At a meeting today in Milan, the Piaggio & C. S.p.A. Board of Directors examined and approved the Group 2008 half-year figures.

At a particularly difficult time on the international market, the focus of the Piaggio Group is on improving efficiency by maintaining strong cash flow. This has enabled it to counter successfully the rise in raw materials costs by diversifying its procurement sources without changing its sales strategy, opting to maintain a premium price profile for its product offer. The increase in depreciation and amortisation as a result of increased investment for development of new models and engines was offset, at net profit level, through recognition of deferred tax assets.

In the first half of 2008, the Piaggio Group sold a total of 372,700 vehicles worldwide, compared with 395,800 vehicles in the year-earlier period. Consolidated net sales in the first half of 2008 amounted to € 900.3 million, a decrease of 7% from € 968.6 million in the year-earlier period. The figure reflected the negative impact for approximately € 19 million of the appreciation of the euro against the other currencies (in particular, dollar, pound and Indian rupee).

The half-year industrial gross margin was € 272.4 million, compared with € 292.9 million in the year-earlier period. The return on revenues improved (to 30.3% from 30.2%) despite the rising cost of raw materials, confirming the effectiveness of the Group strategies to improve productivity.

The Piaggio Group posted a half-year profit before tax of € 63.9 million (-28% YoY) and net profit of € 47.3 million (-8.2% YoY), after tax of € 16.6 million computed on the expected full-year mean tax rate, lower than the rate applied in 2007, partly as the result of recognition of deferred tax assets. Consolidated net debt increased from € 269.8 million at 31 December 2007 to € 326.9 million at 30 June 2008. The € 57.1 million increase reflects the cash settlement on the Piaggio 2004-2009 warrants for a total amount of 64.2 million, the dividend payout of € 23.3 million, and share buybacks (€ 2.9 million in the first half of 2008); these outlays were offset by the positive trend in cash flows from operations. Shareholders' equity at 30 June 2008 was € 427.7 million, compared with € 471.4 million at 31 December 2007. The reduction arose as a result of dividend payouts and the cash settlement on Aprilia financial instruments.

On 3 July 2008 the Piaggio & C. S.p.A. 2004-2009 warrants and the EMH financial instruments were settled in cash. On 7 July 2008 the company completed its buy-back of 10,000,000 ordinary shares, representing 2.52% of share capital, to service the incentives and loyalty plan for Piaggio Group top management approved by the Shareholders' Meeting of 7 May 2007 pursuant to art. 114-bis of Legislative Decree 58/1998. During July, the parent company continued to buy back shares in connection with the buy-back approved by the Shareholders' Meeting of 24 June 2008. At 28 July 2008 it held 15,871,188 own shares, with an average purchase price of € 2.3556.

In line with the first half, management will focus in particular on raising productivity and containing costs. With regard to sales, the Group confirms its expectations of substantial growth outside Europe and normalisation of seasonal trends in Europe.

Piaggio & C. S.p.A. reported 2008 half-year net sales of € 719.1 million, EBITDA of € 99.6 million and net profit of € 41.3 million.

The Boards of Directors of Piaggio & C. S.p.A. and its wholly owned subsidiary Moto Guzzi S.p.A. have approved the Plan for the Upstream Merger of Moto Guzzi into and with Piaggio. The final decisions regarding the merger will be approved by the two companies’ Boards of Directors rather than by an Extraordinary Shareholders’ Meeting, as allowed by art. 2505, paragraph 2, of the Italian Civil Code and by the by-laws of both companies. The merger will be implemented by means of the so-called ‘simplified procedure’, under which the directors are exempted from drafting the report ex art. 2501 quinquies of the Italian Civil Code and from the obligation of presenting a report by independent experts ex art. 2501 sexies c.c., by virtue of the fact that Moto Guzzi is a wholly owned subsidiary of Piaggio.

The plan for the upstream merger of Moto Guzzi into and with Piaggio drafted jointly by the two companies in question and the required accounting documents (merger balance sheet, financial statements for financial years 2005, 2006, 2007) will be available to the public at the headquarters of the two companies involved in the merger and at the offices of Borsa Italiana S.p.A..

Piaggio consolidates Moto Guzzi on a line-by-line basis, and the market therefore has access to significant data and information, including accounting information, concerning the wholly owned company due to be merged. The Issuer believes that the planned merger presents no particular risks or uncertainties that could have a material impact on Piaggio operations. Consequently, given the type of transaction (upstream merger of a wholly owned company into and with the controlling company), the Issuer provides appropriate disclosures on the transaction in question in this statement and states that it does not plan to publish the information document as per art.70, paragraph 5, subhead b) of Consob regulation 11971/1999 and subsequent amendments.

Purpose of the merger