Annual / Quarterly Financial Statement • May 13, 2016
Annual / Quarterly Financial Statement
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2015 Separate financial statement
| 3 | Overview of performance, financial conditions and net debt |
|---|---|
| 0.1 Financial Statements | |
| 10 | Balance sheet |
| 12 | Income statement |
| 13 | Statement of comprehensive income |
| 14 | Cash-flow statement |
| 16 | Statement of changes in equity |
| Financial Statements pursuant to Consob 0.2 |
|
| Resolution no. 17221 of March 12, 2010 | |
| 20 | Balance sheet pursuant to Consob Resolution no. 17221 of March 12, 2010 |
| 22 | Income statement pursuant to Consob Resolution no. 17221 of March 12, 2010 |
| 0.3 Notes | |
| 24 | General information on A2A S.p.A. |
| 26 | Financial statements |
| 27 | Basis of preparation |
| 28 | Changes in international accounting standards |
| 35 | Accounting standards and policies |
| 53 | Notes to the balance sheet |
| 78 | Net debt |
| 79 | Notes to the income statement |
| 97 | Note on related party transactions |
| 101 | Consob Communication no. DEM/6064293 of July 28, 2006 |
| 102 | Guarantees and commitments with third parties |
| 103 | Other information |
| 136 | 1. Statement of changes in tangible assets |
|---|---|
| 138 | 2. Statement of changes in intangible assets |
| 140 | 3/a. Statement of changes in investments in subsidiaries |
| 142 | 3/b. Statement of changes in investments in affiliates |
| 144 | 3/c. Statement of changes in investments in other companies (AFS) |
| 146 | 4/a. List of investments in subsidiaries |
| 148 | 4/b. List of investments in affiliates |
| 150 | Key data of the financial statements of the main subsidiaries and affiliates |
| prepared according to IAS/IFRS (pursuant to art. 2429.4 of the Italian Civil | |
| Code) | |
| 152 | Key data of the financial statements of the main subsidiaries and affiliates |
| prepared according to ITALIAN GAAP (pursuant to art. 2429.4 of the Italian | |
| Civil Code) | |
| 154 | Certification of the financial statements pursuant to Art. 154-bis para. 5 of |
| Leg. Decree No. 58/98 | |
| 155 | 0.5 Independent Auditors' Report |
| 159 | 0.6 Report of the Board of Auditors |
This is a translation of the Italian original "Bilancio separato 2015" and has been prepared solely for the convenience of international readers. In the event of any ambiguity the Italian text will prevail. The Italian original is available on the website www.a2a.eu
The Parent Company is responsible for strategic vision, planning, control, financial management and coordination of the A2A Group activities. It also provides services to support the business and operating activities of Group companies (administrative, legal, supply, and personnel management services, information technology and communications) in order to optimize the resources available and use existing expertise in the most efficient manner. These services are governed by intercompany service agreements.
Finally, A2A S.p.A. provides its subsidiaries with office space and operating areas, as well as related services.
A2A S.p.A. is the owner of thermoelectric plants in Cassano d'Adda, Ponti sul Mincio and Monfalcone, a few hydroelectric plants located in Valtellina, and the hydroelectric plant in Calabria.
Overview of performance, financial conditions and net debt
| Millions of euro | 01 01 2015 12 31 2015 |
01 01 2014 12 31 2014 |
Changes |
|---|---|---|---|
| Revenues | |||
| Revenues from the sale of goods and services | 466.0 | 553.6 | (87.6) |
| Other operating income | 28.0 | 24.5 | 3.5 |
| Total revenues | 494.0 | 578.1 | (84.1) |
| Operating expenses | (290.9) | (353.1) | 62.2 |
| Labour costs | (119.7) | (131.5) | 11.8 |
| Gross operating income - EBITDA | 83.4 | 93.5 | (10.1) |
| Depreciation, amortization and write-downs | (85.8) | (115.6) | 29.8 |
| Provisions | (46.2) | (92.3) | 46.1 |
| Net operating income - EBIT | (48.6) | (114.4) | 65.8 |
| Result from non-recurring transactions | - | 24.8 | (24.8) |
| Financial balance | (71.8) | 70.9 | (142.7) |
| Result before taxes | (120.4) | (18.7) | (101.7) |
| Income taxes | 46.9 | 27.0 | 19.9 |
| Result after taxes from operating activities | (73.5) | 8.3 | (81.8) |
| Net result from discontinued operations | - | - | - |
| Net result of the year | (73.5) | 8.3 | (81.8) |
In the year in question A2A S.p.A. shows revenues for a total of 494.0 million euro (578.1 million euro in the previous year). The decrease, amounting to 84.1 million euro, can mainly be attributed to lower revenues from the sale of Green Certificates due to the effect of both the lower production of the hydroelectric plants, which in 2014 benefited from extraordinary hydraulicity, and less buying and selling of environmental certificates by the company during the year in question.
The operating costs recorded a reduction of 62.2 million euro, going from 353.1 million euro in 2014 to 290.9 million euro in 2015, essentially due to the effect of the reduction in the buying and selling of Green Certificates mentioned above, as well as lower costs to purchase electricity from the subsidiary A2A Energia S.p.A. connected to energy savings deriving from the project to replace the lighting equipment with new LED lamps in the Municipality of Milan in 2014.
Labour costs amounted to 119.7 million euro, a decrease of 11.8 million euro compared to 2014. This decrease can be mainly attributed to the reduction of staff deriving from the company restructuring plan already started in previous years, as well as the lower mobility and redundancy incentive charges incurred in the financial year 2015.
Due to the dynamics mentioned above the "Gross Operating Margin" amounted to 83.4 million euro, a decrease of 10.1 million euro compared to 2014.
"Amortization and depreciation, provisions and write-downs" of the year amounted to 132.0 million euro (207.9 million euro at December 31, 2014) and include amortisation, depreciation and write-downs of the tangible and intangible assets for 85.8 million euro (115.6 million euro at December 31, 2014) and provisions for 46.2 million euro (92.3 million euro at December 31, 2014).
The item recorded an overall reduction of 75.9 million euro, compared to the previous year, due to the lower write-downs performed following the results of the impairment test at December 31, 2015, the reduction of the credit risk provisions, as well as lower amortization and depreciation of tangible assets.
"Net Operating Income" was negative for 48.6 million euro (negative by 114.4 million euro at December 31, 2014).
The "Result from non-recurring transactions" did not record any value while it amounted to 24,8 million euro in the previous year and incorporates the income deriving from the execution of the exchange agreement between A2A S.p.A. and Dolomiti di Energia S.p.A..
The financial balance recorded a negative balance of 71.8 million euro, a worsening of 142.7 million euro compared to December 31, 2014 mainly due to the higher write-downs of shareholdings. This item incorporates dividends from subsidiaries for around 235 million euro, in line with 2014 and the write-down of the shareholdings in Edipower S.p.A., for 117 million euro, in EPCG for 97 million euro, and in Rudnik Uglja Ad Pljevlja for 7 million euro, performed following the results of the Impairment Test (in 2014 the write-downs of shareholdings came to 51 million euro).
The "Result before taxes" was negative for 120.4 million euro (negative for 18.7 million euro at December 31, 2014).
The "Income taxes" was positive for 46.9 million euro (positive for 27 million euro at December 31, 2014). The positive taxation essentially derives from the registration of i) positive current taxes due to remuneration for the transfer to fiscal consolidated financial statements of the interests payable, ii) positive taxes for the adjustment of the deferred taxes already in the financial statements at December 31, 2014 following the provision of art. 1, subsection 20, of Law no. 190 of December 23, 2014 ("2015 Stability Law"), which allows, from the current tax period, the deduction from IRAP of the full labour costs relative to employees with permanent contracts, iii) positive taxes for the adjustment of the taxes of previous years to the new calculation criteria, based on the application of art. 6, paragraph 9 of Legislative Decree December 15, 1997 no. 446 ("industrial holdings" method), introduced following the positive confirmation, by the Revenue Agency of the specific appeal application submitted by A2A..
These effects more than offset the current taxes for the period and the higher taxes deriving from the adjustment, again of the deferred taxes, to the provisions of art. 1, paragraph 61 of Law 208/2015, which provided for the reduction of 3.50% of the IRES rate from January 1, 2017, effective for tax periods following the current year at December 31, 2016.
Following the dynamics explained above the "Result for the year" is negative for 73.5 million euro (positive for 8.3 million euro in the previous year).
The investments for the year amounted to 45.4 million euro and in particular concerned works on hydroelectric plants, thermoelectric plants, improvements to third party assets as well as investments in the Group's IT systems.
| Millions of euro | 12 31 2015 | 12 31 2014 |
|---|---|---|
| CAPITAL EMPLOYED | ||
| Net fixed capital | 4,992.4 | 5,162.3 |
| - Tangible assets | 1,266.7 | 1,302.8 |
| - Intangible assets | 52.6 | 54.3 |
| - Shareholdings and other non-current financial assets (*) | 3,894.7 | 4,085.8 |
| - Other non-current assets/liabilities (*) | 0.4 | (13.3) |
| - Prepaid/deferred tax assets/liabilities | 48.3 | 34.8 |
| - Provisions for risks, charges and liabilities for landfills | (144.3) | (164.5) |
| - Employee benefits | (126.0) | (137.6) |
| of which with counter-entry to equity | (16.4) | (15.6) |
| Working capital | (32.2) | 16.4 |
| - Inventories | 4.8 | 5.5 |
| - Trade receivables and other current assets (*) | 235.6 | 261.3 |
| - Trade payables and other current liabilities (*) | (269.7) | (302.4) |
| - Assets for current assets/liabilities for taxes | (2.9) | 52.0 |
| Assets/liabilities held for sale (*) | 0.5 | - |
| of which with counter-entry to equity | - | - |
| TOTAL CAPITAL EMPLOYED | 4,960.7 | 5,178.7 |
| SOURCES OF COVERAGE | ||
| Equity | 2,161.6 | 2,324.7 |
| Total financial position beyond one year | 2,599.6 | 3,387.6 |
| Total financial position within one year | 199.5 | (533.6) |
| Total net financial position | 2,799.1 | 2,854.0 |
| of which with counter-entry to equity | (27.2) | (50.6) |
| TOTAL SOURCES | 4,960.7 | 5,178.7 |
(*) Excluding balances included in the Net Financial Position.
"Capital employed" totalled 4,960.7 million euro at December 31, 2015, partly covered by "Equity" in the amount of 2,161.6 million euro and net debt of 2,799.1 million euro.
The amount of "Capital employed" decreased by 218.0 million euro. This decrease is due for 169.9 million euro to the decrease in "Net fixed assets", mainly due to the reduction of investments and tangible assets following the write-downs, as well as the decrease in the provisions for risks and employee benefits, for 48.6 million euro to the reduction in "Working capital" and 0.5 million euro to the increase in "Assets/Liabilities held for sale" related to the reclassification of the investment held by A2A S.p.A. in SEASM S.r.l., equal to 67% of the company's share capital, following the management decision to sell said investment.
The "Net financial position", equal to 2,799.1 million euro, improved by 54.9 million euro compared to December 31, 2014 following the positive generation of cash flow attributable to the operations, partially offset by the resources absorbed by the investments in tangible and intangible assets and in shareholdings for 76.5 million euro and by dividends paid for 112.7 million euro.
| Millions of euro | 12 31 2015 | 12 31 2014 |
|---|---|---|
| NET FINANCIAL POSITION AT THE START OF THE YEAR | (2,854.0) | (2,939.0) |
| CONTRIBUTIONS FROM NON-RECURRING TRANSACTIONS | - | 4.5 |
| Result of the year (**) | (73.5) | (16.6) |
| Amortization and depreciation | 80.8 | 86.3 |
| Net taxes paid/receivables for taxes paid | 44.0 | 17.3 |
| Write-downs on shareholdings and fixed assets | 227.1 | 80.6 |
| Change in the assets and liabilities (*) | (57.7) | 88.1 |
| Cash flow from operating activities | 220.7 | 255.7 |
| Cash flow from investment activities | (76.5) | (52.9) |
| Dividends paid | (112.7) | (102.5) |
| Changes in financial assets/liabilities with counter-entry to equity | 23.4 | (19.8) |
| NET FINANCIAL POSITION AT THE END OF THE YEAR | (2,799.1) | (2,854.0) |
(*) Excluding balances with counter-entry to equity.
(**) Net of capital gains for sale of shareholdings.
Overview of performance, financial conditions and net debt
| Millions of euro | 12 31 2015 | 12 31 2014 |
|---|---|---|
| Medium/long-term debt | 3,001.1 | 3,824.3 |
| Medium/long-term financial receivables | (401.5) | (436.7) |
| Total non-current net debt | 2,599.6 | 3,387.6 |
| Short-term debt | 1,408.0 | 607.2 |
| Short-term financial receivables | (621.5) | (730.3) |
| Cash and cash equivalents | (587.0) | (410.5) |
| Total current net debt | 199.5 | (533.6) |
| Net financial debt | 2,799.1 | 2,854.0 |
| Amounts in euro | Note | 12 31 2015 | 12 31 2014 |
|---|---|---|---|
| NON-CURRENT ASSETS | |||
| Tangible assets | 1 | 1,266,693,752 | 1,302,782,636 |
| Intangible assets | 2 | 52,605,327 | 54,356,697 |
| Shareholdings | 3 | 3,890,927,319 | 4,081,644,308 |
| Other non-current financial assets | 3 | 405,362,171 | 406,342,569 |
| Deferred tax assets | 4 | 48,261,061 | 34,807,533 |
| Other non-current assets | 5 | 452,429 | 34,927,876 |
| Total non-current assets | 5,664,302,059 | 5,914,861,619 | |
| CURRENT ASSETS | |||
| Inventories | 6 | 4,777,441 | 5,526,617 |
| Trade receivables | 7 | 146,947,980 | 219,459,293 |
| Other current assets | 8 | 104,703,500 | 41,864,763 |
| Current financial assets | 9 | 605,367,617 | 730,268,721 |
| Current tax assets | 10 | 38,987,274 | 51,955,092 |
| Cash and cash equivalents | 11 | 587,049,592 | 410,501,055 |
| Total current assets | 1,487,833,404 | 1,459,575,541 | |
| NON-CURRENT ASSETS HELD FOR SALE | 12 | 469,000 | - |
| TOTAL ASSETS | 7,152,604,463 | 7,374,437,160 |
(1) As required by Consob Resolution no. 17221 of March 12, 2010, the effects of relations with related parties in the separate financial statements are highlighted in the accounting statements in section 0.2 and commented on in Note 35. Significant non-recurring events and transactions in the separate financial statements are provided in Note 36 pursuant to Consob Communication DEM/6064293 of July 28, 2006.
| Amounts in euro | Note | 12 31 2015 | 12 31 2014 |
|---|---|---|---|
| EQUITY | |||
| Share capital | 13 | 1,629,110,744 | 1,629,110,744 |
| (Treasury shares) | 14 | (60,891,196) | (60,891,196) |
| Reserves | 15 | 666,859,220 | 748,270,204 |
| Net result of the year | 16 | (73,487,107) | 8,257,733 |
| Total equity | 2,161,591,661 | 2,324,747,485 | |
| LIABILITIES | |||
| Non-current liabilities | |||
| Non-current financial liabilities | 17 | 2,973,930,319 | 3,755,898,126 |
| Employee benefits | 18 | 125,996,516 | 137,616,852 |
| Provisions for risks, charges and liabilities for landfills | 19 | 144,313,123 | 164,494,146 |
| Other non-current liabilities | 20 | 27,231,315 | 82,081,615 |
| Total non-current liabilities | 3,271,471,273 | 4,140,090,739 | |
| Current liabilities | |||
| Trade payables | 21 | 162,012,623 | 122,949,653 |
| Other current liabilities | 21 | 115,139,335 | 179,425,157 |
| Current financial liabilities | 22 | 1,400,512,790 | 607,224,126 |
| Tax liabilities | 23 | 41,876,781 | - |
| Total current liabilities | 1,719,541,529 | 909,598,936 | |
| Total liabilities | 4,991,012,802 | 5,049,689,675 | |
| LIABILITIES ASSOCIATED WITH NON-CURRENT ASSETS HELD FOR SALE |
- | - | |
| TOTAL EQUITY AND LIABILITIES | 7,152,604,463 | 7,374,437,160 |
| Amounts in euro | Note | 01 01 2015 12 31 2015 |
01 01 2014 12 31 2014 |
|---|---|---|---|
| Revenues | |||
| Revenues from the sale of goods and services | 465,963,699 | 553,616,259 | |
| Other operating income | 28,044,921 | 24,539,144 | |
| Total revenues | 25 | 494,008,620 | 578,155,403 |
| Operating expenses | |||
| Expenses for raw materials and services | 221,374,062 | 274,555,494 | |
| Other operating expenses | 69,493,703 | 78,542,149 | |
| Total operating expenses | 26 | 290,867,765 | 353,097,643 |
| Labour costs | 27 | 119,732,850 | 131,530,088 |
| Gross operating income - EBITDA | 28 | 83,408,005 | 93,527,672 |
| Depreciation, amortization, provisions and write-downs | 29 | 132,013,925 | 207,946,812 |
| Net operating income - EBIT | 30 | (48,605,920) | (114,419,140) |
| Result from non-recurring transactions | 31 | - | 24,839,349 |
| Financial balance | |||
| Net financial income | 299,498,071 | 315,873,923 | |
| Financial expenses | 371,305,323 | 245,014,787 | |
| Result from disposal of other shareholdings (AFS) | - | (404) | |
| Total financial balance | 32 | (71,807,252) | 70,858,732 |
| Result before taxes | (120,413,172) | (18,721,059) | |
| Income taxes | 33 | (46,926,065) | (26,978,792) |
| Result after taxes from operating activities | (73,487,107) | 8,257,733 | |
| Net result from discontinued operations | - | - | |
| NET RESULT OF THE YEAR | 34 | (73,487,107) | 8,257,733 |
(1) As required by Consob Resolution no. 17221 of March 12, 2010, the effects of relations with related parties in the separate financial statements are highlighted in the accounting statements in section 0.2 and commented on in Note 35. Significant non-recurring events and transactions in the separate financial statements are provided in Note 36 pursuant to Consob Communication DEM/6064293 of July 28, 2006.
13
| Amounts in euro | 12 31 2015 | 12 31 2014 |
|---|---|---|
| Net result of the year (A) | (73,487,107) | 8,257,733 |
| Actuarial gains/(losses) on employee benefits booked in the net equity | 6,086,047 | (15,548,584) |
| Tax effect of other actuarial gains/(losses) | (1,544,790) | 2,272,511 |
| Total actuarial gains/(losses) net of the tax effect (B) | 4,541,257 | (13,276,073) |
| Effective part of gains/(losses) on cash flow hedge | 23,443,082 | (19,719,727) |
| Tax effect of other gains/(losses) | (5,052,274) | 3,967,092 |
| Total other gains/(losses) net of the tax effect (C) | 18,390,808 | (15,752,635) |
| Gains/(losses) from recalculation of available for sale | (248) | - |
| Tax effect of other gains/(losses) | 145,942 | - |
| Gains/(losses) from the restatement of financial assets available for sale (D) | 145,694 | - |
| Total comprehensive result (A) + (B) + (C) + (D) | (50,409,348) | (20,770,975) |
With the exception of the actuarial effects on employee benefits recognized in equity, the other effects stated above will be reclassified to profit or loss in subsequent years.
| Amounts in euro | 12 31 2015 | 12 31 2014 |
|---|---|---|
| CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR | 410,501,055 | 186,891,718 |
| Contribution from non-recurring transactions | - | 4,479,300 |
| CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR | 410,501,055 | 191,371,018 |
| Operating activities | ||
| Result of the year (**) | (73,487,107) | (16,581,616) |
| Tangible assets depreciation | 74,160,540 | 80,477,097 |
| Intangible assets amortization | 6,664,143 | 5,783,225 |
| Fixed assets write-downs | 5,716,663 | 29,390,367 |
| Shareholdings write-downs | 221,372,219 | 51,160,894 |
| Net taxes paid/receivables for disposed taxes (a) Gross change in assets and liabilities (b) |
44,053,403 (57,747,217) |
17,271,485 88,197,744 |
| Total change of assets and liabilities (a+b) (*) | (13,693,814) | 105,469,229 |
| Cash flow from operating activities | 220,732,644 | 255,699,196 |
| Investment activities | ||
| Investments in tangible assets | (39,532,919) | (45,658,411) |
| Investments in intangible assets and goodwill | (5,908,823) | (7,284,981) |
| Investments in shareholdings and securities (*) | (35,802,787) | - |
| Disposal of fixed assets and shareholdings | 4,788,391 | - |
| Cash flow from investment activities | (76,456,138) | (52,943,392) |
| FREE CASH FLOW | 144,276,506 | 202,755,804 |
| Financing activities | ||
| Change in financial assets (*) | 96,644,887 | 344,919,413 |
| Change in financial liabilities (*) | 150,497,221 | (152,979,788) |
| Net financial interests paid | (102,122,725) | (73,067,800) |
| Dividends paid | (112,747,352) | (102,497,592) |
| Cash flow from financing activities | 32,272,031 | 16,374,233 |
| CHANGE IN CASH AND CASH EQUIVALENTS | 176,548,537 | 219,130,037 |
| CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR | 587,049,592 | 410,501,055 |
(*) Cleared of balances in return of shareholders' equity and other balance sheet items.
(**) Result of the year is exposed net of gains on shareholdings' and fixed assets' disposals.
| Description Amounts in euro |
Share Capital note 13 |
Treasury Shares note 14 |
|
|---|---|---|---|
| Equity at December 31, 2013 | 1,629,110,744 | (60,891,196) | |
| Allocation of 2013 net result | |||
| Ordinary dividend distribution | |||
| IAS 32 and IAS 39 reserves (*) | |||
| IAS 19 Revised reserve "Employee Benefits" (*) | |||
| Net result of the year (*) | |||
| Equity at December 31, 2014 | 1,629,110,744 | (60,891,196) | |
| Allocation of 2014 net result | |||
| Ordinary dividend distribution | |||
| IAS 32 and IAS 39 reserves (*) | |||
| IAS 19 Revised reserve "Employee Benefits" (*) | |||
| Other changes | |||
| Net result of the year (*) | |||
| Equity at December 31, 2015 | 1,629,110,744 | (60,891,196) | |
| Availability of Equity Reserves | |||
| A: For share capital increase B: To cover losses C: For distribution to shareholders - available for 406,743,957 euro (**) D: Reserves not available |
(*) These form part of the statement of comprehensive income.
(**) Of which subject to moderate tax suspension of 198,270,129 euro.
Separate financial statements – Year 2015
17
Statement of changes in equity
| Reserves Cash Flow Available Net result note 15 hedge for sale of the year reserve reserve note 16 note 15 note 15 |
Total equity |
|---|---|
| 898,300,812 (23,316,322) (607,840) 5,419,854 |
2,448,016,052 |
| 5,419,854 (5,419,854) |
- |
| (102,497,592) | (102,497,592) |
| (15,752,635) | (15,752,635) |
| (13,276,073) | (13,276,073) |
| 8,257,733 | 8,257,733 |
| 787,947,001 (39,068,957) (607,840) 8,257,733 |
2,324,747,485 |
| 8,257,733 (8,257,733) |
- |
| (112,747,352) | (112,747,352) |
| 18,390,808 145,694 |
18,536,502 |
| 4,541,257 | 4,541,257 |
| 876 | 876 |
| (73,487,107) | (73,487,107) |
| 687,999,515 (20,678,149) (462,146) (73,487,107) |
2,161,591,661 |
| A-B-C D |
0.2 Financial Statements pursuant to Consob Resolution no. 17221 of March 12, 2010
pursuant to Consob Resolution no. 17221 of March 12, 2010
| Amounts in euro | 12 31 2015 | of which Related Parties (note 35) |
12 31 2014 | of which Related Parties (note 35) |
|---|---|---|---|---|
| ASSETS | ||||
| NON-CURRENT ASSETS | ||||
| Tangible assets | 1,266,693,752 | 1,302,782,636 | ||
| Intangible assets | 52,605,327 | 54,356,697 | ||
| Shareholdings | 3,890,927,319 | 3,890,927,319 | 4,081,644,308 | 4,081,644,308 |
| Other non-current financial assets | 405,362,171 | 401,596,232 | 406,342,569 | 402,075,856 |
| Deferred tax assets | 48,261,061 | 34,807,533 | ||
| Other non-current assets | 452,429 | 34,927,876 | ||
| TOTAL NON-CURRENT ASSETS | 5,664,302,059 | 5,914,861,619 | ||
| CURRENT ASSETS | ||||
| Inventories | 4,777,441 | 5,526,617 | ||
| Trade receivables | 146,947,980 | 144,179,706 | 219,459,293 | 218,275,427 |
| Other current assets | 104,703,500 | 78,456,910 | 41,864,763 | 32,141,672 |
| Current financial assets | 605,367,617 | 605,367,617 | 730,268,721 | 730,268,721 |
| Current tax assets | 38,987,274 | 51,955,092 | ||
| Cash and cash equivalents | 587,049,592 | 410,501,055 | ||
| TOTAL CURRENT ASSETS | 1,487,833,404 | 1,459,575,541 | ||
| NON-CURRENT ASSETS HELD FOR SALE | 469,000 | 469,000 | - | |
| TOTAL ASSETS | 7,152,604,463 | 7,374,437,160 |
| Amounts in euro | 12 31 2015 | of which Related Parties (note 35) |
12 31 2014 | of which Related Parties (note 35) |
|---|---|---|---|---|
| EQUITY | ||||
| Share capital | 1,629,110,744 | 1,629,110,744 | ||
| (Treasury shares) | (60,891,196) | (60,891,196) | ||
| Reserves | 666,859,220 | 748,270,204 | ||
| Net result of the year | (73,487,107) | 8,257,733 | ||
| Total equity | 2,161,591,661 | 2,324,747,485 | ||
| LIABILITIES | ||||
| NON-CURRENT LIABILITIES | ||||
| Non-current financial liabilities | 2,973,930,319 | 3,755,898,126 | ||
| Employee benefits | 125,996,516 | 137,616,852 | ||
| Provisions for risks, charges and liabilities for landfills | 144,313,123 | 33,350,586 | 164,494,146 | 99,434,624 |
| Other non-current liabilities | 27,231,315 | 82,081,615 | ||
| Total non-current liabilities | 3,271,471,273 | 4,140,090,739 | ||
| CURRENT LIABILITIES | ||||
| Trade payables | 162,012,623 | 83,737,545 | 122,949,653 | 46,756,325 |
| Other current liabilities | 115,139,335 | 46,948,578 | 179,425,157 | 74,446,271 |
| Current financial liabilities | 1,400,512,790 | 732,742,345 | 607,224,126 | 477,809,072 |
| Tax liabilities | 41,876,781 | - | ||
| Total current liabilities | 1,719,541,529 | 909,598,936 | ||
| Total liabilities | 4,991,012,802 | 5,049,689,675 | ||
| LIABILITIES ASSOCIATED WITH NON-CURRENT ASSETS HELD FOR SALE |
- | - | ||
| TOTAL EQUITY AND LIABILITIES | 7,152,604,463 | 7,374,437,160 |
pursuant to Consob Resolution no. 17221 of March 12, 2010
| Amounts in euro | 01 01 2015 12 31 2015 |
of which Related Parties (note 35) |
01 01 2014 12 31 2014 |
of which Related Parties (note 35) |
|---|---|---|---|---|
| Revenues | ||||
| Revenues from the sale of goods and services | 465.963.699 | 459.633.982 | 553.616.259 | 526.259.096 |
| Other operating income | 28.044.921 | 7.320.088 | 24.539.144 | 10.130.429 |
| Total revenues | 494.008.620 | 578.155.403 | ||
| Operating expenses | ||||
| Expenses for raw materials and services | 221.374.062 | 127.195.934 | 274.555.494 | 194.420.693 |
| Other operating expenses | 69.493.703 | 7.651.241 | 78.542.149 | 458.395 |
| Total operating expenses | 290.867.765 | 353.097.643 | ||
| Labour costs | 119.732.850 | 2.461.994 | 131.530.088 | 1.508.732 |
| Gross operating income - EBITDA | 83.408.005 | 93.527.672 | ||
| Depreciation, amortization, provisions and write-downs | 132.013.925 | 207.946.812 | 99.434.624 | |
| Net operating income - EBIT | (48.605.920) | (114.419.140) | ||
| Result from non-recurring transactions | - | 24.839.349 | ||
| Financial balance | ||||
| Financial income | 299.498.071 | 273.920.071 | 315.873.923 | 301.868.583 |
| Financial expenses | 371.305.323 | 226.017.077 | 245.014.787 | 58.052.969 |
| Result from disposal of other shareholdings (AFS) | - | (404) | ||
| Total financial balance | (71.807.252) | 70.858.732 | ||
| Result before taxes | (120.413.172) | (18.721.059) | ||
| Income taxes | (46.926.065) | (26.978.792) | ||
| Result after taxes from operating activities | (73.487.107) | 8.257.733 | ||
| Net result from discontinued operations | - | - | ||
| NET RESULT OF THE YEAR | (73.487.107) | 8.257.733 |
A2A S.p.A. is a company incorporated under Italian law.
A2A S.p.A. and its subsidiaries (the "Group") operate both in Italy and abroad. In particular, abroad, the A2A Group is present in Montenegro following the acquisition of a controlling stake in the company EPCG which took place in 2009.
In particular, as the "Parent Company", A2A S.p.A. is responsible for the guiding strategy, administration, planning and control, financial management and coordinating the activities of the A2A Group.
Therefore, direct subsidiaries benefit from administrative, tax, legal, personnel management, procurement and communication services, so as to optimize the resources that are available within the Group and to use the existing known how in a cost-effective way.
The A2A Group mainly operates in the following sectors:
24
The separate financial statements for A2A S.p.A. are presented in euro, which is also the functional currency in the economies in which the company operates. In particular, the following notes are prepared in thousands of euro.
The separate financial statements of A2A S.p.A. at December 31, 2015, have been prepared on a going-concern basis and comprise the balance sheet, income statement, statement of comprehensive income, cash flow statement, statement of changes in equity and these notes.
These financial statements have been prepared in accordance with the international accounting standards (IAS/IFRSS) issued by the International Accounting Standard Board (IASB) and endorsed by the European Union, including "International Accounting Standards" (IAS) and "International Financial Reporting Standards" (IFRSS), as well as the interpretations of the "International Financial Reporting Interpretation Committee" (IFRIC) and rules issued in application of art. 9 of Legislative Decree 38/2005.
These explanatory notes include the supplemental information required by the Italian civil code, by Consob Resolutions no. 15519 and 15520 of July 27, 2006, and Consob communication no. 6064293 of July 28, 2006.
These separate financial statements for the year ended December 31, 2015, were approved on April 5, 2016, by the Board of Directors, which authorized its publication, and has been audited by PricewaterhouseCoopers S.p.A. in accordance with their appointment by the shareholders of April 26, 2007, for the nine years from 2007 to 2015.
For the balance sheet, the company A2A S.p.A. has adopted a format which separates current and non-current assets and liabilities, as required by paras. 60 et seq. of IAS 1.
The income statement is presented by nature, a format which is considered more representative than a presentation by function. The selected format is in agreement with the presentation used by the Group's major competitors and in line with international practice.
26
The specific line items "Result from non-recurring transactions" and "Result from disposal of other shareholdings (AFS)" are in the format of the income statement in order to provide clear and immediate identification of the results arising from non-recurring transactions forming part of continuing operations, separating these from the results from discontinued operations. The line item "Non-recurring transactions" consists of the gains and losses arising from the measurement at fair value less costs to sell or from the sale or disposal of noncurrent assets (or disposal groups) classified as held for sale within the meaning of IFRS 5, the gains or losses arising on the disposal of shareholdings in unconsolidated subsidiaries and associates and other non-operating income and expenses. This item is presented between net operating income and the financial balance. In this way net operating income is not affected by non-recurring operations, making it easier to measure the effective performance of the Group's ordinary operating activities.
The cash flow statement has been prepared using the indirect method as permitted by IAS 7.
The statement of changes in equity has been prepared in accordance with IAS 1.
The formats adopted for the financial statements are the same as those used to prepare the annual separate financial statements at December 31, 2014.
The separate financial statements as at December 31, 2015, have been prepared on a historical cost basis, with the exception of those items which under IFRS must be or can be measured at fair value, as discussed in further detail in the accounting policies.
The accounting principles, the accounting policies and the methods of measurement used in the preparation of the separate financial statements are consistent with those used to prepare the annual separate financial statements at December 31, 2014, except as specified below.
Pursuant to IAS 8, the subsequent paragraph "Accounting standards, amendments and interpretations applicable by the company as of the current year" indicates and briefly illustrates the amendments in force as of January 1, 2015.
The following paragraphs, "Accounting standards, amendments and interpretations approved by the European Union but applicable after December 31, 2015" and "Accounting standards, amendments and interpretations not yet approved by the European Union", instead detail the accounting standards and interpretations already issued but not yet effective or not yet approved by the European Union and therefore not applicable for the preparation of the financial statements at December 31, 2015, any impacts of which will then be transposed as of the financial statements of the following years.
As from January 1, 2015, some additions have been applied following specific paragraphs of the international accounting standards already adopted by the company in previous years, none of which had a significant effect on the company's economic and financial results. The main changes are described in the following.
are measured at fair value at each closing date, with changes recognized in the income statement;
f) IAS 24 "Related Party Disclosures": the standard is amended in order to include an entity providing key management personnel services as a related party (management company).
IAS 19 Revised "Employee Benefits": the amendments to IAS 19 on November 21, 2013 allow (but do not impose) the accounting decrease of the "current service cost" of the period of contributions paid by employees or by third parties, that are not related to the number of years of service, instead of the allocation of these contributions over the period when the service is rendered. Said contributions shall meet the following conditions: (i) they are indicated in the formal conditions of the plan; (ii) they are connected to the service rendered by the employee; (iii) they are independent of the number of years of service of the employee (ex. the contributions represent a fixed percentage of the salary or a fixed amount for the entire work period or related to age of the employee).
• IFRIC 21 "Levies": this interpretation of IAS 37 "Provisions, Contingent Liabilities and Contingent Assets" was issued on May 20, 2013 and regards the accounting for levies imposed by governments which do not fall within the scope of IAS 12 "Income Taxes". IAS 37 "Provisions, Contingent Liabilities and Contingent Assets" sets out criteria for the recognition of a liability, one of which is the requirement for the entity to have a present obligation as a result of a past event (known as an obligating event). The interpretation clarifies that the obligating event that gives rise to a liability to pay a levy is the activity described in the legislation that triggers the payment of the levy.
The following accounting standards and interpretations already approved by the European Union and currently not applied by the company could be adopted in the next few years if the conditions arise:
• IFRS 11 "Joint Arrangements": issued by the IASB on May 6, 2014, the amendment to this standard provides guidance on how to account for the acquisition of an interest in a joint operation that is a business as defined by IFRS 3 "Business Combinations". The amendment in question is applicable from January 1, 2016;
that do not represent the actual consumption of the economic benefits of the underlying asset. The above prohibition has also been included in IAS 38, under which intangible assets may be amortized on the basis of revenues only if it can be shown that the revenues and consumption of the economic benefits of the intangible asset are highly correlated;
31
Regarding the first point, the amendment clarifies that the restatement of the financial statement figures shall not be resort to if an asset or group of assets available for sale is reclassified as "held for distribution", or vice versa.
With reference to IFRS 7, the amendment provides that if an entity transfers a financial asset on terms which allow the "derecognition" of the asset, it shall be required to provide information regarding the involvement of the entity in the transferred asset, if it has signed service contracts that show an entity's interest in the future performance of the financial assets transferred.
The amendment of IAS 19 proposed, clarifies that the discount rate to discount the obligations for benefits following the employment relationship, is determined with reference to market yields on corporate bonds of leading companies and, in countries where there is no "thick market" of such securities, the market yields of the securities of public entities are used.
The proposed amendment to IAS 34 requires disclosure of cross-references between the data reported in the interim financial statements and the information associated with them.
The following standards and amendments to existing standards are still pending approval by the European Union and are therefore not applicable by the company. The dates indicated reflect the expected effectiveness date and enacted in the standards; this date is however subject to the actual approval by the competent bodies of the European Union:
• IFRS 9 "Financial instruments": this standard is the first of a multi-phase project which is designed to replace IAS 39 "Financial instruments: recognition and measurement" and to introduce two new criteria to recognize and measure financial assets and liabilities. The main changes introduced by IFRS 9 may be summarized as follows: financial assets can be measured either at fair value or at their amortized cost. As a result, the categories "loans and receivables", "available- for-sale financial assets" and "held-to-maturity investments" disappear. Classification within the two categories is carried out on the basis of an entity's business model and the contractual cash flow characteristics of the financial asset. A financial asset is measured at amortized cost if both of the following requirements are met: the objective of the entity's business model is to hold assets to collect contractual cash flows (and therefore in substance not to earn trading profits) and the characteristics of the cash flows of the asset are solely payments of principal and interest. A financial asset is measured at fair value if it is not measured at amortized cost. The rules to account for derivatives have been simplified, as the embedded derivative and the host financial asset are no longer recognized separately.
32
All equity instruments - listed or unlisted - must be measured at fair value (IAS 39 established on the other hand that unlisted equity instruments should be valued at cost if fair value could not be reliably measured).
An entity has the option of presenting changes in the fair value of equity instruments that are not held for trading in equity; that option is not permitted for equity instruments that are held for trading. This designation is permitted on initial recognition, may be adopted for each individual instrument and is irrevocable. If an election is made for this option, changes in the fair value of these instruments may never be reclassified from equity to the income statement. Dividends on the other hand continue to be recognized in the income statement. IFRS 9 does not permit reclassifications between the two categories of financial asset except in the rare case of a change in an entity's business model. In this case the effects of the reclassification are applied prospectively.
The disclosures required to be made in the notes have been adjusted to the classification and measurements rules introduced by IFRS 9. On November 19, 2013, the IASB issued an amendment to this standard which mainly regards the following:
(i) the substantial revision of the "Hedge accounting", which will allow entities to better reflect their risk management activities in the financial statements;
(ii) enabling entities to change the accounting of liabilities measure at fair value: in particular the effects of a worsening of an entity's own credit risk will no longer be recognized in the income statement;
(iii) the effective date of the standard is deferring, originally effective as of January 1, 2015. A partial amendment to the standard was issued in July 2014 on the subject of the valuation of financial instruments, with the introduction of the expected-loss impairment model for loans which replaces the impairment model based on realized losses. The amendment in question is applicable from January 1, 2018;
IFRS 15 also includes the disclosure requirements that are significantly more extensive than the existing standard concerning the nature, amounts, timing and uncertainty of revenues and cash flows arising from contracts with customers.
On September 11, 2015, the IASB issued an amendment to the standard in question, postponing the date of application with effect from January 1, 2018;
• IFRS 10 "Consolidated Financial Statements": the amendment to this standard issued on December 18, 2014 relates to the exemption from the presentation of the consolidated financial statements if the parent company has investments in "investment entities" that evaluate their subsidiaries at fair value. The amendment to the standard is applicable from January 1, 2016;
Transactions in currencies other than the euro are initially recognized at the exchange rates at the date of the transaction. Monetary assets and liabilities denominated in a foreign currency are converted into euro at the exchange rates at the balance sheet date.
Non-monetary items measured at historical cost in foreign currency are translated at the exchange rates at the date of the transaction. Non-monetary items measured at fair value are translated at the exchange rates at the date when the fair value was determined.
Assets for business use are classified as tangible assets, while non-business assets are classified as investment property.
Tangible assets are measured at cost, including any additional charges directly attributable to bringing the asset into an operating condition (e.g. transport, customs duty, installation and testing costs, notary and land registry fees and any non-deductible VAT), increased when material and where there are obligations by the present value of the estimated cost of restoring the location from an environmental point of view or dismantling the asset. Borrowing costs, where directly attributable to the purchase or construction of an asset, are capitalized as part of the cost of the asset if the type of asset so warrants.
If important components of tangible assets have different useful lives, they are accounted for separately using the "component approach", assigning to each component its own useful life for the purpose of calculating depreciation (the component approach).
Land, whether occupied by residential or industrial buildings or devoid of construction, is not depreciated as it has an unlimited useful life, except for land used in production activities that is subject to deterioration over time (e.g. landfills, quarries).
Ordinary maintenance costs are fully expensed to the income statement in the year they are incurred. Costs for maintenance carried out at regular intervals are attributed to the assets to which they refer and are depreciated over the specific residual possibility of use of such.
Assets acquired under finance leases are accounted for on the basis of IAS 17 "Leases", which requires the leased asset to be recognized as a tangible asset together with a financial liability of the same amount. The liability is progressively reduced on the basis of the scheme for the repayment of the capital portion of the contractual lease instalments, while the carrying amount of the asset is systematically depreciated over its economic and technical life or over the shorter of the lease term and the asset's useful life, but only if there is reasonable certainty that the lessee will obtain ownership by the end of the lease term.
For assets acquired in leasing by Group companies, the guidance contained in IFRIC 4 "Determining whether an Arrangement contains a Lease" is applied. This interpretation provides guidance for arrangements which do not take the legal form of a finance lease but in substance transfer the risks and rewards of ownership of the assets included in the arrangement.
36
Applying the interpretation leads to the same accounting treatment as that required by IAS 17 "Leasing".
Tangible assets are stated net of accumulated depreciation and any write-downs. Depreciation is charged from the year in which the individual asset enters service on a straight-line basis over the estimated useful life of the asset for the business. The estimated realizable value which is deemed to be recoverable at the end of an asset's useful life is not depreciated. The useful life of each asset is reviewed annually and any changes, if needed, are made with a view to showing the correct value of the asset. During the reporting year, the useful lives of the CCGT plants were reviewed, as described in note "1) Tangible assets".
Landfills are depreciated on the basis of the percentage filled, which is calculated as the ratio between the volume occupied at the end of the period and the total volume authorized.
The main depreciation rates used, which are based on technical and economic considerations, are as follows:
| • | buildings _________ | 1.7 % | - | 33.3 % | |
|---|---|---|---|---|---|
| • | production plants _______ | 1.7 % | - | 50.0 % | |
| • | transport lines __________ | 1.4 % | - 100.0 % | ||
| • | transformation stations ________ |
6.7 % | |||
| • | distribution networks __________ | 1.4 % | - | 10.0 % | |
| • | miscellaneous equipment _______ | 4.8 % - | 14.3 % | ||
| • | mobile phones __________ | 100.0 % | |||
| • | furniture and fittings ___________ | 10.0 % - | 12.5 % | ||
| • | electric and electronic office machines _______ |
10.0 % | |||
| • | vehicles __________ | 10.0 % - | 12.5 % | ||
| • | leasehold improvements ________ | 5 % - | 10.9 % |
Tangible assets are subjected to impairment testing if there is any indication that an asset may be impaired in accordance with the paragraph below "Impairment of assets"; write-downs may be reversed in subsequent periods if the reasons for which they were recognized no longer apply.
37
When an asset is disposed of or if future economic benefits are no longer expected from using an asset, it is removed from the balance sheet and any gain or loss (being the difference between the disposal proceeds and the carrying amount) is recognized in the income statement in the year of the derecognition.
Intangible assets are identifiable non-monetary assets without physical substance which are controlled by the enterprise and able to produce future economic benefits, and include goodwill when acquired for consideration.
The fact of being identifiable distinguishes an intangible asset that has been acquired from goodwill; this requirement is normally met when: (i) the intangible asset is attributable to a legal or contractual right, or (ii) the asset is separable, in other words it can be sold, transferred, rented or exchanged individually or as an integral part of other assets.
Control by the enterprise consists of the right to enjoy the future economic benefits flowing from the asset and to restrict the access of others to those benefits.
Intangible assets are stated at purchase or production cost, including ancillary charges, determined in the same way as for tangible assets. Intangible fixed assets produced internally are not capitalized but recognized in the income statement in the year in which the costs are incurred.
Intangible assets with a definite useful life are stated net of the related accumulated amortization and any write-downs in the same way as for tangible assets. Changes in the expected useful life of an asset or in the ways in which the future economic benefits of an asset are obtained are recognized by suitably adjusting the period or method of amortization and treated as changes in accounting estimate. The amortization of intangible fixed assets with a definite useful life is charged to income statement in the cost category that reflects the function of the intangible asset concerned.
Intangible assets are subjected to impairment testing if there are specific indications that they may be impaired, in accordance with the paragraph below "Impairment of assets"; writedowns may be reversed in subsequent periods if the reasons for which they were recognized no longer apply.
Intangible assets with an indefinite useful life and those that are not yet available for use are subjected to impairment testing on an annual basis, whether or not there are any specific indications that they may be impaired, in accordance with the paragraph below "Impairment of assets". Write-downs of goodwill cannot subsequently be written back.
Gains or losses on the disposal of an intangible asset are calculated as the difference between the disposal proceeds and the carrying amount of the asset and recognized in the income statement at the time of the disposal.
The following amortization rates are applied to intangible assets with a definite useful life:
• industrial patents and intellectual property rights __________________ 12.5 % - 33.3 % • concessions, licenses, trademarks and similar rights ________________ 6.7 % - 33.3 %
38
IFRIC 12 states that, based on the characteristics of the concession arrangement, the infrastructures used in the provision of public services under concession are to be recognized as intangible assets if the operator has the right to receive a payment from the customer for the service provided, or as a financial asset if the operator has the right to receive payment from the public sector entity.
Tangible and intangible assets are subjected to impairment testing if there is any specific indication that they may be impaired.
Goodwill, other intangible assets with an indefinite useful life and assets not available for use are tested for impairment at least annually or more frequently if there is any specific indication that they may be impaired.
Impairment testing consists of comparing the carrying amount of an asset with its recoverable amount.
The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use. To determine an asset's value in use, the entity calculates the present value of the estimated future cash flows on the basis of business plans prepared by management, before tax, applying a pre-tax discount rate which reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset is lower than its carrying amount, a loss is recognized in the income statement. If a loss recognized for an asset other than goodwill no longer exists or is reduced, the carrying amount of the asset or cash-generating unit is increased to the new estimate of recoverable value, which may not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset. The reversal of an impairment loss is immediately recognized in the income statement.
When the recoverable amount of the individual asset cannot be estimated, it is based on the cash generating unit (CGU) or group of CGUs that the asset belongs to and/or to which it may be reasonably allocated.
CGUs are identified on the basis of the company's organizational and business structure as homogeneous aggregations that generate independent cash inflows deriving from the continuous use of the assets allocated to them.
Different accounting policies are applied to quotas or certificates held for own use in the "Industrial Portfolio" and those held for trading purposes in the "Trading Portfolio".
Surplus quotas or certificates held for own use in the "Industrial Portfolio" that are in excess of the company's requirements in relation to the obligations accruing at year end are recognized as other intangible assets at the actual cost incurred. Quotas or certificates assigned free of charge are recognized at a zero carrying amount. Given that they are assets for instant use, they are not amortized but subjected to Impairment Testing. The recoverable amount is the higher of value in use and market value. If, on the other hand, there is a deficit because the requirement exceeds the quotas or certificates in portfolio at the balance sheet date, a provision is recognized for the amount needed to meet the residual obligation, estimated on the basis of any purchase contracts, spot or forward, already signed at the balance sheet date; otherwise on the basis of market prices.
Quotas or certificates held for trading in the "Trading Portfolio" are recognized in inventories and measured at the lower of purchase cost and estimated realizable value based on market trends. Quotas or certificates assigned free of charge are recognized at a zero carrying amount. Market value is established on the basis of any sales contracts, spot or forward, already signed at the balance sheet date; otherwise on the basis of market prices.
40
Subsidiaries are those companies over which A2A S.p.A. exercises control as it "is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee", as defined by IFRS 10.
Associates are companies in which the company has a significant influence over strategic decisions, despite not having control, also considering potential voting rights, meaning voting rights deriving from convertible financial instruments; significant influence is assumed to exist when A2A S.p.A. holds, either directly or indirectly, more than 20% of voting rights exercisable at an ordinary shareholders' meeting.
A joint venture is a contractual agreement whereby two or more parties undertake an income generating activity subject to joint control.
Investments in subsidiaries, associates and joint ventures are recognized in the separate financial statements at their purchase cost less any distributions of capital or impairment losses determined through the Impairment Test.
Should the portion attributable to the company of any impairment losses for the shareholding exceed the carrying value of the investment, the value of the investment is set to zero, and the excess share of the loss is recognized among liabilities as a provision in the event the company in responsible for said liability.
The cost is restored in subsequent periods if the reasons for the impairment should cease to apply.
Construction contracts currently in progress are measured on the basis of the contractual fees that have accrued with reasonable certainty on the basis of the stage of completion, using the "cost to cost" method, so as to allocate the revenues and net result of the contract to the individual periods to which they belong in proportion to the progress being made on the project. Any difference, positive or negative, between the value of the contracts and advances received is recognized as an asset or a liability respectively.
In addition to the contractual fees, contract revenues include variants, price revisions and incentive awards to the extent that it is probable that they represent actual revenues that can be reliably determined. Ascertained losses are recognized independently of the stage of completion of contracts.
Inventories of materials and fuel are measured at the lower of weighted average cost and market value at the balance sheet date. Weighted average cost is determined for the period of reference for each inventory code. Weighted average cost includes any additional costs (such as sea freight, customers charges, insurance and lay or demurrage days in the purchase of fuel). Inventories are constantly monitored and, where necessary, obsolete stocks are written down with a charge to the income statement.
41
Financial instruments include investments (excluding investments in subsidiaries, entities under joint control and associates) held for trading (trading investments) or available for sale, and non-current receivables and loans, trade and other receivables deriving from company operations and other current financial assets such as cash and cash equivalents. The latter consist of bank and postal deposits, readily negotiable securities used as temporary investments of surplus cash and financial receivables due within three months. Financial instruments also include financial payables (bank loans and bonds), trade payables, other payables and other financial liabilities and derivatives.
Financial assets and liabilities are recognized at the time that the contractual rights and obligations forming part of the instrument arise.
Financial assets and liabilities are accounted for in accordance with IAS 39 "Financial Instruments: Recognition and Measurement".
Financial assets are initially recognized at fair value, increased by ancillary charges (purchase/ issue costs) in the case of assets and liabilities not measured at fair value through the income statement.
Measurement subsequent to initial recognition depends on which of the following categories the financial instrument falls into:
42
The following is a detailed explanation of the accounting policies applied in measuring each of the above categories after initial recognition:
Separate financial statements – Year 2015 Accounting standards and policies
or losses generated are recognized directly in equity until the assets are written- down or realized, at which stage they are reclassified to the income statement. Losses recognized in equity are in any case reversed and recognized in the income statement, even if the financial asset has not been eliminated, if there is objective evidence that the asset is impaired. Unlisted investments with a fair value that cannot be reliably measured are measured at cost less any write-downs. Write-downs are reversed when the reasons originating the loss no longer exist, with the exception of write-downs on equity instruments. This category essentially includes the other investments (i.e. not subsidiaries, jointly controlled entities or associates), except for those held for trading (trading investments);
• derivative instruments, including embedded derivatives separate from the main agreement are measured at current value (fair value) and any changes are recognized in the income statement if they do not qualify as hedging instruments. Derivatives qualify as hedging instruments when the relationship between the derivative and the hedged item is formally documented and the effectiveness of the hedge is high, this being checked periodically. When derivatives hedge the risk of fluctuation in the fair value of hedged items (fair value hedges), they are measured at fair value through the income statement; consistent with this, the hedged items are adjusted to reflect variations in the fair value associated with the hedged risk. When derivatives hedge the risk of changes in the cash flows of the instruments being hedged (cash flow hedges), the effective portion of changes in the fair value of the derivatives is recognized directly in equity, while the ineffective portion is recognized in the income statement. The amounts recognized directly in equity are then reflected in the income statement in line with the economic effects produced by the hedged item.
43
Changes in the fair value of derivatives that do not meet the conditions to qualify as hedging instruments are recognized in the income statement. In particular, changes in the fair value of derivatives which hedge interest rate risk or currency risk but do not qualify for hedge accounting are recognized in "Financial income/expense" in the income statement; on the other hand changes in the fair value of derivatives which hedge commodity risk but do not qualify for hedge accounting are recognized in "Other operating income" in the income statement.
A financial asset (or where applicable, part of a financial asset or parts of a group of similar financial assets) is derecognized when:
Separate financial statements – Year 2015 Accounting standards and policies
transferred substantially all of the risks and rewards of ownership of the financial asset, or (ii) it has neither transferred nor retained substantially all of the risks and rewards of the asset but has transferred control of the asset.
In the cases in which the company has transferred the rights to receive financial flows from an asset and has neither transferred nor retained substantially all of the risks and rewards or has not lost control of the asset, it continues to recognize the asset to the extent of its continuing involvement in the asset. When continuing involvement takes the form of guaranteeing the transferred asset the extent of the continuing involvement is the lower of the initial carrying amount of the asset and the maximum amount that the company could be required to repay. Trade receivables considered definitively unrecoverable after all necessary recovery procedures have been completed are also removed from the balance sheet.
A financial liability is removed from the balance sheet when the underlying obligation is either discharged or cancelled or when it expires.
Where there has been an exchange between an existing borrower and lender of debt instruments with substantially different terms, or there has been a substantial modification of the terms of an existing financial liability, this exchange or modification is accounted for as a cancellation of the original financial liability and the recognition of a new financial liability. The difference in carrying amounts is recognized in the income statement.
44
The fair value of financial instruments that are listed in an active market is based on market prices at the balance sheet date. The fair value of instruments that are not listed on an active market is determined by using valuation techniques. In particular, in the absence of a forward market curve the measurement at fair value of financial derivatives for electricity has been estimated internally, using models based on industry best practice.
Non-current assets held for sale, disposal groups and discontinued operations whose carrying amount will be recovered principally through sale rather than continuous use are measured at the lower of their carrying amount and fair value less costs to sell. A disposal group is a group of assets to be disposed of together as a group in a single transaction together with the liabilities directly associated with those assets that will be transferred in that transaction. Discontinued operations on the other hand consist of a significant component of the Group such as a separate major line of business or a geographical area of operations or a subsidiary acquired exclusively with a view to resale.
In accordance with IFRSs, the figures for non-current assets held for sale, disposal groups and discontinued operations are shown on two specific lines in the balance sheet: non-current assets held for sale and liabilities directly associated with non-current assets held for sale.
Non-current assets held for sale are not depreciated or amortized and are measured at the lower of carrying amount and fair value less costs to sell; any difference between carrying amount and fair value less costs to sell is recognized in the income statement as a write-down.
The net economic results arising from discontinued operations, and only discontinued operations, pending the disposal process, any gains or losses on disposal and the corresponding comparative figures for the previous year or period are recognized in a specific line of the income statement: "Net result from discontinued operations".
The employees' leaving entitlement (TFR) and pension provisions are determined using actuarial methods; the rights accrued by employees during the year are recognized in the income statement as "labour costs", whereas the figurative financial cost that the company would have to bear if it were to ask the market for a loan of the same amount as the TFR is recognized as part of the "financial balance". Actuarial gains and losses arising from changes in actuarial assumptions are recognized in profit or loss taking into account the residual average working life of the employees.
45
Following the introduction of Finance Law no. 296 of December 27, 2006, only the portion of accrued employees' leaving entitlement that remained in the company has been measured in accordance with IAS 19, as amounts are now paid over to a separate entity as they accrue (either to a supplementary pension scheme or to funds held by INPS). As a result of these payments the company no longer has any obligations in connection with the services employees may render in the future.
Guaranteed employee benefits paid on or after the termination of employment through defined benefit plans (energy discount, health care or other benefits) or long-term benefits (loyalty bonuses) are recognized in the period when the right vests.
The liability for defined benefit plans, net of any plan assets, is determined by independent actuaries on the basis of actuarial assumptions and recognized on an accrual basis in line with the work performed to obtain the benefits.
Gains and losses arising from actuarial calculations are recognized in a specific equity reserve.
Provisions for risks and charges regard costs of a determinate nature and of certain or probable existence which at year-end are uncertain in terms of timing or amount. Provisions are recognized when there is a legal or constructive present obligation arising from past events, the settlement of which is expected to result in an outflow of resources embodying economic benefits, and it is possible to make a reasonable estimate of the obligation.
Provisions are recognized at the best estimate of the amount that the company would have to pay to settle the liability or to transfer it to third parties at the balance sheet date. If the effect of discounting is significant, provisions are calculated by discounting expected future cash flows at a pre-tax discount rate that reflects the current market assessment of the time value of money. If discounting is used the increase in the provision due to the passage of time is recognized as financial expense.
If the liability relates to tangible assets (such as the dismantling and reclamation of industrial sites), the initial provision is recognized as a counter-entry to the assets to which it refers; expense is then charged to profit and loss as the asset in question is depreciated.
Treasury shares are accounted for as a deduction from equity. In particular, treasury shares are recognized as a negative equity reserve.
46
Grants, both from public entities and from third party private entities, are measured at fair value when there is the reasonable certainty that they will be received and that the Group will be able to comply with the terms and conditions for obtaining them.
Grants received to provide support for the cost of specific assets are recognized as a direct deduction from the assets concerned and credited to the income statement over the life of the depreciable asset to which they refer.
Revenue grants (given to provide the company with immediate financial support or as compensation for expenses or losses incurred in a previous accounting period) are recognized in their entirety in the income statement as soon as the conditions for recognizing the grants are met.
Revenues from sales and services are recognized to the extent that it is possible to establish their fair value on a reliable basis and it is probable that the related economic benefits will flow to the Group on the transfer of all significant risks and benefits normally deriving from ownership of the asset or on completion of the service. Depending on the type of transaction, revenues are recognized on the basis of the following specific criteria:
Revenues are stated net of returns, discounts, allowances and rebates, as well as directly related taxes.
Expenses relate to goods or services sold or consumed during the year or as a result of systematic allocation; if no future use is envisaged they are recognized directly in the income statement.
The line item "Non-recurring transactions" consists of the gains and losses arising from the measurement at fair value less costs to sell or from the sale or disposal of non- current assets (or disposal groups) classified as held for sale within the meaning of IFRS 5, the gains or losses arising on the disposal of shareholdings in unconsolidated subsidiaries and associates and other non-operating income and expense.
Financial income is recognized when interest income arises using the effective interest method, i.e. at the rate that exactly discounts expected future cash flows over the expected life of the financial instrument.
Financial expense is recognized in the income statement on an accrual basis on the basis of the effective interest.
48
Dividend income is recognized when it is established that the shareholders have a right to receive payment, and is recognized as financial income in the income statement.
Current income taxes are based on an estimate of taxable income in compliance with tax regulations in force or substantially approved at the balance sheet date, bearing in mind any exemptions or tax credits due. Account is also taken of the fact that the Group now files for tax on a consolidated basis.
Deferred tax assets and liabilities are calculated on the temporary differences between the carrying amount of assets and liabilities in the balance sheet and their tax bases, with the exception of goodwill which is not deductible for tax purposes and any differences resulting from investments in subsidiaries which are not expected to reverse in the foreseeable future. The tax rates used are those expected to apply to the period when the temporary differences reverse. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the tax benefit will be realized. The measurement of deferred tax assets takes account of the period for which business plans are available.
When transactions are recognized directly in equity, any related current or deferred tax effects are also recognized directly in equity. Deferred taxes on the undistributed profits of Group companies are only provided for if there is the real intention to distribute such profits and, in any case, if the taxation is not offset as the result of filing a Group tax return.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
Taxes are only offset when they are levied by the same tax authority, when there is the legal right of set-off and when settlement of the net balance is expected.
49
Preparing the financial statements and notes requires the use of estimates and assumptions in determining certain assets and liabilities and measuring contingent assets and liabilities. The actual results after the event could differ from such estimates.
Estimates have been used for making assessments for impairment testing, for calculating certain sales revenues, provisions for risks and charges, provisions for receivables and other provisions, depreciation and amortization and for measuring derivatives, employee benefits and taxation. The underlying estimates and assumptions are regularly reviewed and the effect of any change is immediately recognized in the income statement.
The following are the key assumptions made by management as part of the process of making these accounting estimates. The inherently critical element of such estimates comes from using assumptions or professional opinions on matters that are by their very nature uncertain. Changes in the conditions underlying the assumptions and opinions used could have a material impact on subsequent results.
The carrying amount of non-current assets (including goodwill and other intangible assets) and of assets held for sale is reviewed periodically and whenever circumstances or events require a more frequent assessment. If it is considered that the carrying amount of a group of non-current assets is impaired, the group is written down to its recoverable amount which is estimated with reference to its use or future disposal, depending on the company's latest plans. Management is of the opinion that the estimates of such recoverable amounts are reasonable, although possible changes in the factors underlying the estimates on which these recoverable amounts have been calculated could produce different measurements. For further details on the way in which impairment testing was carried out and the results of such testing, reference is made to the specific paragraph.
Revenues from sales to retail and wholesale customers are recognized on an accrual basis. Revenues from sales of electricity and gas to customers are recognized when the supply takes place, based on periodic meter readings; they also include an estimate of the usage of electricity and gas from the date of the last reading to the balance sheet date. Revenues from the date of the last reading to the balance sheet date are based on estimates of customers' daily usage, according to their historical profile, and are adjusted to reflect weather conditions or other factors that may affect the usage being estimated.
In certain circumstances it is not easy to identify whether a legal or constructive present obligation exists. The directors assess these situations case by case, together with an estimate of the economic resources required to settle the obligation. Estimating such provisions is the result of a complex process that involves subjective judgements on the part of company management. When the directors are of the opinion that it is only possible that a liability could arise, the risks are disclosed in the section on commitments and contingent liabilities without making any provision.
The provision liabilities for landfills represents the amount set aside to meet the costs which will be incurred for the management of the period of closure and post-closure of landfills currently in use. The future outlays, calculated for each landfill by a specific appraisal, were discounted in accordance with the provisions of IAS 37.
The provision for bad debts reflects the estimated losses in the company's receivables portfolio. Provisions have been made to cover specific cases of insolvency as well as estimated losses expected on the basis of past experience with balances of similar credit risk
Although the provision is considered adequate, the use of different assumptions or changes in prevailing economic conditions, even more so in this period of recession, could give rise to adjustments to the bad debts provision.
Depreciation and amortization charges are a significant cost for the company. Non-current assets are depreciated or amortized on a straight-line basis over the useful lives of the assets. The useful life of the company's non-current assets is established by the directors, with the assistance of expert appraisers, when they are purchased. The company periodically reviews technological and sector changes, dismantling/closure charges and the recovery amount of assets to update their residual useful lives. This periodic update could lead to a change in the period of depreciation or amortization and hence also in the depreciation or amortization charge in future years.
51
The derivatives used are measured at fair value based on the forward market curve at the balance sheet date, if the underlying of the derivative is traded on markets that provide official, liquid forward prices. If the market does not provide forward prices, forecast price curves are used based on simulation models developed by Group companies internally. However, the actual results of derivatives could differ from the measurements made.
The serious turbulence on markets for the energy commodities traded by the company, as well the fluctuations in exchange and interest rates, could lead to greater volatility in cash flows and in expected results.
The calculations of expenses and the related liabilities are based on actuarial assumptions. The full effects of any changes in these actuarial assumptions are recognized in a specific equity reserve.
52
Accounting for business combinations entails allocating the difference between purchase cost and net carrying amount to the assets and liabilities of the acquired business. For the majority of assets and liabilities this difference is allocated by recognizing the assets and liabilities at fair value. If positive, the unallocated portion is recognized as goodwill. If negative, it is recognized in the income statement. The A2A S.p.A. bases its allocations on available information and, for the more significant business combinations, on external appraisals.
The uncertainties that exist regarding the way of applying certain tax regulations have led the Group to taking an interpretative stance when providing for current taxes in the financial statements; such interpretations could be overturned by official clarifications on the part of the tax authorities.
Deferred tax assets are accounted for on the basis of the taxable profit expected to be available in future years. Assessing the expected taxable profit for the purpose of accounting for deferred taxation depends on factors that can vary over time, and may lead to significant effects on the measurement of deferred tax assets.
The investment in SEASM S.r.l., held 67% by A2A S.p.A., has been reclassified, as it is not a discontinued operation in accordance with IFRS 5, to "Non-current assets held for sale", following management's decision to sell the investment as discussed in further detail in note 12 "Non-current assets held for sale".
Notes to the balance sheet
| Thousands of euro | Balance Changes during the year |
Balance | |||||
|---|---|---|---|---|---|---|---|
| at 12 31 2014 |
Invest. | Other changes |
Disposals net of provision |
Deprec. and write downs |
Total changes |
at 12 31 2015 |
|
| Land | 29,635 | 39 | (2) | 37 | 29,672 | ||
| Buildings | 275,293 | 704 | 1,177 | (758) | (13,088) | (11,965) | 263,328 |
| Plant and machinery | 947,228 | 475 | 24,726 | (62,474) | (37,273) | 909,955 | |
| Industrial and commercial equipment | 1,549 | 161 | (337) | (176) | 1,373 | ||
| Other assets | 2,349 | 362 | 160 | (2) | (585) | (65) | 2,284 |
| Construction in progress and advances | 26,669 | 31,377 | (22,800) | 8,577 | 35,246 | ||
| Leasehold improvements | 20,059 | 6,454 | (1,677) | 4,777 | 24,836 | ||
| Total tangible assets | 1,302,782 | 39,533 | 3,302 | (762) | (78,161) | (36,088) | 1,266,694 |
| of which: | |||||||
| Historical cost | 3,414,001 | 39,533 | 3,302 | (3,041) | 39,794 | 3,453,795 | |
| Accumulated depreciation | (1,972,158) | 2,279 | (74,161) | (71,882) (2,044,040) | |||
| Write-downs | (139,061) | (4,000) | (4,000) | (143,061) |
As at December 31, 2015, "Tangible assets" amounted to 1,266,694 thousand euro (1,302,782 thousand euro as of the previous fiscal year).
"Tangible assets" presented a net decrease of 36,088 thousand euro resulting from the following:
in structural production overcapacity. Further details of the work carried out for the impairment test can be found in the Consolidated Annual Report (note 2);
• depreciation for the year for 74,161 thousand euro.
For a detailed analysis of changes in the year, reference shall be made to annex "1 Statement of changes in tangible assets".
Investments made during the year refer to:
55
"Tangible assets" include "Construction in progress and advances" for 35,246 thousand euro (26,669 thousand euro at December 31, 2014), presenting an increase of 8,577 thousand euro resulting from the counter effects of the following items:
including: 1,170 thousand euro for the completion of the works mainly related to the buildings of the office of Via Lamarmora in Brescia and the plants in Cassano D'Adda, Monfalcone and Grosio; 21,437 thousand euro for works related to the production plants (of which 9,661 thousand euro for the hydroelectric plants of Calabria, 6,852 thousand euro for the plant in Monfalcone, 3,040 thousand euro for the plants in Premadio, 1,698 thousand euro for the plants in Valtellina and 186 thousand euro for the plant in Cassano d'Adda); 156 thousand for other assets;
• the decrease of 37 thousand euro due to other changes in the accounts.
| Thousands of euro | Balance | Changes during the year | |||||
|---|---|---|---|---|---|---|---|
| at 12 31 2014 |
Invest. | Other changes |
Write downs |
Amort. | Total changes |
at 12 31 2015 |
|
| Industrial patents and intellectual property rights | 5,555 | 1,940 | (38) | (3,318) | (1,416) | 4,139 | |
| Concessions, licences, trademarks and similar rights | 9,710 | 2,247 | 868 | (3,296) | (181) | 9,529 | |
| Goodwill | 38,435 | (955) | (955) | 37,480 | |||
| Assets in progress | 473 | 1,722 | (872) | 850 | 1,323 | ||
| Other intangible assets | 184 | (50) | (50) | 134 | |||
| Total intangible assets | 54,357 | 5,909 | (42) | (955) | (6,664) | (1,752) | 52,605 |
56
At the reporting date, "Intangible assets" amounted to 52,605 thousand euro (54,357 thousand euro as at December 31, 2014). In applying IFRIC 12, from 2010 intangible assets also include assets in concession.
The net decrease of 1,752 thousand euro was the result of the combined effect of the following components:
More specifically, investments made during the year refer to the following:
Included in the total balance of "Intangible assets" are "Assets in progress" for 1,323 thousand euro (473 thousand euro as at December 31, 2014), resulting in an increase of 850 thousand euro due to the combined effect of the following items:
For more in-depth information, refer to annex "2. Statement of changes in intangible assets".
| Thousands of euro | Balance | Changes during the year | Balance | |||||
|---|---|---|---|---|---|---|---|---|
| at 12 31 2014 |
Invest. | Other changes |
Reclassifi cations |
Disp./ Write downs |
Amort. | Total changes |
at 12 31 2015 |
|
| Goodwill | 38,435 | - | - | - | (955) | - | (955) | 37,480 |
| Total goodwill | 38,435 | - | - | - | (955) | - | (955) | 37,480 |
Under IAS 36 goodwill, an intangible asset with an indefinite useful life, is not amortized systematically but tested at least once a year ("Impairment Test"). As goodwill neither generates independent cash flow nor can it be sold separately, IAS 36 calls for a secondary audit of its recoverable amount, determining cash flows generated by a set of assets that constitute the business to which it belongs, i.e. the Cash Generating Unit (CGU).
57
The value entered in the separate financial statements is a portion of the amount recorded within the consolidated financial statements, totalling 37,480 thousand euro as a result of extraordinary transactions with third parties. Thus, the method followed to identify the CGUs, involving the allocation of goodwill and the calculation of the recoverable amounts, is consistent with that adopted for the consolidated financial statements, reference to which is made for further details (note 2).
As regards the goodwill balance of 955 thousand euro resulting from extraordinary transactions made with Group entities, Impairment Tests have determined losses in value as at December 31, 2015.
| Thousands of euro | Balance at 12 31 2014 |
Changes during the year |
Balance at 12 31 2015 |
in the NFP | of which included |
|---|---|---|---|---|---|
| 12 31 2014 | 12 31 2015 | ||||
| Shareholdings in subsidiaries | 4,025,496 | (186,169) | 3,839,327 | - | - |
| Shareholdings in affiliates | 56,149 | (4,549) | 51,600 | - | - |
| Other non-current financial assets | 406,342 | (980) | 405,362 | 402,171 | 401,554 |
| Total shareholdings and other non-current financial assets | 4,487,987 | (191,698) 4,296,289 | 402,171 | 401,554 |
58
"Shareholdings in subsidiaries" amounted to 3,839,327 thousand euro (4,025,496 thousand euro as at December 31, 2014).
| Shareholdings in subsidiaries - Thousands of euro | Total |
|---|---|
| Balance at December 31, 2014 | 4,025,496 |
| Changes during the year: | |
| - effect of non-recurring transactions | - |
| - acquisitions and capital increases | - |
| - sales and decreases | (4,798) |
| - revaluations | - |
| - write-downs from Impairment Test | (214,000) |
| - other changes | 33,098 |
| - reclassifications | (469) |
| Total changes for the year | (186,169) |
| Balance at December 31, 2015 | 3,839,327 |
As at December 31, 2015, the value of shareholdings in subsidiary companies presented a decrease of 186,169 thousand euro with respect to the close of the previous fiscal year and is attributed as follows:
• for 469 thousand euro to the reclassification in accordance with IFRS 5, of the investment in SEASM S.r.l. held 67% by A2A S.p.A., under "Non-current assets held for sale" following management's decision to divest the investment.
Further information regarding movements involving shareholdings in subsidiary companies may be found within annexes 3/a and 4/a to compare their book value and corresponding portions of net assets.
"Shareholdings in affiliates and joint ventures" amounted to 51,600 thousand euro (56,149 thousand euro as at December 31, 2014).
| Shareholdings in affiliates and joint ventures - Thousands of euro | Total |
|---|---|
| Balance at December 31, 2014 | 56,149 |
| Changes during the year: | |
| - effect of non-recurring transactions | - |
| - acquisitions and capital increases | 2,451 |
| - sales and decreases | - |
| - revaluations | - |
| - write-downs from Impairment Test | (7,000) |
| - reclassifications | - |
| Total changes for the year | (4,549) |
| Balance at December 31, 2015 | 51,600 |
Transactions carried out during the fiscal year are detailed as follows:
As at December 31, 2015, the value of shareholdings in affiliates and joint ventures presented a decrease of 4,549 thousand euro with respect to the close of the previous fiscal year and is attributable to the effect of the following operations of opposite sign:
Further details regarding shareholdings in affiliates may be found in annexes 3/b and 4/b.
The recoverable value of shareholdings has been measured based on the present value of the corresponding expected net cash flows attributable to the shareholdings of A2A S.p.A. The cash flows used are in line with those used for the Impairment Test of the CGU for the consolidated financial statements. The same applies to the methodological approach and discount rates adopted further detailed in the Consolidated Annual Financial Report (note 2).
Shown below are the carrying values of the individual shareholdings subject to Impairment Test by an external expert, along with a specification of the type and discount rate applied. It shall be recalled that the Impairment Test is carried out for all investments which have a carrying value higher than the corresponding fraction of shareholders' equity of competence and/or in the presence of specific impairment indicators.
| Shareholdings Millions of euro |
Pre-impairment test values at 12 31 2015 |
Recoverable amount (value in use) at 12 31 2015 |
Write-down | WACC | Growth rate g |
|---|---|---|---|---|---|
| Edipower S.p.A. | 854.6 | 737.6 | (117.0) | 9.0% | 1.0% |
| EPCG | 376.0 | 279.0 | (97.0) | 10.3% | 1.0% |
| Rudnik Uglja Ad Pljevlja | 19.1 | 12.1 | (7.0) | 12.7% | 1.0% |
| Shareholdings Millions of euro |
Pre-impairment test values at 12 31 2014 |
Recoverable amount (value in use) at 12 31 2014 |
Write-down | WACC | Growth rate g |
|---|---|---|---|---|---|
| Ergosud S.p.A. | 50.3 | - | (50.3) | 6.6% | from 0.0% to 1.0% |
| Edipower S.p.A. | 854.6 | 857.8 | - | 6.6% | from 0.0% to 1.0% |
The other shareholdings did not require any write-downs.
| Shareholdings Millions of euro |
Pre-impairment test values at 12 31 2015 |
Recoverable amount (value in use) at 12 31 2015 |
WACC | Growth rate g |
|---|---|---|---|---|
| Aspem S.p.A. | 26.5 | 49.0 | 7.3% - 8.3% - 6.2%(*) | 1.0% |
| A2A Ciclo Idrico S.p.A. | 167.0 | 295.0 | 6.3% | 1.0% |
| Ergosud S.p.A. | - | - | 9.0% | 1.0% |
(*) The values indicated refer respectively to the three sectors in which the company operates (gas-environment-water networks).
Notes to the balance sheet
| Shareholdings Millions of euro |
Pre-impairment test values at 12 31 2014 |
Recoverable amount (value in use) at 12 31 2014 |
WACC | Growth rate g |
|---|---|---|---|---|
| Aspem S.p.A. | 26.5 | 35.0 | 4.7% - 5.5% - 7.1% (*) | from 0.5% to 1.0% |
| A2A Ciclo Idrico S.p.A. | 167.0 | 238.0 | 7.1% | 2.0% |
| EPCG | 376.0 | 402.0 | 8.7% | from 1.0% to 3.0% |
| Rudnik Uglja Ad Pljevlja | 19.1 | 20.0 | 8.7% | from 1.0% to 3.0% |
(*) The values indicated refer respectively to the three sectors in which the company operates (gas-environment-water networks).
"Other non-current financial assets" amounted to 405,362 thousand euro (406,342 thousand euro as at December 31, 2014), of which:
61
• financial assets held for sale amounted to 3,808 thousand euro (4,171 thousand euro at December 31, 2014) and decreased by 363 thousand euro due to the write-downs in the year under review.
| Thousands of euro | Balance at 12 31 2014 |
Changes during the year |
Balance at 12 31 2015 |
|---|---|---|---|
| Deferred tax assets | 34,808 | 13,453 | 48,261 |
This item, which includes the net effect of deferred tax liabilities and deferred tax assets as per corporate income tax and regional tax as well as provisions made solely for tax purposes, resulted in a net asset of 48,261 thousand euro. The recoverability of "Deferred tax assets" recorded in the financial statements is considered likely, as the future plans envisage taxable income sufficient to use the deferred tax assets.
Deferred tax assets have been determined, with regard to IRAP, using the tax rate in force. Regarding IRES, following the provision of art. 1, paragraph 61 of Law 208/2015, which ordered the reduction of 3.5 percentage points of the IRES rate from January 1, 2017, effective for tax periods following the current year at December 31, 2016, in these financial statements, the amount of deferred tax assets and liabilities has been adjusted to the new rate (24%).
At December 31, 2015, the amounts relative to deferred tax assets/deferred tax liabilities have been expressed as net ("Offsetting") in application of IAS 12.
This item is detailed in the table below:
| Thousands of euro | Balance at 12 31 2015 |
Balance at 12 31 2014 |
|---|---|---|
| Value differences of tangible assets | 81,922 | 95,450 |
| Adoption of the finance lease standard (IAS 17) | 5,592 | 6,235 |
| Value differences of intangible assets | 5,633 | 6,455 |
| Employee leaving entitlement (TFR) | 187 | 509 |
| Amounts to be paid in 2016 | 1,571 | - |
| Other deferred tax liabilities | 3,976 | 5,574 |
| Deferred tax liabilities (A) | 98,881 | 114,223 |
| Tax loss carryforwards | - | - |
| Taxed risk provisions | 62,196 | 48,885 |
| Amortization, depreciation and write-downs | 31,808 | 37,375 |
| Adoption of the financial instrument standard (IAS 39) | 6,889 | 412 |
| Bad debts provision | 1,816 | 1,889 |
| Grants | 2,654 | 2,908 |
| Goodwill | 31,039 | 39,696 |
| Amounts to be paid in 2016 | 5,259 | - |
| Other deferred tax assets | 5,481 | 17,866 |
| Deferred tax assets (B) | 147,142 | 149,031 |
| Net effect deferred tax assets (B-A) | 48,261 | 34,808 |
Company forecasts confirm the recoverability of receivables through the future realization of adequate positive results.
For further details and information, please refer to the item "Income/expenses for income tax" on the income statement.
| Thousands of euro | Balance at 12 31 2014 |
Changes during the |
Balance at 12 31 2015 |
in the NFP | of which included |
|---|---|---|---|---|---|
| year | 12 31 2014 | 12 31 2015 | |||
| Non-current derivatives | 34,476 | (34,476) | - | 34,476 | - |
| Other non-current assets | 452 | 1 | 453 | - | - |
| Total other non-current assets | 34,928 | (34,475) | 453 | 34,476 | - |
"Other non-current assets" amounted to 453 thousand euro (34,928 thousand euro as at December 31, 2014), presenting a decrease of 34,475 thousand euro, and consist of the following:
| Thousands of euro | Balance at 12 31 2014 |
Changes during the year |
Balance at 12 31 2015 |
|---|---|---|---|
| Inventories | 5,527 | (750) | 4,777 |
As at December 31, 2015, inventories amounted to 4,777 thousand euro (5,527 thousand euro as at December 31, 2014), resulting in a negative change of 750 thousand euro. This items includes inventories of materials amounting to 4,732 thousand euro, net of relative provisions for obsolescence equal to 4,290 thousand euro (3,605 thousand euro at December 31, 2014), as well as fuels for 45 thousand euro.
64
| Thousands of euro | Balance at 12 31 2014 |
Changes during the year |
Balance at 12 31 2015 |
|---|---|---|---|
| Trade receivables | 224,134 | (73,439) | 150,695 |
| Bad debt provision | (4,675) | 928 | (3,747) |
| Total trade receivables | 219,459 | (72,511) | 146,948 |
At December 31, 2015, trade receivables amounted to 146,948 thousand euro (219,459 thousand euro at December 31, 2014) and decreased by 72,511 thousand euro, related to:
As of the reporting date, the bad debt provision amounted to 3,747 thousand euro, a net decrease of 928 thousand euro. This provision is considered adequate to cover the risks to which it relates.
The changes in the provisions to adjust the value of receivables for the sale of electricity and the provision of services are detailed in the following table:
| Thousands of euro | Balance at 12 31 2014 |
Provisions | Utilizations | Other changes |
Balance at 12 31 2015 |
|---|---|---|---|---|---|
| Bad debts provision | 4,675 | (188) | (740) | - | 3,747 |
| Thousands of euro | 12 31 2014 | 12 31 2015 |
|---|---|---|
| Trade receivables of which: | 219,459 | 146,948 |
| Current | 48,304 | 28,753 |
| Past due of which: | 11,701 | 11,748 |
| - Past due up to 30 days | 1,091 | 618 |
| - Past due from 31 to 180 days | 457 | 5 |
| - Past due from 181 to 365 days | 2,652 | 3,068 |
| - Past due over 365 days | 7,501 | 8,057 |
| Invoices to be issued | 164,129 | 110,194 |
| Bad debts provision | (4,675) | (3,747) |
| Thousands of euro | Balance at Changes 12 31 2014 during the |
Balance at 12 31 2015 |
of which included in the NFP |
||
|---|---|---|---|---|---|
| year | 12 31 2014 | 12 31 2015 | |||
| Current derivatives | - | 16,096 | 16,096 | - | 16,096 |
| Other current assets of which: | 41,864 | 46,744 | 88,608 | - | - |
| - advances to suppliers | 281 | (9) | 272 | - | - |
| - receivables from employees | 285 | 23 | 308 | - | - |
| - tax receivables | 1,234 | 740 | 1,974 | - | - |
| - receivables related to future years | 1,460 | 366 | 1,826 | - | - |
| - receivables from subsidiaries for tax consolidation | 32,142 | 46,315 | 78,457 | - | - |
| - receivables from social security entities | 1,006 | (25) | 981 | - | - |
| - receivables for water derivation fees | 1,617 | (637) | 980 | - | - |
| - Stamp Office | 162 | (32) | 130 | - | - |
| - other sundry receivables | 3,677 | 3 | 3,680 | - | - |
| Total other current assets | 41,864 | 62,840 | 104,704 | - | 16,096 |
"Other current assets" presented a balance of 104,704 thousand euro (41,864 thousand euro as at December 31, 2014), an increase of 62,840 thousand euro with respect to the previous year. This item refers to the current financial hedging derivatives for 16,096 thousand euro, the increase of which is related to the reclassification from "Other non-current assets" of assets for "Derivatives" for financial hedging, mainly related to Interest Rate Swap (IRS) contracts to hedge the risk of adverse change in interest rates on bonds due within one year, receivables for tax consolidation to subsidiaries, for 78,457 thousand euro, to VAT receivables and other receivables from the tax authorities, for 1,974 thousand euro, to advances to suppliers for 272 thousand euro and other receivables for 7,905 thousand euro.
| Thousands of euro | Balance at 12 31 2014 |
Changes during the |
Balance at 12 31 2015 |
of which included in the NFP |
|
|---|---|---|---|---|---|
| year | 12 31 2014 | 12 31 2015 | |||
| Financial assets from related parties | 730,269 | (124,902) | 605,367 | 730,269 | 605,367 |
| Total financial assets from related parties | 730,269 | (124,902) | 605,367 | 730,269 | 605,367 |
"Current financial assets" amounted to 605,367 thousand euro and refer to:
The decrease amounted to 124,902 thousand euro and mainly refers to lower receivables accrued on the current account held with the subsidiaries.
66
| Thousands of euro | Balance at 12 31 2014 |
Changes during the year |
Balance at 12 31 2015 |
|---|---|---|---|
| Current tax assets | 51,955 | (12,968) | 38,987 |
At December 31, 2015, this item amounted to 38,987 thousand euro (51,955 thousand euro at December 31, 2014) and refers to IRAP receivables (12,674 thousand euro), as well as to IRES receivables (19,627 thousand euro), relating to amounts requested for reimbursement on payments of previous years, and the remaining credit for Robin Tax (6,686 thousand euro) paid in previous years and that will be recovered in subsequent years.
| Thousands of euro | Balance at 12 31 2014 |
Changes during the |
Balance at 12 31 2015 |
in the NFP | of which included |
|---|---|---|---|---|---|
| year | 12 31 2014 | 12 31 2015 | |||
| Cash and cash equivalents | 410,501 | 176,549 | 587,050 | 410,501 | 587,050 |
"Cash and cash equivalents" at December 31, 2015 amounted to 587,050 thousand euro (410,501 thousand euro at December 31, 2014), with an increase of 176,549 thousand euro compared with the end of the previous year. Bank deposits include accrued interest not yet credited by the end of the year.
| Thousands of euro | Balance at 12 31 2014 |
Changes during the year |
Balance at 12 31 2015 |
|---|---|---|---|
| Non-current assets held for sale | - | 469 | 469 |
The item includes the reclassification of the investment held by A2A S.p.A. in SEASM S.r.l., equal to 67% of the company's share capital, following management's decision to divest said investment. The company SEASM S.r.l. holds and manages a 380 kV electrical substation called "Voghera" and intended to connect to the national electricity transmission network (RTN) the thermoelectric plant of Voghera Energia.
Equity, which as of December 31, 2015, amounted to 2,161,592 thousand euro (2,324,748 thousand euro as of December 31, 2014), is set forth within the following table:
| Thousands of euro | Balance at 12 31 2014 |
Changes during the year |
Balance at 12 31 2015 |
|---|---|---|---|
| Equity | |||
| Share capital | 1,629,111 | - | 1,629,111 |
| (Treasury shares) | (60,891) | - | (60,891) |
| Reserves | 748,270 | (81,411) | 666,859 |
| Net result for the year | 8,258 | (81,745) | (73,487) |
| Total equity | 2,324,748 | (163,156) | 2,161,592 |
At December 31, 2015, the "Share capital" amounted to 1,629,111 thousand euro and is comprised of 3,132,905,277 ordinary shares with a unitary value of 0.52 euro each.
At December 31, 2015, the "Treasury shares" amounted to 60,891 thousand euro (unchanged with respect to December 31, 2014) and consist of 26,917,609 own shares held by the company. Notes to the balance sheet
| Thousands of euro | Balance at 12 31 2014 |
Changes during the year |
Balance at 12 31 2015 |
|---|---|---|---|
| Reserves | 748,270 | (81,411) | 666,859 |
| of which: | |||
| Changes in the fair value of cash flow hedge derivatives | (50,651) | 23,443 | (27,208) |
| Tax effect | 11,582 | (5,052) | 6,530 |
| Cash flow hedge reserves | (39,069) | 18,391 | (20,678) |
| Change in the IAS 19 Revised reserve - Employee benefits | (35,665) | 6,086 | (29,579) |
| Tax effect | 9,056 | (1,545) | 7,511 |
| IAS 19 Revised reserve - Employee benefits | (26,609) | 4,541 | (22,068) |
| Change in the Available-for-sale reserves | (608) | - | (608) |
| Tax effect | - | 146 | 146 |
| Change in Available for sale | (608) | 146 | (462) |
"Reserves", which at December 31, 2015 amounted to 666,859 thousand euro (748,270 thousand euro at December 31, 2014), decreased by 81,411 thousand euro mainly due to the distribution of the dividend.
This item includes the following unavailable reserves:
It is noted that in 2015, dividends amounting to 112,747 thousand euro corresponding to 0.0363 euro per share were distributed, as approved by the shareholders' meeting on June 11, 2015.
This item equals a loss of 73,487 thousand euro and includes the net result for the reporting year.
It shall be noted that the total value adjustments and provisions made as per article 109, paragraph 4 lett. B of the Consolidated Tax Act (TUIR) amounted to 141,956 thousand euro, net of the deferred tax provision relating to amounts deducted.
70
| Thousands of euro | Balance at Changes 12 31 2014 during the |
Balance at 12 31 2015 |
of which included in the NFP |
||
|---|---|---|---|---|---|
| year | 12 31 2014 | 12 31 2015 | |||
| Non-convertible bonds | 2,936,757 | (505,804) | 2,430,953 | 2,936,757 | 2,430,953 |
| Payables to banks | 819,141 | (276,164) | 542,977 | 819,141 | 542,977 |
| Total non-current financial liabilities | 3,755,898 | (781,968) 2,973,930 | 3,755,898 | 2,973,930 |
"Non-current financial liabilities" amounted to 2,973,930 thousand euro (3,755,898 thousand euro at December 31, 2014), reflecting a decrease of 781,968 thousand euro.
"Non-convertible bonds" regard the following bonds, accounted for at amortized cost:
The decrease in the non-current component of "Non-convertible bonds" equal to 505,804 thousand euro compared to December 31, 2014 is mainly due to the reclassification of the bond maturing 2016 under "Current financial liabilities" in part offset by the effects of the Liability Management operation in February 2015 and the resulting changes in amortized cost.
Non-current "Payables to banks" amounted to 542,977 thousand euro, a decrease of 276,164 thousand euro mainly related to the voluntary early repayment of a 200,000 thousand euro loan.
At the end of the fiscal year, "Employee Benefits" amounted to 125,997 thousand euro (137,617 thousand euro as of December 31, 2014) with changes as follows during the period:
| Thousands of euro | Balance at 12 31 2014 |
Provisions | Utilizations | Other changes |
Balance at 12 31 2015 |
|---|---|---|---|---|---|
| Employee leaving entitlement (TFR) | 33,804 | 4,739 | (2,800) | (5,183) | 30,560 |
| Employee benefits | 103,813 | - | (4,999) | (3,377) | 95,437 |
| Total employee benefits | 137,617 | 4,739 | (7,799) | (8,560) | 125,997 |
71
Technical valuations were carried out on the basis of the following assumptions:
| 2015 | 2014 | |
|---|---|---|
| Discount rate | from 0.24% to 2.03% | from 0.29% to 1.49% |
| Annual inflation rate | from 1.5% to 2.0% | from 0.6% to 2.0% |
| Annual salary increase rate | 1.0% | 1.0% |
| Annual TFR increase rate | from 2.6% to 3.0% | from 1.9% to 3.0% |
| Average annual increase rate of supplementary pensions | 1.5% | 1.5% |
| Annual turnover frequencies | from 2.0% to 5.0% | from 2.0% to 5.0% |
| Annual TFR advance frequencies | from 2.0% to 2.5% | from 2.0% to 2.5% |
It is noted that:
the curve relative to the inflation rate under the current economic situation, which has particular volatility of the majority of economic indicators, was changed as shown in the table. This hypothesis was derived from the "Document of Economics and Finance 2015 - Update September 2015 Sect. II-Tab II.2" issued by the MEF and "The medium/long-term trends in the pension and social-health system - Report no. 16 "published by the State General Accounting Office;
the annual rate of salary increase applied exclusively to companies with fewer than 50 employees on average in 2006 was determined on the basis of the reference data communicated by Group companies;
72
As required by IAS 19, the sensitivity for post-employment employee benefit obligations is outlined below:
| Thousands of euro | Turnover rate +1% |
Turnover rate | -1% | Inflation rate +0.25% |
Inflation rate -0.25% |
Actualization | rate +0.25% |
Actualization rate -0.25% |
|---|---|---|---|---|---|---|---|---|
| Employee leaving entitlement (TFR) | 30,406 | 30,671 | 30,868 | 30,201 | 30,003 | 31,077 | ||
| Thousands of euro | Actualization rate +0.25% |
Actualization rate -0.25% |
Mortality table | increased by 10% |
Mortality table decreased by 10% |
|||
| Premungas | 27,225 | 28,208 | 26,477 | 29,097 | ||||
| Electricity and gas discount | 59,470 | 62,809 | 59,614 | 62,770 | ||||
Additional months 3,565 3,781 n.s. n.s.
| Thousands of euro | Balance at 12 31 2014 |
Provisions net of releases |
Utilizations | Other changes |
Balance at 12 31 2015 |
|---|---|---|---|---|---|
| Decommissioning provisions | 22,812 | - | (782) | 3,414 | 25,444 |
| Tax provisions | 5,044 | (553) | (1,822) | (657) | 2,012 |
| Personnel lawsuits and disputes provisions | 23,845 | 44,032 | (617) | (48) | 67,212 |
| Other risk provisions | 112,793 | 3,016 | (66,585) | 421 | 49,645 |
| Provisions for risks, charges and liabilities for landfills |
164,494 | 46,495 | (69,806) | 3,130 | 144,313 |
"Decommissioning provisions", which amounted to 25,444 thousand euro, include charges for costs of dismantling and recovery of production sites related to thermoelectric plants. The changes in the year were related to utilizations for 782 thousand euro, to cover the expenses incurred during the year; other changes for 3,414 thousand euro, mainly refer to the effects of the addendum to the expert reports to support the decommissioning provision, as further specified in note 1.
"Tax Provisions", which amounted to 2,012 thousand, refer to provisions for pending or potential litigation with the tax authorities or territorial entities for levies and direct and indirect taxes. The changes in the year were related to releases for 553 thousand euro for the ICI/IMU (property tax) dispute with some territorial entities. Utilizations, for 1,822 thousand euro, refer to disbursements for the year resulting from the closure of some disputes in which the company was unsuccessful. Other changes, negative for 657 thousand euro, refer to the reclassification under "Other current liabilities" of the portions of the provision that will be used in the early months of the following year for which payment notices have already been received.
The "Personnel lawsuits and disputes provisions" amounted to 67,212 thousand euro and mainly refer to lawsuits pending with social security institutions for 15,221 thousand euro, for contributions not paid, to lawsuits with third parties, for 51,889 thousand euro and with employees, for 102 thousand euro, to cover the liabilities that could arise from litigations in progress. Provisions of the year, for 44,032 thousand euro, mainly refer to the provision subsequent to the filing of the Award regarding compensation for damages in favour of Pessina Costruzioni in relation to the dispute for Asm Novara S.p.A.. For further information, reference shall be made to the specific paragraph in "Other information – Asm Novara S.p.A. dispute".
The "Other risk provisions", amounting to 49,645 thousand euro, mainly refer to provisions relating to public water derivation fees, for 9,268 thousand euro; to the mobility provision related to the charge resulting from the corporate restructuring plan related to future Separate financial statements – Year 2015 Notes to the balance sheet
outgoing employees for mobility, for 2,315 thousand euro; to the provision related to future impairment losses of certain investments for 33,351 thousand euro; other risks provisions for 4,711 thousand euro. Net provisions for the year amounted to 3,016 thousand euro and refer to allocations to provisions relating to public water derivation fees. Utilizations, amounting to 66,585 thousand euro, mainly refer to the absorption of losses for the year 2014 of the subsidiary A2A Trading S.r.l., as well as disbursements for the year for public water diversion fees and employee mobility provision.
| Thousands of euro | Balance at 12 31 2014 |
Changes during the |
Balance at 12 31 2015 |
of which included in the NFP |
|
|---|---|---|---|---|---|
| year | 12 31 2014 | 12 31 2015 | |||
| Other non-current liabilities | 24 | (1) | 23 | - | - |
| Non-current derivatives | 82,058 | (54,850) | 27,208 | 68,326 | 27,208 |
| Total other non-current liabilities | 82,082 | (54,851) | 27,231 | 68,326 | 27,208 |
"Other non-current liabilities" amounted to 27,231 thousand euro and mainly refer to the fair value measurement of derivatives to hedge interest rate risk on variable rate mortgages and bonds.
The decrease of 54,851 thousand euro is due:
| Thousands of euro | Balance at Changes 12 31 2014 during the |
Balance at 12 31 2015 |
of which included in the NFP |
||
|---|---|---|---|---|---|
| year | 12 31 2014 | 12 31 2015 | |||
| Advances | 207 | 112 | 319 | - | - |
| Payables to suppliers | 76,173 | 1,909 | 78,082 | - | - |
| Trade payables to related parties: | 46,569 | 37,043 | 83,612 | - | - |
| - subsidiaries | 46,137 | 36,939 | 83,076 | - | - |
| - parent companies | 20 | 436 | 456 | - | - |
| - affiliates | 412 | (332) | 80 | - | - |
| Total trade payables | 122,949 | 39,064 | 162,013 | - | - |
| Payables to social security institutions | 13,734 | 222 | 13,956 | - | - |
| Current derivatives | - | 7,474 | 7,474 | - | 7,474 |
| Other payables: | 165,691 | (71,982) | 93,709 | - | - |
| - payables for tax consolidation | 65,542 | (27,794) | 37,748 | - | - |
| - payables for tax transparency | 8,438 | - | 8,438 | - | - |
| - payables to personnel | 22,600 | (4,724) | 17,876 | - | - |
| - payables to CCSE | 3 | - | 3 | - | - |
| - tax payables | 37,319 | (24,698) | 12,621 | - | - |
| - payables for liabilities of competence of the following year |
1,957 | 1 | 1,958 | - | - |
| - payables to Dolomiti Energia S.p.A. for trade of Edipower S.p.A. shares |
12,000 | (12,000) | - | - | - |
| - payables for collections to be allocated | 5,101 | (1,621) | 3,480 | - | - |
| - payables to insurance companies | 1,437 | (37) | 1,400 | - | - |
| - payables to customers for work to be performed | 3,871 | (735) | 3,136 | - | - |
| - payables for water derivation fees | 106 | 10 | 116 | - | - |
| - payables to waterway municipalities | 1,147 | 103 | 1,250 | - | - |
| - others | 6,170 | (487) | 5,683 | - | - |
| Total other current liabilities | 179,425 | (64,286) | 115,139 | - | 7,474 |
| Total trade payables and other current liabilities | 302,374 | (25,222) | 277,152 | - | 7,474 |
"Trade payable and other current liabilities" amounted to 277,152 thousand euro (302,374 thousand euro at December 31, 2014), representing an overall decrease of 25,222 thousand euro. This line includes the effects of application of the tax transparency agreement stipulated with an affiliate company.
| Thousands of euro | Balance at 12 31 2014 |
Changes during the |
Balance at 12 31 2015 |
of which included in the NFP |
|
|---|---|---|---|---|---|
| year | 12 31 2014 | 12 31 2015 | |||
| Non-convertible bonds | 51,764 | 519,822 | 571,586 | 51,764 | 571,586 |
| Payables to banks | 77,651 | 18,533 | 96,184 | 77,651 | 96,184 |
| Financial payables to related parties | 477,809 | 254,934 | 732,743 | 477,809 | 732,743 |
| Total current financial liabilities | 607,224 | 793,289 | 1,400,513 | 607,224 | 1,400,513 |
"Current financial liabilities" amounted to 1,400,513 thousand euro, compared to 607,224 thousand euro as of the close of the preceding fiscal year.
In particular, "Non-convertible bonds" increased by 519,822 thousand euro due to the reclassification from "Non-current financial liabilities" of the bond maturing in November 2016 and coupon of 4.50%, partially repurchased in February 2015 for 258,179 thousand nominal euro. The nominal value of this bond is currently 503,412 thousand euro. Accounting is at fair value hedge; the bond is therefore measured at amortized cost, adjusted for the change in fair value of the risk hedged. The risk of change in fair value of the bond due to interest rate fluctuations, has been hedged by means of subscription of a fix to variable IRS derivative. Said hedge is documented and currently effective (as demonstrated by the results of the efficacy tests performed). The adjustment of the carrying value of the bond due to changes in the fair value of the hedged risk is recognized in the income statement, where it is offset with the changes in the fair value of the hedging derivative.
Interest of 52,861 thousand euro (51,764 thousand euro at December 31, 2014) accrued on the bonds at December 31, 2015.
Current "Payables to banks" have increased by 18,533 thousand euro during the year, mainly due to the reclassification of the portion due within one year from the item "Non-current financial liabilities".
"Financial payables to related parties" showed an increase of 254,934 thousand euro; it should be noted that the interest rates on intercompany accounts have been obtained by applying a three-month Euribor spread.
| Thousands of euro | Balance at 12 31 2014 |
Changes during the year |
Balance at 12 31 2015 |
|---|---|---|---|
| Tax liabilities | - | 41.876 | 41.876 |
At December 31, 2015, this item amounted to 41,876 thousand euro (no value at December 31, 2014) and refers to the payable for current IRES.
78
The following table provides details of net debt.
| Thousands of euro | Notes | 12 31 2015 | 12 31 2014 |
|---|---|---|---|
| Bonds - non-current portion | 17 | 2,430,953 | 2,936,757 |
| Bank loans - non-current portion | 17 | 542,977 | 819,141 |
| Other non-current liabilities | 20 | 27,208 | 68,326 |
| Total medium/long-term debt | 3,001,138 | 3,824,224 | |
| Non-current financial assets with related parties | 3 | (401,458) | (402,075) |
| Other non-current financial assets and other non-current assets | 3-5 | (96) | (34,572) |
| Total medium/long-term financial receivables | (401,554) | (436,647) | |
| Total non-current net debt | 2,599,584 | 3,387,577 | |
| Bonds - current portion | 22 | 571,586 | 51,764 |
| Bank loans - current portion | 22 | 96,184 | 77,651 |
| Other current liabilities | 21 | 7,474 | - |
| Financial liabilities to related parties - current portion | 22 | 732,743 | 477,809 |
| Total short-term debt | 1,407,987 | 607,224 | |
| Other current assets | 8 | (16,096) | - |
| Financial assets with related parties - current portion | 9 | (605,367) | (730,269) |
| Total short-term financial receivables | (621,463) | (730,269) | |
| Cash and cash equivalents | 11 | (587,050) | (410,501) |
| Total current net debt | 199,474 | (533,546) | |
| Net debt | 2,799,058 | 2,854,031 |
Revenues in 2015 amounted to 494,009 thousand euro (578,155 thousand euro at December 31, 2014), therefore decreasing by 84,146 thousand euro.
Details of the most important sources of revenues are provided below:
| Revenues - Thousands of euro | 12 31 2015 | 12 31 2014 | Changes |
|---|---|---|---|
| Revenues from the sale of goods | 121,554 | 211,015 | (89,461) |
| Revenues from services | 344,410 | 342,601 | 1,809 |
| Total revenues from the sale of goods and services | 465,964 | 553,616 | (87,652) |
| Other operating income | 28,045 | 24,539 | 3,506 |
| Total revenues | 494,009 | 578,155 | (84,146) |
"Revenues from the sale of goods and services" amounted to 465,964 thousand euro (553,616 thousand euro in 2014), down 87,652 thousand euro. This change is due to the decrease in sales revenues, for 89,461 thousand euro, mainly related to lower sales of Green Certificates, to both the subsidiary A2A Trading S.r.l. and to third parties due to lower production of hydroelectric plants, which in 2014 had benefited from an extraordinary water availability. Revenues from services increased for a total of 1,809 thousand euro, due mainly to the increase in revenues from tolling agreements and power purchase agreements entered into with A2A Trading S.r.l. and the increase in revenues from the Municipality of Milan following progressive completion of the plan to replace all traditional public lighting systems with LED lamps.
"Other operating income", amounting to 28,045 thousand euro (24,539 thousand euro in the previous year), relates to rents from subsidiaries and affiliates, releases from provisions made in prior years, reimbursements for losses and penalties from customers, insurance companies and individuals, as well as the sale of equipment and materials.
| Thousands of euro | 12 31 2015 | 12 31 2014 | Changes |
|---|---|---|---|
| Sales of electricity, of which: | 7,664 | 13,440 | (5,776) |
| - third-party customers | 551 | 905 | (354) |
| - subsidiaries | 7,113 | 12,535 | (5,422) |
| Sales of heat, of which | 303 | 258 | 45 |
| - subsidiaries | 303 | 258 | 45 |
| Sales of materials, of which: | 3,486 | 2,830 | 656 |
| - third-party customers | 329 | 439 | (110) |
| - subsidiaries | 3,120 | 2,369 | 751 |
| - affiliates | 37 | 22 | 15 |
| Sales of emission certificates and allowances, of which: | 110,101 | 194,487 | (84,386) |
| - third-party customers | 263 | 20,212 | (19,949) |
| - subsidiaries | 109,838 | 174,275 | (64,437) |
| Total revenues from the sale of goods | 121,554 | 211,015 | (89,461) |
| Services, of which: | |||
| - third-party customers | 5,201 | 5,831 | (630) |
| - subsidiaries | 299,230 | 297,705 | 1,525 |
| - Municipalities of Milan and Brescia | 38,629 | 37,688 | 941 |
| - affiliates | 1,350 | 1,377 | (27) |
| Total revenues from services | 344,410 | 342,601 | 1,809 |
| Total revenues from the sale of goods and services | 465,964 | 553,616 | (87,652) |
| Other operating income, of which: | |||
| - subsidiaries | 7,320 | 10,131 | (2,811) |
| - affiliates | - | - | - |
| Other revenues | 20,725 | 14,408 | 6,317 |
| Total other operating income | 28,045 | 24,539 | 3,506 |
| Total revenues | 494,009 | 578,155 | (84,146) |
"Operating expenses" totalled 290,868 thousand euro (353,097 thousand euro in 2014), with a decrease of 62,229 thousand euro.
The main components of this item are as follows:
| Operating expenses - Thousands of euro | 12 31 2015 | 12 31 2014 | Changes |
|---|---|---|---|
| Raw materials and consumables | 100,442 | 166,325 | (65,883) |
| Service costs | 120,932 | 108,230 | 12,702 |
| Total expenses for raw materials and services | 221,374 | 274,555 | (53,181) |
| Other operating expenses | 69,494 | 78,542 | (9,048) |
| Total operating expenses | 290,868 | 353,097 | (62,229) |
"Expenses for raw materials and services" amounted to 221,374 thousand euro (274,555 thousand euro in 2014), a decrease of 53,181 thousand euro.
This decrease is due to the combined effect of lower costs incurred for the purchase of raw materials and consumables, amounting to 65,883 thousand euro, mainly due to the decrease in purchases of Green Certificates and energy from subsidiaries and higher costs for services, amounting to 12,702 thousand euro, relating to contracts and works, various services provided by third parties, subsidiaries and affiliates.
The following table sets out details of the more significant components:
| Expenses for raw materials and services - Thousands of euro | 12 31 2015 | 12 31 2014 | Changes |
|---|---|---|---|
| Purchases of power and fuel, of which: | 19,612 | 32,114 | (12,502) |
| - third-party suppliers | 1,181 | 1,382 | (201) |
| - subsidiaries | 18,431 | 30,732 | (12,301) |
| Change in inventories of fuel | 68 | (17) | 85 |
| Purchases of demineralized industrial water | 303 | 156 | 147 |
| Purchases of materials of which: | 7,593 | 7,261 | 332 |
| - third-party suppliers | 7,505 | 7,167 | 338 |
| - subsidiaries | 88 | 94 | (6) |
| Change in inventories of materials | 681 | 125 | 556 |
| Purchases of emission certificates and allowances of which: | 72,185 | 126,686 | (54,501) |
| - third-party suppliers | 432 | 256 | 176 |
| - subsidiaries | 71,753 | 126,430 | (54,677) |
| Total expenses for raw materials and consumables | 100,442 | 166,325 | (65,883) |
| Delivery and transmission costs | 8 | 2 | 6 |
| Transport from subsidiaries | - | - | - |
| Subcontracts and works | 25,095 | 18,557 | 6,538 |
| Services, of which: | 95,829 | 89,671 | 6,158 |
| - third-party suppliers | 59,639 | 52,937 | 6,702 |
| - subsidiaries | 35,881 | 36,398 | (517) |
| - affiliates | 309 | 336 | (27) |
| Total service costs | 120,932 | 108,230 | 12,702 |
| Total expenses for raw materials and services | 221,374 | 274,555 | (53,181) |
| Leasehold improvements: | 13,005 | 29,922 | (16,917) |
| - third-party suppliers | 12,861 | 29,512 | (16,651) |
| - subsidiaries | 144 | 410 | (266) |
| Sundry operating expenses | 48,981 | 48,572 | 409 |
| Other expenses from subsidiaries | 7,508 | 48 | 7,460 |
| Losses on disposal of tangible assets | - | - | - |
| Other operating expenses | 69,494 | 78,542 | (9,048) |
| Total operating expenses | 290,868 | 353,097 | (62,229) |
During the year, the Company paid 2,000 thousand euro in donations to the AEM and ASM foundations.
82
Net of capitalized expenses, labour costs at December 31, 2015, amounted to 119,733 thousand euro (131,530 thousand euro in the previous year). The decrease compared to the previous year is mainly attributable to the decrease in the workforce and lower mobility costs, partially offset by contractual increases.
"Labour costs" may be analyzed as follows:
| Labour costs - Thousands of euro | 12 31 2015 | 12 31 2014 | Changes |
|---|---|---|---|
| Wages and salaries | 75,391 | 77,845 | (2,454) |
| Social security charges | 26,386 | 27,113 | (727) |
| Employee leaving entitlement (TFR) | 4,740 | 4,947 | (207) |
| Other costs | 13,216 | 21,625 | (8,409) |
| Total labour costs | 119,733 | 131,530 | (11,797) |
The item under review also includes the remuneration paid by A2A S.p.A. to the members of the Board of Directors in the year for a total of 2,513 thousand euro; for further details, reference is made to the specific file "Remuneration Report - 2016".
The table below shows the average number of employees during the year, broken down by category:
| 2015 | 2014 | Changes | |
|---|---|---|---|
| Executives | 75 | 76 | (1) |
| Managers | 189 | 187 | 2 |
| White collars | 912 | 937 | (25) |
| Blue collars | 200 | 224 | (24) |
| Total | 1,376 | 1,424 | (48) |
Due to the effect of the dynamics explained above, "Gross operating margin" totalled 83,408 thousand euro (93,528 thousand euro in 2014).
"Depreciation, amortization, provisions and write-downs" amounted to 132,014 thousand euro (207,947 thousand euro at December 31, 2014), representing a decrease of 75,933 thousand euro.
| Depreciation, amortization, provisions, and write-downs Thousands of euro |
12 31 2015 | 12 31 2014 | Changes |
|---|---|---|---|
| Amortization of intangible assets | 6,664 | 5,783 | 881 |
| Depreciation of tangible assets | 74,161 | 80,477 | (6,316) |
| Other write-downs of fixed assets | 4,955 | 29,336 | (24,381) |
| Total amortization, depreciation and write-downs | 85,780 | 115,596 | (29,816) |
| Bad debts provision included in current assets and cash and cash equivalents |
(261) | 686 | (947) |
| Provisions for risks | 46,495 | 91,665 | (45,170) |
| Total depreciation, amortization, provisions and write-downs | 132,014 | 207,947 | (75,933) |
In particular, "Amortization and depreciation" totalled 80,825 thousand euro (86,260 thousand euro in 2014), showing a net decrease of 5,435 thousand euro mainly resulting from the decrease, of 10,000 thousand euro, in amortization and depreciation related to the 230 MW production section of the thermoelectric plant in Cassano d'Adda, which completed depreciation in the year 2014, partially offset by higher depreciation for 4,565 thousand euro, resulting from both depreciation on the investments made during the year under review and the revision of the remaining useful life of a thermoelectric plant. Depreciation is calculated on the basis of technical and economic rates considered representative of the remaining useful life of the related tangible assets.
The write-downs of fixed assets amounted to 4,955 thousand euro and mainly relate to the write-down of the thermoelectric plants of Cassano d'Adda, as well as the write-down of some goodwill recognized in previous years as a result of extraordinary transactions, while in the previous year they amounted to 29,336 thousand euro and concerned the write-down of the thermoelectric plant of Ponti sul Mincio and some goodwill recognized in previous years as a result of extraordinary transactions. Write-downs were carried out following the results obtained in the impairment test, performed by an external independent expert appointed by the Group. This was performed as a result of the continuation of the economic crisis in Italy and the resulting decrease in requirements which, together with the further increase in production from non-programmable renewable sources, has caused a substantial decrease in production of all thermoelectric plants. Further details of the work carried out for the impairment test can be found in the Consolidated Annual Report (note 2).
Regarding the transposition of the "Growth Decree", which lays down procedures for calculating the surrender value of the water system works used to supply water under concession to hydroelectric power plants (the "wet works"), the calculation criteria (revaluation coefficients and useful lives) needed to quantify the surrender value at the end of the relative concessions have not been set yet by the relevant authorities. In the absence of Separate financial statements – Year 2015 Notes to the income statement
a regulatory framework, the company had carried out, as of June 2012, a series of simulations using ISTAT coefficients, which were found to be the only possible data that is objectively usable, and made its own estimates of the economic and technical lives of the assets. The results of these simulations led to a very wide variability range, confirming that it is currently impossible to make a reliable estimate of the surrender values at the end of the concessions. Nevertheless, for concessions close to expiry the net carrying amount of the wet works was significantly lower than the range of results obtained. As a result, therefore, since June 30, 2012, depreciation and amortization is no longer charged only for those concessions nearing expiry, while the same valuation methods continue to be applied to the remaining concessions.
The "Bad debt provision" amounted to a negative value of 261 thousand euro (686 thousand euro in 2014), decreasing by 947 thousand euro.
The balance of "Provisions for risks and charges" shows a net effect of 46,495 thousand euro (91,665 thousand euro at December 31, 2014) due to allocations of 48,245 thousand euro made during the year, offset by the 1,750 thousand euro of risk provisions made in previous years, released in the current year since the original disputes have ceased to exist. Provisions for the year were concerned for 44,032 thousand euro allocations to the "Personnel lawsuits and disputes provisions", including the allocation for Asm Novara S.p.A. dispute; for 3,017 thousand euro allocations to "Other risk provisions" for public water derivation fees; releases for 553 thousand euro related to the "Tax provisions" mainly concerning the ICI/IMU dispute. For further details, reference is made to note 19) Provisions for risks, charges and liabilities for landfills.
For further information on the dispute with Pessina Costruzioni for Asm Novara S.p.A., reference is made to the specific paragraph "Other information - Asm Novara S.p.A. dispute".
84
The "Net operating income" is negative by 48,606 thousand euro (negative by 114,419 thousand euro at December 31, 2014).
This item had a zero balance at December 31, 2015, while it amounted to 24,839 thousand euro in the previous year and incorporated the income on the exchange agreement between A2A S.p.A. and Dolomiti Energia S.p.A. which provided for the sale to A2A S.p.A. of Edipower S.p.A. shares owned by Dolomiti Energia in exchange for the sale of Dolomiti Energia shares held by A2A S.p.A. plus the balance in cash or assets for a total of 16 million euro. This income derived from the difference between the value attributed to the shareholding in Dolomiti Energia S.p.A. as part of the exchange and its carrying value in the financial statements of A2A S.p.A..
Financial expenses exceeded financial income by 71,807 thousand euro (positive for 70,859 thousand euro at December 31, 2014). Details of the most significant sub-items are shown in the table below:
| Financial income - Thousands of euro | 12 31 2015 | 12 31 2014 | Changes |
|---|---|---|---|
| Income on derivatives | 23,550 | 12,561 | 10,989 |
| Income from financial assets: | 275,948 | 303,313 | (27,365) |
| Income from dividends: | 236,559 | 244,908 | (8,349) |
| - subsidiaries | 234,946 | 240,676 | (5,730) |
| - affiliates | 1,392 | 4,146 | (2,754) |
| - in other companies | 221 | 86 | 135 |
| Income on receivables/securities recorded as non-current assets: |
2 | 2 | - |
| - from others | 2 | 2 | - |
| Income on receivables/securities recorded as current assets: |
39,302 | 58,397 | (19,095) |
| - from subsidiaries | 34,309 | 53,845 | (19,536) |
| - from affiliates | 74 | 2 | 72 |
| - from parent companies | 3,200 | 3,200 | - |
| - from others: | 1,719 | 1,350 | 369 |
| a) bank current accounts | 918 | 1,334 | (416) |
| b) other receivables | 801 | 16 | 785 |
| Foreign exchange gains | 85 | 6 | 79 |
| Total financial income | 299,498 | 315,874 | (16,376) |
"Financial income" totalled 299,498 thousand euro (315,874 thousand euro at December 31, 2014), and relate to income from financial assets.
In particular, the income on derivatives amounted to 23,550 thousand euro (12,561 thousand at December 31, 2014) and related to the positive performance of the fair value of, and realized gains on, financial derivative contracts and the income from the cancellation of the derivative related to the option agreement between A2A S.p.A. and Società Elettrica Altoatesina S.p.A. (SEL) concerning a part of the shares of Edipower S.p.A. held by it for 13,732 thousand euro; in the previous year, this item had been included in financial expenses and the expense had been determined by the fair value of the option shares, as further described in note 19) Other non-current liabilities.
Income on financial assets amounted to 275,948 thousand euro (303,313 thousand euro at December 31, 2014) and concerned:
| Financial expenses - Thousands of euro | 12 31 2015 | 12 31 2014 | Changes |
|---|---|---|---|
| Expenses on financial assets held for trading | 221,372 | 51,161 | 170,211 |
| - Shareholdings write-downs | 221,372 | 51,161 | 170,211 |
| Expenses on derivatives | 5,174 | 21,431 | (16,257) |
| Expenses on financial assets | 144,759 | 172,423 | (27,664) |
| - from subsidiaries | 5,016 | 6,889 | (1,873) |
| - from affiliates | - | - | - |
| - parent company | - | - | - |
| - others: | 139,743 | 165,534 | (25,791) |
| a) interest on bond | 124,514 | 135,014 | (10,500) |
| b) banks | 12,822 | 25,102 | (12,280) |
| c) others | 2,407 | 5,311 | (2,904) |
| d) foreign exchange losses | - | 107 | (107) |
| Total financial expenses | 371,305 | 245,015 | 126,290 |
"Financial expenses" amounted to 371,305 thousand euro (245,015 thousand euro in 2014) and referred to:
87
The nature and content of derivatives are described in the section "Other information".
| Income taxes - Thousands of euro | 12 31 2015 | 12 31 2014 | Changes |
|---|---|---|---|
| Current taxes | (27,322) | (26,463) | (859) |
| Deferred tax assets | (4,263) | 37,349 | (41,612) |
| Deferred tax liabilities | (15,341) | (37,865) | 22,524 |
| Total income taxes | (46,926) | (26,979) | (19,947) |
It is noted that for IRES purposes, the Company filed for tax on a consolidated basis, together with its main subsidiaries, in accordance with arts. 117-129 of DPR 917/86.
To this end, a contract has been entered into with each of the subsidiaries to regulate the tax benefits and burdens transferred, with specific reference to current items.
The deferred tax assets and liabilities calculated when determining the subsidiaries' taxable income, again only for IRES purposes, are not transferred to the parent company, A2A S.p.A., but are recognized in the income statement of the individual subsidiary each time there is an effective divergence between net income calculated for tax reporting purposes and net income calculated for financial reporting purposes due to any temporary differences. The deferred tax assets and liabilities shown in the income statement of A2A S.p.A. are therefore calculated exclusively on the divergences between its income for taxable purposes and income for financial reporting purposes.
Current income tax (IRES) of A2A S.p.A. is calculated on its own taxable income net of the adjustments relating to the national tax consolidation filing, in accordance with appendix E of accounting standard OIC 25 of August 2014.
In compliance with accounting standard OIC 25, the "income/expense related to consolidation", which constitute the remuneration/contra-entry for the transfer to the parent company A2A S.p.A. of a tax loss or taxable income, are recognized in the balance sheet.
The total amount of IRAP was determined by subjecting the net value of production, suitably adjusted by the increases and decreases required by tax legislation.
The deferred tax assets and liabilities for IRAP purposes are booked to the income statement so as to show the total tax charge for the year, taking into account the tax effects of temporary differences.
88
No items have been excluded from the calculation of deferred taxation for IRES or IRAP purposes and deferred assets and liabilities are recognized according to the balance sheet method.
Following the provision of art. 1, paragraph 61 of Law 208/2015, which ordered the reduction of 3.50% of the IRES rate from January 1, 2017, effective for tax periods following the current year at December 31, 2016, in these financial statements, the amount of deferred tax assets and liabilities has been adjusted to the new rate (24%). The net effect is equal to 315 thousand euro of additional taxes.
We note that following Sentence no. 10/2015 of the Constitutional Court, which declared the additional IRES of 6.50% ("Robin Hood Tax") to be unconstitutional with effect from February 12, 2015, in these financial statements there is no effect for said tax, since the tax assets and liabilities on temporary differences generated in previous years were fully reversed in the year 2014. Instead, the financial statements at December 31, 2014 include the effects of the additional tax.
We also note that, following the provision of art. 1, paragraph 20, of Law December 23, 2014, no. 190 ("2015 Stability Law"), from the current tax period the entire labour costs relating to employees with permanent contracts are deducted from IRAP and that, also with reference to IRAP, taxes for previous years and the period implement the new method of calculation, based on the application of art. 6, par. 9 of Legislative Decree December 15, 1997 no. 446 (method of "industrial holdings"), introduced following the positive confirmation, by the Inland Revenue, to the specific request for clarification filed by A2A. The consistency of deferred tax assets was subsequently adapted to the new IRAP rate for the specific sector (5.57%).
At December 31, 2015, income taxes for the year (IRES and IRAP), amounted to -46,926 thousand euro (-26,979 thousand euro at the end of the previous year) and were made up as follows:
The main permanent increases in IRES include write-downs of shareholding in the amount of 221,362 thousand euro, non-deductible extraordinary expenses in the amount of 1,801 thousand euro, as well as property taxes (IMU) in the amount of 12,688 thousand euro.
Reconciliation between the statutory tax rate and the effective tax rate for IRES and IRAP purposes are presented in the statements below.
| Income before tax | (120,413,172) | |
|---|---|---|
| Theoretical tax expense | (33,113,622) | |
| Permanent differences | 90,449,442 | |
| Income before taxes adjusted for permanent differences | (29,963,730) | |
| Temporary differences deductible in future years | 60,582,264 | |
| Temporary differences taxable in future years | - | |
| Reversal of prior year temporary differences | (8,893,204) | |
| Taxable income | 21,725,330 | |
| Current taxes on income for the year | 5,974,466 | |
| other income to be deducted from tax consolidation | (21,711,850) | |
| taxes to be deducted to equity | (299,679) | |
| Total current income taxes for the year | (16,037,063) |
| Difference between production value and costs | 33,365,494 | |
|---|---|---|
| Costs not relevant for IRAP purposes | 79,210,206 | |
| Total | (45,844,712) | |
| Theoretical tax expense (5.57%) | (2,553,550) | |
| Temporary differences deductible in future years | 58,239,001 | |
| Temporary differences taxable in future years | - | |
| Reversal of prior year temporary differences | (12,394,289) | |
| Taxable income for IRAP purposes | - | |
| Current IRAP on income for the year | - |
Details are provided below on the analytic situation of the deferred tax assets and liabilities which, as required by international accounting standards, also shows the changes in equity reserves.
| Case description Units of euro |
Deferred taxes previous year | Adjustments | Uses in current year | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Taxable amount |
Tax rate | Tax | Taxable amount |
Tax rate | Tax | Taxable amount |
Tax rate | Tax | ||
| Differences in amount of tangible assets | 319,292,468 | 27.5% | 87,805,429 | 8,301,863 | 27.5% | 2,283,012 | 17,867,231 | 27.5% | 4,913,489 | |
| Application of the lease finance standard (IAS 17) | 20,171,593 | 27.5% | 5,547,188 | - | 27.5% | - | 267,751 | 27.5% | 73,632 | |
| Application of the financial instrument standard (IAS 39) | - | 27.5% | - | - | 27.5% | - | - | 27.5% | - | |
| Differences in amount of intangible assets | 23,470,724 | 27.5% | 6,454,449 | - | 27.5% | - | - | 27.5% | - | |
| Capital gains installments | - | 27.5% | - | - | 27.5% | - | - | 27.5% | - | |
| Employee leaving entitlement (TFR) | 1,850,053 | 27.5% | 508,765 | (1,071,412) | 27.5% | (294,638) | - | 27.5% | - | |
| Amounts to be paid in 2016 | 5,400,580 | 27.5% | 1,485,160 | 313,394 | 27.5% | 86,183 | - | 27.5% | - | |
| Other deferred tax liabilities | 18,298,757 | 27.5% | 5,032,158 | (5,277,657) | 27.5% | (1,451,356) | 146,138 | 27.5% | 40,188 | |
| Total | 388,484,175 | 106,833,148 | 2,266,188 | 623,202 | 18,281,120 | 5,027,308 |
| Case description Units of euro |
Deferred taxes previous year | Adjustments | Uses in current year | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Taxable amount |
Tax rate | Tax | Taxable amount |
Tax rate | Tax | Taxable amount |
Tax rate | Tax | ||
| - | - | - | - | - | - | |||||
| Taxed risk provisions | 171,464,995 | 27.5% | 47,152,874 | (1,826,441) | 27.5% | (502,271) | 6,062,171 | 27.5% | 1,667,097 | |
| Amortization, depreciation and write-downs | 110,249,667 | 27.5% | 30,318,658 | - | 27.5% | - | 7,923,311 | 27.5% | 2,178,911 | |
| Application of the financial instrument standard (IAS 39) | 1,497,250 | 27.5% | 411,744 | 50,651,173 | 27.5% | 13,929,073 | - | 27.5% | - | |
| Bad debt provision | 6,868,891 | 27.5% | 1,888,945 | 696,890 | 27.5% | 191,645 | - | 27.5% | - | |
| Costs for business combinations | - | 27.5% | - | - | 27.5% | - | - | 27.5% | - | |
| Grants | 9,644,123 | 27.5% | 2,652,134 | - | 27.5% | - | - | 27.5% | - | |
| Goodwill | 114,465,871 | 27.5% | 31,478,115 | - | 27.5% | - | 12,188,842 | 27.5% | 3,351,932 | |
| Amounts to be paid in 2016 | 19,126,094 | 27.5% | 5,259,676 | - | 27.5% | - | - | 27.5% | - | |
| Other deferred tax assets | 64,929,847 | 27.5% | 17,855,708 | (41,509,309) | 27.5% | (11,415,060) | 1,015,923 | 27.5% | 279,379 | |
| Total | 498,246,739 | 137,017,853 | 8,012,313 | 2,203,386 | 27,190,247 | 7,477,318 |
Separate financial statements – Year 2015
Notes to the income statement
| Sub-total | Changes in tax rate | Increases for the year | Increases/uses to equity | Total deferred taxes liabilities | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Taxable | Tax rate | Tax | Taxable Tax rate |
Tax | Taxable | Tax rate | Tax | Taxable | Tax rate | Tax Taxable |
Tax rate | Tax | |
| amount | amount | amount | amount | amount | |||||||||
| 309,727,100 | 27.5% | 85,174,952 309,727,100 | 24.0% | 74,334,504 | - | 24.0% | - | - | 24.0% | - 309,727,100 | 24.0% | 74,334,504 | |
| 19,903,842 | 27.5% | 5,473,556 | 19,903,842 | 24.0% | 4,776,922 | - | 24.0% | - | - | 24.0% | - 19,903,842 |
24.0% | 4,776,922 |
| - 27.5% |
- | - 24.0% |
- | - | 24.0% | - | - | 24.0% | - - |
24.0% | - | ||
| 23,470,724 | 27.5% | 6,454,449 | 23,470,724 | 24.0% | 5,632,974 | - | 24.0% | - | - | 24.0% | - 23,470,724 |
24.0% | 5,632,974 |
| - 27.5% |
- | - 24.0% |
- | - | 24.0% | - | - | 24.0% | - - |
24.0% | - | ||
| 778,641 | 27.5% | 214,126 | 778,641 24.0% |
186,874 | - | 24.0% | - | - | 24.0% | - 778,641 |
24.0% | 186,874 | |
| 5,713,974 | 27.5% | 1,571,343 | 5,713,974 27.5% |
1,571,343 | - | 27.5% | - | - | 27.5% | - 5,713,974 |
27.5% | 1,571,343 | |
| 12,874,963 | 27.5% | 3,540,615 | 12,874,963 24.0% |
3,089,991 | - | 24.0% | - | - | 24.0% | - 12,874,963 |
24.0% | 3,089,991 | |
| 372,469,243 | 102,429,042 372,469,243 | 89,592,607 | - | - | - | - 372,469,243 | 89,592,607 |
| Sub-total | Changes in tax rate | Increases for the year | Increases/uses to equity | Total deferred taxes liabilities | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Taxable amount |
Tax rate | Tax | Taxable amount |
Tax rate | Tax | Taxable amount |
Tax rate | Tax | Taxable amount |
Tax rate | Tax | Taxable amount |
Tax rate | Tax |
| - 163,576,383 |
27.5% | - 44,983,505 |
- 163,576,383 |
24.0% | - 39,258,332 |
- 53,938,955 |
24.0% | - 12,945,349 |
- (4,996,306) |
24.0% | - (1,199,113) |
- 212,519,032 |
24.0% | - 51,004,568 |
| 102,326,356 | 27.5% | 28,139,748 | 102,326,356 | 24.0% | 24,558,325 | 4,961,553 | 24.0% | 1,190,773 | - | 24.0% | - 107,287,909 | 24.0% | 25,749,098 | |
| 52,148,423 | 27.5% | 14,340,816 | 52,148,423 | 24.0% | 12,515,622 | - | 24.0% | - (23,443,082) | 24.0% | (5,626,340) | 28,705,341 | 24.0% | 6,889,282 | |
| 7,565,781 | 27.5% | 2,080,590 | 7,565,781 | 24.0% | 1,815,787 | - | 24.0% | - | - | 24.0% | - | 7,565,781 | 24.0% | 1,815,787 |
| - | 27.5% | - | - | 24.0% | - | - | 24.0% | - | - | 24.0% | - | - | 24.0% | - |
| 9,644,123 | 27.5% | 2,652,134 | 9,644,123 | 24.0% | 2,314,590 | - | 24.0% | - | - | 24.0% | - | 9,644,123 | 24.0% | 2,314,590 |
| 102,277,029 | 27.5% | 28,126,183 | 102,277,029 | 24.0% | 24,546,487 | 901,756 | 24.0% | 216,421 | - | 24.0% | - | 103,178,785 | 24.0% | 24,762,908 |
| 19,126,094 | 27.5% | 5,259,676 | 19,126,094 | 27.5% | 5,259,676 | - | 27.5% | - | - | 27.5% | - | 19,126,094 | 27.5% | 5,259,676 |
| 22,404,615 | 27.5% | 6,161,269 | 22,404,615 | 24.0% | 5,377,108 | 780,000 | 24.0% | 187,200 | (1,089,492) | 24.0% | (261,478) | 22,095,123 | 24.0% | 5,302,830 |
| 479,068,805 | 131,743,921 479,068,805 | 115,645,926 | 60,582,264 | 14,539,743 (29,528,880) | (7,086,931) | 510,122,189 | 123,098,739 |
| Case description Units of euro |
Deferred taxes previous year | Adjustments | Uses in current year | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Taxable amount |
Tax rate | Tax | Taxable amount |
Tax rate | Tax | Taxable amount |
Tax rate | Tax | ||
| Differences in amount of tangible assets | 148,433,998 | 4.20% | 6,234,228 | - | 4.20% | - | 12,211,789 | 4.20% | 512,895 | |
| Application of the lease finance standard (IAS 17) | 14,629,909 | 4.20% | 614,456 | - | 4.20% | - | - | 4.20% | - | |
| Differences in amount of intangible assets | 6,778 | 4.20% | 285 | - | 4.20% | - | - | 4.20% | - | |
| Other deferred tax liabilities | 12,855,252 | 4.20% | 539,921 | 3,337,600 | 4.20% | 140,179 | 286,418 | 4.20% | 12,030 | |
| Total | 175,925,937 | 7,388,889 | 3,337,600 | 140,179 | 12,498,207 | 524,925 |
| Case description Units of euro |
Deferred taxes previous year | Adjustments | Uses in current year | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Taxable amount |
Tax rate | Tax | Taxable amount |
Tax rate | Tax | Taxable amount |
Tax rate | Tax | ||
| Taxed risk provisions | 41,251,585 | 4.20% | 1,732,567 | 117,301,016 | 4.20% | 4,926,643 | 6,062,171 | 4.20% | 254,611 | |
| Amortization, depreciation and write-downs | 111,415,099 | 4.20% | 4,679,434 | - | 4.20% | - | 6,641,483 | 4.20% | 278,942 | |
| Costs for business combinations | - | 4.20% | - | - | 4.20% | - | - | 4.20% | - | |
| Grants | 6,087,924 | 4.20% | 255,693 | - | 4.20% | - | - | 4.20% | - | |
| Goodwill | 126,175,505 | 4.20% | 5,299,371 | - | 4.20% | - | 12,188,842 | 4.20% | 511,931 | |
| Other deferred tax assets | 1,083,992 | 4.20% | 45,528 | - | 4.20% | - | - | 4.20% | - | |
| Total | 286,014,105 | 12,012,592 | 117,301,016 | 4,926,643 24,892,496 | 1,045,485 |
Notes to the income statement
| Sub-total | Changes in tax rate | Increases for the year | Increases/uses to equity | Total deferred taxes liabilities | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Taxable amount |
Tax rate | Tax | Taxable amount |
Tax rate | Tax | Taxable amount |
Tax rate | Tax | Taxable amount |
Tax rate | Tax | Taxable amount |
Tax rate | Tax |
| 136,222,209 | 4.20% | 5,721,333 | 136,222,209 | 5.57% | 7,587,577 | - 5.57% |
- | - | 5.57% | - | 136,222,209 | 5.57% | 7,587,577 | |
| 14,629,909 | 4.20% | 614,456 | 14,629,909 | 5.57% | 814,886 | - 5.57% |
- | - | 5.57% | - | 14,629,909 | 5.57% | 814,886 | |
| 6,778 | 4.20% | 285 | 6,778 | 5.57% | 378 | - | 5.57% | - | - | 5.57% | - | 6,778 | 5.57% | 378 |
| 15,906,434 | 4.20% | 668,070 | 15,906,434 | 5.57% | 885,988 | - | 5.57% | - | - | 5.57% | - | 15,906,434 | 5.57% | 885,988 |
| 166,765,330 | 7,004,144 166,765,330 | 9,288,829 | - | - | - | - 166,765,330 | 9,288,829 |
| Adjustments Uses in current year |
Sub-total | Changes in tax rate | Increases for the year | Increases/uses to equity | Total deferred taxes liabilities | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Taxable Tax rate Tax Taxable Tax rate Tax |
Taxable | Tax rate | Tax | Taxable | Tax rate | Tax | Taxable | Tax rate | Tax | Taxable | Tax rate | Tax | Taxable | Tax rate | Tax |
| amount | amount | amount | amount | amount | amount | ||||||||||
| 6,062,171 4.20% 254,611 |
152,658,217 | 4.20% | 6,411,645 | 152,658,217 | 5.57% | 8,503,063 | 53,260,789 | 5.57% | 2,966,626 | (4,996,306) | 5.57% | (278,294) 200,922,700 | 5.57% | 11,191,394 | |
| 4.20% 278,942 |
104,773,616 | 4.20% | 4,400,492 | 104,773,616 | 5.57% | 5,835,890 | 4,000,000 | 5.57% | 222,800 | - | 5.57% | - | 108,773,616 | 5.57% | 6,058,690 |
| 4.20% - |
- | 4.20% | - | - | 5.57% | - | - | 5.57% | - | - | 5.57% | - | - | 5.57% | - |
| 4.20% - |
6,087,924 | 4.20% | 255,693 | 6,087,924 | 5.57% | 339,097 | - | 5.57% | - | - | 5.57% | - | 6,087,924 | 5.57% | 339,097 |
| 511,931 | 113,986,663 | 4.20% | 4,787,440 | 113,986,663 | 5.57% | 6,349,057 | 901,756 | 5.57% | 50,228 | - | 5.57% | - | 114,888,419 | 5.57% | 6,399,285 |
| 4.20% - |
1,083,992 | 4.20% | 45,528 | 1,083,992 | 5.57% | 60,378 | 76,456 | 5.57% | 4,259 | - | 5.57% | - | 1,160,448 | 5.57% | 64,637 |
| 1,045,485 | 378,422,625 | 15,893,750 378,422,625 | 21,078,140 | 58,239,001 | 3,243,912 (4,996,306) | (278,294) 431,665,320 | 24,043,758 |
96
Net result of the year was negative for 73,487 thousand euro (positive for 8,258 thousand euro at December 31, 2014).
"Related parties" are those indicated by the international accounting standard that concerns Related Party Disclosures (IAS 24 revised).
On October 5, 2007, the Municipalities of Milan and Brescia signed a Shareholders' Agreement to regulate the ownership structure of A2A S.p.A.; this gave the Municipalities joint control over the company.
97
Specifically, the merger effective January 1, 2008, regardless of the legal structure established, was considered a joint venture, whose joint control was exercised by the Municipalities of Milan and Brescia, each of which owned a share equal to 27.5%.
On June 13, 2014, the Shareholders' Meeting modified the company's governance system, passing from the original two-tier system, adopted in 2007, to a "traditional" system of management and control with the appointment of the Board of Directors.
In December 2014, the Municipalities of Milan and Brescia sold a total shareholding of 0.51% of A2A S.p.A., while in the first two months of 2015, the Municipalities of Milan and Brescia sold an additional shareholding of 4.5% of A2A S.p.A.. At the date of approval of these separate financial statements, the two shareholders held a shareholding of 50% plus two shares that enables the two municipalities to maintain control over the company.
The A2A Group companies and the Municipalities of Milan and Brescia routinely entertain commercial relationships related to the supply of electricity, gas, heat, and potable water, management of public lighting systems and street lights, management of water purification and sewers, garbage collection and street sweeping and video surveillance.
Similarly, the A2A Group companies entertain commercial relationships with the companies controlled by the Municipalities of Milan and Brescia, for example, Metropolitana Milanese S.p.A., ATM S.p.A., Brescia Mobilità S.p.A., Brescia Trasporti S.p.A. and Centrale del Latte di Brescia S.p.A., supplying them with electrical energy, gas, heat, water purification and sewer service at market rates appropriate to the supply conditions and providing the services required. Note that these companies are considered related parties in the preparation of the financial statement schedules pursuant to Consob Resolution 17221 of March 12, 2010.
The relationships between the Municipalities of Milan and Brescia and the A2A Group, in relation to granting the services associated with public lighting, street lights, management and supply of electricity, gas, heat, and water purification and sewer service are regulated by special conventions and specific contracts.
The relationships between the companies controlled by the Municipalities of Milan and Brescia, which refer to the supply of electricity, are at arm's length conditions.
On April 3, 2014, Amsa S.p.A., a subsidiary of A2A S.p.A., entered a service agreement with the Municipality of Milan covering waste management, street and green area cleaning, special services and other services upon request (such as the removal of illegally dumped waste, reclamation and snow removal) for the period from January 1, 2014, to December 31, 2016.
98
The parent company A2A S.p.A., operates like a centralized treasury for the majority of the subsidiaries.
The relationships between the companies take place through current accounts, entertained between the parent company and the subsidiaries, regulated at the Euribor three-month rate for receivables (of A2A S.p.A.) or decreased by the liabilities by an amount equal to the rate applied by the financial market.
For the financial year 2015, A2A S.p.A. and its subsidiaries have adopted the VAT procedure of the Group.
Note that for IRES purposes, A2A S.p.A. files for tax on a consolidated basis, together with its main subsidiaries, in accordance with arts. 117-129 of DPR 917/86. To this end, with each of the subsidiaries joining, a special contract was drawn up to regulate the tax advantages/ disadvantages transferred, with specific reference to the current entries. These contracts also govern the transfer of any excess of ROL as set forth by prevailing legislation.
The parent company provides the subsidiaries and affiliates with administrative, fiscal, legal, management and technical services in order to optimize the resources available in the company and to use the existing expertise in terms of economic convenience. These services are regulated by special intercompany service contracts stipulated annually. A2A S.p.A. also provides its subsidiaries and affiliates with office spaces and operating areas, at their own sites, as well as the services related to their use, at market conditions.
In exchange for the monthly consideration, in proportion to the actual availability of the thermoelectric and hydroelectric plant, the parent company offers A2A Trading S.r.l. the electrical generation service.
Telecom services are provided by the subsidiary Selene S.p.A..
Finally, it is noted that pursuant to the Consob communication issued on September 24, 2010, bearing the provisions regarding related party transactions in accordance with Consob Resolution no. 17221 of March 12, 2010, as amended, on November 11, 2010, the Group had approved the procedure for related party transactions which took effect on January 1, 2011, and which aims to ensure the transparency and substantial fairness of the related party transactions executed by A2A S.p.A. directly, or through subsidiaries, identified in accordance with the IAS 24 revised accounting standard. On June 22, 2015, the Board of Directors resolved, with the prior approval of the Risks Control Committee, the adaptation of the procedure to the traditional governance system.
Below are the tables with detail of the related party transactions, in accordance with the Consob Resolution no. 17221 of March 12, 2010:
| Balance | Total | Of which with related parties | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| sheet Thousands of euro |
12 31 2015 | Subsi diary compa nies |
Affiliates | Munici pality of Milan |
Subsi diaries Munici pality of Milan |
Munici pality of Brescia |
Subsidia ries Munici pality of Brescia |
Related parties indivi duals |
Total related parties |
% effect on the balance sheet item |
| TOTAL ASSETS OF WHICH: | 7,152,604 5,045,684 | 61,086 | 11,192 | 3 | 2,889 | 142 | - 5,120,996 | 71.6% | ||
| Non current assets | 5,664,302 | 4,238,130 | 51,600 | - | - | 2,655 | 139 | - 4,292,524 | 75.8% | |
| Shareholdings | 3,890,927 | 3,839,327 | 51,600 | - | - | - | - | - 3,890,927 | 100.0% | |
| Other non current financial assets | 405,362 | 398,803 | - | - | - | 2,655 | 139 | - | 401,597 | 99.1% |
| Current assets | 1,487,833 | 807,085 | 9,486 | 11,192 | 3 | 234 | 3 | - | 828,003 | 55.7% |
| Trade receivables | 146,948 | 129,648 | 3,099 | 11,192 | 3 | 234 | 3 | - | 144,179 | 98.1% |
| Othe current assets | 104,704 | 78,457 | - | - | - | - | - | - | 78,457 | 74.9% |
| Current financial assets | 605,367 | 598,980 | 6,387 | - | - | - | - | - | 605,367 | 100.0% |
| Non current assets held for sale | 469 | 469 | - | - | - | - | - | - | 469 | 100.0% |
| TOTAL LIABILITIES OF WHICH: | 4,991,012 | 886,444 | 9,449 | 456 | 126 | - | - | 305 | 896,780 | 18.0% |
| Non current liabilities | 3,271,471 | 33,351 | - | - | - | - | - | - | 33,351 | 1.0% |
| Provisions for risks, charges and liabilities for landfills |
144,313 | 33,351 | - | - | - | - | - | - | 33,351 | 23.1% |
| Current liabilities | 1,719,541 | 853,093 | 9,449 | 456 | 126 | - | - | 305 | 863,429 | 50.2% |
| Trade payables | 162,013 | 83,076 | 80 | 456 | 126 | - | - | - | 83,738 | 51.7% |
| Other current liabilities | 115,139 | 38,206 | 8,438 | - | - | - | - | 305 | 46,949 | 40.8% |
| Current financial liabilities | 1,400,513 | 731,811 | 931 | - | - | - | - | - | 732,742 | 52.3% |
Note on related party transactions
| Income statement | Total | Of which with related parties | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Thousands of euro | 12 31 2015 | Subsi diary compa nies |
Affiliates | Munici pality of Milan |
Subsi diaries Munici pality of Milan |
Munici pality of Brescia |
Subsidia ries Munici pality of Brescia |
Related parties indivi duals |
Total related parties |
% effect on the balance sheet item |
||
| REVENUES | 494,009 | 426,924 | 1,387 | 38,398 | - | 231 | 14 | - | 466,954 | 94.5% | ||
| Revenues from the sale of goods and services |
465,964 | 419,604 | 1,387 | 38,398 | - | 231 | 14 | - | 459,634 | 98.6% | ||
| Other operating income | 28,045 | 7,320 | - | - | - | - | - | - | 7,320 | 26.1% | ||
| OPERATING EXPENSES | 290,868 | 133,805 | 309 | - | 493 | - | - | 240 | 134,847 | 46.4% | ||
| Expenses for raw materials and services |
221,374 | 126,153 | 309 | - | 493 | - | - | 240 | 127,195 | 57.5% | ||
| Other operating expenses | 69,494 | 7,652 | - | - | - | - | - | - | 7,652 | 11.0% | ||
| LABOUR COSTS | 119,733 | - | - | - | - | - | - | 2,462 | 2,462 | 2.1% | ||
| FINANCIAL BALANCE | (71,807) | 50,239 | (5,535) | - | - | 3,200 | - | - | 47,904 | n.s. | ||
| Financial income | 299,498 | 269,255 | 1,466 | - | - | 3,200 | - | - | 273,921 | 91.5% | ||
| Financial expenses | 371,305 | 219,016 | 7,001 | - | - | - | - | - | 226,017 | 60.9% |
Section 0.2 of this file provides complete schedules as required under Consob Resolution no. 17221 of March 12, 2010.
101
There were no atypical and/or unusual transactions during the year under review.
| Thousands of euro | 2015 | 2014 |
|---|---|---|
| Guarantees received | 81,725 | 83,777 |
| Guarantees given | 169,358 | 195,601 |
Guarantees received amounted to 81,725 thousand euro (83,777 thousand euro at December 31, 2014) and include 75,115 million euro for sureties and security deposits issued by subcontractors to guarantee the proper execution of the work assigned and 6,610 thousand euro for sureties and security deposits received from customers to guarantee the regularity of payments.
Guarantees provided amounted to 169,358 thousand euro (195,601 thousand euro at December 31, 2014), of which for obligations undertaken in the loan agreements of 133,830 thousand euro. Said guarantees include bank sureties for 37,103 thousand euro, insurance for 13,152 thousand euro and parent company guarantees related to associated companies for 119,103 thousand euro.
Reference should be made to the specific section of this Report on Operations for a description of subsequent events.
At December 31, 2015, A2A S.p.A. held 26,917,609 treasury shares (unchanged from the previous year), representing 0.859% of share capital which consists of 3,132,905,277 shares. At the date of these financial statements, no treasury shares were held through subsidiaries, finance companies or nominees.
103
"Non-current assets held for sale" at December 31, 2015, show a balance of 649 thousand euro and refer to the reclassification of the investment in SEASM S.r.l., held 67% by A2A S.p.A., since this is a discontinued operation in accordance with IFRS 5 as a result of management's decision to divest it, as more fully described in note no. 12 "Non-current assets held for sale".
The parent company, A2A S.p.A., provides centralized risk management for Group companies.
The A2A Group operates in the electricity, natural gas and district heating industry and is exposed to various financial risks in performing its activity:
Details on the risks to which A2A S.p.A. is exposed are provided below.
104
A2A S.p.A. is exposed to price risk, including the related exchange rate risk, on all of the energy commodities that it handles, namely electricity, natural gas, heat, coal, fuel oil, and environmental certificates; the financial performance of production, purchasing and sales activities is affected by the related price fluctuations. These fluctuations act both directly and indirectly, through formulas and indexing in the pricing structure.
To stabilize cash flows and to lock in Group profits on transactions, A2A S.p.A. has an Energy Risk Policy that sets out clear guidelines to manage and control the above risks, based on guidance by the Committee of Chief Risk Officers Organizational Independence and Governance Working Group ("CCRO") and the Group on Risk Management of Euroelectric. Reference was also made to the Accords of the Basel Committee on bank supervision approved in June 2004 ( "Basel 2") and the requirements laid down in international accounting standards on how to recognize the volatility of commodity price and financial derivatives in the income statement and balance sheet.
In the A2A Group, assessment of this kind of risk is centralized at the holding company, which has established a Group Risk Management Organizational Unit as part of the Planning, Finance and Control Organizational Unit. This unit has the task to manage and monitor market and commodity risks, to create and evaluate structured products, to propose financial energy risk hedging strategies, and to support senior management in defining the Group's energy risk management policies.
Each year, A2A S.p.A. sets the Group's commodity risk limits approving PaR and VaR proposed in the Risk Committee, in conjunction with approval of the Budget/Business Plan; the Risk Management supervises the situation to ensure compliance with these limits and proposes to senior management the hedging strategies designed to bring risk within the set limits.
The activities that are subject to risk management include all of the positions on the physical market for energy products, both purchasing/production and sales, and all of the positions in the energy derivatives market taken by Group companies.
For the purpose of monitoring risks, industrial and trading portfolios have been separated and are managed in different ways. The industrial portfolio consists of the physical and financial contracts directly relating to the Group's industrial operations, namely where the objective is to enhance production capacity also through the wholesaling and retailing of gas, electricity and heat.
The trading portfolio comprises all contracts, both physical and financial, entered into to supplement the profits made from the industrial activities, i.e. all contracts that are ancillary though not strictly necessary to the industrial activity.
In order to identify trading activity, the A2A Group follows the Capital Adequacy Directive and the definition of assets held for trading provided by International Accounting Standard (IAS) 39: namely assets held for the purpose of short-term profit taking on market prices or margins, without being for hedging purposes, and designed to create a high-turnover portfolio.
105
Given that they exist for different purposes, the two portfolios have been segregated and are monitored separately with specific tools and limits. More specifically, the trading portfolio is subject to particular risk control and management procedures as laid down in Deal Life Cycle documents.
Senior management is systematically updated on changes in the Group's commodity risk by the Group Risk Management Unit, which controls the Group's net exposure. This is calculated centrally on the entire asset and contract portfolio and monitors the overall level of economic risk assumed by the industrial and trading portfolios (Profit at Risk - PaR, Value at Risk - VaR, Stop Loss).
A2A S.p.A. did not enter into any commodity derivative contracts.
VaR (Value at Risk) (2) is used to assess the impact that fluctuations in the market price of the
underlying have on the financial derivatives taken out by A2A S.p.A. that are attributable to the industrial portfolio. PaR(1) or Profit at Risk, is the change in the value of a financial instruments portfolio within set probability assumptions as the result of a shift in the market indices. The PaR is calculated using the Montecarlo Method (at least 10,000 trials) and a 99% confidence level. It simulates scenarios for each relevant price driver depending on the volatility and correlations associated with each one, using as the central level the forward market curves at the balance sheet date, if available. By means of this method, after having obtained a distribution of probability associated with changes in the result of outstanding financial contracts, it is possible to extrapolate the maximum change expected over a time horizon given by the accounting period at a set level of probability. Based on this methodology, the current accounting period, and in the event of extreme market changes, with a 99% confidence level, the expected maximum loss on financial derivatives outstanding at December 31, 2015, is zero (zero loss at December 31, 2014).
This means that A2A S.p.A. expects, with 99% probability, not to undergo changes on the fair value of its financial instrument portfolio at December 31, 2015, due to adverse commodity price fluctuations.
106
The volatility of financial expenses associated to the performance of interest rates is monitored and mitigated through a policy of interest rate risk management aimed at identifying a balanced mix of fixed-rate and floating rate loans and the use of derivatives that limit the effects of fluctuations in interest rates.
| Millions of euro | December 31, 2015 | December 31, 2014 | ||||||
|---|---|---|---|---|---|---|---|---|
| Without derivatives |
With derivatives |
% with derivatives |
Without derivatives |
With derivatives |
% with derivatives |
|||
| Fixed rate | 3,003 | 3,155 | 87% | 2,988 | 3,360 | 86% | ||
| Floating rate | 639 | 487 | 13% | 897 | 525 | 14% | ||
| Total | 3,642 | 3,642 | 100% | 3,885 | 3,885 | 100% |
Bank borrowings and other financing may be analyzed as follows at December 31, 2015:
(1) Profit at Risk: statistical measurement of the maximum potential negative deviation of the margin of an asset portfolio in case of unfavorable market changes over a given time horizon and with a defined confidence interval.
| Loan | Derivative | Accounting |
|---|---|---|
| A2A S.p.A. loan with BEI: expiring in November 2023, residual balance at December 31, 2015 amounting to 152.4 million euro, at floating rate interest. |
Collar to fully cover the loan and the same maturity, with a floor on Euribor rate 2.99% and 4.65% cap. At December 31, 2015, the fair value was negative for 17.2 million euro. |
Il finanziamento è valutato a costo ammortizzato. Il collar è in cash flow hedge con imputazione al 100% in apposita riserva del Patrimonio netto. |
| A2A S.p.A. bond with a nominal value of 503.4 million euro, maturing in 2016 bearing fixed interest at 4.5%. |
IRS ("Fix to Float") on the entire nominal amount with same duration as the loan. At December 31, 2015, the fair value was positive for 16.2 million euro. |
Fair value hedge The fair value hedge valuation is equal to the amortized cost of financial liabilities increased by accrued interest. The amortized cost includes the portion of competence of the discount and issue costs. This value includes the fair value of the derivative. In the income statement, the change in the fair value of the financial liability is offset by the change in the fair value of the derivative, as the risk hedge is 100% effective. |
| Collar on 3.4 million euro with the same duration of the loan, with floor on Euribor rate 2.25% and 4.50% cap. At December 31, 2015, the fair value was negative for 0.1 million euro. |
The collar is measured at fair value through the Income Statement. |
|
| Collar on 350 million euro maturing November 2016, with floor on Euribor rate 1.54% and 3.25% cap. At December 31, 2015, the fair value was negative for 5.6 million euro. |
The collar is measured at fair value through the Income Statement. |
|
| Collar on 150 million euro maturing November 2016, with floor on Euribor rate 1.20% and double cap 2.80% and 5%. At December 31, 2015, the fair value was negative for 1.9 million euro. |
The collar is measured at fair value through the Income Statement. |
107
In order to analyze and manage the risks relating to interest rate risk the Company has developed an internal model enabling the exposure to this risk to be calculated using the Montecarlo method, assessing the effect that fluctuations in interest rates may have on future cash flows. Under this methodology at least ten thousand scenarios are simulated for each key variable on the basis of the associated volatilities and correlations, using market rate forward curves for future levels. In this way a probability distribution of the results is obtained from which the worst case scenario and best case scenario can be extrapolated using a 99% confidence level.
The following are the results of the simulation with the related maximum variances: (worst case and best case scenarios) for 2016 together with a comparison with 2015:
| Millions of euro | Year 2016 (base case: -117.6) |
Year 2015 (base case: -132.4) |
||
|---|---|---|---|---|
| Worst case | Best case | Worst case | Best case | |
| Change in expected cash flows (including hedge flows) Confidence level 99% |
(0.3) | 0.3 | (0.3) | 0.2 |
A sensitivity analysis is also provided for potential changes in the fair value of the derivatives on shifting the forward rate curve by +50 bps and -50 bps:
| Millions of euro | 12 31 2015 (base case: -8.5) |
12 31 2014 (base case: -4.1) |
||
|---|---|---|---|---|
| -50 bps | +50 bps | -50 bps | +50 bps | |
| Change in fair value of derivatives | (3.3) | 3.0 | (9.6) | 8.1 |
| (of which cash flow hedges) | (3.3) | 3.0 | (4.2) | 3.9 |
| (of which fair value hedges) | 1.4 | (1.4) | 4.0 | (3.9) |
This sensitivity analysis is calculated to determine the effect of the change of the forward interest rate curve of the fair value of derivatives ignoring any impact of the adjustment due to counterparty risk – "Bilateral Credit Value Adjustment" (bCVA) – introduced in the calculation of fair value in accordance with international accounting standard IFRS13.
A2A S.p.A. does not consider it necessary at the present time to take out any specific hedges against currency risk for sales, other than that arising from commodity prices, as the amounts involved are quite small and are paid or collected within a short period of time, and any imbalance is immediately offset by a sale or purchase of foreign currency.
The only case of hedging currency risk that was not related to commodities is the fixed rate bullet bond of 14 billion yen with maturity 2036 issued in 2006.
A cross currency swap contract was stipulated for the entire duration of this loan, which converts the principal and interest payments from yen into euro. This derivative is accounted for as a cash flow hedge, with full recognition in the equity reserve.
At December 31, 2015, the fair value of the hedge was negative for 10.1 million euro. This fair value would improve by 18.2 million euro in the event of a 10% decline in the euro/yen exchange rate (appreciation of the yen) and would fall by 14.9 million euro in the event of a 10% rise in the euro/yen exchange rate (depreciation of the yen).
In this case too, the sensitivity analysis was performed with the aim of calculating the effect of changes in the forward curve of the euro/yen exchange rate on the fair value ignoring any impact on the adjustment due to the bCVA.
To monitor this risk, the Company ensures the maintenance of adequate financial resources, as well as a liquidity buffer sufficient to meet unexpected commitments. At December 31, 2015, the Company contracted revolving committed credit lines for 800 million euro, unused. It also has unused long-term financing for a total of 120 million euro and cash and cash equivalents totalling 587 million euro.
Liquidity risk management is also pursued by directly accessing the capital market, particularly through the Bond Issue Program (Euro Medium Term Note Programme) extended to 4 billion euro, as approved by the Board of Directors on November 6, 2014 and by programming an appropriate distribution of maturities aimed at mitigating the risk of refinancing.
The following table analyses the worst case for financial liabilities (including trade payables) in which all of the flows shown are undiscounted future nominal cash flows determined on the basis of residual contractual maturities for both principal and interest; they also include the undiscounted nominal flows of derivative contracts on interest rates.
Loans are generally included on the basis of their contractual maturity for repayment, whereas revocable loans have been considered redeemable at sight.
| Year 2015 Millions of euro | 1-3 months | 4-12 months | After 12 months |
|---|---|---|---|
| Bonds | 48 | 566 | 3,004 |
| Payables and other financial liabilities | 50 | 54 | 601 |
| Total financial flows | 98 | 620 | 3,605 |
| Trade payables | 40 | 1 | - |
| Total trade payables | 40 | 1 | - |
| Year 2014 Millions of euro | 1-3 months | 4-12 months | After 12 months |
|---|---|---|---|
| Bonds | 44 | 78 | 3,533 |
| Payables and other financial liabilities | 5 | 89 | 920 |
| Total financial flows | 49 | 167 | 4,453 |
| Trade payables | 41 | - | - |
| Total trade payables | 41 | - | - |
Credit risk relates to the possibility that a counterparty may be in default, or fail to respect its commitment in the manner and timing provided by contract. This type of risk is managed by the Group through specific procedures (Credit Policy, Energy Risk Management procedure) and appropriate mitigation actions.
This risk is overseen by both the Credit Management function allocated centrally (and the corresponding functions of the operating companies) and the Group Risk Management Organizational Unit responsible for supporting the Group companies. Risk mitigation is through the prior assessment of the creditworthiness of the counterparty and the constant verification of compliance with exposure limit as well as through the request for adequate guarantees.
The credit terms granted to customers as a whole have a variety of deadlines, in accordance with applicable law and market practice. In cases of delayed payment, default interest is charged as explicitly prescribed by the underlying supply contracts or by current law (application of the default rate as per Legislative Decree no. 231/2002).
Trade receivables are recognized on the balance sheet net of any write-downs. It is felt that the amount shown provides and accurate representation of the fair value of the trade receivables portfolio.
For the aging of trade receivables, reference is made to note 7) Trade receivables.
A2A S.p.A. was not exposed to equity risk at December 31, 2015.
At December 31, 2015, A2A S.p.A. held 26,917,609 treasury shares, representing 0.859% of the share capital consisting of 3,132,905,277 shares.
As prescribed by IAS/IFRS, treasury shares do not constitute an equity risk as their purchase cost is deducted from equity, and even if they are sold any gain or loss on the purchase cost does not have any effect on Income Statement.
A summary is provided below on bank borrowings and amounts due to other lenders (excluding subsidiaries and associates) excluding financial payables relating to derivatives:
| Thousands of euro | Accounting | Portions | Portions | Portion maturing by | |||||
|---|---|---|---|---|---|---|---|---|---|
| balance 12 31 2015 |
maturing within 12 months |
maturing after 12 months |
12 31 2017 | 12 31 2018 | 12 31 2019 | 12 31 2020 | After | ||
| Bonds | 3,002,539 | 571,586 | 2,430,953 | - | - | 746,139 | - | 1,684,814 | |
| Bank loans | 639,161 | 96,184 | 542,977 | 48,366 | 46,324 | 51,504 | 57,681 | 339,102 | |
| TOTAL | 3,641,700 | 667,770 | 2,973,930 | 48,366 | 46,324 | 797,643 | 57,681 | 2,023,916 |
111
At December 31, 2015, A2A S.p.A. had bonds for a total book value of 3,002 million euro.
The terms and conditions of these bond issues are in line with the market standard for this type of financial instrument.
The bonds issued by A2A S.p.A. as part of the EMTN Programme (amounting in total to 2,350 million euro at December 31, 2015) contain a change of control put clause in favour of investors for any changes in control of the Company which lead to a resulting downgrading of the rating to sub-investment grade in the following 180 days. If the rating returns to investment grade within the 180-day period, the put option is not exercisable.
The private bond in yen (book value of 100 million euro) falling due in 2036 contains a put right clause in favour of the investor, which triggers if the rating falls below BBB- or equivalent level (sub-investment grade).
The loan agreements entered into with the European Investment Bank (book value of 603 million euro) contain a credit rating clause guarding against a rating of below BBB- or equivalent level (sub-investment grade). In the event of a change in control of A2A S.p.A., the loan agreements entered into with the European Investment Bank falling due after 2024 for a total of 449 million euro at December 31, 2015, grant the bank the right to invoke early Separate financial statements – Year 2015 Other information
repayment of the loan on providing notice to the Company containing an explanation of the underlying reasons.
The agreement entered into by A2A S.p.A. with UniCredit S.p.A., brokered by the EIB, for a value of 18 million euro falling due in June 2018 contains a credit-rating clause that provides for a commitment by the Company to maintain an investment grade rating for the whole loan term. In the event of non-compliance there are a number of annual financial covenants to be respected based on the ratios of debt to equity, debt to gross operating income and gross operating income to interest expense.
The lines of revolving committed credit in Club Deal for 600 million euro expiring November 2019, and bilateral revolving committed credit lines for a total of 200 million euro falling due in 2017, currently unused, include a Change of Control clause which in the event of a change of control of the Company causing a Material Adverse Effect allows the banks to request the facility to be extinguished and early repayment of any amounts drawn. In addition, the revolving facility in Club Deal is subject to the consolidated financial covenant NFP/EBITDA not exceeding 4.4x in 2015. The parameter level at December 31 is 2.8x.
The following can be found in the agreements for the bond loans, the loans mentioned above and the lines of revolving committed credit: (i) negative pledge clauses under which A2A S.p.A. undertakes not to pledge, with exceptions, guarantees on its assets or those of its directly held subsidiaries over and above a specific threshold; (ii) cross- default/acceleration clauses which entail immediate reimbursement of the loans in the event of serious non-performance; and (iii) clauses that provide for immediate repayment in the event of declared insolvency on the part of certain directly held subsidiaries.
At December 31, there was no situation of non-compliance with the covenants of A2A S.p.A..
112
Tests were performed to determine whether these transactions qualify for hedge accounting in accordance with International Accounting Standard IAS 39. In particular:
1) transactions qualifying for hedge accounting under IAS 39: can be analyzed between transactions to hedge cash flows (cash flow hedges) and transactions to hedge fair value of assets and liabilities (fair value hedges). For the cash flow hedges, the accrued result is included in gross operating income when realized on commodity derivatives and in the financial balance for interest rate and currency derivatives, whereas the future value is shown in equity. For fair value hedge transactions, the impacts in the income statement are canceled within the same line of the financial statements;
The use of derivatives in the A2A Group is governed by a coordinated set of procedures (Energy Risk Policy, Deal Life Cycle) which are based on industry best practices and designed to limit the risk of the Group being exposed to commodity price fluctuations, based on a cash flow hedging strategy.
Outstanding derivatives at December 31, 2015, are measured at fair value based on the forward market curve at the balance sheet date if the underlying of the derivative is traded on markets that have a forward pricing structure. In the absence of a forward market curve, fair value is measured on the basis of internal estimates using models that refer to industry best practices.
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A2A S.p.A. uses "continuous-time" discounting to measure fair value. As a discount factor, it uses the interest rate for risk-free assets, identified in the Euro Overnight Index Average (EONIA) rate and represented in its forward structure by the Overnight Index Swap (OIS) curve. The fair value of the cash flow hedges has been classified on the basis of the underlying derivative contracts in accordance with IAS 39.
In compliance with the provisions of IFRS 13, the fair value of an over-the-counter (OTC) financial instrument is determined taking into account the non-performance risk. To quantify the fair value adjustment attributable to this risk, A2A S.p.A. has, in line with best market practices, developed a proprietary model called the "bilateral Credit Value Adjustment" (bCVA), which takes into account changes in the creditworthiness of the counterpart as well as the changes in its own creditworthiness.
The bCVA has two addends, calculated by considering the possibility that both counterparties go bankrupt, known as the Credit Value Adjustment (CVA) and the Debit Value Adjustment (DVA):
Separate financial statements – Year 2015 Other information
The bVCA is thus calculated with reference to the exposure, measured on the basis of the market value of the derivative at the time of default, to the probability of default (PD) and the Loss Given Default (LGD). This latter item, which represents the non- recoverable portion of the receivable in the case of default, is measured on the basis of the IRB Foundation Methodology as stated in the Basel 2 accords, whereas the PD is measured on the basis of the rating of the counterparties (internal rating based where not available) and the historic probability of default associated with this and published annually by Standard & Poor's.
Applying the above method did not result in significant changes in fair value measurements.
The following analyses show the outstanding amounts of derivative contracts stipulated and not expired at the balance sheet date, by maturity.
| Thousands of euro | Notional value (a) due within 1 year |
Notional value (a) due within 1 and 5 years |
Notional Amount value (a) reported |
Progressive effect to |
|||
|---|---|---|---|---|---|---|---|
| to be received |
to be paid |
to be received |
to be paid |
due over 5 years |
in balance sheet(b) |
the income statement at 12 31 2015 (c) |
|
| Interest rate risk management | |||||||
| - cash flow hedges as per IAS 39 | 19,048 | 76,190 | 57,143 | (17,157) | |||
| - not considered hedges as per IAS 39 | 503,412 (d) | 8,622 (e) | 8,622 (e) | ||||
| Total derivatives on interest rates |
- | 522,460 | - | 76,190 | 57,143 | (8,535) | 8,622 |
| Exchange rate risk management | |||||||
| - considered hedges as per IAS 39 on commercial transactions on financial transactions |
98,000 | (10,051) | |||||
| - not considered hedges as per IAS 39 on commercial transactions on financial transactions |
|||||||
| Total exchange rate derivatives | - | - | - | - | 98,000 | (10,051) | - |
(a) Represents the sum of the notional value of the elementary contracts that derive from any dismantling of complex contracts.
(b) Represents the net receivable (+) or payable (-) recognized in the balance sheet following the measurement of derivatives at fair value.
(c) Represents the adjustment of derivatives to fair value recognized progressively over time in the income statement from the stipulation of the contract to the present day.
(d) Includes derivative instruments with underlying bond worth 503 million euro, maturing in 2016, and an IRS with notional value of 503 million euro, with no economic effect, as a result of the fair value measurement, hedges and three collars with a notional value of 503 million euro, not qualifying as hedges under IAS 39.
(e) Includes the effect on collars, with a total notional amount of 503 million euro, not considered as hedges according to IAS 39.
At December 31, 2015, there were no outstanding commodity derivatives.
At December 31, 2015, there are no derivatives on investments, while at December 31, 2014, a derivative was recognized in the separate financial statements related to the option agreement between A2A S.p.A. and Società Elettrica Altoatesina S.p.A. (SEL) concerning a portion of the shares of Edipower S.p.A. for 13,732 thousand euro. This derivative was cancelled during the year under review following the signing of the agreement between A2A S.p.A. and Cellina Energy, a company wholly owned by Società Elettrica Altoatesina S.p.A., which approved the non-proportional demerger of Edipower S.p.A., the objective of which is the overall reorganization of the ownership structure of the Company so that following the operation, A2A S.p.A. shall hold 100% of Edipower S.p.A..
The following table shows the balance sheet figures at December 31, 2015, for derivative transactions.
| Thousands of euro | Notes | Total |
|---|---|---|
| ASSETS | ||
| NON-CURRENT ASSETS | - | |
| Other non-current assets - Derivatives | 5 | - |
| CURRENT ASSETS | 16,096 | |
| Other current assets - Derivatives | 8 | 16,096 |
| TOTAL ASSETS | 16,096 | |
| LIABILITIES | ||
| NON-CURRENT LIABILITIES | 27,208 | |
| Other non-current liabilities - Derivatives | 20 | 27,208 |
| CURRENT LIABILITIES | 7,474 | |
| Trade payables and other current liabilities - Derivatives | 21 | 7,474 |
| TOTAL LIABILITIES | 34,682 |
The following table sets out the income statement figures at December 31, 2015 arising from the management of derivatives.
| Thousands of euro | Realized | Change in the fair value during the year |
Amounts recognized in the income statement |
|---|---|---|---|
| 32) FINANCIAL BALANCE | |||
| Interest rate and equity risk management of which: | |||
| FINANCIAL INCOME | |||
| Gains on derivatives | |||
| - considered hedges as per IAS 39 | - | - | - |
| - not considered hedges as per IAS 39 | 8,950 | 14,600 | 23,550 |
| Total gains on derivatives | 8,950 | 14,600 | 23,550 |
| FINANCIAL EXPENSES | |||
| Charges on derivatives | |||
| - considered hedges as per IAS 39 | (4,836) | - | (4,836) |
| - not considered hedges as per IAS 39 | (5,233) | 4,895 | (338) |
| Total charges on derivatives | (10,069) | 4,895 | (5,174) |
| TOTAL BOOKED TO FINANCIAL BALANCE | (1,119) | 19,495 | 18,376 |
To complete the analyses required by IFRS 7 and IFRS 13, the following table sets out the various types of financial instrument that are to be found in the various balance sheet items, with an indication of the accounting policies used and, in the case of financial instruments measured at fair value, an indication of where changes are recognized (income statement or equity). The last column of the table shows the fair value of the instrument at December 31, 2015, where applicable.
| Thousands of euro | Criteria to measure the reported amount of financial instruments | |||||||
|---|---|---|---|---|---|---|---|---|
| Notes | Financial instruments measured at fair value with changes recognized in: |
Financial instruments measured at amortized cost |
Share holding / Holdings securities convertible into unlisted |
Amount as stated in the balance sheet at 12 31 2015 |
Fair value at 12 31 2015 (*) |
|||
| Income statement |
Equity | shareholdings measured at cost |
||||||
| (1) | (2) | (3) | (4) | (5) | ||||
| ASSETS | ||||||||
| Other non-current financial assets: | ||||||||
| Shareholdings / Securities convertible into shareholdings available for sale of which: |
||||||||
| - unlisted | 3,808 | 3,808 | n.a. | |||||
| - listed | - | - | ||||||
| Financial assets held to maturity | 96 | 96 | 96 | |||||
| Other non-current financial assets | 401,458 | 401,458 | 401,458 | |||||
| Total other non-current financial assets | 3 | 405,362 | ||||||
| Other non-current assets | 5 | 453 | 453 | 453 | ||||
| Trade receivables | 7 | 146,948 | 146,948 | 146,948 | ||||
| Other current assets | 8 | 16,096 | 88,608 | 104,704 | 104,704 | |||
| Current financial assets | 9 | 605,367 | 605,367 | 605,367 | ||||
| Cash and cash equivalents | 11 | 587,050 | 587,050 | 587,050 | ||||
| Assets held for sale | 12 | 469 | 469 | 469 | ||||
| LIABILITIES | ||||||||
| Financial liabilities | ||||||||
| Non-current bonds (**) | 17 | 2,430,953 | 2,430,953 | 2,430,953 | ||||
| Current bonds (**) | 22 | 522,387 (a) | 49,199 | 571,586 | 571,586 | |||
| Other non-current and current financial liabilities 17 and 22 | 1,371,904 | 1,371,904 | 1,371,904 | |||||
| Other non-current liabilities | 20 | 27,208 | 23 | 27,231 | 27,231 | |||
| Trade payables | 21 | 162,013 | 162,013 | 162,013 | ||||
| Other current liabilities | 21 | 7,474 | 107,665 | 115,139 | 115,139 |
(*) The fair value has not been calculated for receivables and payables not related to derivative contracts and loans as the corresponding carrying amount is a good approximation to this.
(**) Including accrued interest.
(a) Amortized cost + fair value risk hedge, as further specified in note 22) Current financial liabilities.
(1) Financial assets and liabilities measured at fair value with the changes in fair value recognized in the Income statement.
(2) Cash flow hedges.
(3) Financial assets available for sale measured at fair value with profit/loss recognized in equity.
(4) Loans and receivables and financial liabilities measured at amortized cost.
(5) Available-for-sale financial assets, including unlisted shareholdings whose fair value cannot be measured reliably, are carried at the lower of costs, which may be reduced due to impairment.
IFRS 7 and IFRS 13 require that fair value classification of financial instruments to be based on the quality of the input source used to calculate the fair value.
In particular, IFRS 7 and IFRS 13 set out three levels of fair value:
The following table provides a breakdown of the assets and liabilities in the different levels of fair value.
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| Thousands of euro | Note | Level 1 | Level 2 | Level 3 | Total |
|---|---|---|---|---|---|
| Assets available for sale measured at fair value | 3 | 3,808 | 3,808 | ||
| Other current assets | 8 | 16,096 | 16,096 | ||
| TOTAL ASSETS | - | 19,904 | - | 19,904 | |
| Other non-current liabilities | 20 | 27,208 | 27,208 | ||
| Current financial liabilities | 22 | 522,387 (a) | 522,387 | ||
| Other current liabilities | 21 | 7,474 | 7,474 | ||
| TOTAL LIABILITIES | - | 557,069 | - | 557,069 |
(a) Amortized cost + fair value risk hedge, as further specified in note 22) Current financial liabilities.
The following table shows the main concessions obtained by A2A S.p.A.:
| Number | Maturity | Notes | ||
|---|---|---|---|---|
| from | to | |||
| Hydroelectric concessions |
20 | 2016 | 2043 | of which: - 7 Concessions past due managed in prorogation. |
| Urban illumination and traffic lights management agreements |
7 | 2024 | 2029 | of which: - 2 Concessions managed in tacit renewal. - 2 Concessions with maturity consistent with the duration of A2A S.p.A |
| Other concessions | 3 | 2020 | 2039 |
Adequate provisions are provided where necessary for the disputes and litigation described below. It is noted that if there is no explicit reference to the presence of a provision, the Company assessed the corresponding risk as possible without appropriating provisions in the financial statements.
With regard to the EC infringement procedure, it is noted that the Company has already proceeded, as described below, to the payment of all amounts due. Any developments in the dispute could therefore only result in a benefit.
On June 5, 2002, the European Commission published Decision no. 2003/193/EC stating that the three-year exemption from income tax provided by article 3 paragraph 70 of Law no. 549/95 and article 66.14 of Decree Law no. 331/1993, converted into Law no. 427/93, is incompatible with community law, considering this to be "State aid" which is prohibited by article 87.1 of the EC Treaty.
The company appealed against this decision before the community jurisdictions but these appeals were rejected. The Italian State went ahead with the recovery of the aid in three separate stages, issuing different orders for the various tax period concerned.
The process followed by the various community and national appeals was described in the financial statements up until 2012 and in the quarterly reports up until the third quarter of 2013, to which reference is made for brevity. All the amounts requested for the principal and interest for 289.3 million euro have been settled to avoid any executive action.
The situation regarding pending matters is as follows:
Separate financial statements – Year 2015 Other information
made an appearance before the court and filed a brief; the Italian State and the European Commission have done the same, taking a position in opposition to the Company. The related proceedings are registered under number C-89/14.
As of today, therefore, the question concerning the quantification of the interest due on the amounts to be recovered is still pending in cassation (whether the interest is compound or simple interest), related to the Second and Third recovery. On this point, the interpretation made by the European Court of Justice is binding on national courts. On March 26, 2015, the Attorney General at the Court of Justice, Melchior Wathelet, submitted his non-binding conclusions to the Court. According to the Attorney General, European legislation does not preclude that national legislation provides for the application of compound interest to a recovery action for illegal aid. However, the same Attorney General found that before 2008, neither European nor national legislation envisaged the application of compound interest for recovery activities.
By sentence ruled on September 3, 2015, the EU Court substantially transposed the opinion of the Attorney General, considering that a national legislation regarding interest on the recovery of State aid, which provides for the application of compound interest, is not contrary to European law. However, the Court highlighted that – before 2008 – no legislation (European and national) provided for the application of compound interest for the recovery of State aid relating to Decisions issued – as in this case – before the entry into force of Reg. no. 794/2004.
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Following this binding sentence on the national court, the proceedings in cassation on the Third recovery suspended following the prejudicial referral to the Court of Justice, will resume its course. The date of the hearing for discussion was set for March 18, 2016.
The purchase by BAS S.p.A. of the investment in HISA was made through a local consultant, Consult Latina.
As the wording of the contract was not totally clear and because BAS S.p.A. on its own did not buy 100% of HISA, BAS S.p.A. held that the contractual clause was not applicable and that the payment request made by Consult Latina was unjustified, and accordingly did not pay the fee due to Consult Latina, which in 1998 commenced legal action for payment.
Legal counsel has confirmed that the preliminary phase has been completed and that only the final sentence is awaited.
A2A S.p.A. has always instructed legal counsel to settle the case and has recently expressed its willingness to increase previous offers to cover the costs of the suit, although awaiting a specific figure that can then be assessed, also showing its availability to listen to and consider incremental requests. To date, specific requests are pending, considering that the Court urged the parties to find a settlement solution in recent months. Redengas, a subsidiary of HISA, the shares of which are subject to a lien by Consult Latina, has filed a new suit to call for the removal of the lien on the shares that remains in Consult Latina's favor; legal counsel has advised that the legal counsel of Redengas has announced that it will file a counter suit against A2A S.p.A. and Consult Latina, but several months later this has still to be notified. On June 3, 2014 the court rejected the suit filed by A2A S.p.A. and Consult Latina to remove the sequestration ordered by the judge at the request of Consult Latina on the present and future shares of Redengas, and A2A S.p.A. has filed an appeal.
The Court convened the parties in a council chamber which was held December 18, 2014 to verify the conditions of a conciliation or transaction; following the discussion, the Court has set a new discussion session for February 19, 2015 to receive indications from the parties; in view of subsequent postponements requested by Consult Latina, the parties are continuing to pursue settlement options without formal pleadings being carried out.
The Company has set aside a risk provision of 1.3 million euro.
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On May 2 and May 3, 2011 respectively, the Milan Arbitration Chamber sent A2A S.p.A. (the holder of an interest of 50% in the share capital of Ergosud S.p.A.) and E.ON Europa S.L. a request for arbitration in which Société Financiere Cremonese S.A. in conjunction with Eurosviluppo Industriale S.p.A. initiated an arbitration procedure against such companies, requesting (i) ascertainment as to non-fulfillment by E.ON Europa S.L. and A2A S.p.A. of the obligations assumed in the agreements of December 16, 2004, October 15, 2004 and July 25, 2007 inter partes and (ii) by virtue of the effect, that they be ordered to pay the remaining part of the price for the sale of the shares making up the whole share capital of Ergosud S.p.A., amounting to 10,000,000 euro, as well as compensation for the damages suffered by Société Financiarie Cremonese S.A. and Eurosviluppo Industriale S.p.A. from the double standpoint of the consequential loss or damage and loss of profits in the amount of 126,496,496 euro, save better specification, plus damages for the stoppage at the worksite, interest and revaluation.
E.ON Europa S.L. and A2A S.p.A. duly appeared before the court calling for the request to be rejected in full and by cross-claim calling for the counterparties to be condemned to pay compensation for the damages suffered by the defendants as the result of the numerous examples of contractual non-fulfilment, quantified initially in the amount of 30,500,000 euro, or alternatively the greater or lesser sum considered equitable, quantified also pursuant to article 1226 of the civil code, plus interest, pursuant to article 1283 of the civil code, and monetary revaluation, pursuant to article 1284 of the civil code.
On September 7, 2011, the Chamber of Arbitration officially suspended arbitration due to the non-payment of the legal expenses by the claimant.
Lawyers for A2A S.p.A. and E.ON Europa S.L. have checked whether arbitration can be continued only for the counter-claim without having to take responsibility for the payment of the claimant's expenses.
With regard to payment of the legal fees by defendants A2A S.p.A and E.ON Europa S.L., and the non-payment by claimants S.F.C. S.A. and Eurosviluppo Industriale S.p.A., on December 2, 2011 the secretary of the Chamber of Arbitration communicated that the claimants' applications had been extinguished and proceedings would continue only for the applications presented by A2A S.p.A. and E.ON Europa S.L.; in simultaneous letters, the secretary also advised that all documentation had been sent to the arbitrators to allow the proceedings to commence.
The Board consists of Giuseppe Portale (Chairman), Vincenzo Mariconda (arbitrator appointed by A2A S.p.A. and E.ON Europa S.L.) and Giovanni Frau (arbitrator identified by S.F.C. S.A. and Eurosviluppo Industriale S.p.A.).
123
On February 1, 2012 the first hearing was held after formalities had been completed regarding the setting up of the Board at which it was stated that the terms for the questions originally proposed by S.F.C. S.A. and Eurosviluppo Industriale S.p.A. had lapsed. In addition, the parties were assigned the dates by which pleading and replies should be filed and items of evidence produced. In particular, having become claimants from a substantial standpoint (wishing to continue with the case by counter-claim following the above-mentioned lapse of the counterparty's terms), E.ON Europa S.L. and A2A S.p.A. were invited to note their questions and indicate their evidence by March 15, 2012; the subsequent dates for filing pleading were set as April 16, 2012, May 8, 2012 and May 31, 2012.
The date of the hearing for the personal appearance of the parties was set for June 12, 2012 in order to make an attempt at reaching a settlement and for any informal questioning. At the hearing, adjourned to June 19, 2012, the Arbitration Board acknowledged the bankruptcy of Eurosviluppo Industriale S.p.A. which had occurred and set a date of October 30, 2012 for the appointment of a receiver and a date of November 20, 2012 for the hearing for the attempt to reach a settlement and carry out any informal questioning of the parties.
In view of the intervening bankruptcy of Eurosviluppo Industriale and the process issues raised during such declaration, the Board issued a decision dated November 13, 2012 ordering that the hearing set for November 20, 2012 should not be devoted to an attempt at reaching a settlement and, therefore, would not include the presence of the parties.At the hearing on November 20, 2012, the Board set the deadline for filing the award as July 4, 2013; also, the deadlines for the parties to file briefs were set as December 20, 2012 and January 31, 2013, and February 20, 2013 was set for the hearing date for discussion, to be held at the office of the Chairman of the Board. At the hearing of February 22, 2013 (the hearing was adjourned from February 20 to February 22 due to a commitment of the Chairman of the Arbitration Board), the Board issued an order requesting A2A S.p.A. and E.ON Europa S.L. to add to their respective attorneys to remedy all possible defects by March 20, 2013, and set March 20, 2013 and April 5, 2013 as the new final dates for the filing of briefs and replies to clarify and explain their respective positions. Subsequent to these obligations, the Board reserved the right to issue an order. On June 5, 2013, the Board filed an order in which it set July 22, 2013 as the date of the hearing for an attempt to reach a settlement and for questioning by the parties; given the deadline of July 4, 2013 previously set for the filing of the decision, the Board made an application to the Chamber for the granting of a reasonable extension.
124
At the end of the hearing of July 22, 2013, in which the questioning by the parties took place and the absence of the conditions for reaching a settlement was confirmed, the Chamber set a deadline of September 30, 2013 for filing documents and drawing up preliminary motions and October 21, 2013 for any submissions in reply from the lawyers. On October 2, 2013 the Chamber of Arbitration noted that S.F.C. S.A. and the bankruptcies had not paid the contributions requested in July and as of today the proceeding is suspended. On October 22, 2013, S.F.C. S.A., in breach of the terms of the arbitration and the questions raised by the Arbitration Board, filed an appraisal arranged on its behalf having technical content. In a decision on November 27, 2013, the Board ordered an expert witness to verify the cogeneration capabilities of the plant and appointed as the expert witness Mr. L. Guizzi. The company appointed Mr. Massardo as its own expert witness, S.F.C. S.A. Mr. Ambrogio and Mr. Lazzeri. After the hearing of January 22, 2014 for formalities relating to the appointment of the expert witnesses, the Board set a deadline of June 16, 2014 for the filing of the related report. The report was filed within the legal terms and contained confirmation of the arguments of A2A S.p.A. and E.ON Europa S.L. The continuation of the arbitration may be affected by the fact the S.F.C. S.A., Eurosviluppo Industriale S.p.A. and Consorzio Eurosviluppo S.c.a.r.l. On February 4, 2015, the Arbitration Board set new terms for the expert witness and the parties for replies following the filing of a further technical brief of S.F.C. S.A. to then set the hearing for April 23, 2015. The Chamber of Arbitration ordered the postponement of the deadline for filing the award. At the hearing on April 23, 2015, the Board set new terms for briefs and a hearing date if requested by the parties at September 23. A hearing was not requested and it is therefore necessary to wait for the filing of the award. The Chamber of Arbitration set a new deadline for the filing of the award on February 1, 2016, then postponed to March 2, 2016. On March 1, 2016, the Arbitration Chamber notified the filing of the award signed by the arbitrators on February 29, 2016. The award was approved unanimously and, after rejecting the issue of constitutionality raised by SFC and Eurosviluppo Industriale and the preliminary exceptions carried out by the Bankruptcy Eurosviluppo Industriale, ascertained the nonfulfilment of SFC and Eurosviluppo Industriale of the obligations of private agreements signed with A2A and EON, declared that EON and A2A are not required to pay the third instalment of the price established for the purchase of Ergosud shares (for 10 million euro) and ordered SFC and Eurosviluppo Industriale to pay jointly the total compensation for damages to A2A and EON of 8.1 million euro plus legal interest, rejects or declares absorbed any other issue and declares fully settled between the parties the costs of arbitration.
The Company has not allocated any provisions as it does not deem as probable the risk related to this pending lawsuit.
On May 27, 2011, Consorzio Eurosviluppo Industriale S.c.a.r.l. served a writ on Ergosud S.p.A. and A2A S.p.A. with the following claims: (i) compensation for damages, of both a contractual and extra-contractual nature, jointly, or alternatively exclusively and separately, in the amount of 35,411,997 euro (of which 1,065,529 euro as the residual portion of their share of the expenses); (ii) compensation for damages for the stoppage at the worksite and the failure to return the areas of pertinence to the Consortium.
125
In the filing of appearance Ergosud S.p.A. and A2A S.p.A. called for the request to be rejected in full because it is unfounded in its merit and in its substance, and pointed out: (i) the lack of the right of the Consortium to institute proceedings as it is currently in a state of bankruptcy, (ii) the lack of the right of the Consortium to institute proceedings for the damages allegedly suffered by Fin Podella at the item "anticipation of program contract" for 6,153,437 euro and the damages allegedly suffered by Conservificio Laratta S.r.l. for 359,000 euro.
The first hearing was fixed for October 30, 2011. This case has been assigned to the Second Civil Section of the Court, Single Judge Lorenzo Pontecorvo. The first appearance hearing was set for November 30, 2011 and the judge deferred decision concerning the legitimacy of the failed Consortium to establish a case.
On this occasion, Ergosud S.p.A. and A2A S.p.A. were not able to make any cross-claims as the competence for this lies with the bankruptcy judge.
S.F.C. S.A. filed a notice of joinder on November 8, 2011 pursuant to article 105 CPC (Civil Procedure Code) (which allows a third party to make a new, different request to the original judge, extending the argument) and called that Ergosud S.p.A. alone should be ordered to pay damages, in part similar to those claimed by the Consortium, quantified in 27,467,031 euro.
The legitimacy of S.F.C. S.A. is independent with respect to that of the Consortium, the original claimant, and should it be found that the request of the Consortium may not proceed further for lack of grounds (or because of the bankruptcy that has occurred), the judgment would continue between S.F.C. S.A. and Ergosud S.p.A.. In this scenario, A2A S.p.A. could ask to be excluded since no request would have been raised against the Company, but for the purpose of simplicity the judge would probably remit the question to the final sentence.
Within the term set for the first hearing, the lawyers formulated conclusions on behalf of Ergosud S.p.A. in respect of the request made by S.F.C. S.A., then counter-claiming in a more complete manner in the subsequent preliminary pleadings pursuant to article 183, paragraph VI of the civil procedure code.
The judge found the bankruptcy was legitimate as S.F.C. S.A. and therefore set the end of the proceedings and the hearing for December 19, 2012, declaring the need to execute an expert opinion on a number of points, indicating the questions to put to the expert and setting May 23, 2013 as the date for the hearing to appoint the court's expert witness. At that hearing the judge, changed in the meantime, confirmed the questions already formulated on December 19, 2012 and appointed the court experts Messrs. Pompili and Caroli, setting a term for the parties to appoint their own consultants. The start of the experts' work was scheduled as June 18, 2013, with a deadline of 180 days after that date. A2A S.p.A. and Ergosud S.p.A. appointed as their experts Mr. Massardo and Mr. Gioffrè, persons who over the years have already drawn up reports on the matters to which the questions refer. The deadline for the expert's filing was postponed. The court experts Messrs. Pompili and Caroli submitted their reports within the term set for their observations, confirming the defensive reasoning of Ergosud S.p.A. and A2A S.p.A.; the parties' experts had until June 30, 2014 to submit their observations and their reports were filed with the court on July 31, 2014. The hearing date was fixed for January 22, 2015 to review the expert's report and then postponed to April 1, 2015. At said hearing, the hearing for clarification of conclusions has been scheduled for November 30, 2016.
The Company has not allocated any provisions as it does not deem as probable the risk related to this pending lawsuit.
126
In November 2011, the Trieste Judicial Authority took restrictive action against several individuals in the Veneto, Friuli Venezia Giulia and Lombardy regions, including an employee of the Monfalcone thermoelectric plant, for criminal association aimed at defrauding the state and private persons and conceptual falsity, as well as activities organized for illegal trafficking in waste.
This investigation was initiated with a report filed in March 2011 by the management of the A2A Group against A2A employees and third party businessmen suspected of being responsible for fraud carried out to the harm of the Company itself, who - for the payment of conspicuous sums of money - guaranteed the disposal of special waste by illegal trafficking and the falsification of forms identifying the waste and certificates of analysis, in relation to the supply of biomasses and the certification of their calorific value. More specifically, biomass quantities were recorded on entry at figures higher than the real ones, with the relative calorific values also being increased.
A2A S.p.A., the owner of the production site, ordered the precautionary suspension of the employee concerned and a freezing of the payments of the invoices issued by the biomass suppliers, which, to its knowledge, are involved in the investigations.
Nevertheless the A2A Group, and in particular A2A Trading S.r.l., may incur damages, at its sole expense, arising from the qualitative and quantitative differences in the biomasses, since there is the risk for the latter, as toller and in charge of the plant's dispatch, that on the completion of the preliminary stage it may incur increased costs for the biomasses not delivered and increased costs for (others) incorrectly stating the calorific value of the biomasses, delivered and not delivered.
127
To this should be added that the increased use of coal instead of biomasses could have as a consequence an increase in the environmental costs relating to the second half of 2009 and the whole of 2010, as well the need to reimburse the additional income or environmental allowances recognized with respect to the real income or allowances (the reference here is to Green Certificates). In fact for 2009 and 2010 the Company may have filed declarations generating environmental allowances that are greater than those actually produced, as the calculation may have been affected by considering biomass energy to conventional source energy ratio that is mistakenly higher than the real figure.
If this were the case, the Company would have to file corrections to the above-mentioned past declarations and reimburse the income relating to environmental allowances that may have additionally been recognized. To date, the GSE, as it blocked the issuing of licenses for subsequent years, did not address return requests for previous annuities of competence of the A2A Group (second half of 2009-full-year 2010). If the GSE were to take action against the A2A Group, it will evaluate the appropriate actions, including damages, considering also the amount withheld from third-party suppliers.
Further, in accordance with the procedures and modalities required, A2A Trading S.r.l. has filed a request with the GSE to obtain Green Certificates relating to 2011 in which the calculation has been made on the basis of the real quantities of biomasses delivered to the power station and, in agreement with the Public Prosecutor, by taking into account a possible false increase of 20% in the calorific values of such. Despite the fact that the GSE has acknowledged the correctness of the calculations made by A2A Trading S.r.l. for 2011, as of today the abovementioned 2011 Green Certificates have not yet been issued.
Some provisions have been adopted as part of alternative rites to some of the defendants, with recognition of minimum compensation and recasts of expenses in favor of A2A.
The proceeding passed, for local jurisdiction, before the Court of Gorizia. The debate has started.
The Company has not allocated any provisions as it considers to be the aggrieved party in the proceedings.
128
On March 29, 2013, Pessina Costruzioni notified A2A S.p.A. of the appointment of the arbitrator and the deposition with the arbitrators to initiate the arbitration, in fulfilment of the shareholders' agreements signed in August 2007, with the scope of having A2A S.p.A. ordered to pay compensation for damages for the non-fulfillment of its obligations under the agreements.
A2A S.p.A. appointed its arbitrator within the established term of 20 days, rejecting the requests.
After discussion on the appointment, and after a request for the appointment of a sole arbitrator made by Pessina to the Court of Novara, the parties signed an agreement concerning the formation of the Arbitration Board.
The appointed arbitrators are the Lawyers Bruna Gabardi Vanoli, Marco Praino (designated by Pessina) and Salvatore Sanzo (designated by A2A S.p.A.); the hearing for the formal constitution of the board was on July 1, 2013. After this preliminary fulfilment, the parties will specify the applications for arbitration. As a result of the hearing, by means of a summary order, the board fulfilled the requirements for it to be formally established and be able to commence work, setting the deadlines for briefs and preliminary motions and the date of the first hearing. The dates set are October 15 and December 20, 2013 and February 21, 2014 for the submission of briefs and March 5, 2014 for the first hearing. By order of October 8, 2013, the Arbitration Board postponed the deadline for the submission of briefs respectively to October 9, 2013, January 21, 2014 and March 25, 2014. Consequently, the hearing set for March 2014 was postponed to April 10, 2014. The location for the arbitration was set as the offices of the President of the Arbitration Board in Milan. At the hearing of April 10, 2014, preceded by the submission of the parties' briefs, the Board set three new deadlines for the briefs (May 20 for A2A, June 17 for Pessina and June 26 for A2A) and set the date of the merit hearing as July 11, 2014. During the hearing, the plaintiff requested to fix a hearing for conclusions that by order outside the hearing filed on July 22 was set for September 16, 2014. At that hearing, the board set the terms for the filing of the final statements and the date of final hearing; at the request of the parties, such terms were postponed to December 3 and January 7, 2015 for the briefs and February 3, 2015 for the hearing. At that hearing, the board ordered an extension of the deadline for filing the award to 120 days. At the end of May 2015, A2A, having had news of habitual familiarity and commensality elements between the Chair of the Arbitration Board and the lawyer of the claimant, filed at the court of Milan application for recusal of the Chair of the Arbitration Board.
In view of the news of the appeal, with Ordinance 6 issued outside the hearing on June 3, 2015, the Board suspended the filing of the award until the end of the proceeding, or until the day following the notification of the outcome of the proceeding conducted by the most diligent party.
The Delegated Chair issued an order rejecting the request condemning A2A to litigation costs to the Chair of the Board and to Pessina.
129
On June 30, 2015, Pessina notified the Board, in execution of Ordinance 6/15, requesting the board to summarize the pending arbitration process.
On June 30, 2015, the Board, with the dissenting opinion of the arbitrator appointed by A2A filed its award that deems A2A responsible for violation of the shareholders' agreement signed on August 4, 2007 and, consequently, the order to pay damages of 37,968,938.95 euro plus legal fees and arbitration expenses.
The company challenged the Award pursuant to art. 829 CPC before the Milan Court of Appeal. The appeal concerns: 1) nullity of the Award for violation of art. 829, paragraph 1, no. 2, CPC, in light of the lack of impartiality of the Chair of the Arbitration Board, the lawyer Bruna Gabardi Vanoli; 2) the nullity of the Award, pursuant to art. 829, no. 4, CPC, as the arbitration board pronounced outside the limits of the arbitration agreement; 3) nullity of the Award for violation of the adversarial principle, pursuant to art. 829, no. 9 CPC, in so far as the arbitration board based its decision on art. III of the Shareholders' Agreement; 4) failure to state reasons under art. 829, no. 5 and 823, no. 5 CPC, and violation of the adversarial principle pursuant to art. 829, no. 9 CPC, as the arbitration board took its decision, excluding, for no reason, the evaluation of the documentation filed in court by A2A; 5) nullity of the Award for violation of the adversarial principle, pursuant to art. 829, no. 9 CPC, as the arbitration board decided on the basis of accepting the importance of the office of an equitable settlement of the damage, without submitting the issue to a hearing of the parties; 6) nullity of the Award pursuant to art. 829, no. 5 and 823, no. 5 CPC, as the arbitration board assessed the damages on an equitable basis pursuant to art. 1226 Civil Code, without justifying the existence of the condition for the applicability of said provision, and without justifying the existence of the damage; 7) nullity of the Award pursuant to art. 829, no. 3, as the arbitration board assessed the damages on an equitable basis pursuant to art. 1226 Civil Code, without the necessary conditions, in violation of public order. After the first hearing held on December 16, 2015, a hearing was scheduled for the final judgement on May 3, 2016.
Simultaneously, in July 2015, A2A filed an appeal for suspension of enforcement of the Award. The Court of Appeal by a decree issued by the Chair of the 1st Civil Section on July 10, 2015, without hearing the parties, suspended the enforceability of the Award until the hearing before the Board set for September 15, 2015. On joint request of the parties on September 11, 2015, said hearing was postponed to November 10, 2015. By order issued outside the hearing on November 19, 2015, the decree issued on July 10 was revoked. By decision 3378 of December 18, the Court of Milan granted the enforceability of the award requested by Pessina, immediately suspended the same day by order issued by the President of the First Section of the Court of Appeal at the request of A2A, scheduling a hearing on January 19, 2016. By order of January 26, 2016 notified on February 4, 2016, the Court of Appeals revoked the Presidential Decree of December 18, 2015 and rejected the request for suspension of the contested measure. On February 24, 2016, Pessina notified injunction and on March 7, 2016 notified garnishment (with a leading banking institution with which A2A opened a specifically dedicated bank account), with the simultaneous assumption by the garnishee of the obligations that the law imposes on the keeper. On March 23, 2016, the garnishment was registered and the hearing for the third-party statement was fixed by the Court of Brescia for May 23, 2016.
130
The Company has taken into account the outcome of the Award in the establishment of appropriations to provisions for future risks and charges, allocating the full amount of the Award plus expenses, despite the firm conviction of its positions.
On March 24, 2015, Carlo Tassara S.p.A. notified A2A, Electricité de France (EDF) and Edison a summons requesting the Court of Milan to condemn A2A and EDF to compensation for damages allegedly suffered by Carlo Tassara, in its capacity as minority shareholder of Edison, in relation to the mandatory tender offer launched by EDF on Edison shares consequently to the transaction by which, in 2012, A2A sold its indirect shareholding in Edison to EDF and simultaneously acquired 70% of the capital of Edipower from Edison and Alpiq.
Until 2012, in fact, A2A and EDF held joint control of Edison S.p.A. Edison, in turn, held 50% of Edipower S.p.A. (the remaining capital of Edipower was held 20% by Alpiq, 20% by A2A and the remaining 10% by Iren).
In the 2012 transaction, A2A sold its indirect shareholding in Edison to EDF and simultaneously acquired 70% of the capital of Edipower from Edison and Alpiq.
In the summons notified, Carlo Tassara complained that, in the transaction, EDF and A2A agreed on a mutual "discount" on the price paid by EDF for the purchase of Edison shares, on the one hand, and on the price paid by A2A for the purchase of 70% of Edipower, on the other. This discount was expected to be the result of abusive conduct by EDF and A2A as shareholders of Edison and the violation, among other things, of the regulations on transactions with related parties. This - according to Carlo Tassara - was expected to allow maintaining artificially low the price of the Edison shares paid to A2A and consequently the tender offer price paid to minorities of Edison (which by law was expected to be equal to that paid to A2A).
However, in 2012, A2A and EDF had voluntarily subjected the Transaction to the prior examination of Consob precisely in order to confirm the correctness of the tender offer price. Following extensive examinations, Consob had deemed that a compensatory mechanism could be detected in the transaction as a whole (i.e. between the sale of Edipower on the one hand and the sale of Edison shares on the other) and that therefore the tender offer price was to be increased from 0.84 euro to 0.89 euro per share.
In light of said decision, the parties had increased the sale price of the shareholding in Edison based on the price of 0.89 euro per share, for a total increase of around 84 million euro. EDF launched the tender offer at 0.89 euro per share.
Carlo Tassara resorted to Consob in order to further increase the price of the tender offer, but Consob rejected the request.
In addition, pending the tender offer, Carlo Tassara challenged before the TAR the tender offer document and the related resolution of approval by Consob requesting suspensions thereof for reasons of urgency. However, the TAR postponed the decision on the suspension to a date following the closing of the tender offer and, as a result of this, Carlo Tassara adhered to the tender offer and waived the cautionary request.
The writ of summons does not quantify the damages allegedly suffered by Carlo Tassara as a result of these transactions, referring for their determination to the outcome in the course of proceedings.
During the first hearing held on December 1, 2015, the prejudicial and preliminary exceptions were discussed (mainly, preclusion and admissibility of action and the lack of capacity to be sued of Tassara).
At the following hearing on January 26, 2016 for final judgement, solely to develop the aforementioned exceptions, the judge held the case to decision assigning to the parties the terms for the filing of final submissions and reply briefs.
The Company, having fulfilled the requirements of the regulations in force, does not consider likely the risk for which it has not allocated any provisions.
* * *
The following information is provided in connection with the main litigation of a fiscal nature.
132
On January 20, 2014 the Regional Department of the Lombardy Tax Revenue Office – Milan Large Taxpayers Section – initiated a general audit of A2A S.p.A. for IRES, IRAP and VAT purposes for fiscal 2010. This audit was completed on December 15, 2014. The findings related to violations exclusively regarding direct taxation. On January 14, 2015, the Company also requested a report of facts ascertained, and following notification of the tax assessments by the Tax Authorities, on March 31, 2015, adhered to the tax claim. At December 31, 2015, no provision for risks is recorded as the Company has already adjusted the tax notices received during the year.
In early 2006, the Italian Finance Police – Lombardy Regional Unit, Milan – carried out a tax audit of AMSA Holding S.p.A. (now A2A S.p.A.) for VAT purposes for tax years 2001 to 2005.
The audit ended with the issue of a final report contesting the legitimacy of the ordinary VAT rate, in place of the special rate applied by suppliers for waste disposal and plant maintenance, as well as the subsequent deduction made after the invoices issued for these services were duly paid.
The report was followed by formal notices of assessment from the Tax Revenue Office (Milan 3 Office) for each year audited; appeals were then filed with the Provincial Tax Commission within the term provided by law.
The appeals for 2001 and for 2004 and 2005 were discussed on January 25, 2010 and on February 17, 2010 respectively, with a favorable outcome for the Company in all cases. The Tax Revenue Office appealed against the verdict of the first court. The Regional Tax Commission rejected this appeal for all three years, 2001, 2004 and 2005.
For 2011 the Tax Revenue Office filed an appeal with the Supreme Court against which AMSA Holding S.p.A. filed a cross-appeal on November 9, 2012.
The outcomes of the 2002 and 2003 disputes were also favorable for the Company but the Tax Revenue Office filed an appeal against both sentences. The appeal for 2002 was discussed on November 30, 2010, and by way of a sentence lodged on February 2, 2011 the Milan Regional Tax Commission overturned the sentence of the first court, upholding the Tax Revenue Office's appeal on almost all counts with the exception of the hazardous waste category. The company filed an appeal with the Supreme Court for 2002. For 2003 the appeal made by the Tax Revenue Office was discussed on November 7, 2011 before the Regional Tax Commission which rejected it with a sentence filed on November 11, 2011. The Tax Revenue Office has not appealed to the Supreme Court for 2003, 2004 and 2005 and the sentence has become final, thereby closing the litigation. For 2001 and 2002, the hearing dates for discussion before the Supreme Court have not yet been set. The Company has set aside a risk provision for 1.6 million euro.
At December 31, 2015, A2A S.p.A. had no surplus of environmental certificates.
In accordance with Article 2427, paragraph 16-bis, of the Italian civil code, it is hereby reported that the Company paid the independent auditors total fees for the legally required auditing of the annual accounts and for other services provided during the year in the amount of 321.8 thousand euro, unchanged compared to the year 2014.
The registered office of the Company is in Brescia in Via Lamarmora 230.
| Tangible assets Thousands of euro |
Balance at 12 31 2014 | Changes during the year | ||||||
|---|---|---|---|---|---|---|---|---|
| Gross value |
Accumulated depreciation |
Residual value |
Acquisitions | Changes in category |
Gross value |
Reclassifications Accumulated depreciation |
||
| Land | 34,805 | (5,170) | 29,635 | 39 | ||||
| Buildings | 540,290 | (264,997) | 275,293 | 704 | 1,177 | |||
| Plant and equipment | 2,598,382 | (1,651,154) | 947,228 | 475 | 21,387 | |||
| Industrial and commercial equipment | 21,923 | (20,374) | 1,549 | 161 | ||||
| Other assets | 31,634 | (29,285) | 2,349 | 362 | 160 | |||
| Under construction and advances | 26,669 | 26,669 | 31,377 | (22,763) | ||||
| Leasehold improvements | 21,237 | (1,178) | 20,059 | 6,454 | ||||
| Total tangible assets | 3,274,940 | (1,972,158) | 1,302,782 | 39,533 | - | - | - |
| Tangible assets Thousands of euro |
Balance at 12 31 2013 | Changes during the year | ||||||
|---|---|---|---|---|---|---|---|---|
| Gross value |
Accumulated depreciation |
Residual value |
Acquisitions | Changes in category |
Reclassifications Gross value |
Accumulated depreciation |
||
| Land | 34,999 | (5,170) | 29,829 | 56 | ||||
| Buildings | 539,756 | (253,042) | 286,714 | 977 | 1,223 | (17) | 1 | |
| Plant and equipment | 2,618,303 | (1,584,785) | 1,033,518 | 3,899 | 1,966 | |||
| Industrial and commercial equipment | 21,568 | (20,007) | 1,561 | 355 | 16 | (1) | ||
| Other assets | 31,941 | (29,058) | 2,883 | 176 | ||||
| Under construction and advances | 10,696 | 10,696 | 19,586 | (3,189) | ||||
| Leasehold improvements | 627 | (600) | 27 | 20,609 | 1 | |||
| Total tangible assets | 3,257,890 | (1,892,662) | 1,365,228 | 45,658 | - | - | - |
Separate financial statements – Year 2015
1 - Statement of changes in tangible assets
| Balance at 12 31 2014 Changes during the year |
Changes during the year | Balance at 12 31 2015 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Gross Residual Changes Reclassifications Accumulated Acquisitions |
Others | Disposals | Write | Depreciation | Total | Gross | Accumulated | Residual | |
| value value in depreciation Gross Accumulated category value depreciation |
changes | Gross value |
Accumulated depreciation |
downs | changes for the year |
value | depreciation | value | |
| 34,805 (5,170) 29,635 39 |
(2) | 37 | 34,842 | (5,170) | 29,672 | ||||
| 540,290 (264,997) 275,293 704 1,177 |
(1,362) | 604 | (284) | (12,804) | (11,965) | 540,525 | (277,197) | 263,328 | |
| (1,651,154) 947,228 475 21,387 |
3,339 | (1,228) | 1,228 | (3,716) | (58,758) | (37,273) | 2,618,639 | (1,708,684) | 909,955 |
| 1,549 161 |
(8) | 8 | (337) | (176) | 22,076 | (20,703) | 1,373 | ||
| 2,349 362 160 |
(441) | 439 | (585) | (65) | 31,715 | (29,431) | 2,284 | ||
| 31,377 (22,763) |
(37) | 8,577 | 35,246 | - | 35,246 | ||||
| 6,454 | (1,677) | 4,777 | 27,691 | (2,855) | 24,836 | ||||
| 39,533 - - - |
3,302 | (3,041) | 2,279 | (4,000) | (74,161) | (36,088) | 3,310,734 | (2,044,040) | 1,266,694 |
| Changes during the year | Balance at 12 31 2014 | |||||||
|---|---|---|---|---|---|---|---|---|
| Others | Disposals | Write | Depreciation | Total | Gross | Accumulated | Residual | |
| changes | Gross value |
Accumulated depreciation |
downs | changes for the year |
value | depreciation | value | |
| (250) | (194) | 34,805 | (5,170) | 29,635 | ||||
| (1,649) | (11,956) | (11,421) | 540,290 | (264,997) | 275,293 | |||
| (456) | (513) | 511 | (24,817) | (66,880) | (86,290) | 2,598,382 | (1,651,154) | 947,228 |
| (8) | 8 | (8) | (374) (12) |
21,923 | (20,374) | 1,549 | ||
| (465) | 462 | (18) | (689) (534) |
31,634 | (29,285) | 2,349 | ||
| 37 | (461) | 15,973 | 26,669 | - | 26,669 | |||
| (578) 20,032 |
21,237 | (1,178) | 20,059 | |||||
| (419) | (986) | 981 | (27,203) | (80,477) | (62,446) | 3,274,940 | (1,972,158) | 1,302,782 |
| Intangible assets Thousands of euro |
Balance at 12 31 2014 | Changes during the year | ||||||
|---|---|---|---|---|---|---|---|---|
| Gross value |
Accumulated depreciation |
Residual value |
Acquisitions | Changes in category |
Gross value |
Reclassifications Accumulated depreciation |
||
| Industrial patents and intellectual property rights | 81,285 | (75,730) | 5,555 | 1,940 | ||||
| Concessions, licences, trademarks and similar rights | 31,846 | (22,136) | 9,710 | 2,247 | 872 | |||
| Goodwill | 38,435 | 38,435 | ||||||
| Assets in progress | 473 | 473 | 1,722 | (872) | ||||
| Other intangible assets | 1,307 | (1,123) | 184 | |||||
| Total intangible assets | 153,346 | (98,989) | 54,357 | 5,909 | – | – | – |
| Intangible assets Thousands of euro |
Balance at 12 31 2013 | Effect transaction non-recurring acquisition business unit from Edipower |
|||
|---|---|---|---|---|---|
| Gross value |
Accumulated depreciation |
Residual value |
|||
| Industrial patents and intellectual property rights | 78,315 | (71,749) | 6,566 | ||
| Concessions, licences, trademarks and similar rights | 22,991 | (20,384) | 2,607 | ||
| Goodwill | 39,612 | 39,612 | 955 | ||
| Assets in progress | 5,064 | 5,064 | |||
| Other intangible assets | 1,307 | (1,073) | 234 | ||
| Total intangible assets | 147,289 | (93,206) | 54,083 | 955 |
Separate financial statements – Year 2015
2 - Statement of changes in intangible assets
| Changes during the year | Balance at 12 31 2015 | |||||||
|---|---|---|---|---|---|---|---|---|
| Others | Disposals/Sales | Write | Amortization | Total | Gross | Accumulated | Residual | |
| changes | Gross value |
Accumulated depreciation |
downs | changes for the year |
value | depreciation | value | |
| (38) | (3,318) | (1,416) | 83,187 | (79,048) | 4,139 | |||
| (4) | (3,296) | (181) | 34,961 | (25,432) | 9,529 | |||
| (955) | (955) | 37,480 | - | 37,480 | ||||
| 850 | 1,323 | - | 1,323 | |||||
| (50) | (50) | 1,307 | (1,173) | 134 | ||||
| (42) | – | – | (955) | (6,664) | (1,752) | 158,258 | (105,653) | 52,605 |
| Effect transaction non-recurring acquisition Balance at 12 31 2013 business unit from Edipower |
Changes during the year | Balance at 12 31 2014 | ||||||
|---|---|---|---|---|---|---|---|---|
| Gross Accumulated Residual Acquisitions value depreciation value |
Changes category |
Other in changes |
Write-downs Amortization | Total changes for the year |
Gross value |
Accumulated depreciation |
Residual value |
|
| (71,749) 6,566 |
1,900 1,084 |
(14) | (3,981) | (1,011) | 81,285 | (75,730) | 5,555 | |
| 2,294 6,561 |
(1,752) | 7,103 | 31,846 | (22,136) | 9,710 | |||
| 955 | (2,132) | (2,132) | 38,435 | - | 38,435 | |||
| 3,091 (7,645) |
(37) | (4,591) | 473 | - | 473 | |||
| (50) | (50) | 1,307 | (1,123) | 184 | ||||
| 955 | 7,285 | - (51) |
(2,132) | (5,783) | (681) | 153,346 | (98,989) | 54,357 |
| Shareholdings | Balance at | Changes in 2015 | |||
|---|---|---|---|---|---|
| Thousands of euro | financial statements 12 31 2014 |
Increases | Decreases | Effect non-recurring Transactions |
|
| FINANCIAL ASSETS | |||||
| Subsidiaries: | |||||
| Edipower S.p.A. | 854,552 | ||||
| A2A Reti Gas S.p.A. | 696,280 | ||||
| A2A Reti Elettriche S.p.A. | 668,333 | ||||
| A2A Ambiente S.p.A. | 634,894 | ||||
| Elektroprivreda Cnre Gore AD Nikšic´ (EPCG) | 376,017 | ||||
| A2A Calore & Servizi S.r.l. | 334,477 | ||||
| A2A Ciclo Idrico S.p.A. | 167,000 | ||||
| Abruzzoenergia S.p.A. | 98,971 | ||||
| A2A Energia S.p.A. | 98,743 | ||||
| Retragas S.r.l. | 30,105 | ||||
| Aspem S.p.A. | 26,508 | ||||
| A2A Logistica S.p.A. | 17,268 | ||||
| Selene S.p.A. | 9,222 | ||||
| Assoenergia S.p.A. in liquidation | 5,050 | (4,788) | |||
| Proaris S.r.l. | 3,557 | ||||
| Camuna Energia S.r.l. | 1,467 | ||||
| A2A Trading S.r.l. | 1,099 | ||||
| Ecofert S.r.l. in liquidation | 802 | ||||
| Plurigas S.p.A. in liquidation | 560 | ||||
| SEASM S.r.l. | 469 | ||||
| A2A Montenegro d.o.o. | 102 | ||||
| Mincio Trasmissione S.r.l. | 10 | ||||
| A3A S.r.l. | 10 | ||||
| Ostros Energia S.r.l. in liquidation | - | ||||
| Total subsidiaries | 4,025,496 | - | (4,788) | - | |
| Equity investments held for sale | |||||
| SEASM S.r.l. | - |
Separate financial statements – Year 2015
3/a - Statement of changes in investments in subsidiaries
| Changes in 2015 | Balance at | Share of equity | |||
|---|---|---|---|---|---|
| Write-downs | Other changes |
financial statements 12 31 2015 |
% shareholding |
Equity at 12 31 2015 |
Pro rata amount |
| (117,000) | 737,552 | 79.50% | 955,951 | 759,981 | |
| 696,280 | 100.00% | 709,542 | 709,542 | ||
| 668,333 | 100.00% | 734,564 | 734,564 | ||
| 634,894 | 100.00% | 585,051 | 585,051 | ||
| (97,000) | 279,017 | 41.75% | 913,790 | 381,507 | |
| 334,477 | 100.00% | 356,598 | 356,598 | ||
| 167,000 | 100.00% | 171,357 | 171,357 | ||
| 98,971 | 100.00% | 99,854 | 99,854 | ||
| 98,743 | 100.00% | 170,735 | 170,735 | ||
| 30,105 | 87.27% | 40,180 | 35,065 | ||
| 26,508 | 90.00% | 10,086 | 9,077 | ||
| 17,268 | 100.00% | 17,534 | 17,534 | ||
| 9,222 | 100.00% | 11,903 | 11,903 | ||
| (10) | (252) | - | 97.76% | - | - |
| 3,557 | 60.00% | 6,087 | 3,652 | ||
| 1,467 | 74.50% | 1,083 | 807 | ||
| 33,350 | 34,449 | 100.00% | 86,701 | 86,701 | |
| 802 | 47.00% | 1,706 | 802 | ||
| 560 | 70.00% | 18,434 | 12,904 | ||
| (469) | - | - | - | - | |
| 102 | 100.00% | 118 | 118 | ||
| 10 | 100.00% | 246 | 246 | ||
| 10 | 100.00% | 9 | 9 | ||
| - | 80.00% | (4,279) | (3,423) | ||
| (214,010) | 32,629 | 3,839,327 | 4,887,250 | 4,144,584 | |
| 469 | 469 | 67.00% | 692 | 464 |
| Changes in 2015 | |||||
|---|---|---|---|---|---|
| Thousands of euro | financial statements 12 31 2014 |
Increases | Decreases | Effect non-recurring Transactions |
|
| FINANCIAL ASSETS | |||||
| Affiliates: | |||||
| ACSM-AGAM S.p.A. (*) | 31,600 | 2,451 | |||
| Rudnik Uglja Ad Pljevlja (*) | 19,067 | ||||
| Azienda Servizi Valtrompia S.p.A. | 3,383 | ||||
| Sviluppo Turistico Lago d'Iseo S.p.A. (*) | 837 | ||||
| SET S.p.A. | 466 | ||||
| Serio Energia S.r.l. (*) | 400 | ||||
| Ge.S.I. S.r.l. | 380 | ||||
| Visano Società Trattamento Reflui S.c.a.r.l. (*) | 10 | ||||
| Centrale Termoelettrica del Mincio S.r.l. | 6 | ||||
| Ergon Energia S.r.l. in liquidation (*) | - | ||||
| Ergosud S.p.A. (*) | - | ||||
| Total affiliates | 56,149 | 2,451 | - | - |
(*) Data of the financial statements at December 31, 2014.
Separate financial statements – Year 2015
3/b - Statement of changes in investments in affiliates
| Balance at Changes in 2015 |
Changes in 2015 | Balance at Share of equity |
|||||
|---|---|---|---|---|---|---|---|
| financial Increases Decreases Effect statements non-recurring 12 31 2014 |
Write-downs | Other changes |
financial statements 12 31 2015 |
% shareholding |
Equity at 12 31 2015 |
Pro rata amount |
|
| Transactions | |||||||
| 34,051 | 23.94% | 130,110 | 31,148 | ||||
| (7,000) | 12,067 | 39.49% | 19,517 | 7,707 | |||
| 3,383 | 48.77% | 11,842 | 5,775 | ||||
| 837 | 24.29% | 3,167 | 769 | ||||
| 466 | 49.00% | 1,276 | 625 | ||||
| 400 | 40.00% | 1,975 | 790 | ||||
| 380 | 44.50% | 4,155 | 1,849 | ||||
| 10 | 40.00% | 26 | 10 | ||||
| 6 | 45.00% | 9 | 4 | ||||
| - | 50.00% | 142 | 71 | ||||
| - | 50.00% | 176,197 | 88,099 | ||||
| (7,000) | - | 51,600 | 348,416 | 136,847 |
| Company name Thousands of euro |
Shareholding % |
Shareholder | Carrying amount at 12 31 2015 |
|---|---|---|---|
| Available-for-sale financial assets (AFS) | |||
| Infracom S.p.A. | 0.44% | A2A S.p.A. | 155 |
| Immobiliare-Fiera di Brescia S.p.A. | 5.83% | A2A S.p.A. | 280 |
| Azienda Energetica Valtellina e Valchiavenna S.p.A. (AEVV) | 9.39% | A2A S.p.A. | 1,846 |
| Others: | |||
| AQM S.r.l. | 7.52% | A2A S.p.A. | |
| AvioValtellina S.p.A. | 0.18% | A2A S.p.A. | |
| Banca di Credito Cooperativo dell'Oglio e del Serio S.C. | n.s. | A2A S.p.A. | |
| Brescia Mobilità S.p.A. | 0.25% | A2A S.p.A. | |
| Consorzio DIX.IT in liquidation | 14.28% | A2A S.p.A. | |
| Consorzio L.E.A.P. | 10.53% | A2A S.p.A. | |
| Consorzio Milano Sistema in liquidation | 10.00% | A2A S.p.A. | |
| Emittenti Titoli S.p.A. | 1.85% | A2A S.p.A. | |
| E.M.I.T. S.r.l. in liquidation | 10.00% | A2A S.p.A. | |
| INN.TEC. S.r.l. | 11.45% | A2A S.p.A. | |
| Isfor 2000 S.c.p.A. | 4.94% | A2A S.p.A. | |
| Stradivaria S.p.A. | n.s. | A2A S.p.A. | |
| Total other financial assets | 1,527 | ||
| Total available-for-sale financial assets | 3,808 |
Note: A2A S.p.A. took part in the setting up of Società Cooperativa Polo dell'innovazione della Valtellina, by subscribing 5 shares having a nominal value of 50 euro.
| Company name Thousands of euro |
Registered office | Currency | Share capital at 12 31 2015 |
|
|---|---|---|---|---|
| Subsidiaries: | ||||
| Edipower S.p.A. | Milan | Euro | 1,139,312 | |
| A2A Reti Gas S.p.A. | Brescia | Euro | 445,000 | |
| A2A Reti Elettriche S.p.A. | Brescia | Euro | 520,000 | |
| A2A Ambiente S.p.A. | Brescia | Euro | 220,000 | |
| Elektroprivreda Cnre Gore AD Nikšic´ (EPCG) | Nikšic´ (Montenegro) | Euro | 907,108 | |
| A2A Calore & Servizi S.r.l. | Brescia | Euro | 150,000 | |
| A2A Ciclo Idrico S.p.A. | Brescia | Euro | 70,000 | |
| Abruzzoenergia S.p.A. | Gissi (CH) | Euro | 130,000 | |
| A2A Energia S.p.A. | Milan | Euro | 2,000 | |
| Retragas S.r.l. | Brescia | Euro | 34,495 | |
| Aspem S.p.A. | Varese | Euro | 174 | |
| A2A Logistica S.p.A. | Brescia | Euro | 250 | |
| Selene S.p.A. | Brescia | Euro | 3,000 | |
| Proaris S.r.l. | Milan | Euro | 1,875 | |
| Camuna Energia S.r.l. | Cedegolo (BS) | Euro | 900 | |
| A2A Trading S.r.l. | Milan | Euro | 1,000 | |
| Ecofert S.r.l. in liquidation | S.Gervasio Bresciano (BS) | Euro | 100 | |
| Plurigas S.p.A. in liquidation | Milan | Euro | 800 | |
| A2A Montenegro d.o.o. | Podgorica (Montenegro) | Euro | 100 | |
| Mincio Trasmissione S.r.l. | Brescia | Euro | 10 | |
| A3A S.r.l. | Brescia | Euro | 10 | |
| Ostros Energia S.r.l. in liquidation | Brescia | Euro | 350 | |
| Equity investments held for sale | ||||
| SEASM S.r.l. | Brescia | Euro | 700 | |
Separate financial statements – Year 2015
147
4/a - List of investments in subsidiaries
| Delta (a-b) |
Balance at financial statements (b) |
Pro rata amount (a) |
% held |
Result at 12 31 2015 |
Equity at 12 31 2015 |
|---|---|---|---|---|---|
| 22,429 | 737,552 | 759,981 | 79.50% | (101,234) | 955,951 |
| 13,262 | 696,280 | 709,542 | 100.00% | 48,971 | 709,542 |
| 66,231 | 668,333 | 734,564 | 100.00% | 42,950 | 734,564 |
| (49,843) | 634,894 | 585,051 | 100.00% | 83,242 | 585,051 |
| 102,658 | 279,017 | 381,675 | 41.75% | 21,874 | 914,191 |
| 22,121 | 334,477 | 356,598 | 100.00% | 25,030 | 356,598 |
| 4,357 | 167,000 | 171,357 | 100.00% | 7,781 | 171,357 |
| 883 | 98,971 | 99,854 | 100.00% | (6,710) | 99,854 |
| 71,992 | 98,743 | 170,735 | 100.00% | 54,659 | 170,735 |
| 4,960 | 30,105 | 35,065 | 87.27% | 1,486 | 40,180 |
| (17,431) | 26,508 | 9,077 | 90.00% | 2,993 | 10,086 |
| 266 | 17,268 | 17,534 | 100.00% | 125 | 17,534 |
| 2,681 | 9,222 | 11,903 | 100.00% | 1,837 | 11,903 |
| 95 | 3,557 | 3,652 | 60.00% | 205 | 6,087 |
| (660) | 1,467 | 807 | 74.50% | 26 | 1,083 |
| 52,252 | 34,449 | 86,701 | 100.00% | 88,727 | 86,701 |
| 802 | 802 | 47.00% | - | 1,706 | |
| 12,344 | 560 | 12,904 | 70.00% | 869 | 18,434 |
| 16 | 102 | 118 | 100.00% | 10 | 118 |
| 236 | 10 | 246 | 100.00% | 51 | 246 |
| (1) | 10 | 9 | 100.00% | - | 9 |
| (3,423) | - | (3,423) | 80.00% | (24) | (4,279) |
| 464 | - | 464 | 67.00% | 11 | 692 |
| Company name Thousands of euro |
Registered office | Currency | Share capital at 12 31 2015 |
|
|---|---|---|---|---|
| ACSM-AGAM S.p.A. (*) | Monza | Euro | 76,619 | |
| Rudnik Uglja Ad Pljevlja (*) | Pljevlja (Montenegro) | Euro | 21,493 | |
| Azienda Servizi Valtrompia S.p.A. | Gardone Val Trompia (BS) | Euro | 6,000 | |
| Sviluppo Turistico Lago d'Iseo S.p.A. (*) | Iseo (BS) | Euro | 1,616 | |
| SET S.p.A. (*) | Toscolano Maderno (BS) | Euro | 104 | |
| Serio Energia S.r.l. (*) | Concordia sulla Secchia (MO) | Euro | 1,000 | |
| Ge.S.I. S.r.l. | Brescia | Euro | 1,000 | |
| Visano Società Trattamento Reflui S.c.a.r.l. (*) | Brescia | Euro | 25 | |
| Centrale Termoelettrica del Mincio S.r.l. | Ponti sul Mincio (MN) | Euro | 11 | |
| Ergon Energia S.r.l. in liquidation (*) | Milan | Euro | 600 | |
| Ergosud S.p.A. (*) | Rome | Euro | 81,448 |
(*) Data of the financial statements at December 31, 2014.
Separate financial statements – Year 2015
4/b - List of investments in affiliates
| Currency Share Equity at Result at % Pro rata Balance at capital at 12 31 2015 12 31 2015 held amount financial 12 31 2015 (a) statements (b) |
|
|---|---|
| Euro 76,619 130,110 6,630 23.94% 31,148 34,051 |
|
| Euro 21,493 19,517 (19,840) 39.49% 7,707 12,067 |
|
| 6,000 11,842 2,189 48.77% 5,775 3,383 |
|
| 1,616 3,167 (16) 24.29% 769 837 |
|
| 1,276 570 49.00% 625 466 |
|
| 1,975 627 40.00% 790 400 |
|
| 4,155 288 44.50% 1,849 380 |
|
| 26 - 40.00% 10 10 |
|
| 9 2 45.00% 4 6 |
|
| 142 178 50.00% 71 - |
|
| 176,197 6,065 50.00% 88,099 - |
(pursuant to article 2429.4 of the Italian Civil Code)
| SUBSIDIARIES | A2A TRADING S.r.l. | SELENE S.p.A. | RETRAGAS S.r.l. | |||
|---|---|---|---|---|---|---|
| Share capital: | Euro | 1,000,000 | Euro | 3,000,000 | Euro | 34,494,650 |
| % held: | A2A S.p.A. | 100.00% | A2A S.p.A. | 100.00% | A2A S.p.A. A2A Reti Gas S.p.A. |
87.27% 4.33% |
| Description - Thousands of euro | 12 31 15 | 12 31 14 | 12 31 15 | 12 31 14 | 12 31 15 | 12 31 14 |
| Revenues | 2,475,129 | 2,583,802 | 22,706 | 24,346 | 7,787 | 8,657 |
| Gross operating income | 142,184 | (153,938) | 5,174 | 4,452 | 4,469 | 5,780 |
| Net operating income | 141,172 | (154,840) | 2,970 | 3,100 | 2,349 | 3,682 |
| Profit before tax | 135,190 | (165,888) | 2,845 | 2,894 | 2,356 | 3,718 |
| Result of the year | 88,727 | (118,509) | 1,837 | 2,004 | 1,486 | 2,193 |
| Assets | 840,490 | 983,927 | 23,177 | 30,968 | 44,187 | 44,421 |
| Liabilities | 753,789 | 1,093,474 | 11,274 | 21,024 | 4,007 | 3,648 |
| Equity | 86,701 | (109,547) | 11,903 | 9,944 | 40,180 | 40,773 |
| Net financial position | (26,122) | (147,418) | (639) | (8,574) | 8,406 | 9,357 |
| AFFILIATES | ERGON ENERGIA S.r.l. in liquidation |
GE.S.I. S.r.l. | AZIENDA SERVIZI VALTROMPIA S.p.A. |
||||
|---|---|---|---|---|---|---|---|
| Share capital: | Euro | 600,000 | Euro | 1,000,000 | Euro | 6,000,000 | |
| % held: | A2A S.p.A. | 50.00% | A2A S.p.A. | 44.50% | A2A S.p.A. | 48.77% | |
| Description - Thousands of euro | 12 31 14 (*) |
12 31 13 | 12 31 15 | 12 31 14 | 12 31 15 | 12 31 14 | |
| Revenues | 547 | - | 5,087 | 4,665 | 15,850 | 14,639 | |
| Gross operating income | 234 | (107) | 688 | 514 | 4,810 | 2,221 | |
| Net operating income | 280 | 143 | 339 | 245 | 3,350 | 1,399 | |
| Profit before tax | 205 | (153) | 366 | 237 | 3,250 | 1,375 | |
| Profit/Loss for the year | 178 | (153) | 288 | 116 | 2,189 | 916 | |
| Assets | 8,146 | 14,408 | 6,673 | 5,659 | 28,602 | 29,879 | |
| Liabilities | 8,004 | 14,445 | 2,518 | 1,738 | 16,760 | 20,247 | |
| Equity | 142 | (37) | 4,155 | 3,921 | 11,842 | 9,632 | |
| Net financial position | (1,837) | (7,666) | 931 | 353 | (7,525) | 1,394 |
(*) Last approved financial statements available.
Separate financial statements – Year 2015
Key data of the financial statements of the main subsidiaries and affiliates prepared according to IAS/IFRS
| A2A TRADING S.r.l. SELENE S.p.A. RETRAGAS S.r.l. |
ABRUZZOENERGIA S.p.A. | EPCG | EDIPOWER S.p.A. | A2A AMBIENTE S.p.A. | ||||
|---|---|---|---|---|---|---|---|---|
| Euro 1,000,000 Euro 3,000,000 Euro 34,494,650 |
Euro | 130,000,000 | Euro | 907,107,720 | Euro | 1,139,311,954 | Euro | 220,000,000 |
| A2A S.p.A. 100.00% A2A S.p.A. 100.00% A2A S.p.A. 87.27% A2A Reti Gas S.p.A. 4.33% |
A2A S.p.A. | 100.00% | A2A S.p.A. | 41.75% | A2A S.p.A. | 79.50% | A2A S.p.A. | 100.00% |
| Description - Thousands of euro 12 31 15 12 31 14 12 31 15 12 31 14 12 31 15 12 31 14 |
12 31 15 | 12 31 14 | 12 31 15 | 12 31 14 | 12 31 15 | 12 31 14 | 12 31 15 | 12 31 14 |
| 2,475,129 2,583,802 22,706 24,346 7,787 8,657 |
34,512 | 37,735 | 241,806 | 239,619 | 519,271 | 609,152 | 382,849 | 402,515 |
| 142,184 (153,938) 5,174 4,452 4,469 5,780 |
19,491 | 16,838 | 52,618 | 65,940 | 174,229 | 200,164 | 133,730 | 154,624 |
| 141,172 (154,840) 2,970 3,100 2,349 3,682 |
(1,309) | 5,246 | 18,899 | 27,850 | (101,414) | 24,653 | 96,998 | 78,493 |
| 135,190 (165,888) 2,845 2,894 2,356 3,718 |
(6,861) | (554) | 24,588 | 34,085 | (110,403) | 1,199 | 115,407 | 142,215 |
| 88,727 (118,509) 1,837 2,004 1,486 2,193 |
(6,710) | (3,310) | 21,874 | 31,085 | (101,234) | (55,769) | 83,242 | 110,705 |
| 840,490 983,927 23,177 30,968 44,187 44,421 |
278,911 | 288,512 | 1,154,218 | 1,130,270 | 1,770,782 | 1,831,555 | 933,300 | 985,063 |
| 753,789 1,093,474 11,274 21,024 4,007 3,648 |
179,057 | 181,969 | 240,027 | 203,228 | 814,831 | 778,186 | 348,249 | 378,567 |
| 86,701 (109,547) 11,903 9,944 40,180 40,773 |
99,854 | 106,543 | 914,191 | 927,042 | 955,951 | 1,053,369 | 585,051 | 606,496 |
| (26,122) (147,418) (639) (8,574) 8,406 9,357 |
(160,620) | (172,623) | 147,408 | 105,679 | (219,435) | (350,014) | 343,365 | 315,029 |
| METAMER S.r.l. | |
|---|---|
| Euro | 650,000 |
| A2A Energia S.p.A. | 50.00% |
| 12 31 15 | 12 31 14 |
| 24,212 | 24,522 |
| 1,387 | 1,340 |
| 999 | 1,015 |
| 1,119 | 1,176 |
| 713 | 657 |
| 11,151 | 11,128 |
| 8,122 | 8,122 |
| 3,119 | 3,006 |
| 4,306 | 3,295 |
| SUBSIDIARIES | PROARIS S.r.l. | A2A RETI ELETTRICHE S.p.A. |
A2A RETI GAS S.p.A. |
A2A CALORE & SERVIZI S.r.l. |
|||||
|---|---|---|---|---|---|---|---|---|---|
| Share capital: | Euro | 1,875,000 | Euro | 520,000,000 | Euro | 445,000,000 | Euro | 150,000,000 | |
| % held: | A2A S.p.A. | 60.00% | A2A S.p.A. | 100.00% | A2A S.p.A. | 100.00% | A2A S.p.A. | 100.00% | |
| Description - Thousands of euro | 12 31 15 | 12 31 14 | 12 31 15 | 12 31 14 | 12 31 15 | 12 31 14 | 12 31 15 | 12 31 14 | |
| Revenues | 2,728 | 3,341 | 338,353 | 363,068 | 211,177 | 210,591 | 231,828 | 237,920 | |
| Gross operating income | 295 | 356 | 133,417 | 151,099 | 104,142 | 103,444 | 71,443 | 58,290 | |
| Net operating income | 260 | 321 | 75,778 | 96,615 | 77,453 | 68,040 | 40,866 | 23,355 | |
| Profit before tax | 269 | 343 | 66,816 | 86,842 | 77,403 | 67,921 | 34,997 | 16,502 | |
| Profit/Loss for the year | 205 | 227 | 42,950 | 44,381 | 48,971 | 31,003 | 25,030 | 9,535 | |
| Assets | 7,139 | 7,157 | 1,208,187 | 1,234,493 | 856,416 | 832,288 | 688,397 | 689,592 | |
| Liabilities | 1,052 | 1,059 | 473,623 | 500,799 | 146,874 | 142,317 | 331,799 | 349,024 | |
| Equity | 6,087 | 6,098 | 734,564 | 733,714 | 709,542 | 689,971 | 356,598 | 340,568 | |
| Net financial position | 2,312 | 1,784 | (151,104) | (171,380) | 49,314 | 40,768 | (194,468) | (189,519) |
| AFFILIATES | ERGOSUD S.p.A. | PREMIUMGAS S.p.A. | ||||
|---|---|---|---|---|---|---|
| Share capital: | Euro | 81,447,964 | Euro | 120,000 | ||
| % held: | A2A S.p.A. | 50.00% | A2A Alfa S.r.l. | 50.00% | ||
| Description - Thousands of euro | 12 31 14 (*) |
12 31 13 | 12 31 15 | 12 31 14 | ||
| Revenues | 63,986 | 66,893 | 11,558 | 7,549 | ||
| Gross operating income | 38,619 | 36,294 | (890) | (1,119) | ||
| Net operating income | 17,868 | 16,034 | (898) | (1,127) | ||
| Profit before tax | 12,176 | 10,052 | (898) | 490 | ||
| Profit/Loss for the year | 6,065 | 6,114 | (831) | 589 | ||
| Assets | 446,344 | 488,345 | 20,756 | 9,925 | ||
| Liabilities | 270,147 | 318,214 | 14,916 | 3,254 | ||
| Equity | 176,197 | 170,131 | 5,840 | 6,671 | ||
| Net financial position | (214,026) | (249,406) | 244 | 976 |
(*) Last approved financial statements available.
Separate financial statements – Year 2015
Key data of the financial statements of the main subsidiaries and affiliates prepared according to ITALIAN GAAP
| A2A ENERGIA S.p.A. | PLURIGAS S.p.A. in liquidation |
A2A CICLO IDRICO S.p.A. |
ASPEM S.p.A. | A2A LOGISTICA S.p.A. | |||||
|---|---|---|---|---|---|---|---|---|---|
| Euro | 2,000,000 | Euro | 800,000 | Euro | 70,000,000 | Euro | 173,785 | Euro | 250,000 |
| A2A S.p.A. | 100.00% | A2A S.p.A. | 70.00% | A2A S.p.A. | 100.00% | A2A S.p.A. | 90.00% | A2A S.p.A. | 100.00% |
| 12 31 15 | 12 31 14 | 12 31 15 | 12 31 14 | 12 31 15 | 12 31 14 | 12 31 15 | 12 31 14 | 12 31 15 | 12 31 14 |
| 1,300,743 | 1,449,076 | 2,375 | 38,956 | 76,494 | 70,647 | 41,378 | 38,254 | 28,134 | 31,059 |
| 99,482 | 84,592 | 905 | (157) | 24,247 | 14,437 | 6,288 | 4,801 | 414 | 208 |
| 80,437 | 62,370 | 905 | (157) | 11,800 | 3,089 | 4,986 | 3,352 | 376 | 160 |
| 81,407 | 63,960 | 1,146 | 94 | 9,893 | 1,167 | 4,413 | 3,258 | 390 | 231 |
| 54,659 | 35,240 | 869 | 18 | 7,781 | 175 | 2,993 | 1,891 | 125 | 95 |
| 616,070 | 640,754 | 20,951 | 36,570 | 298,065 | 289,726 | 38,509 | 47,451 | 27,464 | 30,044 |
| 445,335 | 489,478 | 2,517 | 4,005 | 126,708 | 126,150 | 28,423 | 38,467 | 9,930 | 12,635 |
| 170,735 | 151,276 | 18,434 | 32,565 | 171,357 | 163,576 | 10,086 | 8,984 | 17,534 | 17,409 |
| 48,929 | (19,928) | 18,735 | 32,501 | (60,271) | (56,343) | 2,906 | 4,093 | 17,023 | 19,196 |
Certification of the financial statements pursuant to article 154-bis, paragraph 5 of Legislative Decree no. 58/98
154
of administrative and accounting procedures for the preparation of financial statements in the year 2015.
Milan, April 5, 2016
(For the Board of Directors) (Manager in charge of
Luca Camerano Andrea Eligio Crenna preparing the corporate accounting documents)
To the shareholders of A2A SpA
156
In accordance with our audit engagement, we performed a statutory audit of the accounts underlying the financial statements of A2A SpA (the "Company") as of 31 December 2015, as approved by the Board of Directors on 5 April 2016, and consequently we issued our audit report on the draft financial statements including an unqualified opinion thereon on 15 April 2016.
The financial statements of A2A SpA as of and for the year ended 31 December 2015 were re-approved by the Board of Directors today to reflect the impacts on the financial statements disclosures of the investigation, which is still covered by judicial secrecy, which led on 15 April 2016 to the execution by the judicial authorities of Montenegro of a pre-trial detention order against the former Chief Financial Officer of EPCG AD, a Montenegrin subsidiary of A2A SpA.
Following this re-approval, we performed the analyses required by ISA No. 560 "Subsequent events".
Conclusion
Based on the foregoing, we issue again below our report on the financial statements of A2A SpA as of 31 December 2015:
We have audited the accompanying financial statements of A2A SpA as of 31 December 2015, which comprise the statement of financial position, income statement, statement of comprehensive income, cash flow statement, statement of changes in equity for the year then ended, a summary of significant accounting policies and other explanatory notes.
The directors of A2A SpA are responsible for the preparation of financial statements that give a true and fair view in compliance with International Financial Reporting Standards as adopted by the European Union, as well as with the regulations issued to implement article 9 of Legislative Decree No. 38/2005.
Separate financial statements – Year 2015
Independent Auditors' Report
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing (ISA Italia) drawn up pursuant to article 11, paragraph 3, of Legislative Decree No. 39 of 27 January 2010. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing audit procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The audit procedures selected depend on the auditor's professional judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of financial statements that give a true and fair view, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
In our opinion, the financial statements give a true and fair view of the financial position of A2A SpA as of 31 December 2015 and of the result of its operations and cash flows for the year then ended in compliance with International Financial Reporting Standards as adopted by the European Union, as well as with the regulations issued to implement article 9 of Legislative Decree No. 38/2005.
Opinion on the consistency with the financial statements of the report on operations and of certain information set out in the report on corporate governance and ownership structure
We have performed the procedures required under auditing standard (SA Italia) No. 720B in order to express an opinion, as required by law, on the consistency of the report on operations and of the information set out in the report on corporate governance and ownership structure referred to in article 123-bis, paragraph 4, of Legislative Decree No. 58/1998, which are the responsibility of the directors of A2A SpA, with the financial statements of A2A SpA as of 31 December 2015. In our opinion, the report on operations and the information in the report on corporate governance and ownership structure mentioned above are consistent with the financial statements of A2A SpA as of 31
Separate financial statements – Year 2015 Independent Auditors' Report
December 2015.
Milan, 28 April 2016
PricewaterhouseCoopers SpA
Signed by
Giulio Grandi (Partner)
This report has been translated into English from the Italian original solely for the convenience of international readers
Dear
Shareholders,
Pursuant
to
article
153,
paragraph
1
of
Legislative
Decree
no.
58
of
February
24,
1998
and
article
2429
of
the
Civil
Code,
we
wish
to
inform
you
that,
during
the
year
ended
December
31,
2015,
we
carried
out
the
supervisory
and
control
activities
according
to
the
rules
of
the
Civil
Code,
of
articles
148
et
seq
of
the
CFA
of
Legislative
Decree
January
27,
2010
no.
39
and
the
indications
contained
in
CONSOB
communications,
taking
into
account
the
principles
of
conduct
recommended
by
the
National
Council
of
Chartered
Accountants
and
Accounting
Experts.
As
auditing
body,
we:
contrast
with
the
law,
by-‐laws
or
the
resolutions
of
the
shareholders' meeting
or
such
to
affect
the
integrity
of
the
Company's
assets;
received
from
the
Audit
and
Risk
Committee,
the
Director
in
charge
of
the
internal
control
and
risk
management
system
and
the
Head
of
the
Internal
Audit
function
information
regarding
risk
mapping
of
the
activities
in
progress,
verification
programs
and
implementation
projects
of
the
internal
control
system,
even
through
participation
in
12
meetings
of
the
Committee,
during
which
we
took
cognizance
of
the
activity
carried
out
by
the
Committee;
examined
periodically,
as
part
of
the
supervision
of
the
effectiveness
of
the
internal
control
and
risk
management
system
adopted
by
the
Company,
the
updated
mapping
of
risks
relating
to
the
Company
and
its
subsidiaries
prepared
by
the
Director
in
charge
of
the
internal
control
and
risk
management
system
and
submitted
by
the
latter
to
the
Board
of
Directors
for
review;
Separate financial statements – Year 2015 Report of the Board of Auditors
system
of
the
Company
with
respect
to
the
same
characteristics
and
profile
of
risk
undertaken;
(ii)
expressed
a
favourable
opinion
on
the
organizational,
administrative
and
accounting
structure
of
A2A
and
its
subsidiaries
with
strategic
importance,
with
particular
reference
to
the
internal
control
and
risk
management
system;
162
("Model")
consistent
with
the
principles
contained
in
Legislative
Decree
231/01
and
in
line
with
the
guidelines
established
by
industry
Associations.
The
Supervisory
Board
of
the
Company
reported
to
the
Board
on
the
activities
carried
out
during
the
first
half
of
2015
and
thereafter,
by
special
report,
informed
the
same
on
the
activities
carried
out
during
2015
confirming
the
operation
and
observance
of
the
Model.
On
June
22,
2015,
the
Board
of
Directors
of
A2A
S.p.A.
resolved
the
update
of
the
Organization,
Management
and
Control
Model
pursuant
to
Legislative
Decree
231/01
adapting
it
to
the
new
governance
of
the
company
and
including
the
crime
of
corruption
among
individuals.
On
the
same
date,
the
Board
of
Directors
approved
the
new
Code
of
Ethics
of
A2A
S.p.A.,
which
was
adopted
by
all
Group
companies;
companies
approved
in
March
2006
and
last
amended
in
July
2015.
The
Annual
Report
on
Corporate
Governance
adequately
illustrates
the
corporate
governance
system
and
the
choices
adopted.
Moreover,
the
Board:
certified,
on
the
basis
of
statements
made
by
the
Directors
and
took
note
of
the
assessments
expressed
by
the
Board,
that
the
criteria
and
procedures
adopted
by
the
Board
to
assess
the
independence
of
its
members
were
correctly
applied;
took
note
of
the
procedures
adopted
and
instructions
issued
by
A2A
S.p.A.
for
the
preparation
of
the
Annual
Financial
Report
of
the
A2A
Group
at
December
31,
2015,
the
Half-‐Year
Financial
Report
of
the
A2A
Group
at
June
30,
2015
and
the
Interim
Reports
on
Operations
of
the
A2A
Group
at
March
31
and
September
30,
2015;
approved
by
the
Board
of
Directors
at
its
meeting
of
April
5,
2016,
and
verified
that
the
same
contains
the
information
required
by
article
123-‐ter of
Legislative
Decree
58/98
and
article
84-‐quater
of
the
Issuers'
Regulation;
ascertained,
on
the
basis
of
verifications
carried
out
and
the
information
received
by
the
Company,
the
existence
of
an
adequate
administrative
and
accounting
system,
and
the
additional
conditions
required
by
article
36
of
Consob
Resolution
no.
16191/2007,
relating
to
subsidiaries
with
significant
relevance
established
and
regulated
under
the
laws
of
non-‐ EU
countries;
confirmed
that
it
was
not
required
to
communicate
to
Consob
and
the
management
company
of
the
market
any
circumstances
involving
non-‐compliance
with
the
provisions
of
art.
36
of
the
Market
Regulation;
to
bring
to
the
attention
of
the
Audit
and
Risk
Committee
in
its
capacity
as
the
Related
Party
Committee;
a) to
exchange
information
on
the
verifications
carried
out
by
the
latter
pursuant
to
Legislative
Decree
39/2010
and
Consob
Communication
no.
DAC/99023932
of
March
29,
1999
on
the
regular
accounting
and
correct
reporting
of
events
in
the
accounting
records.
During
these
meetings,
there
were
no
reports
of
problems
or
abnormalities;
b) for
the
examination
and
evaluation
of
the
preparation
process,
including
the
evaluation
of
the
correct
application
of
accounting
standards
and
homogeneity
of
the
same,
the
Half-‐Year
Financial
Report
of
the
A2A
Group
at
June
30,
2015
and
the
Annual
Financial
Report
of
the
A2A
Group
at
December
31,
2015,
as
well
as
the
outcomes
of
the
audit
and
evaluation
of
this
document.
received,
pursuant
to
article
19
paragraph
3
of
Legislative
Decree
39/2010,
the
report
of
the
independent
auditors,
illustrating
the
key
issues
arising
from
the
statutory
audit
and
any
significant
weaknesses
identified
in
the
internal
control
system
in
relation
to
the
financial
reporting
process,
in
which
no
significant
weaknesses
were
identified;
received,
pursuant
to
art.
17,
paragraph
9,
letter
a)
of
Legislative
Decree
39/2010,
from
the
independent
auditors
of
the
Company,
confirmation
of
its
independence
as
well
as
the
timely
disclosure
of
non-‐audit
services
provided
to
the
Company
by
the
independent
auditors
and
entities
belonging
to
the
same
network;
In
this
regard,
we
report
that,
in
2015,
we
had
no
evidence
of
the
assignment
of
tasks
other
than
the
statutory
audit
of
annual
and
consolidated
accounts
to
PricewaterhouseCoopers
S.p.A.
(or
to
entities/persons
belonging
to
its
network),
a
company
entrusted
with
the
assignment
of
the
statutory
audit
by
the
Shareholders'
Meeting
of
April
26,
2007,
with
the
sole
exception
of
the
assignment
indicated
below
conferred
to
PricewaterhouseCoopers
S.p.A.,
with
the
favourable
opinion
of
the
Board
of
Auditors:
"Verifications
of
compliance
and
consequent
signing
of
tax
statements
for
compensation
of
tax
receivables
for
seven
companies
of
the
Group
(A2A
S.p.A.;
Abruzzoenergia
S.p.A.;
A2A
Reti
Elettriche
S.p.A.;
PremiumGas
S.p.A;
A2A
Energia
S.p.A.;
A2A
Reti
Gas
S.p.A.
and
A2A
Trading
S.r.l.)
on
September
23,
2015,
21,000.00
euro".
166
In
addition,
the
Company
directly
conferred
to
PricewaterhouseCoopers
S.p.A.
the
following
additional
assignments:
statements
for
2014
on
June
30,
2015,
9,000.00
euro;
167
It
is
noted
that
on
July
1,
2015,
the
assignment
procedure
was
changed
following
which
each
assignment
must
be
previously
submitted
for
the
favourable
opinion
of
the
Board
of
Auditors
and,
subsequently,
for
the
approval
of
the
Board
of
Directors;
It
is
also
noted
that
the
Auditors
communicated
any
offices
held
– as
members
of
the
Board
of
Directors
or
the
Board
of
Auditors
– in
companies
other
than
A2A
S.p.A.
No
complaints
were
received
pursuant
to
art.
2408
Civil
Code
nor
reports
of
any
kind
by
third
parties.
In
the
course
of
the
supervisory
activity,
no
significant
omissions
or
reprehensible
facts
or
irregularities
whatsoever
were
identified.
Finally,
in
2015,
the
Board:
S.p.A.,
A2A
Calore
&
Servizi
S.r.l.
and
Edipower
S.p.A.
to
verify,
among
other
things,
the
status
of
implementation
by
said
Companies
of
the
directives
issued
by
the
parent
company.
The
Board
noted
that
the
subsidiaries
were
in
line
with
the
directives
received.
The
meeting
allowed
for
an
exchange
of
information
regarding,
among
other
things,
the
functioning
of
corporate
activity,
the
characteristics
of
the
internal
control
system,
the
business
organization
of
the
subsidiaries,
the
composition
and
activities
of
the
Supervisory
Body,
the
Committees,
Internal
Audit
function and
the
changes
in
the
organizational
structure
of
the
Company
during
the
year
2015;
received
from
the
Board
of
Directors
the
draft
financial
statements
for
the
year
2015
and
the
report
on
operations
of
A2A
S.p.A.
as
well
as
the
consolidated
financial
statements
2015
of
the
A2A
Group
under
the
agreed
terms;
received
the
Reports
on
the
Financial
Statements
and
Consolidated
Financial
Statements
of
the
Group
at
December
31,
2015,
issued
by
the
independent
auditors
in
accordance
with
articles
14
and
16
of
Legislative
Decree
no.
39
of
January
27,
2010,
which
expresses
an
unqualified
opinion
on
the
separate
financial
statements
of
the
Company
and
the
consolidated
financial
statements
of
the
Group;
Separate financial statements – Year 2015 Report of the Board of Auditors
Lastly,
it
is
recalled
that
the
Shareholders' Meeting
of
June
11,
2015
resolved
to
confer
the
assignment
of
the
statutory
audit
of
the
financial
statements
of
A2A
S.p.A.,
the
consolidated
financial
statements
and
the
half-‐year
financial
report
of
the
A2A
Group,
for
the
years
ending
from
December
31,
2016
to
December
31,
2024.
to
Reconta
Ernst
&
Young
S.p.A.
since
the
current
assignment
attributed
to
PricewaterhouseCoopers
S.p.A.
will
expire
with
the
resolution
of
the
Shareholders' Meeting
called
to
approve
the
financial
statements
of
the
Company
at
December
31,
2015.
Providing
the
foregoing
and
to
the
extent
of
our
expertise,
we:
verified
the
adequacy
of
the
Company's
organizational
structure,
the
internal
control
system
and
the
administration
and
accounting
system,
in
their
actual
functioning;
verified
compliance
with
the
laws
governing
the
preparation
and
format
of
the
Financial
Statements
of
the
Company
and
the
Consolidated
Financial
Statements
of
the
Group
and
the
reports
on
operations
regarding
year
2015,
also
through
direct
verifications
and
information
obtained
by
the
independent
auditors;
monitored
compliance
of
the
Procedure
for
Transactions
with
Related
Parties,
prepared
by
the
Company
pursuant
to
Consob
Regulation
17221
of
March
12,
2010
while
verifying
adaptation
of
the
Procedure
following
the
adoption
of
the
"traditional" governance
system
approved
by
the
Board
of
Directors
on
June
22,
2015;
verified
the
adequacy
of
the
provisions
provided
by
the
Company
to
subsidiaries.
170
It
is
noted
that
the
A2A
Board
of
Directors
had
approved
the
draft
financial
statements
of
the
Company
at
December
31,
2015
on
April
5,
2016
and
that
the
auditing
firm
PWC
had
issued
its
report
on
the
draft
financial
statements
on
April
15,
2016.
The
aforementioned
financial
statements
have
been
subject
to
re-‐approval
today
by
the
Board
of
Directors,
to
reflect
the
impact
of
financial
statement
disclosures
as
a
result
of
the
investigations,
still
covered
by
the
confidentiality
of
investigations,
which
led,
on
April
15,
this
year,
to
the
execution
by
the
judicial
authorities
of
Montenegro
of
a
precautionary
detention
order
against
the
former
Chief
Financial
Officer
of
EPGC,
Montenegrin
subsidiary
of
A2A
S.p.A.
However,
based
on
the
information
in
our
possession,
the
former
Chief
Financial
Officer
of
EPCG
appointed
by
A2A
is
accused
-‐
along
with
two
previous
EPCG
managers
appointed
by
A2A,
and
three
Montenegrin
officials
of
EPCG
-‐
of
abuse
of
office
in
the
management
of
service
contracts
stipulated
by
EPCG,
as
they
were
stipulated
without
complying
with
the
local
legislation
on
Public
Procurement.
The
Board
of
Directors
-‐
as
outlined
in
further
detail
in
the
report
on
operations
-‐
based
on
the
assessments
made
and
the
limited
information
available
to
date,
including
the
uncertainty
of
the
counts
of
the
charge
with
respect
to
those
under
investigation
and
the
fact
that
A2A
and
other
Group
companies
are
currently
not
recipients
of
any
measure,
deemed
that
the
risk
of
the
possible
involvement
of
A2A,
direct
or
indirect,
in
terms
of
potential
penalties
applicable
and/or
claims
for
compensation
or
indemnity
actions,
can
be
assessed
as
possible.
Simultaneously
and
considering
the
state
of
the
proceedings
and
for
the
reasons
outlined,
the
same
Board
deemed
it
impossible
to
quantify
in
reliable
terms
the
amount
of
the
indemnities
or
penalties,
direct
or
indirect.
In
view
of
the
above,
the
Company
-‐
in
accordance
with
IAS
37
-‐
considered
it
correct
to
handle
the
case
in
question
providing
adequate
information
and
not
allocating
specific
risks
provision.
Also
today,
the
auditing
firm
PWC
has
reissued
the
report
on
the
financial
statements
and
consolidated
financial
statements,
with
no
remarks.
*
*
*
In
view
of
the
above,
we
kindly
request
that
you
approve
the
financial
statements
at
December
31,
2015
presented
by
the
Board
of
Directors
along
with
the
report
on
operations
and
the
proposed
allocation
of
the
result
for
the
year.
171
Milan,
28
April
2016
THE
BOARD
OF
AUDITORS
(Giacinto
Sarubbi)
-‐
Chairman
(Cristina
Casadio)
-‐
Standing
Auditor
(Norberto
Rosini)
-‐
Standing
Auditor
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