protects its assets through theft and illegal entry prevention systems, particularly for assets with a durable life and inventories.

Information Immaterial risk

- Information used to support strategic and operational decisions, although sometimes compiled manually, is available, complete, correct, reliable and timely.

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customers.

EXTERNAL

Market - There exists the risk of a reduction in the demand for outsourced services

(Semiconductors)

- Risk caused by technological innovation. The Group operates on the basis of technically complex processes which, in the case of technological innovation, entail significant financial investment.

Regulations Immaterial risk

No significant uncertainties are expected from potential modifications in Italian or foreign regulations such as to pose a threat to the business.

Catastrophes Immaterial risk

No concrete risks of catastrophe have been identified which could affect the business. Competition - In the short (and partly also in the medium) term, there is a marginal risk of possible

entry by new competitors or the creation of competitive practices by competitors which could have a negative effect on our market share (Semiconductors).

- There is a concrete risk that new competitors may enter the market so as to negatively affect our expected results, given the development prospects for the photovoltaic sector (Photovoltaic).

Political and social context - For the photovoltaic business, this risk is not considered to be material (Photovoltaic)

Outlook for the business

Memories

With due caution, as should be applied in an exceedingly turbulent market, the DRAM memories business might have reached its lowest point and could be ready for a price rebound, since production capacity has been heavily reduced through the voluntary decisions taken by all manufacturers in the sector or by a forced decision such as was the case of Qimonda which has practically abandoned all production given its state of insolvency.

In addition, the intensive clearing out of inventories effected by memories producers over recent months with the temporary closure of plants can trigger recovery in plants remaining in existence as from the second quarter of this year or the second half of 2009.

The singular nature of the consequences leading to Qimonda’s default should be noted. On the one hand, this caused significant losses to EEMS in its 2008 financial statements, but on the other, it now places the EEMS Group in the position of having significant unutilised production capacity which can absorb the expected volumes growth without having to make further investment, if not that necessary to adapt technology to the migration towards DDR3 memories. This could bring about a significant competitive edge over other operators who before setting up such production capacity will require time and will have to find the necessary financial resources.

This opportunity can have a positive fall-out for the EEMS Group as soon as the market trend has turned around (the first signals are noticeable), possibly already during the course of 2009.

In addition EEMS, having closed the semiconductors activities in advance of the present crisis, now finds itself operating in a geographical area (China) where it can exploit, better than others, a very competitive structure.

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Photovoltaic business

With regard to the photovoltaic business, which although it is at the moment influenced by a lack of credit available to finance photovoltaic plant projects, the Company has installed the capacity necessary for cells and modules to sustain the business in 2009, which is forecast to grow over the preceding year. The installed production capacity for cells is 30 MWp and completion is being reached on expanding production capacity for 40 MWp modules. The Company intends to improve its market penetration and to do this it is going to pursue strategic alliances, as well as engaging in own initiatives, at the downstream end of the production chain.

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EEMS Italia S.p.A. – Operations and Performance

Summary of financial position and results

Selected parent company income statement data

(in thousands of euros) 2008 % 2007 %

Total operating revenues 24,145 100.0 54,329 100.0 Operating result before depreciation and amortisation and

writeback/writedown of non-current assets (8,590) (35.6) 9,334 17.2 Operating result (39,790) (164.8) (9,316) (17.1) Result before taxes (41,601) (172.3) (11,471) (21.1) Net result for the year (31,249) (129.4) (6,741) (12.4) Portion pertaining to the Group (31,249) (129.4) (6,741) (12.4) Portion pertaining to minority interests - - -

-Number of shareholders 42,502,845 42,502,345

Number of employees - Italy 317 417

Selected parent company balance sheet data

(in thousands of euros) 31.12.2008 31.12.2007

TOTAL NON-CURRENT ASSETS 157,703 163,009 TOTAL CURRENT ASSETS 25,214 28,048 ASSETS INTENDED FOR DECOMMISSION - 2,418 TOTAL ASSETS 182,916 193,475 TOTAL EQUITY 106,924 137,592 TOTAL NON-CURRENT LIABILITIES 48,413 43,573 TOTAL CURRENT LIABILITIES 27,579 12,310 TOTAL LIABILITIES 75,992 55,883 TOTAL LIABILITIES AND EQUITY 182,916 193,475 Summary parent company cash flow data

Cash flow from operational activities (2,768) 747

Cash flow from investment activities (17,708) (31,342)

Cash flow from financial activities 26,030 12,600

Effect on cash of exchange fluctuations (119) (14)

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Certain financial indicators are shown below: 2008 2007 Earnings indices ROE (25.6)% (4.8)% ROI (21.1)% (4.7)% ROS NS (18.3)% Solvency indices Treasury margin 0.91 2.13 Solvency quotient 0.91 2.28

Major shareholders

Ordinary shares number 42,502,345. Shareholders possessing more than 2% thereof at 31 December 2008 are as follows:

- Mallett Sarl (in liquidation): 42.65% - Vincenzo D’Antonio: 5.89%

Proposal for the approval of the 2008 financial statements of EEMS Italia

S.p.A. and allocation of the results for the year

To the Shareholders

We thank you for the trust you have placed in us and invite you to approve the parent company and consolidated financial statements at 31 December 2008 as submitted to you, proposing that the loss for the year of Euro 31,249,240 be set against profits brought forward.

13 March 2009

For the Board of Directors The Chairman

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Consolidated Financial Statements of the EEMS Group

at 31 December 2008

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CONSOLIDATED INCOME STATEMENT

Consolidated Income Statement

Revenues 6 153,638 155,870

Other operating income 7 452 1,298 Total operating revenues 154,090 157,168 Raw materials and consumable stores used 8 55,526 48,806 - including: non-recurring items 314

-Services 9 31,416 22,811

- including: non-recurring items 1,620

-Staff costs 10 33,215 32,518

- including: non-recurring items 4,610 -Other operating costs 11 7,896 2,968 - including: non-recurring items 6,052 -Operating result before depreciation and

amortisation and writebacks/writedowns of

non-current assets 26,037 50,065

Depreciation and amortisation 15.16 41,057 42,344 (Writebacks)/Writedowns 15.16 30,071 160 - including: non-recurring items 23,889

-Operating result (45,091) 7,561

Financial income 12 2,668 1,137 Financial charges 12 (6,138) (5,231) Result before taxes (48,561) 3,467 Taxes for the year 13 (13,397) (8,613) Net result for the year (35,164) 12,080 Portion pertaining to the Group (35,164) 12,080 Portion pertaining to minority interests -

-Profit (loss) per share for Group 14 (0.827) 0.285

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CONSOLIDATED BALANCE SHEET

Consolidated Balance Sheet

(in thousands of euros) 31.12.2008 31.12.2007

Non-current assets:

Intangible assets: 15

Goodwill 11,346 11,202

Definite-life intangible assets 5,133 3,447

Fixed assets: 16

Property, plant and equipment - corporate owned 167,259 176,279 Assets held under financial leases 5,201 11,544

Other non-current assets:

Investments -

-Financial accounts receivable - -Miscellaneous receivables and other non-current assets 17 9,488 3,723

Deferred tax assets 13,950

-TOTAL NON-CURRENT ASSETS 212,377 206,195 Current assets:

Inventories 8 8,010 7,972

Trade receivables 18 12,458 32,458

Tax credits 19 5,272 1,697

Current financial assets - 11

Cash and cash equivalents 20 34,199 28,166

Other current assets 17 2,426 2,873

TOTAL CURRENT ASSETS 62,365 73,177 TOTAL ASSETS 274,742 279,372

Equity: 21

Equity pertaining to parent company 128,174 157,199 Equity pertaining to minority interests -

-TOTAL EQUITY 128,174 157,199 Non-current liabilities:

Non-current financial liabilities 22 61,069 59,485 Staff termination pay and other provisions 10 4,895 8,152 Deferred tax liabilities 13 - 1,188 Provision for future risks and charges 23 3,513 328 Miscellaneous payables and other non-current liabilities 23 1,708

-TOTAL NON-CURRENT LIABILITIES 71,185 69,153 Current liabilities:

Current financial liabilities 22 48,354 15,090

Trade payables 24 18,742 31,205

Taxes payable 25 468 579

Other current liabilities 26 7,819 6,146

TOTAL CURRENT LIABILITIES 75,383 53,020 TOTAL LIABILITIES 146,568 122,173 TOTAL LIABILITIES AND EQUITY 274,742 279,372

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CONSOLIDATED STATEMENT OF CASH FLOWS

Consolidated Statement off Cash Flows

Results for the year (35,164) 12,080

Adjustments to reconcile the results for the year to cash flow from operations:

Depreciation and amortisation 15,16 41,057 42,344

Provision for staff termination pay 10 1,104 1,482

Interest expense on staff termination pay actuarial calculation 10 293 366

Other non-cash items (860) 919

Provision for future risks and charges 3,191 124

(Writeback)/writedown of property, plant and equipment 15,16 30,071 160

Deferred taxes 13 (14,707) (9,361)

Net gains on sale of property, plant and equipment (200) (471)

Staff termination pay disbursed 10 (4,655) (1,623)

Change in current assets:

Receivables 18,857 (14,251)

Inventories 408 (1,774)

Payables to suppliers excluding suppliers of investment assets (4,812) 4,022

Taxes payable (30) (529)

Other flows (3,983) (6,653)

Cash flow from operational activities 30,570 26,835

Proceeds from sale of property, plant and equipment 402 1,830

Purchases of property, plant and equipment (56,630) (62,645)

Purchases of intangible assets (32) (1,279)

Change in guarantee deposits (272) (514)

Cash flow from investment activities (56,532) (62,608)

New bank loans 54,871 54,093

Bank loan refunds (19,846) (21,156)

Refund of principal on leased machinery arrangements (3,603) (5,609)

Share capital increase 21 - 458

Cash flow from financial activities 31,422 27,786

Effect on cash of exchange fluctuations 573 (387)

Increase (decrease) in cash and cash equivalents 6,033 (8,374)

Cash and cash equivalents at beginning of year 28,166 36,540

Cash and cash equivalents at end of year 20 34,199 28,166

Additional information:

Taxes paid 1,267 993

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Consolidated Statement of Changes in Equity for Year ended 31 December 2007

(in thousands of euros) Share

capital Share premium account Legal reserve FTA reserve Other reserves Profits brought forward Translation difference reserve Net profit (loss) for the year Total equity pertaining to the Group Total equity pertaining to minority interests Total Balance at 1/1/2007 21,067 73,996 3,165 1,125 (2,433) 49,758 (199) 7,405 153,884 - 153,884 Allocation of 2006 net profit - - - - - 7,405 - (7,405) - - - Translation difference reserve - - - (9,511) - (9,511) - (9,511)

Effect of reduction in tax rates on share issue costs (Note 21)

- - - - (157) - - - (157) - (157)

Exercise of warrants (Note

21) 184 274 - - - 458 - 458

Change in IAS reserves

(Note 21) - - - - 46 - - - 46 - 46

Other equity instruments

(Note 21) - - - - 399 - - - 399 - 399

Results for the year - - - - - - - 12,080 12,080 - 12,080 Balance at 31/12/2007 21,251 74,270 3,165 1,125 (2,145) 57,163 (9,710) 12,080 157,199 - 157,199

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Consolidated Statement of Changes in Equity for Year ended 31 December 2008

(in thousands of euros) Share

capital Share premium account Legal reserve FTA reserve Other reserves Profits brought forward Translation difference reserve Net profit (loss) for the year Total equity pertaining to the Group Total equity pertaining to minority interests Total Balance at 1/1/2008 21,251 74,270 3,165 1,125 (2,145) 57,163 (9,710) 12,080 157,199 - 157,199 Allocation of 2007 net profit - - - - - 12,080 - (12,080) - - - Translation difference reserve - - - 5,689 - 5,689 - 5,689

Change in IAS reserves

(Note 21) - - - - (132) - - - (132) - (132)

Other equity instruments

(Note 21) - - - - 582 - - - 582 - 582

Results for the year - - - - - - - (35,164) (35,164) - (35,164) Balance at 31/12/2008 21,251 74,270 3,165 1,125 (1,695) 69,243 (4,020) (35,164) 128,174 - 128,174

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Notes to the Consolidated Financial Statements

1. Form and structure of the consolidated financial statements

and consolidation area

General information

The parent company EEMS Italia S.p.A. is an Italian company whose shares are listed on the Mercato Telematico Azionario – Segmento STAR managed by Borsa Italiana.

The main geographical sectors of activity in which the EEMS Group operates are described in the section dealing with Segment Reporting.

Compliance with IFRS

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (subsequently referred to also as ‘‘IFRS’’) adopted by the European Union and in accordance with the regulations giving effect to article 9 of Legislative Decree n° 38/2005.

The consolidated financial statements were authorised for publication on 13 March 2009. The accounting standards applied are the following:

International Financial Reporting Standards (IFRS)

IFRS 2 Share-based payments IFRS 3 Business combinations

IFRS 7 Financial instruments – disclosures IFRS 8 Operating segments

IAS 1 Presentation of financial statements IAS 2 Inventories

IAS 7 Statement of Cash Flows

IAS 8 Accounting policies, changes in accounting estimates and errors IAS 10 Events after the reporting period

IAS 12 Income taxes

IAS 16 Property, plant and equipment IAS 17 Leases

IAS 18 Revenue IAS 12 Income taxes IAS 19 Employee benefits

IAS 21 Changes in foreign exchange rates IAS 23 Borrowing costs

IAS 24 Related party disclosures

IAS 27 Consolidated and separate financial statements IAS 32 Financial instruments presentation and disclosure IAS 33 Earnings per share

IAS 36 Impairment of assets

IAS 37 Provisions, contingent liabilities and contingent assets IAS 38 Intangible assets

IAS 39 Financial instruments recognition and measurement IFRIC 11 Group and Treasury Share Transactions

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The following standards have not been applied in the consolidated financial statements since the relative conditions are not present:

IFRS 1 First-time adoption of international financial reporting standards IFRS 4 Insurance contracts

IFRS 5 Non-current assets held for sale and discontinued operations IFRS 6 Exploration for and evaluation of mineral resources

IAS 11 Construction contracts IAS 14 Segment reporting IAS 20 Government grants IAS 26 Retirement benefit plans IAS 28 Investments in associates

IAS 29 Financial reporting in hyperinflationary economies

IAS 30 Disclosures in financial statements of banks and similar financial institutions IAS 31 Interests in joint ventures

IAS 34 Interim financial reporting IAS 40 Investment property IAS 41 Agriculture

The Company has adopted in advance IFRS 8 – Operating segments, replacing IAS 14.

The new IFRSs and IFRICs adopted by the EU and in force as from 1 January 2009 are reported hereunder, with brief descriptions. The adoption of these revised standards and interpretations has had no effect on the consolidated financial statements.

IFRIC 14 – IAS 19 – Assets for defined employee benefit plans and minimum coverage requirements

Amendment to IAS 39 – Financial instruments recognition and measurement and to IFRS 7 – Financial instruments – disclosures which allows the reclassification, in particular circumstances, of certain financial assets other than derivatives from the “'fair value through profit or loss” category. These amendments also allow the transfer of loans and receivables from the “held for sale” category to the “held to maturity” category if the entity is capable of holding such instruments for a determined future period. The amendment applies as from 1 July 2008. Its adoption however has had no effect on the present consolidated financial statements since the Company has made none of the reclassifications permitted by it.

IFRSs and IFRICs to be adopted after 31 December 2008

The International Accounting Standards Board and IFRIC issued during the year further standards and interpretations which will go into effect in periods subsequent to the date of the present consolidated financial statements (in the case of IFRIC 12 mentioned above, depending on EU adoption). EEMS has not adopted any of these standards and interpretations in advance. The main effects expected on their application are described below.

IAS 23 – Borrowing costs

In March 2007 an amended version of IAS 23 – Borrowing costs was issued which will become effective for years starting on 1 January 2009 or thereafter. The standard was amended to require the capitalisation of borrowing costs when such costs directly relate to a qualifying asset. A qualifying asset is one that takes a substantial period of time to get ready for use or sale. In accordance with the transitory provisions for this standard, the Group will apply it to future situations. Accordingly, borrowing costs will be capitalised on qualifying assets starting from dates subsequent to 1 January

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2009. No change will be made for borrowing costs incurred up to that date and which have been charged off in the statement of income.

IFRIC 12 – Service concession arrangements

Interpretation IFRIC 12 was issued in November 2006 and will be effective for annual periods beginning subsequent to the year of approval by the EU. This interpretation applies to operators who provide services under concession and establishes the accounting treatment for obligations taken on and rights received under a concession agreement. The Company is not an operator in this sector and accordingly this interpretation will not affect its financial statements.

In addition to IFRIC 12, there are other standards and interpretations (or amendments thereto) where the endorsement process is still under way and whose effects, although they have not yet been evaluated in detail, would not appear to have an effect for the Group.

IFRIC 13 – Customer loyalty programmes

Interpretation IFRIC 13 was issued in June 2007 and will be effective for annual periods beginning on or after 1 July 2008. This interpretation requires that award credits to customers be accounted for as a separate component of the sale transaction in which they were granted and accordingly a portion of the fair value of the proceeds received be allocated to the awards and amortised over the periods in which the credits/awards are collected. The Company does not expect that this interpretation will have an effect on its financial statements in that at present there are no fidelity arrangements in place.

IFRIC 14 – IAS 19 – Defined benefit assets, minimum funding requirements and interaction

Interpretation IFRIC 14 was issued in July 2007 and will be effective for annual periods beginning on or after 1 July 2008. The interpretation provides general guidance on how to assess the limit in IAS 19 – Employee Benefits on the amount of the surplus that can be recognised as an asset. EEMS does not expect that this interpretation will have an impact on the Group’s financial position or results in that the only defined benefit plan is in deficit (staff termination pay accrued as at 31 December 2006).

IFRS 2 – Share-based payments – Vesting conditions and cancellations

This amendment to IFRS 2 – Vesting conditions and cancellations was published in January 2008 and will be effective as from the first year following 1 January 2009. The standard narrows the definition of vesting conditions to one condition which includes an explicit or constructive obligation to furnish a service. Any other condition is a non-vesting condition and must be taken into consideration when determining the fair value of the instrument representing the capital assigned.

Where the award does not vest as a consequence of the fact that it does not rank as a non-vesting condition which is under the control of the entity or the counterparty, it must be accounted for as a cancellation.

The Company has not engaged in transactions with share-based payments based on non-vesting conditions and, in consequence, no significant effects are expected from the recording of option-based payment agreements.

IFRS 3R – Business combinations and IAS 27/R – Consolidated and separate financial statements

The two revised standards were ratified and adopted in January 2008 and are applicable in the first annual period subsequent to 1 July 2009. IFRS 3R introduces a number of changes regarding the accounting for business combinations which will affect the amount of goodwill to be recorded, results for the year in which the acquisition takes place and results for subsequent years. IAS 27R requires that a change in the share held in a subsidiary be accounted for as a capital transaction. Consequently, this change will have no effect on goodwill and will not give rise to a gain or a loss. In addition, the revised standards introduce changes in accounting for a loss incurred by a subsidiary as well as for the loss of

Financial Risk Management EEMS

Consolidated and Parent Company Financial Statements

at 31 December 2008 of EEMS Italia

Contents

EEMS Group – Operations and Performance

Group structure

Parent Company Board of Directors

Board of Statutory Auditors

Independent Auditors

Nature of the business and activities

The Group as a going concern

Significant events in

2008

Semiconductors Division

Restructuring of production operations at the Cittaducale plant

Photovoltaic Division

Comments on the Group’s financial position and results

Financial summary and indicators

Statement showing reconciliation between financial position and results excluding

the effect of non-recurrent (pre-impairment) items

Financial data by business sector

Semiconductors – Asia

Photovoltaic

Semiconductors – Italy

Non-financial indicators

Reconciliation between results for the year and equity as per the parent

company financial statements of EEMS Italia S.p.A and the consolidated

financial statements at 31 December 2008 and 2007

Shares held by key managers

Capital Expenditures

Global semiconductors market

Global photovoltaic market

Research and development

Management and Control Organisational Model

pursuant to Legislative Decree n° 231/01

Report on corporate governance and ownership

Treatment of personal data

Related parties and intercompany transactions

A

typical and/or

unusual operations

Financial risk management

Other risks and uncertainties

Outlook for the business

EEMS Italia S.p.A. – Operations and Performance

Summary of financial position and results

Major shareholders

Proposal for the approval of the 2008 financial statements of EEMS Italia

S.p.A. and allocation of the results for the year

Consolidated Financial Statements of the EEMS Group

at 31 December 2008

Consolidated Income Statement

Consolidated Balance Sheet

Consolidated Statement off Cash Flows

Consolidated Statement of Changes in Equity for Year ended 31 December 2007

Consolidated Statement of Changes in Equity for Year ended 31 December 2008

Notes to the Consolidated Financial Statements

1. Form and structure of the consolidated financial statements

and consolidation area