Annual Report • Mar 24, 2016
Annual Report
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2015 Financial Statements
Eligible persons are called to an Ordinary and Extraordinary General Meeting of Shareholders to be held in the Boardroom of Intesa SanPaolo, in Milan, Piazza Belgioioso 1, on 14 April 2016, at 11:00 AM in first call and, if necessary, in second call, on 15 April 2016 at 9:00, at the same place, to deliberate on the following:
Milan, March 11th 2016
For the Board of Directors Chairman and Chief Executive Officer Roberto Colaninno
| Mission 8 | |
|---|---|
| Key operating and financial data 9 | |
| The Piaggio Group 12 | |
| Corporate structure 13 | |
| Company Boards 14 | |
| Organisational structure 15 | |
| Strategy and areas of development 18 Business strategy 18 Sustainability strategy 19 |
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| Piaggio and financial markets 20 | |
| Investor Relations 20 | |
| Shareholding structure 21 | |
| Share performance 21 | |
| Main share indicators 22 | |
| Dividends 22 | |
| Group ratings 23 | |
| Significant events during the year 24 | |
| Background 27 | |
| The macroeconomic framework 27 | |
| The market 28 | |
| Two-wheeler 28 Commercial Vehicles 31 |
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| The regulatory framework 32 | |
| Financial position and performance of the Group 38 | |
| Consolidated income statement 38 | |
| Consolidated statement of financial position 41 | |
| Consolidated Statement of Cash Flows 43 | |
| Alternative non-GAAP performance measures 44 | |
| Results by type of product 45 | |
| Two-wheeler 45 | |
| Main results 46 | |
| Market positioning 47 Brands and products 47 |
| The distribution network 50 Investments 51 |
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|---|---|
| Commercial Vehicles 53 Main results 54 |
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| Market positioning 54 | |
| Brands and products 55 The distribution network 55 |
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| Investments 56 | |
| Risks and uncertainties 57 | |
| External risks 57 | |
| Internal risks 59 | |
| Sustainability 64 | |
| Research and Development 65 | |
| Respect for the environment 68 | |
| Developing human resources 70 | |
| Events occurring after the end of the period 95 | |
| Operating outlook 96 | |
| Transactions with related parties 98 | |
| Relations with Parent Companies 98 | |
| Investments of members of the board of directors and members of the control committee 101 |
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| Corporate Governance 102 | |
| Other information 104 | |
| Statement of reconciliation between shareholders' equity and earnings for the period of the Parent Company and consolidated companies 105 |
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| Explanatory memorandum 106 | |
| Economic glossary 107 | |
| Consolidated Financial Statements as of 31 December 2015 109 | |
| Consolidated Income Statement 110 | |
| Consolidated Statement of Comprehensive Income 111 | |
| Consolidated Statement of Financial Position 112 | |
| Consolidated Statement of Cash Flows 114 | |
| Changes in Consolidated Shareholders' Equity 115 | |
| Notes to the Consolidated Financial Statements 117 | |
| Attachments 213 |
| Piaggio Group companies 214 | |
|---|---|
| Information pursuant to article 149-duodecies of the Consob Regulation on Issuers 219 |
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| Certification of the Consolidated Financial Statements pursuant to article 154-bis of Italian Legislative Decree no. 58/98 220 |
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| Report of the Independent Auditors on the Consolidated Financial Statements . 221 |
| 2015 223 | |
|---|---|
| Income Statement 224 | |
| Statement of Comprehensive Income 225 | |
| Statement of Financial Position 226 | |
| Statement of Cash Flows 228 | |
| Changes in Shareholders' Equity 229 | |
| Notes to the Financial Statements 231 | |
| Attachments 308 | |
| Piaggio Group companies 309 | |
| Information pursuant to article 149-duodecies of the Consob Regulation on Issuers 310 |
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| Certification of the Financial Statements pursuant to article 154/bis of Legislative Decree 58/98 314 |
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| Report of the Independent Auditors on the Financial Statements of the Parent Company 315 |
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Report of the Board of Statutory Auditors to the General Shareholders' Meeting ............................................................................................................................................................ 317
The mission of the Piaggio Group is to generate value for its shareholders, clients and employees, by acting as a global player that creates superior quality products, services and solutions for urban and extraurban mobility that respond to evolving needs and lifestyles.
To stand out as a player that contributes to the social and economic growth of the communities in which it operates, considering, in its activities, the need to protect the environment and the collective well-being of the community.
To be an Italian global player in the light mobility segment, standing out for its superior design, creativity and tradition. To become a leading European company with a world class reputation, championing a business model based on the values of quality and tradition, and on the ongoing creation of value.
| 2015 | 2014 | 2013 | |
|---|---|---|---|
| In millions of euros | |||
| Data on earnings | |||
| Net revenues | 1,295.3 | 1,213.3 | 1,212.5 |
| Gross industrial margin | 374.4 | 364.7 | 357.5 |
| Operating income | 56.7 | 69.7 | 62.6 |
| Profit before tax | 20.1 | 26.5 | 30.3 |
| Adjusted profit before tax2 | 20.1 | 30.1 | 30.3 |
| Adjusted net profit 3 | 11.9 | 18.6 | 18.1 |
| Net profit | 11.9 | 16.1 | (6.5) |
| .Non-controlling interests | (0.0) | 0.0 | 0.0 |
| .Owners of the Parent | 11.9 | 16.1 | (6.5) |
| Data on financial performance | |||
| Net employed capital (NEC) | 902.4 | 905.9 | 867.7 |
| Net debt | (498.1) | (492.8) | (475.6) |
| Shareholders' equity | 404.3 | 413.1 | 392.1 |
| Balance sheet figures and financial ratios | |||
| Gross margin as a percentage of net revenues (%) Adjusted net profit2 as a percentage of net revenues |
28.9% | 30.1% | 29.5% |
| (%) | 0.9% | 1.5% | 1.5% |
| Net profit as a percentage of net revenues (%) | 0.9% | 1.3% | -0.5% |
| ROS (Operating income/net revenues) | 4.4% | 5.7% | 5.2% |
| ROE (Net profit/shareholders' equity) | 2.9% | 3.9% | -1.7% |
| ROI (Operating income/NCE) | 6.3% | 7.7% | 7.2% |
| EBITDA | 161.8 | 159.3 | 146.8 |
| EBITDA/net revenues (%) | 12.5% | 13.1% | 12.1% |
| Other information | |||
| Sales volumes (unit/000) | 519.7 | 546.5 | 555.6 |
| Investments in property, plant and equipment and | |||
| intangible assets Research and Development4 |
101.9 46.8 |
94.9 46.3 |
87.6 47.7 |
| Employees at the end of the period (number) | 7,053 | 7,510 | 7,688 |
1 For a definition of individual items, see the "Economic Glossary".
2 To make results of the previous 3 financial years comparable, the Group determined profit before tax as "adjusted" which excludes the effect of non-recurrent operations.
3 To make results of the previous 3 financial years comparable, the Group determined a net profit defined as "adjusted" which excludes the effect of non-recurrent operations.
4 The item Research and Development includes investments for the year recognised in the statement of financial position and costs recognised in profit or loss.
| EMEA and AMERICAS |
INDIA | ASIA PACIFIC |
TOTAL | ||
|---|---|---|---|---|---|
| 2W | |||||
| 2015 | 218.9 | 212.6 | 88.1 | 519.7 | |
| Sales volumes | 2014 | 219.5 | 229.2 | 97.8 | 546.5 |
| (units/000) | Change | (0.5) | (16.5) | (9.7) | (26.8) |
| Change % | -0.2% | -7.2% | -9.9% | -4.9% | |
| 2015 | 745.4 | 353.7 | 196.2 | 1,295.3 | |
| Turnover | 2014 | 699.5 | 324.7 | 189.1 | 1,213.3 |
| (million euros) | Change | 45.9 | 29.0 | 7.1 | 82.0 |
| Change % | 6.6% | 8.9% | 3.8% | 6.8% | |
| 2015 | 3.943,6 | 2,761.2 | 857.5 | 7,562.3 | |
| Average number of staff | 2014 | 4,054.3 | 2,866.0 | 896.0 | 7,816.3 |
| (no.) | Change | (110.7) | (104.8) | (38.5) | (254.0) |
| Change % | -2.7% | -3.7% | -4.3% | -3.2% | |
| Investments property, Property, plant and |
2015 | 74.0 | 12.5 | 15.4 | 101.9 |
| equipment | 2014 | 79.3 | 9.7 | 5.9 | 94.9 |
| intangible assets | Change | (5.3) | 2.8 | 9.5 | 7.0 |
| (million euros) | Change % | -6.7% | 28.5% | 161.9% | 7.4% |
| 2015 | 36.0 | 4.7 | 6.1 | 46.8 | |
| Research and Development5 |
2014 | 39.6 | 3.1 | 3.5 | 46.3 |
| (million euros) | Change | (3.6) | 1.6 | 2.5 | 0.5 |
| Change % | -9.1% | 49.9% | 72.4% | 1.1% |
5 The item Research and Development includes investments for the year recognised in the statement of financial position and costs recognised in profit or loss.
Revenues by geographic segment (figures in millions of euros)
Sales volumes by geographic area (figures in thousands of units)
Sales volumes by geographic segment - 2015
The Piaggio Group is Europe's largest manufacturer of two-wheeler motor vehicles and an international leader in its field. The Group is also a major player worldwide in the commercial vehicles market.
The Piaggio Group product range includes scooters, mopeds and motorcycles from 50cc to 1,400cc marketed under the Piaggio, Vespa, Gilera, Aprilia, Moto Guzzi, Derbi and Scarabeo brands. The Group also operates in the three- and four-wheeler light transport sector with its Ape, Porter and Quargo ranges of commercial vehicles.
Some of the Piaggio Group brands are the most prestigious and historic in the world of motorcycle racing: from Gilera (established in 1909), to Moto Guzzi (established in 1921), Derbi (1922) and Aprilia which in just over twenty years has made a name for itself as one of the most successful manufacturers taking part in the world speed and superbike championships.
The Group, with headquarters in Pontedera (Pisa, Italy), operates at an international level through production sites located in Pontedera, which manufactures two-wheeler vehicles under the Piaggio, Vespa and Gilera brands, vehicles for light transport for the European market and engines for scooters and motorcycles; in Noale (Venice) with a technical centre for the development of motorcycles for the entire Group and the headquarters of Aprilia Racing; in Scorzè (Venice), which manufactures Aprilia, Scarabeo and Derbi two-wheelers, and Piaggio Wi-Bikes; in Mandello del Lario (Lecco), which manufactures Moto Guzzi vehicles and engines; in Baramati (in the Indian state of Maharashtra), which manufactures threeand four-wheeler light transport vehicles for the Indian market and exports, the Vespa for the Indian market and engines for the Group's commercial vehicles; in Vinh Phuc (Vietnam), which manufactures scooters and engines for the local market and Asean area. The Piaggio Group is also a 45% stakeholder in a joint-venture operation in China (in Foshan, in the Guangdong province) which is therefore consolidated with the equity method in the Group's results. In the US, the Piaggio Group Advanced Design Center operates at Pasadena, California. In addition, Piaggio Fast Forward Inc. was set up in Cambridge, Massachusetts in June 2015, a subsidiary of Piaggio & C. S.p.A., for research into innovative solutions in the mobility and transport sector.
In 2015, the corporate structure of the Group changed, following the establishment of a new company Piaggio Fast Forward Inc. in the United States on 15 June 2015, for the research and development of new mobility and transport systems.
Board of Directors Chairman and Chief Executive Officer Roberto Colaninno (1), (2) Deputy Chairman Matteo Colaninno Directors Michele Colaninno
Giuseppe Tesauro (3), (4), (5), (6) Graziano Gianmichele Visentin (4), (5), (6) Maria Chiara Carrozza (4) Federica Savasi Vito Varvaro (5), (6) Andrea Formica
1
3
Alternate Auditors Giovanni Naccarato
Supervisory Body Antonino Parisi
Daniele Girelli Elena Fornara
Giovanni Barbara Ulisse Spada
Alessandra Simonotto
Independent Auditors PricewaterhouseCoopers S.p.A.
(1) Director responsible for the internal control system and risk management
(2) Executive Director
(3) Lead Indipendent Director
(4) Member of the Appointment Proposal Committee (1) Director in charge of internal audit
(5) Member of the Remuneration Committee (2) Lead Independent Director
(6) Member of the Internal Control and Risk Management Committee (3) Member of the Appointment Proposal Committee
All the information on the powers reserved for the Board of Directors, the authority granted to the Chairman and CEO, as well as the functions of the various Committees of the Board of Directors, can be found in the Governance section of the Issuer's website www.piaggiogroup.com.
The structure of Piaggio & C. S.p.A.'s organisation is based on the following Front-line functions:
guaranteeing protection of the Group's trademarks at a worldwide level, and the management of obligations concerning company law.
each department, for the area and products in its management, is responsible for achieving sales targets established for scooters, motorcycles, commercial vehicles, spare parts and accessories, defining price policies for single markets and identifying appropriate actions to develop the sales network, through the coordination of sales companies in Europe, and for managing corporate sales to Major Clients and the central public administration sector at a European level.
Asia Pacific 2 Wheeler: this is responsible for coordinating the companies Piaggio Vietnam, Piaggio Asia Pacific, Piaggio Group Japan Corporation, Foshan Piaggio Vehicles Technology Research & Development and Piaggio Indonesia, in order to guarantee business and industrial profitability, turnover, market share and customer satisfaction for the Group's two-wheeler vehicles, by managing production and sales on reference markets.
Piaggio Vehicles Private Limited: this is responsible for guaranteeing business and industrial profitability, turnover, market share and customer satisfaction for the Group's commercial vehicles and Vespa scooters in India, by managing production and sales on reference markets.
The Piaggio Group aims to create value by adopting a strategy which:
Europe Two-wheeler – lever market recovery, consolidating a leadership position in the scooter segment. Focus on the Aprilia and Moto Guzzi brands to improve sales and profitability in the motorcycle segment. Entry on the electrical bicycle market, levering technological and design leadership, as well as the strength of the distribution network.
America Two-Wheeler segment - continuing growth, with the introduction of the premium products Aprilia and Moto Guzzi and consolidating the sales network.
Europe Commercial Vehicles - maintaining growth based on eco-sustainable solutions, with a product range featuring new engines with zero or low environmental impact and lower emissions.
Two-wheeler - consolidating the position on the scooter market with the expansion of the Vespa range and the introduction of new models in the premium segment (scooters and motorcycles).
Commercial Vehicles - an increase in volumes and profitability, through the consolidation of a strong competitive position on the three-wheeler market thanks to the Apè city Pax, the introduction of the new four-wheeler products, the sub 0.5 stroke and sub 1 stroke and a focus on the export of threewheeler vehicles to Africa and Latin America.
Strong growth: the objective is to replicate the premium strategy for Vietnam throughout the area (Indonesia, Thailand, Malaysia, Taiwan), exploring opportunities for medium and large sized motorcycles, penetrating the premium segment on the Chinese market thanks to a new, direct presence in the country.
The Group will aim to consolidate its business position by levering and investing in the potential of its key assets:
a strong international presence, with local operations for all core company processes, from marketing to research and development, production and purchasing.
The Group's Corporate Social Responsibility (CSR) strategic objectives – which are largely integrated with and connected to the development of the strategic plan – are based on the following areas:
The results achieved in 2015, the sustainability policy adopted by the Group and initiatives taken are presented in the Piaggio Group's Corporate Social Responsibility Report, which is issued at the same time as this Report and is available on its institutional website www.piaggiogroup.com under Social Responsibility.
Piaggio considers financial disclosure to be of fundamental importance in building a relationship of trust with the financial market.
In particular the Investor Relations function engages institutional and individual investors as well as financial analysts in an ongoing dialogue, producing transparent, timely and accurate information to promote a correct perception of the Group's value.
In 2015, the Group had numerous occasions to engage with the financial community, meeting more than 130 investors on main financial markets during road shows and conferences.
Initiatives also included direct meetings and conference calls, managed daily by the IR function, and institutional communication events concerning quarterly results.
The Company's website www.piaggiogroup.com is constantly updated with exhaustive information concerning the Group and all major corporate documentation, in both Italian and English.
In particular, press releases disclosed to the market by the Press Office, the Company's periodic financial reports, the Corporate Social Responsibility Report, and the Company's business and financial performance are all published on-line, along with the material used in meetings with the financial community, Piaggio share consensus as well as corporate governance documents (articles of association, insider trading and material concerning shareholders' meetings).
Raffaele Lupotto – Senior Vice President, Head of Investor Relations Email: [email protected] Tel: +39 0587 272286 Fax: +39 0587 276093
As of 31 December 2015, share capital consisted of 361,208,380 ordinary shares. At the same date, the shareholding structure, according to the shareholder ledger supplemented with notices received pursuant to article 120 of Legislative Decree no. 58/1998 and other available information, was as follows:
*In a capacity as manager, among others, of the FCP Aggressor fund which holds 2.2729% of the share capital
Piaggio & C. SpA has been listed on the Milan Stock Exchange since 11 July 2006. Piaggio shares, also affected by market volatility in the second half of the year, ended 2015 at € 2.34 per share, slightly down compared to the end of 2014.
| 2015 | 2014 | |
|---|---|---|
| Official share price on the last day of trading (euro) | 2.34 | 2.40 |
| Number of shares (no.) | 361,208,380 | 363,674,880 |
| Earnings per share (euro) | ||
| Basic earnings | 0.033 | 0.044 |
| Diluted earnings | 0.033 | 0.044 |
| Shareholders' equity by share (euro) | 1.12 | 1.14 |
| Market capitalisation (in millions of euros)* | 840 | 873 |
* Obtained by multiplying the official share price of the last day of trading by the number of shares.
The Shareholders Meeting of Piaggio & C. S.p.A. of 13 April 2015 resolved to distribute a dividend of 7.2 eurocents per ordinary share. During 2014, dividends were not distributed.
| Reference Financial Statements | 2014 | 2013 | 2012 |
|---|---|---|---|
| Detachment date | 20 April 2015 | - | 20 May 2013 |
| Payment date | 22 April 2015 | - | 23 May 2013 |
| Dividend per share (euro) | 0.072 | - | 0.092 |
| Current | 31/12/2014 | |
|---|---|---|
| Standard & Poor's | ||
| Corporate | B+ | B+ |
| Outlook | Stable | Stable |
| Moody's | ||
| Corporate | B1 | Ba3 |
| Outlook | Stable | Negative |
5 March 2015 – Aprilia's 2015 sports' season was presented. In 2015, Aprilia took part in the MotoGP championships with the riders Alvaro Bautista and Marco Melandri6 , in the Superbike championships with the riders Leon Haslam and Jordi Torres and in the Superstock championships with the riders Kevin Calia and Lorenzo Savadori. As regards Aprilia's involvement in MotoGP, a first year will be spent entirely on development, above all in race conditions, before a prototype motorbike with a Full Factory configuration makes its début on the track in 2016.
9 March 2015 - The Indian subsidiary Piaggio Vehicles Private Ltd. announced the launch of its new commercial vehicle, the Ape Xtra Dlx.
31 March 2015 - Piaggio & C. S.p.A. signed a document with ING Bank NV to access 30 million euros relative to a five-year 220 million euro loan formalised with a pool of banks in July 2014. With this document, of which the amount is available since early April 2015, the syndicated loan has reached the maximum amount foreseen of 250 million euros.
23 April 2015 - The Indian subsidiary Piaggio Vehicles Private Ltd. obtained ISO 14001:2004 certification (environmental management systems) and OHSAS 18001:2007 certification (occupational health and safety management systems) for its Commercial Vehicles and Engines production sites, as well as ISO 50001 certification for the energy management system of its two-wheeler production site.
21 May 2015 - The new Moto Guzzi Audace and Eldorado motorcycles were unveiled.
9 June 2015 - The Vespa 946 Emporio Armani, the result of a collaboration between Giorgio Armani and Piaggio to celebrate two world-famous symbols of Italian style and design was unveiled.
15 July 2015 – The world's first scooter sharing service, with a free floating format, was launched in Milan. The service is provided by the company Enjoy and uses Piaggio Mp3 scooters. To mark the occasion, the Piaggio Group developed a special version of the Mp3 - the 300LT Business ABS - which combines all the new functions of smartphone localisation with a vehicle sharing format. The initial fleet for the scooter sharing initiative launched by Enjoy in the city of Milan comprises a first supply of 150 vehicles.
12 August 2015 - The Piaggio Group announced the start of Vespa brand business operations in Nepal. Manufactured at the Piaggio Vehicles Private Ltd.'s Baramati site, the Vespa VX and Vespa S 125cc models immediately went on sale at three different showrooms in Kathmandu, owned by D-Lifestyles, a
6 On 8 July 2015 Aprilia Racing and Marco Melandri reached an agreement to terminate the rider's contract. Consequently, Marco Melandri stopped riding for Aprilia Racing as from the German Grand Prix of 12 July 2015.
company of the Nepalese group Dev Jyoti, which operates in the consumer goods, IT and energy sectors.
17 September 2015 – After its launch in Italy and European countries last June, the Vespa 946 Emporio Armani made its début on leading Asian markets and is now available in Japan and will shortly sell in Vietnam and Indonesia, which are strategic markets for Piaggio Group operations in Asia.
29 September 2015 – Moody's lowered Piaggio's rating from Ba3 to B1, giving it a stable outlook.
2 October 2015 – More than one thousand students - with several other thousands in streaming attended the presentation of Piaggio Fast Forward, the Piaggio Group's great innovation project. Piaggio Fast Forward (piaggiofastforward.com) was created in 2015 as a new company established and controlled by the Piaggio Group, in order to develop a new way of doing research, to interpret signs of change and to come up with intelligent solutions to future problems and needs. Piaggio Fast Forward is located at a centre of excellence: Cambridge (Massachusetts, United States) - a platform where research, the university, visions for the future, technology and businesses all come together and encourage ideas.
4 October 2015 – Lorenzo Savadori riding an Aprilia RSV4 RF won the Superstock 1000 FIM Cup 2015 and Aprilia won the manufacturer's title.
13 October 2015 - Piaggio Group Americas, a subsidiary of the Piaggio Group based in New York, opened the Group's first multi-brand flagship store in America, in Manhattan, in the very heart of the city, on 6, Grand Street, based on the strategic lines of the Motoplex store opening programme. The dealership showcases the Piaggio Group's most prestigious brands such as Vespa, Piaggio, Aprilia and Moto Guzzi.
14 October 2015 - The Vespa 946 Emporio Armani made its début in the United States. To mark the occasion, an event was held at the Emporio Armani, SoHo - New York.
In October, the Piaggio Group started to sell new versions of the Piaggio Porter featuring the new MultiTech Euro 6 petrol engine, which delivers a better performance, fewer emissions and fuel savings.
30 October 2015 - The Vespa 946 Emporio Armani was launched in the People's Republic of China, during a dedicated event in Beijing.
13 November 2015 - The new high-wheeled scooter, the Piaggio Medley, made its début at EICMA, based on a more powerful model, with new liquid cooled Piaggio iGet 125 and 150cc engines, and start&stop function. Slightly bigger than the Liberty, and more compact than the powerful Beverly, the Medley is a new segment from the Piaggio Group targeting a young, often male target, with driving licence. The new generation of the Liberty was also unveiled, Piaggio's high-wheeled scooter, with a new range of eco-friendly, energy-efficient, electronic injection four stroke engines (Piaggio iGet 50, 125 and 150cc), with ABS fitted as standard on the 125 and 150 versions.
13 November 2015 - The new standard version of the Piaggio Wi-Bike, entirely designed and manufactured by Piaggio in Italy, with four different configurations available, was unveiled at EICMA.
13 November 2015 - The Moto Guzzi V9 with new 850cc V engine and shaft drive, new chassis and design was unveiled at EICMA, in the V9 Bobber version, with large tyres and the light and easy Roamer version, a custom model with medium engine capacity.
3 December 2015 – The European Investment Bank (EIB) and Piaggio signed a loan agreement for 70 million euros supporting Piaggio Group Research and Development projects that will take place at its Italian sites. The seven-year loan will fund the development of innovative technological, product and process solutions in the areas of active and passive safety, sustainability (including electric engines and reduced consumption in petrol engines) and customer satisfaction, with the study of new mobility concepts, new driver/vehicle interfaces, and communication and web connection profiles.
As in 2014 and 2015, the world economy grew by approximately 3%, with dynamics differing by geographic segment, against a background of reduced inflation in western countries and commodity prices affected by a further drastic fall in oil prices.
In East Asia, the two leading economies confirmed considerable growth factors, albeit with different dynamics. In China, this growth slowed down to 6.9% in a scenario with policies weakening the domestic currency, while in India growth improved (approximately +7%) with a concurrent decrease in inflation and the budget deficit.
Japan instead still did not manage to record a significant growth, despite the considerable state deficit and expansive monetary policy adopted.
In the United States, growth was consolidated (approximately +2.5%), allowing for a gradual reduction in the federal deficit and normalisation of the monetary policy. As a result the dollar got stronger, with a positive impact on the trade balances of EU countries.
Overall growth improved in the eurozone, in a context of marginal inflation, which led the ECB to confirm major programmes for monetary intervention.
In Italy, after three consecutive years of decline, GDP registered a growth which is near 1%. The slight improvement in consumer trends and employment confirmed the need for further structural reforms - to improve competitiveness, and for EU policies that not only focus on the strict control of government undertakings, but also on supporting investments.
In 2015, the world two-wheeler market (scooters and motorcycles), based on figures from monitored markets, recorded sales of nearly 46 million vehicles, with a decrease of approximately 6.5% compared to the previous year, but with different dynamics anchored to the geographic segment.
India, the most important two-wheeler market, registered a slight growth in 2015, ending the year with just over 16 million vehicles sold, up by 0.9% compared to 2014.
China instead recorded decreasing volumes in 2015, down by 14.8% compared to the previous year and ending the period with 9.1 million units sold.
The Asian area, Asean 5, reported a considerable decrease in 2015 (-10.1% compared to 2014) ending the year with 12.18 million units sold. Indonesia, the main market in this area, declined considerably in 2015, with total volumes of over 6.48 million units and a decrease of 17.6% compared to the previous year. Thailand also recorded a downwards trend (1.6 million units sold; -4.1% compared to 2014) as well as Malaysia (378 thousand units sold; - 14.7% compared to 2014); Whereas sales in Vietnam increased (2.8 million units sold; +4.8% compared to 2014), and in the Philippines (850 thousand units sold; +8% compared to 2014);
Volumes of other Asian area countries (Singapore, Hong Kong, South Korea, Japan, Taiwan, New Zealand and Australia) decreased, in overall terms, compared to the previous year, with 1.22 million units sold (-5%). In this area, the decrease registered by Japan was considerable (-10.3% in 2015, with 374 thousand vehicles sold), while it was less negative for Taiwan, which ended the period with 668 thousand units sold (-0.9% compared to 2014).
The North American market, up by 3.3% compared to 2014 (557,000 vehicles sold) confirmed its growth trend in 2015 as well.
Brazil, the first market in the South America area, recorded a downturn of 16.8%, with just under 1.2 million vehicles sold in 2015.
Europe, the reference area for Piaggio Group activities, confirmed its positive growth trend in 2015 as well, reporting a 5.4% increase in sales on the two-wheeler market compared to 2014 (+10% for the motorcycle segment and +1.8% for scooters), ending the period with 1.212 million units sold.
The European scooter market in 2015 accounted for 673,000 registered vehicles, with an increase in sales of 1.8% compared to 2014.
In 2015, vehicle registrations were higher in the over 50cc segment, with 396,000 units against 277,000 units in the 50cc scooter segment. The over 50cc scooter segment increased by 6.9% compared to 2014, while the 50cc segment fell by 4.6%.
France was the most important market with 134,300 thousand units sold, followed by Italy with 129,600 thousand units and Spain with 102,500 thousand units. Holland has become the fourth country, in terms of sales volumes (64,700 units) ahead of Germany, which is now in fifth place on the European market with 61,500 units sold. Lastly, the United Kingdom registered 32,200 vehicles. In 2015, the Italian market reported a positive growth trend compared to the previous year (+3%). The 50cc segment went down by 13.3%, with 21,000 units sold. In the over 50cc segment, 108,600 units were sold, registering an increase of 7% compared to 2014.
The French market with 134,300 vehicles decreased by 5.8% compared to the 142,500 vehicles sold the previous year: this is due to the performance of the 50cc scooter subsegment (-10.2%) while the over 50cc subsegment was stable (+0.6%).
The German market registered a slight decrease (-1.6%) with approximately 61,500 vehicles sold in 2015 compared to 62,500 in 2014. On this market, the downturn was due to the 50cc scooter segment (-4.7%), while the over 50cc scooter segment reported an increase (+2%).
Spain performed the best among leading markets, with a growth of +16.6% compared to 2014. In this case as well, the result was due to a considerable increase in the over 50cc subsegment (+18.1%), while the 50cc scooter subsegment reported an increase of 8.2%.
In the United Kingdom the market grew by 1.1% thanks to a good performance from the over 50cc subsegment (+6.6%), which was only partially offset by a fall in the 50cc scooter subsegment (- 11.2%).
In 2015 the market still reported a downturn (-10.4%), with approximately 33,000 units sold: this negative trend is due to the over 50cc scooter segment, where sales fell by 13% and to the 50cc scooter segment, with sales going down by 8.3%.
The scooter market in the United States (which accounts for 90% of the reference area), declined by 10.7%, with 30,000 vehicles sold; a downturn was also registered on the Canadian market, with nearly 3,300 vehicles registered in 2015, accounting for a decrease of 8.3%.
The main scooter market in the Asean 5 area is Indonesia, with just under 5.7 million items sold, reporting a decrease of approximately 16% compared to 2014. The Cub segment (vehicles with gears) recorded the most significant downturn, confirming the negative trend of the previous year and closing
with 829 thousand units and a decrease of -43%. The decrease in the automatic scooter segment was far more moderate (-8.3% compared to 2014 and nearly 4.9 million units sold).
The second main market is Vietnam, which reported a 4.8% increase and 2.8 million units sold, of which 1.5 million Cub scooters (-0.9% compared to 2014) and 1.3 million automatic scooters (+12.8% compared to 2014).
The Vietnamese market mainly concerns scooters, as sales in the motorcycle segment are not particularly significant. The 50cc scooter segment is not operative on this market.
In the Cub segment, 51cc to 115cc models were the best performers, with more than 1.2 million units sold, accounting for 78% of the entire segment.
The automatic scooter market increased by 12.9% in 2015, ending the year with over 4.9 million units sold.
The over 90cc range is the main product segment, with more than 4.7 million units sold in 2015 (+14.2% compared to the previous year) and accounting for 97% of the total automatic scooter market. The 50cc scooter segment is not operative in India.
With 539,000 units registered, the motorcycle market ended 2015 with a 10% increase. All subsegments reported a growth trend, including the 50cc subsegment (+1.9%, closing with 31,100 units sold). More significant growth trends were recorded for other sub-segments: 51-125cc motorcycles closed with sales of 85,000 units (+18.9%), while sales of 126-750cc motorcycles amounted to 156,000 units (+4.8%).
Lastly, the over 750cc segment reported the highest growth, +11.6%, with 266,600 motorcycles sold. Germany is now the main European market with 121,700 units sold, taking over from France (107,000); the United Kingdom with 82,500 vehicles stayed in third place, ahead of Italy which ended the year with 65,000 units sold; Spain ranked fifth with 45,500 vehicles sold.
In 2015, all main countries in the eurozone reported positive trends compared to the previous year: the increase (as a percentage) was highest in Spain (+22.5%), with a very good performance also recorded in the United Kingdom (+18%), Italy (+13.7%) and Germany (+8.4%), while France recorded a slight downturn (0.8%).
The recovery of the motorcycle market in North America (USA and Canada) confirmed the trend underway in the past three years: 2015 ended with an increase of 4.4%, and 524,000 units were sold compared to 502,000 in the previous year. In the United States (accounting for 89% of the area), the motorcycle segment improved, recording a 4.6% increase, selling 470,600 units against 450,000 units
in 2014. The trend on the Canadian market was also positive, ending the year with 53,700 units sold and an increase of 2.3%.
India is the most important motorcycle market in Asia, selling over 10.5 million units in 2015, accounting for a 3.4% decrease.
The motorcycle market in the Asean 5 area is far less important than the scooter sector. Sales of motorcycles in Vietnam were not significant. in other countries, the highest sales were recorded in Indonesia; however with 839 thousand units sold, it reported a decrease of 33.2% compared to the previous year.
In 2015, the European market for light commercial vehicles (vehicles with a maximum mass of up to 3.5 tons) where the Piaggio Group operates, accounted for 1.7 million units sold, up 11.6% compared to 2014 (source ACEA data). In detail, the trends of main European reference markets are as follows: Germany (+4.2%), France (+2.0%), Italy (+12.4%) and Spain (+36.1%).
Sales on the Indian three-wheeler market, where Piaggio Vehicles Private Limited, a subsidiary of Piaggio & C. S.p.A. operates, fell from 531,500 units in 2014 to 514,000 in 2015, registering a 3.3% decrease.
Within this market, the passenger vehicle subsegment reported a negative trend, decreasing by 2.9% and closing with 419,000 units. The cargo segment reported a decrease of 5.1%, from 100,000 units in 2014 to 95,000 units in 2015. The traditional three-wheeler market is flanked by the four-wheeler light commercial vehicles (LCV) market (cargo vehicles for goods transport) where Piaggio Vehicles Private Limited operates. The LCV cargo market, with vehicles with a maximum mass below 2 tons and where the Porter 600 and Porter 1000 compete, accounted for 115,400 units sold in 2015, falling by 16.6% compared to 2014.
In March, the European Commission launched a public consultation on the 2011 White Paper on Transport: "Roadmap to a Single European Transport Area: Towards a competitive and resource efficient transport system".
The aim of the 2015 consultation was to assess the implementation status of the guidelines contained in the White Paper and to identify new topics of interest for transport policy in light of various new technological developments and the changing socio-economic environment in Europe.
The consultation closed on 2 June 2015. ACEM (the Association of European Motorcycle Manufacturers) took part on behalf of its members, including Piaggio.
Based on the consultation analysis document, published by the Commission in August, the majority of participants involved had the following opinions:
Moreover, in July 2015, the Committee on Transport of the European Parliament adopted the report prepared by the Euro MP Wim Van de Camp on the review of the White Paper on Transport. This report has a positive general approach to two-wheeler vehicles and in particular states that two-wheelers (motorcycles, scooters, mopeds), including electrical vehicles, have a considerable role to play in sustainable mobility, specifically in urban areas where they can help solve congestion and parking problems, and provide a solution for logistics. The report underscores the fact that the specific benefits of these vehicles must be adequately considered and reflected in laws and guidelines on transport established by the European Union.
As provided for in Regulation (EU) No 168/2013 on the approval and market surveillance of two- or three-wheeler vehicles and quadricycles, published in January 2013, the European Commission launched an environmental impact study in the first half of 2015 to assess air quality and the pollution caused by category L vehicles (mopeds, motorcycles, tricycles and quadricycles).
The Joint Research Centre (JRC), on request of the European Commission, held a public consultation from 31 March to 10 July 2015, involving European manufacturers who are members of ACEM, on the costs, benefits and technical feasibility of Euro 5.
In June 2015, the Commission called a tender to identify research laboratories/centres, supervised by JRC, to check and validate the results obtained by JRC during the pre-study and data collection stage. The research centres identified shall submit a final report to the European Commission in September 2016 and, in light of the results, the Commission will present a report to the European Parliament and Council by the end of 2016. It will either confirm the requirements already contained in Regulation (EC) No 168/2013 for Euro 5 emissions standards (2020), or else will put forward new suitable legislative proposals, which will have to be approved by the European Parliament and the EU Council.
As for personal protective equipment (PPE), the European Union has issued a number of directives over the years, including the Directive 89/686/EEC on the manufacture and sale of PPE, including products intended for drivers of scooters and motorcycles. It also defines the legal obligations designed to ensure that PPE placed on the European market offers the highest level of protection.
To facilitate a common interpretation and uniform application of the directive, guidelines were adopted some years ago which are currently under review by an EU working group. The working group is made up of representatives from European institutions, Member States and the two-wheeler industry.
In 2014, under the aegis of UNECE Working Party 29 (World Forum for Harmonization of Vehicle Regulations) in Geneva, the European Commission unveiled a raft of proposals for Global Technical Regulations relating to pollution from two-wheeler vehicles. Discussions of the proposals continued into the first half of 2015. One of the objectives is to negotiate with member countries of Working Party 29 on the transposition, to the fullest extent possible, of the requirements that will come into force from January 2016, making Europe the global leader for this type of regulation. Among the regulations currently under discussion are those relating to exhaust emissions, evaporative emissions, durability of anti-pollution systems and on-board diagnostic systems.
At the June 2015 meeting of UNECE Working Party 29, Member States ratified the final version of the 03 series of amendments to UNECE Regulation 51 concerning noise emissions from motor vehicles.
With this new series of amendments, the UNECE has adopted the requirements of Regulation (EU) No 540/2014 on the sound level of motor vehicles, which it will implement according to the same timetable. Phase 1 of the new noise limits applies to new vehicle types from 1 July 2016. Unlike the European regulation, it also introduces exemptions for certain vehicle categories commonly found outside Europe. For example, until 30 June 2022, less stringent limits will apply to goods vehicles with a gross vehicle weight of ≤ 2.5 tonnes, provided they meet certain specific constraints in terms of engine displacement and conformation.
On 29 April 2015, Regulation (EU) 2015/758 concerning type-approval requirements for the deployment of the eCall in-vehicle system was published in the Official Journal of the European Union. This makes it compulsory to fit the eCall (emergency call) system on board in new types of passenger cars and light commercial vehicles (categories M1 and N1), which, in the event of a road accident, must be able to dial the single European emergency number 112 automatically and transmit the vehicle's location.
For this mechanism to be fully operational, the appropriate infrastructure must exist for the eCall system, which must be free to use for all consumers. In short:
investigate whether the eCall requirement should be extended to other categories of vehicles, such as two-wheelers. If appropriate, the Commission will have to present a legislative proposal for consideration by the European Parliament and Council.
During the second half of 2015, the European Commission also presented two proposals for delegated regulations, that will define the administrative procedure and technical requirements and testing procedures for the type approval of vehicles, with reference to respective eCall systems.
On 28 October, representatives of EU Member States on the Technical Committee of Motor Vehicles (TCMV) voted by a large majority on a package of measures to introduce real driving emissions tests for air pollutant emissions for passenger and commercial vehicles. This is because some recent laboratory tests did not accurately reflect the amount of air pollution emitted during real driving conditions. The member states therefore established that as from September 2017, these RDE tests will determine, along with new WLTP (Worldwide harmonized Light vehicles Test Procedures), whether a vehicle may be granted type approval and therefore placed on the market.
In particular, manufacturers will have to be able to limit the difference between laboratory emissions and emissions in real driving conditions (the so-called conformity factor):
In the first few months of 2015, the Italian Government announced its intention of presenting the Green Act, to establish government guidelines on energy efficiency, the development of renewable energies, incentives for sustainable mobility, measures to manage and efficiently use natural energy resources, sustainable agriculture, and financial and tax measures for development of the green economy. The Green Act should be issued as a framework regulation involving various institutions.
Pending the publication of the Green Act, stakeholders, including trade associations such as ANFIA (the Italian Association of the Automotive Industry) and ANCMA (the Italian National Association of Manufacturers of Mopeds, Motorcycles and Accessories), which Piaggio belongs to, prepared and presented some proposals for environmental and industrial policy, calling for:
In the second half of 2014, an amendment was tabled before the Italian Parliament in the context of highway code reforms delegated to the Government. Along with other legislative proposals, it sought to allow access to ring roads and motorways for motorcycles with an engine capacity of ≥ 120 cc if driven by drivers over the age of 18. This amendment, approved by the Chamber of Deputies, was stalled, following a negative opinion from the Budget Committee of the Senate, concerning an assumed lack of
financial cover for some of the proposals it contained. The bill was then reviewed by the Senate in November 2015, with some amendments presented by members of the Public Works Committee, which should be voted on during the first few months of 2016.
In June 2015, Confindustria ANCMA (the Italian National Association of Manufacturers of Mopeds, Motorcycles and Accessories), of which Piaggio is a member, attended a hearing organised by the joint finance and manufacturing committees of the Chamber of Deputies to discuss the "Competition" bill. The subject of the hearing was ANCMA proposals to tackle the high cost of insurance that has penalised mopeds and motorcycles for years. Based on the results of a study commissioned from the LUISS University in Rome, ANCMA showed how the direct compensation mechanism, introduced in Italy in 2007, has led to higher costs for companies that insure two-wheeler vehicles and, consequently, an increase in insurance premiums for these vehicles.
The bill "Provisions for the fulfilment of obligations arising from Italy's membership of the European Union" (European Law 2014)", after being approved by the Chamber of Deputies, went to the Senate in June 2015 and was assigned to the 14th Committee on Political Affairs of the European Union. The bill in question allows drivers over the age of 16 who hold an AM, A1 or B1 licence to carry a passenger (not precedently permitted by the highway code), thus bringing national requirements into line with EU legislation. On 23 July, the Senate gave final approval and the bill was published in the Gazzetta Ufficiale and became law on 3 August.
During the first half of 2015, a package of new measures to improve road safety was unveiled and subsequently approved by the French Government. Two changes that came into force on 1 July for drivers of two-wheeler vehicles are particularly worth mentioning:
The entry into force of European Regulation 168/2013/EC on the approval of two- or three-wheel vehicles and quadricycles, as from January 2016, will stop the application of a specific French law that currently limits the maximum power of motorcycles that may be registered in France to 100 horsepower.
The French government is preparing a draft decree based on which motorcycles approved before this date must have ABS in order for the version with unlimited power (over 100 hp) to be registered.
This problem does not apply to motorcycles with type approval from January 2016 onwards, as these will be approved according to European Regulation 168/2013 and so have ABS as standard (for two wheelers over 125cc).
The Pedestrian Safety Enhancement Act of 2010 delegated the NHTSA (National Highway Traffic Safety Administration) to adopt a regulatory process to establish a regulation that would require electric and hybrid vehicles to have an acoustic warning system enabling pedestrians and particularly non-sighted pedestrians to perceive the presence of vehicles that operate below their cross over speed (the speed at which the noise of the tyres, wind resistance or other factors mean that vehicles can be detected even without an alarm system). Motorcycles are also considered. The MIC (Motorcycle Industry Council) presented some technical observations requiring the exclusion of two-wheeler vehicles from these requirements. Based on information released in December 2015 from the Department of Transport, the Final Rule on the matter should be published in March 2016, while requirements will become mandatory starting from three years from this date.
In July, the EPA (Environmental Protection Agency) and NHTSA published a regulatory proposal to create a new stage compared to current standards on greenhouse gas emissions and the energy efficiency of vehicles. Not all of the proposal applies to motorcycles, but the EPA has suggested adopting a part of stage 2 requirements (recall devices and hearing procedures) for on-road motorcycles.
The AMA (American Motorcyclist Association) is promoting the implementation of requirements that will enable motorcyclists to advance through slow-moving traffic using a manoeuvre commonly known as "lane splitting". According to the AMA, this would make motorcyclists less exposed to the frequent acceleration and deceleration of vehicles on congested roads and could help reduce collisions involving these vulnerable road users.
The Canadian Ministry of Transport is evaluating the possibility of including the UNECE 60 regulation (identification of driver-operated controls) as part of CMVSS (Canada Motor Vehicle Safety Standard) no. 123 on controls and displays. Times are still being defined.
In July 2014, the Expert Committee on Auto Fuel Vision & Policy 2025 published a report with its contribution to defining a roadmap for Bharat V (emission standards). According to information disclosed in early 2015, the time frames for this new stage of standards to come into force appear to be as follows: 1 April 2020 for newly type-approved two-wheeler vehicles, and 1 April 2021 for newly registered two-wheeler vehicles.
On 12 June 2015, final notification for Bharat Stage IV was issued, which requires the entry into force, by 1 April 2016, of new requirements for vehicles with new type approval (one year later for existing vehicles).
To encourage the development and production of hybrid and electric two-wheeler vehicles, in April 2015 the Ministry of Transport announced a specific type-approval procedure, with less stringent requirements than those existing for conventional internal combustion engine vehicles.
The entry into force of anti-pollution legislation known as "China 4", basically equivalent to Euro 4 standards and originally scheduled for January 2016, has been postponed to 1 January 2017.
Between 2012 and 2014, the Japanese authorities and various stakeholders examined and discussed a proposal for new emissions regulations for two-wheeler vehicles. This led to the implementation of several amendments to the original proposal in April 2015. New rules have also been drawn up, which manufacturers will have to follow for the type-approval of their two-wheeler vehicles in the near future. Of these requirements, it is worth mentioning the following:
These requirements are due to enter into force in October 2016 (September 2017 for imported vehicles) and are not expected to include mopeds.
In August, the obligation for newly registered motorcycles to conform to Euro 3 emission standards came into force. This obligation has been in effect since August 2013 for models with new type approval.
| 2015 | 2014 | Change | ||||
|---|---|---|---|---|---|---|
| In millions of | Accounting | In millions of | Accounting | In millions of | ||
| euros | for a % | euros | for a % | euros | % | |
| Consolidated Income Statement (reclassified) |
||||||
| Net sales revenues | 1,295.3 | 100.0% | 1,213.3 | 100.0% | 82.0 | 6.8% |
| Cost to sell7 | 920.9 | 71.1% | 848.6 | 69.9% | 72.3 | 8.5% |
| Gross industrial margin7 | 374.4 | 28.9% | 364.7 | 30.1% | 9.7 | 2.7% |
| Operating expenses | 317.7 | 24.5% | 295.0 | 24.3% | 22.7 | 7.7% |
| EBITDA7 | 161.8 | 12.5% | 159.3 | 13.1% | 2.4 | 1.5% |
| Amotisation/Depreciation | 105.0 | 8.1% | 89.6 | 7.4% | 15.4 | 17.2% |
| Operating income | 56.7 | 4.4% | 69.7 | 5.7% | (13.0) | -18.6% |
| Result of financial items | (36.6) | -2.8% | (43.1) | -3.6% | 6.5 | -15.2% |
| of which non-recurrent costs | 0.0% | (3.6) | -0.3% | 3.6 | -100.0% | |
| Profit before tax | 20.1 | 1.6% | 26.5 | 2.2% | (6.4) | -24.2% |
| Adjusted profit before tax | 20.1 | 1.6% | 30.1 | 2.5% | (10.0) | -33.1% |
| Taxes | 8.2 | 0.6% | 10.5 | 0.9% | (2.2) | -21.2% |
| Net profit | 11.9 | 0.9% | 16.1 | 1.3% | (4.2) | -26.1% |
| Impact of non-recurrent costs | (2.6) | 2.6 | -100.0% | |||
| Adjusted net profit | 11.9 | 0.9% | 18.6 | 1.5% | (6.8) | -36.3% |
| 2015 | 2014 | Change |
|---|---|---|
| 745.4 | 699.5 | 45.9 |
| 353.7 | 324.7 | 29.0 |
| 196.2 | 189.1 | 7.1 |
| 1,295.3 | 1,213.3 | 82.0 |
| 884.9 | 841.0 | 43.9 |
| 410.4 | 372.3 | 38.1 |
| 1,295.3 | 1,213.3 | 82.0 |
In terms of consolidated turnover, the Group ended 2015 with net revenues up considerably compared to 2014 (+ 6.8%). Growth, due mainly to the devaluation of the euro against Asian currencies and the dollar, was stronger in India (+ 8.9%). The decrease in units sold was offset by a shift in the mix towards products with a greater unit value (+ 5.0% from motorcycle sales), and by the premium prices policy. With regard to product type, the increase in turnover was significant for both two-wheeler vehicles (+ 5.2%) and Commercial Vehicles (+ 10.2%). Consequently, the impact of two-wheeler vehicles on turnover went down from 69.3% in 2014 to the current figure of 68.3%, while the impact of commercial vehicles went up from 30.7% in 2014 to 31.7% in 2015.
7 For a definition of the parameter, see the "Economic Glossary".
The Group's gross industrial margin increased compared to the previous year, in absolute terms (€ +9.7 million), and decreased in relation to net turnover (28.9% against 30.1% in 2014). Amortisation/depreciation included in the gross industrial margin was equal to € 36.9 million (€ 34.5 million in 2014).
Operating expenses in 2015 went up compared to the previous year, and amounted to € 317.7 million (€ 295.0 million in 2014). The increase is due to higher amortisation recognised under operating expenses (€ 68.1 million in 2015 compared to € 55.1 million in 2014) and communication, marketing and racing costs.
This performance resulted in a consolidated EBITDA which was higher than the previous year, and equal to € 161.8 million (€ 159.3 million in 2014). In relation to turnover, EBITDA was equal to 12.5% (13.1% in 2014). In terms of Operating Income (EBIT), performance was down on 2014, with a consolidated EBIT equal to € 56.7 million, decreasing by € 13.0 million compared to 2014; in relation to turnover, EBIT was equal to 4.4% (5.7% in 2014).
The result of financing activities improved compared to the previous year by € 6.5 million, with Net Charges amounting to € 36.6 million (€ 43.1 million in 2014). The lower financial charges are due to the fall in the cost of indebtedness on account of refinancing operations carried out during 2014, which resulted in a non-recurrent cost of € 3.6 million in the same period, to a greater capitalisation of interest and fewer charges from currency management, which more than offset the effects of the higher level of average indebtedness for the period.
Adjusted net profit stood at € 11.9 million (0.9% of turnover), down on the figure for the previous year of € 16.1 million (1.3% of turnover).
Taxes for the period were equal to € 8.2 million, while they amounted to € 10.5 million in 2014. The figure for 2014 was affected by the above recognition of non-recurrent income amounting to € 1.0 million.
| 2015 | 2014 | Change | |
|---|---|---|---|
| In thousands of units | |||
| EMEA and Americas | 218.9 | 219.5 | (0.5) |
| India | 212.6 | 229.2 | (16.5) |
| Asia Pacific 2W | 88.1 | 97.8 | (9.7) |
| TOTAL VEHICLES | 519.7 | 546.5 | (26.8) |
| Two-wheeler | 322.5 | 334.2 | (11.7) |
| Commercial Vehicles | 197.2 | 212.3 | (15.1) |
| TOTAL VEHICLES | 519.7 | 546.5 | (26.8) |
The Piaggio Group sold 519,700 vehicles worldwide in 2015, with a reduction in volumes totalling around 4.9% compared to the previous year, when 546,500 vehicles were sold. The number of vehicles sold in India (- 7.2%) and Asia Pacific 2W (- 9.9%) decreased, while figures were steady for vehicles sold in EMEA and the Americas (- 0.2%). As regards product type, the downturn mainly concerned sales of commercial vehicles (- 7.1%), while the decrease for two-wheelers was less significant (- 3.5%).
For a more detailed analysis of market trends and results, see relative sections.
| As of 31 December | As of 31 December | ||
|---|---|---|---|
| 2015 | 2014 | Change | |
| In millions of euros | |||
| Statement of financial | |||
| position | |||
| Net working capital | (32.0) | (16.1) | (15.9) |
| Property, plant and equipment | 319.6 | 319.5 | 0.0 |
| Intangible assets | 674.0 | 668.4 | 5.6 |
| Financial assets | 9.7 | 10.0 | (0.3) |
| Provisions | (68.8) | (76.0) | 7.1 |
| Net capital employed | 902.4 | 905.9 | (3.5) |
| Net financial debt | 498.1 | 492.8 | 5.3 |
| Shareholders' equity | 404.3 | 413.1 | (8.8) |
| Sources of funds | 902.4 | 905.9 | (3.5) |
| Non-controlling interests | (0.2) | 0.9 | (1.2) |
Net working capital as of 31 December 2015 was negative (€ 32.0 million), generating a cash flow of approximately € 15.9 million during 2015.
Property, plant and equipment, which includes investment property, totalled € 319.6 million as of 31 December 2015, more or less in line with figures for the previous year. Investments for the year were equal to approximately € 38.1 million and the value adjustment of this balance sheet item to the end-ofyear exchange rate increased the carrying amount by approximately € 7.2 million, which offset depreciation for the year (€ 45.5 million).
Intangible assets totalled € 674.0 million, up by approximately € 5.6 million compared to 31 December 2014. This increase is mainly due to investments for the period (€ 63.8 million) that exceeded amortisation for the period by approximately € 4.3 million. The appreciation of Asian currencies against the Euro generated an increase in the carrying amount of approximately € 2.0 million.
Financial assets totalled € 9.7 million, and were basically in line with figures for the previous year.
Provisions totalled € 68.8 million, decreasing compared to 31 December 2014 (€ 76.0 million).
As fully described in the next section on the "Consolidated Statement of Cash Flows", net financial debt as of 31 December 2015 was equal to € 498.1 million, compared to € 492.8 million as of 31 December 2014. The increase of approximately € 5.3 million is mainly due to the reduction in shareholders' equity arising from the payment of dividends, which was only partially offset by the positive contribution of working capital.
8 For a definition of individual items, see the "Economic Glossary".
Shareholders' equity as of 31 December 2015 amounted to € 404.3 million, down by approximately € 8.8 million compared to 31 December 2014.
The Consolidated Statement of Cash Flows, prepared in accordance with international accounting standards, is presented in the "Consolidated Financial Statements and Notes as of 31 December 2015"; the following is a comment relating to the summary statement shown.
| 2015 | 2014 | Change | |
|---|---|---|---|
| In millions of euros | |||
| Change in Consolidated Net Debt | |||
| Opening Consolidated Net Debt | (492.8) | (475.6) | (17.2) |
| Cash flow from operating activities | 109.8 | 105.3 | 4.5 |
| (Increase)/Reduction in Working Capital | 15.9 | (14.3) | 30.2 |
| (Increase)/Reduction in Net Investments | (110.4) | (113.0) | 2.7 |
| Change in Shareholders' Equity | (20.6) | 4.9 | (25.5) |
| Total change | (5.3) | (17.2) | 11.9 |
| Closing Consolidated Net Debt | (498.1) | (492.8) | (5.3) |
During 2015 the Piaggio Group used financial resources amounting to € 5.3 million.
Cash flow from operating activities, defined as net profit, minus non-monetary costs and income, was equal to € 109.8 million.
Working capital generated a cash flow of approximately € 15.9 million; in detail:
Investing activities generated a total of € 2.7 million of financial resources. The investments refer to approximately € 31.4 million for capitalised development expenditure, and approximately € 70.5 million for property, plant and equipment and intangible assets.
As a result of the above financial dynamics, which involved a cash flow of € 5.3 million, the net debt of the Piaggio Group amounted to € –498.1 million.
9 Net of customer advances.
In accordance with CESR/05-178b recommendation on alternative performance measures, in addition to IFRS financial measures, Piaggio has included other non-IFRS measures in its Report on Operations. These are presented in order to measure the trend of the Group's operations to a better extent and should not be considered as an alternative to IFRS measures.
In particular the following alternative performance measures have been used:
For a comparison of 2014 and 2013 results with the current year, profit before tax and net profit for 2014 and net profit for 2013 were recalculated, excluding the effect of non-recurring events (which are discussed in full in section 51 "Significant non-recurring events and operations" of the Notes). Further profitability measures are defined as adjusted profit before tax and adjusted net profit.
The Piaggio Group is comprised of and operates by geographical segments - EMEA and the Americas, India and Asia Pacific - to develop, manufacture and distribute two-wheeler and commercial vehicles. Each Geographical Segment has production sites and a sales network dedicated to customers in the
relative segment. Specifically:
For details of results and final capital invested by each operating segment, reference is made to the Notes to the Consolidated Financial Statements.
The volumes and turnover in the three geographical segments, also by product type, are analysed below.
| 2015 | 2014 | Change % | Change | |||||
|---|---|---|---|---|---|---|---|---|
| Two-wheeler | Volumes Sell-in |
Turnover | Volumes Sell-in |
Turnover | Volumes | Turnover | Volumes | Turnover |
| (units/000) | (million euros) |
(units/000) | (million euros) |
|||||
| EMEA and Americas | 206.1 | 665.5 | 209.4 | 633.6 | -1.6% | 5.0% | (3.3) | 32.0 |
| of which EMEA | 191.0 | 592.1 | 193.2 | 572.8 | -1.1% | 3.4% | (2.2) | 19.3 |
| (of which Italy) | 39.5 | 132.2 | 37.0 | 120.6 | 6.9% | 9.7% | 2.5 | 11.6 |
| of which America | 15.1 | 73.4 | 16.1 | 60.8 | -6.7% | 20.8% | (1.1) | 12.7 |
| India | 28.3 | 23.2 | 27.0 | 18.3 | 4.9% | 26.2% | 1.3 | 4.8 |
| Asia Pacific 2W | 88.1 | 196.2 | 97.8 | 189.1 | -9.9% | 3.8% | (9.7) | 7.1 |
| TOTAL | 322.5 | 884.9 | 334.2 | 841.0 | -3.5% | 5.2% | (11.7) | 43.9 |
| Scooters | 291.8 | 605.2 | 305.1 | 604.6 | -4.4% | 0.1% | (13.3) | 0.6 |
| Motorcycles | 30.5 | 152.5 | 29.1 | 120.3 | 5.0% | 26.7% | 1.4 | 32.2 |
| Wi-Bike | 0.2 | 0.4 | 0.2 | 0.4 | ||||
| Spare parts and | ||||||||
| Accessories | 123.9 | 114.4 | 8.3% | 9.5 | ||||
| Other | 2.9 | 1.7 | 73.2% | 1.2 | ||||
| TOTAL | 322.5 | 884.9 | 334.2 | 841.0 | -3.5% | 5.2% | (11.7) | 43.9 |
Two-wheeler vehicles can mainly be grouped into two product segments: scooters and motorcycles, in addition to the related spare parts and accessories business, the sale of engines to third parties, involvement in main two-wheeler sports championships and technical service.
The world two-wheeler market comprises two macro areas, which clearly differ in terms of characteristics and scale of demand: economically advanced countries (Europe, United States, Japan) and emerging nations (Asia Pacific, China, India, Latin America).
In the first macro area, which is a minority segment in terms of volumes, the Piaggio Group has a historical presence, with scooters meeting the need for mobility in urban areas and motorcycles for recreational purposes.
In the second macro area, which in terms of sales, accounts for most of the world market and is the Group's target for expanding operations, two-wheeler vehicles are the primary mode of transport.
During 2015, the Piaggio Group sold a total of 322,500 two-wheeler vehicles worldwide, accounting for a net turnover equal to approximately € 884.9 million (+ 5.2%), including spare parts and accessories (€ 123.9 million, +8.3%).
The decrease in units sold was offset by a shift in the mix towards products with a greater unit value (+ 5.0% from motorcycle sales), and by the premium prices policy.
In Asia Pacific, the fall in sales was affected by a considerable drop in demand in the Asean 5 area (- 10.4% compared to 2014).
The Piaggio Group maintained its leadership position on the European market in 2015, closing with a 15.2% share thanks to a strong presence in the scooter segment (24.1% share in 2015).
The Group, with its own sites in India and Vietnam, also operates in the "premium" segment of the Indian market and in Asia Pacific countries. In particular, Piaggio is one of the leading segment operators in Vietnam, which is the Group's main market in the Asian area.
The Group retained its strong position on the North American scooter market, where it closed the year with a market share of just under 21%, and where it is committed to increasing its profile in the motorcycle segment, through the Aprilia and Moto Guzzi brands.
The Piaggio Group operates on the two-wheeler market with a portfolio of 7 brands that have enabled it to establish and consolidate a leadership position in Europe: Piaggio, Vespa, Gilera, Aprilia, Scarabeo, Moto Guzzi and Derbi.
The brands offer a complementary product assortment, so that the Group can supply the market with a fully comprehensive range to target the needs of different customer groups.
Engines for the Piaggio, Vespa, Gilera, Derbi, Aprilia, Scarabeo and Moto Guzzi brands are entirely designed and manufactured by the company.
In 2015, the Piaggio Group was absolute market leader, thanks to the introduction of vehicles with a style and content placing them at the top of their segments.
With a wide range of models covering all main scooter segments, Piaggio is one of Europe's and the world's leading brands. The huge success of Piaggio has been built up around the ease of use, design and outstanding functionality of its products.
During 2015, three new models were unveiled:
with results, in terms of volumes and turnover, having an impact as from 2016.
In November, during the 2015 edition of EICMA, the new generation of the Liberty was unveiled - one of Piaggio's greatest successes and a symbol of the compact High Wheeled segment since 1997 - selling over 900,000 models worldwide.
The new Liberty has been entirely re-engineered and is the first vehicle in its category with Front Wheel ABS as standard (for number plate versions).
It has also been restyled and now features a new range of "i-get" (Italian Green Experience Technology) 50cc, 125cc and 150cc 3 valve engines that are standard setters for their quiet, superb, energy-efficient performance (up to 45km/l WMTC cycle for the 125cc version).
Created with a discerning, adult rider in mind, and as a link between the prestigious Beverly and easyto-handle Liberty, Piaggio unveiled its new mid-power High Wheeled Medley at EICMA, as part of an entirely new project that will help Piaggio gain an edge in the entire High Wheeled segment, which is one of the most important and competitive the world over.
With its unique style and content, the Piaggio Medley introduces the new "i-get" range of air-cooled, 125cc and 150cc 4 valve engines, with radiator on board and Start&Stop system, representing the state-of-the-art in terms of performance and energy efficiency (over 47 km/l WMTC cycle for the 125cc version).
Concept and style are based on the best seller the Beverly, plus the Piaggio Medley features the biggest under-seat compartment in the segment (for up to 2 full face helmets), which, along with the Bosch, 2 channel ABS system fitted as standard on all versions, makes it a leader in the category.
After its official presentation at EICMA 2015, Piaggio launched its latest project on the European market at the end of 2015: The Wi-Bike, a pedal assist bicycle with 250 watt electric motor, entirely designed, developed and manufactured in Italy by the Piaggio Group.
Besides the attractive design, the Wi-Bike has an outstanding technological content. It features an integrated satellite security system: a GPS/GSM module always connects the bike to the user, via a special App, so the bike can be located at any time and the rider can receive alerts by smartphone if it gets stolen.
With sophisticated algorithms designed by Piaggio, the App extends basic vehicle functions, enabling the user to select 3 different riding modes and up to 10 motor assistance levels. By selecting Fitness mode, the Wi-Bike turns into a mobile trainer, and the user can configure power, measure calories burnt and monitor heart beat (if wearing a heart rate monitor).
With the Wi-Bike, Piaggio has designed a product that goes well beyond the concept of an electric bicycle, proposing innovative functions and new levels of interaction between the rider, bike and environment.
Vespa is the leading brand of the Piaggio Group. Distributed worldwide, it is synonymous with style and sophistication and is a true ambassador of the best in Italian design.
In 2015, Vespa unveiled two models that are the very essence of its image and style:
the Primavera Touring special series;
the Vespa 946 Emporio Armani.
The Vespa Primavera now includes a special Touring series, with accessories and design details inspired by a passion for travel: the front and rear racks are both chrome-plated, the brown seat matches the new Silk Grey shade, plus the model features a stylish front and signature plate.
This new version is available for the entire Primavera engine range: 50 2-stroke, 50 4-stroke 4V, 125 4 stroke 3V and 150 4-stroke 3V.
To mark the 40th anniversary of the Giorgio Armani foundation and the 130th anniversary of the Piaggio Group in 2015, Giorgio Armani designed the new version of the Vespa 946. A single shade: a special palette of greys with just a hint of green, metal parts with a matt effect, the Emporio Armani logo on the side, the logo with eagle on the front headlamp, brown leather finishes, plus an innovative four stroke electronic injection engine, ideal for urban mobility, designed for the utmost energy efficiency. The dual 220 mm disk brake system, dual channel ABS and large 12 inch wheels guarantee the utmost safety on the road.
The Gilera brand features models in both the scooter and motorcycle segments. The brand came into being in 1909 and was acquired by the Piaggio Group in 1969. Gilera is known for its successes in racing, winning six world championship manufacturer's titles and eight world championship rider's titles. Gilera is a brand designed for a young, vibrant market and dynamic motorcyclists.
The Derbi brand features a range of 50cc to 300cc scooters and a range of 50cc and 125cc motorcycles. Its target customers, aged 14-17 years, have made it one of the biggest manufacturers in the 50cc segment. The brand has made a name for itself winning 21 world titles, gaining a leadership position in Spain and Europe on the 50cc and 125cc motorcycle market.
Aprilia includes a 50cc to 850cc scooter range, and a 50cc to 1200cc motorcycle range. The brand is known for its sporting style worldwide, winning many important competitions, the excellent performance of its products, and a cutting-edge innovation and design.
In 2015, Aprilia re-engineered its leading products (the RSV4 1000 and Tuono V4 1100), increasing engine performance (the RSV4 has an hp of over 200) and implementing innovative technological solutions related to electronic management, making the RSV4 and Tuono standard setters in the ultraperformance sports bike segment.
The Scarabeo brand features a wide range of scooters from 50cc to 500cc, and is the Group's premium brand, along with the Vespa. The Scarabeo brand was launched by Aprilia in 1993, and is the first brand to have introduced high-wheeled scooters in Europe.
The Moto Guzzi brand came into being in 1921, and is one of the most well-known motorcycle brands in Europe, with a strong brand loyalty among customers. In 1970 Moto Guzzi gained worldwide popularity when it became the motorcycle of choice of the police in Los Angeles, California. Moto Guzzis, which have always been unique with their distinctive 90° V twin cylinder engines, are perfect for touring and combine a stylish traditional design with the latest technologies in the world of motorcycles.
During 2015, Moto Guzzi re-engineered the California range, based on the superb V2 1400 engine made in Mandello. The new Audace, Eldorado and Touring SE models feature a new design and technical innovations, that have enabled the Audace to become the Piaggio Group's first motorcycle to comply with strict Euro 4 standards.
In the Domestic Europe, Emerging Markets and Importers area (Europe excluding Italy, and the Middle East and Africa) the Piaggio Group operates directly in main European countries and through importers on other markets. In December 2015, the Group's sales network comprised more than 1,372 dealers. At present, the Piaggio Group is active in 87 countries in the area and in 2015 it further consolidated its sales activities.
In 2015, measures concerning the Group's distribution structure took into account market changes in the area, and focussed on achieving a greater qualitative/quantitative balance. Contractual sales and after-sales standards in agency agreements regulating network relationships were also revised. These standards are geared towards improving the end customer's experience during all stages of the "customer journey".
Guidelines on the distribution structure cover 5 main points:
In the Americas, the Piaggio Group is directly present in the United States and Canada, while in Latin America it operates through a network of importers. At the end of 2015, the Group had 250 partners, of which 208 in the United States, 42 in Canada and a network of 20 importers in Central and South America.
In 2015, the process to streamline and consolidate the distribution network continued, through the
replacement and appointment of new partners to support the growth of Piaggio's brands with a special focus on the motorcycle segment and on consolidating the Group's presence in the scooter segment. In Latin America, the Piaggio Group continued to consolidate its own distribution network, with the signing of new business agreements and the introduction of new products in the motorcycle segment.
In the Asia Pacific Area, the Piaggio Group has a direct commercial presence in Vietnam, Indonesia, China and Japan, while in all other markets of this area it operates through importers.
The distribution network is being continually developed in line with the Group's strategic objectives, which plan to expand operations in the region.
In Vietnam, the headquarters of the entire Asia Pacific area, the Group's distribution network of 4 importers in 2008 increased to 54 dealers at the end of 2015, with 86 sales outlets throughout the country. The main goal was and still is to increase distribution network figures, and above all to consolidate the quality of corporate identity in order to "convert" the entire Asian network to a Motoplex concept.
The same goal applies to Indonesia, Japan and China, where Piaggio manages a network of 36, 59 and 12 outlets respectively.
Lastly, as concerns Asia Pacific, managed by the Singapore team, the number of sales outlets went up from 254 in 2014 to 263 at the end of 2015, with a network of 15 distributors operating in Cambodia, Malaysia, Taiwan, Thailand, South Korea, Hong Kong, Singapore, Macau, Australia and New Zealand.
Past and ongoing actions for all markets in the Asia Pacific area, include:
In India, Piaggio Vehicles Private Limited had 80 dealers as of 31 December 2015, with plans to further increase its sales outlets in 2016. At present, the network covers main areas throughout the country.
Investments mainly targeted the following areas:
As regards product investments in particular, considerable resources were allocated to developing new products to market in both European and Asian (Vietnamese and Indian) areas, as commented on previously.
Industrial investments were also made, targeting safety, quality and the productivity of production processes.
| 2015 | 2014 | Change % | Change | |||||
|---|---|---|---|---|---|---|---|---|
| Commercial Vehicles |
Volumes Sell -in (units/000) |
Turnover (million euros) |
Volumes Sell-in (units/000) |
Turnover (million euros) |
Volumes | Turnover | Volumes | Turnover |
| EMEA and Americas | 12.8 | 79.8 | 10.1 | 65.9 | 27.1% | 21.1% | 2.7 | 13.9 |
| of which EMEA | 11.5 | 76.7 | 9.1 | 63.8 | 26.1% | 20.3% | 2.4 | 13.0 |
| (of which Italy) | 4.2 | 43.1 | 3.6 | 36.4 | 16.3% | 18.6% | 0.6 | 6.8 |
| of which America | 1.4 | 3.1 | 1.0 | 2.1 | 36.5% | 43.3% | 0.4 | 0.9 |
| India | 184.3 | 330.6 | 202.1 | 306.3 | -8.8% | 7.9% | (17.8) | 24.2 |
| TOTAL | 197.2 | 410.4 | 212.3 | 372.3 | -7.1% | 10.2% | (15.1) | 38.1 |
| Ape Porter Quargo |
188.7 2.8 |
319.5 31.8 |
202.9 2.4 |
294.6 26.2 |
-7.0% 17.1% |
8.5% 21.1% |
(14.2) 0.4 |
24.9 5.5 |
| Mini Truk | 0.9 4.7 |
5.3 11.0 |
0.6 6.3 |
4.4 12.6 |
46.8% -25.2% |
20.7% -12.7% |
0.3 (1.6) |
0.9 (1.6) |
| Spare parts and Accessories |
42.7 | 34.4 | 24.2% | 8.3 | ||||
| TOTAL | 197.2 | 410.4 | 212.3 | 372.3 | -7.1% | 10.2% | (15.1) | 38.1 |
The Commercial Vehicles category includes three- and four-wheelers with a maximum mass below 3.5 tons (category N1 in Europe) designed for commercial and private use, and related spare parts and accessories.
In 2015, sales of Commercial Vehicles generated a turnover of approximately € 410.4 million, including approximately € 42.7 million relative to spare parts and accessories, up by 10.2% over the previous year. During the year, 197,200 units were sold, down 7.1% compared to 2014.
On the Emea and Americas market, the Piaggio Group sold 12,800 units, generating a total net turnover of approximately € 79.8 million, including spare parts and accessories for € 18.9 million. The 27.1% increase in sales was supported by the good performance of the reference market.
Sales of three-wheeler vehicles went down from 172,615 units in 2014 to 158,950 units in 2015, registering a decrease of 7.9%.
The same subsidiary also exported 20,259 three-wheeler vehicles (23,144 in 2014); the downturn is mainly due to a slowdown in the sales of some African countries.
On the four-wheeler market, sales of Piaggio Vehicles Private Limited decreased by 21.1% in 2015, compared to sales of 5,037 units in 2014.
The Piaggio Group operates in Europe and India on the light commercial vehicles market, with vehicles designed for short range mobility in urban areas (European urban centres) and suburban areas (the product range for India).
The Group distributes its products mainly in Italy (which accounted for 45% of the Group's volumes in Europe in 2015), as well as in Germany (22%), France (3%) and Spain (2%). The Group acts as operator on these markets in a niche segment (urban mobility), thanks to its range of low environmental impact products.
The Group is also present in India, in the passenger vehicle and cargo sub-segments of the threewheeler market.
The traditional three-wheeler market in India is flanked by the four-wheeler light commercial vehicles (LCV) market (cargo vehicles for goods transport) where Piaggio Vehicles Private Limited operates with the Porter 600 and 1000.
On the Indian three-wheeler market, Piaggio Vehicles Private Limited had a market share of 30.9% in 2015 (32.5% in 2014). Detailed analysis of the market shows that Piaggio Vehicles Private Limited consolidated its market leader position in the goods transport segment (cargo segment) with a market share of 54.1% (52.2% in 2014). Its market share, although decreasing, remained steady in the Passenger segment, standing at 25.7% (27.9% in 2014). On the four-wheeler market, Piaggio Vehicles Private Limited had a marginal role, with its share decreasing to 4.4% (4.6% in 2014).
The Ape is the Group's best-selling brand in the commercial vehicles sector. The Ape is highly regarded because of its outstanding versatility, and is the ideal solution for door-to-door deliveries and shortrange mobility requirements.
The Piaggio Group range also includes the compact, robust Porter and Quargo models.
European range vehicles are currently manufactured at production sites in Pontedera, while the range of vehicles intended for the Indian market is manufactured entirely at the production site in Baramati.
In September 2015, Piaggio started production of the Porter and Porter MAXXI Euro 6, with petrol engine. In the first quarter or 2016, the Euro 6 LPG and natural gas engines will go onto the market.
The Indian subsidiary Piaggio Vehicles Private Limited has achieved a considerable brand awareness over the years and has an excellent reputation for customer service, quality and style. Combined with a network of dealers throughout India, this has enabled the Group to gain a significant market share. Traditionally a market leader in the three-wheeler segment with various models of the Ape, Piaggio has also operated on the four-wheeler commercial vehicles market for several years now, with two versions of the Porter which are manufactured locally.
In Europe, Piaggio Commercial Vehicles operates through a direct sales network in Italy, Benelux, France, Greece, Germany and Spain (accounting for approximately 60% of all of Europe), with some 400 sales outlets and 1,000 service centres.
In Italy, 101 dealers manage a second-level network, comprising some 500 sales outlets and authorised repair centres, to provide a professional service in line with the expectations of the end customer.
The strategy to consolidate Piaggio's presence on the direct network continued, in order to ensure an extensive commercial presence by consolidating partnerships with operators and ensuring continual qualification in terms of image and content, in line with technological updates to the product range (Porter Euro 6).
As regards the indirect sales network, with importers that manage a sales & service network as a whole or based on part ownership, Piaggio Commercial Vehicles has 15 operators in Europe and 25 on emerging markets in Latin America, Africa and the East.
In India, Piaggio Vehicles Private Limited has 332 dealers, as well as 465 authorised after-sales centres.
In 2015, investments concerned the development of the Porter with a Euro 6 engine and consolidation of the Indian three- and four-wheeler range.
After the adoption of the new Corporate Governance Code, the Group launched an Enterprise Risk Management (ERM) Project to define and gradually implement a structured and integrated system to identify, measure and manage company risks in line with relative best practices (i.e. CoSO ERM) and applicable regulatory requirements.
The project developed a structured, proactive and disciplined methodological approach to map and evaluate all potential risks later identified by the Piaggio Group being updated.
To mitigate any negative effects arising from the macroeconomic scenario, the Piaggio Group continued its strategic vision, expanding operations on markets in Asia where growth rates of economies are still high and consolidating the competitive positioning of its products. To achieve this, the Group focuses on research activities, and in particular on the development of engines with a low consumption and a low or zero environmental impact.
Piaggio's success depends on its ability to manufacture products that cater for consumer's tastes and can meet their needs for mobility. If the Group's products were not appreciated by customers, lower revenues would be generated, or if more aggressive sales policies were adopted in terms of discounts given, margins would be lower, with a negative impact on financial position and performance.
To tackle this risk, the Piaggio Group has always invested in major research and development projects, to enable it to optimally meet customer needs and anticipate market trends, introducing innovative products with high added value, levering brand identity.
Over the last few years, the competitiveness of markets in which the Group operates has increased considerably, above all in terms of prices and also due to a declining demand worldwide. In addition, the Group is exposed to the actions of competitors that, through technological innovation or replacement products, could obtain products with better quality standards and streamline costs, offering products at more competitive prices.
Piaggio has tried to tackle this risk, which could have a negative impact on the financial position and performance of the Group, by manufacturing high quality products that are innovative, cost-effective, reliable and safe, and by consolidating its presence in Asia.
Numerous national and international laws and regulations on safety, noise levels, consumption and the emission of pollutant gases apply to Piaggio products. Strict regulations on atmospheric emissions, waste disposal, the drainage and disposal of water and other pollutants also apply to the Group's production sites.
The enactment of regulations which are more stringent than those currently in force could lead to products being taken off the market and force manufacturers to make investments to renew product ranges and/or renovate/modernise production sites.
To deal with these risks, the Group has always invested in research and development into innovative products, anticipating any restrictions on current regulations. Moreover, the Group, as one of the sector's leading manufacturers, is often requested to be represented on parliamentary committees appointed to discuss and formulate new laws.
The Piaggio Group operates in an international arena and is therefore exposed to risks connected with a high level of internationalisation, such as exposure to local economic conditions and policies, compliance with different tax systems, customs barriers or more in general the introduction of laws or regulations which are more stringent than the current regulatory framework. The countries where the Piaggio Group operates may adopt economic policies and/or government measures in the form of incentives or tax relief, that may have a considerable impact on consumer trends.
All these factors may have a negative impact on the financial position and performance of the Group. In particular, the growing presence of the Group in India and Vietnam has increased its exposure to political instability or negative economic developments in these countries.
The Piaggio Group is exposed to financial risk concerning trends and the volatility of financial markets, that may affect the value of financial instruments and price of company shares. Any particularly negative economic trends could make it difficult or particularly expensive for the Group to raise funds.
The Group's business is extremely seasonal, particularly on western markets where sales of two-wheeler vehicles mainly take place in Spring and Summer. In addition, an extremely wet spring could lead to fewer sales of products with a negative effect on the Group's business and financial performance. Piaggio tackles these risks first and foremost by consolidating its presence on markets, such as India and Asia Pacific, which are not affected by an extremely seasonal nature, and by adopting a flexible production structure that can deal with peak demand through vertical part-time and fixed-term employment contracts, as well as seasonal planning.
The Group operates through industrial sites located in Italy, India and Vietnam. These sites are subject to operating risks, including natural disasters, sabotage, terrorist attacks and significant interruptions to supplies of commodities or components. Any interruption to production activities could have a negative impact on the operations and financial position and performance of the Group.
The operating risks related to industrial sites in Italy and other countries are managed through specific insurance cover assigned to sites based on their relative importance.
Natural disasters may also prevent the distribution and sale of company products in affected areas.
Group profitability on some markets could be negatively affected by any decrease in the purchasing power of currency and consequent increase in prices. In particular, the Group is subject to the risk arising from the organisation's failure to put in place an appropriate response plan to deal with these price fluctuations.
In its effort to ensure the sustainability of its products, the Piaggio Group takes into account the entire life cycle, which comprises the design, procurement of raw materials, production proper, use of the product by customers and, finally, decommissioning, which consists in disassembly at the end of service life and in the disposal and/or recycling of the components and raw materials. This strategy exposes the Group to the risk of using suppliers or sub-suppliers that do not meet the Group's sustainability standards (risk connected to the sustainable supply chain); and to the risk connected with inadequate technological investments that are functional for sustainable mobility, for creating environmentally friendly products and an adequate technological level of products to meet new mobility needs of consumers and regulatory developments (risk connected with the development of environmentally friendly products). This could exacerbate how stakeholders perceive the Group and its reputation, and affect stakeholder loyalty.
The Piaggio Group undertakes operations in currencies other than the euro and this exposes it to the risk of fluctuating exchange rates of different currencies.
Exposure to the business risk consists of envisaged payables and receivables in foreign currency, taken from the budget for sales and purchases reclassified by currency and accrued on a monthly basis.
The Group's policy is to hedge at least 66% of the exposure of each reference month.
Exposure to the settlement risk consists of receivables and payables in foreign currency acquired in the accounting system at any moment. The hedge must at all times be equal to 100% of the import, export or net settlement exposure for each currency.
In 2015, the exchange risk was managed in line with the current policy, which aims to neutralise the possible negative effects of exchange rate changes on company cash-flow, by hedging the business risk, which concerns changes in company profitability in relation to the annual business budget on the basis of a key change (the so-called "budget change") and of the settlement risk, which concerns the differences between the exchange rate recorded in the financial statements for receivables or payables in foreign currency and that recorded in the related receipt or payment.
Production costs are exposed to the risk of fluctuating energy, raw material and component. Piaggio has chosen to manage this risk by adopting plans to reduce energy consumption and provide specific training on energy saving. If the Piaggio Group were not able to offset an increase in these costs against sales prices, its financial position and performance would be affected.
The Group has assets and liabilities which are sensitive to changes in interest rates and are necessary to manage liquidity and financial requirements. These assets and liabilities are subject to an interest rate risk and are hedged by derivatives or by specific fixed-rate loan agreements.
For a further description, reference is made to section 43 of the Notes to the Consolidated Financial Statements.
The Group is exposed to the risk arising from the production of cash flows that are not sufficient to guarantee Group payments due, or adequate profitability and growth to achieve its strategic objectives. Moreover, this risk is connected with the difficulty the Group may have in obtaining loans or a worsening in conditions of loans necessary to support Group operations in appropriate time frames.
To deal with these risks, cash flows and the Group's credit line needs are monitored or managed centrally under the control of the Group's Treasury in order to guarantee an effective and efficient management of financial resources as well as optimise the debt maturity standpoint.
In addition, the Parent Company finances the temporary cash requirements of Group companies by providing direct short-term loans regulated in market conditions or guarantees.
This risk is connected with any downgrading of the credit rating of customers and suppliers and consequent possibility of late payments, or the insolvency of customers and suppliers and consequent failure to receive payments.
To balance this risk, the Parent Company has stipulated agreements with primary factoring companies in Italy and other countries for the sale of trade receivables without recourse. For a further description, reference is made to section 21 of the Notes to the Consolidated Financial Statements.
This risk is connected with compliance with covenants and targets to reduce loans, to maintain a sustainable debt/equity balance.
To offset this risk, the measurement of financial covenants and other contract commitments is monitored by the Group on an ongoing basis.
These risks are connected with a failure to maintain product technological innovation at adequate levels and failure to comply with regulatory requirements and product quality and safety standards in relation to market requests, with a consequent liability of the Group in relation to:
To mitigate these risks, the Piaggio Group adopts an efficient quality control system for supplied components and finished products.
The Group is exposed to the following risks:
To deal with these risks, the Group has a flexible production capacity and sources from several suppliers of components in order to prevent the unavailability of one supplier affecting company production. Moreover, the operating risks related to industrial sites in Italy and other countries are managed through specific insurance cover assigned to sites based on their relative importance.
In carrying out its operations, the Group sources raw materials, semifinished products and components from a number of suppliers. Group operations are conditioned by the ability of its suppliers to guarantee the quality standards and specifications requested for products, as well as relative delivery times.
The Piaggio Group legally protects its products and brands throughout the world. In some countries where the Group operates, laws do not offer certain standards of protection for intellectual property rights. This circumstance could render the measures adopted by the Group to protect itself from the unlawful use of these rights by third parties inadequate. Unlawful plagiarism by competitors could have a negative effect on the Group's sales.
The Group is also exposed to the risk of failing to comply with laws on intellectual property rights.
Within the framework of its operations, the Group is involved in legal and tax proceedings. As regards some of the proceedings, the Group could be in a position where it is not able to effectively quantify potential liabilities that could arise. Detailed analysis of main legal proceedings is given in the relative paragraph of the Notes to the Consolidated Financial Statements.
In Europe, the Piaggio Group operates in an industrial context with a strong trade union presence, and is potentially exposed to the risk of strikes and interruptions to production activities.
In the recent past, the Group was not affected by major interruptions to production because of strikes. To avoid the risk of interruptions to production activities, as far as possible, the Group bases its relations with trade union organisations on dialogue.
The following are connected risks:
To offset these risks, the Group has established specific policies for recruitment, career development, training, remuneration and talent management, which are adopted in all countries where the Group operates according to the same principles of merit, fairness and transparency, and focussing on aspects that are relevant for the local culture.
The Group is exposed to the risk of the unauthorised access to/use of company data and information that could have a negative impact on profitability, in particular concerning data and information which is strategic for the company (e.g. technological and product know-how), confidential information and sensitive information protected by privacy laws (for example information about employees and customers). The Group has established operating policies and technical security measures designed to afford adequate protection for company data and information.
The Group is exposed to the risk of possible inadequacies in its procedures that are intended to ensure compliance with Italian and relevant foreign regulations applicable to financial disclosure, running the risk of fines and other sanctions. In particular there is a risk that financial reporting for Group stakeholders is not accurate and reliable due to significant errors or the omission of material facts and
that the Group provides disclosure required by applicable laws in a manner which is inadequate, inaccurate or untimely.
To deal with these risks, the financial statements are audited by Independent Auditors. The control activities required by Law 262/2005 are also carried out at the most important foreign subsidiaries Piaggio Vehicles Pvt. Ltd, Piaggio Vietnam Co Ltd, Piaggio Hellas S.A. and Piaggio Group Americas Inc.
The Group's conduct is guided by the principles and values set forth by the Group's Code of Ethics, which all Group personnel is required to observe as well as all those who interact with the Company throughout the world.
The Group's objectives include creating value for all shareholders, while complying with business ethics and adopting a number of social values.
In particular, its industrial strategy is based on technological innovation which targets environmentally friendly mobility.
In this context, the Group considers research into cutting-edge solutions as a critical factor for successful investment choices and industrial and commercial initiatives. Innovation is geared to cutting pollutant emissions and consumption, as well as increasing vehicle safety. Plus the Piaggio Group firmly believes that stakeholder involvement is fundamental for the development of the Company and communities where it works, in terms of economic and social well-being.
Safeguarding the environment while carrying out all Company operations is essential for humankind, technology and nature to coexist peacefully. The Group therefore makes sustainable products, which must be manufactured using production facilities with minimal environmental impact. Production systems are made sustainable through optimising process efficiency and converting facilities that are no longer competitive.
The environmental strategy for the Group's production sites aims for a more rational use of natural resources and minimal harmful emissions and waste from production.
People are fundamental for Piaggio. They are vital to creating added value in the long term. The Group has defined objectives for the growth, promotion and training of human resources, ensuring that each person is rewarded for the contributions they make and that their expectations and goals are met.
In order to achieve the objective of sustainable development, growth must go beyond the boundaries of the Company. It must go further afield to reach suppliers and dealers, with whom Piaggio wants to cooperate being a reliable partner, forging a common ground to work and grow together, to create value for the end customer. The success of a company is also closely linked to customer confidence and satisfaction: customers must be listened to, informed and respected, establishing relations based on transparency and trust.
Since 2008, the Piaggio Group has published, on a voluntary basis, its annual Corporate Social Responsibility Report, which provides information on the economic as well as the environmental and social performance of the Group and is an important form of dialogue with internal and external stakeholders.
In its CSR 2015 Report, the Group undertook and published a structured analysis of the "materiality" of sustainability issues for the Company and its Stakeholders, making it possible to produce more streamlined information that targets key issues for the Group's stakeholders.
Anticipating customer requirements, creating products that are innovative in terms of their technology, style and functionality, pursuing research for a better quality of life are all fields of excellence in which the Piaggio Group excels, as well as a means for measuring its leadership position on the market. The Piaggio Group develops these areas through activities at its research and development centres in Italy, India, Vietnam, the United States and China.
In particular, the main objective of the Piaggio Group is to meet the most progressive needs for mobility, while reducing the environmental impact and consumption of its vehicles, guaranteeing their performance and levels of excellence. A constant focus is placed on research into vehicles that are at the forefront in terms of:
In 2015, the Piaggio Group continued its policy of retaining technological leadership in the sector, allocating total resources of € 46.8 million to research and development, of which € 31.4 million capitalised under intangible assets as development expenditure.
| 2015 | 2014 | |||||
|---|---|---|---|---|---|---|
| Capitalised | Expenses | Total | Capitalised | Expenses | Total | |
| In millions of euros | ||||||
| Two-wheeler | 25.7 | 12.6 | 38.3 | 27.2 | 12.5 | 39.7 |
| Commercial Vehicles | 5.8 | 2.7 | 8.5 | 4.6 | 2.0 | 6.6 |
| Total | 31.4 | 15.4 | 46.8 | 31.8 | 14.5 | 46.3 |
| EMEA and Americas | 22.7 | 13.3 | 36.0 | 26.9 | 12.7 | 39.6 |
| India | 3.7 | 1.0 | 4.7 | 2.5 | 0.7 | 3.1 |
| Asia Pacific 2W | 5.0 | 1.1 | 6.1 | 2.4 | 1.1 | 3.5 |
| Total | 31.4 | 15.4 | 46.8 | 31.8 | 14.5 | 46.3 |
During the year, the Piaggio Group focussed on four fundamental areas, in order to achieve the best results possible:
Engine acoustics and timbre were also focussed on, developing numerical/experimental methodologies for designing the intake and exhaust systems and engine components with acoustic emissions that are lower and more pleasant.
In 2015, the process to continually improve the 125 cc engine led to the development of the new iGet 125 and 150 Euro 4 air engine10, which made its début on the new Liberty ABS 3V. The project, which aims to reduce overall and improve rideability, made it possible to optimise the engine injection and control system.
The greatest efforts in 2015 were focused on the development of a new family of engines called "iGet 4V Water", available in 125cc and 150cc. With electronic injection, four valve distribution and radiator on the engine, they can also feature the "Start & Stop" system.
Compliant with the Euro 4 standard, they are the result of a design philosophy guided primarily by new and higher levels of quality and reliability.
Each component, from the exhaust to the inside of the gearbox cover and the new air filter has been designed to make for a smooth, quiet and comfortable ride, and to lengthen the life of the engine.
The design aims above all to reduce friction and in particular friction in the timing system.
The mechanical noise of the new iGet is also extremely low thanks to a reduction in play and the optimisation of materials and shapes.
Building the radiator into the engine has reduced the overall weight of the vehicle and engine warm-up times, with benefits in terms of consumption and cold emissions.
The gearbox has been entirely redesigned and uses a latest-generation double toothed belt to minimise passive losses, as well as a setting that improves rideability, performance and consumption.
The new built-in engine electronic control unit, integrated with the S&S management part (Alternator, S&S Inverter, RISS), has been entirely developed by Piaggio.
10 As from 1 January 2016, all new models of motorcycles shall meet Euro 4 standards. Euro 3 motorcycles may still be sold for one year, provided they were previously type approved. As from 1 January 2017, all newly registered motor vehicles shall meet Euro 4 standards.
One example of the application of research to improve riding pleasure is the new power unit for the Moto Guzzi Roamer V9 and V9 Bobber, developed to increase maximum torque and elasticity, key ways to ensure a pleasurable ride and fun on the road.
The changes have affected practically everything, except the traditional transversal 90° V-twin engine. In addition to the crankcase and the drive shaft, the lubrication system has also been redesigned to reduce power consumption. The reduced-flow oil pump is new, made possible by the use of new piston cooling oil jets equipped with a control valve and flow and thermodynamic management, starting with the bore and stroke values. The timing now has inclined valves to improve volumetric efficiency. The electronic engine control unit and electronic injection system are new. The engine is in line with the Euro 4 anti-emissions standard.
The six-speed gearbox is new and highly precise with soft changes, and the clutch is single disc. The final transmission again uses a cardan shaft.
Activities were strongly focussed in this area in 2015, including:
electrically adjustable suspension, on the Piaggio X10 and Aprilia Caponord, of which the ADD package is a part (electronic suspension);
dissemination and expansion of the Piaggio Multimedia Platform info-mobility system, based on linking the smartphone and the vehicle via Bluetooth®, iOS and Android;
In keeping with the principles set forth in its Code of Ethics, the Piaggio Group operates at a global level with "choices of investment and of industrial and commercial initiatives […..] based on the respect of the environment and of public health." (article 7).
In particular "In compliance with the applicable regulations, the Company has respect for environmental issues in determining its choices, also adopting – where operationally and economically compatible and possible – eco-compatible technologies and methods of production, with the purpose of reducing the environmental impact of its own activities." (article 8).
The Piaggio Group firmly believes that safeguarding the environment while carrying out all Company operations is essential for mankind, technology and nature to coexist peacefully. It is convinced that commitment to sustainable development is not only a business ethic, but also an important variable of all corporate strategies. The Group therefore makes sustainable products, which must be manufactured using production facilities with minimal environmental impact.
The Piaggio Group, which has expanded some production sites, is continuing to pursue its environmental policy to cut down on the use of natural resources and minimise harmful emissions and productionrelated waste. With these objectives in mind, initiatives focus on the following areas:
In 2015, the Group completed development of the painting plant at the two-wheeler site in Pontedera, which will become fully operational during 2016. This plant guarantees high quality standards and also delivers very significant environmental benefits, above all as regards atmospheric emissions.
In the context of management systems, ISO 14001 environmental certification enables Piaggio to adopt a structured and co-ordinated approach to management at the Group's sites, so it may define environmental objectives and identify risks and opportunities for improvement, ensure compliance with all environmental laws and regulations, reduce energy costs, manage waste and raw materials, and put in place a process for the continuous improvement of its environmental performance.
The Piaggio Group, which has had ISO 14001 certification for the Environment for years, for its three Italian sites, for the Vinh Phuc Vietnamese plant and for the Indian plant, obtained this certification in 2015 for its Indian sites manufacturing Commercial Vehicles and Engines.
Moreover, the Indian subsidiary obtained ISO 50001 certification (for energy management systems) for its two-wheeler site.
During 2015, no damage was caused to the environment for which the Group, through its companies, was declared as being definitively liable, nor were sanctions or penalties applied for environmental offences or damage.
Piaggio's focus on the environmental impact of its operations is also reflected by its CSR Report, which it has published since 2008, defining its commitments and describing its performance to stakeholders. See the CSR 2015 - "The Environmental Dimension" for an analysis of the Group's environmental performance.
In 2015, the Group continued its rationalisation operations and organisational redesign, extending the activities already under way in the EMEA region to Asia and India. As of 31 December 2015, Group employees totalled 7,053, down by 457 (- 6.1%) compared to 31 December 2014.
| Company employees by geographic segment as of 31 December | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Employee/staff numbers | 2015 | 2014 | 2013 | |||||||
| EMEA and Americas | 3,872 | 4,008 | 4,098 | |||||||
| of which Italy | 3,638 | 3,734 | 3,805 | |||||||
| India | 2,353 | 2,622 | 2,677 | |||||||
| Asia Pacific 2W | 828 | 880 | 913 | |||||||
| Total | 7,053 | 7,510 | 7,688 |
| Average number of Company employees by professional category11 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Employee/staff numbers |
2015 | 2014 | 2013 | ||||||
| Senior management | 105 | 110 | 111 | ||||||
| Middle management | 579 | 554 | 558 | ||||||
| White collars | 2,012 | 2,122 | 2,161 | ||||||
| Blue collars | 4,866 | 5,030 | 5,343 | ||||||
| Total | 7,562 | 7,816 | 8,173 |
| Graduate | High School | Middle School |
Primary School |
Total | |
|---|---|---|---|---|---|
| Employee/staff numbers | |||||
| EMEA and Americas | 677 | 1,670 | 1,422 | 103 | 3,872 |
| of which Italy | 545 | 1,592 | 1,404 | 97 | 3,638 |
| India | 589 | 1,757 | 7 | 0 | 2,353 |
| Asia Pacific 2W | 314 | 514 | 0 | 0 | 828 |
| Total | 1,580 | 3,941 | 1,429 | 103 | 7,053 |
11 In 2015, criteria identifying professional categories in India were updated, to bring them further in line with the Group's criteria, with 2013-14 data also being reclassified.
An entry turnover rate of 1.51% and leaving turnover rate of 4.4% was recorded in Italy in 2015.
| Staff as of 31 |
Men | Women | < 31 | 31 - 40 | 41 - 50 | > 50 | Total | % Turnover |
|
|---|---|---|---|---|---|---|---|---|---|
| Employee/staff numbers |
December 2015 |
Incoming | |||||||
| Senior management |
63 | 2 | - | - | 1 | - | 1 | 2 | 3.17% |
| Middle management |
231 | 11 | - | - | 8 | 3 | - | 11 | 4.76% |
| White collars | 934 | 23 | 19 | 24 | 14 | 4 | - | 42 | 4.50% |
| Blue collars | 2,410 | - | - | - | - | - | - | - | 0% |
| Total | 3,638 | 36 | 19 | 24 | 23 | 7 | 1 | 55 | 1.51% |
| Leavers | |||||||||
| Senior management |
63 | 5 | - | - | - | 3 | 2 | 5 | 7.94% |
| Middle management |
231 | 9 | 2 | - | 4 | 5 | 2 | 11 | 4.76% |
| White collars | 934 | 27 | 10 | 3 | 11 | 11 | 12 | 37 | 3.96% |
| Blue collars | 2,410 | 81 | 26 | 1 | 6 | 6 | 94 | 107 | 4.44% |
| Total | 3,638 | 122 | 38 | 4 | 21 | 25 | 110 | 160 | 4.40% |
Piaggio adopts a system of recruitment, development and salary packages for personnel which recognises and rewards merit and performance. Any type of discrimination is explicitly forbidden by the Code of Ethics.
The central importance of human resources and the development of core competencies for the growth of our business represent the underlying foundations of our relationship with our employees, shaping company policy for the placement, development, training and rewarding of staff.
Organisational innovation is pursued as a means of sharpening the Company's competitive advantage and supporting the creation of a multinational, lean, customer-oriented organisation that generates value and works in an integrated way, based on a "network" logic, with all partners (e.g.: supplier, dealers) that contribute to the Company's value chain.
In its relations with staff and regardless of the work they carry out, Piaggio respects the principles set forth by the Group's Code of Ethics in all circumstances, as well as the laws in force in the geographic areas where it operates.
Piaggio does not resort to child labour according to the age limits in force in the various countries or to forced labour and adheres to main international laws, such as the UN Convention on the Rights of the Child (UNCRC) and the 1998 Human Rights Act.
The recruitment process is based on ongoing monitoring of the domestic and international labour market. Real recruitment needs are anticipated by creating constantly updated application pipelines.
The Group promotes the development of its human resources and keeps a "pool" of resources ready and able to cover key management and professional positions. Career ladders and development paths are based primarily on the review of an employee's competencies, conduct, performance and potential.
Importance is placed on using transparent criteria and methods used for reviewing employees. Such reviews focus on:
in relation to the employee's role, company needs and possible development paths.
The training process analyses training needs and defines training procedures and actions to guarantee that each resource is adequately aligned with the managerial and technical-professional skills model. It involves the transfer of knowledge and procedures conducive to the acquisition of knowledge for the safe performance of business tasks and identifying, reducing and managing risks.
The Group rewards people and their work on the basis of competitive, fair and merit-based criteria that are transparent, and aimed at motivating and retaining the human resources that make important contributions to achieving the Company's results.
The Group rejects any form of discrimination on the basis of gender, age, nationality, ethnic background, ideology or religion. It operates in strict compliance with law and contractual requirement, and in keeping with the customs, practices and usages of each country in which the Company operates.
Workers and their representatives are encouraged to contribute to the pursuit of the Company's objectives, while promoting the underlying values of the Company and its competitive standing in full compliance with existing regulations and collective labour agreements.
Organisational changes continued during 2015 to strengthen global organisation and spread knowledge of the Group's brands with products at the cutting-edge of technology, innovation and quality.
Suitable measures were continued to ensure the organisational system is maintained and continually improved, and that the Company's various geographic areas are aligned on an ongoing basis.
Identifying and assessing resources who can meet various organisational needs in each country where Piaggio is present.
The Group's desired positioning as an employer is established through employer branding initiatives and an extensive network of Academic Relations (32 agreements with Italian and foreign universities providing internships for young graduates) that covers all company geographic areas.
The process of digitising Recruitment activities across the web and social media was also finalised in 2015.
During the recruitment process, candidates undergo two types of evaluation based on Piaggio's competencies model: one concerns managerial skills and is carried out by HR, the other looks at professional competencies and is carried out by the line manager. This evaluation method and the authorisation flow for recruitment are fully integrated in SAP in the SAP Recruiting module.
The development of core competencies required by business and market developments is a priority. This is why the Group's human resources development policies focus on building, maintaining and developing factors that are instrumental for competing in international contexts which are continually evolving.
In line with the Group's strategic plan and its core values, Piaggio has identified a managerial competencies model that represents the skills set to be implemented day by day to ensure personal success and the success of the Company.
At the same time, it has developed a benchmark model of professional competencies that reflect the company's pool of professional skills and know-how, which is the true foundation and the only real guarantee of the continuity and quality of results.
During 2015, the identification of managerial and technical/professional competencies was also updated at Group level, and development and training plans were configured to overcome gaps identified in 2014.
In addition, in line with organisational developments in 2014, the technical and professional competencies model was updated, introducing new roles and competencies in marketing and digital.
The Group's managerial competencies model
Development tools are provided with the objective of building and continuously improving the managerial and professional competencies identified in the respective models, while at the same time bringing out people's potential and identifying and rewarding outstanding performance. The set of tools provided by Piaggio includes:
development plans, which identify the action to be taken for the growth of the employee;
job rotation and participation in strategic or international projects;
During 2015, development actions to consolidate the Company's international mindset were consolidated.
For our highest value human assets, management and professional career paths are designed in order to cover key roles and ensure that strategic and technological know-how is kept and developed in the Group at the international level. In 2014, tools for monitoring and managing plans for taking over key
positions within the Group were consolidated. In light of this, during 2015 an analysis was conducted on integrating these processes using a dedicated IT platform.
On the basis of the position they hold, staff reviews focus on the following key aspects, taking into account professional growth and company objectives reached:
Evaluation outcomes are discussed by reviewers with the people they evaluate, and may form the basis of a development and training plan.
Employees are evaluated by comparing their competencies against the Company mode for their specific role, as evidenced by concrete and observable action in their everyday work. The review process is managed in an integrated way through a dedicated IT platform and provides the information necessary for the processes of succession planning, management reviews and a gap analysis of professional competencies, which are conducted across the Group.
Performance reviews affect development paths and career opportunities, as well as rewards (see "reward policies" section).
During 2015, the Evaluation Management System was consolidated at Group level. This standard evaluation system is for all white collar and managerial staff, assisted by computer tools for the realtime management of all evaluations, for human capital development purposes.
| Geographic segment | EMEA&Americas | of which Italy |
Asia Pacific 2W |
India |
|---|---|---|---|---|
| Senior Management (Executives and Senior Managers) | 100% | 100% | 100% | 100% |
| Middle management | 100% | 100% | 100% | 100% |
| White Collars | 100% | 100% | 100% | 100% |
| Blue Collars | N.A. | N.A. | 100%13 | N.A. |
12 The definition of this indicator considered all employees who had worked at least six months during the year and had not left the Company before six months from the evaluation.
13 A specific process based on local standards was adopted for worker performance reviews in Vietnam.
The Piaggio Way talent management programme has been one of the development tools adopted by the Group since 2010. It is aimed at employees around the world who show a high potential, great enthusiasm for their work and the courage to undertake new paths, in order to identify and ensure a growth path for the most deserving resources.
Three assessment sessions have been performed since its launch, involving a total of 193 employees of all the Group's geographic areas (52% EMEA, 31% India, 17% Asia Pacific), with an increasing proportion of Asian participants.
At present, the Group's pool talent comprises some 70 employees. Piaggio Way boasts a community of 34 students who have completed their development plan and who still remain active in the programme.
The talents added to the programme are given fast-lane access to development, involving:
To remain on the programme participants undergo a structured annual Talent Review conducted with the involvement of Piaggio top management.
The training process analyses training needs and defines training procedures and actions to guarantee that each resource is adequately aligned with the managerial and technical-professional skills model. The training process for internal resources is designed to:
facilitate "Digital Transformation and Innovation";
manage and mitigate overall risk management, in order to ensure business continuity;
In order to operate effectively, the Group has adopted a Learning Management System called Piaggio Global Training to manage the training process. The system matches training needs analysis with the gaps identified during performance assessments (Evaluation Management System), improving active cooperation between managers of the process.
In addition, the system provides a real-time overview of progress with training activities and improves effectiveness by expanding training methods from traditional methods (e.g. classroom-based) to the possibilities offered by e-learning technologies.
| 2015* | 2014* | |||||||
|---|---|---|---|---|---|---|---|---|
| Thematic area | EMEA AMERICAS |
INDIA | ASIA PACIFIC 2W |
TOTAL | EMEA AMERICAS |
INDIA | ASIA PACIFIC 2W |
TOTAL |
| Managerial training | 4,129 | 10,160 | 1,431 | 15,720 | 5,542 | 18,440 | 2,472 | 26,454 |
| Technical – professional training |
8,429 | 38,281 | 52 | 46,762 | 16,204 | 37,496 | 964 | 54,664 |
| Language training | 8,074 | 939 | 996 | 10,009 | 8,707 | 136 | 1,993 | 10,836 |
| Health and safety training | 4,686 | 7,965 | 801 | 13,452 | 3,763 | 5,870 | 6,147 | 15,780 |
| TOTAL | 25,318 | 57,345 | 3,280 | 85,943 | 34,216 | 61,942 | 11,576 | 107,734 |
| Professional category | 2015* | 2014* |
|---|---|---|
| Senior management | 1,073 | 666 |
| Middle management | 8,935 | 10,909 |
| White collars | 36,290 | 56,107 |
| Blue collars | 25,847 | 30,195 |
| Project workers | 13,798 | 9,857 |
| Total | 85,943 | 107,734 |
| Total per-capita | 12.2 | 14.3 |
* Data does not include on-the-job training
| Thematic area | 2015 | 2014 | ||||
|---|---|---|---|---|---|---|
| Men | Women | Total | Men | Women | Total | |
| Managerial training | 14,285 | 1,435 | 15,720 | 24,113 | 2,341 | 26,454 |
| Technical – professional training | 43,728 | 3,034 | 46,762 | 50,555 | 4,109 | 54,664 |
| Language training | 7,415 | 2,594 | 10,009 | 7,818 | 3,018 | 10,836 |
| Health and safety training | 11,913 | 1,539 | 13,452 | 14,994 | 786 | 15,780 |
| TOTAL | 77,341 | 8,602 | 85,943 | 97,481 | 10,253 | 107,734 |
Analysing 2015 data, the number of hours devoted to Language training remained stable, strongly influenced by Italy, which alone accounted for 80% of the time (7,982 hours).
The number of hours of training on Health and Safety issues fell, as the figure for 2014 included specific ad hoc campaigns in India and the Asia Pacific area. There was an increase in hours of training in EMEA & the Americas (+24.5%) due to specific training projects aimed at creating a culture of safety.
In India, technical/professional training comprised extensive campaigns on quality management, project management and lean management.
Reward policies aim to reward people and their work on the basis of competitive, fair and merit-based criteria that are transparent and used in review processes (see the section "Developing Human Capital").
The Group reward system is differentiated for the various professional groups in the Company, and consists of a fixed salary component and variable objective- and benefits-based incentive systems.
Piaggio offers new recruits and all its employees a salary package in line with the best market practices. Accordingly, Piaggio has adopted a structured salary review process based on:
comparing salaries with market benchmarks, considering the market positioning of the Company as a whole and the review of individual organisational roles, which is periodically revised. Comparisons are conducted using internationally recognised methods, with the support of specialist consultants;
setting out guidelines for the salary review process that take into account company results and focus on criteria of meritocracy, competitiveness, internal fairness and sustainability;
specific identification of fixed and variable salary components, in accordance with guidelines, with meritocracy logics and retention needs relative to strategic resources for the business.
An analysis performed on a single country basis where Piaggio works did not reveal any significant differences between the basic salary and remuneration of men compared to women with the same category, experience and assigned duties.
In fact, the ratio of minimum standard entry-level salaries and to local minimum wage in Italy in 2015 was 1.06 for male and female white collars and 1.51 for newly-hired male middle management.14
An equivalent comparison made in Vietnam and India for blue collars alone showed a ratio of 1.10 and 1.00 respectively. In these markets there are no legal minimums for white collars and middle management.
Ratio of average basic salaries for women to average basic salaries for men of the same professional category15
Achieving excellent results for company-established objectives is rewarded by variable incentive systems focused on quality and quantity objectives in line with the business, as well as the internal efficiency of each area of responsibility.
14 The ratio cannot be calculated for categories of male/female blue collars and female middle management, as no employees were recruited to these categories in 2015.
15 Categories not reported in individual geographic segments do not have any female employees.
The full process of setting objectives and reviewing results is conducted with employees, using objective criteria.
Piaggio offers a benefits package in line with the best local market practices, which is structured on an organisational basis. Benefits include, by way of example:
Benefits are offered to full-time, part-time and temporary employees without distinction.
Piaggio operates globally with a diversity of employees, in terms of age and gender, in Europe, the Americas and Asia. For Piaggio, managing diversity means acknowledging and respecting difference as part of the shared substratum of company culture. Staff diversity represents various different ways of pursuing and achieving the highest levels of performance within a single, broader Group organisational design.
The Group's concrete commitment to embracing diversity is reflected by its adoption of a Code of Ethics, conformity to international laws on equal opportunities and use of policies that protect forms of diversity already found within the Company.
The company seeks to spread its culture and values throughout the world with a view to creating the conditions for promoting an international mindset and a truly multinational organisation in which all employees can benefit from equal opportunities.
Human resources management processes are conducted applying the same principles of merit, fairness and transparency in all the countries in which the Group operates, with the accent placed on aspects of relevance for the local culture.
Piaggio selects and hires its staff based solely on the candidates' characteristics and experiences and the requirements of the position. As shown in the graph below(16) , Piaggio promotes and supports the selection and hiring of candidates from many parts of the world, to contribute to the international mindset that is a key value for the Group.
16 Figures include senior managers, first- and second-level executives reporting to top management at Piaggio & C SpA, and the first- and second-level executives of subsidiaries. The term local refers to the national level and local senior managers means senior managers with nationality the same as the country where they work.
Percentage of senior managers of local nationality divided by geographic segment as of 31 December
In order to promote and sustain intercultural exchange and diversity management, the Group encourages the international mobility of its people, enabling the reciprocal secondment of employees between Group companies.
Female employees at Piaggio play a fundamental role at all levels of the organisational structure and Account for 22.5% of white collars.
| 2015 | 2014 | |||
|---|---|---|---|---|
| Employee/staff numbers | Men | Women | Men | Women |
| EMEA and Americas | 2,725 | 1,147 | 2,827 | 1,181 |
| of which Italy | 2,545 | 1,093 | 2,622 | 1,112 |
| India | 2,306 | 47 | 2,564 | 58 |
| Asia Pacific 2W | 681 | 147 | 723 | 157 |
| Total | 5,712 | 1,341 | 6,114 | 1,396 |
| Fixed-term contract | Open-ended contract17 | ||||||
|---|---|---|---|---|---|---|---|
| Employee/staff numbers | Men | Women | Total | Men | Women | Total | |
| EMEA and Americas | 6 | 2 | 8 | 2,719 | 1,145 | 3,864 | |
| of which Italy | 6 | 1 | 7 | 2,539 | 1,092 | 3,631 | |
| India | 971 | 19 | 990 | 1,335 | 28 | 1,363 | |
| Asia Pacific 2W | 131 | 40 | 171 | 550 | 107 | 657 | |
| Total | 1,108 | 61 | 1,169 | 4,604 | 1,280 | 5,884 |
Equal opportunities are offered to employees of both genders, with concrete initiatives in place to help people strike a balance between work and domestic life. Such initiatives include alternatives to full time work.
| Full time | Part time | |||||
|---|---|---|---|---|---|---|
| Employee/staff numbers | Men | Women | Total | Men | Women | Total |
| EMEA and Americas | 2,627 | 827 | 3,454 | 98 | 320 | 418 |
| of which Italy | 2,447 | 778 | 3,225 | 98 | 315 | 413 |
| India | 2,306 | 47 | 2,353 | 0 | 0 | 0 |
| Asia Pacific 2W | 681 | 146 | 827 | 0 | 1 | 1 |
| Total | 5,614 | 1,020 | 6,634 | 98 | 321 | 419 |
17 For Italy, this data also includes some internship contracts that are considered open-ended contracts.
Part-time employment in Italy as of 31 December 2015
Piaggio's aim is to consolidate its number of female employees and make their working conditions easier. To this end, alternatives to full time work have been in use for several years in Italy and are becoming increasingly popular with employees.
In 2015, 413 employees were working an alternative to full-time hours in Italy: In particular, 4.3% of the workforce was employed with a horizontal part-time contract, and 7.1% on a job-share contract.
Within the Group, the largest population is in the age group between 41-50 years old, while the youngest population, up to 30 years, is the second largest. This generational mix is a fundamental condition for more expert staff, capable of taking the initiative and handing down the skills they have learnt, to disseminate their knowledge and expertise to younger employees.
| Employee/staff numbers |
up to 30 | 31-40 | 41-50 | > 50 | Total | |
|---|---|---|---|---|---|---|
| Senior management |
0 | 3 | 45 | 62 | 110 | |
| Middle management |
1 | 148 | 274 | 129 | 552 | |
| 2014 | White collars | 381 | 847 | 558 | 316 | 2,102 |
| Blue collars | 1,795 | 791 | 1,237 | 923 | 4,746 | |
| Total | 2,177 | 1,789 | 2,114 | 1,430 | 7,510 | |
| Senior management |
0 | 3 | 40 | 61 | 104 | |
| Middle management |
2 | 145 | 290 | 136 | 573 | |
| 2015 | White collars | 291 | 778 | 547 | 317 | 1,933 |
| Blue collars | 1,591 | 658 | 1,306 | 888 | 4,443 | |
| Total | 1,884 | 1,584 | 2,183 | 1,402 | 7,053 |
Company employees by professional category and age bracket as of 31 December
Piaggio not only guarantees people with disabilities the chance to work, but also recognises the value of their diversity and importance of dialogue in any activity, from the simplest to the most complex. In agreement with trade union organisations and laws in force, which require companies to employ a certain number of people with disabilities, Piaggio in Italy has also forged alliances with social cooperatives, convinced that work can contribute to personal development.
The insertion and integration of disabled people into the workforce is also made possible in practice by the accessibility of company facilities and the existence of a relative company procedure.
| Employee/staff numbers | 2015 | 2014 | 2013 |
|---|---|---|---|
| Middle management | 0 | 1 | 1 |
| White collars | 11 | 10 | 10 |
| Blue collars with supervisory duties/blue | 132 | ||
| collars | 137 | 130 | |
| Total | 143 | 148 | 141 |
| Percentage out of total employees | 3.9% | 4.0% | 3.7% |
In 2015, 143 people with disabilities and from legally protected categories were employed at sites in Italy. The breakdown in the table above shows that people with disabilities account for 3.9% of the total work force.
Our companies apply the laws passed by pertinent national legislation.
The Group does not discriminate in any way against women who take maternity leave. On the contrary, to try to help balance family and work life, 156 employees have been granted horizontal part-time contracts in Italy. In addition, as a further supplement to the work-life balance, at the Pontedera site workers can take advantage of the childcare agreement (see Industrial Relations section).
As proof of the above, the following information has been provided for the companies where the phenomenon is more numerically significant.
| Parental/maternity leaves | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Italy | Vietnam | EMEA/USA | |||||||
| M | W | Total | M | W | Total | M | W | Total | |
| Employees on maternity leave during 2015 Employees retuning to |
24 | 47 | 71 | 88 | 32 | 120 | 1 | 8 | 9 |
| work in 2015 after maternity leave Employees retuning to |
24 | 18 | 42 | 84 | 25 | 109 | 1 | 2 | 3 |
| work in 2014 after maternity leave Employees retuning to work and on payroll 12 |
23 | 11 | 34 | 23 | 23 | 3 | 5 | 8 | |
| month after returning from maternity leaves |
22 | 10 | 32 | 19 | 19 | 2 | 3 | 5 | |
| Return to work rate | 95.65% | 90.91% | 94.12% | 82.61% | 82.61% | 66.67% | 60.00% | 62.50% |
Piaggio Group's Internal Communication Policy is aimed at informing employees on business performance and prospects and bringing them closer to top management strategies.
The system is based on the conviction that sharing strategic objectives with every employee is a key factor to success.
Piaggio uses communication and information tools which respect and empower the social and cultural realities within the Group.
Specifically, in Italy there is the "PiaggioNet" corporate intranet, which provides news and information about the Group, as well as services for staff (e.g. an area devoted to time management, employees' payslips online and internal manuals/procedures). In 2015 the Piaggio Welfare section was enhanced to improve the visibility of related issues and of initiatives to improve the "welfare" of employees and their families (e.g. supplementary healthcare, the Family Space, company catering, special agreements and discounts, and supplementary pension schemes).
These functions are also accessible to blue collars through their corporate badge by using specific "Info Points" in the Italian plants of the Piaggio Group.
Employees of foreign subsidiaries are provided equivalent information through the dedicated PiaggioNet International portal, where content is published in English.
Additional specific initiatives are provided for employees of premises in Asia and India, for example:
The Piaggio Group acknowledges the role of trade union organisations and workers' representatives and is committed to establishing relations with them focussed on attention, dialogue and a common understanding; in fact ongoing dialogue is considered as fundamental for finding the best solutions to specific company needs.
The Piaggio Group's Industrial Relations policy is therefore based on involving workers and their representatives in pursuing company objectives, and is focussed on ongoing dialogue and engagement. The solutions and conduct adopted in various countries where the Group operates are in line with the social and institutional context, but are always consistent with the fundamental principles and overall needs of the Group.
In 2015, dialogue and engagement with trade union organisations and workers' representatives continued with the aim of seeking shared solutions to respond to the market crisis and manage consequences for workers. Collective bargaining has made it possible to identify shared management tools that can be used to tackle the long period of crisis in the industry, while safeguarding company competencies, thus avoiding a loss of resources and instead promoting their re-employment.
At the Pontedera site – which has established itself as a centre of excellence in innovation, research and design, and in the production of vehicles and engines – the union agreement signed in February 2015 extended the Solidarity Contract from February to November 2015. An additional agreement signed in October 2015 saw it extended once again until November 2016.
In February 2015, a mobility procedure was activated for 150 employees in order to downsize staff activities and structurally rebalance the production workforce.
At the Noale site, activities continued to streamline staff and staff activities, with a new mobility procedure affecting 20 people. Additionally, the ordinary wage guarantee fund was invoked in light of the unexpected fall in work volumes during 2015.
At the Scorzè site, the union agreement signed in January 2015 affirmed the importance of the production site; however, taking into account, the steady decline in orders and the consequent fall in production runs, a union agreement was reached in December 2014 for the use of the Solidarity Contract for all employees at the site, with effect from February 2015 to January 2016; a union agreement signed in December 2015 extended the duration of the agreement until January 2017.
By contrast, at the Mandello del Lario production site, 2015 saw confirmation of a rising trend in sales volumes; in agreement with the trade unions, the increase in production was managed by using temporary employment contracts and flexible working time.
| Membership of trade union organisations at Italian sites (2013 – 2015) is shown in the table below: | ||||
|---|---|---|---|---|
| ----------------------------------------------------------------------------------------------------- | -- | -- | -- | -- |
| 2015 | 2014 | 2013 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Pontedera | Noale e Scorze' |
Mandello | Del Lario Pontedera | Noale e Scorze' |
Mandello | Del Lario Pontedera | Noale e Scorze' |
Mandello Del Lario |
|
| FIOM | 321 | 134 | 43 | 373 | 145 | 42 | 363 | 153 | 44 |
| UILM | 326 | 1 | 2 | 330 | 1 | 2 | 318 | 1 | 2 |
| FIM | 334 | 137 | 21 | 354 | 128 | 24 | 352 | 135 | 24 |
| UGL | 13 | 19 | 66 | ||||||
| CGIL/CISL/UIL | 2 | 2 | 2 | ||||||
| Total number of employeess who are members of |
996 | 272 | 66 | 1,078 | 274 | 68 | 1.101 | 289 | 70 |
| a trade union | 35.1% | 48.7% | 65.3% | 36.8% | 48.3% | 65.4% | 37.1% | 48.1% | 68.0% |
As regards industrial action, the trend of strikes in 2015 showed a clear fall in the number of hours lost for this reason; in particular, during the year there were no general/category-wide strikes (with the exception of one event at Mandello del Lario for the loss of 144 hours), while in terms of micro-disputes at the company, the number of hours lost fell by more than 57% compared to 2014, to a very low level overall.
All micro-disputes at the company were at the Pontedera site.
The table below summarises hours lost due to strikes in 2014 and 2015 at company sites, with a focus on micro conflicts:
| 2015 | 2014 | ||
|---|---|---|---|
| General/category | 144 | 2,094 | |
| Company | 6,807 | 15,992 | |
| N° HOUR LOST DUE TO STRIKES | Total | 6,951 | 18,086 |
| General/category | 0% | 0.10% | |
| Company | 0.34% | 0.78% | |
| % HOUR LOST compared to Hour | of which Pontedera compared to hour worked at Pontedera | 0.41% | 0.90% |
| WORKED | Total | 0.34% | 0.88% |
| General/category | 18 | 262 | |
| N° OF DAYS LOST DUE TO | Company | 851 | 1,999 |
| STRIKES | Total | 869 | 2,261 |
A structured company welfare system has been established in Italy, with services that aim to increase the well-being of employees and their families, in economic and social terms. In particular, the following have been put in place for employees at Pontedera:
A national trade union agreement at the end of 2011 established a private health insurance fund (Metasalute) for metal and steel processing workers in Italy; the Company started paying its portion of the fund in 2012. Participation in the scheme is voluntary and became operative in 2013.
The scheme also includes health benefits/services for employees:
Finally all sites offer employees vaccinations free of charge.
In Vietnam, trade union representatives at a company level (selected by a Company Trade Union Committee) are tasked with protecting employees, helping them to understand aspects concerning labour regulations and company policies, and providing economic support for some company initiatives benefiting employees.
In particular, the current Trade Union Committee, elected in February 2014 and comprising 15 members who will remain in office for 5 years, made an excellent contribution in 2015, having sponsored and assisted the Company in a number of events to bolster employee motivation. The main events are outlined below, following on from those organised last year:
No strikes were held in 2015.
In India, trade unions have a two-tier structure - at a company and local/area level; this structure is also replicated at the Indian subsidiary where the trade union system comprises a company trade union committee with Piaggio workers' representatives, and a central trade union committee, which is the highest hierarchical level, with members selected by the trade union. At present, the Company trade union committee (appointed in December 2015 and remaining in office for one year) has 8 members.
A collective company agreement is in place at the Indian subsidiary, signed in July 2013 and with a 4 year validity.
In 2015, main activities concerning industrial relations focussed on:
Safeguarding and improving the health and safety of workers is integral to the Piaggio Group's operations and strategic within the framework of its more general objectives. This principle is valid and adopted in all countries where the Piaggio Group operates. In particular, the Group has taken concrete actions for:
Health prevention and protection for workers in such a complex industrial context as the Piaggio Group, both in Italy and abroad, can only take place through an adequately structured organisation which specifically aims to foster as far as possible a safety "culture" within the company. Therefore, the belief that safety must focus on conduct and daily operations is today disseminated at all levels. This approach has led the Piaggio Group to adopt safety management standards that are very similar in all countries where it operates, regardless of whether legal constraints are not as strict as company standards. In this framework, the sites in Italy, India and Vietnam have an Occupational Health and Safety Management System certified to OHSAS 18001 by an accredited certification body.
In line with Health and Safety Management System requirements, the Group has identified safety training as the key driver for disseminating a culture and fostering a conduct focussed on safety leadership and for generating commitment and steering conduct.
Promoting health is another important aspect for Piaggio, and this is achieved based on two areas of action: free testing and information campaigns on healthy lifestyles. Each Group site has a health unit for prevention, surveillance and first aid, manned by specialist medical and paramedical staff.
Starting in February 2015, an organisational change was initiated regarding the system for managing health and safety at work, which is based on the identification of different levels of responsibilities as summarised below, followed by the launch of a project to update the relevant procedural framework.
From March 2015, a new method of investigating accidents was adopted to improve the process of identifying the causes and preventative/protective measures to be taken to avoid the recurrence of similar events.
During 2015, the close relationship between the "Training" department and the "Safety, Hygiene and Occupational Medicine" was further consolidated as regards analysing staff training needs on safety. This relationship led in July to a course for the company experts whom Piaggio entrusts with the responsibility of supervising external companies, ensuring their coordination and cooperation, and overseeing their operations.
Starting in March 2015, the "safety walk" was launched to strengthen the visibility and presence in the factory of the Safety, Hygiene and Occupational Medicine department. The "safety walks" involve unannounced site inspections on safety aspects. The remedial actions identified during the inspections are managed in the same ways and using the same reports as for Integrated Quality, Environment and Safety Audits.
| Production sites | 2015 | 2014 | 2013 | 2012 | 2011 |
|---|---|---|---|---|---|
| Pontedera | 2.4 | 2.5 | 3.0 | 3.3 | 3.0 |
| Noale and Scorzè | 1.4 | 0.6 | 0.2 | 0.9 | 1.7 |
| Mandello del Lario | 1.6 | 1.2 | 1.1 | 3.2 | 3.1 |
18 The Frequency Index is: IF = (No. of accidents * 100,000) / Hours worked.
The number of accidents is calculated considering only accidents in the workplace, excluding accidents reported as of article 53 of Presidential Decree no. 1124/65. Accidents as of article 53 include both commuting accidents and accidents not considered reliable (due to the lack of a specific, short-term external cause of the injury or the lack of a causal link).
| Production sites | 2015 | 2014 |
|---|---|---|
| Pontedera | 73.1 | 130.8 |
| Noale and Scorzè | 65.5 | 22.4 |
| Mandello del Lario | 19.5 | 49.6 |
At the Pontedera production site, the Lost Day Rate in 2015 was almost half that of 2014. Also at the Mandello del Lario site, the rate fell despite the increase in workplace accidents. However, at the Noale and Scorzè sites, the rate rose compared to 2014 due to commuting accidents that resulted in relatively long periods of absence for the employees involved.
The main priority of the company, in compliance with local laws, international health and safety standards and Piaggio Group policies. In this framework, it guarantees that objectives to improve occupational health and safety are pursued through an Occupational Safety and Medicine unit.
Managers of each department guarantee that the occupational health and safety programme is effectively developed and implemented, helping their co-workers perform activities in their remit.
All managers and supervisors are tasked with establishing and maintaining a safe working environment, that poses no risks to health; in this context, each supervisor adopts concrete measures to guarantee to ensure that employees receive training and information on health and safety.
At the same time, all employees cooperate in developing programmes that guarantee their own and colleagues' health and safety.
In accordance with Group guidelines, suppliers and external companies that perform works at the site are contractually bound to comply with occupational health and safety policies, respect Piaggio Vietnam procedures and programmes, and observe instructions given to them. Violating these instructions is considered as a breach of contract and sufficient grounds to terminate the contract.
In addition, a Safety Committee has been established involving all members of functions and chaired by the production manager. The Committee members are responsible for managing any safety-related problems within their functional area and the required corrective actions. They also conduct periodic
19 The severity index is calculated as Ig = (working days lost / hours worked) x 100,000. In calculating the Index, working days lost because of all events that resulted in absence from work were calculated; so accidents reported pursuant to article 53 of Presidential Decree no. 1124/65 (commuting accidents and accidents not considered reliable due to the lack of a specific, short-term external cause of the injury or the lack of a causal link) were also considered.
audits of the entire site and report to the committee on all relevant aspects regarding safety, so that corrective actions may be promptly taken.
In order to effectively implement general health and safety regulations, a programme of activities is defined each year, based on operating plans, that are updated on an ongoing basis.
Again in 2015, extensive training on conduct and specialist training was provided, for a total of around 2,260 hours (801 hours for Piaggio employees and 1,460 for staff of external companies).
Alongside the training and awareness-raising activities, a number of initiatives – introduced in 2014 to reward and reinforce exemplary behaviour – were used again in 2015. For example, at the 17th National Safety Week 2015, Piaggio Vietnam hosted an event to raise awareness and boost commitment to the health and safety of employees and employers.
There has been a company medical centre at the Vinh Phuc site in Vietnam since 2013, with nurses and a doctor who monitor general health problems, offer check-ups and provide medical assistance in firstaid situations.
During 2015, Piaggio Vietnam was awarded at "Certificate of Merit" by the Ministry for Labour and Social Affairs for its health and safety activities in 2014. In the province of Vinh Phuc, Piaggio Vietnam is one of the five companies to receive such an award.
| FI | 2015 | 2014 | 2013 | 2012 | 2011 |
|---|---|---|---|---|---|
| Vietnam | 0.3 | 0.1 | 0.2 | 0.2 | 0.1 |
In order to guarantee the highest occupational health and safety standards, the Indian subsidiary has an organisational structure that operatively involves the "Occupier" (employer), which is a single person for various production sites with responsibility for the health, safety and well-being of all employees in the work place, Factory Managers and a Safety Committee comprising 20 members that include executives, managers and white collars. The Safety Committee meets at regular intervals to plan, revise and discuss action plans necessary to establish and disseminate a safety culture in the work place among employees. The presence of a Health & Safety team guarantees that the entire system may operate effectively.
In particular, in accordance with the guidelines adopted by the Group, as part of this organisation, additional roles and responsibilities have been defined that apply to the entire company.
Functional area managers have primary responsibility for health and safety within their division and for managing safety policies and relative organisational procedures, supported by safety managers.
Managers and supervisors have primary responsibility for guaranteeing that the company occupational health and safety policy and objectives are implemented and pursued. All managers and supervisors are responsible for the health and safety of their co-workers. This responsibility also covers the safety of equipment and assets within their areas of responsibility.
In line with the Group's approach, a great deal has been invested in training over the last few years as a main driver to increase each employee's accountability in relation to safety and, consequently, to promote their proactive approach and involvement in safety issues.
In 2015, training was provided on safety in the workplace for employees, suppliers and contractors working at the site for a total of about 7,600 hours, in order to increase the awareness of individuals about safe conduct and provide the necessary updates on changes in local legislation.
Alongside the training and awareness-raising activities, a number of initiatives were introduced to reward and reinforce exemplary behaviour. For example, again this year, as part of the safety week celebration held 4-11 March 2015, awards were handed out to the winners of various competitions.
| FI | 2015 | 2014 | 2013 | 2012 |
|---|---|---|---|---|
| Engine & Commercial Vehicles | 0.08 | 0.3 | 0.2 | 0.4 |
| 2W India | 0.0 | n/a | n/a | n/a |
14 January 2016 – The new range of state-of-the-art Piaggio iGet engines with the air cooled version made its début on the new Piaggio Liberty. The new Piaggio iGet engines are based on a design philosophy that targets an improved fuel consumption and emissions, plus a better and more advanced quality and reliability.
In a macroeconomic context in which the recovery of the global economy will probably consolidate, but that is still affected by uncertainties over the growth rate in Europe and risks of a slowdown in some countries in Far East Asia, the Group is committed, in commercial and industrial terms, to:
In technological terms, the Piaggio Group will focus on new solutions for current and future mobility problems. This is the strategy of Piaggio Fast Forward, established in Cambridge, Massachusetts and tasked with developing - in partnership with university professors and researchers and leading companies worldwide - innovative solutions for future mobility, as well as PADc (Piaggio Advanced Design Center) in Pasadena, that will continue to explore new frontiers in design in order to develop increasingly innovative, functional and efficient products with a style that is unique and deserving of the track record of the Piaggio Group and its most prestigious brands.
In Europe, the Group's Research and Development Centres had a more conventional focus, defining new products and production startup, continuing the development of technologies and platforms that underline the functional aspects and emotional appeal of vehicles with ongoing developments to engines, extended use of vehicle/user digital platforms and the trialling of new product and service configurations. These Centres will be flanked by Aprilia Racing, renowned for its sporting glory, but also for its activities as a profit centre for the development and sale of high-performance motorcycles, and as the most advanced development platform for studying and testing new materials and technological solutions that may benefit all Group products.
More in general, the Group is committed - as in the past and for operations in 2016 - to increasing productivity with a strong focus on efficient costs and investments, while complying with its business ethics.
Revenues, costs, payables and receivables as of 31 December 2015 involving parent companies, subsidiaries and associates refer to the sale of goods or services which are a part of normal operations of the Group.
Transactions are carried out at normal market values, depending on the characteristics of the goods and services provided.
The information on transactions with related parties, including information required by Consob in its communication of 28 July 2006 DEM/6664293, is given in the notes to the Consolidated Financial Statements and notes to the separate Financial Statements of the Parent Company.
The procedure for transactions with related parties, pursuant to article 4 of Consob Regulation no. 17221 of 12 March 2010 as amended, approved by the Board on 30 September 2010, is published on the institutional site of the Issuer www.piaggiogroup.com, under Governance.
| Designation | Registered office | Type | % of ownership | |
|---|---|---|---|---|
| 2015 | 2014 | |||
| IMMSI S.p.A. | Mantova - Italy | Direct parent company | 50.0621 | 50.2450 |
| Omniaholding S.p.A. | Mantova - Italy | Final parent company | 0.0277 | 0.0275 |
Piaggio & C. S.p.A. is controlled by the following companies:
Piaggio & C. S.p.A. is subject to the management and coordination of IMMSI S.p.A. pursuant to article 2497 et seq. of the Italian Civil Code. During the period, this management and coordination concerned the following activities:
IMMSI has provided consultancy services and assistance for the Company and subsidiaries concerning extraordinary financing operations, organisation, strategy and coordination, as well as services intended to optimise the financial structure of the Group.
In 2013, for a further three years, the Parent Company signed up to the National Consolidated Tax Mechanism pursuant to articles 117-129 of the Consolidated Income Tax Act (T.U.I.R) of which IMMSI S.p.A. is the consolidating company, and to whom other IMMSI Group companies report to. The consolidating company determines a single global income equal to the algebraic sum of taxable amounts (income or loss) realised by individual companies that opt for this type of group taxation.
The consolidating company recognises a receivable from the consolidated company which is equal to the corporate tax to be paid on the taxable income transferred by the latter. Whereas, in the case of companies reporting tax losses, the consolidating company recognises a payable related to corporate tax on the portion of loss actually used to determine global overall income. Under the National Consolidated Tax Mechanism, companies may, pursuant to Article 96 of Presidential Decree no. 917/86, allocate the excess of interest payable which is not deductible to one of the companies so that, up to the excess of Gross Operating Income produced in the same tax period by other subjects party to the consolidation (or, in the presence of specific legal requirements, from foreign companies), the amount may be used to reduce the total income of the Group.
Piaggio & C. S.p.A. has undertaken a rental agreement for offices owned by Omniaholding S.p.A.. This agreement, signed in normal market conditions, was previously approved by the Related Parties Transactions Committee, as provided for by the procedure for transactions with related parties adopted by the Company.
Piaggio Concept Store Mantova Srl has a lease contract for its sales premises and workshop with Omniaholding S.p.A.. This agreement was signed in normal market conditions.
Omniaholding S.p.A. has undersigned Piaggio & C. bonds for a value of € 2.9 million on the financial market, and collected related interest.
The main relations with subsidiaries, eliminated in the consolidation process, refer to the following transactions:
Piaggio Concept Store Mantova
o sells components to:
Piaggio Vietnam sells vehicles, spare parts and accessories, which it has manufactured in some cases, for sale on respective markets, to:
Piaggio Vehicles Private Limited sells vehicles, spare parts and accessories, for sale on respective markets, and components and engines to use in manufacturing, to Piaggio & C. S.p.A..
o distribute vehicles, spare parts and accessories purchased by Piaggio & C. on their respective markets.
o provide a vehicle, spare part and accessory distribution service to Piaggio Vietnam for their respective markets.
o provide a sales promotion service and after-sales services to Piaggio & C. S.p.A. for their respective markets.
o provides a sales promotion service and after-sales services to Piaggio Vietnam in the Asia Pacific region.
o provides a sales promotion service and after-sales services to Piaggio Group Americas in Canada.
o component and vehicle design/development service;
o scouting of local suppliers;
o provides a vehicle and component research/design/development service to Piaggio & C. S.p.A.
Aprilia Racing provides to Piaggio & C. S.p.A.:
o rents a property to Piaggio & C. S.p.A.
o charges its management costs to Piaggio & C. S.p.A.
Main intercompany relations between subsidiaries and JV Zongshen Piaggio Foshan Motorcycle Co. Ltd, refer to the following transactions:
grants licences for rights to use the brand and technological know how to Zongshen Piaggio Foshan Motorcycle Co. Ltd..
sells vehicles to Zongshen Piaggio Foshan Motorcycle Co. Ltd. for sale on the Chinese market.
Members of the board of directors and members of the control committee of the Issuer do not hold shares in the Issuer.
The Company is organised in accordance with the traditional administration and control model mentioned in articles 2380-bis et seq. of the Italian Civil Code, with the Shareholders' Meeting, the Board of Directors and the Board of Statutory Auditors.
Roberto Colaninno is Chairman and Chief Executive Officer of the Company, Matteo Colaninno is Deputy Chairman and Gabriele Galli is General Manager Finance.
The Company has adopted the Corporate Governance Code of Borsa Italiana S.p.A. and observes principles of corporate governance contained in the code.
The Company is subject to the management and coordination of IMMSI S.p.A. pursuant to article 2497 et seq. of the Italian Civil Code.
The Board of Directors of the Company in office at the date of this Report comprises nine members, appointed by the Ordinary General Meeting of Shareholders of 13 April 2015 based on the two lists of candidates submitted by the majority shareholder IMMSI S.p.A. and by the Legal Practice Trevisan & Associati. The Board of Directors will remain in office until the date of the Ordinary General Meeting of Shareholders called for approval of the Financial Statements for the financial year ending 31 December 2017.
The majority of the Board of Directors are non-executive, independent directors, and their number and authority are such that they ensure that their opinion has a significant weight in the Issuer's Board decisions. Non-executive directors and independent directors bring their specific competencies to Board discussions, contributing to the making of decisions that conform to corporate interests.
The Appointment Proposal Committee, the Remuneration Committee, the Internal Control and risk management Committee and the Related Parties Transactions Committee have been established within the Board.
The internal control and risk management system requires the Board, after consulting with the Internal Control and Risk Management Committee, to define guidelines for the internal control and risk management system which comprises all processes to identify, measure, manage and monitor main risks. This system helps ensure efficient and effective company operations, the reliability of financial information, compliance with laws and regulations as well as the company's articles of association and with internal procedures, and the safeguarding of company assets.
In this context, the Board of Directors is assisted by a Director appointed to oversee operation of the internal control and risk management system and an Internal Control and risk management Committee.
The Board of Directors, in response to a proposal by the Director in charge of the internal control and risk management system and having obtained the opinion of the Internal Control and risk management Committee and the Board of Statutory Auditors, appointed the Internal Auditing Supervisor to verify that the internal control and risk management system is operative and adequate, ensuring that he/she receives adequate means to carry out his/her functions, including - as regards the operating structure and internal organisational procedures - access to information needed for his/her position.
The Board of Statutory Auditors in office at the date of this Report was elected by the Ordinary General Meeting of Shareholders held on 13 April 2015, based on the two lists of candidates submitted by the majority shareholder IMMSI S.p.A. and by the Legal Practice Trevisan & Associati, in accordance with the provisions of Article 24.2 of the Articles of Association, and will hold office until approval of the annual financial statements for the year ending 31 December 2017.
The Company produces an annual Report on Corporate Governance and Corporate Ownership, describing the corporate governance system adopted by the Issuer, and containing information on corporate ownership and the internal control and risk management system. The entire report is available on the website of the Issuer www.piaggiogroup.com under Governance.
With reference to the obligations of the "Consolidated Privacy Act", enacted with Italian Legislative Decree no. 196 of 30 June 2003, – Annex B), Technical Regulations – Piaggio & C. S.p.A., as Data Controller has adopted the security measures listed in the regulations, and updated its Security Policy Document according to law.
The purpose of the Security Policy Document is to:
define and describe the security policies adopted concerning the processing of personal data relative to employees, outsourced staff, customers, suppliers and other subjects concerned;
define and explain the organisational criteria adopted by the Company to put these measures in place.
As regards regulatory requirements on conditions for listing companies controlling companies established and governed according to laws of non-EU Member States on the stock exchange and material importance for the purposes of consolidated financial statements, the following is reported:
Pursuant to article 2.6.2, section 13 of the Regulation of Stock Markets organised and managed by Borsa Italiana S.p.A., the conditions as of article 37 of Consob regulation no. 16191/2007 exist.
| Net profit as of 31/12/2015 |
Shareholders' equity as of 31/12/2015 |
Net profit as of 31/12/2014 |
Shareholders' equity as of 31/12/2014 |
|
|---|---|---|---|---|
| In thousands of euros | ||||
| Piaggio & C. S.p.A. | 15,058 | 320,321 | 14,810 | 328,978 |
| Net profit and shareholders' equity of subsidiaries Elimination of the carrying amount of investments |
60,358 | 187,541 (92,390) |
59,164 | 187,768 (89,597) |
| Elimination of dividends from subsidiaries | (65,389) | (56,985) | ||
| Sale/disposal of intangible assets/property, plant and equipment to subsidiaries |
538 | (16,381) | (328) | (16,247) |
| Elimination of the effects of other intergroup transactions and other records |
1,302 | 5,202 | (597) | 2,167 |
| Piaggio Group | 11,867 | 404,293 | 16,064 | 413,069 |
Dear Shareholders,
The Board of Directors of your Company has convened the ordinary Shareholders' Meeting for your approval of the draft financial statements for Piaggio & C. S.p.A. at 31 December 2015.
The financial statements at 31 December 2015 closed with a profit of Euro 15,057,591.94, therefore, we propose to allocate the profit as follows:
Euro 752,879.60 as legal reserve;
Euro 14,304,712.34 as dividends;
Furthermore, taking into account the amount of the available reserves in the financial statement of the Company (equal to Euro 5,773,666.36) and – pursuant to the article 2426 no. 5 of the Italian civil code – the amount of the development costs and the purchase of treasury share, we are submitting, for your approval, the proposal to distribute a dividend of Euro 0.05 for every qualifying share and therefore (taking into account the 1,896,000 treasury shares in the Company's portfolio) a total of Euro 17,965,619, of which:
Euro 14,304,712.34, from the profit of the period (excluding the amount of Euro 752.879,60 to be allocated as legal reserve);
additional Euro 3,660,906.66 from the "Retained Earnings" reserve.
To establish 18th April 2016 as the coupon no. 9 detachment date, 19th April 2016 as dividend record date and 20th April 2016 as the date from which the dividend is payable".
Milan, March 11th 2016
For the Board of Directors Chairman and Chief Executive Officer Roberto Colaninno
Net working capital: defined as the net sum of: current and non-current trade and other receivables, inventories, trade and other long term payables and current trade payables, other receivables (short and long term tax receivables, deferred tax assets) and other payables (tax payables, other short term payables and deferred tax liabilities).
Net property, plant and equipment: consist of property, plant, machinery and industrial equipment, net of accumulated depreciation, investment property and assets held for sale.
Net intangible assets: consist of capitalised development costs, costs for patents and know-how and goodwill arising from acquisition/merger operations carried out by the Group.
Financial assets: defined by the Directors as the sum of investments and other non-current financial assets.
Provisions: consist of retirement funds and employee benefits, other long-term provisions and the current portion of other long-term provisions.
Gross industrial margin: defined as the difference between "Revenues" and corresponding "Cost to sell" of the period.
Cost to sell: include the cost for materials (direct and consumables), accessory purchase costs (transport of incoming material, customs, movements and warehousing), employee costs for direct and indirect manpower and related expenses, work carried out by third parties, energy costs, depreciation of property, plant, equipment and industrial equipment, external maintenance and cleaning costs net of sundry cost recovery recharged to suppliers.
Operating expenses: consist of employee costs, costs for services, leases and rentals, and additional operational expenditure net of operating income not included in the gross industrial margin. Operating expenses also include amortisation and depreciation not included in the calculation of the gross industrial margin.
Consolidated Ebitda: defined as "Operating income" before the amortisation/depreciation and impairment costs of intangible assets and property, plant and equipment, as resulting from the Consolidated Income Statement.
Net capital employed: determined as the algebraic sum of "Net fixed assets", "Net working capital" and provisions.
In some cases, data could be affected by rounding off defects due to the fact that figures are represented in millions of euros; changes and percentages are calculated from figures in thousands of euros and not from rounded off figures in millions of euros.
Piaggio Group
| 2015 | 2014 | ||||
|---|---|---|---|---|---|
| of which | of which | ||||
| related | related | ||||
| Total | parties | Total | parties | ||
| In thousands of euros | Notes | ||||
| Net revenues | 4 | 1,295,286 | 794 | 1,213,272 | 166 |
| Cost for materials | 5 | 770,297 | 25,616 | 707,515 | 20,674 |
| Cost for services and leases and rentals | 6 | 235,892 | 3,776 | 212,638 | 3,715 |
| Employee costs | 7 | 213,326 | 211,513 | ||
| Depreciation and impairment costs of | |||||
| property, plant and equipment | 8 | 45,552 | 41,710 | ||
| Amortisation and impairment costs of intangible | |||||
| assets | 8 | 59,491 | 47,934 | ||
| Other operating income | 9 | 106,180 | 737 | 97,123 | 2,491 |
| Other operating costs | 10 | 20,198 | 33 | 19,424 | 19 |
| Operating income | 56,710 | 69,661 | |||
| Income/(loss) from investments | 11 | 295 | 141 | (184) | (113) |
| Financial income | 12 | 878 | 1,606 | ||
| Borrowing costs | 12 | 37,476 | 157 | 43,504 | 388 |
| of which non-recurrent | 51 | 3,552 | |||
| Net exchange gains/(losses) | 12 | (304) | (1,065) | ||
| Profit before tax | 20,103 | 26,514 | |||
| Taxes for the period | 13 | 8,236 | (655) | 10,450 | (125) |
| of which non-recurrent | 51 | (977) | |||
| Profit from continuing operations | 11,867 | 16,064 | |||
| Assets held for sale: | |||||
| Gains or losses arising from assets held for sale | 14 | ||||
| Net Profit (Loss) for the period | 11,867 | 16,064 | |||
| Attributable to: | |||||
| Owners of the Parent | 11,873 | 16,065 | |||
| Non controlling interests | (6) | (1) | |||
| Earnings per share (figures in €) | 15 | 0.033 | 0.044 | ||
| Diluted earnings per share (figures in €) | 15 | 0.033 | 0.044 |
| Consolidated Statement of Comprehensive Income | ||
|---|---|---|
| -- | -- | ------------------------------------------------ |
| 2015 | 2014 | ||
|---|---|---|---|
| In thousands of euros | Notes | ||
| Net Profit (loss) for the period (A) | 11,867 | 16,064 | |
| Items that will not be reclassified to profit or loss | |||
| Remeasurements of defined benefit plans | 45 | 1,841 | (5,594) |
| Total | 1,841 | (5,594) | |
| Items that may be reclassified to profit or loss | |||
| Profit (loss) deriving from the translation of financial | |||
| statements of foreign companies denominated in foreign currency |
45 | 3,313 | 8,215 |
| Total gains (losses) on cash flow hedges | 45 | 244 | 735 |
| Total | 3,557 | 8,950 | |
| Other Comprehensive Income (Expense) (B)* | 5,398 | 3,356 | |
| Total Comprehensive Income (Expense) for the period (A | |||
| + B) | 17,265 | 19,420 | |
| * Other Profits (and losses) take account of relative tax effects | |||
| Attributable to: | |||
| Owners of the Parent | 17,189 | 19,430 | |
| Non controlling interests | 76 | (10) |
| As of 31 December 2015 | As of 31 December 2014 | ||||
|---|---|---|---|---|---|
| of which | of which | ||||
| related | related | ||||
| Total | parties | Total | parties | ||
| In thousands of euros | Notes | ||||
| ASSETS | |||||
| Non-current assets | |||||
| Intangible assets | 16 | 673,986 | 668,354 | ||
| Property, plant and equipment | 17 | 307,608 | 307,561 | ||
| Investment property | 18 | 11,961 | 11,961 | ||
| Investments | 37 | 9,529 | 8,818 | ||
| Other financial assets | 38 | 24,697 | 19,112 | ||
| Long-term tax receivables | 23 | 5,477 | 3,230 | ||
| Deferred tax assets | 19 | 56,434 | 46,434 | ||
| Trade receivables | 21 | ||||
| Other receivables | 22 | 13,419 | 153 | 13,647 | 197 |
| Total non-current assets | 1,103,111 | 1,079,117 | |||
| Assets held for sale | 28 | ||||
| Current assets | |||||
| Trade receivables | 21 | 80,944 | 1,150 | 74,220 | 856 |
| Other receivables | 22 | 29,538 | 8,879 | 36,749 | 9,440 |
| Short-term tax receivables | 23 | 21,541 | 35,918 | ||
| Inventories | 20 | 212,812 | 232,398 | ||
| Other financial assets | 39 | 2,176 | |||
| Cash and cash equivalents | 40 | 101,428 | 98,206 | ||
| Total current assets | 448,439 | 477,491 | |||
| TOTAL ASSETS | 1,551,550 | 1,556,608 |
| As of 31 December 2015 |
As of 31 December 2014 |
||||
|---|---|---|---|---|---|
| of which related |
of which related |
||||
| In thousands of euros SHAREHOLDERS' EQUITY AND LIABILITIES |
Notes | Total | parties | Total | parties |
| Shareholders' equity | |||||
| Share capital and reserves attributable to the owners of the Parent |
44 | 404,535 | 412,147 | ||
| Share capital and reserves attributable to non-controlling interests |
44 | (242) | 922 | ||
| Total shareholders' equity | 404,293 | 413,069 | |||
| Non-current liabilities | |||||
| Financial liabilities falling due after one year | 41 | 520,391 | 2,900 | 506,463 | 2,900 |
| Trade payables | 28 | ||||
| Other long-term provisions | 29 | 9,584 | 10,394 | ||
| Deferred tax liabilities | 30 | 4,369 | 5,123 | ||
| Retirement funds and employee benefits | 31 | 49,478 | 55,741 | ||
| Tax payables Other long-term payables |
32 33 |
4,624 | 0 3,645 |
||
| Total non-current liabilities | 588,446 | 581,366 | |||
| Current liabilities | |||||
| Financial liabilities falling due within one year | 41 | 105,895 | 102,474 | ||
| Trade payables | 28 | 380,363 | 10,108 | 386,288 | 15,580 |
| Tax payables | 32 | 14,724 | 14,445 | ||
| Other short-term payables | 33 | 48,050 | 8,666 | 49,148 | 8,397 |
| Current portion of other long-term provisions | 29 | 9,779 | 9,818 | ||
| Total current liabilities | 558,811 | 562,173 | |||
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES |
1,551,550 | 1,556,608 |
This statement shows the factors behind changes in cash and cash equivalents, net of short-term bank overdrafts, as required by IAS 7.
| 2015 | 2014 | ||||
|---|---|---|---|---|---|
| of which | of which | ||||
| Total | related parties | Total | related parties | ||
| In thousands of euros | Notes | ||||
| Operating activities | |||||
| Consolidated net profit | 11,873 | 16,065 | |||
| Allocation of profit to non-controlling interests | (6) | (1) | |||
| Taxes for the period | 13 | 8,236 | 10,450 | ||
| Depreciation of property, plant and equipment | 8 | 45,523 | 41,419 | ||
| Amortisation of intangible assets | 8 | 59,491 | 47,934 | ||
| Allocations for risks and retirement funds and employee | |||||
| benefits | 17,032 | 17,453 | |||
| Write-downs / (Reversals) | 2,470 | (1,969) | |||
| Losses / (Gains) on the disposal of property, plants and | |||||
| equipment | (251) | 32 | |||
| Losses / (Gains) on the disposal of intangible assets | 0 | 0 | |||
| Financial income | 12 | (877) | (905) | ||
| Dividend income | (130) | (5) | |||
| Borrowing costs | 12 | 36,751 | 41,044 | ||
| Income from public grants | (3,487) | (2,823) | |||
| Portion of earnings of associates | (141) | 113 | |||
| Change in working capital: | |||||
| (Increase)/Decrease in trade receivables | 21 | (4,957) | (294) | 3,383 | 8 |
| (Increase)/Decrease in other receivables | 23 | 8,113 | 605 | (10,040) | (2,244) |
| (Increase)/Decrease in inventories | 20 | 19,586 | (24,590) | ||
| Increase/(Decrease) in trade payables | 28 | (5,925) | (5,472) | 40,124 | 4,376 |
| Increase/(Decrease) in other payables | (119) | 269 | 3,229 | 1,923 | |
| Increase/(Decrease) in provisions for risks | 29 | (9,913) | (15,495) | ||
| Increase/(Decrease) in retirement funds and employee | |||||
| benefits | 31 | (14,613) | (2,851) | ||
| Other changes | 16,375 | (38,193) | |||
| Cash generated from operating activities | 185,031 | 124,374 | |||
| Interest paid | (32,790) | (36,180) | |||
| Taxes paid | (23,400) | (21,832) | |||
| Cash flow from operating activities (A) | 128,841 | 66,362 | |||
| Investing activities | |||||
| Investment in property, plant and equipment | 17 | (38,062) | (36,628) | ||
| Sale price, or repayment value, of property, plant and | |||||
| equipment | 581 | 833 | |||
| Investment in intangible assets | 16 | (63,828) | (58,265) | ||
| Sale price, or repayment value, of intangible assets | 56 | 59 | |||
| Sale price of financial assets | 47 | 915 | |||
| Collected interests | 749 | 528 | |||
| Cash flow from investment activities (B) | (100,457) | (92,558) | |||
| Financing activities | |||||
| Exercise of stock options with capital increase | 44 | 5,076 | |||
| Exercising of stock options with sale of treasury shares | 245 | ||||
| Purchase of treasury shares | 44 | (34) | (3,787) | ||
| Outflow for dividends paid | 44 | (26,007) | |||
| Loans received | 41 | 58,130 | 207,973 | ||
| Outflow for repayment of loans | 41 | (49,270) | (134,683) | ||
| Financing received for leases | 41 | 267 | |||
| Repayment of finance leases | 41 | (31) | (5,835) | ||
| Cash flow from financing activities (C) | (17,212) | 69,256 | |||
| Increase / (Decrease) in cash and cash equivalents (A+B+C) | 11,172 | 43,060 | |||
| Opening balance | 90,125 | 52,816 | |||
| Exchange differences | 5 | (5,751) | |||
| Closing balance | 101,302 | 90,125 |
Movements from 1 January 2015 / 31 December 2015
| Share | Share premium |
Legal | Reserve for measurement of financial |
IAS transition |
Group conversion |
Treasury | Earnings | Consolidated Group shareholders' |
Share capital and reserves attributable to non controlling |
TOTAL SHAREHOLDERS' |
||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Notes | capital | reserve | reserve | instruments | reserve | reserve | shares | reserve | equity | interests | EQUITY | |
| In thousands of euros | ||||||||||||
| As of 1 January 2015 | 207,614 | 7,171 | 16,902 | (830) | (5,859) | (18,839) | (5,787) | 211,775 | 412,147 | 922 | 413,069 | |
| Profit for the period | 11,873 | 11,873 | (6) | 11,867 | ||||||||
| Other Comprehensive Income (expense) |
244 | 3,231 | 1,841 | 5,316 | 82 | 5,398 | ||||||
| Total comprehensive income (expense) for the period |
0 | 0 | 0 | 244 | 0 | 3,231 | 0 | 13,714 | 17,189 | 76 | 17,265 | |
| Transactions with shareholders: |
||||||||||||
| Allocation of profits | 44 | 741 | (741) | 0 | 0 | |||||||
| Distribution of dividends | 44 | (26,007) | (26,007) | (26,007) | ||||||||
| Annulment of treasury shares Purchase of treasury |
44 | 5,787 | (5,787) | 0 | 0 | |||||||
| shares | 44 | (34) | (34) | (34) | ||||||||
| 25% acquisition of Piaggio Hrtvaska |
44 | 1,240 | 1,240 | (1,240) | 0 | |||||||
| As of 31 December 2015 | 207,614 | 7,171 | 17,643 | (586) | (5,859) | (15,608) | (34) | 194,194 | 404,535 | (242) | 404,293 |
| Notes | Share capital |
Share premium reserve |
Legal reserve |
Reserve for measurement of financial instruments |
IAS transition reserve |
Group conversion reserve |
Treasury shares |
Earnings reserve |
Consolidated Group shareholders' equity |
Share capital and reserves attributable to non controlling interests |
TOTAL SHAREHOLDERS' EQUITY |
|
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| In thousands of euros | ||||||||||||
| As of 1 January 2014 | 206,027 | 3,681 | 16,902 | (1,565) | (5,859) | (27,063) | (2,245) | 201,305 | 391,183 | 932 | 392,115 | |
| Profit for the period | 16,065 | 16,065 | (1) | 16,064 | ||||||||
| Other Comprehensive Income (expense) |
735 | 8,224 | (5,594) | 3,365 | (9) | 3,356 | ||||||
| Total comprehensive income (expense) for the period |
0 | 0 | 0 | 735 | 0 | 8,224 | 0 | 10,471 | 19,430 | (10) | 19,420 | |
| Transactions with shareholders: |
||||||||||||
| Allocation of profits | 0 | 0 | ||||||||||
| Distribution of dividends | 44 | 0 | 0 | |||||||||
| Exercise of stock options: | ||||||||||||
| - issue of new shares | 44 | 1,587 | 3,489 | 5,076 | 5,076 | |||||||
| - sale of treasury shares Purchase of treasury |
44 | 245 | 245 | 245 | ||||||||
| shares | 44 | (3,787) | (3,787) | (3,787) | ||||||||
| Other changes | 44 | 1 | (1) | 0 | 0 | |||||||
| As of 31 December 2014 |
207,614 | 7,171 | 16,902 | (830) | (5,859) | (18,839) | (5,787) | 211,775 | 412,147 | 922 | 413,069 |
Piaggio & C. S.p.A. (the Company) is a joint-stock company established in Italy at the Register of Companies of Pisa. The addresses of the registered office and places where the Group conducts its main business operations are listed in the introduction to the financial statements. The main operations of the Company and its subsidiaries (the Group) are described in the Report on Operations.
These Financial Statements are expressed in euros (€) since this is the currency in which most of the Group's transactions take place. Foreign operations are included in the consolidated financial statements according to the standards indicated in the notes below.
As of 31 December 2015, the structure of the Piaggio Group was as indicated in the Report on Operations and is the structure referred to herein.
The scope of consolidation has changed since the consolidated financial statements as of 31 December 2014, following the creation, on 15 June 2015, of Piaggio Fast Forward Inc., a company set up in the United States for the research and development of new mobility and transportation systems.
The Consolidated Financial Statements of the Piaggio Group as of 31 December 2015 have been drafted in compliance with the International Accounting Standards (IAS/IFRS) in force at that date, issued by the International Accounting Standards Board and approved by the European Commission, as well as in compliance with the provisions established in Article 9 of Legislative Decree no. 38/2005 (Consob Resolution no. 15519 dated July 27/7/06 containing the "Provisions for the presentation of financial statements", Consob Resolution no. 15520 dated July 27/7/06 containing the "Changes and additions to the Regulation on Issuers adopted by Resolution no. 11971/99", Consob communication no. 6064293 dated 28/7/06 July containing the "Corporate reporting required in accordance with Article 114, paragraph 5 of Legislative Decree no. 58/98"). The interpretations of the International Financial Reporting Interpretations Committee ("IFRIC"), previously the Standing Interpretations Committee ("SIC"), were also taken into account.
Moreover, international accounting standards have been uniformly adopted for all Group companies.
The financial statements of subsidiaries, used for consolidation and for the joint venture consolidated using the equity method, have been appropriately modified and reclassified, where necessary, to bring them in line with the international accounting standards and classification criteria used by the Group on a consistent basis.
The Financial Statements have been prepared on a historical cost basis, amended as required for the measurement of investment property and some financial instruments, and on a going-concern basis. In fact, despite the difficult economic and financial context, the Group has evaluated that there are no significant doubts about its continuing as a going concern (as defined in section 25 of IAS 1), also in relation to actions already identified to adapt to changing levels in demand, as well as the industrial and financial flexibility of the Group.
These Consolidated Financial Statements were audited by PricewaterhouseCoopers S.p.A..
A specific paragraph in this Report provides information on any significant events occurring after the end of the period and on the operating outlook.
The Group has chosen to highlight all changes generated by transactions with non-shareholders within two statements reporting trends of the period, respectively named the "Consolidated Income Statement" and "Consolidated Statement of Comprehensive Income". The Financial Statements are therefore composed of the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Consolidated Statement of Cash Flows, the Statement of Changes in Consolidated Shareholders' Equity and these notes.
The Consolidated Income Statement is presented with the items classified by nature. The overall Operating Income is shown, which includes all income and cost items, irrespective of their repetition or fact of falling outside normal operations, except for the items of financial operations included under Operating Income and Profit before tax. In addition, the income and cost items arising from assets that are held for sale or to be discontinued, including any capital gains or losses net of the tax element, are recorded in a specific item preceding profit attributable to the owners of the parent and to non-controlling interests.
The Consolidated Statement of Comprehensive Income is presented in accordance with the provisions of IAS 1 amended. Items presented in "Other comprehensive income(expese)" are grouped based on whether they are potentially reclassifiable to profit or loss.
The Consolidated Statement of Financial Position is presented in opposite sections with separate indication of assets, liabilities and shareholders' equity.
In turn, assets and liabilities are reported in the Consolidated Financial Statements on the basis of their classification as current and non-current.
The Consolidated Statement of Cash Flows is divided into cash-flow generating areas. The Statement of Cash Flows model adopted by the Piaggio Group has been prepared using the indirect method. The cash and cash equivalents recorded in the Consolidated Statement of Cash Flows include the Consolidated Statement of Financial Position balances for this item at the reporting date. Financial flows in foreign currency have been converted at the average exchange rate for the period. Income and costs related to interest, dividends received and income taxes are included in the cash flow generated from operations.
The Statement of Changes in Consolidated Shareholders' Equity is presented as provided for in IAS 1 revised.
It includes the total statement of comprehensive income while separately reporting the amounts attributable to owners of the Parent company as well as the quota pertaining to non-controlling interests, the amounts of operations with shareholders acting in this capacity and potential effects of retrospective application or of the retroactive calculation pursuant to IAS 8. Reconciliation between the opening and closing balance of each item for the period is presented.
The Consolidated Financial Statements of the Group Piaggio & C. include the Financial Statements of the Parent Company Piaggio & C. S.p.A. and Italian and foreign companies in which it has direct or indirect control, which are listed in the attachments.
| Subsidiaries | Associates | Total | |||||
|---|---|---|---|---|---|---|---|
| Italy | Abroad | Total | Italy | Abroad | Total | ||
| Companies: | |||||||
| - consolidated on a line-by-line basis | 3 | 21 | 24 | 24 | |||
| - consolidated with the equity method | 2 | 3 | 5 | 5 | |||
| Total companies | 3 | 21 | 24 | 2 | 3 | 5 | 29 |
As of 31 December 2015 subsidiaries and associates of Piaggio & C. S.p.A. were as follows:
Assets and liabilities, and income and costs, of consolidated companies are recognised on a global integration basis, eliminating the carrying amount of consolidated investments in relation to the relative shareholders' equity at the time of purchase or underwriting. The carrying amount of investments has been eliminated against the shareholders' equity of subsidiaries/associates, assigning to non-controlling interests under specific items the relative portion of shareholders' equity and relative net profit due for the period, in the case of subsidiaries consolidated on a lineby-line basis.
Subsidiaries are companies in which the Group exercises control. This control exists when the Group is exposed, or is entitled to receive variable returns from its involvement in the company and has the capacity to influence such returns through its power over the controlled company. The acquisition of subsidiaries is recognised according to the acquisition method. The cost of acquisition is determined by the sum of present values at the date control of the given assets was obtained, liabilities borne or undertaken and financial instruments issued by the Group in exchange for control of the acquired company.
In the case of acquisitions of companies, acquired and identifiable assets, liabilities and potential liabilities are recognised at the present value at the date of acquisition. The positive difference between the acquisition cost and the share of the Group at the present value of said assets and liabilities is classified as goodwill and recognised in the financial statements as an intangible asset. Any negative difference ("negative goodwill") is recognised instead in profit and loss at the date of acquisition.
The financial statements of subsidiaries are included in the Consolidated Financial Statements starting from the date when control is acquired until control ceases.
The portions of shareholders' equity and income attributable to non-controlling interests are separately indicated in the Consolidated Statement of Financial Position and Consolidated Income Statement respectively.
On 11 November 2015, Piaggio Vespa BV acquired the remaining 25% of Piaggio Hrtvaska, already consolidated on a line-by-line basis. In compliance with IAS 27 requirement, in respect of these transactions on non-controlling interest, the difference between the price paid and value of acquired assets, previously assigned to non-controlling interest, is now recognised in consolidated shareholders' equity.
Associates are companies in which the Group has considerable influence but not control of financial and operational policies. The Consolidated Financial Statements include the portion relative to the Group of income of associates, accounted for using the equity method, starting from the date when it commences to have considerable influence and ending when said influence ceases. With the equity method, investments in associates are initially recognised at cost and subsequently adjusted to indicate the portion of post-acquisition profits or losses attributable to the Group and movements in the statement of comprehensive income. If any portion attributable to the Group of losses of the associates exceeds the carrying amount of the investment in the financial statements, the value of the investment is reset to zero and the portion of further losses is not recorded, except in cases where and to the extent to which the Group is required to be held liable for said losses.
The Group adopts IFRS 11 for all joint arrangements. According to IFRS 11, investments in joint arrangements are classified as joint operations or joint ventures depending on the contractual obligations and rights of each investor. The Group has classified the only joint arrangement agreement in place as being a joint venture. Joint ventures are measured with the equity method. With the equity method, interests in joint ventures are initially recognised at cost and subsequently adjusted to indicate the portion of post-acquisition profits or losses attributable to the Group and movements in the statement of comprehensive income.
In the event any portion attributable to the Group of losses of the joint venture exceeds the carrying amount of the investment in the financial statements, the value of the investment is reset to zero and the portion of further losses is not recorded, except in cases where and to the extent in which the Group is required to be held liable for said losses.
As regards transactions between a Group company and a joint venture, unrealised profits and losses are eliminated to an extent equal to the percentage of the investment of the Group in the jointly controlled company, with the exception of unrealised losses that constitute evidence of an impairment of the transferred asset.
In preparing the Consolidated Financial Statements, all balances and significant transactions between Group companies have been eliminated, as well as unrealised profits and losses arising from intergroup transactions. Unrealised profits and losses generated from transactions with associates or jointly controlled companies are eliminated based on the value of the investment of the Group in the companies.
Transactions in foreign currency are recorded at the exchange rate in effect on the date of the transaction. Monetary assets and liabilities in foreign currency are translated at the exchange rate in effect at the reporting date.
The separate financial statements of each company belonging to the Group are prepared in the currency of the primary economic environment in which they operate (the functional currency). For the purposes of the Consolidated Financial Statements, the financial statements of each foreign entity are in euro, which is the functional currency of the Group and the presentation currency of the Consolidated Financial Statements.
All assets and liabilities of foreign companies in a currency other than the euro which come under the scope of consolidation are translated, using exchange rates in effect at the reporting date (currency exchange rates method). Income and costs are translated at the average exchange rate of the period. Translation differences arising from the application of this method, as well as translation differences arising from a comparison of initial shareholders' equity translated at current exchange rates and the same equity translated at historical rates, are recognised in the statement of comprehensive income and allocated to a specific reserve in shareholders' equity until disposal of the investment. Average exchange rates for translating the cash flows of foreign subsidiaries are used in preparing the Consolidated Statement of Cash Flows.
The exchange rates used to translate the financial statements of companies included in the scope of consolidation into euros are shown in the table below.
| Currency | Spot exchange | Average | Spot exchange | Average exchange |
|---|---|---|---|---|
| rate | exchange rate | rate | rate | |
| 31 December | 2015 | 31 December | 2014 | |
| 2015 | 2014 | |||
| US Dollar | 1.0887 | 1.10951 | 1.2141 | 1.3285 |
| Pounds Sterling | 0.73395 | 0.72585 | 0.7789 | 0.80612 |
| Indian Rupee | 72.0215 | 71.1956 | 76.719 | 81.0406 |
| Singapore Dollars | 1.5417 | 1.52549 | 1.6058 | 1.68232 |
| Chinese Renminbi | 7.0608 | 6.97333 | 7.5358 | 8.18575 |
| Croatian Kuna | 7.638 | 7.6137 | 7.6580 | 7.63442 |
| Japanese Yen | 131.07 | 134.314 | 145.23 | 140.306 |
| Vietnamese Dong | 24,435.06 | 24,147.36965 | 25,834.65 | 27,967.22 |
| Canadian Dollars | 1.5116 | 1.41856 | 1.4063 | 1.46614 |
| Indonesian Rupiah | 15,029.50 | 14,861.45152 | 15,103.40 | 15,720.31055 |
| Brazilian Real | 4.3117 | 3.70044 | 3.2207 | 3.12113 |
The most significant accounting policies adopted to prepare the Consolidated Financial Statements as of 31 December 2015 are outlined below.
As provided for in IAS 38, an intangible asset which is purchased or internally generated, is recognised as an asset only if it is identifiable, controllable and future economic benefits are expected and its cost may be measured reliably.
Intangible assets with a definite useful life are measured at acquisition cost or production cost net of amortisation and accumulated impairment losses. Borrowing costs related to the acquisition, construction or production of certain activities that require a significant period of time before they are ready for use or sale (qualifying assets), are capitalised along with the asset.
Amortisation is referred to the expected useful life and commences when the asset is available for use.
In the case of acquisitions of companies, acquired and identifiable assets, liabilities and potential liabilities are recognised at the present value at the date of acquisition. The positive difference between the acquisition cost and the share of the Group at the present value of said assets and liabilities is classified as goodwill and recognised in the financial statements as an intangible asset. Any negative difference ("negative goodwill") is recognised instead in profit and loss at the date of acquisition.
Goodwill is not amortised but tested annually for impairment, or more frequently if specific events or changed circumstances indicate that an asset may be impaired, as provided for in IAS 36 - Impairment of Assets.
After initial recognition, goodwill is recognised at cost net of any accumulated impairment losses. At the disposal of part of or an entire company previously acquired from whose acquisition goodwill arose, the corresponding residual value of goodwill is considered when measuring the capital gain or loss of the disposal.
Development costs of projects for the manufacture of vehicles and engines are recognised as assets only if all of the following conditions are met: the costs can be reliably measured and the technical feasibility of the product, the volumes and expected prices indicate that costs incurred during development will generate future economic benefits. Capitalised development costs include only costs incurred that may be directly attributed to the development process.
Capitalised development costs are amortised on a systematic criterion basis, starting from the beginning of production through the estimated life of the product.
All other development costs are recognised in profit or loss when they are incurred.
As provided for in IAS 38 – Intangible Assets, other intangible assets which are purchased or internally generated are recognised as assets if it is probable that use of the asset will generate future economic benefits and the cost of the asset can be reliably measured.
These assets are recognised at acquisition or production cost and are amortised on a straight line basis over their estimated useful life, if they have a definite useful life.
Other intangible assets recognised following the acquisition of a company are accounted for separately from goodwill, if their present value may be reliably measured.
The amortisation period for an intangible asset with a useful life is revised at least at the end of each reporting period. If the expected useful life of the asset differs from estimates previously made, the amortisation period is changed accordingly.
The amortisation periods of intangible assets are shown below:
| Development costs | 3-5 years |
|---|---|
| Industrial Patent and Intellectual Property Rights | 3-5 years |
| Other | 5 years |
| Trademarks | 15 years |
The Piaggio Group has decided to adopt the cost method on first-time application of the IAS/IFRS, as allowed by IFRS 1. For the measurement of property, plant and equipment, therefore, the preference was not to use the fair value method. Property, plant and equipment were booked at the purchase or production cost and were not revalued. Borrowing costs related to the acquisition, construction or production of certain assets that require a significant period of time before they are ready for use or sale (qualifying assets), are capitalised along with the asset.
Costs incurred after acquisition are capitalised only if they increase the future economic benefits of the asset they refer to. All other costs are recognised in profit or loss when they are incurred. Property, plant and equipment under construction are measured at cost and depreciated starting from the period in which they are put into operation.
Depreciation is determined, on a straight line basis, on the cost of the assets net of their relative residual values, based on their estimated useful life.
The depreciation periods of Plant, property and equipment are summarised below:
| Land | Land is not depreciated. |
|---|---|
| Buildings | 33-60 years |
| Plant and machinery | 5 -15 years |
| Equipment | 4-20 years |
| Other assets | 3-10 years |
Profits and losses arising from the sale or disposal of assets are measured as the difference between the sale revenue and net carrying amount of the asset and are recognised in profit or loss for the period.
Lease contracts for property, plant and machinery where the Group, as lessee, basically undertakes all risks and benefits of the property, are classified as finance leases. Finance leases are capitalised when the lease is established, at the fair value of the leased asset or, if less, at the current value of minimum payments due. The corresponding amount due to the lessor, net of borrowing costs, is recognised as a financial payable. The borrowing cost is recognised in profit or loss over the lease period, so as to produce an interest rate that is constant for the remaining amount due for each period. Property, plant and machinery of finance leases are depreciated during the useful life of the asset or the shorter of the useful life of the asset or the duration of the lease agreement, if there is no reasonably certainty that the Group will obtain the property at the end of the lease period.
Leases in which a significant part of the risks and benefits of ownership are not transferred to the Group as the lessor, are classified as operating leases. Payments made for operating leases (net of any incentives received from the lessee), are recognised in profit or loss on a straight-line basis for the duration of the lease agreement.
The Group has its own production plants even in countries where ownership rights are not allowed. In 2007, on the basis of clarification from IFRIC, the Group reclassified as receivables the rentals paid in advance to obtain the availability of land where its production sites are situated.
At the end of the reporting period, the Group reviews the carrying amount of its tangible and
intangible assets to determine whether there is any indication that these assets may be impaired (impairment test). If there is an indication that an asset may be impaired, the asset's recoverable amount is estimated to determine the amount of the write-down. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the asset's cash generating unit.
The recoverable amount is the higher of an asset's fair value less costs to sell (if available) and its value in use. In measuring the value in use, estimated future cash flows are discounted at their fair value, using a rate which reflects current market changes in the fair value of money and specific risks of the asset.
If the recoverable amount of an asset (or of a cash generating unit) is estimated to be lower than the relative carrying amount, the carrying amount of the asset is reduced to the lower recoverable value. An impairment loss is immediately recognised in profit or loss, unless the asset concerns land or property other than investment property recognised at revalued values. In said case, the loss is recorded in the relative revaluation reserve.
When the conditions that gave rise to an impairment loss no longer exist, the carrying amount of the asset (or of a cash generating unit), except for goodwill, is increased to the new value arising from an estimate of its recoverable amount, up to the net carrying amount applicable to the asset if no impairment loss had been recognised. The reversal of the impairment loss is immediately recognised in profit or loss.
An intangible asset with an indefinite useful life is tested annually for impairment, or more frequently if there is an indication that an asset may be impaired.
As permitted by IAS 40, non instrumental property and buildings held for rental and/or asset appreciation purposes are measured at fair value. Investment properties are eliminated from the financial statements when they are disposed of or when they may not be used over time and future economic benefits from their sales are not expected.
Transactions with affiliates and related parties are indicated in specific sections of the Report on Operations and Notes, referred to herein.
Non-current assets (or disposal groups) that are classified as held for sale are measured at the lower of the carrying amount and fair value less costs to sell.
Non-current assets (and disposal groups) are classified as held for sale when it is expected that their carrying amount will be recovered through a sale rather than through their use in company operations. This condition is only met when the sale is highly probable, the asset (or disposal group) is available for immediate sale and management is committed to a plan to sell, which should take place within 12 months from the date in which this item was classified as held for sale. Financial assets
Financial assets are recognised and deleted from the financial statements based on the negotiation date and are initially measured at fair value, represented by the initial increased amount, with the exception of assets held for negotiation, of costs relative to the transaction.
At subsequent end of reporting periods, the financial assets the Group intends and can retain up until maturity (securities held until maturity) are recognised at amortised cost based on the effective interest rate method, net of reversals for impairment losses.
Financial assets other than those held to maturity are classified as held for trading or for sale, and are measured at fair value at the end of each period. When financial assets are held for trading, profits and losses arising from changes in fair value are recognised in profit or loss for the period; in the case of financial assets held for sale, profits and losses arising from changes in fair value are recognised in the statement of comprehensive income and allocated to a specific reserve of shareholders' equity until sold, recovered or disposed of.
Inventories are recognised as the lower of the purchase or production cost, determined by assigning to products the costs directly incurred in addition to the portion of indirect costs reasonably attributable to the performance of production activities in normal production capacity conditions and the market value at the end of the reporting period.
The purchase or production cost is determined based on the weighted average cost method.
As regards raw materials and work in progress, the market value is represented by the estimated net realisable value of corresponding finished products minus completion costs. as regards finished products, the market value is represented by the estimated net realisable value (price lists minus the costs to sell and distribution costs).
The lower measurement based on market trends is eliminated in subsequent years, if the trends no longer exist.
Obsolete, slow moving and/or excess inventories are impaired in relation to their possible use or future realisation, in a provision for the write-down of inventories.
Trade receivables and other receivables are initially recognised at fair value and subsequently recognised based on the amortised cost method, net of the provisions for write-downs. Losses on receivables are recognised when there is objective evidence that the Group is not able to recover the amount due from the other party on the basis of contractual terms.
When payment of amounts due exceeds standard terms of payment granted to clients, the receivable is discounted.
The Group sells a significant part of its trade receivables through factoring and in particular, sells trade receivables without recourse. Following these sales with the total and unconditional transfer to the transferee of the risks and benefits transferred, the receivables are eliminated from the financial statements.
In the case of transfers in which the risks and benefits are not transferred, the relative receivables remain in the statement of financial position until the transferred sum has been paid. In this case any advance payments collected by the factor are recognised under payables as amounts due to other lenders.
Cash and cash equivalents includes cash on hand, current bank accounts, deposits payable on
demand and other high liquidity short term financial investments, which are readily convertible into cash and not affected by any major risk of a change in value. This item does not include bank overdrafts payable on demand.
Treasury shares are recognised as a reduction of shareholders' equity. The original cost of treasury shares and revenues arising from subsequent sales are recognised as movements of shareholders' equity.
Financial liabilities are recognised based on amounts cashed net of relative transaction costs. After initial recognition, loans are measured at amortised cost and calculated using the effective interest rate. Financial liabilities hedged by derivatives are measured at present value, according to procedures established for hedge accounting applicable to the fair value hedge and cash flow hedge.
On initial recognition, a liability may also be designated at fair value recognised in profit or loss when this eliminates or considerably reduces a lack of uniformity in the measurement or recognition (sometimes defined as "asymmetric accounting") that would otherwise arise from the measurement of an asset or liability or recognition of relative profit and loss on different bases. This fair value designation is exclusively applied to some financial liabilities in currency subject to exchange risk hedging.
Group assets are primarily exposed to financial risks from changes in exchange and interest rates, and commodity prices. The Group also uses derivatives to manage these risks, according to procedures in line with the Group's risk management policies.
Derivatives are initially measured at fair value represented by the initial amount.
Financial derivatives are only used for hedging purposes, against exchange rate and interest rate fluctuations. In line with IAS 39, financial derivatives may qualify for hedge accounting, only when the hedging instrument is formally designated and documented, is expected to be highly effective and this effectiveness can be reliably measured and is highly effective throughout the reporting periods for which it is designated.
When financial instruments may be measured by hedge accounting, the following accounting treatment is adopted:
loss is reversed from other shareholders' equity and recognised in profit or loss in the same period as the hedging transaction. The gain or loss associated with hedging or the part of hedging which is ineffective, is immediately recognised in profit or loss. If the hedging instrument or hedging ceases, but the transaction covered by hedging is not yet realised, profits and losses, recognised in equity, are instead recognised in profit or loss when the transaction takes place. If hedge accounting ceases for a cash flow hedge relationship, gains and losses deferred in other shareholders' equity are recognised immediately in profit or loss.
If hedge accounting cannot be applied, gains and losses from measurement at present value of the financial derivative are immediately recognised in profit or loss.
The Group recognises provisions for risks and charges when it has a legal or implicit obligation to third parties and it is likely that Group resources will have to be used to meet the obligation and when the amount of the obligation itself can be reliably estimated.
Changes in estimates are recognised in profit or loss when the change takes place.
If the effect is considerable, provisions are calculated discounting future cash flows estimated at a discount rate gross of taxes, to reflect current market changes in the fair value of money and specific risks of the liability.
Liabilities relative to employee benefits paid on or after termination of employment for defined benefit plans are determined separately for each plan, based on actuarial hypotheses estimating the amount of future benefits that employees will accrue at the reporting date (the "projected unit credit method"). Liabilities, recognised in the financial statements net of any assets serving the plan, are entered for the period when the right accrues. Liabilities are measured by independent actuaries.
The cost components of defined benefits are recognised as follows:
Termination benefits are recognised at the closest of the following dates: i) when the Group can no longer withdraw the offer of such benefits and ii) when the Group recognises the costs of restructuring.
As provided for in IFRS 2 - Share-Based Payment, the total amount of the present value of stock options at the date of assignment is recognised wholly in profit or loss under employee costs, with a counter entry recognised directly in shareholders' equity, if the grantees of the instruments representing capital become owners of the right on assignment. If a "maturity period" is required, in which certain conditions are necessary before grantees become holders of the right, the cost for payments, determined on the basis of the present value of options at the date of assignment, is recognised under employee costs on a straight line basis for the period between the date of assignment and maturity, with a counter entry directly recognised in shareholders' equity.
Determination of fair value based on the Black Scholes method.
Changes in the present value of options subsequent to the date of assignment do not have any effect on initial recognition.
Deferred taxes are determined based on the temporary differences between the value of the asset and liability and their tax value. Deferred tax assets are measured only to the extent to which it is likely that adequate future taxable sums exist against which the deferred taxes can be used. The carrying amount of deferred taxe assets is reviewed at the end of the reporting period and reduced to the extent to which it is no longer likely that sufficient taxable income exists allowing for all or a portion of said assets to be recovered.
Deferred taxes are determined based on tax rates expected for the period in which the tax assets are realised, considering the rates in effect or which are known to come into effect. Deferred taxes are directly recognised in profit or loss, except for items directly recognised in the statement of comprehensive income, in which case relative deferred taxes are also recognised in the statement of comprehensive income.
In the case of reserves of undistributed profits of subsidiaries and since the Group is able to control distribution times, deferred taxes are allocated for the reserves when distribution is expected in the future.
Deferred tax assets and liabilities are recognised at their net value when applied by the tax authorities and when they may be lawfully offset in the same tax jurisdiction.
Payables are recognised at fair value and then measured based on the amortised cost method.
To guarantee suppliers easier credit conditions, the Group has established factoring agreements, and typically supply chain financing or reverse factoring agreements. Based on the agreements, suppliers may, at their discretion, transfer receivables due from the Group to a lender and collect amounts before the due date.
In some cases, payment terms are extended further in agreements between the supplier and the Group; these extensions may be interest or non-interest bearing.
The Group has established a specific policy to assess the nature of reverse factoring operations. Based on the content of agreements, which differs by area of origin, the Finance function, at a central level, analyses the clauses of agreements in qualitative terms, as well as legal aspects in order to assess regulatory references and the type of transaction assignment (as provided for by IAS 39 AG57 b). In some cases, as payment terms have been extended, quantitative analysis is carried out to verify the materiality of changes in contract terms, based on quantitative tests as required by IAS 39 AG 62.
In this context, relations, for which a primary obligation with the supplier is maintained and any deferment, if granted, does not significantly change payment terms, are still classified as trade liabilities.
Revenues for the sale of vehicles and spare parts are recognised to the extent that it is likely the Group will receive the economic benefits and their amount may be measured reliably. Revenues are recognised when the risks and benefits connected with ownership are transferred to the purchaser, the sale price is agreed or may be determined and payment is reasonably certain. Revenues are represented net of discounts, including, among others, sales incentive programmes and bonuses to customers, as well as taxes directly connected with the sale of the goods. Revenues from the provision of services are recognised when the services are provided with reference to the interim payment certificate.
Revenues also include lease payments recognised on a straight line basis for the duration of the contract.
Equipment grants are recognised in the financial statements when their payment is certain and are recognised in profit or loss based on the useful life of the asset for which the grants have been provided.
Operating grants are recognised in the financial statements, when their payment is certain and are recognised in profit or loss in relation to costs for which the grants have been provided.
Financial income is recognised on an accrual basis and includes interest payable on invested funds, exchange differences receivable and income from financial instruments, when not offset in hedging transactions. Interest receivable is recognised in profit or loss when it matures, considering the actual return.
Borrowing costs are recognised on an accrual basis and include interest payable on financial payables calculated using the effective interest rate method, exchange differences payable and losses on derivative financial instruments. The rate of interest payable of finance lease payments is recognised in profit or loss, using the effective interest rate method.
Dividends recognised in profit or loss, from non-controlling interests, are recognised on an accrual basis, and therefore at the time when, following the resolution to distribute dividends by the subsidiary, the relative right to payment arises.
Taxes represent the sum of current and deferred tax assets and liabilities.
Taxes allocated under statutory accounting circumstances of individual companies included in the scope of consolidation are recognised in the consolidated financial statements, based on taxable income estimated in compliance with national laws in force at the end of the reporting period, considering applicable exemptions and tax receivables owing. Income taxes are recognised in the income statement, with the exception of those taxes relative to items directly deducted from or charged to the statement of comprehensive income.
Taxes are recorded under "Tax payables" net of advances and withheld taxes. Taxes due in the event of the distribution of reserves as withheld taxes recognised in the financial statements of individual Group companies are not allocated, as their distribution is not planned.
In 2013, for a further three years, the Parent Company signed up to the National Consolidated Tax Convention pursuant to articles 117-129 of the Consolidated Income Tax Act (T.U.I.R) of which IMMSI S.p.A. is the consolidating company, and to whom other IMMSI Group companies report to. The consolidating company determines a single global income equal to the algebraic sum of taxable amounts (income or loss) realised by individual companies that opt for this type of group taxation.
The consolidating company recognises a receivable from the consolidated company which is equal to the corporate tax to be paid on the taxable income transferred by the latter. Whereas, in the case of companies reporting tax losses, the consolidating company recognises a payable related to corporate tax on the portion of loss actually used to determine global overall income.
Basic earnings per share are calculated dividing the profit or loss attributable to shareholders of the Parent Company by the weighted average of ordinary shares in circulation during the period. Diluted earnings per share are calculated dividing the profit or loss attributable to shareholders of the Parent Company by the weighted average of ordinary shares in circulation adjusted to take account of the effects of all potential ordinary shares with a dilutive effect. Shares related to the stock option plan are considered as shares that may be potentially issued. The adjustment to make to the number of stock options to calculate the number of adjusted shares is determined by multiplying the number of stock options by the subscription cost and dividing it by the share market price.
The preparation of the financial statements and notes in compliance with IFRS requires management to make estimates and assumptions which have an impact on the values of assets and liabilities and on disclosure regarding contingent assets and liabilities at the end of the reporting period. Actual results could differ from estimates. Estimates are used to measure intangible assets tested for impairment (see § Impairment losses) and to identify provisions for bad debts, for obsolete inventories, amortisation and depreciation, impairment of assets, employee benefits, taxes, restructuring provisions and other allocations and funds. Estimates and assumptions are periodically revised and the effects of any change are immediately recognised in profit or loss.
In the current world economic and financial crisis, assumptions made as to future trends are marked by a considerable degree of uncertainty. Therefore the possibility in the next reporting period of results that differ from estimates cannot be ruled out, and these could require even significant adjustments which at present cannot be predicted or estimated.
The critical measurement processes and key assumptions used by the Group in adopting IFRS and that may have a significant impact on figures in the Consolidated Financial Statements or for which a risk exists that significant differences in value may arise in relation to the carrying amount of assets and liabilities in the future are summarised below.
Non-current assets include Property, Plant and Equipment, Goodwill, Other Intangible Assets, Investment Property, Investments and Other Financial Assets. The Group periodically revises the carrying amount of non-current assets held and used and of assets held for sale, when facts and circumstances make this necessary. This analysis is carried out at least annually for Goodwill, and whenever facts and circumstances make it necessary. Analysis of the recoverability of the carrying amount of Goodwill is generally based on estimates of expected cash flows from the use or sale of the asset and adequate discount rates to calculate the fair value. For investment property, the Group appoints an independent expert at the end of each reporting period (six-monthly or annually) to measure the "Fair value less cost of disposal" based on a market approach. When the carrying amount of a non-current asset is impaired, the Group recognises a write-down equal to the excess between the carrying amount of the asset and its recoverable value through use or sale, determined with reference to cash flows of the most recent company plans.
The Group has deferred tax assets from deductible temporary differences and theoretical tax benefits from losses to be carried forward. In estimating recoverable value, the Group considered the results of the company plan in line with the results used for impairment testing. Net deferred tax assets allocated on this basis refer to temporary differences and tax losses which, to a significant extent, may be recovered over an indefinite period, and are therefore compatible with a context in which an end to current difficulties and uncertainties and an upswing in the economy could take longer than the time frame of the abovementioned estimates.
Provisions for employee benefits and net borrowing costs are measured using an actuarial method that requires the use of estimates and assumptions to determine the net value of the obligation. The actuarial method considers financial parameters such as the discount rate and growth rates of salaries and considers the likelihood of potential future events occurring on the basis of demographic parameters such as relative mortality rates and employee resignations or retirements. The assumptions used for the measurement are explained in section 31 "Retirement funds and employee benefits".
Provisions for bad debts
The provision for bad debts reflects management's estimate of expected losses related to receivables. Based on past experience, provisions are made for expected losses on receivables. Management carefully monitors the quality of receivables and current and forward-looking conditions of the economy and reference markets. Estimates and assumptions are periodically revised and the effects of any change are recognised in profit or loss.
The provision for obsolete inventories reflects management's estimate of impairment losses expected by the Group, determined based on past experience. Anomalous market price trends could have an effect on future inventory write-downs.
Provision for product warranties
At the time of a product's sale, the Group makes provisions relative to estimated costs for the product warranty. This provision is estimated based on historical information about the nature, frequency and average cost of warranty jobs.
Potential liabilities
The Group recognises a liability for ongoing legal disputes when it considers a financial outflow likely and when the amount of the losses arising therefrom may be reasonably estimated. If a financial outflow is possible, but the amount cannot be determined, it is recorded in the notes to the Financial Statements. The Group is subject to legal and tax proceedings concerning complex and difficult legal issues, of varying degrees of uncertainty, including facts and circumstances relative to each case, jurisdiction and different applicable laws. Given the uncertainties concerning these issues, it is hard to predict with certainty the outflow arising from these disputes and it is therefore possible that the value of provisions for legal proceedings and disputes of the Group may vary as a result of future developments in proceedings underway.
The Group monitors the status of ongoing proceedings and consults its legal and tax advisers.
Amortisation and Depreciation
The cost of assets is amortised/depreciated on a straight line basis over their estimated useful life. The economic useful life of Group assets is determined by Directors at the time of purchase; the calculation is based on historical experience gained in years of operations and on knowledge of technological innovations that may make the asset obsolete and no longer economical.
The Group periodically evaluates technological and segment changes, in order to update the remaining useful life. This periodic updating could change the amortisation/depreciation period and therefore amortisation/depreciation charges of future years.
Income tax
The Group is subject to different income tax laws in various jurisdictions. Group tax liabilities are determined based on management valuations referred to transactions of which the tax effect is not certain at the end of the reporting period. The Group recognises the liabilities that could arise from future inspections of tax authorities based on an estimate of taxes that will be due. If the outcome of inspections differs from management's estimates, significant effects on current and deferred taxes could arise.
All amounts in the tables and in these notes have been rounded off to thousands of euros.
As from 1 January 2015, several changes introduced by international accounting standards and interpretations have been applied, none of which have had a significant impact on the Group's financial statements. The main changes are outlined below:
The following amendments and interpretations, applicable as of 1 January 2015, regulate specific cases which are not present within the Group at the end of the reporting period:
should be classified as a financial liability in accordance with IAS 32 "Financial Instruments: Presentation". It also clarified that the principle in question does not apply to joint ventures and joint arrangements covered by IFRS 11;
The following accounting standard is applicable for years commencing on or after 1 January 2016:
On 12 May 2014, the IASB issued amendments to IAS 16 and IAS 38 "Clarification of Acceptable Methods of Depreciation and Amortisation", that consider the adoption of depreciation and amortisation methods based on revenues as unacceptable. As regards intangible assets, this indication is considered as a relative assumption, that may only be overcome in one of the following circumstances: (i) the right to use an intangible asset is related to the realisation of a predefined threshold for revenues to be produced; or (ii) when it may be demonstrated that the realisation of revenues and use of the economic benefits of the asset are strongly related.
At the date of these Financial Statements, competent bodies of the European Union had not completed the approval process necessary for the application of the following accounting standards and amendments:
accounting provisions. The provisions of IFRS 9 will be applicable for years commencing on or after 1 January 2018.
As regards the first point, the amendment clarifies that the financial statements need not be restated if an asset or group of assets available for sale was reclassified as "held for distribution", or vice versa.
With reference to IFRS 7, the amendment states that if an entity transfers a financial asset on terms that allow the de-recognition of the asset, information must be disclosed concerning the entity's involvement in the transferred asset.
The proposed amendment to IAS 19 makes it clear that, in determining the discount rate of the obligation arising following the termination of the employment relationship, it is the currency in which the obligations are denominated that counts, rather than the country in which they arise.
The proposed amendment to IAS 34 requires cross-references between information reported in the interim financial statements and the related disclosure.
On 18 December 2014, the IASB issued the amendment to IAS 1 "Presentation of Financial Statements". The amendment to the standard concerned, applicable from 1 January 2016, seeks to provide clarification regarding the aggregation or disaggregation of items if their amount is relevant or "material". In particular, the amended standard requires there to be no aggregation of items with different characteristics or disaggregation that hampers disclosure or interpretation of the financial statements. Moreover, the amendment requires the presentation of headings, partial results and additional items, also separating the items listed in section 54 (Statement of Financial Position) and 82 (Income Statement) of IAS 1, when this presentation is significant for the purposes of understanding the statement of financial position and financial position and performance of the entity.
On 18 December 2014, the IASB amended IFRS 10 "Consolidated Financial Statements", and IAS 28 "Investments in associates and joint ventures". Regarding the first point, the amendment clarifies that the exemption of the presentation of consolidated financial statements applies to a parent company that is controlled by an investment company, when the latter measures all its subsidiaries at fair value.
IAS 28 was amended as regards investments in associates or joint ventures that are "investment entities": these investments may be recognised with the equity method or at fair value.
These amendments apply from 1 January 2016.
The Group will adopt these new standards, amendments and interpretations, based on the application date indicated, and will evaluate potential impact, when the standards, amendments and interpretations are endorsed by the European Union.
The organisational structure of the Group is based on 3 Geographical Segments, involved in the production and sale of vehicles, relative spare parts and assistance in areas under their responsibility: EMEA and the Americas, India and Asia Pacific 2W. Operating segments are identified by management, in line with the management and control model used.
In particular, the structure of disclosure corresponds to the structure of periodic reporting analysed by the Chairman and Chief Executive Officer for business management purposes.
Each Geographical Segment has production sites and a sales network dedicated to customers in the relative segment. Specifically:
Central structures and development activities currently dealt with by EMEA and the Americas, are handled by individual segments.
| EMEA and | |||||
|---|---|---|---|---|---|
| Americas | India | Asia Pacific 2W | Total | ||
| 2015 | 218.9 | 212.6 | 88.1 | 519.7 | |
| 2014 | 219.5 | 229.2 | 97.8 | 546.5 | |
| Change | (0.5) | (16.5) | (9.7) | (26.8) | |
| Sales volumes (unit/000) | Change % | -0.2% | -7.2% | -9.9% | -4.9% |
| 2015 | 745.4 | 353.7 | 196.2 | 1,295.3 | |
| 2014 | 699.5 | 324.7 | 189.1 | 1,213.3 | |
| Turnover (in millions of | Change | 45.9 | 29.0 | 7.1 | 82.0 |
| euros) | Change % | 6.6% | 8.9% | 3.8% | 6.8% |
| 2015 | 218.7 | 83.4 | 72.3 | 374.4 | |
| 2014 | 224.8 | 72.1 | 67.8 | 364.7 | |
| Change | (6.1) | 11.3 | 4.5 | 9.7 | |
| Gross margin (in millions of euros) |
Change % | -2.7% | 15.7% | 6.7% | 2.7% |
| 2015 | 161.8 | ||||
| 2014 | 159.3 | ||||
| Change | 2.4 | ||||
| EBITDA (in millions of euros) | Change % | 1.5% | |||
| 2015 | 56.7 | ||||
| 2014 | 69.7 | ||||
| Change | (13.0) | ||||
| EBIT (in millions of euros) | Change % | -18.6% | |||
| 2015 | 11.9 | ||||
| 2014 | 16.1 | ||||
| Net profit (in millions of | Change | (4.2) | |||
| euros) | Change % | -26.1% | |||
| 2015 | 591.1 | 143.6 | 167.7 | 902.4 | |
| 2014 | 581.5 | 156.5 | 168.0 | 905.9 | |
| Capital employed (in millions | Change | 9.6 | (12.8) | (0.3) | (3.5) |
| of euros) | Change % | 1.7% | -8.2% | -0.2% | -0.4% |
| 2015 | 947.6 | 256.7 | 217.0 | 1,421.3 | |
| 2014 | 957.2 | 268.0 | 212.6 | 1,437.8 | |
| Of which receivable (in | Change | (9.6) | (11.3) | 4.4 | (16.5) |
| millions of euros) | Change % | -1.0% | -4.2% | 2.1% | -1.1% |
| 2015 | 356.5 | 113.1 | 49.3 | 518.9 | |
| 2014 | 375.8 | 111.6 | 44.6 | 532.0 | |
| Of which payable (in millions | Change | (19.2) | 1.5 | 4.7 | (13.1) |
| of euros) | Change % | -5.1% | 1.3% | 10.5% | -2.5% |
Revenues are shown net of premiums recognised to customers (dealers).
This item does not include transport costs, which are recharged to customers (€/000 22,854) and invoiced advertising cost recoveries (€/000 4,083), which are posted under other operating income.
The revenues for disposals of Group core business assets essentially refer to the marketing of vehicles and spare parts on European and non-European markets.
The breakdown of revenues by geographical segment is shown in the following table:
| 2015 | 2014 | Changes | |||||
|---|---|---|---|---|---|---|---|
| Amount | % | Amount | % | Amount | % | ||
| In thousands of euros | |||||||
| EMEA and Americas | 745,364 | 57.5 | 699,511 | 57.7 | 45,854 | 6.6 | |
| India | 353,709 | 27.3 | 324,679 | 26.8 | 29,030 | 8.9 | |
| Asia Pacific 2W | 196,213 | 15.1 | 189,082 | 15.6 | 7,131 | 3.8 | |
| Total | 1,295,286 | 100.0 | 1,213,272 | 100.0 | 82,014 | 6.8 |
In 2015, net sales revenues went up by 6.8% compared to the previous year. For a more detailed analysis of trends in individual geographic segments, see comments in the Report on Operations.
These totalled €/000 770,297 compared to €/000 707,515 in 2014.
The percentage of costs accounting for net sales went up, from 58.3% in 2014 to 59.5% in the current period. The item includes €/000 25,616 (€/000 20,674 in 2014) for purchases of scooters from the Chinese subsidiary Zongshen Piaggio Foshan, that are sold on European and Asian markets.
The following table details the content of this financial statement item:
| 2015 | 2014 | Change | |
|---|---|---|---|
| In thousands of euros | |||
| Raw, ancillary materials, consumables and goods | 746,041 | 726,117 | 19,924 |
| Change in inventories of raw, ancillary materials, consumables and goods |
9,329 | (12,227) | 21,556 |
| Change in work in progress of semifinished and finished products |
14,927 | (6,375) | 21,302 |
| Total costs for purchases | 770,297 | 707,515 | 62,782 |
Below is a breakdown of this item:
| 2015 | 2014 | Change | |
|---|---|---|---|
| In thousands of euros | |||
| Employee costs | 17,743 | 16,188 | 1,555 |
| External maintenance and cleaning costs | 8,689 | 8,243 | 446 |
| Energy and telephone costs | 17,211 | 17,493 | (282) |
| Postal expenses | 960 | 972 | (12) |
| Commissions payable | 1,060 | 1,237 | (177) |
| Advertising and promotion | 31,388 | 23,330 | 8,058 |
| Technical, legal and tax consultancy and services | 18,207 | 15,494 | 2,713 |
| Company boards operating costs | 2,147 | 2,261 | (114) |
| Insurance | 3,732 | 4,064 | (332) |
| Insurance from related parties | 49 | 49 | 0 |
| Third party work | 15,048 | 12,657 | 2,391 |
| Outsourced services | 13,706 | 13,280 | 426 |
| Transport costs (vehicles and spare parts) | 33,460 | 32,958 | 502 |
| Internal shuttle services | 509 | 661 | (152) |
| Sundry commercial expenses | 12,478 | 10,647 | 1,831 |
| Expenses for public relations | 3,616 | 3,740 | (124) |
| Product warranty costs | 8,128 | 8,652 | (524) |
| Quality-related events | 10,836 | 4,214 | 6,622 |
| Bank costs and factoring charges | 5,345 | 5,197 | 148 |
| Misc services provided in the business year | 8,555 | 8,713 | (158) |
| Other services | 4,850 | 5,196 | (346) |
| Services from related parties | 2,314 | 2,221 | 93 |
| Lease and rental costs | 14,371 | 13,726 | 645 |
| Costs for leases and rentals of related parties | 1,490 | 1,445 | 45 |
| Total costs for services, leases and rental costs | 235,892 | 212,638 | 23,254 |
The increase recorded was partly due to higher advertising and promotion costs and partly to costs incurred in the year for quality incidents.
Costs for leases and rentals include lease rentals for business properties of €/000 6,829, as well as lease payments for car hire, computers and photocopiers.
The item "Other" includes costs for temporary work of €/000 942.
Employee costs include €/000 4,613 relating to costs for redundancy plans mainly for the Pontedera and Noale production sites.
| 2015 | 2014 | Change | |
|---|---|---|---|
| In thousands of euros | |||
| Salaries and wages | 157,085 | 154,587 | 2,498 |
| Social security contributions | 42,492 | 42,722 | (230) |
| Termination benefits | 8,350 | 8,374 | (24) |
| Other costs | 5,399 | 5,830 | (431) |
| Total | 213,326 | 211,513 | 1,813 |
A breakdown of the headcount by actual number and average number is shown below20:
| Average number | |||
|---|---|---|---|
| 2015 | 2014 | Change | |
| Level | |||
| Senior management | 105.3 | 110.9 | (5.6) |
| Middle management | 579.3 | 553.9 | 25.4 |
| White collars | 2,011.7 | 2,121.7 | (110.0) |
| Blue collars with supervisory | 4,866.0 | 5,029.8 | (163.8) |
| duties/blue collars Total |
7,562.3 | 7,816.3 | (254.0) |
| Number as of | ||||||
|---|---|---|---|---|---|---|
| 31 December 2015 | 31 December 2014 | Change | ||||
| Level | ||||||
| Senior management | 104 | 110 | (6) | |||
| Middle management | 573 | 552 | 21 | |||
| White collars | 1,933 | 2,102 | (169) | |||
| Blue collars with supervisory duties/blue collars |
4,443 | 4,746 | (303) | |||
| Total | 7,053 | 7,510 | (457) |
Average employee numbers were affected by seasonal workers in the summer (on fixed-term employment contracts).
In fact the Group uses fixed-term employment contracts to handle typical peaks in demand in the summer months.
20 In 2015, criteria identifying professional categories in India were updated, to bring them further in line with the Group's criteria, with 2014 data also being reclassified.
In 2015, the Group reduced employee numbers, continuing its restructuring, streamlining and organisational cutbacks. As of 31 December 2015, Group employees totalled 7,053, down by 457 (- 6.1%) compared to 31 December 2014.
| As of | As of | ||||
|---|---|---|---|---|---|
| 31/12/2014 | Incoming | Leavers Relocations | 31/12/2015 | ||
| Level | |||||
| Senior management | 110 | 3 | (11) | 2 | 104 |
| Middle management | 552 | 38 | (54) | 37 | 573 |
| White collars | 2,102 | 154 | (283) | (40) | 1,933 |
| Blue collars | 4,746 | 3,025 | (3,329) | 1 | 4,443 |
| Total (*) | 7,510 | 3,220 | (3,677) | 0 | 7,053 |
| (*) of which fixed-term contracts | 1,162 | 2,967 | (3,109) | (17) | 1,003 |
Changes in employee numbers in the two periods are compared below21:
Distribution of the workforce by geographic segment as of 31 December 2015
21 In 2015, criteria identifying professional categories in India were updated, to bring them further in line with the Group's criteria, with 2014 data also being reclassified.
Amortisation and depreciation for the period, divided by category, is shown below:
| 2015 | 2014 | Change | |
|---|---|---|---|
| In thousands of euros | |||
| Property, plant and equipment | |||
| Buildings | 5,199 | 4,974 | 225 |
| Plant and machinery | 22,073 | 19,411 | 2,662 |
| Industrial and commercial equipment | 14,454 | 14,929 | (475) |
| Other assets | 3,797 | 2,105 | 1,692 |
| Total depreciation of property, plant and | |||
| equipment | 45,523 | 41,419 | 4,104 |
| Write-down of property, plant and equipment | 29 | 291 | (262) |
| Total depreciation of property, plant and | |||
| equipment and impairment costs | 45,552 | 41,710 | 3,842 |
| 2015 | 2014 | Change | |
| In thousands of euros Intangible assets |
|||
| Development costs | 32,680 | 26,754 | 5,926 |
| Industrial Patent and Intellectual Property Rights | 21,233 | 15,500 | 5,733 |
| Concessions, licences, trademarks and similar rights | 4,823 | 4,823 | 0 |
| Other | 755 | 857 | (102) |
| Total amortisation of intangible fixed assets | 59,491 | 47,934 | 11,557 |
| Write-down of intangible assets | 0 | ||
| Total amortisation of intangible assets and | |||
| impairment costs | 59,491 | 47,934 | 11,557 |
As set out in more detail in the paragraph on intangible assets, as from 1 January 2004, goodwill is no longer amortised, but tested annually for impairment.
The impairment test carried out as of 31 December 2015 confirmed the full recoverability of the amounts recorded in the financial statements.
This item consists of:
| 2015 | 2014 | Change | |
|---|---|---|---|
| In thousands of euros | |||
| Operating grants | 3,487 | 2,823 | 664 |
| Increases in fixed assets from internal work | 47,047 | 39,103 | 7,944 |
| Other revenue and income: | |||
| - Rent receipts | 3,706 | 650 | 3,056 |
| - Capital gains on the disposal of assets | 259 | 899 | (640) |
| - Sale of miscellaneous materials | 1,056 | 1,378 | (322) |
| - Recovery of transport costs | 22,854 | 22,244 | 610 |
| - Recovery of advertising costs | 4,083 | 3,799 | 284 |
| - Recovery of sundry costs | 3,672 | 3,832 | (160) |
| - Compensation | 779 | 1,099 | (320) |
| - Compensation for quality-related events | 2,804 | 2,583 | 221 |
| - Licence rights and know-how | 3,104 | 3,072 | 32 |
| - Sponsorship | 4,059 | 2,845 | 1,214 |
| - Profit from changes in the fair value of investment property | 4,615 | (4,615) | |
| - Other income | 9,270 | 8,181 | 1,089 |
| Total other operating income | 106,180 | 97,123 | 9,057 |
The increase is mainly due to the capitalisation of development projects for new products, greater revenues from the rental of racing bikes to teams taking part in various championships and to the growth in sponsorships.
In 2014, this item included "profit from changes in the fair value of investment property" referred to the valuation of the Spanish site of Martorelles for €/000 4,615.
The item contributions includes €/000 2,344 for state and EU contributions for research projects. The grants are recognised in profit or loss, with reference to the amortisation and depreciation of capitalised costs for which the grants were received. This item also includes contributions for exports (€/000 1,143) received from the Indian subsidiary.
This item consists of:
| 2015 | 2014 | Change | |
|---|---|---|---|
| In thousands of euros | |||
| Provision for future risks | 15 | 190 | (175) |
| Provisions for product warranties | 8,667 | 8,501 | 166 |
| Duties and taxes not on income | 4,448 | 3,933 | 515 |
| Various subscriptions | 1,059 | 1,060 | (1) |
| Capital losses from disposal of assets | 8 | 76 | (68) |
| Miscellaneous expenses | 3,472 | 3,028 | 444 |
| Losses on receivables | 88 | 281 | (193) |
| Total sundry operating costs | 9,075 | 8,378 | 697 |
| Write-down of current receivables | 2,441 | 2,355 | 86 |
| Total | 20,198 | 19,424 | 774 |
The increase is mainly due to higher duties and taxes other than income tax and to miscellaneous expenses.
Net income from investments comprise the following:
Below is the breakdown of borrowing costs and income:
| 2015 | 2014 | Change | |
|---|---|---|---|
| In thousands of euros | |||
| Income: | |||
| - Interest receivable from clients | 62 | 59 | 3 |
| - Bank and post office interest payable | 330 | 434 | (104) |
| - Interest payable on financial receivables | 95 | 299 | (204) |
| - Income from fair value measurements | 1 | 701 | (700) |
| - Other | 390 | 113 | 277 |
| Total financial income | 878 | 1,606 | (728) |
| Expenses: | |||
| - Interest payable on bank accounts | 5,407 | 5,258 | 149 |
| - Interest payable on debenture loans - Interest payable on bank loans |
15,498 12,603 |
18,548 13,827 |
(3,050) (1,224) |
| - Interest payable to other lenders | 2,212 | 2,605 | (393) |
| - Interest to suppliers | 785 | 523 | 262 |
| - Cash discounts to clients | 471 | 445 | 26 |
| - Bank charges on loans | 1,206 | 1,707 | (501) |
| - Income from fair value measurements | 649 | 680 | (31) |
| - Borrowing costs from discounting back | |||
| termination and termination benefits | 873 | 1,422 | (549) |
| - Interest payable on lease agreements | 13 | 141 | (128) |
| - Other | 233 | 142 | 91 |
| Total borrowing costs | 39,950 | 45,298 | (5,348) |
| Costs capitalised on property, plant and equipment | 1,405 | 315 | 1,090 |
| Costs capitalised on intangible assets | 1,069 | 1,479 | (410) |
| Total Capitalised Costs | 2,474 | 1,794 | 680 |
| Total net borrowing costs | 37,476 | 43,504 | (6,028) |
| Exchange gains | 18,905 | 12,350 | 6,555 |
| Exchange losses Total net exchange gains/(losses) |
19,209 (304) |
13,415 (1,065) |
5,794 761 |
| Net financial income (borrowing costs) | (36,902) | (42,963) | 6,061 |
The balance of financial income (charges) in 2015 was negative (- €/000 36,902), less than the previous year (- €/000 42,963). The lower financial charges are due to the fall in the cost of indebtedness on account of refinancing operations carried out during 2014, which resulted in a non-recurrent cost of € 3.6 million in the same period, to a greater capitalisation of interest and fewer charges from currency management, which more than offset the effects of the higher level of average indebtedness for the period.
The average rate used during 2015 for the capitalisation of borrowing costs (because of general loans), was equal to 7.05% (6.20% in 2014).
Interest on the debenture loan refers to €/000 134 (€/000 156 in 2014) to the parent company Omniaholding.
Interest payable to other lenders mainly refers to interest payable to factoring companies and banks for the sale of trade receivables. This item includes €/000 23 (€/000 232 in 2014) of interest payable to Chinese subsidiary Zongshen Piaggio Foshan.
The item "Income taxes" is detailed below:
| 2015 | 2014 | Change | |
|---|---|---|---|
| In thousands of euros | |||
| Current taxes | 20,327 | 21,968 | (1,641) |
| Taxes relative to previous years | (459) | 518 | (977) |
| Deferred tax liabilities | (11,632) | (11,059) | (573) |
| Non-recurrent costs | (977) | 977 | |
| Total taxes | 8,236 | 10,450 | (2,214) |
Taxes for 2015 were equal to €/000 8,236, and account for 41.0% of profit before tax. The item current taxes includes income from the Consolidated Tax Convention of €/000 655.
In 2014, taxes were equal to €/000 10,450 and accounted for 39.4% of profit before tax.
| 2015 | 2014 | |
|---|---|---|
| In thousands of euros | ||
| Profit before tax | 20,103 | 26,514 |
| Theoretical rate | 27.50 | 27.50% |
| Theoretical income taxes | 5,528 | 7,291 |
| Tax effect arising from the difference between foreign tax rates and the theoretical rate Effect arising from changes in Profit before tax and deferred |
7,705 | 5,876 |
| taxes | (7,490) | (8,265) |
| Taxes on income generated abroad | 3,292 | 3,343 |
| Expenses (income) from the Consolidated Tax Convention | (655) | (125) |
| Indian tax on the distribution of dividends | 2,997 | 2,104 |
| Regional production tax and other local taxes | 252 | 3,587 |
| Non-recurrent costs (income) | (977) | |
| Other differences | (3,394) | (2,384) |
| Income taxes recognised in the financial statements | 8,236 | 10,450 |
Reconciliation in relation to the theoretical rate is shown below:
Theoretical tax rates were determined applying the corporate tax rate in effect in Italy (27.5%) to profit before tax. The effect arising from the rate of regional production tax and other taxes paid abroad was determined separately, as these taxes are not calculated on the basis of profit before tax.
At the end of the reporting period, there were no gains or losses from assets held for disposal or sale.
Earnings per share are calculated as follows:
| 2015 | 2014 | ||
|---|---|---|---|
| Net profit | €/000 | 11,867 | 16,064 |
| Earnings attributable to ordinary shares | €/000 | 11,867 | 16,064 |
| Average number of ordinary shares in circulation | 361,207,606 | 361,396,654 | |
| Earnings per ordinary share | € | 0.033 | 0.044 |
| Adjusted average number of ordinary shares | 361,207,606 | 361,692,731 | |
| Diluted earnings per ordinary share | € | 0.033 | 0.044 |
The potential effects deriving from stock option plans, which ended in late 2014, were considered when calculating diluted earnings per share for 2014.
The table below shows the breakdown of intangible assets as of 31 December 2015 and 31 December 2014, as well as movements during the period.
| Development | Patent | Concessions, licences and |
Assets under development and |
||||
|---|---|---|---|---|---|---|---|
| costs | rights | trademarks | Goodwill | Other | advances | Total | |
| In thousands of euros | |||||||
| As of 1 January 2014 | |||||||
| Historical cost | 125,623 | 230,024 | 149,074 | 557,322 | 7,010 | 32,293 | 1,101,346 |
| Provisions for write-down | |||||||
| Accumulated amortisation | (56,513) | (187,933) | (86,385) | (110,382) | (5,605) | (446,818) | |
| Net carrying amount | 69,110 | 42,091 | 62,689 | 446,940 | 1,405 | 32,293 | 654,528 |
| 2014 | |||||||
| Investments | 13,239 | 25,316 | 142 | 19,568 | 58,265 | ||
| Put into operation in the period | 14,190 | 5,238 | 256 | (19,684) | |||
| Amortisation | (26,754) | (15,500) | (4,823) | (857) | (47,934) | ||
| Disposals | (55) | (4) | (59) | ||||
| Write-downs | |||||||
| Exchange differences | 2,879 | 174 | 116 | 366 | 3,535 | ||
| Other changes | (7,345) | 7,407 | (43) | 19 | |||
| Total movements for the year | (3,846) | 22,631 | (4,823) | 0 | (386) | 250 | 13,826 |
| As of 31 December 2014 | |||||||
| Historical cost | 134,222 | 270,415 | 149,074 | 557,322 | 7,167 | 32,543 | 1,150,743 |
| Provisions for write-down | |||||||
| Accumulated amortisation | (68,958) | (205,693) | (91,208) | (110,382) | (6,148) | (482,389) | |
| Net carrying amount | 65,264 | 64,722 | 57,866 | 446,940 | 1,019 | 32,543 | 668,354 |
| 2015 | |||||||
| Investments | 16,193 | 29,980 | 116 | 17,539 | 63,828 | ||
| Put into operation in the period | 19,781 | 725 | 26 | (20,532) | |||
| Amortisation | (32,680) | (21,233) | (4,823) | (755) | (59,491) | ||
| Disposals | (4) | (44) | (7) | (55) | |||
| Write-downs | |||||||
| Exchange differences | 1,647 | 116 | 66 | 133 | 1,962 | ||
| Other changes | (2,827) | 2,249 | (34) | (612) | |||
| Total movements for the year | 2,110 | 11,793 | (4,823) | 0 | (581) | (2,867) | 5,632 |
| As of 31 December 2015 | |||||||
| Historical cost | 171,056 | 303,888 | 149,074 | 557,322 | 7,304 | 29,676 | 1,218,320 |
| Provisions for write-down | |||||||
| Accumulated amortisation | (103,682) | (227,373) | (96,031) | (110,382) | (6,866) | (544,334) | |
| Net carrying amount | 67,374 | 76,515 | 53,043 | 446,940 | 438 | 29,676 | 673,986 |
| Value as of 31 December 2015 | Value as of 31 December 2014 | Change | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Under development |
Under development |
Under development |
|||||||
| For the | and | For the | and | For the | and | ||||
| period | advances | Total | period | advances | Total | period | advances | Total | |
| In thousands of euros | |||||||||
| Development costs | 67,374 | 27,193 | 94,567 | 65,264 | 31,631 | 96,895 | 2,110 | (4,438) | (2,328) |
| Patent rights | 76,515 | 2,472 | 78,987 | 64,722 | 887 | 65,609 | 11,793 | 1,585 | 13,378 |
| Concessions, licences | |||||||||
| and trademarks | 53,043 | 53,043 | 57,866 | 57,866 | (4,823) | 0 | (4,823) | ||
| Goodwill | 446,940 | 446,940 | 446,940 | 446,940 | 0 | 0 | 0 | ||
| Other | 438 | 11 | 449 | 1,019 | 25 | 1,044 | (581) | (14) | (595) |
| Total | 644,310 | 29,676 | 673,986 | 635,811 | 32,543 | 668,354 | 8,499 | (2,867) | 5,632 |
The breakdown of intangible assets in operation and under development is as follows:
Intangible assets went up overall by €/000 5,632 mainly referring to investments in the year which were only partially balanced by amortisation for the period.
Increases mainly refer to the capitalisation of development costs for new products and new engines, as well as the purchase of software.
During 2015, borrowing costs for €/000 1,069 were capitalised.
Development expenditure for new projects capitalised in 2015 refers to the study of new vehicles and new engines (two-/three-/four-wheeler) which will feature as the top products in the 2015- 2017 range.
Borrowing costs attributable to the development of products which require a considerable period of time to be realised are capitalised as a part of the cost of the actual assets. Development costs included under this item are amortised on a straight line basis over a period of 3 to 5 years, in consideration of their remaining useful life.
During 2015, development expenditure amounting to €/000 15,400 was directly recognised in profit or loss.
Patents and know-how mainly refer to Vespa vehicles, the GP 800, MP3, RSV4, the hybrid MP3 and 1200 cc engine. Increases for the period mainly refer to new calculation, design and production technologies and methodologies developed by the Group for main new products from the 2015- 2017 range.
Industrial patent and intellectual property rights costs are amortised over three years.
The item Concessions, Licences, Trademarks and similar rights, is broken down as follows:
| As of 31 December 2015 | As of 31 December 2014 | Change | |
|---|---|---|---|
| In thousands of euros | |||
| Guzzi trademark | 17,875 | 19,500 | (1,625) |
| Aprilia trademark | 35,123 | 38,316 | (3,193) |
| Minor trademarks | 45 | 50 | (5) |
| Total Trademark | 53,043 | 57,866 | (4,823) |
The Aprilia and Guzzi trademarks are amortised over a period of 15 years, expiring in 2026.
Goodwill derives from the greater value paid compared to the corresponding portion of the subsidiaries shareholders' equity at the time of purchase, less the related accumulated amortisation until 31 December 2003.
Goodwill was attributed to cash generating units.
| EMEA and AMERICAS | INDIA | ASIA PACIFIC 2W | TOTAL | |
|---|---|---|---|---|
| In thousands of euros | ||||
| 31 12 2015 | 305,311 | 109,695 | 31,934 | 446,940 |
| 31 12 2014 | 305,311 | 109,695 | 31,934 | 446,940 |
The organisational structure of the Group is based on 3 Geographic Segments (CGUs), involved in the production and sale of vehicles, relative spare parts and assistance in areas under their responsibility: EMEA and the Americas, India and Asia Pacific 2W. Each Geographical Segment has production sites and a sales network dedicated to customers in the relative segment. Central structures and development activities currently dealt with by EMEA and the Americas, are handled by individual CGUs.
As specified in the section on accounting standards, from 1 January 2004 goodwill is no longer amortised, but is tested annually or more frequently for impairment if specific events or changed circumstances indicate the possibility of it having been impaired, in accordance with the provisions of IAS 36 Impairment of Assets (impairment test).
The possibility of reinstating booked values is verified by comparing the net carrying amount of individual cash generating units with the recoverable value (value in use). This recoverable value is represented by the present value of future cash flows which, it is estimated, will be derived from the continual use of goods referring to cash generating units and by the terminal value attributable to these goods.
The recoverability of goodwill is verified at least once per year (as of 31 December), even in the absence of indicators of impairment losses.
The main assumptions used by the Group to determine future financial flows, relative to a fouryear period, and the consequent recoverable value (value in use) refer to:
a a hypothesis of estimated financial flows over a four-year period, inferred from budget data for 2016 supplemented by forecast data for 2017-2019, approved by the Board of Directors of the Company, along with an impairment test performed on 10 March 2016;
b. the WACC discount rate.
c. in addition to the period, a growth rate (g rate) has been estimated.
In particular, for discount cash flows, the Group has adopted a discount rate (WACC) which differs based on different cash generating units. This reflects market valuations of the fair value of money and takes account of specific risks of activities and the geographic segment in which the cash generating unit operates.
In the future cash flows discounting model, a terminal value is entered at the end of the cash flow projection period, to reflect the residual value each cash-generating unit should produce. The terminal value represents the current value, at the last year of the projection, of all subsequent cash flows calculated as perpetual income, and was determined using a growth rate (g rate) which differed by CGU, to reflect the different growth potentials of each CGU.
| EMEA and Americas | Asia Pacific 2W | India | |
|---|---|---|---|
| 2014 | |||
| WACC | 6.13% | 9.53% | 10.97% |
| G | 1.0% | 2.0% | 2.0% |
| Growth rate during the | |||
| Plan period | 9.8% | 10.7% | 12.5% |
| 2015 | |||
| WACC | 5.74% | 9.01% | 10.60% |
| G | 1.0% | 2.0% | 2.0% |
| Growth rate during the | |||
| Plan period | 8.7% | 10.8% | 10.2% |
Growth rates used in the Plan are supported by sector analyses and studies. The reduction in the WACC compared to the previous year is mainly due to the reduction in borrowing costs. This rate was determined based on the previous year.
Analyses did not identify any impairment losses. Therefore no write-down was recognised in consolidated data as of 31 December 2015.
In addition, and on the basis of information in the document produced jointly by the Bank of Italy, Consob and Isvap (the insurance watchdog) no. 2 of 6 February 2009, the Group conducted sensitivity analysis of test results in relation to changes in basic assumptions (use of the growth rate in producing the terminal value and discount rate) which affect the value in use of cash generating units. In the case of a positive or negative change of 0.5% of the WACC and G used, analyses would not identify impairment losses.
In all cases, the value in use of the Group was higher than the net carrying amount tested.
Given that the recoverable value was estimated, the Group cannot ensure that there will be no impairment losses of goodwill in future financial periods.
Given the current market weakness, the various factors used in processing estimates could require revision; the Piaggio Group will constantly monitor these factors as well as the existence of impairment losses.
This item mainly refers to costs incurred by Piaggio Vietnam.
The table below shows the breakdown of plant, property and equipment as of 31 December 2015 and 31 December 2014, as well as movements during the period.
| Land | Buildings | Plant and machinery |
Equipment | Other assets |
Assets under construction and advances |
Total | |
|---|---|---|---|---|---|---|---|
| In thousands of euros | |||||||
| As of 1 January 2014 | |||||||
| Historical cost | 28,040 | 153,593 | 398,588 | 492,649 | 44,842 | 27,640 | 1,145,352 |
| Provisions for write down |
(362) | (1,409) | (46) | (1,817) | |||
| Accumulated depreciation |
(51,564) | (287,752) | (462,357) | (39,095) | (840,768) | ||
| Net carrying amount | 28,040 | 102,029 | 110,474 | 28,883 | 5,701 | 27,640 | 302,767 |
| 2014 Investments |
2,625 | 4,592 | 8,182 | 1,966 | 19,263 | 36,628 | |
| Put into operation in the period |
1,070 | 11,250 | 9,283 | 623 | (22,226) | ||
| Depreciation | (4,974) | (19,411) | (14,929) | (2,105) | (41,419) | ||
| Disposals | (11) | (185) | (191) | (116) | (362) | (865) | |
| Write-downs | (167) | (106) | (18) | (291) | |||
| Exchange differences | 1,724 | 7,994 | 4 | 295 | 784 | 10,801 | |
| Other changes | 43 | (41) | 267 | (356) | 27 | (60) | |
| Total movements for the year |
|||||||
| 43 | 393 | 4,340 | 1,887 | 672 | (2,541) | 4,794 | |
| As of 31 December | |||||||
| 2014 | |||||||
| Historical cost Provisions for write |
28,083 | 161,628 | 425,865 | 507,011 | 45,918 | 25,099 | 1,193,604 |
| down | (483) | (1,515) | (64) | (2,062) | |||
| Accumulated | |||||||
| depreciation | (59,206) | (310,568) | (474,726) | (39,481) | (883,981) | ||
| Net carrying amount | 28,083 | 102,422 | 114,814 | 30,770 | 6,373 | 25,099 | 307,561 |
| 2015 Investments |
1,005 | 2,493 | 5,230 | 3,256 | 26,078 | 38,062 | |
| Put into operation in the | |||||||
| period | 1,733 | 12,872 | 2,618 | 714 | (17,937) | ||
| Depreciation Disposals |
(5,199) | (22,073) | (14,454) | (3,797) | (45,523) | ||
| Write-downs | (10) | (118) | (44) | (157) (29) |
(329) (29) |
||
| Exchange differences | 1,600 | 4,961 | 3 | 184 | 497 | 7,245 | |
| Other changes | (247) | 847 | 21 | 621 | |||
| Total movements for | |||||||
| the year | 0 | (1,118) | (1,018) | (6,647) | 192 | 8,638 | 47 |
| As of 31 December | |||||||
| 2015 | |||||||
| Historical cost | 28,083 | 166,102 | 444,581 | 512,246 | 47,967 | 33,737 | 1,232,716 |
| Provisions for write |
|||||||
| down Accumulated |
(483) | (1,521) | (93) | (2,097) | |||
| depreciation | (64,798) | (330,302) | (486,602) | (41,309) | (923,011) | ||
| Net carrying amount | 28,083 | 101,304 | 113,796 | 24,123 | 6,565 | 33,737 | 307,608 |
| Total | 104,677 | 106,074 | (1,397) | |||||
|---|---|---|---|---|---|---|---|---|
| Industrial buildings refer to Group production facilities in Pontedera (Pisa), Noale (Venice), | ||||||||
| Mandello del Lario (Lecco), Baramati (India) and Vinh Phuc (Vietnam). The item also includes a |
2015
As of 31 December
In thousands of euros Industrial buildings 100,418 101,462 (1,044) Ancillary buildings 464 455 9 Light constructions 422 505 (83) Assets under construction 3,373 3,652 (279)
As of 31 December
Property, plant and equipment mainly refer to Group production facilities in Pontedera (Pisa), Noale (Venice), Mandello del Lario (Lecco), Baramati (India) and Vinh Phuc (Vietnam).
The increases mainly refer to moulds for new vehicles launched during the period, as well as the new painting plant for two-wheeler products at Pontedera.
Borrowing costs attributable to the construction of products which require a considerable period of time to be ready for use are capitalised as a part of the cost of the actual assets.
During 2015, borrowing costs for €/000 1,405 were capitalised.
Land is not depreciated.
Land mainly refers to Group production facilities in Pontedera (Pisa), Noale (Venice) and Mandello del Lario (Lecco). The item also includes land in Pisa, with a warehouse.
The item Buildings, net of accumulated depreciation, comprises:
| Mandello del Lario (Lecco), Baramati (India) and Vinh Phuc (Vietnam). The item also includes a | ||||||
|---|---|---|---|---|---|---|
| building at Pisa used as a warehouse. | ||||||
Buildings are depreciated on a straight-line basis using rates considered suitable to represent their useful life.
The item Plant and machinery, net of accumulated depreciation, consists of:
The breakdown of property, plant and equipment in operation and under construction is as follows:
| Value as of 31 December 2015 | Value as of 31 December 2014 | Change | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Under construction |
Under | Under | ||||||||
| For the | and | For the | construction and |
For the | construction and |
|||||
| period | advances | Total | period | advances | Total | period | advances | Total | ||
| In thousands of euros | ||||||||||
| Land | 28,083 | 28,083 | 28,083 | 28,083 | 0 | 0 | 0 | |||
| Buildings | 101,304 | 3,373 | 104,677 | 102,422 | 3,652 | 106,074 | (1,118) | (279) | (1,397) | |
| Plant and machinery | 113,796 | 23,032 | 136,828 | 114,814 | 13,692 | 128,506 | (1,018) | 9,340 | 8,322 | |
| Equipment | 24,123 | 6,949 | 31,072 | 30,770 | 7,584 | 38,354 | (6,647) | (635) | (7,282) | |
| Other assets | 6,565 | 383 | 6,948 | 6,373 | 171 | 6,544 | 192 | 212 | 404 | |
| Total | 273,871 | 33,737 | 307,608 | 282,462 | 25,099 | 307,561 | (8,591) | 8,638 | 47 |
2014 Change
| As of 31 December 2015 |
As of 31 December 2014 |
Change | |
|---|---|---|---|
| In thousands of euros | |||
| General plants | 90,982 | 87,822 | 3,160 |
| Automatic machinery | 6,943 | 8,765 | (1,822) |
| Furnaces and sundry equipment | 425 | 509 | (84) |
| Other | 15,446 | 17,718 | (2,272) |
| Assets under construction | 23,032 | 13,692 | 9,340 |
| Total | 136,828 | 128,506 | 8,322 |
Plant and machinery refer to Group production facilities in Pontedera (Pisa), Noale (Venice), Mandello del Lario (Lecco), Baramati (India) and Vinh Phuc (Vietnam).
The "Other" item mainly includes non-automatic machinery and robotic centres.
| Equipment | €/000 31,072 | ||
|---|---|---|---|
| As of 31 December 2015 |
As of 31 December 2014 |
Change | |
| In thousands of euros | |||
| Industrial equipment | 24,075 | 30,706 | (6,631) |
| Commercial equipment | 48 | 64 | (16) |
| Assets under construction | 6,949 | 7,584 | (635) |
| Total | 31,072 | 38,354 | (7,282) |
The item Equipment mainly refers to production equipment at Pontedera (Pisa), Noale (Venice), Mandello del Lario (Lecco), Baramati (India) and Vinh Phuc (Vietnam).
Main investments in equipment concerned moulds for new vehicles launched during the year or scheduled to be launched in the first half of next year, moulds for new engines and specific equipment for assembly lines.
The item Other assets comprises:
| As of 31 December 2015 |
As of 31 December 2014 |
Change | |
|---|---|---|---|
| In thousands of euros | |||
| EDP systems | 943 | 714 | 229 |
| Office furniture and equipment | 2,788 | 3,288 | (500) |
| Vehicles | 2,072 | 1,784 | 288 |
| Other | 762 | 587 | 175 |
| Assets under construction | 383 | 171 | 212 |
| Total | 6,948 | 6,544 | 404 |
As of 31 December 2015, the net value of assets held through lease agreements was equal to €/000 169, referring to vehicles used by the Aprilia Racing Team.
Future lease rental commitments are detailed in note 41.
As of 31 December 2015 the Group had no buildings with mortgages.
Investment property refers to the Spanish site of Martorelles, where production was stopped in March 2013 and relocated to Italian sites.
In thousands of euros
| Opening balance as of 1 January 2015 | 11,961 |
|---|---|
| Closing balance as of 31 December 2015 | 11,961 |
The net carrying amount as of 31 December 2015 was determined by a specific appraisal conducted by an independent expert who measured the "Fair Value less cost of disposal" based on a market approach (as provided for in IFRS 13). This appraisal identified an overall investment value which was more or less the same as that of the previous year. In this regard, the valuation took account of the current status of the property, the project to convert the area, for the development of a retail centre prepared by the Group, together with comparable transactions. Following the site redevelopment project, an agency management contract was given to a Spanish property company, to seek investors interested in the property.
The Group uses the "fair value model" as provided for by IAS 40. If the cost criterion had still been used instead of fair value, the value of the Martorelles site would have been equal to €/000 6,792. During 2015, costs incurred for management of the site amounted to €/000 479.
Deferred tax assets and liabilities are recognised at their net value when they may be offset in the same tax jurisdiction.
The item totalled €/000 56,434, up on the figure of €/000 46,434 as of 31 December 2014. The increase is mainly due to the recognition of deferred assets from temporary deductible changes. This net balance is broken down in the table below.
| As of 31 December 2015 |
As of 31 December 2014 |
Change | |
|---|---|---|---|
| In thousands of euros | |||
| Deferred tax assets | 72,751 | 65,691 | 7,060 |
| Deferred tax liabilities | (16,317) | (19,257) | 2,940 |
| Total | 56,434 | 46,434 | 10,000 |
As part of measurements to define deferred tax assets, the Group mainly considered the following:
In view of these considerations, and with a prudential approach, it was decided to not wholly recognise the tax benefits arising from losses that can be carried over and from temporary differences.
Deferred tax assets and liabilities were determined applying the tax rate in effect in the year when temporary differences occur. Therefore, the Group adjusted deferred tax assets and liabilities to the new rate introduced by Italian Law no. 208/2015 (2016 Stability Law), which amended article 77, paragraph 1 of the Consolidated Law on Income Tax (TUIR), reducing the nominal corporate income tax (IRES) rate from 27.5% to 24%, with effect for tax periods after the period ending 31 December 2016.
Taxes for the year take account of the positive effect arising from the recognition of deferred tax assets relative to the subsidiary Piaggio Group Americas Inc. for tax losses that may be offset against taxable income of future years, which as of 31 December 2015 equalled €/000 20,510.
| In thousands of euros | Amount of temporary differences | Tax rate | Tax effect |
|---|---|---|---|
| 5,937 | 24.00%/27.90% | 1,654 | |
| Provisions for risks | 5,937 | 1,654 | |
| 8,327 | 27.90% | 2,323 | |
| 854 | 37.63% | 321 | |
| 229 | 29.00% | 66 | |
| 207 | 34.30% | 71 | |
| 40 | 25.00% | 10 | |
| Provision for product warranties | 9,658 | 2,792 | |
| 14,868 | 24.00% | 3,568 | |
| 1,651 | 29.00% | 479 | |
| 121 | 37.63% | 46 | |
| 13 | 34.30% | 4 | |
| Provisions for write-down | 16,653 | 4,097 | |
| 29,945 1,620 |
27.90% 37.63% |
8,355 610 |
|
| 550 | 34.30% | 189 | |
| 962 | 7.50% | 72 | |
| 213 | 29.00% | 62 | |
| 60 | 20.00% | 12 | |
| 11 | 25.00% | 3 | |
| Provisions for obsolete stock | 33,362 | 9,302 | |
| 36,480 | 24.00%/27.9% | 9,411 | |
| 20,375 | 27.90%/31.40% | 6,026 | |
| 5,704 | 37.63% | 2,147 | |
| 4,266 | 33.99% | 1,450 | |
| 3,452 | 24.00% | 828 | |
| 2,650 | 25.00% | 662 | |
| 2,339 | 12.56% | 294 | |
| 282 | 100.00% | 282 | |
| 1,954 | 9.31% | 182 | |
| 538 | 27.50% | 148 | |
| 1,086 | 10.07% | 109 | |
| 268 | 29.00% | 78 | |
| 228 | 33.33% | 76 | |
| 190 | 34.30% | 65 | |
| 343 | 18.10% | 62 | |
| 160 | 30.00% | 48 | |
| 161 69 |
27.90% 31.16% |
45 21 |
|
| 237 | 7.50% | 18 | |
| 64 | 17.00% | 11 | |
| 58 | 18.00% | 10 | |
| 27 | 30.00% | 8 | |
| 6 | 20.00% | 1 | |
| (57,606) | 24.00%/27.90% | (15,950) | |
| Other changes | 23,329 | 6,032 | |
| Total for provisions and other changes | 88,940 | 23,877 | |
| Deferred tax assets already recognised | 23,101 | ||
| Deferred tax assets not booked | 776 | ||
| Piaggio & C. S.p.A. | 101,873 | 24.00% | 24,449 |
| Piaggio Group Americas Inc. | 20,510 | 37.63% | 7,718 |
| Piaggio Group Japan | 3,996 | 34.30% | 1,371 |
| PT Piaggio Indonesia | 3,394 | 25.00% | 848 |
| Piaggio Concept Store Mantova S.r.l. | 2,274 | 24.00% | 546 |
| Piaggio Vespa B.V. | 1,619 | 25.00% | 405 |
| Piaggio Hrvatska Doo | 127 | 20.00% | 25 |
| Piaggio Advanced Design Center Co. | 6 | 23.84% | 2 |
| (1,455) | 25%/37.63% | (367) | |
| Total out of tax losses | 131,171 | 34,704 | |
| Deferred tax assets already recognised | 33,333 | ||
| Deferred tax assets not booked | 1,664 |
Overall, the movement of deferred tax assets can be summarised as follows:
| Values as of 31 December 2014 |
Portion to the Income Statement |
Portion to the Statement of Comprehensive Income |
Portion to the Income Statement |
Portion to the Statement of Comprehensive Income |
Portion offset as part of tax consolidation |
Values as of 31 December 2015 |
|
|---|---|---|---|---|---|---|---|
| In thousands of euros |
|||||||
| Deferred tax assets for: Temporary |
|||||||
| changes Previous tax |
41,589 | (7,855) | (990) | 6,307 | 39,051 | ||
| losses Losses generated within the framework of tax |
588 | (293) | 8,956 | 9,251 | |||
| consolidation | 23,514 | (3,703) | 4,974 | (336) | 24,449 | ||
| Total | 65,691 | (11,851) | (990) | 20,237 | 0 | (336) | 72,751 |
This item comprises:
| As of 31 December | As of 31 December | ||
|---|---|---|---|
| 2015 | 2014 | Change | |
| In thousands of euros | |||
| Raw materials and consumables | 101,082 | 107,219 | (6,137) |
| Provision for write-down | (12,590) | (14,228) | 1,638 |
| Net value | 88,492 | 92,991 | (4,499) |
| Work in progress and semifinished products | 18,873 | 19,040 | (167) |
| Provision for write-down | (852) | (852) | 0 |
| Net value | 18,021 | 18,188 | (167) |
| Finished products and goods | 129,106 | 142,573 | (13,467) |
| Provision for write-down | (22,871) | (21,479) | (1,392) |
| Net value | 106,235 | 121,094 | (14,859) |
| Advances | 64 | 125 | (61) |
| Total | 212,812 | 232,398 | (19,586) |
As of 31 December 2015, inventories had decreased by €/000 19,586.
As of 31 December 2015 current trade receivables amounted to €/000 80,944 compared to €/000 74,220 as of 31 December 2014. No non-current trade payables were recorded for the periods. Their breakdown was as follows:
| As of 31 December 2015 |
As of 31 December | 2014 Change | |
|---|---|---|---|
| In thousands of euros | |||
| Trade receivables due from customers | 79,794 | 73,364 | 6,430 |
| Trade receivables due from JV | 1,136 | 836 | 300 |
| Trade receivables due from parent companies | 9 | (9) | |
| Trade receivables due from associates | 14 | 11 | 3 |
| Total | 80,944 | 74,220 | 6,724 |
Receivables due from joint ventures refer to amounts due from Zongshen Piaggio Foshan Motorcycles.
Receivables due from associates regard amounts due from Immsi Audit.
The item Trade receivables comprises receivables referring to normal sale transactions, recorded net of a provision for bad debt of €/000 27,525.
Movements of provisions were as follows:
| Closing balance as of 31 December 2015 | 27,525 |
|---|---|
| Other changes | 167 |
| Decreases for use | (1,124) |
| Increases for allocations | 1,767 |
| Opening balance as of 1 January 2015 | 26,715 |
| In thousands of euros |
The Group sells, on a rotating basis, a large part of its trade receivables with and without recourse. Piaggio has signed contracts with some of the most important Italian and foreign factoring companies as a move to optimise the monitoring and the management of its trade receivables, besides offering its customers an instrument for funding their own inventories, for factoring classified as without the substantial transfer of risks and benefits. On the contrary, for factoring without recourse, contracts have been formalised for the substantial transfer of risks and benefits. As of 31 December 2015 trade receivables still due, sold without recourse totalled €/000 84,037. Of these amounts, Piaggio received payment prior to natural expiry, of €/000 83,013.
As of 31 December 2015, advance payments received from factoring companies and banks, for trade receivables sold with recourse totalled €/000 15,321 with a counter entry recorded in current liabilities.
Other non-current receivables totalled €/000 13,419 against €/000 13,647 as of 31 December 2014, whereas other current receivables totalled €/000 29,538 compared to €/000 36,749 as of 31 December 2014. They consist of:
| As of 31 December 2015 |
As of 31 December 2014 |
Change | |
|---|---|---|---|
| In thousands of euros | |||
| Other non-current receivables: | |||
| Sundry receivables due from associates | 153 | 197 | (44) |
| Prepaid expenses | 10,975 | 10,102 | 873 |
| Advances to employees | 58 | 61 | (3) |
| Security deposits | 977 | 596 | 381 |
| Receivables due from others | 1,256 | 2,691 | (1,435) |
| Total non-current portion | 13,419 | 13,647 | (228) |
Receivables due from associates regard amounts due from the Fondazione Piaggio.
| As of 31 December 2015 |
As of 31 December 2014 |
Change | |
|---|---|---|---|
| In thousands of euros | |||
| Other current receivables: | |||
| Sundry receivables due from the parent company | 7,959 | 6,882 | 1,077 |
| Sundry receivables due from JV | 873 | 2,541 | (1,668) |
| Sundry receivables due from associates | 47 | 17 | 30 |
| Accrued income | 966 | 528 | 438 |
| Prepaid expenses | 3,946 | 3,834 | 112 |
| Advance payments to suppliers | 1,237 | 1,836 | (599) |
| Advances to employees | 2,440 | 2,030 | 410 |
| Fair value of derivatives | 647 | 696 | (49) |
| Security deposits | 250 | 293 | (43) |
| Receivables due from others | 11,173 | 18,092 | (6,919) |
| Total current portion | 29,538 | 36,749 | (7,211) |
Receivables due from the Parent Company refer to the recognition of accounting effects relating to the transfer of taxable bases pursuant to the Group Consolidated Tax Convention.
Receivables due from joint venues refer to amounts due from Zongshen Piaggio Foshan.
Receivables due from associates regard amounts due from Immsi Audit.
The item Fair Value of hedging derivatives comprises the fair value of hedging transactions on the exchange risk on forecast transactions recognised on a cash flow hedge basis (€/000 647 current portion).
Other receivables are recognised net of a write-down of €/000 4,965.
Movements of provisions were as follows:
| Closing balance as of 31 December 2015 | 4,965 |
|---|---|
| Increases for allocations | 572 |
| Decreases for use | (179) |
| Opening balance as of 1 January 2015 | 4,572 |
| In thousands of euros |
Receivables due from tax authorities consist of:
| 4 | As of 31 December 2015 |
As of 31 December 2014 |
Change |
|---|---|---|---|
| In thousands of euros | |||
| VAT receivables | 18,166 | 34,982 | (16,816) |
| Income tax receivables | 7,727 | 2,743 | 4,984 |
| Other tax receivables | 1,125 | 1,423 | (298) |
| Total tax receivables | 27,018 | 39,148 | (12,130) |
Non-current tax receivables totalled €/000 5,477, compared to €/000 3,230 as of 31 December 2014, while current tax receivables totalled €/000 21,541 compared to €/000 35,918 as of 31 December 2014. The reduction is due to the decrease in VAT receivables of the Indian subsidiary.
The table below shows the breakdown of operating receivables by measurement method:
| Assets | Assets | ||||
|---|---|---|---|---|---|
| As of 31 December 2015 | measured at FVPL |
measured at FVOCI |
Financial derivatives |
Assets at amortised cost |
Total |
| In thousands of euros | |||||
| Non-current | |||||
| Tax receivables | 5,477 | 5,477 | |||
| Other receivables | 13,419 | 13,419 | |||
| Total non-current operating receivables | - | - | - | 18,896 | 18,896 |
| Current | |||||
| Trade receivables | 80,944 | 80,944 | |||
| Tax receivables | 21,541 | 21,541 | |||
| Other receivables | 647 | 28,891 | 29,538 | ||
| Total current operating receivables | - | - | 647 | 131,376 | 132,023 |
| Total operating receivables | - | - | 647 | 150,272 | 150,919 |
| Assets | Assets | ||||
| As of 31 December 2014 | measured at FVPL |
measured at FVOCI |
Financial derivatives |
Assets at amortised cost |
Total |
| In thousands of euros | |||||
| Non-current | |||||
| Tax receivables | 3,230 | 3,230 | |||
| Other receivables | 13,647 | 13,647 | |||
| Total non-current assets | - | - | - | 16,877 | 16,877 |
|---|---|---|---|---|---|
| Current | |||||
| Trade receivables | 74,220 | 74,220 | |||
| Tax receivables | 35,918 | 35,918 | |||
| Other receivables | 696 | 36,053 | 36,749 | ||
| Total current assets | - | - | 696 | 146,191 | 146,887 |
| Total | - | - | 696 | 163,068 | 163,764 |
As of 31 December 2015, there were no receivables due after 5 years.
As regards the breakdown of assets by geographic segment, reference is made to the section on segment reporting.
As of 31 December 2015, there were no assets held for sale.
As of 31 December 2015 and as of 31 December 2014 no trade payables were recorded under non-current liabilities. Those included in current liabilities totalled €/000 380,363, against €/000 386,288 as of 31 December 2014.
| As of 31 December 2015 |
As of 31 December 2014 |
Change | |
|---|---|---|---|
| In thousands of euros | |||
| Amounts due to suppliers | 370,255 | 370,708 | (453) |
| Trade payables to JV | 9,311 | 14,874 | (5,563) |
| Trade payables due to other related parties | 29 | 80 | (51) |
| Amounts due to parent companies | 768 | 626 | 142 |
| Total | 380,363 | 386,288 | (5,925) |
| of which reverse factoring | 147,341 | 168,431 | (21,090) |
To facilitate credit conditions for its suppliers, the Group has used factoring agreements since 2012, mainly supply chain financing and reverse factoring agreements, as described in more detail in "Accounting policies and measurement criteria applied by the Group", to which reference is made. These operations did not change the primary obligation, nor substantially changed payment terms, so their nature is the same and they are still classified as trade liabilities.
As of 31 December 2015, the value of trade payables covered by reverse factoring or supply chain financing agreements was equal to €/000 147,341 (€/000 168,431 as of 31 December 2014).
| Balance | Adjustments | Balance | ||||
|---|---|---|---|---|---|---|
| as of 31 December |
Alloca | Delta exchange |
31 December |
|||
| 2014 | tionsApplications | rate | 2015 | |||
| In thousands of euros | ||||||
| Provision for product warranties | 11,782 | 8,667 | (9,217) | 213 | 11,445 | |
| Provision for contractual risks | 3,905 | 8 | 3,913 | |||
| Provision for litigation | 2,346 | (8) | (315) | 84 | 2,107 | |
| Provisions for guarantee risks | 58 | 58 | ||||
| Provision for tax risks | 186 | (186) | 0 | |||
| Other provisions for risks | 1,935 | 7 | (125) | (62) | 85 | 1,840 |
| Total | 20,212 | 8,682 | (9,536) | (377) | 382 | 19,363 |
The breakdown and changes in provisions for risks during the period were as follows:
The breakdown between the current and non-current portion of long-term provisions is as follows:
| As of 31 December As of 31 December |
|||
|---|---|---|---|
| 2015 | 2014 | Change | |
| In thousands of euros | |||
| Non-current portion: | |||
| Provision for product warranties | 3,173 | 3,850 | (677) |
| Provision for contractual risks | 3,913 | 3,905 | 8 |
| Provision for litigation | 1,509 | 1,516 | (7) |
| Other provisions for risks and charges | 989 | 1,123 | (134) |
| Total non-current portion | 9,584 | 10,394 | (810) |
| As of 31 December | As of 31 December | |||
|---|---|---|---|---|
| 2015 | 2014 | Change | ||
| In thousands of euros | ||||
| Current portion: | ||||
| Provision for product warranties | 8,272 | 7,932 | 340 | |
| Provision for litigation | 598 | 830 | (232) | |
| Provisions for guarantee risks | 58 | 58 | - | |
| Provision for tax risks | 186 | (186) | ||
| Other provisions for risks and charges | 851 | 812 | 39 | |
| Total current portion | 9,779 | 9,818 | (39) |
The product warranty provision relates to allocations for technical assistance on products covered by customer service which are estimated to be provided over the contractually envisaged warranty period. This period varies according to the type of goods sold and the sales market, and is also determined by customer take-up to commit to a scheduled maintenance plan.
The provision increased during the period by €/000 8,667 and €/000 9,217 was used in relation to costs incurred during the period.
The provision of contractual risks refers mainly to charges which may arise from the ongoing negotiation of a supply contract.
The provision for litigation concerns labour litigation and other legal proceedings.
Deferred tax liabilities amount to €/000 4,369 compared to €/000 5,123 as of 31 December 2014.
| As of 31 December As of 31 December |
|||
|---|---|---|---|
| 2015 | 2014 | Change | |
| In thousands of euros | |||
| Retirement funds | 782 | 858 | (76) |
| Termination benefits provision | 48,696 | 54,883 | (6,187) |
| Total | 49,478 | 55,741 | (6,263) |
Retirement funds comprise provisions for employees allocated by foreign companies and additional customer indemnity provisions, which represent the compensation due to agents in the case of the agency contract being terminated for reasons beyond their control. Uses refer to the payment of benefits already accrued in previous years, while allocations refer to benefits accrued in the period. The item "Termination benefits provision", comprising severance pay of employees of Italian companies, includes termination benefits indicated in defined benefit plans.
Their breakdown was as follows:
| Closing balance as of 31 December 2015 | 48,696 |
|---|---|
| Use and transfers of retirement funds | (12,428) |
| Interest cost | 873 |
| Actuarial losses recognised in Equity | (2,982) |
| Cost for the period | 8,350 |
| Opening balance as of 1 January 2015 | 54,883 |
| In thousands of euros |
The economic/technical assumptions used by Group companies operating in Italy to discount the value are shown in the table below:
| | Technical annual discount rate | 2.03% |
|---|---|---|
| | Annual rate of inflation | 1.50% for 2016 |
| 1.80% for 2017 | ||
| 1.70% for 2018 | ||
| 1.60% for 2019 | ||
| 2.00% from 2020 onwards |
Annual rate of increase in termination benefits 2.625% for 2016 2.850% for 2017 2.775% for 2018 2.700% for 2019 3.000% from 2020 onwards
As regards the discount rate, the Group uses the iBoxx Corporates AA rating with a 10+ duration as the valuation reference.
If instead an iBoxx Corporates A rating with a 10+ duration were used, the value of actuarial losses and the provision as of 31 December 2015 would have been lower by € 1,191 thousand. The table below shows the effects, in absolute terms, as of 31 December 2015, which would have
| Provision for post termination benefits |
|
|---|---|
| In thousands of euros | |
| Turnover rate +2% | 48,413 |
| Turnover rate -2% | 49,006 |
| Inflation rate + 0.25% | 49,382 |
| Inflation rate - 0.25% | 47,980 |
| Discount rate + 0.50% | 46,507 |
| Discount rate - 0.50% | 51,016 |
occurred following changes in reasonably possible actuarial assumptions:
The average financial duration of the bond ranges from 10 to 30 years. Estimated future amounts are equal to:
| Year | Future amounts |
|---|---|
| In thousands of euros | |
| 1 | 3,260 |
| 2 | 2,920 |
| 3 | 4,403 |
| 4 | 1,381 |
| 5 | 4,438 |
The subsidiaries operating in Germany and Indonesia have provisions for employees identified as defined benefit plans. As of 31 December 2015, these provisions amounted to €/000 141 and €/000 53 respectively.
"Tax payables" included in current liabilities totalled €/000 14,724, against €/000 14,445 as of 31 December 2014. As of 31 December 2015 and as of 31 December 2014 no tax payables were recorded under non-current liabilities.
Their breakdown was as follows:
| As of 31 December 2015 |
As of 31 December 2014 |
Change | |
|---|---|---|---|
| In thousands of euros | |||
| Due for income taxes | 7,479 | 8,343 | (864) |
| Due for non-income tax | 38 | 40 | (2) |
| Tax payables for: | |||
| - VAT | 1,833 | 970 | 863 |
| - taxes withheld at source | 4,799 | 4,656 | 143 |
| - other | 575 | 436 | 139 |
| Total | 7,207 | 6,062 | 1,145 |
| Total | 14,724 | 14,445 | 279 |
The item includes tax payables recorded in the financial statements of individual consolidated companies, set aside in relation to tax charges for the individual companies on the basis of applicable national laws.
Payables for tax withholdings made refer mainly to withholdings on employees' earnings, on employment termination payments and on self-employed earnings.
| €/000 52,674 |
|---|
| As of 31 December | As of 31 December | ||
|---|---|---|---|
| 2015 | 2014 | Change | |
| In thousands of euros | |||
| Non-current portion: | |||
| Guarantee deposits | 2,201 | 1,973 | 228 |
| Deferred income | 2,194 | 1,241 | 953 |
| Fair value of derivatives | 231 | (231) | |
| Other payables | 229 | 200 | 29 |
| Total non-current portion | 4,624 | 3,645 | 979 |
| As of 31 December 2015 |
As of 31 December 2014 |
Change | |
|---|---|---|---|
| In thousands of euros | |||
| Current portion: | |||
| Amounts due to employees | 15,632 | 16,686 | (1,054) |
| Guarantee deposits | 2 | (2) | |
| Accrued expenses | 6,196 | 6,818 | (622) |
| Deferred income | 1,044 | 430 | 614 |
| Amounts due to social security | |||
| institutions | 6,781 | 8,726 | (1,945) |
| Fair value of derivatives | 420 | 502 | (82) |
| Miscellaneous payables to JV | 1,604 | 1,758 | (154) |
| Sundry payables due to associates | 30 | 39 | (9) |
| Sundry payables due to parent | |||
| companies | 7,032 | 6,600 | 432 |
| Other payables | 9,311 | 7,587 | 1,724 |
| Total | 48,050 | 49,148 | (1,098) |
Other payables included in non-current liabilities totalled €/000 4,624 against €/000 3,645 as of 31
December 2014, whereas other payables included in current liabilities totalled €/000 48,050 compared to €/000 49,148 as of 31 December 2014.
Amounts due to employees include the amount for holidays accrued but not taken of €/000 8,745 and other payments to be made for €/000 6,887.
Payables due to associates refer to various amounts due to the Fondazione Piaggio and Immsi Audit.
Payables to parent companies consist of payables to Immsi referring to expenses relative to the consolidated tax convention.
The item Fair value of hedging derivatives refers to the fair value (€/000 59 current portion) of an interest rate swap for hedging, recognised on a cash flow hedge basis as provided for in IAS 39 (see section 44) and the fair value of derivatives to hedge the foreign exchange risk of forecast transactions recognised on a cash flow hedge basis (€/000 361 current portion).
The item Accrued expenses includes €/000 2,997 for interest on hedging derivatives and relative hedged items measured at fair value.
The table below shows the breakdown of operating payables by measurement method:
| Liabilities | ||||
|---|---|---|---|---|
| As of 31 December 2015 | measured at FVPL |
Financial derivatives |
Liabilities at amortised cost |
Total |
| In thousands of euros | ||||
| Non-current | ||||
| Tax payables | - | |||
| Other payables | 4,624 | 4,624 | ||
| Total non-current operating payables | - | - | 4,624 | 4,624 |
| Current | ||||
| Trade payables | 380,363 | 380,363 | ||
| Tax payables | 14,724 | 14,724 | ||
| Other payables | 420 | 47,630 | 48,050 | |
| Total current operating payables | - | 420 | 442,717 | 443,137 |
| Total operating payables | - | 420 | 447,341 | 447,761 |
| Liabilities measured |
Financial | Liabilities at | ||
|---|---|---|---|---|
| As of 31 December 2014 | at FVPL | derivatives | amortised cost | Total |
| In thousands of euros | ||||
| Non-current | ||||
| Tax payables | - | |||
| Other payables | 231 | 3,414 | 3,645 | |
| Total non-current operating payables | - | 231 | 3,414 | 3,645 |
| Current | ||||
| Trade payables | 386,288 | 386,288 | ||
| Tax payables | 14,445 | 14,445 | ||
| Other payables | 502 | 48,646 | 49,148 | |
| Total current operating payables | - | 502 | 449,379 | 449,881 |
| Total operating payables | - | 733 | 452,793 | 453,526 |
The Group has loans due after 5 years, which are referred to in detail in Note 41 Financial Liabilities.
With the exception of the above payables, no other long-term payables due after five years exist.
As regards the breakdown of liabilities by geographic segment, reference is made to the section on segment reporting.
This section provides information on the carrying amount of financial assets and liabilities held, and in particular:
The Group holds the following financial assets and liabilities:
| Financial assets as of 31 December 2015 |
Assets measured at FVPL |
Assets measured at FVOCI |
Financial derivatives |
Assets at amortised cost |
Total |
|---|---|---|---|---|---|
| In thousands of euros | |||||
| Non-current | |||||
| Other financial assets | 24,658 | 39 | 24,697 | ||
| Total non-current financial assets | - | - | 24,658 | 39 | 24,697 |
| Current Other financial assets |
2,176 | 2,176 | |||
| Cash and cash equivalents | 95,964 | 95,964 | |||
| Securities | 5,464 | 5,464 | |||
| Total current financial assets | - | - | 2,176 | 101,428 | 103,604 |
| Total financial assets | - | - | 26,834 | 101,467 | 128,301 |
| Financial assets as of 31 December 2014 |
Assets measured at FVPL |
Assets measured at FVOCI |
Financial derivatives |
Assets at amortised cost |
Total |
| In thousands of euros | |||||
| Non-current | |||||
| Other financial assets | 19,026 | 86 | 19,112 | ||
| Total non-current financial assets | - | - | 19,026 | 86 | 19,112 |
| Current | |||||
| Other financial assets | - | ||||
| Cash and cash equivalents | 92,211 | 92,211 | |||
| Securities | 5,941 | 5,941 | |||
| Total current financial assets | - | - | - | 98,152 | 98,152 |
| Total financial assets | - | - | 19,026 | 98,238 | 117,264 |
| Financial liabilities as of 31 December 2015 |
Liabilities measured at FVPL |
Fair value adjustment |
Financial derivatives |
Liabilities at amortised cost |
Total |
|---|---|---|---|---|---|
| In thousands of euros | |||||
| Non-current | |||||
| Bank borrowings | 20,521 | 4,251 | 184,842 | 209,614 | |
| Bonds | 19,454 | 290,139 | 309,593 | ||
| Other loans | 1,005 | 1,005 | |||
| Leases | 179 | 179 | |||
| Hedging derivatives | - | ||||
| Total non-current financial liabilities | 20,521 | 23,705 | - | 476,165 | 520,391 |
| Current | |||||
| Bank borrowings | 9,397 | 2,131 | 77,792 | 89,320 | |
| Other loans | 15,645 | 15,645 | |||
| Leases | 31 | 31 | |||
| Hedging derivatives | 899 | 899 | |||
| Total current financial liabilities | 9,397 | 2,131 | 899 | 93,468 | 105,895 |
| Total financial liabilities | 29,918 | 25,836 | 899 | 569,633 | 626,286 |
| Financial liabilities as of 31 December 2014 |
Liabilities measured at FVPL |
Fair value adjustment |
Financial derivatives |
Liabilities at amortised cost |
Total |
| In thousands of euros | |||||
| Non-current | |||||
| Bank borrowings | 33,848 | 5,647 | 164,851 | 204,346 | |
| Bonds | 12,275 | 288,369 | 300,644 | ||
| Other loans | 1,262 | 1,262 | |||
| Leases | 211 | 211 | |||
| Hedging derivatives | - | ||||
| Total non-current financial liabilities | 33,848 | 17,922 | - | 454,693 | 506,463 |
| Current |
| Total financial liabilities | 40,653 | 17,922 | - | 550,362 | 608,937 |
|---|---|---|---|---|---|
| Total current financial liabilities | 6,805 | - | - | 95,669 | 102,474 |
| Hedging derivatives | - | ||||
| Leases | 30 | 30 | |||
| Other loans | 21,869 | 21,869 | |||
| Bank borrowings | 6,805 | 73,770 | 80,575 |
The investments heading comprises:
| As of 31 December As of 31 December |
|||
|---|---|---|---|
| 2015 | 2014 | Change | |
| In thousands of euros | |||
| Interests in joint ventures | 9,350 | 8,610 | 740 |
| Investments in associates | 179 | 208 | (29) |
| Total | 9,529 | 8,818 | 711 |
The increase in the item Interests in joint ventures refers to the equity valuation of the investment in the Zongshen Piaggio Foshan Motorcycles Co. Ltd. joint venture.
| As of 31 December 2015 |
As of 31 December 2014 |
Change | |
|---|---|---|---|
| In thousands of euros | |||
| Joint venture Accounted for using the equity method: |
|||
| Zongshen Piaggio Foshan Motorcycles Co. |
| Total joint ventures | 9,350 | 8,610 | 740 |
|---|---|---|---|
| Ltd – China | 9,350 | 8,610 | 740 |
The investment in Zongshen Piaggio Foshan Motorcycles Co. Ltd was classified under the item "joint ventures" in relation to agreements made in the contract signed on 15 April 2004 between Piaggio & C. S.p.A. and its historical partner Foshan Motorcycle Plant, and the Chinese company Zongshen Industrial Group Company Limited.
Piaggio & C. S.p.A. has a 45% interest in Zongshen Piaggio Foshan Motorcycles, of which 12.5% via the direct subsidiary Piaggio China Company Ltd. The carrying amount of the investment is equal to €/000 9,350 and refers to shareholders' equity pro-quota adjusted to take into account the measurement criteria adopted by the Group.
| Zongshen Piaggio Foshan Motorcycle Co. | Accounts as of 31 December 2015 |
Accounts as of 31 December 2014 |
||
|---|---|---|---|---|
| In thousands of euros | ||||
| 45% * | 45% * | |||
| Working capital | 10,474 | 4,714 | 11,083 | 4,987 |
| Total assets | 14,957 | 6,731 | 12,098 | 5,444 |
| Net capital employed | 25,432 | 11,444 | 23,182 | 10,432 |
| Provisions | 105 | 47 | 131 | 59 |
| Consolidated debt | 4,549 | 2,047 | 4,073 | 1,833 |
| Shareholders' equity | 20,777 | 9,350 | 18,978 | 8,540 |
| Total sources of financing | 25,432 | 11,444 | 23,182 | 10,432 |
| * Group ownership Reconciliation of Shareholders' Equity |
||||
| In thousands of euros | ||||
| Opening balance as of 1 January 2015 | 8,540 | |||
| Profit (Loss) for the period | 163 | |||
| Other comprehensive income | 647 | |||
| Closing balance as of 31 December 2015 | 9,350 | |||
| Investments in Associates | €/000 179 | |||
| This item comprises: | ||||
| amount as of 31 December |
Carrying | Carrying amount as of 31 December |
||
| In thousands of euros | 2014 | Adjustment | 2015 | |
| Associates | ||||
| Immsi Audit S.c.a.r.l. | 10 | 10 |
The table below summarises main financial data of the joint ventures:
The value of investments in associates was adjusted during the year to the corresponding value of shareholders' equity.
S.A.T. S.A. – Tunisia - Depuradora D'Aigues de Martorelles S.C.C.L. 42 (7) 35 Pontech Soc. Cons. a.r.l. – Pontedera 156 (22) 134 Total associates 208 (29) 179
| As of 31 December | |||
|---|---|---|---|
| 2015 | As of 31 December 2014 |
Change | |
| In thousands of euros | |||
| Fair value of derivatives | 24,658 | 19,026 | 5,632 |
| Investments in other companies | 39 | 86 | (47) |
| Total | 24,697 | 19,112 | 5,585 |
The item Fair value of hedging derivatives refers to €/000 20,290 from the fair value of the cross currency swap for a private debenture loan, to €/000 3,933 from the long-term portion of the fair value of the cross currency swap for medium-term loans of the Indian subsidiary and to €/000 435 from the long-term portion of the cross currency swap for a medium-term loan of the Vietnamese subsidiary. For more details see section 43 "Financial risks" of the Notes.
The breakdown of the item "Investments in other companies" is shown in the table below:
| As of 31 December 2015 |
As of 31 December 2014 |
Change | |
|---|---|---|---|
| In thousands of euros | |||
| Other companies: | |||
| A.N.C.M.A. – Rome | 2 | 2 | - |
| GEOFOR S.p.A. – |
|||
| Pontedera | 47 | (47) | |
| ECOFOR SERVICE S.p.A. | |||
| – Pontedera | 2 | 2 | - |
| Mitsuba Italia SpA | - | ||
| Consorzio Fiat Media |
|||
| Center – Turin | 3 | 3 | - |
| S.C.P.S.T.V. | 21 | 21 | - |
| IVM | 11 | 11 | - |
| Total other | |||
| companies | 39 | 86 | (47) |
During the year, the investment in Geofor S.p.A. Pontedera was sold, realising a capital gain of €/000 24 recognised as income from investments.
This item refers to €/000 1,959 relative to the short-term portion of the fair value of cross currency swaps for medium-term loans of the Indian subsidiary and €/000 217 for the short-term portion of the cross currency swap for the medium-term loan of the Vietnamese subsidiary. For more details see section 43 "Financial risks" of the Notes.
As of 31 December 2014, no values relative to current financial assets were recognised.
The item, which mainly includes short-term and on demand bank deposits, is broken down as follows:
| As of 31 December 2015 |
As of 31 December 2014 |
Change | |
|---|---|---|---|
| In thousands of euros | |||
| Bank and post office deposits | 95,913 | 92,211 | 3,702 |
| Cheques | 1 | 7 | (6) |
| Cash and assets in hand | 50 | 54 | (4) |
| Securities | 5,464 | 5,934 | (470) |
| Total | 101,428 | 98,206 | 3,222 |
The item Securities refers to deposit agreements entered into by the Indian subsidiary to effectively use temporary liquidity.
The table below reconciles the amount of cash and cash equivalents above with cash and cash equivalents recognised in the Statement of Cash Flows.
| As of 31 December 2015 |
As of 31 December 2014 |
Change | |
|---|---|---|---|
| In thousands of euros | |||
| Liquidity | 101,428 | 98,206 | 3,222 |
| Current account overdrafts | (126) | (8,081) | 7,955 |
| Closing balance | 101,302 | 90,125 | 11,177 |
| Financial liabilities as of 31 December 2015 |
Financial liabilities as of 31 December 2014 |
Change | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Current | Non current |
Total | Current | Non current |
Total | Current | Non current |
Total | |
| In thousands of euros | |||||||||
| Gross financial debt | 102,865 | 496,686 | 599,551 | 102,474 | 488,541 | 591,015 | 391 | 8,145 | 8,536 |
| Fair value adjustment | 3,030 | 23,705 | 26,735 | 17,922 | 17,922 | 3,030 | 5,783 | 8,813 | |
| Total | 105,895 | 520,391 | 626,286 | 102,474 | 506,463 | 608,937 | 3,421 | 13,928 | 17,349 |
This increase is attributable to a greater use of available medium-term credit lines.
| As of 31 December 2015 |
As of 31 December 2014 |
Change | |
|---|---|---|---|
| In thousands of euros | |||
| Liquidity | 101,428 | 98,206 | 3,222 |
| Securities | - | ||
| Current financial receivables | - | - | - |
| Payables due to banks | (47,978) | (38,262) | (9,716) |
| Current portion of bank borrowings | (39,211) | (42,313) | 3,102 |
| Amounts due to factoring companies | (15,321) | (20,744) | 5,423 |
| Amounts due under leases | (31) | (30) | (1) |
| Current portion of payables due to other lenders | (324) | (1,125) | 801 |
| Current financial debt | (102,865) | (102,474) | (391) |
| Net current financial debt | (1,437) | (4,268) | 2,831 |
| Payables due to banks and lenders | (205,363) | (198,699) | (6,664) |
| Debenture loan | (290,139) | (288,369) | (1,770) |
| Amounts due under leases | (179) | (211) | 32 |
| Amounts due to other lenders | (1,005) | (1,262) | 257 |
| Non-current financial debt | (496,686) | (488,541) | (8,145) |
Net financial debt of the Group amounted to €/000 498,123 as of 31 December 2015 compared to €/000 492,809 as of 31 December 2014.
NET FINANCIAL DEBT* (498,123) (492,809) (5,314) * Pursuant to Consob Communication of 28 July 2006 and in compliance with the recommendation of the CESR of 10 February 2005 "Recommendation for the consistent implementation of the European Commission's Regulation on Prospectuses". The indicator does not include financial assets and liabilities arising from the fair value measurement of financial derivatives for hedging and otherwise, the fair value adjustment of relative hedged items equal to €/000 26,735 and relative accruals.
Non-current financial liabilities totalled €/000 496,686 against €/000 488,541 as of 31 December 2014, whereas current financial liabilities totalled €/000 102,865 compared to €/000 102,474 as of 31 December 2014.
The attached tables summarise the breakdown of financial debt as of 31 December 2015 and 31 December 2014, as well as changes for the period.
| Accounting balance as of 31/12/2014 |
Repayments | New issues | Reclassification to the current portion |
Exchange delta |
Other changes |
Accounting balance as of 31/12/2015 |
|
|---|---|---|---|---|---|---|---|
| In thousands of euros | |||||||
| Non-current portion: | |||||||
| Bank borrowings | 198,699 | 44,000 | (39,091) | 1,204 | 551 | 205,363 | |
| Bonds | 288,369 | 1,770 | 290,139 | ||||
| Other medium-/long-term loans: |
|||||||
| of which leases of which amounts due |
211 | (32) | 179 | ||||
| to other lenders | 1,262 | 54 | (311) | 1,005 | |||
| Total other loans | 1,473 | 54 | (343) | 1,184 | |||
| Total | 488,541 | - | 44,054 | (39,434) | 1,204 | 2,321 | 496,686 |
| Accounting balance as of 31/12/2014 |
Repayments | New issues |
Reclassification from the non current portion |
Exchange delta |
Other changes |
Accounting balance as of 31/12/2015 |
|
|---|---|---|---|---|---|---|---|
| In thousands of euros | |||||||
| Current portion: Current account overdrafts |
8,081 | (7,955) | 126 | ||||
| Current account payables | 30,181 | 14,064 | 3,607 | 47,852 | |||
| Bonds Payables due to factoring companies |
20,744 | (5,423) | - 15,321 |
||||
| Current portion of medium- /long-term loans: |
|||||||
| of which leases | 30 | (31) | 32 | 31 | |||
| of which due to banks of which amounts due to |
42,313 | (42,723) | 39,091 | 549 | (19) | 39,211 | |
| other lenders | 1,125 | (1,124) | 12 | 311 | 324 | ||
| Total other loans | 43,468 | (43,878) | 12 | 39,434 | 549 | (19) | 39,566 |
| Total | 102,474 | (57,256) | 14,076 | 39,434 | 4,156 | (19) | 102,865 |
The breakdown of the debt is as follows:
| Accounting | Accounting | |||
|---|---|---|---|---|
| balance As of |
balance As of |
Nominal value Nominal value As of |
As of | |
| 31/12/2015 | 31/12/2014 | 31/12/2015 | 31/12/2014 | |
| In thousands of euros | ||||
| Bank borrowings | 292,552 | 279,274 | 294,343 | 281,601 |
| Bonds | 290,139 | 288,369 | 301,799 | 301,799 |
| Other medium-/long-term loans: | ||||
| of which leases | 210 | 241 | 210 | 241 |
| of which amounts due to other lenders | 16,650 | 23,131 | 16,650 | 23,131 |
| Total other loans | 16,860 | 23,372 | 16,860 | 23,372 |
| Total | 599,551 | 591,015 | 613,002 | 606,772 |
| Nominal value | Amounts falling due |
Amounts falling due |
||||||
|---|---|---|---|---|---|---|---|---|
| as of | within 12 | after 12 | ||||||
| 31/12/2015 | months | months | Amounts falling due in | |||||
| 2017 | 2018 | 2019 | 2020 | Beyond | ||||
| In thousands of euros | ||||||||
| Bank borrowings - of which opening of credit lines |
294,343 | 87,208 | 207,135 | 57,793 | 105,994 | 43,207 | 94 | 47 |
| and bank overdrafts of which medium/long-term bank |
47,979 | 47,979 | ||||||
| loans | 246,364 | 39,229 | 207,135 | 67,793 | 95,994 | 43,207 | 94 | 47 |
| Bonds | 301,799 | 301,799 | 9,669 | 9,669 | 10,359 | 11,050 | 261,052 | |
| Other medium-/long-term loans: | ||||||||
| of which leases of which amounts due to other |
210 | 31 | 179 | 33 | 35 | 111 | ||
| lenders | 16,650 | 15,645 | 1,005 | 328 | 331 | 336 | 10 | |
| Total other loans | 16,860 | 15,676 | 1,184 | 361 | 366 | 447 | 10 | - |
| Total | 613,002 | 102,884 | 510,118 | 77,823 | 106,029 | 54,013 | 11,154 | 261,099 |
The table below shows the debt servicing schedule as of 31 December 2015:
The following table analyses financial debt by currency and interest rate.
| Accounting balance |
Accounting balance |
Nominal value | Applicable interest rate |
|
|---|---|---|---|---|
| As of 31/12/2014 | As of 31/12/2015 | |||
| In thousands of euros | ||||
| Euro | 519,023 | 521,714 | 535,165 | 3.54% |
| Indian Rupee | 21,385 | 18,709 | 18,709 | 10.19% |
| Indonesian Rupiah | 3,112 | 3,327 | 3,327 | 10.52% |
| US Dollar | 11,148 | 19,748 | 19,748 | 3.14% |
| Vietnamese Dong | 31,596 | 31,323 | 31,323 | 9.61% |
| Japanese Yen | 4,751 | 4,730 | 4,730 | 2.87% |
| Total currencies other | ||||
| than the euro | 71,992 | 77,837 | 77,837 | |
| Total | 591,015 | 599,551 | 613,002 | 4.08% |
Medium and long-term bank debt amounts to €/000 244,574 (of which €/000 205,363 non-current and €/000 39,211 current) and consists of the following loans:
overall loan of €/000 250,000 comprises a €/000 175,000 four-year tranche as a revolving credit line of which a nominal value of €/000 40,000 had been used at 31 December 2015 and a tranche as a five-year loan with amortisation of €/000 75,000 which has been wholly disbursed. Contract terms require covenants (described below);
All the above financial liabilities are unsecured.
The item Bonds for €/000 290,139 (nominal value of €/000 301,799) refers to:
The company may pay back the amount of the High Yield debenture loan issued on 24 April 2014, early, in full or in part, under the conditions indicated in the indenture. The value of prepayment options was not deducted from the original contract, as these are considered as being closely related to the host instrument (as provided for by IAS 39 AG30 g).
Medium-/long-term payables due to other lenders equal to €/000 1,539 of which €/000 1,184 due after the year and €/000 355 as the current portion, are detailed as follows:
Financial advances received from factoring companies and banks, on the sale of trade receivables with recourse, totalled €/000 15,321.
In line with market practices for borrowers with a similar credit rating, main loan contracts require compliance with:
1) financial covenants, on the basis of which the company undertakes to comply with certain levels of contractually defined financial indices, with the most significant comprising the ratio of net financial debt/gross operating margin (EBITDA), measured on the consolidated perimeter of the Group, according to definitions agreed on with lenders;
The measurement of financial covenants and other contract commitments is monitored by the Group on an ongoing basis. According to results as of 31 December 2015, all covenants had been fully met.
The high-yield debenture loan issued by Piaggio & C. in April 2014 requires compliance with typical covenants of international high-yield market practices. In particular, the company must observe the EBITDA/Net borrowing costs index, based on the threshold established in the Prospectus, to increase financial debt defined during issue. In addition, the Prospectus includes some obligations for the issuer, which limit, inter alia, the capacity to:
Failure to comply with the covenants and other contract commitments of the loan and debenture loan, if not remedied in agreed times, may give rise to an obligation for the early repayment of the outstanding amount of the loan.
All financial liabilities are measured in accordance with accounting standards and based on the amortised cost method (except for liabilities with hedging derivatives measured at Fair Value Through Profit & Loss, for which the same measurement criteria used for the derivative are applied): according to this method, the nominal amount of the liability is decreased by the amount of relative costs of issue and/or stipulation, in addition to any costs relating to refinancing of previous liabilities. The amortisation of these costs is determined on an effective interest rate basis, and namely the rate which discounts the future flows of interest payable and reimbursements of principle at the net carrying amount of the financial liability.
IFRS 13 – Fair Value Measurement defines fair value on the basis of the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In the absence of an active market or market that does not
operate regularly, fair value is measured by valuation techniques. The standard defines a fair value hierarchy:
The valuation techniques referred to levels 2 and 3 must take into account adjustment factors that measure the risk of insolvency of both parties. To this end, the standard introduces the concepts of Credit Value Adjustment (CVA) and Debit Value Adjustment (DVA): CVA makes it possible to include the counterparty credit risk in the fair value measurement; DVA reflects the risk of insolvency of the Group.
The table below shows the fair value of payables measured using the amortised cost method as of 31 December 2015:
| Nominal value | Carrying amount | Fair Value * | |
|---|---|---|---|
| In thousands of euros | |||
| High yield debenture loan | 250,000 | 238,570 | 256,690 |
| Private debenture loan | 51,799 | 51,569 | 71,618 |
| EIB (R&D loan 2013-2015) | 43,636 | 43,636 | 42,979 |
| Credit line from B. Pop. Emilia Romagna | 25,000 | 24,946 | 24,291 |
| Loan from Banco Popolare | 10,000 | 9,992 | 8,214 |
| Revolving syndicated loan | 40,000 | 38,852 | 38,201 |
| Syndicated loan maturing in July 2019 | 75,000 | 74,419 | 52,644 |
*The value deducts DVA related to the issuer, i.e. it includes the risk of insolvency of Piaggio.
For liabilities due within 18 months, the carrying amount is basically considered the same as the fair value.
The table below shows the assets and liabilities measured and recognised at fair value as of 31 December 2015, by hierarchical level of fair value measurement.
| LEVEL 1 | LEVEL 2 | LEVEL 3 | |
|---|---|---|---|
| In thousands of euros | |||
| ASSETS MEASURED AT FAIR VALUE | |||
| Investment property | 11,961 | ||
| Financial derivatives: | |||
| - of which financial assets |
26,181 | 652 | |
| - of which other receivables |
647 | ||
| Investments in other companies | 39 | ||
| Total assets | 26,828 | 12,652 | |
| LIABILITIES MEASURED AT FAIR VALUE | |||
| Financial derivatives | |||
| - of which financial liabilities |
(899) |
| (108,873) |
|---|
| (107,554) |
| (420) |
Investment property relative to the Martorelles site was measured as hierarchical level 3. This value was confirmed by a specific valuation of an independent expert, who measured the "Fair value less cost of disposal" based on a market approach (as provided for by IFRS 13). The valuation took account of comparable transactions on the local market, and the project to convert the area (from an industrial to a commercial site, as approved by the local authorities on 18 February 2014), referring however the value of the investment to its current status. Consequently, an accompanying 10% increase or decrease in all the variables based on the valuation of the investment would have generated a higher value of around €/000 3,800 and a lower value of €/000 3,600, with an equivalent greater or lesser impact on the income statement for the period.
The valuation of the cross currency swap relative to the Vietnamese subsidiary was also assigned the same hierarchy level. This classification reflects the illiquidity of the local market, which does now allow for a valuation based on conventional criteria. If valuation techniques typical of liquid markets had been adopted, which is not the case for the Vietnamese financial market, derivatives would have had a negative fair value totalling €/000 355, rather than a positive fair value of €/000 652 (included under financial hedging instruments - level 3) and accrued expenses on financial derivatives equal to €/000 734.
| The following tables show Level 2 and Level 3 changes during 2015: | |||
|---|---|---|---|
| LEVEL 2 | |
|---|---|
| In thousands of euros | |
| Balance as of 31 December 2014 | (86,422) |
| Gain (loss) recognised in profit or loss | 4,747 |
| Increases/(Decreases) | (370) |
| Balance as of 31 December 2015 | (82,045) |
| LEVEL 3 | |
| In thousands of euros | |
| Balance as of 31 December 2014 | 12,131 |
| Gain (loss) recognised in profit or loss | 568 |
| Increases/(Decreases) | (47) |
| Balance as of 31 December 2015 | 12,652 |
Net profit relative to hierarchy level 3 of €/000 568 refers to profit from hedging derivatives of €/000 568 and the decrease refers to the sale of the investment in Geofor S.p.A. for €/000 47.
This section describes all financial risks to which the Group is exposed and how these risks could affect future results.
The Group considers that its exposure to credit risk is as follows:
| As of 31 December 2015 |
As of 31 December 2014 |
|
|---|---|---|
| In thousands of euros | ||
| Liquid assets | 95,913 | 92,211 |
| Securities | 5,464 | 5,941 |
| Financial receivables | 26,873 | 19,112 |
| Other receivables | 42,957 | 50,396 |
| Tax receivables | 27,018 | 39,148 |
| Trade receivables | 80,944 | 74,220 |
| Total | 279,169 | 281,028 |
The Group monitors or manages credit centrally by using established policies and guidelines. The portfolio of trade receivables shows no signs of concentrated credit risk in light of the broad distribution of our licensee or distributor network. In addition, most trade receivables are shortterm. In order to optimise credit management, the Company has established revolving programmes with some primary factoring companies for selling its trade receivables without recourse in Europe and the United States.
The financial risks the Group is exposed to are liquidity risk, exchange risk, interest rate risk and credit risk.
The management of these risks, in order to reduce management costs and dedicated resources, is centralised and treasury operations take place in accordance with formal policies and guidelines which are applicable to all Group companies.
The liquidity risk arises from the possibility that available financial resources are not sufficient to cover, in due times and procedures, future payments arising from financial and/or commercial obligations. To deal with these risks, cash flows and the Group's credit line needs are monitored or managed centrally under the control of the Group's Treasury in order to guarantee an effective and efficient management of the financial resources as well as optimise the debt's maturity standpoint. In addition, the Parent Company finances the temporary cash requirements of Group companies by providing direct short-term loans regulated in market conditions or guarantees. A cash pooling zero balance system is used between the Parent Company and European companies to reset the receivable and payable balances of subsidiaries on a daily basis, for a more effective and efficient management of liquidity in the Eurozone.
As of 31 December 2015 the most important sources of financing irrevocable until maturity granted to the Parent Company were as follows:
Other Group companies also have the following irrevocable loans:
As of 31 December 2015, the Group had a liquidity of €/000 101,428, €/000 205,000 of undrawn credit lines irrevocable to maturity and €/000 129,537 of revocable credit lines, as detailed below:
| As of 31 December 2015 |
As of 31 December 2014 |
|
|---|---|---|
| In thousands of euros | ||
| Variable rate with maturity within one year - irrevocable | ||
| until maturity | 20,000 | |
| Variable rate with maturity beyond one year - | ||
| irrevocable until maturity | 205,000 | 104,000 |
| Variable rate with maturity within one year - cash | ||
| revocable | 110,537 | 99,037 |
| Variable rate with maturity within one year - with | ||
| revocation for self-liquidating typologies | 19,000 | 19,000 |
| Total undrawn credit lines | 334,537 | 242,037 |
22 Undersigned on 3 December 2015 and not used at the end of the reporting period.
The table below shows the timing of future payments in relation to trade payables:
| Within 30 days | Between 31 and 60 days |
Between 61 and 90 days |
Over 90 days | Total | |
|---|---|---|---|---|---|
| In thousands of euros |
|||||
| Trade payables | 237,152 | 91,384 | 18,928 | 32,900 | 380,363 |
Management considers that currently available funds, as well as funds that will be generated from operations and loans, will enable the Group to meets its requirements relative to investments, the management of working capital and repayment of loans on expiry and will ensure an adequate level of operating and strategic flexibility.
The Group operates in an international context where transactions are conducted in currencies different from the euro. This exposes the Group to risks arising from exchange rates fluctuations. For this purpose, the Group has an exchange rate risk management policy which aims to neutralise the possible negative effects of the changes in exchange rates on company cash-flows.
This policy analyses:
the transaction exchange risk: the policy wholly covers this risk which arises from differences between the recognition exchange rate of receivables or payables in foreign currency in the financial statements and the recognition exchange rate of actual collection or payment. To cover this type of exchange risk, the exposure is naturally offset in the first place (netting between sales and purchases in the same currency) and if necessary, by signing currency future derivatives, as well as advances of receivables denominated in currency;
the translation exchange risk: arises from the conversion into euro of the financial statements of subsidiaries prepared in currencies other than the euro during consolidation. The policy adopted by the Group does not require this type of exposure to be covered;
the economic exchange risk: arises from changes in company profitability in relation to annual figures planned in the economic budget on the basis of a reference change (the "budget change") and is covered by derivatives. The items of these hedging operations are therefore represented by foreign costs and revenues forecast by the sales and purchases budget. The total of forecast costs and revenues is processed monthly and relative hedging is positioned exactly on the average weighted date of the economic event, recalculated based on historical criteria. The economic occurrence of future receivables and payables will occur during the budget year.
As of 31 December 2015, the Group had undertaken the following futures operations (recognised based on the regulation date), relative to payables and receivables already recognised to hedge the transaction exchange risk:
| Company | Operation | Currency | Amount in | Value in local | Average |
|---|---|---|---|---|---|
| currency | currency | maturity | |||
| (forward | |||||
| exchange rate) | |||||
| In thousands | In thousands | ||||
| Piaggio & C. | Purchase | CNY | 58,700 | 8,315 | 29/01/2016 |
| Piaggio & C. | Purchase | JPY | 225,000 | 1,700 | 13/01/2016 |
| Piaggio & C. | Purchase | SEK | 1,000 | 109 | 29/02/2016 |
| Piaggio & C. | Purchase | USD | 11,500 | 10,575 | 21/01/2016 |
| Piaggio & C. | Sale | CAD | 640 | 434 | 29/01/2016 |
| Piaggio & C. | Sale | CNY | 11,900 | 1,652 | 15/01/2016 |
| Piaggio & C. | Sale | GBP | 650 | 879 | 30/03/2016 |
| Piaggio & C. | Sale | INR | 506,000 | 6,969 | 10/01/2016 |
| Piaggio & C. | Sale | USD | 5,650 | 5,151 | 29/01/2016 |
| Piaggio Group Americas |
Sale | € | 415 | 442 | 28/01/2016 |
| Piaggio Vespa BV | Sale | HRK | 17,050 | 2,227 | 15/01/2016 |
| Piaggio Vespa BV | Sale | SGD | 610 | 401 | 18/02/2016 |
| Piaggio Indonesia | Purchase | € | 3,620 | 56,986,716 | 02/02/2016 |
| Piaggio Indonesia | Purchase | USD | 128 | 1,820,070 | 15/02/2016 |
| Piaggio Vehicles Private Limited |
Sale | € | 1,645 | 119,895 | 23/02/2016 |
| Piaggio Vehicles Private Limited |
Sale | USD | 2,211 | 147,136 | 01/02/2016 |
| Company | Operation | Currency | Amount in currency |
Value in local currency (forward exchange rate) |
Average maturity |
|---|---|---|---|---|---|
| In thousands | In thousands | ||||
| Piaggio & C. | Purchase | CNY | 254,700 | 35,462 | 02/06/2016 |
| Piaggio & C. | Sale | GBP | 7,240 | 10,516 | 19/06/2016 |
As of 31 December 2015, the Group had undertaken the following transactions to hedge the business exchange risk:
To hedge the economic exchange risk alone, cash flow hedging is adopted with the effective portion of profits and losses recognised in a specific shareholders' equity reserve. Fair value is determined based on market quotations provided by main traders.
As of 31 December 2015 the total fair value of hedging instruments for the economic exchange risk recognised on a hedge accounting basis was positive by €/000 285. During 2015, gains under other components of the Statement of Comprehensive Income were recognised amounting to €/000 285 and profits from other components of the Statement of Comprehensive Income amounting to €/000 656 were reclassified under profit/loss for the period.
The net balance of cash flows during 2015 is shown below, divided by main currency:
| Cash Flow 2015 | |
|---|---|
| In millions of Euros | |
| Canadian Dollar | 5.4 |
| Pound Sterling | 26.2 |
| Japanese Yen | (5.7) |
| US Dollar | 19.0 |
| Indian Rupee | 22.6 |
| Croatian Kuna | 2.8 |
| Chinese Yuan* | (36.2) |
| Vietnamese Dong | 20.4 |
| Indonesian Rupiah | 11.1 |
| Total cash flow in foreign currency | 65.6 |
* cash flow partially in euro
In view of the above, an assumed appreciation/depreciation of 3% of the Euro would have generated potential losses for €/000 1,915 and potential profits for €/000 2,033 respectively.
This risk arises from fluctuating interest rates and the impact this may have on future cash flows arising from variable rate financial assets and liabilities. The Group regularly measures and controls its exposure to the risk of interest rate changes, as established by its management policies, in order to reduce fluctuating borrowing costs, and limit the risk of a potential increase in
interest rates. This objective is achieved through an adequate mix of fixed and variable rate exposure, and the use of derivatives, mainly interest rate swaps and cross currency swaps.
an interest rate swap to hedge a variable rate loan for a nominal amount of €/000 117,857 (as of 31 December 2015 for €/000 10,714) granted by the European Investment Bank. The structure has fixed step-up rates, in order to stabilise financial flows associated with the loan; in accounting terms, the instrument is recognised on a cash flow hedge basis, with profits/losses arising from the fair value measurement allocated to a specific reserve in Shareholders' equity; as of 31 December 2015, the fair value of the instrument was negative by €/000 59; sensitivity analysis of the instrument, assuming a 1% increase and decrease in the shift of the variable rates curve, shows a potential impact on Shareholders' Equity, net of the relative tax effect, which was negligible.
identified a potential impact on the Income Statement, net of the relative tax effect, of €/000 -1 and €/000 1 respectively;
As of 31 December 2015, the Group had a cross currency swap relative to the Indian subsidiary to hedge the intercompany loan of €/000 5,000 granted by the Parent Company. The purpose of the instrument is to hedge the exchange risk and interest rate risk, turning the loan from Euros to Indian Rupees and from a variable to a fixed rate. Based on hedge accounting principles, this derivative is classified as non-hedging and therefore is measured at fair value with measurement effects recognised in profit or loss. As of 31 December 2015, the fair value of the instrument was equal to €/000 -890. Sensitivity analysis of the instrument and its underlying, assuming a 1% increase and decrease in the shift of the variable rates curve, showed a potential impact on the Income Statement, net of the relative tax effect of €/000 14 and €/000 -15 respectively, assuming constant exchange rates. Assuming a 1% reversal and write-down of the exchange rate of the Indian Rupee, sensitivity analysis of the instrument and its underlying identified a potential impact on the Income Statement, net of the relative tax effect, of €/000 -30 and €/000 31 respectively.
| FAIR VALUE | |
|---|---|
| In thousands of euros | |
| Piaggio & C. S.p.A. | |
| Interest Rate Swap | (59) |
| Cross Currency Swap | 20,289 |
| Piaggio Vehicles Private Limited | |
| Cross Currency Swap | 3,238 |
| Cross Currency Swap | 2,654 |
| Cross Currency Swap | (890) |
| Piaggio Vietnam | |
| Cross Currency Swap | 652 |
During the year, the nominal share capital of Piaggio & C. did not change.
On 23 April 2015 the new composition of share capital of Piaggio & C. S.p.A (fully subscribed and paid up) was registered with the relative Companies Register, following the annulment of 2,466,500 treasury shares without any change to the share capital, resolved by the Extraordinary Shareholders' Meeting of 13 April 2015.
Therefore, as of 31 December 2015, the nominal share capital of Piaggio & C., fully subscribed and paid up, was equal to € 207,613,944.37, divided into 361,208,380 ordinary shares.
On 14 December 2015, the Parent Company acquired 16,000 treasury shares at the average price of € 2.1285 euro per share, for a total value of € 34,056 euro.
Consequently, as of 31 December 2015, Piaggio & C. S.p.A. held 16,000 treasury shares, equal to 0.0044% of the share capital.
Shares in circulation and treasury shares
| no. of shares | 2015 | 2014 |
|---|---|---|
| Situation as of 1 January | ||
| Shares issued | 363,674,880 | 360,894,880 |
| Treasury shares in portfolio | 2,466,500 | 839,669 |
| Shares in circulation | 361,208,380 | 360,055,211 |
| Movements for the period | ||
| Exercise of stock options | 2,780,000 | |
| Cancellation of treasury shares | (2,466,500) | |
| Purchase of treasury shares | 16,000 | 1,826,831 |
| Sale of treasury shares to exercise stock options | (200,000) | |
| Situation as of 31 December | ||
| Shares issued | 361,208,380 | 363,674,880 |
| Treasury shares in portfolio | 16,000 | 2,466,500 |
| Shares in circulation | 361,192,380 | 361,208,380 |
In the first few months of 2016, the Parent Company acquired 1,880,000 treasury shares. Therefore at the time of going to press, Piaggio & C. S.p.A. held 1,896,000 treasury shares, equal to 0.525% of the share capital.
The share premium reserve as of 31 December 2015 had not changed.
The legal reserve increased by €/000 741 as a result of the allocation of earnings for the last period.
The financial instruments fair value reserve is negative and refers to the effects of cash flow hedge accounting in foreign currencies, interest and specific business transactions. These transactions are described in full in the note on financial instruments.
The Shareholders Meeting of Piaggio & C. S.p.A. of 13 April 2015 resolved to distribute a dividend of 7.2 eurocents per ordinary share. During 2014, dividends were not distributed.
| Total amount | Dividend per share | ||||
|---|---|---|---|---|---|
| 2015 | 2014 | 2014 | |||
| €/000 | €/000 | € | € | ||
| Authorised and paid | 26,007 | - | 0.072 | - |
As the stock plan has terminated, the relative reserve was included under earnings reserves.
The end of period figures refer to non-controlling interests in Aprilia Brasil Industria de Motociclos S.A.
The figure is broken down as follows:
| Reserve for measurement of financial instruments |
Group conversion reserve |
Earnings reserve |
Group total |
Share capital and reserves attributable to non-controlling interests |
Total other comprehensive income (expense) |
|
|---|---|---|---|---|---|---|
| In thousands of euros | ||||||
| As of 31 December 2015 | ||||||
| Items that will not be reclassified to profit or loss |
||||||
| Remeasurements of defined benefit plans | 1,841 | 1,841 | 1,841 | |||
| Total | 0 | 0 | 1,841 | 1,841 | 0 | 1,841 |
| Items that may be reclassified to profit or loss |
||||||
| Total translation gains (losses) | 3,231 | 3,231 | 82 | 3,313 | ||
| Total profits (losses) on cash flow hedges | 244 | 244 | 244 | |||
| Total | 244 | 3,231 | 0 | 3,475 | 82 | 3,557 |
| Other Comprehensive Income (Expense) |
244 | 3,231 | 1,841 | 5,316 | 82 | 5,398 |
| As of 31 December 2014 | ||||||
| Items that will not be reclassified to profit or loss |
||||||
| Remeasurements of defined benefit plans | (5,594) | (5,594) | (5,594) | |||
| Total | - | - | (5,594) | (5,594) | - | (5,594) |
| Items that may be reclassified to profit or loss |
||||||
| Total translation gains (losses) | 8,224 | 8,224 | (9) | 8,215 | ||
| Total profits (losses) on cash flow hedges | 735 | 735 | 735 | |||
| Total | 735 | 8,224 | - | 8,959 | (9) | 8,950 |
| Other Comprehensive Income (Expense) |
735 | 8,224 | (5,594) | 3,365 | (9) | 3,356 |
The tax effect relative to other components of the Statement of Comprehensive Income is broken down as follows:
| As of 31 December 2014 | |||||||
|---|---|---|---|---|---|---|---|
| As of 31 December 2015 | |||||||
| Tax | |||||||
| (expense) | (expense) | ||||||
| Gross value | / benefit | Net value | Gross value | / benefit | Net value | ||
| In thousands of euros | |||||||
| Remeasurements of defined benefit plans | 2,710 | (869) | 1,841 | (7,598) | 2,004 | (5,594) | |
| Total translation gains (losses) | 3,313 | 3,313 | 8,215 | 8,215 | |||
| Total profits (losses) on cash flow hedges | 418 | (174) | 244 | 1,050 | (315) | 735 | |
| Other Comprehensive Income (Expense) | 6,441 | (1,043) | 5,398 | 1,667 | 1,689 | 3,356 |
As of 31 December 2015, there were no incentive plans based on financial instruments.
For a complete description and analysis of fees of Directors, Statutory Auditors and Key Managers, reference is made to the remuneration report available from the registered office, and on the Company's website in the section "Governance".
| 2015 |
|---|
| 1,694 |
| 201 |
| 422 |
| 2,317 |
Revenues, costs, payables and receivables as of 31 December 2015 involving parent companies, subsidiaries and associates refer to the sale of goods or services which are a part of normal operations of the Group.
Transactions are carried out at normal market values, depending on the characteristics of the goods and services provided.
The information on transactions with related parties, including information required by Consob in its communication of 28 July 2006 DEM/6664293, is given in the notes to the Consolidated Financial Statements and notes to the separate Financial Statements of the Parent Company.
The procedure for transactions with related parties, pursuant to article 4 of Consob Regulation no. 17221 of 12 March 2010 as amended, approved by the Board on 30 September 2010, is published on the institutional site of the Issuer www.piaggiogroup.com, under Governance.
Piaggio & C. S.p.A. is controlled by the following companies:
| Designation | Registered office | Type | % of ownership | |
|---|---|---|---|---|
| 2015 | 2014 | |||
| IMMSI S.p.A. | Mantova - Italy | Direct parent company | 50.0621 | 50.2450 |
| Omniaholding S.p.A. | Mantova - Italy | Final parent company | 0.0277 | 0.0275 |
Piaggio & C. S.p.A. is subject to the management and coordination of IMMSI S.p.A. pursuant to article 2497 et seq. of the Italian Civil Code. During the period, this management and coordination concerned the following activities:
In 2013, for a further three years, the Parent Company signed up to the National Consolidated Tax Mechanism pursuant to articles 117-129 of the Consolidated Income Tax Act (T.U.I.R) of which IMMSI S.p.A. is the consolidating company, and to whom other IMMSI Group companies report to. The consolidating company determines a single global income equal to the algebraic sum of taxable amounts (income or loss) realised by individual companies that opt for this type of group taxation.
The consolidating company recognises a receivable from the consolidated company which is equal to the corporate tax to be paid on the taxable income transferred by the latter. Whereas, in the case of companies reporting tax losses, the consolidating company recognises a payable related to corporate tax on the portion of loss actually used to determine global overall income. Under the National Consolidated Tax Mechanism, companies may, pursuant to Article 96 of Presidential Decree no. 917/86, allocate the excess of interest payable which is not deductible to one of the companies so that, up to the excess of Gross Operating Income produced in the same tax period by other subjects party to the consolidation (or, in the presence of specific legal requirements, from foreign companies), the amount may be used to reduce the total income of the Group.
Piaggio & C. S.p.A. has undertaken a rental agreement for offices owned by Omniaholding S.p.A.. This agreement, signed in normal market conditions, was previously approved by the Related Parties Transactions Committee, as provided for by the procedure for transactions with related parties adopted by the Company.
Piaggio Concept Store Mantova Srl has a lease contract for its sales premises and workshop with Omniaholding S.p.A.. This agreement was signed in normal market conditions.
Omniaholding S.p.A. has undersigned Piaggio & C. bonds for a value of € 2.9 million on the financial market, and collected related interest.
Pursuant to article 2.6.2, section 13 of the Regulation of Stock Markets organised and managed by Borsa Italiana S.p.A., the conditions as of article 37 of Consob regulation no. 16191/2007 exist.
The main relations with subsidiaries, eliminated in the consolidation process, refer to the following transactions:
Piaggio Vietnam sells vehicles, spare parts and accessories, which it has manufactured in some cases, for sale on respective markets, to:
o Piaggio Group Japan
o Piaggio & C. S.p.A.
Piaggio Vehicles Private Limited sells vehicles, spare parts and accessories, for sale on respective markets, and components and engines to use in manufacturing, to Piaggio & C. S.p.A..
o distribute vehicles, spare parts and accessories purchased by Piaggio & C. on their respective markets.
o provide a vehicle, spare part and accessory distribution service to Piaggio Vietnam for their respective markets.
o provide a sales promotion service and after-sales services to Piaggio & C. S.p.A. for their respective markets.
o provides a sales promotion service and after-sales services to Piaggio Vietnam in the Asia Pacific region.
o provides a sales promotion service and after-sales services to Piaggio Group Americas in Canada.
o provides a vehicle and component research/design/development service to Piaggio & C. S.p.A.
o rents a property to Piaggio & C. S.p.A.
o charges its management costs to Piaggio & C. S.p.A.
Main intercompany relations between subsidiaries and JV Zongshen Piaggio Foshan Motorcycle Co. Ltd, refer to the following transactions:
grants licences for rights to use the brand and technological know how to Zongshen Piaggio Foshan Motorcycle Co. Ltd..
sells vehicles to Zongshen Piaggio Foshan Motorcycle Co. Ltd. for sale on the Chinese market.
The table below summarises relations described above and financial relations with parent companies and associates as of 31 December 2015 and 31 December 2014 and relations during the year, as well as their overall impact on financial statement items.
| As of 31 December 2015 | Fondazione Piaggio |
Zongshen Piaggio Foshan |
IMMSI Audit |
Pontech Pontedera & Tecnologia |
Is Molas | Studio Girelli |
Trevi | Omniaholding | IMMSI | Total | % of accounting item |
|---|---|---|---|---|---|---|---|---|---|---|---|
| In thousands of euros |
|||||||||||
| Income statement | |||||||||||
| Revenues from sales | 794 | 794 | 0.06% | ||||||||
| Costs for materials | 25,616 | 25,616 | 3.33% | ||||||||
| Costs for services | 30 | 850 | 37 | 34 | 19 | 1,267 | 2,237 | 1.06% | |||
| Insurance | 49 | 49 | 0.57% | ||||||||
| Leases and rentals | 181 | 1,309 | 1,490 | 9.40% | |||||||
| Other operating income | 648 | 38 | 1 | 50 | 737 | 0.69% | |||||
| Other operating costs | 19 | 14 | 33 | 0.16% | |||||||
| Write-down/Impairment of investments | 163 | (22) | 141 | 47.80% | |||||||
| Borrowing costs | 23 | 134 | 157 | 0.42% | |||||||
| Taxes | (655) | (655) | -7.95% | ||||||||
| Assets | |||||||||||
| Other non-current receivables | 153 | 153 | 1.14% | ||||||||
| Current trade receivables | 1,136 | 14 | 1,150 | 1.42% | |||||||
| Other current receivables | 873 | 47 | 7,959 | 8,879 | 30.06% | ||||||
| Liabilities Financial liabilities falling due after one |
|||||||||||
| year | 2,900 | 2,900 | 0.56% | ||||||||
| Current trade payables | 9,311 | 19 | 10 | 39 | 729 | 10,108 | 2.66% | ||||
| Other current payables | 30 | 1,604 | 7,032 | 8,666 | 18.04% |
Contract commitments of the Piaggio Group are summarised based on their expiry.
| Between 2 and | ||||
|---|---|---|---|---|
| In 1 year | 5 years | After 5 years | Total | |
| In thousands of euros | ||||
| Operating leases | 10,951 | 11,810 | 2,759 | 25,521 |
| Other commitments | 22,452 | 14,681 | 37,133 | |
| Total | 33,403 | 26,491 | 2,760 | 62,654 |
The main guarantees issued by banks on behalf of Piaggio & C. S.p.A in favour of third parties are listed below:
| Type | Amount €/000 |
|---|---|
| A guarantee of BCC-Fornacette to Livorno Customs Authorities for handling Piaggio goods at Livorno Port |
200 |
| A guarantee of BCC-Fornacette issued to Pisa Customs Authorities for handling Piaggio goods at the Pisa docks and at Livorno Port |
200 |
| A guarantee of BCC-Fornacette issued for the Group to Poste Italiane – Rome to guarantee contract obligations for the supply of vehicles |
1,321 |
| A guarantee of Banco di Brescia issued to the local authorities of Scorzè, to guarantee payment of urbanisation and construction charges relative to the Scorzè site |
166 |
| A guarantee of Intesa Sanpaolo issued to the Ministry of the Interior of Algeria, to guarantee contract obligations for the supply of vehicles |
140 |
| A guarantee of Intesa Sanpaolo issued to the Ministry of the Defense of Algeria, to guarantee contract obligations for the supply of vehicles |
158 |
| A guarantee of Intesa Sanpaolo issued to Hafei Motor for € 1,500,000 for an ongoing supply agreement |
1,500 |
| A guarantee of Monte dei Paschi di Siena issued to Chen ShinRubber for € 650,000 for an ongoing supply agreement |
650 |
| A guarantee of Banca Nazionale del Lavoro issued to the local authorities of Scorzè, to guarantee urbanisation and construction charges relative to the Scorzè site for USD 122,000 |
100 |
| A guarantee of Banca Nazionale del Lavoro - Innovation and Networks Executive Agency issued for Project 1_HeERO |
350 |
Piaggio opposed the proceedings undertaken by the consumer association Altroconsumo, in accordance with article 140 of the Consumer Code, opposing, also with the filing of a specific technical report written by an independent expert, the alleged existence of a design defect and hazardous nature of the Gilera Runner first series, which was manufactured and sold by Piaggio from 1997 to 2005. In the case put forward by Altroconsumo, the erroneous design would make the vehicle in question more hazardous in the event of an accident with frontal impact, referring, as an example to two accidents occurring in 1999 and 2009 to Mr Gastaldi and Mr Stella respectively, following which the Gilera Runner burst into flames. The trial judge rejected the claim, ordering Altroconsumo to pay Piaggio's legal fees. Following the appeal made by Altroconsumo, the Board ordered a technical appraisal to ascertain the existence of the design defect claimed by Altroconsumo. Following the results of the appraisal and hearing held on 18 December 2012, the Board informed the parties on 29 January 2013 that Altroconsumo's appeal had been upheld, ruling Piaggio to (i) inform owners of the hazardous nature of the product, (ii) publish the ruling of the Board in some newspapers and specialised magazines (iii) recall the product. The effects of the ruling were subsequently suspended by the Court of Pontedera with a ruling ("inaudita altera parte") of 28 March 2013, concerning the appeal made by Piaggio, in accordance with article 700 of the Italian Code of Civil Proceedings. Following the cross examination with Altroconsumo, the suspension ruling was confirmed by the Court of Pontedera on 3 June 2013. Altroconsumo appealed against the suspension ruling before the Board at the Court of Pisa. The Board therefore ordered a new expert witness report, having established contradictions between i) the report of the Court-appointed expert Professor Cantore in proceedings brought by Altroconsumo and ii) the report of the Court-appointed expert Professor Cantore in proceedings brought by Mr Stella in a separate ruling for the compensation of damages. Activities of the expert were completed and the expert witness report was filed in December 2014. The results of the expert witness report were discussed at the hearing of 19 January 2015, at the end of which the Court of Pisa upheld the judgement issued on 29 January 2013. Piaggio has complied with the decision by publishing a notice in the press and launching a recall campaign for its vehicles pending the outcome of the proceedings, as described below.
Piaggio has taken action before the Court of Pontedera (now the Court of Pisa) for a final dismissal of the ruling of the Court of Pisa of 29 January 2013. Upholding Piaggio's appeal, the Judge ordered a new expert witness report for the product, appointing Professor Belingardi of Turin Polytechnic as the expert, who was sworn in during the hearing of 14 July 2015. The case has been adjourned until 21 April 2016 for a discussion of the expert witness report.
Canadian Scooter Corp. (CSC), sole distributor of Piaggio for Canada, summoned Piaggio & C. S.p.A., Piaggio Group Americas Inc. and Nacional Motor S.A to appear before the Court of Toronto (Canada) in August 2009 to obtain compensation for damages sustained due to the alleged infringement of regulations established by Canadian law on franchising (the Arthur Wishart Act). Proceedings have been stopped while a settlement of the dispute is being defined.
In 2010, Piaggio took action to establish an arbitration board through the Arbitration Chamber of Milan, for a ruling against some companies of the Case New Holland Group (Italy, Holland and the US), to recover damages under contractual and non-contractual liability relating to the execution of a supply and development contract of a new family of utility vehicles (NUV). In the award notified to the parties on 3 August 2012, the Board rejected the claims made by the Company. The Company has appealed against this award to the Appeal Court of Milan, which has established the first hearing for 4 June 2013. The hearing for closing arguments set for 12 January 2016 was adjourned to 26 January 2016. The Court therefore deferred its ruling, assigning the parties the terms for final statements and relative rejoinders and replications.
Da Lio S.p.A., by means of a writ received on 15 April 2009, summoned the Parent Company before the Court of Pisa to claim compensation for the alleged damages sustained for various reasons as a result of the termination of supply relationships. The Company appeared in court requesting the rejection of all opposing requests. Da Lio requested a joinder with the opposition concerning the injunction obtained by Piaggio to return the moulds retained by the supplier at the end of the supply agreement. Judgements were considered and a ruling issued pursuant to article 186-ter of the Italian Code of Civil Proceedings, on 7 June 2011, ordering Piaggio to pay the sum of Euro 109,586.60, in addition to interest relative to sums which were not disputed. During 2012, testimonial evidence was presented. After reaching a decision at the end of testimonial evidence, the Judge admitted a technical/accounting court-appointed expert requested by Da Lio to quantify the amount of interest claimed by Da Lio and value of stock. The technical appraisal was completed at the end of 2014. At the hearing of 12 February, the Judge arranged for a mediation hearing for 23 April 2015. Following the hearing and in the absence of conciliation, the case was adjourned until 23 September 2016 for closing arguments.
In June 2011 Elma srl, a Piaggio dealer since 1995, started two separate proceedings against the Parent Company, claiming the payment of approximately € 2 million for alleged breach of the sole agency ensured by Piaggio for the Rome area and an additional € 5 million as damages for alleged breach and abuse of economic dependence by the Company. Piaggio opposed the proceedings undertaken by Elma, fully disputing its claims and requesting a ruling for Elma to settle outstanding sums owing of approximately € 966,000.
During the case, Piaggio requested the enforcement of bank guarantees that ensured against the risk of default by the dealer issued in its favour by three banks. Elma attempted to stop enforcement of the guarantees with preventive proceedings at the Court of Pisa (Pontedera section): the proceedings ended in favour of Piaggio that collected the amounts of the guarantees (over € 400,000). Trial proceedings took place and a hearing was held on 24 April 2013 to examine evidence. After reaching a decision at the aforesaid hearing, the Judge rejected requests for preliminary examination of Elma and set the hearing for 17 December 2015 for closing arguments.
As regards the matter, Elma has also brought a case against a former senior manager of the Company before the Court of Rome, claiming compensation for damages: Piaggio appeared in the proceedings, requesting, among others, that the case be moved to the Court of Pisa. At the hearing of 27 January 2014, the Judge ruled on the preliminary exceptions and did not admit preliminary briefs. The hearing for closing arguments, set for 21 December 2015, has been adjourned to 3 March 2016.
In a writ received on 29 May 2007, Gammamoto S.r.l. in liquidation, an Aprilia licensee in Rome, brought a case against the Parent Company before the Court of Rome for contractual and noncontractual liability. The Company fully opposed the injunction disputing the validity of Gammamoto's claims and objecting to the lack of jurisdiction of the Judge in charge. The Judge, accepting the petition formulated by the Company, declared its lack of jurisdiction with regards to the dispute. Gammamoto has continued proceedings through the Court of Venice. The Judge admitted testimonial evidence and evidence for examination requested by the parties, establishing the hearing for the preliminary investigation on 12 November 2012. After defining the closing arguments of the hearing of 26 June 2013, the terms for final statements and relative replies were granted, and the case was ruled on. The Court of Venice issued a ruling in favour of Piaggio, filed on 17 February 2014. Gammamoto appealed and at the first hearing on 23 October 2014 the Court decided to rule without proceeding with the preliminary investigation requested by the other party, and in particular without ordering a technical appraisal. The hearing for closing arguments has been set for 1 April 2019.
The company TAIZHOU ZHONGNENG summoned Piaggio before the Court of Turin, requesting the annulment of the Italian part of the 3D mark registered in Italy protecting the form of the Vespa, as well as a ruling dismissing the offence of the counterfeiting of the 3D mark in relation to scooter models seized by the Guardia di Finanza [Italian tax police] at the 2013 EICMA trade show, based on the petition filed by Piaggio, in addition to compensation for damages. At the first hearing for the parties to appear, set for 4 February 2015 and adjourned to 5 February 2015, the Judge lifted reservations, arranging for a technical appraisal to establish the validity of the Vespa 3D mark and the infringement or otherwise of Znen scooter models, setting the next hearing for the court-appointed expert to be sworn in on 18 March 2015. This hearing was then adjourned to 29 May 2015. At that hearing, the judge set the deadline for filing the final expert witness report as 10 January 2016, and scheduled the discussion hearing for 3 February 2016. During this hearing, the final expert witness report filed on 10 January 2016 was discussed and the judge, considering the preliminary stage completed, set the hearing for closing arguments for 26 October 2016.
In a writ of 27 October 2014 Piaggio summoned the companies PEUGEOT MOTOCYCLES ITALIA s.p.a., MOTORKIT s.a.s. di Turcato Bruno e C., GI.PI. MOTOR di Bastianello Attilio and GMR MOTOR s.r.l. before the Court of Milan to obtain the recall of Peugeot "Metropolis" motorcycles from the market, and to establish the infringement of some European patents and designs owned by Piaggio, as well as a ruling for the compensation of damages for unfair competition, and the publication of the ruling in some newspapers.
At the first hearing for the parties to appear set for 4 March 2015, the judge stipulated the terms for the submission of statements pursuant to article 183.6 of the Italian Code of Civil Procedure. In the hearing swearing in the court-appointed expert, on 6 October 2015, the deadline for filing the final expert witness report was set for 15 October 2016, and the discussion hearing for 8 November 2016.
Piaggio brought a similar action against Peugeot Motocycles SAS before the Tribunal de Grande Instance in Paris. As a result of the Piaggio action ("Saisie Contrefaçon"), several documents were obtained by a bailiff and tests carried out to prove the infringement of the MP3 motorcycle by the Peugeot "Metropolis" motorcycle. The hearing took place on 8 October 2015 for the appointment of the expert witness, who will examine the findings of the Saisie Contrefaçon. On 3 February 2016 the hearing took place to discuss the preliminary briefs exchanged between the parties. During this hearing, the judge requested the nomination, possibly in accordance with Peugeot's lawyer, of two or three experts, to select one expert in relation to the selection of seized documents.
In a writ of 4 November 2014 Piaggio summoned the companies YAMAHA MOTOR ITALIA s.p.a., TERZIMOTOR di Terzani Giancarlo e Alberto s.n.c., NEGRIMOTORS s.r.l. and TWINSBIKE s.r.l. before the Court of Milan to obtain the recall of Yamaha "Tricity" motorcycles from the market, and to establish the infringement of some European patents and designs owned by Piaggio, as well as a ruling for the compensation of damages for unfair competition, and the publication of the ruling in some newspapers.
At the first hearing scheduled for 24 March 2015, the judge set the deadline for filing statements pursuant to article 183.6 of the Italian Code of Civil Procedure, scheduling the appointment of the expert witness that was sworn in on 9 September 2015, for the hearing on 1 July 2015. The deadline for filing the final expert witness report was set for 30 April 2016.
In July 2015 YAMAHA HATSUDOKI KABUSHIKI KAISHA (YAMAHA MOTOR CO LTD) brought three separate proceedings before the Court of Rome, the Tribunal de Grande Istance de Paris and the Court of Düsseldorf, against Piaggio & C. SpA, Piaggio France and Piaggio Deutschland GmbH, to obtain (i) the recall of MP3, Gilera Fuoco motorcycles, (ii) a ruling for the compensation of damages, (iii) and the publication of the ruling in some newspapers, after establishing the infringement of some European patents owned by Yamaha concerning an air intake for the cooling of a continuously variable transmission (CVT) and an outer cover with boomerang shape, with basically an aesthetic function, located below the vehicle seat, as well as for unfair competition. The hearing for the first appearance has been set for 11 February 2016 in Rome, for 24 March 2016 in Paris and for 10 November 2016 in Düsseldorf.
In July 2015 YAMAHA HATSUDOKI KABUSHIKI KAISHA (YAMAHA MOTOR CO LTD) brought three separate proceedings before the Court of Rome, the Tribunal de Grande Istance de Paris and the Court of Düsseldorf, against Piaggio & C. SpA, Aprilia Racing S.p.A, Piaggio France and Piaggio Deutschland GmbH, to obtain (i) the recall of Aprilia RSV4 motorcycles, (ii) a ruling for the compensation of damages, (iii) and the publication of the ruling in some newspapers, after establishing the infringement of some European patents owned by Yamaha concerning an injection system for high performance with variable intake pipes, as well as for unfair competition. The hearing for the first appearance has been set for 2 March 2016 in Rome, for 24 March 2016 in Paris and for 10 November 2016 in Düsseldorf.
The amounts allocated by the Company for the potential risks deriving from the current litigation appear to be consistent with the predictable outcome of the disputes.
As regards tax claim rulings involving the Parent Company Piaggio & C. S.p.A. (hereinafter "the Company"), two appeals are ongoing against two tax assessments notified to the Company and relative to the 2002 and 2003 tax years respectively. These assessments originate from an access conducted by the Italian Revenue Agency in 2007 at the Company's offices, following information filed in the Report of Verification issued in 2002 following a general audit.
The Company has obtained a favourable ruling concerning these assessments, in both the first and second instance, and with reference to both tax periods, against which the Italian Revenue Agency has lodged an appeal with the Court of Cassation; the Company has filed relative counter claims and is waiting for dates of hearings to be set.
The Company also filed two appeals with the Income Tax Appellate Tribunal against the assessment orders received on completion of the assessment of income generated by Piaggio & C. S.p.A. in India during the Indian 2009-2010 and 2010-2011 tax periods, involving sums totalling approximately € 1 million for each assessment. These appeals were submitted on 25 March 2015 and 22 February 2016 respectively.
The Company has not considered allocating provisions for these disputes, in view of the positive opinions expressed by consultants appointed as counsel.
The main tax disputes of other Group companies concern Piaggio Vehicles PVT Ltd, Piaggio France S.A. and Piaggio Hellas S.A..
With reference to the Indian subsidiary, some disputes concerning different tax years from 1998 to 2014 are ongoing related to direct and indirect tax assessments and for a part of which, considering positive opinions expressed by consultants appointed as counsel, provisions have not been made in the financial statements. The Indian company has already partly paid the amounts contested, as required by local laws, that will be paid back when proceedings are successfully concluded in its favour.
As regards the French company, a favourable ruling was issued in December 2012 by the Commission Nationale des Impots directes et des taxes sur le chiffre d'affaires, the decisionmaking body ruling prior to legal proceedings in disputes with the French tax authorities concerning a general audit of the 2006 and 2007 periods. The French tax authorities however upheld its claims against the Company, requesting payment of the amounts claimed and issuing relative notices (one for withholding tax and the other for corporate income tax and VAT). The amount concerned, equal to approximately € 3.7 million, was paid in part to the French tax authorities. However, based on positive opinions from professionals appointed as counsel, the Company considers a positive outcome as likely and the subsequent reimbursement of amounts paid.
The Company appealed against the notices and filed an appeal with the Tribunal Administratif concerning withholding tax, which was quashed. This decision was appealed against on 7 September 2015 before the Appeal Court and a date for the hearing still has to be set.
A hearing will also take place before the Tribunal Administratif for findings concerning corporate income tax. The Company has not considered allocating provisions necessary, in view of the positive opinions expressed by consultants appointed as counsel, as well as the opinion of the above Commission.
On 8 April 2015, the Greek company Piaggio Hellas S.A. received a Tax Report following a general audit for the 2008 tax period, with findings for approximately € 0.5 million. On 12 June 2015, the Company appealed against the report with the Tax Center – Dispute Resolution Department. Following the unfavourable outcome of this appeal, the Company, on 9 December 2015, filed an appeal with the Administrative Court of Appeal. A date for the hearing still has to be set. The amount in question was paid in full to the Greek tax authorities. However, based on positive opinions from professionals appointed as counsel, the Company considers a positive outcome as likely and the subsequent reimbursement of amounts paid.
During 2014, the Parent Company exercised the call option of the debenture loan issued by the Company on 1 December 2009 for a total amount of €/000 150,000 and maturing on 1 December 2016. On 9 June, the remaining portion of this loan (equal to approximately € 42 million) was paid back at the price of 103.50%, after the finalisation of the exchange offer launched on 7 April.
The operation led in 2014 to the premium paid to bond holders that did not take up the exchange offer and of costs not yet amortised of the reimbursed loan being recognised under borrowing costs in the income statement.
In 2014, the Parent Company refinanced a revolving credit line with a limited pool of banks of a nominal value of €/000 200,000 maturing in December 2015. This operation resulted in the recognition of costs not yet amortised in the income statement in 2014.
These operations come under significant non-recurrent transactions, as defined by CONSOB Communication DEM/6064293 of 28 July 2006.
For 2015, no significant non-recurrent transactions were recorded.
During 2015 and 2014, the Group did not record any significant atypical and/or unusual transactions, as defined by CONSOB Communication DEM/6037577 of 28 April 2006 and DEM/6064293 of 28 July 2006.
No events to be reported occurred after the end of the period.
This document was published on 24 March 2016, authorised by the Chairman and Chief Executive Officer.
Milan, 11 March 2016 for the Board of Directors Chairman and Chief Executive Officer Roberto Colaninno
Attachments
Companies and material investments of the Group are listed below.
The list presents the companies divided by type of control and method of consolidation.
The following are also shown for each company: the company name, the registered office, the country of origin and the share capital in the original currency, in addition to the percentage held by Piaggio & C. S.p.A. or by other subsidiaries. It should be noted that the percentage share of ownership corresponds to the percentage share of the voting rights exercised at Ordinary General Meetings of Shareholders.
| List of companies included in the scope of consolidation on a line-by-line basis as of 31 December 2015 | |
|---|---|
| --------------------------------------------------------------------------------------------------------- | -- |
| % of the holding | ||||||||
|---|---|---|---|---|---|---|---|---|
| Company name | Registered office |
Country | Share capital | Currency | Direct | Indirect | Means | % total interest |
| Parent company | ||||||||
| Piaggio & C. S.P.A. | Pontedera (Pisa) | Italy | 207,613,944.37 | Euro | ||||
| Subsidiaries | ||||||||
| Aprilia Brasil Industria de Motociclos S.A. |
Manaus | Brazil | 2,020,000.00 | R\$ | 51% | Aprilia World Service Holding do Brasil Ltda |
51% | |
| Aprilia Racing s.r.l. | Pontedera (Pisa) | Italy | 250,000.00 | Euro | 100% | 100% | ||
| Aprilia World Service Holding do Brasil Ltda. |
São Paulo | Brazil | 2,028,780.00 | R\$ | 99.999950709% | Piaggio Group Americas Inc |
99.999950709% | |
| Atlantic 12- Property investment fund |
Rome | Italy | 10,439,872.51 | Euro | 100% | 100% | ||
| Foshan Piaggio Vehicles Technology Research and Development Co Ltd |
Foshan City | China | 10,500,000.00 | RMB | 100% | Piaggio Vespa B.V. | 100% | |
| Nacional Motor S.A. | Barcelona | Spain | 60,000.00 | Euro | 100% | 100% | ||
| Piaggio Advanced Design Center Corp. |
California | USA | 100,000.00 | USD | 100% | 100% | ||
| Piaggio Asia Pacific PTE Ltd. |
Singapore | Singapore | 100,000.00 | sin\$ | 100% | Piaggio Vespa B.V. | 100% | |
| Piaggio China Co. LTD | Hong Kong | China | 12,500,000 auth. capital (12,100,000 subscribed and paid up) |
USD | 99.999990% | 99.999990% | ||
| Piaggio Concept Store | ||||||||
| Mantova S.r.l. | Mantova | Italy | 100,000.00 | Euro | 100% | 100% |
| % of the holding | ||||||||
|---|---|---|---|---|---|---|---|---|
| Company name Registered office | Country | Share capital | Currency | Direct | Indirect | Means | % total interest |
|
| Piaggio Deutschland GmbH |
Düsseldorf | Germany | 250,000.00 | Euro | 100% | Piaggio Vespa B.V. | 100% | |
| Piaggio España S.L.U. | Alcobendas | Spain | 426,642.00 | Euro | 100% | 100% | ||
| Piaggio Fast Forward Inc. | Delaware | USA | 1,676.47 | USD | 89.47% | 89.47% | ||
| Piaggio France S.A.S. | Clichy Cedex | France | 250,000.00 | Euro | 100% | Piaggio Vespa B.V. | 100% | |
| Piaggio Group Americas Inc |
New York | USA | 2,000.00 | USD | 100% | Piaggio Vespa B.V. | 100% | |
| Piaggio Group Canada Inc. |
Toronto | Canada | 10,000.00 | CAD\$ | 100% | Piaggio Group Americas Inc |
100% | |
| Piaggio Group Japan | Tokyo | Japan | 99,000,000.00 | Yen | 100% | Piaggio Vespa B.V. | 100% | |
| Piaggio Hellas S.A. | Athens | Greece | 2,204,040.00 | Euro | 100% | Piaggio Vespa B.V. | 100% | |
| Piaggio Hrvatska D.o.o. | Split | Croatia | 400,000.00 | HKD | 100% | Piaggio Vespa B.V. | 100% | |
| Piaggio Limited | Bromley Kent | United Kingdom |
250,000.00 | GBP | 0.0004% | 99.9996% | Piaggio Vespa B.V. | 100% |
| Piaggio Vehicles Private Limited |
Maharashtra | India | 349,370,000.00 | INR | 99.9999971% | 0.0000029% | Piaggio Vespa B.V. | 100% |
| Piaggio Vespa B.V. | Breda | Holland | 91,000.00 | Euro | 100% | 100% | ||
| Piaggio Vietnam Co Ltd | Hanoi | Vietnam | 64,751,000,000.00 | VND | 63.5% | 100% | ||
| 36.5% | Piaggio Vespa B.V. | |||||||
| PT Piaggio Indonesia | Jakarta | Indonesia | 4,458,500,000.00 | Rupiah | 1% | 99% | Piaggio Vespa B.V. | 100% |
| Company name Registered office | Country | Share capital | Currency | Direct | Indirect | Means | % total interest |
|
|---|---|---|---|---|---|---|---|---|
| Zongshen Piaggio Foshan Motorcycle Co. LTD. |
Foshan City | China | 29,800,000.00 | USD | 32.50% | 45% | ||
| 12.50% | Piaggio China Co. LTD |
List of investments in associates as of 31 December 2015
| % of the holding | ||||||||
|---|---|---|---|---|---|---|---|---|
| Company name Registered office | Country | Share capital | Currency | Direct | Indirect | Means | % total interest |
|
| Depuradora D'Aigues de Martorelles Soc. Coop. Catalana Limitada |
Barcelona | Spain | 60,101.21 | Euro | 22% | Nacional Motor S.A. | 22% | |
| Immsi Audit S.c.a.r.l. | Mantova | Italy | 40,000.00 | Euro | 25% | 25% | ||
| Pont - Tech, Pontedera & Tecnologia S.c.r.l. |
Pontedera (Pisa) | Italy | 884,160.00 | Euro | 20.45% | 20.45% | ||
| S.A.T. Societé d'Automobiles et Triporteurs S.A. |
Tunis | Tunisia | 210,000.00 | TND | 20% | Piaggio Vespa B.V. | 20% |
The following statement was prepared pursuant to article 149 duodecies of the Consob Regulation on Issuers and indicates the fees for 2015 for auditing services and other services provided by the same independent auditors and entities belonging to the independent auditor's network.
| Subject providing the service |
Recipient | Fees for 2015 | |
|---|---|---|---|
| In euro | |||
| Auditing services | PWC | Parent Company | 323,870 |
| PWC | Piaggio & C Subsidiaries |
113,447 | |
| PWC network | Subsidiaries | 344,718 | |
| Auditing services CSR | PWC | Parent Company Piaggio & C |
29,000 |
| Certification services | PWC | Parent Company | 103,000 |
| PWC | Piaggio & C Subsidiaries |
13,000 | |
| PWC network | Subsidiaries | 62,471 | |
| Other services | PWC | Parent Company Piaggio & C |
18,000 |
| PWC network | Subsidiaries | 8,500 | |
| Total | 1,016,006 |
N.B. Sums of subsidiaries operating in currencies other than the euro and agreed on in a local currency have been converted to the average exchange rate of 2015.
* * *
The undersigned Roberto Colaninno (Chairman and Chief Executive Officer) and Alessandra Simonotto (Appointed Executive) of Piaggio & C. S.p.A. hereby certify, also in consideration of article 154-bis, sections 3 and 4, of Legislative Decree no. 58 of 24 February 1998:
the appropriateness with regard to the company's characteristics and
3.1 the Consolidated Financial Statements:
a) have been prepared in compliance with the international accounting standards endorsed by the European Community pursuant to regulation (EC) no. 1606/2002 of the European Parliament and Council of 19 July 2002;
b) correspond to accounting records;
c) give a true and fair view of the consolidated statement of financial position and results of operations of the Issuer and of all companies included in the scope of consolidation;
3.2 The Report on Operations includes reliable analysis of the trend of operations and operating results, as well as the situation of the Issuer and companies included in the scope of consolidation, as well as a description of main risks and uncertainties to which they are exposed.
Date: 11 March 2016
Chairman and Chief Executive Officer
_________________________
_________________________
Executive in charge
Piaggio & C. S.p.A
| 2015 | 2014 | |||||
|---|---|---|---|---|---|---|
| of which | of which | |||||
| related | related | |||||
| Total | parties | Total | parties | |||
| In thousands of euros | Notes | |||||
| Net revenues | 3 | 743,470 | 95,344 | 716,426 | 105,169 | |
| Cost for materials | 4 | 433,400 | 56,407 | 406,334 | 45,444 | |
| Cost for services and leases and rentals | 5 | 182,570 | 43,449 | 173,929 | 39,004 | |
| Employee costs | 6 | 159,033 | 42 | 162,662 | 4 | |
| Depreciation and impairment costs of | ||||||
| property, plant and equipment | 7 | 27,561 | 28,210 | |||
| Amortisation and impairment costs of intangible | ||||||
| assets | 7 | 48,109 | 38,775 | |||
| Other operating income | 8 | 113,109 | 43,915 | 113,729 | 36,073 | |
| Other operating costs | 9 | 15,582 | 770 | 15,534 | 909 | |
| Operating income | (9,676) | 4,711 | ||||
| Income/(loss) from investments | 10 | 49,919 | 42,194 | |||
| Financial income | 11 | 705 | 352 | 1,158 | 319 | |
| Borrowing costs | 11 | 26,750 | 167 | 32,642 | 411 | |
| of which non-recurrent | 46 | 3,552 | ||||
| Net exchange gains/(losses) | 11 | (590) | (498) | |||
| Profit before tax | 13,608 | 14,923 | ||||
| Taxes for the period | 12 | (1,450) | (534) | 113 | (64) | |
| of which non-recurrent | 46 | (977) | ||||
| Profit from continuing operations | 15,058 | 14,810 | ||||
| Assets held for sale: | ||||||
| Profits or losses arising from assets held for sale | 13 | |||||
| Net profit | 15,058 | 14,810 | ||||
| 2015 | 2014 | Change | |
|---|---|---|---|
| Notes | |||
| 15,058 | 14,810 | 247 | |
| 40 | 2,080 | (5,159) | 7,239 |
| 2,080 | (5,159) | 7,239 | |
| 40 | |||
| 40 | 245 | 735 | (490) |
| 245 | 735 | (490) | |
| 2,325 | (4,424) | 6,749 | |
| 17,383 | 10,386 | 6,996 | |
* Other Profits (and losses) take account of relative tax effects
| As of 31 December 2015 |
As of 31 December 2014 |
||||
|---|---|---|---|---|---|
| Total | of which related parties |
Total | of which related parties |
||
| In thousands of euros | Notes | ||||
| ASSETS | |||||
| Non-current assets | |||||
| Intangible assets | 14 | 577,138 | 572,402 | ||
| Property, plant and equipment | 15 | 188,433 | 197,006 | ||
| Investment property | 16 | 0 | 0 | ||
| Investments | 32 | 64,317 | 63,480 | ||
| Other financial assets | 33 | 20,328 | 13,316 | ||
| Long-term tax receivables | 21 | 634 | 893 | ||
| Deferred tax assets | 17 | 32,522 | 29,653 | ||
| Other receivables | 20 | 2,839 | 152 | 3,430 | 197 |
| Total non-current assets | 886,211 | 880,180 | |||
| Assets held for sale | |||||
| Current assets | |||||
| Trade receivables | 19 | 57,244 | 18,428 | 74,669 | 35,867 |
| Other receivables | 20 | 91,417 | 77,052 | 82,536 | 64,364 |
| Short-term tax receivables | 21 | 5,942 | 3,266 | ||
| Inventories | 18 | 157,233 | 170,645 | ||
| Other financial assets | 34 | 13,403 | 13,403 | 13,669 | 13,669 |
| Cash and cash equivalents | 35 | 12,745 | 29,196 | ||
| Total current assets | 337,984 | 373,981 | |||
| TOTAL ASSETS | 1,224,195 | 1,254,161 |
| As of 31 December 2015 |
As of 31 December 2014 |
||||
|---|---|---|---|---|---|
| of which | of which | ||||
| related | related | ||||
| Total | parties | Total | parties | ||
| In thousands of euros | Notes | ||||
| SHAREHOLDERS' EQUITY AND LIABILITIES | |||||
| Shareholders' equity | |||||
| Capital | 39 | 207,614 | 207,614 | ||
| Share premium reserve | 39 | 7,171 | 7,171 | ||
| Legal reserve | 39 | 17,643 | 16,902 | ||
| Other reserves | 39 | 11,001 | 10,756 | ||
| Retained earnings (losses carried forward) | 39 | 61,834 | 71,725 | ||
| Profit (loss) for the period | 39 | 15,058 | 14,810 | ||
| Total shareholders' equity | 320,321 | 328,978 | |||
| Non-current liabilities | |||||
| Financial liabilities falling due after one year | 36 | 495,386 | 2,900 | 472,439 | 2,900 |
| Other long-term provisions | 26 | 7,220 | 8,089 | ||
| Retirement funds and employee benefits | 27 | 47,885 | 54,051 | ||
| Tax payables | 28 | 0 | 0 | ||
| Other long-term payables | 29 | 1,434 | 1,666 | ||
| Total non-current liabilities | 551,925 | 536,245 | |||
| Current liabilities | |||||
| Financial liabilities falling due within one year | 36 | 49,704 | 4,205 | 62,380 | 3,856 |
| Trade payables | 25 | 246,893 | 19,754 | 266,143 | 29,578 |
| Tax payables | 28 | 6,465 | 7,131 | ||
| Other short-term payables | 29 | 41,365 | 12,304 | 46,961 | 16,974 |
| Current portion of other long-term provisions | 26 | 7,522 | 6,323 | ||
| Total current liabilities | 351,949 | 388,938 | |||
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 1,224,195 | 1,254,161 |
This statement shows the factors behind changes in cash and cash equivalents, net of short-term bank overdrafts, as required by IAS 7.
| Notes | 2015 | 2014 | |
|---|---|---|---|
| In thousands of euros | |||
| Operating activities | |||
| Profit (Loss) for the period | 15,057 | 14,810 | |
| Taxes for the period | 12 | (1,450) | 113 |
| Amortisation/depreciation of property, plant and equipment | 7 | 27,561 | 28,211 |
| Amortisation of intangible assets | 7 | 48,109 | 38,776 |
| Allocations for risks and retirement funds and employee benefits | 15,911 | 16,076 | |
| Write-downs / (Reversals) | 4,150 | 4,164 | |
| Losses / (Gains) on the disposal of property, plants and equipment | (46) | (4,346) | |
| Financial income | 11 | (704) | (1,158) |
| Dividend income | (52,395) | (44,380) | |
| Borrowing costs | 11 | 27,340 | 33,140 |
| Change in working capital: | |||
| (Increase)/Decrease in trade receivables | 19 | (1,594) | 3,409 |
| (Increase)/Decrease in other receivables | 20 | 8,576 | (9,974) |
| (Increase)/Decrease in inventories | 18 | 13,412 | (13,013) |
| Increase/(Decrease) in trade payables | 25 | (9,506) | 21,218 |
| Increase/(Decrease) in other payables | 29 | (15,571) | 3,252 |
| Increase/(Decrease) in the current portion of provisions for risks | 26 | (5,731) | (12,548) |
| Increase/(Decrease) in the non-current portion of provisions for risks | 26 | (869) | (1,002) |
| Increase/(Decrease) in retirement funds and employee benefits | 27 | (15,147) | (3,612) |
| Other changes | 7,126 | (2,758) | |
| Cash generated from operating activities | 64,229 | 70,378 | |
| Interest paid | (24,230) | (34,070) | |
| Taxes paid | (7,927) | (10,217) | |
| Cash flow from operating activities (A) | 32,072 | 26,091 | |
| Investing activities | |||
| Investment in property, plant and equipment | 15 | (19,053) | (24,651) |
| Sale price, or repayment value, of property, plant and equipment | 112 | 5,383 | |
| Investment in intangible assets | 14 | (56,010) | (55,958) |
| Sale price, or repayment value, of intangible assets | 56 | 58 | |
| Investment in non-current financial assets | (2,785) | (4,507) | |
| Loans provided | 266 | (717) | |
| Collected interests | 565 | 302 | |
| Dividends from investments | 46,469 | 44,084 | |
| Cash flow from investment activities (B) | (30,380) | (36,006) | |
| Financing activities | |||
| Purchase of treasury shares | 39 | (34) | (3,787) |
| Collection for the exercise of stock options | 39 | 0 | 5,321 |
| Outflow for dividends paid | 39 | (26,007) | 0 |
| Loans received | 36 | 51,119 | 208,554 |
| Outflow for repayment of loans | 36 | (41,423) | (159,592) |
| Repayment of finance leases | 36 | 0 | (5,809) |
| Cash flow from financing activities (C) | (16,345) | 44,687 | |
| Increase / (Decrease) in cash and cash equivalents (A+B+C) | (14,653) | 34,772 | |
| Opening balance | 27,416 | (7,448) | |
| Exchange differences | (71) | 92 | |
| Closing balance | 12,692 | 27,416 |
| Notes | Share capital |
Share premium reserve |
Legal reserve |
Net capital gain from contribution |
Reserve for measurement of financial instruments |
IAS transition reserve |
Treasury shares |
Earnings reserve |
TOTAL SHAREHOLDERS' EQUITY |
|
|---|---|---|---|---|---|---|---|---|---|---|
| In thousands of euros | ||||||||||
| As of 1 January 2015 | 207,614 | 7,171 | 16,902 | 152 | (830) | 11,435 | (5,787) | 92,321 | 328,978 | |
| Profit for the period | 15,058 | 15,058 | ||||||||
| Other Comprehensive Income (expense) | 245 | 2,080 | 2,325 | |||||||
| Total comprehensive income (expense) for the period |
0 | 0 | 0 | 0 | 245 | 0 | 0 | 17,138 | 17,383 | |
| Distribution of profit for 2014 as resolved by the ordinary meeting of shareholders |
||||||||||
| - To shareholders | (26,007) | (26,007) | ||||||||
| - To shareholders' equity | 741 | (741) | 0 | |||||||
| Cancellation of treasury shares | 39 | 5,787 | (5,787) | 0 | ||||||
| Purchase of treasury shares | 39 | (34) | (34) | |||||||
| Other changes | (1) | 2 | 1 | |||||||
| As of 31 December 2015 | 207,614 | 7,171 | 17,643 | 152 | (586) | 11,435 | (34) | 76,926 | 320,321 |
| Notes | Share capital |
Share premium reserve |
Legal reserve |
Net capital gain from contribution |
Reserve for measurement of financial instruments |
IAS transition reserve |
Treasury shares |
Earnings reserve |
TOTAL SHAREHOLDERS' EQUITY |
|
|---|---|---|---|---|---|---|---|---|---|---|
| In thousands of euros | ||||||||||
| As of 1 January 2014 | 206,027 | 3,681 | 16,902 | 0 | (1,565) | 11,435 | (2,245) | 82,671 | 316,906 | |
| Profit for the period | 14,810 | 14,810 | ||||||||
| Other Comprehensive Income (expense) | 735 | (5,159) | (4,424) | |||||||
| Total comprehensive income (expense) for the period |
0 | 0 | 0 | 735 | 0 | 0 | 9,651 | 10,386 | ||
| Exercise of stock options | 39 | 1,587 | 3,489 | 5,076 | ||||||
| Purchase of treasury shares | 39 | (3,787) | 0 | (3,787) | ||||||
| Sale of treasury shares | 39 | 245 | 0 | 245 | ||||||
| Net capital gain from contribution | 39 | 152 | 152 | |||||||
| Other changes | 1 | (1) | 0 | |||||||
| As of 31 December 2014 | 207,614 | 7,171 | 16,902 | 152 | (830) | 11,435 | (5,787) | 92,321 | 328,978 |
Piaggio & C. S.p.A. (the Company) is a joint-stock company established in Italy at the Register of Companies of Pisa. The addresses of the registered office and places where main business operations are conducted are listed in the introduction to the financial statements.
These Financial Statements are expressed in Euros (€) since this is the currency in which most of the Company's transactions take place.
The Financial Statements as of 31 December 2015 have been drafted in compliance with the International Accounting Standards (IAS/IFRS) in force at that date, issued by the International Accounting Standards Board and approved by the European Commission, as well as in compliance with the provisions established in Article 9 of Italian Legislative Decree no. 38/2005 (Consob Resolution no. 15519 dated July 27/7/06 containing "Provisions for the presentation of financial statements", Consob Resolution no. 15520 dated July 27/7/06 containing "Changes and additions to the Regulation on Issuers adopted by Resolution no. 11971/99", Consob communication no. 6064293 dated 28/7/06 July containing "Corporate reporting required in accordance with Article 114, paragraph 5 of Italian Legislative Decree no. 58/98"). The interpretations of the International Financial Reporting Interpretations Committee ("IFRIC"), previously the Standing Interpretations Committee ("SIC"), were also taken into account.
The Financial Statements have been prepared on a historical cost basis, amended as required for the measurement of some financial instruments, and on a going-concern basis. In fact, despite the difficult economic and financial context, the Company has evaluated that there are no significant doubts about its continuing as a going concern (as defined in section 25 of IAS 1), also in relation to actions already identified to adapt to changing levels in demand, as well as the industrial and financial flexibility of the Company.
These Financial Statements are audited by PricewaterhouseCoopers S.p.A..
The Company has chosen to highlight all changes generated by transactions with non-shareholders in two statements reporting trends of the period, the "Income Statement" and "Statement of Comprehensive Income". The Financial Statements are therefore composed of the Income Statement, Statement of Comprehensive Income, Statement of Financial Position, Statement of Cash Flows, Statement of Changes in Shareholders' Equity and these notes.
The Income Statement is presented with items classified by nature. The overall Operating Income is shown, which includes all income and cost items, irrespective of their repetition or fact of falling outside normal operations, except for the items of financial operations included under Operating Income and profit before tax. In addition, income and cost items arising from assets held for sale or to be discontinued, including any capital gains or losses net of the tax element, are recognised in a specific item of the Financial Statements which precede financial performance.
The Statement of Comprehensive Income is presented in accordance with the provisions of IAS 1 amended. Items presented in "Other comprehensive income(expense)" are grouped based on whether they are potentially reclassifiable to profit or loss.
The Statement of Financial Position is presented in opposite sections with separate indication of assets, liabilities and shareholders' equity.
In turn, assets and liabilities are reported in the Financial Statements on the basis of their classification as current and non-current.
The Statement of Cash Flows is divided into cash-flow generating areas. The Statement of Cash Flows model adopted by Piaggio & C. S.p.A. has been prepared using the indirect method. The cash and cash equivalents recorded in the Consolidated Statement of Cash Flows include the Consolidated Statement of Financial Position balances for this item at the reporting date. Financial flows in foreign currency were converted at the spot rate in force at the end of the reporting period. Income and costs related to interest, dividends received and income taxes are included in the cash flow generated from operations.
The Statement of Changes in Shareholders' Equity is presented as provided for in IAS 1 revised.
The Statement includes overall profit (loss) for the period. Reconciliation between the opening and closing balance of each item for the period is presented.
The most significant accounting policies adopted to prepare the Financial Statements as of 31 December 2015 are outlined below.
As provided for in IAS 38, an intangible asset which is purchased or internally generated is recognised as an asset only if it is identifiable, controllable and future economic benefits are expected and its cost may be measured reliably. Borrowing costs related to the acquisition, construction or production of certain activities that require a significant period of time before they are ready for use or sale (qualifying assets), are capitalised along with the asset.
Intangible assets with a definite useful life are measured at acquisition cost or production cost net of amortisation and accumulated impairment losses. Amortisation is referred to the expected useful life and commences when the asset is available for use.
In the case of acquisitions of companies, acquired and identifiable assets, liabilities and potential liabilities are recognised at the present value at the date of acquisition. The positive difference between the acquisition cost and share of the Company at the present value of said assets and liabilities is classified as goodwill and recognised in the financial statements as an intangible asset. Any negative difference ("negative goodwill") is recognised instead in profit and loss at the date of acquisition.
Goodwill is not amortised but tested annually for impairment, or more frequently if specific events or changed circumstances indicate that an asset may be impaired, as provided for in IAS 36 - Impairment of Assets. After initial recognition, goodwill is recognised at cost net of any accumulated impairment losses. At the disposal of part of or an entire company previously acquired from whose acquisition goodwill arose, the corresponding residual value of goodwill is considered when measuring the capital gain or loss of the disposal.
Development costs of projects for the manufacture of vehicles and engines are recognised as assets only if all of the following conditions are met: the costs can be reliably measured and the technical feasibility of the product, the volumes and expected prices indicate that costs incurred during development will generate future economic benefits. Capitalised development costs include only costs incurred that may be directly attributed to the development process.
Capitalised development costs are amortised on a systematic criterion basis, starting from the beginning of production through the estimated life of the product.
All other development costs are recognised in profit or loss when they are incurred.
As provided for in IAS 38 – Intangible Assets, other intangible assets which are purchased or internally generated are recognised as assets if it is probable that use of the asset will generate future economic benefits and the cost of the asset can be reliably measured.
These assets are recognised at acquisition or production cost and are amortised on a straight line basis over their estimated useful life, if they have a definite useful life.
Other intangible assets recognised following the acquisition of a company are accounted for separately from goodwill, if their present value may be reliably measured.
The amortisation period for an intangible asset with a useful life is revised at least at the end of each reporting period. If the expected useful life of the asset differs from estimates previously made, the amortisation period is changed accordingly.
The amortisation periods of intangible assets are shown below:
| 3-5 years |
|---|
| 3-5 years |
| 5 years |
| 15 years |
The Company has decided to adopt the cost method on first-time application of the IAS/IFRS, as allowed by IFRS 1. For the measurement of property, plant and equipment, therefore, the preference was not to use the fair value method. Property, plant and equipment were booked at the purchase or production cost and were not revalued. Borrowing costs related to the acquisition, construction or production of certain assets that require a significant period of time before they are ready for use or sale (qualifying assets), are capitalised along with the asset.
Costs incurred after acquisition are capitalised only if they increase the future economic benefits of the asset they refer to. All other costs are recognised in profit or loss when they are incurred. Property, plant and equipment under construction are measured at cost and depreciated starting from the period in which they are put into operation.
Depreciation is determined, on a straight line basis, on the cost of the assets net of their relative residual values, based on their estimated useful life.
The depreciation periods of Plant, property and equipment are summarised below:
| Land | Land is not depreciated. |
|---|---|
| Buildings | 33 years |
| Plant and machinery | From 5 to 11 years |
| Equipment | From 4 to 5 years |
| Other assets Other |
From 5 to 10 years |
From 5 to 10 years Profits and losses arising from the sale or disposal of assets are measured as the difference between the sale revenue and net carrying amount of the asset and are recognised in profit or loss for the period.
Lease contracts for property, plant and machinery where the Company, as lessee, basically undertakes all risks and benefits of the property, are classified as finance leases. Finance leases are capitalised when the lease is established, at the fair value of the leased asset or, if less, at the current value of minimum payments due. The corresponding amount due to the lessor, net of borrowing costs, is recognised as a financial payable. The borrowing cost is recognised in profit or loss over the lease period, so as to produce an interest rate that is constant for the remaining amount due for each period. Property, plant and machinery of finance leases are depreciated during the useful life of the asset or the shorter of the useful life of the asset and the duration of the lease agreement, if there is no reasonably certainty that the Company will obtain the property at the end of the lease period.
Leases in which a significant part of the risks and benefits of ownership are not transferred to the Company as the lessor, are classified as operating leases. Payments made for operating leases (net of any incentives received from the lessee), are recognised in profit or loss on a straight-line basis for the duration of the lease agreement.
Investments in subsidiaries and associates are recognised at cost adjusted for impairment losses.
Investments in subsidiaries and associates are tested annually for impairment, or more frequently if necessary. If evidence of impairment exists, the loss is recognised in profit or loss as a write-down. In the event any portion attributable to the Company of losses of the subsidiary exceeds the book value of the investment and the Company is liable, the value of the investment is reset to zero and the portion of further losses is recorded as a provision in liabilities. If the impairment loss is subsequently reversed or reduced, the value is reversed within cost limits in the income statement.
At the end of the reporting period, the Company reviews the book value of its plant, property and equipment, intangible assets and investments, to determine whether there is any indication that these assets may be impaired (impairment test). If there is an indication that an asset may be impaired, the asset's recoverable amount is estimated to determine the amount of the write-down. Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the asset's cash generating unit.
The recoverable amount is the greater of the net sale price and value in use. In measuring the value in use, estimated future cash flows are discounted at their fair value, using a rate gross of taxes, which reflects current market changes in the fair value of money and specific risks of the asset.
If the recoverable amount of an asset (or of a cash generating unit) is estimated to be lower than the relative carrying amount, the carrying amount of the asset is reduced to the lower recoverable value. An impairment loss is immediately recognised in profit or loss, unless the asset concerns land or property other than investment property recognised at revalued values. In said case, the loss is recorded in the relative revaluation reserve.
When the conditions that gave rise to an impairment loss no longer exist, the carrying amount of the asset (or of a cash generating unit), except for goodwill, is increased to the new value arising from an estimate of its recoverable amount, up to the net carrying amount applicable to the asset if no impairment loss had been recognised. The reversal of the impairment loss is immediately recognised in profit or loss.
An intangible asset with an indefinite useful life is tested annually for impairment, or more frequently if there is an indication that an asset may be impaired.
The Company has no investment property. As permitted by IAS 40, non instrumental property and buildings held for rental and/or asset appreciation purposes are measured at fair value. Investment properties are eliminated from the financial statements when they are disposed of or when they may not be used over time and future economic benefits from their sales are not expected.
Relations with subsidiaries and related parties are indicated in the specific section of the Notes, to which reference is made.
Non-current assets (or disposal groups) that are classified as held for sale are measured at the lower of the carrying amount and fair value less costs to sell.
Non-current assets (and disposal groups) are classified as held for sale when it is expected that their carrying amount will be recovered through a sale rather than through their use in company operations. This condition is only met when the sale is highly probable, the asset (or disposal group) is available for immediate sale and management is committed to a plan to sell, which should take place within 12 months from the date in which this item was classified as held for sale.
Financial assets are recognised and deleted from the financial statements based on the negotiation date and are initially measured at fair value, represented by the initial increased amount, with the exception of assets held for negotiation, of costs relative to the transaction.
At subsequent end of reporting periods, the financial assets the Company intends and can retain up until maturity (securities held until maturity) are recognised at amortised cost based on the effective interest rate method, net of reversals for impairment losses.
Financial assets other than those held to maturity are classified as held for trading or for sale, and are measured at fair value at the end of each period. When financial assets are held for trading, profits and losses arising from changes in fair value are recognised in profit or loss for the period; in the case of financial assets held for sale, profits and losses arising from changes in fair value are recognised in the statement of comprehensive income and allocated to a specific reserve of shareholders' equity until sold, recovered or disposed of.
Inventories are recognised as the lower of the purchase or production cost, determined by assigning to
235
products the costs directly incurred in addition to the portion of indirect costs reasonably attributable to the performance of production activities in normal production capacity conditions and the market value at the end of the reporting period.
The purchase or production cost is determined based on the weighted average cost method.
As regards raw materials and work in progress, the market value is represented by the estimated net realisable value of corresponding finished products minus completion costs. as regards finished products, the market value is represented by the estimated net realisable value (price lists minus the costs to sell and distribution costs).
The lower measurement based on market trends is eliminated in subsequent years, if the trends no longer exist.
Obsolete, slow moving and/or excess inventories are impaired in relation to their possible use or future realisation, in a provision for the write-down of inventories.
Trade receivables and other receivables are initially recognised at fair value and subsequently recognised based on the amortised cost method, net of the provisions for write-downs. Losses on receivables are recognised when there is objective evidence that the Company is not able to recover the amount due from the other party on the basis of contractual terms.
When payment of amounts due exceeds standard terms of payment granted to clients, the receivable is discounted.
The Company sells a significant part of its trade receivables through factoring and in particular, sells trade receivables without recourse. Following these sales with the total and unconditional transfer to the transferee of the risks and benefits transferred, the receivables are eliminated from the financial statements.
In the case of transfers in which the risks and benefits are not transferred, the relative receivables remain in the statement of financial position until the transferred sum has been paid. In this case any advance payments collected by the factor are recognised under payables as amounts due to other lenders.
Cash and cash equivalents includes cash on hand, current bank accounts, deposits payable on demand and other high liquidity short term financial investments, which are readily convertible into cash and not affected by any major risk of a change in value. This item does not include bank overdrafts payable on demand.
Treasury shares are recognised as a reduction of shareholders' equity. The original cost of treasury shares and revenues arising from subsequent sales are recognised as movements of shareholders' equity. Financial liabilities
Financial liabilities are recognised based on amounts cashed net of relative transaction costs. After initial recognition, loans are measured at amortised cost and calculated using the effective interest rate. Financial liabilities hedged by derivatives are measured at present value, according to procedures established for hedge accounting applicable to the fair value hedge and cash flow hedge:
On initial recognition, a liability may also be designated at fair value recognised in profit or loss when this eliminates or considerably reduces a lack of uniformity in the measurement or recognition (sometimes defined as "asymmetric accounting") that would otherwise arise from the measurement of an asset or liability or recognition of relative profit and loss on different bases. This fair value designation is exclusively applied to some financial liabilities in currency subject to exchange risk hedging.
Company assets are primarily exposed to financial risks from changes in exchange and interest rates, and commodity prices. The Company uses derivatives to hedge risks arising from changes in foreign currency and interest rates in particular irrevocable commitments and planned future transactions. The use of these instruments is regulated by written procedures on the use of derivatives, in line with the Company's risk management policies.
Derivatives are initially measured at fair value represented by the initial amount.
Financial derivatives are only used for hedging purposes, against exchange rate and interest rate fluctuations. In line with IAS 39, financial derivatives may qualify for hedge accounting, only when the hedging instrument is formally designated and documented, is expected to be highly effective and this effectiveness can be reliably measured and is highly effective throughout the reporting periods for which it is designated.
When financial instruments may be measured by hedge accounting, the following accounting treatment is adopted:
If hedge accounting cannot be applied, gains and losses from measurement at present value of the financial derivative are immediately recognised in profit or loss.
The Company recognises provisions for risks and charges when it has a legal or implicit obligation to third parties and it is likely that Company resources will have to be used to meet the obligation and when the amount of the obligation itself can be reliably estimated.
Changes in estimates are recognised in profit or loss when the change takes place.
If the effect is considerable, provisions are calculated discounting future cash flows estimated at a discount rate gross of taxes, to reflect current market changes in the fair value of money and specificrisks of the liability.
Liabilities relative to employee benefits paid on or after termination of employment for defined benefit plans are determined separately for each plan, based on actuarial hypotheses estimating the amount of future benefits that employees will accrue at the reporting date (the "projected unit credit method"). Liabilities, recognised in the financial statements net of any assets serving the plan, are entered for the period when the right accrues. Liabilities are measured by independent actuaries.
The cost components of defined benefits are recognised as follows:
Termination benefits are recognised at the closest of the following dates: i) when the Company can no longer withdraw the offer of such benefits and ii) when the Company recognises the costs of restructuring.
As provided for in IFRS 2 - Share-Based Payment, the total amount of the present value of stock options at the date of assignment is recognised wholly in profit or loss under employee costs, with a counter entry recognised directly in shareholders' equity, if the grantees of the instruments representing capital become owners of the right on assignment. If a "maturity period" is required, in which certain conditions are necessary before grantees become holders of the right, the cost for payments, determined on the basis of the present value of options at the date of assignment, is recognised under employee costs on a straight line basis for the period between the date of assignment and maturity, with a counter entry directly recognised in shareholders' equity.
Determination of fair value based on the Black Scholes method.
Changes in the present value of options subsequent to the date of assignment do not have any effect on initial recognition.
Deferred taxes are determined based on the temporary taxable differences between the value of the asset and liability and their tax value. Deferred tax assets are measured only to the extent to which it is likely that adequate future taxable sums exist against which the deferred taxes can be used. The carrying amount of deferred tax assets is reviewed at the end of the reporting period and reduced to the extent to which it is no longer likely that sufficient taxable income exists allowing for all or a portion of said assets to be recovered.
Deferred taxes are determined based on tax rates expected for the period in which the tax assets are realised, considering the rates in effect or which are known to come into effect. Deferred taxes are directly recognised in profit or loss, except for items directly recognised in the statement of comprehensive income, in which case relative deferred taxes are also recognised in the statement of comprehensive income.
Deferred tax assets and liabilities are recognised at their net value when applied by the tax authorities and when they may be lawfully offset in the same tax jurisdiction.
Payables are recognised at fair value and then measured based on the amortised cost method.
To guarantee suppliers easier credit conditions, the Company has established factoring agreements, and typically supply chain financing or reverse factoring agreements. Based on the agreements, suppliers may, at their discretion, transfer receivables due from the Company to a lender and collect amounts before the due date.
In some cases, payment terms are extended further in agreements between the supplier and the company; these extensions may be interest or non-interest bearing.
The Company has established a specific policy to assess the nature of reverse factoring operations. Based on the content of agreements, which differs by area of origin, the Finance function, at a central level, analyses the clauses of agreements in qualitative terms, as well as legal aspects in order to assess regulatory references and the type of transaction assignment (as provided for by IAS 39 AG57 b). In some cases, as payment terms have been extended, quantitative analysis is carried out to verify the materiality of changes in contract terms, based on quantitative tests as required by IAS 39 AG 62.
In this context, relations, for which a primary obligation with the supplier is maintained and any deferment, if granted, does not significantly change payment terms, are still classified as trade liabilities. Recognition of revenues
Revenues for the sale of vehicles and spare parts are recognised to the extent that it is likely the Group will receive the economic benefits and their amount may be measured reliably.
Revenues are recognised when the risks and benefits connected with ownership are transferred to the purchaser, the sale price is agreed or may be determined and payment is reasonably certain. Revenues are represented net of discounts, including, among others, sales incentive programmes and bonuses to customers, as well as taxes directly connected with the sale of the goods. Revenues from the provision of services are recognised when the services are provided with reference to the interim payment certificate.
Revenues also include lease payments recognised on a straight line basis for the duration of the contract Contributions
Equipment grants are recognised in the financial statements when their payment is certain and are recognised in profit or loss based on the useful life of the asset for which the grants have been provided.
Operating grants are recognised in the financial statements, when their payment is certain and are recognised in profit or loss in relation to costs for which the grants have been provided.
Financial income is recognised on time accrual basis. Includes interest payable on invested funds, exchange differences receivable and income from financial instruments, when not offset in hedging transactions. Interest receivable is recognised in profit or loss when it matures, considering the actual return.
Borrowing Costs
Borrowing costs are recognised on an accrual basis and include interest payable on financial payables calculated using the effective interest rate method, exchange differences payable and losses on derivative financial instruments. The rate of interest payable of finance lease payments is recognised in profit or loss, using the effective interest rate method.
Dividends recognised in profit or loss are recognised on accrual basis, and therefore at the time when, following the resolution to distribute dividends by the subsidiary, the relative right to payment arises. Income tax
Taxes represent the sum of current and deferred tax assets and liabilities.
Taxes allocated on the basis of estimated taxable income determined in compliance with national laws in force at the year end are recorded, taking account of applicable exemptions and tax credits due. Income tax is recognised in profit or loss, with the exception of items directly charged or credited to shareholders' equity, in which case the tax effect is directly recognised in shareholders' equity.
Taxes are recorded under "Tax payables" net of advances and withheld taxes.
As from the 2007 reporting period, the Company has been party to the National Consolidated Tax Convention pursuant to articles 117 - 129 of the Consolidated Income Tax Act (T.U.I.R) of which IMMSI S.p.A. is the consolidating company, and to whom other IMMSI Group companies report to. This arrangement was renewed with effects starting from 2013 and will be operative up until 2015.
Based on the procedure, the consolidating company determines one taxable base for the group of companies that are party to the National Consolidated Tax Convention, and may therefore offset taxable income against tax losses in one tax return. Each company which is party to the National Consolidated Tax Convention transfers taxable income (taxable income or loss) to the consolidating company. The latter recognises a receivable from the consolidated company which is equal to the corporate tax to be paid. Whereas, in the case of companies reporting tax losses, the consolidating company recognises a payable related to corporate tax on the portion of loss actually offset at a Group level.
The preparation of the financial statements and notes in compliance with IFRS requires management to make estimates and assumptions which have an impact on the values of assets and liabilities and on disclosure regarding contingent assets and liabilities at the end of the reporting period. Actual results could differ from estimates. Estimates are used to measure intangible assets tested for impairment (see § Impairment losses) and to identify provisions for bad debts, for obsolete inventories, amortisation and depreciation, impairment of assets, employee benefits, taxes, restructuring provisions and other allocations and funds. Estimates and assumptions are periodically revised and the effects of any change are immediately recognised in profit or loss.
In the current world economic and financial crisis, assumptions made as to future trends are marked by a considerable degree of uncertainty. Therefore the possibility in the next reporting period of results that differ from estimates cannot be ruled out, and these could require even significant adjustments which at present cannot be predicted or estimated.
The critical measurement processes and key assumptions used by the Company in adopting IFRS and that may have a significant impact on figures in the Financial Statements or for which a risk exists that significant differences in value may arise in relation to the carrying amount of assets and liabilities in the future are summarised below.
Recoverable value of non-current assets
Non-current assets include Property, Plant and Equipment, Goodwill, Other Intangible Assets, Investment Property, Investments and Other Financial Assets. The Company periodically revises the carrying amount of non-current assets held and used and of assets held for sale, when facts and circumstances make this necessary. This analysis is carried out at least annually for Goodwill, and whenever facts and circumstances make it necessary. Analysis of the recoverability of the carrying amount of Goodwill is generally based on estimates of expected cash flows from the use or sale of the asset and adequate discount rates to calculate the fair value. When the carrying amount of a noncurrent asset is impaired, the Company recognises a write-down equal to the excess between the carrying amount of the asset and its recoverable value through use or sale, determined with reference to cash flows of the most recent company plans.
Recoverability of deferred tax assets
The Company has deferred tax assets from deductible temporary differences and theoretical tax benefits from losses to be carried forward. In estimating recoverable value, the Company considered the results of the company plan in line with the results used for impairment testing. Net deferred tax assets allocated on this basis refer to temporary differences and tax losses which, to a significant extent, may be recovered over an indefinite period, and are therefore compatible with a context in which an end to current difficulties and uncertainties and an upswing in the economy could take longer than the time frame of the above-mentioned estimates.
Pension schemes and other post-employment benefits
Provisions for employee benefits and net borrowing costs are measured using an actuarial method that requires the use of estimates and assumptions to determine the net value of the obligation. The actuarial method considers financial parameters such as the discount rate and growth rates of salaries and considers the likelihood of potential future events occurring on the basis of demographic parameters such as relative mortality rates and employee resignations or retirements.
The assumptions used for the measurement are explained in section 32 "Retirement funds and employee benefits".
Provisions for bad debts
The provision for bad debts reflects management's estimate of expected losses related to receivables. Based on past experience, provisions are made for expected losses on receivables. Management carefully monitors the quality of receivables and current and forward-looking conditions of the economy and reference markets. Estimates and assumptions are periodically revised and the effects of any change are recognised in profit or loss.
Provision for obsolete inventories
The provision for obsolete inventories reflects management's estimate of impairment losses expected by the Company, determined based on past experience. Anomalous market price trends could have an effect on future inventory write-downs.
Provision for product warranties
At the time of a product's sale, the Company makes provisions relative to estimated costs for the product warranty. This provision is estimated based on historical information about the nature, frequency and average cost of warranty jobs.
Potential liabilities
The Company recognises a liability for ongoing legal disputes when it considers a financial outflow likely and when the amount of the losses arising therefrom may be reasonably estimated. If a financial outflow is possible, but the amount cannot be determined, it is recorded in the notes to the Financial Statements. The Company is subject to legal and tax proceedings concerning complex and difficult legal issues, of varying degrees of uncertainty, including facts and circumstances relative to each case, jurisdiction and different applicable laws. Given the uncertainties concerning these issues, it is hard to predict with certainty the outflow arising from these disputes and it is therefore possible that the value of provisions for legal proceedings and disputes of the Company may vary as a result of future developments in proceedings underway.
The Company monitors the status of ongoing proceedings and consults its legal and tax advisers.
Amortisation and Depreciation
The cost of assets is amortised/depreciated on a straight line basis over their estimated useful life. The economic useful life of Company assets is determined by Directors at the time of purchase; the calculation is based on historical experience gained in years of operations and on knowledge of technological innovations that may make the asset obsolete and no longer economical.
The Company periodically evaluates technological and segment changes, in order to update the remaining useful life. This periodic updating could change the amortisation/depreciation period and therefore amortisation/depreciation charges of future years.
Income tax
The Company is subject to Italian income tax laws. Tax liabilities are determined based on management valuations referred to transactions of which the tax effect is not certain at the end of the reporting period. The Company recognises the liabilities that could arise from future inspections of tax authorities based on an estimate of taxes that will be due. If the outcome of inspections differs from management's estimates, significant effects on current and deferred taxes could arise.
All amounts in the tables and in these notes have been rounded off to thousands of euros.
As from 1 January 2015, several changes introduced by international accounting standards and interpretations have been applied, none of which have had a significant impact on the Company's financial statements. The main changes are outlined below:
non-financial contracts, and that the possibility also remains of recognising current trade receivables and payables without recording discounting effects, if these effects are not material;
b) IAS 16 "Property, Plant and Equipment" and IAS 38 "Intangible Assets": both standards have been amended to clarify how recoverable value and useful life are treated in case of revaluation by the entity.
The following amendments and interpretations, applicable as of 1 January 2015, regulate specific cases which are not present within the Company at the date of these Financial Statements:
The following accounting standard is applicable for years commencing on or after 1 January 2016:
On 12 May 2014, the IASB issued amendments to IAS 16 and IAS 38 "Clarification of Acceptable Methods of Depreciation and Amortisation", that consider the adoption of depreciation and amortisation methods based on revenues as unacceptable. As regards intangible assets, this indication is considered as a relative assumption, that may only be overcome in one of the following circumstances: (i) the right to use an intangible asset is related to the realisation of a predefined threshold for revenues to be produced; or (ii) when it may be demonstrated that the realisation of revenues and use of the economic benefits of the asset are strongly related.
At the date of these Financial Statements, competent bodies of the European Union had not completed the approval process necessary for the application of the following accounting standards and amendments:
As regards the first point, the amendment clarifies that the financial statements need not be restated if an asset or group of assets available for sale was reclassified as "held for distribution", or vice versa.
With reference to IFRS 7, the amendment states that if an entity transfers a financial asset on terms that allow the de-recognition of the asset, information must be disclosed concerning the entity's involvement in the transferred asset.
The proposed amendment to IAS 19 makes it clear that, in determining the discount rate of the obligation arising following the termination of the employment relationship, it is the currency in which the obligations are denominated that counts, rather than the country in which they arise.
The proposed amendment to IAS 34 requires cross-references between information reported in the interim financial statements and the related disclosure.
Regarding the first point, the amendment clarifies that the exemption of the presentation of consolidated financial statements applies to a parent company that is controlled by an investment company, when the latter measures all its subsidiaries at fair value.
IAS 28 was amended as regards investments in associates or joint ventures that are "investment entities": these investments may be recognised with the equity method or at fair value.
These amendments apply from 1 January 2016.
The Company will adopt these new standards, amendments and interpretations, based on the application date indicated, and will evaluate potential impact, when the standards, amendments and interpretations are endorsed by the European Union.
No exceptional circumstances occurred requiring departures from legal provisions concerning Financial Statements pursuant to article 2423, section 4 of the Italian Civil Code.
Revenues for disposals of company core business assets essentially refer to the marketing of vehicles and spare parts on European and non-European markets. They are recognised net of premiums paid to customers and include sales to Group companies amounting to €/000 95,344.
The breakdown of revenues by geographical segment is shown in the following table:
| 2015 | 2014 | Changes | |||||
|---|---|---|---|---|---|---|---|
| Amount | % | Amount | % | Amount | % | ||
| In thousands of euros | |||||||
| EMEA and Americas | 713,313 | 95.94 | 680,930 | 95.05 | 32,383 | 4.76 | |
| Asia Pacific | 29,911 | 4.02 | 35,121 | 4.90 | (5,210) | (14.83) | |
| India | 246 | 0.03 | 375 | 0.05 | (129) | (34.38) | |
| TOTAL | 743,470 | 100.00 | 716,426 | 100.00 | 27,044 | 3.77 |
The breakdown of revenues by type of product is shown in the following table:
| 2015 | 2014 | Changes | ||||
|---|---|---|---|---|---|---|
| Amount | % | Amount | % | Amount | % | |
| In thousands of euros | ||||||
| Two-wheeler | 663,793 | 89.28 | 650,620 | 90.81 | 13,173 | 2.02 |
| Commercial Vehicles | 79,677 | 10.72 | 65,807 | 9.19 | 13,870 | 21.08 |
| TOTAL | 743,470 | 100.00 | 716,426 | 100.00 | 27,044 | 3.77 |
In 2015, net sales revenues increased by €/000 27,044.
This item totalled €/000 433,400 compared to €/000 406,334 as of 31 December 2014 and includes costs for purchases from Group companies amounting to €/000 56,407.
Costs for materials increased by 6.7% compared to the previous year.
The percentage of costs for materials accounting for net sales went up, from 56.7% in 2014 to 58.3% in 2015.
Costs for materials include costs for transport and outsourcing services relative to purchased assets.
The following table details the content of this financial statement item:
| 2015 | 2014 | Change | |
|---|---|---|---|
| In thousands of euros | |||
| Raw, ancillary materials, consumables and goods Change in inventories of raw, ancillary materials, |
420,087 | 419,293 | 794 |
| consumables and goods Change in work in progress of semifinished and finished |
(1,859) | (10,322) | 8,463 |
| products | 15,172 | (2,637) | 17,809 |
| Total costs for purchases | 433,400 | 406,334 | 27,066 |
This item totalled €/000 182,570 compared to €/000 173,929 as of 31 December 2014 and includes costs from Group companies and other related parties amounting to €/000 43,449.
Below is a breakdown of this item:
| 2015 | 2014 | Change | |
|---|---|---|---|
| In thousands of euros | |||
| Employee costs | 7,731 | 7,431 | 300 |
| External maintenance and cleaning costs | 4,792 | 4,614 | 178 |
| Energy, telephone and telex costs | 10,901 | 11,286 | (385) |
| Postal expenses | 562 | 529 | 33 |
| Commissions payable | 20,393 | 20,842 | (449) |
| Advertising and promotion | 11,380 | 11,684 | (304) |
| Technical, legal and tax consultancy and services | 10,405 | 9,530 | 875 |
| Company boards operating costs | 2,031 | 2,184 | (153) |
| Insurance | 2,278 | 2,955 | (677) |
| Third party work | 13,748 | 12,188 | 1,560 |
| Outsourced services | 6,913 | 7,626 | (713) |
| Transport costs (vehicles and spare parts) | 25,569 | 25,583 | (14) |
| Internal shuttle services | 509 | 661 | (152) |
| Sundry commercial expenses | 6,384 | 6,175 | 209 |
| Public relations | 2,420 | 2,654 | (234) |
| Product warranty costs | 6,784 | 7,065 | (281) |
| Costs for quality-related events | 10,948 | 4,517 | 6,431 |
| Bank costs and factoring charges | 3,932 | 3,965 | (33) |
| Misc services provided in the business year | 5,383 | 6,386 | (1,003) |
| Other services | 19,722 | 16,223 | 3,499 |
| Lease and rental costs | 9,785 | 9,831 | (46) |
| Total costs for services | 182,570 | 173,929 | 8,641 |
Costs for quality-related events were partially offset by compensation received, recognised under "Other operating income" and amounting to €/000 2,877.
Lease and rental costs refer to €/000 3,156 for rental payments for buildings and €/000 6,629 for car, software and photocopier hire payments.
Third party work, of €/000 13,748 refers to the processing of production components by outsourced suppliers.
Expenses for the operation of company boards refer to the activities of the Board of Directors and Board Directors with particular responsibilities, as well as the Board of Statutory Auditors, Supervisory Body, Internal Control Committee and Remuneration Committee. These expenses include fees and the reimbursement of costs for €/000 386, €/000 1,310, €/000 202, €/000 62, €/000 41 and €/000 30 respectively.
Business services include services for the disposal of waste and water treatment amounting to €/000 1,095.
Other services include €/000 15,151 for technical, sports and promotional services for Group brands supplied by the subsidiary Aprilia Racing, €/000 1,952 for technical services supplied by the subsidiaries Foshan Piaggio Vehicles Technology Research and Development Co and Piaggio Advanced Design Co and €/000 1,000 for management services supplied by the parent company IMMSI S.p.A.
Insurance costs include €/000 49 paid with related parties. Lease and rental costs include € 1,490 paid with related parties.
Employee costs are broken down as follows:
| 2015 | 2014 | Change | |
|---|---|---|---|
| In thousands of euros | |||
| Salaries and wages | 110,546 | 112,689 | (2,143) |
| Social security contributions | 36,464 | 36,938 | (474) |
| Termination benefits | 8,115 | 8,190 | (75) |
| Other costs | 3,908 | 4,845 | (937) |
| Total | 159,033 | 162,662 | (3,629) |
The workforce as of 31 December 2015 totalled 3,585 members of staff.
Below is a breakdown of the headcount by actual number and average number:
| Average number | ||||||
|---|---|---|---|---|---|---|
| 2015 | 2014 | Change | ||||
| Level | ||||||
| Senior management | 75 | 79 | (4) | |||
| Middle management | 235 | 227 | 8 | |||
| White collars | 894 | 926 | (32) | |||
| Blue collars with |
||||||
| supervisory duties/blue |
||||||
| collars | 2,446 | 2,513 | (67) | |||
| Total | 3,650 | 3,745 | (95) |
| Number as of | ||||||||
|---|---|---|---|---|---|---|---|---|
| 31 December 2015 | 31 December 2014 | Change | ||||||
| Level | ||||||||
| Senior management | 76 | 78 | (2) | |||||
| Middle management | 234 | 227 | 7 | |||||
| White collars | 895 | 907 | (12) | |||||
| Blue collars with |
||||||||
| supervisory duties/blue |
||||||||
| collars | 2,380 | 2,487 | (107) | |||||
| Total | 3,585 | 3,699 | (114) |
Changes in employee numbers in the two periods are compared below:
| As of | As of | ||||
|---|---|---|---|---|---|
| 31/12/2014 | Incoming | Leavers | Relocations | 31/12/2015 | |
| Senior management | 78 | 3 | (7) | 2 | 76 |
| Middle management | 227 | 14 | (15) | 8 | 234 |
| White collars | 907 | 34 | (35) | (11) | 895 |
| Blue collars | 2,487 | (108) | 1 | 2,380 | |
| Total (*) | 3,699 | 51 | (165) | 0 | 3,585 |
| (*) of which fixed-term contracts | 1 | 8 | (3) | (1) | 5 |
Amortisation and depreciation for the period, divided by category, is shown below:
| 2015 | 2014 | Change | |
|---|---|---|---|
| In thousands of euros | |||
| Property, plant and equipment: | |||
| Buildings | 4,058 | 3,984 | 74 |
| Plant and machinery | 8,625 | 8,864 | (239) |
| Industrial and commercial equipment | 14,393 | 14,881 | (488) |
| Other assets | 485 | 481 | 4 |
| Total depreciation of property, plant and equipment | 27,561 | 28,210 | (649) |
| Write-down of property, plant and equipment | - | ||
| Total depreciation of property, plant and equipment and impairment costs |
27,561 | 28,210 | (649) |
| 2015 | 2014 | Change | |
| In thousands of euros | |||
| Intangible assets: | |||
| Development costs | 21,760 | 18,225 | 3,535 |
| Industrial Patent and Intellectual Property Rights | 20,603 | 14,804 | 5,799 |
| Concessions, licences, trademarks and similar rights | 5,746 | 5,746 | 0 |
| Total amortisation of intangible fixed assets | 48,109 | 38,775 | 9,334 |
| Write-down of intangible assets | - | ||
| Total depreciation of intangible assets and impairment costs | 48,109 | 38,775 | 9,334 |
As set out in more detail in the paragraph on intangible assets, as from 1 January 2005, goodwill is no longer amortised, but tested annually for impairment.
The impairment test carried out as of 31 December 2015 confirmed the full recoverability of the amounts recorded in the financial statements.
Amortisation of the item "Concessions, licences, trademarks and similar rights" refers to amortisation of the Aprilia brand for €/000 2,916, of the Guzzi brand for €/000 1,625, of the Derbi brand for €/000 1,200 and of other brands from the merged company Aprilia for €/000 5.
The item "Industrial Patent and Intellectual Property Rights" includes amortisation relative to software equal to €/000 5,303.
This item consists of:
| 2015 | 2014 | Change | |
|---|---|---|---|
| In thousands of euros | |||
| Operating grants | 1,405 | 1,952 | (547) |
| Increases in fixed assets from internal work | 34,754 | 36,680 | (1,926) |
| Other revenue and income: | |||
| - Expenses recovered in invoices | 18,920 | 18,399 | 521 |
| - Rent receipts | 367 | 268 | 99 |
| - Contingent assets from measurement | 259 | (259) | |
| - Capital gains on the disposal of assets | 51 | 4,397 | (4,346) |
| - Recovery of transport costs | 453 | 559 | (106) |
| - Recovery of business costs | 2,063 | 1,985 | 78 |
| - Recovery of registration costs | 15 | 26 | (11) |
| - Recovery of advertising costs | 401 | 401 | |
| - Recovery of stamp duty | 702 | 648 | 54 |
| - Recovery of labour costs | 5,551 | 5,624 | (73) |
| - Recovery of duty on exported products | 67 | 79 | (12) |
| - Recovery of supplier costs | 769 | 778 | (9) |
| - Recovery of warranty costs | 36 | 77 | (41) |
| - Recovery of taxes from customers | 620 | 528 | 92 |
| - Recovery of professional training costs | 83 | 83 | |
| - Recovery of sundry costs | 2,898 | 4,247 | (1,349) |
| - Provision of services to group companies | 15,610 | 7,248 | 8,362 |
| - Licence rights and know-how | 18,544 | 19,355 | (811) |
| - Commission receivable | 1,771 | 1,778 | (7) |
| - Sale of miscellaneous materials | 65 | (65) | |
| - Compensation from damage to third parties | 688 | 1,041 | (353) |
| - Compensation from third parties for quality-related events | 2,877 | 2,582 | 295 |
| - Sponsorship | 268 | 1,000 | (732) |
| - Other income | 4,196 | 4,154 | 42 |
| Total other operating income | 113,109 | 113,729 | (620) |
The decrease totals €/000 620.
Operating grants refer to:
During the period, internal costs for development projects of €/000 34,022 were capitalised, in addition to internal costs for the development of software for €/000 704 and internal costs for the construction of property, plant and equipment, amounting to €/000 28.
Expenses recovered in invoices refer to costs for preparation, advertising, insurance, transport and packaging charged to clients directly in product sales invoices.
This item also includes charges made to other Group companies amounting to €/1,286 and to third parties for €/1,612 for the recovery of sundry costs.
Licence rights were obtained from the subsidiaries Piaggio Vehicles (€/000 8,950) and Piaggio Vietnam (€/000 7,647), as well as from the affiliate Zongshen Piaggio Foshan (€/000 304).
Income (€/000 75) was also generated from the affiliate Zongshen Piaggio Foshan for the sale of knowhow.
Income from the recovery of labour costs mainly refers to amounts charged to Group companies for the use of personnel.
The recovery of costs from suppliers refers to amounts charged for the reprocessing of materials and final inspections, and for failure to supply assembly lines with material.
The recovery of tax duties mainly refers to dealers being charged stamp duty on vehicle conformity certificates.
This item consists of:
| 2015 | 2014 | Change | |
|---|---|---|---|
| In thousands of euros | |||
| Total provisions for risks | 0 | 0 | 0 |
| Provisions for product warranties | 6,448 | 6,479 | (31) |
| Provision for financial services expenses | 5 | - | 5 |
| Total other provisions | 6,453 | 6,479 | (26) |
| Stamp duty | 854 | 813 | 41 |
| Duties and taxes not on income | 1,658 | 952 | 706 |
| Local tax, formerly council tax | 1,364 | 1,396 | (32) |
| Various subscriptions | 845 | 880 | (35) |
| Social charges | 309 | 241 | 68 |
| Capital losses from disposal of assets | 5 | 51 | (46) |
| Miscellaneous expenses | 1,864 | 2,776 | (912) |
| Losses on receivables | 78 | 270 | (192) |
| Total sundry operating costs | 6,977 | 7,379 | (402) |
| Write-down of current receivables | 2,152 | 1,676 | 476 |
| Total impairment | 2,152 | 1,676 | 476 |
| Total other operating costs | 15,582 | 15,534 | 48 |
In total, other operating costs, which include costs from Group companies of €/000 770, increased by €/000 48.
Stamp duty of €/000 854 mainly refers to the tax due on vehicle conformity certificates. This cost is charged to Dealers and the recovered amount is entered under "Other operating income".
This item consists of:
| 2015 | 2014 | Change | |
|---|---|---|---|
| In thousands of euros | |||
| Dividends from subsidiaries | 52,241 | 44,375 | 7,866 |
| Value reinstatements on investments in subsidiaries | 523 | - | 523 |
| Value reinstatements on investments in associates | 1,016 | - | 1,016 |
| Dividends from the investments of non-controlling interests | 130 | 5 | 125 |
| Capital gains on the sale of non-controlling interests | 24 | - | 24 |
| Write-down of investments in subsidiaries | (4,015) | (2,110) | (1,905) |
| Write-down of minority interests | 0 | (76) | 76 |
| Total | 49,919 | 42,194 | 7,725 |
Dividends of €/000 14,314 were distributed by the subsidiary Piaggio Vehicles Ltd, of €/000 21,000 by Piaggio Vespa B.V., of €/000 16,227 by Piaggio Vietnam, of €/000 200 by Piaggio España and of €/000 500 by Aprilia Racing.
Dividends from non-controlling interests were distributed by IVM.
Impairment reversals refer to the subsidiary Piaggio China and the associate Zongshen Piaggio Foshan Motorcycles. The impairment reversal was based on the impairment test that basically confirmed the possible recovery of the corresponding portion of shareholders' equity as of 31 December 2015 presented by the above companies. The assumptions used in the test refer to the 2016-2019 plan (in line with the plan approved at a Group level), the WACC and G in line with the WACC and G used for the Group impairment test, weighted based on geographic segments where cash flows will be produced. In view of the above, the weighted average WACC was equal to 5.87% and the G equal to 1.04%.
The impairment of investments in subsidiaries reflects the impairment losses determined for the following investments:
− Piaggio Fast Forward €/000 1,722: the company, which was established in 2015, carries out research. In the current situation, Piaggio & C. does not consider the investment as recoverable and consequently adjusted the value of the investment to the portion of shareholders' equity (basically comprising the cash and cash equivalents of the subsidiary as of 31 December 2015).
− Piaggio Indonesia €/000 39.
The capital gain of €/000 24 was relative to the sale of the investment in Geofor SpA.
This item consists of:
| 2015 | 2014 | Change | |
|---|---|---|---|
| In thousands of euros | |||
| Total financial income | 705 | 1,158 | (453) |
| Total borrowing costs | (26,750) | (32,642) | 5,892 |
| Total net exchange gains/(losses) | (590) | (498) | (92) |
| Net financial income (borrowing costs) | (26,635) | (31,982) | 5,347 |
Details are given below:
| 2015 | 2014 | Change | |
|---|---|---|---|
| In thousands of euros | |||
| Financial income | |||
| - From subsidiaries | 352 | 319 | 33 |
| Financial income from third parties: | |||
| - Interest receivable from clients | 49 | 23 | 26 |
| - Bank and post office interest payable | 28 | 68 | (40) |
| - Income from fair value measurements | 2 | 677 | (675) |
| - Other | 274 | 71 | 203 |
| Total financial income from third parties: | 353 | 839 | (486) |
| Total financial income | 705 | 1,158 | (453) |
The amount of €/000 352 recognised as financial income from subsidiaries refers to interest from financing activities relative to the subsidiaries Piaggio Vehicles Private Limited (€/000 194), Nacional Motor (€/000 65), and Piaggio Concept Store Mantova (€/000 88) and Aprilia Racing (€/000 4). It also includes interest accrued for cash pooling (€/000 1) undertaken with the subsidiaries Piaggio España and Piaggio Deutschland.
| 2015 | 2014 | Change | |
|---|---|---|---|
| In thousands of euros | |||
| Borrowing Costs | |||
| - Interest payable on a debenture loan | 15,498 | 18,548 | (3,050) |
| - Interest payable on bank accounts | 332 | 968 | (636) |
| - Interest payable on bank loans | 7,190 | 8,094 | (904) |
| - Interest to suppliers | 785 | 523 | 262 |
| - Interest payable on import/export advance loan | - | 15 | (15) |
| - Interest payable to other lenders | 705 | 1,020 | (315) |
| - Interest payable on subdiscount factor operations | 899 | 1,198 | (299) |
| - Cash discounts to clients | 471 | 445 | 26 |
| - Costs for derivatives | 120 | - | 120 |
| - Bank charges on loans | 1,202 | 1,703 | (501) |
| - Interest payable on lease agreements | - | 128 | (128) |
| - Borrowing costs from discounting back termination and termination benefits | 857 | 1,398 | (541) |
| - Other | 2 | 5 | (3) |
| Total borrowing costs | 28,061 | 34,045 | (5,984) |
| Costs capitalised on Property, Plant and Equipment | 362 | 65 | 297 |
| Costs capitalised on Intangible Assets | 949 | 1,338 | (389) |
| Total Capitalised Costs | 1,311 | 1,403 | (92) |
| Total borrowing costs | 26,750 | 32,642 | (5,892) |
During 2015, borrowing costs for €/000 1,311 were capitalised. The average rate used for the capitalisation of borrowing costs (because of general loans), was equal to 4.73%.
Interest on the debenture loan refers to €/000 134 (€/000 156 in 2014) to the parent company Omniaholding.
Interest payable to other lenders mainly refers to interest payable to factoring companies and banks for the sale of trade receivables. This item includes €/000 33 (€/000 255 in 2014) of interest payable to subsidiaries and associates.
| 2015 | 2014 | Change | |
|---|---|---|---|
| In thousands of euros | |||
| Exchange differences from sale | |||
| - Exchange gains | 11,644 | 7,328 | 4,316 |
| - Exchange losses | (12,484) | (7,104) | (5,380) |
| Total exchange gains (losses) | (840) | 224 | (1,064) |
| Exchange differences from measurement | |||
| - Exchange gains | 898 | 903 | (5) |
| - Exchange losses | (648) | (1,625) | 977 |
| Total valuation exchange gains (losses) | 250 | (722) | 972 |
| Net exchange gains/(losses) | (590) | (498) | (92) |
The item "Income taxes" is detailed below:
| 2015 | 2014 | Change | |
|---|---|---|---|
| In thousands of euros | |||
| Current taxes | 2,876 | 6,526 | (3,650) |
| Deferred tax liabilities | (4,241) | (5,635) | 1,394 |
| taxes of previous years | (85) | 199 | (284) |
| Non-recurrent costs (income) | (977) | 977 | |
| Total taxes | (1,450) | 113 | (1,563) |
In 2015, taxes were equal to €/000 1,450, and accounted for 10.6% of profit before tax.
Current taxes consist of:
Deferred tax represents the effects on income generated by the deferred tax assets and liabilities.
As regards deferred tax liabilities, during the year new provisions were made for €/000 913, and provisions from previous years were released for €/000 4,191.
As regards deferred tax assets, on the other hand, new provisions amounted to €/000 8,016, while the release of amounts allocated in previous years came to €/000 7,053.
Payables for taxes allocated in the previous year, of €/000 85, were also released.
Reconciliation in relation to the theoretical rate is shown below:
| In thousands of euros | 2015 | 2014 |
|---|---|---|
| REVENUE TAXES ON INCOME | ||
| Profit before tax | 13,607 | 14,923 |
| Theoretical rate | 27.50% | 27.50% |
| Theoretical tax | 3,742 | 4,104 |
| Tax effect arising from permanent changes | (11,399) | (10,100) |
| Tax effect arising from temporary changes | 3,166 | 1,538 |
| Effect arising from the future reduction of the tax rate on the tax loss | ||
| not offset as part of tax consolidation | 488 | |
| Reversal of deferred corporate tax liabilities allocated in previous years for | ||
| temporary changes | (4,056) | (1,481) |
| Reversal of deferred corporate tax assets allocated in previous years for temporary changes |
3,956 | 3,653 |
| Reversal of deferred tax assets allocated in previous years for tax losses | 3,047 | 341 |
| Tax effect arising from taxes on income produced abroad | 3,171 | 3,160 |
| Taxes relative to previous years | (85) | 147 |
| Expenses (income) from the Consolidated Tax Convention | 121 | (64) |
| Tax affect arising from deferred corporate tax liabilities for temporary | ||
| changes | 885 | 1,394 |
| Tax affect arising from deferred corporate tax assets for temporary | ||
| changes | (3,698) | (4,926) |
| Tax effect arising from the adjustment of deferred corporate income tax assets allocated for the 2014 tax loss |
(759) | |
| Non-recurrent costs (income) | (977) | |
| Tax affect arising from deferred corporate tax assets on interest payable | ||
| deducted within the framework of the Consolidated Tax Convention | (211) | (121) |
| REGIONAL PRODUCTION TAX (IRAP) | ||
| Regional production tax on net revenues for the year | 240 | 3,429 |
| Regional production tax referred to previous years | 52 | |
| Reversal of deferred regional production tax liabilities allocated in previous | ||
| years for temporary changes | (135) | (114) |
| Reversal of deferred regional production tax assets allocated in previous years for temporary changes |
50 | 195 |
| Tax affect arising from deferred regional production tax liabilities for | ||
| temporary changes | 27 | 27 |
| Tax affect arising from deferred regional production tax assets for | ||
| temporary changes | (144) | |
| Income taxes recognised in the financial statements | (1,450) | 113 |
Theoretical tax rates were determined applying the corporate tax rate in effect in Italy (27.5%) to profit before tax. The impact arising from the regional production tax rate was determined separately, as this tax is not calculated on the basis of profit before tax.
As regards corporate income tax, the Company expects it will contribute to the National Consolidated Tax Convention, in which IMMSI acts as Consolidating Party, with a negative taxable amount of €/000 17,210. With reference to the portion of the 2015 tax loss offset by IMMSI, income of €/000 655 was recognised in the income statement.
At the end of the reporting period, there were no gains or losses from assets held for disposal or sale.
The table below shows the breakdown of intangible assets as of 31 December 2015 and 31 December 2014, as well as movements during the year.
| Development costs |
Patent rights |
Concessions, licences and trademarks |
Goodwill | Other | Assets under development and advances |
Total | |
|---|---|---|---|---|---|---|---|
| In thousands of euros | |||||||
| As of 1 January 2014 | |||||||
| Historical cost | 87,430 | 222,756 | 227,105 | 463,926 | - | 28,284 | 1,029,501 |
| Provisions for write-down | - | - | - | - | - | - | - |
| Accumulated amortisation | (42,011) | (182,015) | (154,821) | (95,375) | - | - | (474,222) |
| Net carrying amount | 45,419 | 40,741 | 72,284 | 368,551 | - | 28,284 | 555,279 |
| 2014 | |||||||
| Investments | 13,242 | 25,128 | - | - | - | 17,587 | 55,957 |
| Put into operation in the period |
3,677 | 12,167 | - | - | - | (15,844) | - |
| Amortisation | (18,225) | (14,804) | (5,746) | - | - | - | (38,775) |
| Write-downs | - | - | - | - | - | - | 0 |
| Disposals | (56) | (3) | - | - | - | - | (59) |
| Other changes | - | - | - | - | - | - | - |
| Total movements for the year |
(1,362) | 22,488 | (5,746) | - | - | 1,743 | 17,123 |
| As of 31 December |
|||||||
| 2014 Historical cost |
86,973 | 260,045 | 227,105 | 463,926 | 30,027 | 1,068,076 | |
| Provisions for write-down | |||||||
| Accumulated amortisation | - (42,916) |
- (196,816) |
- (160,567) |
- (95,375) |
- | - | - (495,674) |
| Net carrying amount | 44,057 | 63,229 | 66,538 | 368,551 | - | 30,027 | 572,402 |
| 2015 | |||||||
| Investments | 16,228 | 29,867 | - | - | - | 10,414 | 56,509 |
| Put into operation in the period |
15,001 | 2,793 | - | - | - | (18,293) | (499) |
| Amortisation | (21,760) | (20,603) | (5,746) | - | - | - | (48,109) |
| Write-downs | - | - | - | - | - | - | - |
| Disposals | (4) | (44) | - | - | - | (8) | (56) |
| Other changes | (3,102) | 1 | 1 | - | - | (9) | (3,109) |
| Total movements for the year |
6,363 | 12,014 | (5,745) | - | - | (7,896) | 4,736 |
| As of 31 December |
|||||||
| 2015 Historical cost |
115,095 | 292,661 | 227,106 | 463,926 | 22,131 | 1,120,919 | |
| Provisions for write-down | - | ||||||
| Accumulated amortisation | - (64,675) |
- (217,418) |
- (166,313) |
- (95,375) |
- | - | - (543,781) |
| Net carrying amount | 50,420 | 75,243 | 60,793 | 368,551 | - | 22,131 | 577,138 |
| - |
The breakdown of intangible assets in operation and under development is as follows:
| Value as of 31 December 2015 | Value as of 31 December 2014 | Change | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| For the period |
Under development and advances |
Total | For the period |
Under development and advances |
Total | For the period |
Under development and advances |
Total | |||
| In thousands of euros |
|||||||||||
| R&D costs | 50,420 | 19,989 | 70,409 | 44,057 | 29,306 | 73,363 | 6,363 | (9,317) | (2,954) | ||
| Patent rights | 75,243 | 2,142 | 77,385 | 63,229 | 721 | 63,950 | 12,014 | 1,421 | 13,435 | ||
| Concessions, licences and trademarks |
60,793 | - | 60,793 | 66,538 | - | 66,538 | (5,745) | - | (5,745) | ||
| Goodwill | 368,551 | - | 368,551 | 368,551 | - | 368,551 | - | - | - | ||
| Total | 555,007 | 22,131 | 577,138 | 542,375 | 30,027 | 572,402 | 12,632 | (7,896) | 4,736 |
Intangible assets increased overall by €/000 4,736 following investments net of disposals and amortisation for the period.
Increases mainly refer to the capitalisation of development costs for new products and new engines, as well as the purchase of software.
During 2015 borrowing costs for €/000 949 were capitalised, applying an average interest rate of 4.73%.
Development costs include costs for products and engines in projects for which there is an expectation, for the period of the useful life of the asset, to see net sales at such a level in order to allow the recovery of the costs incurred.
Development expenditure for new projects capitalised in 2015 refers to the study of new vehicles and new engines (two-/three-/four-wheeler) which will feature as the top products in the 2015-2017 range.
Borrowing costs attributable to the development of products which require a considerable period of time to be realised are capitalised as a part of the cost of the actual assets. Development costs included under this item are amortised on a straight line basis over a period of 3 to 5 years, in consideration of their remaining useful life.
During 2015, development costs of approximately € 10.8 million were recognised directly in profit or loss. Pursuant to article 2426, section 5 of the Italian Civil Code, the value of research and development costs still to be amortised equal to €/000 70,409 is unavailable in shareholders' equity.
This item comprises patents for €/000 1,550, know-how for €/000 61,289 and software for €/000 14,546.
As regards software, the increase for the year amounted to €/000 5,728 and mainly refers to the purchase of various licences, as well as the implementation of commercial, production, personnel and administration projects.
Investments in know how amount to €/000 25,074 and mainly refer to new calculation, design and production techniques and methodologies developed by the Company, principally for new products in the 2015-2017 range.
As regards patent rights, costs for €/000 952 were capitalised.
Costs for industrial patent and intellectual property rights are amortised on a straight line basis over three years, except for costs for founding products and costs for the purchase of SAP licences which are amortised over 5 years.
The item Trademarks, concessions and licences, equal to €/000 60,793 consists of:
| As of 31 December 2015 | As of 31 December 2014 | Change | |
|---|---|---|---|
| In thousands of euros | |||
| Derbi trademark | 10,800 | 12,000 | (1,200) |
| Guzzi trademark | 17,875 | 19,500 | (1,625) |
| Aprilia trademark | 32,073 | 34,988 | (2,915) |
| Minor trademarks | 45 | 50 | (5) |
| Total Trademark | 60,793 | 66,538 | (5,745) |
The Derbi brand is amortised over 15 years, maturing in 2024. Amortisation during the year amounted to €/000 1,200.
The Guzzi and Aprilia trademarks are amortised over a period of 15 years, expiring in 2026.
The value of other brands acquired with the Aprilia merger decreased during the year by €/000 5 following amortisation calculated on the basis of the estimated useful life.
As specified in information on accounting standards, as from 1 January 2005 goodwill is no longer amortised, but is tested for impairment annually, or more frequently if specific events or changed circumstances indicate the possibility of impairment, in accordance with IAS 36 Impairment of Assets (impairment test).
In compliance with IAS 36 the methodology adopted is based on the unlevered version of discounted cash flows.
The main assumptions used by the Company to determine future financial flows, relative to a four-year period, and the consequent recoverable value (value in use) refer to:
a a hypothesis of estimated financial flows over a four-year period, inferred from budget data for 2016 supplemented by forecast data for 2017-2019, approved by the Board of Directors of the Company, along with an impairment test performed on 10 March 2016;
b. the WACC discount rate.
c. in addition to the period, a growth rate (g rate) has been estimated.
In particular, to discount cash flows, the Group adopted a discount rate (WACC) which reflects market valuations of the fair value of money and takes account of specific risks of activities and the geographic segment in which the cash generating unit operates (5.74% for 2015 - 6.13% for 2014).
In the future cash flows discounting model, a terminal value is entered at the end of the cash flow projection period, to reflect the residual value Piaggio should produce. The terminal value represents the current value, at the last year of the projection, of all subsequent cash flows calculated as perpetual income, and was determined using a growth rate (g rate) equal to 1%, in line with the previous year.
The impairment test carried out as of 31 December 2015 confirmed that there was no need to make any changes to the figures in the financial statements.
In addition, and on the basis of information in the document produced jointly by the Bank of Italy, CONSOB and Isvap (the insurance watchdog) no. 2 of 6 February 2009, the Company conducted sensitivity analysis of test results in relation to changes in basic assumptions (use of the growth rate in producing the terminal value and discount rate). In the case of a positive or negative change of 0.5% of the WACC and G used, analyses would not identify impairment losses.
Given that the recoverable value was estimated, the Company cannot guarantee the absence of goodwill impairment in future financial periods.
Given the current market crisis, the various factors utilised in the estimates could require revision; the Company will constantly monitor these factors as well as the existence of impairment losses.
The table below shows the breakdown of plant, property and equipment as of 31 December 2015 and 31 December 2014, as well as movements during the period.
| Land | Buildings | Plant and machinery |
Equipment | Other assets |
Assets under construction and advances |
Total | |
|---|---|---|---|---|---|---|---|
| In thousands of euros | |||||||
| As of 1 January 2014 | |||||||
| Historical cost | 28,010 | 127,371 | 278,575 | 463,129 | 26,390 | 21,574 | 945,049 |
| Reversals | - | 4,816 | 2,368 | 6,253 | 199 | - | 13,636 |
| Provisions for write-down | - | - | - | (1,324) | - | - | (1,324) |
| Accumulated depreciation | - | (50,316) | (241,549) | (439,348) | (24,546) | - | (755,759) |
| Net carrying amount | 28,010 | 81,871 | 39,394 | 28,710 | 2,043 | 21,574 | 201,602 |
| 2014 | |||||||
| Investments | - | 2,625 | 4,146 | 8,055 | 439 | 9,386 | 24,651 |
| Put into operation in the period | - | 576 | 4,356 | 8,964 | 4 | (13,900) | - |
| Depreciation | - | (3,984) | (8,864) | (14,881) | (481) | - | (28,210) |
| Write-downs | - | - | - | - | - | - | - |
| Disposals | - | (10) | (460) | (202) | (4) | (361) | (1,037) |
| Other changes | - | 2 | (1) | - | (1) | - | - |
| Total movements for the year | 0 | (791) | (823) | 1,936 | (43) | (4,875) | (4,596) |
| As of 31 December 2014 | |||||||
| Historical cost | 28,010 | 130,563 | 285,689 | 477,612 | 25,167 | 16,699 | 963,740 |
| Reversals | - | 4,816 | 2,368 | 6,253 | 199 | - | 13,636 |
| Provisions for write-down | - | - | - | (1,324) | - | - | (1,324) |
| Accumulated depreciation | (54,300) | (249,486) | (451,894) | (23,366) | (779,046) | ||
| Net carrying amount | 28,010 | 81,079 | 38,571 | 30,647 | 2,000 | 16,699 | 197,006 |
| 2015 | |||||||
| Investments | - | 992 | 2,482 | 5,089 | 268 | 9,723 | 18,554 |
| Put into operation in the period | - | 735 | 1,586 | 2,628 | 26 | (4,476) | 499 |
| Depreciation | - | (4,058) | (8,625) | (14,393) | (485) | - | (27,561) |
| Write-downs | - | - | - | 5 | - | - | 5 |
| Disposals | - | (11) | (6) | (54) | - | - | (71) |
| Other changes | - | - | 1 | - | - | - | 1 |
| Total movements for the year | 0 | (2,342) | (4,562) | (6,725) | (191) | 5,247 | (8,573) |
| As of 31 December 2015 | |||||||
| Historical cost | 28,010 | 132,279 | 284,538 | 482,703 | 23,987 | 21,946 | 973,463 |
| Reversals | - | 4,816 | 2,368 | 6,253 | 199 | - | 13,636 |
| Provisions for write-down | - | - | - | (1,319) | - | - | (1,319) |
| Accumulated depreciation | - | (58,358) | (252,897) | (463,715) | (22,377) | (797,347) | |
| Net carrying amount | 28,010 | 78,737 | 34,009 | 23,922 | 1,809 | 21,946 | 188,433 |
Value as of 31 December 2015 Value as of 31 December 2014 Change For the period Under construction and Total For the period Under construction and Total For the period Under construction and
28,010
81,079
38,571
30,647
2,000
Total 166,487 21,946 188,433 180,307 16,699 197,006 (13,820) 5,247 (8,573)
advances
-
2,977
6,112
7,584
26
28,010 -
The breakdown of property, plant and equipment in operation and under construction is as follows:
Property, plant and equipment decreased overall by €/000 8,573. Investments for the period amount to €/000 18,554 and mainly refer to moulds for new vehicles and engines that will be launched in the subsequent year, to drive shaft processing lines, engine test benches, the experimental workshop as well as the new painting plant for two-wheeler products at Pontedera.
Borrowing costs attributable to the construction of products which require a considerable period of time to be ready for use are capitalised as a part of the cost of the actual assets.
During 2015 borrowing costs for €/000 362 were capitalised, applying an average interest rate of 4.73%.
In thousands of euros
Plant and machinery
Land
Buildings
Equipment
Other assets
28,010
78,737
34,009
23,922
1,809
The value of land has not changed compared to the previous year.
advances
-
3,303
11,339
6,938
366
28,010
82,040
45,348
30,860
2,175
Buildings decreased overall by €/000 2,016. The negative imbalance is due to new investments made during the year amounting to €/000 2,052, the decrease from amortisation for the period of €/000 4,058 and the disposal of residual costs of €/000 11.
The capitalisation of €/000 2,052 relative to production buildings mainly refers to works to expand the building for the new two-wheeler painting plant at Pontedera and various works at the sites at Pontedera, Mandello del Lario, Noale and Scorzè.
During the period, capitalisation amounting to €/000 1.727 was recognised, of which €/000 735 relative to investments made in previous years.
The item increased overall by €/000 665. The positive imbalance is due to new investments made during the year amounting to €/000 8,796, the reclassification of projects from other categories amounting to €/000 499, the decrease from amortisation for the period of €/000 8,625 and the disposal of residual costs of €/000 6.
advances
84,056 (2,342) 326 (2,016)
44,683 (4,562) 5,227 665
38,231 (6,725) (646) (7,371)
2,026 (191) 340 149
Total
Capitalisation mainly concerned investments for the new two-wheeler painting plant at Pontedera and activities for production lines for new vehicles and engines.
During the period, capitalisation amounting to €/000 4,068 was recognised, of which €/000 1,586 relative to investments made in previous years.
The item decreased overall by €/000 7,371. The negative imbalance is due to depreciation for the period amounting to €/000 14,393 and the disposal of residual costs of €/000 54, partially offset by new investments for €/000 7,072.
Capitalisation of €/000 7,072 refers to equipment and namely moulds for new vehicles launched during the year or scheduled to be launched in the first half of next year, moulds for new engines and specific equipment for assembly lines.
During the period, capitalisation amounting to €/000 7,718 was recognised, of which €/000 2,628 relative to investments made in previous years.
As of 31 December 2015 the item Other assets, including assets under construction, comprised the following:
| As of 31 December 2015 |
As of 31 December 2014 |
Change | |
|---|---|---|---|
| In thousands of euros | |||
| EDP systems | 919 | 567 | 352 |
| Office furniture and equipment |
607 | 750 | (143) |
| Vehicles | 72 | 105 | (33) |
| Vehicles | 577 | 604 | (27) |
| Total | 2,175 | 2,026 | 149 |
The item increased overall by €/000 149. The positive imbalance is due to the increase from new investments made during the year amounting to €/000 633 partially offset by depreciation for the year of €/000 484.
During the period, capitalisation amounting to €/000 293 was recognised, of which €/000 26 relative to investments made in previous years.
As of 31 December 2015, the Company had no payments for finance leases due on property, plant or machinery.
As of 31 December 2015 the Company did not own land and buildings encumbered by mortgage liens or privileges in favour of banks to secure loans obtained in previous years.
As of 31 December 2015 no investment property was held.
In compliance with IAS 12, the item indicates the net balance of deferred tax assets and liabilities. This net balance is broken down in the table below.
| As of 31 December 2015 |
As of 31 December 2014 |
Change | |
|---|---|---|---|
| In thousands of euros | |||
| Deferred tax assets | 48,472 | 48,882 | (410) |
| Deferred tax liabilities | (15,950) | (19,229) | 3,279 |
| Total | 32,522 | 29,653 | 2,869 |
Deferred tax assets total €/000 48,472 compared to €/000 48,882 as of 31 December 2014, recording a negative change of €/000 410.
The balance of deferred tax assets as of 31 December 2015 refers to:
The negative change of €/000 410 is attributable to:
Additional deferred tax assets amounting to €/000 8,016 were recognised in light of forecast results of Piaggio & C. S.p.A., and the foreseeable use of relative tax benefits in future years.
Details of items affected by the allocation of deferred tax assets as well as the amount of deferred tax assets already recognised and not recognised are shown in the table below.
| Tax | |||
|---|---|---|---|
| Tax effect | effect | ||
| Amount | 27.5%/24% | 3.9% | |
| In thousands of euros | |||
| Nacional Motor goodwill | 15,503 | 3,766 | 605 |
| Provisions for risks | 5,937 | 1,427 | 227 |
| Provision for product warranties | 8,327 | 1,998 | 325 |
| Provisions for write-down | 14,436 | 3,464 | |
| Provisions for obsolete stock | 25,698 | 6,167 | 1,002 |
| Interest payable | 13,278 | 3,187 | |
| Other changes | 5,872 | 1,348 | 65 |
| Total for provisions and other changes | 89,051 | 21,357 | 2,224 |
| Actuarial losses on termination benefits | 1,769 | 425 | |
| Other IAS effects | |||
| 2007 tax loss including Moto Guzzi transferred to IMMSI | 10,987 | 2,637 | |
| 2011 tax loss transferred to IMMSI | 390 | 94 | |
| 2012 tax loss transferred to IMMSI | 27,498 | 6,600 | |
| 2013 tax loss transferred to IMMSI | 29,978 | 7,195 | |
| 2014 tax loss transferred to IMMSI | 18,193 | 4,366 | |
| 2015 tax loss transferred to IMMSI | 14,826 | 3,558 | |
| Total out of tax losses | 101,872 | 24,450 | 0 |
| Losses from the fair value measurement of financial instruments | 59 | 16 | |
| Deferred tax assets already recognised | 48,472 | ||
| Deferred tax assets not recognised for provisions and other changes | 0 |
Overall, the movement of deferred tax assets can be summarised as follows:
| Values as of 31 December 2014 |
Portion to the Income Statement |
Portion to the Statement of Comprehensive Income |
Portion to the Income Statement |
Portion to the Statement of Comprehensive Income |
Portion offset as part of tax consolidation |
Values as of 31 December 2015 |
|
|---|---|---|---|---|---|---|---|
| In thousands of euros Deferred tax assets for: |
|||||||
| Temporary changes |
25,367 | (4,007) | (1,036) | 3,698 | 24,022 | ||
| Losses generated within the framework of tax consolidation |
23,515 | (3,047) | 4,318 | (336) | 24,450 | ||
| Total | 48,882 | (7,054) | (1,036) | 8,016 | - | (336) | 48,472 |
Deferred tax liabilities total €/000 15,950 compared to €/000 19,229 as of 31 December 2014, recording a negative change of €/000 3,279.
As of 31 December 2015, provisions for deferred taxes referred to:
€/000 5,035 for allocation of the merger loss to the Guzzi brand, arising from its merger in 2008; Provisions for deferred tax liabilities were reduced in the period by €/000 4,191 following issue of the relative portion and increased overall by €/000 912 for new provisions.
Deferred tax assets and liabilities were determined applying the tax rate in effect in the year when temporary differences occur. Therefore, the company adjusted deferred tax assets and liabilities to the new rate introduced by Italian Law no. 208/2015 (2016 Stability Law), which amended article 77, paragraph 1 of the Consolidated Law on Income Tax (TUIR), reducing the nominal corporate income tax rate from 27.5% to 24%, with effect for tax periods after the period ending 31 December 2016.
As of 31 December 2015, this item totalled €/000 157,233, compared to €/000 170,645 at the end of 2014, and consisted of:
| As of 31 | As of 31 | ||
|---|---|---|---|
| December 2015 | December 2014 | Change | |
| In thousands of euros | |||
| Raw, ancillary materials and consumables | 69,013 | 75,322 | (6,309) |
| Provision for write-down | (6,706) | (7,998) | 1,292 |
| Net value | 62,307 | 67,324 | (5,017) |
| Work in progress and semifinished products | 18,240 | 17,843 | 397 |
| Provision for write-down | (852) | (852) | 0 |
| Net value | 17,388 | 16,991 | 397 |
| Finished products and goods | 95,677 | 102,445 | (6,768) |
| Provision for write-down | (18,140) | (16,214) | (1,926) |
| Net value | 77,537 | 86,231 | (8,694) |
| Advances | 1 | 99 | (98) |
| TOTAL | 157,233 | 170,645 | (13,412) |
As of 31 December 2015 inventories had decreased by €/000 13,412 in line with production volumes and sales in the year.
Changes in the obsolescence fund are summarised in the table below:
| As of 31 December 2014 |
Use | Allocation | As of 31 December 2015 |
|
|---|---|---|---|---|
| In thousands of euros | ||||
| Raw materials | 7,998 | (1,509) | 217 | 6,706 |
| Work in progress and semifinished products | 852 | - | - | 852 |
| Finished products and goods | 16,214 | (866) | 2,792 | 18,140 |
| TOTAL | 25,064 | (2,375) | 3,009 | 25,698 |
Current trade receivables amounted to €/000 57,244 compared to €/000 74,669 as of 31 December 2014, registering a decrease of €/000 17,425.
No non-current trade receivables were recorded for either period.
| As of 31 December 2015 |
As of 31 December 2014 |
Change | |
|---|---|---|---|
| In thousands of euros | |||
| Trade receivables | 38,816 | 38,801 | 15 |
| Trade receivables due from subsidiaries | 17,490 | 35,022 | (17,532) |
| Trade receivables due from associates | 938 | 836 | 102 |
| Trade receivables due from parent companies | - | 10 | (10) |
| Total | 57,244 | 74,669 | (17,425) |
Trade receivables are recorded net of a provision for bad debts equal to €/000 18,290.
Trade receivables comprise receivables referred to normal sales operations and include receivables in foreign currency for a total value, at the exchange rate in effect as of 31 December 2015, taking account of exchange risk hedging, of €/000 8,581.
The item "Trade receivables" includes invoices to issue amounting to €/000 1,005 relative to normal business transactions and credit notes to issue amounting to €/000 9,974 mainly referring to premiums to pay to the sales network in Italy and abroad, for having reached targets.
Trade receivables are usually sold to factoring companies and mainly on a without recourse and advance payment collection basis.
The Company sells a large part of its trade receivables with and without recourse. Piaggio has signed contracts with some of the most important Italian and foreign factoring companies as a move to optimise the monitoring and the management of its trade receivables, besides offering its customers an instrument for funding their own inventories, for factoring classified as without the substantial transfer of risks and benefits. On the contrary, for factoring without recourse, contracts have been formalised for the substantial transfer of risks and benefits. As of 31 December 2015 trade receivables still due, sold without recourse totalled €/000 51,542. Of these amounts, Piaggio received payment prior to natural expiry, of €/000 50,518.
As of 31 December 2015, advance payments received from factoring companies and banks, for trade receivables sold with recourse totalled €/000 15,320 with a counter entry recorded in current liabilities.
Movements of the provisions for write-down relative to trade receivables were as follows:
| In thousands of euros | |
|---|---|
| Opening balance as of 1 January 2015 | 17,602 |
| Decreases for use recognised in profit or loss | (891) |
| Increases for allocations | 1,579 |
| Closing balance as of 31 December 2015 | 18,290 |
During the period, the provision for bad trade debts was used to cover losses amounting to €/000 891. Allocations to the provision were made against risks arising from the valuation of relative receivables as of 31 December 2015.
Trade receivables due from subsidiaries and associates refer to the supply of products undertaken in normal market conditions.
Other non-current receivables amounted to €/000 2,839 compared to €/000 3,430 as of 31 December 2014, registering a decrease of €/000 591.
Their breakdown was as follows:
| As of 31 | As of 31 | ||
|---|---|---|---|
| December 2015 | December 2014 | Change | |
| In thousands of euros | |||
| Other receivables due from social security institutions | 191 | 895 | (704) |
| Other receivables due from associates | 152 | 197 | (45) |
| Other receivables due from third parties | 2,496 | 2,338 | 158 |
| Total | 2,839 | 3,430 | (591) |
Receivables due from social security institutions refer to sums receivable from and payable by the Italian National Social Security Institute (INPS) for termination benefit accrued by employees on solidarity contracts.
The item "Other" includes guarantee deposits amounting to €/000 329 and prepaid expenses amounting to €/000 2,144.
Current trade receivables amounted to €/000 91,417 compared to €/000 82,536 as of 31 December 2014, registering an increase of €/000 8,881.
Their breakdown is as follows:
| As of 31 December 2015 |
As of 31 December 2014 |
Change | |
|---|---|---|---|
| In thousands of euros | |||
| Other receivables due from third parties | 14,365 | 18,173 | (3,808) |
| Other receivables due from subsidiaries | 68,294 | 54,985 | 13,309 |
| Other receivables due from associates | 920 | 2,557 | (1,637) |
| Other receivables due from parent companies | 7,838 | 6,821 | 1,017 |
| Total | 91,417 | 82,536 | 8,881 |
The item other receivables due from third parties comprises the following:
| As of 31 December 2015 |
As of 31 December 2014 |
Change | |
|---|---|---|---|
| In thousands of euros | |||
| Receivables due from employees | 2,350 | 1,863 | 487 |
| Due from social security institutions | 2,130 | 3,625 | (1,495) |
| Sundry receivables from third parties: | |||
| Amounts due to suppliers | 543 | 634 | (91) |
| Supplier advances | 84 | 799 | (715) |
| Invoices and credit to issue | 2,146 | 2,431 | (285) |
| Sundry receivables due from Italian and foreign third parties | 2,912 | 2,453 | 459 |
| Receivables for the sale of property | 2 | 2 | 0 |
| Due from research subsidies to receive | - | 3,096 | (3,096) |
| Fair value of derivatives | 647 | 696 | (49) |
| Other receivables | 3,551 | 2,574 | 977 |
| Total | 14,365 | 18,173 | (3,808) |
Receivables due from employees refer to advances paid for secondments, sick leave, contract advances, cash provisions, etc.
Sundry receivables of €/000 2,912 mainly refer to receivables due from Italian and foreign parties, originating from transactions not related to typical activities. The item is recognised net of provisions for write-downs of €/000 4,786.
Movements of the provision for bad debts relative to sundry receivables were as follows:
| In thousands of euros | |
|---|---|
| Opening balance as of 1 January 2015 | 4,393 |
| Decreases for use | (179) |
| Increases for allocations | 572 |
| Closing balance as of 31 December 2015 | 4,786 |
During the period, €/000 179 of the provision for bad debts relative to sundry receivables was used to cover losses. During the measurement of relative receivables as of 31 December 2015, a further allocation to the provision of €/000 572 was necessary.
Tax receivables are broken down as follows:
| As of 31 December 2015 |
As of 31 December 2014 |
Change | |
|---|---|---|---|
| In thousands of euros | |||
| VAT receivables | 2,506 | 3,363 | (857) |
| Income tax receivables | 3,848 | 450 | 3,398 |
| Other tax receivables | 222 | 346 | (124) |
| Total | 6,576 | 4,159 | 2,417 |
Non-current tax receivables total €/000 634 compared to €/000 893 as of 31 December 2014. The net negative change amounted to €/000 259.
Current tax receivables due from Tax authorities total €/000 5,942 compared to €/000 3,266 as of 31 December 2014. The positive net change amounted to €/000 2,676.
The table below shows the breakdown of operating receivables by measurement method:
| Operating assets as of 31 December 2015 | Assets measured at FVPL |
Assets measured at FVOCI |
Financial derivatives |
Assets at amortised cost |
Total |
|---|---|---|---|---|---|
| In thousands of euros | |||||
| Non-current assets | |||||
| Tax receivables | 634 | 634 | |||
| Other receivables | 2,839 | 2,839 | |||
| Total non-current operating receivables | 0 | 0 | 0 | 3,473 | 3,473 |
| Current assets | |||||
| Trade receivables | 57,244 | 57,244 | |||
| Other receivables | 647 | 90,770 | 91,417 | ||
| Tax receivables | 5,942 | 5,942 | |||
| Total current operating receivables | 0 | 0 | 647 | 153,956 | 154,603 |
| Total | 0 | 0 | 647 | 157,429 | 158,076 |
| Operating assets as of 31 December 2014 | Assets measured at FVPL |
Assets measured at FVOCI |
Financial derivatives |
Assets at amortised cost |
Total |
|---|---|---|---|---|---|
| In thousands of euros | |||||
| Non-current assets | |||||
| Tax receivables | 893 | 893 | |||
| Other receivables | 3,430 | 3,430 | |||
| Total non-current operating receivables | 0 | 0 | 0 | 4,323 | 4,323 |
| Current assets | |||||
| Trade receivables | 74,669 | 74,669 | |||
| Other receivables | 696 | 81,840 | 82,536 | ||
| Tax receivables | 3,266 | 3,266 | |||
| Total current operating receivables | 0 | 0 | 696 | 159,775 | 160,471 |
| Total operating receivables | 0 | 0 | 696 | 164,098 | 164,794 |
As of 31 December 2015, there were no receivables due after 5 years.
As of 31 December 2015, there were no assets held for sale.
Trade payables are wholly included under current liabilities and total €/000 246,893, compared to €/000 266,143 as of 31 December 2014.
| As of 31 December 2015 |
As of 31 December 2014 |
Change | |
|---|---|---|---|
| In thousands of euros | |||
| Current liabilities: | |||
| Amounts due to suppliers | 227,139 | 236,565 | (9,426) |
| Trade payables due to subsidiaries | 9,918 | 14,708 | (4,790) |
| Trade payables due to associates | 9,067 | 14,164 | (5,097) |
| Trade payables due to parent companies | 769 | 626 | 143 |
| Trade payables due to other related parties | - | 80 | (80) |
| Total | 246,893 | 266,143 | (19,250) |
| of which reverse factoring | 91,038 | 114,576 | (23,538) |
| Of which supply chain financing | 12,218 | 10,340 | 1,878 |
The item comprises trade payables of €/000 212,038 for the purchase of goods, materials and services for business operations and €/000 15,101 for the purchase of assets.
The item includes payables in foreign currency for a total value, at the exchange rate in effect at 31 December 2015, taking account of hedging on exchange risk, of €/000 37,133.
As regards the amount of €/000 614, the payment of amounts due under this item is guaranteed by bank guarantees.
To facilitate credit conditions for its suppliers, the Company has used factoring agreements since 2012, mainly supply chain financing and reverse factoring agreements, as described in more detail in "accounting policies adopted by the Company", to which reference is made. These operations did not change the primary obligation, nor substantially changed payment terms, so their nature is the same and they are still classified as trade liabilities.
As of 31 December 2015, the value of trade payables covered by reverse factoring or supply chain financing agreements was equal to €/000 103,256 (€/000 124,916 as of 31 December 2014).
| Balance as of 31 December 2014 |
Allocations | Applications | Balance as of 31 December 2015 |
|
|---|---|---|---|---|
| In thousands of euros | ||||
| Provisions for risks | ||||
| Provisions for risk on investments | 0 | 478 | 478 | |
| Provision for purchase risks relative to used vehicles | 0 | 431 | 431 | |
| Provision for contractual risks | 3,899 | 3,899 | ||
| Provision for litigation | 1,516 | (8) | 1,508 | |
| Provision for guarantee risks | 58 | 58 | ||
| Provisions for tax risks | 186 | (186) | 0 | |
| Total provisions for risks | 5,659 | 909 | (194) | 6,374 |
| Provisions for expenses | ||||
| Provision for product warranties | 8,719 | 6,447 | (6,839) | 8,327 |
| Other reserves | 34 | 7 | 41 | |
| Total provisions for expenses | 8,753 | 6,454 | (6,839) | 8,368 |
| Total provisions for risks and charges | 14,412 | 7,363 | (7,033) | 14,742 |
The breakdown between the current and non-current portion of long-term provisions is as follows:
| As of 31 December 2015 |
As of 31 December 2014 |
Change | |
|---|---|---|---|
| In thousands of euros | |||
| Current portion: | |||
| Provisions for risk on investments | 478 | - | 478 |
| Provisions for tax risks | - | 186 | (186) |
| Provision for purchase risks relative to used vehicles | 431 | - | 431 |
| Provision for product warranties | 6,572 | 6,103 | 470 |
| Promotional expense fund | 36 | 34 | 2 |
| Provision for financial services expenses | 5 | - | 5 |
| Total current portion | 7,522 | 6,323 | 1,200 |
| As of 31 December | As of 31 December | ||
|---|---|---|---|
| In thousands of euros | 2015 | 2014 | Change |
| In thousands of euros | |||
| Non-current portion: | |||
| Provision for contractual risks | 3,899 | 3,899 | 0 |
| Provision for litigation | 1,508 | 1,516 | (8) |
| Provision for guarantee risks | 58 | 58 | 0 |
| Provision for product warranties | 1,755 | 2,616 | (861) |
| Total non-current portion | 7,220 | 8,089 | (869) |
The provision for risks on investments refers to €/000 472 relative to the subsidiary Piaggio Concept Store Mantova and to €/000 6 relative to the subsidiary Piaggio Indonesia. Provisions were made in consideration of the recapitalization commitments.
The provision for contract risks refers mainly to charges which could arise from the renegotiation of a supply contract.
The provision for litigation concerns €/000 40 for labour litigation and the difference of €/000 1,468 refers to other legal proceedings. Uses of €/000 8 refer to the definition of labour law disputes.
The provision risks on guarantees provided refers to charges expected for guarantees issued on the transfer of company investments.
The provision for tax risk was used in the year as regards the tax assessment of the German tax authorities concerning the VAT registration number directly registered in Germany.
The provision for product warranties of €/000 8,327 refers to potential liabilities related to the sale of products. The provision refers to allocations for technical assistance on products covered by customer service which are estimated to be provided over the contractually envisaged warranty period. This period varies according to the type of goods sold to the sales market and to customer take-up to commit to a scheduled maintenance plan.
The provision increased during the year by €/000 6,447 for new allocations and €/000 6,839 was used for expenses sustained referring to sales in previous years.
| As of 31 December 2015 |
As of 31 December 2014 |
Change | |
|---|---|---|---|
| In thousands of euros | |||
| Provision for retirement | 134 | 125 | 9 |
| Termination benefits provision | 47,751 | 53,926 | (6,175) |
| Total | 47,885 | 54,051 | (6,166) |
The provision for retirement mainly consists of supplementary client funds, representing the amounts payable to agents if agency agreements are terminated for reasons not attributable to them. During the year, the provision was increased by €/000 9 for benefits accrued during the period.
Movements for termination benefits provision are as follows:
| In thousands of euros Opening balance as of 1 January 2015 |
53,926 |
|---|---|
| Cost for the period | 8,115 |
| Actuarial losses recognised in Equity | (2,942) |
| Interest cost | 857 |
| Use and transfers of retirement funds | (12,183) |
| Other changes | (22) |
| Closing balance as of 31 December 2015 | 47,751 |
The economic/technical assumptions used to discount the value are described in the table below:
Technical annual discount rate 2.03% Annual rate of inflation 1.50% for 2016 1.80% for 2017 1.70% for 2018 1.60% for 2019 2.00% from 2020 onwards Annual rate of increase in termination benefits 2.625% for 2016 2.850% for 2017 2.775% for 2018 2.700% for 2019 3.000% from 2020 onwards
As regards the discount rate, the Company uses the iBoxx Corporates AA rating with a 10+ duration as the valuation benchmark. If the iBoxx Corporates AA rating with a 10+ duration had been used, the value of actuarial losses and the provision as of 31 December 2015 would have been lower by €/000 1,163.
The table below shows the effects, in absolute terms, as of 31 December 2015, which would have occurred following changes in reasonably possible actuarial assumptions:
| Provision for termination benefits | |
|---|---|
| In thousands of euros | |
| Turnover rate +2% | 47,476 |
| Turnover rate -2% | 48,052 |
| Inflation rate + 0.25% | 48,421 |
| Inflation rate - 0.25% | 47,052 |
| Discount rate + 0.50% | 45,613 |
| Discount rate - 0.50% | 50,017 |
The average financial duration of the bond is 10 years.
Estimated future amounts are equal to:
| Year | Future amounts |
|---|---|
| In thousands of euros | |
| 1 | 3,214 |
| 2 | 2,876 |
| 3 | 4,360 |
| 4 | 1,338 |
| 5 | 4,362 |
Tax payables totalled €/000 6,465 compared to €/000 7,131 as of 31 December 2014.
| As of 31 December |
As of 31 December |
Change |
|---|---|---|
| - | - | |
| 1,767 18 4,311 |
2,800 - 4,048 |
(1,033) 18 263 |
| 327 42 4,698 6,465 |
261 22 4,331 7,131 |
66 20 367 (666) (666) |
| 2015 6,465 |
2014 7,131 |
Current tax payables of €/000 1,767 refer wholly to taxes to pay abroad for income generated abroad, mainly for royalties, technical consultancy services and other services to the subsidiaries Piaggio Vehicles and Piaggio Vietnam.
Payables for regional production tax are entered offset against relative receivables. Regional production tax due for the year amounted to €/000 240. As regards corporate income tax, the Company expects to contribute to the National Consolidated Tax Convention, with a negative taxable amount of €/000 17,210. Payables for withheld taxes paid refer to the income of employee and outsourced work and commission.
| As of 31 December 2015 |
As of 31 December 2014 |
Change | |
|---|---|---|---|
| In thousands of euros | |||
| Non-current portion: | |||
| Deferred income | 1,234 | 1,235 | (1) |
| Payables from the fair value measurement of | |||
| financial instruments | - | 231 | (231) |
| Other payables | 200 | 200 | 0 |
| Total | 1,434 | 1,666 | (232) |
| As of 31 December |
As of 31 December |
||
|---|---|---|---|
| 2015 | 2014 | Change | |
| In thousands of euros | |||
| Current portion: | |||
| Amounts due to subsidiaries | 6,176 | 10,880 | (4,704) |
| Amounts due to associates | 34 | 119 | (85) |
| Amounts due to parent companies | 6,094 | 5,975 | 119 |
| Amounts due to employees | 9,613 | 10,470 | (857) |
| Amounts due to social security institutions | 5,803 | 7,742 | (1,939) |
| Amounts due to company boards | 271 | 307 | (36) |
| Amounts due for temporary funding | 612 | 126 | 486 |
| Amounts due for financial statement assessments | 331 | 265 | 66 |
| Amounts due to customers | 2,951 | 2,110 | 841 |
| Payables from the fair value measurement of | |||
| financial instruments | 420 | 502 | (82) |
| Accrued expenses | 3,824 | 3,969 | (145) |
| Deferred income | 671 | 425 | 246 |
| Other payables | 4,565 | 4,071 | 494 |
| Total | 41,365 | 46,961 | (5,596) |
Other payables included in non-current liabilities totalled €/000 1,434 against €/000 1,666 as of 31 December 2014, whereas other payables included in current liabilities totalled €/000 41,365 compared to €/000 46,961 as of 31 December 2014.
As regards the non-current portion:
As regards the current portion:
The table below shows the breakdown of operating payables by measurement method:
| Operating liabilities as of 31 December 2015 |
Derivatives at FVPL |
Financial derivatives |
Liabilities at amortised cost |
Total |
|---|---|---|---|---|
| In thousands of euros | ||||
| Non-current liabilities | ||||
| Other payables | 1,434 | 1,434 | ||
| Total non-current liabilities | - | - | 1,434 | 1,434 |
| Current liabilities | ||||
| Trade payables | 246,893 | 246,893 | ||
| Tax payables | 6,465 | 6,465 | ||
| Other payables | 420 | 40,945 | 41,365 | |
| Total current liabilities | - | 420 | 294,303 | 294,723 |
| Total | - | 420 | 295,737 | 296,157 |
| Operating liabilities as of 31 December 2014 |
Derivatives at FVPL |
Financial derivatives |
Liabilities at amortised cost |
Total |
| In thousands of euros | ||||
| Non-current liabilities | ||||
| Other payables | 231 | 1,435 | 1,666 | |
| Total non-current liabilities | - | 231 | 1,435 | 1,666 |
| Current liabilities | ||||
| Trade payables | 266,143 | 266,143 |
| Total | - | 733 | 321,168 | 321,901 |
|---|---|---|---|---|
| Total current liabilities | - | 502 | 319,733 | 320,235 |
| Other payables | 502 | 46,459 | 46,961 | |
| Tax payables | 7,131 | 7,131 | ||
The company has loans due after 5 years; details are given in Note 36 Financial Liabilities. Apart from these loans, no other long-term payables due after five years have been recorded.
This section provides information on the carrying amount of financial assets and liabilities held, and in particular:
The Company holds the following financial assets and liabilities:
| Financial assets as of 31 December 2015 |
Assets measured at FVPL |
Assets measured at FVOCI |
Financial derivatives |
Assets at amortised cost |
Total |
|---|---|---|---|---|---|
| In thousands of euros | |||||
| Non-current assets | |||||
| Other financial assets | 20,289 | 39 | 20,328 | ||
| Total non-current assets | 0 | 0 | 20,289 | 39 | 20,328 |
| Current assets | |||||
| Other financial assets | 13,403 | 13,403 | |||
| Cash and cash equivalents | 12,745 | 12,745 | |||
| Securities | - | ||||
| Total current assets | 0 | 0 | 0 | 26,148 | 26,148 |
| Total | 0 | 0 | 20,289 | 26,187 | 46,476 |
| Financial assets as of 31 December 2014 |
Assets measured at FVPL |
Assets measured at FVOCI |
Financial derivatives |
Assets at amortised cost |
Total |
| In thousands of euros | |||||
| Non-current assets | |||||
| Other financial assets | 13,230 | 86 | 13,316 | ||
| Total non-current assets | 0 | 0 | 13,230 | 86 | 13,316 |
| Current assets | |||||
| Other financial assets | 13,669 | 13,669 | |||
| Cash and cash equivalents | 29,196 | 29,196 | |||
| Securities | - | ||||
| Total current assets | 0 | 0 | 0 | 42,865 | 42,865 |
| Total | 0 | 0 | 13,230 | 42,951 | 56,181 |
| Financial liabilities as of 31 December 2015 |
Derivatives at FVPL |
Fair value adjustment |
Financial derivatives |
Liabilities at amortised cost |
Total |
|---|---|---|---|---|---|
| In thousands of euros | |||||
| Non-current liabilities | |||||
| Bank borrowings | 184,842 | 184,842 | |||
| Bonds | 19,454 | 290,139 | 309,593 | ||
| Other loans | 951 | 951 | |||
| Leases | - | ||||
| Hedging derivatives | - | ||||
| Total non-current liabilities | - | 19,454 | - | 475,932 | 495,386 |
| Current liabilities | |||||
| Bank borrowings | 29,867 | 29,867 | |||
| Other loans | 19,837 | 19,837 | |||
| Leases | - | ||||
| Hedging derivatives | - | ||||
| Total current liabilities | - | - | - | 49,704 | 49,704 |
| Total | - | 19,454 | - | 525,636 | 545,090 |
| Financial liabilities as of 31 December 2014 |
Derivatives at FVPL |
Fair value adjustment |
Financial derivatives |
Liabilities at amortised cost |
Total |
|---|---|---|---|---|---|
| In thousands of euros | |||||
| Non-current liabilities | |||||
| Bank borrowings | 170,533 | 170,533 | |||
| Bonds | 12,575 | 288,369 | 300,944 | ||
| Other loans | 1,262 | 1,262 | |||
| Leases | - | ||||
| Hedging derivatives | - | ||||
| Total non-current liabilities | - | 12,575 | - | 460,164 | 472,739 |
| Current liabilities | |||||
| Bank borrowings | 36,655 | 36,655 | |||
| Other loans | 25,725 | 25,725 | |||
| Leases | - | ||||
| Hedging derivatives | - | ||||
| Total current liabilities | - | - | - | 62,380 | 62,380 |
| Total | - | 12,575 | - | 522,544 | 535,119 |
The investments heading comprises:
| As of 31 December 2015 | As of 31 December 2014 | Change | |
|---|---|---|---|
| In thousands of euros | |||
| Investments in subsidiaries | 57,374 | 57,553 | (179) |
| Investments in associates | 6,943 | 5,927 | 1,016 |
| Total | 64,317 | 63,480 | 837 |
Movements for the period are shown below:
| Carrying amount as |
Carrying amount as |
|||||
|---|---|---|---|---|---|---|
| of | Value | Write | of | |||
| 31/12/2014 | Increases Reclassifications | reinstatement | downs | 31/12/2015 | ||
| In thousands of euros | ||||||
| Subsidiaries | ||||||
| Piaggio Vespa B.V. | 11,927 | 11,927 | ||||
| Piaggio Vehicles Pvt Ltd | 23,725 | 23,725 | ||||
| Nacional Motor | 1,522 | 550 | 2,072 | |||
| Piaggio Vietnam Co Ltd | 1,762 | 1,762 | ||||
| Piaggio China Ltd | 2,046 | 523 | 2,569 | |||
| aprilia racing s.r.l. | 1,440 | 1,440 | ||||
| Piaggio España SL | 2,721 | 2,721 | ||||
| Piaggio Indonesia Piaggio Advanced Design |
30 | (30) | - | |||
| Center | 158 | 158 | ||||
| Piaggio Fast Forward Inc. | 2,282 | (1,722) | 560 | |||
| Piaggio Concept Store Mantova S.r.l. |
470 | (470) | - | |||
| Atlantic 12 FCIIC | 11,752 | (1,312) | 10,440 | |||
| Total subsidiaries | 57,553 | 2,832 | 0 | 523 | (3,534) | 57,374 |
| Associates | ||||||
| Zongshen Piaggio Foshan | 5,736 | 1,016 | 6,752 | |||
| Pontech Soc. Cons. a.r.l. | 181 | 181 | ||||
| Immsi Audit S.c.a.r.l. | 10 | 10 | ||||
| Fondazione Piaggio onlus | - | - | ||||
| Total associates | 5,927 | 0 | 0 | 1,016 | 0 | 6,943 |
| Total investments | 63,480 | 2,832 | 0 | 1,539 | (3,534) | 64,317 |
Increases for the year refer to €/000 550 relative to the financial receivables waiver in favour of Nacional Motor and €/000 2,282 relative to the establishment of Piaggio Fast Forward.
Following impairment test results, the value of the investment in the subsidiary Piaggio China for €/000 523 was reversed, and investments in Piaggio Indonesia for €/000 30, Piaggio Fast Forward for €/000 1,722, Piaggio Concept Store Mantova for €/000 470 and the Closed Property Mutual Investment Fund Atlantic 12 for €/000 1,312 were reversed.
In compliance with the impairment test, the value of the investment in the affiliate Zongshen Piaggio Foshan Motorcycle for €/000 1,016 was reversed.
| As of 31 December | As of 31 December | ||
|---|---|---|---|
| 2015 | 2014 | Change | |
| In thousands of euros | |||
| Fair value of hedging derivatives | 20,289 | 13,230 | 7,059 |
| Investments in other companies | 39 | 86 | (47) |
| Total | 20,328 | 13,316 | 7,012 |
The item "Fair value of hedging derivatives" refers to the fair value of the Cross Currency Swap on the private debenture loan, of which details are given in section 38.
The table below shows the composition of investments in other companies:
| As of 31 December 2015 |
As of 31 December 2014 |
Change | |
|---|---|---|---|
| In thousands of euros | |||
| Other companies: | |||
| A.N.C.M.A. – Rome | 2 | 2 | - |
| GEOFOR S.p.A. – Pontedera | 0 | 47 | (47) |
| ECOFOR SERVICE S.p.A. – Pontedera | 2 | 2 | - |
| Mitsuba Italia S.p.A. | - | ||
| Consorzio Fiat Media Center – Turin | 3 | 3 | - |
| S.C.P.S.T.V. | 21 | 21 | - |
| IVM | 11 | 11 | - |
| Total other companies | 39 | 86 | (47) |
During the year, the investment in Geofor S.p.A. Pontedera was sold, realising a capital gain of €/000 23 recognised as "Income from investments".
This item comprises:
| As of 31 December 2015 |
As of 31 December 2014 |
Change | |
|---|---|---|---|
| In thousands of euros Financial receivables due from third parties |
- | ||
| Financial receivables due from subsidiaries | 13,403 | 13,669 | (266) |
| Total | 13,403 | 13,669 | (266) |
The item Financial receivables due from subsidiaries refers to loans to Nacional Motor for €/000 5,939, to Piaggio Vehicles Private Limited for €/000 5,000, to Piaggio Concept Store Mantova for €/000 2,462 and Aprilia Racing per €/000 2.
This item mainly includes short-term or on demand bank deposits.
Cash and cash equivalents totalled €/000 12,745 against €/000 29,196 as of 31 December 2014, as detailed below:
| As of 31 December | As of 31 December | ||
|---|---|---|---|
| 2015 | 2014 | Change | |
| In thousands of euros | |||
| Bank and post office deposits | 12,720 | 29,167 | (16,447) |
| Cash and assets in hand | 25 | 29 | (4) |
| Total | 12,745 | 29,196 | (16,451) |
The table below reconciles the amount of cash and cash equivalents above with cash and cash equivalents recognised in the Statement of Cash Flows.
| As of 31 December 2015 | As of 31 December 2014 | Change | |
|---|---|---|---|
| In thousands of euros Cash and cash equivalents Current account |
12,745 | 29,196 | (16,451) |
| overdrafts | (53) | (1,780) | 1,727 |
| Closing balance | 12,692 | 27,416 | (14,724) |
In 2015, overall debt increased by €/000 10,271, from €/000 534,819 to €/000 545,090. Total financial debt in 2015, net of the fair value measurement of financial derivatives to hedge foreign exchange risk and interest rate risk of €/000 19,454, increased by €/000 3,092.
| Financial liabilities as of 31 December 2015 |
Financial liabilities as of 31 December 2014 |
Change | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Current | Non current |
Total | Current | Non current |
Total | Current | Non current |
Total | |
| In thousands of euros | |||||||||
| Gross financial debt | 49,704 | 475,932 | 525,636 | 62,380 | 460,164 | 522,544 | (12,676) | 15,768 | 3,092 |
| Fair Value of hedging derivatives |
19,454 | 19,454 | 12,275 | 12,275 | 7,179 | 7,179 | |||
| Total | 49,704 | 495,386 | 545,090 | 62,380 | 472,439 | 534,819 | (12,676) | 22,947 | 10,271 |
This increase is due to repayments, using available resources, of financial payables due, offset by new loans granted.
Total net financial debt went up from €/000 479,679 as of 31 December 2014 to €/000 499,488 as of 31 December 2015, with an increase of €/000 19,809.
| As of 31 December 2015 |
As of 31 December 2014 |
Change | |
|---|---|---|---|
| In thousands of euros Liquidity |
12,745 | 29,196 | (16,451) |
| Short-term financial receivables due from subsidiaries Current financial receivables |
13,403 13,403 |
13,669 13,669 |
(266) (266) |
| Current account overdrafts Current portion of bank borrowings Amounts due to factoring companies Current portion of payables due to other lenders Borrowings from subsidiaries Current financial debt |
(53) (29,814) (15,320) (312) (4,205) (49,704) |
(1,780) (34,875) (20,744) (1,125) (3,856) (62,380) |
1,727 5,061 5,424 813 (349) 12,676 |
| Net current financial debt | (23,556) | (19,515) | (4,041) |
| Payables due to banks and lenders Debenture loan Amounts due to other lenders Non-current financial debt |
(184,842) (290,139) (951) (475,932) |
(170,533) (288,369) (1,262) (460,164) |
(14,309) (1,770) 311 (15,768) |
| NET FINANCIAL DEBT* | (499,488) | (479,679) | (19,809) |
* Pursuant to Consob Communication of 28 July 2006 and in compliance
with the recommendation of the CESR of 10 February 2005 "Recommendation for the consistent implementation of the European Commission's Regulation on Prospectuses".
The indicator does not include financial assets and liabilities arising from the fair value measurement of financial derivatives used as hedging and the fair value adjustment of relative hedged items equal to €/000 19,454 and relative accruals.
The tables below show the composition of financial debt as of 31 December 2015 and 31 December 2014, as well as movements for the year.
| Book value as of 31/12/2014 Repayments |
New issues |
Reclassification to the current portion |
Other changes |
Book value as of 31/12/2015 |
||
|---|---|---|---|---|---|---|
| In thousands of euros | ||||||
| Non-current portion | ||||||
| Bank borrowings Bonds |
170,533 288,369 |
0 | 43,591 | (29,814) | 532 1,770 |
184,842 290,139 |
| Other medium-/long-term loans: of which amounts due to other lenders |
1,262 | (311) | 951 | |||
| Total other loans | 1,262 | 0 | 0 | (311) | 0 | 951 |
| Total | 460,164 | 0 | 43,591 | (30,125) | 2,302 | 475,932 |
| Book value as of 31/12/2014 |
Repayments | New issues |
Reclassification from the non current portion |
Other changes |
Book value as of 31/12/2015 |
|
|---|---|---|---|---|---|---|
| In thousands of euros | ||||||
| Current portion | ||||||
| Current account overdrafts | 1,780 | (1,727) | 53 | |||
| Payables due to subsidiaries | 3,856 | 349 | 4,205 | |||
| Payables due to factoring companies | 20,744 | (5,424) | 15,320 | |||
| Current portion of medium-/long-term | ||||||
| loans: | ||||||
| of which due to banks | 34,875 | (34,875) | 29,814 | 29,814 | ||
| of which amounts due to other lenders | 1,125 | (1,124) | 311 | 312 | ||
| Total other loans | 36,000 | (35,999) | 0 | 30,125 | 0 | 30,126 |
| Total | 62,380 | (43,150) | 349 | 30,125 | 0 | 49,704 |
The breakdown of the debt is as follows:
| Accounting balance |
Accounting balance |
Nominal value |
Nominal value |
|
|---|---|---|---|---|
| As of 31/12/2015 |
As of 31/12/2014 |
As of 31/12/2015 |
As of 31/12/2014 |
|
| In thousands of euros | ||||
| Bank borrowings | 214,709 | 207,188 | 216,499 | 209,511 |
| Bonds | 290,139 | 288,369 | 301,799 | 301,799 |
| Borrowings from subsidiaries | 4,205 | 3,856 | 4,205 | 3,856 |
| Other medium-/long-term loans: | ||||
| of which amounts due to other lenders | 16,583 | 23,131 | 16,583 | 23,131 |
| of which amounts due under leases | ||||
| Total other loans | 16,583 | 23,131 | 16,583 | 23,131 |
| Total | 525,636 | 522,544 | 539,086 | 538,297 |
The table below shows the debt servicing schedule as of 31 December 2015:
| Nominal value as of 31/12/2015 |
Amounts falling due within 12 months |
Amounts falling due after 12 months |
Amounts falling due in | |||||
|---|---|---|---|---|---|---|---|---|
| 2017 | 2018 | 2019 | 2020 | Beyond | ||||
| In thousands of euros | ||||||||
| Bank borrowings | 216,499 | 29,885 | 186,614 | 58,396 | 87,901 | 40,177 | 93 | 47 |
| Bonds | 301,799 | 301,799 | 9,669 | 9,669 | 10,360 | 11,051 | 261,050 | |
| of which amounts due to subsidiaries | 4,205 | 4,205 | ||||||
| Other medium/long-term bank loans | ||||||||
| of which amounts due to other lenders | 16,583 | 15,632 | 951 | 314 | 317 | 320 | ||
| Total other loans | 16,583 | 15,632 | 951 | 314 | 317 | 320 | ||
| Total | 539,086 | 45,517 | 489,364 | 68,379 | 97,887 | 50,857 | 11,144 | 261,097 |
The financial debt consisted of loans and debenture loans contracted primarily in euro; the only financial liability in currency consisted of the private debenture loan (US Private Placement), also covered by a cross currency swap as described in detail below.
Medium and long-term bank debt amounts to €/000 214,656 (of which €/000 184,842 non-current and €/000 29,814 current) and consists of the following loans:
a €/000 19,992 (nominal value of €/000 20,000) loan granted by Banco Popolare and signed in July 2015 of €/000 20,000. This loan comprises a tranche maturing in January 2017 of €/000 10,000 granted as a revolving credit line of which a nominal value of €/000 10,000 had been used at 31 December 2015 and a tranche as a three-year loan with amortisation of €/000 10,000 which has been wholly disbursed;
a €/000 24,947 (of the nominal value of €/000 25,000) medium-term loan granted by Banca Popolare Emilia Romagna in June 2015. The loan matures on 5 June 2019 and will be repaid with an amortisation plan with six-monthly instalments as from 31 December 2016;
All the above financial liabilities are unsecured.
The item Bonds for €/000 290,139 (nominal value of €/000 301,799) refers to:
The Company may pay back the amount of the High Yield debenture loan issued on 24 April 2014, early, in full or in part, under the conditions indicated in the indenture. The value of prepayment options was not deducted from the original contract, as these are considered as being closely related to the host instrument, as provided for by IAS 39 AG30 g).
Medium-/long-term payables due to other lenders equal to €/000 1,263 of which €/000 951 due after the year and €/000 312 as the current portion, refer to subsidised loans provided by the Italian Ministry of Economic Development and Italian Ministry of Education, University and Research using regulations to encourage exports and investments in research and development.
Financial advances received from factoring companies and banks, on the sale of trade receivables with recourse, totalled €/000 15,320.
In line with market practices for borrowers with a similar credit rating, main loan contracts require compliance with:
1) financial covenants, on the basis of which the company undertakes to comply with certain levels of contractually defined financial indices, with the most significant comprising the ratio of net financial debt/gross operating margin (EBITDA), measured on the consolidated perimeter of the Group, according to definitions agreed on with lenders;
The measurement of financial covenants and other contract commitments is monitored by the Company on an ongoing basis. According to results as of 31 December 2015, all covenants had been fully met.
The high-yield debenture loan issued by the company in April 2014 requires compliance with typical covenants of international high-yield market practices. In particular, the company must observe the EBITDA/Net borrowing costs index, based on the threshold established in the Prospectus, to increase financial debt defined during issue. In addition, the Prospectus includes some obligations for the issuer, which limit, inter alia, the capacity to:
Failure to comply with the covenants and other contract commitments of the loan and debenture loan, if not remedied in agreed times, may give rise to an obligation for the early repayment of the outstanding amount of the loan.
All financial liabilities are measured in accordance with accounting standards and based on the amortised cost method (except for liabilities with hedging derivatives measured at Fair Value Through Profit & Loss, for which the same measurement criteria used for the derivative are applied). According to this method, the nominal amount of the liability is decreased by the amount of relative costs of issue and/or stipulation, in addition to any costs relating to refinancing of previous liabilities. The amortisation of these costs is determined on an effective interest rate basis, and namely the rate which discounts the future flows of interest payable and reimbursements of principle at the net carrying amount of the financial liability.
IFRS 13 – Fair Value Measurement defines fair value on the basis of the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In the absence of an active market or market that does not operate regularly, fair value is measured by valuation techniques. The standard defines a fair value hierarchy:
level 1 – quoted prices in active markets for assets or liabilities measured;
The valuation techniques referred to levels 2 and 3 must take into account adjustment factors that measure the risk of insolvency of both parties. To this end, the standard introduces the concepts of Credit Value Adjustment (CVA) and Debit Value Adjustment (DVA): CVA makes it possible to include the counterparty credit risk in the fair value measurement; DVA reflects the risk of insolvency of the Company.
The table below shows the fair value of payables measured using the amortised cost method as of 31 December 2015:
| Nominal value | Carrying amount | Fair Value * | |
|---|---|---|---|
| In thousands of euros | |||
| High yield debenture loan | 250,000 | 238,570 | 256,690 |
| Private debenture loan | 51,799 | 51,569 | 71,618 |
| EIB (R&D loan 2013-2015) | 43,636 | 43,636 | 42,979 |
| Credit line from B. Pop. Emilia Romagna | 25,000 | 24,947 | 24,291 |
| Loan from Banco Popolare | 10,000 | 9,992 | 8,214 |
| Revolving syndicated loan | 40,000 | 38,852 | 38,201 |
| Syndicated loan maturing in July 2019 | 75,000 | 74,419 | 52,644 |
*The value deducts DVA related to the issuer, i.e. it includes the risk of insolvency of Piaggio.
For liabilities due within 18 months, the carrying amount is basically considered the same as the fair value.
The table below shows the assets and liabilities measured and recognised at fair value as of 31 December 2015, by hierarchical level of fair value measurement.
| Level 1 | Level 2 | Level 3 | |
|---|---|---|---|
| In thousands of euros | |||
| Assets measured at fair value | |||
| Hedging financial derivatives | |||
| - of which financial assets |
20,289 | ||
| - of which other receivables |
647 | ||
| Investments in other companies | 39 | ||
| Total | 20,936 | 39 | |
| Liabilities measured at fair value | |||
| Hedging financial derivatives | |||
| - of which other payables |
(420) | ||
| Financial liabilities at fair value recognised through profit or loss | (71,253) | ||
| Total | (71,673) |
| Level 2 | |
|---|---|
| In thousands of euros | |
| Net balance of liabilities as of 31 December 2014 | (50,881) |
| Gain (loss) recognised in profit or loss | 514 |
| Increases/(Decreases) | (370) |
| Net balance of liabilities as of 31 December 2015 | (50,737) |
| Level 3 | |
| In thousands of euros | |
| Balance of assets as of 31 December 2014 | 86 |
| Gain (loss) recognised in profit or loss | |
| Increases/(Decreases) | (47) |
| Balance of assets as of 31 December 2015 | 39 |
This section describes all financial risks to which the Company is exposed and how these risks could affect future results.
The Company considers that its exposure to credit risk is as follows:
| As of 31 December | As of 31 December | |
|---|---|---|
| 2015 | 2014 | |
| In thousands of euros | ||
| Liquid assets | 12,745 | 29,196 |
| Financial receivables | 13,403 | 13,669 |
| Trade receivables | 57,244 | 74,669 |
| Tax receivables | 6,576 | 4,159 |
| Other receivables | 94,256 | 85,966 |
| Total | 184,224 | 207,659 |
The Company monitors or manages credit centrally by using established policies and guidelines. The portfolio of trade receivables shows no signs of concentrated credit risk in light of the broad distribution of our licensee or distributor network. In addition, most trade receivables are short-term. In order to optimise credit management, the Company has established revolving programmes with some primary factoring companies for selling its trade receivables without recourse.
The financial risks the Company is exposed to are liquidity risk, exchange risk, interest rate risk and credit risk.
The management of these risks, in order to reduce management costs and dedicated resources, is centralised and treasury operations take place in accordance with formal policies and guidelines which are applicable to all Group companies.
The liquidity risk arises from the possibility that available financial resources are not sufficient to cover, in due times and procedures, future payments arising from financial and/or commercial obligations. To deal with this risk, cash flows and the Company's credit line needs are monitored or managed centrally under the control of the Treasury in order to guarantee an effective and efficient management of financial resources as well as optimise the debt's maturity standpoint.
In addition, the Company finances the temporary cash requirements of subsidiaries by providing direct short-term loans regulated in market conditions or guarantees. A cash pooling zero balance system is used between the Company and European companies to reset the receivable and payable balances of subsidiaries on a daily basis, for a more effective and efficient management of liquidity in the Eurozone.
As of 31 December 2015 the most important sources of financing irrevocable until maturity granted to the Company were as follows:
As of 31 December 2015, the Company had a liquidity of €/000 12,745, €/000 205,000 of undrawn credit lines irrevocable to maturity and €/000 93,436 of revocable credit lines, as detailed below:
| As of 31 December 2015 |
As of 31 December 2014 |
|
|---|---|---|
| In thousands of euros | ||
| Variable rate with maturity within one year - irrevocable until maturity | 20,000 | |
| Variable rate with maturity beyond one year - irrevocable until maturity | 205,000 | 104,000 |
| Variable rate with maturity within one year - cash revocable | 74,436 | 58,835 |
| Variable rate with maturity within one year - with revocation for | ||
| self-liquidating typologies | 19,000 | 19,000 |
| Total | 298,436 | 201,835 |
The table below shows the timing of future payments in relation to trade payables:
| As of 31 December 2015 |
Within 30 days |
Between 31 and 60 days |
Between 61 and 90 days |
Over 90 days |
|
|---|---|---|---|---|---|
| In thousands of euros | |||||
| Amounts due to suppliers | 227,139 | 133,433 | 62,622 | 3,796 | 27,288 |
| Amounts due to subsidiaries | 9,918 | 7,239 | 2,669 | - | 10 |
| Amounts due to associates | 9,067 | 4,187 | 2,329 | 606 | 1,945 |
| Amounts due to parent companies | 769 | 749 | - | 20 | - |
| Trade payables due to other related parties | - | - | - | - | - |
| Total trade payables | 246,893 | 145,608 | 67,620 | 4,422 | 29,243 |
23 Undersigned on 3 December 2015 and not used at the end of the reporting period.
Management considers that currently available funds, as well as funds that will be generated from operations and loans, will enable the Company to meets its requirements relative to investments, the management of working capital and repayment of loans on expiry and will ensure an adequate level of operating and strategic flexibility.
The company operates in an international context where transactions are conducted in currencies different from the euro. This exposes it to risks arising from exchange rates fluctuations. For this purpose, the Company has an exchange rate risk management policy which aims to neutralise the possible negative effects of the changes in exchange rates on company cash-flows.
This policy analyses:
the transaction exchange risk: the policy wholly covers this risk which arises from differences between the recognition exchange rate of receivables or payables in foreign currency in the financial statements and the recognition exchange rate of actual collection or payment. To cover this type of exchange risk, the exposure is naturally offset in the first place (netting between sales and purchases in the same currency) and if necessary, by signing currency future derivatives, as well as advances of receivables denominated in currency;
the economic exchange risk: arises from changes in company profitability in relation to annual figures planned in the economic budget on the basis of a reference change (the "budget change") and is covered by derivatives. The items of these hedging operations are therefore represented by foreign costs and revenues forecast by the sales and purchases budget. The total of forecast costs and revenues is processed monthly and relative hedging is positioned exactly on the average weighted date of the economic event, recalculated based on historical criteria. The economic occurrence of future receivables and payables will occur during the budget year.
At the end of the reporting period, the Company's exposure to exchange risk was as follows:
| Financial assets as of 31 December 2015 | USD | GBP | CNY | YEN | SGD | CAD | SEK | Total |
|---|---|---|---|---|---|---|---|---|
| In thousands of euros | ||||||||
| Non-current assets | ||||||||
| Financial receivables | - | |||||||
| Fair value of derivatives | - | |||||||
| Total non-current assets | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Current assets | ||||||||
| Trade receivables | 6,648 | (137) | 299 | 1,116 | 51 | 392 | 212 | 8,581 |
| Fair value of derivatives | - | |||||||
| Other financial assets | - | |||||||
| Bank and post office deposits | 1,184 | 280 | 137 | 389 | 1 | 36 | 91 | 2,118 |
| Securities | - | |||||||
| Total current assets | 7,832 | 143 | 436 | 1,505 | 52 | 428 | 303 | 10,699 |
| Total | 7,832 | 143 | 436 | 1,505 | 52 | 428 | 303 | 10,699 |
At the end of the reporting period, the Company had no financial liabilities in currency subject to exchange risk.
As of 31 December 2015, the Group had undertaken the following futures operations (recognised based on the regulation date), relative to payables and receivables already recognised to hedge the transaction exchange risk:
| Operation | Currency | Amount in | Value in euro (forward | Average maturity |
|---|---|---|---|---|
| local currency | exchange rate) | |||
| In thousands | In thousands | |||
| Purchase | CNY | 58,700 | 8,315 | 29/01/2016 |
| Purchase | JPY | 225,000 | 1,700 | 13/01/2016 |
| Purchase | SEK | 1,000 | 109 | 29/02/2016 |
| Purchase | USD | 11,500 | 10,575 | 21/01/2016 |
| Sale | CAD | 640 | 434 | 29/01/2016 |
| Sale | CNY | 11,900 | 1,652 | 15/01/2016 |
| Sale | GBP | 650 | 879 | 30/03/2016 |
| Sale | INR | 506,000 | 6,969 | 10/01/2016 |
| Sale | USD | 5,650 | 5,151 | 29/01/2016 |
As of 31 December 2015, the Company had undertaken the following transactions to hedge the business exchange risk:
| Operation | Currency | Amount in local currency |
Value in euro (forward exchange rate) |
Average maturity |
|---|---|---|---|---|
| In thousands | In thousands | |||
| Purchase | CNY | 254,700 | 35,462 | 02/06/2016 |
| Sale | GBP | 7,240 | 10,516 | 19/06/2016 |
To hedge the economic exchange risk alone, cash flow hedging is adopted with the effective portion of profits and losses recognised in a specific shareholders' equity reserve. Fair value is determined based on market quotations provided by main traders.
As of 31 December 2015 the total fair value of hedging instruments for the economic exchange risk recognised on a hedge accounting basis was positive by €/000 285. During 2015, gains under other components of the Statement of Comprehensive Income were recognised amounting to €/000 285 and profits from other components of the Statement of Comprehensive Income amounting to €/000 656 were reclassified under profit/loss for the period.
The net balance of cash flows during 2015 is shown below, divided by main currency:
| Cash Flow 2015 | |
|---|---|
| In millions of Euros | |
| Canadian Dollar | 4.4 |
| Pound Sterling | 26.4 |
| Japanese Yen | (6.8) |
| US Dollar | 18.2 |
| Chinese Yuan* | (36.2) |
| Total cash flow in foreign currency | 6.1 |
* cash flow partially in euro
In view of the above, an assumed appreciation/depreciation of 3% of the Euro would have generated potential losses for €/000 177 and potential profits for €/000 188 respectively.
This risk arises from fluctuating interest rates and the impact this may have on future cash flows arising from variable rate financial assets and liabilities. The Company regularly measures and controls its exposure to the risk of interest rate changes, as established by its management policies, in order to reduce fluctuating borrowing costs, and limit the risk of a potential increase in interest rates. This objective is achieved through an adequate mix of fixed and variable rate exposure, and the use of derivatives, mainly interest rate swaps and cross currency swaps.
As of 31 December 2015, the following hedging derivatives were in use:
an interest rate swap to hedge a variable rate loan for a nominal amount of €/000 117,857 (as of 31 December 2015 for €/000 10,714) granted by the European Investment Bank. The structure has fixed step-up rates, in order to stabilise financial flows associated with the loan; in accounting terms, the instrument is recognised on a cash flow hedge basis, with profits/losses arising from the fair value measurement allocated to a specific reserve in Shareholders' equity; as of 31 December 2015, the fair value of the instrument was negative by €/000 59; the sensitivity analysis of the instrument, assuming a 1% increase and decrease in the shift of the variable rates curve, shows a potential impact on Shareholders' Equity, net of the relative tax effect, which was negligible.
a Cross Currency Swap to hedge the private debenture loan issued by the Company for a nominal amount of \$/000 75,000. The purpose of the instrument is to hedge both the exchange risk and interest rate risk, turning the loan from US dollars to euro, and from a fixed rate to a variable rate; the instrument is accounted for on a fair value hedge basis, with effects arising from the measurement recognised in profit or loss. As of 31 December 2015, the fair value of the instrument was equal to €/000 20,289. The net economic effect arising from the measurement of the instrument and underlying private debenture loan was equal to €/000 -120; the sensitivity analysis of the instrument and its underlying, assuming a 1% increase and decrease in the shift of the variable rates curve, showed a potential impact on the Income Statement, net of the related tax effect, of €/000 78 and €/000 -74 respectively, assuming constant exchange rates; whereas assuming a 1% reversal and write-down of exchange rates, sensitivity analysis identified a potential impact on the income statement, net of the relative tax effect, of €/000 -35 and €/000 37 respectively.
| FAIR VALUE | |
|---|---|
| In thousands of euros | |
| Interest Rate Swap | (59) |
| Cross Currency Swap | 20,289 |
During the year, the share capital of Piaggio & C. did not change.
On 23 April 2015 the new composition of share capital of Piaggio & C. S.p.A (fully subscribed and paid up) was registered with the relative Companies Register, following the annulment of 2,466,500 treasury shares without any change to the share capital, resolved by the Extraordinary Shareholders' Meeting of 13 April 2015.
Therefore, as of 31 December 2015, the share capital of Piaggio & C., fully subscribed and paid up, was equal to € 207,613,944.37, divided into 361,208,380 ordinary shares.
On 14 December 2015, the Company acquired 16,000 treasury shares at the average price of € 2.1285 euro per share, for a total value of € 34,056 euro.
Following purchases made as of 31 December 2015, Piaggio & C. S.p.A. held 16,000 treasury shares, equal to 0.0044% of the share capital.
| no. of shares | 2015 | 2014 |
|---|---|---|
| Situation as of 1 January | ||
| Shares issued | 363,674,880 | 360,894,880 |
| Treasury shares in portfolio | 2,466,500 | 839,669 |
| Shares in circulation | 361,208,380 | 360,055,211 |
| Movements for the period | ||
| Exercise of stock options | 2,780,000 | |
| Cancellation of treasury shares | (2,466,500) | |
| Purchase of treasury shares | 16,000 | 1,826,831 |
| Sale of treasury shares to exercise stock options | (200,000) | |
| Situation as of 31 December | ||
| Shares issued | 361,208,380 | 363,674,880 |
| Treasury shares in portfolio | 16,000 | 2,466,500 |
| Shares in circulation | 361,192,380 | 361,208,380 |
In the first few months of 2016, the Company acquired 1,880,000 treasury shares. Therefore at the time of going to press, Piaggio & C. S.p.A. held 1,896,000 treasury shares, equal to 0.525% of the share capital.
The share premium reserve as of 31 December 2015 had not changed.
The legal reserve increased by €/000 741 as a result of the allocation of earnings for the last period.
| As of 31 December 2015 |
As of 31 December 2014 |
Change | |
|---|---|---|---|
| In thousands of euros | |||
| Net capital gain from contribution | 152 | 152 | 0 |
| Financial instruments' fair value reserve | (586) | (830) | 244 |
| IFRS transition reserve | 11,435 | 11,435 | 0 |
| Total other provisions | 11,001 | 10,757 | 244 |
The financial instruments fair value provision is negative and refers to the effects of cash flow hedge accounting in foreign currencies and interest. These transactions are described in full in the note on financial instruments.
As of 31 December 2014 this valuation was negative, amounting to €/000 830.
The Shareholders Meeting of Piaggio & C. S.p.A. of 13 April 2015 resolved to distribute a dividend of 7.2 eurocents per ordinary share. During 2014, dividends were not distributed.
| Total amount | Dividend per share | |||
|---|---|---|---|---|
| 2015 | 2014 | 2015 | 2014 | |
| €/000 | €/000 | € | € | |
| Authorised and paid | 26,007 | - | 0.072 | - |
As the stock plan has terminated, the relative reserve was included under earnings reserves.
The breakdown of Earnings reserve as of 31 December 2015 is shown in the following table:
| As of 31 December 2015 |
|
|---|---|
| In migliaia di euro | |
| Earnings reserve gross of treasury shares | 76,926 |
| Treasury shares | (34) |
| Total Earnings reserve | 76,892 |
| Of which: | |
| Retained earnings (losses carried forward) | 61,834 |
| Profit (loss) for the period | 15,058 |
Individual items of Shareholders' equity are analytically presented in the table below, based on origin, availability and use in the three previous years.
| 2014 | ||||
|---|---|---|---|---|
| uses | ||||
| to | ||||
| Type/description | Amount | Possible use |
Portion available |
cover losses |
| In thousands of euros | ||||
| Share capital | 207,614 | |||
| Capital reserves: | ||||
| Share premium | 7,171 | A,B,C(*) | 7,171 | |
| Profit reserves: | ||||
| Legal reserve | 17,643 | B | --- | |
| Net capital gain from contribution | 152 | A,B | ||
| IAS transition reserve | 11,435 | A,B,C | 11,435 | |
| Financial instruments' fair value reserve | (586) | |||
| Total Reserves | 35,815 | 18,606 | ||
| Treasury shares | (34) | |||
| Retained earnings (losses) | 54,057 | 1,649 | ||
| Stock option reserve | 13,385 | |||
| Reserve for actuarial gains (losses) relative to termination benefit | (5,574) | |||
| Total retained earnings (losses) | 61,834 | A,B,C | 1,649 | |
| Profits (losses) for the period | 15,058 | |||
| Total shareholders' equity | 320,321 |
Key:
A: to increase capital
B: to cover losses
C: to allocate to shareholders
(*) wholly available to increase capital and cover losses. For other uses prior adjustment (also by transfer from the share premium reserve) of the legal reserve to 20% of the Share Capital
is necessary. As of 31 December 2015 this adjustment would be equal to €/000 23,880.
Pursuant to article 2426 section 5 of the Italian Civil Code, shareholders' equity is not available for the value of development costs still to be amortised as of 31 December 2015 that amount to €/000 70,409.
The value of other components of the Statement of Comprehensive Income is broken down as follows:
| Reserve for measurement of financial instruments |
Earnings reserve |
Total other comprehensive income (expense) |
|
|---|---|---|---|
| In thousands of euros | |||
| As of 31 December 2015 | |||
| Items that will not be reclassified to profit or loss | |||
| Remeasurements of defined benefit plans | 2,080 | 2,080 | |
| Total | 0 | 2,080 | 2,080 |
| Items that may be reclassified to profit or loss Total income (losses) for the fair value adjustment of |
|||
| financial assets available for sale | 0 | ||
| Total profits (losses) on cash flow hedges | 245 | 245 | |
| Total | 245 | 0 | 245 |
| Other Comprehensive Income (Expense) | 245 | 2,080 | 2,325 |
| As of 31 December 2014 | |||
| Items that will not be reclassified to profit or loss | |||
| Remeasurements of defined benefit plans Total |
0 | (5,159) (5,159) |
(5,159) (5,159) |
| Items that may be reclassified to profit or loss Total income (losses) for the fair value adjustment of financial assets available for sale |
0 | ||
| Total profits (losses) on cash flow hedges | 735 | 735 | |
| Total | 735 | 0 | 735 |
| Other Comprehensive Income (Expense) | 735 | (5,159) | (4,424) |
The tax effect relative to other components of the Statement of Comprehensive Income is broken down as follows:
| As of 31 December 2015 | As of 31 December 2014 | ||||||
|---|---|---|---|---|---|---|---|
| Gross value | Tax (expense) / benefit |
Net value | Gross value | Tax (expense) / benefit |
Net value | ||
| In thousands of euros | |||||||
| Remeasurements of defined benefit plans | 2,942 | (862) | 2,080 | (7,116) | 1,957 | (5,159) | |
| Total profits (losses) on cash flow hedges | 419 | (174) | 245 | 1,050 | (315) | 735 | |
| Other Comprehensive Income (Expense) | 3,361 | (1,036) | 2,325 | (6,066) | 1,642 | (4,424) |
As of 31 December 2015, there were no incentive plans based on financial instruments.
For a complete description and analysis of fees of Directors, Statutory Auditors and Key Managers, reference is made to the remuneration report available from the registered office, and on the Company's website in the section "Governance".
| 2015 | |
|---|---|
| In thousands of euros | |
| Directors | 1,694 |
| Statutory auditors | 201 |
| Key Managers | 422 |
| Total fees | 2,317 |
Revenues, costs, payables and receivables as of 31 December 2015 involving parent companies, subsidiaries and associates refer to the sale of goods or services which are a part of normal operations of the Group.
Transactions are carried out at normal market values, depending on the characteristics of the goods and services provided.
The information on transactions with related parties, including information required by Consob in its communication of 28 July 2006 DEM/6664293, is given in the notes to the Consolidated Financial Statements and notes to the separate Financial Statements.
The procedure for transactions with related parties, pursuant to article 4 of Consob Regulation no. 17221 of 12 March 2010 as amended, approved by the Board on 30 September 2010, is published on the institutional site of the Issuer www.piaggiogroup.com, under Governance.
Piaggio & C. S.p.A. is controlled by the following companies:
| Designation | Registered office | Type | % of ownership | ||||
|---|---|---|---|---|---|---|---|
| 2015 | 2014 | ||||||
| IMMSI S.p.A. | Mantova - Italy | Direct parent company | 50.0621 | 50.2450 | |||
| Omniaholding S.p.A. | Mantova - Italy | Final parent company | 0.0277 | 0.0275 |
During 2015, transactions on the shares of parent companies were not carried out directly or indirectly. Piaggio & C. S.p.A. is subject to the management and coordination of IMMSI S.p.A. pursuant to article 2497 et seq. of the Italian Civil Code. During the period, this management and coordination concerned the following activities:
In 2013, for a further three years, the Parent Company signed up to the National Consolidated Tax Mechanism pursuant to articles 117-129 of the Consolidated Income Tax Act (T.U.I.R) of which IMMSI S.p.A. is the consolidating company, and to whom other IMMSI Group companies report to. The consolidating company determines a single global income equal to the algebraic sum of taxable amounts (income or loss) realised by individual companies that opt for this type of group taxation.
The consolidating company recognises a receivable from the consolidated company which is equal to the corporate tax to be paid on the taxable income transferred by the latter. Whereas, in the case of companies reporting tax losses, the consolidating company recognises a payable related to corporate tax on the portion of loss actually used to determine global overall income. Under the National Consolidated Tax Mechanism, companies may, pursuant to Article 96 of Presidential Decree no. 917/86, allocate the excess of interest payable which is not deductible to one of the companies so that, up to the excess of Gross Operating Income produced in the same tax period by other subjects party to the consolidation (or, in the presence of specific legal requirements, from foreign companies), the amount may be used to reduce the total income of the group.
Piaggio & C. S.p.A. has undertaken a rental agreement for offices owned by Omniaholding S.p.A.. This agreement, signed in normal market conditions, was previously approved by the Related Parties Transactions Committee, as provided for by the procedure for transactions with related parties adopted by the Company.
Omniaholding S.p.A. has undersigned Piaggio & C. bonds for a value of € 2.9 million on the financial market, and collected related interest.
Pursuant to article 2.6.2, section 13 of the Regulation of Stock Markets organised and managed by Borsa Italiana S.p.A., the conditions as of article 37 of Consob regulation no. 16191/2007 exist.
The main intercompany relations with subsidiaries refer to the following transactions:
o receives a components and vehicles design/development service and a local supplier scouting service from Foshan Piaggio Vehicles Technologies R&D;
o receives a vehicle and components research/design/development service from Piaggio Advanced Design Center:
Main intercompany relations between Piaggio & C S.p.A. and JV Zongshen Piaggio Foshan Motorcycle Co. Ltd, refer to the following transactions:
grants licences for rights to use the brand and technological know how to Zongshen Piaggio Foshan Motorcycle Co. Ltd..
sells vehicles, spare parts and accessories, which it has manufactured in some cases, to Piaggio & C. S.p.A. for subsequent sale.
The table below summarises relations described above and financial relations with parent companies, subsidiaries and associates as of 31 December 2015 and 31 December 2014 and relations during the year, as well as their overall impact on financial statement items.
| In thousands of euros |
Revenues from sales |
Costs for materials |
Costs for services, leases and rentals |
Employee costs |
Other operating income |
Other operating costs |
Financial income |
Borrowing costs |
Taxes | Other receivables due after one year |
Trade receivables |
Other receivables due within one year |
Financial receivables |
Financial payables due after one year |
Financial payables due within one year |
Trade payables |
Other payables due within one year |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Piaggio France Piaggio |
6,380 | 294 | 1 | 95 | 820 | 2,179 | |||||||||||
| Deutschland Piaggio |
4,180 | 160 | 29 | 62 | 657 | 156 | |||||||||||
| Limited Piaggio |
3,025 | 84 | 7 | 122 | 423 | ||||||||||||
| Hrvatska Doo | 1,823 | 17 | 35 | 3 | 1 | 10 | 3 | ||||||||||
| Piaggio Hellas Piaggio Group |
15,804 | 978 | 469 | 250 | 11 | 7 | 113 | 57 | |||||||||
| Americas Inc. Piaggio Asia |
46,215 | 320 | 1,092 | 3 | 4,287 | 274 | 9 | ||||||||||
| Pacific Ltd Piaggio |
321 | 0 | 165 | 6 | 21 | ||||||||||||
| Vehicles Pvt. Nacional |
246 | 11,005 | 382 | 14,421 | 39 | 194 | 633 | 11,991 | 5,000 | 2,733 | 110 | ||||||
| Motor | 65 | 0 | 50 | 5,939 | |||||||||||||
| Atlantic 12 Piaggio |
648 | 118 | 0 | 104 | 593 | ||||||||||||
| España | 4,132 | 28 | 93 | 4 | 942 | 243 | 886 | 1,251 | |||||||||
| Piaggio Vespa Zongshen Piaggio Foshan Motorcycle |
2,798 | 107 | 620 | 13 | 21,089 | 283 | 2,233 | ||||||||||
| Co. Piaggio Fast |
279 | 24,020 | 503 | 19 | 23 | 924 | 873 | 9,067 | 4 | ||||||||
| Forward Is Molas |
538 | 537 | |||||||||||||||
| Resort Fondazione |
37 | ||||||||||||||||
| Piaggio | 30 | 152 | 30 | ||||||||||||||
| IMMSI S.p.A. | 2,625 | 50 | 14 | -534 | 7,838 | 729 | 6,086 | ||||||||||
| IMMSI Audit | 850 | 38 | 14 | 47 | |||||||||||||
| Piaggio China Piaggio |
9 | ||||||||||||||||
| Group Japan | 423 | 158 |
| In thousands of euros |
Revenues from sales |
Costs for materials |
Costs for services, leases and rentals |
Employee costs |
Other operating income |
Other operating costs |
Financial income |
Borrowing costs |
Taxes | Other receivables due after one year |
Trade receivables |
Other receivables due within one year |
Financial receivables |
Financial payables due after one year |
Financial payables due within one year |
Trade payables |
Other payables due within one year |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Piaggio Vietnam Co. |
29,437 | 20,399 | 155 | 0 | 22,408 | 43 | 10,798 | 30,745 | 2,460 | 162 | |||||||
| Aprilia Racing PT Piaggio |
485 | 5 | 15,239 | 14 | 1,428 | 19 | 4 | 4 | 30 | 1,844 | 2 | 4,205 | 566 | ||||
| Indonesia Foshan Piaggio Vehicles |
1,089 | 0 | 244 | 71 | |||||||||||||
| Technology R&D Co. Ltd Piaggio Advanced Design |
1,720 | 240 | 29 | 258 | 308 | ||||||||||||
| Center Piaggio Concept Store |
322 | 0 | 0 | 99 | 55 | ||||||||||||
| Mantova | 1,055 | 45 | 222 | 88 | 713 | 93 | 2,462 | 58 | |||||||||
| Omniaholding | 64 | 1 | 134 | 2,900 | 39 | ||||||||||||
| TOTAL % of accounting |
95,344 | 56,407 | 43,449 | 42 | 43,915 | 770 | 352 | 167 | -534 | 152 | 18,428 | 77,052 | 13,403 | 2,900 | 4,205 | 19,754 | 12,304 |
| item | 12.8% | 13.0% | 23.8% | 0.0% | 38.8% | 4.9% | 50.0% | 0.6% | 36.8% | 5.4% | 32.2% | 84.3% | 100.0% | 0.6% | 8.5% | 8.0% | 29.7% |
Contract commitments of the Company are summarised based on their expiry.
| Between 2 and 5 | ||||
|---|---|---|---|---|
| In thousands of euros | In 1 year | years | After 5 years | Total |
| Operating leases | 7,894 | 5,857 | 414 | 14,165 |
| Other commitments | 14,461 | 11,480 | - | 25,940 |
| Total | 22,355 | 17,337 | 414 | 40,105 |
The main guarantees issued by banks on behalf of Piaggio & C. S.p.A in favour of subsidiaries and third parties are listed below:
| TYPE | AMOUNT €/000 |
|---|---|
| A guarantee of Piaggio & C. for the loan granted by I.F.C. to the subsidiary Piaggio Vehicles Private Limited | |
| of which drawn | 9,686 |
| of which undrawn | 7,766 |
| A guarantee of Piaggio & C. for the loan granted by I.F.C. to the subsidiary Piaggio Vehicles Private Limited | |
| of which drawn | 14,559 |
| of which undrawn | 1,836 |
| A guarantee of Piaggio & C. for USD 6,400,000 relative to the working capital loan of USD 5,800,000 granted by the Bank of America to the subsidiary Piaggio Vehicles Private Limited |
|
| of which drawn | 0 |
| of which undrawn | 5,879 |
| A guarantee of Piaggio & C. for INR 550,000,000 relative to the working capital loan of INR 500,000,000 granted by Hongkong and Shanghai Banking Corporation to the subsidiary Piaggio Vehicles Private Limited |
|
| of which drawn | 0 |
| of which undrawn | 7,637 |
| A guarantee of Piaggio & C. for INR 1,500,000,000 relative to the working capital loan of INR 1,500,000,000 granted by Credit Agricole CIB to the subsidiary Piaggio Vehicles Private Limited |
|
| of which drawn | 0 |
| of which undrawn | 20,827 |
| A guarantee of Piaggio & C. for USD 18,700,000 relative to the loan for the Supply Chain Finance programme of USD 17,000,000 granted by Bank of America to the subsidiary Piaggio Vehicles Private Limited |
|
| of which drawn | 11,350 |
| of which undrawn | 5,826 |
| A guarantee of Piaggio & C. for the loan granted by I.F.C. to the subsidiary Piaggio Vietnam | |
| of which drawn | 12,039 |
| of which undrawn | 6,037 |
| A guarantee of Piaggio & C. for USD 22,000,000 relative to the working capital loan of USD 20,000,000 granted by ANZ to the subsidiary Piaggio Vietnam |
|
| of which drawn | 0 |
| of which undrawn | 20,208 |
| A guarantee of Piaggio & C. for USD 11,000,000 relative to the working capital loan of USD 10,000,000 granted by Hongkong and Shanghai Banking Corporation to the subsidiary Piaggio Vietnam |
|
| of which drawn | 0 |
| of which undrawn | 10,104 |
| A guarantee of Piaggio & C. for USD 6,000,000 relative to the working capital loan of USD 5,000,000 granted by ANZ to the subsidiary Piaggio Indonesia |
|
| of which drawn | 1,331 |
| of which undrawn | 4,180 |
| A guarantee of Piaggio & C. for USD 5,500,000 relative to the working capital loan of USD 5,000,000 granted by Hongkong and Shanghai Banking Corporation to the subsidiary Piaggio Indonesia |
|
| of which drawn | 1,996 |
| of which undrawn | 3,056 |
| Warrant to grant credit of Piaggio & C. to guarantee the credit line from Intesa Sanpaolo to the subsidiary Piaggio Group Americas for USD 14,000,000 |
|
| of which drawn | 12,859 |
| of which undrawn | 0 |
Warrant to grant credit of Piaggio & C. to guarantee the credit line from Intesa Sanpaolo to the subsidiary Piaggio Group Japan for USD 7,000,000
| of which drawn | 4,730 |
|---|---|
| of which undrawn | 1,699 |
| Warrant to grant credit of Piaggio & C. to guarantee the credit line from Intesa Sanpaolo to the subsidiary Foshan Piaggio Vehicles Technology Research & Development for USD 1,000,000 |
|
| of which drawn | 0 |
| of which undrawn | 919 |
| A guarantee of Piaggio & C. on the surety granted by BNP Paribas to the subsidiary Piaggio France for € 2,792,280 | |
| of which drawn | 2,792 |
| of which undrawn | 0 |
| A guarantee of Piaggio & C. on a line for derivatives, agreed on with Citibank, for the subsidiary Piaggio Vehicles Private Limited for USD 9,000,000 |
|
| of which drawn | 194 |
| of which undrawn | 8,073 |
| A guarantee of Piaggio & C. on a line for derivatives, agreed on with Hongkong and Shanghai Banking Corporation, for the subsidiary Piaggio Vehicles Private Limited for USD 7,150,000 |
|
| of which drawn | 291 |
| of which undrawn | 6,276 |
| A guarantee of Piaggio & C. on a line for derivatives granted by Bank of America to the subsidiary Piaggio Vehicles Private Limited for USD 3,000,000 |
|
| of which drawn | 1,249 |
| of which undrawn | 1,507 |
| A guarantee of Piaggio & C. for a guarantee on derivatives agreed on by I.F.C. for the subsidiary Piaggio Vietnam of which drawn A guarantee of Piaggio & C. on a line for derivatives, from Hongkong and Shanghai Banking Corporation to the subsidiary Piaggio Indonesia for USD 1,100,000 |
316 |
| of which drawn | 143 |
| of which undrawn | 2,888 |
| A guarantee of BCC-Fornacette to Livorno Customs Authorities for handling Piaggio goods at Livorno Port | 200 |
| A guarantee of BCC-Fornacette issued to Pisa Customs Authorities for handling Piaggio goods at the Pisa docks and at Livorno Port |
200 |
| A guarantee of BCC-Fornacette issued for the Group to Poste Italiane – Rome to guarantee contract obligations for the supply of vehicles |
1,321 |
| A guarantee of Banco di Brescia issued to the local authorities of Scorzè, to guarantee payment of urbanisation and construction charges relative to the Scorzè site |
166 |
| A guarantee of Intesa Sanpaolo issued to the Ministry of the Interior of Algeria, to guarantee contract obligations for the supply of vehicles |
140 |
| A guarantee of Intesa Sanpaolo issued to the Ministry of the Defense of Algeria, to guarantee contract obligations for the supply of vehicles |
158 |
| A guarantee of Intesa Sanpaolo issued to Harbin Dongan Import & Export for € 1,500,000 for an ongoing supply agreement | 1,500 |
| A guarantee of Monte dei Paschi di Siena issued to Chen ShinRubber for € 650,000 for an ongoing supply agreement | 650 |
| A guarantee of Banca Nazionale del Lavoro issued to the local authorities of Scorzè, to guarantee urbanisation and construction charges relative to the Scorzè site for USD 122,000 |
100 |
| A guarantee of Banca Nazionale del Lavoro - Innovation and Networks Executive Agency issued for Project 1_HeERO | 350 |
For details of litigation, see the same section in the Notes to the Consolidated Financial Statements.
During 2014, the Company exercised the call option of the debenture loan issued by the Company on 1 December 2009 for a total amount of €/000 150,000 and maturing on 1 December 2016. On 9 June, the remaining portion of this loan (equal to approximately € 42 million) was paid back at the price of 103.50%, after the finalisation of the exchange offer launched on 7 April.
The operation led in 2014 to the premium paid to bond holders that did not take up the exchange offer and of costs not yet depreciated of the reimbursed loan being recognised under borrowing costs in the income statement.
In 2014, the Company refinanced a revolving credit line with a limited pool of banks of a nominal value of €/000 200,000 maturing in December 2015. This operation resulted in the recognition of costs not yet amortised in the income statement in 2014.
These operations come under significant non-recurrent transactions, as defined by CONSOB Communication DEM/6064293 of 28 July 2006.
For 2015, no significant non-recurrent transactions were recorded.
During 2015 and 2014, the Company did not record any significant atypical and/or unusual transactions, as defined by Consob Communication DEM/6037577 of 28 April 2006 and DEM/6064293 of 28 July 2006.
No events to be reported occurred after the end of the period.
This document was published on 24 March 2016, authorised by the Chairman and Chief Executive Officer.
Milan, 11 March 2016 for the Board of Directors Chairman and Chief Executive Officer Roberto Colaninno
Attachments
Reference is made to attachments to the Consolidated Financial Statements.
The following statement was prepared pursuant to article 149 duodecies of the Consob Regulation on Issuers and indicates the fees for 2015 for auditing services and other services provided by the same independent auditors and entities belonging to the independent auditor's network.
| (in euro) | Subject providing the service |
Fees for 2015 |
|---|---|---|
| Auditing services | PWC | 323,870 |
| Auditing services CSR | PWC | 29,000 |
| Certification services | PWC | 103,000 |
| Other services | PWC | 18,000 |
| Total | 473,870 |
The Company is subject to the management and coordination of IMMSI S.p.A..
Pursuant to article 2497-bis, section 4 of the Italian Civil Code, main data of the last financial statements of the parent company IMMSI S.p.A, with registered office in Mantova (MN), Piazza Vilfredo Pareto 3 – tax code 07918540019, for the year ended 31 December 2014, are summarised below. The above essential data were taken from the Financial Statements for the year ended 31 December 2014. To fully understand the financial position of IMMSI S.P.A as of 31 December 2014, as well as the financial performance of the company in the year ending at this date, reference is made to the financial statements, and the report of the independent auditors, available in the forms and according to procedures established by law.
| 2014 | 2013 | ||
|---|---|---|---|
| In thousands of euros | |||
| Financial income | 7,841 | 35,467 | |
| Of which related parties and intergroup | 7,538 | 24,828 | |
| Borrowing costs | (74,200) | (23,364) | |
| Of which related parties and intergroup | - | (1,192) | |
| Income/(loss) from investments | - | - | |
| Operating income | 4,549 | 4,754 | |
| Of which related parties and intergroup | 2,049 | 2,041 | |
| Costs for materials | (40) | (40) | |
| Costs for services, leases and rentals | (3,479) | (3,276) | |
| Of which related parties and intergroup | (548) | (551) | |
| Employee costs | (1,295) | (1,344) | |
| Depreciation of plant, property and equipment | (78) | (128) | |
| Amortisation of goodwill | - | - | |
| Amortisation of intangible assets with a definite life | - | - | |
| Other operating income | 230 | 169 | |
| Of which related parties and intergroup | 86 | 86 | |
| Other operating costs | (838) | (702) | |
| PROFIT BEFORE TAX | (67,309) | 11,536 | |
| Taxes | 1,681 | 3,307 | |
| Of which related parties and intergroup | 968 | 3,475 | |
| EARNINGS AFTER TAX FROM OPERATING ACTIVITIES | (65,628) | 14,843 | |
| Profit or loss arising from assets held for disposal or sale | - | - | |
| NET PROFIT FOR THE PERIOD | (65,628) | 14,843 |
| 2014 | 2013 | |
|---|---|---|
| In thousands of euros | ||
| NET PROFIT FOR THE PERIOD | (65,628) | 14,843 |
| Items that may be reclassified to profit or loss: | ||
| Profits (losses) from the fair value measurement of assets available for sale (AFS) | (124) | 4,666 |
| Effective portion of profit (losses) from instruments to hedge financial flows | (21) | 570 |
| Items that may be reclassified to profit or loss: | ||
| Actuarial gains (losses) relative to defined benefit plans | (44) | 12 |
| TOTAL PROFIT (LOSS) FOR THE PERIOD | (65,817) | 20,091 |
| As of 31 December 2014 |
As of 31 December 2013 |
|
|---|---|---|
| In thousands of euros | ||
| NON-CURRENT ASSETS | ||
| Intangible assets | - | - |
| Plant, property and equipment | 247 | 240 |
| Of which related parties and intergroup | 16 | 21 |
| Investment property | 73,887 | 73,780 |
| Investments in subsidiaries and associates | 322,359 | 322,359 |
| Other financial assets | 11,449 | 60,700 |
| Of which related parties and intergroup | 1,100 | 3,000 |
| Tax receivables | 411 | 1,409 |
| Deferred tax assets | - | 227 |
| Trade receivables and other receivables | 22 | 240 |
| Of which related parties and intergroup | 15 | 233 |
| TOTAL NON-CURRENT ASSETS | 408,375 | 458,955 |
| ASSETS HELD FOR DISPOSAL | - | - |
| CURRENT ASSETS | ||
| Trade receivables and other receivables | 44,988 | 34,888 |
| Of which related parties and intergroup | 44,246 | 33,737 |
| Tax receivables | 1,443 | 782 |
| Other financial assets | 164,734 | 164,795 |
| Of which related parties and intergroup | 149,857 | 138,886 |
| Cash and cash equivalents | 2,651 | 2,513 |
| TOTAL CURRENT ASSETS | 213,816 | 202,978 |
| TOTAL ASSETS | 622,191 | 661,933 |
| As of 31 December 2014 |
As of 31 December 2013 |
|
|---|---|---|
| In thousands of euros | ||
| SHAREHOLDERS' EQUITY | ||
| Share capital | 178,464 | 178,464 |
| Reserves and retained earnings | 246,607 | 231,952 |
| Net profit for the period | (65,628) | 14,843 |
| TOTAL SHAREHOLDERS' EQUITY | 359,443 | 425,259 |
| NON-CURRENT LIABILITIES | ||
| Financial liabilities | 70,025 | 118,955 |
| Trade payables and other payables | 947 | 926 |
| Retirement fund and similar obligations | 344 | 344 |
| Other long-term provisions | - | - |
| Deferred tax liabilities | 19,624 | 20,504 |
| TOTAL NON-CURRENT LIABILITIES | 90,940 | 140,729 |
| LIABILITIES RELATED TO ASSETS HELD FOR DISPOSAL | - | - |
| CURRENT LIABILITIES | ||
| Financial liabilities | 169,405 | 93,443 |
| Trade payables | 1,152 | 1,137 |
| Of which related parties and intergroup | 291 | 260 |
| Current taxes | 404 | 494 |
| Other payables | 847 | 871 |
| Of which related parties and intergroup | 2 | 2 |
| Current portion of other long-term provisions | - | - |
| TOTAL CURRENT LIABILITIES | 171,808 | 95,945 |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 622,191 | 661,933 |
The undersigned Roberto Colaninno (Chairman and Chief Executive Officer) and Alessandra Simonotto (Appointed Executive) of Piaggio & C. S.p.A. hereby certify, also in consideration of article 154-bis, sections 3 and 4, of Legislative Decree no. 58 of 24 February 1998:
the appropriateness with regard to the company's characteristics and
a) have been prepared in compliance with the international accounting standards endorsed by the European Community pursuant to regulation (EC) no. 1606/2002 of the European Parliament and Council of 19 July 2002;
b) correspond to accounting records;
c) give a true and fair view of the statement of financial position and results of operations of the Issuer;
3.2 The Report on Operations includes reliable analysis of the trend of operations and operating results, as well as the situation of the Issuer and a description of main risks and uncertainties to which they are exposed.
Date: 11 March 2016
Chairman and Chief Executive Officer
Executive in charge ________________
__________________
This report is available on the Internet at: www.piaggiogroup.com
We would like to thank all colleagues for their valuable help in preparing this document.
Disclaimer
This Annual Financial Report 2015 has been translated into English solely for the convenience of the international reader. In the event of conflict or inconsistency between the terms used in the Italian version of the report and the English version, the Italian version shall prevail, as the Italian version constitutes the sole official document.
Management and Coordination IMMSI S.p.A. Share capital € 207,613,944.37, fully paid up Registered office: Viale R. Piaggio 25, Pontedera (Pisa) Pisa Register of Companies and Tax Code 04773200011 Pisa Economic and Administrative Index no. 134077
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