AGM Information • Mar 29, 2016
AGM Information
Open in ViewerOpens in native device viewer
SERVIZI ITALIA S.p.A. Registered Office Via S. Pietro, 59/b 43019 Castellina di Soragna (PR) Share Capital: € 30,699,266 fully paid-up Tax code and Parma Business Register No.: 08531760158 Certified email: [email protected] Tel. +390524598511 Fax +390524598232 www.si-servizitalia.com
| Calling of the ordinary shareholders' meeting | 3 |
|---|---|
| Company officers and corporate information | 5 |
| Group structure |
6 |
| Directors' report | 7 | |
|---|---|---|
| -- | ------------------- | --- |
| Separate financial statements of Servizi Italia S.p.A. as at 31 December 2015 |
36 |
|---|---|
| Separate accounting schedules as at 31 December 2015 |
37 |
| Explanatory Notes to the separate financial statements | 41 |
| Certification of the separate financial statements pursuant to Article 154 bis of Italian Legislative Decree No. 58/98 |
105 |
| Independent auditors' report on the separate financial statements of Servizi Italia S.p.A. |
106 |
| Board of Statutory Auditors' report to the shareholders' meeting of Servizi Italia S.p.A | 108 |
| Consolidated financial statements of the Servizi Italia Group as at 31 December 2015 115 |
|---|
| Consolidated accounting schedules as at 31 December 2015 116 |
| Explanatory Notes to the consolidated financial statements 120 |
| Certification of the consolidated financial statements pursuant to Article 154 bis of Italian Legislative |
| Decree No. 58/98 188 |
| Independent auditors' report on the consolidated financial statements of the Servizi Italia Group 189 |
Registered office in Via San Pietro 59/B — Castellina di Soragna (PR), Italy
Tax code and Parma Business Register enrolment No. 08531760158
VAT No. 02144660343
Those entitled to participate in the shareholders' meeting and exercise the right to vote are called to an ordinary and extraordinary shareholders' meeting care of the registered offices in Via San Pietro 59/b, 43019 Castellina di Soragna (PR), in first calling on 20 April 2016 at 10.30 a.m. and, if necessary, in second calling on 21 April 2016, same time and place, to discuss and resolve on the following agenda:
1. Amendment of Article 2 of the Articles of Association "Corporate purpose".
Disclosure on the share capital. The Company's share capital is divided up into 30,699,266 ordinary shares with a par value of Euro 1 each. Each share assigns the right to one vote. As at 14 March 2016, the Company held 279,891 treasury shares, in relation to which - pursuant to the law - the voting right is suspended. This number could vary in the period between today's date and that of the shareholders' meeting. Any change in the treasury shares shall be communicated when the business of said meeting commences. The information on the composition of the share capital is available on the website www.si-servizitalia.com (Investor Relations >Corporate Governance > Shareholders' Meeting).
Attendance of the Shareholders' Meeting. Pursuant to Article 83 sexies of Italian Legislative Decree No. 58/98 as amended (the "Consolidated Finance Law" or "CFL") and Article 13 of the Articles of Association, shareholders are entitled to attend if they have the right to vote and the Company, by 15 April 2016, has received the communication from the appointed intermediaries, bearing witness to their ownership of the shares on the basis of the accounting records relating to the end of the accounting day of the seventh open market day prior to the date fixed for the meeting in first calling, i.e. 11 April 2016 (record date). Those who only become owners of shares after the record date are not entitled to participate and vote during the meeting. Pursuant to Article 13.2 of the Articles of Association, each party with the right to vote who has the right to participate in the meeting, may arrange for themselves to be represented by others via written proxy, in compliance with and within the limits of the matters laid down by law. The proxy may be granted also electronically or by means of an IT document signed in electronic form as per Article 21, paragraph 2 of Italian Legislative Decree No. 82 dated 7 March 2005, in accordance with current legislation.
A proxy form is available care of the registered offices and on the Company website www.si-servizitalia.com (Investor Relations >Corporate Governance > Shareholders' Meeting), as well as care of the qualified intermediaries; the proxy can be sent to the Company by means of forwarding, via certified e-mail, to the following address [email protected], together with the communication issued by the appointed intermediaries in compliance with their accounting records.
Any prior notification does not excuse the proxy, at the time of accreditation for accessing the meeting, from the obligation to certify the compliance with the original in the copy notified and the identity of the delegating party. The Articles of Association do not envisage voting procedures by mail or using electronic means.
Pursuant to Article 11.6 of the Articles of Association, the Company does not designate a party to which the shareholders can grant a proxy with voting instructions for participation in general meetings in pursuance of Article 135 undecies of the CFL.
Right to ask questions. Pursuant to Article 127 ter of the CFL, those who have the right to vote can ask questions on the business placed on the agenda, also before the meeting, by the deadline of 17 April 2016, by means of registered letter sent to the Company's registered offices, or via certified e-mail to the e-mail address [email protected]; for the purpose of exercising this right, the Company shall have to receive a specific communication issued by the intermediaries care of which the shares owned by the shareholder are deposited. These questions shall be answered at the latest during the meeting, with the faculty of the Company to provide a single answer to questions with the same content.
Supplementing of the agenda and presentation of new resolution proposals. Pursuant to Article 126 bis of the CFL, the shareholders which, also jointly, represent at least a fortieth of the Company's share capital, can request, within ten days of the publication of the notice of calling for the meeting (or rather 25 March 2016), the integration of the list of business to be discussed, indicating the additional matters they propose in the request, or present new resolution proposals on the business already on the agenda. The requests must be presented in writing, forwarded via registered letter to the Company's registered offices, or by means of notification to the e-mail address [email protected] and accompanied by a specific communication issued by the intermediaries care of which the shares owned by the shareholders are deposited. Disclosure shall be made of any integration of the list of business which the meeting shall have to deal with or the presentation of additional resolution proposals on the matters already on the agenda, in the prescribed forms for the publication of this notice of calling, at least fifteen days before the date fixed for the meeting in first calling. The request to supplement the list of business to be dealt with is not permitted for the aspects on which the meeting resolves, as per the law, upon the proposal of the directors or on the basis of a project or a report drawn up by the same, differing from those as per Article 125 ter, first paragraph of the CFL. The shareholders who request the integration of the agenda must draw up a report which discloses the reason for the resolution proposals on the new business whose discussion they propose, or the reason relating to the additional resolution proposals presented on the business already on the agenda. The report must be delivered to the management body by the last deadline for the presentation of the integration request. The management body shall make the report available to the general public, accompanied by its assessments, if any, at the same time as the publication of the notification of integration, making it available care of the registered offices, on the Company website and by means of the other formalities envisaged by the Consob regulations in force on the subject.
Documentation. The illustrative reports of the Board of Directors on the points on the agenda and the resolution proposals contained therein as well as the documentation relating to the business on the agenda, envisaged by current legislation, shall be made available to the general public care of the Company's registered offices, on the Borsa Italiana S.p.A. website, published on the Company website www.si-servizitalia.com, in the section Investor Relations>Corporate Governance>Shareholders' Meeting, as well as care of the authorised storage mechanism at the following e-mail address , under the terms and formalities as per the law. The remaining documentation useful for the meeting shall be published by the legal deadlines. The shareholders have the faculty to obtain a copy of the same at their own expense.
*******
It should furthermore be recalled that, pursuant to Article 125 quater of the CFL, the Company's website www.si-servizitalia.com (Investor Relations>Corporate Governance>Shareholders' Meeting) provides the following documents or information: (i) the documents which will be submitted to the meeting; (ii) the forms which the shareholders have the faculty to use for the vote by proxy and the related instructions; (iii) the information on the amount of the Company's share capital with indication of the number and of the categories of shares which it is divided up into.
Request for information. With regard to any additional information relating to the Shareholders' meeting, and in particular the formalities for exercising the rights, it is possible to consult the Company's website www.si-servizitalia.com, in the section Investor Relations>Corporate Governance>Shareholders' Meeting or write to the Corporate Services office at the following e-mail address [email protected].
This notice of calling is published as of today's date, pursuant to Article 125 bis of the CFL and pursuant to Article 11 of the Articles of Association, on the Company's website www.si-servizitalia.com (Investor Relations >Corporate Governance > Shareholders' Meeting) and is available care of the authorised storage mechanism at the address and, in extract form, in the newspaper MF - MILANO FINANZA dated 15 March 2016.
The shareholders are kindly requested to present themselves at least half an hour before the start of the meeting's business for the purpose of facilitating the registration procedures.
Castellina di Soragna, Parma, Italy 15 March 2016.
The Chairman of the Board of Directors
Signed Roberto Olivi
Board of Directors (in office until approval of the Separate Financial Statements as at 31 December 2017)
| Name and Surname | Position |
|---|---|
| Roberto Olivi | Chairman |
| Enea Righi | Vice-Chairman and CEO |
| Ilaria Eugeniani | Director |
| Emil Anceschi | Director |
| Antonio Paglialonga | Director |
| Lino Zanichelli | Director |
| Vasco Salsi | Director |
| Marco Marchetti | Director |
| Paola Schwizer (1)-(2)- (3) | Independent Director |
| Romina Guglielmetti (1)-(2) | Independent Director |
| Paola Galbiati (1)-(2) | Independent Director |
(1) Member of the Nomination and Remuneration Committee; (2) Member of the Control and Risks Committee; (3) Lead Independent Director
Board of Statutory Auditors (in office until approval of the Separate Financial Statements as at 31 December 2016)
| Name and Surname | Position |
|---|---|
| Marco Elefanti | Chairman |
| Anna Maria Fellegara | Statutory Auditor |
| Andrea Spollero | Statutory Auditor |
| Ernestina Bosoni | Alternate Auditor |
| Lorenzo Keller | Alternate Auditor |
| Name and Surname | Position |
|---|---|
| Veronica Camellini | Chairman |
| Laura Verzellesi | Member |
| Francesco Magrini | Member |
Independent Auditors (until approval of the Separate Financial Statements as at 31 December 2023)
Deloitte & Touche S.p.A. -Via Tortona, 25 - 20144 Milan
Servizi Italia S.p.A. Via S. Pietro, 59/b – 43019 Castellina di Soragna (PR) – Italy
Tel. +390524598511, Fax +390524598232, website:www.si-servizitalia.com;
Share Capital: € 30,699,266 fully paid-up
Tax code and Parma Business Register No.: 08531760158; Certified email: [email protected]
Founded: 1986
Stock market listing: Borsa Italiana S.p.A. Mercato Telematico Azionario (MTA, electronic stock market), STAR segment Ordinary Share ISIN: IT0003814537, BLOOMBERG: SRI IM, REUTERS: SRI.MI
Giovanni Manti – IR, Chiara Peterlini and Elena Abbati – IR assistants
e-mail: [email protected] – Tel. +390524598511, Fax +390524598232
Servizi Italia S.p.A., registered office in Castellina di Soragna (PR), listed in the STAR segment of the Borsa Italiana S.p.A. MTA stock exchange, is the main Italian operator in the supply of integrated services for the rental, washing and sterilisation of textiles and surgical instruments for hospital facilities. With a technologically advanced production platform broken down into laundry facilities, textile sterilisation centres, surgical instrument sterilisation centres and numerous wardrobes, the Company and its Italian and overseas subsidiaries forming the Servizi Italia Group, mainly provide their broad and diversified range of services for public and private healthcare structures in central and northern Italy, in the state of São Paulo in Brazil, in India and Turkey.
As at 31 December 2015, the Servizi Italia Group included the following Companies:
| Company Name Parent Company and Subsidiaries |
Registered Offices | Share capital | ||
|---|---|---|---|---|
| Servizi Italia S.p.A. | Castellina di Soragna (Parma) - Italy | EUR | 30,699,266 | Parent Company |
| SRI Empreendimentos e Participações L.t.d.a. | São Paulo, SP - Brazil | R\$ | 128,379,652 | 100% |
| Servizi Italia Medical S.r.l. | Castellina di Soragna (PR) - Italy | EUR | 200,000 | 100% |
| Se.Sa.Tre. S.c.r.l. | Genoa - Italy | EUR | 20,000 | 60% |
| San Martino 2000 S.c.r.l. | Genoa - Italy | EUR | 10,000 | 60% |
| Lavsim Higienização Têxtil S.A. | São Roque (SP) - Brazil | R\$ | 550,000 | 100%(*) |
| Maxlav Lavanderia Especializada S.A. | Jaguariúna (SP) - Brazil | R\$ | 2,825,060 | 50.1%(*) |
| Vida Lavanderias Especializada S.A. | Santana de Parnaíba (SP) - Brazil | R\$ | 1,900,000 | 50.1%(*) |
| Aqualav Serviços De Higienização Ltda | Vila Idalina, Poá (SP) - Brazil | R\$ | 6,400,000 | 100%(*) |
(*) Held through SRI Empreendimentos e Participações Ltda
| Company Name Associates and Jointly-controlled Companies |
Registered Offices | Share capital | % holding | |
|---|---|---|---|---|
| Centro Italia Servizi S.r.l. | Arezzo - Italy | EUR | 10,000 | 50% |
| PSIS S.r.l. | Padua - Italy | EUR | 10,000,000 | 50% |
| Ekolav S.r.l. | Lastra a Signa (FI) - Italy | EUR | 100,000 | 50% |
| Steril Piemonte S.c.r.l. | Turin - Italy | EUR | 4,000,000 | 50% |
| AMG S.r.l. | Busca (CN) - Italy | EUR | 100,000 | 50% |
| Iniziative Produttive Piemontesi S.r.l. | Turin - Italy | EUR | 2,500,000 | 37.625% |
| Piemonte Servizi Sanitari S.c.r.l. | Turin - Italy | EUR | 10,000 | 30%(ˆ) |
| SE.STE.RO. S.r.l.(**) | Castellina di Soragna (PR) - Italy | EUR | 400,000 | 25% |
| CO.SE.S S.c.r.l. | Perugia - Italy | EUR | 10,000 | 25% |
| SAS Sterilizasyon Servisleri A.Ş. | Istanbul - Turkey | TRY | 500,000 | 51% |
| Shubhram Hospital Solutions Private Limited | New Delhi - India | INR | 85,200,000 | 51% |
| Ankateks Turizm Insaat Tekstil Ltd. | Ankara - Turkey | TRY | 5,000,000 | 40% |
| Finanza & Progetti S.p.A. | Vicenza - Italy | EUR | 550,000 | 50% |
| Saniservice Sh.p.k. | Tirana - Albania | LEK | 2,745,600 | 30% |
(ˆ) Indirect shareholding of 15.05% through Iniziative Produttive Piemontesi S.r.l.
(**) Company in liquidation as of 1 January 2016.
The summary tables below include several non-IFRS alternative performance indicators to allow for a better assessment of economic and financial management trends. The methodology used to calculate and the breakdown of these indicators is specified below the tables in line with the instructions of the European Securities and Market Authority (ESMA).
The separate financial statements of Servizi Italia S.p.A. disclose shareholders' equity of Euro 138,123 thousand. The result for the year was a profit of Euro 11,724 thousand. This result was achieved after having provided Euro 3,722 thousand for current and deferred tax and Euro 38,767 thousand for amortisation, depreciation, write-downs and provisions.
The table below presents a comparison of the main 2015 income statement figures with the results for 2014 (in thousands of Euros):
| (thousands of Euros) | 31 December 2015 | 31 December 2014(*) | Changes | Change % |
|---|---|---|---|---|
| Revenues | 202,057 | 193,967 | 8,090 | 4.2% |
| EBITDA (a) | 54,974 | 53,648 | 1,326 | 2.5% |
| EBITDA % | 27.2% | 27.7% | ||
| Operating profit (EBIT) | 16,208 | 18,975 | (2,767) | -14.6% |
| Operating profit (EBIT)% | 8.0% | 9.8% | ||
| Net profit | 11,724 | 12,113 | (389) | -3.2% |
| Net profit % | 5.8% | 6.2% |
(a) The Company management has defined EBITDA as the difference between the value of sales and services and operating costs before depreciation, amortisation, impairment and provisions.
(*) The data shown for the year ending as at 31 December 2014 do not include values referring to Lavanderia Industriale Z.B.M S.p.A. and Si.Gi Servizi Ospedalieri S.r.l., both subject to merger by incorporation into Servizi Italia S.p.A. during the year ending as at 31 December 2015. Please refer to the section "Merger by incorporation of Lavanderia Industriale ZBM S.p.A. and Si.Gi. Servizi Ospedalieri S.r.l." for further details.
The table below presents a comparison of the main 2015 statement of financial position figures with the
| (thousands of Euros) | Year ended as at 31 December | Change 15/14 | Change 15/14 |
|
|---|---|---|---|---|
| 2015 | 2014 | % | ||
| Net operating working capital (a) | 17,740 | 17,308 | 432 | 2% |
| Other current assets/liabilities (b) | (10,594) | (20,388) | 9,794 | -48% |
| Net working capital | 7,146 | (3,080) | 10,226 | -332% |
| Non-current assets - medium/long-term provisions | 198,321 | 177,761 | 20,560 | 12% |
| Invested capital | 205,467 | 174,681 | 30,786 | 18% |
| Shareholders' equity | 138,123 | 120,491 | 17,632 | 15% |
| Net financial debt (d) | 67,344 | 54,190 | 13,154 | 24% |
| Invested capital (c) | 205,467 | 174,681 | 30,786 | 18% |
(a) Net operating working capital is not an accounting measurement under the IFRSs endorsed by the European Union. The Company management has defined net operating working capital as the algebraic sum of inventories, trade receivables and trade payables.
The table below presents a comparison between the main cash flow figures as at 31 December 2015 and as at 31 December 2014 (in thousands of Euros).
| (thousands of Euros) | Year ended as at 31 December | Change 15/14 |
|
|---|---|---|---|
| 2015 | 2014 | ||
| Cash flow generated (absorbed) by operations | 38,336 | 43,861 | (5,525) |
| Cash flow generated (absorbed) by investment activities | (58,827) | (34,746) | (24,081) |
| Cash flow generated (absorbed) by financing activities | 18,264 | (9,765) | 28,029 |
| Increase/(decrease) in cash and cash equivalents | (2,227) | (650) | (1,577) |
| Opening cash and cash equivalents | 4,239 | 1,976 | 2,263 |
| Closing cash and cash equivalents | 2,012 | 1,326 | 686 |
The consolidated financial statements as at 31 December 2015 present Group shareholders' equity of Euro 121,715 thousand and shareholders' equity attributable to non-controlling interests of Euro 379 thousand. The result for the year was a profit of Euro 12,483 thousand. This result was achieved after having provided Euro 3,952 thousand for current and deferred tax and Euro 47,084 thousand for amortisation, depreciation, impairment and provisions.
The companies consolidated line-by-line in the financial statements for the period ended 31 December 2015 were the following:
Consorzio San Martino 2000 S.c.r.l., a consortium company established in 2003, with headquarters in Genoa, for the handling of the contract relating to the San Martino di Genova hospital, 60% of which pertaining to Servizi Italia S.p.A.; it operates exclusively as intermediary between the client and the consortia companies without generating its own profits.
Consorzio SE.SA.TRE. S.c.r.l., a consortium company established in 2008, with headquarters in Genoa, for the handling of the contract relating to the Treviso Local Health Unit No. 9, 60% of which pertaining to Servizi Italia S.p.A., operates as intermediary between the client and the consortia companies without generating its own profits.
Servizi Italia Medical S.r.l., an Italian limited-liability company established in 2005 with headquarters in Castellina di Soragna (PR) whose activities involve the purchase, intermediation, sale and production and/or development of medical devices. The consolidation of Servizi Italia Medical S.r.l. generated sales revenues
for Euro 5,102 thousand, negative EBITDA of Euro 134 thousand, negative EBIT of Euro 217 thousand and a loss pertaining to the Group of Euro 246 thousand.
SRI Empreendimentos e Participações Ltda, a company wholly-owned by Servizi Italia S.p.A., owns:
The companies are involved in the supply of laundry services in the health sector in the state of São Paulo with particular focus on hospitals, nursing homes and healthcare facilities in the capital. The consolidation of the companies generated sales revenues for Euro 20,987 thousand, EBITDA of Euro 3,485 thousand, EBIT of Euro 370 thousand and profit pertaining to the Group for Euro 1,967 thousand.
The reconciliation between the shareholders' equity and result for the year and the corresponding consolidated figures, is as follows:
| (thousands of Euros) | 2015 profit (loss) | 2015 shareholders' equity |
2014 profit (loss) | 2014 shareholders' equity |
|---|---|---|---|---|
| Profit (loss) and shareholders' equity of the parent company | 11,724 | 138,123 | 12,113 | 120,491 |
| Profit (loss) and shareholders' equity of the subsidiaries | (42) | 30,941 | 2,787 | 32,670 |
| Elimination of equity investments | - | (53,060) | - | (52,386) |
| Consolidation differences | - | 10,208 | - | 20,894 |
| Other surplus value emerging at the time of acquisition | (20) | 275 | 350 | 2,147 |
| Registration of options on minority interests | 1,520 | (2,686) | (1,095) | (11,217) |
| Carrying of equity investments at equity | (756) | (1,701) | (235) | (945) |
| Elimination of intercompany dividends | - | - | (500) | - |
| Intercompany profits included in the inventory | 58 | (7) | (6) | (66) |
| Consolidated profit (loss) and shareholders' equity | 12,484 | 122,093 | 13,414 | 111,588 |
| Allocation of non-controlling interests profit (loss) and shareholders' equity |
244 | (379) | 337 | 1,702 |
| Group profit (loss) and shareholders' equity | 12,728 | 121,714 | 13,077 | 109,886 |
The table below presents a comparison of the main consolidated income statement figures as at 31 December 2015 with the results as at 31 December 2014 (in thousands of Euros).
| (thousands of Euros) | 31 December 2015 | 31 December 2014 | Change | Change % |
|---|---|---|---|---|
| Revenues | 229,983 | 234,347 | (4,364) | -1.9% |
| EBITDA (a) | 63,649 | 66,826 | (3,177) | -4.8% |
| EBITDA % | 27.7% | 28.5% | ||
| Operating profit (EBIT) | 16,565 | 23,179 | (6,614) | -28.5% |
| Operating profit (EBIT)% | 7.2% | 9.9% | ||
| Net profit | 12,483 | 13,414 | (931) | -6.9% |
| Net profit % | 5.4% | 5.7% |
(a) The Company management has defined EBITDA as the difference between the value of sales and services and operating costs before depreciation, amortisation, impairment and provisions.
The table below presents a comparison of the main consolidated statement of financial position figures as at 31 December 2015 with the figures as at 31 December 2014 (in thousands of Euros):
| (thousands of Euros) | 31 December 2015 | 31 December 2014 | Change | Change % |
|---|---|---|---|---|
| Net operating working capital (a) | 13,726 | 15,789 | (2,063) | -13.1% |
| Other current assets/liabilities (b) | (7,565) | (25,208) | 17,643 | -70.0% |
| Net working capital | 6,161 | (9,419) | 15,580 | -165.4% |
| Non-current assets - medium/long-term provisions | 183,086 | 179,086 | 4,000 | 2.2% |
| Invested capital | 189,247 | 169,667 | 19,580 | 11.5% |
| Shareholders' equity | 122,094 | 111,588 | 10,506 | 9.4% |
| Net financial debt (d) | 67,153 | 58,079 | 9,074 | 15.6% |
| Invested capital (c) | 189,247 | 169,667 | 19,580 | 11.5% |
(a) Net operating working capital is not an accounting measurement under the IFRSs endorsed by the European Union. The Company management has defined net operating working capital as the algebraic sum of inventories, trade receivables and trade payables.
(b) Other current assets/liabilities are calculated as the difference between other current assets, current tax receivables, current tax payables and other current liabilities.
(c) The Company management has defined invested capital as the sum of Shareholders' equity and net financial debt.
(d) The management has defined net financial debt as the sum of amounts Due to banks and other lenders net of Cash and cash equivalents and current financial receivables.
The table below presents a comparison between the main consolidated cash flow figures as at 31 December 2015 and as at 31 December 2014 (in thousands of Euros).
| (thousands of Euros) | Year ended as at 31 December Change 15/14 |
||
|---|---|---|---|
| 2015 | 2014 | ||
| Cash flow generated (absorbed) by operations | 40,369 | 54,240 | (13,871) |
| Cash flow generated (absorbed) by investment activities | (50,916) | (43,170) | (7,746) |
| Cash flow generated (absorbed) by financing activities | 14,472 | (10,508) | 24,980 |
| Increase/(decrease) in cash and cash equivalents | 3,925 | 562 | 3,363 |
| Opening cash and cash equivalents | 5,178 | 4,559 | 619 |
| Effect of exchange rate fluctuations | 2,021 | (57) | 2,078 |
| Closing cash and cash equivalents | 7,082 | 5,178 | 1,904 |
Servizi Italia S.p.A.'s business performance disclosed revenues from sales and services in 2015 of Euro 202,057 thousand in total.
Consolidated turnover of the Servizi Italia Group was Euro 229,983 thousand, down 1.9% compared to 2014 due mainly to the approximately 18.6% loss in value of the average BRL/EUR exchange rate, which negatively impacted wash-hire turnover, and the renegotiation of existing agreements due to the application of the spending review. In Brazil, at constant exchange rates, revenues would have risen by Euro 3,845 thousand. New contracts such as ASL (LHA) Frosinone, ASL Turin 3, I.N.M.I. - Lazzaro Spallanzani, Istituto Europeo di Oncologia S.r.l., Centro Cardiologico Monzino S.p.A., AUSL (Local Health Authority) of Piacenza, Pessina Gestioni S.r.l. for the service at the Garbagnate Hospital, Circolo di Busto Arsizio Hospital and Fatebenefratelli e Oftalmico Hospital had a positive impact on wash-hire segment turnover.
With regard to the sector-related performance of consolidated revenues from sales and services relating to 2014 and 2015, the following is disclosed:
The table below shows revenues from sales and services of the Servizi Italia Group by region, listed in alphabetical order, for the periods ending on 31 December 2015 and 2014, taken from the consolidated financial statements:
| (thousands of Euros) | 31 December 2015 | % | 31 December 2014 | % | Change |
|---|---|---|---|---|---|
| Abruzzo | 12 | - | 13 | - | -7.7% |
| Basilicata | 402 | 0.2% | 441 | 0.2% | -8.8% |
| Campania | 44 | - | 40 | - | 10.0% |
| Emilia Romagna | 32,066 | 13.9% | 32,250 | 13.8% | -0.6% |
| Friuli Venezia Giulia | 17,270 | 7.5% | 15,247 | 6.5% | 13.3% |
| Lazio | 12,708 | 5.5% | 13,440 | 5.7% | -5.4% |
| Liguria | 27,892 | 12.1% | 32,280 | 13.8% | -13.6% |
| Lombardy | 42,979 | 18.7% | 44,751 | 19.1% | -4.0% |
| Marche | 3,499 | 1.5% | 3,444 | 1.5% | 1.6% |
| Piedmont | 9,972 | 4.4% | 10,102 | 4.3% | -1.3% |
| Sicily | 3,178 | 1.4% | 3,101 | 1.3% | 2.5% |
| Tuscany | 25,969 | 11.3% | 27,620 | 11.8% | -6.0% |
| Trentino Alto Adige | 5,698 | 2.5% | 5,590 | 2.4% | 1.9% |
| Umbria | 255 | 0.1% | 260 | 0.1% | -1.9% |
| Valle D'Aosta | 1,193 | 0.5% | 1,248 | 0.5% | -4.4% |
| Veneto | 25,845 | 11.3% | 21,920 | 9.4% | 17.9% |
| EU revenues | 14 | - | 27 | - | -48.1% |
| Non-EU revenues | 20,987 | 9.1% | 22,573 | 9.6% | -7.0% |
| Total | 229,983 | 100.0% | 234,347 | 100.0% | -1.9% |
Group investments in 2015 amounted to around Euro 40 million, down with respect to the approximately Euro 43 million in 2014.
Purchases of linen and technical fabrics rose from Euro 28.1 million in 2014 to Euro 28.7 million in 2015, representing around 71.7% of the total investments made. This increase was due primarily to the rise in inventory as a result of the awarding of new contracts.
At business line level, the wash-hire segment was the one to disclose the highest investments (Euro 33.4 million) due to purchases of linen. The surgical instrument sterilisation line, where investments were made for around Euro 4.6 million, includes Euro 1.1 million for the purchase of surgical instruments and Euro 1.1 million for the construction of the surgical instrument sterilisation centre at the University Hospital of Messina.
EBITDA rose from Euro 53,648 thousand in 2014 to Euro 54,974 thousand in 2015 (increase of 2.5% in absolute terms). The rise in margins was primarily caused by the increase in turnover in the surgical instrument sterilisation segment and the mergers of Lavanderia Industriale Z.B.M S.p.A. and Si.Gi Servizi Ospedalieri S.r.l. (sole shareholder company), as well as the decrease in wash-hire revenue due to the renegotiation of agreements for the application of the spending review, the increase in personnel expense due to the recognition of the two contractual instalments set forth in the most recent industry national collective labour agreement and the hiring of personnel for the launch of new contracts. Margins were also positively impacted by the reduction in raw material costs, while EBITDA was negatively impacted by increases in transport costs for new contracts and commercial consulting required for the procedures for participation in tenders required under the new regulation on tenders. In terms of margins on the EBITDA with respect to revenues, Servizi Italia S.p.A. reported a slight reduction from 27.7% to 27.2% compared with the previous year. On a like-for-like basis, including Lavanderia Industriale Z.B.M S.p.A. and Si.Gi Servizi Ospedalieri S.r.l. (sole shareholder company) in the values for the comparative period, margins were down by 3.9%.
The operating profit (EBIT) decreased from Euro 18,975 thousand to Euro 16,208 thousand after recognising depreciation, amortisation, impairment and provisions of Euro 38,767 thousand (up 11.8% compared to the same period of the previous year). In relative terms, the ratio between EBIT and revenues from sales and services decreased by 1.8%. There was an increase of 1.3% in the impact of depreciation, amortisation, impairment and provisions on revenue in 2015 compared to 2014. In particular, this rise was due to the depreciation of surgical instruments, whose relative impact increased due to the ramp-up phases of the new sterilisation contracts, and linen depreciation. In addition, amongst amortisation of intangible assets, it is important to note the effects of the accounting of the non-compete agreement stipulated with the previous CEO and the customer portfolio deriving from the incorporated companies Lavanderia Industriale Z.B.M. S.p.A. and Si.Gi. Servizi Ospedalieri S.r.l.
Profit before tax decreased by 12.2% from Euro 17,596 thousand to Euro 15,447 thousand. Financial management revealed a reduction in net financial expense in 2015 due to the drop in rates on loans.
The separate financial statements as at 31 December 2015 close with net profit of Euro 11,724 thousand, down by 3.2% compared to Euro 12,113 thousand in 2014, but with a significant recovery, with respect to the profit before tax due to a reduction of 7.1% in the effective tax rate. The decrease in the tax charge was mainly determined by the new IRAP regulations introduced by the 2015 Stability Law which makes provision, from 1 January 2015, for the deduction, in addition to flat-rate and analytical deductions relating to the cost of labour, of the amount relating to the difference between the total cost of labour (relating to open-ended contracts) and deductions due.
Consolidated EBITDA declined from Euro 66,826 thousand in 2014 to Euro 63,649 thousand in 2015 (decrease of 4.8% in absolute terms). The rise in turnover in the surgical instrument sterilisation line and the reduction in raw material costs and other operating costs were able to limit the loss of margins caused by the decrease in revenue in Brazil (due to the loss in value of the average BRL/EUR exchange rate) and in the domestic market (due to the renegotiation of agreements for the application of the spending review) and the increase in personnel expense due to the recognition of the two contractual instalments set forth in the most recent industry national collective labour agreement, the hiring of personnel for the launch of new contracts
and costs relating to planned maintenance services in Brazil and in the surgical instrument sterilisation segment.
The consolidated operating profit (EBIT) decreased by 28.5% compared to 2014 from Euro 23,179 thousand to Euro 16,565 thousand after recognising depreciation, amortisation, impairment and provisions of Euro 47,084 thousand (up 7.9% compared to the same period of the previous year). In 2015, the 1.5% rise in the impact of amortisation, depreciation, impairment and provisions on revenue was caused by the increase in the depreciation of linen and new production lines in the Brazilian area, and by the rise in linen and surgical instrument depreciation in the Italian area. In addition, amongst amortisation of intangible assets of the Parent Company, it is important to note the effects of the accounting of the non-compete agreement stipulated with the previous CEO. EBIT in relation to turnover therefore decreased from 9.9% to 7.2%.
Profit before tax decreased by 18.8% in absolute value from Euro 20,231 thousand to Euro 16,435 thousand. Financial management highlighted a reduction in net financial expense of 36.3% in absolute value compared to 2014, as a result of the decrease in the rates applied to credit facilities as well as the elimination of interest accrued on the debt relating to the put options exercised with the purchase of the remaining 50% of the company Lavsim Higienização Têxtil S.A. and the impact of the redetermination of debt relating to the put options associated with the acquisition of the remaining 49.9% of the companies Maxlav Lavanderia Especializada S.A. and Vida Lavanderias Especializada S.A.
The consolidated financial statements as at 31 December 2015 close with a net profit of Euro 12,483 thousand, a decrease of 6.9% compared to Euro 13,414 thousand in 2014, with a significant recovery, with respect to the profit before tax, due to the reduction of the tax charge in the Italian area as a result of the new IRAP regulations introduced by the 2015 Stability Law, which makes provision, from 1 January 2015, for the deduction, in addition to flat-rate and analytical deductions relating to the cost of labour, of the amount relating to the difference between the total cost of labour (relating to open-ended contracts) and deductions due.
The information on treasury shares envisaged by Article 2428, paragraph 3 of the Italian Civil Code is presented in the notes to the separate financial statements in sections 6.15 and 10.
During the year under review, as in previous years, the Company did not incur any charges which could be linked in any way to said activities.
Servizi Italia S.p.A.'s transactions with subsidiaries, associates, jointly controlled companies and parent companies mainly relate to:
These transactions are illustrated in detail in the notes to the financial statements, in section 8.
You are also hereby informed that, further to the Regulations adopted by Consob by means of resolution No. 17221 dated 12 March 2010 and subsequent amendments, the Board of Directors approved on 24 November 2010 and updated on 13 November 2015 the Regulations for related party transactions, as published in the company website.
On 29 February 2016, a binding agreement was entered into for the acquisition of 100.0% of a newly incorporated company to be named "Tintoria Lombarda Divisione Sanitaria S.r.l.", to which the operations business unit of the company Tintoria Lombarda di Fasoli Aldo S.p.A., one of the main Italian linen washhire companies for healthcare facilities, will be transferred. The finalisation of this transaction, the closing of which is planned by the end of June 2016, is subject to a series of conditions precedent, including the completion of the union communication and consultation procedure regarding the contribution and the acquisition of consent from certain commissioning bodies for wash-hire contracts. Pursuant to Italian Antitrust Authority communication dated 5 August 2013 and the amendments made to Art. 16 of Italian Law No. 287/90 and Italian Decree Law 1/2012, this acquisition did not trigger the obligation to notify the Antitrust Authority; on the basis of Art. 71 of the Issuers' Regulations, this acquisition is "not significant" considering the parameters set forth in applicable law. For more information, please refer to the press release available on Company's website.
At the date of approval of the draft financial statements, the Board of Directors called an extraordinary meeting with the following item on the agenda: the exercise of the mandate granted by the Extraordinary Shareholders' Meeting held on 26 September 2014 pursuant to Art. 2443 of the Italian Civil Code to carry out a divisible share capital increase against payment for an overall maximum amount of Euro 4,000,000.00, inclusive of any share premium, with the exclusion of the purchase option as per Article 2441, paragraph 4, second section of the Italian Civil Code, reserved for Steris UK Holding Limited, by means of the issue of up to 1,150,000 new ordinary shares with a par value of Euro 1 each, with the same characteristics as those outstanding. For further information, please refer to the documentation concerning the shareholders' meeting of 26 September 2014, the "Lock-up" shareholders' agreement and the press releases of 26 September and 6 October 2014 and subsequent communications available on Company website.
For the year 2016, the Group expects results that will take into account the commitment to consolidating investments made in the countries in which it operates, as well as meeting significant operating efficiency targets in order to maintain and improve business margins and profitability. In particular, the Servizi Italia Group's strategic actions will pursue the following objectives:
As at 31 December 2015 and 31 December 2014, the Group held no financial derivatives.
The operational headquarters of the Company where its activities are carried out are as follows:
Via Sambrioli 1 –25039 Travagliato (BS), Italy
Via Primo Maggio 125– 29027 Podenzano (PC), Italy
The Company shares have been traded in the STAR segment of the Borsa Italiana S.p.A. screen-based stock market (MTA) since 22 June 2009. The main share and stock exchange data as at 31 December 2015 is disclosed below along with share volume and price trends (in Euros):
| Share and stock exchange data | 31 December 2015 |
|---|---|
| No. of shares making up the share capital | 30,699,266 |
| Price at IPO: 4 April 2007 | 8.50 |
| Price as at 30 December 2015 | 3.80 |
| Maximum price during the period | 5.48 |
| Minimum price during the period | 3.69 |
| Average price during the period | 4.37 |
| Volumes traded during the period | 6,609,266 |
| Average volumes during the period | 26,020 |
(**) Further to the closure of the Third and last Exercise Period for the "Warrant Servizi Italia 2012-2015", on 2 November 2015, the share capital rose to from Euro 28,371,486 to Euro 30,699,266.
Share volumes and prices as at 31 December 2015
During 2015, the investor relations team held several individual and group meetings with analysts and investors and also organised guided tours of the sterilisation centres and industrial laundering sites for shareholders and potential investors who so requested. During the reference period, the Company met with investors at the "STAR Conference" events in Milan and London organised by Borsa Italiana.
The information on the ownership set-ups and on corporate governance is contained in the specific report drawn up in accordance with Article 123 bis of the CFL, which forms an integral part of the financial statement documentation and which will be published in accordance with the matters envisaged by current legislation.
Servizi Italia S.p.A. is not subject to the management and co-ordination activities of either the direct parent company Aurum S.p.A. or the indirect parent company Coopservice S. Coop. p. A., since the following indices of probable subjection to third party management and co-ordination activities do not exist, such as the issue of directives pertaining to the financial and lending policy, the establishment of group operating strategies, the concentration of cash management relationships with the same. The Company in fact operates under conditions of corporate and entrepreneurial autonomy and operates autonomously in commercial dealings with its customers and suppliers. Furthermore, Servizi Italia - in compliance with the matters envisaged by Italian Law No. 262 dated 28 December 2005 - has adopted all the necessary measures (such as, for example, the appointment of the Control and Risks Committee and the adoption of Regulations for related party transactions) which permit it to not be subject to management and co-ordination activities.
The information on the remuneration of the directors, the general managers and the executives with strategic responsibilities is contained in a specific report drawn up in accordance with the format No. 7 bis, of Article 123 ter of the CFL, which forms an integral part of the financial statement documentation and which will be published in accordance with the matters envisaged by current legislation.
The Company's model is based on integrated and adequate risk management and internal control systems. This model is meant to ensure the Company's continuity and the adequacy of its processes, activities and services in terms of:
business objectives:
achievement of objectives set within company strategies;
effective and efficient use of organisational resources;
governance objectives:
ensuring the reliability, accuracy, trustworthiness and timeliness of financial reporting;
Via the Director responsible for the internal control and risk management system and the Internal Audit Manager, the Board of Directors plans, organises and manages initiatives designed to ensure that company targets are achieved by periodically reviewing objectives, changing processes based on changes within and outside the Company, and promoting and maintaining a culture and climate favourably oriented towards risk management within the company.
With a view to Governance Control, the Company has prepared and implements a series of internal procedures and controls to apply corporate governance at all levels, in terms of operational efficiency and business integrity.
The Enterprise Risk Management (ERM) tool manages risks in an integrated manner.
The primary objectives of ERM are:
The Company has defined a Corporate Risk Model within its ERM policy, which reflects the types of risk expected in light of the company's activities. Updates are approved annually by the Board of Directors. The Risk Model is the foundation and common language of the process of identifying, evaluating, controlling and reporting priority corporate risks.
The primary business risks identified (strategic, operational, financial and compliance) based on the activities of the Company and its subsidiaries are examined by the entire Board of Directors as well as the members of the Board of Statutory Auditors and the Control and Risks Committee. Meanwhile, the Director responsible for the internal control and risk management system, the Financial Reporting Manager, the Internal Audit Manager, the Organisation and Systems Manager, the Supervisory Body and the Control and Risks Committee are responsible for planning, implementing and managing the internal control system. In addition, in line with the ERM policy, a risk mapping and risk scoring methodology has been adopted which identifies the significance of the risk based on an assessment of global impact, likelihood and control level. The Company also implements the ERM process and the Risk Self-Assessment, the results of which are disclosed to the Control and Risks Committee and the Board of Directors and are used in the preparation of specific risk-based audit plans.
To minimise the various types of risks to which it is exposed, the Group has adopted timescales and control methods which allow the company management to monitor risks and inform the Board of Directors so that it may approve all transactions involving a commitment by the Company with respect to third parties.
Without prejudice to the principle of continuous monitoring and considering the characteristics of the Group's activities, a review of the risk assessment indicates that the Company has been able to achieve the desired mitigation of the primary operational, financial, strategic and compliance risks identified by taking the planned organisational and operating measures and implementing and documenting control points within company processes.
Group activities are impacted by general economic conditions in its various markets. A phase of economic crisis, resulting in a slowdown in consumption, may have a negative effect on Group sales trends, therefore reducing production volumes. The current macroeconomic scenario is causing significant uncertainties in future outlooks, resulting in the risk that deteriorating performance could impact margins in the short term. To mitigate the possible negative impacts of a downturn in demand on company profitability, the Servizi Italia Group has equipped itself with a management structure which, through project management and project control activities, pursues organisational and operating efficiency targets with a view to maintaining business margins and profitability levels.
The Group provides its services in several countries (Brazil, Turkey, Albania and India) through associates and subsidiaries. In pursuing its expansion strategy, the Servizi Italia Group has invested and may continue to invest in the future in countries with relatively unstable political institutions and/or at the centre of situations of international tension. This strategy could expose the Servizi Italia Group to various macroeconomic risks deriving, for example, from changes in the political, social, economic and regulatory systems in those countries or extraordinary events such as acts of terrorism, civil unrest and restrictions on the Group's services, as well as exchange rate control policies, inflation, penalties and nationalisation. The likelihood that the events described above will take place varies from country to country and is difficult to forecast. In any event, the company's top management continuously monitors the situation to promptly respond to possible changes in order to minimise any resulting economic or financial impacts.
The Group aims to pursue growth through a strategy based on strengthening in the markets already covered and additional geographic expansion. In pursuing this strategy, the Group could face difficulties in managing adjustments in the business structure and model or in the capacity to identify trends in markets and the relative local demand. Furthermore, the Group may need to incur start-up costs from opening new companies. Lastly, if the Group's growth is pursued externally through acquisitions, it may need to deal, inter alia, with difficulties associated with the proper valuation of the assets acquired, the integration of activities and the failure to achieve the desired synergies, which could have negative repercussions on the operations and future economic and financial results of the Group. For the purpose of mitigating these risks, Servizi Italia has structured itself with a series of internal processes to safeguard approval and valuation phases for the investment initiatives. Besides the appropriate formalised procedures, the processes envisage due diligence operations, binding contracts, internal multi-level authorisation processes, scrupulous project management and project control activities carried out by the company's top management to promptly respond to possible changes in order to minimise any economic or financial impacts resulting from the events described above, which could take place in the different countries.
The Group aims to pursue internal growth in the markets of the countries in which it operates based on a strategy of being awarded contracts via public tenders or private negotiations, which are governed by laws that vary from country to country. In particular, contracts with customers generally have a term of more than one year, and include the possibility, at the end of the first natural expiry, to extend for a further period, usually for the same duration as the initial contract. This allows the Group to plan its activities for future years. However, there is no certainty that the Group will maintain the contractual supply relationship or that new public tenders or private negotiations will offer technical and economic conditions of interest to the
Group. This could have negative impacts on operations as well as on income, the financial position and cash flows. With regard to the order book, there is no time-related concentration of the expiries of the same, also taking into account that the leadership position and the reputation which Group enjoys and the quality of the service provided have led the customers to renew the contracts entered into. Indeed, the Group's strategy is based on customer retention, involving the maintenance of continuous relationships of exchange with customers in the long term and a target of keeping the churn rate low.
The competitive map in the markets in which the Group operates varies from country to country. In detail: (i) the Italian market is highly competitive due to the presence of various operators in the reference service sectors; (ii) the Brazilian market, against an increasing rate of penetration of demand for services, has experienced an evolution in the competitive map triggered by operators that have carried out external growth transactions and consolidated their position in certain areas of the country, and by other small, family-run businesses, with low capacity for self-financing and low-efficiency management models; (iii) the market of the other countries in which the Group currently operates does not have a significant competitive map. It is not possible to exclude that the intensification of the level of competition in the sector of the services in which the Group operates may condition activities in the future and have significantly negative impacts on operations and on income, the financial position and cash flows. The Group deals with this risk by offering innovative services of proven quality in rigorous compliance with regulations.
The Servizi Italia Group operates in a sector characterised by very specific and detailed legislation, which is continually evolving. The Company cannot exclude that future changes in the existing legislation, or the issuance of new laws for the regulation of particular aspects of the sector in which it operates may influence its production activities (by means of restrictions and/or limitations on the services which are provided as well as the related disbursement processes). In this connection, the availability of internal figures with high technical skills in the respective spheres of responsibility and constantly up-dated in this connection, permit a constant control of the legislative changes. The up-date system with regard to sector standardisation is activated by means of the main on-line channels and sector subscriptions.
The Servizi Italia Group is exposed to interest rate fluctuations especially with regard to the extent of the financial expense relating to the company's net borrowing, which is mainly characterised by short-term debt. The interest rate which the Group is mainly exposed to is the Euribor. In relation to the global financial crisis, the Company is assessing the appropriateness of taking out hedging transactions on the rates, even if the financial management outstanding aspires to the optimisation of the financial expense and not to establishing derivatives for speculative purposes.
The receivables, since they are essentially due from public bodies, are deemed certain in terms of collectability and, by nature, are not subject to the risk of loss. The collection times depend on the loans received, the Local Health Authorities, the Hospitals and the Regional Authorities. The credit risk is constantly monitored by means of periodic processing of past due situations which are subject to the analysis of the Company's financial structure. The Company is also equipped with recovery procedures for problem receivables and avails itself of the assistance of legal advisors in the event of disputes being established. Having taken into account the characteristics of the credit, the risk in question could become more significant in the event of an increase in the private customer component, however this aspect is mitigated by a careful selection and financing of the customers. The predominant presence of receivables due from public bodies makes the credit risk marginal and shifts attention more towards the collection times rather than the possibility of losses.
This is the risk associated with the volatility of the prices of the raw materials and the energy commodities, with particular reference to electricity and gas used in the primary production processes of cotton, to which the purchase cost of the linen is linked. Within the sphere of the tenders, the company avail itself of clauses which permit it to adjust the price of the services provided in the event of significant price changes. The price risk is also controlled by means of the entering into of purchase agreements with price blocks and onaverage annual timescales, joined by constant monitoring of the performance of the prices so as to identify opportunities for making savings.
The exchange rate risk derives from the activities of the Servizi Italia Group, which are partly carried out in currency other than the Euro or linked to exchange rate changes via contractual components index-linked to a foreign currency. Revenues and costs denominated in currency may be influenced by exchange rate fluctuations with an impact on commercial margins (economic risk), like the trade and financial receivables and payables denominated in currency can be affected by the conversion rates used, with effects on the economic result (transactional risk). In conclusion, the exchange rate fluctuations also have repercussions on the consolidated results and the shareholders' equity attributable to the shareholders of the group parent since the financial statements of certain investee companies are drawn up in a currency other than the Euro and subsequently converted into Euro (translation risk).
With reference to the transactional risk, under the co-ordination of the Administration, Finance and Audit divisions, the Group handles the exposure to exchange rate risk on certain currency flows (Brazilian Real,
Turkish Lira, Indian Rupee and Albanian Lek) centrally with regard to the development investments in Brazil, Turkey, India and Albania, with the goal of minimising negative effects. In addition, the company holds controlling interests in companies that prepare financial statements in currencies other than the Euro, its own reporting currency. This exposes the Group to translation risk, due to the conversion into Euro of the assets and liabilities of subsidiaries that use a different reporting currency. The main exposures to translation risk are continuously monitored and, as things currently stand, no specific policies have been adopted to hedge these exposures.
In relation to the Company, the liquidity risk is linked to two main factors:
Concentrating its business on orders contracted with the Public Administration Authorities, the Company is exposed to risks associated with delays in the payments for the receivables. In order to balance this risk, factoring agreements have been entered into with the without-recourse formula.
To correctly manage the liquidity risk, an adequate level of cash and cash equivalents must be maintained. In light of the predominantly public nature of the group's customers and the average collection times, cash and cash equivalents are mainly obtained from accounts receivable financing and medium-term loans.
The Servizi Italia Group has transactions outstanding with related parties (as defined by international accounting standard IAS 24); these transactions have been analysed in the specific supplementary annual and consolidated income statement and statement of financial position schedules as at 31 December 2015 and stated in detail in the related notes. After 31 December 2015, the Group did not enter into significant transactions with related parties other than those, which fall within its core business.
All the transactions entered into with the related parties by the Servizi Italia Group fall within the normal management activities and have been finalised under market conditions.
As of 24 November 2010, pursuant to and for the purposes of Article 2391 bis of the Italian Civil Code and Articles 113 ter, 114 and 115 of the CFL, as well as the matters envisaged by the regulations containing the provisions on related party transactions adopted by Consob under resolution No. 17221 dated 12 March 2010 and subsequently amended by means of resolution No. 17389 dated 23 June 2010, the Group adopted the "Regulations for related party transactions", updated on 13 November 2015. The "Regulations for related party transactions" contain the rules which govern the identification, approval and execution of the related party transactions put together by Servizi Italia, directly or via subsidiaries, for the purpose of ensuring the transparency and correctness, both essential and procedural, of said transactions.
Risks associated with the linen and surgical instrument sterilisation activities and the adequacy of the insurance coverage
The Company is exposed to risks associated with the type of activities carried out as well as the methods for providing the services. In detail, the linen and surgical instrument sterilisation activities involve the preparation of sterile medical devices to be used care of the operator segments of hospitals.
Any defects in the sterilisation process could generate liability for the Company vis-à-vis the customers or third parties and give rise to subsequent requests for damage compensation. Accordingly, the Company has taken out insurance policies to cover these risks, in line with sector practice, to cover the liability: (i) in relation to the product, and (ii) civil vis-à-vis third parties and workers in the sterilisation centres.
However, there can be no certainty with regard to the adequacy of the insurance coverage in relation to any damages caused by the afore-mentioned events. Therefore, the risk that Servizi Italia will have to undertake possible additional charges and costs, with a consequently negative impact on the Group economic and financial results, cannot be excluded. Over the last three years, no events have taken place, which have required the compensation of damages not covered by insurance policies. Furthermore, as of the date of approval of this report, there are no pending matters relating to requests for damage compensation linked to the linen and surgical instrument sterilisation activities.
The Company operates in a sector, that of industrial laundries, particularly exposed to environmental risks such as, by way of example, air, soil and water pollution, deriving from the disposal of waste, toxic-harmful emissions and spillages of toxic-harmful materials. Accordingly, the Company has taken out insurance policies for civil liability to cover, inter alia, environmental risks as well, in line with sector practices. However, there can be no certainty with regard to the adequacy of the insurance coverage in relation to any liabilities or action furthered by third parties for the compensation of damages potentially caused by the company with regard to environmental aspects. Therefore, the risk that Servizi Italia will have to undertake possible additional charges and costs, with a consequently negative impact on its economic and financial results, cannot be excluded.
The Group has adopted the management and organisation model envisaged by Italian Legislative Decree No. 231/2001 for the purpose of creating a system of rules aimed at preventing the adoption of unlawful conduct
by senior management, executives or in any event those with decision-making powers deemed significant for the purpose of application of this legislation.
The Company deems that it has adopted the utmost diligence for the purpose of implementing the provisions as per Italian Legislative Decree No. 231/2001; however, no certainty exists with regard to the fact that the model adopted by the Company may be considered suitable by the legal authority possibly called to check the cases contemplated by said legislation. If such cases should occur, and in the event of an unlawful event, the Company's exemption from liability is not recognised on the basis of the provisions contained in said decree, it is envisaged that the Company, in any event and for all the unlawful acts committed, will be fined, as well as, for more serious cases, be subject to disqualification measures, such as disqualification from carrying out activities, suspension or revocation of authorisations, licences or concessions, prohibition from contracting with public administration authorities, exclusion from loans, grants and subsidies and possible revocation of those already granted and, in conclusion, prohibition from publicising goods and services, with consequent significant negative impacts on the Group's economic and financial results.
Aside from that reported in the section "Significant events and transactions", the Company is involved in proceedings for an alleged offence pursuant to Italian Legislative Decree 231 of 2001 relating to the AUSL (Local Health Authority) of Viterbo, for which a former director was charged with a predicate offence in relation to the awarding of a tender for the assignment of the supply of wash-hire services, sterilisation and hire of surgical instruments for the aforementioned AUSL of Viterbo; no significant events occurred in the period. Through its lawyers, the Parent Company prepared defence pleadings demonstrating the groundlessness of the accusation and, as a result, the absolute lack of involvement of the company as well as its former director.
Pursuant to Art. 3 of Consob Resolution No. 18079 of 20 January 2012, Servizi Italia S.p.A. has decided to apply the out-put regime set forth in Arts. 70, paragraph 8 and 71, paragraph 1-bis of Consob Regulation No. 11971/99 (as amended). Therefore, it has taken advantage of the right to exemption from the obligation to publish the disclosure documents set forth in attachment 3B to the above-mentioned Consob Regulation at the time of significant mergers, spin-offs, share capital increases via the contribution of assets in kind, acquisitions and disposals.
Pursuant to annex B, point 26 of Italian Legislative Decree No. 196/2003 on the Personal data protection code, the directors acknowledge that the Company has worked to uphold personal data protection measures, also in light of the provisions introduced by Italian Legislative Decree No. 196/2003 and Italian Decree Law No. 207 of 30 December 2008, published in Official Gazette No. 300 of 31 December 2008.
The Company takes an integrated approach to Quality, Safety and Environment matters and promotes the development and use of the system as a fundamental element of prevention and continuous operational improvement, with respect for and in systematic dialogue with the relevant social context and in line with international best practices.
In order to become a market leader in terms of service safety and reliability, the Company's organisational structure aims to demonstrate that the activities carried out:
The Company has obtained and maintained the certification according to the following standards:
EC certification, in compliance with enclosure V of the 93/42/EEC European Directive and subsequent amendments (assimilated in Italy by means of Italian Legislative Decree No. 46 dated 24 February 1997 and subsequent amendments), concerning the medical devices, bearing witness to the approval of the quality guarantee system relating to production and/or sterilisation of the Medical Devices created in sterile kits for the operator segments of the hospitals.
During 2015:
With regard to the protection of the health and safety of workers, the Company continued with the training courses in accordance with the matters envisaged by the State-Region Agreements with regard to the training criteria for workers, supervisors and executives (Agreement dated 21 December 2011) and the qualification of the operators to use equipment (agreement dated 22 February 2012), which affected workers at all levels and Prevention and Protection Service Officers.
During 2015, the safety team's activities also included:
Specifically, the activities carried out include:
With regard to 2015, the representative Maurizio Vitali reported to the Board of Directors with regard to aspects concerning Occupational Health and Safety with a review of the trend of the indicative indicators of the Safety Management System, as well as the costs incurred for the safety of the work environments.
With regard to company personnel, the analysis of the industrial accident trend in the last three years 2013- 2015, excluding the accidents to and from work (accidents for all purposes but not to be considered as related to working activities), disclosed a decrease of 2.4% and emphasised, with respect to the previous three-year period, a decrease in the number of accidents of 3.5%. This figure was decisively affected by both the investments made in terms of technological innovation and adaptation of the machines and equipment, and the effective application of the disclosure and training activities implemented for the purpose of raising awareness of conduct in this connection regarding industrial accidents.
With regard to the values of the frequency indices (Fi) and the severity indices (Si), again in 2013-2015, the same provided clear indication of a positive trend further confirming the effective application of the commitments implemented by the Company, in terms of economic and training investments. In detail: (i) the frequency index decreased by around 21%; (ii) the severity index decreased around 4%. The study of the accidents is an important factor for the Company, for the purpose of gaining a more precise view of the causes which generate the same, exclusively linked to the work activities and of being able, consequently, to intervene in a targeted manner where problematic issues appear to be, with a view to prevention and ongoing improvement with regard to occupational health and safety.
To conduct its business, Servizi Italia S.p.A. is required to observe the provisions of binding environmental regulations (Italian Legislative Decree No. 152 of 3 April 2006, which entered into force on 29 April 2006 the "Consolidated Environmental Law" or, alternatively, "Decree 152/2006") with regard to:
atmospheric emissions: the Company has obtained due authorisation from the pertinent bodies for the atmospheric emission of fumes produced by the heating installations and production chimneys for all the production sites;
During 2015, the Company continued with energy efficiency actions aimed at primary energy savings, through the reduction of natural gas consumption by production site plants. In this connection, the commitments undertaken for obtaining Energy Efficiency Certificates was implemented, also referred to as white certificates, established by the Decrees of the Ministry of Productive Activities jointly with the Ministry for the Environment and Land Protection of 20 July 2004 (electricity Italian Ministerial Decree 20/07/02, gas Italian Ministerial Decree 20/07/04), as subsequently amended and supplemented by the Italian Ministerial Decrees 21/12/07 and 28 December 2012, the latter of which sets the national quantitative objectives for the increase in energy efficiency in the 2013-2016 four-year period.
In the course of 2015, the Company, in its capacity as Energy Manager, requested the Energy Services Operator (GSE) for type II Energy Efficiency Certificates, in other words regarding natural gas savings. In 2015, Servizi Italia S.p.A. obtained certification for the energy savings implemented and at the same time the issue of the related Energy Efficiency Certificates (6,218 certificates).
The Servizi Italia Group's total employees, including those of the consolidated companies, were as follows as at 31 December 2015:
| Company | Executives and Middle managers |
White-collar staff |
Blue-collar staff |
Total |
|---|---|---|---|---|
| Servizi Italia S.p.A. | 8 executives and 18 middle managers |
159 | 1,621 | 1,806 |
| Servizi Italia Medical S.r.l. | - | 1 | - | 1 |
| Lavsim Higienização Têxtil S.A. | 1 executive | 16 | 465 | 482 |
| Maxlav Lavanderia Especializada S.A. | 5 executives | 10 | 435 | 450 |
| Vida Lavanderias Especializada S.A. | - | 3 | 179 | 182 |
| Aqualav Serviços De Higienização Ltda | 1 executive | 9 | 215 | 225 |
| TOTAL | 15 executives and 18 middle managers |
198 | 2,915 | 3,146 |
The company's relations with the unions have always been characterised by respect for the roles and prerogatives of all parties and have always resulted in shared agreements. Over the years, this has made it possible to maintain union relations based on reciprocal respect and shared expectations.
With regard to its blue-collar and white-collar staff, Servizi Italia S.p.A. applies the national collective Labour Agreement for employees of companies in the integrated industrial system of textile and related medical services entered into by Assosistema and the trade unions Femca-Cisl, Filctem-Cgil and Uiltec-Uil (and also separately with UGL), the regulatory and economic sections of which expired on 30 June 2015. The Industry Executives national collective labour agreement is applied for the Company's managerial staff.
During 2015, talks continued with the Trade Union Organisations and the company workers' representatives with the aim of defining shared solutions in light of the market situation, particularly to identify flexible operating and logistics solutions and to continue streamlining the staff, in order to pursue greater efficiency and integration.
In the second half of 2015, the solidarity agreements were extended at the Ariccia (RM), Montecchio Precalcino (VI) and Trieste sites.
A union agreement was entered into relating to the Ariccia production unit regarding the amendment of working hours and the performance bonus.
The results for the year and margins were impacted by increased personnel expenses due to the recognition of the two contractual instalments established in the industry national collective labour agreement (January/June 2015), as well as the hiring of personnel for the launch of new contracts.
During 2015, the Human Resources Director and the Appointments and Remuneration Committee complied with the matters required by current legislation so as to make information available relating to the remuneration of Directors vested with particular offices, Executives with strategic responsibilities, Senior Manager and Executives, submitting a specific report for the approval of the shareholders' meeting, drawn up as per format No. 7 bis, pursuant to Article 123 ter of the CFL. For further information on the fixed and variable remuneration policy, reference is made to the 2015 Remuneration report, which is an integral part of the financial statement documentation.
Activities were carried out in 2015, involving 21,000 training hours with the involvement of more than 1,100 workers in at least one training initiative during the year, both on operating roles and technical management roles.
The measures were focused on guaranteeing the constant up-dating of all the staff, supporting the professional growth of the junior figures and strengthening the skills of those with roles of responsibility, with the awareness that training represents a strategic leverage for company growth and the development of new business ventures.
As in previous years, steps were taken to prefer the internal resources who guaranteed 90% of the teaching activities, while market training was turned to for the expertise not available in-house.
A consistent portion of the training activities concerned the integrated quality/environment/safety system with particular attention to Italian Legislative Decree No. 81/2008 and subsequent amendments; in this connection, around 6,800 hours were provided to guarantee the training and up-dating of the operational staff and supervisors.
Amongst the most relevant projects, three ergonomics courses were provided at the Montecchio Precalcino, Castellina and Treviso facilities.
With regard to organisational changes, the policy adopted by the Servizi Italia Group in relation to the entities acquired is characterised by respect and promotion of cultural differences and the management of the companies acquired/invested in, by means of a process of gradual integration of the companies in an already existing Group. The programmes drawn up by Servizi Italia with regard to the acquisition transactions, are therefore in line with this policy and manifest in specific planning. In detail, during 2015:
With regard to the companies operating on the Brazilian market:
training and on-site assistance was guaranteed on laundry operations, with the presence of expert Servizi Italia employees for the purpose of implementing the business, operating and plant engineering model at the laundry sites like that of the other Group production sites;
training and on-site assistance was guaranteed on control and administrative activities, with the presence of expert Servizi Italia employees for the purpose of facilitating the financial statement definition and reporting operations and encouraging the correct information flow to the local independent auditors and the Servizi Italia control bodies;
With regard to the companies operating on the Indian market:
With regard to the companies operating on the Turkish market:
Dear Shareholders,
We hereby invite you to approve the separate financial statements as at 31 December 2015 and, considering the net profit for the year amounting to Euro 11,724,115, the Board of Directors hereby proposes:
The dividend will be paid as from 27 April 2016, with ex-dividend date on 25 April 2016, and will be paid to the shares which will be in circulation as of that date.
The Chairman of the Board of Directors
(Roberto Olivi)
SERVIZI ITALIA S.p.A. Registered Office Via S. Pietro, 59/b 43019 Castellina di Soragna (PR) Share Capital: € 30,699,266 fully paid-up Tax code and Parma Business Register No.: 08531760158 Certified email: [email protected] Tel. +390524598511 Fax +390524598232 www.si-servizitalia.com
Servizi Italia S.p.A. Page 36 of 191
| (Euros) | Notes | As at 31 December 2015 |
of which with related parties |
As at 31 December 2014 |
of which with related parties |
|---|---|---|---|---|---|
| ASSETS | (Note 8) | (Note 8) | |||
| Non-current assets | |||||
| Property, plant and equipment | 6.1 | 100,257,999 | - | 101,730,499 | - |
| Intangible assets | 6.2 | 2,837,205 | - | 715,236 | - |
| Goodwill | 6.3 | 32,275,094 | - | 21,708,990 | - |
| Equity investments in subsidiaries and associates | 6.4 | 62,592,005 | - | 52,083,625 | - |
| Equity investments in other companies | 6.5 | 3,542,018 | - | 3,273,344 | - |
| Financial receivables | 6.6 | 3,824,477 | 933,821 | 4,108,224 | 1,802,631 |
| Deferred tax assets | 6.7 | 1,152,802 | - | 873,763 | - |
| Other assets | 6.8 | 3,713,813 | - | 3,971,051 | - |
| Total non-current assets | 210,195,413 | 188,464,732 | |||
| Current assets | |||||
| Inventories | 6.9 | 3,034,776 | - | 2,714,545 | - |
| Trade receivables | 6.10 | 78,990,937 | 10,226,535 | 78,774,607 | 12,781,715 |
| Current tax receivables | 6.11 | 2,274,083 | - | - | - |
| Financial receivables | 6.12 | 9,017,439 | 6,838,018 | 8,736,847 | 6,789,015 |
| Other assets | 6.13 | 4,450,336 | - | 2,170,119 | - |
| Cash and cash equivalents | 6.14 | 2,011,757 | - | 1,325,970 | - |
| Total current assets | 99,779,328 | 93,722,088 | |||
| TOTAL ASSETS | 309,974,741 | 282,186,820 | |||
| SHAREHOLDERS' EQUITY AND LIABILITIES | |||||
| Shareholders' equity | |||||
| Share capital | 6.15 | 30,443,650 | - | 27,905,760 | - |
| Other reserves and retained earnings | 6.15 | 95,955,644 | - | 80,472,307 | - |
| Profit (loss) for the year | 11,724,115 | - | 12,112,688 | - | |
| TOTAL SHAREHOLDERS' EQUITY | 6.15 | 138,123,409 | 120,490,755 | ||
| LIABILITIES | |||||
| Non-current liabilities | |||||
| Due to banks and other lenders | 6.16 | 34,666,304 | - | 26,191,836 | - |
| Deferred tax liabilities | 6.17 | 1,758,872 | - | 1,468,161 | - |
| Employee benefits | 6.18 | 9,964,228 | - | 9,170,719 | - |
| Provisions for risks and charges | 6.19 | 151,428 | - | 64,425 | - |
| Other financial liabilities | 6.20 | - | - | - | - |
| Total non-current liabilities | 46,540,832 | 36,895,141 | |||
| Current liabilities | |||||
| Due to banks and other lenders | 6.16 | 43,706,999 | - | 38,061,444 | - |
| Trade payables | 6.21 | 64,285,249 | 13,228,964 | 64,181,646 | 19,704,978 |
| Current tax payables | 6.22 | - | - | 768,858 | - |
| Employee benefits | 6.18 | - | - | 1,049,743 | - |
| Other financial liabilities | 6.23 | 962,467 | - | - | - |
| Other payables | 6.24 | 16,355,785 | - | 20,739,233 | - |
| Total current liabilities | 125,310,500 | 124,800,924 | |||
| TOTAL LIABILITIES | 171,851,332 | 161,696,065 | |||
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 309,974,741 | 282,186,820 |
| (Euros) | Notes | As at 31 December 2015 |
of which with related parties (Note 8) |
As at 31 December 2014 |
of which with related parties (Note 8) |
|---|---|---|---|---|---|
| Revenues from sales | 7.1 | 202,057,210 | 3,053,495 | 193,966,632 | 3,130,289 |
| Other income | 7.2 | 11,068,604 | 6,340,122 | 11,544,000 | 6,763,714 |
| Raw materials and consumables | 7.3 | (17,026,041) | (1,850,493) | (20,513,388) | (8,837,100) |
| Costs for services | 7.4 | (76,729,877) | (33,234,539) | (73,835,469) | (33,822,667) |
| Personnel expense | 7.5 | (63,110,413) | (3,839,420) | (55,872,407) | (4,027,551) |
| Other costs | 7.6 | (1,285,036) | (23,887) | (1,641,388) | (27,127) |
| Depreciation, amortisation, impairment and provisions |
7.7 | (38,766,779) | - | (34,672,809) | - |
| Operating profit | 16,207,668 | 18,975,171 | |||
| Financial income | 7.8 | 959,220 | 96,908 | 1,068,576 | 130,906 |
| Financial expense | 7.9 | (2,334,824) | - | (3,585,881) | - |
| Income/(expense) from valuation of equity investments |
(8,999) | - | - | - | |
| Income/(expense) from equity investments in other companies |
7.10 | 623,444 | - | 1,137,975 | - |
| Profit before tax | 15,446,509 | 17,595,841 | |||
| Income taxes | 7.11 | (3,722,394) | (5,483,153) | ||
| Profit (loss) for the year | 11,724,115 | 12,112,688 |
| (Euros) | Year ended as at 31 December | ||
|---|---|---|---|
| Notes | 2015 | 2014 | |
| Profit (loss) for the year | 11,724,115 | 12,112,688 | |
| Other comprehensive income that will not be reclassified to the Income Statement | |||
| Actuarial gains (losses) on defined benefit plans | 6.18 | (70,478) | (891,927) |
| Income taxes on other comprehensive income | 6.7 6.17 | (105) | 245,280 |
| Other comprehensive income that may be reclassified to the Income Statement | |||
| Gains (losses) from translation of foreign financial statements | - | - | |
| Income taxes on other comprehensive income | - | - | |
| Total other comprehensive income after taxes | (70,583) | (646,647) | |
| Total comprehensive income for the period | 11,653,532 | 11,466,041 |
| Cash flow generated (absorbed) by operations Profit/(loss) before tax 15,446,509 - 17,595,841 - Payment of current taxes (7,140,426) - (4,767,213) - Amortisation and depreciation 7.7 38,045,782 - 33,999,369 - Impairment and provisions 720,996 - 673,441 - 7.7 (Income)/expense from equity investments in other companies 7.10 (623,444) - (1,137,975) - Gains/(losses) on disposal 6.1 (177,238) - (12,116) - Interest income and expense accrued 7.8 7.9 1,375,604 - 2,517,305 - Interest income collected 442,512 - 695,878 - 7.8 Interest expense paid 7.9 (2,195,121) - (3,272,697) - Provision for employee benefits 410,330 - 249,934 - 6.18 46,305,504 46,541,767 (Increase)/decrease in inventories 6.9 (133,126) - (251,332) - (Increase)/decrease in trade receivables 6.10 1,173,112 2,555,180 12,522,872 3,954,626 Increase/(decrease) in trade payables 544,829 (6,476,014) (6,869,294) (91,719) 6.21 Increase/(decrease) in other assets and liabilities (8,127,812) - (7,555,618) - Settlement of employee benefits 6.18 (1,426,857) - (527,175) - Cash flow generated (absorbed) by operations 38,335,650 43,861,220 Cash flow generated (absorbed) by investment activities in: Intangible assets 6.2 (1,365,079) - (276,262) - Property, plant and equipment 7.7 (31,714,882) - (29,658,703) - Dividends received 623,444 - 923,368 - 7.10 Sale of equity investments - - 229,757 - Purchase of equity investments (26,370,719) - (5,964,245) - 6.4 6.5 Cash flow generated (absorbed) by investment activities (58,827,236) (34,746,085) Cash flow generated (absorbed) by financing activities Financial receivables 6.6 6.13 24,012 819,807 1,780,285 1,603,397 Net (purchase)/sales of treasury shares 6.15 941,900 - (406,744) - Dividends paid (4,503,386) - (3,780,941) - Share capital increase 7,681,674 - 4,216,097 - 6.15 Current liabilities to banks and other lenders 6.16 5,645,556 - (11,844,724) - |
(Euros) | Notes | As at 31 December 2015 |
of which with related parties (Note 8) |
As at 31 December 2014 |
of which with related parties (Note 8) |
|---|---|---|---|---|---|---|
| Non-current liabilities to banks and other lenders 8,474,468 - 270,514 - 6.16 |
||||||
| Cash flow generated (absorbed) by financing activities 18,264,224 (9,765,513) |
||||||
| Increase/(decrease) in cash and cash equivalents | (2,227,362) | (650,378) | |
|---|---|---|---|
| Opening cash and cash equivalents | 6.14 | 1,325,970 | 1,976,348 |
| Cash incorporated | 2 | 2,913,150 | - |
| Closing cash and cash equivalents | 6.14 | 2,011,757 | 1,325,970 |
| (Euros) | Share capital |
Share premium reserve |
Legal Reserve |
Profit reserve |
Profit (loss) for the year |
Total Shareholders' Equity |
|---|---|---|---|---|---|---|
| Balance as at 1 January 2014 | 27,032,469 | 40,297,147 | 3,126,598 | 29,474,153 | 9,065,934 | 108,996,301 |
| Allocation of profit from the previous year | - | - | 453,297 | 4,831,696 | (5,284,993) | - |
| Distribution of dividends | - | - | - | - | (3,780,941) | (3,780,941) |
| Share capital increase | 964,681 | 3,251,417 | - | - | - | 4,216,098 |
| Treasury share transactions | (91,390) | (315,354) | - | - | - | (406,744) |
| Comprehensive income for the year | - | - | - | (646,647) | 12,112,688 | 11,466,041 |
| Balance as at 31 December 2014 | 27,905,760 | 43,233,210 | 3,579,895 | 33,659,202 | 12,112,688 | 120,490,755 |
| Allocation of profit from the previous year | - | - | 605,634 | 7,003,668 | (7,609,302) | - |
| Distribution of dividends | - | - | - | - | (4,503,386) | (4,503,386) |
| Share capital increase | 2,327,780 | 5,353,894 | - | - | - | 7,681,674 |
| Incorporations | - | - | - | 1,858,934 | - | 1,858,934 |
| Treasury share transactions | 210,110 | 731,790 | - | - | - | 941,900 |
| Comprehensive income for the year | - | - | - | (70,583) | 11,724,115 | 11,653,532 |
| Balance as at 31 December 2015 | 30,443,650 | 49,318,894 | 4,185,529 | 42,451,221 | 11,724,115 | 138,123,409 |
The separate financial statements of Servizi Italia S.p.A. comprising the statement of financial position, income statement, statement of comprehensive income, cash flow statement, statement of changes in shareholders' equity and notes, have been drawn up in compliance with the international accounting standards "International Financial Reporting Standards IFRS" issued by the International Financial Reporting Standards Board and the interpretations issued by the IFRS Interpretations Committee, on the basis of the text published in the Official Journal of the European Communities (O.J.E.C.).
These financial statements were approved by the Board of Directors on 14 March 2016; the latter authorised the publication of the same.
The accounting standards illustrated below have been applied on a consistent basis to all the periods presented.
The amounts shown in the notes are expressed in thousands of Euros, unless specified otherwise.
The financial statement schedules adopted by the group have the following characteristics:
The following IFRS accounting standards, amendments and interpretations were first adopted by the Group starting January 1, 2015:
On May 20, 2013, IFRIC interpretation 21 – Levies was issued. The interpretation clarifies when a liability for levies (other than income taxes) imposed by government agencies should be recognised. This standard addresses both levies that are accounted for in accordance with IAS 37 - Provisions, Contingent Liabilities and Contingent Assets, and those for which the settlement timing and amount are certain. The interpretation applies retrospectively to reporting periods beginning on or after June 17, 2014.
The amendments apply to reporting periods beginning on or after January 1, 2015. The adoption of these amendments had no impact on the separate financial statements of the Company.
and changes in fair value are recognized in the income statement or as a component within other comprehensive income on the basis of the requirements of IAS 39 (or IFRS 9 ) ;
The changes apply at the latest for annual periods beginning on or after February 1, 2015 or after date.
establishing that a depreciation or amortisation method that is based on revenue is not appropriate, because the revenue arising from the operation of a business of which the asset under depreciation or amortisation is part reflects a different pattern from the mere use of the economic benefits arising from the asset, which is a pre-requisite for depreciation or amortisation. The amendments to IAS 38 introduce a rebuttable presumption, that a criterion of depreciation based on revenues is considered inappropriate for the same reasons set out by the amendments made to IAS 16. In the case of intangible assets, however, this presumption may be overcome, but only in limited and specific circumstances. The amendments apply as of January 1, 2016, though early adoption is allowed.
available to readers of the financial statements in the same manner and with the same time the interim financial statements.
The amendments apply as of January 1, 2016, though early adoption is allowed.
o At cost; or
o in accordance with IFRS 9 (or IAS 39); or
The changes will apply from 1 January 2016 but early application is allowed.
Directors do not expect any significant effect on the separate financial statements of the Company when these amendments are adopted. Directors do not expect any significant effect on the separate financial statements of the Group when these amendments are adopted.
The European Union has not yet completed its endorsement process for the standards and amendments below reported at the date of these Separate Financial Statements.
This standard is applicable as of January 1, 2018, though early adoption is allowed. Still, it is impossible to provide a reasonable estimate as to the effects until the Group completes a detailed analysis of the agreements in place with the customers.
On July 24, 2014, IASB issued the final version of IFRS 9 – Financial instruments. The standard includes the results of steps relating to classification and measurement, impairment and hedge accounting, the IASB project aimed at replacing IAS 39. The new standard, which replaces earlier versions of IFRS 9 must be applied for financial statements that beginning on 1 January 2018 or later. The standard introduces new requirements for the classification and measurement of financial assets and liabilities. In particular, for financial assets the new standard uses a single approach based on how the management of financial instruments and on the characteristics of the contractual cash flows of the financial assets in order to determine the evaluation criteria, replacing the many different rules in IAS 39. For financial liabilities, the main change concerns the accounting treatment of fair value changes of a financial liability designated as a financial liability measured at fair value through profit or loss, if these variations are due to changes in the creditworthiness the issuer of the liability. Under the new standard these changes are recognized in "Other comprehensive income" and not in the income statement. With reference to the impairment , the new standard requires that the estimate of loan and receivables losses is made on the basis of the expected losses model ( and not incurred losses on the model used by IAS 39 ) using supportable information available without unreasonable effort or expense that include historic, current and future . The standard requires that this impairment model applies to all financial instruments, namely financial assets measured at amortized cost, to those measured at fair value through other comprehensive income, receivables arising from leases and trade receivables. Finally, the standard introduces a new hedge accounting model in order to adapt the requirements of the current IAS 39 which sometimes were considered too stringent and not suitable to reflect the risk management policies of the company. The main news of the document include:
The greater flexibility of the new accounting rules are balanced by additional requests for information on the risk management activities of the company.
On January 13, 2016, the IASB issued IFRS 16 – Leases which is to replace IAS 17 – Leases, as well as IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases—Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease.
The new standard provides a new definition of lease and introduces a criterion based on the control (right of use) of an asset to differentiate between lease and service agreements according to: asset identification, right to replacement of the asset, right to obtain all economic benefits arising out of use of the asset and right to control the use of the asset underlying the agreement.
The standard introduces a single lessee accounting model for recognising and measuring lease agreements, which provides for the underlying asset – including assets underlying operating leases – to be recognised in the statement of financial position as assets and lease financial liability. Lessees may elect to not recognise agreements for low-value assets or with a term of up to 12 months within the scope of this standard. No significant changes are introduced for lessor accounting.
The standard applies for reporting period beginning on or after January 1, 2019. Early application is only allowed for early adopters of IFRS 15 - Revenue from Contracts with Customers.
On September 11, 2014 , the IASB issued an amendment to IFRS 10 and IAS 28 Sales or Contribution of Assets between an Investor and its Associate or Joint Venture. The document was published in order to resolve the current conflict between IAS 28 and IFRS 10. According to IAS 28, the gain or loss resulting from the sale or transfer of a non- monetary assets to a joint venture or associate in exchange for a share in the capital of the latter it is limited to the share in the joint venture or connected by other foreign investors to the transaction. In contrast, IFRS 10 requires the recording of the entire gain or loss in the event of loss of control of a subsidiary, even if the entity continues to hold a non-controlling stake in it, including in this case also the sale or transfer of a subsidiary to a joint venture or associate. The changes introduced provide that when a sale/transfer of an asset or a subsidiary to a joint venture or associate, the profit measure or loss is recognized in the financial statements of the assignor/transferor due to the fact that the activities or subsidiary sold/transferred or not constitute a business, as defined in the standard IFRS 3. in the event that the activities or the subsidiary companies sold/transferred represent a business, the entity shall recognize the gain or loss on entire investment held; while , if not, the share of profit or loss on the stake held by the entity still needs to be eliminated .
At the time, the IASB has suspended the application of this amendment .
venture or associate in return for its shares. The IASB has suspended the application of these amendments for the time being.
With reference to IFRS 9, IFRS 15 and IFRS 16 principles described above , the Company is assessing the implementation of policies and impacts on the separate financial statements , while in reference to the other standards and interpretations detailed above , it is not expected that the adoption will have significant impacts the valuation of assets , liabilities , costs and revenues of the Company.
On 1 April 2015, the wholly owned companies Lavanderia Industriale ZBM S.p.A. and Si.Gi. Servizi Ospedalieri S.r.l. (sole shareholder company) were merged via incorporation into Servizi Italia S.p.A. The merger became effective for accounting and tax purposes as of 1 January 2015.
As set forth in the IFRS standards and the instructions laid out in the Assirevi Preliminary Guidelines on IFRS (OPI 2), and in order to obtain a standard benchmark for comparison with the values of the first post-merger financial statements, the data relating to the year 2014 were restated to also include those of the merged companies, and are shown below in the "pro forma" column of the 2014 statement of financial position, the 2014 income statement and the 2014 statement of comprehensive income.
| STATEMENT OF FINANCIAL POSITION | Servizi Italia S.p.A. |
Effects of merger Si.Gi. Servizi Ospedalieri S.r.l. |
Effects of merger Lavanderia Industriale ZBM S.p.A. |
Servizi Italia S.p.A. pro forma |
|---|---|---|---|---|
| (thousands of Euros) | 31 December 2014 |
31 December 2014 |
||
| ASSETS | ||||
| Non-current assets | ||||
| Property, plant and equipment | 101,730,499 | 17,387 | 3,399,668 | 105,147,554 |
| Intangible assets | 715,236 | 1,248,682 | 772,316 | 2,736,233 |
| Goodwill | 21,708,990 | - | 10,566,103 | 32,275,094 |
| Equity investments in associates | 52,083,625 | (1,764,120) | (15,069,612) | 35,249,893 |
| Equity investments in other companies | 3,273,344 | - | 277,600 | 3,550,944 |
| Financial derivatives | - | - | - | - |
| Financial receivables | 4,108,224 | - | 20,857 | 4,129,081 |
| Deferred tax assets | 873,763 | 2,173 | 7,201 | 883,136 |
| Other assets | 3,971,051 | 12,656 | - | 3,983,707 |
| Total non-current assets | 188,464,732 | (483,223) | (25,867) | 187,955,642 |
| Current assets | ||||
| Inventories | 2,714,545 | 28,548 | 158,557 | 2,901,650 |
| Trade receivables | 78,774,607 | 731,070 | 3,000,388 | 82,506,064 |
| Tax receivables | - | 124,057 | 125,982 | 250,039 |
| Financial receivables | 8,736,847 | - | - | 8,736,847 |
| Other assets | 2,170,119 | 16,945 | 102,695 | 2,289,758 |
| Cash and cash equivalents | 1,325,970 | 1,259,510 | 1,653,640 | 4,239,120 |
| Total current assets | 93,722,088 | 2,160,129 | 5,041,262 | 100,923,478 |
| TOTAL ASSETS | 282,186,820 | 1,676,906 | 5,015,395 | 288,879,120 |
| SHAREHOLDERS' EQUITY AND LIABILITIES |
Group shareholders' equity
| Share capital | 27,905,760 | - | - | 27,905,760 |
|---|---|---|---|---|
| Other reserves and retained earnings | 80,472,308 | 24,481 | 1,834,451 | 82,331,240 |
| Profit (loss) for the year | 12,112,688 | - | - | 12,112,688 |
| Total group shareholders' equity | 120,490,755 | 24,481 | 1,834,451 | 122,349,687 |
| LIABILITIES | ||||
| Non-current liabilities | ||||
| Due to banks and other lenders | 26,191,836 | - | - | 26,191,836 |
| Financial derivatives | - | - | - | - |
| Deferred tax liabilities | 1,468,161 | 392,055 | 235,797 | 2,096,012 |
| Employee benefits | 9,170,719 | 218,761 | 331,351 | 9,720,832 |
| Provisions for risks and charges | 64,425 | - | - | 64,425 |
| Other financial liabilities | - | - | - | - |
| Total non-current liabilities | 36,895,141 | 610,816 | 567,148 | 38,073,105 |
| Current liabilities | ||||
| Due to banks and other lenders | 38,061,444 | - | - | 38,061,444 |
| Trade payables | 64,181,646 | 709,348 | 987,153 | 65,878,147 |
| Current tax payables | 768,858 | 154,481 | - | 923,340 |
| Employee benefits | 1,049,742 | - | - | 1,049,742 |
| Other payables | 20,739,233 | 177,778 | 1,626,643 | 22,543,654 |
| Other financial liabilities | - | - | - | - |
| Total current liabilities | 124,800,923 | 1,041,608 | 2,613,796 | 128,456,328 |
| Total liabilities | 161,696,065 | 1,652,424 | 3,180,944 | 166,529,433 |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 282,186,820 | 1,676,905 | 5,015,395 | 288,879,120 |
| INCOME STATEMENT | Servizi Italia S.p.A. |
Effects of merger Si.Gi. Servizi Ospedalieri S.r.l. |
Effects of merger Lavanderia Industriale ZBM S.p.A. |
Servizi Italia S.p.A. pro forma |
|---|---|---|---|---|
| (thousands of Euros) | 31 December |
31 December |
||
| 2014 | 2014 | |||
| Revenues from sales | 193,966,632 | 146,889 | 10,896,770 | 205,010,291 |
| Other income | 11,544,000 | 185,129 | (226,112) | 11,503,017 |
| Raw materials and consumables | (20,513,388) | (35,822) | (578,556) | (21,127,766) |
| Costs for services | (73,835,469) | (119,047) | (2,621,161) | (76,575,677) |
| Personnel expense | (55,872,407) | (123,792) | (3,930,718) | (59,926,916) |
| Other costs | (1,641,388) | 6,075 | (64,816) | (1,700,130) |
| Depreciation, amortisation and impairment | (34,672,809) | (23,829) | (1,806,156) | (36,502,795) |
| Operating profit | 18,975,171 | 35,602 | 1,669,251 | 20,680,023 |
| Financial income | 1,068,577 | 1,907 | 43,287 | 1,113,771 |
| Financial expense | (3,585,881) | 458 | (23,947) | (3,609,369) |
| Income/(expense) from equity investments in other companies | 1,137,975 | - | (500,000) | 637,975 |
| Profit before tax | 17,595,841 | 37,968 | 1,188,591 | 18,822,400 |
| Income taxes | (5,483,153) | (9,333) | (513,080) | (6,005,566) |
| Profit (loss) | 12,112,688 | 28,634 | 675,511 | 12,816,834 |
| STATEMENT OF COMPREHENSIVE INCOME | Servizi Italia S.p.A. |
Effects of merger Si.Gi. Servizi Ospedalieri S.r.l. |
Effects of merger Lavanderia Industriale ZBM S.p.A. |
Servizi Italia S.p.A. pro forma |
|---|---|---|---|---|
| (Euros) | 31 | 31 | ||
| December 2014 |
December 2014 |
|||
| Profit (loss) for the year | 12,112,688 | 28,634 | 675,511 | 12,816,834 |
| Other comprehensive income | ||||
| Actuarial gains (losses) | (891,927) | - | (45,481) | (937,408) |
| Income taxes on other comprehensive income | 245,280 | - | 12,507 | 257,787 |
| Total other comprehensive income after taxes | (646,647) | - | (32,974) | (679,621) |
| Total comprehensive income for the period | 11,466,041 | 28,634 | 642,538 | 12,137,213 |
The Company works on the domestic market, supplying integrated rental, washing and sterilisation services for textiles and surgical instruments to social/welfare and public and private hospital facilities. In particular, the Company offers the following services: (a) wash-hire, including (i) planning and provision of integrated rental, reconditioning (disinfection, washing, finishing and packaging) and logistics (pick-up and distribution to usage centres) services for textile items, mattresses and accessories (pillowcases, curtains), (ii) rental and washing of high visibility "118" emergency service items and (iii) logistics and management of hospital wardrobes; (b) linen sterilisation services, including the planning and rental of sterile medical devices for operating theatres (linens for operating theatres and scrubs) packed in sets for the operating theatre, in cotton or in re-usable technical fabric, as well as personal protection equipment (gloves, masks); and (c) surgical instrument sterilisation services including (i) planning and provision of washing, packaging and sterilisation services for surgical instruments (owned or rented) and accessories for operating theatres and (ii) planning, installation and renovation of sterilisation centres.
Servizi Italia S.p.A. is a subsidiary of the Coopservice S.Coop.p.A. Group, registered office in Reggio Emilia, which holds a controlling shareholding via the Company Aurum S.p.A., registered office at Via Rochdale no. 5, Reggio Emilia.
The separate financial statements have been drawn up in accordance with the criterion of cost, except in the cases specifically described in the following notes, for which the current value ("fair value") has been applied.
Property, plant and equipment include land and buildings, machinery and plant, returnable assets, industrial and commercial equipment, linen and other assets benefiting future periods.
The fixed assets are stated at purchase or production cost, inclusive of the related costs and costs necessary for making the asset available for use, net of accumulated depreciation. The costs subsequent to purchase are included in the value of the asset or recorded as a separate asset only if it is probable that the Company will receive future economic benefits associated with the
assets and the cost can be measured. Maintenance and repairs are recognised in the income statement in the period in which they are incurred.
The depreciation of property, plant and equipment is determined using the linear methods so as to spread the value of the assets over the estimated useful life according to the following categories:
| Years | |
|---|---|
| Industrial buildings | 33 |
| Plant and machinery | 12 |
| General plant | 7 |
| Industrial and commercial equipment | 4 |
| Specific equipment | 8 |
| Linen | 3 |
| Furniture and fixtures | 8 |
| Electronic machinery | 5 |
| Cars | 4 |
| Other vehicles | 5 |
The useful lives are reviewed, and adjusted if necessary, at the end of each period.
The individual components of an asset which are characterised by a different useful life are depreciated separately and on a consistent basis with their duration according to an approach by components. According to this standard, the value of the land and that of the buildings which exist on the same are separated and only the building is depreciated. Returnable assets are depreciated over the residual duration of the contract within the sphere of which they are realised.
If there are indicators of impairment, the assets are subject to an impairment test as per the following section E; any impairment may be subject to subsequent value write-backs if the reasons for the impairment cease to exist.
These assets include the costs for the creation of the sterilisation and washing installations care of the customers which are used exclusively by the Company. These assets are depreciated over the useful life of the assets or the residual duration of the wash-hire contract, whichever is the shorter. The ownership of the asset is transferred to the customer on termination of the contract.
The financial expense is capitalised if directly attributable to the purchase, construction or production of an asset.
A lease is defined as financial if it entails the substantial transfer of all risks and rewards deriving from ownership of the asset. Assets acquired via financial lease agreements are recognised under property, plant and equipment with the recognition under the liabilities of a financial payable for the same amount. The payable is progressively reduced on the basis of the repayment plan for the principal amounts included in the fees contractually envisaged, while the value of the assets recorded among property, plant and equipment is systematically depreciated in relation to the economic-technical life of said asset.
On the other hand, for operating leases, the fees are recognised in the income statement on a straight-line basis during the useful life of the contract.
C. Intangible assets
Only identifiable assets, controlled by the enterprise, which are able to produce future economic benefits, can be defined as intangible assets. They also include the goodwill when acquired for a consideration described in section D below.
These assets are recorded in the financial statements at purchase or production cost, inclusive of the related charges as per the criteria already indicated for property, plant and equipment. The development costs are also capitalised provided that the cost can be reliably determined and that it can be demonstrated that the asset is able to produce future economic benefits.
The intangible assets with a defined useful life are amortised systematically as from the moment the asset is available for use over the envisaged period of utility. They are mainly represented by software licences acquired for a consideration capitalised on the basis of the cost incurred. These costs are amortised using the straight-line method in relation to their estimates useful life (3 years). The value attributed upon acquisition to the customer order book is amortised throughout the remaining useful life of the same contracts, in proportion with the distribution over time of the resulting benefits.
D. Goodwill
Goodwill represents the additional costs incurred with respect to the fair value of the net assets identified at the time of acquisition of a subsidiary, associate or business. In the separate financial statements, the goodwill relating to the acquisition of subsidiaries, associates or jointly-controlled companies is included in the item "Equity investments in subsidiaries, associates and jointly-controlled companies".
All the goodwill is checked annually to identify any impairment losses ("impairment test") and is recognised net of the impairments made.
The impairments possibly recognised are not reinstated.
For the purposes of the impairment test, the goodwill is allocated to the individual cash generating units ("CGUs") or groups of CGUs which it is believed will provide the benefits relating to the acquisition to which the goodwill refers.
E. Impairment test
In situations that could potentially generate impairment losses, property, plant and equipment and intangible assets are tested for impairment by estimating the asset's recoverable value and comparing it with the net book value. If the recoverable value is lower than the book value, the latter is adjusted accordingly. This reduction constitutes an impairment loss, which is recognised in the income statement. For assets other than goodwill, if there is no longer a reason to continue recognising a previously recognised impairment loss, the book value is restored to the new value estimated, although this value cannot exceed the net book value that would have been attributed to the asset if no impairment loss had been recognised. The write-back is also recognised in the income statement.
The goodwill and the assets with an indefinite useful life or assets not available for use are subject at least once a year to an impairment test so as to check the recoverability of the value. The assets which are amortised/depreciated are subject to the impairment test on the occurrence of events and circumstances which indicate that the book value might not be recoverable. In such cases, the book value of the asset is written down until reaching the recoverable value. Write-backs are permitted for other intangible assets, but not on goodwill.
The recoverable value is the greater between the fair value of the assets net of selling costs and the value in use. For the purposes of the impairment test, the assets are grouped together at cash generating units ("CGUs") or groups of CGUs level.
As of each financial statement date, steps are taken to check any recovery of the impairments made on the non-financial assets further to impairment tests.
Servizi Italia S.p.A. controls a company when, in exercising its power over it, it is exposed and entitled to its variable returns, through its involvement in management, and it also has the possibility of impacting the investee's variable returns. The exercise of power over the investee is determined on the basis: (i) of the voting rights, also potential, held and by virtue of which one can exercise the majority of the votes exercisable during the company's ordinary shareholders' meeting; (ii) of the content of any agreements between shareholders or the existence of particular article of association clauses, which assign the power to govern the company; (iii) of the control of a number of votes sufficient to exercise the de facto control of the company's ordinary shareholders' meeting.
The joint-control agreement in which the parties have rights on the net assets of the agreement are joint ventures or jointly-controlled companies, while joint-control agreements in which the parties have rights on the assets and obligations relating to the agreement are joint operations. Joint control is the sharing, on a contractual basis, of the control of an agreement, which exists solely when due to decisions relating to the significant activities the unanimous consent of all the parties which share the control is required.
The companies in which Servizi Italia S.p.A is able to participate in the definition of the operating and financial policies despite the same not being subsidiaries or jointly-controlled parties, are associates. Joint operations are recognised by posting the amount of their assets and liabilities, costs and revenues pertaining to the company.
Equity investments in subsidiaries, associates and jointly-controlled companies are carried at purchase cost, possibly reduced in the event of distribution of the capital or capital reserves or in the presence of losses in value determined further to an impairment test. The cost is reinstated in subsequent years if the reasons for the impairments no longer exist.
These include the equity investments available for sale and the other non-current financial assets such as securities held with the intention of maintaining them in the portfolio until maturity, non-current loans and receivables, trade receivables and other receivables originating from the company and the other current financial assets such as cash and cash equivalents.
Cash and cash equivalents are bank and post office deposits, marketable securities which represent temporary investments of liquidity and financial receivables due within three months.
They also include financial payables, trade payables and other payables and the other financial liabilities as well as derivative instruments.
The financial assets and liabilities are initially recognised at fair value. Their initial recognition takes into account the transaction costs directly attributable to the purchase or the issue costs which are included in the initial recognition of all the assets and liabilities which can be defined as financial instruments. Subsequent recognition depends on the type of instrument. In detail:
Other current assets are recorded, at the time of initial recognition, at fair value and subsequently at amortised cost on the basis of the effective interest rate method. If there is objective evidence of impairment indicators, the asset is written down to an extent so that it is equal to the discounted back value of the flows which can be obtained in the future.
Impairment losses are recognised in the income statement. If in subsequent periods, the reasons for the previous impairments cease to exist, the value of the assets is reinstated up to the extent of the value which would have derived from the application of the amortised cost if the impairment had not been made.
The white certificates are allocated in relation to the achievement of energy savings via the application of efficient systems and technologies.
The white certificates are recognised in the accounts on an accruals basis under "Other income", in proportion to the TOE (tonne of oil equivalent) savings effectively made in the period.
The recognition of the same is carried out at the average annual market value unless the year end market value is significantly lower. The decreases due to sales of white certificates matured during the period or in previous periods are valued at the disposal price. The capital gains and losses deriving from the sales of certificates in periods different to those of maturity are recorded respectively under "Other income" or "Other costs".
I. Inventories
Inventories are recognised at purchase or production cost, inclusive of accessory charges, determined by applying the weighted average cost method or the estimated realisable value calculated on the basis of the market trend net of the sales costs, whichever is the lower.
J. Employee benefits
Consequent to the changes made to the employee severance indemnity (TFR) by Italian Law No. 296 dated 27 December 2006 ("2007 Finance Bill") and subsequent Decrees and Regulations issued in the first few months of 2007, within the sphere of the supplementary welfare reform the related Provision is recognised as follows:
Employee severance indemnity fund accruing as from 1 January 2007: this falls within the category of defined-contribution plans both in the event of opting for supplementary welfare and in the case of assignment to the Treasury Fund care of INPS. The accounting treatment is similar to that existing for other kinds of contributory payments.
Employee severance indemnity fund accrued as at 31 December 2006: this remains to be a defined-benefits plan determined by applying an actuarial-type method; the amount of the rights accrued in the period by the employees is booked to the income statement under the item payroll and related costs while the figurative financial expense which the company would incur if a loan was requested from the market for an amount equal to the severance indemnity is booked to net financial income (expense). The actuarial gains and losses which reflect the effects deriving from changes in the actuarial hypotheses used are recognised under other comprehensive income in accordance with the matters envisaged by IAS 19 Employee benefits, section 93A.
According to the matters envisaged by IFRS 2, stock options are classified within the sphere of "share-based payments" and envisage for the type classified as "equity-settled" (where the payment is regulated using instruments representative of equity) the determination - as of the date of assignment of the fair value - of the option rights issued and the related recognition as personnel expense to be spread in a linear manner over the period of accrual of the rights (socalled vesting period) with the recording of a matching balance under shareholders' equity reserves. This treatment is carried out on the basis of the estimate of the rights which will effectively accrue in favour of the employees, taking into consideration the conditions of availability of the same not based on the market value of the rights.
The accounting treatment of other long-term benefits is similar to that for the post-employment benefit plans, with the exception of the fact that the actuarial gains and losses and costs deriving from prior employment services are recognised in the income statement in full in the period they accrue.
Provisions for risks and charges are provided for exclusively in the presence of a current obligation, consequent to past events, which can be legal, contractual in type or derive from declarations or conduct of the company such as to lead third parties to validly expect that the company itself is responsible or assumes responsibility for fulfilling an obligation (so-called implicit obligations). If the financial effect of time is significant, the liability is discounted back; the effect of this discounting back is recorded under financial expense.
No provision is made against risks for which the occurrence of a liability is only possible. These risks are mentioned in the section on commitments and risks and no provision is recognised.
Revenues and income, costs and expense are recognised net of returns, discounts, allowances and premiums as well as the taxes directly associated with the sale of the goods and the provision of the services.
Sales revenues are recognised at the time ownership is transferred, which as a rule takes place on delivery or shipment of the goods. Revenues for the provision of services are recognised with reference to the stage of completion of the activities to which they refer; in particular, revenues for washing, wash-hire, sterilisation and other services are recognised in the period in which they were provided, even if not yet invoiced, and are determined by supplementing those recognised by means of advance payment invoicing with appropriate estimates.
The revenues are recognised at fair value in consideration of what has been received and represent the amount of the goods supplied and/or services provided.
The costs are correlated to goods and services sold or consumed in the period or deriving from systematic allocation, or when it is not possible to identify the future utility of the same, they are recognised and booked directly to the income statement.
Financial income and expense is recognised on an accruals basis. Financial expense is capitalised as part of the cost of property, plant and equipment and intangible assets to the extent it refers to the purchase, construction or production of the same. Dividends are recognised when the right to collection by the shareholder arises; this normally takes place in the period the shareholders' meeting of the investee company which resolves the distribution of profits or reserves is held.
Current income taxes are recognised on the basis of an estimate of the taxable income in compliance with the rates and current provisions, or essentially approved at the year-end date.
Prepaid and deferred taxes are calculated on the timing differences between the value assigned to an asset or liability in the financial statements and the corresponding values recognised for tax purposes, on the basis of the rates in force at the time the timing differences will reverse. Prepaid taxes are only recorded to the extent that it is probable that there is taxable income available against which they can be used. The recoverability of the prepaid taxes recorded in previous years is valued as of closure of each set of financial statements
When the changes in the assets and liabilities to which they refer are directly recognised under other comprehensive income, the current taxes, prepaid tax assets and deferred tax liabilities are also directly booked to other comprehensive income.
Deferred tax assets and liabilities are offset only if there is a legal right to set-off and the entity intends to settle on a net basis or realise the asset and settle the liability simultaneously.
The basic and diluted earnings per share are indicated at the bottom of the income statement in the consolidated financial statements.
The basic earning per share is calculated by dividing the profit/loss of the Servizi Italia Group by the weighted average of the ordinary shares in circulation during the period, excluding treasury shares. For the purpose of calculating the diluted earning per shares, the weighted average of the shares in circulation is altered undertaking the conversion of all the potential shares which have a dilutive effect.
The drafting of the financial statements requires the directors to apply accounting standards and methods which, under certain circumstances, rest on difficult and subjective valuations and estimates based on past experience and assumptions which are from time to time considered reasonable and realistic in relation to the related circumstances. The application of these estimates and assumptions influences the amounts shown in the financial statement schedules as well as the disclosure provided. The final results of the financial statements items for which the afore-mentioned estimates and assumptions have been used, may differ from those shown in the financial statements which reveal the effects of the occurrence of an event subject to estimation, due to the uncertainty which characterises the assumptions and conditions on which the estimates are based.
The accounting standards which, more than others, require greater subjectivity by the directors when making the estimates and for which a change in the conditions underlying the assumptions used could have a significant impact on the consolidated financial data restated, are briefly described below.
The management of the financial risks within the Servizi Italia Group is carries out centrally within the sphere of precise organisational directives which discipline the handling of the same and the control of all the transactions which have strict relevance in the composition of the financial and/or trade assets and liabilities.
Servizi Italia S.p.A.'s activities are exposed to various types of risk, including interest rate, credit, liquidity and price risks.
To minimise such risks, Servizi Italia S.p.A. has adopted timescales and control methods which allow company management to monitor this risk and inform the Board of Directors so that it may approve all transactions involving a commitment by the Company with respect to third parties.
When carrying out its activities, the Company is exposed to the following financial risks:
This is the risk associated with the volatility of the prices of the raw materials and the energy commodities, with particular reference to electricity and gas used in the primary production processes and of cotton to which the purchase cost of the linen is linked. Within the sphere of the tenders, the company avails itself of clauses which permit it to adjust the price of the services provided in the event of significant cost changes. The price risk is also controlled by means of the entering into of purchase agreements with price blocks and on-average annual timescales, joined by constant monitoring of the performance of the prices so as to identify opportunities for making savings.
The Company's net financial debt primarily comprises short-term payables which, as at 31 December 2015, represent approximately 55.77% of its debt, at an average annual rate of around 1.56%. In relation to the global financial crisis, the Company is monitoring the market and assessing the appropriateness of taking out hedging transactions on the rates in order to limit the negative impacts of changes in interest rates on the company's income statement. The table below demonstrates the effect that would be generated by a 0.5% increase or decrease in rates (in thousands of Euros).
| (thousands of Euros) | 0.5% rate increase | 0.5% rate decrease | ||
|---|---|---|---|---|
| 31 December 2015 | 31 December 2014 | 31 December 2015 | 31 December 2014 | |
| Financial receivables | +65 | +63 | (65) | (63) |
| Financial payables | +405 | +415 | (405) | (415) |
| Factoring of receivables | +379 | +507 | (379) | (507) |
The receivables, since they are essentially due from public bodies, are deemed certain in terms of collectability and, by nature, are not subject to the risk of loss. The collection times depend on the loans received, the Local Health Authorities, the Hospitals and the Regional Authorities and at present average collection days are 141.
A summary of the trade receivables net and gross of the related bad debt provisions and the stratification by maturity of receivables not written down, is presented below:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Gross trade receivables | 84,522 | 84,095 |
| Bad debt provisions | (5,531) | (5,320) |
| Net trade receivables | 78,991 | 78,775 |
| Guarantees in portfolio | None | None |
| Falling due | 42,885 | 47,983 |
| Past due by less than 3 months | 15,535 | 15,390 |
| Past due by more than 3 months | 8,651 | 5,612 |
| Past due by more than 7 months | 11,920 | 9,790 |
The credit risk is constantly monitored by means of periodic processing of past due situations which are subject to the analysis of the Company's financial structure. The Company is also equipped with recovery procedures for problem receivables and avails itself of the assistance of legal advisors in the event of disputes being established. Having taken into account the characteristics of the credit, the risk in question could become more significant in the event of an increase in the private customer component, however this aspect is mitigated by a careful selection and financing of the customers. The predominant presence of receivables due from public bodies makes the credit risk marginal and shifts attention more towards the collection times rather than the possibility of losses.
In relation to the Company, the liquidity risk is linked to two main factors:
Concentrating its business on orders contracted with the Public Administration Authorities, the Company is exposed to risks associated with delays in the payments for the receivables. In order to balance this risk, factoring agreements have been entered into with the without-recourse formula, renewed also for 2016.
To correctly manage the liquidity risk, an adequate level of cash and cash equivalents must be maintained. In light of the predominantly public nature of the group's customers and the average collection times, cash and cash equivalents are mainly obtained from accounts receivable financing and medium-term loans. The Company has entered into covenants relating to the mortgage loans with Cassa di Risparmio in Bologna S.p.A., Banca Nazionale del Lavoro S.p.A., Cassa di Risparmio di Parma e Piacenza SpA and Banca Popolare di Milano S.Coop.a r.l., therefore the possibility of early repayment of these loans with respect to the repayment plan, is envisaged. As at 31 December 2015, the Company had observed the covenants entered into.
The following table analyses the "worst case" scenario with reference to the financial liabilities (including trade payables and other payables) in which all the flows indicated are un-discounted future nominal cash flows, determined with reference to the residual contractual maturities, both for the principal portion and the interest portion. The loans have been included on the basis of the first maturity on which the repayment can be requested and the non-revolving loans are considered to be callable on demand. The financial payables with a maturity of less than or equal to 3 months are almost entirely characterised by self-liquidating bank loans for invoice advances which, in as such, are replaced on maturity by new advances on newly-issued invoices. It should also be considered that the company only partially uses the short-term bank credit facilities available.
| (thousands of Euros) | Financial payables | Trade and other payables | Total | ||||
|---|---|---|---|---|---|---|---|
| 31 December 2015 |
31 December 2014 |
31 December 2015 |
31 December 2014 |
31 December 2015 |
31 December 2014 |
||
| Less than or equal to 3 months | 34,797 | 27,454 | 65,812 | 64,260 | 100,609 | 91,714 | |
| 3 to 12 months | 9,391 | 11,697 | 13,969 | 20,808 | 23,360 | 32,505 | |
| 1 to 2 years | 10,794 | 9,917 | - | - | 10,794 | 9,917 | |
| More than 2 years | 24,570 | 17,508 | - | - | 24,570 | 17,508 | |
| Total | 79,552 | 66,575 | 79,781 | 85,069 | 159,333 | 151,644 |
The investments in Brazil, Turkey and India, and recently in Albania, launch the Group into an international context, exposing it to exchange rate risk generated by fluctuations in the Euro/Real, Euro/Turkish Lira, Euro/Indian Rupee and Euro/Albanian Lek exchange rates.
The exchange rate risk must only be hedged if it has a significant impact on the cash flows with respect to the reference currency. The costs and risks associated with a hedging policy must be acceptable both from a financial and commercial standpoint and accordingly the Company has decided not to enter into hedging transactions on exchange rates since no inflows of capital are envisaged over the short term.
IFRS 13 requires that the classification of the financial instruments at fair value be determined on the basis of the quality of the sources of the inputs used in the valuation of the fair value.
The classification of IFRS 13 involves the following hierarchy:
The types of financial instruments present in the financial statement items are shown in the following table, with indication of the accounting treatment applied. Note that no financial instrument has been valued at fair value. With regard to the financial instruments valued at amortised cost, it is believed that the book value also represents a reasonable approximation of their valuation at fair value. With regard to equity investments in other companies, prices listed on active markets are not available. Therefore, their fair value cannot be measured reliably. For the same reason, they are measured at cost, possibly written down due to impairment.
| Euros | Financial liabilities | |||||
|---|---|---|---|---|---|---|
| at fair value through profit and loss |
held to maturity | loans and receivables |
available for sale |
at fair value through profit and loss |
at amortised cost |
|
| Measurement criteria | fair value | amortised cost | amortised cost | cost | fair value | amortised cost |
| Non-current assets | ||||||
| Equity investments in other companies | 3,542,018 | |||||
| Financial receivables | 3,824,477 | |||||
| Other assets | 3,713,813 | |||||
| Current assets | ||||||
| Trade receivables | 78,990,937 | |||||
| Current tax receivables | 2,274,083 | |||||
| Financial receivables | 9,017,439 | |||||
| Other assets | 4,450,336 | |||||
| Non-current liabilities | ||||||
| Due to banks and other lenders | 34,666,304 | |||||
| Other financial liabilities | - | |||||
| Current liabilities | ||||||
| Due to banks and other lenders | 43,706,999 | |||||
| Trade payables | 64,285,249 | |||||
| Current tax payables | - | |||||
| Other financial liabilities | 962,467 | |||||
| Other payables | 16,355,785 |
The Company's objectives, in relation to the management of the capital and the financial resources, involve safeguarding the ability to continue to operate with continuity, remunerate the shareholders and the other stakeholders and at the same time maintain an optimum capital structure so as to minimise the related cost.
For the purpose of maintaining or adapting the structure of the capital, the Company may adjust the amount of the dividends paid to the shareholders, reimburse or issue new shares or sell assets to reduce the debt. On a consistent basis with other operators, Servizi Italia S.p.A. controls capital on the basis of the debt ratio (gearing) calculated as the ratio between the net financial debt and net invested capital.
| (thousands of Euros) | Year ended as at 31 December | Change 15/14 Change 15/14 | ||
|---|---|---|---|---|
| 2015 | 2014 | % | ||
| Shareholders' equity (B) | 138,123 | 120,491 | 17,632 | 15% |
| Net financial debt (a) (A) | 67,344 | 54,190 | 13,154 | 24% |
| Net invested capital (C) | 205,467 | 174,681 | 30,786 | 18% |
| Gearing (A/C) | 32.8% | 31.0% |
(a) The management has defined net financial debt as the sum of amounts Due to banks and other lenders net of Cash and cash equivalents and Current financial receivables.
With regard to the main dynamics which have affected the debt, see section 6.17.
On 2 November 2015, further to the closure of the Third and last Exercise Period (from 1 October 2015 until 30 October 2015) of the "Warrant Servizi Italia S.p.A. 2012 – 2015", the Company announced that 9,311,120 Warrants had been exercised and consequently 2,327,780 newly-issued ordinary Servizi Italia shares had been subscribed (at a ratio of 1 new share for each 4 warrants exercised) at a price of Euro 3.30 each, admitted for listing on the Borsa Italiana screen-based stock market (MTA), with a par value of Euro 1.00 each, with regular dividend rights and the same characteristics as the ordinary Servizi Italia shares in circulation as of the issue date (the "Conversion Shares"), for a total equivalent value of Euro 7,681,674. Due to the closure of the Third Exercise Period, the 2012-2015 Warrants are no longer exercisable or traded on the Regulated Market.
Further to the afore-mentioned subscriptions, the new share capital of Servizi Italia therefore amounted to Euro 30,699,266, represented by 30,699,266 ordinary shares with a par value of Euro 1.00 each. The related certification pursuant to Article 2444 of the Italian Civil Code was filed care of the Parma Business Register as of the same date.
Servizi Italia S.p.A. operates in the following sectors:
The segment reporting is provided in the attached consolidated financial statements of the Servizi Italia Group and in short reflects the structure of the reporting periodically analysed by management so as to manage the business, and is subject to periodic HQ reporting.
Changes in property, plant and equipment and the associated accumulated depreciation are shown in the table below.
| (thousands of Euros) | Land and Buildings |
Plant and machinery |
Returnable assets |
Equipment | Other assets | Assets under construction |
Total |
|---|---|---|---|---|---|---|---|
| Historical cost | 2,094 | 92,296 | 20,652 | 43,234 | 72,432 | 9,395 | 240,103 |
| Accumulated depreciation | (835) | (49,846) | (10,321) | (27,226) | (46,153) | - | (134,381) |
| Balance as at 1 January 2014 | 1,259 | 42,450 | 10,331 | 16,008 | 26,279 | 9,395 | 105,722 |
| Increases | 52 | 1,899 | 325 | 5,319 | 21,443 | 938 | 29,976 |
| Decreases | - | (122) | (6) | (4) | (13) | (161) | (306) |
| Depreciation | (104) | (6,020) | (1,708) | (4,557) | (21,273) | - | (33,662) |
| Reclassifications | - | 1,242 | 3,046 | 3,483 | 72 | (7,843) | - |
| Balance as at 31 December 2014 | 1,207 | 39,449 | 11,988 | 20,249 | 26,508 | 2,329 | 101,730 |
| Historical cost | 2,199 | 94,668 | 26,453 | 51,147 | 69,303 | 2,329 | 246,099 |
| Accumulated depreciation | (992) | (55,219) | (14,465) | (30,898) | (42,795) | - | (144,369) |
| Balance as at 1 January 2015 | 1,207 | 39,449 | 11,988 | 20,249 | 26,508 | 2,329 | 101,730 |
| Incorporations | - | 1,850 | 68 | 84 | 1,414 | - | 3,416 |
| Historical cost | 2,204 | 102,966 | 24,650 | 54,115 | 96,734 | 2,810 | 283,479 |
|---|---|---|---|---|---|---|---|
| Balance as at 31 December 2015 | 1,159 | 37,384 | 10,685 | 18,957 | 29,263 | 2,810 | 100,258 |
| Reclassifications | - | 326 | - | 913 | 71 | (1,310) | - |
| Depreciation | (106) | (6,408) | (1,795) | (5,007) | (23,466) | - | (36,782) |
| Decreases | (1) | (49) | (21) | (9) | (30) | (314) | (424) |
| Increases | 59 | 2,216 | 445 | 2,727 | 24,766 | 2,105 | 32,318 |
The increases in 2015 amounting to Euro 59 thousand mainly relate to investments in temporary constructions for the Ariccia (Euro 15 thousand), Travagliato (Euro 15 thousand), Montecchio Precalcino (Euro 8 thousand) and Arco di Trento premises (Euro 2 thousand).
The increases concern investments in plant and machinery for washing and sterilisation at the following production sites: Podenzano for Euro 205 thousand, Castellina di Soragna for Euro 202 thousand, Montecchio Precalcino for Euro 164 thousand, Arco di Trento for Euro 150 thousand, Ariccia for Euro 108 thousand, Genova Bolzaneto for Euro 107 thousand, Careggi Firenze for Euro 84 thousand and Travagliato for Euro 69 thousand.
The remaining part concerns investments achieved care of customers for the purchase of plant and machinery to support the performance of the washing and sterilisation activities, in particular for the sterilisation centre at Viterbo Hospital and for the Varese centre and for the wardrobe at the Piacenza Hospital and Centro Cardiologico Monzino.
The reclassifications mainly relate to the bringing onto stream of new plant and machinery at the premises in Genova Bolzaneto (Euro 142 thousand), Podenzano (Euro 70 thousand) and Travagliato (Euro 60 thousand).
These mainly refer to investments made at customers to construct and renovate existing plants used for washing and sterilisation activities. Therefore, the Company maintains control over, obtains benefits from and bears the operating risks of these plants. The entity maintains ownership of the plants at the end of the wash-hire/washing/sterilisation contract.
With regard to the year ended 31 December 2015, the investments mainly concerned the redevelopment of the properties where the rented production sites are located and in particular the industrial laundries for a total of Euro 388 thousand, while the remaining portion relates to investments made care of customers for the achievement of improvements and the adaptation of the existing systems used for the performance of the activities for Euro 56 thousand.
On the basis of contractual commitments, the Company bore the cost of the partial renovation of premises of the industrial laundry facilities owned by the contracting entities, to increase the efficiency of the rented linen washing and sanitation service. These costs have been amortised in accordance with the amortisation schedules linked to the duration of the existing contract with the contracting entities, which is less than the useful life of the works completed.
The changes during the year ended 31 December 2015 present an increase of Euro 2,727 thousand for the purchase of industrial and commercial equipment, of which Euro 1,548 thousand for the purchase of surgical instruments.
Reclassifications of equipment regard primarily the start of use of surgical instruments for the Udine sterilisation centre (Euro 638 thousand) and for the Baggiovara centre (Euro 201 thousand).
The item is broken down as follows:
| (thousands of Euros) | As at 31 December 2015 | As at 31 December 2014 |
|---|---|---|
| Linens and mattresses | 28,013 | 25,346 |
| Furniture and fixtures | 133 | 130 |
| Electronic machinery | 878 | 776 |
| Cars | 20 | 23 |
| Motor vehicles | 157 | 182 |
| Telephone switchboards | 62 | 51 |
| Total | 29,263 | 26,508 |
The purchases made during the year mainly derive from investments in linen, for a total of Euro 24,286 thousand, necessary for an increasingly efficient management of the warehouse, both for the new contracts acquired during 2015 and at the time of the renewal of existing contracts.
The Company sold linen, generating a capital gain of Euro 238 thousand.
Furthermore, the value of the linen and mattresses completely amortised, for a total of Euro 1,145 thousand, was reversed from the respective accumulated depreciation, because it is presumed that on conclusion of the useful life of said assets, the value is no longer quantifiable so as to be able to establish any additional contribution to the production process.
These are mainly returnable assets as per the previous point, under construction at period end.
The item for 2015 is broken down as follows:
| (thousands of Euros) | As at 31 December 2015 |
|---|---|
| Sterilisation centre investments | 2,198 |
| Laundering facility investments | 477 |
| Investments on contracts | 135 |
| Total | 2,810 |
As the breakdown shows, the greatest investments for the year just ended amounting to Euro 2,105 thousand, relate to the construction of structural works and plant engineering in particular for the new sterilisation centre at the Messina "Gaetano Martino" general hospital (Euro 1,315 thousand) and for the new sterilisation centre at the Busto Arsizio Hospital (Euro 463 thousand).
Reclassifications for the year ended as at 31 December 2015 mainly regard the start of use of surgical instruments in Udine and Baggiovara and the investments made in plant and machinery detailed previously.
A breakdown by category as at 31 December 2015 and 2014 of the assets under financial lease is provided below:
| (thousands of Euros) | Land and Buildings |
Plant and machinery |
Equipment | Other assets | Total |
|---|---|---|---|---|---|
| Historical cost | 59 | 12,692 | 844 | 378 | 13,973 |
| Accumulated depreciation | (59) | (11,546) | (844) | (378) | (12,827) |
| Balance as at 1 January 2015 | - | 1,146 | - | - | 1,146 |
| Historical cost | 59 | 11,410 | 729 | 371 | 12,569 |
| Accumulated depreciation | (59) | (10,714) | (729) | (371) | (11,873) |
| Balance as at 31 December 2015 | - | 696 | - | - | 696 |
A breakdown as at 31 December 2015 and 2014 of the commitments for operational leasing fees is provided below:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Within 12 months | 3,171 | 2,947 |
| Between one and five years | 7,333 | 8,344 |
| Beyond 5 years | 5,400 | 6,831 |
| Total | 15,904 | 18,122 |
This item changed as follows:
| (thousands of Euros) | Trademarks and Software | Customer contract portfolio |
Other intangible assets |
Assets under construction and payments on account |
Total |
|---|---|---|---|---|---|
| Balance as at 1 January 2014 | 401 | - | - | 375 | 776 |
| Increases | 77 | - | - | 199 | 276 |
| Decreases | - | - | - | - | - |
| Amortisation | (337) | - | - | - | (337) |
| Reclassifications | 302 | - | - | (302) | - |
| Balance as at 31 December 2014 | 443 | - | - | 272 | 715 |
| Historical cost | 2,419 | - | - | 272 | 2,691 |
| Accumulated amortisation | (1,976) | - | - | - | (1,976) |
| Balance as at 1 January 2015 | 443 | - | - | 272 | 715 |
| Incorporations | 21 | 2,000 | - | - | 2,021 |
| Increases | 251 | - | 1,016 | 112 | 1,379 |
| Decreases | - | - | - | (14) | (14) |
| Amortisation | (501) | (410) | (353) | - | (1,264) |
| Reclassifications | 223 | - | - | (223) | - |
| Balance as at 31 December 2015 | 437 | 1,590 | 663 | 147 | 2,837 |
| Historical cost | 3,045 | 3,184 | 1,016 | 147 | 7,392 |
| Accumulated amortisation | (2,608) | (1,594) | (353) | - | (4,555) |
| Balance as at 31 December 2015 | 437 | 1,590 | 663 | 147 | 2,837 |
The increase in intangible assets is essentially due to the accounting of the non-compete agreement stipulated with the previous CEO which provides for the obligation not to carry out, in the areas identified, activities in competition with the Group for a period of two years. This amount is amortised using the pro rata temporis method based on the duration of the agreement which expires on 22 April 2017.
The increase in the item "Customer contract portfolio" was due to the effects of the merger via incorporation of Lavanderia Industriale ZBM S.p.A. and Si.Gi. Servizi Ospedalieri S.r.l., as a result of the allocation of the merger deficit to a separable and identifiable intangible asset, i.e., the customer portfolio of the incorporated companies.
Assets under construction mainly concern the management software being implemented.
This item changed as follows:
| (thousands of Euros) | Goodwill |
|---|---|
| Balance as at 1 January 2014 | 21,709 |
| Increases /(decreases) | - |
| Balance as at 31 December 2014 | 21,709 |
| Increases /(decreases) | 10,566 |
| Balance as at 31 December 2015 | 32,275 |
Goodwill is allocated to Servizi Italia S.p.A.'s cash generating units identified on the basis of geographical area, which reflects the areas of operation of the companies acquired over the years. The increase during the year relates exclusively to the effects of the merger via incorporation of Lavanderia Industriale ZBM S.p.A., which took place by reflecting the values in continuity with those determined at the time of acquisition of control over that company.
The impairment test is carried out by comparing the value of the goodwill and the series of activities autonomously able to produce cash flow (CGU), which the same can be reasonably allocated to, with the value in use of the CGU or that recoverable from the same via sale, whichever is the higher. In detail, the value in use was determined by applying the "discounted cash flow" method discounting back the operating cash flows emerging from economic-financial projections relating to a period of five years. The long-term plans which have been used for the impairment tests were approved by advance by the Board of Directors of Servizi Italia S.p.A. The underlying hypotheses of the plans used reflect past experience and the information gathered at the time of purchase, and are consistent the external sources of information available. With reference to the explicit period, the Company took into consideration expected trends set forth in the 2016-2020 business plan.
The terminal value is determined by applying a perpetual growth factor of 1.0% to the operating cash flow relating to the last year of the plan appropriately standardised, essentially representative on the one part of the inflation rate expected in Italy and on the other part of the uncertainties which characterise the Italian market. The discount rate used, equating to 5.54% (6.64% in the previous year) reflects the current valuations of the market with reference to the current value of money and the specific risks associated with the activities. The discount rate has been estimated net of taxes, on a consistent basis with the cash flows considered, by means of the determination of the weighted average cost of the capital (WACC).
Sensitivity analysis was carried out on the recoverability of the book value of the goodwill in line with the change in the main assumptions used for determining the value in use, also in consideration of the prudent approach used to select the financial parameters specified above. The analysis carried out showed that, to make the book value equal to the recoverable value, it would be necessary to (i) reduce the terminal value growth rate by 70% or (ii) increase the WACC adopted by 10% or (iii) reduce the reference EBIT on an annual basis by 11.41%, all while keeping the terminal value growth rate unchanged at 1% as well as all other plan assumptions.
At this time, it is not reasonable to hypothesise any change in the assumptions made which could lead to the cancellation of the surplus.
With reference to 31 December 2015 and the previous years, the impairment tests carried out did not reveal any impairment to be booked to the recorded goodwill.
| (thousands of Euros) | Change in 2015 | |||
|---|---|---|---|---|
| 1 January 2015 | Increases | Decreases | 31 December 2015 | |
| Subsidiaries | ||||
| S. Martino 2000 S.c.r.l. | 6 | - | - | 6 |
| Se.sa.tre. S.c.r.l. | 12 | - | - | 12 |
| Lavanderia Industriale Z.B.M. S.p.A. | 15,070 | - | (15,070) | - |
| SRI Empreendimentos e Participações LTDA | 23,615 | 17,500 | - | 41,115 |
| Si.Gi. Servizi Ospedalieri S.r.l (sole shareholder company) | 1,764 | - | (1,764) | - |
| Servizi Italia Medical S.r.l. | 707 | - | - | 707 |
| Total | 41,174 | 17,500 | (16,834) | 41,840 |
| (thousands of Euros) | Change in 2014 | |||
| 1 January 2014 | Increases | Decreases | 31 December 2014 | |
| Subsidiaries | ||||
| S. Martino 2000 S.c.r.l. | 6 | - | - | 6 |
| Se.sa.tre. S.c.r.l. | 12 | - | - | 12 |
| Lavanderia Industriale Z.B.M. S.p.A. | 15,070 | - | - | 15,070 |
| SRI Empreendimentos e Participacoes LTDA | 20,114 | 3,501 | - | 23,615 |
| Si.Gi. Servizi Ospedalieri S.r.l (sole shareholder company) | - | 1,764 | - | 1,764 |
| Servizi Italia Medical S.p.A. | 307 | 400 | - | 707 |
| Total | 35,509 | 5,665 | - | 41,174 |
Equity investments in subsidiaries underwent the following changes:
The main change in the item is due to the share capital increase of SRI Empreendimentos e Participações Ltda for Euro 17,500 thousand. This increase was necessary for the acquisition of 100% of the Brazilian company Aqualav Serviços De Higienização Ltda, one of the leading market operators in the State of São Paulo (Brazil) in the linen washing segment for healthcare structures, as well as to conclude the acquisition of the remaining 50% of the share capital of the company Lavsim Higienização Têxtil S.A. ("Lavsim"), already invested in as from 2 July 2012 by Servizi Italia S.p.A. via the subsidiary SRI Empreendimentos e Participações Ltda. The changes in the movements of Si.Gi. Servizi Ospedalieri S.r.l. and Lavanderia Industriale Z.B.M. S.p.A. were caused by the merger via incorporation of the two wholly-owned companies into Servizi Italia S.p.A. with accounting and tax effects as of 1 January 2015.
| (thousands of Euros) | Change in 2015 | |||
|---|---|---|---|---|
| 1 January 2015 | Increases | Decreases | 31 December 2015 | |
| Associates and jointly controlled companies | ||||
| Finanza & Progetti S.p.A. | - | 5,100 | - | 5,100 |
| Centro Italia Servizi S.r.l. | 5 | - | - | 5 |
| CO.SE.S S.c.r.l. | 3 | - | - | 3 |
| PSIS S.r.l. | 5,000 | - | - | 5,000 |
| Ekolav S.r.l. | 50 | - | - | 50 |
| Steril Piemonte S.c.r.l. | 2,000 | - | - | 2,000 |
| AMG S.r.l. | 2,033 | - | - | 2,033 |
| Iniziative Produttive Piemontesi S.r.l. | 1,322 | - | - | 1,322 |
| SE.STE.RO. S.r.l. | 100 | - | - | 100 |
| Piemonte Servizi Sanitari S.c.r.l. | 3 | - | - | 3 |
| Saniservice Sh.p.k. | - | 6 | - | 6 |
| Ankateks Turizm Insaat Tekstil Temizleme Sanayi Ve | - | 4,469 | - | 4,469 |
| SAS Sterilizasyon Servisleri A.Ş. | 86 | - | - | 86 |
| Shubhram Hospital Solutions Private Limited | 308 | 267 | - | 575 |
| Total | 10,910 | 9,842 | - | 20,752 |
Equity investments in associates and jointly-controlled companies underwent the following changes:
The Albania Ministry of Health's awarding of the sterilisation services management concession entailed the establishment of a new company, Saniservice Sh.p.k., headquartered in Tirana, to develop and provide the concession services. Servizi Italia holds 30% of the Company's share capital and other shareholders hold the remaining 70%, with the commitment to support SaniService in the management of other services required under the concession. The SaniService concession has a total value of more than Euro 70 million for the entire period of the contract (10 years) and includes an annual price review based on local inflation.
On 15 October 2015, the acquisition was completed of a 40.0% stake in Ankateks Turizm Inşaat Tekstil Temizleme San. Ve Tic. Ltd. Şti, a leading Turkish operator operating under the "Ankara Laundry" brand in the linen washing sector for healthcare structures, predominantly in the areas of Ankara and - through the subsidiary Ergülteks Temizlik Tekstil Ltd. Şti - Izmir.
The acquisition of 50.0% of the share capital of Finanza e Progetti S.p.A. enabled Servizi Italia S.p.A. to acquire 80% of Ospedal Grando S.r.l., a project company for the construction and management of the Treviso Cittadella Sanitaria hospital. Ospedal Grando also engaged Servizi Italia S.p.A. for the management and provision of linen and mattress wash-hire services, the reconditioning and sterilisation of textiles and surgical instruments and the relative accessory services at the Treviso ULSS (local health unit) 9 starting in January 2018, for a period of 15 years.
| (thousands of Euros) | Change in 2014 | |||
|---|---|---|---|---|
| 1 January 2014 | Increases | Decreases | 31 December 2014 | |
| Associates and jointly controlled companies | ||||
| Si.Gi. Servizi Ospedalieri S.r.l (sole shareholder company) | 94 | - | (94) | - |
| Centro Italia Servizi S.r.l. | 5 | - | - | 5 |
| CO.SE.S S.c.r.l. | 3 | - | - | 3 |
| PSIS S.r.l. | 5,000 | - | - | 5,000 |
| Ekolav S.r.l. | 50 | - | - | 50 |
The item in question changed as follows in 2014:
| Total | 10,610 | 394 | (94) | 10,910 |
|---|---|---|---|---|
| Shubhram Hospital Solutions Private Limited | - | 308 | - | 308 |
| SAS Sterilizasyon Servisleri A.Ş. | - | 86 | - | 86 |
| Piemonte Servizi Sanitari S.c.r.l. | 3 | - | - | 3 |
| SE.STE.RO. S.r.l. | 100 | - | - | 100 |
| Iniziative Produttive Piemontesi S.r.l. | 1,322 | - | - | 1,322 |
| AMG S.r.l. | 2,033 | - | - | 2,033 |
| Steril Piemonte S.c.r.l. | 2,000 | - | - | 2,000 |
The registered offices, share capital and % holding in subsidiaries, associates and jointly-controlled companies held by the Company are shown below along with the total values of the current and noncurrent assets, current and non-current liabilities, revenues, costs and profit/loss at 31 December 2015:
| (thousands) | ||||
|---|---|---|---|---|
| Company Name | Registered Offices | Currency | Share capital |
% holding |
| San Martino 2000 S.c.r.l. | Genoa | EUR | 10 | 60% |
| Se.Sa.Tre. S.c.r.l. | Genoa | EUR | 20 | 60% |
| Servizi Italia Medical S.r.l. | Castellina di Soragna (PR) | EUR | 200 | 100% |
| SRI Empreendimentos e Participacoes LTDA | São Paulo (Brazil) | R\$ | 128,379 | 100% |
| Lavsim Higienização Têxtil S.A. | São Roque, SP (Brazil) | R\$ | 550 | 100% |
| Maxlav Lavanderia Especializada S.A. | Jaguariúna, SP (Brazil) | R\$ | 2,825 | 50.1% |
| Vida Lavanderias Especializada S.A. | Santana de Parnaíba, SP (Brazil) | R\$ | 1,900 | 50.1% |
| Aqualav Serviços De Higienização Ltda | Vila Idalina, Poá, SP (Brazil) | R\$ | 6,400 | 100.0% |
| SAS Sterilizasyon Servisleri A.Ş. | Istanbul, Turkey | TL | 500 | 51% |
| Saniservice Sh.p.k. | Tirana, Albania | LEK | 2,746 | 30% |
| Shubhram Hospital Solutions Private Limited | New Delhi - India | INR | 85,200 | 51% |
| Ankateks Turizm İnsaat Tekstil Temizleme Sanayi Ve | Ankara, Turkey | TL | 5,000 | 40% |
| Finanza & Progetti S.p.A. | Padua | EUR | 550 | 50% |
| Centro Italia Servizi S.r.l. | Arezzo | EUR | 10 | 50% |
| CO.SE.S S.c.r.l. | Perugia | EUR | 10 | 25% |
| PSIS S.r.l. | Padua | EUR | 10,000 | 50% |
| Ekolav S.r.l. | Lastra a Signa (FI) | EUR | 100 | 50% |
| Steril Piemonte S.c.r.l. | Turin | EUR | 4,000 | 50% |
| AMG S.r.l. | Busca (CN) | EUR | 100 | 50% |
| SE.STE.RO. S.r.l. | Castellina di Soragna (PR) | EUR | 400 | 25% |
| Iniziative Produttive Piemontesi S.r.l. | Turin | EUR | 2,500 | 37.63% |
| Piemonte Servizi Sanitari S.c.r.l. | Turin | EUR | 10 | 30% |
| (thousands) | As at 31 December 2015 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Company Name | Currency | Non current assets |
Current assets |
Non current liabilities |
Current liabilities |
Shareholders' equity |
Revenues | Costs | Profit/ (Loss) |
| San Martino 2000 S.c.r.l. | EUR | 1,823 | 2,307 | - | 4,120 | 10 | 8,763 | 8,763 | - |
| Se.Sa.Tre. S.c.r.l. | EUR | 5,479 | 7,039 | 1,286 | 11,212 | 20 | 11,270 | 11,270 | - |
| Servizi Italia Medical S.r.l. | EUR | 70 | 3,212 | 25 | 1,876 | 1,381 | 5,102 | 5,348 | (246) |
| SRI Empreendimentos e Participacoes LTDA |
R\$ | 114,000 | 20,678 | 2,250 | 1,387 | 131,041 | - | (1,112) | 1,112 |
| Lavsim Higienização Têxtil S.A. | R\$ | 35,579 | 8,750 | 30,184 | 6,710 | 7,435 | 38,729 | 37,204 | 1,525 |
| Maxlav Lavanderia Especializada S.A. | R\$ | 17,748 | 10,128 | 17,180 | 7,102 | 3,594 | 33,149 | 34,015 | (866) |
| Vida Lavanderias Especializada S.A. | R\$ | 976 | 2,244 | 1,247 | 2,398 | (425) | 9,177 | 10,123 | (946) |
| Aqualav Serviços De Higienização Ltda | R\$ | 14,290 | 7,936 | 11,165 | 7,269 | 3,792 | - | - | - |
| SAS Sterilizasyon Servisleri A.Ş. | TL | 1 | 340 | - | 183 | 158 | 607 | 736 | (129) |
| Saniservice Sh.p.k. | LEK | 313 | 58,686 | 35,006 | 42,285 | (18,292) | - | 21,038 | (21,038 ) |
| Shubhram Hospital Solutions Private | INR | 598,898 | 46,185 | 441,869 | 250,582 | (47,368) | 19,571 | 114,11 | (94,543 |
| Limited | 4 | ) | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Ankateks Turizm İnsaat Tekstil Temizleme Sanayi Ve |
TL | 11,799 | 4,685 | 6,621 | 7,955 | 1,908 | 14,038 | 13,255 | 783 |
| Finanza & Progetti S.p.A. | EUR | 2,282 | 1,243 | 26 | 589 | 2,910 | - | 235 | (235) |
| Centro Italia Servizi S.r.l. | EUR | 274 | 797 | 264 | 493 | 314 | 1,844 | 1,830 | 14 |
| CO.SE.S S.c.r.l. | EUR | 6 | 2,547 | 123 | 2,420 | 10 | 2,600 | 2,600 | - |
| PSIS S.r.l. | EUR | 25,093 | 6,174 | 3,539 | 19,440 | 8,288 | 9,271 | 8,897 | 374 |
| Ekolav S.r.l. | EUR | 1,616 | 1,096 | 676 | 1,913 | 123 | 2,559 | 2,547 | 12 |
| Steril Piemonte S.c.r.l. | EUR | 5,678 | 1,531 | - | 3,264 | 3,945 | 2,891 | 2,891 | - |
| AMG S.r.l. | EUR | 2,215 | 2,746 | 484 | 2,058 | 2,419 | 4,219 | 4,104 | 115 |
| SE.STE.RO. S.r.l. | EUR | 15 | 1,718 | 42 | 1,201 | 490 | 1,052 | 1,050 | 2 |
| Iniziative Produttive Piemontesi S.r.l. | EUR | 867 | 3,891 | 281 | 2,789 | 1,688 | 5,684 | 5,799 | (115) |
| Piemonte Servizi Sanitari S.c.r.l. | EUR | 41 | 1,412 | - | 1,443 | 10 | 2,301 | 2,301 | - |
The shareholders' equity of the companies Shubhram Hospital Solutions Private Limited and Saniservice Sh.p.k. was negative, reflecting the results of the industrial start-up phase and the launch of new contracts.
The item changed as follows:
| (thousands of Euros) | Change in 2015 | |||
|---|---|---|---|---|
| 1 January 2015 | Increases | Decreases | 31 December 2015 | |
| Asolo Hospital Service S.p.A. | 464 | - | - | 464 |
| Prosa S.p.A. | 462 | - | - | 462 |
| PROG.ESTE S.p.A. | 1,212 | - | - | 1,212 |
| Progeni S.p.A. | 380 | - | - | 380 |
| Sesamo S.p.A. | 353 | - | - | 353 |
| CCFS Consorzio Coop. Finanziario | 14 | - | - | 14 |
| Gesteam S.r.l. | 9 | - | - | 9 |
| Consorzio Lani Energie | 1 | - | - | 1 |
| Summano Sanità S.p.A. | 11 | - | - | 11 |
| Project Ca' Arnaldi S.r.l. in liquidation | 9 | - | (9) | - |
| Consorzio Nazionale Servizi | 13 | - | - | 13 |
| Synchron Nuovo San Gerardo S.p.A. | 344 | - | - | 344 |
| SPV Arena Sanità | - | 278 | - | 278 |
| Other | 1 | - | - | 1 |
| Total | 3,273 | 278 | (9) | 3,542 |
Project Ca' Arnaldi S.r.l was placed in liquidation during the year.
This item in question changed as follows in 2014:
| (thousands of Euros) | Change in 2014 | |||||
|---|---|---|---|---|---|---|
| 1 January 2014 | Increases | Decreases | 31 December 2014 | |||
| Asolo Hospital Service S.p.A. | 464 | - | - | 464 | ||
| Prosa S.p.A. | 462 | - | - | 462 | ||
| PROG.ESTE S.p.A. | 1,212 | - | - | 1,212 | ||
| Progeni S.p.A. | 380 | - | - | 380 | ||
| Sesamo S.p.A. | 353 | - | - | 353 | ||
| Italia Servizi Integrati S.p.A. | 15 | - | (15) | - | ||
| CCFS Consorzio Coop. Finanziario | 14 | - | - | 14 | ||
| Gesteam S.r.l. | 9 | - | - | 9 |
| Total | 3,288 | - | (15) | 3,273 |
|---|---|---|---|---|
| Other | 1 | - | - | 1 |
| Synchron Nuovo San Gerardo S.p.A. | 344 | - | - | 344 |
| Consorzio Nazionale Servizi | 13 | - | - | 13 |
| Project Ca' Arnaldi S.r.l. | 9 | - | - | 9 |
| Summano Sanità S.p.A. | 11 | - | - | 11 |
| Consorzio Lani Energie | 1 | - | - | 1 |
The total values of the assets, liabilities, revenues and net profit/loss, on the basis of the last set of available financial statements, of the main equity investments in other companies held by the Company are presented below, along with related shareholding held as at 31 December 2015:
| (thousands of Euros) | Financial statement figures as at 31 December 2014 | |||||||
|---|---|---|---|---|---|---|---|---|
| Registered | as at 31 December | |||||||
| Offices | Assets | Liabilities Revenues |
Profit/ (Loss) | 2015 | ||||
| Asolo Hospital Service S.p.A. | Asolo (TV) | 114,748 | 104,169 | 43,760 | 875 | 7.03% | ||
| Prosa S.p.A. | Carpi (MO) | 11,893 | 6,773 | 5,926 | 935 | 13.20% | ||
| Progeni S.p.A. | Milan | 303,170 | 292,754 | 41,825 | (80) | 3.80% | ||
| Sesamo S.p.A. | Carpi (MO) | 43,993 | 36,478 | 18,001 | 2,225 | 12.17% | ||
| Prog.este. S.p.A. | Carpi (MO) | 218,887 | 209,968 | 35,374 | 332 | 10.14% |
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Prosa S.p.A. | 321 | 434 |
| Sesamo S.p.A. | 353 | 353 |
| Progeni S.p.A. | 982 | 982 |
| Prog.Este S.p.A. | 531 | 531 |
| Saniservice Sh.p.k. | 162 | - |
| Summano Sanità S.p.A. | 3 | 5 |
| Se.Sa.Tre. S.c.r.l. | 772 | 1,803 |
| Arena Sanità | 446 | - |
| Syncron | 254 | - |
| Total | 3,824 | 4,108 |
Financial receivables relate to interest-bearing loans granted to the companies Prosa S.p.A. (rate equal to 1.60% plus 3-month Euribor), Sesamo S.p.A. (rate equal to 3% plus 20-year IRS rate), Progeni S.p.A. (rate equal to 5.06% + 2.25%), Prog.Este S.p.A. (rate equal to 4.7135% +1.75%) and Summano Sanità S.p.A. (rate equal to 3.8% + 2.30%), with a term equal to the global service agreements for which they were established (expiring on 21 February 2031, 31 December 2037, 31 December 2033, 31 December 2031 and 31 December 2030, respectively). The loan to the subsidiary Se.Sa.Tre. S.c.r.l. was granted for the purpose of ensuring its correct financial management at a rate equal to the 3-month Euribor plus a spread of 1% and a maturity date of 31 December 2017. This loan decreased as a result of the repayment as per the repayment plan. The loan in favour of Prosa S.p.A. decreased due to a partial repayment which took place in 2015. In 2015, three new loans were disbursed to Arena Sanità S.p.A. (rate 3.4% + 6m Euribor), Synchron S.p.A. (rate 8%) and Saniservice Sh.p.k. (rate 7%).
This item changed as follows:
| (thousands of Euros) | Share capital increase costs |
Property, plant and equipment |
Employee benefits |
Other costs with deferred deductibility |
Total |
|---|---|---|---|---|---|
| Deferred taxation as at 1 January 2014 | 79 | - | - | 102 | 181 |
| Changes recognised in the income statement | (26) | 430 | - | 116 | 520 |
| Changes recognised under shareholders' equity | 40 | - | - | - | 40 |
| Changes recognised in other comprehensive income | - | - | 133 | - | 133 |
| Deferred taxation as at 31 December 2014 | 93 | 430 | 133 | 218 | 874 |
| Incorporations of Lavanderia Industriale ZBM S.p.A. and Si.Gi. Servizi Ospedalieri S.r.l. | - | 13 | 7 | 2 | 22 |
| Changes recognised in the income statement | (45) | 341 | - | (33) | 263 |
| Changes recognised under shareholders' equity | - | - | - | - | - |
| Changes recognised in other comprehensive income | - | - | (6) | - | (6) |
| Deferred taxation as at 31 December 2015 | 48 | 784 | 134 | 187 | 1,153 |
Following the approval of the 2016 Stability Law (Italian Law No. 208 of 28 December 2015), which lowered the IRES rate from 27.5% to 24% starting on 1 January 2017, deferred tax assets were adjusted accordingly. This adjustment had a negative effect of Euro 24 thousand.
There are no deferred tax assets not recognised in the financial statements because they were considered non-recoverable.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Substitute tax Italian D.L. 185 subsequent years | 1,880 | 2,139 |
| Receivables for IRES reimbursement request pursuant to Art. 2c.1-quater Italian D.L. 201 | 1,834 | 1,832 |
| Total | 3,714 | 3,971 |
Other non-current assets decreased from Euro 3,971 thousand as at 31 December 2014 to Euro 3,714 thousand as at 31 December 2015. The drop is due to the release of the substitute tax to the income statement for the pertinent deduction of the goodwill released in 2013 and previous years. This substitute tax was recognised as prepaid current taxes and is released to the income statement over the period of time in which the Company benefits from the tax deductions connected with the goodwill.
Inventories at year-end primarily included washing products, chemical products, packaging and consumables. No impairments were made to the value of the inventories in the current and previous years.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Due from third parties | 68,836 | 66,020 |
| Due from the subsidiaries | 9,392 | 11,595 |
| Due from associates | 643 | 814 |
| Due from parent companies | 120 | 346 |
| Total | 78,991 | 78,775 |
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Due from customers | 74,367 | 71,340 |
| Bad debt provision | (5,531) | (5,320) |
| Total | 68,836 | 66,020 |
The Company took part in a number of transactions concerning the transfer of receivables described below:
The bad debt provision changed as follows in 2015 and 2014:
| Balance as at 1 January 2014 | 5,123 |
|---|---|
| Uses | (413) |
| Adjustments | (25) |
| Provisions | 635 |
| Balance as at 31 December 2014 | 5,320 |
| Incorporations | 15 |
| Uses | (160) |
| Adjustments | (40) |
| Provisions | 396 |
| Balance as at 31 December 2015 | 5,531 |
The balance of Euro 9,392 thousand as at 31 December 2015 includes trade receivables due from the subsidiaries Se.Sa.Tre S.c.r.l. for Euro 7,651 thousand, San Martino 2000 S.c.r.l. for Euro 1,639 thousand and Servizi Italia Medical S.r.l. for Euro 102 thousand. Amounts due from Se.Sa.Tre. S.c.r.l. are essentially linked to the chargeback of costs invoiced to Servizi Italia S.p.A., but referring to the handling of the contract related to LHU 9 in Treviso.
The balance as at 31 December 2015 of trade receivables due from associates and jointly-controlled companies, amounting to Euro 643 thousand, is essentially represented by trade receivables due from PSIS S.r.l. for Euro 172 thousand, Steril Piemonte S.c.r.l. for Euro 160 thousand, AMG S.r.l. for Euro 149 thousand, SE.STE.RO. S.r.l. for Euro 67 thousand, Saniservice Sh.p.k. for Euro 36 thousand and Ekolav S.r.l. for Euro 22 thousand.
Furthermore, there is a credit balance due from the parent company Coopservice Soc.Coop. p.A. for Euro 120 thousand.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Tax receivables | 5,475 | - |
| Tax payables | (3,201) | - |
| Total | 2,274 | - |
With regard to 2014, the balance is stated in the item "Current tax payables" since the net value was a liability.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Asolo Hospital Service S.p.A. | 1,563 | 1,648 |
| P.S.I.S. S.r.l. | 3,856 | 3,800 |
| Ekolav S.r.l. | 172 | 170 |
| AMG S.r.l. | 502 | 500 |
| Se.Sa.Tre. S.c.r.l. | 1,059 | 1,079 |
| Steril Piemonte S.c.r.l. | 1,156 | 1,150 |
| Iniziative Produttive Piemontesi S.r.l. | 91 | 90 |
| Gesteam S.r.l. | 328 | 300 |
| Other | 290 | - |
| Total | 9,017 | 8,737 |
Financial receivables are for loans granted to the companies indicated above, which are due within the year or repayable on demand. The increase compared to 31 December 2014 is essentially due to interest accrued on individual loans and still not collected. This item also changed compared to 31 December 2014 due to the Euro 182 thousand repayment on interest-bearing loans granted to Asolo Hospital Service S.p.A.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Guarantee deposits receivable | 154 | 67 |
| Due from others | 3,504 | 1,338 |
| Prepayments | 792 | 765 |
| Total | 4,450 | 2,170 |
Guarantee deposits receivable essentially relate to energy utilities and rentals.
The item Due from others mainly includes:
The remaining balance of the Receivables due from others is made up of advances and amounts due from social security and welfare institutions and sundry, all due within 12 months.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Bank and postal deposits | 1,992 | 1,263 |
| Cheques | - | 25 |
| Cash at bank and in hand | 20 | 38 |
| Total | 2,012 | 1,326 |
On 2 November 2015, further to the closure of the Third and last Exercise Period (from 1 October until 30 October 2015) of the "Warrant Servizi Italia S.p.A. 2012 – 2015", the Company announced that 9,311,120 Warrants had been exercised and consequently 2,327,780 newly-issued ordinary Servizi Italia shares had been subscribed (at a ratio of 1 new share for each 4 warrants exercised) at a price of Euro 3.30 each, admitted for listing on the Borsa Italiana screen-based stock market (MTA), with a par value of Euro 1.00 each, with regular dividend rights and the same characteristics as the ordinary Servizi Italia shares in circulation as of the issue date (the "Conversion Shares"), for a total equivalent value of Euro 7,681,674. Due to the closure of the Third Exercise Period, the 2012-2015 Warrants are no longer exercisable or traded on the Regulated Market.
During 2015, the Company purchased 186,890 treasury shares with a value of Euro 797 thousand, equivalent to 0.61% of the share capital, at the average book price of Euro 4.27 per share and sold 397,000 treasury shares for a value of Euro 1,739 thousand, equating to 1.29% of the share capital at an average price of Euro 4.38 per share. Following these transactions, the Company held 255,616 treasury shares amounting to 0.83% of the share capital as at 31 December 2015. The equivalent value of the treasury shares held on 31 December 2015, equal to Euro 1,101 thousand, was classified as decreasing the share capital for the par value of the same, equating to Euro 256 thousand, and as reducing the share premium reserve for the excess of the purchase value with respect to the par value, amounting to Euro 845 thousand.
The Legal reserve and Other reserves increased due to the allocation of the 2014 profit of the Company as per the resolution of the shareholders' meeting held on 22 April 2015, along with the payment of dividends for Euro 4,503 thousand equating to 16 Euro cents per share.
The increase in the item "Profit reserve" includes Euro 1,859 thousand due to the effects of the merger via incorporation of Lavanderia Industriale ZBM S.p.A. and Si.Gi. Servizi Ospedalieri S.r.l., as specified in more detail in the section "Merger via incorporation of Lavanderia Industriale ZBM S.p.A. and Si.Gi. Servizi Ospedalieri S.r.l.".
| (thousands of Euros) | Amount | Utilizability (1) | Available portion | Distributable portion |
|---|---|---|---|---|
| Share capital | 30,444 | - | - | - |
| Share premium reserve | 49,319 | A, B | 49,319 | - |
| Legal Reserve | 4,186 | B | - | - |
| Other reserves | 42,451 | A, B, C | 42,451 | 41,350 |
| Total share capital and reserves | 126,399 | 91,770 | 41,350 | |
| Profit (loss) for the year | 11,724 | |||
| Total Shareholders' Equity | 138,123 | |||
| (1) Utilizability: | A: for share capital increases |
6.15.2 Possibility of use and distributable nature of the Shareholders' equity items
The share premium reserve cannot be distributed since the legal reserve has not reached the limit envisaged by Article 2430 of the Italian Civil Code.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December 2015 | As at 31 December 2014 | ||||
|---|---|---|---|---|---|---|
| Current | Non current |
Total | Current | Non current |
Total | |
| Due to banks | 43,451 | 34,666 | 78,117 | 37,721 | 26,192 | 63,913 |
| Due to other lenders | 256 | - | 256 | 340 | - | 340 |
| Total | 43,707 | 34,666 | 78,373 | 38,061 | 26,192 | 64,253 |
B: to cover losses
C: for distribution to shareholders
The portion of the payable falling due within 12 months relating to the item Due to banks as at 31 December 2015 presents an increase with respect to 31 December 2014 of Euro 5,730 thousand. This increase was caused by greater recourse to self-liquidating credit lines for the payment of suppliers. The portion of the payable falling due beyond 12 months relating to the item Due to banks as at 31 December 2015 increased with respect to 31 December 2014 by Euro 8,474 thousand as a result of the repayment of the loan instalments which fell due during the year, the early repayment of Euro 6,500 thousand on the mortgage taken out from Banca Popolare dell'Emilia Romagna and of Euro 7,560 thousand on the loan from Banca del Mezzogiorno – MedioCredito Centrale S.p.A., and the subscription of new mortgages with the bank Carige Italia S.p.A. in the amount of Euro 10,000 thousand on 31 March 2015 with a duration of five years, with Cassa di Risparmio di Parma e Piacenza SpA in the amount of Euro 10,000 thousand on 27 April 2015 with a duration of four years and with Banca Popolare di Milano S.Coop.a r.l. for a total of Euro 15,000 thousand on 2 November 2015 with a duration of five years. The loan taken out with Cassa di Risparmio in Bologna S.p.A. in 2012 requires a net financial position of less than 1.5 times the value of shareholders' equity (covenant) to be maintained, a condition which had been met as at 31 December 2015. The loan stipulated with Banca Nazionale del Lavoro S.p.A. requires the maintenance of a net financial position of less than 2 times the value of shareholders' equity and less than 2.5 times the Ebitda (covenant), conditions which had been met as at 31 December 2015. The loans stipulated with Cassa di Risparmio in Bologna S.p.A. in 2014 and with Cassa di Risparmio di Parma e Piacenza S.p.A. require the maintenance of a net financial position of less than 1.5 times the value of shareholders' equity and less than 2.5 times the Ebitda (covenant), conditions which had been met as at 31 December 2015. The loan stipulated with Banca Popolare di Milano S.Coop.a r.l. requires the maintenance of a net financial position of less than 2 times the value of shareholders' equity and less than 2 times the Ebitda (covenant), conditions which had been met as at 31 December 2015.
Amounts due to banks are shown below by maturity:
| (thousands of Euros) | As at 31 December | ||
|---|---|---|---|
| 2015 | 2014 | ||
| Less than or equal to 6 months | 38,254 | 30,604 | |
| 6 to 12 months | 5,197 | 7,117 | |
| 1 to 5 years | 33,897 | 26,192 | |
| More than 5 years | 769 | - | |
| Total | 78,117 | 63,913 |
Non-current amounts due to banks are broken down by maturity as follows:
| (thousands of Euros) | As at 31 December | ||
|---|---|---|---|
| 2015 | 2014 | ||
| 1 to 2 years | 10,455 | 9,272 | |
| 2 to 5 years | 23,442 | 16,920 | |
| More than 5 years | 769 | - | |
| Total | 34,666 | 26,192 |
The average effective interest rates for 2015 were as follows:
| As at 31 December | ||
|---|---|---|
| 2015 | 2014 | |
| Advances on invoices | 1.56% | 1.97% |
| Bank loan | 2.10% | 3.81% |
Amounts due to other lenders as at 31 December 2015, for the current portion, are represented by the amount due to the Viterbo Hospital authority for Euro 50 thousand relating to a double payment made in our favour and the amount due to Credem Factor for invoices factored without recourse of Euro 206 thousand, mistakenly paid in our favour by the customer.
Payables to other lenders are broken down by maturity below:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Less than or equal to 6 months | 256 | 340 |
| 6 to 12 months | - | - |
| 1 to 5 years | - | - |
| More than 5 years | - | - |
| Total | 256 | 340 |
No amounts due to other lenders have been recorded under non-current liabilities.
The following table shows the breakdown of the amounts due to other lenders by type of rate:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Floating rate | 256 | 340 |
| Fixed rate | - | - |
| Total | 256 | 340 |
Deferred tax liabilities are broken down below by nature of the timing differences that generated them:
| (thousands of Euros) | Leasing | Employee benefits |
Property, plant and equipment |
Intangible assets |
Goodwill | Total |
|---|---|---|---|---|---|---|
| Deferred tax liabilities as at 1 January 2014 | 376 | 121 | 28 | - | 1,090 | 1,615 |
| Changes recognised in the income statement | (138) | (9) | (5) | - | 117 | (35) |
| Changes recognised in other comprehensive income | - | (112) | - | - | - | (112) |
| Deferred tax liabilities as at 31 December 2014 | 238 | - | 23 | - | 1,207 | 1,468 |
| Incorporations of Lavanderia Industriale ZBM S.p.A. and Si.Gi. Servizi Ospedalieri S.r.l. | - | - | - | 628 | - | 628 |
| Changes recognised in the income statement | (130) | - | (2) | (173) | (32) | (337) |
| Deferred tax liabilities as at 31 December 2015 | 108 | - | 21 | 455 | 1,175 | 1,759 |
Following the approval of the 2016 Stability Law (Italian Law No. 208 of 28 December 2015), which lowered the IRES rate from 27.5% to 24% starting on 1 January 2017, deferred tax liabilities were adjusted accordingly. This adjustment had a positive effect of Euro 199 thousand.
This item changed as follows:
| (thousands of Euros) | Year | |
|---|---|---|
| 2015 | 2014 | |
| Opening balance | 10,220 | 9,341 |
| Incorporations | 508 | - |
| Provision | 453 | 250 |
| Financial expense | 140 | 264 |
| Actuarial (gains)/losses | 70 | 892 |
| Transfers (to)/from other provisions | - | - |
| (Uses) | (1,427) | (527) |
| Closing balance | 9,964 | 10,220 |
The item includes mainly the Provision for Employee Severance Indemnity recognised to the employees, which increased following the merger via incorporation of the companies Si.Gi. Servizi Ospedalieri S.r.l. and Lavanderia Industriale Z.B.M. S.p.A., effective for accounting and tax purposes on 1 January 2015.
This item includes the amount accrued on the LTI-Cash 2015-2017 variable remuneration plan for Directors, Managers, Senior Managers and Executives, based on which a bonus is disbursed at the end of the three-year period if certain economic and financial targets are met and in relation to the Servizi Italia share price, and the termination indemnity accrued by the CEO.
With the approval of the financial statements as at 31 December 2014, the vesting period of the LTI Cash 2012-2013-2014 Plan was completed. On 12 March 2015, the Remuneration Committee provided in-depth disclosure and support to the Board of Directors, highlighting the achievement of the performance target and therefore proposing the disbursement of the bonus to the Beneficiaries under the terms and as per the formalities established in the regulations. The proposal was approved by the Board of Directors and the Board of Statutory Auditors, in fact decreeing the closure of said plan and disbursement to the beneficiaries of around Euro 1,050 thousand.
The valuation techniques were carried out on the basis of the hypotheses described by the following table:
| Year | ||
|---|---|---|
| 2015 | 2014 | |
| Technical annual discounting back rate | 1.39% | 1.50% |
| Annual inflation rate | 1.75% | 1.75% |
| Annual growth rate of the severance indemnity | 2.81% | 2.81% |
With regard to the discount rate, the iBoxx Eurozone Corporates AA 7 - 10 index as of the valuation date was taken as reference for the valuation of this parameter. The duration of the liability is 10 years.
Further to the supplementary welfare reform as per Italian Legislative Decree No. 252 dated 5 December 2005, for employees who have decided to allocate the indemnity as from 1 January 2007 to the INPS Treasury Fund, the advances as per Article 2120 of the Italian Civil Code are calculated on the entire value of the severance indemnity accrued by the worker.
These advances are disbursed by the employer within the limits of the capacity of the amounts accrued by virtue of the provisions made up until 31 December 2006. If the amount of the advance is not covered by the amount accrued care of the employer, the difference is disbursed by the Treasury Fund set up care of INPS.
With regard to the matters set forth above and for just the employees who have complied with the Treasury Fund and who have not requested advances on the indemnity, corrections have been made in the actuarial valuations increasing the requested percentage to be applied to the Fund accrued as at 31 December 2006 and revalued until the calculation date.
In accordance with the matters required by the reviewed version of IAS 19, sensitivity analysis is presented below in line with the change in the main actuarial hypotheses included in the calculation model.
| (thousands of Euros) | Discount rate | Inflation rate | Duration | |||
|---|---|---|---|---|---|---|
| +0.50% | -0.50% | +0.25% | -0.25% | +1 year | -1 year | |
| Change in liabilities | (356) | 379 | 107 | (105) | (51) | 274 |
| (thousands of Euros) | Year | |
|---|---|---|
| 2015 | 2014 | |
| Opening balance | 64 | - |
| Provisions | 120 | 64 |
| Uses | (33) | - |
| Other changes | - | - |
| Closing balance | 151 | 64 |
The company has set aside Euro 120 thousand for legal disputes.
The item in question did not change during the year
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Due to suppliers | 52,310 | 45,367 |
| Due to subsidiaries | 4,818 | 11,023 |
| Due to associates | 3,711 | 3,621 |
| Due to parent companies | 3,446 | 4,171 |
| Total | 64,285 | 64,182 |
The balance as at 31 December 2015 refers entirely to trade payables due within 12 months.
The balance as at 31 December 2015 includes trade payables due within 12 months to the subsidiaries San Martino 2000 S.c.r.l for Euro 1,082 thousand, Se.Sa.Tre S.c.r.l. for Euro 3,204 thousand and Servizi Italia Medical S.p.A. for Euro 532 thousand.
The balance as at 31 December 2015 mainly refers to trade payables due to Steril Piemonte S.c.r.l. (Euro 704 thousand), Ekolav S.r.l. (Euro 552 thousand), Se.Ste.Ro. S.r.l. (Euro 549 thousand), Co.Se.S. S.c.r.l. (Euro 432 thousand), AMG S.r.l. (Euro 425 thousand), Piemonte Servizi Sanitari S.c.r.l. (Euro 390 thousand) and Centro Italia Servizi S.r.l. (Euro 322 thousand).
Trade payables due to the parent company Coopservice S.Coop.p.A. amount to Euro 3,446 thousand.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Tax receivables | - | 4,972 |
| Tax payables | - | (5,741) |
| Total | - | (769) |
With regard to 2015, the balance is stated in the item "Current tax receivables " since the net value is a credit.
Euro 962 thousand was recognised in this item. This amount relates to the remaining payable to other company shareholders for the acquisition of the 40.0% stake in Ankateks Turizm Inşaat Tekstil Temizleme San. Ve Tic. Ltd. Şti.
The table below provides a breakdown of other current payables:
| (thousands of Euros) | As at 31 December | ||
|---|---|---|---|
| 2015 | 2014 | ||
| Accrued liabilities | 18 | 11 | |
| Deferred income | 800 | 880 | |
| Due to social security and welfare institutions | 4,685 | 4,138 | |
| Other payables | 10,853 | 15,710 | |
| Total | 16,356 | 20,739 |
Amounts due to social security institutions include contributions to INPS/INAIL/INPDAI (National Social Security Institution/Italian Institution for Insurance Against Workplace Accidents/National Welfare Institute for Industrial Managerial Employees) totalling Euro 4,685 thousand, all falling due within the year.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | ||
|---|---|---|---|
| 2015 | 2014 | ||
| Due to employees | 8,097 | 7,554 | |
| Employee/professional IRPEF (personal income tax) payable | 1,965 | 1,584 | |
| Current and deferred VAT payable | - | 6,414 | |
| Other payables | 791 | 158 | |
| Total | 10,853 | 15,710 |
The reduction in other payables compared to the previous year was mainly due to the decrease in the VAT payable for invoices issued to the public administration due to the application as of 1 January 2015 of the split payment regulation introduced in Italy with the 2015 Stability Law.
The table below lists the guarantees given by the Company, existing as at 31 December 2015:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Guarantees issued by banks and insurance companies for tenders | 59,822 | 45,912 |
| Guarantees issued by banks and insurance companies for lease agreements and utilities | 577 | 549 |
| Guarantees issued by banks and insurance companies in favour of third parties | 36,962 | 34,215 |
| Owned assets held by third parties | 49 | 49 |
| Pledge on Asolo Hospital Service shares to back loans granted to the Project Companies | 464 | 464 |
| Pledge on Sesamo shares to back loans granted to the Project Companies | 237 | 237 |
| Pledge on Prog.Este shares to back loans granted to the Project Companies | 1,212 | 1,212 |
| Pledge on Progeni shares to back loans granted to the Project Companies | 380 | 380 |
| Total | 99,703 | 83,018 |
Guarantees issued by banks and insurance companies for tenders: these were issued on behalf of the company in favour of customers or potential customers for participation in tenders, to guarantee the correct execution of the service.
Guarantees issued by banks and insurance companies for lease agreements and utilities: these were issued on behalf of the company to guarantee the payment of lease instalments and invoices for the supply of electricity and gas.
Guarantees issued by banks and insurance companies in favour of third parties: these are guarantees issued to back the payment of the company's portion of the project financing and guarantees issued in favour of PSIS S.r.l., Steril Piemonte S.c.r.l., I.P.P. S.r.l., Ekolav S.r.l. and Shubhram Hospital Solutions Private Limited to back loan agreements.
Mortgage loans on owned property: the company has not granted liens on owned property and has no mortgage loans.
Pledge on Asolo Hospital Service, Sesamo, Progeni and Prog.Este shares to back loans granted to the Project Companies: this pledge was granted to the banks providing the project financing on the shares representing the company's shareholding in the special purpose entity.
The item is broken down as follows by business:
| (thousands of Euros) | Year ended as at 31 December | ||
|---|---|---|---|
| 2015 | 2014 | ||
| Wash-hire | 145,527 | 136,214 | |
| Steril B | 19,002 | 20,456 | |
| Steril C | 37,528 | 37,297 | |
| Total | 202,057 | 193,967 |
The revenues of Servizi Italia rose by 4.2% since last year. This increase was caused primarily by the merger via incorporation of Lavanderia Industriale Z.B.M. S.p.A. and Si.Gi. Servizi Ospedalieri S.r.l. with accounting and tax effects as of 1 January 2015. Using the 2014 revenue of Servizi Italia S.p.A. plus the revenue of Lavanderia Industriale Z.B.M. S.p.A. as a comparison, there was a loss in revenue of 1.4% in absolute value. The rise in turnover due to the launch of new contracts such as ASL (LHA) Frosinone, ASL Turin 3, I.N.M.I. - Lazzaro Spallanzani, Istituto Europeo di Oncologia S.r.l., Centro Cardiologico Monzino S.p.A. and AUSL (Local Health Authority) of Piacenza was offset by a loss in revenue due to the expiry of contracts at the start of the year, such as Rome C LHA and IRCCS Foundation "National Cancer Institute" and the review of prices on other contracts requested by some customers for the application of the spending review. Turnover in the surgical instrument sterilisation segment grew by 0.6% compared to the previous year. This increase is mainly attributable to the gradual increase in turnover from customers such as the Udine University Hospital, Trieste Hospital and Careggi Hospital in Florence and the new contract for the Spedali Civili Hospital in Brescia. The fall in linen sterilisation line revenue is linked to the end of the contract with Legnano Hospital and the reduction in the turnover of the customer Careggi Hospital of Florence (in the latter case, the use of sterilised technical textile for the operating theatre decreased since the entity has opted for the singleuse product).
| (thousands of Euros) | 31 December 2015 | % | 31 December 2014 | % | Change |
|---|---|---|---|---|---|
| Abruzzo | 4 | - | - | - | - |
| Basilicata | 402 | 0.2% | 441 | 0.2% | -8.8% |
| Campania | 44 | - | 41 | - | 7.3% |
| Emilia Romagna | 31,909 | 15.8% | 30,239 | 15.6% | 5.5% |
| Friuli Venezia Giulia | 17,270 | 8.5% | 15,248 | 7.9% | 13.3% |
| Lazio | 12,708 | 6.3% | 13,440 | 6.9% | -5.4% |
| Liguria | 26,791 | 13.3% | 26,830 | 13.8% | -0.1% |
| Lombardy | 42,470 | 21.0% | 42,021 | 21.7% | 1.1% |
| Marche | 3,499 | 1.7% | 3,361 | 1.8% | 4.1% |
| Piedmont | 9,838 | 4.9% | 9,963 | 5.2% | -1.3% |
| Sicily | 3,178 | 1.6% | 3,100 | 1.6% | 2.5% |
| Tuscany | 25,635 | 12.7% | 27,307 | 14.1% | -6.1% |
| Trentino Alto Adige | 5,697 | 2.8% | 495 | 0.3% | 1050.9% |
| Umbria | 255 | 0.1% | 261 | 0.1% | -2.3% |
| Valle D'Aosta | 1,193 | 0.6% | 1,248 | 0.7% | -4.4% |
| Veneto | 21,150 | 10.5% | 19,972 | 10.3% | 5.9% |
| EEC Revenue | 14 | - | - | - | - |
| Total | 202,057 | 100.0% | 193,967 | 100.0% | 4.2% |
This balance comprises recoveries of costs and personnel attributable to third parties for Euro 5,324 thousand, chargebacks of Euro 3,801 thousand for consortium costs, non-recurring income of Euro 466 thousand, ordinary capital gains from disposal of assets for Euro 247 thousand and other income of Euro 1,231 thousand.
Consumption of raw materials, amounting to Euro 17,026 thousand, decreased with respect to the previous year (Euro 20,513 thousand in 2014). In 2014, this item included the costs incurred for the construction of the instrument sterilisation centres of the Arezzo LHU for the San Donato hospital and the Brescia Spedali Civili hospital sold to the customers.
The item is broken down as follows:
| (thousands of Euros) | Year ended as at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| External laundering and other industrial services | (17,678) | (17,234) |
| Travel and transport | (11,386) | (10,453) |
| Utilities | (10,052) | (9,624) |
| Administrative costs | (2,319) | (2,407) |
| Consortium and sales costs | (20,954) | (20,779) |
| Personnel expense | (1,427) | (1,447) |
| Maintenance | (4,133) | (3,757) |
| Use of third-party assets | (7,240) | (6,936) |
| Other services | (1,541) | (1,198) |
| Total | (76,730) | (73,835) |
The increase in the item costs for services was basically linked to the effect of the merger of Lavanderia Industriale Z.B.M. S.p.A. and Si.Gi. Servizi Ospedalieri S.r.l.
The external laundering and other industrial services disclose an increase of 2.6%. The increase in third-party processing at external laundries is attributable to the effect of the merger Lavanderia Industriale Z.B.M. S.p.A., the increase in the linen store service at new customers such as Istituto Europeo di Oncologia S.r.l., Centro Cardiologico Monzino S.p.A. and Circolo di Busto Arsizio Hospital and the increase in the service at existing customers like the Reggio Emilia Hospital, Local Health Unit no. 3 Alto - Collinare - Medio Friuli and Niguarda Ca' Granda Hospital in Milan.
Travel and transport costs increased by Euro 933 thousand. Comparing the data from 2014 including the transport costs of Lavanderia Industriale Z.B.M. S.p.A., the item would have increased by Euro 296 thousand. This rise was connected with logistics services activated at new customers.
Utilities were up by Euro 428 thousand. However, comparing the figure from 2014 inclusive of the cost of Lavanderia Industriale Z.B.M. S.p.A., there would have been a reduction of Euro 282 thousand due to the reduction in light and gas tariffs and the reduction in water consumption, made possible by greater production efficiencies and lower volumes processed.
Administrative costs declined as a result of lower expenses for collaborations, offset by rising costs for extraordinary transactions linked to the acquisition of the new companies Ankateks Turizm Inşaat Tekstil Temizleme San. Ve Tic. Ltd. Şti and Tintoria Lombarda Divisione Sanitaria S.r.l. and legal consulting for appeals on the awarding of contracts.
Consortium and sales costs were up by Euro 175 thousand, from Euro 20,779 thousand as at 31 December 2014 to Euro 20,954 thousand as at 31 December 2015. The lower chargebacks of costs received for the temporary joint consortia working with the customers San Giovanni Addolorata Hospital in Rome and ASL (local health authority) 8 Arezzo were countered by the increase in commercial consulting for participation in tenders in relation to the procedures required by the new regulation on tenders.
Maintenance costs were up by Euro 376 thousand from Euro 3,757 thousand to Euro 4,133 thousand. This was basically due to greater maintenance expenses at the surgical instrument sterilisation centres and for machinery.
The item is broken down as follows:
| (thousands of Euros) | Year ended as at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Costs for directors' fees | (1,227) | (892) |
| Salaries and wages | (43,280) | (38,155) |
| Temporary work | (1,503) | (2,155) |
| Social security charges | (14,068) | (12,242) |
| Employee severance indemnity | (2,832) | (2,390) |
| Other costs | (200) | (38) |
| Total | (63,110) | (55,872) |
Personnel expense increased by Euro 7,238 thousand from Euro 55,872 thousand in 2014 to Euro 63,110 thousand in 2015. The rise in personnel expense compared to the same period in the previous year is related to the increase in wages and salaries as established in the National Collective Labour Agreement in two contractual instalments: the first starting in January 2015 and the second as of June 2015. In addition to these increases was the effect of the merger via incorporation of Lavanderia Industriale Z.B.M. S.p.A. and Si.Gi. Servizi Ospedalieri S.r.l. effective as of 1 January 2015 (comparing the 2014 Servizi Italia S.p.A. personnel costs added to those of the two merged companies, there was an increase of Euro 3,183 thousand) and new personnel hired at the surgical instrument sterilisation centres in Brescia and Udine.
The table below shows the average breakdown of personnel:
| As at 31 December | ||
|---|---|---|
| 2015 | 2014 | |
| Executives | 8 | 5 |
| Middle managers | 18 | 20 |
| White-collar staff | 143 | 133 |
| Blue-collar staff | 1,609 | 1,488 |
| Total | 1,778 | 1,646 |
The item is broken down as follows:
| (thousands of Euros) | Year ended as at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Tax-related expense | (170) | (149) |
| Contingent liabilities | (398) | (609) |
| Membership fees | (204) | (173) |
| Gifts to customers and employees | (118) | (167) |
| Other | (395) | (543) |
| Total | (1,285) | (1,641) |
The item is broken down as follows:
| (thousands of Euros) | Year ended as at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Amortisation of intangible assets | (1,264) | (337) |
| Depreciation of property, plant and equipment | (36,782) | (33,662) |
| Impairment of receivables | (634) | (610) |
| Other provisions | (87) | (64) |
| Total | (38,767) | (34,673) |
The increase in the amortisation of intangible assets refers mainly to the effects of the amortisation of the customer portfolio of the incorporated companies Lavanderia Industriale ZBM S.p.A. and Si.Gi. Servizi Ospedalieri S.r.l. and the effects of the recognition of the non-compete agreement stipulated with the previous CEO.
The 9.27% increase in the depreciation of property, plant and equipment was linked mainly to investments in linens and the increase of surgical instrument depreciation, whose relative impact increased due to the ramp-up phases of the new sterilisation contracts.
The increase in the item Impairment of receivables is attributable to the provision for the partial impairment of the amount due from several customers in relation to which bankruptcy proceedings are probable.
The item is broken down as follows:
| (thousands of Euros) | Year ended as at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Bank interest income | 3 | 2 |
| Default interest | 517 | 373 |
| Interest income on loans to third-party companies | 376 | 276 |
| Other financial income | 63 | 418 |
| Total | 959 | 1,069 |
Despite the overall improvement in collections, default interest was up following payment delays by some specific customers. The "interest income on loans" was up due to new loans granted, while the other financial income dropped sharply due to the collection of default interest relating to previous years in 2014.
The item is broken down as follows:
| (thousands of Euros) | Year ended as at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Interest expense and bank commission | (1,713) | (2,401) |
| Interest and expense to other lenders | (425) | (839) |
| Financial expense on severance indemnities | (150) | (281) |
| Other financial expense | (47) | (65) |
|---|---|---|
| Total | (2,335) | (3,586) |
The decrease in "Interest expense and bank commission" resulted from the cancellation of loans with higher rates and the subscription of new, lower-rate loans, as well as the renegotiation of rates on selfliquidating credit lines. The decrease in the item "Interest and expense to other lenders" was caused by the reduction in both the spreads renegotiated with the banks and the total amount transferred as part of without recourse factoring transactions. "Other financial expense" was essentially stable.
The item income and expense from equity investment is represented by dividends collected in 2015 for Euro 623 thousand. In detail, Euro 240 thousand was collected from the subsidiary, Centro Italia Servizi S.r.l., Euro 117 thousand from the investee company Prosa S.p.A. established for the handling of the Vaio - Fidenza (PR) hospital project and Euro 266 thousand as the portion of the reserve from Asolo Hospital Service S.p.A.
The item is broken down as follows:
| (thousands of Euros) | Year ended as at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Current taxes | (4,316) | (6,037) |
| Deferred tax assets/(liabilities) | 594 | 554 |
| Total | (3,722) | (5,483) |
The incidence of the taxes on the pre-tax result is reconciled with the theoretical rate in the table below:
| (thousands of Euros) | Year ended as at 31 December | |||||
|---|---|---|---|---|---|---|
| 2015 | Incidence | 2014 | Incidence | |||
| IRES (company earnings tax) reconciliation | ||||||
| Profit before tax from Income statement | 15,447 | 17,596 | ||||
| Theoretical taxes | 4,248 | 27.5% | 4,839 | 27.5% | ||
| Tax effects of the permanent differences: | ||||||
| on increases | 140 | 0.9% | 334 | 1.9% | ||
| on decreases | (1,784) | -11.6% | (1,753) | -10.0% | ||
| substitute taxes | 258 | 1.7% | 272 | 1.5% | ||
| Total effective IRES taxes | 2,861 | 16.3% | 3,692 | 21.0% | ||
| IRAP (regional business tax) | 861 | 5.6% | 1,791 | 10.2% | ||
| Total effective IRES and IRAP taxes | 3,722 | 24.1% | 5,483 | 31.2% |
The tax rate declined by roughly 7.1 percentage points from 31.2% in 2014 to 24.1% in 2015. The decrease in the tax charge was mainly determined by the new IRAP regulations introduced by the 2015 Stability Law which makes provision, from 1 January 2015, for the deduction, in addition to flatrate and analytical deductions relating to the cost of labour, of the amount relating to the difference between the total cost of labour (relating to open-ended contracts) and deductions due.
Servizi Italia S.p.A.'s transactions with subsidiaries, associates, jointly controlled companies and parent companies are entered into in compliance with the Regulations for related party transactions in force, and mainly relate to:
In terms of income, the financial position and cash flows, the main transactions are ordinary transactions concluded at arm's length or standard conditions, governed by dedicated contracts. These transactions consist of the accumulation of uniform transactions carried out starting from the reference year, in execution of a unitary plan, which are not individually qualifiable as of greater significance. In addition, considered on a cumulative basis, the group of these transactions activated during the reference year is not qualified as of greater significance. During the reference year, the final amount recognised in the financial statements was generated by the renewal of contracts in place or contracts activated during the period.
Income statement, statement of financial position and financial transactions with companies of the Servizi Italia Group in 2015 are presented below:
| (thousands of Euros) | 31 December 2015 | |||||
|---|---|---|---|---|---|---|
| Income statement | Sale of goods and services |
Purchase of goods and services |
Personnel expense |
Purchases of property, plant and equipment and intangible assets |
Other costs | Financial income |
| Coopservice S.Coop.p.A. (parent company) | 317 | 10,242 | - | 1 | - | - |
| Aurum S.p.A. (parent company) | - | - | - | - | - | - |
| Consorzio San Martino 2000 S.c.r.l. (subsidiary) | 3,073 | 5,258 | - | - | - | - |
| Consorzio Se.Sa.Tre. S.c.r.l. (subsidiary) | 4,981 | 7,073 | - | 6 | 4 | 28 |
| Servizi Italia Medical S.r.l. (subsidiary) | 131 | 1,793 | - | 18 | - | - |
| Centro Italia Servizi S.r.l. (associate) | 9 | 924 | - | - | - | - |
| Consorzio Co.Se.S. (associate) | - | 650 | - | - | - | - |
| SE.STE.RO. S.r.l. (associate) | 72 | 496 | - | - | 2 | - |
| PSIS S.r.l. (associate) | 106 | 34 | - | 26 | 5 | 56 |
| Amg S.r.l. (associate) | 314 | 878 | - | - | - | 3 |
| Ekolav S.r.l. (associate) | 4 | 1,354 | - | 1 | - | 2 |
| Steril Piemonte S.c.r.l. (associate) | 312 | 1,458 | - | - | - | 6 |
| Piemonte Servizi Sanitaria S.c.r.l. (associate) | - | 690 | - | - | - | - |
| Iniziative Produttive Piemontesi S.r.l. (associate) | - | 472 | - | - | - | - |
| SAS Sterilizasyon Servisleri A.Ş. (associate) | - | - | - | - | - | - |
| Shubhram Hospital Solutions Private Limited (associate) | - | - | - | - | - | - |
| Ankateks Turizm İnsaat Tekstil Temizleme Sanayi VE (associate) | - | - | - | - | - | - |
|---|---|---|---|---|---|---|
| Saniservice Sh.p.k. (associate) | 36 | - | - | - | - | 2 |
| Finanza & Progetti (associate) | - | - | - | - | - | - |
| Elettrica Gover S.r.l. (affiliated company) | - | 1 | - | 12 | - | - |
| Focus S.p.A. (affiliated company) | - | 2,502 | - | - | 13 | - |
| Archimede S.p.A. (affiliated company) | 5 | - | 1,118 | - | - | - |
| Electric System S.r.l. (affiliated company) | - | 1 | - | - | - | - |
| New Fleur S.r.l. (affiliated company) | 34 | 810 | - | - | - | - |
| Ad Personam S.r.l. (affiliated company) | - | 25 | - | - | - | - |
| Padana Emmedue S.r.l. (related party) | - | 288 | - | - | - | - |
| Padana Emmedue S.p.A. (related party) | - | 136 | - | - | - | - |
| Total | 9,394 | 35,085 | 1,118 | 64 | 24 | 97 |
| (thousands of Euros) | 31 December 2014 | |||||
|---|---|---|---|---|---|---|
| Income statement | Sale of goods and services |
Purchase of goods and services |
Personnel expense |
Purchases of property, plant and equipment and intangible assets |
Other costs |
Financial income |
| Coopservice S.Coop.p.A. (parent company) | 406 | 9,797 | - | 4 | 5 | - |
| Aurum S.p.A. (parent company) | - | - | - | - | - | - |
| Consorzio San Martino 2000 S.c.r.l. (subsidiary) | 3,094 | 5,260 | - | - | - | - |
| Consorzio Se.Sa.Tre. S.c.r.l. (subsidiary) | 5,003 | 6,924 | - | 4 | 9 | 48 |
| Servizi Italia Medical S.p.A. (subsidiary) | 80 | 8,802 | - | 10 | - | - |
| Lavanderia Industriale Z.B.M. S.p.A. (subsidiary) | 317 | 600 | - | - | - | - |
| Si.Gi. Servizi Ospedalieri S.r.l sole shareholder company (subsidiary) | - | 34 | - | - | 1 | - |
| Centro Italia Servizi S.r.l. (associate) | 9 | 983 | - | - | - | - |
| Consorzio Co.Se.S. (associate) | - | 626 | - | - | - | - |
| SE.STE.RO. S.r.l. (associate) | 70 | 505 | - | - | - | - |
| PSIS S.r.l. (associate) | 217 | - | - | 20 | - | 65 |
| Amg S.r.l. (associate) | 356 | 980 | - | - | - | 3 |
| Ekolav S.r.l. (associate) | - | 1,208 | - | 2 | - | 3 |
| Steril Piemonte S.c.r.l. (associate) | 311 | 1,621 | - | - | - | 11 |
| Piemonte Servizi Sanitaria S.c.r.l. (associate) | - | 702 | - | - | - | - |
| Iniziative Produttive Piemontesi S.r.l. (associate) | - | 656 | - | - | - | 1 |
| SAS Sterilizasyon Servisleri A.Ş. (associate) | 13 | - | - | - | - | - |
| Shubhram Hospital Solutions Private Limited (associate) | - | - | - | - | - | - |
| Elettrica Gover S.r.l. (affiliated company) | 1 | 19 | - | 116 | - | - |
| Focus S.p.A. (affiliated company) | - | 2,551 | - | - | 12 | - |
| Archimede S.p.A. (affiliated company) | - | - | 2,033 | - | - | - |
| Electric System S.r.l. (affiliated company) | - | 1 | - | - | - | - |
| New Fleur S.r.l. (affiliated company) | 17 | 1,365 | - | - | - | - |
| Ad Personam S.r.l. (affiliated company) | - | 26 | - | - | - | - |
| Total | 9,894 | 42,660 | 2,033 | 156 | 27 | 131 |
Aside from the figures shown above, as at 31 December 2015 income statement transactions with related parties include directors' fees of Euro 1,281 thousand and executive personnel expense of Euro 1,440 thousand. As at 31 December 2014, directors' fees amounted to Euro 927 thousand, while executive personnel expense came to Euro 1,067 thousand.
| (thousands of Euros) | 31 December 2015 | ||||||
|---|---|---|---|---|---|---|---|
| Statement of financial position | Amount of trade receivables |
Amount of trade payables |
Amount of financial receivables |
Amount of financial payables |
Amount of other liabilities |
||
| Coopservice S.Coop.p.A. (parent company) | 120 | 3,446 | - | - | - | ||
| Aurum S.p.A. (parent company) | - | - | - | - | - | ||
| Consorzio San Martino 2000 S.c.r.l. (subsidiary) | 1,639 | 1,082 | - | - | - | ||
| Consorzio Se.Sa.Tre. S.c.r.l. (subsidiary) | 7,651 | 3,204 | 1,831 | - | - | ||
| Servizi Italia Medical S.r.l. (subsidiary) | 102 | 532 | - | - | - | ||
| Centro Italia Servizi S.r.l. (associate) | 9 | 322 | - | - | - | ||
| Consorzio Co.Se.S. (associate) | - | 432 | - | - | - | ||
| SE.STE.RO. S.r.l. (associate) | 67 | 549 | - | - | - | ||
| PSIS S.r.l. (associate) | 172 | 108 | 3,856 | - | - | ||
| Amg S.r.l. (associate) | 149 | 425 | 502 | - | - | ||
| Ekolav S.r.l. (associate) | 21 | 552 | 172 | - | - | ||
| Steril Piemonte S.c.r.l. (associate) | 160 | 704 | 1,156 | - | - | ||
| Piemonte Servizi Sanitaria S.c.r.l. (associate) | - | 390 | - | - | - | ||
| Iniziative Produttive Piemontesi S.r.l. (associate) | 20 | 230 | 91 | - | - | ||
| SAS Sterilizasyon Servisleri A.Ş. (associate) | - | - | - | - | - | ||
| Shubhram Hospital Solutions Private Limited (associate) | 9 | - | - | - | - | ||
| Ankateks Turizm İnsaat Tekstil Temizleme Sanayi VE (associate) | - | - | - | - | - | ||
| Saniservice Sh.p.k. (associate) | 36 | - | 164 | - | - | ||
| Finanza & Progetti (associate) | - | - | - | - | - | ||
| Elettrica Gover S.r.l. (affiliated company) | - | - | - | - | - | ||
| Focus S.p.A. (affiliated company) | - | 2 | - | - | - | ||
| Archimede S.p.A. (affiliated company) | - | 142 | - | - | - | ||
| Electric System S.r.l. (affiliated company) | - | - | - | - | - | ||
| New Fleur S.r.l. (affiliated company) | 72 | 637 | - | - | - | ||
| Ad Personam S.r.l. (affiliated company) | - | 1 | - | - | - | ||
| Padana Emmedue S.r.l. (related party) | - | 96 | - | - | - | ||
| Padana Emmedue S.p.A. (related party) | - | 375 | - | - | - | ||
| Total | 10,227 | 13,229 | 7,772 | - | - |
| (thousands of Euros) | 31 December 2014 | |||||||
|---|---|---|---|---|---|---|---|---|
| Statement of financial position | Amount of trade receivables |
Amount of trade payables |
Amount of financial receivables |
Amount of financial payables |
Amount of other liabilities |
|||
| Coopservice S.Coop.p.A. (parent company) | 346 | 4,171 | - | - | - | |||
| Aurum S.p.A. (parent company) | - | - | - | - | - | |||
| Consorzio San Martino 2000 S.c.r.l. (subsidiary) | 2,756 | 2,947 | - | - | - | |||
| Consorzio Se.Sa.Tre. S.c.r.l. (subsidiary) | 8,471 | 3,208 | 2,882 | - | - | |||
| Servizi Italia Medical S.p.A. (subsidiary) | 61 | 3,861 | - | - | - | |||
| Lavanderia Industriale Z.B.M. S.p.A. (subsidiary) | 306 | 973 | - | - | - | |||
| Si.Gi. Servizi Ospedalieri S.r.l sole shareholder company (subsidiary) |
1 | 34 | - | - | - | |||
| Centro Italia Servizi S.r.l. (associate) | 8 | 637 | - | - | - | |||
| Consorzio Co.Se.S. (associate) | - | 314 | - | - | - | |||
| SE.STE.RO. S.r.l. (associate) | 172 | 507 | - | - | - | |||
| PSIS S.r.l. (associate) | 194 | 34 | 3,800 | - | - | |||
| Amg S.r.l. (associate) | 208 | 488 | 500 | - | - | |||
| Ekolav S.r.l. (associate) | 120 | 522 | 170 | - | - |
| Steril Piemonte S.c.r.l. (associate) | 109 | 507 | 1,150 | - | - |
|---|---|---|---|---|---|
| Piemonte Servizi Sanitaria S.c.r.l. (associate) | - | 416 | - | - | - |
| Iniziative Produttive Piemontesi S.r.l. (associate) | 1 | 196 | 90 | - | - |
| SAS Sterilizasyon Servisleri A.Ş. (associate) | - | - | - | - | - |
| Shubhram Hospital Solutions Private Limited (associate) | 2 | - | - | - | - |
| Elettrica Gover S.r.l. (affiliated company) | 2 | 113 | - | - | - |
| Focus S.p.A. (affiliated company) | - | - | - | - | - |
| Archimede S.p.A. (affiliated company) | - | 273 | - | - | - |
| Electric System S.r.l. (affiliated company) | - | - | - | - | - |
| New Fleur S.r.l. (affiliated company) | 25 | 494 | - | - | - |
| Ad Personam S.r.l. (affiliated company) | - | 10 | - | - | - |
| Total | 12,782 | 19,705 | 8,592 | - | - |
The most significant dealings, for which the transactions of the individual contracts are part of the Company's ordinary business operations, are broken down by Company below.
Revenues from sales and the associated trade receivables as at 31 December 2015 refer primarily to linen and textile washing services provided to the parent company.
Servizi Italia S.p.A. acquires the following from the parent company: (i) road transport of textile items and/or surgical instruments for Euro 8,779 thousand; (ii) wardrobe management services at customers for Euro 536 thousand; (iii) the use of third-party personnel for Euro 18 thousand; (iv) technical cleaning services provided at certain production sites/operating locations of Servizi Italia and security/surveillance services provided in some locations through night patrols and alarm systems, for Euro 677 thousand.
As at 31 December 2015, revenues from sales of goods and services and the related trade receivables due from Consorzio San Martino 2000 S.c.r.l. refer to the services provided by Servizi Italia S.p.A. for the execution of the contract outstanding with the San Martino hospital in Genoa. By contrast, purchase costs and the related trade payables regard the chargeback of costs incurred by the Consortium, which are divided amongst the shareholders on the basis of their shareholdings.
As at 31 December 2015, revenues due from Consorzio Se.Sa.Tre. S.c.r.l. refer to the services provided by Servizi Italia S.p.A. for the execution of the contract outstanding with the Treviso Local Health Authority 9 in the Veneto Region. By contrast, purchase costs and the related trade payables regard the chargeback of costs incurred by the Consortium, which are divided amongst the shareholders on the basis of their shareholdings. The value of the financial receivables refer to an interest-bearing loan, granted pro rata by the shareholders Servizi Italia S.p.A. and Servizi Ospedalieri S.p.A., in order to guarantee the Consortium the economic means necessary for carrying out its business activities.
Purchases of goods and services and the related trade payables due in relation to Servizi Italia Medical S.r.l. are primarily for the purchase of single-use medical device supplies for surgical procedures (Euro 1,793 thousand).
As at 31 December 2015, revenues from sales of goods and services and the related trade receivables due from Centro Italia Servizi S.r.l. refer to the sale of assets to be used in the wash-hire business carried out by this associate at the Arezzo hospital. On the other hand, purchase costs and the relative trade payables regard the charge-back of costs incurred by Centro Italia Servizi S.r.l., which are divided amongst the shareholders on the basis of their shareholdings.
As at 31 December 2015, revenues from the sale of goods and services and purchase costs vis-à-vis Consorzio CO.SE.S S.c.r.l. refer to the chargeback of costs incurred by the Company and by the Consortium for surgical instrument sterilisation activities at the San Giovanni Addolorata hospital in Rome.
Purchases of goods and services and the related trade payables due in relation to Se.Ste.Ro. S.r.l. are primarily for the sterilisation service for Bambino Gesù Paediatric Hospital in Rome.
As at 31 December 2015, revenues from the sale of goods and services due from PSIS S.r.l. refer to the administrative management service charge-back. The financial receivable relates to a loan granted for Euro 3,856 thousand to support current investments.
At the end of 2015, economic transactions were mainly for external laundering services at the Asti, Casale Monferrato and Vercelli and Turin 3 LHAs (Euro 869 thousand); the revenues derive from linen sterilisation services and the supply of single-use medical devices for surgical procedures. The financial receivables of Euro 502 thousand are for internal financing granted to support current investments.
Purchases of goods and services and the related trade payables due in relation to Ekolav S.r.l. are primarily for laundering (Euro 1,047 thousand) and transport (Euro 89 thousand) services. The financial receivable is for a Euro 172 thousand loan granted to the associate.
As at 31 December 2015, revenues from the sale of goods and services and purchase costs linked to Steril Piemonte S.c.r.l. refer to the chargeback of costs incurred by the Company and by the Consortium for surgical instrument sterilisation activities at ASL (Local Health Authority) AL Piedmont Region.
As at 31 December 2015, income statement and statement of financial position transactions with Piemonte Servizi Sanitari S.c.r.l. refer to the handling of tenders relating the Novara and Turin 4 LHAs.
Purchases of goods and services and the related trade payables due in relation to Iniziative Produttive Piemontesi S.r.l., mainly refer to the chargebacks on supplies of sterile kits for the Ordine Mauriziano hospital in Turin and the Desio & Vimercate hospital for Euro 472 thousand. The financial receivable is for a Euro 91 thousand loan granted to the associate.
Focus S.p.A.
Transactions with Focus S.p.A. relate to lease agreements on the Castellina di Soragna, Montecchio Precalcino, Ariccia and Genoa Bolzaneto properties. The first agreements are for six years and renewable for another six, while the Genoa Bolzaneto agreement is for fourteen years and renewable for another six. Servizi Italia S.p.A.'s transactions with Focus S.p.A. in relation to lease agreements are entered into in compliance with the Regulations for related party transactions in force. The total consideration for leased properties amounted to Euro 2,502 thousand in 2014.
Transactions with Archimede S.p.A. are associated with temporary staff leasing service agreements.
Transactions with New Fleur S.r.l. are primarily for laundry services rendered.
Transactions with Padana Emmedue S.p.A. relate to six-year lease agreements on the Travagliato and Podenzano properties, which are renewable for another six years. The total consideration for leased properties amounted to Euro 288 thousand in 2015. Servizi Italia S.p.A.'s transactions with Padana Emmedue S.p.A. in relation to lease agreements are entered into in compliance with the Regulations for related party transactions in force.
Servizi Italia S.p.A. purchases linen washing services from Padana Emmedue S.r.l. In 2015, the relative consideration amounted to Euro 136 thousand.
There are no income components deriving from events or transactions whose occurrence is nonrecurrent or from those transactions or events which do not take place frequently during the usual performance of the business, as defined by point 2 of the Consob resolution No. 15559 dated 27 July 2006.
During the year, there were no atypical and/or unusual transactions as defined in Consob communication No. 6064293 dated 28 July 2006.
On 22 April 2015, the Shareholders' Meeting revoked the programme for the purchase and sale of treasury shares approved by the Shareholders' Meeting on 22 April 2014, and approved a new plan, the launch of which was approved by the Board of Directors on 22 April 2015.
The details of the programme are provided below pursuant to Art. 144-bis of the Issuers' Regulations. The plan for the purchase and sale of treasury shares complies with the need to gain access to opportunities for the efficient investment of company liquidity and to have the possibility of using it for strategic transactions and/or to complete subsequent share purchase and sale transactions, to the extent allowed by permitted market practices. The plan will have a maximum duration of 18 months as from 22 April 2015, date of issue of the authorisation by the shareholders' meeting. The maximum number of shares which can be purchased, not exceeding 20% of the company's share capital as at the shareholder resolution date, is 5,674,297 ordinary shares. The purchases and sales of treasury shares will be carried out on the organised market, in compliance with the applicable legislative and regulatory provisions, according to the operating formalities established by Article 132 of the CFL, Article 144 bis of the Issuers' Regulations, in compliance with the EC Regulation 2273/2003 dated 22 December 2003 and in observance of the shareholders' meeting resolution dated 22 April 2015. Treasury shares will be purchased for a maximum equivalent value to the extent to which can be covered by distributable reserves and available reserves as set forth in the latest duly approved financial statements. The treasury shares will be purchased at a minimum purchase price of no less than 20% of the weighted average of official share prices recorded by Borsa Italiana in the 3 days preceding each individual transaction and at a maximum purchase price of no higher than 20% of the weighted average of official share prices recorded by Borsa Italiana in the 3 days preceding each individual transaction.
The intermediary engaged to execute the treasury shares purchase programme is INTERMONTE SIM S.p.A.
As at 31 December 2015, the number of treasury shares in the portfolio amounted in total to 255,616 shares, corresponding to 0.8326% of the share capital.
On 11 March 2016, the Company announced that up until 11 March 2016 it had acquired 279,891 treasury shares on the organised market managed by Borsa Italiana, equal to 0.912% of the share capital.
Remuneration paid for 2015 to the members of the management and audit bodies, the general managers and the executives with strategic responsibilities, is summarised below. All the amounts are expressed in thousands of Euros.
| Remuneration as at 31 December 2015 | |
|---|---|
| Office within Servizi Italia S.p.A. | (thousands of Euros) |
| Directors | 985* |
| Board of Statutory Auditors | 65 |
|---|---|
| Supervisory Body | 66 |
* In 2015, the board was re-appointed, so certain directors left office on 22 April 2015, and other directors entered office on the same date, for a term lasting until the approval of the financial statements as at 31/12/2017.
For further details relating to the remuneration paid to the members of the management and audit bodies in office and no longer in office, the general managers and the executives with strategic responsibilities identified by the Board of Directors, please see the Remuneration Report drawn up in accordance with Article 123-ter of the CFL for 2015.
There were no payment plans based on financial instruments as at 31 December 2015.
In 2015, the Shareholders' Meeting of 22 April 2015 engaged Deloitte & Touche S.p.A. to audit the individual and consolidated financial statements of Servizi Italia for the years 2015-2023 after the expiry of the engagement of PriceWaterhouseCoopers S.p.A.. The fees for the services provided by the Independent auditing firm and the bodies belonging to the network of the same are illustrated below:
| Type of services | Party providing the services | Recipient | Fees |
|---|---|---|---|
| Accounts audit | Deloitte & Touche S.p.A | Servizi Italia S.p.A. | 70,775 |
| Accounts audit | Deloitte & Touche S.p.A | Subsidiaries | 16,625 |
| Accounts audit | Deloitte & Touche S.p.A. network | Subsidiaries | 38,212 |
| Advisory services | Deloitte & Touche S.p.A. network | Servizi Italia S.p.A. | 34,000 |
| Advisory services | Deloitte & Touche S.p.A. network | Subsidiaries | 135,879 |
| Total | 295,491 |
On 20 January 2015, the Company announced that the acquisition of the remaining 50% of the share capital of the company Lavsim Higienização Têxtil S.A. ("Lavsim") had been completed, already invested in as from 2 July 2012 by Servizi Italia S.p.A. through the subsidiary SRI Empreendimentos e Participações Ltda.
On 26 February 2015, the Company disclosed that it had drawn up the deeds for the merger via incorporation of the wholly-owned subsidiaries Si.Gi. Servizi Ospedalieri S.r.l. (sole shareholder company) and Lavanderia Industriale Z.B.M. S.p.A. within Servizi Italia S.p.A. The statutory effectiveness of the merger applied as from 1 April 2015. As from that date, the absorbing company (Servizi Italia S.p.A.) took over all the income and expense-generating legal relations relating to the absorbed companies, all the directors and officers of the absorbed companies fell from office and all the powers of attorney previously issued ceased.
On 22 April 2015, the Shareholders' Meeting approved the financial statements as at 31 December 2014 and the distribution of a gross dividend of Euro 0.16 per share outstanding on the coupon date, excluding treasury shares. Payment took place on 29 April 2015, with a coupon payment on 27 April 2015.
At the same meeting, the Shareholders:
The Shareholders' Meeting authorised the Board of Directors to purchase and avail treasury shares, subject to revocation of the resolution of 22 April 2014. The Shareholders' Meeting authorised the Board of Directors to purchase and sell treasury shares. The plan responds to the need to gain access to opportunities for the efficient investment of company liquidity and to have the possibility of using it for strategic transactions and/or to complete subsequent share purchase and sale transactions, to the extent allowed by permitted market practices. The authorisation is for a maximum number of Servizi Italia S.p.A. ordinary shares equating to 20% of the share capital, taking into account the treasury shares already held, for a period of 18 months as of the Shareholders' Meeting resolution. The purchase transactions will be carried out on the market at a price of up to 20% more or less than the weighted average official prices in the 3 days preceding the individual transaction.
As announced on 1 April 2015, as of 22 April 2015 Mr Luciano Facchini is no longer director of the Italian subsidiaries. In the interest of the Group, Servizi Italia S.p.A. entered into a non-compete and confidentiality agreement with Mr Facchini, under which he agreed not to carry out any activity and not to do business in competition with the activities carried out by Servizi Italia. The non-compete and confidentiality agreement became effective on 22 April 2015 and will expire after 24 (twenty-four) months. Servizi Italia will pay Luciano Facchini the gross sum of Euro 1,000,000.00 (one million/00), with no interest, in two instalments.
On 22 April, the Board of Directors:
On 13 May 2015, based on the criteria of the Borsa Italiana Corporate Governance Code, the Board of Statutory Auditors and the Board of Directors checked the independence of the directors and also carried out the annual check of the requirements for remaining in the STAR segment pursuant to the Borsa Italiana Issuers' Regulations and the instructions to the Issuers' Regulations. The Company sent the required information within the terms set forth by Borsa Italiana.
Notice was received on 26 May 2015 of the conclusion of the preliminary investigations of criminal proceedings for an alleged offence pursuant to Italian Legislative Decree 231 of 2001 with which a company director, a former director and the Company have been charged, relating to the awarding of a tender for the assignment of the nine-year contract of the AOU Policlinico of Modena, so-called "Global Service", which took place by means of resolution of 19 December 2008, to the RTI (temporary joint consortium) established by Coopservice Soc.Coop.p.A., in its capacity as lead contractor, and other companies including Servizi Italia S.p.A., Padana Everest S.r.l. and Lavanderia Industriale ZBM S.p.A. (companies actually merged by incorporation in Servizi Italia S.p.A.). The Company, which is only involved in said proceedings for the purposes of the administrative liability of the legal entities pursuant to Italian Legislative Decree 231 of 2001, confirms that it is completely uninvolved in the events contested and promptly appointed a defence counsel to undertake any necessary action to prove this.
As part of these criminal proceedings, the subsidiary Servizi Italia Medical S.r.l. was also investigated for an alleged offence, pursuant to Italian Legislative Decree 231 of 2001, with which a former director has been charged, in relation to the awarding of the supply, based on piecework contracts, of single procedure kits, which took place by means of resolution dated 28 December 2009. The subsidiary, only involved in said proceedings for the purposes of the administrative liability of the legal entities pursuant to Italian Legislative Decree 231 of 2001, confirms that it is completely uninvolved in the events contested and promptly appointed a defence counsel to undertake any necessary action to prove this.
On 27 July 2015, the Company announced the signing of the agreement for the purchase of a stake in Ankateks Turizm Inşaat Tekstil Temizleme San. Ve Tic. Ltd. Şti ("Ankateks" or "Ankateks Group"), a leading Turkish operator operating under the Ankara Laundry brand in the linen washing sector for healthcare structures, predominantly in the Ankara and Izmir areas. For more information, please refer to the press release available on Company's website.
In the course of July 2015, production activities were launched at the industrial laundry facility in New Delhi, India, which has recorded increasing volumes of linen wash-hire services.
On 13 October 2015, the tax administration sent a notice of its report on findings regarding direct taxes, VAT and IRAP for the year 2010 with respect to Padana Everest S.r.l., which was incorporated into Servizi Italia S.p.A. in 2012, claiming a higher tax base on the presumption that income was unduly reduced in connection with the detaxation of investments set forth in Decree Law No. 78 of 1 July 2009 (also known as "Tremonti-ter"). On 19 February 2016, Servizi Italia submitted an appeal against the notice, asking for it to be cancelled as it deems the tax claim to be illegitimate and objectively groundless.
On 15 October 2015, the Company announced the closing for the purchase of a 40.0% stake in Ankateks Turizm Inşaat Tekstil Temizleme San. Ve Tic. Ltd. Şti, a leading Turkish operator operating under the "Ankara Laundry" brand in the linen washing sector for healthcare structures, predominantly in the areas of Ankara and - through the subsidiary Ergülteks Temizlik Tekstil Ltd. Şti - Izmir. The transaction, the signing of which was announced on 27 July, consisted of the purchase of a stake of 40.0% in Ankateks for a preliminary consideration fixed at 16.5 million Turkish Lira (around Euro 4.9 million at the EUR/TRY exchange rate of 3.3473 at 14 October 2015). The stake was purchased by making recourse to bank borrowing. A portion of the price was paid in cash and a portion was withheld by Servizi Italia as a guarantee. The final transaction price will be recalculated and will be based on the 2016 profit of Ankateks and of the subsidiary Ergülteks. On approval of the 2016 results, moreover, Servizi Italia will have the chance to obtain control of the Group through the acquisition of an additional 15.0% of Ankateks's share capital (rising to a stake of 55.0%) based on the same pricing criterion. With reference to Ankateks's governance, Servizi Italia appoints two of the five members of the Board of Directors, which may rise to three if Servizi Italia increases its stake to 55.0% in accordance with the procedure mentioned above. With reference to the provisions of art. 71 of the Issuers' Regulations, the transaction is deemed "not significant" in light of the parameters laid out under applicable regulations.
On 2 November 2015, further to the closure of the Third and last Exercise Period (from 1 October until 30 October 2015) of the "Warrant Servizi Italia S.p.A. 2012 – 2015", the Company announced that 9,311,120 Warrants had been exercised and consequently 2,327,780 newly-issued ordinary Servizi Italia shares had been subscribed (at a ratio of 1 new share for each 4 warrants exercised) at a price of Euro 3.30 each, admitted for listing on the Borsa Italiana screen-based stock market (MTA), with a par value of Euro 1.00 each, with regular dividend rights and the same characteristics as the ordinary Servizi Italia shares in circulation as of the issue date (the "Conversion Shares"), for a total equivalent value of Euro 7,681,674. Due to the closure of the Third Exercise Period, the 2012-2015 Warrants are no longer exercisable or traded on the Regulated Market.
Further to the afore-mentioned subscriptions, the new share capital of Servizi Italia therefore amounted to Euro 30,699,266, represented by 30,699,266 ordinary shares with a par value of Euro 1.00 each. The related certification pursuant to Article 2444 of the Italian Civil Code was filed care of the Parma Business Register as of the same date.
On 13 November 2015, with the favourable opinion of the Related Party Transactions Committee, the Servizi Italia S.p.A. Board of Directors also approved the amendment to the Regulations for Related Party Transactions, which were updated to take into account the company's changed organisational needs, with a view to boosting the efficiency of information flows and examination procedures relating to related party transactions.
On 14 December 2015, the company announced that it had entered into a contract that it was awarded - along with other partners with which it established an ad hoc company in Albania - for the ten-year concession by the Albania Ministry of Health for the following services: (i) sterilisation, maintenance and rental of surgical instruments, (ii) re-usable material sterilisation management, (iii) the supply of single-use medical devices and other accessory services at all state and regional hospitals in Albania. For more information, please refer to the press release available on the Company's website.
On 23 December 2015, the Company announced that it had entered into an acquisition agreement and as a result acquired 100% of the Brazilian company Aqualav Serviços De Higienização Ltda, one of the leading market operators in the State of São Paulo (Brazil) in the linen washing segment for healthcare structures. In agreement between the parties, Servizi Italia acquired 100% of the company from the seller in exchange for consideration of R\$ 13.6 million (approximately Euro 3.1 million at the Euro/R\$ exchange rate of 4.37292 at 22 December 2015), without prejudice to adjustments to be applied as a result of the precise calculation of the net financial position, which must be determined by the end of January 2016. A portion of the price was paid in cash and a portion was withheld by Servizi Italia as a guarantee for any indemnities, contingent liabilities and the price adjustment mechanism. As part of the negotiation, Servizi Italia also obtained real estate guarantees provided by the seller to cover potential future liabilities not associated with Servizi Italia's management. The shareholdings were acquired via the wholly owned subsidiary SRI Empreendimentos e Participações L.t.d.a and the acquisition was financed by bank borrowings. With reference to the provisions of art. 71 of the Issuers' Regulations, the transaction is deemed "not significant" in light of the parameters laid out under applicable regulations. For more information, please refer to the press release available on the Company's website.
On 23 December 2015, the Servizi Italia S.p.A. Board of Directors approved the update of the Organisation, Management and Control Model prepared pursuant to Italian Legislative Decree No. 231 of 8 June 2001 to include the new types of crime introduced. The updated Model is available on the Company's website in the Sustainability section.
On 28 December 2015, the Company announced its acquisition of 50.0% of the share capital of Finanza e Progetti S.p.A. from Lend Lease Cemea Investments B.V., an Australian multinational company working in the infrastructure segment, operating in Italy via the subsidiary Lend Lease S.r.l., as well as its signing of a contract for the assignment of wash-hire and sterilisation services and the maintenance and rental of textiles and surgical instruments at Treviso LHA 9 starting in January 2018 for a period of 15 years (until 2032). For the acquisition of 50.0% of Finanza e Progetti, the parties agreed on a price of Euro 4,000,000.00 (four million/00), defined by using potential cash flows expected to arise from the Company's activities as a reference. To support the activities of Ospedal Grando in the Treviso Cittadella Sanitaria project, Servizi Italia also committed to providing additional financial resources (in the form of a share capital increase or shareholder loan) to Finanza e Progetti totalling up to Euro 8.0 million, expected to be paid out over the next 7 years. The outlays will be financed by Servizi Italia via bank borrowings. Pursuant to Italian Antitrust Authority communication dated 5 August 2013 and the amendments made to Art. 16 of Italian Law No. 287/90 and Italian Decree Law 1/2012, this acquisition did not trigger the obligation to notify the Antitrust Authority; on the basis of Art. 71 of the Issuers' Regulations, this acquisition is "not significant" considering the parameters set forth in applicable law. For more information, please refer to the press release available on the Company's website.
The main characteristics of the contracts awarded during the year, which have an annual contract value of more than Euro 50 thousand, are provided below:
| Customer | Service provided | Duration | Contract value per year (thousands of |
|---|---|---|---|
| years | Euros) | ||
| AAS 1 Triestina – Trieste (awarded as part of a temporary joint consortium) |
Linen wash-hire and linen store support services. | 1.25 | 107 |
| Azienda Provinciale per i Servizi Sanitari della Provincia di Trento (awarded as part of a temporary joint consortium) |
Linen wash-hire service. | 4.33 | 3,487 |
| Azienda Ospedaliera della Provincia di Pavia (in compliance with the procedure fulfilled by Azienda Ospedaliera Mellino Mellini di Chiari Brescia) |
Linen wash-hire service. | 3.7 | 1,892 |
| ASP Opera Pia Coianiz – Tarcento (UD) |
Supply and reconditioning of sanitary linen. | 4 | 129 |
| Istituto Europeo di Oncologia S.r.l. - Milan (awarded as part of a temporary joint consortium) |
Linen wash-hire service at Istituto Europeo di Oncologia (IEO) and Centro Cardiologico Monzino (CCM) in Milan. |
5 | 843 |
| Azienda Ospedaliera San Carlo di Milano |
Integrated rental, reconditioning and logistics service relating to textile devices and mattresses. |
3 | 1,046 |
| ESTAR - Pisa | Linen wash-hire service. | 5 | 280 |
| Azienda Ospedaliera Ospedali Riuniti Marche Nord Pesaro |
Linen wash-hire service, flat and packed linen, mattresses, cushions, mattress covers, wool blankets, sterile sets in trilaminate and microfibre fabric. |
3 | 443 |
| Azienda Ospedaliera Carlo Poma di Mantova |
Integrated rental, reconditioning and logistics service relating to textile devices |
4 | 3,156 |
| ASL 4 Chiavarese | Linen wash-hire service. | 1 | 1,080 |
| Azienda Ospedaliera Ospedale di Circolo di Busto Arsizio* |
Surgical instrument sterilisation, maintenance and rental service, inclusive of works to complete the sterilisation centre. |
8 | 1,382 |
| Azienda Ospedaliera Ospedale di Circolo di Busto Arsizio* |
Linen wash-hire service. | 6 | 1,304 |
| Azienda Ospedaliera della Provincia di Lodi* (awarded as part of a temporary joint consortium) |
Linen and packed linen wash-hire service. | 6 | 106 |
| Azienda Ospedaliera Ospedale di Circolo di Melegnano |
Wash-hire, reconditioning and logistics service relating to textile devices and mattresses. |
4 | 1,294 |
*New Customer
On 29 February 2016, a binding agreement was entered into for the acquisition of 100.0% of a newly incorporated company to be named "Tintoria Lombarda Divisione Sanitaria S.r.l.", to which the operations business unit of the company Tintoria Lombarda di Fasoli Aldo S.p.A., one of the main Italian linen washhire companies for healthcare facilities, will be transferred. The finalisation of this transaction, the closing of which is planned for June 2016, is subject to a series of conditions precedent, including the completion of the union communication and consultation procedure regarding the contribution and the acquisition of consent from certain commissioning bodies for wash-hire contracts. Pursuant to Italian Antitrust Authority communication dated 5 August 2013 and the amendments made to Art. 16 of Italian Law No. 287/90 and Italian Decree Law 1/2012, this acquisition did not trigger the obligation to notify the Antitrust Authority; on the basis of Art. 71 of the Issuers' Regulations, this acquisition is "not significant" considering the parameters set forth in applicable law. For more information, please refer to the press release available on the Company's website.
On 11 March 2016, the Company announced that up until 11 March 2016 it had acquired 279,891 treasury shares on the organised market managed by Borsa Italiana, equal to 0.912% of the share capital.
At the date of approval of the draft financial statements, the Board of Directors called a meeting with the following item on the agenda: the exercise of the mandate granted by the Extraordinary Shareholders' Meeting on 26 September 2014 pursuant to Art. 2443 of the Italian Civil Code to carry out a divisible share capital increase against payment for an overall maximum amount of Euro 4,000,000.00, inclusive of any share premium, with the exclusion of the purchase option as per Article 2441, paragraph 4, second section of the Italian Civil Code, reserved for Steris UK Holding Limited, by means of the issue of up to 1,150,000 new ordinary shares with a par value of Euro 1 each, with the same characteristics as those outstanding. For further information, please refer to the documentation concerning the shareholders' meeting of 26 September 2014, the "Lock-up" shareholders' agreement and the press releases of 26 September and 6 October 2014 and subsequent communications available on the Company website.
The Chairman of the Board of Directors (Roberto Olivi)
Castellina di Soragna, 14 March 2016
In consideration of the provisions of Art. 154-bis, paragraphs 3 and 4 of Italian Legislative Decree No. 58 of 24 February 1998, the undersigned Enea Righi, in his capacity as CEO, and Ilaria Eugeniani, in her capacity as Financial Reporting Manager of Servizi Italia S.p.A., certify:
It is also hereby stated that the separate financial statements as at 31 December 2015:
The Directors' report includes a reliable analysis of the operating performance and result, as well as of the issuer's situation, together with a description of the main risks and uncertainties it is exposed to.
The CEO
Enea Righi
The Financial Reporting Manager
Ilaria Eugeniani
Independent auditors' report on the separate financial statements of Servizi Italia S.p.A.
SERVIZI ITALIA S.p.A. Registered Office Via S. Pietro, 59/b 43019 Castellina di Soragna (PR) Share Capital: € 30,699,266 fully paid-up Tax code and Parma Business Register No.: 08531760158 Certified email: [email protected] Tel. +390524598511 Fax +390524598232 www.si-servizitalia.com
| (thousands of Euros) | of which | ||||
|---|---|---|---|---|---|
| Notes | 31 December 2015 |
with related parties (Note 8) |
31 December 2014 |
of which with related parties (Note 8) |
|
| ASSETS | |||||
| Non-current assets | |||||
| Property, plant and equipment | 6.1 | 120,736 | - | 129,724 | - |
| Intangible assets | 6.2 | 3,473 | - | 3,471 | - |
| Goodwill | 6.3 | 42,483 | - | 42,602 | - |
| Equity-accounted investments | 6.4 | 19,051 | - | 9,966 | - |
| Equity investments in other companies | 6.5 | 3,542 | - | 3,551 | - |
| Financial receivables | 6.6 | 3,234 | 162 | 2,714 | - |
| Deferred tax assets | 6.7 | 1,800 | - | 1,382 | - |
| Other assets | 6.8 | 6,108 | - | 4,067 | - |
| Total non-current assets | 200,427 | 197,477 | |||
| Current assets | |||||
| Inventories | 6.9 | 4,409 | - | 4,295 | - |
| Trade receivables | 6.10 | 74,746 | 1,139 | 76,169 | 1,392 |
| Current tax receivables | 6.11 | 2,478 | - | 286 | - |
| Financial receivables | 6.12 | 8,067 | 5,779 | 7,791 | 5,710 |
| Other assets | 6.13 | 9,241 | - | 6,397 | - |
| Cash and cash equivalents | 6.14 | 7,082 | - | 5,178 | - |
| Total current assets | 106,023 | 100,116 | |||
| TOTAL ASSETS | 306,450 | 297,593 | |||
| SHAREHOLDERS' EQUITY AND LIABILITIES | |||||
| Group shareholders' equity | |||||
| Share capital | 6.15 | 30,444 | - | 27,906 | - |
| Other reserves and retained earnings | 6.15 | 78,543 | - | 68,903 | - |
| Profit (loss) for the year | 12,728 | - | 13,077 | - | |
| Total shareholders' equity attributable to shareholders of the | 121,715 | 109,886 | |||
| parent Total shareholders' equity attributable to non-controlling interests |
379 | 1,702 | |||
| TOTAL SHAREHOLDERS' EQUITY | 6.15 | 122,094 | 111,588 | ||
| LIABILITIES | |||||
| Non-current liabilities | |||||
| Due to banks and other lenders | 6.16 | 36,111 | - | 28,258 | - |
| Deferred tax liabilities | 6.17 | 1,867 | - | 2,265 | - |
| Employee benefits | 6.18 | 9,989 | - | 9,805 | - |
| Provisions for risks and charges | 6.19 | 2,277 | - | 126 | - |
| Other financial liabilities | 6.20 | 3,208 | - | 6,194 | - |
| Total non-current liabilities | 53,452 | 46,648 | |||
| Current liabilities | |||||
| Due to banks and other lenders | 6.16 | 46,191 | - | 42,791 | - |
| Trade payables | 6.21 | 65,429 | 8,607 | 64,675 | 9,095 |
| Current tax payables | 6.22 | 365 | - | 1,023 | - |
| Employee benefits | 6.18 | - | - | 1,050 | - |
| Other financial liabilities | 6.23 | 1,078 | - | 5,799 | - |
| Other payables | 6.24 | 17,841 | - | 24,019 | - |
| Total current liabilities | 130,904 | - | 139,357 | - | |
| TOTAL LIABILITIES | 184,356 | 186,005 | |||
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 306,450 | 297,593 |
| (thousands of Euros) | Notes | 31 December 2015 |
of which with related parties (Note 8) |
31 December 2014 |
of which with related parties (Note 8) |
|---|---|---|---|---|---|
| Revenues from sales | 7.1 | 229,983 | 997 | 234,347 | 1,068 |
| Other income | 7.2 | 5,372 | 568 | 5,838 | 725 |
| Raw materials and consumables | 7.3 | (23,775) | (53) | (27,194) | (32) |
| Costs for services | 7.4 | (72,881) | (21,456) | (72,722) | (21,642) |
| Personnel expense | 7.5 | (73,398) | (4,255) | (71,442) | (4,777) |
| Other costs | 7.6 | (1,652) | (20) | (2,001) | (19) |
| Depreciation, amortisation, impairment and provisions | 7.7 | (47,084) | - | (43,647) | - |
| Operating profit | 16,565 | 23,179 | |||
| Financial income | 7.8 | 3,315 | 69 | 1,350 | 83 |
| Financial expense | 7.9 | (3,303) | - | (5,182) | - |
| Income/(expense) from equity investments in other companies | 7.10 | 383 | - | 819 | - |
| Revaluation/impairment of equity-accounted investments | 6.4 | (525) | - | 65 | - |
| Profit before tax | 16,435 | 20,231 | |||
| Income taxes | 7.11 | (3,952) | (6,817) | ||
| Profit (loss) for the year | 12,483 | 13,414 | |||
| of which: Attributable to shareholders of the parent | 12,728 | 13,077 | |||
| Attributable to non-controlling interests | (245) | 337 | |||
| Basic earnings per share (in Euros) | 7.12 | 0.443 | 0.482 | ||
| Diluted earnings per share (in Euros) | 7.12 | 0.443 | 0.470 |
| (thousands of Euros) | 31 December | ||
|---|---|---|---|
| Notes | 2015 | 2014 | |
| Profit (loss) for the year | 12,483 | 13,414 | |
| Other comprehensive income that will not be reclassified to the Income Statement | |||
| Actuarial gains (losses) on defined benefit plans | 6.18 | (70) | (937) |
| Income taxes on other comprehensive income | 6.7 6.17 | - | 258 |
| Other comprehensive income that may be reclassified to the Income Statement | |||
| Gains (losses) from translation of foreign financial statements | (6,027) | (83) | |
| Income taxes on other comprehensive income | - | - | |
| Total other comprehensive income after taxes | (6,097) | (762) | |
| Total comprehensive income for the period | 6,386 | 12,652 | |
| of which: Attributable to shareholders of the parent | 6,695 | 12,310 | |
| Attributable to non-controlling interests | (309) | 342 |
| (thousands of Euros) | of which | of which | |||
|---|---|---|---|---|---|
| Notes | As at 31 December 2015 |
with related parties (Note 8) |
As at 31 December 2014 |
with related parties (Note 8) |
|
| Cash flow generated (absorbed) by operations | |||||
| Profit (loss) before tax | 16,436 | - | 20,231 | - | |
| Payment of current taxes | (7,463) | - | (6,131) | - | |
| Amortisation and depreciation | 7.7 | 46,317 | - | 42,932 | - |
| Impairment and provisions | 7.7 | 767 | - | 716 | - |
| (Revaluation)/impairment of equity investments | 6.4 7.10 | 142 | - | (885) | - |
| Gains/losses on disposal | 7.2 7.6 | (252) | - | (22) | - |
| Interest income and expense accrued | 7.8 7.9 | (12) | - | 3,832 | - |
| Interest income collected | 429 | - | 935 | - | |
| Interest expense paid | (2,740) | - | (3,763) | - | |
| Provisions for employee benefits | 6.18 | 429 | - | 269 | - |
| 54,053 | 58,114 | ||||
| (Increase)/decrease in inventories | 6.9 | (166) | - | (469) | - |
| (Increase)/decrease in trade receivables | 6.10 | (537) | 253 | 8,267 | 259 |
| Increase/(decrease) in trade payables | 6.21 | 3,275 | (488) | (5,854) | 176 |
| Increase/(decrease) in other assets and liabilities | (14,750) | - | (5,244) | - | |
| Settlement of employee benefits | 6.18 | (1,506) | - | (574) | - |
| Cash flow generated (absorbed) by operations | 40,369 | 54,240 | |||
| Cash flow generated (absorbed) from investment activities in: | |||||
| Intangible assets | 6.2 | (1,386) | - | (446) | - |
| Property, plant and equipment | 6.1 | (38,212) | - | (41,966) | - |
| Dividends received | 7.10 | 240 | - | 423 | - |
| Acquisitions | 3.3 | (3,062) | - | (947) | - |
| Equity investments | 6.4 6.5 | (8,496) | - | (234) | - |
| Cash flow generated (absorbed) by investment activities | (50,916) | (43,170) | |||
| Cash flow generated (absorbed) from financing activities in: | |||||
| Financial receivables | 6.6 6.12 | (732) | (69) | 953 | 560 |
| Dividends paid | 6.15 | (4,504) | - | (3,781) | - |
| Net (purchase)/sales of treasury shares | 6.15 | 942 | - | (407) | - |
| Share capital increase | 6.15 | 7,682 | - | 4,216 | - |
| Current liabilities to banks and other lenders | 6.16 | 3,486 | - | (11,366) | - |
| Non-current liabilities to banks and other lenders | 6.16 | 7,598 | - | (123) | - |
| Cash flow generated (absorbed) from financing activities | 14,472 | (10,508) | |||
| (Increase)/decrease in cash and cash equivalents | 3,925 | 562 | |||
| Opening cash and cash equivalents | 6.14 | 5,178 | 4,559 | ||
| Effect of exchange rate fluctuations | 2,021 | (57) | |||
| Closing cash and cash equivalents | 6.14 | 7,082 | 5,178 |
| (thousands of Euros) | Share capital |
Share premium reserve |
Legal Reserve |
Retained earnings |
Translation reserve |
Profit (loss) for the year |
Reserves and profit (loss) of non controlling interests |
Total Shareholders' Equity |
|---|---|---|---|---|---|---|---|---|
| Balance as at 1 January 2014 | 27,032 | 40,297 | 3,126 | 19,623 | (1,342) | 8,830 | 1742 | 99,308 |
| Allocation of profit from the previous year | - | - | 454 | 4,595 | - | (5,049) | - | - |
| Distribution of dividends | - | - | - | - | - | (3,781) | - | (3,781) |
| Change in the scope of consolidation | - | - | - | (17) | - | - | (383) | (400) |
| Share capital increase | 965 | 3,251 | - | - | - | - | - | 4,216 |
| Treasury share transactions | (91) | (316) | - | - | - | - | - | (407) |
| Comprehensive income for the year | - | - | - | (680) | (88) | 13,077 | 343 | 12,652 |
| Balance as at 31 December 2014 | 27,906 | 43,232 | 3,580 | 23,521 | (1,430) | 13,077 | 1,702 | 111,588 |
| Allocation of profit from the previous year | - | - | 606 | 7,968 | - | (8,574) | - | - |
| Distribution of dividends | - | - | - | - | - | (4,503) | - | (4,503) |
| Change in the scope of consolidation | - | - | - | 1,013 | - | - | (1,013) | - |
| Share capital increase | 2,328 | 5,354 | - | - | - | - | - | 7,682 |
| Treasury share transactions | 210 | 732 | - | - | - | - | - | 942 |
| Change in translation reserve | - | - | - | - | (5,962) | - | (66) | (6,028) |
| Comprehensive income for the year | - | - | - | (71) | - | 12,728 | (244) | 12,413 |
| Balance as at 31 December 2015 | 30,444 | 49,318 | 4,186 | 32,431 | (7,392) | 12,728 | 379 | 122,094 |
The consolidated financial statements of Servizi Italia S.p.A. comprising the statement of financial position, income statement, statement of comprehensive income, cash flow statement, statement of changes in shareholders' equity and notes, have been drawn up in compliance with the international accounting standards "International Financial Reporting Standards IFRS" issued by the International Financial Reporting Standards Board and the interpretations issued by the IFRS Interpretations Committee, on the basis of the text published in the Official Journal of the European Communities (O.J.E.C.).
These financial statements were approved by the Board of Directors on 14 March 2016; the latter authorised the publication of the same.
The accounting standards illustrated below have been applied on a consistent basis to all the periods presented.
The amounts shown in the notes are expressed in thousands of Euros, unless specified otherwise.
The financial statement schedules adopted by the group have the following characteristics:
The following IFRS accounting standards, amendments and interpretations were first adopted by the Group starting January 1, 2015:
On May 20, 2013, IFRIC interpretation 21 – Levies was issued. The interpretation clarifies when a liability for levies (other than income taxes) imposed by government agencies should be recognised. This standard addresses both levies that are accounted for in accordance with IAS 37 - Provisions, Contingent Liabilities and Contingent Assets, and those for which the settlement timing and amount are certain. The interpretation applies retrospectively to reporting periods beginning on or after June 17, 2014.
The amendments apply to reporting periods beginning on or after January 1, 2015. The adoption of these amendments had no impact on the consolidated financial statements of the Group.
classified as equity instrument) shall be remeasured at fair value at each measurement date and changes in fair value are recognized in the income statement or as a component within other comprehensive income on the basis of the requirements of IAS 39 (or IFRS 9 ) ;
The changes apply at the latest for annual periods beginning on or after February 1, 2015 or after date.
On May 6, 2014, IASB issued an amendment to IFRS 11 Joint Arrangements – "Accounting for acquisitions of interests in joint operations" concerning the accounting for acquisitions of noncontrolling interests in a joint operation when the operation constitutes a business, in the sense envisaged by IFRS 3. The changes require that for these cases apply the principles set forth by IFRS 3 relating to recognition of the effects of a business combination .The amendments apply as of January 1, 2016, though early adoption is allowed.
financial statements to other parts of the interim financial report and that the document is available to readers of the financial statements in the same manner and with the same time the interim financial statements.
The amendments apply as of January 1, 2016, though early adoption is allowed.
Directors do not expect any significant effect on the consolidated financial statements of the Group when these amendments are adopted.
The European Union has not yet completed its endorsement process for the standards and amendments below reported at the date of these Consolidated Financial Statements.
This standard is applicable as of January 1, 2018, though early adoption is allowed. Still, it is impossible to provide a reasonable estimate as to the effects until the Group completes a detailed analysis of the agreements in place with the customers.
On July 24, 2014, IASB issued the final version of IFRS 9 – Financial instruments. The standard includes the results of steps relating to classification and measurement, impairment and hedge accounting, the IASB project aimed at replacing IAS 39. The new standard, which replaces earlier versions of IFRS 9 must be applied for financial statements that beginning on 1 January 2018 or later. The standard introduces new requirements for the classification and measurement of financial assets and liabilities. In particular, for financial assets the new standard uses a single approach based on how the management of financial instruments and on the characteristics of the contractual cash flows of the financial assets in order to determine the evaluation criteria, replacing the many different rules in IAS 39. For financial liabilities, the main change concerns the accounting treatment of fair value changes of a financial liability designated as a financial liability measured at fair value through profit or loss, if these variations are due to changes in the creditworthiness the issuer of the liability. Under the new standard these changes are recognized in "Other comprehensive income" and not in the income statement. With reference to the impairment , the new standard requires that the estimate of loan and receivables losses is made on the basis of the expected losses model ( and not incurred losses on the model used by IAS 39 ) using supportable information available without unreasonable effort or expense that include historic, current and future . The standard requires that this impairment model applies to all financial instruments, namely financial assets measured at amortized cost, to those measured at fair value through other comprehensive income, receivables arising from leases and trade receivables. Finally, the standard introduces a new hedge accounting model in order to adapt the requirements of the current IAS 39 which sometimes were considered too stringent and not suitable to reflect the risk management policies of the company. The main news of the document include:
The greater flexibility of the new accounting rules are balanced by additional requests for information on the risk management activities of the company.
On January 13, 2016, the IASB issued IFRS 16 – Leases which is to replace IAS 17 – Leases, as well as IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases—Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease.
The new standard provides a new definition of lease and introduces a criterion based on the control (right of use) of an asset to differentiate between lease and service agreements according to: asset identification, right to replacement of the asset, right to obtain all economic benefits arising out of use of the asset and right to control the use of the asset underlying the agreement.
The standard introduces a single lessee accounting model for recognising and measuring lease agreements, which provides for the underlying asset – including assets underlying operating leases – to be recognised in the statement of financial position as assets and lease financial liability. Lessees may elect to not recognise agreements for low-value assets or with a term of up to 12 months within the scope of this standard. No significant changes are introduced for lessor accounting.
The standard applies for reporting period beginning on or after January 1, 2019. Early application is only allowed for early adopters of IFRS 15 - Revenue from Contracts with Customers.
On September 11, 2014 , the IASB issued an amendment to IFRS 10 and IAS 28 Sales or Contribution of Assets between an Investor and its Associate or Joint Venture. The document was published in order to resolve the current conflict between IAS 28 and IFRS 10. According to IAS 28, the gain or loss resulting from the sale or transfer of a non- monetary assets to a joint venture or associate in exchange for a share in the capital of the latter it is limited to the share in the joint venture or connected by other foreign investors to the transaction. In contrast, IFRS 10 requires the recording of the entire gain or loss in the event of loss of control of a subsidiary, even if the entity continues to hold a non-controlling stake in it, including in this case also the sale or transfer of a subsidiary to a joint venture or associate. The changes introduced provide that when a sale/transfer of an asset or a subsidiary to a joint venture or associate, the profit measure or loss is recognized in the financial statements of the assignor/transferor due to the fact that the activities or subsidiary sold/transferred or not constitute a business, as defined in the standard IFRS 3. in the event that the activities or the subsidiary companies sold/transferred represent a business, the entity shall recognize the gain or loss on entire investment held; while , if not, the share of profit or loss on the stake held by the entity still needs to be eliminated .
At the time, the IASB has suspended the application of this amendment .
With reference to IFRS 9, IFRS 15 and IFRS 16 principles described above , the Group is assessing the implementation of policies and impacts on the consolidated financial statements , while in reference to the other standards and interpretations detailed above , it is not expected that the adoption will have significant impacts the valuation of assets , liabilities , costs and revenues of the Group.
The Group primarily works in the domestic market and in the State of São Paulo (Brazil), in India and in Turkey, in supplying integrated rental, washing and sterilisation services for textiles and surgical instruments to social/welfare and public and private hospital facilities. In particular, the Company offers the following services: (a) wash-hire, including (i) planning and provision of integrated rental, reconditioning (disinfection, washing, finishing and packaging) and logistics (pick-up and distribution to usage centres) services for textile items, mattresses and accessories (pillowcases, curtains), (ii) rental and washing of high visibility "118" emergency service items and (iii) logistics and management of hospital wardrobes; (b) linen sterilisation services, including the planning and rental of sterile medical devices for operating theatres (linens for operating theatres and scrubs) packed in sets for the operating theatre, in cotton or in re-usable technical fabric, as well as personal protection equipment (gloves, masks); and (c) surgical instrument sterilisation services including (i) planning and provision of washing, packaging and sterilisation services for surgical instruments (owned or rented) and accessories for operating theatres and (ii) planning, installation and renovation of sterilisation centres.
Servizi Italia S.p.A. is a subsidiary of the Coopservice S.Coop.p.A. group, registered offices in Reggio Emilia, which holds a controlling shareholding via the Company Aurum S.p.A., the same, therefore, indirectly controls the Servizi Italia Group.
The consolidated financial statements include the financial statements of Servizi Italia S.p.A. and of the companies over which it exercises direct or indirect control, beginning on the date on which it is acquired and until the date on which it is no longer held. Servizi Italia S.p.A. controls a company when, in exercising its power over it, it is exposed and entitled to its variable returns, through its involvement in management, and it also has the possibility of impacting the investee's variable returns. The exercise of power over the investee is determined on the basis: (i) of the voting rights, also potential, held by the Group and by virtue of which the Group can exercise the majority of the votes exercisable during the company's ordinary shareholders' meeting; (ii) of the content of any agreements between shareholders or the existence of particular article of association clauses, which assign the Group the power to govern the company; (iii) of the control by the Group of a number of votes sufficient to exercise the de facto control of the company's ordinary shareholders' meeting.
Investments in associates and jointly controlled companies (joint ventures) are measured using the equity method. On the basis of the equity method, the equity investment is recognised in the statement of financial position at purchase cost, adjusted, upwards or downwards, for the portion pertaining to the Group of the changes in the net assets of the investee. The goodwill pertaining to the investee is included in the book value of the equity investment and is not amortised. The transactions generating internal gains realised by the Group with associates and joint ventures are eliminated limited to the holding owned by the Group. Adjustments are made to the financial statements of companies carries at equity, necessary for bringing the accounting standards into line with those adopted by the Group.
Joint operations are recognised by posting the amount of their assets and liabilities, costs and revenues pertaining to the company directly in the financial statements of the company party to the agreements.
The joint-control agreement in which the parties have rights on the net assets of the agreement are joint ventures, while joint-control agreements in which the parties have rights on the assets and obligations relating to the agreement are joint operations. Joint control is the sharing, on a contractual basis, of the control of an agreement, which exists solely when due to decisions relating to the significant activities the unanimous consent of all the parties which share the control is required.
The companies in which Servizi Italia is able to participate in the definition of the operating and financial policies despite the same not being subsidiaries or jointly-controlled parties, are associates.
The financial statements consolidated line-by-line were prepared as at 31 December 2015 and have been adjusted as required to bring them into line with the accounting standards of Servizi Italia S.p.A.:
Euros, which is the reporting currency of the Group and the presentation currency for the consolidated financial statements. All the assets and liabilities of foreign companies in currency other than Euros which fall within the scope of consolidation, are converted using the exchange rates existing as of the financial statement reference date (current exchange rate method). Income, costs and cash flows are converted at the average exchange rate for the period. The exchange differences deriving from the comparison between the opening shareholders' equity converted using the current rates and the same converted using the historical rates, as well as the difference between the profit/loss expressed using the average rates and that expressed using the current rates, are booked to other comprehensive income and recorded in a specific reserve;
| Currency | Exchange rate as at 31 December 2015 | Average exchange rate for 2015 |
|---|---|---|
| Brazilian real | 4.3117 | 3.7004 |
| Turkish lira | 3.1765 | 3.0255 |
| Albanian lek | 137.02 | 139.0021 |
| Indian Rupee | 72.0215 | 71.1956 |
The scope of consolidation includes the following subsidiaries (consolidated line-by-line):
| (thousands) | Registered offices | Currency | Share capital as at 31 December 2015 |
Shareholding as at 31 December 2015 |
Shareholding as at 31 December 2014 |
|---|---|---|---|---|---|
| San Martino 2000 S.c.r.l. | Genoa | EUR | 10 | 60% | 60% |
| Se.sa.tre. S.c.r.l. | Genoa | EUR | 20 | 60% | 60% |
| Servizi Italia Medical S.r.l. | Castellina di Soragna (PR) | EUR | 200 | 100% | 100% |
| SRI Empreendimentos e Participacoes LTDA | São Paulo (Brazil) | R\$ | 128,380 | 100% | 100% |
| Lavsim Higienização Têxtil S.A. | São Roque (Brazil) | R\$ | 550 | 100% | 50% |
| Maxlav Lavanderia Especializada S.A. | Jaguariúna (Brazil) | R\$ | 2,825 | 50.1% | 50.1% |
| Vida Lavanderias Especializada S.A. | Santana de Parnaiba (Brazil) | R\$ | 1,900 | 50.1% | 50.1% |
| Aqualav Serviços De Higienização Ltda | Vila Idalina (Brazil) | R\$ | 6,400 | 100% | - |
The equity investments in Maxlav Lavanderia Especializada S.A. and Vida Lavanderias Especializada S.A. are considered to be subsidiaries also due to the agreements with the local shareholders which assign Servizi Italia control as defined above. On 16 January 2015, Servizi Italia S.p.A. acquired the remaining 50% of the share capital of the company Lavsim Higienização Têxtil S.A. and on 23 December 2015 it acquired 100% of the Brazilian company Aqualav Serviços De Higienização Ltda, one of the leading market operators in the State of São Paulo (Brazil) in the linen washing segment for healthcare structures.
Investments in associates and jointly controlled companies are measured using the equity method and are as follows:
| (thousands) | Registered offices | Currency | Share capital as at 31 December 2015 |
Shareholding as at 31 December 2015 |
Shareholding as at 31 December 2014 |
|---|---|---|---|---|---|
| Centro Italia Servizi S.r.l. | Arezzo | EUR | 10 | 50% | 50% |
| CO.SE.S S.c.r.l. | Perugia | EUR | 10 | 25% | 25% |
| PSIS S.r.l. | Padua | EUR | 10,000 | 50% | 50% |
| Ekolav S.r.l. | Lastra a Signa (FI) | EUR | 100 | 50% | 50% |
| AMG S.r.l. | Busca (CN) | EUR | 100 | 50% | 50% |
| Steril Piemonte S.c.r.l. | Turin | EUR | 4,000 | 50% | 50% |
| Iniziative Produttive Piemontesi S.r.l. | Turin | EUR | 2,500 | 37.63% | 37.63% |
| SE.STE.RO. S.r.l. | Castellina di Soragna (PR) | EUR | 400 | 25% | 25% |
| Piemonte Servizi Sanitari S.c.r.l. | Turin | EUR | 10 | 30% | 30% |
| Finanza & Progetti S.p.A. | Padua | EUR | 550 | 50% | - |
| Saniservice Sh.p.k. | Tirana, Albania | LEK | 2,746 | 30% | - |
| Shubhram Hospital Solutions Private Limited | New Delhi - India | INR | 85,200 | 51% | 51% |
| SAS Sterilizasyon Servisleri A.Ş. | Istanbul, Turkey | TL | 500 | 51% | 51% |
| Ankateks Turizm İnsaat Tekstil Temizleme Sanayi Ve | Ankara, Turkey | TL | 5,000 | 40% | - |
With reference to Shubhram Hospital Solutions Private Limited and SAS Sterilizasyon Servisleri A.Ş., the governance and the handling of the operating and strategic policies are disciplined by agreements entered into with local partners which assign the shareholders joint control over the two companies.
The Albania Ministry of Health's awarding on 14 December 2015 of the sterilisation services management concession entailed the establishment of a new company, Saniservice Sh.p.k., headquartered in Tirana, to develop and provide the concession services.
On 15 October 2015, the acquisition was completed of a 40.0% stake in Ankateks Turizm Inşaat Tekstil Temizleme San. Ve Tic. Ltd. Şti, a leading Turkish operator operating under the "Ankara Laundry" brand in the linen washing sector for healthcare structures, predominantly in the areas of Ankara and - through the subsidiary Ergülteks Temizlik Tekstil Ltd. Şti - Izmir.
On 28 December 2015, Servizi Italia completed the acquisition of 50.0% of the share capital of Finanza e Progetti S.p.A. This transaction enabled Servizi Italia S.p.A. to acquire 80% of Ospedal Grando S.r.l., a project company for the construction and management of the Treviso Cittadella Sanitaria hospital. Ospedal Grando also engaged Servizi Italia S.p.A. for the management and provision of linen and mattress wash-hire services, the reconditioning and sterilisation of textiles and surgical instruments and the relative accessory services at the Treviso ULSS (local health unit) 9 starting in January 2018, for a period of 15 years.
On 23 December 2015, the Company announced that it had entered into an acquisition agreement and as a result acquired 100% of the Brazilian company Aqualav Serviços De Higienização Ltda, one of the leading market operators in the State of São Paulo (Brazil) in the linen washing segment for healthcare structures. In agreement between the parties, Servizi Italia acquired 100% of the company from the seller for a consideration of R\$ 13,817,817.78. A portion of the price was paid in cash and a portion was withheld by Servizi Italia as a guarantee for any indemnities, contingent liabilities and the price adjustment mechanism. As part of the negotiation, Servizi Italia also obtained real estate guarantees provided by the seller to cover potential future liabilities not associated with Servizi Italia's management. The shareholdings were acquired via the wholly owned subsidiary SRI Empreendimentos e Participações L.t.d.a and the acquisition was financed by bank borrowings.
The fair value of the assets and liabilities of Aqualav Serviços De Higienização Ltda with respect to the overall price led to the determination of goodwill for Euro 2,325 thousand attributable to the synergies, in particular production and cost related, that can be obtained in the Brazilian production context. Consequently, this goodwill is allocated to the Brazil CGU for the purposes of assessing recoverability (impairment test).
The comparison between the book value as per the IFRS standards and the fair value of the assets and liabilities acquired and the goodwill generated by the acquisition, is presented below:
| 23 December 15 | ||
|---|---|---|
| Fair value | Book value | |
| (thousands of Euros) | (thousands of Euros) | |
| Property, plant and equipment | 1,454 | 1,454 |
| Intangible assets | - | - |
| Other non-current assets | 1,860 | 1,860 |
| Deferred tax assets | - | - |
| Inventories | 26 | 26 |
| Trade and other receivables | 1,556 | 1,556 |
| Employee benefits and risk provisions | (2,157) | (2,157) |
| Deferred tax liabilities | - | - |
| Non-current financial payables | (434) | (434) |
| Current financial payables | (391) | (391) |
| Trade payables | (187) | (187) |
| Current tax payables | (196) | (196) |
| Other non-current payables | (793) | (793) |
| Cash and cash equivalents as at the acquisition date | 143 | 143 |
| Fair value of the net assets acquired | 880 | |
| Total acquisition price | 3,205 | |
| Goodwill deriving from the acquisition | 2,325 |
The fair values of the company acquired correspond to the book values.
The consolidated financial statements have been drawn up in accordance with the criterion of cost, except in the cases specifically described in the following notes, for which the current value ("fair value") has been applied.
Property, plant and equipment include land and buildings, machinery and plant, returnable assets, industrial and commercial equipment, linen and other assets benefiting future periods.
The fixed assets are stated at purchase or production cost, inclusive of the related costs and costs necessary for making the asset available for use, net of accumulated depreciation. The costs subsequent to purchase are included in the value of the asset or recorded as a separate asset only if it is probable that the Company will receive future economic benefits associated with the assets and the cost can be measured. Maintenance and repairs are recognised in the income statement in the period in which they are incurred.
The depreciation of property, plant and equipment is determined using the linear methods so as to spread the value of the assets over the estimated useful life according to the following categories:
| Years | |
|---|---|
| Industrial buildings | 33 |
| Plant and machinery | 12 |
| General plant | 7 |
| Industrial and commercial equipment | 4 |
| Specific equipment | 8 |
| Linen | 3 |
| Furniture and fixtures | 8 |
| Electronic machinery | 5 |
| Cars | 4 |
| Other vehicles | 5 |
The useful lives are reviewed, and adjusted if necessary, at the end of each period.
The individual components of an asset which are characterised by a different useful life are depreciated separately and on a consistent basis with their duration according to an approach by components. According to this standard, the value of the land and that of the buildings which exist on the same are separated and only the building is depreciated. Returnable assets are depreciated over the residual duration of the contract within the sphere of which they are realised.
If there are indicators of impairment, the assets are subject to an impairment test as per the following section E; any impairment may be subject to subsequent value write-backs if the reasons for the impairment cease to exist. These assets include the costs for the creation of the sterilisation and washing installations care of the customers which are used exclusively by the Company. These assets are depreciated over the useful life of the assets or the residual duration of the wash-hire contract, whichever is the shorter. The ownership of the asset is transferred to the customer on termination of the contract.
The financial expense is capitalised if directly attributable to the purchase, construction or production of an asset.
A lease is defined as financial if it entails the substantial transfer of all risks and rewards deriving from ownership of the asset. Assets acquired via financial lease agreements are recognised under property, plant and equipment with the recognition under the liabilities of a financial payable for the same amount. The payable is progressively reduced on the basis of the repayment plan for the principal amounts included in the fees contractually envisaged, while the value of the assets recorded among property, plant and equipment is systematically depreciated in relation to the economic-technical life of said asset.
On the other hand, for operating leases, the fees are recognised in the income statement on a straight-line basis during the useful life of the contract.
Only identifiable assets, controlled by the enterprise, which are able to produce future economic benefits, can be defined as intangible assets.
These assets are recorded in the financial statements at purchase or production cost, inclusive of the related charges as per the criteria already indicated for property, plant and equipment. The development costs are also capitalised provided that the cost can be reliably determined and that it can be demonstrated that the asset is able to produce future economic benefits.
The intangible assets with a defined useful life are amortised systematically as from the moment the asset is available for use over the envisaged period of utility. They are mainly represented by software licences acquired for a consideration capitalised on the basis of the cost incurred. These costs are amortised using the straight-line method in relation to their estimates useful life (3 years). The value attributed upon acquisition to the customer order book is amortised throughout the remaining useful life of the same contracts, in proportion with the distribution over time of the resulting benefits.
Goodwill represents the additional costs incurred with respect to the fair value of the net assets identified at the time of acquisition of a subsidiary, associate or business. In the consolidated financial statements, the goodwill relating to the acquisition of associates and jointly-controlled companies is included in the item "Equity-accounted investments".
All the goodwill is checked annually to identify any impairment losses ("impairment test") and is recognised net of the impairments made.
The impairments possibly recognised are not reinstated.
For the purposes of the impairment test, the goodwill is allocated to the individual cash generating units ("CGUs") or groups of CGUs which it is believed will provide the benefits relating to the acquisition to which the goodwill refers.
E. Impairment test
F. In situations that could potentially generate impairment losses, property, plant and equipment and intangible assets are tested for impairment by estimating the asset's recoverable value and comparing it with the net book value. If the recoverable value is lower than the book value, the latter is adjusted accordingly. This reduction constitutes an impairment loss, which is recognised in the income statement. For assets other than goodwill, if there is no longer a reason to continue recognising a previously recognised impairment loss, the book value is restored to the new value estimated, although this value cannot exceed the net book value that would have been attributed to the asset if no impairment loss had been recognised. The writeback is also recognised in the income statement.
The goodwill and the assets with an indefinite useful life or assets not available for use are subject at least once a year to an impairment test so as to check the recoverability of the value. The assets which are amortised/depreciated are subject to the impairment test on the occurrence of events and circumstances which indicate that the book value might not be recoverable. In such cases, the book value of the asset is written down until reaching the recoverable value. Write-backs are permitted for other intangible assets, but not on goodwill.
The recoverable value is the greater between the fair value of the assets net of selling costs and the value in use. For the purposes of the impairment test, the assets are grouped together at cash generating units ("CGUs") or groups of CGUs level.
As of each financial statement date, steps are taken to check any recovery of the impairments made on the non-financial assets further to impairment tests.
G. Equity investments
Investments in associates and jointly controlled companies are measured using the equity method.
These include the equity investments available for sale and the other non-current financial assets such as securities held with the intention of maintaining them in the portfolio until maturity, non-current loans and receivables, trade receivables and other receivables originating from the company and the other current financial assets such as cash and cash equivalents.
Cash and cash equivalents are bank and post office deposits, marketable securities which represent temporary investments of liquidity and financial receivables due within three months.
They also include financial payables, trade payables and other payables and the other financial liabilities as well as derivative instruments.
The financial assets and liabilities are initially recognised at fair value. Their initial recognition takes into account the transaction costs directly attributable to the purchase or the issue costs which are included in the initial recognition of all the assets and liabilities which can be defined as financial instruments. Subsequent recognition depends on the type of instrument. In detail:
trading assets are recognised at fair value with recording of the changes in the income statement;
available-for-sale assets ("Equity investments in other companies") are recognised at fair value and the gains or losses which emerge are recorded under other comprehensive income as from the moment of the effective disposal when they reverse to the income statement. The losses from recognition at fair value are by contrast directly booked to the income statement in cases when objective evidence exists that the financial asset has undergone impairment even if the asset has not yet been disposed of. Unlisted equity investments in relation to which the fair value cannot be reliably measured are by contrast recognised at cost less impairment. This category includes the equity investment held for a percentage of less than 20%.
Other current assets are recorded, at the time of initial recognition, at fair value and subsequently at amortised cost on the basis of the effective interest rate method. If there is objective evidence of impairment indicators, the asset is written down to an extent so that it is equal to the discounted back value of the flows which can be obtained in the future.
Impairment losses are recognised in the income statement. If in subsequent periods, the reasons for the previous impairments cease to exist, the value of the assets is reinstated up to the extent of the value which would have derived from the application of the amortised cost if the impairment had not been made.
The white certificates are allocated in relation to the achievement of energy savings via the application of efficient systems and technologies.
The white certificates are recognised in the accounts on an accruals basis under "Other income", in proportion to the TOE (tonne of oil equivalent) savings effectively made in the period.
The recognition of the same is carried out at the average annual market value unless the year end market value is significantly lower. The decreases due to sales of white certificates matured during the period or in previous periods are valued at the disposal price. The capital gains and losses deriving from the sales of certificates in periods different to those of maturity are recorded respectively under "Other income" or "Other costs".
Inventories are recognised at purchase or production cost, inclusive of accessory charges, determined by applying the weighted average cost method or the estimated realisable value calculated on the basis of the market trend net of the sales costs, whichever is the lower.
Consequent to the changes made to the employee severance indemnity (TFR) by Italian Law No. 296 dated 27 December 2006 ("2007 Finance Bill") and subsequent Decrees and Regulations issued in the first few months of 2007, within the sphere of the supplementary welfare reform the related Provision is recognised as follows:
Employee severance indemnity fund accruing as from 1 January 2007: this falls within the category of defined-contribution plans both in the event of opting for supplementary welfare and in the case of assignment to the Treasury Fund care of INPS. The accounting treatment is similar to that existing for other kinds of contributory payments.
Employee severance indemnity fund accrued as at 31 December 2006: this remains to be a defined-benefits plan determined by applying an actuarial-type method; the amount of the rights accrued in the period by the employees is booked to the income statement under the item payroll and related costs while the figurative financial expense which the company would incur if a loan was requested from the market for an amount equal to the severance indemnity is booked to net financial income (expense). The actuarial gains and losses which reflect the effects deriving from changes in the actuarial hypotheses used are recognised under other comprehensive income in accordance with the matters envisaged by IAS 19 Employee benefits, section 93A.
According to the matters envisaged by IFRS 2, stock options are classified within the sphere of "share-based payments" and envisage for the type classified as "equity-settled" (where the payment is regulated using instruments representative of equity) the determination - as of the date of assignment of the fair value - of the option rights issued and the related recognition as personnel expense to be spread in a linear manner over the period of accrual of the rights (socalled vesting period) with the recording of a matching balance under shareholders' equity reserves. This treatment is carried out on the basis of the estimate of the rights which will effectively accrue in favour of the employees, taking into consideration the conditions of availability of the same not based on the market value of the rights.
The accounting treatment of other long-term benefits is similar to that for the post-employment benefit plans, with the exception of the fact that the actuarial gains and losses and costs deriving from prior employment services are recognised in the income statement in full in the period they accrue.
Provisions for risks and charges are provided for exclusively in the presence of a current obligation, consequent to past events, which can be legal, contractual in type or derive from declarations or conduct of the company such as to lead third parties to validly expect that the company itself is responsible or assumes responsibility for fulfilling an obligation (so-called implicit obligations). If the financial effect of time is significant, the liability is discounted back; the effect of this discounting back is recorded under financial expense.
No provision is made against risks for which the occurrence of a liability is only possible. These risks are mentioned in the section on commitments and risks and no provision is recognised.
Revenues and income, costs and expense are recognised net of returns, discounts, allowances and premiums as well as the taxes directly associated with the sale of the goods and the provision of the services.
Sales revenues are recognised at the time ownership is transferred, which as a rule takes place on delivery or shipment of the goods. Revenues for the provision of services are recognised with reference to the stage of completion of the activities to which they refer; in particular, revenues for washing, wash-hire, sterilisation and other services are recognised in the period in which they were provided, even if not yet invoiced, and are determined by supplementing those recognised by means of advance payment invoicing with appropriate estimates.
The revenues are recognised at fair value in consideration of what has been received and represent the amount of the goods supplied and/or services provided.
The costs are correlated to goods and services sold or consumed in the period or deriving from systematic allocation, or when it is not possible to identify the future utility of the same, they are recognised and booked directly to the income statement.
Financial income and expense is recognised on an accruals basis. Financial expense is capitalised as part of the cost of property, plant and equipment and intangible assets to the extent it refers to the purchase, construction or production of the same. Dividends are recognised when the right to collection by the shareholder arises; this normally takes place in the period the shareholders' meeting of the investee company which resolves the distribution of profits or reserves is held.
Current income taxes are recognised on the basis of an estimate of the taxable income in compliance with the rates and current provisions, or essentially approved at the year-end date.
Prepaid and deferred taxes are calculated on the timing differences between the value assigned to an asset or liability in the financial statements and the corresponding values recognised for tax purposes, on the basis of the rates in force at the time the timing differences will reverse. Prepaid taxes are only recorded to the extent that it is probable that there is taxable income available against which they can be used. The recoverability of the prepaid taxes recorded in previous years is valued as of closure of each set of financial statements
When the changes in the assets and liabilities to which they refer are directly recognised under other comprehensive income, the current taxes, prepaid tax assets and deferred tax liabilities are also directly booked to other comprehensive income.
Deferred tax assets and liabilities are offset only if there is a legal right to set-off and the entity intends to settle on a net basis or realise the asset and settle the liability simultaneously.
The basic earning per share is calculated by dividing the profit/loss of the Servizi Italia Group by the weighted average of the ordinary shares in circulation during the period, excluding treasury shares. For the purpose of calculating the diluted earning per shares, the weighted average of the shares in circulation is altered undertaking the conversion of all the potential shares which have a dilutive effect.
The drafting of the financial statements requires the directors to apply accounting standards and methods which, under certain circumstances, rest on difficult and subjective valuations and estimates based on past experience and assumptions which are from time to time considered reasonable and realistic in relation to the related circumstances. The application of these estimates and assumptions influences the amounts shown in the financial statement schedules as well as the disclosure provided. The final results of the financial statement items for which the afore-mentioned estimates and assumptions have been used, may differ from those shown in the financial statements which reveal the effects of the occurrence of an event subject to estimation, due to the uncertainty which characterises the assumptions and conditions on which they are based.
The accounting standards which, more than others, require greater subjectivity by the directors when making the estimates and for which a change in the conditions underlying the assumptions used could have a significant impact on the consolidated financial data restated, are briefly described below.
Goodwill: in accordance with the accounting standards adopted for the drafting of the financial statements, the Company checks the goodwill each year so as to ascertain the existence of any impairment to be recognised in the income statement. In detail, the check in question involves the allocation of the goodwill to cash flow generating units and the subsequent determination of the related recoverable value. If it should emerge as lower than the book value of the cash flow generating units, steps shall have to be taken to impairment the goodwill allocated to the same. The allocation of the goodwill to the cash flow generating units and the determination of the latter leads to the adoption of estimates which depend on factors which may change over time with consequent effects, possibly significant, with respect to the valuations made by the directors.
Linen assets: the economic life of the Company's linen used in the production process has been estimated taking into consideration numerous factors which influence the same, such as for example the wear and tear deriving from use and from the washing cycles. These factors are liable to changes over time and could significantly affect the depreciation of the linen.
The management of the financial risks within the Servizi Italia Group is carries out centrally within the sphere of precise organisational directives which discipline the handling of the same and the control of all the transactions which have strict relevance in the composition of the financial and/or trade assets and liabilities.
The Servizi Italia Group's activities are exposed to various risk types, including interest rate fluctuations and credit, liquidity, cash flow risks and currency-type risks.
To minimise such risks, the Servizi Italia Group has adopted timescales and control methods which allow the company management to monitor risks and inform the Board of Directors so that it may approve all transactions involving a commitment by the Company with respect to third parties.
When carrying out its activities, the Group is exposed to the following financial risks:
interest rate risk;
credit risk;
This is the risk associated with the volatility of the prices of the raw materials and the energy commodities, with particular reference to electricity and gas used in the primary production processes and of cotton to which the purchase cost of the linen is linked. Within the sphere of the tenders, the Group avails itself of clauses which permit it to adjust the price of the services provided in the event of significant cost changes. The price risk is also controlled by means of the entering into of purchase agreements with price blocks and on-average annual timescales, joined by constant monitoring of the performance of the prices so as to identify opportunities for making savings.
The Group's net financial debt primarily comprises short-term payables which, as at 31 December 2015, represent approximately 56.12% of its debt, at an average annual rate of around 1.92%. In relation to the global financial crisis, the Company is monitoring the market and assessing the appropriateness of taking out hedging transactions on the rates in order to limit the negative impacts of changes in interest rates on the company's income statement. The table below demonstrates the effect that would be generated by a 0.5% increase or decrease in rates (in thousands of Euros).
| (thousands of Euros) | 0.5% rate increase | 0.5% rate decrease | ||
|---|---|---|---|---|
| 31 December 2015 | 31 December 2014 | 31 December 2015 | 31 December 2014 | |
| Financial receivables | +67 | +66 | (67) | (66) |
| Financial payables | +428 | +449 | (428) | (449) |
| Factoring of receivables | +379 | +507 | (379) | (507) |
The receivables, since they are essentially due from public bodies, are deemed certain in terms of collectability and, due to their nature, are not subject to the risk of loss. The collection times depend on the loans received, the Local Health Authorities, the Hospitals and the Regional Authorities and at present average collection days are 117.
A summary of the trade receivables net and gross of the related bad debt provisions and the stratification by maturity of receivables not written down, is presented below:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Gross trade receivables | 80,277 | 81,504 |
| Bad debt provisions | (5,531) | (5,335) |
| Net trade receivables | 74,746 | 76,169 |
| Guarantees in portfolio | None | None |
| Falling due | 44,148 | 44,750 |
| Past due by less than 3 months | 12,946 | 15,287 |
| Past due by more than 3 months | 6,434 | 3,318 |
| Past due by more than 7 months | 11,217 | 12,814 |
The credit risk is constantly monitored by means of periodic processing of past due situations which are subject to the analysis of the Group's financial structure. The Group is also equipped with recovery procedures for problem receivables and avails itself of the assistance of legal advisors in the event of disputes being established. Having taken into account the characteristics of the credit, the risk in question could become more significant in the event of an increase in the private customer component, however this aspect is mitigated by a careful selection and financing of the customers. The absolutely predominant presence of receivables due from public bodies makes the credit risk absolutely marginal and shifts attention more towards the collection times rather than the possibility of losses.
In relation to the Group, the liquidity risk is linked to two main factors:
Concentrating its business on orders contracted with the Public Administration Authorities, the Group is exposed to risks associated with delays in the payments for the receivables. In order to balance this risk, factoring agreements have been entered into with the without-recourse formula, renewed also for 2015.
To correctly manage the liquidity risk, an adequate level of cash and cash equivalents must be maintained. In light of the predominantly public nature of the group's customers and the average collection times, cash and cash equivalents are mainly obtained from accounts receivable financing and medium-term loans. The Company has entered into covenants relating to the mortgage loans with Cassa di Risparmio in Bologna S.p.A., Banca Nazionale del Lavoro S.p.A., Cassa di Risparmio di Parma e Piacenza SpA and Banca Popolare di Milano S.Coop.a r.l., therefore the possibility of early repayment of these loans with respect to the repayment plan, is envisaged. As at 31 December 2015, the Company had observed the covenants entered into.
The following table analyses the "worst case" scenario with reference to the financial liabilities (including trade payables and other payables) in which all the flows indicated are un-discounted future nominal cash flows, determined with reference to the residual contractual maturities, both for the principal portion and the interest portion. The loans have been included on the basis of the first maturity on which the repayment can be requested and the non-revolving loans are considered to be callable on demand. The financial payables with a maturity of less than or equal to 3 months are almost entirely characterised by self-liquidating bank loans for invoice advances which, in as such, are replaced on maturity by new advances on newly-issued invoices. It should also be considered that the company only partially uses the short-term bank credit facilities available.
| (thousands of Euros) | Financial payables | Trade and other payables | Total | |||
|---|---|---|---|---|---|---|
| 31 December 2015 |
31 December 2014 |
31 December 2015 |
31 December 2014 |
31 December 2015 |
31 December 2014 |
|
| Less than or equal to 3 months | 35,962 | 36,761 | 66,188 | 64,330 | 102,150 | 101,091 |
| 3 to 12 months | 11,141 | 12,220 | 16,632 | 24,597 | 27,773 | 36,817 |
| 1 to 2 years | 11,455 | 10,303 | - | - | 11,455 | 10,303 |
| More than 2 years | 29,292 | 27,430 | - | - | 29,292 | 27,430 |
| Total | 87,850 | 86,714 | 82,820 | 88,927 | 170,670 | 175,641 |
The investments in Brazil, Turkey and India, and recently in Albania, launch the Group into an international context, exposing it to exchange rate risk generated by fluctuations in the Euro/Real, Euro/Turkish Lira, Euro/Indian Rupee and Euro/Albanian Lek exchange rates.
The exchange rate risk must only be hedged if it has a significant impact on the cash flows with respect to the reference currency. The costs and risks associated with a hedging policy must be acceptable both from a financial and commercial standpoint and accordingly the Company has decided not to enter into hedging transactions on exchange rates since no inflows of capital are envisaged over the short term.
IFRS 13 requires that the classification of the financial instruments at fair value be determined on the basis of the quality of the sources of the inputs used in the valuation of the fair value.
The classification of IFRS 13 involves the following hierarchy:
The types of financial instruments present in the financial statement items are shown in the following table, with indication of the accounting treatment applied. Note that no financial instrument has been valued at fair value. With regard to the financial instruments valued at amortised cost, it is believed that the book value also represents a reasonable approximation of their valuation at fair value. With regard to equity investments in other companies, prices listed on active markets are not available. Therefore, their fair value cannot be measured reliably. For the same reason, they are measured at cost, possibly written down due to impairment.
| Thousands of Euros | Financial liabilities | |||||
|---|---|---|---|---|---|---|
| at fair value through profit and loss |
held to maturity |
loans and receivables |
available for sale |
at fair value through profit and loss |
at amortised cost |
|
| Measurement criteria | fair value | amortised cost | amortised cost | cost | fair value |
amortised cost |
| Non-current assets | ||||||
| Equity investments in other companies | 3,542 | |||||
| Financial receivables | 3,234 | |||||
| Other assets | 6,108 | |||||
| Current assets | ||||||
| Trade receivables | 74,746 | |||||
| Current tax receivables | 2,478 | |||||
| Financial receivables | 8,067 | |||||
| Other assets | 9,241 |
| Due to banks and other lenders Other financial liabilities |
36,111 3,208 |
|---|---|
| Current liabilities | |
| Due to banks and other lenders | 46,191 |
| Trade payables | 65,429 |
| Current tax payables | 365 |
| Other financial liabilities | 1,078 |
| Other payables | 17,841 |
The Group's objectives, in relation to the management of the capital and the financial resources, involve safeguarding the ability of the Group to continue to operate with continuity, remunerate the shareholders and the other stakeholders and at the same time maintain an optimum capital structure so as to minimise the related cost.
For the purpose of maintaining or adapting the structure of the capital, the Group may adjust the amount of the dividends paid to the shareholders, reimburse or issue new shares or sell assets to reduce the debt. On a consistent basis with other operators, the Group controls capital on the basis of the debt ratio (gearing) calculated as the ratio between the net financial debt and net invested capital.
| (thousands of Euros) | Year ended as at 31 December | Change 15/14 |
Change 15/14 |
|
|---|---|---|---|---|
| 2015 | 2014 | % | ||
| Shareholders' equity (B) | 122,094 | 111,588 | 10,506 | 9.4% |
| Net financial debt (a) (A) | 67,153 | 58,079 | 9,074 | 15.6% |
| Net invested capital (C) | 189,247 | 169,667 | 19,580 | 11.5% |
| Gearing (A/C) | 35.5% | 34.2% |
a)The management has defined net financial debt as the sum of amounts Due to banks and other lenders net of Cash and cash equivalents and current financial receivables.
With regard to the main dynamics which have affected the debt, see section 6.25.
On 2 November 2015, further to the closure of the Third and last Exercise Period (from 1 October 2015 until 30 October 2015) of the "Warrant Servizi Italia S.p.A. 2012 – 2015", the Company announced that 9,311,120 Warrants had been exercised and consequently 2,327,780 newly-issued ordinary Servizi Italia shares had been subscribed (at a ratio of 1 new share for each 4 warrants exercised) at a price of Euro 3.30 each, admitted for listing on the Borsa Italiana screen-based stock market (MTA), with a par value of Euro 1.00 each, with regular dividend rights and the same characteristics as the ordinary Servizi Italia shares in circulation as of the issue date (the "Conversion Shares"), for a total equivalent value of Euro 7,681,674. Due to the closure of the Third Exercise Period, the 2012-2015 Warrants are no longer exercisable or traded on the Regulated Market.
Further to the afore-mentioned subscriptions, the new share capital of Servizi Italia therefore amounted to Euro 30,699,266, represented by 30,699,266 ordinary shares with a par value of Euro 1.00 each. In detail, further to the two transactions, the share capital was increased by Euro 2,328 thousand and a share premium paid to the subscriber amounting to Euro 5,354 thousand was recorded in the specific reserve.
The Servizi Italia Group's segment reporting is defined as follows:
In terms of geographical areas, please note that the Servizi Italia Group:
As a result, information is not presented by geographical area, with the exception of revenue, which is broken down by region in paragraph 7.1.
The segment reporting reflects the structure of the reporting periodically analysed by management so as to manage the business, and is subject to periodic HQ reporting.
| (thousands of Euros) | Year ended as at 31 December 2015 | |||
|---|---|---|---|---|
| Wash-hire | Steril B | Steril C | Total | |
| Revenues from sales and services | 173,453 | 19,002 | 37,528 | 229,983 |
| Other income | 2,940 | 342 | 2,090 | 5,372 |
| Raw materials and materials | (16,410) | (4,893) | (2,472) | (23,775) |
| Costs for services | (53,823) | (5,810) | (13,248) | (72,881) |
| Personnel expense | (57,277) | (4,339) | (11,782) | (73,398) |
| Other costs | (1,322) | (70) | (260) | (1,652) |
| EBITDA (a) | 47,561 | 4,232 | 11,856 | 63,649 |
| Depreciation, amortisation and impairment | (38,194) | (2,181) | (6,709) | (47,084) |
| Operating profit (EBIT) | 9,367 | 2,051 | 5,147 | 16,565 |
| Financial income and expense and income and expense from equity investments in other companies | (130) | |||
| Profit before tax | 16,435 | |||
| Income taxes | (3,952) | |||
| Profit (loss) for the year | 12,483 | |||
| Of which portion attributable to non-controlling interests | (245) | |||
| Of which portion attributable to shareholders of the parent | 12,728 |
| (thousands of Euros) | Year ended as at 31 December 2014 | |||
|---|---|---|---|---|
| Wash-hire | Steril B | Steril C | Total | |
| Revenues from sales and services | 176,594 | 20,456 | 37,297 | 234,347 |
| Other income | 3,064 | 405 | 2,369 | 5,838 |
| Raw materials and materials | (16,673) | (5,577) | (4,944) | (27,194) |
| Costs for services | (55,521) | (5,591) | (11,610) | (72,722) |
| Personnel expense | (56,359) | (4,323) | (10,760) | (71,442) |
| Other costs | (1,210) | (164) | (627) | (2,001) |
| EBITDA (a) | 49,895 | 5,206 | 11,725 | 66,826 |
| Depreciation, amortisation, impairment and provisions | (35,595) | (2,065) | (5,987) | (43,647) |
| Operating profit (EBIT) | 14,300 | 3,141 | 5,738 | 23,179 |
| Financial income and expense and income and expense from equity investments in other companies | (2,948) | |||
| Profit before tax | 20,231 | |||
| Income taxes | (6,817) | |||
| Profit (loss) for the year | 13,414 | |||
| Of which portion attributable to non-controlling interests | (337) | |||
| Of which portion attributable to shareholders of the parent | 13,077 |
(a) EBITDA is not an accounting measurement under the IFRSs endorsed by the European Union. The Company management has defined EBITDA as the difference between the value of sales and services and operating costs before depreciation, amortisation, impairment and provisions.
In absolute terms, wash-hire represented 75.4% of group revenue, a decrease of 1.8% compared to 2014. The approximately 18.6% average exchange loss of the BRL in 2015 with respect to the average exchange in 2014 significantly impacted the turnover of the wash-hire line. In Brazil, at constant exchange rates revenue would have risen by Euro 3,845 thousand. New contracts such as ASL (LHA) Frosinone, ASL Torino 3, I.N.M.I. - Lazzaro Spallanzani, Istituto Europeo di Oncologia S.r.l., Centro Cardiologico Monzino S.p.A., AUSL (Local Health Authority) of Piacenza, Pessina Gestioni S.r.l. for Garbagnate Hospital, Circolo di Busto Arsizio Hospital and Fatebenefratelli e Oftalmico Hospital had a positive impact on wash-hire segment turnover. It is important to note that certain wash-hire agreements expired during the year, such as those with Rome LHA C and IRCCS Foundation "National Cancer Institute". In terms of margins, the wash-hire EBITDA margin was 27.4% compared to 28.3% in the previous year, and the EBIT margin decreased from 8.1% to 5.4%, while depreciation, amortisation, impairment and provisions rose by Euro 2,599 thousand compared to 2014. At EBIT level, amortisation, depreciation, impairment and provisions recorded growth due to higher linen depreciation of the Brazilian companies and due to the impact of the amortisation of the customer portfolio of the incorporated companies Si.Gi. Servizi Ospedalieri S.r.l. and Lavanderia Industriale Z.B.M. S.p.A.
Revenues from linen sterilisation services decreased by 7.1% to Euro 19,002 thousand, accounting for 8.6% of total sales. The fall in line revenue is linked to the end of the contract with the Legnano Hospital and the reduction in the turnover of the customer Careggi Hospital of Florence (in the latter case, the use of sterilised technical textile for the operating theatre decreased since the entity has opted for the single-use product), despite the increase in turnover of the customer ESTAV Centro. In terms of margins, the EBITDA margin of the linen sterilisation business stood at 22.3% compared to 25.4% in the previous year, and the EBIT margin decreased to 10.8% from 15.4%.
Turnover in the surgical instrument sterilisation segment grew by 0.6% compared to 2014. This growth is mainly attributable to the gradual increase in turnover from customers such as the Udine University Hospital, Trieste Hospital and Careggi Hospital in Florence and the new contract for the Spedali Civili Hospital in Brescia. In 2014, this line's turnover was impacted by the transfer of the surgical instrument sterilisation centres care of the Brescia Spedali Civili hospital and the Arezzo LHU for the San Donato hospital for a total of Euro 2,261 thousand. Surgical instrument sterilisation is the segment with the highest profitability in terms of EBITDA, at 31.6%, while its EBIT amounted to 13.7%. The greater incidence of amortisation of the surgical instrument sterilisation activities is linked to the nature of the business which requires high investments for the creation, adaptation of the structural and plant engineering works and the purchase of surgical instruments. These investments are usually reimbursed over the duration of the contract by the customer. With respect to 2014, margins were affected by greater depreciation of surgical instruments deriving from the ramp-up phases of the new contracts and the maintenance costs on said instruments.
The information in the tables below represents the assets directly attributable to investments by business segment:
| (thousands of Euros) | Year ended as at 31 December 2015 | |||
|---|---|---|---|---|
| Wash-hire | Steril B | Steril C | Total | |
| Total revenues from sales and services | 173,453 | 19,002 | 37,528 | 229,983 |
| Investments in property, plant and equipment and intangible assets | 33,429 | 2,032 | 4,614 | 40,075 |
| Depreciation of property, plant and equipment and amortisation of intangible assets | 37,427 | 2,181 | 6,709 | 46,317 |
| Net book value of property, plant and equipment and intangible assets | 85,315 | 5,281 | 33,613 | 124,209 |
| (thousands of Euros) | Year ended as at 31 December 2014 | |||
|---|---|---|---|---|
| Wash-hire | Steril B | Steril C | Total | |
| Total revenues from sales and services | 176,594 | 20,456 | 37,297 | 234,347 |
| Investments in property, plant and equipment and intangible assets | 34,976 | 1,718 | 5,861 | 42,555 |
| Depreciation of property, plant and equipment and amortisation of intangible assets | 34,879 | 2,066 | 5,987 | 42,932 |
| Net book value of property, plant and equipment and intangible assets | 91,355 | 6,007 | 35,833 | 133,195 |
As things stand, the disclosure regarding the book value of the segment assets and liabilities is deemed to be insignificant.
Changes in property, plant and equipment and the associated accumulated depreciation are shown in the table below.
| (thousands of Euros) | Land and Buildings |
Plant and machinery |
Returnable assets |
Equipment | Other assets |
Assets under construction |
Total |
|---|---|---|---|---|---|---|---|
| Historical cost | 2,170 | 111,068 | 31,394 | 48,586 | 98,244 | 9,475 | 300,937 |
| Accumulated depreciation | (854) | (58,858) | (16,059) | (30,175) | (65,059) | - | (171,005) |
| Balance as at 1 January 2014 | 1,316 | 52,210 | 15,335 | 18,411 | 33,185 | 9,475 | 129,932 |
| Translation differences | 1 | 88 | 12 | 1 | 71 | 1 | 174 |
| Change in the scope of consolidation | - | - | - | 4 | 14 | - | 18 |
| Increases | 84 | 5,711 | 1,138 | 5,485 | 28,727 | 970 | 42,115 |
| Decreases | - | (170) | (6) | (11) | (27) | (161) | (375) |
| Depreciation | (115) | (7,660) | (2,894) | (5,179) | (26,292) | - | (42,140) |
| Reclassifications | - | 1,497 | 2,871 | 3,483 | 72 | (7,923) | - |
| Balance as at 31 December 2014 | 1,286 | 51,676 | 16,456 | 22,194 | 35,750 | 2,362 | 129,724 |
| Historical cost | 2,308 | 117,113 | 37,834 | 56,335 | 91,098 | 2,362 | 307,050 |
| Accumulated depreciation | (1,022) | (65,437) | (21,378) | (34,141) | (55,348) | - | (177,326) |
|---|---|---|---|---|---|---|---|
| Balance as at 1 January 2015 | 1,286 | 51,676 | 16,456 | 22,194 | 35,750 | 2,362 | 129,724 |
| Translation differences | (19) | (2,048) | (360) | (16) | (896) | (8) | (3,347) |
| Change in the scope of consolidation | - | 944 | 256 | 28 | 226 | - | 1,454 |
| Increases | 62 | 3,503 | 541 | 2,842 | 29,574 | 2,155 | 38,677 |
| Decreases | (1) | (262) | (36) | (9) | (146) | (315) | (769) |
| Depreciation | (114) | (7,878) | (2,997) | (5,830) | (28,184) | - | (45,003) |
| Reclassifications | - | 326 | 5 | 913 | 93 | (1,337) | - |
| Balance as at 31 December 2015 | 1,214 | 46,261 | 13,865 | 20,122 | 36,417 | 2,857 | 120,736 |
| Historical cost | 2,289 | 121,686 | 35,777 | 59,045 | 112,993 | 2,857 | 334,647 |
| Accumulated depreciation | (1,075) | (75,425) | (21,912) | (38,923) | (76,576) | - | (213,911) |
| Balance as at 31 December 2015 | 1,214 | 46,261 | 13,865 | 20,122 | 36,417 | 2,857 | 120,736 |
The change in the scope of consolidation refers to the acquisition of Aqualav Serviços De Higienização Ltda.
The investments in 2015 mainly related to the washing, ironing and folding systems, as well as new sterilisation systems, steam, water treatment systems and air induction and cooling systems.
For the year ended 31 December 2015, the investments mainly concerned the building and plant engineering works linked to the achievement of improvements and the adaptation of the existing installations used for the washing and sterilisation activities. Therefore, the Company maintains control over, obtains benefits from and bears the operating risks of these plants. The entity maintains ownership of the plants at the end of the wash-hire/washing/sterilisation contract.
On the basis of contractual commitments, the Group bore the cost of the partial renovation of premises of the industrial laundry facilities owned by the contracting entities, to increase the efficiency of the rented linen washing and sanitation service. These costs have been amortised in accordance with the amortisation schedules linked to the duration of the existing contract with the contracting entities, which is less than the useful life of the works completed.
The item presents an increase of Euro 2,842 thousand in the year ended 31 December 2015 for the purchase of industrial and commercial equipment, of which Euro 1,622 thousand for surgical instruments.
Reclassifications of equipment regard primarily the start of use of surgical instruments for the Udine sterilisation centre (Euro 638 thousand) and for the Baggiovara centre (Euro 201 thousand).
| (thousands of Euros) | As at 31 December | As at 31 December |
|---|---|---|
| 2015 | 2014 | |
| Linens and mattresses | 34,357 | 33,547 |
| Furniture and fixtures | 155 | 174 |
| Total | 36,417 | 35,750 |
|---|---|---|
| Other | 6 | 12 |
| Telephone switchboards | 62 | 55 |
| Motor vehicles | 821 | 1,012 |
| Cars | 43 | 65 |
| Electronic machinery | 973 | 885 |
Purchases made during the period refer primarily to investments in linens, for a total of Euro 28,740 thousand, so as to ensure increasingly efficient inventory management, both for the partial renewal of contracts and for the first supply relating to contracts acquired during the year in question.
Assets under construction
These are mainly returnable assets as per the previous point, under construction at period end.
The item is broken down as follows as at 31 December 2015:
| (thousands of Euros) | As at 31 December |
|---|---|
| 2015 | |
| Sterilisation centre investments | 2,198 |
| Laundering facility investments | 493 |
| Investments on contracts | 135 |
| Investments at the production sites of the subsidiaries Lavsim Higienização Têxtil S.A. and Maxlav Lavanderia Especializada S.A. | 31 |
| Total | 2,857 |
There is no property, plant and equipment under guarantee in favour of third parties.
A breakdown by category as at 31 December 2015 and 2014 of the assets under financial lease is provided below:
| (thousands of Euros) | Land and Buildings |
Plant and machinery |
Equipment | Other assets | Total |
|---|---|---|---|---|---|
| Historical cost | 59 | 12,692 | 844 | 378 | 13,973 |
| Accumulated depreciation | (59) | (11,546) | (844) | (378) | (12,827) |
| Balance as at 1 January 2015 | - | 1,146 | - | - | 1,146 |
| Historical cost | 59 | 11,410 | 729 | 371 | 12,569 |
| Accumulated depreciation | (59) | (10,714) | (729) | (371) | (11,873) |
| Balance as at 31 December 2015 | - | 696 | - | - | 696 |
A breakdown as at 31 December 2015 and 2014 of the commitments for operational leasing fees is provided below:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Within 12 months | 3,386 | 3,530 |
| Between one and five years | 7,898 | 9,731 |
| Beyond 5 years | 5,522 | 7,140 |
| Total | 16,805 | 20,400 |
This item changed as follows:
| (thousands of Euros) | Trademarks and Software |
Customer contract portfolio |
Other intangible assets | Assets under construction |
Total |
|---|---|---|---|---|---|
| Historical cost | 2,684 | 4,378 | - | 506 | 7,568 |
| Accumulated amortisation | (2,195) | (3,261) | - | - | (5,456) |
| Balance as at 1 January 2014 | 489 | 1,117 | - | 506 | 2,112 |
| Translation differences | - | - | - | 2 | 2 |
| Change in the scope of consolidation | - | 1,708 | - | - | 1,708 |
| Increases | 80 | - | - | 360 | 440 |
| Decreases | - | - | - | - | - |
| Amortisation | (395) | (396) | - | - | (791) |
| Reclassifications | 302 | - | - | (302) | - |
| Balance as at 31 December 2014 | 476 | 2,429 | - | 566 | 3,471 |
| Historical cost | 2,916 | 3,643 | - | 566 | 7,125 |
| Accumulated amortisation | (2,440) | (1,214) | - | - | (3,654) |
| Balance as at 1 January 2015 | 476 | 2,429 | - | 566 | 3,471 |
| Translation differences | (1) | - | - | (67) | (68) |
| Change in the scope of consolidation | - | - | - | - | - |
| Increases | 270 | - | 1,016 | 112 | 1,398 |
| Decreases | - | - | - | (14) | (14) |
| Amortisation | (506) | (455) | (353) | - | (1,314) |
| Reclassifications | 223 | - | - | (223) | - |
| Balance as at 31 December 2015 | 462 | 1,974 | 663 | 374 | 3,473 |
| Historical cost | 3,317 | 3,613 | 1,016 | 374 | 8,320 |
| Accumulated amortisation | (2,855) | (1,639) | (353) | - | (4,847) |
| Balance as at 31 December 2015 | 462 | 1,974 | 663 | 374 | 3,473 |
The column "Customer contract portfolio" represents the residual value assigned to the contracts held by Lavanderia Industriale Z.B.M. S.p.A. and by Si.Gi. Servizi Ospedalieri S.r.l (sole shareholder company) at the time of allocation of the purchase price. The value of these contracts is amortised on a consistent basis with the period in which they will generate benefits. Assets under construction mainly concern the management software being implemented.
The increase in "Other intangible assets" is essentially due to the accounting of the non-compete agreement stipulated with the previous CEO which provides for the obligation not to carry out, in the areas identified, activities in competition with the Group for a period of two years. This amount is amortised using the pro rata temporis method based on the duration of the agreement which expires on 22 April 2017.
Goodwill is allocated to the Servizi Italia Group's cash generating units identified on the basis of geographical area, which reflects the areas of operation of the companies acquired over the years.
Goodwill is allocated by geographical area as follows:
| (thousands of Euros) | As at 31 December 2014 |
Increases/ (Decreases) |
Translation differences |
As at 31 December 2015 |
|---|---|---|---|---|
| Italy CGU | 32,943 | - | - | 32,943 |
| Brazil CGU | 9,659 | 2,325 | (2,444) | 9,540 |
| Total | 42,602 | 2,325 | (2,444) | 42,483 |
All goodwill identified is included in the Wash-hire operating segment as defined for the purposes of segment reporting set forth in IFRS 8. The change in the value of the goodwill of the Brazil CGU is due to the process for the book allocation of the purchase price for Aqualav Serviços De Higienização Ltda and the translation differences due to the increase in the Brazilian Real exchange rate.
The impairment test is carried out by comparing the overall book value of each goodwill item and the series of net assets autonomously able to produce cash flow (CGU), which the same can be reasonably allocated to, with the value in use of the CGU or that recoverable from the same via sale, whichever is the higher. In detail, the value in use was determined by applying the "discounted cash flow" method discounting back the operating flows emerging from economic-financial projections relating to a period of five years. The long-term plans which have been used for the impairment tests were approved by advance by the Boards of Directors of the subsidiaries and/or by the parent company Servizi Italia S.p.A. The underlying hypotheses of the plans used reflect past experience, and the information gathered at the time of purchase for the Brazilian market and are consistent the external sources of information available. With reference to the explicit period, the Company took into consideration expected trends set forth in the 2016-2020 business plan.
The terminal value is determined by applying a perpetual growth factor of 1.0% for the Italy CGU and 4.5% for the Brazil CGU to the operating cash flow relating to the last year of the plan appropriately standardised, essentially representative on the one part of the inflation rate expected in Italy and in Brazil to which the prices of services offered are indexed and on the other part of the uncertainties which characterise the Italian and Brazilian markets. The discount rate used to discount back the cash flows of the CGUs located in Italy is 5.54% (6.64% last year), while it is 12.09% for the Brazil CGU (11.60% last year). These rates reflect the current valuations of the market with reference to the current value of money and the specific risks associated with the activities. The discount rates have been estimated net of taxes, on a consistent basis with the cash flows considered, by means of the determination of the weighted average cost of the capital (WACC).
Sensitivity analysis was carried out on the recoverability of the book value of the goodwill in line with the change in the main assumptions used for determining the value in use, also in consideration of the prudent approach used to select the financial parameters specified above. On the basis of the assumptions made as per the model for the goodwill, the changes in the values of the growth rate and the WACC, which would make the recoverable value of the CGUs equal to the book value, are presented below:
| (thousands of Euros) | % Reduction in the growth rate of the terminal values |
% Increase in the WACC discount rate |
|---|---|---|
| Italy CGU | 70% | 10% |
| Brazil CGU | 11% | 3% |
With reference to 31 December 2015 and the previous years, the impairment tests carried out did not reveal any impairment to be booked to the recorded goodwill.
This item changed as follows:
| (thousands of Euros) | Change in 2015 | |||||
|---|---|---|---|---|---|---|
| 1 January 2015 | Increases | Decreases | Revaluations | Impairments | 31 December 2015 |
|
| Associates and jointly controlled companies | ||||||
| Saniservice Sh.p.k. | - | 6 | - | - | (46) | (40) |
| Ankateks Turizm Insaat Tekstil Temizleme Sanayi Ve | - | 4,469 | - | 16 | - | 4,485 |
| Finanza & Progetti S.p.A. | - | 5,100 | - | - | (9) | 5,091 |
| Centro Italia Servizi S.r.l. | 390 | - | (240) | 7 | - | 157 |
| CO.SE.S S.c.r.l. | 3 | - | - | - | - | 3 |
| PSIS S.r.l. | 3,957 | - | - | 187 | - | 4,144 |
| Ekolav S.r.l. | 55 | - | - | 6 | - | 61 |
| Steril Piemonte S.c.r.l. | 1,973 | - | - | - | - | 1,973 |
| AMG S.r.l. | 2,198 | - | - | 57 | - | 2,255 |
| Iniziative Produttive Piemontesi S.r.l. | 1,149 | - | - | - | (43) | 1,106 |
| SE.STE.RO. S.r.l. | 123 | - | - | - | - | 123 |
| Piemonte Servizi Sanitari S.c.r.l. | 3 | - | - | - | - | 3 |
| SAS Sterilizasyon Servisleri A.Ş. | 52 | - | - | - | (27) | 25 |
| Shubhram Hospital Solutions Private Limited | 63 | 267 | - | - | (665) | (335) |
| Total | 9,966 | 9,842 | (240) | 273 | (790) | 19,051 |
This item in question changed as follows in 2014:
| (thousands of Euros) | Change in 2014 | ||||||
|---|---|---|---|---|---|---|---|
| 1 January 2014 |
Increases | Decreases | Revaluations | Impairments | 31 December 2014 | ||
| Associates and jointly controlled companies | |||||||
| Si.Gi. Servizi Ospedalieri S.r.l. | 518 | - | (696) | 178 | - | - | |
| Centro Italia Servizi S.r.l. | 149 | - | - | 241 | - | 390 | |
| CO.SE.S S.c.r.l. | 3 | - | - | - | - | 3 | |
| PSIS S.r.l. | 4,106 | - | - | - | (149) | 3,957 | |
| Ekolav S.r.l. | 49 | - | - | 6 | - | 55 | |
| Steril Piemonte S.c.r.l. | 1,973 | - | - | - | - | 1,973 | |
| AMG S.r.l. | 2,117 | - | - | 81 | - | 2,198 | |
| Iniziative Produttive Piemontesi S.r.l. | 1,166 | 1 | - | - | (18) | 1,149 | |
| SE.STE.RO. S.r.l. | 168 | - | (50) | 5 | - | 123 | |
| Piemonte Servizi Sanitari S.c.r.l. | 3 | - | - | - | - | 3 | |
| SAS Sterilizasyon Servisleri A.Ş. | - | 86 | - | - | (34) | 52 | |
| Shubhram Hospital Solutions Private Limited | - | 308 | - | - | (245) | 63 | |
| Total | 10,252 | 395 | (746) | 511 | (446) | 9,966 |
The total values of the current and non-current assets, current and non-current liabilities, revenues, costs and profit/loss of the equity investments carried at equity are presented below:
| (thousands) | As at 31 December 2015 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Company Name | Currency | Non current assets |
Current assets |
Non current liabilities |
Current liabilities |
Shareholders' equity |
Revenues | Costs | Profit/ (Loss) |
| SAS Sterilizasyon Servisleri A.Ş. | TL | 1 | 340 | - | 183 | 158 | 607 | 736 | (129) |
| Saniservice Sh.p.k. | LEK | 313 | 58,686 | 35,006 | 42,285 | (18,292) | - | 21,038 | (21,038) |
| Shubhram Hospital Solutions Private Limited | INR | 598,898 | 46,185 | 441,869 | 250,582 | (47,368) | 19,571 | 114,114 | (94,543) |
| Ankateks Turizm İnsaat Tekstil Temizleme Sanayi Ve | TL | 11,799 | 4,685 | 6,621 | 7,955 | 1,908 | 14,038 | 13,255 | 783 |
| Finanza & Progetti S.p.A. | EUR | 2,282 | 1,243 | 26 | 589 | 2,910 | - | 235 | (235) |
| Centro Italia Servizi S.r.l. | EUR | 274 | 797 | 264 | 493 | 314 | 1,844 | 1,830 | 14 |
| CO.SE.S S.c.r.l. | EUR | 6 | 2,547 | 123 | 2,420 | 10 | 2,600 | 2,600 | - |
| PSIS S.r.l. | EUR | 25,093 | 6,174 | 3,539 | 19,440 | 8,288 | 9,271 | 8,897 | 374 |
| Ekolav S.r.l. | EUR | 1,616 | 1,096 | 676 | 1,913 | 123 | 2,559 | 2,547 | 12 |
| Steril Piemonte S.c.r.l. | EUR | 5,678 | 1,531 | - | 3,264 | 3,945 | 2,891 | 2,891 | - |
| AMG S.r.l. | EUR | 2,215 | 2,746 | 484 | 2,058 | 2,419 | 4,219 | 4,104 | 115 |
| SE.STE.RO. S.r.l. | EUR | 15 | 1,718 | 42 | 1,201 | 490 | 1,052 | 1,050 | 2 |
| Iniziative Produttive Piemontesi S.r.l. | EUR | 867 | 3,891 | 281 | 2,789 | 1,688 | 5,684 | 5,799 | (115) |
| Piemonte Servizi Sanitari S.c.r.l. | EUR | 41 | 1,412 | - | 1,443 | 10 | 2,301 | 2,301 | - |
The overall values of cash and cash equivalents, current and non-current financial liabilities, impairments and amortisation/depreciation, interest income, interest expense and income taxes of the jointly-controlled companies as at 31 December 2015, are presented below:
| (thousands) | As at 31 December 2015 | |||||||
|---|---|---|---|---|---|---|---|---|
| Company Name | Currenc y |
Cash and cash equivalent s |
Current fin. liabilitie s |
Non current fin. liabilitie s |
Impairments and amortisation/depreciatio n |
Interes t income |
Interes t expens e |
Incom e taxes |
| SAS Sterilizasyon Servisleri A.Ş. | TL | 71 | - | - | 1 | 10 | - | - |
| Shubhram Hospital Solutions Private Limited |
INR | 2,225 | 213,903 | 441,791 | 10,910 | 259 | 19,803 | - |
| Saniservice Sh.p.k. | LEK | 2,038 | - | - | - | - | 382 | - |
| Finanza & Progetti S.p.A. | EUR | 577 | - | - | 5 | - | - | - |
| Centro Italia Servizi S.r.l. | EUR | 77 | - | - | 220 | - | 2 | 14 |
| PSIS S.r.l. | EUR | 214 | 13,666 | 3,539 | 2,541 | - | 521 | 53 |
| AMG S.r.l. | EUR | 1,115 | 1,000 | - | 585 | 2 | 6 | 83 |
The item in question did not change during 2015:
| (thousands of Euros) | Change in 2015 | |||
|---|---|---|---|---|
| 1 January 2015 | Increases | Impairment losses/Decreases |
31 December 2015 |
|
| Asolo Hospital Service S.p.A. | 464 | - | - | 464 |
| Prosa S.p.A. | 462 | - | - | 462 |
| PROG.ESTE S.p.A. | 1,212 | - | - | 1,212 |
| Progeni S.p.A. | 380 | - | - | 380 |
| Sesamo S.p.A. | 353 | - | - | 353 |
| CCFS Consorzio Coop. Finanziario | 14 | - | - | 14 |
| Gesteam S.r.l. | 9 | - | - | 9 |
| Consorzio Lani Energie | 1 | - | - | 1 |
|---|---|---|---|---|
| Summano Sanità S.p.A. | 11 | - | - | 11 |
| Project Ca' Arnaldi S.r.l. | 9 | - | (9) | - |
| Consorzio Nazionale Servizi | 13 | - | - | 13 |
| Synchron Nuovo San Gerardo S.p.A. | 344 | - | - | 344 |
| SPV Arena Sanità | 278 | - | - | 278 |
| Other | 1 | - | - | 1 |
| Total | 3,551 | - | (9) | 3,542 |
| (thousands of Euros) | Change in 2014 | |||
|---|---|---|---|---|
| 1 January 2014 | Increases | Impairment losses/Decreases |
31 December 2014 | |
| Asolo Hospital Service S.p.A. | 464 | - | - | 464 |
| Prosa S.p.A. | 462 | - | - | 462 |
| PROG.ESTE S.p.A. | 1212 | - | - | 1,212 |
| Progeni S.p.A. | 380 | - | - | 380 |
| Sesamo S.p.A. | 353 | - | - | 353 |
| Italia Servizi Integrati S.p.A. | 15 | - | (15) | - |
| CCFS Consorzio Coop. Finanziario | 14 | - | - | 14 |
| Gesteam S.r.l. | 9 | - | - | 9 |
| Consorzio Lani Energie | 1 | - | - | 1 |
| Summano Sanità S.p.A. | 11 | - | - | 11 |
| Project Ca' Arnaldi S.r.l. | 9 | - | - | 9 |
| Consorzio Nazionale Servizi | 13 | - | - | 13 |
| Synchron Nuovo San Gerardo S.p.A. | 344 | - | - | 344 |
| SPV Arena Sanità | 208 | 70 | - | 278 |
| Other | 1 | - | - | 1 |
| Total | 3,496 | 70 | (15) | 3,551 |
The total values of the assets, liabilities, revenues and profit/loss, on the basis of the last set of available financial statements, of the main equity investments in other companies held by the Company are presented below, along with related shareholding held as at 31 December 2015:
| (thousands of Euros) | Financial statement figures as at 31 December 2014 | % holding | ||||
|---|---|---|---|---|---|---|
| Registered | Assets | as at 31 December | ||||
| Offices | Liabilities | Revenues | Profit/ (Loss) | 2015 | ||
| Asolo Hospital Service S.p.A. | Asolo (TV) | 114,748 | 104,169 | 43,760 | 875 | 7.03% |
| Prosa S.p.A. | Carpi (MO) | 11,893 | 6,773 | 5,926 | 935 | 13.20% |
| Progeni S.p.A. | Milan | 303,170 | 292,754 | 41,825 | (80) | 3.80% |
| Sesamo S.p.A. | Carpi (MO) | 43,993 | 36,478 | 18,001 | 2,225 | 12.17% |
| Prog.este. S.p.A. | Carpi (MO) | 218,887 | 209,968 | 35,374 | 332 | 10.14% |
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Prosa S.p.A. | 321 | 434 |
| Total | 3,234 | 2,714 |
|---|---|---|
| Ospedale Irmandade de Santa Casa de Misericordia de São Paulo | 182 | 387 |
| Syncron | 254 | - |
| Arena Sanità | 446 | 21 |
| Summano Sanità S.p.A. | 3 | 6 |
| Prog.Este S.p.A. | 531 | 531 |
| Progeni S.p.A. | 982 | 982 |
| Saniservice Sh.p.k. | 162 | - |
| Sesamo S.p.A. | 353 | 353 |
Financial receivables relate to interest-bearing loans granted to the companies Prosa S.p.A. (rate equal to 1.60% plus 3-month Euribor), Sesamo S.p.A. (rate equal to 3% plus 20-year IRS rate), Progeni S.p.A. (rate equal to 5.06% + 2.25%), Prog.Este S.p.A. (rate equal to 4.7135% + 1.75%), Summano Sanità S.p.A. (rate equal to 3.8% + 2.30%) and Arena Sanità S.p.A. (rate equal to 3.4% + 6-month Euribor) and with a term equal to the global service agreements for which they were established (expiring on 21 February 2031, 31 December 2037, 31 December 2033, 31 December 2031, 31 December 2030 and 20 August 2032, respectively). The loan in favour of Prosa S.p.A. decreased due to a partial repayment which took place in 2015, while the loan to Irmandade de Santa Casa de Misericordia Hospital in São Paulo decreased as a result of the collection of instalments paid as per the repayment plan. The loan granted to Arena Sanità S.p.A. rose by Euro 425 thousand and, in the course of 2015, two new loans were disbursed, to Saniservice Sh.p.k. (Euro 162 thousand, with a rate of 7%) and Synchron S.p.A. (Euro 254 thousand, with a rate of 8%).
| (thousands of Euros) | Share capital increase costs |
Property, plant and equipment |
Employee benefits |
Other costs with deferred deductibility |
Total |
|---|---|---|---|---|---|
| Deferred taxation as at 1 January 2014 | 79 | - | - | 574 | 653 |
| Change in the scope of consolidation | - | - | - | 2 | 2 |
| Changes recognised in the income statement | (26) | 430 | - | 143 | 547 |
| Changes recognised under shareholders' equity | 40 | - | - | - | 40 |
| Changes recognised in other comprehensive income | - | - | 140 | - | 140 |
| Deferred taxation as at 31 December 2014 | 93 | 430 | 140 | 719 | 1,382 |
| Changes recognised in the income statement | (45) | 354 | - | 115 | 424 |
| Changes recognised under shareholders' equity | - | - | - | - | |
| Changes recognised in other comprehensive income | - | - | (6) | - | (6) |
| Deferred taxation as at 31 December 2015 | 48 | 784 | 134 | 834 | 1,800 |
This item changed as follows:
Following the approval of the 2016 Stability Law (Italian Law No. 208 of 28 December 2015), which lowered the IRES rate from 27.5% to 24% starting on 1 January 2017, deferred tax assets were adjusted accordingly. This adjustment had a negative effect of Euro 24 thousand. There are no deferred tax assets not recognised in the financial statements because they were considered nonrecoverable.
The item is broken down as follows:
| (thousands of Euros) As at 31 December |
||
|---|---|---|
| 2015 | 2014 | |
| Substitute tax Italian D.L. 185 subsequent years | 1,880 | 2,139 |
| Receivables for IRES reimbursement request pursuant to Art. 2c.1-quater Italian D.L. 201 | 1,834 | 1,832 |
| Aqualav receivable in escrow account | 1,860 | - |
| Other non-current assets | 534 | 96 |
| Total | 6,108 | 4,067 |
Other non-current assets rose from Euro 4,067 thousand as at 31 December 2014 to Euro 6,108 thousand as at 31 December 2015. The increase in this item is due to the recognition of the escrow account of Aqualav Serviços De Higienização Ltda for Euro 1,860 thousand, estimated in the financial statements of the Brazilian subsidiary. The drop in substitute tax is due to the release to the income statement for the pertinent deduction of the goodwill released in 2013 and previous years. This substitute tax was recognised as prepaid current taxes and is released to the income statement over the period of time in which the Group benefits from the tax deductions connected with the goodwill.
Inventories at year-end primarily included single-use, washing products, chemical products, packaging and consumables. No impairments were made to the value of the inventories in the current and previous years.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |||
|---|---|---|---|---|
| 2015 | 2014 | |||
| Due from third parties | 73,983 | 75,009 | ||
| Due from associates | 643 | 814 | ||
| Due from parent companies | 120 | 346 | ||
| Total | 74,746 | 76,169 |
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Due from customers | 79,514 | 80,344 |
| Bad debt provision | (5,531) | (5,335) |
| Total | 73,983 | 75,009 |
The Company took part in a number of transactions concerning the transfer of receivables described below:
The bad debt provision changed as follows in 2015 and in 2014:
| (thousands of Euros) | |
|---|---|
| Balance as at 1 January 2014 | 5,138 |
| Uses | (454) |
| Adjustments | (26) |
| Provisions | 677 |
| Balance as at 31 December 2014 | 5,335 |
| Uses | (160) |
| Adjustments | (40) |
| Provisions | 396 |
| Balance as at 31 December 2015 | 5,531 |
The balance as at 31 December 2015 of trade receivables due from associates and jointly-controlled companies, amounting to Euro 643 thousand, is essentially represented by trade receivables due from PSIS S.r.l. for Euro 172 thousand, Steril Piemonte S.c.r.l. for Euro 160 thousand, AMG S.r.l. for Euro 149 thousand, SE.STE.RO. S.r.l. for Euro 67 thousand, Saniservice Sh.p.k. for Euro 36 thousand and Ekolav S.r.l. for Euro 22 thousand.
Furthermore, there is a credit balance due from the parent company Coopservice Soc.Coop. p.A. for Euro 120 thousand.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | ||
|---|---|---|---|
| 2015 | 2014 | ||
| Tax receivables | 5,679 | 7,793 | |
| Tax payables | (3,201) | (7,507) | |
| Total | 2,478 | 286 |
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | ||
|---|---|---|---|
| 2015 | 2014 | ||
| Asolo Hospital Service S.p.A. | 1,563 | 1,648 | |
| P.S.I.S. S.r.l. | 3,856 | 3,800 | |
| Ekolav S.r.l. | 172 | 170 | |
| AMG S.r.l. | 502 | 500 | |
| Steril Piemonte S.c.r.l. | 1,156 | 1,150 | |
| Iniziative Produttive Piemontesi S.r.l. | 91 | 90 | |
| Gesteam S.r.l. | 328 | 300 | |
| Other | 399 | 133 | |
| Total | 8,067 | 7,791 |
Financial receivables are for loans granted to the companies indicated above, which are due within the year or repayable on demand. The increase compared to 31 December 2014 is essentially due to interest accrued on individual loans and still not collected. In 2015, a partial repayment of Euro 182 thousand was made on the interest-bearing loan granted to Asolo Hospital Service S.p.A. The item "Other" discloses the interest-bearing loan (rate of 11.4%) for Euro 108 thousand in favour of the customer Irmandade de Santa Casa de Misericordia Hospital in São Paulo (Brazil) granted by the subsidiary SRI Empreendimentos e Participações L.t.d.a..
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | ||
|---|---|---|---|
| 2015 | 2014 | ||
| Due from others | 8,205 | 5,502 | |
| Prepayments | 831 | 826 | |
| Guarantee deposits receivable | 156 | 69 | |
| Accrued income | 49 | - | |
| Total | 9,241 | 6,397 |
The item Receivables due from others is made up of the amount due to the subsidiaries Se.Sa.Tre. S.c.r.l. and San Martino 2000 from the consortium Servizi Ospedalieri S.p.A. totalling Euro 2,263 thousand and, for the remaining amount, advances and amounts due from social security and welfare institutions, all due within 12 months.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | ||
|---|---|---|---|
| 2015 | 2014 | ||
| Bank and postal deposits | 7,057 | 5,110 | |
| Cheques | - | 25 | |
| Cash at bank and in hand | 25 | 43 | |
| Total | 7,082 | 5,178 |
This item increased by Euro 1,904 thousand compared to 31 December 2014. This increase is essentially linked to the cash and cash equivalents of the Brazilian subsidiary SRI Empreendimentos e Participações Ltda, which will be used in 2016 to finance local investments.
On 2 November 2015, further to the closure of the Third and last Exercise Period (from 1 October until 30 October 2015) of the "Warrant Servizi Italia S.p.A. 2012 – 2015", the Company announced that 9,311,120 Warrants had been exercised and consequently 2,327,780 newly-issued ordinary Servizi Italia shares had been subscribed (at a ratio of 1 new share for each 4 warrants exercised) at a price of Euro 3.30 each, admitted for listing on the Borsa Italiana screen-based stock market (MTA), with a par value of Euro 1.00 each, with regular dividend rights and the same characteristics as the ordinary Servizi Italia shares in circulation as of the issue date (the "Conversion Shares"), for a total equivalent value of Euro 7,681,674. Due to the closure of the Third Exercise Period, the 2012-2015 Warrants are no longer exercisable or traded on the Regulated Market.
During 2015, the Company purchased 186,890 treasury shares with a value of Euro 797 thousand, equivalent to 0.61% of the share capital, at the average book price of Euro 4.27 per share and sold 397,000 treasury shares for a value of Euro 1,739 thousand, equating to 1.29% of the share capital at an average price of Euro 4.38 per share. Following these transactions, the Company held 255,616 treasury shares amounting to 0.83% of the share capital as at 31 December 2015. The equivalent value of the treasury shares held on 31 December 2015, equal to Euro 1,101 thousand, was classified as decreasing the share capital for the par value of the same, equating to Euro 256 thousand, and as reducing the share premium reserve for the excess of the purchase value with respect to the par value, amounting to Euro 845 thousand.
The legal reserve and other reserves increased due to the allocation of the 2014 profit, along with the payment of dividends for Euro 4,503 thousand and the reduction due to the translation difference associated with the assets of the Brazilian companies as a result of decline in value of the Brazilian real compared to the Euro.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December 2015 | As at 31 December 2014 | ||||
|---|---|---|---|---|---|---|
| Current | Non-current | Total | Current | Non-current | Total | |
| Due to banks | 44,361 | 35,589 | 79,950 | 41,667 | 27,013 | 68,680 |
| Due to other lenders | 1,830 | 522 | 2,352 | 1,124 | 1,245 | 2,369 |
| Total | 46,191 | 36,111 | 82,302 | 42,791 | 28,258 | 71,049 |
6.16.1 Due to banks
The portion of the payable falling due within 12 months relating to the item Due to banks as at 31 December 2015 presents an increase with respect to 31 December 2014 of Euro 2,694 thousand as a result of greater recourse to self-financing credit lines for supplier payments.
The portion of the payable falling due beyond 12 months relating to the item Due to banks as at 31 December 2015 presents an increase with respect to 31 December 2014 of Euro 8,576 thousand. This portion includes the unsecured loan taken out from Cassa di Risparmio in Bologna S.p.A. (remaining payable beyond 12 months of Euro 9,000 thousand). The change with respect to 31 December 2014 is connected to the repayment of the loan instalments which fell due during the year, the early repayment of Euro 6,500 thousand on the mortgage taken out from Banca Popolare dell'Emilia Romagna and of Euro 7,560 thousand on the loan from Banca del Mezzogiorno – MedioCredito Centrale S.p.A., and the subscription of new mortgages with the bank Carige Italia S.p.A. in the amount of Euro 10,000 thousand (remaining payable beyond 12 months of Euro 6,562 thousand) on 31 March 2015 with a duration of five years, with Cassa di Risparmio di Parma e Piacenza SpA in the amount of Euro 10,000 thousand (remaining payable beyond 12 months of Euro 6,304 thousand) on 27 April 2015 with a duration of four years and with Banca Popolare di Milano S.Coop.a r.l. for a total of Euro 15,000 thousand (remaining payable beyond 12 months of Euro 12,800 thousand) on 2 November 2015 with a duration of five years. The loan taken out with Cassa di Risparmio in Bologna S.p.A. in 2012 requires a net financial position of less than 1.5 times the value of shareholders' equity (covenant) to be maintained, a condition which had been met as at 31 December 2015. The loan stipulated with Banca Nazionale del Lavoro S.p.A. requires the maintenance of a net financial position of less than 2 times the value of shareholders' equity and less than 2.5 times the Ebitda (covenant), conditions which had been met as at 31 December 2015. The loans stipulated with Cassa di Risparmio in Bologna S.p.A. in 2014 and with Cassa di Risparmio di Parma e Piacenza S.p.A. require the maintenance of a net financial position of less than 1.5 times the value of shareholders' equity and less than 2.5 times the Ebitda (covenant), conditions which had been met as at 31 December 2015. The loan stipulated with Banca Popolare di Milano S.Coop.a r.l. requires the maintenance of a net financial position of less than 2 times the value of shareholders' equity and less than 2 times the Ebitda (covenant), conditions which had been met as at 31 December 2015.
The portion of debt due beyond 12 months also includes the medium-term debt of the Brazilian subsidiaries Lavsim Higienização Têxtil S.A. for a total of Euro 169 thousand, Maxlav Lavanderia Especializada S.A. for a total of Euro 162 thousand, Vida Lavanderias Especializada S.A. for a total of Euro 157 thousand and Aqualav Serviços De Higienização Ltda for a total of Euro 434 thousand.
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Less than or equal to 6 months | 38,759 | 34,285 |
| 6 to 12 months | 5,602 | 7,383 |
| 1 to 5 years | 34,820 | 27,012 |
| More than 5 years | 769 | - |
| Total | 79,950 | 68,680 |
Amounts due to banks are shown below by maturity:
Non-current amounts due to banks are broken down by maturity as follows:
| (thousands of Euros) | As at 31 December | ||
|---|---|---|---|
| 2015 | 2014 | ||
| 1 to 2 years | 11,109 | 9,625 | |
| 2 to 5 years | 23,711 | 17,387 |
| More than 5 years | 769 | - |
|---|---|---|
| Total | 35,589 | 27,012 |
The average effective interest rates as at 31 December 2015 were as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Advances on invoices | 1.92% | 2.04% |
| Bank loan | 2.17% | 3.89% |
Amounts due to other lenders as at 31 December 2015, for the current portion, are mainly represented by the amount due to the Viterbo Hospital authority for Euro 50 thousand relating to a double payment made in our favour, the amount due to Credem Factor for invoices factored without recourse of Euro 206 thousand, mistakenly paid in our favour by the customer, the debt contracted by the subsidiary Se.Sa.Tre. S.c.r.l. vis-à-vis Servizi Ospedalieri S.p.A. for Euro 706 thousand (Euro 719 thousand as at 31 December 2014), and the debt of the Brazilian subsidiaries for a total of Euro 868 thousand.
As at 31 December 2015, the non-current portion was attributable to the debt contracted by the subsidiary Se.Sa.Tre. S.c.r.l. vis-à-vis Servizi Ospedalieri S.p.A. for Euro 515 thousand (Euro 1,202 thousand as at 31 December 2014), and the debt of the Brazilian subsidiaries for a total of Euro 7 thousand.
Payables to other lenders are broken down by maturity below.
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Less than or equal to 6 months | 1,113 | 377 |
| 6 to 12 months | 717 | 747 |
| 1 to 5 years | 522 | 1,245 |
| More than 5 years | - | - |
| Total | 2,352 | 2,369 |
| (thousands of Euros) | As at 31 December | ||
|---|---|---|---|
| 2015 | 2014 | ||
| 1 to 2 years | 522 | 721 | |
| 2 to 5 years | - | 525 | |
| More than 5 years | - | - | |
| Total | 522 | 1,245 |
The following table shows the breakdown of the amounts due to other lenders by type of rate:
| (thousands of Euros) | As at 31 December | ||
|---|---|---|---|
| 2015 | 2014 | ||
| Floating rate | 2,096 | 2,029 | |
| Fixed rate | 256 | 340 |
Deferred tax liabilities are broken down below by nature of the timing differences that generated them:
| (thousands of Euros) | Leasing | Employee benefits |
Property, plant and equipment and intangible assets |
Goodwill | Other | Total |
|---|---|---|---|---|---|---|
| Deferred tax liabilities as at 1 January 2014 | 376 | 125 | 396 | 1,091 | - | 1,988 |
| Change in the scope of consolidation | - | - | 536 | - | - | 536 |
| Changes recognised in the income statement | (138) | (7) | (111) | 115 | - | (141) |
| Changes recognised in other comprehensive income | - | (118) | - | - | - | (118) |
| Deferred tax liabilities as at 31 December 2014 | 238 | - | 821 | 1,206 | - | 2,265 |
| Change in the scope of consolidation | - | - | - | - | - | - |
| Changes recognised in the income statement | (130) | - | (236) | (32) | - | (398) |
| Changes recognised in other comprehensive income | - | - | - | - | - | |
| Deferred tax liabilities as at 31 December 2015 | 108 | - | 585 | 1,174 | - | 1,867 |
Following the approval of the 2016 Stability Law (Italian Law No. 208 of 28 December 2015), which lowered the IRES rate from 27.5% to 24% starting on 1 January 2017, deferred tax liabilities were adjusted accordingly. This adjustment had a positive effect of Euro 199 thousand.
There are no deferred taxes which have not been recognised since the related payment is deemed unlikely.
This item changed as follows:
| (thousands of Euros) | Year | |
|---|---|---|
| 2015 | 2014 | |
| Opening balance | 10,855 | 9,732 |
| Change in the scope of consolidation | - | 219 |
| Provision | 430 | 271 |
| Financial expense | 140 | 273 |
| Actuarial (gains)/losses | 70 | 937 |
| Transfers (to)/from other provisions | - | - |
| (Uses) | (1,506) | (577) |
| Closing balance | 9,989 | 10,855 |
This item includes the employee severance indemnity as well as the amount accrued on the LTI-Cash 2015-2017 variable remuneration plan for Directors, Managers, Senior Managers and Executives, based on which a bonus is disbursed at the end of the three-year period if certain economic and financial targets are met and in relation to the Servizi Italia share price, and the termination indemnity accrued by the CEO.
With the approval of the financial statements as at 31 December 2014, the vesting period of the LTI Cash 2012-2013-2014 Plan was completed. On 12 March 2015, the Remuneration Committee provided in-depth disclosure and support to the Board of Directors, highlighting the achievement of the performance target and therefore proposing the disbursement of the bonus to the Beneficiaries under the terms and as per the formalities established in the regulations. The proposal was approved by the Board of Directors and the Board of Statutory Auditors, in fact decreeing the closure of said plan and disbursement to the beneficiaries of around Euro 1,050 thousand.
The valuation techniques were carried out on the basis of the hypotheses described by the following table:
| Year | ||
|---|---|---|
| 2015 | 2014 | |
| Technical annual discounting back rate | 1.39% | 1.50% |
| Annual inflation rate | 1.75% | 1.75% |
| Annual growth rate of the severance indemnity | 2.81% | 2.81% |
With regard to the discount rate, the iBoxx Eurozone Corporates AA 7 - 10 index as of the valuation date was taken as reference for the valuation of this parameter. The duration of the liability is 10 years.
Further to the supplementary welfare reform as per Italian Legislative Decree No. 252 dated 5 December 2005, for employees who have decided to allocate the indemnity as from 1 January 2007 to the INPS Treasury Fund, the advances as per Article 2120 of the Italian Civil Code are calculated on the entire value of the severance indemnity accrued by the worker.
These advances are disbursed by the employer within the limits of the capacity of the amounts accrued by virtue of the provisions made up until 31 December 2006. If the amount of the advance is not covered by the amount accrued care of the employer, the difference is disbursed by the Treasury Fund set up care of INPS.
With regard to the matters set forth above and for just the employees who have complied with the Treasury Fund and who have not requested advances on the indemnity, corrections have been made in the actuarial valuations increasing the requested percentage to be applied to the Fund accrued as at 31 December 2006 and revalued until the calculation date.
In accordance with the matters required by the reviewed version of IAS 19, sensitivity analysis is presented below in line with the change in the main actuarial hypotheses included in the calculation model.
| (thousands of Euros) | Discount rate | Inflation rate | Duration | |||
|---|---|---|---|---|---|---|
| +0.50% | -0.50% | +0.25% | -0.25% | +1 year | -1 year | |
| Change in liabilities | (356) | 379 | 107 | (105) | (51) | 274 |
The item is broken down as follows:
| (thousands of Euros) | Year | |
|---|---|---|
| 2015 | 2014 | |
| Opening balance | 126 | 343 |
| Provisions | 2,199 | 64 |
| Uses | (33) | (281) |
| Other changes | (15) | - |
| Closing balance | 2,277 | 126 |
The provision shown as at 31 December 2015 was due to the recognition of a provision for labour disputes of Aqualav Serviços De Higienização Ltda in the amount of Euro 1,860 thousand estimated in the financial statements of the Brazilian subsidiary. This amount is guaranteed by the sellers so that any future liabilities do not negatively impact the company's income statement.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Deferred price Aqualav Serviços De Higienização Ltda | 522 | - |
| Payable for put options Maxlav Lavanderia Especializada S.A. and Vida Lavanderias Especializada S.A. | 2,686 | 6,194 |
| Total | 3,208 | 6,194 |
The item decreased by Euro 2,986 thousand from Euro 6,194 thousand to Euro 5,241 thousand. The decrease compared to 31 December 2014 derives from the redetermination of the value of the payable for put options connected with the acquisition of the remaining 49.9% of the companies Maxlav Lavanderia Especializada S.A. and Vida Lavanderias Especializada S.A., the depreciation of the real compared to the Euro, and the payment of sums withheld to guarantee the price paid for the acquisition of Maxlav Lavanderia Especializada S.A. and Vida Lavanderias Especializada S.A. This item includes the non-current portion of sums withheld to guarantee the price paid for the acquisition of Aqualav Serviços De Higienização Ltda, amounting to Euro 522 thousand.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Due to suppliers | 58,091 | 56,477 |
| Due to associates | 3,711 | 3,621 |
| Due to parent companies | 3,627 | 4,577 |
| Total | 65,429 | 64,675 |
The balance as at 31 December 2015 refers entirely to trade payables due within 12 months.
The balance as at 31 December 2015 mainly refers to trade payables due to Steril Piemonte S.c.r.l. (Euro 704 thousand), Ekolav S.r.l. (Euro 552 thousand), Se.Ste.Ro. S.r.l. (Euro 549 thousand), Co.Se.S. S.c.r.l. (Euro 432 thousand), AMG S.r.l. (Euro 425 thousand), Piemonte Servizi Sanitari S.c.r.l. (Euro 390 thousand) and Centro Italia Servizi S.r.l. (Euro 322 thousand).
Trade payables due to the parent company Coopservice S.Coop.p.A. amount to Euro 3,627 thousand.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | ||
|---|---|---|---|
| 2015 | 2014 | ||
| Tax receivables | 2,438 | 4,972 | |
| Tax payables | (2,803) | (5,995) | |
| Total | (365) | (1,023) |
The amount refers to current tax payables of consolidated companies.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Payable to Ankateks shareholders | 962 | - |
| Payable for put options and earn-out on Lavsim Higienização Têxtil S.A. | - | 5,722 |
| Deferred price Aqualav Serviços De Higienização Ltda | 58 | - |
| Payable for earn-out on Maxlav Lavanderia Especializada S.A. and Vida Lavanderias Especializada S.A. | 58 | 77 |
| Total | 1,078 | 5,799 |
The change in this item arose from the payment on 16 January 2015 of the amount due for the exercising of the put option relating to the acquisition of the remaining 50% of the share capital of the company Lavsim Higienização Têxtil S.A., in which Servizi Italia S.p.A. has held an equity investment since 2 July 2012 through the subsidiary SRI Empreendimentos e Participações Ltda. This item also includes Euro 962 thousand recognised in relation to the remaining payable to other shareholders for the acquisition of the 40.0% stake in Ankateks Turizm Inşaat Tekstil Temizleme San. Ve Tic. Ltd. Şti. This item includes the current portion of sums withheld to guarantee the price paid for the acquisition of Aqualav Serviços De Higienização Ltda, amounting to Euro 58 thousand.
The table below provides a breakdown of other current liabilities.
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Accrued liabilities | 18 | 12 |
| Deferred income | 800 | 964 |
| Due to social security and welfare institutions | 5,115 | 4,937 |
| Other payables | 11,908 | 18,106 |
| Total | 17,841 | 24,019 |
Amounts due to social security include contributions to INPS/INAIL/INPDAI (National Social Security Institution/Italian Institution for Insurance Against Workplace Accidents/National Welfare Institute for Industrial Managerial Employees) totalling Euro 5,115 thousand, all falling due within the year.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Due to employees | 8,859 | 8,980 |
| Employee/professional IRPEF (personal income tax) payable | 1,972 | 1,711 |
| Current and deferred VAT payable | - | 6,761 |
| Other payables | 1,077 | 654 |
| Total | 11,908 | 18,106 |
The reduction in payables compared to the previous year was mainly due to the decrease in the VAT payable for invoices issued to the public administration due to the application as of 1 January 2015 of the split payment regulation introduced in Italy with the 2015 Stability Law. The increase in the item Other payables is due mainly to the recognition of the current payable for the non-compete agreement amounting to Euro 516 thousand.
The Group's net financial debt as at 31 December 2015 and as at 31 December 2014 is shown below.
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Cash and cash equivalents in hand | 25 | 68 |
| Cash at bank | 7,057 | 5,110 |
| Cash and cash equivalents | 7,082 | 5,178 |
|---|---|---|
| Current financial receivables | 8,067 | 7,791 |
| Current liabilities to banks and other lenders | (46,191) | (42,791) |
| Current net financial debt | (38,124) | (35,000) |
| Non-current liabilities to banks and other lenders | (36,111) | (28,257) |
| Non-current net financial debt | (36,111) | (28,257) |
| Net financial debt | (67,153) | (58,079) |
The increase in net financial debt essentially resulted from the payment made for the acquisition of the remaining 50% of the share capital of Lavsim Higienização Têxtil S.A., amounting to Euro 6,094 thousand, calculated based on the exchange rate of 3.0357 at the payment date of 16 January 2015 and the payment made for the acquisition of Aqualav Serviços De Higienização Ltda, amounting to Euro 3,160 thousand, calculated based on the exchange rate of 4.37292 at the payment date of 22 December 2015.
The rise in financial debt was also caused by the acquisition of a 40.0% stake in the Turkish company Ankateks Turizm Inşaat Tekstil Temizleme San. Ve Tic. Ltd. Şti for approximately Euro 3.5 million, as well as the acquisition of 50.0% of the share capital of Finanza e Progetti S.p.A., which will provide services at Treviso LHA 9.
In particular, examining the individual items, there was an increase of Euro 1,904 thousand in cash and cash equivalents as a result of the liquidity deposited in current accounts of the Brazilian subsidiary SRI Empreendimentos e Participações Ltda, which will be used to finance future local investments.
The increase of Euro 276 thousand in financial receivables compared to 31 December 2014 was basically caused by interest accrued on individual loans and not yet collected and the partial repayment of the loans granted to Ospedale Irmandade de Santa Casa de Misericordia de São Paulo and Asolo Hospital Service S.p.A.
Current amounts due to banks and other lenders rose by Euro 3,400 thousand due to greater recourse to self-liquidating credit lines for the payment of suppliers.
Non-current amounts due to banks and other lenders rose by Euro 7,854 thousand as a result of the repayment of the loan instalments which fell due during the period, the early repayment of Euro 6,500 thousand on the mortgage taken out from Banca Popolare dell'Emilia Romagna and of Euro 7,560 thousand on the loan from Banca del Mezzogiorno – MedioCredito Centrale S.p.A., and the subscription of new mortgages with the bank Carige Italia S.p.A. in the amount of Euro 10,000 thousand on 31 March 2015, with Cassa di Risparmio di Parma e Piacenza SpA in the amount of Euro 10,000 thousand on 27 April 2015 and with Banca Popolare di Milano S.Coop.a r.l. for a total of Euro 15,000 thousand on 2 November 2015.
The net financial position below has been prepared in accordance with CESR, now ESMA, recommendation of 10 February 2005, and reports the value of "Other current financial liabilities" in "Other current financial payables" and the value of "Other non-current financial liabilities" in "Other non-current payables".
| (thousands of Euros) | As at 31 | of which with | As at 31 December | of which with |
|---|---|---|---|---|
| December 2015 | related parties | 2014 | related parties | |
| A. Cash | 25 | - | 68 | - |
| B. Other cash equivalents | 7,057 | - | 5,110 | - |
|---|---|---|---|---|
| C. Securities held for trading | - | - | - | - |
| D. Cash and cash equivalents (A) + (B) + (C) | 7,082 | 5,178 | ||
| E. Current financial receivables | 8,067 | 5,779 | 7,791 | 5,710 |
| F. Current bank borrowings | (31,648) | - | (26,391) | - |
| G. Current portion of non-current borrowings | (14,544) | - | (16,400) | - |
| H. Other current financial payables | (1,078) | - | (5,799) | - |
| I. Current financial debt (F) + (G) + (H) | (47,269) | (48,590) | ||
| J. Current net financial debt (I) - (E) - (D) | (32,120) | (35,621) | ||
| K. Non-current bank borrowings | (36,111) | - | (28,258) | - |
| L. Bonds issued | - | - | - | - |
| M. Other non-current payables | (3,208) | - | (6,194) | - |
| N. Non-current financial debt (K) + (L) + (M) | (39,318) | (34,452) | ||
| O. Net financial debt (J) + (N) | (71,439) | (70,073) |
The table below lists the guarantees given, existing as at 31 December 2015:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Guarantees issued by banks and insurance companies for tenders | 59,838 | 51,229 |
| Guarantees issued by banks and insurance companies for lease agreements and utilities | 577 | 549 |
| Guarantees issued by banks and insurance companies in favour of third parties | 36,962 | 34,215 |
| Owned assets held by third parties | 49 | 49 |
| Pledge on Asolo Hospital Service shares to back loans granted to the Project Companies | 464 | 464 |
| Pledge on Sesamo shares to back loans granted to the Project Companies | 237 | 237 |
| Pledge on Prog.Este shares to back loans granted to the Project Companies | 1,212 | 1,212 |
| Pledge on Progeni shares to back loans granted to the Project Companies | 380 | 380 |
| Total | 99,719 | 88,335 |
Guarantees issued by banks and insurance companies for tenders: these were issued on behalf of the company in favour of customers or potential customers for participation in tenders, to guarantee the correct execution of the service.
Guarantees issued by banks and insurance companies for lease agreements and utilities: these were issued on behalf of the company to guarantee the payment of lease instalments and invoices for the supply of electricity and gas.
Guarantees issued by banks and insurance companies in favour of third parties: these are guarantees issued to back the payment of the company's portion of the project financing and guarantees issued in favour of PSIS S.r.l., Steril Piemonte S.c.r.l., I.P.P. S.r.l., Ekolav S.r.l. and Shubhram Hospital Solutions Private Limited to back loan agreements.
Mortgage loans on owned property: the company has not granted liens on owned property and has no mortgage loans.
Pledge on Asolo Hospital Service, Sesamo, Progeni and Prog.Este shares to back loans granted to the project companies: this pledge was granted to the banks providing the project financing on the shares representing the company's shareholding in the special purpose entity.
The item is broken down as follows by business:
| (thousands of Euros) | Year ended as at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Wash-hire | 173,453 | 176,594 |
| Steril B | 19,002 | 20,456 |
| Steril C | 37,528 | 37,297 |
| Total | 229,983 | 234,347 |
Revenues and services by geographical area are broken down as follows:
| (thousands of Euros) | 31 December 2015 | 31 December 2014 |
|---|---|---|
| Abruzzo | 12 | 13 |
| Basilicata | 402 | 441 |
| Campania | 44 | 40 |
| Emilia Romagna | 32,066 | 32,250 |
| Friuli Venezia Giulia | 17,270 | 15,247 |
| Lazio | 12,708 | 13,440 |
| Liguria | 27,892 | 32,280 |
| Lombardy | 42,979 | 44,751 |
| Marche | 3,499 | 3,444 |
| Piedmont | 9,972 | 10,102 |
| Sicily | 3,178 | 3,101 |
| Tuscany | 25,969 | 27,620 |
| Trentino Alto Adige | 5,698 | 5,590 |
| Umbria | 255 | 260 |
| Valle D'Aosta | 1,193 | 1,248 |
| Veneto | 25,845 | 21,920 |
| EU revenues | 14 | 27 |
| Non-EU revenues | 20,987 | 22,573 |
| Total | 229,983 | 234,347 |
This balance comprises ordinary gains of Euro 294 thousand from the disposal of assets, recoveries of costs and personnel attributable to third parties for Euro 1,026 thousand, chargebacks of Euro 2,567 thousand for consortium costs, non-recurring income of Euro 422 thousand, income for Euro 1,025 thousand and rents receivable for Euro 38 thousand.
Consumption of raw materials, amounting to Euro 23,775 thousand, decreased by Euro 3,419 thousand with respect to the previous year. This reduction was caused primarily by the costs incurred last year for the construction of the instrument sterilisation centres of the Arezzo LHU for the San Donato hospital and the Brescia Spedali Civili hospital sold to the customers. The consolidation of the Brazilian companies weighed in on the item for Euro 2,432 thousand.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| External laundering and other industrial services | (20,229) | (20,397) |
| Travel and transport | (12,148) | (12,134) |
| Utilities | (12,027) | (11,926) |
| Administrative costs | (3,156) | (3,272) |
| Consortium and sales costs | (9,021) | (8,983) |
| Personnel expense | (2,007) | (2,024) |
| Maintenance | (5,555) | (5,101) |
| Use of third-party assets | (7,639) | (7,752) |
| Other services | (1,099) | (1,133) |
| Total | (72,881) | (72,722) |
External laundering and other industrial services fell by Euro 168 thousand compared to 2014. The reduction in this item is attributable essentially to lower use of the external laundering service, partially offset by the increase in the linen store service at new customers such as Istituto Europeo di Oncologia S.r.l. and Centro Cardiologico Monzino S.p.A., and the increase in the service at existing customers like the Reggio Emilia Hospital, Local Health Unit no. 3 Alto - Collinare - Medio Friuli and Niguarda Ca' Granda Hospital in Milan.
Travel and transport costs increased slightly by Euro 14 thousand as a result of the redefinition of the Group's production logistics and services provided for new customers, while in Brazil transport costs declined by Euro 109 thousand.
Administrative costs declined from Euro 3,272 thousand in 2014 to EUR 3,156 thousand in 2015 essentially as a result of lower expenses for collaborations, while there were rising costs for extraordinary transactions linked to the acquisition of the new companies Aqualav Serviços De Higienização Ltda, Ankateks Turizm Inşaat Tekstil Temizleme San. Ve Tic. Ltd. Şti and Tintoria Lombarda Divisione Sanitaria S.r.l. and legal consulting for appeals on the awarding of contracts.
Consortium and sales costs increased from Euro 8,983 thousand in 2014 to Euro 9,021 thousand in 2015. The lower charge-backs of costs received for the temporary joint consortia of the customers LHA AL of Alessandria and Arezzo LHA 8 are in contrast to the higher sales consultancy costs for participation in tenders due to new procedures required under the new tender regulations.
The rise in the cost for maintenance services by Euro 454 thousand was basically due to higher maintenance expenses at the surgical instrument sterilisation centres (in particular the surgical instrument maintenance expense rose by Euro 372 thousand) and for machinery. The cost for maintenance services planned in Brazil was up by Euro 13 thousand compared to the same period of last year.
The reduction in costs for the use of third-party assets was caused by the decrease in rentals of antidecubitus mattresses deriving from lower turnover from customers.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Costs for directors' fees | (1,302) | (1,131) |
| Salaries and wages | (50,936) | (49,429) |
| Temporary work | (1,502) | (2,202) |
| Social security charges | (16,603) | (16,041) |
| Employee severance indemnity | (2,853) | (2,594) |
| Other costs | (202) | (45) |
| Total | (73,398) | (71,442) |
The rise in personnel expense compared to the same period in the previous year is essentially related to the increase in wages and salaries as established in the national collective labour agreement in two contractual instalments: the first starting in January 2015 and the second as of June 2015. These increases were augmented by the hiring of new personnel at the surgical instrument sterilisation centres in Brescia and Udine.
The table below shows the average breakdown of personnel:
| As at 31 December | ||
|---|---|---|
| 2015 | 2014 | |
| Executives | 15 | 11 |
| Middle managers | 19 | 21 |
| White-collar staff | 185 | 181 |
| Blue-collar staff | 2,992 | 2,800 |
| Total | 3,211 | 3,013 |
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Tax-related expense | (175) | (179) |
| Contingent liabilities | (405) | (636) |
| Membership fees | (205) | (201) |
| Gifts to customers and employees | (118) | (182) |
| Other | (749) | (803) |
| Total | (1,652) | (2,001) |
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Amortisation of intangible assets | (1,314) | (792) |
| Depreciation of property, plant and equipment | (45,003) | (42,140) |
| Other write-downs of intangible assets and property, plant and equipment | (6) | - |
| Impairment of receivables | (634) | (651) |
| Other provisions | (127) | (64) |
| Total | (47,084) | (43,647) |
The amortisation of intangible assets rose by 65.91%, while the amortisation of intangible assets rose by 6.79%. The change in the amortisation of intangible assets refers to the recognition of the noncompete agreement stipulated with the previous CEO and the impact of the customer portfolio of the incorporated single shareholder company Si.Gi. Servizi Ospedalieri S.r.l.
The increase in the depreciation of property, plant and equipment was linked mainly to investments in linens and the increase of surgical instrument depreciation, whose relative impact increased due to the ramp-up phases of the new sterilisation contracts.
The increase in the item Impairment of receivables is attributable to the provision for the partial impairment of the amount due from several customers in relation to which bankruptcy proceedings are probable.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Bank interest income | 177 | 144 |
| Default interest | 517 | 415 |
| Interest income on loans to third-party companies | 348 | 228 |
| Other financial income | 2,273 | 563 |
| Total | 3,315 | 1,350 |
The increase in "bank interest income" derives from careful financial management of cash and cash equivalents present in the current account of the subsidiary SRI Empreendimentos e Participações Ltda care of BNP Paribas in São Paulo as a consequence of the investments made in Brazil. Despite the overall improvement in collections, "default interest" was up following payment delays by some specific customers. "Interest income on loans" rose as a result of new loans granted, while "other financial income" was impacted by the sharp increase in financial income associated with the redetermination of the value of the payable for put options connected with the acquisition of the remaining 49.9% of the companies Maxlav Lavanderia Especializada S.A. and Vida Lavanderias Especializada S.A.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2015 | 2014 | |
| Interest expense and bank commission | (1,951) | (2,562) |
| Interest and expense to other lenders | (433) | (926) |
| Financial expense on employee benefits | (150) | (289) |
| Foreign exchange gains and losses | (133) | - |
| Other financial expense | (636) | (1,405) |
| Total | (3,303) | (5,182) |
The decrease in "Interest expense and bank commission" resulted from the cancellation of loans with higher rates and the subscription of new, lower-rate loans, as well as the renegotiation of rates on selfliquidating credit lines. The decrease in the item "Interest and expense to other lenders" was caused by the reduction in both the spreads renegotiated with the banks and the total amount transferred as part of without recourse factoring transactions. Foreign exchange losses derive from the revaluation as at 31 December 2015 of the remaining payable in Turkish currency to other company shareholders for the acquisition of the 40.0% stake in Ankateks Turizm Inşaat Tekstil Temizleme San. Ve Tic. Ltd. Şti. (Euro 24 thousand) and the foreign exchange difference on the payment for machinery acquired in foreign currency by the Brazilian subsidiary Maxlav Lavanderia Especializada S.A. (Euro 109 thousand). The item "Other financial expense" rose due mainly to financial expense on the liabilities for the put options associated with the acquisition of the remaining 49.9% of the companies Maxlav Lavanderia Especializada S.A. and Vida Lavanderias Especializada S.A. and are down following the payment made for the acquisition of the remaining 50% of the share capital of Lavsim Higienização Têxtil S.A., which generated costs of Euro 545 thousand in 2014.
The item income and expense from equity investment is represented by dividends collected in 2015 for Euro 383 thousand. In detail, Euro 117 thousand was collected from the investee company Prosa S.p.A. established for the handling of the Vaio - Fidenza (PR) hospital project and Euro 266 thousand as the portion of the reserve from Asolo Hospital Service S.p.A..
The item is broken down as follows:
| (thousands of Euros) | Year ended as at 31 December | |||
|---|---|---|---|---|
| 2015 | 2014 | |||
| Current taxes | (4,867) | (7,507) | ||
| Deferred tax assets/(liabilities) | 915 | 690 | ||
| Total | (3,952) | (6,817) |
The incidence of the taxes on the pre-tax result is reconciled with the theoretical rate in the table below:
| (thousands of Euros) | ||||
|---|---|---|---|---|
| 2015 | Incidence | 2014 | Incidence | |
| IRES (company earnings tax) reconciliation | ||||
| Profit before tax from Income statement | 16,435 | 20,231 | ||
| Theoretical taxes | 4,520 | 27.5% | 5,564 | 27.5% |
| Tax effects of the permanent differences: | ||||
| on increases | 206 | 1.4% | 409 | 2.0% |
| on decreases | (2,273) | -11.9% | (1,747) | -8.6% |
| substitute taxes | 258 | 1.8% | 272 | 1.3% |
| differential on foreign taxes | 362 | 2.5% | 400 | 2.0% |
| Total effective IRES taxes | 3,073 | 21.3% | 4,897 | 24.2% |
| IRAP (regional business tax) | 879 | 6.1% | 1,920 | 9.5% |
| Total effective taxes | 3,952 | 27.4% | 6,817 | 33.7% |
The tax rate declined from 33.7% in 2014 to 27.4% in 2015. The decrease in the tax charge was mainly determined in the Italian area by the new IRAP regulations introduced by the 2015 Stability Law which makes provision, from 1 January 2015, for the deduction, in addition to flat-rate and analytical deductions relating to the cost of labour, of the amount relating to the difference between the total cost of labour (relating to open-ended contracts) and deductions due.
Basic and diluted earnings per share are calculated in the tables below.
| (thousands of Euros/thousands of shares) | Year ended as at 31 December | |||
|---|---|---|---|---|
| 2015 | 2014 | |||
| Profit/loss attributable to shareholders of the parent company: | 12,728 | 13,077 | ||
| Average number of shares | 28,737 | 27,143 | ||
| Basic earnings per share | 0.443 | 0.482 | ||
| (thousands of Euros/thousands of shares) | Year ended as at 31 December | |||
| 2015 | 2014 | |||
| Profit/loss attributable to shareholders of the parent company: | 12,728 | 13,077 | ||
| Average number of shares outstanding | 28,737 | 27,143 | ||
| Number of shares with dilutive effect | - | 670 |
Average number of shares used to calculate diluted EPS 28,737 27,813 Diluted earnings per share 0.443 0.470
The average number of shares outstanding rose compared to the 2014 financial statements following the share capital increase in October 2015 with the subscription of 9,311,120 "Warrant Servizi Italia S.p.A. 2012 – 2015", equivalent to 2,327,780 shares.
Servizi Italia S.p.A.'s transactions with subsidiaries, associates, jointly controlled companies and parent companies are entered into in compliance with the Regulations for related party transactions in force, and mainly relate to:
In terms of income, the financial position and cash flows, the main transactions are ordinary transactions concluded at arm's length or standard conditions, governed by dedicated contracts. These transactions consist of the accumulation of uniform transactions carried out starting from the reference year, in execution of a unitary plan, which are not individually qualifiable as of greater significance. In addition, considered on a cumulative basis, the group of these transactions activated during the reference year is not qualified as of greater significance. During the reference year, the final amount recognised in the financial statements was generated by the renewal of contracts in place or contracts activated during the period.
Income statement, statement of financial position and financial transactions with companies of the Servizi Italia Group in 2015 are presented below:
| (thousands of Euros) 31 December 2015 |
|||||||
|---|---|---|---|---|---|---|---|
| Income statement | Sale of goods and services |
Other income |
Purchase of goods and services |
Personnel expense |
Purchases of property, plant and equipment and intangible assets |
Other costs |
Financial income |
| Coopservice S.Coop.p.A. (parent company) | 281 | 36 | 10,610 | - | 1 | - | - |
| Aurum S.p.A. (parent company) | - | - | - | - | - | - | - |
| Centro Italia Servizi S.r.l. (joint control) | 3 | 6 | 924 | - | - | - | - |
| Consorzio Co.Se.S. (associate) | - | - | 650 | - | - | - | - |
| SE.STE.RO. S.r.l. (associate) | 32 | 65 | 496 | - | - | 2 | - |
| PSIS S.r.l. (associate) | 198 | 105 | 34 | - | 26 | 5 | 56 |
| Amg S.r.l. (associate) | 311 | 3 | 878 | - | - | - | 3 |
| Ekolav S.r.l. (associate) | 4 | - | 1,354 | - | 1 | - | 2 |
| Steril Piemonte S.c.r.l. (associate) | 13 | 312 | 1,458 | - | - | - | 6 |
| Piemonte Servizi Sanitaria S.c.r.l. (associate) | - | - | 690 | - | - | - | - |
| Iniziative Produttive Piemontesi S.r.l. (associate) | 121 | - | 472 | - | - | - | - |
| SAS Sterilizasyon Servisleri A.Ş. (associate) | - | - | - | - | - | - | - |
| Shubhram Hospital Solutions Private Limited (associate) | - | - | - | - | - | - | - |
| Saniservice Sh.p.k. (associate) | - | 36 | - | - | - | - | 2 |
| Elettrica Gover S.r.l. (affiliated company) | - | - | 1 | - | 12 | - | - |
| Focus S.p.A. (affiliated company) | - | - | 2,502 | - | - | 13 | - |
| Archimede S.p.A. (affiliated company) | - | 5 | - | 1,118 | - | - | - |
| Electric System S.r.l. (affiliated company) | - | - | 1 | - | - | - | - |
| New Fleur S.r.l. (affiliated company) | 34 | - | 810 | - | - | - | - |
| Ad Personam S.r.l. (affiliated company) | - | - | 25 | - | - | - | - |
| Padana Emmedue S.r.l. (related party) | - | - | 288 | - | - | - | - |
| Padana Emmedue S.p.A. (related party) | - | - | 136 | - | - | - | - |
| Limpar Serviços Especializados e Comércio de Produtos Ltda (related party) |
- | - | 142 | - | - | - | - |
| Lilian Promenzio Rodrigues Affonso (related party) | - | - | 38 | - | - | - | - |
| Total | 997 | 568 | 21,509 | 1,118 | 40 | 20 | 69 |
|---|---|---|---|---|---|---|---|
| (thousands of Euros) | 31 December 2014 | ||||||
| Income statement | Sale of goods and services |
Other income |
Purchase of goods and services |
Personnel expense |
Purchases of property, plant and equipment and intangible assets |
Other costs |
Financial income |
| Coopservice S.Coop.p.A. (parent company) | 361 | 46 | 10,431 | - | 4 | 7 | - |
| Aurum S.p.A. (parent company) | - | - | - | - | - | - | - |
| Centro Italia Servizi S.r.l. (joint control) | 1 | 8 | 983 | - | - | - | - |
| Consorzio Co.Se.S. (associate) | - | - | 626 | - | - | - | - |
| SE.STE.RO. S.r.l. (associate) | 37 | 64 | 505 | - | - | - | - |
| PSIS S.r.l. (associate) | 222 | 217 | - | - | 20 | - | 65 |
| Amg S.r.l. (associate) | 291 | 65 | 980 | - | - | - | 3 |
| Ekolav S.r.l. (associate) | - | - | 1,208 | - | 2 | - | 3 |
| Steril Piemonte S.c.r.l. (associate) | 15 | 311 | 1,621 | - | - | - | 11 |
| Piemonte Servizi Sanitaria S.c.r.l. (associate) | - | - | 702 | - | - | - | - |
| Iniziative Produttive Piemontesi S.r.l. (associate) | 124 | - | 656 | - | - | - | 1 |
| SAS Sterilizasyon Servisleri A.Ş. (associate) | - | 13 | - | - | - | - | - |
| Shubhram Hospital Solutions Private Limited (associate) | - | - | - | - | - | - | - |
| Elettrica Gover S.r.l. (affiliated company) | 1 | 19 | - | 116 | - | - | |
| Focus S.p.A. (affiliated company) | - | - | 2,551 | - | - | 12 | - |
| Archimede S.p.A. (affiliated company) | - | - | - | 2,071 | - | - | - |
| Electric System S.r.l. (affiliated company) | - | - | 1 | - | - | - | - |
| New Fleur S.r.l. (affiliated company) | 17 | - | 1,365 | - | - | - | - |
| Ad Personam S.r.l. (affiliated company) | - | - | 26 | - | - | - | - |
| Total | 1,068 | 725 | 21,674 | 2,071 | 142 | 19 | 83 |
Aside from the figures shown above, as at 31 December 2015 income statement transactions with related parties include directors' fees of Euro 1,361 thousand and executive personnel expense of Euro 1,776 thousand. As at 31 December 2014, directors' fees amounted to Euro 1,179 thousand, while executive personnel expense came to Euro 1,527 thousand.
| (thousands of Euros) | 31 December 2015 | ||||
|---|---|---|---|---|---|
| Statement of financial position | Amount of trade receivables | Amount of trade payables |
Amount of financial receivables |
Amount of financial payables |
Amount of other liabilities |
| Coopservice S.Coop.p.A. (parent company) | 120 | 3,627 | - | - | - |
| Aurum S.p.A. (parent company) | - | - | - | - | - |
| Centro Italia Servizi S.r.l. (joint control) | 9 | 322 | - | - | - |
| Consorzio Co.Se.S. (associate) | - | 432 | - | - | - |
| SE.STE.RO. S.r.l. (associate) | 84 | 549 | - | - | - |
| PSIS S.r.l. (associate) | 437 | 108 | 3,856 | - | - |
| Amg S.r.l. (associate) | 149 | 425 | 502 | - | - |
| Ekolav S.r.l. (associate) | 21 | 552 | 172 | - | - |
| Steril Piemonte S.c.r.l. (associate) | 160 | 704 | 1156 | - | - |
| Piemonte Servizi Sanitaria S.c.r.l. (associate) | - | 390 | - | - | - |
| Iniziative Produttive Piemontesi S.r.l. (associate) | 42 | 230 | 91 | - | - |
| Shubhram Hospital Solutions Private Limited (associate) | 9 | - | - | - | - |
| Saniservice Sh.p.k. (associate) | 36 | - | 164 | - | - |
| Elettrica Gover S.r.l. (affiliated company) | - | - | - | - | - |
| Focus S.p.A. (affiliated company) | - | 2 | - | - | - |
|---|---|---|---|---|---|
| Archimede S.p.A. (affiliated company) | - | 142 | - | - | - |
| Electric System S.r.l. (affiliated company) | - | - | - | - | - |
| New Fleur S.r.l. (affiliated company) | 72 | 637 | - | - | - |
| Ad Personam S.r.l. (affiliated company) | - | 1 | - | - | - |
| Padana Emmedue S.r.l. (related party) | - | 96 | - | - | - |
| Padana Emmedue S.p.A. (related party) | - | 375 | - | - | - |
| Limpar Serviços Especializados e Comércio de Produtos Ltda (related party) | - | - | - | - | - |
| Lilian Promenzio Rodrigues Affonso (related party) | - | 15 | - | - | - |
| Total | 1,139 | 8,607 | 5,941 | - | - |
| (thousands of Euros) | 31 December 2014 | ||||
|---|---|---|---|---|---|
| Statement of financial position | Amount of trade receivables |
Amount of trade payables |
Amount of financial receivables |
Amount of financial payables |
Amount of other liabilities |
| Coopservice S.Coop.p.A. (parent company) | 346 | 4,577 | - | - | - |
| Aurum S.p.A. (parent company) | - | - | - | - | - |
| Centro Italia Servizi S.r.l. (joint control) | 8 | 637 | - | - | - |
| Consorzio Co.Se.S. (associate) | - | 314 | - | - | - |
| SE.STE.RO. S.r.l. (associate) | 184 | 507 | - | - | - |
| PSIS S.r.l. (associate) | 353 | 34 | 3,800 | - | - |
| Amg S.r.l. (associate) | 208 | 488 | 500 | - | - |
| Ekolav S.r.l. (associate) | 120 | 522 | 170 | - | - |
| Steril Piemonte S.c.r.l. (associate) | 109 | 507 | 1,150 | - | - |
| Piemonte Servizi Sanitaria S.c.r.l. (associate) | - | 416 | - | - | - |
| Iniziative Produttive Piemontesi S.r.l. (associate) | 35 | 196 | 90 | - | - |
| SAS Sterilizasyon Servisleri A.Ş. (associate) | - | - | - | - | - |
| Shubhram Hospital Solutions Private Limited (associate) | 2 | - | - | - | - |
| Elettrica Gover S.r.l. (affiliated company) | 2 | 113 | - | - | - |
| Focus S.p.A. (affiliated company) | - | - | - | - | - |
| Archimede S.p.A. (affiliated company) | - | 280 | - | - | - |
| Electric System S.r.l. (affiliated company) | - | - | - | - | - |
| New Fleur S.r.l. (affiliated company) | 25 | 494 | - | - | - |
| Ad Personam S.r.l. (affiliated company) | - | 10 | - | - | - |
| Total | 1,392 | 9,095 | 5,710 | - | - |
The most significant dealings, for which the transactions of the individual contracts are part of the Company's ordinary business operations, are broken down by company below.
Revenues from sales and the associated trade receivables as at 31 December 2015 refer primarily to linen and textile washing services provided to the parent company.
The Servizi Italia Group acquires the following from the parent company: (i) road transport of textile items and/or surgical instruments for Euro 9,050 thousand; (ii) wardrobe management services at customers for Euro 536 thousand; (iii) the use of third-party personnel for Euro 18 thousand; (iv) technical cleaning services provided at certain production sites/operating locations of Servizi Italia and
security/surveillance services provided in some locations through night patrols and alarm systems, for Euro 765 thousand.
As at 31 December 2015, revenues from sales of goods and services and the related trade receivables due from Centro Italia Servizi S.r.l. refer to the sale of assets to be used in the wash-hire business carried out by this associate at the Arezzo hospital. On the other hand, purchase costs and the relative trade payables regard the charge-back of costs incurred by Centro Italia Servizi S.r.l., which are divided amongst the shareholders on the basis of their shareholdings.
As at 31 December 2015, revenues from the sale of goods and services and purchase costs vis-à-vis Consorzio CO.SE.S S.c.r.l. refer to the chargeback of costs incurred by the Company and by the Consortium for surgical instrument sterilisation activities at the San Giovanni Addolorata hospital in Rome.
Purchases of goods and services and the related trade payables due in relation to Se.Ste.Ro. S.r.l. are primarily for the sale of single-use medical devices for Euro 25 thousand and the sterilisation service for Bambino Gesù Paediatric Hospital in Rome.
As at 31 December 2015, revenues from the sale of goods and services to PSIS S.r.l. mainly refer to the chargeback of administrative management services for Euro 86 thousand and the sale of single-use medical devices for Euro 197 thousand. The financial receivable relates to a loan granted for Euro 3,856 thousand to support current investments.
At the end of 2015, economic transactions were mainly for external laundering services at the Asti, Casale Monferrato and Vercelli and Turin 3 LHAs (Euro 869 thousand); the revenues derive from linen sterilisation services and the supply of single-use medical devices for surgical procedures. The financial receivables of Euro 502 thousand are for internal financing granted to support current investments.
Purchases of goods and services and the related trade payables due in relation to Ekolav S.r.l. are primarily for laundering (Euro 1,047 thousand) and transport (Euro 89 thousand) services. The financial receivable is for a Euro 172 thousand loan granted to the associate.
As at 31 December 2015, revenue from the sale of goods and services and purchase costs linked to Steril Piemonte S.c.r.l. refer to the chargeback of costs incurred by the Company and by the Consortium for surgical instrument sterilisation activities at ASL (Local Health Authority) AL Piedmont Region.
As at 31 December 2015, income statement and statement of financial position transactions with Piemonte Servizi Sanitari S.c.r.l. refer to the handling of tenders relating the Novara and Turin 4 LHAs.
Revenues from the sale of goods and services to Iniziative Produttive Piemontesi S.r.l. as at 31 December 2015 primarily relates to the sale of single-use Medical Devices for Euro 121 thousand, whereas purchase costs relate to chargebacks for supplies of sterile kits for the Ordine Mauriziano Hospital in Turin and the Desio & Vimercate hospital for Euro 472 thousand. The financial receivable is for a Euro 91 thousand loan granted to the associate.
Transactions with Focus S.p.A. relate to lease agreements on the Castellina di Soragna, Montecchio Precalcino, Ariccia and Genoa Bolzaneto properties. The first agreements are for six years and renewable for another six, while the Genoa Bolzaneto agreement is for fourteen years and renewable for another six. Servizi Italia S.p.A.'s transactions with Focus S.p.A. in relation to lease agreements are entered into in compliance with the Regulations for related party transactions in force. The total consideration for leased properties amounted to Euro 2,502 thousand in 2014.
Transactions with Archimede S.p.A. are associated with temporary staff leasing service agreements.
Transactions with Padana Emmedue S.p.A. relate to six-year lease agreements on the Travagliato and Podenzano properties, which are renewable for another six years. The total consideration for leased properties amounted to Euro 288 thousand in 2015. Servizi Italia S.p.A.'s transactions with Padana Emmedue S.p.A. in relation to lease agreements are entered into in compliance with the Regulations for related party transactions in force.
Servizi Italia S.p.A. purchases linen washing services from Padana Emmedue S.r.l. In 2015, the relative consideration amounted to Euro 136 thousand.
Purchases of goods and services and the related trade payables due in relation to Limpar Serviços Especializados e Comércio de Produtos Ltda are primarily for cleaning services for Euro 94 thousand at the Maxlav Lavanderia Especializada S.A. facility and for Euro 48 thousand at Vida Lavanderias Especializada S.A.
Lilian Promenzio Rodrigues Affonso
Transactions with Lilian Promenzio Rodrigues Affonso relate to the ten-year lease agreement on the Maxlav Lavanderia Especializada S.A. property. The total consideration for leased properties amounted to Euro 38 thousand in 2015.
There are no income components deriving from events or transactions whose occurrence is nonrecurrent or from those transactions or events which do not take place frequently during the usual performance of the business, as defined by point 2 of the Consob resolution No. 15559 dated 27 July 2006.
During the year, there were no atypical and/or unusual transactions as defined in Consob communication No. 6064293 dated 28 July 2006.
On 22 April 2015, the Shareholders' Meeting revoked the programme for the purchase and sale of treasury shares approved by the Shareholders' Meeting on 22 April 2014, and approved a new plan, the launch of which was approved by the Board of Directors on 22 April 2015.
The details of the programme are provided below pursuant to Art. 144-bis of the Issuers' Regulations. The plan for the purchase and sale of treasury shares complies with the need to gain access to opportunities for the efficient investment of company liquidity and to have the possibility of using it for strategic transactions and/or to complete subsequent share purchase and sale transactions, to the extent allowed by permitted market practices. The plan will have a maximum duration of 18 months as from 22 April 2015, date of issue of the authorisation by the shareholders' meeting. The maximum number of shares which can be purchased, not exceeding 20% of the company's share capital as at the shareholder resolution date, is 5,674,297 ordinary shares. The purchases and sales of treasury shares will be carried out on the organised market, in compliance with the applicable legislative and regulatory provisions, according to the operating formalities established by Article 132 of the CFL, Article 144 bis of the Issuers' Regulations, in compliance with the EC Regulation 2273/2003 dated 22 December 2003 and in observance of the shareholders' meeting resolution dated 22 April 2015. Treasury shares will be purchased for a maximum equivalent value to the extent to which can be covered by distributable reserves and available reserves as set forth in the latest duly approved financial statements. The treasury shares will be purchased at a minimum purchase price of no less than 20% of the weighted average of official share prices recorded by Borsa Italiana in the 3 days preceding each individual transaction and at a maximum purchase price of no higher than 20% of the weighted average of official share prices recorded by Borsa Italiana in the 3 days preceding each individual transaction.
The intermediary engaged to execute the treasury shares purchase programme is INTERMONTE SIM S.p.A.
As at 31 December 2015, the number of treasury shares in the portfolio amounted in total to 255,616 shares, corresponding to 0.8326% of the share capital.
On 11 March 2016, the Company announced that up until 11 March 2016 it had acquired 279,891 treasury shares on the organised market managed by Borsa Italiana, equal to 0.912% of the share capital.
Remuneration paid for 2015 to the members of the management and audit bodies, the general managers and the executives with strategic responsibilities with other offices in the Group companies, is summarised below. All the amounts are expressed in thousands of Euro.
| Office within the Servizi Italia Group | Remuneration as at 31 December 2015 (thousands of Euros) |
|---|---|
| Directors | 1,026 |
| Board of Statutory Auditors | 89 |
| Supervisory Body | 69 |
For further details relating to the remuneration paid to the members of the management and audit bodies in office and no longer in office, the general managers and the executives with strategic responsibilities identified by the Board of Directors, please see the Remuneration Report drawn up in accordance with Article 123-ter of the CFL for 2015.
There were no payment plans based on financial instruments as at 31 December 2015.
On 20 January 2015, the Company announced that the acquisition of the remaining 50% of the share capital of the company Lavsim Higienização Têxtil S.A. ("Lavsim") had been completed, already invested in as from 2 July 2012 by Servizi Italia S.p.A. via the subsidiary SRI Empreendimentos e Participações Ltda.
On 26 February 2015, the Company disclosed that it had drawn up the deeds for the merger via incorporation of the wholly-owned subsidiaries Si.Gi. Servizi Ospedalieri S.r.l. (sole shareholder company) and Lavanderia Industriale Z.B.M. S.p.A. within Servizi Italia S.p.A. The statutory effectiveness of the merger applied as from 1 April 2015. As from that date, the absorbing company (Servizi Italia S.p.A.) took over all the income and expense-generating legal relations relating to the absorbed companies, all the directors and officers of the absorbed companies fell from office and all the powers of attorney previously issued ceased.
On 22 April 2015, the Shareholders' Meeting approved the financial statements as at 31 December 2014 and the distribution of a gross dividend of Euro 0.16 per share outstanding on the coupon date, excluding treasury shares. Payment took place on 29 April 2015, with a coupon payment on 27 April 2015.
At the same meeting, the Shareholders:
The Shareholders' Meeting authorised the Board of Directors to purchase and sell treasury shares, subject to revocation of the resolution of 22 April 2014. The Shareholders' Meeting authorised the Board of Directors to purchase and sell treasury shares. The plan responds to the need to gain access to opportunities for the efficient investment of company liquidity and to have the possibility of using it for strategic transactions and/or to complete subsequent share purchase and sale transactions, to the extent allowed by permitted market practices. The authorisation is for a maximum number of Servizi Italia S.p.A. ordinary shares equating to 20% of the share capital, taking into account the treasury shares already held, for a period of 18 months as of the Shareholders' Meeting resolution. The purchase transactions will be carried out on the market at a price of up to 20% more or less than the weighted average official prices in the 3 days preceding the individual transaction.
As announced on 1 April 2015, as of 22 April 2015 Mr Luciano Facchini is no longer director of the Italian subsidiaries. In the interest of the Group, Servizi Italia S.p.A. entered into a non-compete and confidentiality agreement with Mr Facchini, under which he agreed not to carry out any activity and not to do business in competition with the activities carried out by Servizi Italia. The non-compete and confidentiality agreement became effective on 22 April 2015 and will expire after 24 (twenty-four) months. Servizi Italia will pay Luciano Facchini the gross sum of Euro 1,000,000.00 (one million/00), with no interest, in two instalments.
On 22 April, the Board of Directors:
On 13 May 2015, based on the criteria of the Borsa Italiana Corporate Governance Code, the Board of Statutory Auditors and the Board of Directors checked the independence of the directors and also carried out the annual check of the requirements for remaining in the STAR segment pursuant to the Borsa Italiana Issuers' Regulations and the instructions to the Issuers' Regulations. The Company sent the required information within the terms set forth by Borsa Italiana.
Notice was received on 26 May 2015 of the conclusion of the preliminary investigations of criminal proceedings for an alleged offence pursuant to Italian Legislative Decree 231 of 2001 with which a company director, a former director and the Company have been charged, relating to the awarding of a tender for the assignment of the nine-year contract of the AOU Policlinico of Modena, so-called "Global Service", which took place by means of resolution of 19 December 2008, to the RTI (temporary joint consortium) established by Coopservice Soc.Coop.p.A., in its capacity as lead contractor, and other companies including Servizi Italia S.p.A., Padana Everest S.r.l. and Lavanderia Industriale ZBM S.p.A. (companies actually merged by incorporation in Servizi Italia S.p.A.). The Company, which is only involved in said proceedings for the purposes of the administrative liability of the legal entities pursuant to Italian Legislative Decree 231 of 2001, confirms that it is completely uninvolved in the events contested and promptly appointed a defence counsel to undertake any necessary action to prove this.
As part of these criminal proceedings, the subsidiary Servizi Italia Medical S.r.l. was also investigated for an alleged offence, pursuant to Italian Legislative Decree 231 of 2001, with which a former director has been charged, in relation to the awarding of the supply, based on piecework contracts, of single procedure kits, which took place by means of resolution dated 28 December 2009. The subsidiary, only involved in said proceedings for the purposes of the administrative liability of the legal entities pursuant to Italian Legislative Decree 231 of 2001, confirms that it is completely uninvolved in the events contested and promptly appointed a defence counsel to undertake any necessary action to prove this.
On 27 July 2015, the Company announced the signing of the agreement for the purchase of a stake in Ankateks Turizm Inşaat Tekstil Temizleme San. Ve Tic. Ltd. Şti ("Ankateks" or "Ankateks Group"), a leading Turkish operator operating under the Ankara Laundry brand in the linen washing sector for healthcare structures, predominantly in the Ankara and Izmir areas. For more information, please refer to the press release available on the Company's website.
In the course of July 2015, production activities were launched at the industrial laundry facility in New Delhi, India, which has recorded increasing volumes of linen wash-hire services.
On 13 October 2015, the tax administration sent a notice of its report on findings regarding direct taxes, VAT and IRAP for the year 2010 with respect to Padana Everest S.r.l., which was incorporated into Servizi Italia S.p.A. in 2012, claiming a higher tax base on the presumption that income was unduly reduced in connection with the detaxation of investments set forth in Decree Law No. 78 of 1 July 2009 ("Tremonti-ter"). On 19 February 2016, Servizi Italia submitted an appeal against the notice, asking for it to be cancelled as it deems the tax claim to be illegitimate and objectively groundless.
On 15 October 2015, the Company announced the closing for the purchase of a 40.0% stake in Ankateks Turizm Inşaat Tekstil Temizleme San. Ve Tic. Ltd. Şti, a leading Turkish operator operating under the "Ankara Laundry" brand in the linen washing sector for healthcare structures, predominantly in the areas of Ankara and - through the subsidiary Ergülteks Temizlik Tekstil Ltd. Şti - Izmir. The transaction, the signing of which was announced on 27 July, consisted of the purchase of a stake of 40.0% in Ankateks for a preliminary consideration fixed at 16.5 million Turkish Lira (around Euro 4.9 million at the EUR/TRY exchange rate of 3.3473 at 14 October 2015). The stake was purchased by making recourse to bank borrowing. A portion of the price was paid in cash and a portion was withheld by Servizi Italia as a guarantee. The final transaction price will be recalculated and will be based on the 2016 profit of Ankateks and of the subsidiary Ergülteks. On approval of the 2016 results, moreover, Servizi Italia will have the chance to obtain control of the Group through the acquisition of an additional 15.0% of Ankateks's share capital (rising to a stake of 55.0%) based on the same pricing criterion. With reference to Ankateks's governance, Servizi Italia appoints two of the five members of the Board of Directors, which may rise to three if Servizi Italia increases its stake to 55.0% in accordance with the procedure mentioned above. With reference to the provisions of art. 71 of the Issuers' Regulations, the transaction is deemed "not significant" in light of the parameters laid out under applicable regulations.
On 2 November 2015, further to the closure of the Third and last Exercise Period (from 1 October 2015 until 30 October 2015) of the "Warrant Servizi Italia S.p.A. 2012 – 2015", the Company announced that 9,311,120 Warrants had been exercised and consequently 2,327,780 newly-issued ordinary Servizi Italia shares had been subscribed (at a ratio of 1 new share for each 4 warrants exercised) at a price of Euro 3.30 each, admitted for listing on the Borsa Italiana screen-based stock market (MTA), with a par value of Euro 1.00 each, with regular dividend rights and the same characteristics as the ordinary Servizi Italia shares in circulation as of the issue date (the "Conversion Shares"), for a total equivalent value of Euro 7,681,674. Due to the closure of the Third Exercise Period, the 2012-2015 Warrants are no longer exercisable or traded on the Regulated Market.
Further to the afore-mentioned subscriptions, the new share capital of Servizi Italia therefore amounted to Euro 30,699,266, represented by 30,699,266 ordinary shares with a par value of Euro 1.00 each. The related certification pursuant to Article 2444 of the Italian Civil Code was filed care of the Parma Business Register as of the same date.
On 13 November 2015, with the favourable opinion of the Related Party Transactions Committee, the Servizi Italia S.p.A. Board of Directors also approved the amendment to the Regulations for Related Party Transactions, which were updated to take into account the company's changed organisational needs, with a view to boosting the efficiency of information flows and examination procedures relating to related party transactions.
On 14 December 2015, the company announced that it had entered into a contract that it was awarded along with other partners with which it established an ad hoc company in Albania - for the ten-year concession by the Albania Ministry of Health for the following services: (i) sterilisation, maintenance and rental of surgical instruments, (ii) re-usable material sterilisation management, (iii) the supply of single-use medical devices and other accessory services at all state and regional hospitals in Albania. For more information, please refer to the press release available on the Company's website.
On 23 December 2015, the Company announced that it had entered into an acquisition agreement and as a result acquired 100% of the Brazilian company Aqualav Serviços De Higienização Ltda, one of the leading market operators in the State of São Paulo (Brazil) in the linen washing segment for healthcare structures. In agreement between the parties, Servizi Italia acquired 100% of the company from the seller in exchange for consideration of R\$ 13.6 million (approximately Euro 3.1 million at the Euro/R\$ exchange rate of 4.37292 at 22 December 2015), without prejudice to adjustments to be applied as a result of the precise calculation of the net financial position, which must be determined by the end of January 2016. A portion of the price was paid in cash and a portion was withheld by Servizi Italia as a guarantee for any indemnities, contingent liabilities and the price adjustment mechanism. As part of the negotiation, Servizi Italia also obtained real estate guarantees provided by the seller to cover potential future liabilities not associated with Servizi Italia's management. The shareholdings were acquired via the wholly owned subsidiary SRI Empreendimentos e Participações L.t.d.a and the acquisition was financed by bank borrowings. With reference to the provisions of art. 71 of the Issuers' Regulations, the transaction is deemed "not significant" in light of the parameters laid out under applicable regulations. For more information, please refer to the press release available on the Company's website.
On 23 December 2015, the Servizi Italia S.p.A. Board of Directors approved the update of the Organisation, Management and Control Model prepared pursuant to Italian Legislative Decree No. 231 of 8 June 2001 to include the new types of crime introduced. The updated Model is available on the Company's website in the Sustainability section.
On 28 December 2015, the Company announced its acquisition of 50.0% of the share capital of Finanza e Progetti S.p.A. from Lend Lease Cemea Investments B.V., an Australian multinational company working in the infrastructure segment, operating in Italy via the subsidiary Lend Lease S.r.l., as well as its signing of a contract for the assignment of wash-hire and sterilisation services and the maintenance and rental of textiles and surgical instruments at Treviso LHA 9 starting in January 2018 for a period of 15 years (until 2032). For the acquisition of 50.0% of Finanza e Progetti, the parties agreed on a price of Euro 4,000,000.00 (four million/00), defined by using potential cash flows expected to arise from the Company's activities as a reference. To support the activities of Ospedal Grando in the Treviso Cittadella Sanitaria project, Servizi Italia also committed to providing additional financial resources (in the form of a share capital increase or shareholder loan) to Finanza e Progetti totalling up to Euro 8.0 million, expected to be paid out over the next 7 years. The outlays will be financed by Servizi Italia via bank borrowings. Pursuant to Italian Antitrust Authority communication dated 5 August 2013 and the amendments made to Art. 16 of Italian Law No. 287/90 and Italian Decree Law 1/2012, this acquisition did not trigger the obligation to notify the Antitrust Authority; on the basis of Art. 71 of the Issuers'
Regulations, this acquisition is "not significant" considering the parameters set forth in applicable law. For more information, please refer to the press release available on the Company's website.
The main characteristics of the contracts awarded during the year, which have an annual contract value of more than Euro 50 thousand, are provided below:
| Customer | Duration Service provided |
Contract value per year (thousands of |
|
|---|---|---|---|
| years | Euros) | ||
| AAS 1 Triestina – Trieste (awarded as part of a temporary joint consortium) |
Linen wash-hire and linen store support services. | 1.25 | 107 |
| Azienda Provinciale per i Servizi Sanitari della Provincia di Trento (awarded as part of a temporary joint consortium) |
Linen wash-hire service. | 4.33 | 3,487 |
| Azienda Ospedaliera della Provincia di Pavia (in compliance with the procedure fulfilled by Azienda Ospedaliera Mellino Mellini di Chiari Brescia) |
Linen wash-hire service. | 3.7 | 1,892 |
| ASP Opera Pia Coianiz – Tarcento (UD) |
Supply and reconditioning of sanitary linen. | 4 | 129 |
| Istituto Europeo di Oncologia S.r.l. - Milan (awarded as part of a temporary joint consortium) |
Linen wash-hire service at Istituto Europeo di Oncologia (IEO) and Centro Cardiologico Monzino (CCM) in Milan. |
5 | 843 |
| Azienda Ospedaliera San Carlo di Milano |
Integrated rental, reconditioning and logistics service relating to textile devices and mattresses. |
3 | 1,046 |
| ESTAR - Pisa | Linen wash-hire service. | 5 | 280 |
| Azienda Ospedaliera Ospedali Riuniti Marche Nord Pesaro |
Linen wash-hire service, flat and packed linen, mattresses, cushions, mattress covers, wool blankets, sterile sets in trilaminate and microfibre fabric. |
3 | 443 |
| Azienda Ospedaliera Carlo Poma di Mantova |
Integrated rental, reconditioning and logistics service relating to textile devices |
4 | 3,156 |
| ASL 4 Chiavarese | Linen wash-hire service. | 1 | 1,080 |
| Azienda Ospedaliera Ospedale di Circolo di Busto Arsizio* |
Surgical instrument sterilisation, maintenance and rental service, inclusive of works to complete the sterilisation centre. |
8 | 1,382 |
| Azienda Ospedaliera Ospedale di Circolo di Busto Arsizio* |
Linen wash-hire service. | 6 | 1,304 |
| Azienda Ospedaliera della Provincia di Lodi* (awarded as part of a temporary joint consortium) |
Linen and packed linen wash-hire service. | 6 | 106 |
| Azienda Ospedaliera Ospedale di Circolo di Melegnano |
Wash-hire, reconditioning and logistics service relating to textile devices and mattresses. |
4 | 1,294 |
*New Customer
On 29 February 2016, a binding agreement was entered into for the acquisition of 100.0% of a newly incorporated company to be named "Tintoria Lombarda Divisione Sanitaria S.r.l.", to which the operations business unit of the company Tintoria Lombarda di Fasoli Aldo S.p.A., one of the main Italian linen washhire companies for healthcare facilities, will be transferred. The finalisation of this transaction, the closing of which is planned for June 2016, is subject to a series of conditions precedent, including the completion of the union communication and consultation procedure regarding the contribution and the acquisition of consent from certain commissioning bodies for wash-hire contracts. Pursuant to Italian Antitrust Authority communication dated 5 August 2013 and the amendments made to Art. 16 of Italian Law No. 287/90 and Italian Decree Law 1/2012, this acquisition did not trigger the obligation to notify the Antitrust Authority; on the basis of Art. 71 of the Issuers' Regulations, this acquisition is "not significant" considering the parameters set forth in applicable law. For more information, please refer to the press release available on the Company's website.
On 11 March 2016, the Company announced that up until 11 March 2016 it had acquired 279,891 treasury shares on the organised market managed by Borsa Italiana, equal to 0.912% of the share capital.
At the date of approval of the draft financial statements, the Board of Directors called a meeting with the following item on the agenda: the exercise of the mandate granted by the Extraordinary Shareholders' Meeting on 26 September 2014 pursuant to Art. 2443 of the Italian Civil Code to carry out a divisible share capital increase against payment for an overall maximum amount of Euro 4,000,000.00, inclusive of any share premium, with the exclusion of the purchase option as per Article 2441, paragraph 4, second section of the Italian Civil Code, reserved for Steris UK Holding Limited, by means of the issue of up to 1,150,000 new ordinary shares with a par value of Euro 1 each, with the same characteristics as those outstanding. For further information, please refer to the documentation concerning the shareholders' meeting of 26 September 2014, the "Lock-up" shareholders' agreement and the press releases of 26 September and 6 October 2014 and subsequent communications available on the Company website.
The Chairman of the Board of Directors
(Roberto Olivi)
Castellina di Soragna, 14 March 2016
In consideration of the provisions of Art. 154-bis, paragraphs 3 and 4 of Italian Legislative Decree No. 58 of 24 February 1998, the undersigned Enea Righi, in his capacity as CEO, and Ilaria Eugeniani, in her capacity as Financial Reporting Manager of Servizi Italia S.p.A., certify:
It is also hereby stated that the consolidated financial statements as at 31 December 2015:
The Directors' report includes a reliable analysis of the operating performance and result, as well as of the issuer's situation and that of all the companies included in the scope of consolidation, together with a description of the main risks and uncertainties it is exposed to.
The CEO
Enea Righi
The Financial Reporting Manager
Ilaria Eugeniani
Independent auditors' report on the consolidated financial statements of the Servizi Italia Group
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.