sample annual report (financial statements of a fictitious real estate company)

1

Year 2 Annual Report

Ferrari Real Estate Company

Year TWO F E R R A R I C O M P A N Y

Always Driven

2



The Company continuously move in synergy to be able to serve our customers

needs. Through the diverse offerings of the Ferrari Company, we remain deeply

committed to enhancing people’s overall quality of life.

.

38.13%Total Asset Growth

28 % Capital Investment Growth

Three Buildings built in Year 2

3



Table of Contents

CEO letter 1

President’s Report 2

Financial Highlights 3

Financial Statements

Statement of Financial Performance 4

Statement of Financial Position 5

Statement of Changes in Equity 6

Statement of Cash Flows 7

Notes to Financial Statements 8

Certification of Financial Statements 16

Contact Information 17

1



Letter from the CEO

The Ferrari Company continues to be a

vibrant, viable, satisfying workplace, an

organization truly committed to delivering the

highest quality professional services to its clients

and customers, a business respected within the

community for its productivity, performance and

innovation – a business driven by results, whose

standards of practice are ethically and morally

rooted.

Strength through Optimism

Like many real estate companies, we at the

Ferrari Company were prudently optimistic about

prospects in Year Two. Thankfully, this positive

outlook was reflected in the performance of the

company.

Basking in a more favorable business

environment, we were placed in a prime position

to seize new opportunities for growth. We

focused on acquiring lands through trading from

Hat Spring Company and extend our reach to

better serve existing and prospective clients.

We strengthened our efforts through

transforming our properties to high quality

developments by erecting three buildings in New

York, Tennessee and St. James Place. This

increases returns enabling us to expand market

breath and depth and maintain the necessary

profitability to support the efforts of further

development.

In the second year, we achieved our

objective of remaining a dominant force in our

industry, of continually reforming Ferrari

Company into one of the dominant Real Estate

firms, consistently expanding our market share;

our market breadth and depth; increasing

diversity in our client base; increasing our

revenues; re-investing in the personal growth of

our personnel,

Acquiring New York, Tennessee and St.

James Place enabled us to remain a dominant

force in the industry. Revenues had a multiple

increase from M14 to M70 from just developing

only one building. Nevertheless, lack of inflows

from these developments can be traced from the

period the construction was finished. Since the

company has completed the structures in the

later months of the second year, revenues are

optimistically expected to flow in the third year.

What makes us alive in the world of real

estate is not luck but our strategy. It is our intent

and commitment to develop a project,

investment, asset-specific or portfolio responsive,

performance-oriented plan by choosing

cautiously the right properties to be developed.

We believe that the real goals and

aspirations of our clients, regardless of size,

complexity or compensation, are purely and

simply our sole responsibility. In every decision

and recommendation we make, and in every

action we take, the best interests of the client

must be paramount. It is on behalf of the clients

and the real property challenges and the assets

that the clients have entrusted to us that we focus

our every effort, our professional energy. We will

practice our profession and carry out our duties in

a manner to meet or exceed every professional

standard of practice.

Renewed Confidence towards Progress

With a great cash balance on hand,

robust development in the third year is

forecasted. Ferrari Company had decided to build

up a strong foundation through focusing in the

expansion of a single real estate monopoly

before diversifying. The orange monopoly is our

priority for the upcoming years to increase our

revenues and to consistently expand our market

share.

We at Ferrari, remain undeterred in

fulfilling our vision to be the best Real Estate

Company for all our shareholders. Buoyed by

sustained business confidence, we aim to

enhance and develop our properties further. We

are committed to transform every property to high

quality developments that create superior value

to our customers and for our shareholders. Every

Ferrari Land project carries with it, the reputation

of having the highest standards of quality in

service. That is, the Ferrari Land Brand.

Ty M. Bollinger

CEO

A sharp contrast to the year it

emerged, the second year provided an ideal

environment for economic growth. While it

witnessed a road to real estate development

with trading-off properties posting lackluster

growth and emerging markets registering

robust progress, the year was nevertheless

welcomed with much optimism by companies

and individuals around the world.

2



President’s Report

The economy in the second year has

been erratic due to investment spending and

development of properties by all companies.

The Ferrari Company has improved all its

effort to maintain the stability and resiliency

of the real estate system.

Against this backdrop, Ferrari’s net

income decreased by 25.77% to M 388.80,

from M 523.80 in year one. This resulted in

the Return on Average Equity of 16%.

We ended the year with M 2,875.80

billion in resources, 38.13% higher than the

same period last year. This was on the back

of an investment of 400 to other companies

and buildings with a total cost of M 282.

Riding the positive growth of the economy,

our lands rose 15.22% to 1060 from 920 of

the previous year. We strengthened our

capital through a 420 investment from other

companies, though coupled with a

decreased earnings growth this year, total

equity reached M 2,832.60 by year-end, a

40% increase in equity.

Total revenues grew 3.56% to M 756.00

from M 730 in the previous year.

Nevertheless, the weakness in net interest

income was caused by an increase in rental

expenses, miscellaneous expenses and

depreciation expense. The total expense

had an erratic increase of 119% to 324.00

from 148.00 of the previous year. This

erratic experience has shaken the company,

pulling down the company’s net income for

the second year.

Net cash outflow was M 28.20 leading

to a 2.43% decrease in ending cash

balance, from M 1162 to M 1133.80. Net

cash flows provided by operating activities

decreased by 32.68%; for investing

activities, net cash outflows decreased by

8.69%; and cash flow from financing

activities totalled M 420.

We opened the orange group lands the

first monopoly built with three buildings

(houses), geared towards servicing the

preferential requirements of our companies,

as well as take advantage of the increase in

rental revenues and the trade and

investment opportunities with other

companies.

Ferrari Company maintained its focus

on the development of properties. We

decided to dispose of undeveloped

properties, on the back of the upbeat

sentiment in the property sector. Thus, we

traded with Hat Spring Company to acquire

Tennessee Avenue in exchange of cash and

Atlantic Avenue.

We recognize that as the real estate

industry becomes more competitive, we

need to differentiate ourselves and devise a

strategy to develop our properties fast at the

lowest cost, yet with enough return to

remain profitable.

To execute our development-centric

strategy, we need to construct more

buildings, acquire lands suitable for

development and triple the return from these

properties. Choosing the best, developing

the most able, and retaining the most

committed are the tenets that shape the

company geared towards development.

Moving forward, we expect a more

challenging environment. But we also

welcome the next chapter in our history with

optimism. Our economy is rebuilding; if

investors’ risk appetite continues to improve,

then emerging markets will likely be the

recipients of large investments. The

companies thrust of promoting investments

through infrastructure development is

expected to usher a renewed demand for

credit and more opportunities for trading and

investments. We are looking forward to

participating in this invigorated business

environment. With our strong balance sheet,

the Ferrari Company is well poised to

capitalize on these growth opportunities.

On behalf of our management and

shareholders, I thank our people for staying

committed to our institutional goals. To our

customers, rest assured we will stay true to

our promise of being your real estate

partner. The road to success may not

always be paved and easy, but with your

unfailing support, we will always be driven to

do our very best.

.

\

Angelie De Ramos

President

We continuously drive ourselves to create

the right solutions for our customers, and to

uphold the trust of our shareholders. Our

unwavering focus on our financial statements has

been a transformative and key component of our

performance as an institution.

M 2,875.80

stronger in total

assets, increasing by

M 793.80 from the

previous year.

Year 2 Year 1

3.9 5.2

Net Income

In hundreds

3



Financial Highlights

Financial Position

Financial Performance

0

500

1000

1500

2000

2500

3000

3500

Year 1 Year 2

Assets

Liabilities

Shareholders' Equity

0

100

200

300

400

500

600

700

800

Year 1 Year 2

Revenue

Expenses

Net Income

4



For the Game Year-Ended Month 13, Year 2

Total Revenue Year 2 Year 1

Rent Revenue M 26.00 M 100.00

Salary Revenue

600.00 600.00

Miscellaneous Revenue

130.00 30.00

Total Income M 756.00 M 730.00

Total Expense:

Rent Expense M 156.00 M 148.00

Miscellaneous Expense

150.00 0

Depreciation Expense

18.00 0

Total Expense

324.00 148.00

Income before Tax M 432.00 M 582.00

Less: Income Tax Expense

43.20 58.20

Net Income M 388.80 M 523.80

5



As of Game Year-Ended Month 13, Year 2

Assets Note Year 2 Year 1

Cash on Hand

M 1,133.80 M 1,162.00

Property and Buildings 2

1,342.00 920.00

Investment in Equity Securities 3

400.00 0

Total Assets

M 2,875.80 M 2,082.00

Liabilities and Shareholders’ Equity

Liabilities

Trade and other Payables 4 M 43.20 M 58.20

Total Liabilities 43.20 58.20

Equity

Contributed Capital

1,920.00 1,500.00

Retained Earnings

912.60 523.80

Total Shareholders’ Equity

2,832.60 2,023.80

Total Liabilities and Shareholders’ Equity

M 2,875.80 M 2,082.00

6




Note Year 2 Year 1

Contributed capital, start of turn 1 M 1,500.00 M 1,500.00

Additional Contributed Capital 5

420.00 0

Contributed capital, turn 13

1,920.00 1,500.00

Retained Earnings, turn 1

523.80 523.80

Net Income

388.80 0

Retained Earnings, turn 13

912.60 523.80

Balances, turn 13 M 2,832.60 M 2,023.80

7




Cash flow from Operating Activities Year 2 Year 1

Received from Passing Go M 600.00 M 600.00

Received from Rentals

26.00 100.00

Received from Miscellaneous

130.00 30.00

Paid for Rentals

(156.00) (148.00)

Paid for Miscellaneous

(150.00) 0

Payment for Income Tax (58.20) 0

Net Cash flows provided by Operating Activities M 391.80 M 582.00

Cash flow from Investing Activities

Payment for the Acquisition of Land

(220.00) (920.00)

Sale of Property

80.00 0

Payment for Investing

(400.00) 0

Payment for Building Houses

(300.00) 0

Net Cash flows provided by Investing Activities M (840.00) M (920.00)

Cash flow from Financing Activities

Received from Investment 420.00 0

Net Cash flows provided by Financing Activities M 420.00 M 0

Net Change in Cash for the Year

(28.20) (338.00)

Beginning Cash

1,162.00 1,500.00

Ending Cash M 1,133.80 M 1,162.00

8



Reporting Entity. Ferrari Company is engaged in real estate operations as a developer of raw

land, residential subdivision and mixed-use urban projects including condominium and

commercial buildings, industrial and farm estates.

Ferrari Company is a professionally-managed portfolio of diversified real estate holdings and

is basically meant for high net worth investors. But, not-so-rich investors can also get a slice

of the real estate pie by investing in our funds, which give them an opportunity to participate

in specific asset classes such as residential, commercial, hospitality etc. in a more

concentrated manner.

The nature of Ferrari Company is used in three fundamental ways. First, is to view it as a

tangible asset, real estate constitutes the physical components of location and space., real

estate is defined as the land and any built improvements permanently affixed on, or to, the

land.

Next, to denote the “bundle” of rights associated with the ownership and use of the physical

characteristics of space and location constitutes the services that Ferrari provides to our

users. The value of a bundle of rights is a function of the property’s physical, locational, and

legal characteristics. The physical characteristics include the age, size, design, and

construction quality of the structure, as well as the size, shape, and other natural features of

the land. For residential property, the locational characteristics include convenience and

access to places of employment, schools, shopping, health care facilities, and other places

important to households. The location characteristics of commercial properties may involve

visibility, access to customers, suppliers, and employees, or the availability of reliable data

and communications infrastructure. The physical and location characteristics required to

provide valuable real estate services vary significantly by property type.

And finally, to refer our company to the industry, or business activities, related to the

acquisition, operation, and disposition of the physical assets. Real estate creates jobs for

many applicants, and is the source of high percentage of local government revenues.

Our market activity is influenced by the activities and conditions that take place in three

sectors of a market economy: the user market, the financial or capital market, and lastly, the

government sector. Our company users compete in the market for location and space.

Among the users are both renters and owners. The financial resources to acquire our assets

are allocated in the capital market; hence, the equity (ownership) and debt investors are

9



capital market participants. Government influences the activities of each of the participant

groups through regulations, provisions of services and infrastructure, taxes, and various

subsidies.

Two primary characteristics of our company distinguish us from others: heterogeneity and

immobility. Because of these two factors, the market for evaluating, producing, buying,

selling, leasing, and managing real estate tends to be localized, highly segmented, and

involves privately negotiated transactions.

Statement of Compliance. The accompanying financial statements have been prepared in

conformity with accounting principles generally accepted in the Philippines.

Estimates and assumptions. Preparing financial statements requires management to make

assumptions and estimates that affect the reported amounts of assets, liabilities, revenues

and expenses.

The preparation of financial statements in conformity with IFRS requires management to

make judgments, estimates, and assumptions that affect the application of policies and

reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities,

and the reported amounts of income and expense. The estimates and underlying

assumptions are based on historical experience and various other factors that are believed

to be reasonable under the circumstances, the results of which form the basis of making the

judgments about carrying values of assets and liabilities that are not readily apparent from

other sources. Actual results may differ from those estimates.

The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to

accounting estimates are recognized in the period in which the estimate is revised if the

revision affects only that period or in the period of the revision and future periods if the

revision affects both current and future periods. Judgments made by management in the

application of IFRS that have significant effect on the financial statements and estimates

with a significant risk of material adjustment in the next year are discussed in note 32 of the

Consolidated Financial Statements.

Measurement Basis. The accompanying financial statements are presented and prepared in

Monopoly dollars under the historical cost convention.

Fiscal year. Ferrari Company operates on a thirteen month fiscal year.

Accounting principles. The financial statements and accompanying notes to the financial

statements for Ferrari Company are prepared in accordance with generally accepted

accounting principles.

Revenue Recognition. Rental revenue is recognized over the duration of the lease term,

inclusive of the rent-free periods. Revenue is recognised to the extent that it is probable that

10



the economic benefits will flow to the entity and the revenue can be reliably measured. Rent

and Salary revenue is recognized when earned while rent and miscellaneous expenses are

recognized when incurred.

When a company lands on the property, rent revenue is recognized and must be paid

accordingly. Also, salary revenue is also recognized as earned each time the company passes

“Go” and the miscellaneous revenue is earned with regards to the scenario given in the

chance and community chest cards. This is in accordance with the income recognition

principle and the accrual basis of accounting.

Expense Recognition. With regards to expenses, accrual basis governs the recognition of

expenses when it is incurred. Each time a company lands on competitors’ properties, rent

expense is recognized and must be paid accordingly. Miscellaneous expenses are also

recognized immediately as expenses when incurred. Chance and community chest cards

either give revenue or expenses to be earned and incurred respectively by the company. Cost

includes expenditure that is directly attributable to the acquisition of the property and

buildings.

Rental Revenue. Rental revenue is recorded when earned. Rental revenue varies from

property to property. Properties which are nearer to “Go” have sizeable returns compared to

the properties past “Go” like the brown color group which gives small revenue but easy and

inexpensive to develop. Rental Revenue of a property increases as more houses and

buildings are being built on it. Nevertheless, the cost of developing a property also varies

from low-cost to high-cost.

Salary Revenue. Salary Revenue is recognized each time the company passes “Go.” One way

in which the company earned salary revenue is through the chance or community chest

cards when the manager has chosen a card which enables the company to advance to “Go”

and collect M 100. Thus, “Go” is regarded as the point of recognition of Salary revenue. This

is still in accordance with the accrual method of accounting since salary revenue is earned

regardless of receipt of cash.

79% of the company’s revenue comes from the Salary. Due to chance cards, the company

advances to “Go” and collects its salary revenue. Thus, the company have much and

consequently, avoided paying from other players’ properties as a benefit of advancing to

“Go.”

Miscellaneous Revenue. Miscellaneous revenue is recorded when earned. Miscellaneous

revenue results from chance or community chest cards. This can be receipt of dividend,

collection of interest and other income which most of the time has small or average value.

This results from peripheral operations of a business.

Rent Expenses. Rental expense is recorded when incurred. Rental expense varies from

property to property. Properties which are nearer to “Go” have sizeable rental payments like

the Blue and Green property which gives the most expensive rental payments. Rental

expenses incurred composed only of color group properties. No payment for railroads and

utilities has been incurred during the year.

Miscellaneous Expenses. Miscellaneous expense is recorded when incurred. Miscellaneous

expense results from chance or community chest cards. This can be a mandatory payment to

11



a competitor, hospital fees, speeding fees, tuition fees and the like. This results from

peripheral operations of the business.

Property and Buildings. Property and buildings are carried at cost less accumulated

depreciation and any impairment losses in value. Initially, an item of property and equipment

is measured at its cost, directly attributable costs of bringing the asset to working condition.

With regards to depreciable properties, the useful lives and depreciation method are

reviewed periodically to ensure that such useful lives and depreciation method are

consistent with the expected pattern of economic benefits from those assets. When an asset

is disposed of, the cost and accumulated depreciation and impairment losses, if any, are

removed from the accounts and any resulting gain or loss arising from the retirement or

disposal is credited to or charged against current operations.

Depreciation is charged to the statement of income on a straight-line basis over the

estimated useful life of each part of an item of property, plant, and equipment. Land is not

depreciated. The estimated useful life for buildings is 50 months.

Financial assets. Financial assets include investments, loans and receivables, and derivative

financial instruments. Financial assets are recorded initially at fair value. Subsequent

measurement depends on the designation of the financial assets.

Investments. All equity investments that are not subsidiaries or equity-accounted investees

(joint ventures and/or associates) are classified as investments. Investment available-for-

sale is valued at their fair value. When the fair value cannot be reliably determined, the

investment is carried at cost. A gain or loss arising from a change in the fair value of the

investment available-for-sale shall be recognized directly in equity, except for impairment

losses and foreign exchange gains and losses, until the financial asset is derecognized, at

which time the cumulative gain or loss previously recognized in equity shall be recognized in

profit or loss. If the investments are valued at cost, income from investments is based on the

dividend received from the investments.

Cash and Cash Equivalents. Cash and cash equivalents are carried in the balance sheets at

cost. For the purpose of the cash flow statements, cash and cash equivalents consist of cash

on hand and in banks, and other short term highly liquid investments with original maturities

of three months or less from date of acquisition and that are subject to an insignificant risk

of change in value.

The company has a sizeable cash balance because the company didn’t buy much properties.

Still, the properties acquired during the year are enough for the business to earn a return

from its properties purchased. Moreover, the company usually receives more cash from

salary and rental revenue. Rental and miscellaneous expenses also result to an outflow.

However, these rental payments are still low since the properties are still underdeveloped.

Cash flows from operating activities, with a net amount of M 391.80 include cash receipts

from revenue and payments to expenses. Investing activities which comprise of payments

for purchases of properties are the major outflows that decrease the cash balance,

12



amounting to M 840 and cash inflows from investing activities amounted to M 420. With a

beginning cash balance of M 1,162, net change in cash flows, amounting to a decrease in

28.20 results to an ending cash balance of M 1,133.80.

Trade and other Payables. Trade and other payables are current liabilities or short term

obligations which are not discounted but measured, recorded and reported at their face

amount. Included in Trade and other payables are bank overdraft, income taxes, accounts

payable and the like.

Taxation. Income tax on the profit or loss for the year is composed of current and deferred

income tax. Income tax is recognized in the statements of income except to the extent that it

relates to items recognized directly in equity, in which case it is recognized in equity.

Current tax is the expected tax payable or tax receivable on the taxable income for the year,

using the tax rates and tax laws that have been enacted or substantively enacted by the

balance sheet date, and any adjustment to tax payable or tax receivable in respect of

previous years.

A deferred tax asset is recognized for deductible temporary differences and for the carry

forward of unused tax losses and unused tax credits to the extent that it is probable that

future taxable profits will be available against which these can be utilized. Deferred tax

assets are reviewed at each reporting date and are reduced to the extent that it is no longer

probable that the related tax benefit will be realized.

Shareholders’ equity. When share capital recognized as equity is repurchased (treasury

shares), the amount of the consideration paid, including directly attributable costs, is

recognized as a change in equity. Dividends are recognized as a liability upon being declared.

Capital. This is the invested or paid-in capital. Capital is composed of the initial investments,

amounting to M 1500 of the owners and an additional investment of M 420 from different

companies. Total contributed capital amounted to M 1920.

Retained Earnings. Part of the shareholders’ equity, retained earnings represents the

cumulative balance of periodic earnings, dividend distributions, fundamental errors and

other capital adjustments. The retained earnings for year two comprise solely of net income

from year one, amounting to M 523.80 and from year two, M 388.80. Total retained earnings

amounted to 912.60. No dividends were declared for this year.

Provisions and Contingencies. The Company, in the ordinary course of business, sets up

appropriate provisions for its present legal or constructive obligations in accordance with its

policies on provisions and contingencies.

Provisions are recognized when the Company has a present legal or constructive obligation

as a result of a past event, it is probable that an outflow of resources embodying economic

benefits will be required to settle the obligation and a reliable estimate can be made of the

amount of the obligation. If the effect of the time value of money is material, provisions are

determined by discounting the expected future cash flows at a pre-tax rate that reflects

current market assessments of the time value of money and, where appropriate, the risks

specific to the liability. Where discounting is used, the increase in the provision due to the

passage of time is recognized as an interest expense.

13



Contingent liabilities are not recognized in the financial statements but are disclosed in the

notes to financial statements unless the possibility of an outflow of resources embodying

economic benefits is remote. Contingent assets are not recognized in the financial

statements but are disclosed in the notes to financial statements when an inflow of

economic benefits is probable.

Cash flows from operating activities. Cash flows from operating activities are calculated by

the direct method. Cash payments to rental and miscellaneous expenses are all recognized

as cash flow from operating activities. Cash flows from operating activities also include

income taxes paid on all activities.

Cash flows from investing activities. Cash flows from investing activities are those arising

from net capital expenditure, from the acquisition and sale of properties. Net acquisition

spending excludes acquisition related costs which are included in cash flows from operating

activities. Net capital expenditure is the balance of purchases of property, plant, and

equipment less book value of disposals.

Cash flows from financing activities. The cash flows from financing activities comprise the

cash receipts from additional investment from other companies.

Property and Buildings

Land M 1060

Buildings – Houses 300

Total Property and Buildings, gross M 1360

Less: Accumulated Depreciation 18

Total Property and Buildings, net M 1342

Land Cost

St. James Place M 180

New York Avenue 200

Tennessee Avenue 180

Baltic Avenue 60

Kentucky Avenue 220

Indiana Avenue 220

TOTAL M 1060

Buildings – Houses Cost

St. James Place M 100

New York Avenue 100

Tennessee Avenue 100

TOTAL M 300

14



Company Cost

IronMan Company M 25

CAR-ra Chuchi Company 25

SHOEper Company 20

Royal Ship Company 30

Fast and Furious Company 30

Missouri Battleship Corporation 30

Company C 20

Hachiko Company 20

Mad Hatter Lands & Homes Corp 20

FURry Friends Enterprise 25

Car Company 35

Rhenishoes Company 20

Titanic Company 30

Nike Company 40

HAT-Spring Company 30

TOTAL M 400

Total Income M 756.00

Total Expense

324.00

Income before Tax M 432.00

Less: Income Tax Expense (10% of 432)

43.20

Net Income M 388.80

Income tax on the profit for the year comprises current tax only. Current income tax is the

expected tax payable on the taxable income for the year using tax rates enacted or

substantially enacted as of the balance sheet date, and any adjustment to tax payable in

respect to previous years.

The amount of tax owed is computed by taking the amount of pre-tax income times the tax

rate, according to the given tax rate of 10% for pre-tax income ranging from M0 to M1000.

15



No dividends were declared for this year. Shareholding structure on the closing date of the

share registration book as of Year two:

Company Cost

CAR-ra Chuchi Company M 20

SHOEper Company 25

Royal Ship Company 25

Fast and Furious Company 20

Missouri Battleship Corporation 30

Company C 20

Hachiko Company 20

Mad Hatter Lands & Homes Corp 30

FURry Friends Enterprise 20

Car Company 30

Rhenishoes Company 40

Titanic Company 40

Nike Company 55

HAT-Spring Company 35

TOTAL M 420

The Ferrari Company received a Get-Out-of-Jail-Free card on turn 1/9. This card entitles the

company to get out of jail without paying the fine, a M50 value. There is a reasonable

probability that the company will receive this benefit in the future, but it depends upon (1)

going to jail (a common risk of doing business, unfortunately) and (2) whether using the card

to get out of jail is in the company's best interest.

16



Certification of Financial Statements

I, Ty M. Bollinger, certify that:

1. I have reviewed this annual report on Form 10-K of Ferrari Company;

2. Based on my knowledge, this annual report does not contain any untrue statement of a

material fact or omit to state a material fact necessary to make the statements made, in light

of the circumstances under which such statements were made, not misleading with respect

to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included

in this annual report, fairly present in all material respects the financial condition, results of

operations and cash flows of Ferrari Company as of, and for, the periods presented in this

annual report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as

defined in Exchange Act Rules 13a-14 and 15d-14) and have:

a) Designed such disclosure controls and procedures to ensure that material information

relating to Ferrari, including its consolidated subsidiaries, is made known to us by others

within those entities, particularly during the period in which this annual report is being

prepared;

b) Evaluated the effectiveness of Ferrari's disclosure controls and procedures as of a date

within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and

c) Presented in this annual report our conclusions about the effectiveness of the disclosure

controls and procedures based on our evaluation as of the Evaluation Date;

5. I have disclosed, based on my most recent evaluation, to Ferrari's auditors and audit

committee of Ferrari's Board of Directors (or persons performing equivalent functions):

a) All significant deficiencies in the design or operation of internal controls which could

adversely affect Ferrari's ability to record, process, summarize and report financial data and

have identified for Ferrari's auditors any material weaknesses in internal controls; and

b) Any fraud, whether or not material, that involves management or other employees who

have a significant role in Ferrari's internal controls; and

6. I have indicated in this annual report whether there were significant changes in internal

controls or in other factors that could significantly affect internal controls subsequent to the

date of our most recent evaluation, including any corrective actions with regard to significant

deficiencies and material weaknesses.

Ty. M Bollinger

Chief Executive Officer

Ferrari Company

Date: September 10, 2012

/s/ Ty. M Bollinger

sample annual report (financial statements of a fictitious real estate company)

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