Annual / Quarterly Financial Statement • May 3, 2017
Annual / Quarterly Financial Statement
Open in ViewerOpens in native device viewer
| 3 | Overview of performance, financial conditions and net debt |
|---|---|
| 0.1 Financial Statements | |
| 14 | Balance sheet |
| 16 | Income statement |
| 17 | Statement of comprehensive income |
| 18 | Cash-flow statement |
| 20 | Statement of changes in equity |
| 0.2Financial Statements pursuant to Consob Resolution no. 17221 of March 12, 2010 |
|
| 24 | Balance sheet pursuant to Consob Resolution no. 17221 of March 12, 2010 |
| 26 | Income statement pursuant to Consob Resolution no. 17221 of March 12, 2010 |
| 28 | General information on A2A S.p.A. |
|---|---|
| 30 | Financial statements |
| 31 | Basis of preparation |
| 32 | Changes in international accounting standards |
| 40 | Accounting standards and policies |
| 58 | Notes to the balance sheet |
| 84 | Net debt |
| 85 | Notes to the income statement |
| 105 | Note on related party transactions |
| 111 | Consob Communication no. DEM/6064293 of July 28, 2006 |
| 114 | Guarantees and commitments with third parties |
| 115 | Other information |
Separate financial statements – Year 2016 Contents
2
| 154 | 1. Statement of changes in tangible assets |
|---|---|
| 156 | 2. Statement of changes in intangible assets |
| 158 | 3/a. Statement of changes in investments in subsidiaries |
| 160 | 3/b. Statement of changes in investments in affiliates |
| 162 | 3/c. Statement of changes in investments in other companies (AFS) |
| 164 | 4/a. List of investments in subsidiaries |
| 166 | 4/b. List of investments in affiliates |
| 168 | Key data of the financial statements of the main subsidiaries and affiliates |
| prepared according to IAS/IFRS (pursuant to art. 2429.4 of the Italian Civil | |
| Code) | |
| 170 | Key data of the financial statements of the main subsidiaries and affiliates |
| prepared according to ITALIAN GAAP (pursuant to art. 2429.4 of the Italian | |
| Civil Code) | |
| 172 | Certification of the financial statements pursuant to Art. 154-bis para. 5 of |
| Leg. Decree No. 58/98 | |
| 173 | 0.5 Independent Auditors' Report |
| 177 | 0.6 Report of the Board of Auditors |
This is a translation of the Italian original "Bilancio separato 2016" and has been prepared solely for the convenience of international readers. In the event of any ambiguity the Italian text will prevail. The Italian original is available on the website www.a2a.eu
3
The Parent Company is responsible for strategic vision, planning, control, financial management and coordination of the A2A Group activities. It also provides services to support the business and operating activities of Group companies (administrative, legal, supply, and personnel management services, information technology and communications) in order to optimize the resources available and use existing expertise in the most efficient manner. These services are governed by intercompany service agreements.
Finally, A2A S.p.A. provides its subsidiaries with office space and operating areas, as well as related services.
A2A S.p.A. owns some hydroelectric plants in Valtellina, the hydroelectric unit in Calabria, as well as the hydroelectric plants of the units in Udine and Mese (former Edipower S.p.A.).
In line with the implementation of the 2015-2019 Business Plan and subsequent 2016-2020, in 2016, the A2A Group carried out a number of corporate transactions, especially relating to the Generation and Trading Business Unit, to reorganize the productive assets in specific companies with homogeneous plants.
As a result of the non-recurring transactions described above, the contents of the balance sheet and income statement at December 31, 2016 are therefore not homogeneous and therefore difficult to compare with those of the previous year as they include:
wholly owned by Società Elettrica Altoatesina S.p.A.) in application of the demerger deed stipulated the parties on December 28, 2015, whose economic effect on the income statement was recorded under "Result from non-recurring transactions";
Below is a summary, by period, of the plants included in the separate financial statements of A2A S.p.A.:
| Year 2015 | Year 2016 | |
|---|---|---|
| 1st half 2016 (*) | 2nd half 2016 | |
| Hydroelectric Unit Valtellina | Hydroelectric Unit Valtellina | Hydroelectric Unit Valtellina |
| Hydroelectric Unit Calabria | Hydroelectric Unit Calabria | Hydroelectric Unit Calabria |
| Plant in Cassano d'Adda. | Plant in Cassano d'Adda | - |
| Plant in Ponti sul Mincio | Plant in Ponti sul Mincio | - |
| Plant in Monfalcone | Plant in Monfalcone | (**) |
| Hydroelectric Unit Mese | Hydroelectric Unit Mese | |
| Hydroelectric Unit Udine | Hydroelectric Unit Udine | |
| Plant in Piacenza | - | |
| Plant in Sermide | - | |
| Plant in Chivasso | - | |
| Plant in Brindisi | - |
(*) The so-called "Cellina Unit" owned by Edipower S.p.A. was sold to Cellina Energy S.r.l., effective January 1, 2016.
(**) The Monfalcone plant was sold effective December 31, 2016, in the transitional period between July 1, 2016 and December 31, 2016, a business unit lease contract was in effect between A2A S.p.A. and A2A Energiefuture S.p.A..
Overview of performance, financial conditions and net debt
| Millions of euro | 01 01 2016 12 31 2016 |
01 01 2015 12 31 2015 |
Changes |
|---|---|---|---|
| Revenues | |||
| Revenues from the sale of goods and services | 2,554.2 | 466.0 | 2,088.2 |
| Other operating income | 206.7 | 28.0 | 178.7 |
| Total revenues | 2,760.9 | 494.0 | 2,266.9 |
| Operating expenses | (2,326.2) | (290.9) | (2,035.3) |
| Labour costs | (151.7) | (119.7) | (32.0) |
| Gross operating income - EBITDA | 283.0 | 83.4 | 199.6 |
| Depreciation, amortization and write-downs | (333.2) | (85.8) | (247.4) |
| Provisions | (27.6) | (46.2) | 18.6 |
| Net operating income - EBIT | (77.8) | (48.6) | (29.2) |
| Result from non-recurring transactions | 48.3 | - | 48.3 |
| Financial balance | 258.4 | (71.8) | 330.2 |
| Result before taxes | 228.9 | (120.4) | 349.3 |
| Income taxes | 45.2 | 46.9 | (1.7) |
| Result after taxes from operating activities | 274.1 | (73.5) | 347.6 |
| Net result from discontinued operations | - | - | - |
| Net result of the year | 274.1 | (73.5) | 347.6 |
In the year in question A2A S.p.A. shows revenues for a total of 2,760.9 million euro (494.0 million euro in the previous year). Sales revenues (2,380.9 million euro) mainly refer to electricity sales to wholesalers, institutional operators, even on IPEX markets (Italian Power Exchange) and subsidiaries, sales of gas and fuels to third parties and subsidiaries and the sale of environmental certificates. Revenues from services (173.3 million euro) mainly relate to provisions to subsidiaries of administrative, fiscal, legal, managerial and technical services, and revenues from the Municipality of Milan for the maintenance and management of public lighting systems. Other revenues (206.7 million euro) include, as from January 1, 2016, incentives on net production from renewable sources, revenues relating to the reinstatement of costs of the San Filippo del Mela plant for the essentiality regime from January to May 2016.
Operating costs amounted to 2,326.2 million euro (290.9 million euro at December 31, 2015) and refer to costs for raw materials (1,882.6 million euro) related primarily to purchases of energy and fuels, both for electricity production and for resale, purchases of materials and environmental certificates; service costs (201.2 million euro), which refer to the costs for the transport and storage of natural gas, costs for plant maintenance as well as for professional and technical services costs; other operating costs (242.4 million euro), which include the contracting of thermoelectric production plants "tolling agreement" of both subsidiaries and associates, as well as water derivation fees, damages and penalties.
Labour costs equalled 151.7 million euro (119.7 million euro at December 31, 2015). The increase is mainly due to the effect of non-recurring transactions for the year.
Due to the dynamics mentioned above the "Gross Operating Margin" equals 283.0 million euro (83.4 million euro at December 31, 2015).
"Amortization and depreciation, provisions and write-downs" of the year amounted to 360.8 million euro (132.0 million euro at December 31, 2015) and include amortisation, depreciation and write-downs of the tangible and intangible assets for 333.2 million euro (85.8 million euro at December 31, 2015) and provisions for 27.6 million euro (46.2 million euro at December 31, 2015).
The item includes 203.3 million euro relating essentially to the write-down of the thermoelectric plant of Monfalcone as a result of the findings of the appraisal carried out by an independent external expert as part of the transfer to the subsidiary A2A Energiefuture S.p.A.. This item includes 23.1 million euro of provisions for risks and charges, mainly relating to public water derivation fees and contractual charges as well as 4.5 million euro relating to credit risk provisions.
"Net Operating Income" is negative for 77.8 million euro (negative for 48.6 million euro at December 31, 2015).
6
The "Result from non-recurring transactions" is 48.3 million euro (no value at December 31, 2015) and incorporates the income from the demerger of the "Cellina Unit" (formerly Edipower S.p.A.) in favour of Cellina Energy S.r.l., which took effect on January 1, 2016 following the demerger deed signed between the parties on December 28, 2015 as further specified in the paragraph "Significant events during the year" in the file Report on Operations.
Financial balance is positive for 258.4 million euro (negative for 71.8 million euro at December 31, 2015). This item incorporates dividends from subsidiaries for 446.9 million euro (234.9 million euro as at 31 December 2015), the write-down of the shareholdings in A2A gencogas S.p.A., for 54.0 million euro, in Rudnik Uglja Ad Pljevlja for 5.0 million euro, performed following the results of the Impairment Test (in 2015, the write-downs of shareholdings came to 221.4 million euro), as well as net financial expenses for 129.5 million euro (85.3 million euro at December 31, 2015).
The "Result before taxes" was positive for 228.9 million euro (negative for 120.4 million euro at December 31, 2015).
"Income taxes" were positive for 45.2 million euro (positive for 46.9 million euro at December 31, 2015).
The positive tax is mainly due to the recognition of i) positive current taxes by way of remuneration for the transfer to the consolidated tax interest expense, ii) decrease in deferred tax liabilities as a result of the reversal of temporary differences from previous years, partially offset by decrease in deferred tax assets also due, primarily, to the reversal of temporary differences from previous years and, second, the specific reversal of part of the IRAP deferred tax assets to adapt them to future taxable income of the plan.
Following the dynamics explained above the "Net result of the year" is positive for 274.1 million euro (negative for 73.5 million euro in the previous year).
* * *
Investments for the year amounted to 127.3 million euro and in particular concerned work on hydroelectric plants, improvements to third party assets, investments on the Group's IT systems, as well as investments in shareholdings to acquire 51% of Linea Group Holding S.p.A.. Overview of performance, financial conditions and net debt
| Millions of euro | 12 31 2016 | 12 31 2015 | Changes |
|---|---|---|---|
| CAPITAL EMPLOYED | |||
| Net fixed capital | 4,926.6 | 4,992.4 | (65.8) |
| - Tangible assets | 1,193.1 | 1,266.7 | (73.6) |
| - Intangible assets | 115.8 | 52.6 | 63.2 |
| - Shareholdings and other non-current financial assets (*) | 3,905.3 | 3,894.7 | 10.6 |
| - Other non-current assets/liabilities (*) | (16.9) | 0.4 | (17.3) |
| - Prepaid/deferred tax assets/liabilities | 73.4 | 48.3 | 25.1 |
| - Provisions for risks, charges and liabilities for landfills | (179.6) | (144.3) | (35.3) |
| - Employee benefits | (164.5) | (126.0) | (38.5) |
| of which with counter-entry to equity | (47.3) | (16.4) | |
| Working capital | 116.8 | (32.2) | 149.0 |
| - Inventories | 71.6 | 4.8 | 66.8 |
| - Trade receivables and other current assets (*) | 1,020.8 | 235.6 | 785.2 |
| - Trade payables and other current liabilities (*) | (1,001.2) | (269.7) | (731.5) |
| - Assets for current assets/liabilities for taxes | 25.6 | (2.9) | 28.5 |
| of which with counter-entry to equity | 8.1 | - | |
| Assets/liabilities held for sale (*) | - | 0.5 | (0.5) |
| of which with counter-entry to equity | - | - | - |
| TOTAL CAPITAL EMPLOYED | 5,043.4 | 4,960.7 | 82.7 |
| SOURCES OF COVERAGE | |||
| Equity | 2,316.5 | 2,161.6 | 154.9 |
| Total financial position beyond one year | 2,530.4 | 2,599.6 | (69.2) |
| Total financial position within one year | 196.5 | 199.5 | (3.0) |
| Total net financial position | 2,726.9 | 2,799.1 | (72.2) |
| of which with counter-entry to equity | (10.9) | (27.2) | |
| TOTAL SOURCES | 5,043.4 | 4,960.7 | 82.7 |
(*) Excluding balances included in the Net Financial Position.
"Capital employed" totalled 5,043.4 million euro at December 31, 2016, partly covered by "Equity" in the amount of 2,316.5 million euro and net debt of 2,726.9 million euro.
As a result of previously described non-recurring transactions, the figures at December 31, 2016 are not comparable with the figures at December 31, 2015; provided below are the main items that make up the Employed Capital.
Net fixed capital amounted to 4,926.6 million euro and includes:
• tangible assets for 1,193.1 million euro mainly related to the hydroelectric plants in Valtellina, the Calabria, Mese and Udine units;
9
• employee benefits for 164.5 million euro that include the leaving entitlement (TFR) accrued to employees for 27.6 million euro and other provisions for benefits for 136.9 million euro.
Working capital amounted to 116.8 million euro and includes:
other current liabilities totalling 333.7 million euro, which mainly include: liabilities for commodity derivatives (247.4 million euro); payables to subsidiaries for tax consolidation (28.5 million euro); payables to social security institutions and to employees (30.5 million euro); payables for fiscal transparency to Ergosud S.p.A. (7.2 million euro); and tax payables for excise and withholdings (5.4 million euro);
• current tax assets/payables for 25.6 million euro that include current tax assets of 51.4 million euro related to IRAP receivables, IRES receivables for amounts requested for reimbursement and receivables for Robin Tax paid in previous years, partially offset by IRES current tax payables of 25.8 million euro.
The "Net debt" of 2,726.9 million euro, improved by 72.2 million euro compared to December 31, 2015 and includes the effect of the non-recurring transactions during the year, which was negative by 70.2 million euro. Operations during the year generated resources of 373.3 million euro, partly offset by the resources absorbed by net investments in tangible and intangible assets and shareholdings of 121.3 million euro and dividends paid to shareholders of 125.9 million euro.
| Millions of euro | 12 31 2016 | 12 31 2015 |
|---|---|---|
| NET FINANCIAL POSITION AT THE START OF THE YEAR | (2,799.1) | (2,854.0) |
| CONTRIBUTIONS FROM NON-RECURRING TRANSACTIONS | (70.2) | - |
| Result of the year (**) | 219.7 | (73.5) |
| Amortization and depreciation | 129.9 | 80.8 |
| Net taxes paid/receivables for taxes paid | 8.0 | 44.0 |
| Write-downs on shareholdings and fixed assets | 265.5 | 227.1 |
| Change in the assets and liabilities (*) | (249.8) | (57.7) |
| Cash flow from operating activities | 373.3 | 220.7 |
| Cash flow from investment activities | (121.3) | (76.5) |
| Dividends paid | (125.9) | (112.7) |
| Changes in financial assets/liabilities with counter-entry to equity | 16.3 | 23.4 |
| NET FINANCIAL POSITION AT THE END OF THE YEAR | (2,726.9) | (2,799.1) |
(*) Excluding balances with counter-entry to equity.
(**) Result of the year is exposed net of gains on shareholdings' and fixed assets' disposals.
Overview of performance, financial conditions and net debt
| Millions of euro | 12 31 2016 | Effect of non-recurring transactions |
12 31 2015 |
|---|---|---|---|
| Medium/long-term debt | 2,937.0 | - | 3,001.1 |
| Medium/long-term financial receivables | (406.6) | - | (401.5) |
| Total non-current net debt | 2,530.4 | - | 2,599.6 |
| Short-term debt | 857.4 | (89.5) | 1,408.0 |
| Short-term financial receivables | (382.7) | 187.8 | (621.5) |
| Cash and cash equivalents | (278.2) | (28.1) | (587.0) |
| Total current net debt | 196.5 | 70.2 | 199.5 |
| Net debt | 2,726.9 | 70.2 | 2,799.1 |
| Amounts in euro | Note | 12 31 2016 | 12 31 2015 |
|---|---|---|---|
| NON-CURRENT ASSETS | |||
| Tangible assets | 1 | 1,193,119,976 | 1,266,693,752 |
| Intangible assets | 2 | 115,786,296 | 52,605,327 |
| Shareholdings | 3 | 3,901,566,008 | 3,890,927,319 |
| Other non-current financial assets | 3 | 406,463,302 | 405,362,171 |
| Deferred tax assets | 4 | 73,426,087 | 48,261,061 |
| Other non-current assets | 5 | 4,453,710 | 452,429 |
| Total non-current assets | 5,694,815,379 | 5,664,302,059 | |
| CURRENT ASSETS | |||
| Inventories | 6 | 71,635,325 | 4,777,441 |
| Trade receivables | 7 | 650,195,136 | 146,947,980 |
| Other current assets | 8 | 370,735,926 | 104,703,500 |
| Current financial assets | 9 | 382,645,017 | 605,367,617 |
| Current tax assets | 10 | 51,359,537 | 38,987,274 |
| Cash and cash equivalents | 11 | 278,207,406 | 587,049,592 |
| Total current assets | 1,804,778,347 | 1,487,833,404 | |
| NON-CURRENT ASSETS HELD FOR SALE | 12 | - | 469,000 |
| TOTAL ASSETS | 7,499,593,726 | 7,152,604,463 |
(1) As required by Consob Resolution no. 17221 of March 12, 2010, the effects of relations with related parties in the separate financial statements are highlighted in the accounting statements in section 0.2 and commented on in Note 35. Significant non-recurring events and transactions in the separate financial statements are provided in Note 36 pursuant to Consob Communication DEM/6064293 of July 28, 2006.
| Amounts in euro | Note | 12 31 2016 | 12 31 2015 |
|---|---|---|---|
| EQUITY | |||
| Share capital | 13 | 1,629,110,744 | 1,629,110,744 |
| (Treasury shares) | 14 | (53,660,996) | (60,891,196) |
| Reserves | 15 | 466,984,916 | 666,859,220 |
| Net result of the year | 16 | 274,049,714 | (73,487,107) |
| Total equity | 2,316,484,378 | 2,161,591,661 | |
| LIABILITIES | |||
| Non-current liabilities | |||
| Non-current financial liabilities | 17 | 2,922,181,214 | 2,973,930,319 |
| Employee benefits | 18 | 164,559,678 | 125,996,516 |
| Provisions for risks, charges and liabilities for landfills | 19 | 179,628,845 | 144,313,123 |
| Other non-current liabilities | 20 | 32,261,924 | 27,231,315 |
| Total non-current liabilities | 3,298,631,661 | 3,271,471,273 | |
| Current liabilities | |||
| Trade payables | 21 | 667,474,444 | 162,012,623 |
| Other current liabilities | 21 | 333,766,188 | 115,139,335 |
| Current financial liabilities | 22 | 857,449,886 | 1,400,512,790 |
| Tax liabilities | 23 | 25,787,169 | 41,876,781 |
| Total current liabilities | 1,884,477,687 | 1,719,541,529 | |
| Total liabilities | 5,183,109,348 | 4,991,012,802 | |
| LIABILITIES ASSOCIATED WITH NON-CURRENT ASSETS HELD FOR SALE |
- | - | |
| TOTAL EQUITY AND LIABILITIES | 7,499,593,726 | 7,152,604,463 |
| Amounts in euro | Note | 01 01 2016 12 31 2016 |
01 01 2015 12 31 2015 |
|---|---|---|---|
| Revenues | |||
| Revenues from the sale of goods and services | 2,554,203,010 | 465,963,699 | |
| Other operating income | 206,691,561 | 28,044,921 | |
| Total revenues | 25 | 2,760,894,571 | 494,008,620 |
| Operating expenses | |||
| Expenses for raw materials and services | 2,083,797,799 | 221,374,062 | |
| Other operating expenses | 242,403,978 | 69,493,703 | |
| Total operating expenses | 26 | 2,326,201,777 | 290,867,765 |
| Labour costs | 27 | 151,699,176 | 119,732,850 |
| Gross operating income - EBITDA | 28 | 282,993,618 | 83,408,005 |
| Depreciation, amortization, provisions and write-downs | 29 | 360,854,186 | 132,013,925 |
| Net operating income - EBIT | 30 | (77,860,568) | (48,605,920) |
| Result from non-recurring transactions | 31 | 48,336,439 | - |
| Financial balance | |||
| Net financial income | 491,423,599 | 299,498,071 | |
| Financial expenses | 233,065,225 | 371,305,323 | |
| Result from disposal of other shareholdings (AFS) | - | - | |
| Total financial balance | 32 | 258,358,374 | (71,807,252) |
| Result before taxes | 228,834,245 | (120,413,172) | |
| Income taxes | 33 | (45,215,469) | (46,926,065) |
| Result after taxes from operating activities | 274,049,714 | (73,487,107) | |
| Net result from discontinued operations | - | - | |
| NET RESULT OF THE YEAR | 34 | 274,049,714 | (73,487,107) |
(1) As required by Consob Resolution no. 17221 of March 12, 2010, the effects of relations with related parties in the separate financial statements are highlighted in the accounting statements in section 0.2 and commented on in Note 35. Significant non-recurring events and transactions in the separate financial statements are provided in Note 36 pursuant to Consob Communication DEM/6064293 of July 28, 2006.
| Amounts in euro | 12 31 2016 | 12 31 2015 |
|---|---|---|
| Net result of the year (A) | 274,049,714 | (73,487,107) |
| Actuarial gains/(losses) on Employee's Benefits booked in the Net equity | (36,144,144) | 6,086,047 |
| Tax effect of other actuarial gains/(losses) | 11,214,346 | (1,544,790) |
| Total actuarial gains/(losses) net of the tax effect (B) | (24,929,798) | 4,541,257 |
| Effective part of gains/(losses) on cash flow hedge | 24,378,320 | 23,443,082 |
| Tax effect of other gains/(losses) | (6,302,733) | (5,052,274) |
| Total other gains/(losses) net of the tax effect (C) | 18,075,587 | 18,390,808 |
| Gains/(losses) from recalculation of available for sale | - | (248) |
| Tax effect of other gains/(losses) | - | 145,942 |
| Gains/(losses) from the restatement of financial assets available for sale (D) | - | 145,694 |
| Total comprehensive result (A) + (B) + (C) + (D) | 267,195,503 | (50,409,348) |
With the exception of the actuarial effects on employee benefits recognized in equity, the other effects stated above will be reclassified to the Income Statement in subsequent years.
| Amounts in euro | 12 31 2016 | 12 31 2015 |
|---|---|---|
| CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR | 587,049,592 | 410,501,055 |
| Contribution from non-recurring transactions | 28,102,900 | - |
| CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR | 615,152,492 | 410,501,055 |
| Operating activities | ||
| Result of the year (**) | 219,713,275 | (73,487,107) |
| Tangible assets depreciation | 121,488,437 | 74,160,540 |
| Intangible assets amortization | 8,429,260 | 6,664,143 |
| Fixed assets write-downs | 205,394,156 | 5,716,663 |
| Shareholdings write-downs | 60,130,442 | 221,372,219 |
| Net taxes paid/receivables for disposed taxes (a) Gross change in assets and liabilities (b) |
7,958,109 (249,871,300) |
44,053,403 (57,747,217) |
| Total change of assets and liabilities (a+b) (*) | (241,913,191) | (13,693,814) |
| Cash flow from operating activities | 373,242,379 | 220,732,644 |
| Investment activities | ||
| Investments in tangible assets | (27,568,056) | (39,532,919) |
| Investments in intangible assets and goodwill | (10,650,456) | (5,908,823) |
| Investments in shareholdings and securities (*) | (89,067,015) | (35,802,787) |
| Disposal of fixed assets and shareholdings | 6,010,000 | 4,788,391 |
| Cash flow from investment activities | (121,275,527) | (76,456,138) |
| FREE CASH FLOW | 251,966,852 | 144,276,506 |
| Financing activities | ||
| Change in financial assets (*) | 22,501,414 | 96,644,887 |
| Change in financial liabilities (*) | (380,884,578) | 150,497,221 |
| Net financial interests paid | (104,618,280) | (102,122,725) |
| Dividends paid | (125,910,494) | (112,747,352) |
| Cash flow from financing activities | (588,911,938) | 32,272,031 |
| CHANGE IN CASH AND CASH EQUIVALENTS | (336,945,086) | 176,548,537 |
| CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR | 278,207,406 | 587,049,592 |
(*) Cleared of balances in return of shareholders' equity and other balance sheet items.
(**) Result of the year is exposed net of gains on shareholdings' and fixed assets' disposals.
| Description Amounts in euro |
Share Capital note 13 |
Treasury shares note 14 |
|
|---|---|---|---|
| Equity at December 31, 2014 | 1,629,110,744 | (60,891,196) | |
| Allocation of 2014 net result | |||
| Ordinary dividend distribution | |||
| IAS 32 and 39 reserves (*) | |||
| IAS 19 Revised reserve "Employee Benefits" (*) | |||
| Other changes | |||
| Net result of the year (*) | |||
| Equity at December 31, 2015 | 1,629,110,744 | (60,891,196) | |
| Allocation of 2014 net result | |||
| Ordinary dividend distribution | |||
| Contribution from non-recurring transactions | |||
| Operations on own shares | 7,230,200 | ||
| IAS 32 and 39 reserves (*) | |||
| IAS 19 Revised reserve "Employee Benefits" (*) | |||
| Other changes | |||
| Net result of the year (*) | |||
| Equity at December 31, 2016 | 1,629,110,744 | (53,660,996) | |
| Availability of Equity Reserves A: For share capital increase B: To cover losses C: For distribution to Shareholders - available for euro 214,940,217 (**) D: Reserves not avaliable |
(*) These form part of the statement of comprehensive income.
20
(**) Of which to fyscal moderate suspension equal to euro 124,783,022.
Separate financial statements – Year 2016
Statement of changes in equity
| Net result of the year note 16 |
Available for sale reserve note 15 |
Cash Flow hedge reserve note 15 |
Reserves note 15 |
|---|---|---|---|
| 8,257,733 2,324,747,485 |
(607,840) | (39,068,957) | 787,947,001 |
| (8,257,733) | 8,257,733 | ||
| (112,747,352) | (112,747,352) | ||
| 18,536,502 | 145,694 | 18,390,808 | |
| 4,541,257 | 4,541,257 | ||
| 876 | |||
| (73,487,107) (73,487,107) |
|||
| (73,487,107) 2,161,591,661 |
(462,146) | (20,678,149) | 687,999,515 |
| 73,487,107 | (73,487,107) | ||
| (125,910,494) | (125,910,494) | ||
| 48,336,439 39,584,035 |
(3,981,983) | (4,770,421) | |
| 10,063,304 | 2,833,104 | ||
| 22,057,570 | 22,057,570 | ||
| (16,614,973) | (16,614,973) | ||
| 225,713,275 225,713,275 |
|||
| 274,049,714 2,316,484,378 |
(462,146) | (2,602,562) | 470,049,624 |
| D | A-B-C | ||
0.2 Financial Statements pursuant to Consob Resolution no. 17221 of March 12, 2010
pursuant to Consob Resolution no. 17221 of March 12, 2010
| Amounts in euro | 12 31 2016 | of which Related Parties (note 35) |
12 31 2015 | of which Related Parties (note 35) |
|---|---|---|---|---|
| ASSETS | ||||
| NON-CURRENT ASSETS | ||||
| Tangible assets | 1,193,119,976 | 1,266,693,752 | ||
| Intangible assets | 115,786,296 | 52,605,327 | ||
| Shareholdings | 3,901,566,008 | 3,901,566,008 | 3,890,927,319 | 3,890,927,319 |
| Other non-current financial assets | 406,463,302 | 402,792,009 | 405,362,171 | 401,596,232 |
| Deferred tax assets | 73,426,087 | 48,261,061 | ||
| Other non-current assets | 4,453,710 | 452,429 | ||
| TOTAL NON-CURRENT ASSETS | 5,694,815,379 | 5,664,302,059 | ||
| CURRENT ASSETS | ||||
| Inventories | 71,635,325 | 4,777,441 | ||
| Trade receivables | 650,195,136 | 171,861,525 | 146,947,980 | 144,179,706 |
| Other current assets | 370,735,926 | 59,593,634 | 104,703,500 | 78,456,910 |
| Current financial assets | 382,645,017 | 381,245,017 | 605,367,617 | 605,367,617 |
| Current tax assets | 51,359,537 | 38,987,274 | ||
| Cash and cash equivalents | 278,207,406 | 587,049,592 | ||
| TOTAL CURRENT ASSETS | 1,804,778,347 | 1,487,833,404 | ||
| NON-CURRENT ASSETS HELD FOR SALE | - | - | 469,000 | 469,000 |
| TOTAL ASSETS | 7,499,593,726 | 7,152,604,463 |
| Amounts in euro | 12 31 2016 | of which Related Parties (note 35) |
12 31 2015 | of which Related Parties (note 35) |
|---|---|---|---|---|
| EQUITY | ||||
| Share capital | 1,629,110,744 | 1,629,110,744 | ||
| (Treasury shares) | (53,660,996) | (60,891,196) | ||
| Reserves | 466,984,916 | 666,859,220 | ||
| Net result of the year | 274,049,714 | (73,487,107) | ||
| Total equity | 2,316,484,378 | 2,161,591,661 | ||
| LIABILITIES | ||||
| NON-CURRENT LIABILITIES | ||||
| Non-current financial liabilities | 2,922,181,214 | 2,973,930,319 | ||
| Employee benefits | 164,559,678 | 125,996,516 | ||
| Provisions for risks, charges and liabilities for landfills | 179,628,845 | 94,019,372 | 144,313,123 | 33,350,586 |
| Other non-current liabilities | 32,261,924 | 27,231,315 | ||
| Total non-current liabilities | 3,298,631,661 | 3,271,471,273 | ||
| CURRENT LIABILITIES | ||||
| Trade payables | 667,474,444 | 79,573,486 | 162,012,623 | 83,737,545 |
| Other current liabilities | 333,766,188 | 36,420,057 | 115,139,335 | 46,948,578 |
| Current financial liabilities | 857,449,886 | 562,985,047 | 1,400,512,790 | 732,742,345 |
| Tax liabilities | 25,787,169 | 41,876,781 | ||
| Total current liabilities | 1,884,477,687 | 1,719,541,529 | ||
| Total liabilities | 5,183,109,348 | 4,991,012,802 | ||
| LIABILITIES ASSOCIATED WITH NON-CURRENT ASSETS HELD FOR SALE |
- | - | ||
| TOTAL EQUITY AND LIABILITIES | 7,499,593,726 | 7,152,604,463 |
Separate financial statements – Year 2016
pursuant to Consob Resolution no. 17221 of March 12, 2010
| Amounts in euro | 01 01 2016 12 31 2016 |
of which Related Parties (note 35) |
01 01 2015 12 31 2015 |
of which Related Parties (note 35) |
|---|---|---|---|---|
| Revenues | ||||
| Revenues from the sale of goods and services | 2,554,203,010 | 840,687,784 | 465,963,699 | 459,633,982 |
| Other operating income | 206,691,561 | 9,790,621 | 28,044,921 | 7,320,088 |
| Total revenues | 2,760,894,571 | 494,008,620 | ||
| Operating expenses | ||||
| Expenses for raw materials and services | 2,083,797,799 | 136,621,523 | 221,374,062 | 127,195,934 |
| Other operating expenses | 242,403,978 | 123,250,578 | 69,493,703 | 7,651,241 |
| Total operating expenses | 2,326,201,777 | 290,867,765 | ||
| Labour costs | 151,699,176 | 2,714,228 | 119,732,850 | 2,461,994 |
| Gross operating income - EBITDA | 282,993,618 | 83,408,005 | ||
| Depreciation, amortization, provisions and write-downs | 360,854,186 | 132,013,925 | ||
| Net operating income - EBIT | (77,860,568) | (48,605,920) | ||
| Result from non-recurring transactions | 48,336,439 | - | ||
| Financial balance | ||||
| Financial income | 491,423,599 | 471,792,883 | 299,498,071 | 273,920,071 |
| Financial expenses | 233,065,225 | 63,569,466 | 371,305,323 | 226,017,077 |
| Result from disposal of other shareholdings (AFS) | - | - | ||
| Total financial balance | 258,358,374 | (71,807,252) | ||
| Result before taxes | 228,834,245 | (120,413,172) | ||
| Income taxes | (45,215,469) | (46,926,065) | ||
| Result after taxes from operating activities | 274,049,714 | (73,487,107) | ||
| Net result from discontinued operations | - | - | ||
| NET RESULT OF THE YEAR | 274,049,714 | (73,487,107) |
A2A S.p.A. is a company incorporated under Italian law.
A2A S.p.A. and its subsidiaries (the "Group") operate both in Italy and abroad. In particular, abroad, the A2A Group is present in Montenegro following the acquisition of a controlling stake in the company EPCG which took place in 2009.
In particular, as the "Parent Company", A2A S.p.A. is responsible for the guiding strategy, administration, planning and control, financial management and coordinating the activities of the A2A Group.
Therefore, Group companies benefit from administrative, tax, legal, personnel management, procurement and communication services, so as to optimize the resources that are available within the Group and to use the existing known how in a cost-effective way.
Following the non-recurring transactions in the year, the company increased its operating activities.
The A2A Group mainly operates in the following sectors:
28
The separate financial statements for A2A S.p.A. are presented in euro, which is also the functional currency in the economies in which the company operates. In particular, the following notes are prepared in thousands of euro.
The separate financial statements of A2A S.p.A. at December 31, 2016, have been prepared on a going-concern basis and comprise the balance sheet, income statement, statement of comprehensive income, cash flow statement, statement of changes in equity and these notes.
These financial statements have been prepared in accordance with the international accounting standards (IAS/IFRSS) issued by the International Accounting Standard Board (IASB) and endorsed by the European Union, including "International Accounting Standards" (IAS) and "International Financial Reporting Standards" (IFRSS), as well as the interpretations of the "International Financial Reporting Interpretation Committee" (IFRIC) and rules issued in application of art. 9 of Legislative Decree 38/2005.
These explanatory notes include the supplemental information required by the Italian civil code, by Consob Resolutions no. 15519 and 15520 of July 27, 2006, and Consob communication no. 6064293 of July 28, 2006.
In this file, use has been made of some alternative indicators of performance (APM) that are different from the financial indicators expressly provided for by the IAS/IFRS international accounting standards adopted by the company; for details of these indicators, please see the specific paragraph "Alternative Indicators of Performance (APM)" in the file of the "Report on Operations".
These separate financial statements for the year ended December 31, 2016, were approved on April 3, 2017, by the Board of Directors, which authorized its publication, and has been audited by EY S.p.A. in accordance with their appointment by the shareholders of June 11, 2015, for the nine years from 2016 to 2024.
For the balance sheet, the company A2A S.p.A. has adopted a format which separates current and non-current assets and liabilities, as required by paras. 60 et seq. of IAS 1.
The income statement is presented by nature, a format which is considered more representative than a presentation by function. The selected format is in agreement with the presentation used by the Group's major competitors and in line with international practice.
The specific line items "Result from non-recurring transactions" and "Result from disposal of other shareholdings (AFS)" are in the format of the income statement in order to provide clear and immediate identification of the results arising from non-recurring transactions forming part of continuing operations, separating these from the results from discontinued operations. The line item "Non-recurring transactions" consists of the gains and losses arising from the measurement at fair value less costs to sell or from the sale or disposal of non-current assets (or disposal groups) classified as held for sale within the meaning of IFRS 5, the gains or losses arising on the disposal of shareholdings in unconsolidated subsidiaries and associates and other non-operating income and expenses. This item is presented between net operating income and the financial balance. In this way net operating income is not affected by nonrecurring operations, making it easier to measure the effective performance of the Group's ordinary operating activities.
The cash flow statement has been prepared using the indirect method as permitted by IAS 7.
The statement of changes in equity has been prepared in accordance with IAS 1.
The formats adopted for the financial statements are the same as those used to prepare the annual separate financial statements at December 31, 2015.
The separate financial statements as at December 31, 2016, have been prepared on a historical cost basis, with the exception of those items which under IFRS must be or can be measured at fair value, as discussed in further detail in the accounting policies.
The accounting principles, the accounting policies and the methods of measurement used in the preparation of the separate financial statements are consistent with those used to prepare the annual separate financial statements at December 31, 2015, except as specified below.
Pursuant to IAS 8, the subsequent paragraph "Accounting standards, amendments and interpretations applicable by the company as of the current year" indicates and briefly illustrates the amendments in force as of January 1, 2016.
The following paragraphs, "Accounting standards, amendments and interpretations approved by the European Union" and "Accounting standards approved by the European Union but applicable in future years" instead detail the accounting standards and interpretations already issued, whether not yet approved or approved by the European Union and therefore not applicable for the preparation of the financial statements at December 31, 2016, any impacts of which will then be transposed as of the financial statements of the following years.
As from January 1, 2016, some additions have been applied following specific paragraphs of the international accounting standards already adopted by the company in previous years, none of which had an effect, with respect to December 31, 2015, on the company's economic and financial results or reporting methods.
The main changes are described in the following:
• IFRS 11 "Joint Arrangements": issued by the IASB on May 6, 2014, the amendment to this standard provides guidance on how to account for the acquisition of an interest in a joint operation that is a business as defined by IFRS 3 "Business Combinations". The amendment in question is applicable from January 1, 2016. There were no impacts for the company because at December 31, 2016, this case was not present. Specifically, with the entry into force of the amendment to IFRS 11, the company has carried out an analysis of its jointly controlled shareholdings or joint ventures, analyzing for each the type of joint arrangement and verifying the existence of requirements of the standard for the identification of joint operations;
IAS 27 Revised "Separate Financial Statements": the amendment to this standard, issued by the IASB on August 12, 2014 and applicable from January 1, 2016, allows entities to use the equity method to account for investments in subsidiaries, joint ventures and associates in their separate financial statements. In continuity with previous years, the company has decided not to resort to said option;
IAS 28 "Investments in Associates and Joint Ventures": on December 18, 2014, this standard was amended regarding the investments in associates and joint ventures that are "investment entities": these investments can be measured at fair value or with the equity method. This amendment is applicable from January 1, 2016. There were no impacts for the company because at December 31, 2016, this case was not present;
34
(iv) IAS 34 "Interim financial reporting".
Regarding the first point, the amendment clarifies that the restatement of the financial statement figures shall not be resort to if an asset or group of assets available for sale is reclassified as "held for distribution", or vice versa. There were no impacts for the company because at December 31, 2016, this case was not present.
With reference to IFRS 7, the amendment provides that if an entity transfers a financial asset on terms which allow the "derecognition" of the asset, it shall be required to provide information regarding the involvement of the entity in the transferred asset, if it has signed service contracts that show an entity's interest in the future performance of the financial assets transferred. There were no impacts for the company because at December 31, 2016, this case was not present.
The amendment of IAS 19 proposed, clarifies that the discount rate to discount the obligations for benefits following the employment relationship, is determined with reference to market yields on corporate bonds of leading companies and, in countries where there is no "thick market" of such securities, the market yields of the securities of public entities are used. There were no impacts because the company already applies this accounting treatment.
The proposed amendment to IAS 34 requires disclosure of cross-references between the data reported in the interim financial statements and the information associated with them. There were no impacts because the company, in the preparation of the interim financial statements, already applies as required by the amendment to the standard in question.
The following standards and amendments to existing standards are still pending approval by the European Union and are therefore not applicable by the company. The dates indicated reflect the expected effectiveness date and enacted in the standards; this date is however subject to the actual approval by the competent bodies of the European Union:
entities that also apply IFRS 15. Any impacts regarding the adoption of the standard on the separate financial statements are being evaluated;
on December 8, 2016, the IASB issued some amendments to the standards approved in the three-year period 2014-2016 in particular IFRS 1 "First-time adoption of International Accounting Standards", IFRS 12 "Disclosure of shareholdings in other entities" and IAS 28 "Shareholdings in associates":
(i) With reference to IFRS 1, some exemptions are eliminated as provided by specific paragraphs of the standard;
The following standards have been approved by the European Union but will apply from 2018; therefore, they are not applicable by the company in the financial statements at December 31, 2016.
• IFRS 9 "Financial instruments": this standard, approved by the European Union on November 29, 2016, entirely replaces IAS 39 "Financial instruments: recognition and measurement" and introduces two new criteria to recognize and measure financial assets and liabilities. The main changes introduced by IFRS 9 may be summarized as follows: financial assets can be measured either at fair value or at their amortized cost. As a result, the categories "loans and receivables", "available- for-sale financial assets" and "held-to-maturity investments" disappear. Classification within the two categories is carried out on the basis of an entity's business model and the contractual cash flow characteristics of the financial asset. A financial asset is measured at amortized cost if both of the following requirements are met: the objective of the entity's business model is to hold assets to collect contractual cash flows (and therefore in substance not to earn trading profits) and the characteristics of the cash flows of the asset are solely payments of principal and interest. A financial asset is measured at fair value if it is not measured at amortized cost. The rules to account for derivatives have been simplified, as the embedded derivative and the host financial asset are no longer recognized separately.
All equity instruments - listed or unlisted - must be measured at fair value (IAS 39 established on the other hand that unlisted equity instruments should be valued at cost if fair value could not be reliably measured).
An entity has the option of presenting changes in the fair value of equity instruments that are not held for trading in equity; that option is not permitted for equity instruments that are held for trading. This designation is permitted on initial recognition, may be adopted for each individual instrument and is irrevocable. If an election is made for this option, changes in the fair value of these instruments may never be reclassified from equity to the income statement. Dividends on the other hand continue to be recognized in the income statement. IFRS 9 does not permit reclassifications between the two categories of financial asset except in the rare case of a change in an entity's business model. In this case the effects of the reclassification are applied prospectively.
The disclosures required to be made in the notes have been adjusted to the classification and measurements rules introduced by IFRS 9. On November 19, 2013, the IASB issued an amendment to this standard which mainly regards the following:
(i) the substantial revision of the "Hedge accounting", which will allow entities to better reflect their risk management activities in the financial statements;
A partial amendment to the standard was issued in July 2014 on the subject of the valuation of financial instruments, with the introduction of the expected-loss impairment model for loans which replaces the impairment model based on realized losses. Said impairment model uses a "forward looking" information in order to obtain early recognition of losses on receivables with respect to the "incurred loss" model that defers the recognition of the loss until occurrence of the event with reference to financial assets measured at amortized cost, financial assets measured at fair value recorded in other items of the comprehensive income statement, receivables arising from lease contracts, as well as assets arising from contracts and certain loan commitments and financial guarantee contracts.
The amendment in question is applicable from January 1, 2018.
38
The impact of the adoption of this standard on the separate financial statements is currently being analyzed; however, the company does not expect significant effects from the application thereof on recurring transactions;
• IFRS 15 "Revenues from contracts with customers": the standard, issued by the IASB on May 28, 2014 and approved by the European Union on October 29, 2016, is the result of efforts to achieve convergence between the IASB and the FASB ("Financial Accounting Standard Board", the body responsible for issuing new accounting standards in the United States) in order to achieve a single revenue recognition model applicable both in terms of IFRS and US GAAP. The new standard will apply to all contracts with customers, including contract work in progress, and will thus replace the current IAS 18 - Revenues and IAS 11 - Long-term contracts and all related interpretations. The essential element of IFRS 15 requires the recognition of revenue to be carried out for an amount that reflects the amount that the company expects to be entitled to receive in respect of the transfer of goods and/ or services.
A contract with a customer falls within the scope of the standard if all the following conditions are met:
Separate financial statements – Year 2016 Changes in international accounting standards
(iv) it is probable that the consideration to which the entity is entitled to in exchange for the goods or services will be collected.
IFRS 15 also includes the disclosure requirements that are significantly more extensive than the existing standard concerning the nature, amounts, timing and uncertainty of revenues and cash flows arising from contracts with customers.
Based on these considerations, and preliminary analysis conducted on the contracts in place, it is believed that the application of IFRS 15 will not have a material impact on the separate financial statements of A2A S.p.A.. The provisions of IFRS 15, following the amendments made with the amendment issued on September 11, 2015, will be effective for years beginning on or after January 1, 2018; at the present state, A2A S.p.A. does not expect to exercise the option of early adoption granted by the standard. The standard includes mandatory retroactive application and the transition can take place in two possible ways: retroactively to each previous year presented in accordance with IAS 8 (full retrospective approach) or retroactively by accounting for the cumulative effect from the initial application date (modified retrospective approach). In case of choosing the second approach, IFRS 15 is only applied retroactively to contracts that are not concluded at the initial application date (January 1, 2018). A2A is evaluating which of the two options of retroactive application to adopt.
For the purposes of implementation of IFRS 15, the company expects the completion of its analyses by the end of 2017, in time for the evaluation of the quantitative aspects of the adoption of the new standard, to be included in the annual financial statements at December 31, 2017.
Transactions in currencies other than the euro are initially recognized at the exchange rates at the date of the transaction. Monetary assets and liabilities denominated in a foreign currency are converted into euro at the exchange rates at the balance sheet date.
Non-monetary items measured at historical cost in foreign currency are translated at the exchange rates at the date of the transaction. Non-monetary items measured at fair value are translated at the exchange rates at the date when the fair value was determined.
40
Assets for business use are classified as tangible assets, while non-business assets are classified as investment property.
Tangible assets are measured at cost, including any additional charges directly attributable to bringing the asset into an operating condition (e.g. transport, customs duty, installation and testing costs, notary and land registry fees and any non-deductible VAT), increased when material and where there are obligations by the present value of the estimated cost of restoring the location from an environmental point of view or dismantling the asset. Borrowing costs, where directly attributable to the purchase or construction of an asset, are capitalized as part of the cost of the asset if the type of asset so warrants.
If important components of tangible assets have different useful lives, they are accounted for separately using the "component approach", assigning to each component its own useful life for the purpose of calculating depreciation (the component approach).
Land, whether occupied by residential or industrial buildings or devoid of construction, is not depreciated as it has an unlimited useful life, except for land used in production activities that is subject to deterioration over time (e.g. landfills, quarries).
Ordinary maintenance costs are fully expensed to the income statement in the year they are incurred. Costs for maintenance carried out at regular intervals are attributed to the assets to which they refer and are depreciated over the specific residual possibility of use of such.
Assets acquired under finance leases are accounted for on the basis of IAS 17 "Leases", which requires the leased asset to be recognized as a tangible asset together with a financial liability of the same amount. The liability is progressively reduced on the basis of the scheme for the repayment of the capital portion of the contractual lease instalments, while the carrying amount of the asset is systematically depreciated over its economic and technical life or over the shorter of the lease term and the asset's useful life, but only if there is reasonable certainty that the lessee will obtain ownership by the end of the lease term.
For assets acquired in leasing by Group companies, the guidance contained in IFRIC 4 "Determining whether an Arrangement contains a Lease" is applied. This interpretation provides guidance for arrangements which do not take the legal form of a finance lease but in substance transfer the risks and rewards of ownership of the assets included in the arrangement.
Applying the interpretation leads to the same accounting treatment as that required by IAS 17 "Leasing".
41
Tangible assets are stated net of accumulated depreciation and any write-downs. Depreciation is charged from the year in which the individual asset enters service on a straight-line basis over the estimated useful life of the asset for the business. The estimated realizable value which is deemed to be recoverable at the end of an asset's useful life is not depreciated. The useful life of each asset is reviewed annually and any changes, if needed, are made with a view to showing the correct value of the asset. During the reporting year, the useful lives of the CCGT plants were reviewed, as described in note "1) Tangible assets".
Landfills are depreciated on the basis of the percentage filled, which is calculated as the ratio between the volume occupied at the end of the period and the total volume authorized.
The main depreciation rates used, which are based on technical and economic considerations, are as follows:
| • | buildings ____________ | 1.7 % | - | 33.3 % |
|---|---|---|---|---|
| • | production plants___________ | 1.7 % | - | 50.0 % |
| • | transport lines _______ | 1.4 % | - 100.0 % | |
| • | transformation stations ___________ | 6.7 % | ||
| • | distribution networks _______ | 1.4 % | - | 10.0 % |
| • | miscellaneous equipment _________ | 4.8 % | - | 14.3 % |
| • | mobile phones _______ | 100.0 % | ||
| • | furniture and fittings ________ | 10.0 % - | 12.5 % | |
| • | electric and electronic office machines ____ | 10.0 % | ||
| • | vehicles _____________ | 10.0 % - | 12.5 % | |
| • | leasehold improvements __________ | 5 % | - | 10.9 % |
Tangible assets are subjected to impairment testing if there is any indication that an asset may be impaired in accordance with the paragraph below "Impairment of assets"; write-downs may be reversed in subsequent periods if the reasons for which they were recognized no longer apply.
When an asset is disposed of or if future economic benefits are no longer expected from using an asset, it is removed from the balance sheet and any gain or loss (being the difference between the disposal proceeds and the carrying amount) is recognized in the income statement in the year of the derecognition.
42
Intangible assets are identifiable non-monetary assets without physical substance which are controlled by the enterprise and able to produce future economic benefits, and include goodwill when acquired for consideration.
The fact of being identifiable distinguishes an intangible asset that has been acquired from goodwill; this requirement is normally met when: (i) the intangible asset is attributable to a legal or contractual right, or (ii) the asset is separable, in other words it can be sold, transferred, rented or exchanged individually or as an integral part of other assets.
Control by the enterprise consists of the right to enjoy the future economic benefits flowing from the asset and to restrict the access of others to those benefits.
Intangible assets are stated at purchase or production cost, including ancillary charges, determined in the same way as for tangible assets. Intangible fixed assets produced internally are not capitalized but recognized in the income statement in the year in which the costs are incurred.
Intangible assets with a definite useful life are reported in the financial statements net of the related accumulated amortization and impairments in the same way as for tangible assets. Changes in the expected useful life or in the ways in which the future economic benefits of an intangible asset are achieved by the company are accounted for by suitably adjusting the period or method of amortization, treating them as changes in accounting estimates. The amortization of intangible fixed assets with a definite useful life is charged to income statement in the cost category that reflects the function of the intangible asset concerned.
Intangible assets are subjected to impairment testing if there are specific indications that they may be impaired, in accordance with the paragraph below "Impairment of assets"; impairment losses may be reversed in subsequent periods if the reasons for which they were recognized no longer apply.
Intangible assets with an indefinite useful life and those that are not yet available for use are subjected to impairment testing on an annual basis, whether or not there are any specific indications that they may be impaired, in accordance with the paragraph below "Impairment of assets". Impairment losses recognized for goodwill are not reversed.
Gains or losses on the disposal of an intangible asset are calculated as the difference between the disposal proceeds and the carrying amount of the asset and recognized in the income statement at the time of the disposal.
The following amortization rates are applied to intangible assets with a definite useful life:
| • | industrial patents and intellectual property rights _______ | 12.5 % - 33.3 % | |
|---|---|---|---|
| • | concessions, licenses, trademarks and similar rights______ | 6.7 % | - 33.3 % |
IFRIC 12 states that, based on the characteristics of the concession arrangement, the infrastructures used in the provision of public services under concession are to be recognized as intangible assets if the operator has the right to receive a payment from the customer for the service provided, or as a financial asset if the operator has the right to receive payment from the public sector entity.
44
Tangible and intangible assets are subjected to impairment testing if there is any specific indication that they may be impaired.
Goodwill, other intangible assets with an indefinite useful life and assets not available for use are tested for impairment at least annually or more frequently if there is any specific indication that they may be impaired.
Impairment testing consists of comparing the carrying amount of an asset with its recoverable amount.
The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use. To determine an asset's value in use, the entity calculates the present value of the estimated future cash flows on the basis of business plans prepared by management, before tax, applying a pre-tax discount rate which reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset is lower than its carrying amount, a loss is recognized in the income statement. If a loss recognized for an asset other than goodwill no longer exists or is reduced, the carrying amount of the asset or cash-generating unit is increased to the new estimate of recoverable value, which may not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset. Reversals of impairment losses are immediately recognized in the income statement.
When the recoverable amount of the individual asset cannot be estimated, it is based on the cash generating unit (CGU) or group of CGUs that the asset belongs to and/or to which it may be reasonably allocated.
CGUs are identified on the basis of the company's organizational and business structure as homogeneous aggregations that generate independent cash inflows deriving from the continuous use of the assets allocated to them.
Different accounting policies are applied to quotas or certificates held for own use in the "Industrial Portfolio" and those held for trading purposes in the "Trading Portfolio".
Surplus quotas or certificates held for own use in the "Industrial Portfolio" which are in excess of the Group's requirements in relation to the obligations accruing at year end are recognized as other intangible assets at the actual cost incurred. Quotas or certificates assigned free of charge are recognized at a zero carrying amount. Given that they are assets for instant use, they are not amortized but subjected to Impairment Testing. The recoverable amount is the higher of value in use and market value. If, on the other hand, there is a deficit because the requirement exceeds the quotas or certificates in portfolio at the balance sheet date, a provision is recognized for the amount needed to meet the residual obligation, estimated on the basis of any purchase contracts, spot or forward, already signed at the balance sheet date; otherwise on the basis of market prices.
Quotas or certificates held for trading in the "Trading Portfolio" are recognized in inventories and measured at the lower of purchase cost and estimated realizable value based on market trends. Quotas or certificates assigned free of charge are recognized at a zero carrying amount. Market value is established on the basis of any sales contracts, spot or forward, already signed at the balance sheet date; otherwise on the basis of market prices.
Subsidiaries are those companies over which A2A S.p.A. exercises control as it "is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee", as defined by IFRS 10.
45
Associates are companies in which the company has a significant influence over strategic decisions, despite not having control, also considering potential voting rights, meaning voting rights deriving from convertible financial instruments; significant influence is assumed to exist when A2A S.p.A. holds, either directly or indirectly, more than 20% of voting rights exercisable at an ordinary shareholders' meeting.
A joint venture is a contractual agreement whereby two or more parties undertake an income generating activity subject to joint control.
Investments in subsidiaries, associates and joint ventures are recognized in the separate financial statements at their purchase cost less any distributions of capital or impairment losses determined through the Impairment Test.
Should the portion attributable to the company of any impairment losses for the shareholding exceed the carrying value of the investment, the value of the investment is set to zero, and the excess share of the loss is recognized among liabilities as a provision in the event the company in responsible for said liability.
The cost is restored in subsequent periods if the reasons for the impairment should cease to apply.
Construction contracts currently in progress are measured on the basis of the contractual fees that have accrued with reasonable certainty on the basis of the stage of completion, using the "cost to cost" method, so as to allocate the revenues and net result of the contract to the individual periods to which they belong in proportion to the progress being made on the project. Any difference, positive or negative, between the value of the contracts and advances received is recognized as an asset or a liability respectively.
In addition to the contractual fees, contract revenues include variants, price revisions and incentive awards to the extent that it is probable that they represent actual revenues that can be reliably determined. Ascertained losses are recognized independently of the stage of completion of contracts.
Inventories of materials and fuel are measured at the lower of weighted average cost and market value at the balance sheet date. Weighted average cost is determined for the period of reference for each inventory code. Weighted average cost includes any additional costs (such as sea freight, customers charges, insurance and lay or demurrage days in the purchase of fuel). Inventories are constantly monitored and, where necessary, obsolete stocks are written down with a charge to the income statement.
They include shareholdings (excluding shareholdings in subsidiaries, joint ventures and associates) held for trading (so-called trading shareholdings) or available for sale, non-current receivables and loans and other non-current financial assets, trade and other receivables deriving from company operations and other current financial assets such as cash and cash equivalents. The latter consist of bank and postal deposits, readily negotiable securities used as temporary investments of surplus cash and financial receivables due within three months. Financial instruments also include financial payables (bank loans and bonds), trade payables, other payables and other financial liabilities and derivatives.
Financial assets and liabilities are recognized at the time that the contractual rights and obligations forming part of the instrument arise.
Financial assets and liabilities are accounted for in accordance with IAS 39 "Financial Instruments: Recognition and Measurement".
Financial assets are initially recognized at fair value, increased by ancillary charges (purchase/ issue costs) in the case of assets and liabilities not measured at fair value through the income statement.
Measurement subsequent to initial recognition depends on which of the following categories the financial instrument falls into:
The following is a detailed explanation of the accounting policies applied in measuring each of the above categories after initial recognition:
Separate financial statements – Year 2016 Accounting standards and policies
realized, at which stage they are reclassified to the income statement. Losses recognized in equity are in any case reversed and recognized in the income statement, even if the financial asset has not been eliminated, if there is objective evidence that the asset is impaired. Unlisted investments with a fair value that cannot be reliably measured are measured at cost less any write-downs. Write-downs are reversed when the reasons originating the loss no longer exist, with the exception of write-downs on equity instruments. This category essentially includes the other investments (i.e. not subsidiaries, jointly controlled entities or associates), except for those held for trading (trading investments);
• derivative instruments, including embedded derivatives separate from the main agreement are measured at current value (fair value) and any changes are recognized in the income statement if they do not qualify as hedging instruments. Derivatives qualify as hedging instruments when the relationship between the derivative and the hedged item is formally documented and the effectiveness of the hedge is high, this being checked periodically. When derivatives hedge the risk of fluctuation in the fair value of hedged items (fair value hedges), they are measured at fair value through the income statement; consistent with this, the hedged items are adjusted to reflect variations in the fair value associated with the hedged risk. When derivatives hedge the risk of changes in the cash flows of the instruments being hedged (cash flow hedges), the effective portion of changes in the fair value of the derivatives is recognized directly in equity, while the ineffective portion is recognized in the income statement. The amounts recognized directly in equity are then reflected in the income statement in line with the economic effects produced by the hedged item.
48
Changes in the fair value of derivatives that do not meet the conditions to qualify as hedging instruments are recognized in the income statement. In particular, changes in the fair value of derivatives which hedge interest rate risk or currency risk but do not qualify for hedge accounting are recognized in "Financial income/expense" in the income statement; on the other hand changes in the fair value of derivatives which hedge commodity risk but do not qualify for hedge accounting are recognized in "Other operating income" in the income statement.
A financial asset (or where applicable, part of a financial asset or parts of a group of similar financial assets) is derecognized when:
In the cases in which the company has transferred the rights to receive financial flows from an asset and has neither transferred nor retained substantially all of the risks and rewards or has not lost control of the asset, it continues to recognize the asset to the extent of its continuing involvement in the asset. When continuing involvement takes the form of guaranteeing the transferred asset the extent of the continuing involvement is the lower of the initial carrying amount of the asset and the maximum amount that the company could be required to repay. Trade receivables considered definitively unrecoverable after all necessary recovery procedures have been completed are also removed from the balance sheet.
A financial liability is removed from the balance sheet when the underlying obligation is either discharged or cancelled or when it expires.
Where there has been an exchange between an existing borrower and lender of debt instruments with substantially different terms, or there has been a substantial modification of the terms of an existing financial liability, this exchange or modification is accounted for as a cancellation of the original financial liability and the recognition of a new financial liability. The difference in carrying amounts is recognized in the income statement.
The fair value of financial instruments that are listed in an active market is based on market prices at the balance sheet date. The fair value of instruments that are not listed on an active market is determined by using valuation techniques. In particular, in the absence of a forward market curve the measurement at fair value of financial derivatives for electricity has been estimated internally, using models based on industry best practice.
Non-current assets held for sale, disposal groups and discontinued operations whose carrying amount will be recovered principally through sale rather than continuous use are measured at the lower of their carrying amount and fair value less costs to sell. A disposal group is a group of assets to be disposed of together as a group in a single transaction together with the liabilities directly associated with those assets that will be transferred in that transaction. Discontinued operations on the other hand consist of a significant component of the Group such as a separate major line of business or a geographical area of operations or a subsidiary acquired exclusively with a view to resale.
In accordance with IFRSs, the figures for non-current assets held for sale, disposal groups and discontinued operations are shown on two specific lines in the balance sheet: non-current assets held for sale and liabilities directly associated with non-current assets held for sale.
Separate financial statements – Year 2016 Accounting standards and policies
Non-current assets held for sale are not depreciated or amortized and are measured at the lower of carrying amount and fair value less costs to sell; any difference between carrying amount and fair value less costs to sell is recognized in the income statement as a write-down.
The net economic results arising from discontinued operations, and only discontinued operations, pending the disposal process, any gains or losses on disposal and the corresponding comparative figures for the previous year or period are recognized in a specific line of the income statement: "Net result from discontinued operations".
The employees' leaving entitlement (TFR) and pension provisions are determined using actuarial methods; the rights accrued by employees during the year are recognized in the income statement as "labour costs", whereas the figurative financial cost that the company would have to bear if it were to ask the market for a loan of the same amount as the TFR is recognized as part of the "financial balance". Actuarial gains and losses arising from changes in actuarial assumptions are recognized in income statement taking into account the residual average working life of the employees.
Following the introduction of Finance Law no. 296 of December 27, 2006, only the portion of accrued employees' leaving entitlement that remained in the company has been measured in accordance with IAS 19, as amounts are now paid over to a separate entity as they accrue (either to a supplementary pension scheme or to funds held by INPS). As a result of these payments the company no longer has any obligations in connection with the services employees may render in the future.
Guaranteed employee benefits paid on or after the termination of employment through defined benefit plans (energy discount, health care or other benefits) or long-term benefits (loyalty bonuses) are recognized in the period when the right vests.
The liability for defined benefit plans, net of any plan assets, is determined by independent actuaries on the basis of actuarial assumptions and recognized on an accrual basis in line with the work performed to obtain the benefits.
Gains and losses arising from actuarial calculations are recognized in a specific equity reserve.
Provisions for risks and charges regard costs of a determinate nature and of certain or probable existence which at year-end are uncertain in terms of timing or amount. Provisions are recognized when there is a legal or constructive present obligation arising from past events, the settlement of which is expected to result in an outflow of resources embodying economic benefits, and it is possible to make a reasonable estimate of the obligation.
Provisions are recognized at the best estimate of the amount that the company would have to pay to settle the liability or to transfer it to third parties at the balance sheet date. If the effect of discounting is significant, provisions are calculated by discounting expected future cash flows at a pre-tax discount rate that reflects the current market assessment of the time value of money. If discounting is used the increase in the provision due to the passage of time is recognized as financial expense.
If the liability relates to tangible assets (such as the dismantling and reclamation of industrial sites), the initial provision is recognized as a counter-entry to the assets to which it refers; expense is then charged to profit and loss as the asset in question is depreciated.
Treasury shares are accounted for as a deduction from equity. In particular, treasury shares are recognized as a negative equity reserve.
Grants, both from public entities and from third party private entities, are measured at fair value when there is the reasonable certainty that they will be received and that the Group will be able to comply with the terms and conditions for obtaining them.
Grants received to provide support for the cost of specific assets are recognized as a direct deduction from the assets concerned and credited to the income statement over the life of the depreciable asset to which they refer.
Revenue grants (given to provide the company with immediate financial support or as compensation for expenses or losses incurred in a previous accounting period) are recognized in their entirety in the income statement as soon as the conditions for recognition thereof are met.
Revenues from sales and services are recognized to the extent that it is possible to establish their fair value on a reliable basis and it is probable that the related economic benefits will flow to the Group on the transfer of all significant risks and benefits normally deriving from ownership of the asset or on completion of the service. Depending on the type of transaction, revenues are recognized on the basis of the following specific criteria:
Revenues are stated net of returns, discounts, allowances and rebates, as well as directly related taxes.
Expenses relate to goods or services sold or consumed during the year or as a result of systematic allocation; if no future use is envisaged they are recognized directly in the income statement.
The item "Non-recurring transactions" consists of the gains and losses arising from the measurement at fair value less costs to sell or from the sale or disposal of non- current assets (or disposal groups) classified as held for sale within the meaning of IFRS 5, the gains or losses arising on the disposal of shareholdings in unconsolidated subsidiaries and associates and other non-operating income and expense.
Financial income is recognized when interest income arises using the effective interest method, i.e. at the rate that exactly discounts expected future cash flows over the expected life of the financial instrument.
Financial expense is recognized in the income statement on an accrual basis on the basis of the effective interest.
Dividend income is recognized when it is established that the shareholders have a right to receive payment, and is recognized as financial income in the income statement.
Current income taxes are based on an estimate of taxable income in compliance with tax regulations in force or substantially approved at the balance sheet date, bearing in mind any exemptions or tax credits due. Account is also taken of the fact that the Group now files for tax on a consolidated basis.
Deferred tax assets and liabilities are calculated on the temporary differences between the carrying amount of assets and liabilities in the balance sheet and their tax bases, with the exception of goodwill which is not deductible for tax purposes and any differences resulting from investments in subsidiaries which are not expected to reverse in the foreseeable future. The tax rates used are those expected to apply to the period when the temporary differences reverse. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the tax benefit will be realized. The measurement of deferred tax assets takes account of the period for which business plans are available.
When transactions are recognized directly in equity, any related current or deferred tax effects are also recognized directly in equity. Deferred taxes on the undistributed profits of Group companies are only provided for if there is the real intention to distribute such profits and, in any case, if the taxation is not offset as the result of filing a Group tax return.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
Taxes are only offset when they are levied by the same tax authority, when there is the legal right of set-off and when settlement of the net balance is expected.
54
Preparing the financial statements and notes requires the use of estimates and assumptions in determining certain assets and liabilities and measuring contingent assets and liabilities. The actual results after the event could differ from such estimates.
Estimates have been used for making assessments for impairment testing, for calculating certain sales revenues, provisions for risks and charges, provisions for receivables and other provisions, depreciation and amortization and for measuring derivatives, employee benefits and taxation. The underlying estimates and assumptions are regularly reviewed and the effect of any change is immediately recognized in the income statement.
The following are the key assumptions made by management as part of the process of making these accounting estimates. The inherently critical element of such estimates comes from using assumptions or professional opinions on matters that are by their very nature uncertain. Changes in the conditions underlying the assumptions and opinions used could have a material impact on subsequent results.
The carrying amount of non-current assets (including goodwill and other intangible assets) and of assets held for sale is reviewed periodically and whenever circumstances or events require a more frequent assessment. If it is considered that the carrying amount of a group of non-current assets is impaired, the group is written down to its recoverable amount which is estimated with reference to its use or future disposal, depending on the company's latest plans. Management is of the opinion that the estimates of such recoverable amounts are reasonable, although possible changes in the factors underlying the estimates on which these recoverable amounts have been calculated could produce different measurements. For further details on the way in which impairment testing was carried out and the results of such testing, reference is made to the specific paragraph.
Revenues from sales to retail and wholesale customers are recognized on an accrual basis. Revenues from sales of electricity and gas to customers are recognized when the supply takes place, based on periodic meter readings; they also include an estimate of the usage of electricity and gas from the date of the last reading to the balance sheet date. Revenues from the date of the last reading to the balance sheet date are based on estimates of customers' daily usage, according to their historical profile, and are adjusted to reflect weather conditions or other factors that may affect the usage being estimated.
In certain circumstances it is not easy to identify whether a legal or constructive present obligation exists. The directors assess these situations case by case, together with an estimate of the economic resources required to settle the obligation. Estimating such provisions is the result of a complex process that involves subjective judgements on the part of company management. When the directors are of the opinion that it is only possible that a liability could arise, the risks are disclosed in the section on commitments and contingent liabilities without making any provision.
The liabilities for landfills provision represents the amount set aside to meet the costs which will be incurred for the management of the period of closure and post-closure of landfills currently in use. The future outlays, calculated for each landfill by a specific appraisal, were discounted in accordance with the provisions of IAS 37.
The provision for bad debts reflects the estimated losses in the company's receivables portfolio. Provisions have been made to cover specific cases of insolvency as well as estimated losses expected on the basis of past experience with balances of similar credit risk.
Separate financial statements – Year 2016 Accounting standards and policies
Although the provision is considered adequate, the use of different assumptions or changes in prevailing economic conditions, even more so in this period of recession, could give rise to adjustments to the bad debts provision.
56
Depreciation and amortization charges are a significant cost for the company. Non-current assets are depreciated or amortized on a straight-line basis over the useful lives of the assets. The useful lives of the company's non-current assets are established by the directors, with the assistance of expert appraisers, when they are purchased. The company periodically reviews technological and sector changes, dismantling/closure charges and the recovery amount of assets to update their residual useful lives. This periodic update could lead to a change in the period of depreciation or amortization and hence also in the depreciation or amortization charge in future years.
The derivatives used are measured at fair value based on the forward market curve at the balance sheet date, if the underlying of the derivative is traded on markets that provide official, liquid forward prices. If the market does not provide forward prices, forecast price curves are used based on simulation models developed by Group companies internally. However, the actual results of derivatives could differ from the measurements made.
The serious turbulence on markets for the energy commodities traded by the company, as well the fluctuations in exchange and interest rates, could lead to greater volatility in cash flows and in expected results.
The calculations of expenses and the related liabilities are based on actuarial assumptions. The full effects of any changes in these actuarial assumptions are recognized in a specific equity reserve.
Accounting for business combinations entails allocating the difference between purchase cost and net carrying amount to the assets and liabilities of the acquired business. For the majority of assets and liabilities this difference is allocated by recognizing the assets and liabilities at fair value. If positive, the unallocated portion is recognized as goodwill. If negative, it is recognized in the income statement. A2A S.p.A. bases its allocations on available information and, for the more significant business combinations, on external appraisals.
The uncertainties that exist regarding the way of applying certain tax regulations have led the company to taking an interpretative stance when providing for current taxes in the financial statements; such interpretations could be overturned by official clarifications on the part of the tax authorities.
Deferred tax assets are accounted for on the basis of the taxable profit expected to be available in future years. Assessing the expected taxable profit for the purpose of accounting for deferred taxation depends on factors that can vary over time, and may lead to significant effects on the measurement of deferred tax assets.
The Balance Sheet of A2A S.p.A. includes, with respect to the situation at December 31, 2015, the effect of the following non-recurring transactions:
58
The shareholding in SEASM S.r.l. held 67% by A2A S.p.A., reclassified in the previous year under "Non-current assets held for sale" since it is a discontinued operation in accordance with IFRS 5, following the decision of management to sell it, in 2016, it was reported under "Shareholdings in subsidiaries" as the sale was not finalized.
Notes to the balance sheet
| Thousands of euro | Balance | Effect | Changes during the year Balance |
||||||
|---|---|---|---|---|---|---|---|---|---|
| at 12 31 2015 |
of non recurring transactions |
Invest. | Others changes |
Disposals and sales net of prov. |
Depreciation and write-downs |
Total changes |
at 12 31 2016 |
||
| Land | 29,672 | 4,027 | 2 | (1,009) | (1,007) | 32,692 | |||
| Buildings | 263,328 | 25,776 | 1,029 | 420 | (1,628) | (40,361) | (40,540) | 248,564 | |
| Plant and machinery | 909,955 | 174,972 | 1,962 | 52,128 | (445) | (276,802) | (223,157) | 861,770 | |
| Industrial and commercial equipment | 1,373 | 302 | 254 | (593) | (339) | 1,336 | |||
| Other assets | 2,284 | 29 | 644 | (2) | (1,152) | (510) | 1,803 | ||
| Construction in progress and advances | 35,246 | 3,219 | 17,789 | (35,131) | (20) | (2,663) | (20,025) | 18,440 | |
| Leasehold improvements | 24,836 | 5,888 | (2,209) | 3,679 | 28,515 | ||||
| Total tangible assets | 1,266,694 | 208,325 | 27,568 | 17,415 | (2,093) | (324,789) | (281,899) | 1,193,120 | |
| of which: | |||||||||
| Historical cost | 3,453,795 | (622,213) | 27,568 | 17,415 | (34,485) | 10,498 | 2,842,080 | ||
| Accumulated depreciation | (2,044,040) | 850,150 | 32,392 | (121,489) | (89,097) (1,282,987) | ||||
| Write-downs | (143,061) | (19,612) | (203,300) | (203,300) | (365,973) |
As at December 31, 2016, "Tangible assets" amounted to 1,193,120 thousand euro (1,266,694 thousand euro in the previous year) and include the effect of non-recurring transactions for the year for a total of 208,325 thousand euro.
"Tangible assets" in 2016, net of non-recurring transactions, show a decrease of 281,899 thousand euro resulting from the following:
For a detailed analysis of changes in the year, reference shall be made to annex "1 Statement of changes in tangible assets".
Investments made during the year refer to:
60
"Tangible assets" include "Construction in progress and advances" for 18,440 thousand euro (35,246 thousand euro at December 31, 2015), presenting, net of non-recurring transactions, a decrease of 20,025 thousand euro resulting from the counter effects of the following items:
| Thousands of euro | Balance | Effect | Changes during the year | Balance | ||||
|---|---|---|---|---|---|---|---|---|
| at 12 31 2015 |
of non recurring transactions |
Invest. | Others changes |
Amort. | Total changes |
at 12 31 2016 |
||
| Industrial patents and intellectual property rights | 4,139 | 3,090 | 2,475 | 1,496 | (4,246) | (275) | 6,954 | |
| Concessions, licences, trademarks and similar rights | 9,529 | (21) | 4,361 | 562 | (4,152) | 771 | 10,279 | |
| Goodwill | 37,480 | 37,480 | ||||||
| Assets in progress | 1,323 | 8 | 3,814 | (2,239) | 1,575 | 2,906 | ||
| Other intangible assets | 134 | 54,404 | 3,660 | (31) | 3,629 | 58,167 | ||
| Total intangible assets | 52,605 | 57,481 | 10,650 | 3,479 | (8,429) | 5,700 | 115,786 |
At the reporting date, "Intangible assets" amounted to 115,786 thousand euro (52,605 thousand euro at December 31, 2015) and include the effect of non-recurring transactions in the year for a total of 57,481 thousand euro. In applying IFRIC 12, from 2010 intangible assets also include assets in concession.
The increase for the year, excluding non-recurring transactions, was 5,700 thousand euro and is due to the combined effect of the following components:
More specifically, investments made during the year refer to the following:
"Intangible assets" include "Construction in progress" for 2,906 thousand euro (1,323 thousand euro at December 31, 2015), presenting, net of non-recurring transactions, an increase of 1,575 thousand euro resulting from the counter effects of the following items:
For more in-depth information, refer to annex "2. Statement of changes in intangible assets".
| Thousands of euro | Balance | Changes during the year | Balance | ||||||
|---|---|---|---|---|---|---|---|---|---|
| at 12 31 2015 |
Invest. | Others changes |
Reclass. | Disp./ Write downs |
Amort. | Total changes |
at 12 31 2016 |
||
| Goodwill | 37,480 | - | - | - | - | - | - | 37,480 | |
| Total goodwill | 37,480 | - | - | - | - | - | - | 37,480 |
Goodwill equal to 37,480 thousand euro, was formed as a result of non-recurring transactions with third parties.
Under IAS 36 goodwill, an intangible asset with an indefinite useful life, is not amortized systematically but tested at least once a year ("Impairment Test"). As goodwill neither generates independent cash flow nor can it be sold separately, IAS 36 calls for a secondary audit of its recoverable amount, determining cash flows generated by a set of assets that constitute the business to which it belongs, i.e. the Cash Generating Unit (CGU).
The verification of the recoverable value has been carried out within the broader Impairment Test activities of the various CGU carried out for the Consolidated Financial Statements, which includes the goodwill in question.
From the impairment test carried out, the recoverable value of the CGU revealed no need for write-downs. More specifically, the future cash flows associated with the goodwill of A2A S.p.A. allow the recovery thereof.
The parameters used for the purposes of the Impairment Test are set out in note 2 of the Consolidated Annual Financial Report, to which reference is made for further details.
| Thousands of euro | Balance at 12 31 2015 |
Effect of non-recurring transactions |
Net changes during the year |
Balance at 12 31 2016 |
of which included in the NFP |
|
|---|---|---|---|---|---|---|
| 12 31 2015 | 12 31 2016 | |||||
| Shareholdings in subsidiaries | 3,839,327 | (42,805) | 58,358 | 3,854,880 | - | - |
| Shareholdings in affiliates | 51,600 | - | (4,914) | 46,686 | - | - |
| Other non-current financial assets | 405,362 | 5 | 1,096 | 406,463 | 401,554 | 402,749 |
| Total shareholdings and other non-current financial assets | 4,296,289 | (42,800) | 54,540 | 4,308,029 | 401,554 | 402,749 |
"Shareholdings in subsidiaries" amounted to 3,854,880 thousand euro (3,839,327 thousand euro as at December 31, 2015).
The following table illustrates the changes during the year:
| Shareholdings in subsidiaries - Thousands of euro | Total |
|---|---|
| Balance at December 31, 2015 | 3,839,327 |
| Effect of non-recurring transactions | (42,805) |
| Changes during the year: | |
| - acquisitions and capital increases | 112,929 |
| - sales and decreases | (10) |
| - revaluations | - |
| - write-downs | (55,030) |
| - other changes | - |
| - reclassifications | 469 |
| Total net changes in the year | 58,358 |
| Balance at December 31, 2016 | 3,854,880 |
The value of shareholdings in subsidiaries, net of the effect of non-recurring transactions for the year 2016, is negative for 42,805 thousand euro, a total increase of 58,358 thousand euro compared to the previous year-end and is due:
Further information regarding movements involving shareholdings in subsidiary companies may be found within annexes 3a and 4a to compare their book value and corresponding portions of net assets.
"Shareholdings in affiliates and joint ventures" amounted to 46,686 thousand euro (51,600 thousand euro as at December 31, 2015).
The changes in the year are shown below:
| Shareholdings in affiliates and joint ventures - Thousands of euro | |||||
|---|---|---|---|---|---|
| Balance at December 31, 2015 | 51,600 | ||||
| Changes during the year: | |||||
| - effect of non-recurring transactions | - | ||||
| - acquisitions and capital increases | 86 | ||||
| - sales and decreases | - | ||||
| - revaluations | - | ||||
| - write-downs | (5,000) | ||||
| - reclassifications | - | ||||
| Total net changes in the year | (4,914) | ||||
| Balance at December 31, 2016 | 46,686 |
As at December 31, 2016, the value of shareholdings in affiliates and joint ventures presented a decrease of 4,914 thousand euro with respect to the close of the previous fiscal year and is attributable to the effect of the following operations of opposite sign:
Further details regarding shareholdings in affiliates may be found in annexes 3/b and 4/b.
The recoverable value of shareholdings has been measured based on the present value of the corresponding expected net cash flows attributable to the shareholdings of A2A S.p.A.. The cash flows used are in line with those used for the Impairment Test of the CGU for the consolidated financial statements. The same applies to the methodological approach and discount rates adopted further detailed in the Consolidated Annual Financial Report (note 2).
Shown below are the carrying values of the individual shareholdings subject to Impairment Test by an external expert, along with a specification of the type and discount rate applied. It shall be recalled that the Impairment Test is carried out for all investments which have a carrying value higher than the corresponding fraction of shareholders' equity of competence and/or in the presence of specific impairment indicators.
| Shareholdings Millions of euro |
Pre-impairment test values at 12 31 2016 |
Recoverable amount (value in use) at 12 31 2016 |
Write-down | WACC | Growth rate g |
|---|---|---|---|---|---|
| A2A gencogas S.p.A. | 564.3 | 510.3 | (54.0) | 9.9% | 1.0% |
| Rudnik Uglja Ad Pljevlja | 12.1 | 7.1 | (5.0) | 12.9% | 1.0% |
| Shareholdings Millions of euro |
Pre-impairment test values at 12 31 2015 |
Recoverable amount (value in use) at 12 31 2015 |
Write-down | WACC | Growth rate g |
| Edipower S.p.A. | 854.6 | 737.6 | (117.0) | 9.0% | 1.0% |
| EPCG | 376.0 | 279.0 | (97.0) | 10.3% | 1.0% |
Even in the presence of a result of Impairment Test higher than the value of the shareholding in EPCG, it was not considered prudent to reverse the previous write-down.
The other shareholdings did not require any write-downs. It is noted that for A2A Ciclo Idrico S.p.A., the 2016 impairment test was not carried out in the absence of impairment indicators.
| Shareholdings Millions of euro |
Pre-impairment test values at 12 31 2016 |
Recoverable amount (value in use) at 12 31 2016 |
WACC | Growth rate g |
|---|---|---|---|---|
| Aspem S.p.A. | 26.5 | 39.0 | 7.3% - 8.9% - 7.0%(*) | 1.0% |
| EPCG | 279.0 | 283.0 | 9.9% | 1.0% |
(*) The values indicated refer respectively to the three sectors in which the company operates (gas-environment-water networks).
| Shareholdings Millions of euro |
Pre-impairment test values at 12 31 2015 |
Recoverable amount (value in use) at 12 31 2015 |
WACC | Growth rate g |
|---|---|---|---|---|
| Aspem S.p.A. | 26.5 | 49.0 | 7.3% - 8.3% - 6.2%(*) | 1.0% |
| A2A Ciclo Idrico S.p.A. | 167.0 | 295.0 | 6.3% | 1.0% |
| Ergosud S.p.A. | - | - | 9.0% | 1.0% |
(*) The values indicated refer respectively to the three sectors in which the company operates (gas-environment-water networks).
66
"Other non-current financial assets", which include the effect of non-recurring transactions for 5 thousand euro, amounted to 406,463 thousand euro (405,362 thousand euro at December 31, 2015), of which:
| Thousands of euro | Balance at 12 31 2015 |
Effect of non-recurring transactions |
Changes during the year |
Balance at 12 31 2016 |
|---|---|---|---|---|
| Deferred tax assets | 48,261 | (5,573) | 30,738 | 73,426 |
This item, which includes the net effect of deferred tax liabilities and deferred tax assets as per corporate income tax and regional tax as well as provisions made solely for tax purposes, resulted in a net asset of 73,426 thousand euro. The recoverability of "Deferred tax assets" recognized in the financial statements is considered likely, since future plans include IRES taxable income sufficient to absorb the temporary differences that will be reversed; for the years of the plan for which the IRAP taxable income is not provided sufficiently to absorb IRAP temporary differences, it was decided to repay the related IRAP deferred tax assets and liabilities.
Deferred tax assets are calculated using the tax rate applicable at the time of repayment.
At December 31, 2016, the amounts relative to deferred tax assets/deferred tax liabilities have been expressed as net after offsetting in accordance with IAS 12.
This item is detailed within the table below:
| Thousands of euro | Balance at 12 31 2016 |
Balance at 12 31 2015 |
|---|---|---|
| Value differences of tangible assets | 171,511 | 81,922 |
| Adoption of the financial lease standard (IAS 17) | 5,592 | 5,592 |
| Value differences of intangible assets | 2,886 | 5,633 |
| Employee leaving entitlement (TFR) | 1,226 | 187 |
| Amounts to be paid in 2016 | - | 1,571 |
| Other deferred tax liabilities | 6,103 | 3,976 |
| Deferred tax liabilities (A) | 187,318 | 98,881 |
| Tax loss carryforwards | - | - |
| Taxed risk provisions | 93,488 | 62,196 |
| Amortization, depreciation and write-downs | 89,989 | 31,808 |
| Application of the financial instrument standard (IAS 39) | 359 | 6,889 |
| Bad debts provision | 2,008 | 1,816 |
| Grants | 2,654 | 2,654 |
| Goodwill | 65,914 | 31,039 |
| Amounts to be paid in 2016 | (1) | 5,259 |
| Other deferred tax assets | 6,333 | 5,481 |
| Deferred tax assets (B) | 260,744 | 147,142 |
| Net effect deferred tax assets (B-A) | 73,426 | 48,261 |
For further details and information, please refer to the item "Income/expenses for income tax" on the income statement.
| Thousands of euro | Balance at 12 31 2015 |
Effect of non-recurring |
Changes during the |
of which included in the NFP |
||
|---|---|---|---|---|---|---|
| transactions | year | 12 31 2015 | 12 31 2016 | |||
| Non-current derivatives | - | - | 3,868 | 3,868 | - | 3,868 |
| Other non-current assets | 453 | 197 | (64) | 586 | - | - |
| Total other non-current assets | 453 | 197 | 3,804 | 4,454 | - | 3,868 |
"Other non-current assets" amounted to 4,454 thousand euro (453 thousand euro at December 31, 2015), with an increase of 3,804 thousand euro compared with the previous year, net of the effect of non-recurring transactions, positive for 197 thousand euro, and were made up of:
| Thousands of euro | Balance at 12 31 2015 |
Effect of non-recurring transactions |
Changes during the year |
Balance at 12 31 2016 |
|---|---|---|---|---|
| - Materials | 9,022 | (7,883) | 187 | 1,326 |
| - Material obsolescence provision | (4,290) | 5,548 | (1,766) | (508) |
| Total materials | 4,732 | (2,335) | (1,579) | 818 |
| - Fuel | 45 | 82,703 | (18,994) | 63,754 |
| - Others (include environmental certificates) | - | 21,505 | (21,497) | 8 |
| Raw and ancillary materials and consumables |
4,777 | 101,873 | (42,070) | 64,580 |
| Third-party fuel | - | 3,264 | 3,791 | 7,055 |
| Total inventory | 4,777 | 105,137 | (38,279) | 71,635 |
Inventories at December 31, 2016 amounted to 71,635 thousand euro (4,777 thousand euro at December 31, 2015) and include the net effect of non-recurring transactions, positive for 105,137 thousand euro, while the changes in the year were negative and equal to 38,279 thousand euro.
This item includes:
| Thousands of euro | Balance at 12 31 2015 |
Effect of non-recurring transactions |
Changes during the year |
Balance at 12 31 2016 |
|---|---|---|---|---|
| Trade receivables invoices issued | 40,501 | 107,427 | (45,116) | 102,812 |
| Trade receivables invoices to be issued | 110,194 | 162,294 | 285,465 | 557,953 |
| Bad debts provision | (3,747) | (4,613) | (2,210) | (10,570) |
| Total trade receivables | 146,948 | 265,108 | 238,139 | 650,195 |
At December 31, 2016, trade receivables amounted to 650,195 thousand euro (146,948 thousand euro at December 31, 2015) and increased by 238,139 thousand euro, net of the effect of non-recurring transactions, positive for 265,108 thousand euro. These receivables include:
Trade receivables at December 31, 2016 include the receivables relating to the trading activities and receivables for the commercialization of electricity and gas resulting from the incorporation of A2A Trading S.r.l. with effect from January 1, 2016.
At the reporting date, the bad debt provision amounted to 10,570 thousand euro, an increase of 2,210 thousand euro, net of non-recurring transactions for 4,613 thousand euro. This provision is considered adequate to cover the risks to which it relates.
The changes in the provisions to adjust the value of receivables for the sale of electricity and the provision of services are detailed in the following table:
| Thousands of euro | Balance at 12 31 2015 |
Effect of non-recurring transactions |
Accruals | Utilizations | Other changes |
Balance at 12 31 2016 |
|---|---|---|---|---|---|---|
| Bad debts provision | 3,747 | 4,613 | 2,592 | (382) | - | 10,570 |
The following is the aging of trade receivables:
| Thousands of euro | 12 31 2015 | 12 31 2016 |
|---|---|---|
| Trade receivables of which: | 146,948 | 650,195 |
| Current | 28,753 | 32,428 |
| Past due of which: | 11,748 | 70,384 |
| - Past due up to 30 days | 618 | 45,302 |
| - Past due from 31 to 180 days | 5 | 2,137 |
| - Past due from 181 to 365 days | 3,068 | 3,109 |
| - Past due over 365 days | 8,057 | 19,836 |
| Invoices to be issued | 110,194 | 557,953 |
| Bad debts provision | (3,747) | (10,570) |
Notes to the balance sheet
| Thousands of euro | Balance at 12 31 2015 |
Effect of non-recurring |
Changes during the |
Balance at 12 31 2016 |
in the NFP | of which included |
|---|---|---|---|---|---|---|
| transactions | year | 12 31 2015 | 12 31 2016 | |||
| Current derivatives | 16,096 | 38,675 | 205,662 | 260,433 | 16,096 | 65 |
| Other current assets of which: | 88,608 | (11,135) | 32,830 | 110,303 | - | - |
| - receivables from Cassa per i Servizi Energetici e Ambientali |
- | - | 5,827 | 5,827 | ||
| - advances to suppliers | 272 | 4,878 | 1,808 | 6,958 | ||
| - receivables from employees | 308 | 22 | (112) | 218 | ||
| - tax receivables | 1,974 | 953 | 18,424 | 21,351 | ||
| - receivables related to future years | 1,826 | (1,804) | 941 | 963 | ||
| - receivables from subsidiaries for tax consolidation | 78,457 | (35,321) | 16,458 | 59,594 | ||
| - receivables from social security entities | 981 | 52 | (1) | 1,032 | ||
| - receivables for water derivation fees | 980 | - | (927) | 53 | ||
| - Stamp office | 130 | - | (2) | 128 | ||
| - receivables for security deposits | - | 1,003 | (521) | 482 | ||
| - receivables from Ergosud | - | 19,000 | (9,864) | 9,136 | ||
| - receivables for hedging | - | - | 2,750 | 2,750 | ||
| - other sundry receivables | 3,680 | 82 | (1,951) | 1,811 | ||
| Total other current assets | 104,704 | 27,540 | 238,492 | 370,736 | 16,096 | 65 |
"Other current assets" presented a balance of 370,736 thousand euro (104,704 thousand euro at December 31, 2015), an increase of 238,492 thousand euro with respect to the previous year, net of non-recurring transactions, positive for 27,540 thousand euro.
"Current derivatives" equal to 260,433 thousand euro refer primarily to the fair value measurement of commodity derivatives at the end of the year under review resulting from the incorporation of A2A Trading S.r.l., effective January 1, 2016; at December 31, 2015, this item included the fair value measurement of hedging derivatives, mainly related to Interest Rate Swap (IRS) contracts to hedge against the risk of unfavourable changes in interest rates on bonds matured during the year.
Receivables from Cassa per i Servizi Energetici e Ambientali, amounting to 5,827 thousand euro (no value at December 31, 2015), refer to receivables relating to the conclusion of the mechanism inherent Resolution 196/2013/R/gas.
Tax receivables, amounting to 21,351 thousand euro, mainly relate to tax receivables from the tax authorities for VAT, excise and withholding taxes.
Receivables from Ergosud amounting to 9,136 thousand euro refer to the receivable due for new entry plants (Scandale Plant), regarding portions of emission allowances as provided by AEEGSI Resolutions ARG/elt no. 194/10 and no. 117/10.
| Thousands of euro | Balance at 12 31 2015 |
Effect of non-recurring |
Changes during the |
Balance at 12 31 2016 |
in the NFP | of which included |
|---|---|---|---|---|---|---|
| transactions | year | 12 31 2015 | 12 31 2016 | |||
| Financial assets from third parties | - | - | 1.400 | 1.400 | - | 1.400 |
| Financial assets from related parties | 605,367 | (187,858) | (36,264) | 381,245 | 605,367 | 381,245 |
| Total current financial assets | 605,367 | (187,858) | (34,864) | 382,645 | 605,367 | 382,645 |
"Current financial assets" amounted to 382,645 thousand euro and refer to:
This item, net of the effect of non-recurring transactions, negative for 187,858 thousand euro, decreased by 34,864 thousand euro and mainly refers to lower receivables accrued on the current account held with the subsidiaries.
72
| Thousands of euro | Balance at 12 31 2015 |
Effect of non-recurring transactions |
Changes during the year |
Balance at 12 31 2016 |
|---|---|---|---|---|
| Current tax assets | 38,987 | 13,719 | (1,346) | 51,360 |
At December 31, 2016, this item amounted to 51,360 thousand euro (38,987 thousand euro at December 31, 2015) and refers to IRAP receivables (13,863 thousand euro), as well as to IRES receivables (25,015 thousand euro), relating to amounts requested for reimbursement on payments of previous years, and the remaining credit for Robin Tax (12,482 thousand euro) paid in previous years and that will be recovered in subsequent years.
| Thousands of euro | Balance at 12 31 2015 |
Effect of non-recurring |
Changes during the |
Balance at 12 31 2016 |
in the NFP | of which included |
|---|---|---|---|---|---|---|
| transactions | year | 12 31 2015 | 12 31 2016 | |||
| Cash and cash equivalents | 587,050 | 28,103 | (336,946) | 278,207 | 587,050 | 278,207 |
"Cash and cash equivalents" at December 31, 2016 amounted to 278,207 thousand euro (587,050 thousand euro at December 31, 2015), with a decrease of 336,946 thousand euro compared with the end of the previous year, net of the effect of non-recurring transactions, positive for 28,103 thousand euro. Bank deposits include accrued interest not yet credited by the end of the year.
| Thousands of euro | Balance at 12 31 2015 |
Effect of non-recurring transactions |
Changes during the year |
Balance at 12 31 2016 |
|---|---|---|---|---|
| Non-current assets held for sale | 469 | - | (469) | - |
The item "Non-current assets held for sale" at December 31, 2016, shows a zero balance, while at December 31, 2015, it was 469 thousand euro and referred to the reclassification of the shareholding in SEASM S.r.l., held 67% by A2A S.p.A., since this is a discontinued operation in accordance with IFRS 5 as a result of management's decision to divest it; in 2016, the shareholding was recognized in the item "Shareholdings in subsidiaries" as the disposal was not finalized.
Equity, which at December 31, 2016 amounted to 2,316,485 thousand euro (2,161,592 thousand euro at December 31, 2015), is set forth within the following table:
| Thousands of euro | Balance at 12 31 2015 |
Effect of non-recurring transactions |
Changes during the year |
Balance at 12 31 2016 |
|---|---|---|---|---|
| Equity | ||||
| Share capital | 1,629,111 | - | - | 1,629,111 |
| (Treasury shares) | (60,891) | - | 7,230 | (53,661) |
| Reserves | 666,859 | (8,752) | (191,122) | 466,985 |
| Result of the year | (73,487) | 48,336 | 299,201 | 274,050 |
| Total equity | 2,161,592 | 39,584 | 115,309 | 2,316,485 |
74
At December 31, 2016, the "Share capital" amounted to 1,629,111 thousand euro and is comprised of 3,132,905,277 ordinary shares with a unitary value of 0.52 euro each.
"Treasury shares" amounted to 53,661 thousand euro (60,891 thousand euro at December 31, 2015 and consist of 23,721,421 treasury shares held by the company (26,917,609 treasury shares at December 31, 2015). In February and March 2016, the company A2A S.p.A. had purchased 35,000,000 treasury shares with a total value of 37,177 thousand euro as part of the buy back program approved by the Shareholders' Meeting on June 11, 2015. Treasury shares acquired during the year and a further portion already held in the previous year were used as part of the payment for the purchase of 51% of the share capital of LGH S.p.A. by A2A S.p.A. in August 2016 with a total value of 47,241 thousand euro. The adjustment of the value of treasury shares at cost value, compared to the market value on the transaction date, resulted in a positive change of 2,833 thousand euro, which was recognized as a balancing entry in equity reserves as required by IAS/IFRS international standards.
Notes to the balance sheet
| Thousands of euro | Balance at 12 31 2015 |
Effect of non-recurring transactions |
Changes during the year |
Balance at 12 31 2016 |
|---|---|---|---|---|
| Reserves | 666,859 | (8,752) | (191,122) | 466,985 |
| of which: | ||||
| Change in the fair value of cash flow hedge derivatives |
(27,208) | (5,523) | 29,901 | (2,830) |
| Tax effect | 6,530 | 1,541 | (7,844) | 227 |
| Cash flow hedge reserves | (20,678) | (3,982) | 22,057 | (2,603) |
| Change in the IAS 19 Revised reserve - Employee Benefits |
(29,579) | (12,760) | (23,384) | (65,723) |
| Tax effect | 7,511 | 4,445 | 6,770 | 18,726 |
| IAS 19 Revised reserve - Employee Benefits |
(22,068) | (8,315) | (16,614) | (46,997) |
| Change in the Available-for-sale reserves | (608) | - | - | (608) |
| Tax effect | 146 | - | - | 146 |
| Change in Available for sale | (462) | - | - | (462) |
"Reserves", which at December 31, 2016 amounted to 466,985 thousand euro (666,859 thousand euro at December 31, 2015), net of negative non-recurring transactions for 8,752 thousand euro, were negative for 191,122 thousand euro mainly due to the distribution of the dividend and coverage of the loss for 2015.
This item includes the following unavailable reserves:
It should be noted that during 2016, dividends amounting to 125,910 thousand euro corresponding to 0.041 euro per share were distributed, as approved by the shareholders' meeting on June 7, 2016.
This item was positive for 274,050 thousand euro and includes the net result for the reporting year.
It is noted that the total value adjustments and provisions made as per article 109, paragraph 4 lett. B of the Consolidated Tax Act (TUIR) amounted to 74,518 thousand euro, net of the deferred tax provision relating to amounts deducted.
76
| Thousands of euro | Balance at 12 31 2015 |
Effect of non-recurring |
Changes during the |
Balance at 12 31 2016 |
of which included in the NFP |
|
|---|---|---|---|---|---|---|
| transactions | year | 12 31 2015 | 12 31 2016 | |||
| Non-convertible bonds | 2,430,953 | - | (248,387) 2,182,566 2,430,953 2,182,566 | |||
| Payables to banks | 542,977 | - | 196,638 | 739,615 | 542,977 | 739,615 |
| Total non-current financial liabilities | 2,973,930 | - | (51,749) 2,922,181 2,973,930 2,922,181 |
"Non-current financial liabilities" amounted to 2,922,181 thousand euro (2,973,930 thousand euro at December 31, 2015), reflecting a decrease of 51,749 thousand euro.
"Non-convertible bonds" regard the following bonds, accounted for at amortized cost:
The decrease in the non-recurring item of "Non-convertible bonds", equal to 248,387 thousand euro compared to December 31, 2015, is due to the partial repurchase of the bonds maturing 2019 and 2021 in line with the Group's strategy aimed at optimizing the timing of maturities and the consequent changes in amortized costs.
Non-current "Payables to banks" amounted to 739,615 thousand euro, an increase of 196,638 thousand euro mainly due to the new BEI loans.
At the end of the fiscal year, "Employee Benefits" amounted to 164,560 thousand euro (125,997 thousand euro as of December 31, 2015) with changes as follows during the period:
| Thousands of euro | Balance at 12 31 2015 |
Effect of non-recurring transactions |
Provisions | Utilizations | Other changes |
Balance at 12 31 2016 |
|---|---|---|---|---|---|---|
| Employee leaving entitlement (TFR) | 30,560 | (849) | 5,892 | (3,683) | (4,241) | 27,679 |
| Employee benefits | 95,437 | 21,988 | - | (5,775) | 25,231 | 136,881 |
| Total employee benefits | 125,997 | 21,139 | 5,892 | (9,458) | 20,990 | 164,560 |
Other changes mainly refer to payments made to INPS and supplementary pension funds, as well as to the recognition of actuarial differences that include the increase resulting from the service cost for 236 thousand euro, the increase resulting from the interest cost for 2,141 thousand euro and the increase resulting from actuarial gains/losses for 24,276 thousand euro.
Technical valuations were carried out on the basis of the following assumptions:
| 2016 | 2015 | |
|---|---|---|
| Discount rate | from 0.0% to 1.3% | from 0.24% to 2.03% |
| Annual inflation rate | from 1.5% to 2.0% | from 1.5% to 2.0% |
| Annual seniority bonus increase rate | 2.0% | 2.0% |
| Annual additional months increase rate | 0.0% | 0.0% |
| Annual cost of electricity increase rate | 2.0% | 2.0% |
| Annual cost of gas increase rate | 0.0% | 0.0% |
| Annual salary increase rate | 1.0% | 1.0% |
| Annual TFR increase rate | from 2.6% to 3.0% | from 2.6% to 3.0% |
| Average annual increase rate of supplementary pensions | 1.1% | 1.5% |
| Annual turnover frequencies | from 2.0% to 5.0% | from 2.0% to 5.0% |
| Annual TFR advance frequencies | from 2.0% to 2.5% | from 2.0% to 2.5% |
It is noted that:
78
As required by IAS 19, the sensitivity for post-employment employee benefit obligations is outlined below:
| Thousands of euro | Turnover rate +1% |
Turnover rate - 1% |
Inflation rate + 0.25% |
Inflation rate - 0.25% |
Actualization + 0.25% |
rate | Actualization rate - 0.25% |
||
|---|---|---|---|---|---|---|---|---|---|
| Employee leaving entitlement (TFR) |
27,436 | 27,729 | 27,887 | 27,268 | 27,085 | 28,082 | |||
| Thousands of euro | Actualization +0.25% |
rate | Actualization | rate -0.25% |
Mortality table increased by 10% |
Mortality table decreased by 10% |
|||
| Premungas | 26,332 | 27,337 | 25,584 | 28,221 | |||||
| Electricity and gas discount | 72,172 | 76,231 | 76,388 | 72,115 | |||||
| Additional months | 13,398 | 14,218 | n.s. | n.s. |
| Thousands of euro | Balance at 12 31 2015 |
Effect of non-recurring transactions |
Provisions | Releases | Utilizations | Other changes |
Balance at 12 31 2016 |
|---|---|---|---|---|---|---|---|
| Decommissioning provisions | 25,444 | (42,649) | - | - | (855) | 18,060 | - |
| Tax provisions | 2,012 | 22,816 | 3,118 | (12,835) | (6,029) | (5,170) | 3,912 |
| Personnel lawsuits and disputes provisions |
67,212 | 714 | 1,273 | - | (38,535) | 977 | 31,641 |
| Other risk provisions | 49,645 | 69,936 | 31,834 | (282) | (12,187) | 5,130 | 144,076 |
| Provisions for risks, charges and liabilities for landfills |
144,313 | 50,817 | 36,225 | (13,117) | (57,606) | 18,997 | 179,629 |
"Decommissioning provisions" were equal to zero, while at December 31, 2015, they amounted to 25,444 thousand euro and included charges for costs of dismantling and recovery of production sites related to thermoelectric plants. In the first six months of the year, other changes amounted to 18,060 thousand euro were related to the adjustment of discounting rates. At July 1, 2016, these provisions due to non-recurring transactions were fully transferred to the subsidiaries A2A Energiefuture S.p.A. and A2A gencogas S.p.A..
"Tax Provisions", which amounted to 3,912 thousand euro, refer to provisions for pending or potential litigation with the tax authorities or territorial entities for levies and direct and indirect taxes. The changes in the year were related to the effects of non-recurring transactions for 22,816 thousand euro, provisions for 3,118 thousand euro and releases for 12,835 thousand euro, mainly relating to the ICI/IMU dispute with some regional authorities. Utilizations, for 6,029 thousand euro, refer to disbursements for the year resulting from the closure of some disputes in which the company was unsuccessful. Other changes, negative for 5,170 thousand euro, refer to the reclassification under "Other current liabilities" of the portions of the provision that will be used in the early months of the following year for which payment notices have already been received.
The "Personnel lawsuits and disputes provisions" amounted to 31,641 thousand euro and refer to lawsuits pending with social security institutions, for contributions not paid for 16,085 thousand euro, to lawsuits with third parties for 14,477 thousand euro and with employees for 1,079 thousand euro, to cover the liabilities that could arise from litigations in progress. Nonrecurring transactions brought a positive effect of 714 thousand euro. Provisions for the year, for 1,273 thousand euro, mainly refer to disputes pending with Social Security Institutions. Uses, for 38,535 thousand euro, mainly refer to the payment made in respect of the ongoing lawsuit with Pessina Costruzioni in relation to the dispute for Asm Novara S.p.A. as further described in the paragraph "Other information – Asm Novara S.p.A. dispute". Other changes totalled 977 thousand euro.
"Other risk provisions", amounting to 144,076 thousand euro, relate to the provision concerning the burden of existing bonds present in the tolling contract with the company Ergosud S.p.A. for 88,866 thousand euro (former A2A Trading S.r.l.); to provisions relating to public water derivation fees for 29,215 thousand euro; to the mobility provision relating to the charge resulting from the corporate restructuring plan related to future outgoing employees for mobility, for 545 thousand euro; to provisions for contractual charges for 14,570 thousand euro and other risk provisions for 10,880 thousand euro. Non-recurring transactions brought a positive effect of 69,936 thousand euro. Net provisions for the year amounted to 31,834 thousand euro and mainly refer to allocations to provisions relating to public water derivation fees and contractual expenses. Releases amounted to 282 thousand euro. Utilizations, amounting to 12,187 thousand euro mainly refer to outlays during the year for public water derivation fees, employee mobility provision and onerous contracts. Other changes were positive for 5,130 thousand euro.
80
| Thousands of euro | Balance at 12 31 2015 |
Effect of non-recurring |
Changes during the |
Balance at 12 31 2016 |
in the NFP | of which included |
|---|---|---|---|---|---|---|
| transactions | year | 12 31 2015 | 12 31 2016 | |||
| Other non-current liabilities | 23 | 3,402 | 14,025 | 17,450 | - | - |
| Non-current derivatives | 27,208 | - | (12,396) | 14,812 | 27,208 | 14,812 |
| Total other non-current liabilities | 27,231 | 3,402 | 1,629 | 32,262 | 27,208 | 14,812 |
"Other non-current liabilities" amounted to 32,262 thousand euro, including the positive effect of non-recurring transactions for 3,402 thousand euro, and refer to:
| Thousands of euro | Balance at 12 31 2015 |
Effect of non-recurring |
Changes during the |
Balance at 12 31 2016 |
of which included in the NFP |
|
|---|---|---|---|---|---|---|
| transactions | year | 12 31 2015 | 12 31 2016 | |||
| Advances | 319 | (311) | (1) | 7 | - | - |
| Payables to suppliers | 78,082 | 468,020 | 42,169 | 588,271 | - | - |
| Trade payables to related parties: | 83,612 | (60,069) | 55,653 | 79,196 | - | - |
| - subsidiaries | 83,076 | (60,107) | 41,477 | 64,446 | - | - |
| - parent companies | 456 | - | 23 | 479 | - | - |
| - associates | 80 | 38 | 14,153 | 14,271 | - | - |
| Total trade payables | 162,013 | 407,640 | 97,821 | 667,474 | - | - |
| Payables to social security institutions | 13,956 | 2,019 | (3,292) | 12,683 | - | - |
| Current derivatives | 7,474 | 43,697 | 196,201 | 247,372 | 7,474 | - |
| Other payables: | 93,709 | (9,925) | (10,073) | 73,711 | - | - |
| - payables for tax consolidation | 37,748 | (24,032) | 14,778 | 28,494 | - | - |
| - payables for tax transparency | 8,438 | - | (1,271) | 7,167 | - | - |
| - payables to personnel | 17,876 | 3,666 | (3,701) | 17,841 | - | - |
| - payables to Cassa per i Servizi Energetici e Ambientali | 3 | 10,558 | (10,558) | 3 | - | - |
| - tax payables | 12,621 | (3,860) | (3,295) | 5,466 | - | - |
| - payables for liabilities of competence of the following year |
1,958 | (9) | (1,454) | 495 | - | - |
| - payables for collections to be allocated | 3,480 | 573 | 2,115 | 6,168 | - | - |
| - payables to insurance companies | 1,400 | - | (247) | 1,153 | - | - |
| - payables to customers for work to be performed | 3,136 | - | (2,853) | 283 | - | - |
| - payables for water derivation fees | 116 | - | (116) | - | - | - |
| - payables to waterway municipalities | 1,250 | - | (143) | 1,107 | - | - |
| - others | 5,683 | 3,179 | (3,328) | 5,534 | - | - |
| Total other current liabilities | 115,139 | 35,791 | 182,836 | 333,766 | 7,474 | - |
| Total trade payables and other current liabilities | 277,152 | 443,431 | 280,657 | 1,001,240 | 7,474 | - |
"Trade payables and other current liabilities" amounted to 1,001,240 thousand euro (277,152 thousand euro at December 31, 2015), representing an overall increase of 280,657 thousand euro net of the effect of non-recurring transactions, positive for 443,431 thousand euro.
"Trade payables" amounted to 667,474 thousand euro and include both debt exposure to third-party suppliers (588,278 thousand euro) and trade payables to related parties (79,196 thousand euro). Trade payables at December 31, 2016 include the payables relating to the trading activities resulting from the incorporation of A2A Trading S.r.l. with effect from January 1, 2016.
"Payables to social security institutions" amounted to 12,683 thousand euro and relate to the company's debt position with social security and pension institutions, related to contributions of the month of December 2016 not yet paid.
"Current derivative instruments" amounted to 247,372 thousand euro and refer to the fair value measurement of the commodity derivatives resulting from the incorporation of A2A Trading S.r.l. with effect from January 1, 2016.
"Other current liabilities" mainly refer to:
| Thousands of euro | Balance at 12 31 2015 |
Effect of non-recurring |
Changes during the |
of which included in the NFP |
||
|---|---|---|---|---|---|---|
| transactions | year | 12 31 2015 | 12 31 2016 | |||
| Non-convertible bonds | 571,586 | - | (526,104) | 45,482 | 571,586 | 45,482 |
| Payables to banks | 96,184 | - | 152,798 | 248,982 | 96,184 | 248,982 |
| Financial payables to related parties | 732,743 | (89,585) | (80,173) | 562,985 | 732,743 | 562,985 |
| Total current financial liabilities | 1,400,513 | (89,585) | (453,479) | 857,449 | 1,400,513 | 857,449 |
82
"Current financial liabilities" amounted to 857,449 thousand euro and showed a decrease of 453,479 thousand euro, net of the effect of non-recurring transactions (-89,585 thousand euro).
"Non-convertible Bonds" decreased by 526,104 thousand euro mainly due to the repayment of the bond with maturity in November 2016.
Interest of 45,482 thousand euro (52,861 thousand euro at December 31, 2015) accrued on the bonds at December 31, 2016.
Current "Payables to banks" increased during the year by 152,798 thousand euro, mainly due to the use of short-term lines.
"Financial payables to related parties" amounted to 562,985 thousand euro and relate to intercompany current accounts on which rates are applied at market conditions, with variable Euribor base with specific spreads for companies.
| Thousands of euro | Balance at 12 31 2015 |
Effect of non-recurring transactions |
Changes during the year |
Balance at 12 31 2016 |
|---|---|---|---|---|
| Tax liabilities | 41,876 | 591 | (16,680) | 25,787 |
At December 31, 2016, this item amounted to 25,787 thousand euro (41,876 thousand euro at December 31, 2015) and refers to the payable for current IRES.
The following table provides details of net debt.
| Thousands of euro | Notes | 12 31 2016 | Effect of non-recurring transactions |
12 31 2015 |
|---|---|---|---|---|
| Bonds - non-current portion | 17 | 2,182,566 | - | 2,430,953 |
| Bank loans - non-current portion | 17 | 739,615 | - | 542,977 |
| Other non-current liabilities | 20 | 14,812 | - | 27,208 |
| Total medium/long-term debt | 2,936,993 | - | 3,001,138 | |
| Non-current financial assets with related parties | 3 | (402,653) | - | (401,458) |
| Other non-current financial assets and other non-current assets |
3-5 | (3,964) | - | (96) |
| Total medium/long-term financial receivables | (406,617) | - | (401,554) | |
| Total non-current net debt | 2,530,376 | - | 2,599,584 | |
| Bonds - current portion | 22 | 45,482 | - | 571,586 |
| Bank loans - current portion | 22 | 248,982 | - | 96,184 |
| Other current liabilities | 21 | - | - | 7,474 |
| Financial liabilities to related parties - current portion | 22 | 562,985 | (89,585) | 732,743 |
| Total short-term debt | 857,449 | (89,585) | 1,407,987 | |
| Other current assets | 8 | (65) | - | (16,096) |
| Financial assets with third parties - current portion | 9 | (1,400) | - | - |
| Financial assets with related parties - current portion | 9 | (381,245) | 187,858 | (605,367) |
| Total short-term financial receivables | (382,710) | 187,858 | (621,463) | |
| Cash and cash equivalents | 11 | (278,207) | (28,103) | (587,050) |
| Total current net debt | 196,532 | 70,170 | 199,474 | |
| Net debt | 2,726,908 | 70,170 | 2,799,058 |
As a result of the non-recurring transactions described below, the contents of the income statement at December 31, 2016 are not homogeneous and therefore not comparable with those of the previous year-end. In fact, in 2016, revenues and costs were recognized for activities that were not in the scope of A2A S.p.A. in 2015; moreover, considering that some activities produced economic effects in A2A S.p.A., only for the first half of 2016, even the income statement for 2017 will not be comparable with as recorded in 2016. The income statement at December 31, 2016 includes:
• the economic effects for the period January/June 2016 for the management of the thermoelectric plant of the Monfalcone plant subject of a lease contract of a business unit between A2A S.p.A. and A2A Energiefuture S.p.A. for the period from July 1, 2016 to December 31, 2016 and transferred to A2A Energiefuture S.p.A., effective December 31, 2016.
Revenues in 2016 amounted to 2,760,895 thousand euro (494,009 thousand euro at December 31, 2015).
| Revenues - Thousands of euro | 12 31 2016 | 12 31 2015 | Changes |
|---|---|---|---|
| Revenues from the sale of goods | 2,380,908 | 121,554 | 2,259,354 |
| Revenues from services | 173,295 | 344,410 | (171,115) |
| Total revenues from the sale of goods and services | 2,554,203 | 465,964 | 2,088,239 |
| Other operating revenues | 206,692 | 28,045 | 178,647 |
| Total revenues | 2,760,895 | 494,009 | 2,266,886 |
Notes to the income statement
| Thousands of euro | 12 31 2016 | 12 31 2015 | Changes |
|---|---|---|---|
| Sales of electricity of which: | 1,658,868 | 7,664 | 1,651,204 |
| - third-party customers | 1,377,429 | 551 | 1,376,878 |
| - subsidiaries | 280,309 | 7,113 | 273,196 |
| - associates | 1,130 | - | 1,130 |
| Sales of gas and fuels of which: | 656,931 | - | 656,931 |
| - third-party customers | 312,866 | - | 312,866 |
| - subsidiaries | 344,065 | - | 344,065 |
| Sales of heat of which: | 463 | 303 | 160 |
| - third-party customers | 22 | - | 22 |
| - subsidiaries | 441 | 303 | 138 |
| Sales of materials of which: | 4,312 | 3,486 | 826 |
| - third-party customers | 797 | 329 | 468 |
| - subsidiaries | 3,444 | 3,120 | 324 |
| - associates | 71 | 37 | 34 |
| Sales of emission certificates and allowances of which: | 60,334 | 110,101 | (49,767) |
| - third-party customers and inventory change | 17,046 | 263 | 16,783 |
| - subsidiaries | 43,288 | 109,838 | (66,550) |
| Total revenues from the sale of goods | 2,380,908 | 121,554 | 2,259,354 |
| Services of which: | |||
| - third-party customers | 5,365 | 5,201 | 164 |
| - subsidiaries | 129,513 | 299,230 | (169,717) |
| - Municipalities of Milan and Brescia | 36,959 | 38,629 | (1,670) |
| - associates | 1,458 | 1,350 | 108 |
| Total revenues from services | 173,295 | 344,410 | (171,115) |
| Total revenues from the sale of goods and services | 2,554,203 | 465,964 | 2,088,239 |
| Other operating revenues of which: | |||
| Other revenues from subsidiaries | 9,759 | 7,320 | 2,439 |
| Other revenues from associates | 32 | - | 32 |
| Reinstatement of costs plant S.Filippo del Mela (essential Unit plant - period January/May 2016) |
41,755 | - | 41,755 |
| Damage compensation | 3,086 | 13,948 | (10,862) |
| Contingent assets | 20,591 | 4,427 | 16,164 |
| Incentives for production from renewable sources (feed-in-tariff) |
94,894 | - | 94,894 |
| Gains on disposals of tangible assets | 6,271 | 3 | 6,268 |
| Other revenues | 30,304 | 2,347 | 27,957 |
| Total other operating revenues | 206,692 | 28,045 | 178,647 |
| Total revenues | 2,760,895 | 494,009 | 2,266,886 |
"Revenues from the sale of goods and services" amounted to 2,554,203 thousand euro (465,964 thousand euro in 2015).
Separate financial statements – Year 2016 Notes to the income statement
Sales revenues amounted to 2,380,908 thousand euro and mainly refer to the sale of electricity (1,658,868 thousand euro) to wholesalers and institutional operators (Gestore Mercato Elettrico S.p.A. and Terna S.p.A.), also through sales on the IPEX markets (Italian Power Exchange) as well as to subsidiaries and associates for a total of 25,577 million kWh, to the sale of gas and fuel to third parties and subsidiaries (656,931 thousand euro) from the commercialization of 1,787 million cubic meters of gas, the sale of heat and materials in particular to subsidiaries (4,775 thousand euro) and the sale of environmental certificates to third parties and subsidiaries (60,334 thousand euro).
Revenues from services amount to 173,295 thousand euro and mainly relate to revenues from provisions to subsidiaries of administrative, fiscal, legal, managerial and technical services, and revenues from the Municipality of Milan for the maintenance and management of public lighting systems.
"Other operating revenues", equal to 206,692 thousand euro (28,045 thousand euro in the previous year), refer to the recognition, as of January 1, 2016, of incentives on net production from renewable sources (94,894 thousands euro) for the entire remaining period of right to Green Certificates after 2015 recognized by the Energy Services Operator, in implementation of the Ministerial Decree of July 6, 2012 as regards plants from renewable sources (entered into service by December 31, 2012 and that have acquired the right to benefit from Green Certificates); revenues related to the reinstatement of the costs of the thermoelectric plant in San Filippo del Mela (41,755 thousand euro) that as of the end of May 2016 has remained in essentiality regime only the 150 kV plant; revenues related to the conclusion of the mechanism as defined by Resolution 196/2013/R/gas (26,395 thousand euro); as well as rents from subsidiaries and associates, contingent assets recorded as a result of the difference of appropriations in previous years, reimbursements for damages and penalties received from customers, insurance and private entities.
88
"Operating expenses" totalled 2,326,202 thousand euro (290,868 thousand euro in 2015).
The main components of this item are as follows:
| Operating expenses - Thousands of euro | 12 31 2016 | 12 31 2015 | Changes |
|---|---|---|---|
| Costs for raw materials and consumables | 1,882,551 | 100,442 | 1,782,109 |
| Costs for services | 201,247 | 120,932 | 80,315 |
| Total expenses for raw materials and services | 2,083,798 | 221,374 | 1,862,424 |
| Other operating expenses | 242,404 | 69,494 | 172,910 |
| Total operating expenses | 2,326,202 | 290,868 | 2,035,334 |
| Expenses for raw materials and services - Thousands of euro | 12 31 2016 | 12 31 2015 | Changes |
|---|---|---|---|
| Purchases of power and fuel of which: | 1,776,216 | 19,612 | 1,756,604 |
| - third-party suppliers | 1,698,592 | 1,181 | 1,697,411 |
| - subsidiaries | 77,178 | 18,431 | 58,747 |
| - associates | 446 | - | 446 |
| Change in inventories of fuel | 18,991 | 68 | 18,923 |
| Purchases of water of which: | 383 | 303 | 80 |
| - third-party suppliers | 317 | 303 | 14 |
| - subsidiaries | 66 | - | 66 |
| Purchases of materials of which: | 11,114 | 7,593 | 3,521 |
| - third-party suppliers | 11,076 | 7,505 | 3,571 |
| - subsidiaries | 38 | 88 | (50) |
| Change in inventories of materials | 1,582 | 681 | 901 |
| Hedging gains on operating derivatives | (19,255) | - | (19,255) |
| Hedging losses on operating derivatives | 4,234 | - | 4,234 |
| Purchases of emission certificates and allowances of which: | 89,286 | 72,185 | 17,101 |
| - third-party suppliers | 64,020 | 432 | 63,588 |
| - subsidiaries | 25,247 | 71,753 | (46,506) |
| - associates | 19 | - | 19 |
| Total expenses for raw materials and consumables | 1,882,551 | 100,442 | 1,782,109 |
| Delivery and transmission costs of which: | 65,555 | 8 | 65,547 |
| - third-party suppliers | 62,629 | 8 | 62,621 |
| - subsidiaries | 2,926 | - | 2,926 |
| Maintenance and repairs | 36,957 | 25,095 | 11,862 |
| Services of which: | 98,735 | 95,829 | 2,906 |
| - third-party suppliers | 68,902 | 59,639 | 9,263 |
| - Municipalities of Milan and Brescia | 101 | - | 101 |
| - subsidiaries | 29,433 | 35,881 | (6,448) |
| - associates | 299 | 309 | (10) |
| Total service costs | 201,247 | 120,932 | 80,315 |
| Total costs for raw materials and services | 2,083,798 | 221,374 | 1,862,424 |
| Leasehold improvements: | 173,977 | 13,005 | 160,972 |
| - third-party suppliers | 54,114 | 12,861 | 41,253 |
| - subsidiaries | 100,528 | 144 | 100,384 |
| - associates | 19,335 | - | 19,335 |
| Other operating costs of which: | 68,427 | 56,489 | 11,938 |
| Other expenses from subsidiaries | 3,369 | 7,508 | (4,139) |
| Water derivation concession fees | 35,122 | 22,915 | 12,207 |
| Damages and penalties | 731 | 706 | 25 |
| Contingent liabilities | 3,142 | 1,232 | 1,910 |
| Losses on disposal of tangible assets | 466 | 58 | 408 |
| Sundry operating expenses | 25,597 | 24,070 | 1,527 |
| Total other operating costs | 242,404 | 69,494 | 172,910 |
| Total operating expenses | 2,326,202 | 290,868 | 2,035,334 |
"Expenses for raw materials and services" amounted to 2,083,798 thousand euro (221,374 thousand euro in 2015).
Costs for raw materials and consumables amounted to 1,882,551 thousand euro and mainly refer to costs for purchases of electricity and fuel (1,776,216 thousand euro) from third parties and subsidiaries for both electricity production and for resale to customers and wholesalers; the change in inventories of fuels (18,991 thousand euro), net of the positive effect of gains/ losses from hedging derivatives (-15,021 thousand euro); the purchase of materials and water (13,079 thousand euro including the change in inventories); and the purchase of environmental certificates (89,286 thousand euro).
Service costs amounted to 201,247 thousand euro and relate to the logistics costs for transport on the natural gas network (65,555 thousand euro), costs for maintenance and repairs (36,957 thousand euro) related to both the plants and information systems of the company, as well as costs for services from third parties and subsidiaries (98,735 thousand euro) that include costs for administrative and technical professional services, costs for certification activities, gas storage costs, expenses for insurance, monitoring, banking and other services.
"Other operating expenses" amounted to 242,404 thousand euro. This item includes the use of third-party assets for 173,977 thousand euro mainly relating to the contracting of thermoelectric production plants "tolling agreement" owned by the subsidiaries A2A Energiefuture S.p.A. and A2A gencogas S.p.A., costs related to the use of part of a portion of the electricity capacity of Ergosud S.p.A. under the "tolling" contract and administration stipulated between the parties contract and the contracting of the plant in Bertonico (Lodi) within the framework of the agreement stipulated last year with the companies Sorgenia S.p.A. and Sorgenia Power S.p.A.. Other costs amounted to 68,427 thousand euro and mainly refer to public water derivation fees, damages and penalties and contingent liabilities.
During the year, the Company paid 2,000 thousand euro in donations to the AEM and ASM Foundations.
The following table sets out the results arising from the trading portfolio; these figures relate to trading in electricity, gas and environmental certificates.
| Trading margin - Thousands of euro | Notes | 12 31 2016 |
|---|---|---|
| Revenues | 25 | 1,179,532 |
| Operating costs | 26 | (1,192,696) |
| Total trading margin | (13,164) |
This activity includes all the operations involved in the stipulation of contracts, physical and financial, purchase and sale, signed in order to benefit from actual or expected differences between the sale and purchase price for an additional margin than as can be achieved only with industrial activity. The contracts referred to above cover: electricity, power, transport capacity and natural gas.
Net of capitalized expenses, labour costs at December 31, 2016, amounted to 151,699 thousand euro (119,733 thousand euro in the previous year).
91
"Labour costs" may be analyzed as follows:
| Labour costs - Thousands of euro | 12 31 2016 | 12 31 2015 | Changes |
|---|---|---|---|
| Wages and salaries | 98,499 | 76,479 | 22,020 |
| Social security charges | 32,867 | 26,386 | 6,481 |
| Employee leaving entitlement (TFR) | 5,892 | 4,740 | 1,152 |
| Other costs | 15,770 | 13,216 | 2,554 |
| Total labour costs before capitalizations | 153,028 | 120,821 | 32,207 |
| Capitalized labour costs | (1,329) | (1,088) | (241) |
| Total labour costs | 151,699 | 119,733 | 31,966 |
The table below shows the average number of employees during the year, broken down by category:
| 2016 | 2015 | Changes | |
|---|---|---|---|
| Managers | 76 | 75 | 1 |
| Supervisors | 198 | 189 | 9 |
| White-collar workers | 866 | 912 | (46) |
| Blue-collar workers | 156 | 200 | (44) |
| Total | 1,296 | 1,376 | (80) |
At December 31, 2016, A2A S.p.A. employees totalled 1,410, including the effects of any nonrecurring transactions for the year, while at December 31, 2015, they were equal to 1,360.
The item "Other labour costs" includes early retirement incentives for 598 thousand euro (2,251 thousand euro at December 31, 2015).
Separate financial statements – Year 2016 Notes to the income statement
The item also includes the remuneration paid by A2A S.p.A. to the members of the Board of Directors in the year for a total of 2,722 thousand euro; for further details, reference is made to the specific file "Remuneration Report - 2017".
92
Due to the effect of the dynamics explained above, "Gross operating margin" totalled 282,994 thousand euro (83,408 thousand euro in 2015).
"Depreciation, amortization, provisions and write-downs" equalled 360,854 thousand euro (132,014 thousand euro at December 31, 2015).
| Amortization, depreciation, provisions and write-downs Thousands of euro |
12 31 2016 | 12 31 2015 | Changes | |||
|---|---|---|---|---|---|---|
| Amortization of intangible assets | 8,429 | 6,664 | 1,765 | |||
| Depreciation of tangible assets | 121,489 | 74,161 | 47,328 | |||
| Other write-downs of fixed assets | 203,300 | 4,955 | ||||
| Total amortization, depreciation and write-downs | 333,218 | 85,780 | 247,438 | |||
| Bad debts provision included in current assets and cash and cash equivalents |
4,528 | (261) | 4,789 | |||
| Provisions for risks | 23,108 | 46,495 | (23,387) | |||
| Total depreciation, amortization, provisions and write-downs | 360,854 | 132,014 | 228,840 |
The following table provides details of the individual items:
In particular, "Depreciation and Amortization" totalled 129,918 thousand euro (80,825 thousand euro in 2015). This item includes, in addition to the effect of non-recurring operations, higher depreciation and amortization resulting from investments made during the year in question net of the lower depreciation and amortization following the conclusion of the process of depreciation of plant parts and disposals during the year. Depreciation is calculated on the basis of technical and economic rates considered representative of the remaining useful life of the related tangible assets.
Write-downs of assets totalled 203,300 thousand euro and include for 202,000 thousand euro the write-down of the thermoelectric plant in Monfalcone as a result of the findings of the appraisal carried out by an independent external expert and for 1,300 thousand euro the writedown carried out on some plants in the first half of 2016 by the former Edipower S.p.A..
Regarding the transposition of the "Growth Decree", which lays down procedures for calculating the surrender value of the water system works used to supply water under concession to hydroelectric power plants (the "wet works"), the calculation criteria (revaluation coefficients and useful lives) needed to quantify the surrender value at the end of the relative concessions have not been set yet by the relevant authorities. In the absence of a regulatory framework, the company had carried out, as of June 2012, a series of simulations using ISTAT coefficients, which were found to be the only possible data that is objectively usable, and made its own estimates of the economic and technical lives of the assets. The results of these simulations led to a very wide variability range, confirming that it is currently impossible to make a reliable estimate of the surrender values at the end of the concessions. Nevertheless, for concessions close to expiry the net carrying amount of the wet works was significantly lower than the range of results obtained. As a result, therefore, since June 30, 2012, depreciation and amortization is no longer charged only for those concessions nearing expiry, while the same valuation methods continue to be applied to the remaining concessions.
The "Bad debt provision" amounted to 4,528 thousand euro (negative for 261 thousand euro in 2015), increasing by 4,789 thousand euro.
The balance of "Provisions for risks and charges" shows a net effect of 23,108 thousand euro (46,495 thousand euro at December 31, 2015) due to allocations of 36,224 thousand euro made during the year, offset by the 13,116 thousand euro of risk provisions made in previous years, released in the current year since the original disputes have ceased to exist. Provisions in the year included for 31,833 thousand euro provisions to "Other risk provisions" mainly related to public water derivation fees and contractual charges, for 1,273 thousand euro provisions to "Personnel lawsuits and disputes provision", for 3,118 thousand euro provisions to "Tax provisions"; releases mainly refer to "Tax provisions" regarding the ICI/IMU dispute. For further details, reference is made to note 19) Provisions for risks, charges and liabilities for landfills.
The "Net Operating Income" is negative by 77,860 thousand euro (negative by 48,606 thousand euro at December 31, 2015).
At December 31, 2016, the item in question amounted to 48,336 thousand euro (a zero balance at December 31, 2015) and includes the income from the demerger of the "Cellina Unit" (formerly Edipower S.p.A.) in favour of Cellina Energy S.r.l., which took effect on January 1, 2016 following the demerger deed signed between the parties on December 28, 2015 as further specified in the paragraph "Significant events during the year" in the file Report on Operations.
Financial income exceeded financial expenses by 258,358 thousand euro (negative 71,807 thousand euro at December 31, 2015). Details of the most significant items are shown in the table below:
94
| Financial income - Thousands of euro | 12 31 2016 | 12 31 2015 | Changes |
|---|---|---|---|
| Income on derivatives | 16,234 | 23,550 | (7,316) |
| Income from financial assets: | 475,189 | 275,948 | 199,241 |
| Income from dividends: | 449,127 | 236,559 | 212,568 |
| - subsidiaries | 446,885 | 234,946 | 211,939 |
| - associates | 1,014 | 1,392 | (378) |
| - in other companies | 1,228 | 221 | 1,007 |
| Income on receivables/securities recorded as non-current assets |
4 | 2 | 2 |
| - from others | 4 | 2 | 2 |
| Income on receivables/securities recorded as current assets: | 24,848 | 39,302 | (14,454) |
| - from subsidiaries | 17,568 | 34,309 | (16,741) |
| - from associates | 192 | 74 | 118 |
| - from parent companies | 6,134 | 3,200 | 2,934 |
| - from others: | 954 | 1,719 | (765) |
| a) on bank accounts | 484 | 918 | (434) |
| b) on other receivables | 470 | 801 | (331) |
| Foreign exchange gains | 1,210 | 85 | 1,125 |
| Total financial income | 491,423 | 299,498 | 191,925 |
"Financial income" totalled 491,423 thousand euro (299,498 thousand euro at December 31, 2015), and relate to income from financial assets.
In particular, Income on derivatives amounted to 16,234 thousand euro (23,550 thousand at December 31, 2015) and include the positive performance of the fair value (7,618 thousand euro) and realized gains (8,616 thousand euro) on financial derivative contracts.
Income on financial assets amounted to 475,189 thousand euro (275,948 thousand euro at December 31, 2015) and concerned:
| Financial expenses | |
|---|---|
| Financial expenses - Thousands of euro | 12 31 2016 | 12 31 2015 | Changes |
|---|---|---|---|
| Expenses on financial assets held for trading | 60,130 | 221,372 | (161,242) |
| - Shareholdings write-downs | 60,130 | 221,372 | (161,242) |
| Expenses on derivatives | 4,609 | 5,174 | (565) |
| Expenses on financial assets | 168,326 | 144,759 | 23,567 |
| - from subsidiaries | 3,539 | 5,016 | (1,477) |
| - from associates | - | - | - |
| - parent company | - | - | - |
| - others: | 164,787 | 139,743 | 25,044 |
| a) interest on bond loans | 119,512 | 124,514 | (5,002) |
| b) banks | 5,784 | 12,822 | (7,038) |
| c) discounting charges | 2,609 | 1,945 | 664 |
| d) sundry | 36,325 | 462 | 35,863 |
| e) foreign exchange losses | 557 | - | 557 |
| Total financial expenses | 233,065 | 371,305 | (138,240) |
"Financial expenses" amounted to 233,065 thousand euro (371,305 thousand euro in 2015) and referred to:
The nature and content of derivatives are described in the section "Other information".
96
| Losses/gains for income taxes - Thousands of euro | 12 31 2016 | 12 31 2015 | Changes |
|---|---|---|---|
| Current IRES | (17,572) | (16,037) | (1,535) |
| Current IRAP | - | - | - |
| Effect of differences - taxes of previous years | 3,560 | (11,285) | 14,845 |
| Total current taxes | (14,012) | (27,322) | 13,310 |
| Deferred tax assets | 39,617 | (4,263) | 43,880 |
| Deferred tax liabilities | (70,821) | (15,341) | (55,480) |
| Total losses/gains for income taxes | (45,216) | (46,926) | 1,710 |
It is noted that for IRES purposes, the company filed for tax on a consolidated basis, together with its main subsidiaries, in accordance with arts. 117-129 of DPR 917/86.
To this end, a contract has been entered into with each of the subsidiaries to regulate the tax benefits and burdens transferred, with specific reference to current items.
The deferred tax assets and liabilities calculated when determining the subsidiaries' taxable income, again only for IRES purposes, are not transferred to the parent company, A2A S.p.A., but are recognized in the income statement of the individual subsidiary each time there is an effective divergence between net income calculated for tax reporting purposes and net income calculated for financial reporting purposes due to any temporary differences. The deferred tax assets and liabilities shown in the income statement of A2A are therefore calculated exclusively on the divergences between its income for taxable purposes and income for financial reporting purposes.
Current income tax (IRES) of A2A S.p.A. is calculated on its own taxable income net of the adjustments relating to the national tax consolidation filing, in accordance with appendix E of accounting standard OIC 25 of August 2014.
In compliance with accounting standard OIC 25, the "income/expense related to consolidation", which constitute the remuneration/contra-entry for the transfer to the parent company A2A of a tax loss or taxable income, are recognized in the balance sheet.
The total amount of IRAP is calculated at 5.57% of the net value of production, suitably adjusted for the items foreseen in the relevant tax legislation.
97
The deferred tax assets and liabilities for IRAP purposes are booked to the income statement so as to show the total tax charge for the year, taking into account the tax effects of temporary differences. The recoverability of "Deferred tax assets" recognized in the financial statements is considered likely, since future plans include IRES taxable income sufficient to absorb the temporary differences that will be reversed; for the years of the plan for which the IRAP taxable income is not provided sufficiently to absorb IRAP temporary differences, it was decided to repay the related IRAP deferred tax assets and liabilities (with a net effect of about 8,000 thousand euro of higher taxes in the current year).
No items have been excluded from the calculation of deferred taxation for IRES or IRAP purposes and deferred assets and liabilities are recognized according to the balance sheet method.
At December 31, 2016, income taxes for the year (IRES and IRAP), amounted to -45,216 thousand euro (-46,926 thousand euro at the end of the previous year) and were made up as follows:
3,560 thousand euro related to taxes of previous years;
-56,491 thousand euro for deferred tax liabilities for IRES purposes;
98
The main permanent increases in IRES include write-downs of shareholding in the amount of 60,030 thousand euro, non-deductible extraordinary expenses in the amount of 6,288 thousand euro, as well as property taxes (IMU) in the amount of 12,203 thousand euro.
The following are the statements of reconciliation between the tax expense based on the statutory tax rate and the effective tax charge for IRES and IRAP purposes.
| Pre-tax profit | 228,834,245 | |
|---|---|---|
| Theoretical tax expense | 62,929,417 | |
| Permanent differences | (294,425,819) | |
| Income before taxes adjusted for permanent differences | (65,591,574) | |
| Temporary differences deductible in subsequent years | 186,984,958 | |
| Temporary differences taxable in subsequent years | (21,215,749) | |
| Reversal of prior year temporary differences | (54,530,133) | |
| Taxable income | 45,647,502 | |
| Current taxes on income for the year | 12,553,063 | |
| Other income to deducted from tax consolidation | (30,407,147) | |
| Taxes to be deducted to equity | 282,175 | |
| Total current income taxes for the year | (17,571,909) |
| 221,193,943 | |
|---|---|
| 318,339,973 | |
| (97,146,030) | |
| (5,411,034) | |
| 182,833,574 | |
| (21,215,749) | |
| (64,471,795) | |
| - | |
| - | |
Details are provided below on the analytic situation of the deferred tax assets and liabilities which, as required by international accounting standards, also shows the changes in equity reserves.
| Case description Units of euro |
Deferred tax liabilities A2A initial |
Transactions non recurring 2016 |
Deferred tax liabilities previous year |
Adjustments | Uses in current year | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Taxable | Taxable | Taxable | Rate | Tax | Taxable | Rate | Tax | Taxable | Rate | Tax | ||
| amount | amount | amount | amount | amount | ||||||||
| Measurement differences for tangible assets | 304,455,389 377,281,120 681,736,509 | 24.0% 163,616,762 (27,295,076) | 24.0% | (6,550,818) 135,636,107 | 24.0% | 32,552,666 | ||||||
| Application of the leasing standard (IAS 17) | 19,903,842 | - | 19,903,842 | 24.0% | 4,776,922 | - | 24.0% | - | - | 24.0% | - | |
| Application of the financial instrument standard (IAS 39) | - | - | - | 24.0% | - | - | 24.0% | - | - | 24.0% | - | |
| Measurement differences of intangible assets | 23,470,724 (11,447,324) | 12,023,400 | 24.0% | 2,885,616 | - | 24.0% | - | - | 24.0% | - | ||
| Deferred capital gains | - | - | - | 24.0% | - | - | 24.0% | - | - | 24.0% | - | |
| Employee leaving entitlement (TFR) | 778,641 | 4,330,140 | 5,108,781 | 24.0% | 1,226,107 | - | 24.0% | - | - | 24.0% | - | |
| Amounts to be paid in 2016 | 5,713,974 | 73,314,741 | 79,028,715 | 27.5% | 21,732,897 | 55 | 27.5% | 15 | 79,028,770 | 27.5% | 21,732,912 | |
| Other deferred tax liabilities | 18,146,672 | 7,493,893 | 25,640,565 | 24.0% | 6,153,736 | (3,109,815) | 24.0% | (746,356) | - | 24.0% | - | |
| Total | 372,469,243 450,972,570 823,441,813 | 200,392,040 (30,404,836) | (7,297,159) 214,664,877 | 54,285,577 |
| Case description Units of euro |
Deferred tax assets A2A initial |
Transactions non recurring 2016 |
Deferred tax assets previous year |
Adjustments | Uses in current year | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Taxable amount |
Taxable amount |
Taxable amount |
Rate | Tax | Taxable amount |
Rate | Tax | Taxable amount |
Rate | Tax | ||
| Taxed risk provisions | 212,519,032 | 82,227,705 | 294,746,737 | 24.0% | 70,739,217 | (2,620,446) | 24.0% | (628,907) | 60,775,943 | 24.0% 14,586,226 | ||
| Amortization, depreciation and write-downs | 107,287,909 | 248,960,289 | 356,248,198 | 24.0% | 85,499,568 | 17,836,691 | 24.0% | 4,280,806 | 57,155,075 | 24.0% 13,717,218 | ||
| Application of the financial instrument standard (IAS 39) | 1,497,250 | - | 1,497,250 | 24.0% | 359,340 | - | 24.0% | - | - | 24.0% | - | |
| Bad debt provision | 7,565,781 | 3,015,184 | 10,580,965 | 24.0% | 2,539,432 | (3,415,469) | 24.0% | (819,713) | - | 24.0% | - | |
| Costs for business combinations | - | 24.0% | - | 24.0% | - | 24.0% | - | |||||
| Grants | 9,644,123 | - | 9,644,123 | 24.0% | 2,314,590 | - | 24.0% | - | - | 24.0% | - | |
| Goodwill | 103,178,785 | 198,415,310 | 301,594,095 | 24.0% | 72,382,583 | (38,700,760) | 24.0% | (9,288,182) | 1,217 | 24.0% | 292 | |
| Amounts to be paid in 2016 | 19,126,094 | 123,807,547 | 142,933,641 | 27.5% | 39,306,751 | 6,623,490 | 27.5% | 1,821,460 | 149,557,131 | 27.5% 41,128,211 | ||
| Other deferred tax assets | 49,303,214 | 8,079,563 | 57,382,777 | 24.0% | 13,771,867 | - | 24.0% | - | 1,704,783 | 24.0% | 409,148 | |
| Total | 510,122,189 | 664,505,598 1,174,627,787 | 286,913,346 (20,276,494) | (4,634,536) | 269,194,149 | 69,841,095 |
Separate financial statements – Year 2016
Notes to the income statement
| Sub-total | Changes in tax rate | Increases for the year | Increases/uses to equity | Non-recurring transactions year-end |
Total deferred tax liabilities | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Taxable | Rate | Tax | Taxable | Rate | Tax | Taxable | Rate | Tax | Taxable | Rate | Tax Taxable |
Rate | Tax | Taxable | Rate | Tax | |
| amount | amount | amount | amount | amount | amount | ||||||||||||
| 518,805,326 | 24.0% 124,513,278 518,805,326 | 24.0% 124,513,278 21,215,749 | 24.0% 5,091,780 | - 24.0% |
- 86,878,244 | 24.0% 20,850,779 626,899,320 | 24.0% 150,455,837 | ||||||||||
| 19,903,842 | 24.0% | 4,776,922 19,903,842 | 24.0% | 4,776,922 | - 24.0% |
- | - 24.0% |
- | - 24.0% |
- 19,903,842 | 24.0% | 4,776,922 | |||||
| - | 24.0% | - | 24.0% | - | 24.0% | - | - 24.0% |
- | - 24.0% |
- | 24.0% | - | |||||
| 12,023,400 | 24.0% | 2,885,616 12,023,400 | 24.0% | 2,885,616 | - 24.0% |
- | - 24.0% |
- | - 24.0% |
- 12,023,400 | 24.0% | 2,885,616 | |||||
| - | 24.0% | - | 24.0% | - | 24.0% | - | - 24.0% |
- | - 24.0% |
- | 24.0% | - | |||||
| 5,108,781 | 24.0% | 1,226,107 | 5,108,781 | 24.0% | 1,226,107 | - 24.0% |
- | - 24.0% |
- | - 24.0% |
- | 5,108,781 | 24.0% | 1,226,107 | |||
| - | 27.5% | - | - 27.5% |
- | - 27.5% |
- 27.5% |
- | - 27.5% |
- | - | 27.5% | - | |||||
| 22,530,750 | 24.0% | 5,407,380 22,530,750 | 24.0% | 5,407,380 | - 24.0% |
- | - 24.0% |
- | - 24.0% |
- 22,530,750 | 24.0% | 5,407,380 | |||||
| 578,372,100 | 138,809,304 578,372,100 | 138,809,304 21,215,749 | 5,091,780 | - | - 86,878,244 | 20,850,779 686,466,094 | 164,751,862 |
| Sub-total | Changes in tax rate | Increases for the year | Increases/uses to equity | year-end | Non-recurring transactions | Total deferred tax assets | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Taxable | Rate | Tax | Taxable | Rate | Tax | Taxable | Rate | Tax | Taxable | Rate | Tax Taxable |
Rate | Tax | Taxable | Rate | Tax |
| amount | amount | amount | amount | amount | amount | |||||||||||
| 231,350,349 | 24.0% 55,524,084 231,350,349 | 24.0% 55,524,084 63,924,985 | 24.0% 15,341,996 23,249,991 | 24.0% 5,579,998 |
24.0% - |
- 318,525,325 | 24.0% 76,446,078 | |||||||||
| 316,929,814 | 24.0% 76,063,155 316,929,814 | 24.0% 76,063,155 121,078,840 | 24.0% 29,058,922 | - | 24.0% | - (115,121,756) | 24.0% (27,629,221) 323,169,361 | 24.0% 77,560,647 | ||||||||
| 1,497,250 | 24.0% | 359,340 | 1,497,250 | 24.0% | 359,340 | - | 24.0% | - | - | 24.0% | - | - 24.0% |
- 1,497,250 |
24.0% | 359,340 | |
| 7,165,496 | 24.0% | 1,719,719 | 7,165,496 | 24.0% | 1,719,719 | 1,201,133 | 24.0% | 288,272 | - | 24.0% | - | 24.0% - |
- 8,366,629 |
24.0% | 2,007,991 | |
| 24.0% | - | 24.0% | - | 24.0% | - | 24.0% | - | 24.0% - |
- | 24.0% | - | |||||
| 9,644,123 | 24.0% | 2,314,590 | 9,644,123 | 24.0% | 2,314,590 | - | 24.0% | - | - | 24.0% | - | - 24.0% |
- 9,644,123 |
24.0% | 2,314,590 | |
| 262,892,118 | 24.0% 63,094,108 262,892,118 | 24.0% 63,094,108 | - | 24.0% | - | - | 24.0% | - | - 24.0% |
- 262,892,118 | 24.0% 63,094,108 | |||||
| - | 27.5% | - | - | 27.5% | - | - | 27.5% | - | 27.5% | 27.5% - |
- - |
27.5% | ||||
| 55,677,994 | 24.0% 13,362,719 55,677,994 | 24.0% 13,362,719 | 780,000 | 24.0% | 187,200 (28,875,093) | 24.0% (6,930,022) | - 24.0% |
- 27,582,901 | 24.0% | 6,619,896 | ||||||
| 885,157,144 | 212,437,715 885,157,144 | 212,437,715 186,984,958 | 44,876,390 (5,625,102) | (1,350,024) (115,121,756) | (27,629,221) 951,677,707 | 228,402,650 |
| Case description Units of euro |
Deferred tax liabilities A2A initial |
Transactions non recurring 2016 |
Deferred tax liabilities previous year |
Adjustments | Uses in current year | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Taxable | Taxable | Taxable | Rate | Tax | Taxable | Rate | Tax | Taxable | Rate | Tax | ||
| amount | amount | amount | amount | amount | ||||||||
| Measurement differences for tangible assets | 136,222,209 425,846,582 562,068,790 | 5.57% 31,307,232 59,562,145 | 5.57% | 3,317,611 152,613,580 | 5.57% | 8,500,576 | ||||||
| Application of the leasing standard (IAS 17) | 14,629,909 | - 14,629,909 | 5.57% | 814,886 | - | 5.57% | - | - | 5.57% | - | ||
| Measurement differences of intangible assets | 6,778 | - | 6,778 | 5.57% | 378 | 2,111 | 5.57% | 118 | - | 5.57% | - | |
| Other deferred tax liabilities | 15,906,434 | 5,550,286 21,456,721 | 5.57% | 1,195,139 (1,108,302) | 5.57% | (61,732) | 27,375,343 | 5.57% | 1,524,807 | |||
| Total | 166,765,330 431,396,868 598,162,198 | 33,317,634 58,455,954 | 3,255,997 179,988,923 | 10,025,383 |
| 102 | Case description Units of euro |
Deferred tax assets A2A initial |
Transactions non recurring 2016 |
Deferred tax assets previous year |
Adjustments | Uses in current year | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Taxable | Taxable | Taxable | Rate | Tax | Taxable | Rate | Tax | Taxable | Rate | Tax | |||
| amount | amount | amount | amount | amount | |||||||||
| Taxed risk provisions | 200,922,700 | 56,578,493 257,501,193 | 5.57% 14,342,816 23,104,384 | 5.57% | 1,286,914 | 61,288,713 | 5.57% | 3,413,781 | |||||
| Amortization, depreciation and write-downs | 108,773,616 147,922,892 256,696,508 | 5.57% 14,297,996 148,276,761 | 5.57% | 8,259,016 | 92,944,480 | 5.57% | 5,177,008 | ||||||
| Costs for business combinations | - | 5.57% | - | 5.57% | - | 5.57% | - | ||||||
| Grants | 6,087,924 | - | 6,087,924 | 5.57% | 339,097 | - | 5.57% | - | - | 5.57% | - | ||
| Goodwill | 112,678,312 193,621,151 306,299,463 | 5.57% 17,060,880 60,507,560 | 5.57% | 3,370,271 | 89,613,853 | 5.57% | 4,991,492 | ||||||
| Other deferred tax assets | 3,202,768 | 4,108,856 | 7,311,624 | 5.57% | 407,257 | 1,735,037 | 5.57% | 96,642 | 613,672 | 5.57% | 34,182 | ||
| Total | 431,665,320 402,231,392 833,896,712 | 46,448,047 233,623,742 | 13,012,842 244,460,718 | 13,616,462 |
Notes to the income statement
| Sub-total | Rate adjustment | Increases for the year | Increases/uses to equity | Transactions year-end and | extraordinary reversal | Total deferred tax liabilities | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Taxable | Rate | Tax | Taxable | Rate | Tax | Taxable | Rate | Tax | Taxable | Rate | Tax | Taxable | Rate | Tax | Taxable | Rate | Tax |
| amount | amount | amount | amount | amount | amount | ||||||||||||
| 469,017,355 | 5.57% 26,124,267 469,017,355 | 5.57% 26,124,267 3,556,506 | 5.57% | 198,097 | - 5.57% |
- (94,559,836) | 5.57% (5,266,983) 378,014,026 | 5.57% 21,055,381 | |||||||||
| 14,629,909 | 5.57% | 814,886 14,629,909 | 5.57% | 814,886 | - | 5.57% | - | - 5.57% |
- - |
5.57% | - 14,629,909 | 5.57% | 814,886 | ||||
| 8,889 | 5.57% | 495 | 8,889 | 5.57% | 495 | - | 5.57% | - | - 5.57% |
- - |
5.57% | - | 8,889 | 5.57% | 495 | ||
| (7,026,924) | 5.57% | (391,400) (7,026,924) | 5.57% (391,400) 17,659,243 | 5.57% | 983,620 | 5.57% - |
- 1,848,488 |
5.57% | 102,961 12,480,807 | 5.57% | 695,181 | ||||||
| 476,629,229 | 26,548,248 476,629,229 | 26,548,248 21,215,749 | 1,181,717 | - | - (92,711,348) | (5,164,022) 405,133,631 | 22,565,943 |
| Transactions year-end and Increases for the year Increases/uses to equity Total deferred tax assets 103 extraordinary reversal |
Rate adjustment | Sub-total | |
|---|---|---|---|
| Rate Tax Taxable Rate Tax Taxable Rate Tax Taxable Rate Tax |
Taxable Rate Tax Taxable |
Taxable Rate Tax |
|
| amount amount amount |
amount amount |
amount | |
| 5.57% 3,530,843 23,249,991 5.57% 1,295,025 5.57% - 305,957,220 5.57% 17,041,817 - |
5.57% 12,215,949 63,390,364 | 219,316,864 5.57% 12,215,949 219,316,864 |
|
| 5.57% 6,651,212 - 5.57% - (213,371,927) 5.57% (11,884,816) 223,132,721 5.57% 12,428,493 |
5.57% 17,380,004 119,411,353 | 312,028,789 5.57% 17,380,004 312,028,789 |
|
| 5.57% - 5.57% - 5.57% 5.57% - - - |
5.57% - |
5.57% - |
|
| - 5.57% - - 5.57% - - 5.57% - 6,087,924 5.57% 339,097 |
6,087,924 5.57% 339,097 |
6,087,924 5.57% 339,097 |
|
| 5.57% - 5.57% - (226,566,574) 5.57% (12,619,758) 50,626,596 5.57% 2,819,901 - - |
5.57% 15,439,660 | 277,193,170 5.57% 15,439,660 277,193,170 |
|
| 5.57% 1,774 (13,636,647) 5.57% (759,561) 5.57% - (5,171,801) 5.57% (288,069) - |
8,432,989 5.57% 469,717 31,857 |
8,432,989 5.57% 469,717 |
|
| 10,183,830 9,613,344 535,463 (439,938,501) (24,504,575) 580,632,660 32,341,239 |
45,844,427 182,833,574 | 823,059,736 45,844,427 823,059,736 |
104
Result of the year was positive for 274,050 thousand euro (negative for 73,487 thousand euro at December 31, 2015).
"Related parties" are those indicated by the international accounting standard that concerns Related Party Disclosures (IAS 24 revised).
On October 5, 2007, the Municipalities of Milan and Brescia signed a Shareholders' Agreement to regulate the ownership structure of A2A S.p.A.; this gave the Municipalities joint control over the company.
Specifically, the merger effective January 1, 2008, regardless of the legal structure established, was considered a joint venture, whose joint control was exercised by the Municipalities of Milan and Brescia, each of which owned a share equal to 27.5%.
On June 13, 2014, the Shareholders' Meeting modified the company's governance system, passing from the original two-tier system, adopted in 2007, to a "traditional" system of management and control through the appointment of the Board of Directors.
In December 2014, the Municipalities of Milan and Brescia sold a total shareholding of 0.51% of A2A S.p.A., while in the first two months of 2015, the Municipalities of Milan and Brescia sold an additional shareholding of 4.5% of A2A S.p.A..
On October 4, 2016, the Municipalities of Milan and Brescia renewed for another three years, with effect from January 1, 2017, the Shareholders' Agreement signed on December 30, 2013, concerning 1,566,452,642 ordinary shares representing 50% plus two shares of the share capital of A2A S.p.A.. On May 20, 2016, the two Municipalities had proceeded to sign an appendix to the Agreement, which envisaged reducing from six months to three months the term of the agreement, during which it is possible to terminate the same.
On October 26, 2016, the Municipality of Milan received from the Municipality of Brescia the proposal, approved by the Council of said Municipality on October 25, 2016, to partially amend the Shareholders' Agreement relating to A2A S.p.A. existing between the two Municipalities. In particular, said proposal requires the commitment of the two Municipalities to maintain syndicated and bound, in the new agreement, a number of shares held by them in equal measure, equal to 42% of the share capital of A2A S.p.A.. On November 4, 2016, the Council of the Municipality of Milan, after having favourably examined the proposal of the Municipality of Brescia of a partial amendment to the Shareholders' Agreement, submitted to the Municipal Council the proposal of the new Shareholders' Agreement for the final determinations of competence.
On January 23, 2017, the Milan City Council approved the new Shareholders' Agreement between the Municipality of Milan and the Municipality of Brescia regarding the shareholding in A2A S.p.A. and has undertaken the commitment not to proceed with the disposal of any shares owned by the Municipality of Milan.
At the date of approval of these separate financial statements at December 31, 2016, the two shareholders held a shareholding of 50% plus two shares that enables the two municipalities to maintain control over the company.
106
The A2A Group companies and the Municipalities of Milan and Brescia routinely entertain commercial relationships related to the supply of electricity, gas, heat, and potable water, management of public lighting systems and street lights, management of water purification and sewers, garbage collection and street sweeping and video surveillance.
Similarly, the A2A Group companies entertain commercial relationships with the companies controlled by the Municipalities of Milan and Brescia, for example, Metropolitana Milanese S.p.A., ATM S.p.A., Brescia Mobilità S.p.A., Brescia Trasporti S.p.A. and Centrale del Latte di Brescia S.p.A., supplying them with electrical energy, gas, heat, water purification and sewer service at market rates appropriate to the supply conditions and providing the services required. Note that these companies are considered related parties in the preparation of the financial statement schedules pursuant to Consob Resolution 17221 of March 12, 2010.
The relationships between the Municipalities of Milan and Brescia and the A2A Group, in relation to granting the services associated with public lighting, street lights, management and supply of electricity, gas, heat, and water purification and sewer service are regulated by special conventions and specific contracts.
The relationships between the companies controlled by the Municipalities of Milan and Brescia, which refer to the supply of electricity and gas, are at arm's length conditions.
On April 3, 2014, Amsa S.p.A., a subsidiary of A2A S.p.A., entered a service agreement with the Municipality of Milan covering waste management, street and green area cleaning, special services and other services upon request (such as the removal of illegally dumped waste, reclamation and snow removal) for the period from January 1, 2014, to December 31, 2016; the finalization of the renewal of this contract is currently underway.
The parent company A2A S.p.A., operates like a centralized treasury for the majority of the subsidiaries.
Relations between the companies are regulated through current accounts between the parent company and the subsidiaries, on which rates are applied, at market conditions, based on variable Euribor, with specific spreads for companies.
For the financial year 2016, A2A S.p.A. and its subsidiaries have adopted the VAT procedure of the Group.
Note that for IRES purposes, A2A S.p.A. files for tax on a consolidated basis, together with its main subsidiaries, in accordance with arts. 117-129 of DPR 917/86. To this end, with each of the subsidiaries joining, a special contract was drawn up to regulate the tax advantages/ disadvantages transferred, with specific reference to the current entries. These contracts also govern the transfer of any excess of ROL as set forth by prevailing legislation.
The parent company provides the subsidiaries and affiliates with administrative, fiscal, legal, management and technical services in order to optimize the resources available in the company and to use the existing expertise in terms of economic convenience. These services are regulated by special intercompany service contracts stipulated annually. A2A S.p.A. also provides its subsidiaries and affiliates with office spaces and operating areas, at their own sites, as well as the services related to their use. These services are regulated at market conditions.
The companies A2A gencogas S.p.A. and A2A Energiefuture S.p.A., for a monthly fee related to the actual availability of the thermoelectric plants, provide to the Parent Company the power generation service.
Telecommunication services are provided by the subsidiary A2A Smart City S.p.A..
Finally, note that pursuant to the Consob communication issued on September 24, 2010, bearing the provisions regarding related party transactions in accordance with Consob Resolution no. 17221 of March 12, 2010, as amended, on November 11, 2010, the Group had approved the procedure for related party transactions which took effect on January 1, 2011, and which aims to ensure the transparency and substantial fairness of the related party transactions executed by A2A S.p.A. directly, or through subsidiaries, identified in accordance with the IAS 24 revised accounting standard. The Board of Directors of June 20, 2016 resolved, with the approval of the Risk Control Committee, the review of the procedure "Regulation of transactions with Related Parties". The review of the procedure particularly involves the reduction, introduced optionally, of the threshold for transactions with subsidiaries of the Municipalities of Milan and Brescia, regarding which to provide for the application of the Procedure.
Below are the tables with detail of the related party transactions, in accordance with the Consob Resolution no. 17221 of March 12, 2010:
| Balance | Total | Of which with related parties | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| sheet Thousands of euro |
12 31 2016 | Subsi diary compa nies |
Associa ted compa nies |
Municipa lity of Milan |
Subsidia ries Municipa lity of Milan |
Municipa lity of Brescia |
Subsidia ries Municipa lity of Brescia |
Related parties indivi duals |
Total related parties |
% effect on the balance sheet item |
|||
| TOTAL ASSETS OF WHICH: | 7,499,593 4,831,395 | 64,274 | 15,735 | 3 | 5,510 | 142 | - 4,917,059 | 65.6% | |||||
| Non-current assets | 5,694,815 4,253,829 | 46,686 | - | - | 3,704 | 139 | - 4,304,358 | 75.6% | |||||
| Shareholdings | 3,901,566 3,854,880 | 46,686 | - | - | - | - | - 3,901,566 | 100.0% | |||||
| Other non-current financial assets |
406,463 | 398,949 | - | - | - | 3,704 | 139 | - | 402,792 | 99.1% | |||
| Current assets | 1,804,778 | 577,566 | 17,588 | 15,735 | 3 | 1,806 | 3 | - | 612,701 | 33.9% | |||
| Trade receivables | 650,195 | 144,592 | 9,723 | 15,735 | 3 | 1,806 | 3 | - | 171,862 | 26.4% | |||
| Other current assets | 370,736 | 59,594 | - | - | - | - | - | - | 59,594 | 16.1% | |||
| Current financial assets | 382,645 | 373,380 | 7,865 | - | - | - | - | - | 381,245 | 99.6% | |||
| TOTAL LIABILITIES OF WHICH: 5,183,108 | 658,675 | 113,154 | 479 | 377 | - | - | 312 | 772,997 | 14.9% | ||||
| Non-current liabilities | 3,298,632 | 4,154 | 89,865 | - | - | - | - | - | 94,019 | 2.9% | |||
| Provisions for risks, charges and liabilities for landfills |
179,629 | 4,154 | 89,865 | - | - | - | - | - | 94,019 | 52.3% | |||
| Current liabilities | 1,884,476 | 654,521 | 23,289 | 479 | 377 | - | - | 312 | 678,978 | 36.0% | |||
| Trade payables | 667,474 | 64,446 | 14,271 | 479 | 377 | - | - | - | 79,573 | 11.9% | |||
| Other current liabilities | 333,766 | 28,941 | 7,167 | - | - | - | - | 312 | 36,420 | 10.9% | |||
| Current financial liabilities | 857,449 | 561,134 | 1,851 | - | - | - | - | - | 562,985 | 65.7% |
Note on related party transactions
| Income | Total | Of which with related parties | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| statement Thousands of euro |
12 31 2016 | Subsi diary compa nies |
Associa ted compa nies |
Municipa lity of Milan |
Subsidia ries Municipa lity of Milan |
Municipa lity of Brescia |
Subsidia ries Municipa lity of Brescia |
Related parties indivi duals |
Total related parties |
% effect on the balance sheet item |
||
| REVENUES | 2,760,895 | 810,819 | 2,691 | 35,781 | - | 1,178 | 10 | - | 850,479 | 30.8% | ||
| Revenues from the sale of goods and services |
2,554,203 | 801,060 | 2,659 | 35,781 | - | 1,178 | 10 | - | 840,688 | 32.9% | ||
| Other operating revenues | 206,692 | 9,759 | 32 | - | - | - | - | - | 9,791 | 4.7% | ||
| OPERATING COSTS | 2,326,202 | 238,785 | 20,117 | 101 | 506 | - | 22 | 340 | 259,871 | 11.2% | ||
| Expenses for raw materials and services |
2,083,798 | 134,888 | 764 | 101 | 506 | - | 22 | 340 | 136,621 | 6.6% | ||
| Other operating costs | 242,404 | 103,897 | 19,353 | - | - | - | - | - | 123,250 | 50.8% | ||
| LABOUR COSTS | 151,699 | - | - | - | - | - | - | 2,525 | 2,525 | 1.7% | ||
| AMORTIZATION, DEPRECIATION, PROVISIONS AND WRITE-DOWNS |
360,854 | 2,439 | 2,332 | - | - | - | - | - | 4,771 | 1.3% | ||
| FINANCIAL BALANCE | 258,358 | 405,883 | (3,794) | - | - | 6,134 | - | - | 408,223 | n.s. | ||
| Financial income | 491,423 | 464,453 | 1,206 | - | - | 6,134 | - | - | 471,793 | 96.0% | ||
| Financial expenses | 233,065 | 58,570 | 5,000 | - | - | - | - | - | 63,570 | 27.3% |
Section 0.2 of this file provides complete schedules as required under Consob Resolution no. 17221 of March 12, 2010.
The year in question has seen the following non-recurring transactions:
Below is the table with the effects of the non-recurring transactions described above.
Separate financial statements – Year 2016
Consob Communication no. DEM/6064293 of July 28, 2006
| Detail of non-recurrering transactions Amounts in euro |
Note | Merger A2A Trading S.r.l. net of non-recurring transactions in 2016 |
Merger Edipower S.p.A. net of non-recurring transactions in 2016 |
|
|---|---|---|---|---|
| ASSETS | ||||
| NON-CURRENT ASSETS | ||||
| Tangible assets | 1 | 488,309,541 | ||
| Intangible assets | 2 | 56,493,261 | 1,008,940 | |
| Shareholdings | 3 | 1,030,797 | ||
| Other non-current financial assets | 3 | 5,000 | ||
| Deferred tax assets | 4 | 26,987,670 | 22,288,608 | |
| Other non-current assets | 5 | 142,862 | 54,390 | |
| TOTAL NON-CURRENT ASSETS | 84,654,590 | 511,666,479 | ||
| CURRENT ASSETS | ||||
| Inventories | 6 | 115,579,965 | (6,014,261) | |
| Trade receivables | 7 | 469,562,633 | 467,265 | |
| Other current assets | 8 | 71,724,355 | 15,630,352 | |
| Current financial assets | 9 | (2,032,195) | ||
| Current tax assets | 10 | 6,174,918 | 7,543,537 | |
| Cash and cash equivalents | 11 | 27,740,489 | 365,561 | |
| TOTAL CURRENT ASSETS | 690,782,360 | 15,960,259 | ||
| NON-CURRENT ASSETS HELD FOR SALE | 12 | |||
| TOTAL ASSETS | 775,436,950 | 527,626,738 | ||
| EQUITY AND LIABILITIES | ||||
| EQUITY | ||||
| Share capital | 13 | 1,000,000 | 709,141,954 | |
| (Treasury shares) | 14 | 0 | ||
| Reserves | 15 | 561,338 | (412,560,326) | |
| Result of the year | 16 | 0 | 48,336,439 | |
| SHAREHOLDERS' EQUITY | 1,561,338 | 344,918,067 | ||
| LIABILITIES | ||||
| NON-CURRENT LIABILITIES | ||||
| Non-current financial liabilities | 17 | |||
| Employee benefits | 18 | 1,485,964 | 27,706,810 | |
| Provisions for risks, charges and liabilities for landfills | 19 | 92,620,672 | 17,403,745 | |
| Other non-current liabilities | 20 | 3,402,071 | ||
| TOTAL NON-CURRENT LIABILITIES | 94,106,636 | 48,512,626 | ||
| CURRENT LIABILITIES | ||||
| Trade payables | 21 | 504,451,654 | 108,421,033 | |
| Other current liabilities | 21 | 70,778,357 | 25,775,012 | |
| Current financial liabilities | 22 | 103,947,601 | ||
| Tax liabilities | 23 | 591,364 | ||
| TOTAL CURRENT LIABILITIES | 679,768,976 | 134,196,045 | ||
| TOTAL LIABILITIES LIABILITIES DIRECTLY ASSOCIATED TO NON-CURRENT ASSETS HELD FOR SALE |
773,875,612 0 |
182,708,671 0 |
||
| TOTAL EQUITY AND LIABILITIES | 775,436,950 | 527,626,738 |
| Effect of non-recurring transactions |
A2A S.p.A. Transfer of business unit Monfalcone Plant to A2A Energiefuture S.p.A. 12/31/2016 |
A2A S.p.A. Lease of business unit Monfalcone Plant to A2A Energiefuture S.p.A. 07/01/2016 - 12/31/2016 |
A2A S.p.A. Transfer of business unit CCGT plants to A2A gencogas S.p.A. 07/01/16 |
Equity eliminations between: A2A S.p.A. A2A Trading S.r.l. Edipower S.p.A. |
|---|---|---|---|---|
| 208,325,172 | (103,002,185) | (13,570,532) | (163,411,652) | |
| 57,481,199 | (44,060) | 33,559 | (10,501) | |
| (42,804,833) | 133,100,000 | 164,756,000 | (341,691,630) | |
| 5,000 | ||||
| (5,573,332) | (53,259,759) | 201,047 | (1,790,898) | |
| 197,252 | ||||
| 217,630,458 | (23,206,004) | (13,335,926) | (457,051) | (341,691,630) |
| 105,136,916 | (4,183,303) | (209,068) | (36,417) | |
| 265,108,357 | (204,921,541) | |||
| 27,540,148 | (21,446) | (440,328) | (59,352,785) | |
| (187,857,956) | (206,969) | 13,385,154 | (5,471,180) | (193,532,766) |
| 13,718,455 | ||||
| 28,102,900 | (1,250) | (1,900) | ||
| 251,748,820 | (4,390,272) | 13,153,390 | (5,949,825) | (457,807,092) |
| 469,379,278 | (27,596,276) | (182,536) | (6,406,876) | (799,498,722) |
| (710,141,954) | ||||
| (8,752,404) | 683,105 | 762,569 | 401,800,910 | |
| 48,336,439 | ||||
| 39,584,035 | 683,105 | 762,569 | (308,341,044) | |
| 21,139,539 | (3,613,010) | (169,647) | (4,270,578) | |
| 50,816,534 | (23,601,170) | (484,671) | (1,771,456) | (33,350,586) |
| 3,402,071 | ||||
| 75,358,144 | (27,214,180) | (654,318) | (6,042,034) | (33,350,586) |
| 407,640,146 | (311,000) | (204,921,541) | ||
| 35,790,754 (89,585,165) |
(1,065,201) | 471,782 | (816,411) | (59,352,785) (193,532,766) |
| 591,364 | ||||
| 354,437,099 | (1,065,201) | 471,782 | (1,127,411) | (457,807,092) |
| 429,795,243 | (28,279,381) | (182,536) | (7,169,445) | (491,157,678) |
| 469,379,278 | (27,596,276) | (182,536) | (6,406,876) | (799,498,722) |
| Thousands of euro | 2016 | 2015 |
|---|---|---|
| Guarantees received | 199,495 | 81,725 |
| Guarantees provided | 278,706 | 169,358 |
114
Guarantees received amounted to 199,495 thousand euro (81,725 thousand euro at December 31, 2015) and include 63,270 thousand euro for sureties and security deposits issued by subcontractors to guarantee the proper execution of the work assigned and 136,225 thousand euro for sureties and security deposits received from customers to guarantee the regularity of payments.
Guarantees provided amounted to 278,706 thousand euro (169,358 thousand euro at December 31, 2015), of which for obligations undertaken in the loan agreements of 118,996 thousand euro. Said guarantees include bank sureties for 148,653 thousand euro, insurance for 13,152 thousand euro and parent company guarantees related to associated companies for 116,901 thousand euro.
Reference should be made to the specific section of this Report on Operations for a description of subsequent events.
At December 31, 2016, A2A S.p.A. held 23,721,421 treasury shares (26,917,609 at December 31, 2015), representing 0.757% of the share capital consisting of 3,132,905,277 shares. In the first three months of the year, there was an increase in the number of treasury shares compared to December 31, 2015 of 35,000,000 shares purchased between February 16 and March 31, 2016 for a counter value of approximately 37 million euro. In August, a portion of 38,196,188 treasury shares for a counter value of 47 million euro were sold for the acquisition of the majority stake of Linea Group Holding S.p.A..
At December 31, 2016, no treasury shares were held through subsidiaries, finance companies or nominees.
The item "Non-current assets held for sale" at December 31, 2016, shows a zero balance, while at December 31, 2015, it was 469 thousand euro and referred to the reclassification of the shareholding in SEASM S.r.l., held 67% by A2A S.p.A., since this is a discontinued operation in accordance with IFRS 5 as a result of management's decision to divest it; in 2016, the shareholding was recognized in the item "Shareholdings in subsidiaries" as the disposal was not finalized.
The parent company, A2A S.p.A., provides centralized risk management for Group companies.
The A2A Group operates in the electricity, natural gas and district heating industry and is exposed to various financial risks in performing its activity:
116
g) default and covenant non-compliance risk.
The commodity price risk, related to the volatility of energy commodity prices (gas, electricity, fuel oil, coal, etc.) and prices of environmental securities (EUA/ETS emission rights, green certificates, white certificates, etc.), consists of the possible negative effects that a change in the market price of one or more commodities may have on the cash flows and income prospects of the company, including the exchange rate risk related to the same commodities.
Interest rate risk is the risk of additional financial costs as the result of an unfavourable change in interest rates.
Currency risk not related to commodities is the risk of higher costs or lower revenues because of an unfavourable change in exchange rates between currencies.
Liquidity risk is the risk that financial resources will not be sufficient to meet established financial and business obligations in a timely manner.
Credit risk is the exposure to potential losses deriving from non-performance of commitments by commercial, trading and financial counterparties.
Equity risk is the possibility of incurring losses due to an unfavourable change in the price of shares.
Default and covenant risk represent the possibility that loan agreements or bond regulations to which one or more Group companies are party contain provisions allowing the counterparties, banks or bondholders, to ask the debtor for immediate reimbursement of the amounts lent if certain events take place.
Details on the risks to which A2A S.p.A. is exposed are provided below.
A2A S.p.A. is exposed to price risk, including the related exchange rate risk, on all of the energy commodities that it handles, namely electricity, natural gas, heat, coal, fuel oil, and environmental certificates; the financial performance of production, purchasing and sales activities is affected by the related price fluctuations. These fluctuations act both directly and indirectly, through formulas and indexing in the pricing structure.
To stabilize cash flows and to assure the Group's economic and financial stability, A2A S.p.A. has an Energy Risk Policy that sets out clear guidelines to manage and control the above risks, based on guidance by the Committee of Chief Risk Officers Organizational Independence and Governance Working Group ("CCRO") and the Group on Risk Management of Euroelectric. Reference was also made to the Accords of the Basel Committee on bank supervision approved in June 2004 ( "Basel 2") and the requirements laid down in international accounting standards on how to recognize the volatility of commodity price and financial derivatives in the income statement and balance sheet.
In the A2A Group, assessment of this kind of risk is centralized at the holding company, which has established a Group Risk Management Organizational Unit as part of the Planning, Finance and Control Organizational Unit. This unit has the task to manage and monitor market and commodity risks, to create and evaluate structured products, to propose financial energy risk hedging strategies, and to support senior management in defining the Group's energy risk management policies.
Each year, A2A S.p.A. sets the Group's commodity risk limits approving PaR and VaR proposed in the Risk Committee, in conjunction with approval of the Budget/Business Plan; the Risk Management supervises the situation to ensure compliance with these limits and proposes to senior management the hedging strategies designed to bring risk within the set limits.
The activities that are subject to risk management include all of the positions on the physical market for energy products, both purchasing/production and sales, and all of the positions in the energy derivatives market taken by Group companies.
For the purpose of monitoring risks, industrial and trading portfolios have been separated and are managed in different ways. The industrial portfolio consists of the physical and financial contracts directly relating to the Group's industrial operations, namely where the objective is to enhance production capacity also through the wholesaling and retailing of gas, electricity and heat.
The trading portfolio comprises all contracts, both physical and financial, entered into to supplement the profits made from the industrial activities, i.e. all contracts that are ancillary though not strictly necessary to the industrial activity.
In order to identify trading activity, the A2A Group follows the Capital Adequacy Directive and the definition of assets held for trading provided by International Accounting Standard (IAS) 39: namely assets held for the purpose of short-term profit taking on market prices or margins, without being for hedging purposes, and designed to create a high-turnover portfolio.
Given that they exist for different purposes, the two portfolios have been segregated and are monitored separately with specific tools and limits. More specifically, the trading portfolio is subject to particular risk control and management procedures as laid down in Deal Life Cycle documents.
Senior management is systematically updated on changes in the Group's commodity risk by the Group Risk Management Unit, which controls the Group's net exposure. This is calculated centrally on the entire asset and contract portfolio and monitors the overall level of economic risk assumed by the industrial and trading portfolios (Profit at Risk - PaR, Value at Risk - VaR, Stop Loss).
The hedging of price risk by means of derivatives focuses on protecting against the volatility of energy prices on the power exchange (IPEX), stabilizing electricity price margins on the wholesale market with particular attention being paid to fixed price energy sales and purchases and stabilizing price differences deriving from various indexing mechanisms for the pricing of gas and electricity. To that end, hedging contracts were executed during the year on electricity purchase and sale agreements and on contracts to hedge the fee for the use of electricity transport capacity between the areas of the IPEX market (CCC contracts); hedging contracts were concluded with leading banks on contracts for the purchase of coal so as to protect sales margins and at the same time keep the risk profile to within the limits set by the Group's energy risk policy.
As part of the optimization of the portfolio of greenhouse gas emission allowances (see Directive 2003/87/EC), A2A S.p.A. has stipulated Future and Forward contracts on the ICE ECX (European Climate Exchange) price. These are considered hedging transactions from an accounting point of view in the event of demonstrable surplus/deficit quotas.
The fair value at December 31, 2016 was 8,114 thousand euro (-5,523 thousand euro at December 31, 2015(1)).
Also as part of its optimization of the industrial portfolio, contracts have been entered into by A2A S.p.A. to hedge the fee for the use of electricity transport capacity within the areas of the IPEX market (CCC contracts), as well as Forward contracts on the market price of EUA environmental certificates (ECX ICE). These do not qualify as hedging transactions from an accounting point of view as they fail to meet the requirement set out in the accounting standards.
The fair value at December 31, 2016 was -248 thousand euro (3 thousand euro at December 31, 2015(1)).
As part of its trading activity, A2A S.p.A. has taken out Future contracts on major European energy stock exchanges (EEX, Powernext) and forward contracts on the price of electricity with delivery in Italy and neighboring countries such as France, Germany and Switzerland. A2A S.p.A. has also signed interconnection contracts with operators in neighboring countries, which are considered purchases of options. Forward contracts have been stipulated on the market price of EUA environmental certificates (ECX ICE), as well as Future contracts, which permit delivery of the allowances at the contract price as well as cash settlement of the differential between the market price and the contract price. Also as part of trading activities, both Future and Forward contracts were also stipulated for the market price of gas (ICE-Endex CEGH).
The fair value at December 31, 2016 was 5,130 thousand euro (498 thousand euro at December 31, 2015(1)).
PaR(2) or Profit at Risk, is the change in the value of a financial instruments portfolio within set probability assumptions as the result of a shift in the market indices. The PaR is calculated using the Montecarlo Method (at least 10,000 trials) and a 99% confidence level. It simulates scenarios for each relevant price driver depending on the volatility and correlations associated with each one, using as the central level the forward market curves at the balance sheet date, if available. By means of this method, after having obtained a distribution of probability associated with changes in the result of outstanding financial contracts, it is possible to extrapolate the maximum change expected over a time horizon given by the accounting period at a set level of probability. Based on this methodology, over the time horizon of the accounting period and in the event of extreme market movements and at a 99% confidence level, the expected maximum negative change in financial derivatives outstanding at December 31, 2016 was 10,688 thousand euro (50,789 thousand euro at December 31, 2015).
The following are the results of the simulation with the related maximum variances:
| Thousands of euro | 12 31 2016 | 12 31 2015 (*) | ||
|---|---|---|---|---|
| Profit at Risk (PaR) | Worst case | Best case | Worst case | Best case |
| Confidence level 99% | (10,688) | 13,551 | (50,789) | 62,560 |
(*) Values of A2A Trading S.r.l. at December 31, 2015, incorporated in A2A S.p.A. as of January 1, 2016.
This means that with a 99% probability, A2A S.p.A. expects not to have changes in fair value exceeding 10,688 thousand euro in its entire portfolio of financial instruments at December 31, 2016 due to commodity price fluctuations in the 12 months following. If there are any negative changes in the fair value of derivatives, these would be compensated by changes in the underlying as the result of changes in market prices.
VaR (Value at Risk)(3) is used to assess the impact that fluctuations in the market price of the underlying have on the financial derivatives taken out by A2A S.p.A. that are attributable to the trading portfolio. It is the negative change in the value of a financial instruments portfolio within set probability assumptions as the result of an unfavourable shift in the market indices. VaR is calculated using the RiskMetrics method with a holding period of 1 day and a confidence level of 99%. Alternative methods are used for contracts where it is not possible to perform a daily estimate of VaR such as stress test analysis.
(2) Profit at Risk: statistical measurement of the maximum potential negative deviation of the margin of an asset portfolio in case of unfavourable market changes over a given time horizon and with a defined confidence interval.
(3) Value at Risk: statistical measurement of the maximum potential drop in the fair value of an asset portfolio in the event of unfavourable movements in the market with a given time horizon and confidence level.
Under this method, in the case of extreme market movements, with a confidence level of 99% and a holding period of 1 day, the maximum estimated loss on the derivatives in question was 1,709 thousand euro at December 31, 2016 (1,067 thousand euro at December 31, 2015).
In order to ensure closer monitoring of activities, VaR and Stop Loss limits are also set, understood as the sum of VaR, P&L Realized and P&L Unrealized.
The following are the results of the assessments:
| Thousands of euro | 12 31 2016 | 12 31 2015 (*) | ||
|---|---|---|---|---|
| Value at Risk (VaR) | VaR | Stop Loss | VaR | Stop Loss |
| Confidence level 99%, holding period 1 day |
(1,709) | (13,139) | (1,067) | (1,067) |
(*) Values of A2A Trading S.r.l. at December 31, 2015, incorporated in A2A S.p.A. as of January 1, 2016.
The volatility of financial expenses associated to the performance of interest rates is monitored and mitigated through a policy of interest rate risk management aimed at identifying a balanced mix of fixed-rate and floating rate loans and the use of derivatives that limit the effects of fluctuations in interest rates.
Bank borrowings and other financing may be analyzed as follows at December 31, 2016:
| Millions of euro | December 31, 2016 | December 31, 2015 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Without derivatives |
With derivatives |
% with derivatives |
Without derivatives |
With derivatives |
% with derivatives |
||||
| Fixed rate | 2,228 | 2,362 | 73% | 3,003 | 3.155 | 87% | |||
| Floating rate | 989 | 855 | 27% | 639 | 487 | 13% | |||
| Total | 3,217 | 3,217 | 100% | 3,642 | 3.642 | 100% |
At December 31, 2016, the following are the hedging instruments for interest rate risk:
| Millions of euro | |||||
|---|---|---|---|---|---|
| Hedging instrument | Hedged asset | December 31, 2016 | December 31, 2015 | ||
| Fair value | Notional | Fair value | Notional | ||
| IRS+Collar | Fixed rate loan | - | - | 8.6 | 503.4 |
| Collar | Floating rate loan | (14.8) | 133.3 | (17.1) | 152.4 |
| Total | (14.8) | 133.3 | (8.5) | 655.8 |
Millions of euro
| Accounting treatment | Derivatives | Notional | Fair Value assets | Notional | Fair Value liabilities | ||||
|---|---|---|---|---|---|---|---|---|---|
| at 12/31/2016 |
at 12/31/2015 |
at 12/31/2016 |
at 12/31/2015 |
at 12/31/2016 |
at 12/31/2015 |
at 12/31/2016 |
at 12/31/2015 |
||
| Cash flow hedge | Collar | - | - | - | - | 133.3 | 152.4 | (14.8) | (17.1) |
| Fair value hedge | IRS | - | 503.4 | - | 16.2 | - | - | - | - |
| Fair value | Collar | - | - | - | - | - | 503.4 | - | (7.6) |
| Total | - | 16.2 | (14.8) | (24.7) |
The table below illustrates the underlying of outstanding derivatives at December 31, 2016:
| Loan | Derivative | Accounting | ||
|---|---|---|---|---|
| A2A S.p.A. loan with BEI: expiring in | Collar to fully cover the loan and | The loan is measured at amortized | ||
| November 2023, residual balance | the same maturity, with a floor | cost. | ||
| at December 31, 2016 amounting | on Euribor rate 2.99% and 4.65% | The collar is a cash flow hedge, | ||
| to 133.3 million euro, at floating | cap. At December 31, 2016, the fair | with 100% recognized in a specific | ||
| rate interest. | value was negative for 14.8 million | equity reserve. | ||
| euro. |
In order to analyze and manage the risks relating to interest rate risk the company has developed an internal model enabling the exposure to this risk to be calculated using the Montecarlo method, assessing the effect that fluctuations in interest rates may have on future cash flows. Under this methodology at least ten thousand scenarios are simulated for each key variable on the basis of the associated volatilities and correlations, using market rate forward curves for future levels. In this way, a probability distribution of the results is obtained from which the worst case scenario and best case scenario can be extrapolated using a 99% confidence level.
The following are the results of the simulation with the related maximum variances: (worst case and best case scenarios) for 2017 together with a comparison with 2016:
| Millions of euro | Year 2017 (base case: -90.8) |
Year 2016 (base case: -117.6) |
|||
|---|---|---|---|---|---|
| Worst case | Best case | Worst case | Best case | ||
| Change in expected cash flows (including hedge flows) Confidence level 99% |
(0.3) | 0.3 | (0.3) | 0.3 |
A sensitivity analysis is provided relating to possible changes in the fair value of derivatives (excluding cross currency swaps) on shifting the forward rate curve by +50 bps and -50 bps:
| Millions of euro | 12 31 2016 (base case: -14.8) |
12 31 2015 (base case: -8.5) |
|||
|---|---|---|---|---|---|
| -50 bps | +50 bps | -50 bps | +50 bps | ||
| Change in fair value of derivatives | (2.6) | 2.4 | (3.3) | 3.0 | |
| (of which cash flow hedges) | (2.6) | 2.4 | (3.3) | 3.0 | |
| (of which fair value hedges) | - | - | 1.4 | (1.4) |
This sensitivity analysis is calculated to determine the effect of the change of the forward interest rate curve of the fair value of derivatives ignoring any impact of the adjustment due to counterparty risk – "Bilateral Credit Value Adjustment" (bCVA) – introduced in the calculation of fair value in accordance with international accounting standard IFRS13.
In relation to the exchange rate risk other than the one included in the price of commodities, A2A decides whether to enter into hedging actions from the risk of exchange rate.
At December 31, 2016, the following are the hedging instruments for exchange rate risk:
Millions of euro
| Hedging instrument | Hedged asset | December 31, 2016 | December 31, 2015 | ||
|---|---|---|---|---|---|
| Fair value | Notional | Fair value | Notional | ||
| Cross Currency IRS | Fixed rate loan in foreign currency |
3.9 | 98.0 | (10.1) | 98.0 |
| Currency Forward | Future purchases in foreign currency |
0.1 | 0.8 | - | - |
| Total | 4.0 | 98.8 | (10.1) | 98.0 |
The accounting treatment of the derivatives indicated above is as follows:
Millions of euro
| Accounting treatment | Derivatives | Notional | Fair Value assets | Notional | Fair Value liabilities | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| at 12/31/2016 |
at 12/31/2015 |
at 12/31/2016 |
at 12/31/2015 |
at 12/31/2016 |
at 12/31/2015 |
at 12/31/2016 |
at 12/31/2015 |
|||
| Cash flow hedge | CCIRS | 98.0 | - | 3.9 | - | - | 98.0 | - | (10.1) | |
| Fair value | Currency forward |
0.8 | - | 0.1 | - | - | - | - | - | |
| Total | 4.0 | - | - | (10.1) |
1) Cross Currency IRS
The underlying of the derivative refers to the bond at fixed rate of 14 billion yen with maturity 2036 bullet issued in 2006.
A cross currency swap contract was stipulated for the entire duration of this loan, which converts the principal and interest payments from yen into euro.
At December 31, 2016, the fair value of the hedge was positive for 3.9 million euro. This fair value would improve by 20.5 million euro in the event of a 10% decline in the forward curve of the euro/yen exchange rate (appreciation of the yen) and would worsen by 16.8 million euro in the event of a 10% rise in the forward curve of the euro/yen exchange rate (depreciation of the yen). The sensitivity analysis was performed with the aim of calculating the effect of changes in the forward curve of the euro/yen exchange rate on the fair value ignoring any impact on the adjustment due to the bCVA.
2) Currency Forward
The underlying of the derivative refers to payments of invoices in foreign currency, denominated in USD, in relation to the maintenance contract of the Sermide plant. This derivative is accounted as fair value as the underlying is held by the subsidiary A2A gencogas S.p.A., while the derivative is contractualized by A2A S.p.A..
Liquidity risk is the risk that the company, despite being solvent, is unable to meet its obligations in a timely manner or that it is able to do so under unfavourable economic conditions.
| Thousands of euro | Accounting | Portions | Portions | Portion maturing by | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| balance 12 31 2016 |
maturing within 12 |
maturing after 12 |
12 31 2018 | 12 31 2019 | 12 31 2020 | 12 31 2021 | After | |||
| months | months | |||||||||
| Bonds | 2,228,048 | 45,482 | 2,182,566 | - | 565,330 | - | 426,903 | 1,190,333 | ||
| Bank loans | 988,597 | 248,982 | 739,615 | 46,585 | 51,506 | 57,683 | 79,956 | 503,885 | ||
| TOTAL | 3,216,645 | 294,464 | 2,922,181 | 46,585 | 616,836 | 57,683 | 506,859 | 1,694,218 |
The profile of the gross debt maturities of A2A is as follows:
The risk management policy is realized through (i) a debt management strategy diversified by funding sources and maturities, and (ii) maintenance of financial resources sufficient to meet scheduled and unexpected commitments over a given time horizon.
At December 31, 2016, the company had a total of 1 billion euro, as follows: (i) revolving committed credit lines for 800 million euro, with maturity 200 million euro in 2017 and 600 million euro in 2019, used for 100 million euro; (ii) unused long-term financing for a total of 20 million euro; (iii) cash and cash equivalents totalling 280 million euro.
A2A also maintains a Bond Issue Program (Euro Medium Term Note Programme) of 4 billion euro, of which 1,902 million euro still available.
The following table analyses the worst case for financial liabilities (including trade payables) in which all of the flows shown are undiscounted future nominal cash flows determined on the basis of residual contractual maturities for both principal and interest; they also include the undiscounted nominal flows of derivative contracts on interest rates.
| 12 31 2016 Millions of euro | 1-3 months | 4-12 months | After 12 months |
|---|---|---|---|
| Bonds | 45 | 40 | 2,627 |
| Payables and other financial liabilities | 104 | 151 | 801 |
| Total financial flows | 149 | 191 | 3,428 |
| Payables to suppliers | 194 | 1 | 1 |
| Total trade payables | 194 | 1 | 1 |
| 12 31 2015 Millions of euro | 1-3 months | 4-12 months | After 12 months |
| Bonds | 48 | 566 | 3,004 |
| Payables and other financial liabilities | 50 | 54 | 601 |
| Total financial flows | 98 | 620 | 3,605 |
| Payables to suppliers | 40 | 1 | - |
Credit risk relates to the possibility that a counterparty may be in default, or fail to respect its commitment in the manner and timing provided by contract. This type of risk is managed by the Group through specific procedures (Credit Policy, Energy Risk Management procedure) and appropriate mitigation actions.
This risk is overseen by both the Credit Management function allocated centrally (and the corresponding functions of the operating companies) and the Group Risk Management Organizational Unit responsible for supporting the Group companies. Risk mitigation is through the prior assessment of the creditworthiness of the counterparty and the constant verification of compliance with exposure limit as well as through the request for adequate guarantees.
The credit terms granted to customers as a whole have a variety of deadlines, in accordance with applicable law and market practice. In cases of delayed payment, default interest is charged as explicitly prescribed by the underlying supply contracts or by current law (application of the default rate as per Legislative Decree 231/2002).
Trade receivables are recognized on the balance sheet net of any write-downs. It is felt that the amount shown provides and accurate representation of the fair value of the trade receivables portfolio.
For the aging of trade receivables, reference is made to note 7) Trade receivables.
A2A S.p.A. was not exposed to equity risk at December 31, 2016.
At December 31, 2016, A2A S.p.A. held 23,721,421 treasury shares, representing 0.757% of the share capital consisting of 3,132,905,277 shares.
As prescribed by IAS/IFRS, treasury shares do not constitute an equity risk as their purchase cost is deducted from equity, and even if they are sold any gain or loss on the purchase cost does not have any effect on income statement.
Bonds (book value at December 31, 2016 equal to 2,228 million euro), loans (book value at December 31, 2016 equal to 892 million euro) and revolving committed bank lines (book value at December 31, 2016 equal to 97 million euro) present Terms and Conditions in line with the market for each type of instrument. In particular, they envisage: (i) negative pledge clauses under which A2A S.p.A. undertakes not to pledge, with exceptions, guarantees on its assets or those of its directly held subsidiaries over and above a specific threshold; (ii) cross- default/ acceleration clauses which entail immediate reimbursement of the loans in the event of serious non-performance; and (iii) clauses that provide for immediate repayment in the event of declared insolvency on the part of certain direct subsidiaries.
Bonds include (i) 2,128 million euro issued as part of the EMTN Programme, which provide to investors a Change of Control Put in the event of a change of control of the company resulting in a rating downgrade at sub-investment grade level in the following 180 days (if within said 180 days, the company's rating should return to investment grade, the option may not be exercised); (ii) 100 million euro relating to the private bond in yen with maturity 2036 with a Put right clause in favour of the investor in the event that the rating is lower than BBB- or equivalent level (sub-investment grade).
The loans stipulated with the European Investment Bank, with book value of 765 million euro contain a Credit Rating clause (if rating below BBB- or equivalent level to sub-investment grade), of which 632 million euro - due after 2024 - also include a change of control clause of A2A S.p.A., with the right for the bank to invoke, upon notice to the company containing indication of the reasons, the early repayment of the loan.
Lastly, the loan signed with UniCredit, brokered by the EIB, for a book value of 11 million euro and falling due in June 2018, contains a credit-rating clause that provides for a commitment by the company to maintain an investment grade rating for the whole loan term. In the event of non-compliance there are a number of annual financial covenants to be respected based on the ratios of debt to equity, debt to gross operating income and gross operating income to interest expense.
With reference to the bank lines revolving committed available, the line for 600 million euro with maturity November 2019 and the bilateral ones for a total of 200 million euro with maturity 2017 used at December 31, 2016 for 100 million euro, include a Change of Control clause which in the event of a change of control of the company causing a Material Adverse Effect allows the banks to request the facility to be extinguished and early repayment of any amounts drawn. The line for 600 million is also subject to the financial covenant NFP/EBITDA.
At December 31, there was no situation of non-compliance with the covenants of A2A S.p.A..
| Company | Bank | Level of reference | Level recognized | Date of recognition |
|---|---|---|---|---|
| A2A | Pool RCF | NPF/Ebitda <=4.2 | 2.5 | 12/31/2016 |
Tests were performed to determine whether these transactions qualify for hedge accounting in accordance with International Accounting Standard IAS 39. In particular:
1) Transactions qualifying for hedge accounting under IAS 39: can be analyzed between transactions to hedge cash flows (cash flow hedges) and transactions to hedge fair value of assets and liabilities (fair value hedges). For the cash flow hedges, the accrued result is included in gross operating income when realized on commodity derivatives and in the financial balance for interest rate and currency derivatives, whereas the future value is shown in equity. For fair value hedge transactions, the impacts in the income statement are recorded within the same line of the financial statements;
The use of derivatives in the A2A Group is governed by a coordinated set of procedures (Energy Risk Policy, Deal Life Cycle) which are based on industry best practices and designed to limit the risk of the Group being exposed to commodity price fluctuations, based on a cash flow hedging strategy.
The derivatives are measured at fair value based on the forward market curve at the balance sheet date, if the asset underlying the derivative is traded on markets with a forward pricing structure. In the absence of a forward market curve, fair value is measured on the basis of internal estimates using models that refer to industry best practices.
A2A S.p.A. uses "continuous-time" discounting to measure fair value. As a discount factor, it uses the interest rate for risk-free assets, identified in the Euro Overnight Index Average (EONIA) rate and represented in its forward structure by the Overnight Index Swap (OIS) curve. The fair value of the cash flow hedges has been classified on the basis of the underlying derivative contracts in accordance with IAS 39.
In compliance with the provisions of IFRS 13, the fair value of an over-the-counter (OTC) financial instrument is determined taking into account the non-performance risk. To quantify the fair value adjustment attributable to this risk, A2A S.p.A. has, in line with best market practices, developed a proprietary model called the "bilateral Credit Value Adjustment" (bCVA), which takes into account changes in the creditworthiness of the counterpart as well as the changes in its own creditworthiness.
The bCVA has two addends, calculated by considering the possibility that both counterparties go bankrupt, known as the Credit Value Adjustment (CVA) and the Debit Value Adjustment (DVA):
Separate financial statements – Year 2016 Other information
The bCVA is therefore calculated with reference to the exposure, measured on the basis of the market value of the derivative at the time of the default, the probability of default (PD) and the loss given default (LGD). This latter item, which represents the non- recoverable portion of the receivable in the case of default, is measured on the basis of the IRB Foundation Methodology as stated in the Basel 2 accords, whereas the PD is measured on the basis of the rating of the counterparties (internal rating based where not available) and the historic probability of default associated with this and published annually by Standard & Poor's.
Applying the above method did not result in significant changes in fair value measurements.
The following analyses show the outstanding amounts of derivative contracts stipulated and not expired at the balance sheet date, by maturity.
| Thousands of euro | Notional value (a) due within 1 year |
Notional value (a) due within 1 and 5 years |
Notional value (a) |
Amount reported |
Progressive effect to the income |
||
|---|---|---|---|---|---|---|---|
| to be received |
to be paid | to be received |
to be paid | due over 5 years |
in balance sheet (b) |
statement at 12 31 2016 (c) |
|
| Interest rate risk management | |||||||
| - cash flow hedges as per IAS 39 | 19,048 | 76,190 | 38,095 | (14,812) | |||
| - not considered hedges as per IAS 39 | |||||||
| Total derivatives on interest rates | - | 19,048 | - | 76,190 | 38,095 | (14,812) | - |
| Exchange rate risk management | |||||||
| - considered hedges as per IAS 39 On commercial transactions On financial transactions |
98,000 | 3,868 | |||||
| - not considered hedges as per IAS 39 On commercial transactions On financial transactions |
846 | 65 | |||||
| Total exchange rate derivatives | - | - | - | - | 98,846 | 3,933 | - |
(a) Represents the sum of the notional value of the elementary contracts that derive from any dismantling of complex contracts. (b) Represents the net receivable (+) or payable (-) recognized in the balance sheet following the measurement of derivatives at fair value.
(c) Represents the adjustment of derivatives to fair value recognized progressively over time in the income statement from the stipulation of the contract to the present day.
The following is an analysis of the commodity derivative contracts outstanding at the balance sheet date set up for the purpose of managing the risk of the fluctuations in the market prices of commodities.
| Unit of measurement of the notional value |
Notional Value thousands of euro |
Notional value expiring within 1 year |
Notional value expiring within 2 years |
Notional value expiring within 5 years |
Balance sheet value (*) thousands of euro |
Progressive effect to income statement (**)thousands of euro |
|
|---|---|---|---|---|---|---|---|
| Energy product price risk management | |||||||
| A. Cash flow hedges as per IAS 39, including: |
8,113.8 | - | |||||
| - Electricity |
TWh | 107,161.4 | 3.4 | 4,357.4 | |||
| - Oil |
Bbl | ||||||
| - Coal |
Tons | ||||||
| - Natural Gas |
TWh | 823.9 | 91.5 | ||||
| - Natural Gas |
Millions of cubic metres |
4,891.7 | 26.2 | 280.9 | |||
| - Exchange rate |
Millions of dollars |
||||||
| - CO2 Emission rights |
Tons | 10,065.3 | 2,052,000 | 3,384.0 | |||
| B. Considered fair value hedges as per IAS 39 |
- | - | |||||
| C. Not considered hedges as per IAS 39 of which: |
4,881.6 | 4,380.8 | |||||
| C.1 Hedge margin | (248.1) | (250.8) | |||||
| - Electricity |
TWh | 104.0 | 0.1 | (0.3) | (3.0) | ||
| - Oil |
Bbl | ||||||
| - Natural Gas |
MWh | ||||||
| - Natural Gas |
Millions of cubic metres |
||||||
| - CO2 Emission rights |
Tons | 541.0 | 120,000 | (247.8) | (247.8) | ||
| - Exchange rate |
Millions of dollars |
||||||
| C.2 Trading transactions | 5,129.8 | 4,631.5 | |||||
| - Electricity |
TWh | 1,907,354 | 56.9 | 3.6 | 4,513.4 | 3,977.1 | |
| - Natural Gas |
TWh | 453,503.2 | 27.0 | 0.6 | 614.0 | 445.1 | |
| - CO2 Emission rights |
Tons | 1,098.4 | 200,000 | 2.4 | 209.3 | ||
| - Environmental Certificates |
MWh | ||||||
| - Environmental Certificates |
Tep | ||||||
| Total | 12,995.4 | 4,380.8 |
(*) Represents the net receivable (+) or payable (-) recognized in the balance sheet following the measurement of derivatives at fair value. Values of A2A Trading S.r.l. at December 31, 2015, incorporated in A2A S.p.A. as of January 1, 2016.
(**) Represents the adjustment of derivatives to fair value recognized progressively over time in the income statement from stipulation of the contract until the current date.
At December 31, 2016, there are no derivatives on shareholdings like in the previous year.
The following table shows the balance sheet figures at December 31, 2016, for derivative transactions.
| Thousands of euro | Notes | Total |
|---|---|---|
| ASSETS | ||
| NON-CURRENT ASSETS | 3,868 | |
| Other non-current assets - Derivatives | 5 | 3,868 |
| CURRENT ASSETS | 260,433 | |
| Other current assets - Derivatives | 8 | 260,433 |
| TOTAL ASSETS | 264,301 | |
| LIABILITIES | ||
| NON-CURRENT LIABILITIES | 14,812 | |
| Other non-current liabilities - Derivatives | 20 | 14,812 |
| CURRENT LIABILITIES | 247,372 | |
| Trade payables and other current liabilities - Derivatives | 21 | 247,372 |
| TOTAL LIABILITIES | 262,184 |
The following table sets out the income statement figures at December 31, 2016 arising from the management of derivatives.
| Thousands of euro | Notes | Realised during the year |
Change in fair value |
Amounts recognized in the |
|---|---|---|---|---|
| during the year | income statement | |||
| REVENUES | 25 | |||
| Revenues from the sale of goods | ||||
| Energy product price risk management and commodity exchange risk management |
||||
| - considered hedges as per IAS 39 | - | - | - | |
| - not considered hedges as per IAS 39 | 27,362 | (285,115) | (257,753) | |
| Total revenues from the sale of goods | 27,362 | (285,115) | (257,753) | |
| OPERATING EXPENSES | 26 | |||
| Expenses for raw materials and services | ||||
| Energy product price risk management and commodity exchange risk management |
||||
| - considered hedges as per IAS 39 | 9,628 | - | 9,628 | |
| - not considered hedges as per IAS 39 | (52,128) | 289,496 | 237,368 | |
| Total expenses for raw materials and services | (42,500) | 289,496 | 246,996 | |
| Total booked to gross operating income (*) | (15,138) | 4,381 | (10,757) | |
| FINANCIAL BALANCE | 32 | |||
| Financial income | ||||
| Interest rate risk management and equity risk management | ||||
| Income on derivatives | ||||
| - considered hedges as per IAS 39 | - | - | - | |
| - not considered hedges as per IAS 39 | 8,616 | 7,618 | 16,234 | |
| Total | 8,616 | 7,618 | 16,234 | |
| Total financial income | 8,616 | 7,618 | 16,234 | |
| Financial expense | ||||
| Interest rate risk management and equity risk management | ||||
| Expenses on derivatives | ||||
| - considered hedges as per IAS 39 | (4,609) | - | (4,609) | |
| - not considered hedges as per IAS 39 | - | - | - | |
| Total | (4,609) | - | (4,609) | |
| Total financial expenses | (4,609) | - | (4,609) | |
| TOTAL BOOKED TO FINANCIAL BALANCE | 4,007 | 7,618 | 11,625 |
(*) The figures do not include the effect of the "net presentation" of the negotiation margin of trading activities.
To complete the analyses required by IFRS 7 and IFRS 13, the following table sets out the various types of financial instrument that are to be found in the various balance sheet items, with an indication of the accounting policies used and, in the case of financial instruments measured at fair value, an indication of where changes are recognized (income statement or equity). The last column of the table shows the fair value of the instrument at December 31, 2016, where applicable.
| Thousands of euro | Criteria to measure the reported amount of financial instruments | |||||||
|---|---|---|---|---|---|---|---|---|
| Notes | Financial instruments measured at fair value with changes recognized in: |
Financial instruments measured at amortized cost |
Sharehol dings / Securities convertible into unlisted share |
Amount as stated in the balance sheet at 12 31 2016 |
Fair value at 12 31 2016 (*) |
|||
| Income statement |
Equity | holdings measured at cost |
||||||
| (1) | (2) | (3) | (4) | (5) | ||||
| ASSETS | ||||||||
| Other non-current financial assets: | ||||||||
| Shareholdings / Securities convertible into shareholdings available for sale of which: |
||||||||
| - unlisted | 3,714 | 3,714 | n.a. | |||||
| - listed | - | - | ||||||
| Financial assets held to maturity | 96 | 96 | 96 | |||||
| Other non-current financial assets | 402,653 | 402,653 | 402,653 | |||||
| Total other non-current financial assets | 3 | 406,463 | ||||||
| Other non-current assets | 5 | 3,868 | 586 | 4,454 | 4,454 | |||
| Trade receivables | 7 | 650,195 | 650,195 | 650,195 | ||||
| Other current assets | 8 | 252,314 | 8,119 | 110,303 | 370,736 | 370,736 | ||
| Current financial assets | 9 | 382,645 | 382,645 | 382,645 | ||||
| Cash and cash equivalents | 11 | 278,207 | 278,207 | 278,207 | ||||
| Assets held for sale | 12 | - | - | |||||
| LIABILITIES | ||||||||
| Financial liabilities | ||||||||
| Non-current bonds | 17 | 2,182,566 | 2,182,566 | 2,182,566 | ||||
| Current bonds (**) | 22 | 45,482 | 45,482 | 45,482 | ||||
| Other non-current and current financial liabilities 17 and 22 | 1,551,582 | 1,551,582 | 1,551,582 | |||||
| Other non-current liabilities | 20 | 14,812 | 17,450 | 32,262 | 32,262 | |||
| Trade payables | 21 | 667,474 | 667,474 | 667,474 | ||||
| Other current liabilities | 21 | 5 | 247,367 | 86,394 | 333,766 | 333,766 |
(*) The fair value has not been calculated for receivables and payables not related to derivative contracts and loans as the corresponding carrying amount is a good approximation to this.
(**) Including accrued interest.
(1) Financial assets and liabilities measured at fair value with the changes in fair value recognized in the income statement.
(2) Cash flow hedges.
134
(3) Financial assets available for sale measured at fair value with profit/loss recognized in equity.
(4) Loans and receivables and financial liabilities measured at amortized cost.
(5) Available-for-sale financial assets consisting of unlisted shareholdings whose fair value is not reliably measurable are measured at the lower of cost less any impairment losses and fair value.
IFRS 7 and IFRS 13 require that fair value classification of financial instruments to be based on the quality of the input source used to calculate the fair value.
In particular, IFRS 7 and IFRS 13 set out three levels of fair value:
An analysis of the assets and liabilities included in the three fair value levels is set out in the following fair value hierarchy table.
| Thousands of euro | Note | Level 1 | Level 2 | Level 3 | Total |
|---|---|---|---|---|---|
| Available-for-sale assets measured at fair value | 3 | 3,714 | 3,714 | ||
| Other non-current assets | 5 | 3,868 | 3,868 | ||
| Other current assets | 8 | 258,299 | 346 | 1,788 | 260,433 |
| TOTAL ASSETS | 258,299 | 7,928 | 1,788 | 268,015 | |
| Other non-current liabilities | 20 | 14,812 | 14,812 | ||
| Other current liabilities | 21 | 247,185 | 187 | 247,372 | |
| TOTAL LIABILITIES | 247,185 | 14,812 | 187 | 262,184 |
The following tables show the main concessions obtained by A2A S.p.A.:
| Hydroelectric plants | Concession expiry | Concessionaire | ||
|---|---|---|---|---|
| Premadio II | 12/31/2043 | |||
| Premadio I(1) | 12/31/2017 | |||
| Braulio(1) | 12/31/2017 | |||
| San Giacomo(1) | 12/31/2017 | |||
| Generation and Trading | Nuovo Canale Viola(1) | 12/31/2017 | ||
| Valtellina | Grosio(2) | 12/31/2017 | ||
| Lovero(3) | 12/31/2017 | |||
| Stazzona(3) | 12/31/2017 | Region/Province | ||
| Grosotto(3) | 12/31/2017 | |||
| Sernio(3) | 12/31/2017 | |||
| Boscaccia | 01/30/2037 | |||
| Calabria Unit (9 concessions) | 12/31/2029 | |||
| Mese Unit (16 concessions) | 03/31/2029 | |||
| Udine Unit (3 concessions) | 03/31/2029 |
(1) extension of the temporary continuation regime until 12/31/2017 pursuant to Regional Council Decree no. X/4225 of 10/23/15
(2) in temporary continuation regime until 12/31/2017 pursuant to Regional Council Decree no. X/5823 of 11/18/16
(3) extension of the temporary continuation regime until 12/31/2017 pursuant to Regional Council Decree no. X/4595 del 12/17/15
| Hydroelectric plants | Concession expiry | Concessionaire | ||
|---|---|---|---|---|
| Mese plant | 3 concessions water for sanitary and related use | 12/31/2027 | Lombardy Region | |
| 2 concessions State Area | 03/31/2029 | Authorities of Bacino lacuali |
||
| Generation and Trading | Valtellina | 1 concession water for industrial use | renewal process underway |
Lombardy Region |
| Geographical area | Concession expiry | Concessionaire | |
|---|---|---|---|
| Networks and Heat | Milan Brescia |
Indefinite duration (duration equal to company term) |
|
| Bergamo | 2023 | Municipalities | |
| another 4 municipalities | - two municipalities respectively in 2017 and 2028 - two municipalities with tacit renewal |
Adequate provisions are provided where necessary for the disputes and litigation described below. It is noted that if there is no explicit reference to the presence of a provision, the company assessed the corresponding risk as possible without appropriating provisions in the financial statements.
On June 5, 2002, the European Commission published Decision no. 2003/193/EC stating that the three-year exemption from income tax provided by article 3 paragraph 70 of Law no. 549/95 and article 66.14 of Decree Law no. 331/1993, converted into Law no. 427/93, is incompatible with community law, considering this to be "State aid" which is prohibited by article 87.1 of the EC Treaty.
The Company appealed against this decision before the community jurisdictions but these appeals were rejected. The Italian State went ahead with the recovery of the aid in three separate stages, issuing different orders for the various tax period concerned.
The process followed by the various community and national appeals was described in the financial statements up until 2012 and in the quarterly reports up until the third quarter of 2013, to which reference is made for brevity. All the amounts requested for the principal and interest have been settled to avoid any executive action.
The situation regarding pending matters is as follows:
Separate financial statements – Year 2016 Other information
As of today, therefore, the question concerning the quantification of the interest due on the amounts to be recovered is still pending in cassation (whether the interest is compound or simple interest), related to the Second and Third recovery. On this point, the interpretation made by the European Court of Justice is binding on national courts. On March 26, 2015, the Attorney General at the Court of Justice, Melchior Wathelet, submitted his non-binding conclusions to the Court. According to the Attorney General, European legislation does not preclude that national legislation provides for the application of compound interest to a recovery action for illegal aid. However, the same Attorney General found that before 2008, neither European nor national legislation envisaged the application of compound interest for recovery activities.
By sentence ruled on September 3, 2015, the EU Court substantially transposed the opinion of the Attorney General, considering that a national legislation regarding interest on the recovery of State aid, which provides for the application of compound interest, is not contrary to European law. However, the Court highlighted that – before 2008 – no legislation (European and national) provided for the application of compound interest for the recovery of State aid relating to Decisions issued – as in this case – before the entry into force of Reg. no. 794/2004.
Following this binding sentence on the national court, the proceedings in cassation on the Third recovery suspended following the prejudicial referral to the Court of Justice, resumed its course. The defence of the Company filed a statement pointing out that - according to a correct reading of the EU court ruling - the application of compound interest can only occur from November 2008. The hearing was held March 18, 2016; the Attorney General concluded for the dismissal of the appeal of the party. The sentence has not yet been filed.
In any case, concerning the position of A2A, as all the amounts requested were settled some time ago, it is believed that once the pending disputes are completed the company should not have to bear any further costs for the recovery of State aid.
138
In the 90s, the purchase by BAS S.p.A. of the investment in HISA was made thanks to the services of a local consultant, Consult Latina.
Given the non-uniqueness of the contractual text and the non-acquisition of 100% of the investment in HISA, BAS S.p.A. did not pay to Consult Latina the fee requested because it considered the contractual provision as not applicable and therefore the formulated payment request as unjustified. In 1998, Consult Latina established a lawsuit to obtain payment of the fee.
Legal counsel has confirmed that the preliminary phase was completed years ago and that only the final sentence is awaited.
A2A S.p.A. took over the litigation after the incorporation of BAS S.p.A. in 2005 and repeatedly conferred upon the lawyers the mandate to reach a settlement also expressing a willingness to increase previous offers to cover the litigation costs as well as to listen to and weigh even incremental requests.
The Court convened the parties in a council chamber which was held December 18, 2014 to verify the conditions of a conciliation or transaction; following the discussion, the Court has set a new discussion session for February 19, 2015 and then a new mediation hearing on September 27, 2016 as well as one on December 27, 2016 and, in consideration of the nondefinition of settlement agreement, one on February 21, 2017. At the hearing, the parties informed the judge of the advanced state of negotiation and the need for additional time to define payment details. The settlement solution will be accepted, in order to settle the dispute, without recognition of debt.
Over time, Redengas, a subsidiary of HISA whose shares have been foreclosed in guarantee for the payment by A2A, by Consult Latina, has rooted actions to demand the removal of such encumbrances, even foretelling due compensation against A2A S.p.A. and Consult Latina. Said damages would result in additional costs for A2A S.p.A..
The Group has set aside a risk provision of 1.3 million euro.
On May 27, 2011, Consorzio Eurosviluppo Industriale S.c.a.r.l. served a writ on Ergosud S.p.A. and A2A S.p.A. with the following claims: (i) compensation for damages, of both a contractual and extra-contractual nature, jointly, or alternatively exclusively and separately, in the amount of 35,411,997 euro (of which 1,065,529 euro as the residual portion of their share of the expenses); (ii) compensation for damages for the stoppage at the worksite and the failure to return the areas of pertinence to the Consortium.
In the filing of appearance Ergosud S.p.A. and A2A S.p.A. called for the request to be rejected in full because it is unfounded in its merit and in its substance, and pointed out: (i) the lack of the right of the Consortium to institute proceedings as it is in a state of bankruptcy, (ii) the lack of the right of the Consortium to institute proceedings for the damages allegedly suffered by Fin Podella at the item "anticipation of program contract" for 6,153,437 euro and the damages allegedly suffered by Conservificio Laratta S.r.l. for 359,000 euro.
S.F.C. S.A. filed a notice of joinder on November 8, 2011 pursuant to article 105 of the Civil Procedure Code (which allows a third party to make a new, different request to the original judge, extending the argument) and called that Ergosud S.p.A. alone should be ordered to pay damages, in part similar to those claimed by the Consortium, quantified in 27,467,031 euro.
Separate financial statements – Year 2016 Other information
The judge found the bankruptcy of S.F.C. S.A. was legitimate and therefore set the end of the proceedings and the hearing for December 19, 2012, declaring the need to execute an expert opinion, setting May 23, 2013 as the date for the hearing to appoint the court's expert witness. At that hearing the judge, changed in the meantime, confirmed the questions already formulated on December 19, 2012 and appointed the court experts Messrs. Pompili and Caroli, setting a term for the parties to appoint their own consultants. A2A S.p.A. and Ergosud S.p.A. appointed as their experts Mr. Massardo and Mr. Gioffrè, persons who over the years have already drawn up reports on the matters to which the questions refer. After postponements requested by the experts, on July 31, 2014, the CTU was filed with the Court. The hearing for the expert's examination was held after postponement on April 1, 2015 and the hearing for clarification of conclusions has been scheduled for November 30, 2016. At this hearing, filing of the award issued by the Arbitration Court of Milan was admitted in March 2016, and the terms were set for the final statements and replication before arriving to the sentence.
The Group has not allocated any provisions as it does not deem as probable the risk related to this lawsuit.
This investigation was initiated with a report filed in March 2011 by the management of the A2A Group against A2A employees and third party businessmen suspected of being responsible for fraud carried out to the harm of the company itself, who - for the payment of conspicuous sums of money - were responsible for illegal trafficking, the falsification of forms identifying the waste and certificates of analysis, in relation to the supply of biomasses and the certification of their calorific value. More specifically, biomass quantities were recorded on entry at figures higher than the real ones, with the relative calorific values also being increased.
This implies damage to the A2A Group and in particular to A2A Trading S.r.l. (now A2A S.p.A.). The current risk considered possible is for the higher costs incurred for undelivered biomass and higher costs incurred for counterfeiting (others) of the calorific capacity of the biomass delivered and not delivered. This is in addition to the increased use of coal instead of biomasses could have as a consequence an increase in the environmental costs relating to the second half of 2009 and the whole of 2010, as well the need to reimburse the additional income or Green Certificates recognized with respect to the real income. The company could have submitted, without fault and with reference to the years 2009 and 2010, generating statements of environmental rights greater than those actually produced.
To date, the GSE, as it blocked the issuing of licenses for subsequent years, did not address return requests for previous annuities of competence of the A2A Group (second half of 2009-full-year 2010). If the GSE were to take action against the A2A Group, it will evaluate the appropriate actions, including damages, considering also the amount withheld from thirdparty suppliers. A2A Trading S.r.l. (now A2A S.p.A.) filed a request with the GSE, in accordance with the procedures and modalities required, to obtain Green Certificates relating to 2011 in which the calculation has been made on the basis of the real quantities of biomasses delivered to the power station and, in agreement with the Public Prosecutor, by taking into account a possible false (not of A2A) increase of 20% in the calorific values of such. Despite the fact that the GSE has acknowledged to A2A Trading S.r.l. (now A2A S.p.A.) the correctness of the calculations made for 2011, as of today the above-mentioned 2011 Green Certificates have not yet been issued.
In criminal proceedings, some sentencing measures have been adopted in the context of alternative rites to some of the defendants, with recognition of minimum compensation and recasts of expenses in favour of A2A.
The proceeding passed, for local jurisdiction, before the Court of Gorizia.
The dispute is ongoing. At the last hearing of February 23, 2017, some texts of the PM were heard. The next hearing is scheduled for May 18, 2017 also for preliminary investigation.
The Group has not allocated any provisions as it considers being the aggrieved party in the proceedings.
On March 29, 2013, Pessina Costruzioni notified A2A S.p.A. of the appointment of the arbitrator and the deposition with the arbitrators to initiate the arbitration, in fulfilment of the shareholders' agreements signed in August 2007, with the scope of having A2A S.p.A. ordered to pay compensation for damages for the non-fulfillment of its obligations under the agreements.
A2A S.p.A. appointed its arbitrator within the established term of 20 days, rejecting the requests.
After discussion on the appointment, and after a request for the appointment of a sole arbitrator made by Pessina to the Court of Novara, the parties signed an agreement concerning the formation of the Arbitration Board.
The appointed arbitrators are the Lawyers Bruna Gabardi Vanoli, Marco Praino (designated by Pessina) and Salvatore Sanzo (designated by A2A S.p.A.); the hearing for the formal constitution of the board was on July 1st, 2013. After this preliminary fulfilment, the parties will specify the applications for arbitration. As a result of the hearing, by means of a summary order, the board fulfilled the requirements for it to be formally established and be able to commence work, setting the deadlines for briefs and preliminary motions and the date of the first hearing. The dates set are October 15 and December 20, 2013 and February 21, 2014 for the submission of briefs and March 5, 2014 for the first hearing. By order of October 8, 2013, the Arbitration Board postponed the deadline for the submission of briefs respectively to October 9, 2013, January 21, 2014 and March 25, 2014. Consequently, the hearing set for March 2014 was postponed to April 10, 2014. The location for the arbitration was set as the offices of the President of the Arbitration Board in Milan. At the hearing of April 10, 2014, preceded by the submission of the parties' briefs, the Board set three new deadlines for the briefs (May 20 for A2A, June 17 for Pessina and June 26 for A2A) and set the date of the merit hearing as July 11, 2014. During the hearing, the plaintiff requested to fix a hearing for conclusions that by order outside the hearing filed on July 22 was set for September 16, 2014. At that hearing, the board set the terms for the filing of the final statements and the date of final hearing; at the request of the parties, such terms were postponed to December 3 and January 7, 2015 for the briefs and February 3, 2015 for the hearing. At that hearing, the board ordered an extension of the deadline for filing the award to 120 days. At the end of May 2015, A2A, having had news of habitual familiarity and commensality elements between the Chair of the Arbitration Board and the lawyer of the claimant, filed at the court of Milan application for recusal of the Chair of the Arbitration Board.
In view of the news of the appeal, with Ordinance 6 issued outside the hearing on June 3, 2015, the Board suspended the filing of the award until the end of the proceeding, or until the day following the notification of the outcome of the proceeding conducted by the most diligent party.
The Delegated Chair issued an order rejecting the request condemning A2A to litigation costs to the Chair of the Board and to Pessina.
On June 30, 2015, Pessina notified the Board, in execution of Ordinance 6/15, requesting the board to summarize the pending arbitration process.
On June 30, 2015, the Board, with the dissenting opinion of the arbitrator appointed by A2A filed its award that deems A2A responsible for violation of the shareholders' agreement signed on August 4, 2007 and, consequently, the order to pay damages of 37,968,938.95 euro plus legal fees and arbitration expenses.
The company challenged the Award pursuant to art. 829 CPC before the Milan Court of Appeal. The appeal concerns: 1) nullity of the Award for violation of art. 829, paragraph 1, no. 2, CPC, in light of the lack of impartiality of the Chair of the Arbitration Board, the lawyer Bruna Gabardi Vanoli; 2) the nullity of the Award, pursuant to art. 829, no. 4, CPC, as the arbitration board pronounced outside the limits of the arbitration agreement; 3) nullity of the Award for violation of the adversarial principle, pursuant to art. 829, no. 9 CPC, in so far as the arbitration board based its decision on art. III of the Shareholders' Agreement; 4) failure to state reasons under art. 829, no. 5 and 823, no. 5 CPC, and violation of the adversarial principle pursuant to art. 829, no. 9 CPC, as the arbitration board took its decision, excluding, for no reason, the evaluation of the documentation filed in court by A2A; 5) nullity of the Award for violation of the adversarial principle, pursuant to art. 829, no. 9 CPC, as the arbitration board decided on the basis of accepting the importance of the office of an equitable settlement of the damage, without submitting the issue to a hearing of the parties; 6) nullity of the Award pursuant to art. 829, no. 5 and 823, no. 5 CPC, as the arbitration board assessed the damages on an equitable basis pursuant to art. 1226 Civil Code, without justifying the existence of the condition for the applicability of said provision, and without justifying the existence of the damage; 7) nullity of the Award pursuant to art. 829, no. 3, as the arbitration board assessed the damages on an equitable basis pursuant to art. 1226 Civil Code, without the necessary conditions, in violation of public order. Pessina made a cross appeal before the court. After the first hearing held on December 16, 2015, a hearing was scheduled for the final judgement on May 3, 2016. At said hearing, the parties specified the conclusions and A2A also formulated a reasoned request for relief in terms. The Court adjourned the hearing to June 14. At said hearing, the Court granted the terms for the filing of final claims and objections respectively for September 5 and September 26, 2016, stating that the request for relief in terms will be examined and assessed in the final conclusions. Within the terms, the parties filed the conclusion brief and related reply reiterating and clarifying the respective requests and arguments. On November 23, 2016, the Court of Appeal filed the sentence 4337/16 declaring the reasons for appeal inadmissible and unfounded, resulting in absorption of incidental requests; the terms are pending for appeal in Cassation.
In July 2015, contextually to the appeal, A2A filed an appeal for the suspension of enforceability of the Ruling. The Court of Appeal by a decree issued by the Chair of the 1st Civil Section on July 10, 2015, without hearing the parties, suspended the enforceability of the Award until the hearing before the Board set for September 15, 2015. On joint request of the parties on September 11, 2015, said hearing was postponed to November 10, 2015. By order issued outside the hearing on November 19, 2015, the decree issued on July 10 was revoked. By decision 3378 of December 18, 2015, the Court of Milan granted the enforceability of the Award requested by Pessina, immediately suspended the same day by order issued by the President of the First Section of the Court of Appeal at the request of A2A, scheduling a hearing on January 19, 2016. By order of January 26, 2016 notified on February 4, 2016, the Court of Appeals revoked the Presidential Decree of December 18, 2015 and rejected the request for suspension of the contested measure. On February 24, 2016, Pessina notified injunction
and on March 7, 2016 notified garnishment (with a leading banking institution with which A2A opened a specifically dedicated bank account), with the simultaneous assumption by the garnishee of the obligations that the law imposes on the keeper. On March 23, 2016, the garnishment was registered and the hearing for the third-party statement was fixed by the Court of Brescia for May 23, 2016. On April 15, the lawyers of Pessina notified A2A and the third-party bank garnishee the hearing anticipation decree issued on April 6, 2016 by the Court of Brescia, on the request of Pessina, which brought forward to April 27, 2016 the hearing for third-party declaration. Following said hearing, on May 2, 2016, Pessina notified to the thirdparty garnishee identification of the credit that was paid on May 11, 2016 for the value of 38,524,290.56 euro.
144
With Regional Law no. 22/2011, Lombardy essentially doubled the fee for hydroelectric use of public water, thereby infringing the principles of gradualism and reasonableness in the determination of fees, already recognized by the case law, and also violating the principle of equal competition between operators in the national territory.
Faced with the payment requests made by the Region for the years 2012 and 2013, Edipower S.p.A. (now A2A S.p.A.) therefore paid the fee considering solely the increase arising from the planned inflation rate as compared to the previous year. As a consequence, for 2012 and 2013 the Region issued injunctions for the payment of the amount not paid by the company; Edipower S.p.A. (now A2A S.p.A.)appealed against these injunctions before the Regional Court of Public Waters ("TRAP") of Milan, proposing the exception of unconstitutionality of the regional provision.
Same conduct was adopted by Edipower (now A2A S.p.A.) for the annuities of the 2014, 2015 and 2016 fees.
However, given the consolidation of unfavourable law and contrary to the thesis of Edipower S.p.A. (now A2A S.p.A.) (ref. sent. TSAP no. 138/2016 and sent. Const. Court no. 158/2016), there was the extinction of almost all the appeals established by Edipower S.p.A. (now A2A S.p.A.) and payment the amount originally ordered pursuant to art. 309 Code of Civil Procedure, in order to avoid the increase of legal interest and the risk of condemnation to significant legal fees, as happened to other operators, while keeping intact its right to recover any amounts overpaid. Against this background, the injunctions for payment of October 2016 relating to the years 2014-2015 have not been opposed by Edipower S.p.A. (now A2A S.p.A.), which undertook to pay, with reserve of repetition in the event of a favourable judicial outcome, the quantum state fee not yet paid. The only judgement ("pilot") still pending before the TRAP Milan is related to the state property fee for 2013 related to the Liro Auction.
The same issue also concerns the large-scale derivations in Lombardy of A2A, which, since the outset, in view of its specific circumstances, fully pays, but with reservation of repetition, the fee demanded by the Region and then sues for excess repetition. In December 2016, the only case pending for A2A before the TRAP Milan on the "doubling" of the state fee was also concluded, with partial loss of A2A in this respect.
In addition, the D.G.R. (Regional Council Resolution) of Lombardy no. 5130-2016 ordered, by implementing paragraph 5 of art. 53-bis of Regional Law 26/2003 introduced by Regional Law 19/2010, the subjection of the Lombardy hydroelectric concessions already expired to an "additional fee" established "provisionally" at 20 €/kW of nominal power of concession, subject to the request for settlement at the outcome of the assessments underway by the regional offices regarding the profitability of expired concessions. It is noted that said additional fee is imposed retroactively from the original expiry of each concession, and therefore for Grosotto, Lovero and Stazzona from January 1, 2011, for Premadio 1 from July 29, 2013 and for Grosio from November 15, 2016.
A2A, which has always challenged even in court the legitimacy - in the first place constitutional - of the aforementioned paragraph 5, challenged, like other operators, the D.G.R. 5130-2016 before the Superior Court of Public Waters.
For disputes relating to public water derivation fees, at December 31, 2016, the Group set aside risk provisions for the total amount of 29,215 thousand euro equal to the entire claim of the counterparties.
On March 24, 2015, Carlo Tassara S.p.A. notified A2A, Electricité de France (EDF) and Edison a summons requesting the Court of Milan to condemn A2A and EDF to compensation for damages allegedly suffered by Carlo Tassara, in its capacity as minority shareholder of Edison, in relation to the mandatory tender offer launched by EDF on Edison shares consequently to the transaction by which, in 2012, A2A sold its indirect shareholding in Edison to EDF and simultaneously acquired 70% of the capital of Edipower from Edison and Alpiq.
Until 2012, in fact, A2A and EDF held joint control of Edison S.p.A. Edison, in turn, held 50% of Edipower S.p.A. (the remaining capital of Edipower was held 20% by Alpiq, 20% by A2A and the remaining 10% by Iren).
In the 2012 transaction, A2A sold its indirect shareholding in Edison to EDF and simultaneously acquired 70% of the capital of Edipower from Edison and Alpiq.
In the summons notified, Carlo Tassara complained that, in the transaction, EDF and A2A agreed on a mutual "discount" on the price paid by EDF for the purchase of Edison shares, on the one hand, and on the price paid by A2A for the purchase of 70% of Edipower, on the other. This discount was expected to be the result of abusive conduct by EDF and A2A as shareholders of Edison and the violation, among other things, of the regulations on transactions with related parties. This - according to Carlo Tassara - was expected to allow maintaining artificially low the price of the Edison shares paid to A2A and consequently the tender offer price paid to minorities of Edison (which by law was expected to be equal to that paid to A2A).
However, in 2012, A2A and EDF had voluntarily subjected the Transaction to the prior examination of Consob precisely in order to confirm the correctness of the tender offer price. Following extensive examinations, Consob had deemed that a compensatory mechanism could be detected in the transaction as a whole (i.e. between the sale of Edipower on the one hand and the sale of Edison shares on the other) and that therefore the tender offer price was to be increased from 0.84 euro to 0.89 euro per share.
146
In light of said decision, the parties had increased the sale price of the shareholding in Edison based on the price of 0.89 euro per share, for a total increase of around 84 million euro. EDF launched the tender offer at 0.89 euro per share.
Carlo Tassara resorted to Consob in order to further increase the price of the tender offer, but Consob rejected the request.
In addition, pending the tender offer, Carlo Tassara challenged before the TAR the tender offer document and the related resolution of approval by Consob requesting suspensions thereof for reasons of urgency. However, the TAR postponed the decision on the suspension to a date following the closing of the tender offer and, as a result of this, Carlo Tassara adhered to the tender offer and waived the cautionary request.
The writ of summons did not quantify the damage allegedly suffered by Carlo Tassara as a result of such transactions. However, with brief on February 20, 2017, Carlo Tassara requested that the court have an expert witness to calculate them (specifying that it be quantified in the alleged difference between the tender offer price and the market value that the Edison shares had previously). Carlo Tassara also filed an appraisal in which such damages were quantified in a total amount between 197 and 232 million euro, amount to calculate the compensation due from each of the companies that will be considered responsible by the judge.
The parties will discuss the admissibility and relevance of their respective preliminary requests at the next hearing of September 26, 2017. Upon completion of the discussion, the judge will decide on the preliminary motions and, in particular, on the opposing request to have an expert witness.
The Group, having fulfilled the requirements of the regulations in force, does not consider likely the risk for which it has not allocated any provisions.
* * *
The following information is provided in connection with the main litigation of a fiscal nature.
On April 4, 2016, the Provincial Directorate I of Milan - Regional Office of Milan 1 - notified the invitation to appear to provide clarifications on a business transfer in the company Chi.na.co. S.r.l. and the subsequent sale of the investment held in it under control for registration tax purposes. The invitation was followed by a contradictory with the Office and subsequent notification by the latter of the notice of liquidation to the acquiring counterparty, which filed an appeal on September 28, 2016. The risks provision recognized for 1.4 million euro was fully used for the payment of the amounts requested with the liquidation notice.
147
In early 2006, the Italian Finance Police – Lombardy Regional Unit, Milan – carried out a tax audit of AMSA Holding S.p.A. (now A2A S.p.A.) for VAT purposes for tax years 2001 to 2005.
The audit ended with the issue of a final report contesting the legitimacy of the ordinary VAT rate, in place of the special rate applied by suppliers for waste disposal and plant maintenance, as well as the subsequent deduction made after the invoices issued for these services were duly paid.
The report was followed by formal notices of assessment from the Tax Revenue Office (Milan 3 Office) for each year audited; appeals were then filed with the Provincial Tax Commission within the term provided by law.
The appeals for 2001 and for 2004 and 2005 were discussed on January 25, 2010 and on February 17, 2010 respectively, with a favorable outcome for the company in all cases. The Tax Revenue Office appealed against the verdict of the first court. The Regional Tax Commission rejected this appeal for all three years, 2001, 2004 and 2005.
For 2011, the Tax Revenue Office filed an appeal with the Supreme Court against which AMSA Holding S.p.A. filed a cross-appeal on November 9, 2012.
The outcomes of the 2002 and 2003 disputes were also favorable for the company but the Tax Revenue Office filed an appeal against both sentences. The appeal for 2002 was discussed on November 30, 2010, and by way of a sentence lodged on February 2, 2011 the Milan Regional Tax Commission overturned the sentence of the first court, upholding the Tax Revenue Office's appeal on almost all counts with the exception of the hazardous waste category. The Company filed an appeal with the Supreme Court for 2002. For 2003 the appeal made by the Tax Revenue Office was discussed on November 7, 2011 before the Regional Tax Commission which rejected it with a sentence filed on November 11, 2011. The Tax Revenue Office has not appealed to the Supreme Court for 2003, 2004 and 2005 and the sentence has become final, thereby closing the litigation. For 2001 and 2002, the hearing dates for discussion before the Supreme Court have not yet been set. The company has set aside a risk provision for 1.6 million euro.
On December 23, 2009 the Milan Tax Revenue Office served A2A Trading S.r.l. (now A2A S.p.A.) with a VAT tax assessment regarding fiscal 2004. This notice cited the company's failure to invoice taxable transactions and required the company to pay additional VAT as well as penalties and interest amounting to a total of 3.3 million euro.
In particular, under this assessment the Tax Revenue Office served a penalty on A2A Trading S.r.l. (now A2A S.p.A.) for not having invoiced the Tollee (Edipower S.p.A.) for the Green Certificates allegedly transferred between the two.
After appropriate examination, which also included the other Tollers, it was considered that the Tax Revenue Office's conclusions could not be accepted. In fact, under Tolling arrangements Tollers are on the one hand the owners of the raw materials, including fuel, that they supply to the Tollees to produce electricity, and on the other are the "ab origine" owners of the electricity produced. The delivery of Green Certificates to Tollees by Tollers can in no way be considered to be the transfer of title of such.
A2A Trading S.r.l. (now A2A S.p.A.) has therefore not committed any breach of law and accordingly no risk provision has been made in the financial statements for this matter.
On December 16, 2010, the Milan Tax Revenue Office served notice of a VAT tax assessment regarding fiscal 2005 and on October 31, 2011 notice of a VAT tax assessment regarding fiscal 2006 for the same reasons, with the resulting demands for additional value added tax plus penalties and interest totalling 5.2 million euro and 11.2 million euro respectively. As in the case of 2004, and also for 2005 and 2006, A2A Trading S.r.l. (now A2A S.p.A.) has not committed any breach of law accordingly no risk provision has been made in the financial statements for this matter.
A2A Trading S.r.l. (now A2A S.p.A.) has filed an appeal with the relevant bodies against both notices, requesting that the claim for additional taxes be fully annulled.
The Milan Provincial Tax Commission upheld the company's appeals for all years under dispute.
On March 12, 2013 the Tax Revenue Office stated its acceptance, for 2006, of the sentence for the part relating to the dispute regarding the green certificates and filed an appeal with respect to the remaining findings (283,454.16 euro). The Regional Tax Commission rejected the appeal and the Office filed an appeal against this decision with the Supreme Court on August 5, 2014, which was followed by a cross appeal by the company. On May 6, 2013 the Tax Revenue Office notified that it was waiving its appeal and applying for a dismissal of the case for 2004 and 2005.
Note that following the request for documentation regarding Green Certifications for the same Tolling contract in tax years from 2007 to 2010, on October 28, 2011 the Italian Guardia di Finanza - Milan Office served notice of the Report on Findings, highlighting the same failure to bill taxable transactions for the years 2007, 2008 and 2010. No assessment notices have yet been notified.
No provision was ever allocated as the company considered unfounded the claims of the financial administration.
At December 31, 2016, A2A S.p.A. had a surplus of environmental certificates.
In accordance with Article 2427, paragraph 16-bis, of the Italian civil code, it is hereby reported that the company paid EY S.p.A. total fees for the legally required auditing of the annual accounts and for other services provided during the year in the amount of 290 thousand euro.
The registered office of the company is in Brescia in Via Lamarmora 230.
A2A S.p.A. acquired the shareholding - currently of 41.7% - in EPCG by means of the international tender held in 2009, and under the so-called "EPCG Agreement" dated September 3, 2009, it acquired the right to manage the company, appointing the Executive Director (CEO) and Executive Manager.
As part of the management of EPCG by A2A S.p.A., also in order to meet the specific indicators provided by the EPCG Agreement, with effect from 2010, A2A S.p.A. and, as of 2011, Unareti S.p.A. (formerly A2A Reti Elettriche S.p.A.), have provided in favour of EPCG services designed to improve the organization and performance of EPCG. Within the broader set of services provided, consulting services were also included provided for the benefit of EPCG by specialized companies outside the A2A Group, the costs of which were first invoiced to A2A S.p.A. as part of more complex and organic consulting services provided in favour of the entire A2A Group and subsequently by A2A S.p.A. charged to EPCG for the activities carried out in favour of the same.
In view of the synergistic importance of intra-group services requested by EPCG to A2A, EPCG applied for and obtained, by the State Commission for the Control of Public Procurement Procedures, a formal exemption - dated September 6, 2010 - by which the non-necessity is enshrined for EPCG to apply the procedures provided by law on Public Procurement in order to purchase services from A2A S.p.A., A2A Reti Elettriche and certain other (identified by name) companies controlled by A2A S.p.A..
From a different perspective, service contracts between EPCG and A2A S.p.A. - which, while benefiting from the aforementioned exemption, would have needed the approval of the EPCG Board of Directors - were not explicitly approved by the Board, which nonetheless approved the budget of each annuity that includes the aforementioned costs. Therefore, the service contracts related to the years 2010, 2011 and 2012 were signed by the CEO pro tempore of EPCG. Pursuant to said contracts, A2A S.p.A. invoiced with regard to the aforementioned annuities a total of 7.75 million euro to EPCG, which has only paid a portion of 4.34 million euro.
For the years 2013, 2014, 2015 and 2016, in the absence of a specific agreement between the shareholders regarding the formalization of a specific service contract, A2A did not proceed with invoicing, although a broad set of services was indeed provided to EPCG also in said years, and A2A incurred the related charges.
Also, certain consulting services are disputed, related to the period 2011 and 2012 and amounting to about 2 million euro, acquired by EPCG directly from external consulting firms of the A2A Group.
Separate financial statements – Year 2016 Other information
At the beginning of 2014, the local "Party of People with Disabilities and Pensioners" proposed a parliamentary interpellation and filed a complaint to the Special Attorney in relation to service contracts entered into by EPCG with A2A and external consulting firms of the A2A Group. Subsequently, in November 2014, the Montenegrin police sent EPCG a request for documents and data that was fully acknowledged by the management of EPCG in the following month. Two further requests for additional information and documentation were then subjected to EPCG directly by the Special Attorney in August 2015 and February 2016, and in both cases the management of EPCG responded comprehensively to the requests of the investigators.
Until said moment, therefore, EPCG had registered only requests for documentation to which it promptly replied, and EPCG as well as A2A had therefore not - until April 15, 2016 - deemed that said requests could result in actions such to configure a risk if not remote - personal or capital - at the expense of its employees and/or the companies.
On April 15, 2016, the former Italian CFO appointed by A2A in EPCG, who resigned from said office only a few days before for reasons completely unrelated to the issue under consideration, was arrested by the Montenegrin police on order of the Special Attorney. Investigative measures are still covered by investigation confidentiality. Based on as currently known, the former CFO is accused - along with two previous EPCG Italian managers appointed by A2A, and three Montenegrin officials of EPCG - of abuse of office in the management of service contracts stipulated by EPCG. On May 6, 2016, the former CFO was released on payment of a bail deposit and withdrawal of the passport. On December 7, 2016, the passport was returned and the CFO returned to Italy. Given the fact that in Montenegro there is a law on liability of legal persons for offences committed by their managers in their own interest and a possible extension of the investigation to A2A S.p.A. cannot be excluded.
Based on the assessments made, the foregoing and the information available to date, and also considering the fact that A2A and other Group companies are currently not recipients of any measure, A2A believes that the risk of potential penalties applicable and/or claims for compensation or indemnity actions, can be assessed as "possible." Considering the state of the proceedings and for the same reasons outlined herewith, it is also impossible to quantify in reliable terms the amount of said indemnities or penalties, direct or indirect.
In view of the above, the company - in accordance with IAS 37 - considered it correct to handle the case in question providing adequate information and not allocating specific risks provision.
| Tangible assets Thousands of euro |
Balance at 12 31 2015 | Effect of non-recurring transactions | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Gross value |
Accumulated depreciation |
Provision write-down |
Residual value |
Gross value |
Accumulated depreciation |
Provision write-down |
Residual value |
||
| Land | 35,092 | (5,170) | (250) | 29,672 | 7,293 | 2,425 | (5,691) | 4,027 | |
| Buildings | 555,189 | (277,197) | (14,664) | 263,328 | (81,420) | 99,559 | 7,637 | 25,776 | |
| Plant and machinery | 2,746,299 | (1,708,684) | (127,660) | 909,955 | (544,539) | 744,218 | (24,707) | 174,972 | |
| Industrial and commercial equipment | 22,084 | (20,703) | (8) | 1,373 | (3,974) | 4,269 | 7 | 302 | |
| Other assets | 31,733 | (29,431) | (18) | 2,284 | 332 | (321) | 18 | 29 | |
| Construction in progress and advances | 35,707 | (461) | 35,246 | 95 | 3,124 | 3,219 | |||
| Leasehold improvements | 27,691 | (2,855) | 24,836 | - | |||||
| Total tangible assets | 3,453,795 | (2,044,040) | (143,061) 1,266,694 | (622,213) | 850,150 | (19,612) | 208,325 |
| Tangible assets Thousands of euro |
Balance at 12 31 2014 | Changes during the year | ||||||
|---|---|---|---|---|---|---|---|---|
| Gross value |
Accumulated depreciation |
Residual value |
Acquisitions | Changes in category |
Gross value |
Reclassifications Accumulated depreciation |
||
| Land | 34,805 | (5,170) | 29,635 | 39 | ||||
| Buildings | 540,290 | (264,997) | 275,293 | 704 | 1,177 | |||
| Plant and machinery | 2,598,382 | (1,651,154) | 947,228 | 475 | 21,387 | |||
| Industrial and commercial equipment | 21,923 | (20,374) | 1,549 | 161 | ||||
| Other assets | 31,634 | (29,285) | 2,349 | 362 | 160 | |||
| Construction in progress and advances | 26,669 | 26,669 | 31,377 | (22,763) | ||||
| Leasehold improvements | 21,237 | (1,178) | 20,059 | 6,454 | ||||
| Total tangible assets | 3,274,940 | (1,972,158) 1,302,782 | 39,533 | - | - | - |
Separate financial statements – Year 2016
1 - Statement of changes in tangible assets
| Balance at 12 31 2015 Effect of non-recurring transactions |
Changes during the year | Balance at 12 31 2016 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Provision Residual Gross Provision Residual Accumulated Accumulated write-down value value write-down value depreciation depreciation |
Acquisitions | Changes in category |
Others changes |
Disposals Gross value |
Accumulated depreciation |
Depreciation | Write downs |
Total changes for the |
Gross value |
Accumulated depreciation |
Provision write-down |
Residual value |
| 29,672 | year | |||||||||||
| 7,293 2,425 (5,691) 4,027 (81,420) 99,559 |
2 | (1,009) | (1,007) | 42,387 | (2,745) | (6,950) | 32,692 | |||||
| 7,637 25,776 (24,707) |
1,029 | 423 | (3) | (2,744) | 1,116 | (24,358) | (16,003) | (40,540) | 472,474 | (192,525) | (31,385) | 248,564 |
| 174,972 | 1,962 | 34,774 | 17,354 | (31,072) | 30,627 | (175,270) | (101,532) | (223,157) | 2,224,778 | (1,035,371) | (327,637) | 861,770 |
| 302 | 254 | (178) | 178 | (593) | (339) | 18,186 | (16,849) | (1) | 1,336 | |||
| 18 29 |
644 | (2) | (471) | 471 | (1,152) | (510) | 32,236 | (30,433) | 1,803 | |||
| 3,219 | 17,789 | (35,201) | 70 | (20) | (2,663) | (20,025) | 18,440 | - | - | 18,440 | ||
| - | 5,888 | (2,209) | 3,679 | 33,579 | (5,064) | - | 28,515 | |||||
| 208,325 | 27,568 | (4) | 17,419 | (34,485) | 32,392 | (203,300) | (121,489) | (281,899) 2,842,080 (1,282,987) | (365,973) 1,193,120 |
| Changes during the year | Balance at 12 31 2015 | ||||||
|---|---|---|---|---|---|---|---|
| Others | Disposals | Write | Depreciation | Total | Gross | Accumulated | Residual |
| changes | Gross Accumulated value depreciation |
downs | changes for the year |
value | depreciation | value | |
| (2) | 37 | 34,842 | (5,170) | 29,672 | |||
| (1,362) | 604 (284) |
(12,804) | (11,965) | 540,525 | (277,197) | 263,328 | |
| 3,339 | (1,228) 1,228 |
(3,716) | (58,758) | (37,273) | 2,618,639 | (1,708,684) | 909,955 |
| (8) | 8 | (337) | (176) | 22,076 | (20,703) | 1,373 | |
| (441) | 439 | (585) | (65) | 31,715 | (29,431) | 2,284 | |
| (37) | 8,577 | 35,246 | - | 35,246 | |||
| (1,677) | 4,777 | 27,691 | (2,855) | 24,836 | |||
| 3,302 | (3,041) 2,279 |
(4,000) | (74,161) | (36,088) 3,310,734 (2,044,040) | 1,266,694 |
| Intangible assets Thousands of euro |
Balance at 12 31 2015 | Effect of non-recurring transactions | |||||
|---|---|---|---|---|---|---|---|
| Gross value |
Accumulated depreciation |
Residual value |
Gross value |
Accumulated depreciation |
Residual value |
||
| Industrial patents and intellectual property rights | 83,187 | (79,048) | 4,139 | 20,884 | (17,794) | 3,090 | |
| Concessions, licences, trademarks and similar rights | 34,961 | (25,432) | 9,529 | (547) | 526 | (21) | |
| Goodwill | 37,480 | 37,480 | |||||
| Assets in progress | 1,323 | 1,323 | 8 | 8 | |||
| Other intangible assets | 1,307 | (1,173) | 134 | 54,404 | 54,404 | ||
| Total intangible assets | 158,258 | (105,653) | 52,605 | 74,749 | (17,268) | 57,481 |
| Intangible assets Thousands of euro |
Balance at 12 31 2014 | Changes during the year | ||||||
|---|---|---|---|---|---|---|---|---|
| Gross value |
Accumulated depreciation |
Residual value |
Acquisitions | Changes in category |
Gross value |
Reclassifications Accumulated depreciation |
||
| Industrial patents and intellectual property rights | 81,285 | (75,730) | 5,555 | 1,940 | ||||
| Concessions, licences, trademarks and similar rights | 31,846 | (22,136) | 9,710 | 2,247 | 872 | |||
| Goodwill | 38,435 | 38,435 | ||||||
| Assets in progress | 473 | 473 | 1,722 | (872) | ||||
| Other intangible assets | 1,307 | (1,123) | 184 | |||||
| Total intangible assets | 153,346 | (98,989) | 54,357 | 5,909 | – | – | – |
Separate financial statements – Year 2016
2 - Statement of changes in intangible assets
| Balance at 12 31 2015 Effect of non-recurring transactions |
Changes during the year | Balance at 12 31 2016 | ||||||
|---|---|---|---|---|---|---|---|---|
| Gross Residual Gross Residual Accumulated Accumulated value value value value depreciation depreciation |
Acquisitions | Changes in category |
Others changes |
Amortization | Total changes for the year |
Gross value |
Accumulated depreciation |
Residual value |
| Industrial patents and intellectual property rights 83,187 (79,048) 4,139 20,884 (17,794) 3,090 |
2,475 | 1,506 | (10) | (4,246) | (275) | 108,042 | (101,088) | 6,954 |
| Concessions, licences, trademarks and similar rights 34,961 (25,432) 9,529 (547) 526 (21) |
4,361 | 737 | (175) | (4,152) | 771 | 39,337 | (29,058) | 10,279 |
| 37,480 37,480 |
37,480 | - | 37,480 | |||||
| 1,323 8 8 |
3,814 | (2,239) | 1,575 | 2,906 | - | 2,906 | ||
| 134 54,404 54,404 |
3,660 | (31) | 3,629 | 59,371 | (1,204) | 58,167 | ||
| 52,605 74,749 (17,268) 57,481 |
10,650 | 4 | 3,475 | (8,429) | 5,700 | 247,136 | (131,350) | 115,786 |
| Changes during the year | Changes during the year | Balance at 12 31 2015 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Changes Reclassifications Acquisitions in Gross Accumulated category |
Others changes |
Disposals/Sales Gross |
Accumulated | Write downs |
Amortization | Total changes for the year |
Gross value |
Accumulated depreciation |
Residual value |
| value depreciation |
value | depreciation | |||||||
| 1,940 | (38) | (3,318) | (1,416) | 83,187 | (79,048) | 4,139 | |||
| 2,247 872 |
(4) | (3,296) | (181) | 34,961 | (25,432) | 9,529 | |||
| (955) | (955) | 37,480 | - | 37,480 | |||||
| (872) | 850 | 1,323 | - | 1,323 | |||||
| (50) | (50) | 1,307 | (1,173) | 134 | |||||
| (42) | – | – | (955) | (6,664) | (1,752) | 158,258 | (105,653) | 52,605 |
| Shareholdings | Balance at | Changes in 2016 | |||
|---|---|---|---|---|---|
| Thousands of euro | financial statements 12 31 2015 |
Increases | Decreases | Effect of non-recurring transactions |
|
| FINANCIAL ASSETS | |||||
| Subsidiaries: | |||||
| Edipower S.p.A. | 737,552 | (737,552) | |||
| A2A Trading S.r.l. | 34,449 | (34,449) | |||
| Unareti S.p.A. | 696,280 | 685,601 | |||
| A2A Reti Elettriche S.p.A. | 668,333 | (668,333) | |||
| A2A Logistica S.p.A. | 17,268 | (17,268) | |||
| Unareti servizi metrici S.r.l. | 10 | (10) | |||
| A2A Ambiente S.p.A. | 634,894 | ||||
| Elektroprivreda Cnre Gore AD (EPCG) | 279,017 | ||||
| A2A Calore & Servizi S.r.l. | 334,477 | 140 | |||
| A2A Ciclo Idrico S.p.A. | 167,000 | ||||
| A2A gencogas S.p.A. | 98,971 | 465,346 | |||
| A2A Energiefuture S.p.A. | - | 50 | 262,680 | ||
| A2A Energia S.p.A. | 98,743 | ||||
| Retragas S.r.l. | 30,105 | ||||
| Aspem S.p.A. | 26,508 | ||||
| A2A Smart City S.p.A. | 9,222 | ||||
| Proaris S.r.l. | 3,557 | ||||
| Camuna Energia S.r.l. | 1,467 | ||||
| Ecofert S.r.l. in liquidation | 802 | ||||
| Plurigas S.p.A. in liquidation | 560 | ||||
| SEASM S.r.l. | - | ||||
| A2A Alfa S.r.l. | - | 1,030 | |||
| Linea Group Holding S.p.A. | - | 112,779 | |||
| A2A Illuminazione Pubblica S.r.l. | - | 100 | |||
| A2A Montenegro d.o.o. | 102 | ||||
| Mincio Trasmissione S.r.l. | 10 | ||||
| Ostros Energia S.r.l. in liquidation | - | ||||
| Total subsidiaries | 3,839,327 | 112,929 | (10) | (42,805) | |
| Equity investments held for sale | |||||
| SEASM S.r.l. | 469 |
Separate financial statements – Year 2016
3/a - Statement of changes in investments in subsidiaries
| Share of equity | Balance at | Changes in 2016 | |||
|---|---|---|---|---|---|
| Pro rata amount |
Equity at 12 31 2016 |
% shareholding |
financial statements 12 31 2016 |
Others changes |
Write-downs |
| - | - | - | |||
| - | - | - | |||
| 1,466,882 | 1,466,882 | 100.00% | 1,381,881 | ||
| - | - | - | |||
| - | - | - | |||
| - | - | - | |||
| 490,091 | 490,091 | 100.00% | 634,894 | ||
| 309,062 | 740,269 | 41.75% | 279,017 | ||
| 349,647 | 349,647 | 100.00% | 334,617 | ||
| 213,273 | 213,273 | 100.00% | 167,000 | ||
| 521,694 | 521,694 | 100.00% | 510,317 | (54,000) | |
| 308,181 | 308,181 | 100.00% | 262,730 | ||
| 190,957 | 190,957 | 100.00% | 98,743 | ||
| 35,518 | 40,699 | 87.27% | 30,105 | ||
| 8,221 | 9,134 | 90.00% | 26,508 | ||
| 13,736 | 13,736 | 100.00% | 9,222 | ||
| 3,551 | 5,919 | 60.00% | 3,557 | ||
| 791 | 1,062 | 74.50% | 1,467 | ||
| 802 | 1,706 | 47.00% | 802 | ||
| 2,247 | 3,210 | 70.00% | 560 | ||
| 489 | 730 | 67.00% | 469 | 469 | |
| 1,000 | 1,428 | 70.00% | - | (1,030) | |
| 99,764 | 195,615 | 51.00% | 112,779 | ||
| 43 | 100.00% | 100 | |||
| 102 | 102 | 100.00% | 102 | ||
| 303 | 303 | 100.00% | 10 | ||
| 3,452 | 4,315 | 80.00% | - | ||
| 4,019,806 | 4,558,996 | 3,854,880 | 469 | (55,030) | |
| - | (469) |
| Shareholdings | Balance at | Changes in 2016 | ||||
|---|---|---|---|---|---|---|
| Thousands of euro | financial statements 12 31 2015 |
Increases | Decreases | Effect of non-recurring transactions |
||
| FINANCIAL ASSETS | ||||||
| Affiliates: | ||||||
| ACSM-AGAM S.p.A. (**) | 34,051 | |||||
| Rudnik Uglja Ad Pljevlja (*) | 12,067 | |||||
| Azienda Servizi Valtrompia S.p.A. | 3,383 | |||||
| Sviluppo Turistico Lago d'Iseo S.p.A. (**) | 837 | |||||
| SET S.p.A. (**) | 466 | |||||
| Serio Energia S.r.l. (**) | 400 | |||||
| Ge.S.I. S.r.l. | 380 | 86 | ||||
| Visano Società Trattamento Reflui S.c.a.r.l. (**) | 10 | |||||
| Centrale Termoelettrica del Mincio S.r.l. in liquidation |
6 | |||||
| Ergon Energia S.r.l. in liquidation (**) | - | |||||
| Total affiliates | 51,600 | 86 | - | - | ||
| (*) Amounts at December 31, 2014 |
(**) Amounts at December 31, 2015
Separate financial statements – Year 2016
3/b - Statement of changes in investments in affiliates
| Balance at Changes in 2016 financial |
Changes in 2016 | Balance at | Share of equity | ||||
|---|---|---|---|---|---|---|---|
| Increases Decreases Effect of non-recurring transactions |
Write-downs | Others changes |
financial statements 12 31 2016 |
% shareholding |
Equity at 12 31 2016 |
Pro rata amount |
|
| 34,051 | 23.94% | 173,064 | 41,432 | ||||
| (5,000) | 7,067 | 39.49% | 19,517 | 7,707 | |||
| 3,383 | 48.77% | 12,981 | 6,331 | ||||
| 837 | 24.29% | 3,178 | 772 | ||||
| 466 | 49.00% | 1,396 | 684 | ||||
| 400 | 40.00% | 1,950 | 780 | ||||
| 466 | 47.00% | 4,941 | 2,322 | ||||
| 10 | 40.00% | 26 | 10 | ||||
| 6 | 45.00% | 3,855 | 1,735 | ||||
| - | 50.00% | (143) | (72) | ||||
| (5,000) | - | 46,686 | 220,765 | 61,701 |
| Company name Thousands of euro |
Shareholding % |
Shareholder | Carrying amount at 12 31 2016 |
|---|---|---|---|
| Available-for-sale financial assets (AFS) | |||
| Infracom S.p.A. | 0.44% | A2A S.p.A. | 155 |
| Immobiliare-Fiera di Brescia S.p.A. | 1.21% | A2A S.p.A. | 280 |
| Azienda Energetica Valtellina e Valchiavenna S.p.A. (AEVV) | 9.39% | A2A S.p.A. | 1,846 |
| Altre: | |||
| AQM S.r.l. | 7.52% | A2A S.p.A. | |
| AvioValtellina S.p.A. | 0.18% | A2A S.p.A. | |
| Banca di Credito Cooperativo dell'Oglio e del Serio s.c. | n.s. | A2A S.p.A. | |
| Brescia Mobilità S.p.A. | 0.25% | A2A S.p.A. | |
| Consorzio DIX.IT in liquidation | 14.28% | A2A S.p.A. | |
| Consorzio L.E.A.P. | 8.57% | A2A S.p.A. | |
| Consorzio Milan Sistema in liquidation | 10.00% | A2A S.p.A. | |
| Emittenti Titoli S.p.A. | 1.85% | A2A S.p.A. | |
| E.M.I.T. S.r.l. in liquidation | 10.00% | A2A S.p.A. | |
| Isfor 2000 S.c.p.A. | 4.94% | A2A S.p.A. | |
| Stradivaria S.p.A. | n.s. | A2A S.p.A. | |
| DI.T.N.E. | 1.45% | A2A S.p.A. | |
| SIRIO S.C.P.A. | 0.02% | A2A S.p.A. | |
| ORIONE S.C.P.A. | 0.22% | A2A S.p.A. | |
| Total other financial assets | 1,433 | ||
| Total available-for-sale financial assets | 3,714 |
Note: A2A S.p.A. took part in the setting up of Società Cooperativa Polo dell'innovazione della Valtellina, subscribing 5 shares having a nominal value of 50 euro.
| Company name Thousands of euro |
Registered office | Currency | Share capital at 12 31 2016 |
|
|---|---|---|---|---|
| Subsidiaries: | ||||
| Unareti S.p.A. | Brescia | Euro | 965,250 | |
| A2A Ambiente S.p.A. | Brescia | Euro | 220,000 | |
| Elektroprivreda Cnre Gore AD (EPCG) (*) | Nikšić (Montenegro) | Euro | 1,003,666 | |
| A2A Calore & Servizi S.r.l. | Brescia | Euro | 150,000 | |
| A2A Ciclo Idrico S.p.A. | Brescia | Euro | 70,000 | |
| A2A gencogas S.p.A. | Gissi (CH) | Euro | 450,000 | |
| A2A Energia S.p.A. | Milan | Euro | 2,000 | |
| Retragas S.r.l. | Brescia | Euro | 34,495 | |
| Aspem S.p.A. | Varese | Euro | 174 | |
| A2A Smart City S.p.A. | Brescia | Euro | 3,000 | |
| Proaris S.r.l. | Milan | Euro | 1,875 | |
| Camuna Energia S.r.l. | Cedegolo (BS) | Euro | 900 | |
| SEASM S.r.l. | Brescia | Euro | 700 | |
| Ecofert S.r.l. in liquidation | S.Gervasio Bresciano (BS) | Euro | 100 | |
| Plurigas S.p.A. in liquidation | Milan | Euro | 800 | |
| A2A Montenegro d.o.o. | Podgorica (Montenegro) | Euro | 100 | |
| Mincio Trasmissione S.r.l. | Brescia | Euro | 10 | |
| A2A Energiefuture S.p.A. | Milan | Euro | 50,000 | |
| Ostros Energia S.r.l. in liquidation | Brescia | Euro | 350 | |
| Linea Group Holding S.p.A. | Brescia | Euro | 189,494 | |
| A2A Illuminazione Pubblica S.r.l. | Brescia | Euro | 100 |
(*) Amounts at December 31, 2015
Separate financial statements – Year 2016
4/a - List of investments in subsidiaries
| Delta (a-b) (b) |
Balance at financial statements |
Pro rata amount (a) |
% held |
Result at 12 31 2016 |
Equity at 12 31 2016 |
|---|---|---|---|---|---|
| 85,001 | 1,381,881 | 1,466,882 | 100.00% | 92,835 | 1,466,882 |
| (144,803) | 634,894 | 490,091 | 100.00% | 86,949 | 490,091 |
| 30,045 | 279,017 | 309,062 | 41.75% | 37,474 | 740,269 |
| 15,030 | 334,617 | 349,647 | 100.00% | 16,537 | 349,647 |
| 46,273 | 167,000 | 213,273 | 100.00% | 41,916 | 213,273 |
| 11,377 | 510,317 | 521,694 | 100.00% | 21,313 | 521,694 |
| 92,214 | 98,743 | 190,957 | 100.00% | 77,289 | 190,957 |
| 5,413 | 30,105 | 35,518 | 87.27% | 1,927 | 40,699 |
| (18,287) | 26,508 | 8,221 | 90.00% | 7,932 | 9,134 |
| 4,514 | 9,222 | 13,736 | 100.00% | 3,706 | 13,736 |
| 3,557 | 3,551 | 60.00% | 460 | 5,919 | |
| (676) | 1,467 | 791 | 74.50% | 88 | 1,062 |
| 469 20 |
489 | 67.00% | 38 | 730 | |
| 802 | 802 | 47.00% | - | 1,706 | |
| 560 1,687 |
2,247 | 70.00% | (16) | 3,210 | |
| 102 | 102 | 100.00% | - | 102 | |
| 10 293 |
303 | 100.00% | 56 | 303 | |
| 45,451 | 262,730 | 308,181 | 100.00% | 46,696 | 308,181 |
| - 3,452 |
3,452 | 80.00% | (36) | 4,315 | |
| (13,015) | 112,779 | 99,764 | 51.00% | (3,037) | 195,615 |
| 100 (57) |
43 | 100.00% | (57) | 43 |
| Company name Thousands of euro |
Registered office | Currency | Share capital at 12 31 2016 |
|
|---|---|---|---|---|
| ACSM-AGAM S.p.A. (**) | Monza | Euro | 76,619 | |
| Rudnik Uglja Ad Pljevlja (*) | Pljevlja (Montenegro) | Euro | 21,493 | |
| Azienda Servizi Valtrompia S.p.A. | Gardone Val Trompia (BS) | Euro | 6,000 | |
| Sviluppo Turistico Lago d'Iseo S.p.A. (**) | Iseo (BS) | Euro | 1,616 | |
| SET S.p.A. (**) | Toscolano Maderno (BS) | Euro | 104 | |
| Serio Energia S.r.l. (**) | Concordia sulla Secchia (MO) | Euro | 1,000 | |
| Ge.S.I. S.r.l. | Brescia | Euro | 1,000 | |
| Visano Società Trattamento Reflui S.c.a.r.l. (**) | Brescia | Euro | 25 | |
| Centrale Termoelettrica del Mincio S.r.l. in liquidation |
Ponti sul Mincio (MN) | Euro | 11 | |
| Ergon Energia S.r.l. in liquidation | Milan | Euro | 600 | |
(*) Amounts at December 31, 2014 (**) Amounts at December 31, 2015 Separate financial statements – Year 2016
4/b - List of investments in affiliates
| Balance at financial |
Pro rata amount |
% held |
Result at 12 31 2016 |
Equity at 12 31 2016 |
|
|---|---|---|---|---|---|
| statements | (a) | ||||
| (b) | |||||
| 34,051 | 41,432 | 23.94% | 13,367 | 173,064 | |
| 7,067 | 7,707 | 39.49% | (19,840) | 19,517 | |
| 3,383 | 6,331 | 48.77% | 1,154 | 12,981 | |
| 837 | 772 | 24.29% | 11 | 3,178 | |
| 466 | 684 | 49.00% | 120 | 1,396 | |
| 400 | 780 | 40.00% | 526 | 1,950 | |
| 466 | 2,322 | 47.00% | 1,004 | 4,941 | |
| 10 | 10 | 40.00% | - | 26 | |
| 6 | 1,735 | 45.00% | (5,143) | 3,855 | |
| - | (72) | 50.00% | (222) | (143) |
(pursuant to article 2429.4 of the Italian Civil Code)
| SUBSIDIARIES | A2A gencogas S.p.A. | A2A Energiefuture S.p.A. | A2A AMBIENTE S.p.A. | ||||
|---|---|---|---|---|---|---|---|
| Share capital: | Euro | 450,000,000 | Euro | 50,000,000 | Euro | 220,000,000 | |
| % held: | A2A S.p.A. | 100.00% | A2A S.p.A. | 100.00% | A2A S.p.A. | 100.00% | |
| Description - Thousands of euro | 12 31 16 | 12 31 15 | 12 31 16 | 12 31 15 | 12 31 16 | 12 31 15 | |
| Revenues | 97,390 | 34,512 | 112,297 | - | 371,988 | 382,849 | |
| Gross operating income | 50,982 | 19,491 | 47,521 | - | 150,341 | 133,730 | |
| Net operating income | (53,537) | (1,309) | 67,030 | - | 103,083 | 96,998 | |
| Result before taxes | (60,593) | (6,861) | 66,790 | - | 123,949 | 115,407 | |
| Result of the year | (42,125) | (6,710) | 46,697 | - | 86,949 | 83,242 | |
| Assets | 1,110,062 | 278,911 | 447,448 | - | 867,167 | 933,300 | |
| Liabilities | 588,368 | 179,057 | 139,267 | - | 377,076 | 348,249 | |
| Equity | 521,694 | 99,854 | 308,181 | - | 490,091 | 585,051 | |
| Net financial position | (359,045) | (160,620) | 74,946 | - | 253,958 | 343,365 |
| AFFILIATES | GE.S.I. S.r.l. | AZIENDA SERVIZI VALTROMPIA S.p.A. |
ERGON ENERGIA S.r.l. in liquidation |
|||||
|---|---|---|---|---|---|---|---|---|
| Share capital: | Euro | 1,000,000 | Euro | 6,000,000 | Euro | 600,000 | ||
| % held: | A2A S.p.A. | 47.00% | A2A S.p.A. Unareti S.p.A. |
48.77% 0.38% |
A2A S.p.A. | 50.00% | ||
| Description - Thousands of euro | 12 31 16 | 12 31 15 | 12 31 16 | 12 31 15 | 12 31 16 | 12 31 15 | ||
| Revenues | 6,573 | 5,087 | 13,800 | 15,850 | 5 | 84 | ||
| Gross Operating Income | 699 | 688 | 2,874 | 4,810 | (149) | (49) | ||
| Net operating income | 390 | 339 | 1,982 | 3,350 | (214) | (49) | ||
| Result before taxes | 1,122 | 366 | 1,762 | 3,250 | (222) | (62) | ||
| Result of the year | 1,004 | 288 | 1,154 | 2,189 | (222) | (62) | ||
| Assets | 8,077 | 6,673 | 29,238 | 28,602 | 6,855 | 7,218 | ||
| Liabilities | 3,136 | 2,518 | 16,257 | 16,760 | 6,998 | 7,138 | ||
| Equity | 4,941 | 4,155 | 12,981 | 11,842 | (143) | 80 | ||
| Net financial position | 1,851 | 931 | (9,287) | (7,525) | (694) | (900) |
Separate financial statements – Year 2016
Key data of the financial statements of the main subsidiaries and affiliates prepared according to IAS/IFRS
| A2A AMBIENTE S.p.A. | A2A Smart City S.p.A. | RETRAGAS S.r.l. | SEASM S.r.l. | EPCG | Linea Group Holding S.p.A. | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| 220,000,000 | Euro | 3,000,000 | Euro | 34,494,650 | Euro | 700,000 | Euro | 1,003,666,058 | Euro | 189,494,116 |
| 100.00% | A2A S.p.A. | 100.00% | A2A S.p.A. Unareti S.p.A. |
87.27% 4.33% |
A2A S.p.A. | 67.00% | A2A S.p.A. | 41.75% | A2A S.p.A. | 51.00% |
| 12 31 15 | 12 31 16 | 12 31 15 | 12 31 16 | 12 31 15 | 12 31 16 | 12 31 15 | 12 31 16 | 12 31 15 | 12 31 16 | 12 31 15 |
| 382,849 | 26,398 | 22,706 | 7,670 | 7,787 | 357 | 378 | 232,232 | 241,806 | 23,167 | 23,626 |
| 133,730 | 6,501 | 5,174 | 4,987 | 4,469 | 290 | 306 | 66,830 | 52,618 | 205 | (188) |
| 96,998 | 5,415 | 2,970 | 2,813 | 2,349 | 124 | 141 | 32,376 | 18,899 | (6,626) | (7,247) |
| 115,407 | 5,338 | 2,845 | 2,835 | 2,356 | 64 | 70 | 41,204 | 24,588 | (6,744) | 1,019 |
| 83,242 | 1,837 | 1,837 | 1,927 | 1,486 | 38 | 11 | 37,474 | 21,874 | (3,037) | 4,457 |
| 933,300 | 29,999 | 23,177 | 43,602 | 44,187 | 1,884 | 2,102 | 954,485 | 1,154,218 | 635,200 | 670,693 |
| 348,249 | 16,263 | 11,274 | 2,903 | 4,007 | 1,154 | 1,410 | 214,216 | 240,027 | 439,585 | 467,970 |
| 585,051 | 13,736 | 11,903 | 40,699 | 40,180 | 730 | 692 | 740,269 | 914,191 | 195,615 | 202,723 |
| 343,365 | (1,509) | (639) | 7,610 | 8,406 | (1,124) | (1,374) | 192,288 | 147,408 | (172,841) | (160,739) |
| SUBSIDIARIES | Unareti S.p.A. | A2A CALORE & SERVIZI S.r.l. |
A2A ENERGIA S.p.A. | ||||
|---|---|---|---|---|---|---|---|
| Share capital: | Euro | 965,250,000 | Euro | 150,000,000 | Euro | 2,000,000 | |
| % held: | A2A S.p.A. | 100.00% | A2A S.p.A. | 100.00% | A2A S.p.A. | 100.00% | |
| Description - Thousands of euro | 12 31 16 | 12 31 15 | 12 31 16 | 12 31 15 | 12 31 16 | 12 31 15 | |
| Revenues | 519,477 | 211,177 | 223,257 | 231,828 | 1,325,981 | 1,300,743 | |
| Gross operating Income | 222,077 | 104,142 | 75,675 | 71,255 | 138,008 | 99,494 | |
| Net operating income | 141,778 | 77,453 | 34,073 | 40,679 | 114,846 | 80,448 | |
| Result before taxes | 139,137 | 77,403 | 27,838 | 34,997 | 116,063 | 81,407 | |
| Result of the year | 92,835 | 48,971 | 16,537 | 25,030 | 77,289 | 54,659 | |
| Assets | 2,046,944 | 856,416 | 748,113 | 688,397 | 586,918 | 616,070 | |
| Liabilities | 580,062 | 146,874 | 398,466 | 331,799 | 395,961 | 445,335 | |
| Equity | 1,466,882 | 709,542 | 349,647 | 356,598 | 190,957 | 170,735 | |
| Net financial position | 24,211 | 49,314 | (260,363) | (194,468) | 34,630 | 48,929 |
| AFFILIATES | PREMIUMGAS S.p.A. | |||||
|---|---|---|---|---|---|---|
| Share capital: | Euro | 120,000 | ||||
| % held: | A2A Alfa S.r.l. | 50.00% | ||||
| Description - Thousands of euro | 12 31 16 | 12 31 15 | ||||
| Revenues | 91,914 | 11,558 | ||||
| Gross operating income | 1,353 | (890) | ||||
| Net operating income | 1,345 | (898) | ||||
| Result before taxes | 1,345 | (898) | ||||
| Result of the year | 1,125 | (831) | ||||
| Assets | 12,164 | 20,756 | ||||
| Liabilities | 5,199 | 14,916 | ||||
| Equity | 6,965 | 5,840 | ||||
| Net financial position | 2,121 | 244 |
Separate financial statements – Year 2016
Key data of the financial statements of the main subsidiaries and affiliates prepared according to ITALIAN GAAP
| Unareti S.p.A. A2A CALORE A2A ENERGIA S.p.A. & SERVIZI S.r.l. |
A2A CICLO IDRICO S.p.A. |
ASPEM S.p.A. | A2A ALFA S.r.l. | PROARIS S.r.l. | PLURIGAS S.p.A. in liquidation |
|||||
|---|---|---|---|---|---|---|---|---|---|---|
| 965,250,000 Euro 150,000,000 Euro 2,000,000 |
Euro | 70,000,000 | Euro | 173,785 | Euro | 100,000 | Euro | 1,875,000 | Euro | 800,000 |
| 100.00% A2A S.p.A. 100.00% A2A S.p.A. 100.00% |
A2A S.p.A. | 100.00% | A2A S.p.A. | 90.00% | A2A S.p.A. | 70.00% | A2A S.p.A. | 60.00% | A2A S.p.A. | 70.00% |
| 12 31 15 12 31 16 12 31 15 12 31 16 12 31 15 |
12 31 16 | 12 31 15 | 12 31 16 | 12 31 15 | 12 31 16 | 12 31 15 | 12 31 16 | 12 31 15 | 12 31 16 | 12 31 15 |
| 231,828 1,325,981 1,300,743 |
129,812 | 76,494 | 44,426 | 41,378 | - | - | 1,757 | 2,728 | 18 | 2,527 |
| 138,008 99,494 |
79,948 | 24,247 | 5,921 | 6,288 | (54) | (49) | 117 | 295 | (25) | 1,043 |
| 80,448 | 64,443 | 11,800 | 4,382 | 4,986 | (54) | (49) | 82 | 260 | (25) | 1,043 |
| 116,063 81,407 |
62,626 | 9,893 | 4,559 | 4,413 | (54) | (49) | 87 | 269 | (9) | 1,146 |
| 54,659 | 41,916 | 7,781 | 3,048 | 2,993 | (39) | (36) | 27 | 205 | (16) | 869 |
| 616,070 | 362,424 | 298,065 | 36,712 | 38,509 | 1,511 | 1,527 | 7,113 | 7,139 | 5,662 | 20,951 |
| 445,335 | 149,151 | 126,708 | 27,578 | 28,423 | 83 | 60 | 1,194 | 1,052 | 2,452 | 2,517 |
| 170,735 | 213,273 | 171,357 | 9,134 | 10,086 | 1,428 | 1,467 | 5,919 | 6,087 | 3,210 | 18,434 |
| 48,929 | (70,165) | (60,271) | 3,640 | 2,906 | 105 | 134 | 2,353 | 2,312 | 3,578 | 18,735 |
Certification of the financial statements pursuant to article 154-bis, paragraph 5 of Legislative Decree no. 58/98
172
of administrative and accounting procedures for the preparation of financial statements in the year 2016.
Milan, April 3, 2017
Luca Camerano Andrea Eligio Crenna (For the Board of Directors) (Manager in charge of
preparing the corporate accounting documents)
EY S.p.A. Via Meravigli, 12 20123 Milano
Tel: +39 02 722121 Fax: +39 02 722122037 ey.com
Independent auditor's report in accordance with articles 14 and 16 of Legislative Decree n. 39, dated 27 January 2010 (Translation from the original Italian text)
To the Shareholders of A2A S.p.A.
174
We have audited the accompanying financial statements of A2A S.p.A., which comprise the balance sheet as at 31 December 2016, the income statement, the statement of comprehensive income, the statement of changes in equity and the cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes.
The Directors of A2A S.p.A. are responsible for the preparation of these financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union as well as with the regulations issued to implement art. 9 of Legislative Decree n. 38, dated 28 February 2005.
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing (ISA Italia) implemented in accordance with article 11 of Legislative Decree n. 39, dated 27 January 2010. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's professional judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
EY S.p.A. Sede Legale: Via Po, 32 - 00198 Roma Capitale Sociale deliberato Euro 3.250.000,00, sottoscritto e versato Euro 2.950.000,00 i.v. Iscritta alla S.O. del Registro delle Imprese presso la C.C.I.A.A. di Roma Codice fiscale e numero di iscrizione 00434000584 - numero R.E.A. 250904 P.IVA 00891231003 Iscritta al Registro Revisori Legali al n. 70945 Pubblicato sulla G.U. Suppl. 13 - IV Serie Speciale del 17/2/1998 Iscritta all'Albo Speciale delle società di revisione Consob al progressivo n. 2 delibera n.10831 del 16/7/1997
A member firm of Ernst & Young Global Limited
Separate financial statements – Year 2016
Independent Auditors' Report
In our opinion, the financial statements give a true and fair view of the financial position of A2A S.p.A. as at 31 December 2016, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union and with article 9 of Legislative Decree n. 38, dated 28 February 2005.
The financial statements of A2A S.p.A. for the year ended 31 December 2015 were audited by another auditor who expressed an unmodified opinion on those statements on 28 April 2016.
Opinion on the consistency of the Report on Operations and of specific information of the Report on Corporate Governance and the Company's Ownership Structure with the financial statements
We have performed the procedures required under audit standard SA Italia n. 720B in order to express an opinion, as required by law, on the consistency of the Report on Operations and of specific information of the Report on Corporate Governance and the Company's Ownership Structure as provided for by article 123-bis, paragraph 4 of Legislative Decree n. 58, dated 24 February 1998, with the financial statements. The Directors of A2A S.p.A. are responsible for the preparation of the Report on Operations and of the Report on Corporate Governance and the Company's Ownership Structure in accordance with the applicable laws and regulations. In our opinion the Report on Operations and the specific information of the Report on Corporate Governance and the Company's Ownership Structure are consistent with the financial statements of A2A S.p.A. as at 31 December 2016.
Milan, 12 April 2017
EY S.p.A. Signed by: Massimo Antonelli, Partner
This report has been translated into the English language solely for the convenience of international readers.
(pursuant
to
art.
153
Legislative
Decree
58/1998)
Dear
Shareholders,
Pursuant
to
article
153,
paragraph
1
of
Legislative
Decree
no.
58
of
February
24,
1998,
we
wish
to
inform
you
that,
during
the
year
ended
December
31,
2016,
we
carried
out
the
supervisory
and
control
activities
according
to
the
rules
of
the
Civil
Code,
of
articles
148
et
seq
of
the
CFA
of
Legislative
Decree
January
27,
2010
no.
39
and
the
indications
contained
in
CONSOB
communications,
taking
into
account
the
principles
of
conduct
recommended
by
the
National
Council
of
Chartered
Accountants
and
Accounting
Experts.
As
auditing
body,
we:
by-‐laws
or
the
resolutions
of
the
Shareholders'
Meeting
or
such
to
affect
the
integrity
of
the
company's
assets;
attended
12
meetings
of
the
Remuneration
and
Appointments
Committee,
acquiring
information
on
the
work
it
performed
during
the
year;
received
from
the
Audit
and
Risk
Committee,
the
Director
in
charge
of
the
internal
control
and
risk
management
system
and
the
head
of
the
Internal
Audit
function
information
regarding
risk
mapping
of
the
activities
in
progress,
verification
programs
and
implementation
projects
of
the
internal
control
system,
even
through
participation
in
15
meetings
of
the
Committee,
during
which
we
took
cognizance
of
the
activity
carried
out
by
the
Committee
(also
in
its
function
as
Related
Party
Committee);
control
and
risk
management
system
of
the
company
with
respect
to
the
characteristics
of
the
company
and
the
profile
of
risk
undertaken.
In
particular,
on
July
26,
2016
and
March
28,
2017,
the
Board
(i)
expressed
a
favourable
opinion
on
the
adequacy,
effectiveness
and
effective
functioning
of
the
internal
control
and
risk
management
system
of
the
company
with
respect
to
the
same
characteristics
and
profile
of
risk
undertaken;
(ii)
expressed
a
favourable
opinion
on
the
organizational,
administrative
and
accounting
structure
of
A2A
and
its
subsidiaries
with
strategic
importance,
with
particular
reference
to
the
internal
control
and
risk
management
system;
180
In
the
Half-‐Year
Report
to
the
Board
of
Auditors,
the
Supervisory
Board
of
the
company
reported
on
the
activities
carried
out
during
the
first
half
of
2016
and
thereafter,
by
special
report
at
December
31,
2016,
informed
the
same
on
the
activities
carried
out
during
2016
confirming
that
there
were
no
situations
of
misconduct
or
violations
of
the
Model.
On
July
29,
2016,
the
Board
of
Directors
of
A2A
S.p.A.
resolved
the
update
of
the
Organization,
Management
and
Control
Model
pursuant
to
Legislative
Decree
231/01
with
respect
to
the
cases
of
crime
related
to
self-‐laundering
(Law
186/2014),
environmental
crimes
(Law
68/2015)
and
False
Communications
(Law
69/2015);
Moreover,
the
Board:
of
the
Annual
Financial
Report
of
the
A2A
Group
at
December
31,
2016,
the
Half-‐Year
Financial
Report
of
the
A2A
Group
at
June
30,
2016
and
the
Interim
Reports
on
Operations
of
the
A2A
Group
at
March
31
and
September
30,
2016;
subsidiaries
with
significant
relevance
established
and
regulated
under
the
laws
of
non-‐EU
countries;
examined
the
documentation
regulating
financial,
industrial
and
support
intergroup
transactions
that
can
reasonably
be
considered
compliant
with
the
principles
of
good
administration,
compatible
with
the
by-‐laws
of
the
company
and
consistent
with
the
spirit
of
the
law;
found
that
there
were
no
atypical
and/or
unusual
transactions
as
defined
by
Consob
Communication
DEM/6064293
of
July
28,
2006,
intergroup
or
with
third
parties;
this
was
confirmed
by
the
indications
of
the
Board
of
Directors,
Independent
Auditors
and
Director
in
charge
of
the
Internal
Control
and
Risk
Management
System;
carried
out
the
tasks
entrusted
to
the
Board
of
Auditors
in
light
of
the
amendments
introduced
by
article
19,
paragraph
1
of
Legislative
Decree
39/2010,
by
which
the
Board
itself
was
attributed
supervision,
among
other
things,
of
the
statutory
audit
of
annual
accounts
and
consolidated
accounts
and
the
independence
of
the
statutory
auditor
or
the
independent
auditors,
in
particular
as
regards
the
provision
of
non-‐audit
services
to
the
company;
monitored, pursuant
to
art.
19,
paragraph
1
of
Legislative
Decree
39/2010,
the
financial
reporting
process
and
effectiveness
of
internal
control,
internal
audit
and
risk
management
systems;
met
regularly
with
the
independent
auditors:
a) to
exchange
information
on
the
verifications
carried
out
by
the
latter
pursuant
to
Legislative
Decree
39/2010
and
article
150,
paragraph
3
of
Legislative
Decree
58/98
on
the
regular
accounting
and
correct
reporting
of
events
in
the
accounting
records.
During
these
meetings,
there
were
no
reports
of
problems
or
abnormalities;
annual
financial
statements
and
consolidated
financial
statements,
the
Independent
Auditors
stated
that
the
Report
on
Operations
and
the
Report
on
Corporate
Governance
and
Ownership
Structures,
with
reference
to
the
information
indicated
in
art.
123-‐bis,
paragraph
4,
of
Legislative
Decree
February
24,
1998
no.
58,
are
consistent
with
the
financial
statements;
In
this
regard,
we
report
that,
in
2016,
we
had
no
evidence
of
the
assignment
of
tasks
other
than
the
statutory
audit
of
annual
and
consolidated
accounts
to
the
companies
PricewaterhouseCoopers
S.p.A.
and
EY
S.p.A.
(or
to
entities/persons
belonging
to
their
networks),
with
the
sole
exception
of
the
following
appointments
conferred
with
the
approval
of
the
Board
of
Auditors:
| Group company | Description of activities | Fees |
|---|---|---|
| to which the | ||
| service was | ||
| provided | ||
| ASVT S.p.A. and | Verifications of compliance and subsequent tax declarations | 6,000 |
| Bellisolina S.r.l. | for the tax claims (year 2015) | |
| A2A Energia |
Statutory audit of data included in the file "Data Request" | 30,000 |
| S.p.A. | annexed to the request for admission to the cost |
|
| compensation mechanism for the non-‐payment of end | ||
| customers pursuant to Resolution 659/2015 AEEGSI for the | ||
| period October 1, 2011 -‐ September 30, 2012 |
EY
S.p.A.
| Group company to | Description of activities | Fees |
|---|---|---|
| which the service was | ||
| provided | ||
| A2A S.p.A. | Certification activities relating to the updating of the | 30,000 |
| EMTN program of A2A S.p.A. carried out in November | ||
| 2016 | ||
| Unareti S.p.A. | Agreed upon procedures on the statement "Form C -‐ | 7,500 |
| Financial Statements" relating to the program "Seventh | ||
| research framework -‐ FP7" |
| Group company to which the service was provided |
Description of activities | Fees | ||
|---|---|---|---|---|
| A2A | S.p.A. | and | Performance of verifications on regular accounting |
94,000 |
| subsidiaries | concerning the first 2 quarters of 2016 up to the date of | |||
| termination of the statutory audit assignments for A2A | ||||
| (12,000 euro) and Italian subsidiaries (82,000 euro) |
188
No
complaints
were
received
pursuant
to
art.
2408
Civil
Code
nor
reports
of
any
kind
by
third
parties.
In
the
course
of
the
supervisory
activity,
no
significant
omissions
or
reprehensible
facts
or
irregularities
whatsoever
were
identified.
Finally,
the
Board
of
Auditors:
met
with
the
Board
of
Auditors
of
the
subsidiaries
Aprica
S.p.A.,
A2A
Smart
City
S.p.A.,
Ecolombardia4
S.p.A.
to
verify,
among
other
things,
the
status
of
implementation
by
said
companies
of
the
directives
issued
by
the
parent.
The
Board
noted
that
the
subsidiaries
were
in
line
with
the
directives
received.
The
meeting
allowed
for
an
exchange
of
information
regarding,
among
other
things,
the
functioning
of
corporate
activity,
the
characteristics
of
the
internal
control
system,
the
business
organization
of
the
subsidiaries,
the
composition
and
activities
of
the
Supervisory
Body,
the
Committees,
Internal Audit function and
the
changes
in
the
organizational
structure
of
the
company
during
the
year
2016;
received
from
the
Board
of
Directors
the
draft
financial
statements
for
the
year
2016
and
the
report
on
operations
of
A2A
S.p.A.
as
well
as
the
consolidated
financial
statements
2016
of
the
A2A
Group
under
the
agreed
terms;
189
Providing
the
foregoing
and
to
the
extent
of
our
expertise,
we:
Statements
of
the
company
and
the
Consolidated
Financial
Statements
of
the
Group
and
the
reports
on
operations
regarding
year
2016,
also
through
direct
verifications
and
information
obtained
by
the
independent
auditors;
monitored
compliance
of
the
Procedure
for
Transactions
with
Related
Parties,
prepared
by
the
company
pursuant
to
Consob
Regulation
17221
of
March
12,
2010,
adapted
following
the
adoption
of
the
"traditional" governance
on
June
22,
2015
and
submitted
for
periodic
review
by
the
Board
of
Directors
on
June
20,
2016;
verified
the
adequacy
of
the
provisions
provided
by
the
company
to
subsidiaries.
In
view
of
the
above,
we
kindly
request
that
you
approve
the
financial
statements
at
December
31,
2016
presented
by
the
Board
of
Directors
along
with
the
report
on
operations
and
the
proposed
allocation
of
the
result
for
the
year.
*
*
*
Dear
Shareholders,
with
the
approval
of
the
financial
statements
at
December
31,
2016,
is
expiry
of
the
mandate
of
the
Board
of
Statutory
Auditors
appointed
by
the
Shareholders'
Meeting
on
June
13,
2014.
You
are
Separate financial statements – Year 2016 Report of the Board of Auditors
therefore
required
to
appoint
the
new
Board
of
Statutory
Auditors
for
the
next
three
years,
in
accordance
with
the
law
and
the
by-‐laws.
We
wish
to
take
this
opportunity
to
thank
you
for
your
trust
during
these
years
of
mandate.
Milan,
April
13,
2017
THE
BOARD
OF
AUDITORS
(Giacinto
Sarubbi)
-‐
Chairman
(Cristina
Casadio)
-‐
Standing
Auditor
(Norberto
Rosini)
-‐
Standing
Auditor
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.