AGM Information • Mar 29, 2018
AGM Information
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Registered Offices: Via S. Pietro, 59/B 43019 Castellina di Soragna (PR) – ITALY Share Capital: Euro 31,809,451 fully paid-up Tax Code and Register of Companies no.: 08531760158 Certified email: [email protected] Tel. +39 0524 598511 Fax +39 0524 598232 www.si-servizitalia.com
| Notice of call of the ordinary shareholders' meeting 3 | |
|---|---|
| Company officers and corporate information 6 | |
| Group structure 7 | |
| Directors' report 8 |
| Separate financial statements of Servizi Italia S.p.A. as at 31 December 201746 | |
|---|---|
| Separate accounting schedules as at 31 December 2017 47 | |
| Explanatory Notes to the separate financial statements 51 | |
| Certification of the separate financial statements pursuant to Article 154-bis of Italian Legislative | |
| Decree No. 58/98 117 | |
| Independent auditors' report on the separate financial statements of Servizi Italia S.p.A. 118 | |
| Board of Statutory Auditors' report to the shareholders' meeting of Servizi Italia S.p.A. 124 |
| Consolidated financial statements of the Servizi Italia Group as at 31 December 2017 | 131 |
|---|---|
| Consolidated accounting schedules as at 31 December 2017 132 | |
| Explanatory Notes to the consolidated financial statements 136 | |
| Certification of the consolidated financial statements pursuant to Art. 154-bis of Italian | |
| Legislative Decree No. 58/98 205 | |
| Independent auditors' report on the consolidated financial statements of the Servizi Italia Group |
206 |
Registered offices in Via San Pietro 59/B — Castellina di Soragna (PR), Italy
VAT No. 02144660343
Those entitled to participate in the Shareholders' meeting and exercise the right to vote are called to an ordinary shareholders' meeting at the registered offices in Via San Pietro 59/b, 43019 Castellina di Soragna (PR), on a first call on 20 April 2018 at 10.30 and, if necessary, upon a second call, on 23 April 2018, at the same time and place, to discuss and resolve on the following agenda:
The Company's share capital is divided up into 31,809,451 ordinary shares with a par value of Euro 1 each. Each share assigns the right to one vote. As at 7 March 2018, the Company held 10,550 treasury shares, in relation to which - pursuant to the law - the voting right is suspended. This number could vary in the period between today's date and that of the Shareholders' Meeting. Any change in the treasury shares shall be communicated when the business of said meeting commences. The information on the composition of the share capital is available on the website www.si-servizitalia.com (Corporate Governance>Shareholders' Meeting 2018).
Pursuant to Article 83-sexies of Italian Legislative Decree No. 58/98 as amended (the "Consolidated Finance Law" or "CFL") and Article 13 of the Articles of Association, Shareholders are entitled to attend if they have the right to vote and the Company, by 17 April 2018, has received the communication from the appointed intermediaries, bearing witness to their ownership of the shares on the basis of the accounting records relating to the end of the accounting day of the seventh open market day prior to the date set for the Meeting in first call, i.e. 11 April 2018 (record date). Those who only become owners of shares after the record date are not entitled to participate and vote during the Meeting.
Pursuant to Article 13.2 of the Articles of Association, each party with the right to vote who has the right to participate in the Meeting, may arrange for themselves to be represented by others via written proxy, in compliance with and within the limits of the matters laid down by law. The proxy may be granted also electronically or by means of an IT document signed in electronic form as per Article 21, paragraph 2 of Italian Legislative Decree No. 82 dated 7 March 2005, in accordance with current legislation.
A proxy form is available care of the registered offices and on the Company website www.si-servizitalia.com (Corporate Governance > Shareholders' Meeting 2018), as well as care of the qualified intermediaries; the proxy can be sent to the Company by means of forwarding, via certified e-mail, to the following address [email protected], together with the communication issued by the appointed intermediaries in compliance with their accounting records.
Any prior notification does not exempt the proxy holder, at the time of accreditation for accessing the meeting, from the obligation to certify the compliance with the original in the copy notified and the identity of the delegating party. The Articles of Association do not envisage voting procedures by mail or using electronic means.
Pursuant to Article 11.6 of the Articles of Association, the Company does not designate a party to which the Shareholders can grant a proxy with voting instructions for participation in General meetings pursuant to Article 135-undecies of the CFL.
Pursuant to Article 127-ter of the CFL, those who have the right to vote can ask questions about the agenda items, also before the meeting, by the deadline of 17 April 2018, by means of registered letter sent to the Company's registered offices, or via certified e-mail to the e-mail address si[email protected]; for the purpose of exercising this right, the Company must receive a specific communication issued by the intermediaries, the custodians of the shares owned by the Shareholder. These questions shall be answered at the latest during the Meeting, with the faculty of the Company to provide a single answer to questions with the same content.
Pursuant to Article 126-bis of the CFL, the Shareholders which, also jointly, represent at least a fortieth of the Company's share capital, can request, within ten days of the publication of the call for the Meeting (i.e. by 17 March 2018), to add to the meeting's agenda some additional items that they must indicate in their request, or they can submit new resolution proposals on the items already included in the agenda. The requests must be presented in writing, forwarded via registered letter to the Company's registered offices, or by means of notification to the e-mail address [email protected] and accompanied by a specific communication issued by the intermediaries where the shares owned by the Shareholders are deposited. Disclosure shall be made of any integration of the list of business, which the Meeting shall have to deal with, or the presentation of additional resolution proposals on the matters already on the agenda, in the prescribed forms for the publication of this notice of calling, at least fifteen days before the date fixed for the Meeting in first calling. The request to supplement the agenda is not permitted for the items on which the Meeting resolves, as per the law, upon proposal of the directors or on the basis of a project or a report drawn up by the same, differing from those as per Article 125-ter, first paragraph of the CFL. The Shareholders who request the integration of the agenda must draw up a report, which discloses the reason for the resolution proposals on the new business whose discussion they propose, or the reason relating to the additional resolution proposals presented on the business already on the agenda. The report must be delivered to the management body by the last deadline for the presentation of the integration request. The management body shall make the report available to the general public, accompanied by its assessments, if any, at the same time as the publication of the notification of integration, making it available at the registered offices, on the Company website and by means of the other formalities envisaged by the Consob regulations in force on the subject.
It is hereby disclosed that pursuant to the current legislative provisions and Article 15 of the Articles of Association, the appointment of the Board of Directors takes place in the basis of lists presented by the shareholders in which the candidates are listed by means of a consecutive number.
Each list must also have as an attachment, by the deadline for its filing with the registered offices, the additional documentation as set forth by Article 15 of the Articles of Association and indicated in the Directors' Report relating to point 5 of the agenda of the Shareholders' meeting that can be freely consulted on the website www.si-servizitalia.com (Corporate Governance>Shareholders' Meeting 2018).
The following have the right to present lists (in consideration of the matters established by Consob by means of Resolution No. 20273 published on 24 January 2018): Shareholders who, alone or together with other Shareholders, are overall the holders of shares with the right to vote representing at least 2.5% of the share capital with the right to vote during Ordinary Shareholders' Meetings.
The ownership of the minimum investment holding required for the presentation of the lists, is determined with regard to the shares, which are registered in favour of the Shareholder on the day the lists were filed with the Company.
The communication bearing witness to the ownership of this investment holding can also be produced after filing provided that this takes place by the deadlines envisaged for the publication of the lists by the Company by means of forwarding of the communications envisaged by current legislation by 30 March 2018.
The lists, together with the information regarding the identity of the shareholders that present them and the whole holding owned, as well as the curriculum vitae regarding the personal and professional characteristics of the candidates, with the possible certification of their fitness to qualify as independent and the indication of the offices of administration and control covered in other companies and the statements with which each candidates certifies the non existence of causes of ineligibility or incompatibility and the satisfaction of the requirements set forth in the current legislation and the articles of association, must be filed care of the Company's registered offices or forwarded by means of e-mail to [email protected], by the twenty-fifth day prior to that fixed for the meeting in first calling, or rather by 26 March 2018, and made available to the general public care of the registered offices, on the website and using the other formalities envisaged by Consob as per the regulations, at least twenty-one days before the date of the meeting, or rather 30 March 2018.
In the event that just one list is presented (or in the event that no list is presented), the meeting resolves in pursuance of the law and with the legal majorities, without observing the procedure set forth in the articles of association, in observance of the regulations inherent to the balance between genders in force as and when applicable.
Pursuant to article 15 of the Articles of Association, the renewal of the Board of Directors must comply with the regulations regarding a balance in gender, as per Law no. 120 of 12 July 2011. Pursuant to this law, the gender that is less represented is entitled to a number of auditors equal to at least one third of the elected directors. If the Shareholders intend to submit a list for the renewal of the Board of Directors with three or more candidates, these lists must ensure the presence of both genders, so that the candidates of the least represented gender are at least 1/3 of the total (rounding up in the case of a fraction).
It must be noted that the Consob Recommendation no. DEM/9017893 of 26 February 2009 states that the Shareholders who submit a minority list, must file together with the list, a declaration stating the absence of association relationships, also indirect, as set forth in paragraph 3 of article 147-ter of the Consolidated Finance Law and article 144-quinquies of the Issuers' Regulations, with the shareholders holding, also jointly, a controlling interest or plurality interest, where identifiable on the basis of the communications of the significant equity investments pursuant to Art. 120 of the CFL or the publication of the shareholders' agreements pursuant to Art. 122 of the same Decree.
The lists with a number of candidates higher than seven must contain at least three candidates that meet the independence requirements set for the auditors pursuant to paragraph 3 of Art. 148 of the CFL as well as Art. 3 of the Corporate Governance Code. The lists that do not comply with the above provisions will not be considered as submitted lists.
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The reports of the Board of Directors on the items of the agenda and the resolution proposals contained therein as well as the documentation relating to the agenda items, as required by current legislation, shall be made available to the general public at the Company's registered offices, on the Company website www.si-servizitalia.com in the section Corporate Governance>Shareholders' Meeting 2018, and can be accessed through the storage mechanism at the following e-mail address under the terms and formalities as per the law. The remaining documentation useful for the Meeting shall be published by the legal deadlines. The Shareholders have the faculty to obtain a copy of the same at their own expense.
It should furthermore be recalled that, pursuant to Article 125 quater of the CFL, the Company's website www.si-servizitalia.com (Corporate Governance>Shareholders' Meeting 2018) provides the following documents or information: (i) the documents which will be submitted to the Meeting; (ii) the forms which the Shareholders have the faculty to use for the vote by proxy and the related instructions; (iii) the information on the amount of the Company's share capital with indication of the number and of the categories of shares which it is divided up into.
With regard to any additional information relating to the Shareholders' meeting, and in particular the formalities for exercising the rights, it is possible to consult the Company's website www.si-servizitalia.com in the section Corporate Governance>Shareholders' Meeting 2018 or write to the Corporate Services office at the following certified e-mail address [email protected].
This notice of call is published as of today's date, pursuant to Article 125-bis of the CFL and pursuant to Article 11 of the Articles of Association, on the Company's website www.si-servizitalia.com (Corporate Governance > Shareholders' Meeting 2018) and can be accessed through the storage mechanism at the e-mail address and, in extract form, in the newspaper MF - MILANO FINANZA dated 8 March 2018.
The Shareholders are kindly requested to present themselves at least half an hour before the start of the Meeting's business for the purpose of facilitating the registration procedures.
Castellina di Soragna, Parma, Italy 7 March 2018.
The Chairman of the Board of Directors Signed Roberto Olivi
Board of Directors (in office until approval of the Financial Statements as at 31 December 2017)
| Name and Surname | Position |
|---|---|
| Roberto Olivi | Chairman |
| Enea Righi | Vice-Chairman and CEO |
| Ilaria Eugeniani | Director |
| Emil Anceschi (5) | Director |
| Antonio Paglialonga | Director |
| Lino Zanichelli | Director |
| Vasco Salsi | Director |
| Antonio Aristide Mastrangelo (4) | Director |
| Paola Gina Maria Schwizer (1)-(2)- (3) | Independent Director |
| Romina Guglielmetti (1)-(2) | Independent Director |
| Paola Elisabetta Maria Galbiati (1)-(2) | Independent Director |
(1) Member of the Nomination and Remuneration Committee; (2) Member of the Control and Risks Committee; (3) Lead Independent Director; (4) In office from 11 September 2017, co-opted pursuant to Art. 2386 of the Italian Civil Code and art. 13 of the company Articles of Association following the resignation of Marco Marchetti; (5) who ceased to hold office on 17 January 2018.
Board of Statutory Auditors (in office until approval of the Financial Statements as at 31 December 2019)
| Name and Surname | Position |
|---|---|
| Gianfranco Milanesi | Chairman |
| Anna Maria Fellegara | Statutory auditor |
| Simone Caprari | Statutory auditor |
| Chiara Ferretti | Alternate auditor |
| Paolo Alberini | Alternate auditor |
| Supervisory Body (in office until 2 February 2019) |
| Name and Surname | Position |
|---|---|
| Veronica Camellini | Chairman |
| Laura Verzellesi | Member |
| Francesco Magrini | Member |
Independent Auditors (until approval of the Financial Statements as at 31 December 2023)
Deloitte & Touche S.p.A. - Via Tortona, 25 - 20144 Milan
Servizi Italia S.p.A. Via S. Pietro, 59/b – 43019 Castellina di Soragna (PR) – Italy
Tel. +390524598511, Fax +390524598232, website: www.si-servizitalia.com;
Share Capital: Euro 31,809,451 fully paid-up
Tax code and Parma Business Register No.: 08531760158; Certified email: [email protected]
Founded: 1986
Stock market listing: Borsa Italiana S.p.A. Mercato Telematico Azionario (MTA, electronic stock market), STAR segment Ordinary Share ISIN: IT0003814537, BLOOMBERG: SRI IM, REUTERS: SRI.MI
Giovanni Manti (IR), Luigi Innocenti Chiara Peterlini (Assistant) E-mail: [email protected] – Tel. +390524598511, Fax +390524598232
Servizi Italia S.p.A., registered offices in Castellina di Soragna (PR), listed in the STAR segment of the Borsa Italiana S.p.A. MTA stock exchange, is the leading Italian operator in the supply of integrated services for the wash-hire and sterilisation of textile materials and surgical instruments for hospital facilities. With a technologically advanced production platform broken down into laundering facilities, textile sterilisation centres, surgical instrument sterilisation centres and numerous wardrobes, the Company and its Italian and overseas subsidiaries forming the Servizi Italia Group, mainly provide their broad and diversified range of services for public and private healthcare facilities in central and northern Italy, in the state of São Paulo in Brazil, in Turkey, India, Albania and Morocco.
As at 31 December 2017, the Servizi Italia Group included the following Companies:
| Company name Parent Company and Subsidiaries |
Registered office | Share capital | Interest of equity investments |
|
|---|---|---|---|---|
| Servizi Italia S.p.A. | Castellina di Soragna (Parma) - Italy | EUR | 31,809,451 | Parent |
| SRI Empreendimentos e Participações L.t.d.a. | City of São Paulo, State of São Paulo - Brazil |
R\$ | 146,798,102 | 100% |
| Steritek S.p.A. | Malagnino (CR)- Italy | EUR | 134,500 | 70% |
| Se.Sa.Tre. S.c.r.l. in liquidazione | Genoa - Italy | EUR | 20,000 | 60% |
| San Martino 2000 S.c.r.l. | Genoa - Italy | EUR | 10,000 | 60% |
| Lavsim Higienização Têxtil S.A. | São Roque, State of São Paulo - Brazil | R\$ | 550,000 | 100% (*) |
| Maxlav Lavanderia Especializada S.A. | Jaguariúna, State of São Paulo - Brazil | R\$ | 2,825,060 | 50.1% (*) |
| Vida Lavanderias Especializada S.A. | Santana de Parnaíba, State of São Paulo - Brazil |
R\$ | 3,600,000 | 50.1% (*) |
| Aqualav Serviços De Higienização Ltda | Vila Idalina, Poá, State of São Paulo - Brazil |
R\$ | 15,400,000 | 100% (*) |
| Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi |
Ankara – Turkey | TRY | 5,000,000 | 55% |
| Ergülteks Temizlik Tekstil Ltd. Sti. | Smirne - Turkey | TRY | 1,700,000 | 57.5% (**) |
(*) Held through SRI Empreendimentos e Participações Ltda
(**) Held through Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi
| Company name Associates and Jointly-controlled Companies |
Registered office | Share capital | % holding | |
|---|---|---|---|---|
| Arezzo Servizi S.c.r.l. | Arezzo - Italy | EUR | 10,000 | 50% |
| PSIS S.r.l. | Padua - Italy | EUR | 10,000,000 | 50% |
| Ekolav S.r.l. | Lastra a Signa (FI) - Italy | EUR | 100,000 | 50% |
| Steril Piemonte S.c.r.l. | Turin - Italy | EUR | 4,000,000 | 50% |
| AMG S.r.l. | Busca (CN) - Italy | EUR | 100,000 | 50% |
| Iniziative Produttive Piemontesi S.r.l. | Turin - Italy | EUR | 2,500,000 | 37.625% |
| Piemonte Servizi Sanitari S.c.r.l. | Turin - Italy | EUR | 10,000 | 30% (ˆ) |
| SE.STE.RO. S.r.l. in liquidazione | Castellina di Soragna (PR) - Italy | EUR | 400,000 | 25% |
| CO.SE.S S.c.r.l. | Perugia - Italy | EUR | 10,000 | 25% |
| SAS Sterilizasyon Servisleri A.Ş. | Istanbul - Turkey | TRY | 3,502,000 | 51% |
| Shubhram Hospital Solutions Private Ltd. | New Delhi - India | INR | 270,171,720 | 51% |
| Finanza & Progetti S.p.A. | Vicenza - Italy | EUR | 550,000 | 50% |
|---|---|---|---|---|
| Brixia S.r.l. | Milan - Italy | EUR | 10,000 | 23% |
| Saniservice Sh.p.k. | Tirana – Albania | LEK | 2,745,600 | 30% |
| Servizi Sanitari Integrati Marocco S.a.r.l. | Casablanca - Morocco | MAD | 122,000 | 51% |
(ˆ) Indirect shareholding of 15.05% through Iniziative Produttive Piemontesi S.r.l.
This Directors' report includes the data regarding the separate and consolidated financial statement as at 31 December 2017. The Group's main financial highlights as at 31 December 2017 are shown below, compared with those of the previous year. The figures were prepared in compliance with IAS/IFRS.
The consolidated subsidiaries are San Martino 2000 S.c.r.l., Se.Sa.Tre. S.c.r.l. in liquidazione, Steritek S.p.A., SRI Empreendimentos and Participações Ltda (parent company of the companies: Lavsim Higienização Têxtil S.A., Maxlav Lavanderia Especializada S.A., Vida Lavanderias Especializada S.A. and Aqualav Serviços De Higienização Ltda) and Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi (parent company of the company: Ergülteks Temizlik Tekstil Ltd. Sti.). In order to allow for a better evaluation of the economic and financial performance, the following summary tables show some "Alternative performance indicators", not provided by the IFRS International Accounting Standards. The footnotes of said tables indicate the calculation method used and the composition of these ratios, in line with the guidelines of the European Securities and Market Authority (ESMA).
The separate financial statements of Servizi Italia S.p.A. disclose a shareholders' equity of Euro 142,427 thousand. The result for the year was a profit of Euro 13,822 thousand. This result was achieved after having provided Euro 2,448 thousand for current and deferred tax and Euro 43,004 thousand for amortisation, depreciation, impairment and provision. The result of the separate financial statements of Servizi Italia S.p.A. is influenced by the choice to apply valuation at equity of the subsidiaries; the accounting policies in question were amended retrospectively and the change implied the reinstatement of the comparative figures for the year 2016, with a decrease in the economic result of Euro 884 thousand, a decrease of Euro 9,356 thousand on the value of the other reserves and retained earnings and a decrease in the value of the equity investments in subsidiaries and associates of Euro 10,240 thousand.
The table below shows a comparison of the main 2017 income statement figures with the reinstated results for 2016 (in thousands of Euros):
| (thousands of Euros) | 31 December 2017 | 31 December 2016 reinstated | Changes | Chg. % |
|---|---|---|---|---|
| Revenues | 211,199 | 198,757 | 12,442 | 6.3% |
| Servizi Italia S.p.A. | Page 8 of 210 |
| EBITDA (a) | 56,536 | 53,675 | 2,861 | 5.3% |
|---|---|---|---|---|
| EBITDA % | 26.8% | 27.0% | ||
| Operating profit (EBIT) | 13,532 | 14,696 | (1,164) | -7.9% |
| Operating profit (EBIT)% | 6.4% | 7.4% | ||
| Net profit | 13,822 | 10,996 | 2,826 | 25.7% |
| Net profit % | 6.5% | 5.5% |
(a) The Company management has defined EBITDA as the difference between the value of sales and services and operating costs before depreciation, amortisation, impairment and provisions.
The income statement figures felt the effects of the non-recurring and one-off components. Therefore, the main adjusted indicators are reported below:
| (thousands of Euros) | 31 December 2017 | (1) | 31 December 2017 adjusted |
31 December 2016 reinstated |
Changes adj. |
Change % adj. |
|---|---|---|---|---|---|---|
| Revenues | 211,199 | 211,199 | 198,757 | 12,442 | 6.3% | |
| EBITDA (a) | 56,536 | 1,326 | 57,862 | 53,675 | 4,187 | 7.8% |
| EBITDA % | 26.8% | 27.4% | 27.0% | |||
| Operating profit (EBIT) | 13,532 | 14,858 | 14,696 | 162 | 1.1% | |
| Operating profit (EBIT)% | 6.4% | 7.0% | 7.4% | |||
| Net profit | 13,822 | (311) | 14,837 | 10,996 | 3,841 | 34.9% |
| Net profit % | 6.5% | 7.0% | 5.5% |
(1) The adjusted data do not take account of non-recurring costs relating to the restructuring and industrial reorganisation of the North-West area for Euro 557 thousand, in particular incentives, indemnities and Naspi (acronym for Italian monthly compensation for unemployment), before the tax effect of Euro 134 thousand and one-off costs of the indemnity to the affiliated company Focus S.p.A. for Euro 408 thousand, before the tax effect of Euro 114 thousand and the payment of registration tax and accessory charges for the acquisition of Lavanderia Industriale Z.B.M. S.p.A. for Euro 361 thousand, gross of other charges and the tax effects of Euro 63 thousand.
The table below shows a comparison of the main 2017 statement of financial position figures with the figures for 2016 (in thousands of Euros):
| (thousands of Euros) | Year ended as at 31 December | Change | Change | |
|---|---|---|---|---|
| 2017 | 2016 reinstated | % | ||
| Net operating working capital (a) | 8,201 | 12,725 | (4,524) | -36% |
| Other current assets/liabilities (b) | (11,801) | (13,836) | 2,035 | -15% |
| Net working capital | (3,600) | (1,111) | (2,489) | 224% |
| Non-current assets - medium/long-term provisions | 222,316 | 213,080 | 9,236 | 4% |
| Invested capital | 218,716 | 211,969 | 6,747 | 3% |
| Shareholders' equity (B) | 142,427 | 138,521 | 3,906 | 3% |
| Net financial debt (d) | 76,289 | 73,448 | 2,841 | 4% |
| Invested capital (c) | 218,716 | 211,969 | 6,747 | 3% |
(a) Net operating working capital is not an accounting measurement under the IFRSs endorsed by the European Union. The Company management has defined net operating working capital as the algebraic sum of inventories, trade receivables and trade payables.
(b) Other current assets/liabilities are calculated as the difference between other current assets, current tax receivables, current tax payables and other current liabilities.
(c) Invested capital is not an accounting measurement under the IFRSs endorsed by the European Union. The Company management has defined invested capital as the sum of Shareholders' equity and net financial debt.
(d) The management has defined net financial debt as the sum of amounts Due to banks and other lenders net of Cash and cash equivalents and Current financial receivables.
| (thousands of Euros) Year ended as at 31 December |
Change | ||
|---|---|---|---|
| 2017 | 2016 reinstated | ||
| Cash flow generated (absorbed) by operations | 55,581 | 48,894 | 6,687 |
| Net cash flow generated (absorbed) by investment activities | (47,779) | (50,209) | 2,430 |
| Net cash flow generated (absorbed) by financing activities | (7,834) | 328 | (8,162) |
| Increase/(decrease) in cash and cash equivalents | (32) | (987) | 955 |
| Opening cash and cash equivalents | 1,546 | 2,012 | (466) |
| Closing cash and cash equivalents | 1,514 | 1,025 | 489 |
The table below shows a comparison between the main cash flow figures as at 31 December 2017 and as at 31 December 2016 (in thousands of Euros).
The consolidated financial statements as at 31 December 2017 present Group shareholders' equity of Euro 139,075 thousand and shareholders' equity attributable to non-controlling interests of Euro 2,564 thousand. The result for the year was a profit of Euro 14,364 thousand. This result was achieved after having provided Euro 3,397 thousand for current and deferred tax and Euro 53,453 thousand for amortisation, depreciation, impairments and provision.
The companies, consolidated line-by-line in the financial statements for the period ended 31 December 2017, were the following:
Consorzio San Martino 2000 S.c.r.l., a consortium company established in 2003, with its registered office in Genoa, for the management of the contract relating to the San Martino di Genova hospital, 60% of which pertaining to Servizi Italia S.p.A., operates exclusively as intermediary between the customer and the consortia companies without generating its own profits.
Consorzio Se.Sa.Tre. S.c.r.l. in liquidazione, a consortium company established in 2008 and in liquidation as of 1 January 2018, with its registered office in Genoa, for the management of the contract relating to the Treviso Local Healthcare Provider No. 9, 60% of which held by Servizi Italia S.p.A., operates as intermediary between the customer and the consortia companies without generating own profits.
Steritek S.p.A., a joint-stock company established in 1999 with its registered office in Malagnino (CR), the leading Italian supplier of system validation and control services for sterilization processes and surgical instrument washing systems. The consolidation of Steritek S.p.A. generated sales revenues for Euro 998 thousand, an EBITDA of Euro 232 thousand, an EBIT of Euro 202 thousand and a profit pertaining to the Group of Euro 95 thousand.
SRI Empreendimentos e Participações Ltda, a company wholly owned by Servizi Italia S.p.A., owns:
The companies are involved in the supply of laundry services in the health sector in the State of São Paulo with particular focus on hospitals, nursing homes and healthcare facilities in the capital. The consolidation of the companies generated sales revenues for Euro 32,203 thousand, an EBITDA of Euro 6,597 thousand, an EBIT of Euro 964 thousand and losses pertaining to the Group for Euro 227 thousand.
Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi, 55% owned by Servizi Italia S.p.A., with 57.5% controlled company Ergülteks Temizlik Tekstil Ltd. Sti. with a registered office in Smirne, is a leading company subject to Turkish law, based in Ankara and active through the brand "Ankara Laundry" in the laundry washing sector for healthcare facilities mainly located in centralwestern Turkey. The consolidation of companies generated sales revenues for Euro 4,270 thousand, EBITDA of Euro 1,573 thousand, EBIT of Euro 1,406 thousand and profit pertaining to the Group for Euro 437 thousand.
The reconciliation between the shareholders' equity and result for the year and the corresponding consolidated figures is as follows:
| (thousands of Euros) | 2017 profit (loss) |
2017 shareholders' equity |
Restated 2016 profit (loss) |
Restated 2016 shareholders' equity |
|---|---|---|---|---|
| Profit (loss) and shareholders' equity of the parent company | 13,822 | 142,427 | 10,996 | 138,521 |
| Profit (loss) and shareholders' equity of the subsidiaries | 1,424 | 48,225 | (192) | 50,864 |
| Elimination of equity investments | (1,057) | (69,509) | 891 | (71,324) |
| Consolidation differences | - | 28,209 | - | 22,959 |
| Other surplus value emerging at the time of acquisition | 68 | 8 | (653) | 2,378 |
| Registration of options on non-controlling interests | (531) | (5,688) | (309) | (3,724) |
| Valuation of affiliated companies and joint ventures with the equity method | 639 | (2,033) | (217) | (1,918) |
| Elimination of intercompany dividends | - | - | - | - |
| Consolidated profit (loss) and shareholders' equity | 14,364 | 141,639 | 10,515 | 137,756 |
| Allocation of non-controlling interests profit (loss) and shareholders' equity | (594) | (2,564) | (64) | (545) |
|---|---|---|---|---|
| Group profit (loss) and shareholders' equity | 13,770 | 139,074 | 10,451 | 137,212 |
The table below presents a comparison of the main consolidated income statement figures as at 31 December 2017 with the results as at 31 December 2016 (in thousands of Euros):
| (thousands of Euros) | 31 December 2017 | 31 December 2016 | Change | Change % |
|---|---|---|---|---|
| Revenues | 252,102 | 237,716 | 14,386 | 6.1% |
| EBITDA (a) | 69,829 | 64,022 | 5,807 | 9.1% |
| EBITDA % | 27.7% | 26.9% | ||
| Operating profit (EBIT) | 16,376 | 13,745 | 2,631 | 19.1% |
| Operating profit (EBIT)% | 6.5% | 5.8% | ||
| Net profit | 14,365 | 10,515 | 3,850 | 36.6% |
| Net profit % | 5.7% | 4.4% |
(a) The Company management has defined EBITDA as the difference between the value of sales and services and operating costs before depreciation, amortisation, impairment and provisions.
| The income statement figures felt the effects of the non-recurring and one-off components and, therefore, |
|---|
| the main adjusted indicators are reported below: |
| (thousands of Euros) | 31 December 2017 | (1) | 31 December 2017 adjusted |
31 December 2016 | Adjusted changes |
Change % adj. |
|---|---|---|---|---|---|---|
| Revenues | 252,102 | 252,102 | 237,716 | 14,386 | 6.1% | |
| EBITDA (a) | 69,829 | 1,326 | 71,155 | 64,022 | 7,133 | 11.1% |
| EBITDA % | 27.7% | 28.2% | 26.9% | |||
| Operating profit (EBIT) | 16,376 | 17,702 | 13,745 | 3,957 | 28.8% | |
| Operating profit (EBIT)% | 6.5% | 7.0% | 5.8% | |||
| Net profit | 14,365 | (311) | 15,380 | 10,515 | 4,865 | 46.3% |
| Net profit % | 5.7% | 6.1% | 4.4% |
(1) The adjusted data do not take account of non-recurring costs relating to the restructuring and industrial restructuring of the North-West area for Euro 557 thousand, in particular incentives, indemnities and Naspi, gross of the tax effect of Euro 134 thousand and one-off costs relative to the indemnity to the associated company Focus S.p.A. for Euro 408 thousand, before the tax effect of Euro 114 thousand and the payment of registration tax and accessory charges for the acquisition of Lavanderia Industriale Z.B.M. S.p.A. for Euro 361 thousand, gross of other charges and of the tax effect of Euro 63 thousand.
The table below presents a comparison of the main consolidated statement of financial position figures as at 31 December 2017 with the figures as at 31 December 2016 (in thousands of Euros):
| (thousands of Euros) | 31 December 2017 | 31 December 2016 | Change | Change % |
|---|---|---|---|---|
| Net operating working capital (a) | 10,934 | 12,608 | (1,674) | -13.3% |
| Other current assets/liabilities (b) | (12,000) | (11,692) | (308) | 2.6% |
| Net working capital | (1,066) | 916 | (1,982) | -216.4% |
| Non-current assets - medium/long-term provisions | 218,353 | 216,457 | 1,896 | 0.9% |
| Invested capital | 217,287 | 217,373 | (86) | - |
| Shareholders' equity (B) | 141,639 | 137,756 | 3,883 | 2.8% |
| Net financial debt (d) (A) | 75,648 | 79,617 | (3,969) | -5.0% |
| Invested capital (c) | 217,287 | 217,373 | (86) | - |
The table below shows a comparison between the main consolidated cash flow figures as at 31 December 2017 and as at 31 December 2016 (in thousands of Euros):
| (thousands of Euros) | Year ended as at 31 December | Change | |
|---|---|---|---|
| 2017 | 2016 | ||
| Cash flow generated (absorbed) by operations | 67,267 | 56,900 | 10,367 |
| Net cash flow generated (absorbed) by investment activities | (54,315) | (56,035) | 1,720 |
| Net cash flow generated (absorbed) by financing activities | (9,695) | (3,241) | (6,454) |
| Increase/(decrease) in cash and cash equivalents | 3,257 | (2,376) | 5,633 |
| Opening cash and cash equivalents | 5,463 | 7,082 | (1,619) |
| Effect of exchange rate fluctuations | 721 | (757) | 1,478 |
| Closing cash and cash equivalents | 7,999 | 5,463 | 2,536 |
Servizi Italia S.p.A.'s business performance recorded revenues from sales and services in 2017 of Euro 211,199 thousand in total.
The consolidated revenues of the Servizi Italia Group amounted to € 252,102 thousand, reporting an increase of 6.1% compared to 2016, mainly due to the consolidation of Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi and - with regard to line for sterilization of surgical instruments - the consolidation of Steritek S.p.A. In the Brazilian market, the revaluation of circa 6.5% of the average Real / Euro exchange rate compared to the same year of the previous year had an impact in addition to the increase in turnover recorded on new orders.
Please note the following as regards consolidated revenues from sales and services by sector in the years 2017 and 2016:
revenues from surgical instrument sterilisation services increased by 7.8% from Euro 38,466 thousand in the year ended 31 December 2016 to Euro 41,461 thousand in the year ended 31 December 2017. The 2017 turnover of the line was positively affected by the starting of services provided to some customers.
The table below shows revenues from sales and services of the Servizi Italia Group by region, broken down by geographical area, for the years ending on 31 December 2017 and 2016:
| (thousands of Euros) | 31 December 2017 | % | 31 December 2016 | % | Changes |
|---|---|---|---|---|---|
| Revenues - Italy | 215,629 | 85.5% | 210,379 | 88.5% | 2.5% |
| Revenues - Turkey | 4,270 | 1.7% | - | - | - |
| Revenues - Brazil | 32,203 | 12.8% | 27,337 | 11.5% | 17.8% |
| Sales revenues | 252,102 | 100.0% | 237,716 | 100.0% | 6.1% |
Specifically, the increase in turnover in Brazil refers to 10.8% for systematic growth and the remaining 7.0% to positive exchange rate differences.
The table below shows revenues from sales and services of the Servizi Italia Group by region and for the periods ending on 31 December 2017 and 2016, taken from the consolidated financial statements:
| (thousands of Euros) | 31 December 2017 | % | 31 December 2016 | % | Changes |
|---|---|---|---|---|---|
| Abruzzo | 4 | - | 5 | - | -20.0% |
| Basilicata | 431 | 0.2% | 415 | 0.2% | 3.9% |
| Calabria | 2 | - | - | - | - |
| Campania | 63 | - | 50 | - | 26.0% |
| Emilia Romagna | 31,865 | 12.6% | 32,254 | 13.6% | -1.2% |
| Friuli Venezia Giulia | 19,627 | 7.8% | 17,658 | 7.4% | 11.2% |
| Latium | 12,088 | 4.8% | 11,676 | 4.9% | 3.5% |
| Liguria | 26,851 | 10.7% | 28,420 | 12.0% | -5.5% |
| Lombardy | 51,270 | 20.3% | 46,986 | 19.6% | 9.1% |
| Marches | 3,795 | 1.5% | 3,481 | 1.5% | 9.0% |
| Molise | 1 | - | - | - | - |
| Piedmont | 6,644 | 2.6% | 7,733 | 3.3% | -14.1% |
| Apulia | 12 | - | - | - | - |
| Sicily | 3,783 | 1.5% | 3,217 | 1.4% | 17.6% |
| Tuscany | 26,938 | 10.7% | 26,441 | 11.1% | 1.9% |
| Trentino Alto Adige | 6,050 | 2.4% | 5,665 | 2.4% | 6.8% |
| Umbria | 266 | 0.1% | 253 | 0.1% | 5.1% |
| Valle D'Aosta | 499 | 0.2% | 1,031 | 0.4% | -51.6% |
| Veneto | 24,916 | 9.9% | 24,926 | 10.5% | - |
| NON-EU revenues | 524 | 0.2% | 168 | 0.1% | 211.9% |
| NON-EU revenues (TURKEY) | 4,270 | 1.7% | - | - | - |
| NON-EU revenues (BRAZIL) | 32,203 | 12.8% | 27,337 | 11.5% | 17.8% |
| Total | 252,102 | 100% | 237,716 | 100.0% | 6.1% |
Group investments in 2017 amounted to around Euro 50 million, up compared with approximately Euro 43 million in 2016.
Purchases of linen and technical fabrics rose from Euro 30.2 million in 2016 to Euro 35.0 million in 2017, about 70.6% of the total investments made. This increase was due primarily to the increase in assets of Italian and Brazilian companies.
In terms of business, it is the segment of the wash-room which reported the higher investments (Euro 43.0 million), due to the increase in linen supplied with integrated tracking systems in addition to the systems necessary for reading this new equipment. The surgical instrument sterilisation line, in which the investments reached about Euro 4.7 million, included Euro 2.0 million for the purchase of the surgical instruments, Euro 0.5 million for the construction of the surgical instrument sterilisation facility of the ASST (healthcare provider) of Valle Olona for the hospital facilities of Busto Arsizio and Euro 0.2 million for the restructuring of the surgical instrument sterilisation facility at the DEAS (emergency room services) of Azienda Ospedaliera (Hospital) Careggi of Florence.
EBITDA moved from Euro 53,675 thousand in 2016 to Euro 56,536 thousand in 2017 (5.3% increase in absolute value). In relative terms, EBITDA, as regards revenues from sales and services, remained fairly stable, from 27.0% of the previous year to 26.8%. EBITDA was positively affected by the increase in revenues from sales in the wash-hire line - as a result of the merger by incorporation of Tintoria Lombarda Sanitary Division S.r.l. - as well as in the linen sterilization line due to the merger by incorporation of Servizi Italia Medical S.r.l. and in the instrument sterilization line due to the increase in turnover. This financial ratio was affected by greater containment of operating costs such as utilities, rentals, administrative costs and use of third-party personnel, while the increase in personnel costs both in the wash hire segment and in the surgical instrument sterilization segment was a negative factor. The EBITDA ratio was also negatively impacted, for Euro 1,326 thousand, by one-off costs relating to expenses for restructuring and industrial reorganisation following the termination of activities of the Barbariga (BS) site, incentives, indemnities and Naspi (acronym for Italian monthly compensation for unemployment) for Euro 557 thousand and the payment of registration tax and accessory charges for the acquisition of Lavanderia Industriale Z.B.M. S.p.A. for Euro 361 thousand as well as the indemnity totalling Euro 408 thousand recognised to the company Focus S.p.A. for the value loss following the restructuring of the Castellina di Soragna (PR) facilities. Net of one-off components, adjusted EBITDA, amounting to Euro 57,862 thousand, rose by 7.8% in absolute terms, and with a relative incidence of 27.4%, compared to 27.0% in 2016.
The operating profit (EBIT) increased from Euro 14,696 thousand to Euro 13,532 thousand after recognising depreciation, amortisation, impairment and allocations of Euro 43,004 thousand, a 0.8% increase with respect to the incidence of the previous year. This increase was due to the gradual shift to linen equipped with integrated tracking systems, even on initial allocations of new orders, as well as to the amortization of the customer portfolio resulting from the acquisition of the company Tintoria Lombarda Divisione Sanitaria S.r.l. and the increase in the write-down of trade receivables of certain private customers. Net of one-off components, adjusted EBIT, equal to Euro 14,858 thousand, was essentially in line with the period of comparison.
Profit before tax increased by 17.6% from Euro 13,838 thousand to Euro 16,270 thousand. Financial management showed a decrease in net financial charges in 2017 following a decrease in the rates applied to loans. The improvement was achieved due to the positive results obtained in the scope of consolidation of subsidiaries, and made evident by the decision to apply the valuation according to the equity method of the subsidiaries which led to a positive effect on the result of Euro 1,516 thousand compared to the restated comparative amount in which negative differences were recorded for Euro 884 thousand.
The separate financial statements as at 31 December 2017 closed with net profit of Euro 13,822 thousand, up by 25.7% in absolute terms compared to Euro 10,996 thousand in 2016. The result was positively affected by the decrease in the tax burden which was mainly determined by the decrease in the IRES rate, as well as by the benefit deriving from the business income deduction of so-called "super and hyper-depreciation", as required by the 2017 Budget Law (L. 232 / 2016).
Consolidated EBITDA grew from Euro 64,022 thousand in 2016 to Euro 69,829 thousand in 2017, a 9.1% increase in absolute terms. On a like-for-like basis, the increase in EBITDA would be around 3.6% in absolute value. EBITDA was positively impacted by the increase in sales revenues in both the washhire line and the surgical instrument sterilisation line - due to the consolidation of Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi and Steritek S.p.A. - with a greater reduction in operating costs in relative terms such as utilities, rentals, administrative costs and the use of third-party personnel, while it was negatively impacted by a increase in personnel expense, in particular in the Brazilian area, due primarily to the effects of the adjustments to the inflation rate of the labour agreements of the state of São Paulo, and the increase in labour units following growth in the laundry services thanks to the awarding of new contracts and the revaluation of the Real/Euro exchange rate. The EBITDA ratio was also negatively impacted, for Euro 1,326 thousand, by one-off costs relating to expenses for restructuring and industrial reorganisation following the termination of activities of the Barbariga (BS) site, incentives, indemnities and Naspi for Euro 557 thousand and the payment of registration tax and accessory charges for the acquisition of Lavanderia Industriale Z.B.M. S.p.A. for Euro 361 thousand, as well as the indemnity totalling Euro 408 thousand recognised to the company Focus S.p.A. for the value loss following the restructuring of the Castellina di Soragna (PR) facilities. Net of one-off components, adjusted EBITDA, amounting to Euro 71,155 thousand, rose by 11.1% in absolute terms, and with a relative incidence of 28.2% (27.6% given an equivalent scope of consolidation), compared to 26.9% in 2016.
The consolidated operating profit (EBIT) increased from Euro 13,745 thousand to Euro 16,376 thousand after recognising depreciation, amortisation, and write-downs for Euro 53,453 thousand. The relative incidence remained unchanged, equal to 21.2%. The incidence of increases in the depreciations of linen shown in the Italian area is offset by the increase in turnover deriving from laundry services in the Turkish area and consolidated as of 2017.
Net of one-off components, adjusted EBITDA, amounting to Euro 17,702 thousand, and with a relative incidence of 7.0% (6.3% given an equivalent scope of consolidation) grew compared to the 5.8% in 2016.
Profit before tax increased from Euro 13,072 thousand to Euro 17,761 thousand. The improvement was primarily achieved due to the positive results recorded by associates and jointly controlled companies, consolidated using the equity method, and by the collection of dividends paid by subsidiaries.
The consolidated financial statements as at 31 December 2017 closed with a net profit of Euro 14,365 thousand compared to Euro 10,515 thousand realised in 2016, with a relative incidence that grew from 4.4% in 2016 to 5.7% in 2017 (5.5% given the equivalent scope of consolidation) and with an increase in absolute terms of Euro 3,850 thousand, equal to 36.6%.
On 10 February 2017, the merger by incorporation of the wholly-owned subsidiary Tintoria Lombarda Divisione Sanitaria S.r.l. into Servizi Italia S.p.A. was finalised. The merger took effect from 1 March 2017 for statutory purposes. As from that date, the merging company (Servizi Italia S.p.A.) took over all the income and expense-generating legal relations relating to the merged company, with the execution of the organisational integration of the administrative and production processes targeted at achieving greater management efficiency and integration. The merger also made provision for the termination of the production activities provided by the Barbariga (BS) site, which were shifted to other laundry sites with the available production capacity and, in agreement with the trade union organisations, the reallocation of part of the workforce to other production sites.
On 13 February 2017, the Company announced its presence in Morocco, for the primary purpose of developing and strengthening the surgical sterilisation business through the Moroccan company Servizi Italia Marocco S.a.r.l. To this end, Servizi Italia purchased 51.0% of Servizi Sanitari Integrati Marocco S.a.r.l., a company that on 10 February 2017 signed a preliminary contract for the establishment of Servizi Italia Marocco S.a.r.l, which will be 50% owned by Servizi Sanitari Integrati Marocco S.a.r.l. and 50% owned by local partner Blue Field Healthcare S.a.r.l.
On 28 March 2017, the Company published its fourth Sustainability Report, proof of its constant commitment to economic and social sustainability, based on the gradual prospect of shared value. The Report is testimony to the Company's commitment to making strategic content regarding Corporate Social Responsibility available to stakeholders.
On 20 April 2017, the Shareholders' Meeting approved the financial statements as at 31 December 2016 and the distribution of a gross dividend of Euro 0.15 per share outstanding on the coupon date, excluding treasury shares. Payment took place on 26 April 2017, with a coupon payment on 24 April 2017. The Shareholders' Meeting also appointed the members of the Board of Statutory Auditors and its Chairman for the years 2017–2018–2019, and determined the related remuneration.
The Shareholders' Meeting authorised the Board of Directors to purchase and sell treasury shares, subject to revocation of the resolution of 20 April 2016. The authorisation is for a maximum number of Servizi Italia S.p.A. ordinary shares equating to 20% of the share capital, taking into account the treasury shares already held, for a period of 18 months as of the Shareholders' Meeting resolution. Additional information on the event is available on the Company's website.
The Board of Directors meeting, held on 20 April 2017, resolved to launch the programme for the purchase and sale of treasury shares, in implementation of the resolution issued by the ordinary Shareholders' Meeting.
On 12 May 2017, the Board of Directors verified that the statutory auditors met the independence requirements, based on the checks performed by the Board of Statutory Auditors after the appointment, in compliance with the provisions of the Corporate Governance Code. The Board of Directors also verified the requirements for remaining in the STAR segment (ref. 2.2.3, paragraph 10 of the Regulation of Borsa Italiana and IA.4.2.3, paragraph 3, of the Instructions), in order to comply with the terms and methods set forth in the Issuers' Regulations of Borsa Italiana and the instructions in the Issuers' Regulations. In addition, it also approved the legislative update to the Regulations for Related Party Transactions.
On 16 May 2017, the Company announced the exercising of the option to purchase an additional 15% stake in the Turkish company Ankateks, obtaining control of the Group on 19 July 2017, and strengthening its position in the market. Additional information on the event is available on the Company's website.
On 11 July 2017, the Company announced that Servizi Italia S.p.A.'s Board of Directors and the Shareholders' Meeting of Servizi Italia Medical S.r.l. approved the merger by incorporation of the wholly-owned subsidiary Servizi Italia Medical S.r.l. in Servizi Italia S.p.A. The merger operation was effective as of 1 October 2017. The merger became effective for accounting and tax purposes as of 1 January 2017. For more details and information, refer to the documents available on the Company's website.
On 2 August 2017, the Company announced that, pursuant to the applicable regulations, Marco Marchetti stepped down from the role of executive Director and manager of Servizi Italia S.p.A. Pursuant to art. 2386 of the Italian Civil Code and art. 13 of the company Articles of Association; on 11 September, the Board of Directors resolved to appoint, via co-optation, Antonio Aristide Mastrangelo as the new director. For more details and information, refer to the documents available on the Company's website.
On 5 September 2017, the Company announced the acquisition of the majority stake in Steritek S.p.A., a leading Italian operator in providing validation services for sterilisation cycles, for surgical instrument washing services and accessory services for healthcare facilities. Thanks to this transaction, Servizi Italia diversifies its existing business lines, expanding the range of high value added and similar services to its sterilisation activities. For more details and information, refer to the documents available on the Company's website.
On 13 October 2015, the Italian Revenue Agency, Provincial Office of Brescia, sent a Tax Audit Report Notice concerning direct taxes, VAT and IRAP relating to 2010, against Padana Everest S.r.l., merged into Servizi Italia S.p.A. in 2012, where a higher taxable amount was disputed, based on the assumption of an undue decrease in income concerning the tax exemption of investments set forth in Law-Decree no. 78 of 1 July 2009 (so-called "Tremonti-ter"). On 23 December 2015, the Office notified Servizi Italia the Notice of Assessment, with which - by fully acknowledging the findings of the tax audit report - it did not recognize a portion of eligible investments for the Tremonti-ter purposes. In 2016, Servizi Italia filed an appeal against the notice, asking it to be cancelled; the Provincial Tax Commission of Brescia rejected the appeal presented and, on 22 March 2017, Servizi Italia S.p.A. filed an appeal to the Regional Tax Commission, believing the tax claim to be illegitimate and objectively unfounded. The hearing for the appeal has not yet been scheduled.
With regard to the delivery of a Formal Notice of Assessments, dated 30 September 2016, issued by the Italian Revenue Agency - Regional Directorate Office of Emilia Romagna - Major Tax Payers Office, already communicated in the section Information on proceedings in progress in the Half-year Financial Report as at 30 June 2017, on 9 August 2017 Servizi Italia S.p.A. received, regarding the years 2012 and 2013, orders to file an appearance from the Italian Revenue Agency in order to enter into discussions. Therefore, the Company met with officials from the Italian Revenue Agency to re-propose its evaluations and briefs in support of its work, reaching a settlement with the Tax Authorities, which recognised the positions of Servizi Italia S.p.A. regarding the recognition of components arising from factoring fees and the deductions of negative income components provided by contract and recorded according to the IAS 18 principle, mediating on the matter of active transactions with the subsidiary SRI Empreendimentos e Participações L.t.d.a. On 24 October 2017, Servizi Italia S.p.A., in evaluating the benefits of an agreement with the Italian Revenue Agency at the pre-dispute phase, for the purposes of reaching a settlement, paid the amounts set out in the Italian Revenue Agency's proposal, in order to avoid the establishment of long dispute proceedings which would have meant it losing the possibility among other things - of implementing corrective actions in the event of being the losing party. Therefore, the taxes involved in the settlement and the associated accessory charges have already been booked to this report, as well as the recovery of costs for services to SRI Empreendimentos e Participações L.t.d.a., with a net total impact on the consolidated financial statements of around Euro 317 thousand.
During the month of December 2017, the Company established an office in the new headquarters at the same address, implemented as part of the redevelopment project of the production area of Castellina di Soragna (PR). The building, built according to criteria of eco-compatibility, responds to the need for larger spaces following the acquisitions completed by Servizi Italia in recent years; it consists of a ground floor and a first floor with a sizing adequate to meet company developmental needs for years to come. The new headquarters have a modern interior design with open space, offices, meeting rooms as well as common and relaxation areas for improved work well-being in order to contribute to greater efficiency in workflows between people and with a view to effective sharing and exchange of knowledge.
The main characteristics of the contracts awarded during the year, which have an annual contract value of more than Euro 50 thousand, are provided below:
| Customer | Service provided | Duration years |
Contract value per year (thousands of |
|---|---|---|---|
| Euros) | |||
| ESTAR – AO Careggi of Florence (awarded as part of a Temporary Joint Consortium) |
CTO Florence Sterilisation Service | 1 | 1,121 |
| ASP Emanuele Brignole of Genoa | Linen wash-hire service | 2 | 151 |
| Ospedale Evangelico Internazionale of Genoa |
Supply of sterile linen kits for surgical procedures composed of TTR and TNT textiles |
4 | 191 |
| ASSB Bolzano | Service for the wash-hire and delivery of flat and packed linen | 3 | 477 |
| AZIENDA ULSS 6 Vicenza (awarded as part of a Temporary Joint Consortium) |
Linen wash-hire, mattresses and garment service | 5 | 3,380 |
| Az. Osp. San Camillo Forlanini of Rome (awarded as part of a Temporary Joint Consortium) |
Linen wash-hire, non-sterile TNT textile, linens and sterile items service. |
3 | 3,194 |
| APAC Trento – Anaunia Taio (awarded as part of a Temporary Joint Consortium) |
Flat and packed linen wash-hire service. | 4 | 151 |
| Istituto Ortopedico Rizzoli of Bologna (awarded as part of a Temporary Joint Consortium) |
Linen wash-hire service | 6 | 850 |
| La Quiete – Udine (awarded as part of a Temporary Joint Consortium) |
Wash-hire service | 5 | 594 |
| Vimercate Salute e Gestioni Scarl | Wash-hire service | 3 | 686 |
| IRCCS Cà Granda – Ospedale Maggiore Policlinico of Milan (awarded as part of a Temporary Joint Consortium) |
Wash-hire, maintenance, delivery and pickup of mattresses service | 5 | 57 |
| Azienda Universitaria Integrata of Trieste (awarded as part of a Temporary Joint Consortium) |
Wash-hire service | 1 | 69 |
| Suzzara Hospital | Wash-hire service | 3 | 55 |
| Fondazione Salvatore Maugeri | Wash-hire service | 3 | 850 |
| SIRAM - Bergamo Hospital | Wash-hire service provided to ASST "Papa Giovanni XXIII" – Bergamo presidio ospedaliero San Giovanni Bianco |
14 | 220 |
| Brixia Service S.r.l. | Wash-hire service | 3 | 90 |
|---|---|---|---|
| SIRAM - Bergamo Hospital | Management and operation of the sterilization center inside the Papa Giovanni XXIII Hospital in Bergamo |
13 | 1,860 |
| ASP Fondazione Muner de Giudici and ASP Casa di Riposo Giuseppe Sirch |
Laundry service of flat linen, packaged, staff uniforms and washing of guest linen at A.S.P. "FONDAZIONE E. MUNER DE GIUDICI" of Lovaria – Pradamano (UD) and A.S.P. "CASA DI RISPOSO GIUSEPPE SIRCH" of San Pietro al Natisone (UD) |
3 | 169 |
| ULSS 2 Serenissima – Mestre (awarded as part of a temporary joint consortium) |
Sterilization service at the hospital center of Mestre | 3 | 309 |
| Emporium - Griesfeld Nursing Home of Bolzano |
Laundry and rental service of the Griesfeld Nursing Home of Bolzano (BO) |
4 | 50 |
| Comprehensive community Oltradige-Bassa Atesina (Domus - Laives) |
Laundry services for the Centro di Degenza Domus Meridiana of Laives | 4 | 67 |
| APSP Matteo Brunetti - Paluzza UD | Rental, washing, disinfection, drying, ironing and bending of the flat and sanitary linen for the Covil di Paluzza elderly residential facilities |
3 | 54 |
The information on treasury shares provided in Article 2428, paragraph 3 of the Italian Civil Code is included in the explanatory notes to the separate financial statements, sections 6.15 and 10.
During the year under review, as in previous years, the Company did not incur any charges, which could be linked in any way to said activities.
Servizi Italia S.p.A.'s transactions with subsidiaries, associates, jointly controlled companies and parent companies mainly relate to: (i) Relations related to contracts for the supply of services of a commercial nature; and (ii) Financial relations involving loans. These transactions are described in detail in the explanatory notes to the Financial Statements, in section 8.
It should also be noted that, in addition to the Regulations adopted by Consob by means of resolution No. 17221 dated 12 March 2010, as amended, on 24 November 2010 the Board of Directors approved the Regulations for related party transactions, updated on 13 November 2015 and 12 May 2017, which are posted on the Company website.
On 19 January 2018, the Company announced the resignation submitted by the director Emil Anceschi on 17 January 2018. The Board of Directors has noted that - despite the resignation of the director - the composition of the Board of Directors is in any case in line with currently effective provisions on gender balance and the number of directors meeting independence requirements. Given the above - and the imminent expiration of the mandate of the current administrative body on the date of approval of the financial statements as at 31 December 2017 - the Board, with the favourable opinion of the Board of Statutory Auditors, deemed it appropriate to not to proceed with the co-optation pursuant to the company Articles of Association and Art. 2386 of the Italian Civil Code but instead to await a resolution regarding the appointment of the entire administrative body directly at the next Shareholders' Meeting. For more details and information, refer to the documents available on the Company's website.
On 31 January 2108, the Company communicated the resignation of Mr. Maurizio Casol, an executive with strategic responsibilities and related party pursuant to the Regulations approved by Consob resolution no. 17221/2010 and the RPT Regulations adopted by Servizi Italia. For more details and information, refer to the documents available on the Company's website.
The Group - for the 2018 financial year - forecasts results that take into account the commitment to consolidate investments made in the countries in which it operates as well as the consolidation of the Group's organizational structure and the attainment of important management efficiency objectives that aim, amongst other goals, to go beyond just meeting the quality requirements of customers, thereby maintaining and improving the levels of profitability and margins of the business. In particular, the strategy of the Servizi Italia Group will focus on the achievement of the following objectives:
o in Brazil, through cost containment, the on-going search for production synergies and efficiencies and the reorganisation of the Group's companies;
o in India, through activities carried out by the local management, aimed at promoting the business model in order to increase the demand and the revenue which support the startup expenses arising from the opening of the new company;
As at 31 December 2017 and 31 December 2016, the Group held no financial derivatives.
The operational headquarters of the Company where its activities are carried out are as follows:
Via Sambrioli, 1 25039 Travagliato (BS)
Via Primo Maggio n. 125– 29027 Podenzano (PC)
The Company shares have been traded in the STAR segment of the Borsa Italiana S.p.A. screen-based stock market (MTA) since 22 June 2009. The main share and stock exchange data as at 31 December 2017 is disclosed below along with share volume and price trends (in Euros):
| Share and stock exchange data | 31 December 2017 |
|---|---|
| No. of shares making up the share capital |
31,809,451 |
| Price at IPO: 4 April 2007 | 8.50 |
| Price as at 31 December 2017 | 6.70 |
| Maximum price during the period | 6.76 |
| Minimum price during the period | 3.61 |
| Average price during the period | 4.686 |
| Volumes traded during the period |
8,007,036 |
| Average volumes during the period | 31,526.76 |
In 2017, the investor relations team held several individual and group meetings with analysts and investors and also organised guided tours of the sterilisation centres and industrial laundering sites for shareholders and potential investors who so requested. In 2017, the Company met with investors at the "STAR Conference" events in Milan and London organised by Borsa Italiana and also appointed Midcap Partners (Appointed rep by Louis Capital Markets UK, LLP) to conduct a research study, published on the Company's website together with that of Specialist Intermonte SIM.
The information on the ownership set-ups and on corporate governance is contained in the specific report drawn up in accordance with Article 123 bis of the CFL, which forms an integral part of the financial statement documentation and which will be published in accordance with the matters envisaged by current legislation.
Servizi Italia S.p.A. is not subject to the management and co-ordination activities of either the direct parent company Aurum S.p.A. or the indirect parent company Coopservice S. Coop. p. A., since the following indices of probable subjection to third party management and co-ordination activities do not exist, such as the issue of directives pertaining to the financial and lending policy, the establishment of group operating strategies, the concentration of cash management relationships with the same. The Company in fact operates under conditions of corporate and entrepreneurial autonomy and operates autonomously in commercial dealings with its customers and suppliers. Furthermore, Servizi Italia - in compliance with the matters envisaged by Italian Law No. 262 dated 28 December 2005 - has adopted all the necessary measures (such as, for example, the appointment of the Control and Risks Committee, the Lead Independent Director and the adoption of internal regulations regarding transactions with related parties) which permit it not to be subject to management and co-ordination activities.
The information on the remuneration of the directors, the general managers and the executives with strategic responsibilities is contained in a specific report drawn up in accordance with the format No. 7 bis, of Article 123-ter of the CFL, which forms an integral part of the financial statement documentation and which will be published in accordance with the matters envisaged by current legislation.
The consolidated non-financial statement of Servizi Italia S.p.A., drafted in accordance with Leg. Decree 254/16, constitutes an independent report (Sustainability Report) as required by Art. 5 paragraph 3, letter b) of Italian Legislative Decree 254/16, and is available at the website www.si-servizitalia.com, under the section "Sustainability".
The Company's model is based on integrated and adequate risk management and internal control systems.
This model is meant to ensure the Company's continuity and the adequacy of its processes, activities and services in terms of:
Business objectives:
achievement of objectives set within company strategies;
Via the Director responsible for the internal control and risk management system and the Internal Audit Manager, the Board of Directors plans, organises and manages initiatives designed to ensure that company targets are achieved by periodically reviewing objectives, changing processes based on changes within and outside the Company, and promoting and maintaining a culture and climate favourably oriented towards risk management within the company.
With a view to Governance Control, the Company has prepared and implements a series of internal procedures and controls to apply corporate governance at all levels, in terms of operational efficiency and business integrity.
The Enterprise Risk Management (ERM) tool manages risks in an integrated manner.
The primary objectives of ERM are:
The Company has defined a Corporate Risk Model within its ERM policy, which reflects the types of risk expected in light of the company's activities. Updates are approved annually by the Board of Directors. The Risk Model is the foundation and common language of the process of identifying, evaluating, controlling and reporting priority corporate risks.
The primary business risks identified (strategic, operational, financial and compliance) based on the activities of the Company and its subsidiaries are examined by the entire Board of Directors as well as the members of the Board of Statutory Auditors and the Control and Risks Committee. Meanwhile, the Director responsible for the internal control and risk management system, the Financial Reporting Manager, the Internal Audit Manager, the Organisation and Systems Manager, the Supervisory Body and the Control and Risks Committee are responsible for planning, implementing and managing the internal control system. In addition, in line with the ERM policy, a risk mapping and risk scoring methodology has been adopted which identifies the significance of the risk based on an assessment of global impact, likelihood and control level.
The Company also implements the ERM process and the Risk Self-Assessment, the results of which are disclosed to the Control and Risks Committee and the Board of Directors and are used in the preparation of specific risk-based audit plans.
The Group, in order to minimise different types of risks to which it is exposed, has adopted time scales and control methods, which allow the Company's management to monitor risks and to inform the Board of Directors so that it may approve all transactions involving a commitment by the Company with respect to third parties.
Without prejudice to the principle of continuous monitoring and considering the characteristics of the Group's activities, a review of the risk assessment indicates that the Company has been able to achieve the desired mitigation of the primary operational, financial, strategic and compliance risks identified by taking the planned organisational and operating measures and implementing and documenting control points within company processes.
The activities of the Group are affected by the general conditions of the economy in the markets in which it operates. A period of economic crisis, with a consequent slowdown in consumption, may have a negative impact on the sales of the Group, with a subsequent decline in production volumes. The current macro-economic scenario causes a significant uncertainty on forward-looking statements with the consequent risk that a more modest performance may impact, in the short term, the margins. To mitigate the possible negative impact that a lower demand may have on the Company's profitability, the Servizi Italia Group has set up a managing structure that, through project management and project control activities, pursues objectives of organisational and operational efficiency in order to maintain the levels of margins and profitability of the business in general.
The Group provides its services to several countries (Italy, Brazil, Turkey, Albania, India, Morocco) through subsidiaries and associates. While pursuing an expansion strategy, the Servizi Italia Group has invested and could invest even more in the future also in countries characterised by the poor stability of their political institutions and/or in the midst of international tensions. The above strategy could expose the Servizi Italia Group to several types of risks of a macroeconomic nature, deriving, as an example, from changes in the political, social economic and regulatory systems adopted by these countries or from extraordinary events such as acts of terrorism, civil disturbances, restrictions on services provided by the Group, as well as policies aimed at the control of foreign exchange rates, inflation phenomena, sanctions and nationalisations. The probability that the events described above may occur, varies from country to country and it is difficult to predict. However, Top management constantly and closely monitors these situations in order to implement in a timely manner any possible change that can minimise the economic or financial impact resulting therefrom.
The Group aims at continuing to grow through a strategy based on strengthening its presence in the markets in which it operates and on expanding its geographic presence. Within this strategy, the Group may have to face some challenges in managing possible adjustments to the structure or business model, or in its capacity to identifying market trends and related local demand. In addition, the Group may incur start-up expenses arising from the opening of new companies. Finally, if the growth of the Group is pursued through external actions such as acquisition operations, it is possible that it may have to face, inter alias, difficulties connected to the correct measurements and integration of the acquired assets, as well as not achieving the expected synergies which may negatively reflect on the asset and the future economic-financial results of the Group. For the purpose of mitigating these risks, the Group has set up a number of internal processes for safeguarding the approval and valuation phases of the investment initiatives. Furthermore the processes, in addition to the appropriate formal procedures, provide for due diligence operations, binding multi-level internal authorisation processes, more effective project management and project control activities which are carried out by Top management in order to timely implement any possible change and therefore minimise the economic or financial impact that may derive from the above described events which could occur in any of the countries involved.
The Group aims at achieving its internal growth in the markets where it operates, through a strategy that includes the awarding of service contracts through public calls for tender or private negotiations, which are regulated by laws that may differ from country to country. More specifically, the contracts executed with customers have generally a multi-annual duration, with the possibility, at the end of the first natural expiry date, of an extension for an additional period, normally of the same duration as the initial one; this allows the Group to plan its future activities. However, there are no certainties about the Group being able to maintain the same relationship as a contractual vendor and no certainties about the fact that the new public calls for tender or other private negotiations will offer technical-economic conditions of interest to the Group; this may cause negative and significant effects on the business and the economic, equity and financial position of the Group. As regards the contracts in the portfolio, there is no overlapping of expiry dates, and it should also be noted that the leadership and the reputation of the Group and the quality of services provided encourage the customers to renew their contracts. In fact, the strategy adopted by the Group ensures customer retention by maintaining a continuous trade relationship with the customers in the long-term and with the objective of maintaining a low churn rate.
The comparative map of the markets in the countries where the Group operates differs from country to country. In detail: (i) the Italian market is highly competitive due to the presence of different operators in the sector of the services offered; (ii) the Brazilian market, due to the growing penetration rate of the demand for services, has witnessed the development of the competition map represented by operators, who through external growth operations, have strengthened their positions in some areas of the country, and by other family-based and small-sized operators, with a limited capacity of self-financing and relatively ineffective management models; (iii) the market of the other countries where the Group operates at this time is not characterised by a significant competitive map. It is not possible to exclude that the intensification of the level of competition in the sector of the services in which the Group operates may condition activities in the future and have significantly negative impacts on operations and on income, the financial position and cash flows. The Group deals with this risk by offering innovative services of proven quality in rigorous compliance with regulations.
The Servizi Italia Group operates in a sector characterised by very specific and detailed legislation, which is continually evolving. The Company cannot exclude that future changes in the existing legislation, or the issuance of new laws for the regulation of particular aspects of the sector in which it operates may influence its production activities (by means of restrictions and/or limitations on the services which are provided as well as the related disbursement processes). To this regard, the availability of internal professionals with high technical skills in the respective spheres of responsibility and constantly up-dated in their field, permit a constant monitoring of the legislative changes. The update system with regard to sector standardisation is activated by means of the main on-line channels and sector subscriptions.
The Servizi Italia Group is exposed to interest rate fluctuations especially with regard to the extent of the financial expense relating to the company's net borrowing, which is mainly characterised by shortterm debt. The interest rate, which the Group is mainly exposed to, is the Euribor. In relation to the global financial crisis, the Company is assessing the appropriateness of taking out hedging transactions on the rates, even if the financial management outstanding aspires to the optimisation of the financial expense and not to establishing derivatives for speculative purposes.
Receivables are due from public institutions, and as such they are certain in terms of collectability and, by nature, not subject to impairment risks, and from private customers and therefore exposed to uncertainties. The Group has adopted procedures for the ongoing monitoring of its exposure to different counterparties and has implemented adequate measures for risk mitigation through procedures for the recovery of doubtful receivables using legal assistance if the filing of legal actions is required.
Having taken into account the characteristics of the credit, the risk in question could become more significant in the event of an increase in the private customer component, however this aspect is mitigated by a careful selection and financing of the customers.
This is the risk associated with the volatility of the prices of the raw materials and the energy commodities, with particular reference to electricity and gas used in the primary production processes. The price risk is also controlled by means of the entering into of purchase of goods and services agreements with price blocks and on-average annual timescales, joined by constant monitoring of the performance of the prices so as to identify opportunities for making savings. The risk arising from inflation phenomena in the countries where the Group operates may have an impact on the trade margins; this phenomenon is controlled, when the laws of the countries allow for it, through contractual amendments with the Customers in order to adjust the price of the rendered services; or by maintaining on-going trade relationships with the customers in order to identify activities aimed at not negatively impacting the interests of the parties.
The exchange rate risk derives from the activities of the Servizi Italia Group, which are partly carried out in currency other than the Euro or linked to exchange rate changes via contractual components indexlinked to a foreign currency. Revenues and costs denominated in currency may be influenced by exchange rate fluctuations with an impact on commercial margins (economic risk), like the trade and financial receivables and payables denominated in currency can be affected by the conversion rates used, with effects on the economic result (transactional risk). In conclusion, the exchange rate fluctuations also have repercussions on the consolidated results and the shareholders' equity attributable to the shareholders of the group parent since the financial statements of certain investee companies are drawn up in a currency other than the Euro and subsequently converted into Euro (translation risk).
With reference to the transactional risk, under the co-ordination of the Administration, Finance and Audit divisions, the Group handles the exposure to foreign exchange rate risk on certain currency flows (Brazilian Real, Turkish Lira, Indian Rupee and Albanian Lek) as regards development investments in Brazil, Turkey, India and Albania in order to minimise any possible negative effect. It should also be noted that the Company holds controlling interests in companies that prepare their financial statements in a currency other than the Euro, the latter being used for the consolidated financial statements. This exposes the Group to translation risks, due to the conversion into Euro of the assets and liabilities of the subsidiaries that operate with currencies other than the Euro. The main exposures to foreign exchange translation risk are constantly monitored and, at present, it is not believed necessary to adopt specific hedging policies covering these exposures.
Risk linked, for the Company, to two main factors: (i) delay in payments of public customers; and (ii) expiration of short-term loans. Concentrating its business on orders contracted with the Public Administration Authorities, the Company is exposed to risks associated with delays in the payments for the receivables. In order to balance this risk, factoring agreements have been entered into with the without-recourse formula.
To correctly manage the liquidity risk, an adequate level of cash and cash equivalents must be maintained. In light of the predominantly public nature of the group's customers and the average collection times, cash and cash equivalents are mainly obtained from accounts receivable financing and medium-term loans.
Transactions with related parties are regulated in compliance with the provisions of the Regulations approved by Consob with resolution no. 17221 of 12 March 2010, as subsequently amended, and the Regulations for Transactions with Related Parties approved by the Company on 24 November 2010, subsequently amended on 13 November 2015 and 12 May 2017. The Servizi Italia Group has transactions outstanding with related parties (as defined by international accounting standard IAS 24); these transactions have been analysed in the specific supplementary annual and consolidated income statement and statement of financial position schedules as at 31 December 2017 and stated in detail in the related notes.
The "Regulations for related party transactions" contain the rules, which govern the identification, approval and execution of the related party transactions put together by Servizi Italia, directly or via subsidiaries, for the purpose of ensuring the transparency and correctness, both essential and procedural, of said transactions.
Risks associated with the sterilization of linen and surgical instruments and the adequacy of insurance coverage
The Group is exposed to risks related to the type of implemented activities as well as the methods of providing services. In detail, the linen and surgical instrument sterilisation activities involve the preparation of sterile medical devices to be used at the departments of the hospitals.
Any defects in the sterilisation process could generate liability for the Company vis-à-vis the customers or third parties and give rise to subsequent requests for damage compensation. Accordingly, the Company has taken out insurance policies to cover these risks, in line with sector practice, to cover the liability: (i) in relation to the product, and (ii) civil vis-à-vis third parties and workers in the sterilisation centres.
However, there can be no certainty with regard to the adequacy of the insurance coverage in relation to any damages caused by the afore-mentioned events. Therefore, the risk that Servizi Italia will have to undertake possible additional charges and costs, with a consequently negative impact on the Group economic and financial results, cannot be excluded. Over the last three years, no events took place which required the compensation of damages not covered by insurance policies. Furthermore, as of the date of approval of this report, there are no pending matters relating to requests for damage compensation linked to the linen and surgical instrument sterilisation activities.
The Group operates in the sector of industrial laundries, which is particularly exposed to environmental risks such as, by way of example, air, soil and water pollution, deriving from the disposal of waste, toxicharmful emissions and spillages of toxic-harmful materials. Accordingly, the Company has taken out insurance policies for civil liability to cover, inter alias, environmental risks as well, in line with sector practices. However, there can be no certainty with regard to the adequacy of the insurance coverage in relation to any liabilities or action furthered by third parties for the compensation of damages potentially caused by the company with regard to environmental aspects. Therefore, the risk that the Company may have to bear possible additional charges and costs, with a consequently negative impact on its economic and financial results, cannot be excluded.
The Group has adopted the management and organisation model envisaged by Italian Legislative Decree No. 231/2001 for the purpose of creating a system of rules aimed at preventing the adoption of unlawful conduct by senior management, executives or in any event those with decision-making powers deemed significant for the purpose of application of this legislation.
The Company believes that it has applied the utmost diligence in the implementation of the provisions pursuant to Italian Legislative Decree No. 231/2001; however, no certainty exists with regard to the fact that the model adopted by the Company may be considered suitable by the legal authority possibly called to check the cases contemplated by said legislation. If such cases should occur, and in the event of an unlawful event, the Company's exemption from liability is not recognised on the basis of the provisions contained in said decree, it is envisaged that the Company, in any event and for all the unlawful acts committed, will be fined, as well as, for more serious cases, be subject to disqualification measures, such as disqualification from carrying out activities, suspension or revocation of authorisations, licences or concessions, prohibition from contracting with public administration authorities, exclusion from loans, grants and subsidies and possible revocation of those already granted and, in conclusion, prohibition from publicising goods and services, with consequent significant negative impacts on the Group's economic and financial results.
Aside from that reported in the section "Significant events and transactions":
Servizi Italia S.p.A. is involved in proceedings for an alleged offence pursuant to Italian Legislative Decree no. 231 of 2001 relating to the AUSL (Local Health Authority) of Viterbo, for which a former director was charged with a predicate offence in relation to the awarding of a tender for the assignment of the supply of wash-hire services, sterilisation and hire of surgical instruments for the aforementioned AUSL of Viterbo. Through its lawyers, Servizi Italia prepared defence pleadings demonstrating the groundlessness of the accusation and, as a result, the absolute lack of involvement of the company as well as its former director in the alleged events;
Servizi Italia S.p.A. has proceedings in progress for the administrative liability of legal entities - pursuant to Italian Legislative Decree No. 231 of 2001 - for an alleged offence charged to a Director and a former Director, concerning the award of a tender for a nine year contract of the AOU Policlinico di Modena so-called "Global Service" - decided with resolution of 19.12.2008, to the RTI (temporary joint consortium) established by Coopservice Soc.Coop.p.A., in its capacity as lead contractor, and other companies including Servizi Italia S.p.A., Padana Everest S.r.l. and Lavanderia Industriale ZBM S.p.A. (companies merged by incorporation into Servizi Italia S.p.A.). The Company, which confirms its absolute lack of involvement in the events contested, has promptly appointed a defence counsel in order to undertake any legal action that would prove it; the proceedings began in the autumn and are currently underway.
On 3 April 2017, as part of the preliminary hearing relating to the proceedings which involved the subsidiary Servizi Italia Medical S.r.l., the Preliminary Hearing Judge ruled that there was no need to give a decision as the fact did not constitute an offence. The proceedings involving the company for the administrative liability of legal entities - pursuant to Italian Legislative Decree 231 of 2001 - which charged a former Director with reference to the awarding, by means of a resolution on 28/12/2009, of a tender contract of nine years of the AOU Policlinico di Modena, for the assignment of a supply, based on a piecework contract, of disposable procedure kits, were therefore closed.
On 13 October 2015, the Italian Revenue Agency, Provincial Office of Brescia, sent a Tax Audit Report Notice concerning direct taxes, VAT and IRAP relating to 2010, against Padana Everest S.r.l., merged into Servizi Italia S.p.A. in 2012, where a higher taxable amount was disputed, based on the assumption of an undue decrease in income concerning the tax exemption of investments set forth in Law-Decree no. 78 of 1 July 2009 (so-called Tremonti-ter). On 23 December 2015, the Office notified Servizi Italia of the Notice of Assessment, with which - by fully acknowledging the findings of the tax audit report it did not recognize a portion of eligible investments for the Tremonti-ter purposes In 2016, Servizi Italia S.p.A. filed an appeal against the notice, asking it to be cancelled; the Provincial Tax Commission of Brescia rejected the appeal presented and, on 22 March 2017, Servizi Italia S.p.A. filed an appeal to the Regional Tax Commission, believing the tax claim to be illegitimate and objectively unfounded. The hearing for the appeal has not yet been scheduled.
Pursuant to annex B, point 26 of Italian Legislative Decree No. 196/2003 on the Personal data protection code, the directors acknowledge that the Company has worked to uphold personal data protection measures, also in light of the provisions introduced by Italian Legislative Decree No. 196/2003 and Italian Decree Law No. 207 of 30 December 2008, published in Official Gazette No. 300 of 31 December 2008. The company is implementing a project in order to ensure - within the deadlines set by the regulations - company compliance with the provisions of the Regulations (GDPR, General Data Protection Regulation).
The Company takes an integrated approach to Quality, Safety and Environment matters and promotes the development and use of the system as a fundamental element of prevention and continuous operational improvement, with respect for and in systematic dialogue with the relevant social context and in line with international best practices.
In order to become a market leader in terms of service safety and reliability, the Company's organisational structure aims to demonstrate that the activities carried out:
guarantee and demonstrate that the process is able to systematically produce services that comply with preset specifications defined on the basis of customer requirements and applicable regulatory requirements in force;
In 2017:
The Company has obtained and maintained the certification according to the following standards:
As regards labour safety and protection, Servizi Italia S.p.A. has continued in 2017, as in previous years, to carry out important activities aimed at reducing and managing the ergonomic risk:
analyses were carried out with the support of Ergonomics certified technicians and with the use of extremely advanced technologies, such as an analysis of inertial movements;
In addition, the year 2017 witnessed the start of certain construction sites which required the management of the legislation (Section IV, Legislative Decree no. 81/08) and of interferences with productive activities underway (in accordance with Article 26 of Legislative Decree 81/08).
During 2017, the team in charge of safety carried out the following activities:
With regard to 2017, the representative Maurizio Vitali reported to the Board of Directors with regard to aspects concerning Occupational Health and Safety with a review of the trend of indicators that are representative of the Safety Management System, as well as the investment made for the safety of the work environments.
With regard to company personnel, the analysis of the industrial accident trend in the last three years 2015-2017, excluding the accidents to and from work (accidents for all purposes but not to be considered as related to working activities), reported an increase of 13% compared to the previous three years. The data were significantly affected by the following factors: i) the increased organizational complexity due to the management of new contracts and the presence of temporary work sites for the construction of new production sites in the sterilization field; and ii) the expansion of production capacity of the laundry site in Travagliato; the latter has increased production volumes and introduced new personnel with the implementation of an additional work shift.
With regard to the values of the frequency (If) and severity (Ig) indices - again in the 2015-2017 threeyear period - the same reported, compared to the previous three-year period, an average percentage increase of 8.30% for If and 4.33% for Ig. The If figure is mainly due to the greater number of accidents that occurred, even if with few days of absence or even none; the Ig figure is due to events that involved multiple days of absence. In both cases, the events involved non-violent traumas associated with incorrect handling actions taken upon personal initiative. Company oversight remains constant, as does the application of commitments in terms of economic and training investments pertaining to upgrades and the technological innovation and adaptation of machinery and equipment as well as the effective application of reporting e and training activities implemented for the purpose of raising awareness of conduct in this connection regarding industrial accidents. For this purpose, the Company has initiated a specific Safety Coach training course for supervisors, with the aim of controlling behaviours in the workplace.
The study of the accidents is an important factor for the Company, for the purpose of gaining a more precise view of the causes which generate the same, exclusively linked to the work activities and of being able, consequently, to intervene in a targeted manner where problematic issues appear to be, with a view to prevention and ongoing improvement with regard to occupational health and safety.
To conduct its business, Servizi Italia S.p.A. is required to comply with the provisions of binding environmental regulations (Italian Legislative Decree No. 152 of 3 April 2006, which entered into force on 29 April 2006). The main elements for which the Company has obtained due authorisation from the applicable entities for all production sites are emissions into the atmosphere, water, withdrawals and discharges.
Waste management is implemented at each production site that produces waste: the Company regularly updates the waste register with information on the qualitative and quantitative characteristics of waste and, in line with the methods and timing established and in compliance with binding legislation, it has also registered its operating sites for the application of the electronic waste tracking control system (SISTRI).
During the course of 2017, the Company continued with additional energy efficiency actions aimed at primary energy savings, through the reduction of natural gas consumption by production site plants. In 2017, the Company, represented by its Energy Manager, requested the Energy Services Operator (GSE) for type II Energy Efficiency Certificates, i.e. regarding natural gas savings, and obtained certification for the energy savings implemented and at the same time the issue of the related Energy Efficiency Certificates (904 certificates).
For additional information on issues concerning the Group's Management Systems in the areas of Quality, Health and Workplace Safety and the Environment, please refer to the Non-Financial Statement: 2017 Sustainability Report
The Servizi Italia Group's total employees, including those of the consolidated companies, were as follows as at 31 December 2017:
| Company | Executives | Middle managers |
White-collar staff |
Blue-collar staff |
Total |
|---|---|---|---|---|---|
| Servizi Italia S.p.A. | 7 | 22 | 163 | 1,689 | 1,881 |
| Steritek S.p.A. | - | - | 17 | - | 17 |
| Lavsim Higienização Têxtil S.A. | 2 | 9 | 20 | 363 | 394 |
| Maxlav Lavanderia Especializada S.A. | 5 | - | 7 | 436 | 448 |
| Vida Lavanderias Especializada S.A. | - | - | 4 | 173 | 177 |
| Aqualav Serviços De Higienização Ltda | - | 1 | 7 | 219 | 227 |
| Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi | 2 | 1 | 5 | 191 | 199 |
| Ergülteks Temizlik Tekstil Ltd. Sti. | - | - | 3 | 124 | 127 |
| TOTAL | 16 | 33 | 226 | 3,195 | 3,470 |
The company's relations with the unions during 2017 have always been characterised by respect for the roles and prerogatives of all parties and have always resulted in shared agreements. Over the years, this has made it possible to maintain union relations based on reciprocal respect and shared expectations.
With regard to its blue-collar and white-collar staff, Servizi Italia S.p.A. applies the national collective labour Agreement for employees of companies in the integrated industrial system of textile and related medical services entered into by Assosistema and the trade unions Femca-Cisl, Filctem-Cgil and Uiltec-Uil. The Industry Executives national collective labour agreement is applied for the Company's managerial staff.
In 2017, talks continued with the Trade Union Organisations and the company workers' representatives with the aim of defining shared solutions in light of the market situation, particularly to identify flexible operating and logistics solutions and to continue streamlining the staff, in order to pursue greater efficiency and integration. In particular, the Human Resources Department interacted with the area trade union organisations and the trade union representatives, for the management of the project for the renovation of the production sites in the North-west, aimed at rationalising and saturating the production activities in that area. Therefore, a plan was drafted for the handling of excess staff, following the termination of activities of the Barbariga (BS) site, which was confirmed through the transfer of personnel to the neighbouring production sites and incentivised exits.
On 11 May 2017, an agreement was signed for the renewal of the national collective labour Agreement for employees of companies in the integrated industrial system of textile and related medical services. The agreement solidifies what was agreed by the social parties in the outline agreement of 13 July 2016.
Activities were carried out in 2017, involving 8,400 training hours and more than 1,231 employees attending in at least one training classes during the year, regarding operating and technical/management roles. As a result, the total number of hours supplied with respect to the previous year decreased, but the number of workers involved in at least one training intervention significantly increased.
These activities focused on guaranteeing the constant up-dating of all the staff, supporting the professional growth of the junior figures and strengthening the skills of those with roles of responsibility, with the awareness that training represents a strategic leverage for company growth and the development of new business ventures.
Compared to previous years, the share of "market training" has increased compared to that provided by internal teachers, which nevertheless remains above 50% of all implemented training activities.
A consistent portion of the training activities concerned the integrated quality/environment/safety system with particular attention to Italian Legislative Decree No. 81/2008 and its subsequent amendments and supplements; in this connection, around 6,006 hours were provided to guarantee the training and updating of the operational staff and supervisors.
With regard to organisational changes, the policy adopted by the Servizi Italia Group in relation to the entities acquired is characterised by respect and promotion of cultural differences and the management of the companies acquired/invested in, by means of a process of gradual integration of the companies in an already existing Group. The programmes, drawn up by Servizi Italia with regard to acquisition transactions, are therefore in line with this policy and will result in specific planning aimed at guaranteeing a correct control and coordination.
In 2017, a project was implemented that envisaged a phase of analysis of the current organizational model in addition to the identification of organizational critical factors as well as critical success factors; as a result, a new organizational model will be implemented in 2018. The identified model is in compliance with the international growth strategy of the Servizi Italia Group; it provides for:
With regard to the subsidiary which is 70% owned by Steritek SpA, and following the acquisition in September 2017, the company's governance system was restructured by appointing the supervisory bodies and the policies for coordination and control by the Parent Company - which envisage, amongst other items, the roll out of Servizi Italia's accounting platform - were initiated.
As for the company operating in foreign markets in 2017:
training and on site assistance on administrative and auditing activities was guaranteed, with the presence of expert Servizi Italia employees for the purpose of facilitating the financial statement definition and reporting operations and facilitating the correct information flow to the local auditing company and the control bodies of Servizi Italia;
activities were carried out for the optimisations and synergies of services common to the SRI group companies; and a commercial strategy was agreed upon and launched for the purpose of developing the wash-hire service, with the amendment of the supply contracts with the customers from pure washing services to hire services; along with the search for cross-selling opportunities with target customers in favour of the sterilisation or general supply added value services.
Servizi Italia S.p.A., pursuant to article 3 of the Consob Resolution no. 18079 of 20 January 2012, decided to join the out-put regime set forth in article 70, paragraph 8, and 71, paragraph 1-bis, of the Consob Regulations n. 11971/99 (as amended), availing itself of the right to derogate from the obligation to publish the information documents as set forth in annex 3B of the above mentioned Consob Regulations when carrying out significant merging, demerging, share capital increases through contributions in kind, acquisitions and transfer operations.
With reference to the changes made in 2016 to the regulatory framework, Servizi Italia S.p.A. will publish the additional periodical information notwithstanding the obligations set forth for the issuers listed in the STAR segment, as specified in articles 2.2.3, par. 3, of the Regulations of the Markets organised and managed by Borsa Italiana S.p.A. and in the notice no. 7578 issued by Borsa Italiana on 21 April 2016.
Dear Shareholders,
the Board of Directors, given the net profit of the period amounting to Euro 13,822,067, is asking you to approve the separate financial statements closed at 31 December 2017, by proposing:
The dividend will be paid as from 25 April 2018, with ex-dividend date on 23 April 2018, and will be paid to the shares, which will be in circulation as of that date.
The Chairman of the Board of Directors (Roberto Olivi)
SERVIZI ITALIA S.p.A. Registered Offices: Via S. Pietro, 59/B 43019 Castellina di Soragna (PR) – ITALY Share Capital: Euro 31,809,451 fully paid-up Tax Code and Parma Register of Companies no.: 08531760158 Certified email: [email protected] Tel. +39 0524 598511 Fax +39 0524 598232 www.si-servizitalia.com
| (Euros) | Note | As at 31 December 2017 |
of which with related parties (Note 8) |
As at 31 December 2016 reinstated |
of which with related parties (Note 8) |
As at 1 January 2016 reinstated |
of which with related parties (Note 8) |
|---|---|---|---|---|---|---|---|
| ASSETS | |||||||
| Non-current assets | |||||||
| Property, plant and equipment | 6.1 | 99,601,560 | - | 93,412,780 | - | 100,257,999 | - |
| Intangible assets | 6.2 | 4,022,452 | - | 1,875,975 | - | 2,837,205 | - |
| Goodwill | 6.3 | 42,575,158 | - | 32,275,093 | - | 32,275,094 | - |
| Equity-accounted investments | 6.4 | 50,078,578 | - | 49,317,948 | - | 25,962,571 | - |
| Equity investments in associates, jointly controlled companies and other companies |
6.5 | 27,901,350 | - | 34,284,030 | - | 24,294,253 | - |
| Financial receivables | 6.6 | 7,646,969 | 4,659,863 | 7,667,819 | 4,809,236 | 3,824,477 | 933,821 |
| Deferred tax assets | 6.7 | 1,173,460 | - | 1,040,286 | - | 1,152,802 | - |
| Other assets | 6.8 | 3,060,658 | - | 5,146,108 | - | 3,713,813 | - |
| Total non-current assets | 236,060,185 | 225,020,039 | 194,318,214 | ||||
| Current assets | |||||||
| Inventories | 6.9 | 4,303,475 | - | 3,317,130 | - | 3,034,776 | - |
| Trade receivables | 6.10 | 73,582,194 | 13,522,287 | 68,601,375 | 11,403,981 | 78,990,937 | 10,226,535 |
| Current tax receivables | 6.11 | 1,728,481 | - | 2,495,264 | - | 2,274,083 | - |
| Financial receivables | 6.12 | 7,950,913 | 5,883,010 | 16,878,514 | 14,336,452 | 9,017,439 | 6,838,018 |
| Other assets | 6.13 | 7,086,152 | - | 6,335,058 | - | 4,450,336 | - |
| Cash and cash equivalents | 6.14 | 1,513,611 | - | 1,025,100 | - | 2,011,757 | - |
| Total current assets | 96,164,826 | 98,652,441 | 99,779,328 | ||||
| TOTAL ASSETS | 332,225,011 | 323,672,480 | 294,097,542 | ||||
| SHAREHOLDERS' EQUITY AND LIABILITIES Shareholders' equity Share capital Other reserves and retained earnings |
6.15 6.15 |
31,798,901 96,805,953 |
- - |
31,461,231 96,064,174 |
- - |
30,443,650 78,357,520 |
- - |
| Profit (loss) for the year | 13,822,067 | - | 10,996,008 | - | 13,445,040 | - | |
| TOTAL SHAREHOLDERS' EQUITY | 6.15 | 142,426,921 | 138,521,413 | 122,246,210 | |||
| LIABILITIES | |||||||
| Non-current liabilities | |||||||
| Due to banks and other lenders | 6.16 | 39,191,019 | - | 45,021,944 | - | 34,666,304 | - |
| Deferred taxes liabilities | 6.17 | 2,404,641 | - | 1,342,802 | - | 1,758,872 | - |
| Employee benefits | 6.18 | 9,994,532 | - | 10,415,686 | - | 9,964,228 | - |
| Provisions for risks and charges | 6.19 | 120,000 | - | 124,000 | - | 151,428 | - |
| Other financial liabilities | 6.20 | 1,225,000 | - | 57,228 | - | - | - |
| Total non-current liabilities | 52,935,192 | 56,961,660 | 46,540,832 | ||||
| Current liabilities | |||||||
| Due to banks and other lenders | 6.16 | 46,562,791 | - | 46,329,473 | - | 43,706,999 | - |
| Trade payables | 6.21 | 69,684,639 | 13,871,390 | 59,193,276 | 13,500,274 | 64,285,249 | 13,228,964 |
| Current tax payables | 6.22 | - | - | - | - | - | - |
| Employee benefits | 6.18 | 876,772 | - | - | - | - | - |
| Other financial liabilities | 6.23 | 3,685,000 | 2,460,000 | 7,625,266 | - | 962,467 | - |
| Other payables | 6.24 | 16,053,696 | - | 15,041,392 | - | 16,355,785 | - |
| Total current liabilities | 136,862,898 | 128,189,407 | 125,310,500 | ||||
| TOTAL LIABILITIES | 189,798,090 | 185,151,067 | 171,851,332 | ||||
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 332,225,011 | 323,672,480 | 294,097,542 |
| (Euros) | Note | As at 31 December 2017 |
of which with related parties (Note 8) |
As at 31 December 2016 reinstated |
of which with related parties (Note 8) |
|---|---|---|---|---|---|
| Sales revenues | 7.1 | 211,199,346 | 8,993,210 | 198,757,031 | 4,797,275 |
| Other income | 7.2 | 10,707,493 | 7,171,896 | 10,191,234 | 6,717,850 |
| Raw materials and consumables | 7.3 | (20,229,242) | (58,502) | (18,212,644) | (1,294,596) |
| Costs for services | 7.4 | (75,896,223) | (31,818,865) | (73,922,348) | (32,382,853) |
| Personnel expense | 7.5 | (67,475,844) | (4,483,341) | (62,063,525) | (3,757,099) |
| - of which non-recurring | (557,326) | - | |||
| Other costs | 7.6 | (1,769,377) | (423,532) | (1,074,775) | (12,639) |
| Depreciation, amortisation, impairment and provisions | 7.7 | (43,004,234) | - | (38,979,006) | - |
| Operating profit | 13,531,919 | 14,695,967 | |||
| Financial income | 7.8 | 1,750,884 | 600,665 | 1,342,885 | 344,649 |
| Financial expenses | 7.9 | (1,198,445) | - | (1,572,871) | - |
| Revaluation/impairment of equity-accounted investments | 6.4 | 304,050 | - | (883,977) | - |
| Income/(expense) from equity investments in other companies | 7.10 | 1,882,058 | 379,013 | 256,370 | 181,840 |
| Profit before tax | 16,270,466 | 13,838,374 | |||
| Income taxes | 7.11 | (2,448,399) | (2,842,366) | ||
| - of which non-recurring | (133,758) | - | |||
| Profit (loss) for the year | 13,822,067 | 10,996,008 |
| (Euros) | Year ended as at 31 December | ||
|---|---|---|---|
| Note | 2017 | 2016 reinstated | |
| Profit (loss) for the year | 13,822,067 | 10,996,008 | |
| Other comprehensive income that will not be reclassified to the Income Statement | |||
| Actuarial gains (losses) on defined benefit plans | 6.18 | 22,069 | (236,476) |
| Portion of comprehensive income of the companies measured using the equity method |
- | (5,586) | |
| Income taxes on other comprehensive income | 6.7 6.17 | (5,297) | 58,095 |
| Other comprehensive income that may be reclassified to the Income Statement | |||
| Portion of comprehensive income of the companies measured using the equity method |
6.4 | (6,840,693) | 6,525,026 |
| Income taxes on other comprehensive income | - | - | |
| Total other comprehensive income after taxes | (6,823,921) | 6,341,059 | |
| Total comprehensive income for the period | 6,998,146 | 17,337,067 |
| (Euros) | Note | As at 31 December 2017 |
of which with related parties (Note 8) |
As at 31 December 2016 reinstated |
of which with related parties (Note 8) |
|---|---|---|---|---|---|
| Cash flow generated (absorbed) by operations | |||||
| Profit/(loss) before tax | 16,270,466 | - | 13,838,374 | - | |
| Payment of current taxes | (883,389) | - | (2,765,084) | - | |
| Amortisation | 7.7 | 42,160,890 | - | 38,417,643 | - |
| Impairment and provisions | 7.7 | 843,344 | - | 1,445,341 | - |
| (Income)/expense from equity investments in other companies | 7.10 | (2,186,108) | - | (256,370) | - |
| Gains/(losses) on disposal | 7.2 7.6 | (508,785) | - | (228,460) | - |
| Interest income and expense accrued | 7.8 7.9 | (552,439) | - | 229,986 | - |
| Interest income collected | 7.8 | 678,770 | - | 488,270 | - |
| Interest expense paid | 7.9 | (970,302) | - | (1,339,411) | - |
| Provision for employee benefits | 6.18 | 367,581 | - | 505,807 | - |
| 55,220,028 | 50,336,096 | ||||
| (Increase)/decrease in inventories | 6.9 | (673,947) | - | (282,354) | - |
| (Increase)/decrease in trade receivables | 6.10 | (1,344,840) | (3,295,752) | 7,122,400 | 2,555,180 |
| Increase/(decrease) in trade payables | 6.21 | 10,289,267 | 642,426 | (2,895,633) | (6,476,014) |
| Increase/(decrease) in other assets and liabilities | 6.8 6.13 6.19 6.20 6.23 6.24 |
(7,132,556) | - | (4,965,892) | - |
| Settlement of employee benefits | 6.18 | (777,195) | - | (420,116) | - |
| Cash flow generated (absorbed) by operations | 55,580,757 | 48,894,501 | |||
| Net cash flow generated (absorbed) by the investment activities in | |||||
| Intangible assets | 6.2 | (308,109) | - | (292,041) | - |
| Property, plant and equipment | 6.1 | (38,510,468) | - | (30,090,693) | - |
| Dividends received | 7.10 | 669,589 | - | 256,370 | - |
| Sale of equity investments | 14,847 | - | - | - | |
| Purchase of equity investments | 6.4 6.5 | (9,645,113) | - | (20,083,084) | - |
| Net cash flow generated (absorbed) by investment activities | (47,779,254) | (50,209,448) | |||
| Net cash flow generated (absorbed) by financing activities in | |||||
| Financial receivables | 6.6 6.12 | 1,348,294 | (2,771,034) | (11,587,960) | 819,807 |
| Net (purchase)/sales of treasury shares | 6.15 | 1,620,067 | - | (333,912) | - |
| Dividends paid | 6.15 | (4,712,705) | - | (4,727,949) | - |
| Share Capital increase | 6.15 | - | - | 3,999,997 | - |
| Current liabilities to banks and other lenders | 6.16 | (258,315) | - | 2,622,474 | - |
| Non-current liabilities to banks and other lenders | 6.16 | (5,830,925) | - | 10,355,640 | - |
| Net cash flow generated (absorbed) by financing activities | (7,833,584) | 328,290 | |||
| Increase/(decrease) in cash and cash equivalents | (32,081) | (986,657) | |||
| Opening cash and cash equivalents | 6.14 | 1,025,100 | 2,011,757 |
|---|---|---|---|
| Incorporated cash | 2 | 520,592 | - |
| Closing cash and cash equivalents | 6.14 | 1,513,611 | 1,025,100 |
| (Euros) | Share capital |
Share premium reserve |
Legal reserve |
Profit reserve |
Translatio n reserve |
Profit (loss) for the year |
Total Shareholders' Equity |
|---|---|---|---|---|---|---|---|
| Balance as at 1 January 2016 | 30,443,650 | 49,318,894 | 4,185,529 | 42,451,221 | - | 11,724,115 | 138,123,409 |
| Allocation of profit from the previous year | - | - | 586,206 | 6,409,960 | - | (6,996,166) | - |
| Reinstatement due to using the equity method | - | - | - | (8,485,884) | (7,391,315) | - | (15,877,199) |
| Distribution of dividends | - | - | - | - | - | (4,727,949) | (4,727,949) |
| Share Capital increase | 1,110,185 | 2,889,812 | - | - | - | - | 3,999,997 |
| Treasury share transactions | (92,604) | (241,308) | - | - | - | - | (333,912) |
| Comprehensive income for the year | - | - | - | (183,967) | 6,525,026 | 10,996,008 | 17,337,067 |
| Balance as at 31 December 2016 | 31,461,231 | 51,967,398 | 4,771,735 | 40,191,330 | (866,289) | 10,996,008 | 138,521,413 |
| Allocation of profit from the previous year | - | - | 593,999 | 5,689,304 | - | (6,283,303) | - |
| Distribution of dividends | - | - | - | - | - | (4,712,705) | (4,712,705) |
| Share Capital increase | - | - | - | - | - | - | - |
| Incorporations | - | - | - | - | - | - | - |
| Treasury share transactions | 337,670 | 1,282,397 | - | - | - | - | 1,620,067 |
| Comprehensive income for the year | - | - | - | 16,772 | (6,840,693) | 13,822,067 | 6,998,146 |
| Balance as at 31 December 2017 | 31,798,901 | 53,249,795 | 5,365,734 | 45,897,406 | (7,706,982) | 13,822,067 | 142,426,921 |
The separate financial statements of Servizi Italia S.p.A. comprising the statement of financial position, income statement, statement of comprehensive income, cash flow statement, statement of changes in shareholders' equity and explanatory notes, have been draw up in compliance with the international accounting standards "International Financial Reporting Standards IFRS" issued by the International Financial Reporting Standards Board and with the interpretations issued by the IFRS Interpretation Committee, based on the text published in the Official Journal of the European Communities (O.J.E.C.).
These financial statements were approved by the Board of Directors on 13 March 2018; the latter authorised the publication of the same.
The accounting standards illustrated below have been applied on a consistent basis to all the periods presented.
The amounts shown in the explanatory notes are expressed in thousands of Euros, unless specified otherwise.
The financial statement schedules adopted by the group have the following characteristics:
The following IFRS accounting principles, amendments and interpretations were applied for the first time by the Company starting on 1 January 2017:
Amendment to IAS 7 "Disclosure Initiative" (issued on 29 January 2016). This document provides some clarifications to improve the information on financial liabilities. Specifically, the amendments require such disclosures as to allow the recipients of the financial statements to understand changes in liabilities generated by financing operations.
Amendment to IAS 12 "Recognition of Deferred Tax Assets for Unrealised Losses" (issued on 19 January 2016). This document provides clarifications on the recognition of deferred tax assets for unrealised losses in the measurement of financial assets "Available for Sale", under certain circumstances and on the estimation of taxable income for future periods.
The option of these amendments did not impact the financial statements of the Company.
Accounting standards, amendments and IFRS and IFRIC interpretations endorsed by the European Union, still not applicable on a mandatory basis and not adopted early by the Company as at 31 December 2017
This standard applies as from 1 January 2018. The amendments to IFRS 15, Clarifications to IFRS 15 – Revenue from Contracts with Customers, have been approved by the European Union on 6 November 2017.
Based on the analyses carried out, the directors expect the application of IFRS 15 not to have a significant impact on the amounts posted as revenue and on the relevant information reported in the financial statements of the Company.
The new standard must be applied in the financial statements beginning on 1 January 2018 or later.
Based on the analyses carried out, the directors expect the application of IFRS 9 not to have a significant impact on the amounts and on the relevant information reported in the financial statements of the Company. In particular, the application of the accounting standard will have an overall negative impact on the Shareholders' equity as at 31 December 2017 of Euro 151 thousand to be attributed to the recognition of trade receivables according to the provisions of the new standard.
Standard IFRS 16 – Leases (issued on 13 January 2016), intended to replace IAS 17 – Leases, as well as the IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases—Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease.
The new standard provides a new definition of lease and introduces a criterion based on control (right of use) of an asset to differentiate between leasing and service agreements, by identifying the following distinguishing factors: asset identification, right of replacement of the asset, right to obtain substantially all the economic benefits deriving from the use of the asset and right to control the use of the asset underlying the agreement.
The standard introduces a single lessee accounting model for the recognition and measurement of lease agreements, which provides for the recording of the leased asset, under assets with a counter entry under financial liabilities, with the possibility of not recognising as leasing the contracts that have "low-value assets" and the leasing with a contract duration of up to 12 months. On the other hand, the Standard does not include significant changes for the lessor.
The standard applies for reporting period beginning on or after 1 January 2019. Early application is only allowed for early adopters of IFRS 15 - Revenue from Contracts with Customers.
With reference to IFRS 16 described above, the Company is evaluating the implementation criteria and the impacts on its financial statements, however, it is not possible to estimate the effects until the Company has completed a detailed analysis; the application of the new standard will mainly concern lease agreements on properties and operating lease agreements on vehicles.
With reference to the other standards and interpretations detailed above, it is not expected that the adoption will lead to significant impacts on the measurement of the assets, liabilities, costs and revenues of the Company.
At the reference date of this Annual Report, the competent bodies of the European Union have still not concluded the approval process needed for the adoption of the amendments and standards described below.
Document "Annual Improvements to IFRSs: 2014-2016 Cycle", issued on 8 December 2016 (including IFRS 1 First-Time Adoption of International Financial Reporting Standards - Deletion of short-term exemptions for first-time adopters, IAS 28 Investments in Associates and Joint Ventures – Measuring investees at Fair value through profit or loss: an investmentby-investment choice or a consistent policy choice, IFRS 12 Disclosure of Interests in Other Entities – Clarification of the scope of the Standard) which partially supplement the pre-existing standards. Most of the amendments apply as from 1 January 2018.
Interpretation of IFRIC 22 "Foreign Currency Transactions and Advance Consideration" (issued on 8 December 2016). This interpretation provides guidelines on foreign currency transactions when non-monetary advance consideration paid or received is recognised before recognition of the relating asset, expense or income. This document clarifies how an entity has to determine the date of the transaction and consequently the spot exchange rate to be used for foreign currency transactions whose consideration is paid or received in advance. IFRIC 22 applies as from 1 January 2018.
This interpretation applies as from 1 January 2019, though early adoption is allowed.
Amendment to IAS 28 "Long-term Interests in Associates and Joint Ventures" (issued on 12 October 2017)". This document clarifies the need to apply IFRS 9, including the requirements linked to the impairment, to the other long-term interests in associates and joint ventures to which the equity method does not apply. The amendment applies as from 1 January 2019, though early adoption is allowed.
Document "Annual Improvements to IFRSs 2015-2017 Cycle", issued on 12 December 2017 (including IFRS 3 Business Combinations and IFRS 11 Joint Arrangements – Remeasurement of previously held interest in a joint operation, IAS 12 Income Taxes – Income tax consequences of payments on financial instruments classified as equity, IAS 23 Borrowing costs Disclosure of Interests in Other Entities – Borrowing costs eligible for capitalisation), which acknowledges the amendments to some standards as part of the annual improvement process. The amendments apply as from 1 January 2019, though early adoption is allowed.
On 23 December 2015, Regulation (EU) 2015/2441 of the Commission of 18 December 2015 was published in Official Gazette L 336. It adopts the "Amendments to IAS 27 Separate Financial Statements: entitled Equity Method in Separate Financial Statements". The amendments allow the application of the equity method described in IAS 28 Investments in Associates and Joint Ventures, for the recognition, in the separate financial statements, of the investments in subsidiaries, joint ventures and associates, beginning from the financial statements regarding the years that start from 1 January 2016.
In order to better represent the results obtained by Servizi Italia S.p.A. starting from these financial statements, the Directors have decided to use the equity method for the recognition of the investments in subsidiaries, in place of the criterion of cost applied in previous years. The equity method in particular is consistent with the non temporary nature of the investment in subsidiaries and the significant influence on their operating and strategic policies exercised by Servizi Italia S.p.A. Its application allows the recognition of the economic results of the subsidiaries at the time they form, according to accrual basis accounting and consistently with the indications in the consolidated financial statements of the group; the application of the equity method actually realises a synthetic consolidation of the financial statements of the subsidiaries.
In accordance with par. 22 of IAS 8, the change in the accounting policies in question was made retrospectively, i.e. recording the effects in the opening shareholders' equity in the financial statements as at 31 December 2016, presented solely for the purpose of comparison with these financial statements. This allows for a representation of the equity and financial situation and of the economic results of the company as if it had always used the equity method for the recognition of the investments in subsidiaries. The following adjustments were thus made to the financial highlights of the year 2016:
The tables below highlight the changes to the individual items occurred in the Income statement and in the Statement of comprehensive income 2016 and in the Balance Sheet as at 31 December 2016 and 1 January 2016, consequently to the mentioned amendments.
| (thousands of Euros) | 31 December 2016 | Reinstatement | 31 December 2016 reinstated |
|---|---|---|---|
| Sales revenues | 198,757,031 | - | 198,757,031 |
| Other income | 10,191,234 | - | 10,191,234 |
| Raw materials and consumables | (18,212,644) | - | (18,212,644) |
| Costs for services | (73,922,348) | - | (73,922,348) |
| Personnel expense | (62,063,525) | - | (62,063,525) |
| Other costs | (1,074,775) | - | (1,074,775) |
| Depreciation, amortisation, impairment and provisions | (38,979,006) | - | (38,979,006) |
| Operating profit | 14,695,967 | 14,695,967 | |
| Financial income | 1,342,885 | - | 1,342,885 |
| Financial expenses | (1,572,871) | - | (1,572,871) |
| Revaluation/impairment of equity-accounted investments | - | (883,977) | (883,977) |
| Income/(expense) from equity investments in other companies | 256,370 | - | 256,370 |
| Profit before tax | 14,722,351 | (883,977) | 13,838,374 |
| Income taxes | (2,842,366) | - | (2,842,366) |
| Profit (loss) for the year | 11,879,985 | (883,977) | 10,996,008 |
| (thousands of Euros) | 31 | 31 December 2016 | |
|---|---|---|---|
| December | Reinstatement | reinstated | |
| 2016 | |||
| Profit (loss) for the year | 11,879,985 | (883,977) | 10,996,008 |
| Other comprehensive income | |||
| Actuarial gains (losses) | (236,476) | - | (236,476) |
| Portion of comprehensive income of the investments measured using | - | (5,586) | (5,586) |
| the equity method | |||
| Income taxes on other comprehensive income | 56,754 | 1,341 | 58,095 |
| Other comprehensive income that may be reclassified to the Income Statement | |||
| Portion of comprehensive income of the investments measured using | - | 6,525,026 | 6,525,026 |
| the equity method | |||
| Income taxes on other comprehensive income | - | - | - |
| Total other comprehensive income after taxes | (179,722) | 6,520,781 | 6,341,059 |
| Total comprehensive income for the period | 11,700,263 | 5,636,804 | 17,337,067 |
| (thousands of Euros) | 31 December 2016 |
Reclassifications | Reinstatement | 31 December 2016 reinstated |
|---|---|---|---|---|
| ASSETS | ||||
| Non-current assets | ||||
| Property, plant and equipment | 93,412,780 | - | - | 93,412,780 |
| Intangible assets | 1,875,975 | - | - | 1,875,975 |
| Goodwill | 32,275,093 | - | - | 32,275,093 |
| Equity investments in subsidiaries and associates | 90,240,181 | (90,240,181) | - | - |
| Equity-accounted investments | - | 59,558,343 | (10,240,395) | 49,317,948 |
| Equity investments in other companies | 3,602,192 | (3,602,192) | - | - |
| Equity investments in associates, jointly controlled and other companies |
- | 34,284,030 | - | 34,284,030 |
| Financial receivables | 7,667,819 | - | - | 7,667,819 |
| Deferred tax assets | 1,040,286 | - | - | 1,040,286 |
| Other assets | 5,146,108 | - | - | 5,146,108 |
| Total non-current assets | 235,260,434 | - | (10,240,395) | 225,020,039 |
| Current assets | ||||
| Inventories | 3,317,130 | - | - | 3,317,130 |
| Trade receivables | 68,601,375 | - | - | 68,601,375 |
| Tax receivables | 2,495,264 | - | - | 2,495,264 |
| Financial receivables | 16,878,514 | - | - | 16,878,514 |
| Other assets | 6,335,058 | - | - | 6,335,058 |
| Cash and cash equivalents | 1,025,100 | - | - | 1,025,100 |
| Total current assets | 98,652,441 | - | - | 98,652,441 |
| TOTAL ASSETS | 333,912,875 | - | (10,240,395) | 323,672,480 |
| SHAREHOLDERS' EQUITY AND LIABILITIES | ||||
| Group shareholders' equity | ||||
| Share capital | 31,461,231 | - | - | 31,461,231 |
| Other reserves and retained earnings | 105,420,592 | - | (9,356,418) | 96,064,174 |
| Profit (loss) for the year | 11,879,985 | - | (883,977) | 10,996,008 |
| Total group shareholders' equity | 148,761,808 | - | (10,240,395) | 138,521,413 |
| LIABILITIES | ||||
| Non-current liabilities | ||||
| Due to banks and other lenders | 45,021,944 | - | - | 45,021,944 |
| Deferred taxes liabilities | 1,342,802 | - | - | 1,342,802 |
| Employee benefits | 10,415,686 | - | - | 10,415,686 |
|---|---|---|---|---|
| Provisions for risks and charges | 124,000 | - | - | 124,000 |
| Other financial liabilities | 57,228 | - | - | 57,228 |
| Total non-current liabilities | 56,961,660 | - | - | 56,961,660 |
| Current liabilities | ||||
| Due to banks and other lenders | 46,329,473 | - | - | 46,329,473 |
| Trade payables | 59,193,276 | - | - | 59,193,276 |
| Other financial liabilities | 7,625,266 | - | - | 7,625,266 |
| Other payables | 15,041,392 | - | - | 15,041,392 |
| Total current liabilities | 128,189,407 | - | - | 128,189,407 |
| Total liabilities | 185,151,067 | - | - | 185,151,067 |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES |
333,912,875 | - | (10,240,395) | 323,672,480 |
| (thousands of Euros) | 1 January 2016 |
Reclassifications | Reinstatement | 1 January 2016 reinstated |
|---|---|---|---|---|
| ASSETS | ||||
| Non-current assets | ||||
| Property, plant and equipment | 100,257,999 | - | - | 100,257,999 |
| Intangible assets | 2,837,205 | - | - | 2,837,205 |
| Goodwill | 32,275,094 | - | - | 32,275,094 |
| Equity investments in subsidiaries and associates | 62,592,005 | (62,592,005) | - | - |
| Equity-accounted investments | - | 41,839,770 | (15,877,199) | 25,962,571 |
| Equity investments in other companies | 3,542,018 | (3,542,018) | - | - |
| Equity investments in associates, jointly controlled and other companies |
- | 24,294,253 | - | 24,294,253 |
| Financial receivables | 3,824,477 | - | - | 3,824,477 |
| Deferred tax assets | 1,152,802 | - | - | 1,152,802 |
| Other assets | 3,713,813 | - | - | 3,713,813 |
| Total non-current assets | 210,195,413 | - | (15,877,199) | 194,318,214 |
| Current assets | ||||
| Inventories | 3,034,776 | - | - | 3,034,776 |
| Trade receivables | 78,990,937 | - | - | 78,990,937 |
| Tax receivables | 2,274,083 | - | - | 2,274,083 |
| Financial receivables | 9,017,439 | - | - | 9,017,439 |
| Other assets | 4,450,336 | - | - | 4,450,336 |
| Cash and cash equivalents | 2,011,757 | - | - | 2,011,757 |
| Total current assets | 99,779,328 | - | - | 99,779,328 |
| TOTAL ASSETS | 309,974,741 | - | (15,877,199) | 294,097,542 |
| SHAREHOLDERS' EQUITY AND LIABILITIES | ||||
| Group shareholders' equity | ||||
| Share capital | 30,443,650 | - | - | 30,443,650 |
| Other reserves and retained earnings | 95,955,644 | - | (17,598,124) | 78,357,520 |
| Profit (loss) for the year | 11,724,115 | - | 1,720,925 | 13,445,040 |
| Total group shareholders' equity | 138,123,409 | - | (15,877,199) | 122,246,210 |
| LIABILITIES | ||||
| Non-current liabilities | ||||
| Due to banks and other lenders | 34,666,304 | - | - | 34,666,304 |
| Deferred taxes liabilities | 1,758,872 | - | - | 1,758,872 |
| Employee benefits | 9,964,228 | - | - | 9,964,228 |
| Provisions for risks and charges | 151,428 | - | - | 151,428 |
| Other financial liabilities | - | - | - | - |
| Total non-current liabilities | 46,540,832 | - | - | 46,540,832 |
| Current liabilities |
| Due to banks and other lenders | 43,706,999 | - | - | 43,706,999 |
|---|---|---|---|---|
| Trade payables | 64,285,249 | - | - | 64,285,249 |
| Other financial liabilities | 962,467 | - | - | 962,467 |
| Other payables | 16,355,785 | - | - | 16,355,785 |
| Total current liabilities | 125,310,500 | - | - | 125,310,500 |
| Total liabilities | 171,851,332 | - | - | 171,851,332 |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 309,974,741 | - | (15,877,199) | 294,097,542 |
On 1 March 2017 and 1 October 2017, respectively, the wholly owned companies Tintoria Lombarda Divisione Sanitaria S.r.l. and Servizi Italia Medical S.r.l. (sole shareholder company) were merged via incorporation into Servizi Italia S.p.A. The merger became effective for accounting and tax purposes as of 1 January 2017.
In order to obtain a standard benchmark for comparison with the values of the first post-merger financial statements, the data relating to the year 2016 were restated to also include those of the merged companies, and the reinstated 2016 statement of financial position, the 2016 income statement and the 2016 statement of comprehensive income are shown below in the "pro forma" column.
| STATEMENT OF FINANCIAL POSITION | Servizi Italia S.p.A 31 December 2016 |
Effects of the merger | Servizi Italia S.p.A 31 December 2016 |
|
|---|---|---|---|---|
| (Euros) | Reinstated | Tintoria Lombarda Divisione Sanitaria S.r.l. |
Servizi Italia Medical S.r.l. |
Proforma |
| ASSETS | ||||
| Non-current assets | ||||
| Property, plant and equipment | 93,412,780 | 7,726,087 | 25,088 | 101,163,955 |
| Intangible assets | 1,875,975 | 3,384,515 | 33,095 | 5,293,585 |
| Goodwill | 32,275,093 | 10,300,065 | - | 42,575,158 |
| Equity-accounted investments | 49,317,948 | (13,462,432) | (1,402,871) | 34,452,645 |
| Equity investments in associates, jointly controlled and other companies | 34,284,030 | 27,158 | - | 34,311,188 |
| Derivatives | - | - | - | - |
| Financial receivables | 7,667,819 | 158,000 | - | 7,825,819 |
| Deferred tax assets | 1,040,286 | 21,840 | - | 1,062,126 |
| Other assets | 5,146,108 | - | - | 5,146,108 |
| Total non-current assets | 225,020,039 | 8,155,233 | (1,344,688) | 231,830,584 |
| Current assets | ||||
| Inventories | 3,317,130 | 82,971 | 229,427 | 3,629,528 |
| Trade receivables | 68,601,375 | 5,590,277 | 416,727 | 74,608,379 |
| Tax receivables | 2,495,264 | - | 167,593 | 2,662,857 |
| Financial receivables | 16,878,514 | (7,944,910) | - | 8,933,604 |
| Other assets | 6,335,058 | 303,465 | 296,259 | 6,934,782 |
| Cash and cash equivalents | 1,025,100 | 317,214 | 203,378 | 1,545,692 |
| Total current assets | 98,652,441 | (1,650,983) | 1,313,384 | 98,314,842 |
| TOTAL ASSETS | 323,672,480 | 6,504,250 | (31,304) | 330,145,426 |
| Group shareholders' equity | ||||
|---|---|---|---|---|
| Share capital | 31,461,231 | - | - | 31,461,231 |
| Other reserves and retained earnings | 96,064,174 | - | - | 96,064,174 |
| Profit (loss) for the year | 10,996,008 | - | - | 10,996,008 |
| Total group shareholders' equity | 138,521,413 | - | - | 138,521,413 |
| LIABILITIES | ||||
| Non-current liabilities | ||||
| Due to banks and other lenders | 45,021,944 | - | - | 45,021,944 |
| Derivatives | - | - | - | - |
| Deferred taxes liabilities | 1,342,802 | 1,196,403 | - | 2,539,205 |
| Employee benefits | 10,415,686 | 802,344 | 65 | 11,218,095 |
| Provisions for risks and charges | 124,000 | - | - | 124,000 |
| Other financial liabilities | 57,228 | 36,588 | - | 93,816 |
| Total non-current liabilities | 56,961,660 | 2,035,335 | 65 | 58,997,060 |
| Current liabilities | ||||
| Due to banks and other lenders | 46,329,473 | 491,632 | - | 46,821,105 |
| Trade payables | 59,193,276 | 2,514,254 | (42,366) | 61,665,164 |
| Current tax payables | - | 1,004 | - | 1,004 |
| Employee benefits | - | - | - | - |
| Other financial liabilities | 7,625,266 | - | - | 7,625,266 |
| Other payables | 15,041,392 | 1,462,025 | 10,997 | 16,514,414 |
| Total current liabilities | 128,189,407 | 4,468,915 | (31,369) | 132,626,953 |
| Total liabilities | 185,151,067 | 6,504,250 | (31,304) | 191,624,013 |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 323,672,480 | 6,504,250 | (31,304) | 330,145,426 |
| INCOME STATEMENT | Servizi Italia S.p.A 31 December 2016 |
Effects of the merger | Servizi Italia S.p.A 31 December 2016 |
|
|---|---|---|---|---|
| (Euros) | Reinstated | Tintoria Lombarda Divisione Sanitaria S.r.l. |
Servizi Italia Medical S.r.l. |
Proforma |
| Sales revenues | 198,757,031 | 6,567,739 | 1,336,369 | 206,661,139 |
| Other income | 10,191,234 | 15,347 | (136,054) | 10,070,527 |
| Raw materials and consumables | (18,212,644) | (466,812) | (970,131) | (19,649,587) |
| Costs for services | (73,922,348) | (2,467,782) | (94,587) | (76,484,717) |
| Personnel expense | (62,063,525) | (2,357,936) | (94,262) | (64,515,723) |
| Other costs | (1,074,775) | (39,294) | (1,984) | (1,116,053) |
| Depreciation, amortisation and impairment | (38,979,006) | (1,512,240) | (16,703) | (40,507,949) |
| Operating profit | 14,695,967 | (260,978) | 22,648 | 14,457,637 |
| Financial income | 1,342,885 | (32,778) | 542 | 1,310,649 |
| Financial expenses | (1,572,871) | (107,671) | (1,241) | (1,681,783) |
| Revaluation/impairment of equity-accounted investments | (883,977) | 251,899 | (21,949) | (654,027) |
| Income/(expense) from equity investments in other companies | 256,370 | - | - | 256,370 |
| Profit before tax | 13,838,374 | (149,528) | - | 13,688,846 |
| Income taxes | (2,842,366) | 149,528 | - | (2,692,838) |
| Profit (loss) for the year | 10,996,008 | - | - | 10,996,008 |
| Servizi Italia S.p.A 31 December 2016 |
Servizi Italia S.p.A 31 December 2016 |
|||
|---|---|---|---|---|
| (Euros) | Reinstated | Tintoria Lombarda Divisione Sanitaria S.r.l. |
Servizi Italia Medical S.r.l. |
Proforma |
| Profit (loss) for the year | 10,996,008 | - | - | 10,996,008 |
| Other comprehensive income | ||||
| Actuarial gains (losses) | (236,476) | (5,586) | - | (242,062) |
| Portion of comprehensive income of the investments measured using the equity method |
(5,586) | 5,586 | - | - |
| Income taxes on other comprehensive income | 58,095 | - | - | 58,095 |
| Other comprehensive income that may be reclassified to the Income Statement Portion of comprehensive income of the investments measured using the equity method |
6,525,026 | - | - | 6,525,026 |
| Income taxes on other comprehensive income | - | - | - | - |
| Total other comprehensive income after taxes |
6,341,059 | - | - | 6,341,059 |
| Total comprehensive income for the period | 17,337,067 | - | - | 17,337,067 |
The Company operates in the domestic market, providing integrated wash-hire and sterilisation services for textiles and surgical instruments to social/welfare and public and private hospital facilities. In particular, the Company offers the following services: (a) wash-hire, including (i) planning and provision of integrated rental, reconditioning (disinfection, washing, finishing and packaging) and logistics (pick-up and distribution to usage centres) services for textile items, mattresses and accessories (pillowcases, curtains), (ii) rental and washing of high visibility "118" emergency service items and (iii) logistics and management of hospital wardrobes; (b) linen sterilisation services, including the planning and rental of sterile medical devices for operating theatres (linens for operating theatres and scrubs) packed in sets for the operating theatre, in cotton or in re-usable technical fabric, as well as personal protection equipment (gloves, masks); and (c) surgical instrument sterilisation services including (i) planning and provision of washing, packaging and sterilisation services for surgical instruments (owned or rented) and accessories for operating theatres and (ii) planning, installation and renovation of sterilisation centres.
Servizi Italia S.p.A. is a subsidiary of the Coopservice S.Coop.p.A. Group, registered offices in Reggio Emilia, which holds a controlling shareholding via the Company Aurum S.p.A., registered offices at Via Rochdale no. 5, Reggio Emilia.
The separate financial statements have been drawn up in accordance with the criterion of cost, except in the cases specifically described in the following notes, for which the current value ("fair value") has been applied.
Tangible fixed assets include land and buildings, machinery and plant, returnable assets, industrial and commercial equipment, linen and other assets benefiting future periods.
The fixed assets are stated at purchase or production cost, inclusive of the related costs and costs necessary for making the asset available for use, net of accumulated depreciation. The costs subsequent to purchase are included in the value of the asset or recorded as a separate asset only if it is probable that the Company will receive future economic benefits associated with the assets and the cost can be measured. Maintenance and repairs are recognised in the income statement in the period in which they are incurred.
The depreciation of tangible fixed assets is calculated on a straight-line basis so as to spread the value of the assets over the estimated useful life according to the following categories:
| Years | |
|---|---|
| Industrial buildings | 33 |
| Plant and machinery | 12 |
| General plant | 7 |
| Industrial and commercial equipment | 4 |
| Specific equipment | 8 |
| Linen | 3 |
| Furniture and fixtures | 8 |
| Electronic machinery | 5 |
| Cars | 4 |
| Other vehicles | 5 |
The useful lives are reviewed, and adjusted if necessary, at the end of each period.
The individual components of an asset, which are characterised by a different useful life, are depreciated separately and on a consistent basis with their duration according to an approach by components. Returnable assets are depreciated over the residual duration of the contract within the sphere of which they are realised.
If there are indicators of impairment, the assets are subject to an Impairment test as per the following section E; any impairments may be subject to subsequent value write-backs if the reasons for the impairment cease to exist.
These fixed assets include the costs for the creation of the sterilisation and washing installations at the customer sites, which are used exclusively by the Company. These assets are depreciated over the useful life of the assets or the residual duration of the wash-hire contract, whichever is the shorter. The ownership of the asset is transferred to the customer on termination of the contract.
The financial expense is capitalised if directly attributable to the purchase, construction or production of an asset.
A lease agreement is defined to be financial if it involves the substantial transfer of all risks and benefits arising from owning the asset. Assets acquired via financial lease agreements are recognised under property, plant and equipment with the recognition under the liabilities of a financial payable for the same amount. The payable is progressively reduced on the basis of the repayment plan for the principal amounts included in the fees contractually envisaged, while the value of the assets recorded among property, plant and equipment is systematically depreciated in relation to the economic-technical life of said asset.
For operating lease agreements, instead, the instalments are recorded in the Income Statement on a straight-line basis over the life of the contract.
C. Intangible assets
Only identifiable assets, controlled by the enterprise, which are able to produce future economic benefits, can be defined as intangible assets. They also include the goodwill when acquired for a consideration described in section D below.
These assets are recorded in the financial statements at purchase or production cost, inclusive of the related charges as per the criteria already indicated for property, plant and equipment. The development costs are also capitalised provided that the cost can be reliably determined and that it can be demonstrated that the asset is able to produce future economic benefits.
The intangible assets with a defined useful life are amortised systematically as from the moment the asset is available for use over the envisaged period of utility. They are mainly represented by software licences acquired for a consideration capitalised on the basis of the cost incurred. These costs are amortised on a straight-line basis according to their estimates useful life (3 years). The value attributed, upon an acquisition, to the contract portfolio is amortised based on the residual duration of the related contracts and proportional to the time of the distribution of the benefit flow resulting therefrom.
Goodwill represents the additional costs incurred with respect to the fair value of the net assets identified at the time of acquisition of a subsidiary, associate or business. In the separate financial statements, the goodwill relating to the acquisition of subsidiaries, associates or jointly controlled companies is included in the item "Equity investments in subsidiaries, associates and jointly-controlled companies".
All the goodwill is checked annually to identify any impairment losses ("Impairment test") and is recognised net of the impairments made.
The impairments possibly recognised are not reinstated.
For the purposes of the Impairment test, the goodwill is allocated to the individual cash generating units ("CGUs") or groups of CGUs, which it is believed, will provide the benefits relating to the acquisition to which the goodwill refers.
In the presence of situations that may potentially generate impairment losses, the property, plant and equipment and intangible assets are subject to Impairment tests through the measurement of the recoverable value of the asset and a comparison with the related net accounting value. If the recoverable value is less than the carrying value, the latter is adjusted accordingly. This reduction represents a loss in value, which is recognised in the Income Statement. If a write-down, previously carried out, no longer has a reason to exist, except for the goodwill, its book value is written back using the new value deriving from the estimate, provided that this value does not exceed the net carrying value that the asset would have had if no write-down was ever carried out. The write-back is also recorded in the Income Statement.
The goodwill and the assets with an indefinite useful life or assets not available for use are subject at least once a year to an Impairment test so as to check the recoverability of the value. The assets, which are amortised/depreciated, are subject to the Impairment test on the occurrence of events and circumstances, which indicate that the book value might not be recoverable. In such cases, the book value of the asset is written down until reaching the recoverable value. Contrary to the rules applied to other intangible assets, write-backs are not permitted for the goodwill.
The recoverable value is the greater between the fair value of the assets net of selling costs and the value in use. For the purposes of the Impairment test, the assets are grouped together at cash generating units ("CGUs") or groups of CGUs level.
As of each financial statement date, steps are taken to check any recovery of the impairments made on the non-financial assets further to impairment tests.
Servizi Italia S.p.A. controls a company when, in exercising the power it holds on it, is exposed and is entitled to its variable returns, getting involved in its management, and has, at the same time, the possibility to impact the variable returns of the investee company. The exercise of rights on the investee company is based on: (i) of the voting rights, also potential, held and by virtue of which one can exercise the majority of the votes exercisable during the company's ordinary shareholders' meeting; (ii) of the content of any agreements between shareholders or the existence of particular article of association clauses, which assign the power to govern the company; (iii) of the control of a number of votes sufficient to exercise the de facto control of the company's ordinary shareholders' meeting.
Joint control agreements in which the parties hold rights on the net assets of the agreement are defined as joint ventures or jointly controlled companies, while the jointly controlled agreements in which the parties hold rights on the assets and obligations related to the agreement are defined as jointly controlled assets. Joint control is the sharing, on a contractual basis, of the control of an agreement, which exists solely when due to decisions relating to the significant activities the unanimous consent of all the parties, which share the control, is required.
The companies, in which Servizi Italia S.p.A. is able to participate in the definition of the operating and financial policies despite the same not being subsidiaries or jointly controlled parties, are associates. Jointly controlled assets (joint operations) are recorded by recognising the portion of asset and liability, cost and revenue that pertain thereto.
The investments in subsidiaries are included in the annual financial statements with the equity method, as allowed by IAS 27 and in line with IAS 28.
In application of the equity method, the investment in a subsidiary is initially recognised at cost and the book value is increased or decreased in order to record the portion pertaining to the parent company in the profits or losses of the subsidiary made after the acquisition date. The portion of the profit (loss) for the year of the subsidiary pertaining to the parent company is recognised in the separate income statement. The dividends received from a subsidiary reduce the book value of the investment. Adjustments of the book value may be needed also following changes to the shareholding held, deriving from changes in the items of the other comprehensive income of the subsidiary (e.g. the changes deriving from the difference of conversion of items in foreign currency). The portion of these changes pertaining to the participant is recognised in other comprehensive income.
If the attributable portion of the losses of a subsidiary is the same or higher than the value of the equity investment, after zeroing the value of the share, the additional losses were provided and recognised as liabilities, only to the extent that legal or implicit contractual obligations exist or the payments on the behalf of the subsidiary have been made. If the subsidiary subsequently obtains profits, the parent company records the portion of the profits pertaining to it only after settling its portion of losses not recognised.
The profits and losses from transactions between an entity and a subsidiary are recognised in the financial statements of the entity only limited to the share of third parties in the subsidiary. When a company measured at equity own subsidiaries, associates or joint-ventures, the profit (loss) for the year, the other comprehensive income and the net assets considered in the application of the equity method are those recognised in the consolidated financial statements of the investee company.
In case of subjective evidence of impairment, the equity investments undergoes the Impairment test procedure, according to the same methods described previously for property, plant and equipment and intangible assets in paragraph "Impairment test".
For the purposes of the application of the equity method, the financial statements of each foreign entity are expressed in Euros, which is the reporting currency of Servizi Italia S.p.A. and the presentation currency for the separate financial statements. All the assets and liabilities of foreign companies in currency other than Euros are converted using the exchange rates existing as of the financial statement reference date (current exchange rate method). Income and costs are converted at the average exchange rate for the period. The exchange differences deriving from the application of this methods, as well as exchange differences deriving from the comparison between the opening shareholders' equity converted using the current rates and the same converted using the historical rates, pass through comprehensive income and accumulated in a specific shareholders' equity reserve until the investment is transferred.
The exchange rates used for the conversion into Euros of the financial statements of the subsidiaries are illustrated below:
| Currency | Exchange rate as at 31 December 2017 |
Average exchange rate for 2017 |
Exchange rate as at 31 December 2016 |
Average exchange rate for 2016 |
|---|---|---|---|---|
| Brazilian Real (R\$) | 3.9729 | 3.6041 | 3.4305 | 3.856143 |
| Turkish Lira (TL) | 4.5464 | 4.1214 | 3.7072 | 3.343253 |
Equity investments in associates and jointly controlled companies are carried at purchase cost, possibly reduced in the event of distribution of the capital or capital reserves or in the presence of losses in value determined further to an Impairment test. The cost is reinstated in subsequent years if the reasons for the impairments no longer exist.
The equity investments in other companies are recognised at fair value and the gains or losses, which emerge, are recorded under other comprehensive income as from the moment of the effective disposal when they reverse to the income statement. The losses from recognition at fair value are by contrast directly booked to the income statement in cases when objective evidence exists that the equity investment has undergone impairment even if it has not yet been disposed of. Unlisted equity investments in relation to which the fair value cannot be reliably measured are by contrast recognised at cost less impairment; the cost is reinstated in subsequent years if the reasons for the impairments no longer exist. This category includes the equity investment held for a percentage of less than 20%;
These include the other non-current financial assets such as securities held with the intention of maintaining them in the portfolio until maturity, non-current loans and receivables, trade receivables and other receivables originating from the company and the other current financial assets such as cash and cash equivalents.
Cash and cash equivalents are bank and post office deposits, marketable securities, which represent temporary investments of liquidity and financial receivables due within three months.
They also include financial payables, trade payables and other payables and the other financial liabilities as well as derivative instruments.
The financial assets and liabilities are initially recognised at fair value. Their initial recognition takes into account the transaction costs directly attributable to the purchase or the issue costs, which are included in the initial recognition of all the assets and liabilities, which can be defined as financial instruments. Subsequent recognition depends on the type of instrument. In detail:
Other current assets are recorded, at the time of initial recognition, at fair value and subsequently at amortised cost on the basis of the effective interest rate method. If there is objective evidence of impairment indicators, the asset is written down to an extent so that it is equal to the discounted back value of the flows, which can be obtained in the future.
Impairment losses are recognised in the income statement. If in subsequent periods, the reasons for the previous impairments cease to exist, the value of the assets is reinstated up to the extent of the value, which would have derived from the application of the amortised cost if the impairment had not been made.
The white certificates are allocated in relation to the achievement of energy savings via the application of efficient systems and technologies.
The white certificates are recognised in the accounts on an accruals basis under "Other income", in proportion to the TOE (tonne of oil equivalent) savings effectively made in the period.
The recognition of the same is carried out at the average annual market value unless the yearend market value is significantly lower. The decreases due to sales of white certificates matured during the period or in previous periods are valued at the disposal price. The capital gains and losses deriving from the sales of certificates in periods different to those of maturity are recorded respectively under "Other income" or "Other costs".
I. Inventories
Inventories are recognised at purchase or production cost, inclusive of accessory charges, determined by applying the weighted average cost method or the estimated realisable value calculated on the basis of the market trend net of the sales costs, whichever is the lower.
Consequent to the changes made to the employee severance indemnity (TFR) by Italian Law No. 296 dated 27 December 2006 ("2007 Finance Bill") and subsequent Decrees and Regulations issued in the first few months of 2007, within the sphere of the supplementary welfare reform the related Provision is recognised as follows:
Employee severance indemnity fund accruing as from 1 January 2007: this falls within the category of defined-contribution plans both in the event of opting for supplementary welfare and in the case of assignment to the Treasury Fund of INPS. The accounting treatment is similar to that existing for other kinds of contributory payments.
Employee severance indemnity fund accrued as at 31 December 2006: this remains to be a defined-benefits plan determined by applying an actuarial-type method; the amount of the rights accrued in the period by the employees is booked to the Income statement under the item payroll and related costs while the figurative financial expense which the company would incur if a loan was requested from the market for an amount equal to the severance indemnity is booked to net financial income (expense). The actuarial gains and losses which reflect the effects deriving from changes in the actuarial hypotheses used are recognised under other comprehensive income in accordance with the matters envisaged by IAS 19 Employee benefits, section 93A.
IFRS 2 sets forth that the stock options are to be classified within the scope of "share-based payments" and provides, for the type classified as "equity-settled" (where the payment is regulated using instruments representative of equity), for the determination - as of the date of assignment of the fair value - of the option rights issued and the related recognition as personnel expense to be spread in a linear manner over the period of accrual of the rights (the so-called vesting period) with the recording of a matching balance under shareholders' equity reserves. This treatment is carried out on the basis of the estimate of the rights, which will effectively accrue in favour of the employees, taking into consideration the conditions of availability of the same not based on the market value of the rights.
The accounting treatment of other long-term benefits is similar to that for the postemployment benefit plans, with the exception of the fact that the actuarial gains and losses and costs deriving from prior employment services are recognised in the income statement in full in the period they accrue.
Provisions for risks and charges are provided for exclusively in the presence of a current obligation, consequent to past events, which can be legal, contractual in type or derive from declarations or conduct of the company such as to lead third parties to validly expect that the company itself is responsible or assumes responsibility for fulfilling an obligation (so-called implicit obligations). If the financial effect of time is significant, the liability is discounted back; the effect of this discounting back is recorded under financial expense.
Conversely, no allocation is made against risks for which the onset of a liability is only possible. In this case, a mention is entered into the appropriate information section regarding commitments and risk, and no allocation is made.
Revenues and income, costs and expense are recognised net of returns, discounts, allowances and premiums as well as the taxes directly associated with the sale of the goods and the provision of the services.
Sales revenues are recognised at the time ownership is transferred, which as a rule takes place on delivery or shipment of the goods. Revenues for the provision of services are recognised with reference to the stage of completion of the activities to which they refer; in particular, revenues for washing, wash-hire, sterilisation and other services are recognised in the period in which they were provided, even if not yet invoiced, and are determined by supplementing those recognised by means of advance payment invoicing with appropriate estimates.
The revenues are recognised at fair value in consideration of what has been received and represent the amount of the goods supplied and/or services provided.
The costs are correlated to goods and services sold or consumed in the period or deriving from systematic allocation, or when it is not possible to identify the future utility of the same, they are recognised and booked directly to the income statement.
Financial income and expense is recognised on an accruals basis. Financial expense is capitalised as part of the cost of property, plant and equipment and intangible assets to the extent it refers to the purchase, construction or production of the same. Dividends are recognised when the right to collection by the shareholder arises; this normally takes place in the period the shareholders' meeting of the investee company, which resolves the distribution of profits or reserves, is held.
Current income taxes are recognised on the basis of an estimate of the taxable income in compliance with the rates and current provisions, or essentially approved at the year-end date.
Prepaid and deferred taxes are calculated on the timing differences between the value assigned to an asset or liability in the financial statements and the corresponding values recognised for tax purposes, on the basis of the rates in force at the time the timing differences will reverse. Prepaid taxes are only recorded to the extent that it is probable that there is taxable income available against which they can be used. The recoverability of the prepaid taxes recorded in previous years is valued as of closure of each set of financial statements.
When the changes in the assets and liabilities to which they refer are directly recognised under other comprehensive income, the current taxes, prepaid tax assets and deferred tax liabilities are also directly booked to other comprehensive income.
Deferred tax assets and liabilities are offset only if there is a legal right to exercise the offset operation and if it is intended to settle the items on a net basis, or realise the asset and simultaneously extinguish the liability.
Basic and diluted earnings per share are indicated at the bottom of the Income Statement in the consolidated financial statements.
The basic earnings per share are calculated by dividing the profit/loss of the Servizi Italia Group by the weighted average of the ordinary shares in circulation during the period, excluding treasury shares. For the purpose of calculating the diluted earnings per shares, the weighted average of the shares in circulation is altered undertaking the conversion of all the potential shares, which have a dilutive effect.
The drafting of the financial statements requires the directors to apply accounting standards and methods, which, under certain circumstances, rest on difficult and subjective valuations and estimates based on past experience and assumptions, which are from time to time considered reasonable and realistic in relation to the related circumstances. The application of these estimates and assumptions influences the amounts shown in the financial statement schedules as well as the disclosure provided. The final results of the financial statements items for which the afore-mentioned estimates and assumptions have been used, may differ from those shown in the financial statements, which reveal the effects of the occurrence of an event subject to estimation, due to the uncertainty which characterises the assumptions, and conditions on which the estimates are based.
The accounting standards, which, more than others, require greater subjectivity by the directors when making the estimates and for which a change in the conditions underlying the assumptions used could have a significant impact on the consolidated financial data restated, are briefly described below.
These factors are liable to changes over time and could significantly affect the depreciation of the linen.
The management of the financial risks within the Servizi Italia Group is carries out centrally within the sphere of precise organisational directives, which discipline the handling of the same and the control of all the transactions, which have strict relevance in the composition of the financial and/or trade assets and liabilities.
Servizi Italia S.p.A.'s activities are exposed to various types of risk, including interest rate, credit, liquidity and price risks.
To minimise such risks, Servizi Italia S.p.A. has adopted timescales and control methods, which allow company management to monitor this risk and inform the Board of Directors so that it may approve all transactions involving a commitment by the Company with respect to third parties.
When carrying out its activities, the Company is exposed to the following financial risks:
liquidity risk;
exchange rate risk.
This is the risk associated with the volatility of the prices of the raw materials and the energy commodities, with particular reference to electricity and gas used in the primary production processes and of cotton to which the purchase cost of the linen is linked. Within the sphere of the tenders, the company avails itself of clauses, which permit it to adjust the price of the services provided in the event of significant cost changes. The price risk is also controlled by means of the entering into of purchase agreements with price blocks and on-average annual timescales, joined by constant monitoring of the performance of the prices so as to identify opportunities for making savings.
The Company's net financial debt comprises short-term payables which, as at 31 December 2017, represent approximately 54.3% of its debt, at an average annual rate of around 0.44%. In relation to the global financial crisis, the Company is monitoring the market and assessing the appropriateness of taking out hedging transactions on the rates in order to limit the negative impacts of changes in interest rates on the company's income statement. The table below demonstrates the effect that would be generated by a 0.5% increase or decrease in rates (in thousands of Euros).
| (thousands of Euros) | 0.5% rate increase | 0.5% rate decrease | ||
|---|---|---|---|---|
| 31 December 2017 | 31 December 2016 | 31 December 2017 | 31 December 2016 | |
| Financial receivables | +72 | +88 | (72) | (88) |
| Financial payables | +491 | +471 | (491) | (471) |
| Factoring of receivables | +458 | +428 | (458) | (428) |
The receivables, since they are essentially due from public bodies, are deemed certain in terms of collectability and, by nature, are not subject to the risk of loss. The collection times depend on the loans received, the Local Health Authorities, the Hospitals and the Regional Authorities and at present average collection days are 125.
A summary of the trade receivables net and gross of the related bad debt provisions and the stratification by maturity of receivables not written down is presented below:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Gross trade receivables | 79,457 | 73,776 |
| Bad debt provisions | (5,875) | (5,175) |
| Net trade receivables | 73,582 | 68,601 |
| Guarantees in portfolio | None | None |
| Falling due | 35,573 | 31,898 |
| Past due by less than 3 months | 12,677 | 12,035 |
| Past due by more than 3 months | 6,412 | 6,585 |
| Past due by more than 7 months | 18,920 | 18,083 |
The credit risk is constantly monitored by means of periodic processing of past due situations which are subject to the analysis of the Company's financial structure. The Company has also set out recovery procedures for doubtful receivables and avails itself of the assistance of legal advisors in the event of disputes. Having taken into account the characteristics of the credit, the risk in question could become more significant in the event of an increase in the private customer component, however this aspect is mitigated by a careful selection and financing of the customers. The predominant presence of receivables due from public bodies makes the credit risk marginal and shifts attention more towards the collection times rather than the possibility of losses.
In relation to the Company, the liquidity risk is linked to two main factors:
Concentrating its business on orders contracted with the Public Administration Authorities, the Company is exposed to risks associated with delays in the payments for the receivables. In order to balance this risk, factoring agreements have been entered into with the without-recourse formula, renewed also for 2017.
To correctly manage the liquidity risk, an adequate level of cash and cash equivalents must be maintained. In light of the predominantly public nature of the group's customers and the average collection times, cash and cash equivalents are mainly obtained from accounts receivable financing and medium-term loans. The Company has entered into covenants relating to the mortgage loans with Cassa di Risparmio in Bologna S.p.A., Banca Nazionale del Lavoro S.p.A., Cassa di Risparmio di Parma e Piacenza S.p.A., Banca Popolare di Milano S.Coop.a r.l. and Unicredit Banca S.p.A.; therefore, the possibility of early repayment of these loans with respect to the repayment plan is envisaged. As at 31 December 2017, the Company had observed the covenants entered into.
The following table analyses the "worst case" scenario with reference to the financial liabilities (including trade payables and other payables) in which all the flows indicated are un-discounted future nominal cash flows, determined with reference to the residual contractual maturities, both for the principal portion and the interest portion. The loans have been included on the basis of the first maturity on which the repayment can be requested and the non-revolving loans are considered callable on demand. The financial payables with a maturity of less than or equal to 3 months are almost entirely characterised by self-liquidating bank loans for invoice advances which, in as such, are replaced on maturity by new advances on newly-issued invoices. It should also be considered that the company only partially uses the short-term bank credit facilities available.
| (thousands of Euros) | Financial payables | Trade and other payables | Total | |||
|---|---|---|---|---|---|---|
| 31 December 2017 |
31 December 2016 |
31 December 2017 |
31 December 2016 |
31 December 2017 |
31 December 2016 |
|
| Less than or equal to 3 months | 28,598 | 18,271 | 64,974 | 52,107 | 93,571 | 70,378 |
| 3 to 12 months | 18,367 | 28,572 | 20,227 | 21,613 | 38,594 | 50,185 |
| 1 to 2 years | 21,464 | 18,701 | - | - | 21,464 | 18,701 |
| More than 2 years | 18,104 | 26,933 | - | - | 18,104 | 26,933 |
| Total | 86,533 | 92,476 | 85,201 | 73,720 | 171,734 | 166,196 |
Investments in Brazil, Turkey, India, Albania and recently Morocco have positioned the Group in an international context, exposing it to risks generated by fluctuations in the Euro/Real, Euro/Turkish Lira, Euro/Indian Rupee, Euro/Moroccan Dirham and Euro/Albanese Lek exchange rates.
The exchange rate risk must only be hedged if it has a significant impact on the cash flows with respect to the reference currency. The costs and risks associated with a hedging policy must be acceptable both from a financial and commercial standpoint and accordingly the Company has decided not to enter into hedging transactions on exchange rates since no inflows of capital are envisaged over the short term.
IFRS 13 requires that the classification of the financial instruments at fair value be determined on the basis of the quality of the sources of the inputs used in the valuation of the fair value.
The classification of IFRS 13 involves the following hierarchy:
The types of financial instruments present in the financial statement items are shown in the following table, with indication of the accounting treatment applied. Note that no financial instrument has been valued at fair value. With regard to the financial instruments valued at amortised cost, it is believed that the book value also represents a reasonable approximation of their valuation at fair value. With regard to equity investments in other companies, prices listed on active markets are not available. Therefore, their fair value cannot be measured reliably. For the same reason, they are measured at cost, possibly written down due to impairment.
| (Euros) | Financial assets | Financial liabilities | |||||
|---|---|---|---|---|---|---|---|
| At fair value through profit and loss |
Held to maturity |
Loans and receivables |
Available for sale |
At fair value through profit and loss |
At amortised cost |
||
| Measurement criteria | Fair value | Amortised cost |
Amortised cost | Cost | Fair value | Amortised cost | |
| Non-current assets | |||||||
| Equity investments in other companies | 3,612,344 | ||||||
| Financial receivables | 7,646,969 | ||||||
| Other assets | 3,060,658 |
| Trade receivables | 73,582,194 | |
|---|---|---|
| Current tax receivables | 1,728,481 | |
| Financial receivables | 7,950,913 | |
| Other assets | 7,086,158 | |
| Non-current liabilities | ||
| Due to banks and other lenders | 39,191,019 | |
| Other financial liabilities | 1,225,000 | |
| Current liabilities | ||
| Due to banks and other lenders | 46,562,791 | |
| Trade payables | 69,684,639 | |
| Current tax payables | - | |
| Other financial liabilities | 3,685,000 | |
| Other payables | 16,053,696 |
The Company's objectives, in relation to the management of the capital and the financial resources, involve safeguarding the ability to continue to operate with continuity, remunerate the shareholders and the other stakeholders and at the same time maintain an optimum capital structure so as to minimise the related cost.
For the purpose of maintaining or adapting the structure of the capital, the Company may adjust the amount of the dividends paid to the shareholders, reimburse or issue new shares or sell assets to reduce the debt. On a consistent basis with other operators, Servizi Italia S.p.A. controls capital on the basis of the debt ratio (gearing) calculated as the ratio between the net financial debt and net invested capital.
| (thousands of Euros) | Year ended as at 31 December | Change | Change | |
|---|---|---|---|---|
| 2017 | 2016 reinstated | % | ||
| Shareholders' equity (B) | 142,427 | 138,521 | 3,906 | 3% |
| Net financial debt (a) (A) | 76,289 | 73,448 | 2,841 | 4% |
| Invested capital (C) | 218,716 | 211,969 | 6,747 | 3% |
| Gearing (A/C) | 34.9% | 34.7% |
(a) The management has defined net financial debt as the sum of amounts Due to banks and other lenders net of Cash and cash equivalents and current financial receivables.
With regard to the main dynamics, which have affected the indebtedness, see section 6.16.
Servizi Italia S.p.A. operates in the following sectors:
The segment reporting is provided in the attached consolidated financial statements of the Servizi Italia Group and in short reflects the structure of the reporting periodically analysed by management so as to manage the business, and is subject to periodic HQ reporting.
Changes in property, plant and equipment and the associated accumulated depreciation are shown in the table below.
| (thousands of Euros) | Land and buildings |
Plant and machinery |
Returnable assets |
Equipment | Other assets | Assets under construction |
Total |
|---|---|---|---|---|---|---|---|
| Historical cost | 2,204 | 102,966 | 24,650 | 54,115 | 96,734 | 2,810 | 283,479 |
| Accumulated amortisation | (1,045) | (65,582) | (13,965) | (35,158) | (67,471) | - | (183,221) |
| Balance as at 1 January 2016 | 1,159 | 37,384 | 10,685 | 18,957 | 29,263 | 2,810 | 100,258 |
| Increases | 40 | 1,991 | 1,421 | 2,438 | 22,390 | 2,346 | 30,626 |
| Decreases | - | (187) | (2) | (59) | (32) | (27) | (307) |
| Amortisation | (104) | (6,336) | (2,514) | (5,079) | (23,131) | - | (37,164) |
| Reclassifications | 4 | 731 | 1,110 | 650 | 47 | (2,542) | - |
| Balance as at 31 December 2016 | 1,099 | 33,583 | 10,700 | 16,907 | 28,537 | 2,587 | 93,413 |
| Historical cost | 2,248 | 104,615 | 27,176 | 56,459 | 98,184 | 2,587 | 291,269 |
| Accumulated amortisation | (1,149) | (71,032) | (16,476) | (39,552) | (69,647) | - | (197,856) |
| Balance as at 1 January 2017 | 1,099 | 33,583 | 10,700 | 16,907 | 28,537 | 2,587 | 93,413 |
| Incorporations | 3,311 | 885 | 130 | 142 | 3,283 | - | 7,751 |
| Increases | 35 | 4,529 | 1,511 | 3,417 | 28,058 | 1,624 | 39,174 |
| Decreases | - | (86) | - | (105) | (9) | (46) | (246) |
| Amortisation | (185) | (6,220) | (2,556) | (5,032) | (26,588) | - | (40,581) |
| Write-downs (write-back) | - | 90 | (2) | - | - | 2 | 90 |
| Reclassifications | - | 1,425 | 596 | 74 | 6 | (2,101) | - |
| Balance as at 31 December 2017 | 4,260 | 34,206 | 10,379 | 15,403 | 33,287 | 2,066 | 99,601 |
| Historical cost | 6,286 | 114,206 | 29,421 | 59,716 | 111,568 | 2,066 | 323,263 |
| Accumulated amortisation | (2,026) | (80,000) | (19,042) | (44,313) | (78,281) | - | (223,662) |
| Balance as at 31 December 2017 | 4,260 | 34,206 | 10,379 | 15,403 | 33,287 | 2,066 | 99,601 |
The item Mergers by incorporation includes the balances of the companies merged by incorporation Tintoria Lombarda Divisione Sanitaria S.r.l. and Servizi Italia Medical S.r.l.
The item includes incorporations for Euro 3,311 thousand (relating to the acquisition of Tintoria Lombarda Divisione Sanitaria S.r.l.) and increases equal to Euro 35 thousand. The latter mainly relate to investments in temporary constructions made for the Pavia di Udine (Euro 16 thousand) and Florence (Euro 15 thousand) premises.
The increases concern investments in plant and machinery for laundries and the sterilisation centres at the following production sites: Castellina di Soragna for Euro 1,838 thousand, Ariccia for Euro 183 thousand, Pavia di Udine for Euro 173 thousand, Travagliato for Euro 321 thousand, Florence for Euro 337 thousand, Genoa Bolzaneto for Euro 85 thousand and Arco di Trento for Euro 61 thousand. Investments are also recorded for Euro 328 thousand for the new Management headquarters in Castellina di Soragna.
The remaining part regards investments carried out at the customers' sites for the purchase of plants and machinery in support of wash and sterilisation activities, in particular for surgical instruments sterilisation at Clinica Columbus in Milan (Euro 68 thousand), the surgical instrument sterilisation centre at ASST in Crema (Euro 100 thousand) and the various wardrobes located in Italy (Euro 820 thousand) to allow the reading of the linen tracking systems.
The item presents reclassifications of Euro 1,425 thousand, of which Euro 357 thousand relating to the launch of the new Ariccia facility and Euro 749 thousand relating to investments for reading the linen tracking systems.
These mainly refer to investments made at customers to construct and renovate existing plants used for washing and sterilisation activities. Therefore, the Company maintains control over, obtains benefits from and bears the operating risks of these plants. The entity maintains ownership of the plants at the end of the wash-hire/washing/sterilisation contract.
On the basis of contractual commitments, the Company bore the cost of the partial renovation of premises of the industrial laundry facilities owned by the contracting entities, to increase the efficiency of the rented linen washing and sanitation service. These costs have been amortised in accordance with the amortisation schedules linked to the duration of the existing contract with the contracting entities, which is less than the useful life of the works completed.
With regard to the year ended 31 December 2017, the increases in investments, equal to Euro 1,511 thousand mainly concerned the redevelopment of the properties where the leased production sites are located and in particular the industrial laundries for a total of Euro 937 thousand, while the remaining portion relates to investments made at the customers sites for improvements and the adjustments of the existing systems in use for Euro 511 thousand. Euro 40 thousand refer to the new Management headquarters.
In addition, this item shows the reclassification of Euro 596 thousand. In particular, Euro 434 thousand refers to the start of the new surgical instrument sterilisation facility of Ariccia, Euro 62 thousand to the laundry facility of Montecchio Precalcino, Euro 45 thousand to the Arco di Trento laundry facility and Euro 35 thousand to the Travagliato laundry facility.
The changes during the year ended 31 December 2017 present an increase of Euro 3,417 thousand for the purchase of industrial and commercial equipment, of which Euro 1,937 thousand for the purchase of surgical instruments.
The item includes incorporations for Euro 3,283 thousand, of which Euro 3,221 thousand refers to the laundry facility of the incorporated company Tintoria Lombarda Divisione Sanitaria S.r.l.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December 2017 | As at 31 December 2016 |
|---|---|---|
| Linens and mattresses | 31,787 | 27,366 |
| Furniture and fixtures | 340 | 111 |
| Electronic machinery | 934 | 775 |
| Cars | 2 | 7 |
| Motor vehicles | 147 | 206 |
| Telephone switchboards | 77 | 72 |
| Total | 33,287 | 28,537 |
The purchases made during the year mainly derive from linen, for a total of Euro 27,278 thousand, which are necessary for an increasingly efficient management of the warehouse, both for the new contracts acquired during 2017 and at the time of the renewal of existing contracts.
The Company sold linen, generating a capital gain of Euro 388 thousand.
Furthermore, the value of the linen and mattresses completely amortised, for a total of Euro 21,924 thousand, was reversed from the respective accumulated depreciation, because it is presumed that on conclusion of the useful life of said assets, the value is no longer quantifiable so as to be able to establish any additional contribution to the production process.
These are investments under way at the end of the year.
The item for 2017 is broken down as follows:
| (thousands of Euros) | as at 31 December 2017 |
|---|---|
| Sterilisation centre investments | 749 |
| Laundering facility investments | 503 |
| Investments on contracts | 807 |
| Total | 2,059 |
Investments in sterilisation centres primarily concern the construction or renovation of surgical instrument sterilisation centres. These investments concern, in particular, the construction of the new surgical instrument sterilisation centre at ASST of Valle Olona for the hospital of Busto Arsizio (Euro 519 thousand).
Investments for laundries in the year refer to the requalification of the production areas (for Euro 50 thousand) and to the supplies and adjustments of plant and machinery for the washing lines (for Euro 453 thousand).
In the year investments for contracts recorded an increase of Euro 650 thousand and reclassifications of Euro 788 thousand. These investments mainly refer to the machinery for reading of the tracking systems for the linen destined to different wardrobes.
A breakdown as at 31 December 2017 and 2016 of the commitments for operational leasing fees is provided below:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Within 12 months | 3,441 | 3,296 |
| Between one and five years | 12,705 | 10,277 |
| Beyond 5 years | 11,197 | 10,727 |
| Total | 27,343 | 24,300 |
This item changed as follows:
| (thousands of Euros) | Trademarks and software | Customer contracts |
Other intangible assets | Assets under construction and |
Total |
|---|---|---|---|---|---|
| portfolio | payments on account | ||||
| Balance as at 1 January 2016 | 437 | 1,590 | 663 | 147 | 2,837 |
| Increases | 252 | - | - | 43 | 295 |
| Decreases | (3) | - | - | - | (3) |
| Amortisation | (410) | (335) | (508) | - | (1,253) |
| Reclassifications | 147 | - | - | (147) | - |
| Balance as at 31 December 2016 | 423 | 1,255 | 155 | 43 | 1,876 |
| Historical cost | 3,439 | 3,184 | 1,016 | 43 | 7,682 |
| Accumulated amortisation | (3,016) | (1,929) | (861) | - | (5,806) |
| Balance as at 1 January 2017 | 423 | 1,255 | 155 | 43 | 1,876 |
| Incorporations | 7 | 3,381 | - | 29 | 3,417 |
| Increases | 295 | - | - | 17 | 312 |
| Decreases | (4) | - | - | - | (4) |
| Amortisation | (410) | (1,014) | (155) | - | (1,579) |
| Write-downs (write-back) | - | - | - | - | - |
| Reclassifications | 43 | - | - | (43) | - |
| Balance as at 31 December 2017 | 354 | 3,622 | - | 46 | 4,022 |
| Historical cost | 4,011 | 7,006 | 1,016 | 46 | 12,079 |
| Accumulated amortisation | (3,657) | (3,384) | (1,016) | - | (8,057) |
| Balance as at 31 December 2017 | 354 | 3,622 | - | 46 | 4,022 |
The increase in intangible assets is essentially due to investments in software for Euro 295 thousand.
Assets in progress mainly concern the management software being implemented.
This item changed as follows:
| (thousands of Euros) | Goodwill |
|---|---|
| Balance as at 1 January 2016 | 32,275 |
| Increases /(decreases) | - |
| Balance as at 31 December 2016 | 32,275 |
| Increases /(decreases) | 10,300 |
| Balance as at 31 December 2017 | 42,575 |
The goodwill is allocated to Servizi Italia S.p.A.'s cash generating unit, which reflects the operational areas of the companies acquired and incorporated over the years.
The impairment test is carried out by comparing the value of the goodwill and the number of activities autonomously able to produce cash flow (CGU), which the same can be reasonably allocated to, with the value in use of the CGU or that recoverable from the same via sale, whichever is the higher (fair value). In detail, the value in use was determined by applying the "discounted cash flow" method discounting back the operating cash flows emerging from economic-financial projections relating to a period of five years. The multi-annual plan, which was used for impairment tests, was previously approved by the Board of Directors of Servizi Italia S.p.A. The underlying hypotheses of the plan used reflect past experience and the information gathered at the time of purchase, and are consistent the external sources of information available. The Company has taken into consideration, with reference to the period in question, the expected performance resulting from the industrial plan set up for the 2018-2022 period.
The terminal value is determined by applying a perpetual growth factor of 1.40% to the operating cash flow relating to the last year of the plan appropriately standardised, essentially representative on the one part of the inflation rate expected in Italy and on the other part of the uncertainties, which characterise the Italian market. The discount rate used, equating to 5.87% (5.08% in the previous year), reflects the current valuations of the market with reference to the current value of money and the specific risks associated with the activities. The discount rate has been estimated, after taxes, on a consistent basis with the cash flows being considered, by means of the determination of the weighted average cost of the capital (WACC).
A sensitivity analysis was carried out about the recoverability of the book value of the goodwill according to changes in the main assumptions that were used to calculate the book values also considering a conservative approach to the choice of the financial parameters above. The analysis carried out has shown that, to make the recoverable value the same as the carrying value, the following would be necessary: (i) a reduction in the growth rate of the terminal values of 3.0 percentage points (1.6% decline) or (ii) an increase of 39% of the WACC adopted or (iii) an annual reduction of the reference EBIT of 35%, all of this in order to maintain unchanged, from time to time, the other assumptions of the plan. At this time, it is not reasonable to hypothesise any change in the assumptions made which could lead to the cancellation of the surplus.
With reference to 31 December 2017 and the previous years, the impairment test carried out did not reveal any impairments to be booked to the recorded goodwill.
| (thousands of Euros) | Change in 2017 | ||||||
|---|---|---|---|---|---|---|---|
| 31 December 2016 reinstated |
Revaluations / Impairment |
Increases | Decreases | Change Translation reserve |
31 December 2017 | ||
| Subsidiaries | |||||||
| S. Martino 2000 S.c.r.l. | 6 | - | - | - | - | 6 | |
| Se.Sa.Tre. S.c.r.l. in liquidazione | 12 | - | - | - | - | 12 | |
| Steritek S.p.A. | - | 95 | 3,105 | - | - | 3,200 | |
| SRI Empreendimentos e Participacoes LTDA | 34,435 | (228) | 1,000 | - | (4,702) | 30,505 | |
| Ankateks Turizm Insaat Tekstil Temizleme Sanayi Ve | - | 437 | 18,057 | - | (2,138) | 16,356 | |
| Tintoria Lombarda Divisione Sanitaria S.r.l. | 13,462 | - | - | (13,462) | - | - | |
| Servizi Italia Medical S.r.l. | 1,403 | - | - | (1,403) | - | - | |
| Total | 49,318 | 304 | 22,162 | (14,865) | (6,840) | 50,079 |
Equity investments in subsidiaries underwent the following changes:
On 19 July 2017, Servizi Italia S.p.A. exercised the call option targeted at acquiring an additional 15% of the share capital of the Turkish company Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi, which in turn controls the company Ergülteks Temizlik Tekstil Ltd. Sti. (Ankara Group), in which Servizi Italia S.p.A. had a 40% stake since 15 October 2015. Servizi Italia S.p.A. now holds 55% and thus obtained control over the Ankara Group, significantly strengthening its position in the Turkish market. The value of the equity investment includes Euro 1,212 thousand referring to the greater fair value, compared to the cost incurred, of the 40% share held before acquiring control over the Ankara Group. This re-determined value, together with the payment made for the purchase of the subsequent 15%, represents the opening recognition cost of the equity investment, subsequently adjusted to consider the portions of profits and losses recorded by the subsidiary on the date control was acquired.
On 5 September 2017, Servizi Italia S.p.A. also acquired 70% of the share capital of Steritek S.p.A. The value of the equity investments has decreased consequently to the mergers by incorporation of Tintoria Lombarda Divisione Sanitaria S.r.l. and Servizi Italia Medical S.r.l.
The value of the equity investments in subsidiaries is affected by the adoption of the equity method for the measurement of the shareholdings in subsidiaries, as previously described. In accordance with par. 22 of IAS 8, the accounting policies in question were amended retrospectively with a decrease in the value of the equity investments in subsidiaries of the year 2016 of Euro 10,240 thousand, as described in the previous paragraph "Redetermination of the 2016 Income statement and Balance sheet figures following the adoption of the equity method for the recognition of the equity investments in subsidiaries".
Equity investments in subsidiaries measured with the equity method, except for those in consortia, include implicit goodwill originating at the time of the acquisition, as follows:
o SRI Empreendimentos e Participações L.t.d.a.: Euro 10,354 thousand
When considering that the equity method synthetically reflects the same effects of the consolidation process, the implicit goodwill contained in the book value of the equity investments in subsidiaries is thus equal to that posted in the consolidated financial statements of the Servizi Italia Group and, as such, is subject to the impairment test each year. In detail, the value in use is determined by applying the "discounted cash flow" method discounting back the operating flows emerging from economic-financial projections relating to a period of five years. The underlying hypotheses of the plans used reflect past experience, and the information gathered at the time of purchase for the Brazilian/Turkish market and are consistent the external sources of information available. The Company has taken into consideration, with reference to the period in question, the expected performance resulting from the industrial plan set up for the 2018-2022 period.
The terminal value is determined by applying a perpetual growth factor of 1.40% for the Steritek CGU, 4.02% for the Brazil CGU and 7.51% for the Turkey CGU to the operating cash flow relating to the last year of the plan appropriately standardised (these rates are essentially representative on the one part of the inflation rate expected in Italy, Brazil and Turkey to which the prices of services offered are indexed and on the other part of the uncertainties which characterise the Brazilian and Turkish markets, which present risks of a macroeconomic nature). The discount rate used to discount back the cash flows of the Steritek CGU located in Italy is 5.87%, 10.94% for the Brazil CGU and 14.22% for the Turkey CGU. These rates reflect the current valuations of the market with reference to the current value of money and the specific risks associated with the activities. The discount rates have been estimated, after taxes, on a consistent basis with the cash flows considered, by means of the determination of the weighted average cost of the capital (WACC). Following is a list of companies, share capital and investment in the subsidiaries held and the total amount of current and non-current assets, current and non-current liabilities, revenue, costs and results at 31 December 2017:
| (thousands) | ||||
|---|---|---|---|---|
| Company name | Registered office | Currency | Share capital |
% holding |
| San Martino 2000 S.c.r.l. | Genoa | Eur | 10 | 60% |
| Se.Sa.Tre. S.c.r.l. in liquidazione | Genoa | Eur | 20 | 60% |
| Steritek S.p.A. | Cremona | Eur | 134 | 70% |
| SRI Empreendimentos e Participacoes LTDA | São Paulo (Brazil) | R\$ | 142,913 | 100% |
| Lavsim Higienização Têxtil S.A.* | São Roque, São Paulo (Brazil) | R\$ | 550 | 100% |
| Maxlav Lavanderia Especializada S.A.* | Jaguariúna, State of São Paulo (Brazil) | R\$ | 2,825 | 50.10% |
| Vida Lavanderias Especializada S.A.* | Santana de Parnaíba SP (Brazil) | R\$ | 3,600 | 50.10% |
| Aqualav Serviços De Higienização Ltda* | Vila Idalina, Poá, State of São Paulo (Brazil) | R\$ | 15,400 | 100.00% |
| Ankateks Turizm İnsaat Tekstil Temizleme Sanayi Ve | Ankara, Turkey | TL | 5,000 | 55% |
| Ergülteks Temizlik Tekstil Ltd. Sti.** | Smirne, Turkey | TL | 1,700 | 57.5% |
* Held through SRI Empreendimentos e Participações Ltda
** Held through Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi
| (thousands) | As at 31 December 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Company name | Currency | Non current assets |
Current assets |
Non current liabilities |
Current liabilities |
Shareholders' equity |
Revenues | Costs | Profit/ (Loss) |
| San Martino 2000 S.c.r.l. | Eur | 1,817 | 3,585 | - | 5,392 | 10 | 8,095 | 8,095 | - |
| Se.Sa.Tre. S.c.r.l. in liquidazione | Eur | 1,533 | 4,548 | - | 6,061 | 20 | 11,051 | 11,051 | - |
| Steritek S.p.A. | Eur | 125 | 2,197 | 247 | 532 | 1,543 | 2,675 | 2,300 | 375 |
| SRI Empreendimentos e Participacoes LTDA | R\$ | 139,615 | 16,904 | 861 | 5,523 | 150,135 | - | 291 | (291) |
| Lavsim Higienização Têxtil S.A.* | R\$ | 36,403 | 10,462 | 26,593 | 11,604 | 8,668 | 45,932 | 44,411 | 1,521 |
| Maxlav Lavanderia Especializada S.A.* | R\$ | 23,557 | 17,083 | 25,345 | 10,676 | 4,619 | 46,336 | 45,351 | 985 |
| Vida Lavanderias Especializada S.A.* | R\$ | 1,689 | 2,921 | 570 | 2,005 | 2,035 | 12,922 | 12,617 | 305 |
| Aqualav Serviços De Higienização Ltda* | R\$ | 21,991 | 13,440 | 20,059 | 6,436 | 8,936 | 21,520 | 22,320 | (800) |
| Ankateks Turizm İnsaat Tekstil Temizleme Sanayi Ve | TL | 12,446 | 19,178 | 6,622 | 14,596 | 10,406 | 12,875 | 9,548 | 3,327 |
| Ergülteks Temizlik Tekstil Ltd. Sti.** | TL | 2,857 | 7,834 | 1,145 | 7,410 | 2,136 | 5,584 | 5,402 | 182 |
* Held through SRI Empreendimentos e Participações Ltda
** Held through Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2016 | ||
| 2017 | reinstated | |
| Equity investments in associates, jointly controlled | 24,289 | 30,682 |
| Equity investments in other companies | 3,612 | 3,602 |
| Total | 27,901 | 34,284 |
Equity investments in associates and jointly controlled companies underwent the following changes:
| (thousands of Euros) | Change in 2017 | |||||
|---|---|---|---|---|---|---|
| 1 January 2017 reinstated |
Increases | Decreases | 31 December 2017 | |||
| Finanza & Progetti S.p.A. | 5,260 | 3,060 | - | 8,320 | ||
| Brixia S.r.l. | - | 3,002 | - | 3,002 | ||
| Arezzo Servizi S.c.r.l. | 5 | - | - | 5 | ||
| CO.SE.S S.c.r.l. | 3 | - | - | 3 | ||
| PSIS S.r.l. | 5,000 | - | - | 5,000 | ||
| Ekolav S.r.l. | 50 | - | - | 50 | ||
| Steril Piemonte S.c.r.l. | 2,000 | - | - | 2,000 | ||
| AMG S.r.l. | 2,033 | - | - | 2,033 | ||
| Iniziative Produttive Piemontesi S.r.l. | 1,322 | - | - | 1,322 | ||
| SE.STE.RO. S.r.l. in liquidazione | 100 | - | - | 100 | ||
| Piemonte Servizi Sanitari S.c.r.l. | 3 | - | - | 3 | ||
| Saniservice Sh.p.k. | 6 | - | - | 6 | ||
| Servizi Sanitari Integrati Marocco S.a.r.l. | - | 89 | - | 89 | ||
| Ankateks Turizm Insaat Tekstil Temizleme Sanayi Ve | 12,697 | - | (12,697) | - | ||
| SAS Sterilizasyon Servisleri A.Ş. | 341 | 153 | - | 494 | ||
| Shubhram Hospital Solutions Private Limited | 1,862 | - | - | 1,862 | ||
| Total | 30,682 | 6,304 | (12,697) | 24,289 |
The reduction in the item is attributable mainly to the acquisition of control of the company Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi on 19 July 2017, after which Servizi Italia S.p.A. exercised the option to acquire 15% of the share capital on 16 May 2017. Up until the date of acquisition of the control, the company was classified with associates.
An increase in the share already held by Tintoria Lombarda Divisione Sanitaria S.r.l. in Brixia S.r.l. (a company which handles Facility Management services in the hospital ASST Spedali Civili of Brescia) was recorded in the period, with a subsequent increase in the turnover achieved in the relevant contract and the subscription of a new tranche of the share capital increase in the company Finanza & Progetti S.p.A.
The increase in value of the shareholding in the company Finanza & Progetti S.p.A. refers to a capital increase of Euro 3,060 thousand.
On 13 February 2017, Servizi Italia purchased 51.0% of Servizi Sanitari Integrati Marocco S.a.r.l., a company that on 10 February 2017 signed a preliminary contract for the establishment of Servizi Italia Marocco S.a.r.l, which will be 50% owned by Servizi Sanitari Integrati Marocco S.a.r.l. and 50% owned by local partner Blue Field Healthcare S.a.r.l.
Following is a list of companies, share capital and investment in the associates and jointly controlled companies held by the Company and the total amount of current and non-current assets, current and non-current liabilities, revenue, costs and results at 31 December 2017:
| (thousands) | ||||
|---|---|---|---|---|
| Company name | Registered office | Currency | Share capital |
% holding |
| SAS Sterilizasyon Servisleri A.Ş. | Istanbul, Turkey | TL | 3502 | 51% |
| Saniservice Sh.p.k. | Tirana – Albania | Lek | 2,746 | 30% |
| Shubhram Hospital Solutions Private Limited | New Delhi - India | INR | 270,172 | 51% |
| Finanza & Progetti S.p.A.* | Padua | Eur | 550 | 50% |
| Arezzo Servizi S.c.r.l. | Arezzo | Eur | 10 | 50% |
| CO.SE.S S.c.r.l. | Perugia | Eur | 10 | 25% |
| PSIS S.r.l. | Padua | Eur | 10,000 | 50% |
| Ekolav S.r.l. | Lastra a Signa (FI) | Eur | 100 | 50% |
| Steril Piemonte S.c.r.l. | Turin | Eur | 4,000 | 50% |
| AMG S.r.l. | Busca (CN) | Eur | 100 | 50% |
| SE.STE.RO S.r.l. in liquidazione | Castellina di Soragna (PR) | Eur | 400 | 25% |
| Iniziative Produttive Piemontesi S.r.l. | Turin | Eur | 2,500 | 37.63% |
| Brixia S.r.l. | Milan | Eur | 10 | 23% |
| Servizi Sanitari Integrati Marocco S.a.r.l. | Casablanca - Morocco | MAD | 122 | 51% |
| Piemonte Servizi Sanitari s.c.r.l. | Turin | Eur | 10 | 30% |
| (thousands) | As at 31 December 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Company name | Currency | Non current assets |
Current assets |
Non current liabilities |
Current liabilities |
Shareholders' equity |
Revenues | Costs | Profit/ (Loss) |
| SAS Sterilizasyon Servisleri A.Ş. | TL | 1,897 | 2,544 | - | 282 | 4,159 | 2,996 | 1,950 | 1,046 |
| Saniservice Sh.p.k. | Lek | 1,266,616 | 833,056 | 1,231,942 | 887,913 | (20,183) | 945,820 | 832,274 | 113,546 |
| Shubhram Hospital Solutions Private Limited | INR | 916,912 | 118,008 | 558,098 | 499,008 | (22,186) | 326,222 | 392,797 | (66,575) |
| Finanza & Progetti S.p.A.* | Eur | 18,469 | 16,370 | 13 | 23,840 | 10,986 | 23,059 | 21,539 | 1,520 |
| Arezzo Servizi S.c.r.l. | Eur | 1,064 | 638 | 267 | 1,425 | 10 | 2,349 | 2,349 | - |
| CO.SE.S S.c.r.l.** | Eur | 1 | 1,170 | 129 | 1,032 | 10 | 2,794 | 2,794 | - |
|---|---|---|---|---|---|---|---|---|---|
| PSIS S.r.l. | Eur | 21,523 | 4,034 | 2,884 | 14,876 | 7,797 | 8,223 | 8,828 | (605) |
| Ekolav S.r.l. | Eur | 2,087 | 1,300 | 843 | 2,313 | 231 | 2,867 | 2,775 | 92 |
| Steril Piemonte S.c.r.l. | Eur | 4,558 | 2,279 | - | 2,892 | 3,945 | 2,721 | 2,721 | - |
| AMG S.r.l. | Eur | 1,900 | 2,681 | 545 | 1,339 | 2,697 | 4,074 | 3,819 | 255 |
| SE.STE.RO S.r.l. in liquidazione | Eur | - | 456 | - | 1 | 455 | - | (8) | 8 |
| Iniziative Produttive Piemontesi S.r.l. | Eur | 690 | 3,174 | 247 | 1,801 | 1,816 | 3,606 | 3,535 | 71 |
| Brixia S.r.l. | Eur | 2 | 5,294 | - | 5,249 | 47 | 18,591 | 18,599 | (8) |
| Servizi Sanitari Integrati Marocco S.a.r.l. | Mad | 500 | 390 | - | 78 | 812 | - | 86 | (86) |
| Piemonte Servizi Sanitari s.c.r.l. | Eur | 15 | 686 | - | 691 | 10 | 1,120 | 1,120 | - |
*The data refers to the sub-consolidation with the subsidiary Ospedal Grando S.p.A.
** dated 31 December 2016
| (thousands of Euros) | Change in 2017 | |||||
|---|---|---|---|---|---|---|
| 1 January 2017 reinstated |
Increases | Decreases | 31 December 2017 | |||
| Asolo Hospital Service S.p.A. | 464 | - | - | 464 | ||
| Prosa S.p.A. | 462 | - | - | 462 | ||
| PROG.ESTE S.p.A. | 1,212 | - | - | 1,212 | ||
| Progeni S.p.A. | 380 | - | - | 380 | ||
| Sesamo S.p.A. | 353 | - | - | 353 | ||
| Synchron Nuovo San Gerardo S.p.A. | 344 | - | - | 344 | ||
| Spv Arena Sanità | 278 | - | - | 278 | ||
| Futura S.r.l. | - | 25 | - | 25 | ||
| Other | 109 | - | (15) | 94 | ||
| Total | 3,602 | 25 | (15) | 3,612 |
Equity investments in other companies underwent the following changes:
Regarding this item, mention should be made of the increase of Euro 25 thousand in the equity investment in Futura S.r.l., the company acquired through the merger of Tintoria Lombarda Divisione Sanitaria S.r.l. During the year the shares (equal to Euro 15 thousand) of Consorzio C.C.F.S. were sold.
The equity investments in other companies refer to investments of a strategic and productive nature, which are actually all held as they refer to the management of contracts or concessions. These equity investments were measured at the cost of purchase or of establishment since no active market exists for these securities which, in most cases, cannot even be freely transferred to third parties as they are subject to rules and understandings that actually prevent their free circulation. This accounting policy is in any case deemed to be close to the fair value of the security.
The total values of the assets, liabilities, revenues and net profit/loss, on the basis of the last set of available financial statements, of the main equity investments in other companies held by the Company are presented below, along with related shareholding held as at 31 December 2017:
| (thousands of Euros) | Financial statement figures as at 31 December 2016 | |||||||
|---|---|---|---|---|---|---|---|---|
| Registered office |
Assets | Liabilities | Revenues | Profit/ (Loss) | Shareholding as at 31 December 2017 |
|||
| Asolo Hospital Service S.p.A. | Asolo (TV) | 101,476 | 95,763 | 43,007 | 467 | 7.03% | ||
| Prosa S.p.A. | Carpi (MO) | 9,580 | 4,267 | 1,979 | 1,052 | 13.20% | ||
| Progeni S.p.A. | Milan | 298,032 | 304,581 | 44,258 | 999 | 3.80% | ||
| Sesamo S.p.A. | Carpi (MO) | 38,137 | 30,643 | 18,113 | 1,040 | 12.17% | ||
| Prog.Este. S.p.A. | Carpi (MO) | 217,220 | 218,366 | 35,015 | 307 | 10.14% |
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Prosa S.p.A. | 189 | 255 |
| Sesamo S.p.A. | 353 | 353 |
| Progeni S.p.A. | 982 | 982 |
| Prog.Este. S.p.A. | 531 | 531 |
| Saniservice Sh.p.K. | 4,000 | 4000 |
| Summano Sanità S.p.A. | 2 | 2 |
| Futura S.r.l. | 158 | - |
| Ankateks Turizm Insaat Tekstil Temizleme Sanayi Ve | 660 | 809 |
| Arena Sanità | 476 | 461 |
| Syncron | 296 | 275 |
| Total | 7,647 | 7,668 |
The financial receivables refer to the interest-bearing loans granted to the companies Prosa S.p.A. (3.50% rate plus 3-month Euribor), Sesamo S.p.A. (3% rate plus IRS rate at 20 years), Progeni S.p.A. (7.31% rate), Prog.Este. S.p.A. (rate equal to 6.96%), Summano Sanità S.p.A. (rate equal to 6.25%), Arena Sanità S.p.A. (rate 3.4% plus 6-month Euribor) and Synchron S.p.A. (rate 8%) and with a term equal to the global service agreements for which the companies were established (expiring on 21 February 2031, 31 December 2037, 31 December 2033, 31 December 2031, 31 December 2035, 20 August 2032, 14 June 2042, respectively), as well as the loans granted to the company Futura S.r.l. (expiring on 31 December 2035) and to the Albanian investee company Saniservice Sh.p.K. and the Turkish investee company Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi, whose value in foreign currency fell due to the write-down of the Turkish Lira. The loan granted to Prosa S.p.A. decreased after a partial repayment occurred in 2017, while the loans granted to the companies Arena Sanità S.p.A. and Synchron S.p.A. increased due to the capitalisation of the interest accrued during the year.
This item changed as follows:
| (thousands of Euros) | Share Capital increase costs |
Property, plant and equipment |
Employee benefits |
Other costs with deferred deductibility |
Total |
|---|---|---|---|---|---|
| Deferred taxation as at 1 January 2016 | 48 | 784 | 134 | 187 | 1,153 |
| Changes recognised in the income statement | (36) | (127) | - | (7) | (170) |
| Changes recognised under shareholders' equity | - | - | - | - | - |
| Changes recognised in other comprehensive income | - | - | 57 | - | 57 |
| Deferred taxation as at 31 December 2016 | 12 | 657 | 191 | 180 | 1,040 |
| Incorporations | - | - | 18 | 4 | 22 |
| Changes recognised in the income statement | (9) | 66 | (21) | 80 | 116 |
| Changes recognised under shareholders' equity | - | - | - | - | - |
| Changes recognised in other comprehensive income | - | - | (5) | - | (5) |
| Deferred taxation as at 31 December 2017 | 3 | 723 | 183 | 264 | 1,173 |
Deferred tax assets referring to property, plant and equipment represent the deferred taxation related to the ordinary process of depreciation of the linen.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Substitute tax Italian Decree Law 185/2008 subsequent years | 2,885 | 3,313 |
| Receivables for IRES reimbursement request pursuant to Art. 2 par. 1-quater Italian Decree Law No. 201 | 176 | 1,833 |
| Total | 3,061 | 5,146 |
Other non-current assets moved from Euro 5,146 thousand as at 31 December 2016 to Euro 3,061 thousand as at 31 December 2017. The reduction in the item is due to the collection in June 2017 of part of the receivable of the IRES refund request pursuant to art. 2, paragraph 1-quater Decree Law no. 201. The drop in substitute tax is due to the release to the income statement for the pertinent deduction of the goodwill released in 2016 and previous years. This substitute tax was recognised as a prepaid current tax and is released to the income statement over the period of time in which the Company benefits from the tax deductions connected with the goodwill.
Inventories at year-end primarily included washing products, chemical products, packaging, spare parts and consumables. No impairments were made to the value of the inventories in the current and previous years.
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Due from third parties | 60,182 | 57,280 |
| Due from the subsidiaries | 9,946 | 10,058 |
| Due from associates | 3,269 | 896 |
| Due from parent companies | 184 | 366 |
| Receivables from companies under the control of the parent companies | 1 | 1 |
| Total | 73,582 | 68,601 |
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Due from customers | 66,057 | 62,455 |
| Bad debt provision | (5,875) | (5,175) |
| Total | 60,182 | 57,280 |
The Company took part in a number of transactions concerning the transfer of receivables described below:
The bad debt provision changed as follows in 2017 and 2016:
| (thousands of Euros) | |
|---|---|
| Balance as at 1 January 2016 | 5,531 |
| Uses | (533) |
| Adjustments | (81) |
| Provisions | 258 |
| Balance as at 31 December 2016 | 5,175 |
| Incorporations | 198 |
| Uses | (42) |
| Adjustments | (123) |
| Provisions | 667 |
| Balance as at 31 December 2017 | 5,875 |
The balance of Euro 9,946 thousand as at 31 December 2017 includes trade receivables due from the subsidiaries Se.Sa.Tre S.c.r.l. in liquidazione for Euro 4,529 thousand, San Martino 2000 S.c.r.l. for Euro 4,422 thousand, SRI Empreendimentos e Participacoes LTDA for Euro 935 thousand and Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi for Euro 59 thousand. Amounts due from Se.Sa.Tre. in liquidazione are essentially linked to the chargeback of costs invoiced to Servizi Italia S.p.A., but referring to the management of the contract related to AULSS 2 Marca Trevigiana. Amounts due from San Martino 2000 S.c.r.l. are instead essentially linked to the charge-back of costs invoiced to Servizi Italia S.p.A., but referring to the management of the contract related to IRCCS Az. Osp. Univ. San Martino of Genoa.
The balance as at 31 December 2017 of trade receivables due from associates and jointly controlled companies, amounting to Euro 3,269 thousand, is essentially represented by trade receivables due from Brixia S.r.l. for Euro 1,371 thousand, Saniservice Sh.p.k. for Euro 811 thousand, PSIS S.r.l. for Euro 342 thousand, Steril Piemonte S.c.r.l. for Euro 278 thousand, AMG S.r.l. for Euro 252 thousand and Finanza & Progetti S.p.A. for Euro 127 thousand. The change when compared to the 31 December 2016 figure is primarily attributable to the company Brixia S.r.l. for the services contracted with ASST Spedali Civili of Brescia. Furthermore, there is a credit balance due from the parent company Coopservice Soc.Coop. p.A. for Euro 184 thousand.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Tax receivables | 6,045 | 5,489 |
| Tax payables | (4,317) | (2,994) |
| Total | 1,728 | 2,495 |
This item includes the amount exceeding the receivables for advances on the current taxes of 2017, net of related tax payables.
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Asolo Hospital Service S.p.A. | 1,777 | 1,673 |
| P.S.I.S. S.r.l. | 3,891 | 3,847 |
| Ekolav S.r.l. | 172 | 174 |
| Arezzo Servizi S.c.r.l. | 403 | 151 |
| Se.Sa.Tre. S.c.r.l. in liquidazione | 5 | 785 |
| Tintoria Lombarda Divisione Sanitaria S.r.l. | - | 7,945 |
| Steril Piemonte S.c.r.l. | 651 | 1,153 |
|---|---|---|
| Iniziative Produttive Piemontesi S.r.l. | 90 | 90 |
| Gesteam S.r.l. | 313 | 313 |
| Other | 649 | 748 |
| Total | 7,951 | 16,879 |
Financial receivables are for loans granted to the companies indicated above, which are due within the year or repayable on demand. The reduction compared to 31 December 2016 is due to the cancellation, after the merger by incorporation, of the loan to Tintoria Lombarda Divisione Sanitaria S.r.l. During the year 2017 a partial repayment of Euro 500 thousand was made on the interest-bearing loan granted to Steril Piemonte S.c.r.l., while the loan to Arezzo Servizi S.c.r.l. was increased by Euro 250 thousand.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Guarantee deposits receivable | 118 | 119 |
| Due from others | 6,151 | 5,506 |
| Prepayments | 817 | 710 |
| Total | 7,086 | 6,335 |
Guarantee deposits receivable essentially relate to energy utilities and rentals.
The item Due to others includes mainly the receivables from INPS for the welfare support system and tax bonus, as per Italian Legislative Decree 66/2014 for Euro 163 thousand and VAT receivables for Euro 4,301 thousand.
The remaining balance of the Receivables due from others is made up of advances and amounts due from social security and welfare institutions and sundry, all due within 12 months.
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Bank and postal deposits | 1478 | 998 |
| Cheques | - | 1 |
| Cash al bank and in hand | 36 | 26 |
| Total | 1,514 | 1,025 |
The share capital (fully paid up) of Servizi Italia S.p.A. is equal to Euro 31,809,451, represented by 31,809,451 ordinary shares with nominal value of Euro 1.00 each.
During the year 2017, the Company purchased 53,750 treasury shares with a value of Euro 220 thousand, equivalent to 0.17% of the share capital, at the average purchase price of Euro 4.09 per share and sold 391,420 treasury shares for a value of Euro 1,840 thousand, equating to 1.23% of the share capital at an average price of Euro 4.70 per share. Following these transactions, the Company held 10,550 treasury shares amounting to 0.03% of the share capital as at 31 December 2017. Their nominal amount as at 31 December 2017, of Euro 49 thousand, was classified as a decrease to share capital for their nominal amount of Euro 11 thousand, and the value exceeding the nominal amount, totalling Euro 38 thousand, was recognised as a reduction in the share premium reserve. The value of other reserves and retained earnings is affected by the adoption of the equity method for the measurement of the shareholdings in subsidiaries, as previously described. In accordance with par. 22 of IAS 8, the accounting policies in question were amended retrospectively on the year 2016, with a decrease in the value of other reserves and retained earnings of Euro 9,356 thousand and Euro 884 thousand in the economic result of the year.
The Legal reserve and Other reserves increased due to the allocation of the 2016 profit of the Company as per the resolution of the shareholders' meeting held on 20 April 2017, along with the payment of dividends for Euro 4,713 thousand equating to 15 euro cents per share.
| (thousands of Euros) | Amount | Usability (1) | Available portion | Distributable portion |
|---|---|---|---|---|
| Share capital | 31,799 | - | - | - |
| Share premium reserve | 53,250 | A, B | 53,250 | - |
| Legal Reserve | 5,366 | B | - | - |
| Other reserves | 38,190 | A, B, C | 38,190 | 38,190 |
| Total share capital and reserves | 128,604 | 91,440 | 38,190 | |
| Profit (loss) for the year | 13,822 | |||
| Total Shareholders' Equity | 142,427 | |||
| (1) Usability: | A: for share capital increases | |||
| B: to hedge losses |
C: for distribution to shareholders
6.15.2 Possibility of use and distributable nature of the Shareholders' equity items
The share premium reserve cannot be distributed since the legal reserve has not reached the limit envisaged by Article 2430 of the Italian Civil Code.
Other reserves include Retained earnings for Euro 45,897 thousand and the negative reserve for the conversion of the financial statements in foreign currency of the subsidiaries measured with the equity method for Euro 7,707 thousand.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December 2017 | As at 31 December 2016 | ||||
|---|---|---|---|---|---|---|
| Current | Non-current | Total | Current | Non-current | Total | |
| Bank borrowing | 46,513 | 39,191 | 85,704 | 46,279 | 45,022 | 91,301 |
| Payables due to other lenders | 50 | - | 50 | 50 | - | 50 |
| Total | 46,563 | 39,191 | 85,754 | 46,329 | 45,022 | 91,351 |
The portion of the payable falling due within 12 months relating to the item Due to banks as at 31 December 2017 showed an increase compared with 31 December 2016 of Euro 234 thousand. This increase was due to the repayment of the loan instalments expired during the period, net of the instalments of the new loans expiring within 12 months.
The portion of the payable falling due beyond 12 months relating to the item Due to banks as at 31 December 2017 decreased with respect to 31 December 2016 by Euro 5,831 thousand as a result of both the payment of mortgage instalments that fell due during the period and the subscription of new loans granted by Unicredit Banca S.p.A., in the amount of Euro 10,000 thousand on 9 May 2017, with a three-year duration, and by Banca Popolare dell'Emilia Romagna S.p.A., in the amount of Euro 10,000 thousand on 23 November 2017, with a four-year duration. The subscription of the new loans was necessary in order to support the funding of the planned investments and the payment of both the deferred price for the initial share of 40% held, and the acquisition of an additional 15% stake in the Turkish company Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi, maintaining a balanced ratio of short to medium-term borrowing. The loan stipulated with Banca Nazionale del Lavoro S.p.A. requires the maintenance of a net financial position of less than 1.5 times the value of shareholders' equity and less than 2.0 times the Ebitda (covenant), conditions which had been met as at 31 December 2017. The loans stipulated with Cassa di Risparmio in Bologna S.p.A., Unicredit Banca S.p.A. and Cassa di Risparmio di Parma e Piacenza S.p.A. require the maintenance of a net financial position of less than 1.5 times the value of shareholders' equity and less than 2.5 times the Ebitda (covenant), conditions which had been met as at 31 December 2017. The loan stipulated with Banca Popolare di Milano S.Coop.a r.l. requires the maintenance of a net financial position of less than 2 times the value of shareholders' equity and less than 2 times the Ebitda (covenant), conditions which had been met as at 31 December 2017.
Amounts due to banks are shown below by maturity:
| As at 31 December |
|---|
| 2016 |
| 37,142 |
| 9,137 |
| 45,022 |
| - |
| 91,301 |
Non-current amounts due to banks are broken down by maturity as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| 1 to 2 years | 21,215 | 18,356 |
| 2 to 5 years | 17,976 | 26,666 |
| More than 5 years | - | - |
| Total | 39,191 | 45,022 |
The average effective interest rates for 2017 were as follows:
| As at 31 December | ||
|---|---|---|
| 2017 | 2016 | |
| Advances on invoices | 0.44% | 0.74% |
| Bank loan | 0.86% | 1.01% |
Payables to other lenders are broken down by maturity below:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Less than or equal to 6 months | 50 | 50 |
| 6 to 12 months | - | - |
| 1 to 5 years | - | - |
| More than 5 years | - | - |
| Total | 50 | 50 |
No amounts due to other lenders have been recorded under non-current liabilities.
The following table shows the breakdown of the amounts due to other lenders by type of rate:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Floating rate | - | - |
| Fixed rate | 50 | 50 |
| Total | 50 | 50 |
Deferred tax liabilities are broken down below by nature of the timing differences that generated them:
| (thousands of Euros) | Leasing | Property, plant and equipment |
Intangible assets |
Goodwill | Total |
|---|---|---|---|---|---|
| Deferred tax liabilities as at 1 January 2016 | 108 | 21 | 455 | 1,175 | 1,759 |
| Changes recognised in the income statement | (64) | - | (455) | 103 | (416) |
| Changes recognised in other comprehensive income | - | - | - | - | - |
| Deferred tax liabilities as at 31 December 2016 | 44 | 21 | - | 1,278 | 1,343 |
| Incorporations | - | 253 | 943 | - | 1,196 |
| Changes recognised in the income statement | (19) | (5) | (211) | 101 | (134) |
| Changes recognised in other comprehensive income | - | - | - | - | - |
| Deferred tax liabilities as at 31 December 2017 | 25 | 269 | 732 | 1,379 | 2,405 |
The increase in the deferred tax provision was due primarily to the incorporation of the surplus amounts allocated to the customer portfolios and to the real estate portfolio of Tintoria Lombarda Divisione Sanitaria S.r.l. following the merger by incorporation in 2017.
This item changed as follows:
| (thousands of Euros) | Year | |
|---|---|---|
| 2017 | 2016 | |
| Opening balance | 10,416 | 9,964 |
| Incorporations | 802 | - |
| Provision | 368 | 506 |
| Financial expenses | 85 | 129 |
| Actuarial (gains)/losses | (22) | 237 |
| Transfers (to)/from other provisions | - | - |
| (Uses) | (777) | (420) |
| Reclassification | (877) | - |
| Closing balance | 9,995 | 10,416 |
The item includes the Provision for Employee Severance Indemnity recognised to the employees of Italian group companies and identified as a defined benefit plan.
Worth mentioning about this item is the reclassification of Euro 877 thousand of the amounts accrued on the LTI-Cash 2015-2017 variable remuneration plan for Directors, Managers, Senior Managers and Executives, based on which a bonus is disbursed in 2018 if certain economic and financial targets are met and in relation to the Servizi Italia share price, as well as the severance for termination of the office accrued by the CEO.
With the approval of the financial statements as at 31 December 2017, the vesting period concluded relating to the 2015-2016-2017 LTI Cash Plan for Directors with special duties identified by the Board of Directors, Managers with strategic responsibilities, Senior Managers and special / key figures. The Remuneration Committee, together with the Board of Statutory Auditors, on March 13, 2018, provided in-depth disclosure and support to the Board of Directors, highlighting the achievement of the target performance expected for the group net result cumulated during the vesting period. The Board of Directors approved the disbursement of the bonus to the Beneficiaries, within the terms and conditions established in the regulation, of the target monetary premium, which, moreover, benefited from the positive value of the Total Shareholder Return linked to the value of the Company's share and to the dividends distributed. The amount set aside during the vesting period (including the company's social security contributions for each beneficiary), for Euro 877 thousand and allocated to the 2015-2016-2017 LTI Cash Plan, has therefore been expensed in the 2017 financial statements.
The valuation techniques were carried out on the basis of the hypotheses described by the following table:
| Year | ||
|---|---|---|
| 2017 | 2016 | |
| Technical annual discounting back rate | 0.88% | 0.86% |
| Annual inflation rate | 1.50% | 1.50% |
| Annual growth rate of the severance indemnity | 2.63% | 2.63% |
With regard to the discount rate, the iBoxx Eurozone Corporates AA 7 - 10 index as of the valuation date was taken as reference for the valuation of this parameter. The duration of the liability is 10 years.
Further to the supplementary welfare reform as per Italian Legislative Decree No. 252 dated 5 December 2005, for employees who have decided to allocate the indemnity as from 1 January 2007 to the INPS Treasury Fund, the advances as per Article 2120 of the Italian Civil Code are calculated on the entire value of the severance indemnity accrued by the worker.
These advances are disbursed by the employer within the limits of the capacity of the amounts accrued by virtue of the provisions made up until 31 December 2006. If the amount of the advance is not covered by the amount accrued care of the employer, the difference is disbursed by the Treasury Fund set up care of INPS.
With regard to the matters set forth above and for just the employees who have complied with the Treasury Fund and who have not requested advances on the indemnity, corrections have been made in the actuarial valuations increasing the requested percentage to be applied to the Fund accrued as at 31 December 2006 and revalued until the calculation date.
6.18.3 Sensitivity analysis
In accordance with the matters required by the reviewed version of IAS 19, sensitivity analysis is presented below in line with the change in the main actuarial hypotheses included in the calculation model.
| (thousands of Euros) | Discount rate | Inflation rate | Duration | |||
|---|---|---|---|---|---|---|
| 0.50% | -0.50% | 0.25% | -0.25% | +1 year | -1 year | |
| Change in liabilities | (341) | 363 | 102 | (100) | (119) | 116 |
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Opening balance | 124 | 151 |
| Provisions | - | - |
| Uses | (4) | (27) |
| Other changes | - | - |
| Closing balance | 120 | 124 |
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Payable due to Area S.r.l. | 1,000 | - |
| Payable to Steritek S.p.A. shareholders | 225 | - |
| Other payables | - | 57 |
| Total | 1,225 | 57 |
The increase, compared with 31 December 2016, is due to recognition of the instalment of price connected to the acquisition of the 70% of the share capital of Steritek S.p.A. and the payable due to Area S.r.l. for the acquisition of shares in Brixia S.r.l.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Due to suppliers | 57,099 | 46,648 |
| Due to subsidiaries | 4,892 | 5,344 |
| Due to associates | 2,877 | 2,649 |
| Due to parent companies | 3,904 | 4,259 |
| Payables to companies under the control of the parent companies | 913 | 293 |
| Total | 69,685 | 59,193 |
The balance as at 31 December 2017 refers entirely to trade payables due within 12 months.
The balance as at 31 December 2017 includes trade payables due within 12 months to the subsidiaries San Martino 2000 S.c.r.l for Euro 2,468 thousand, Se.Sa.Tre S.c.r.l. in liquidazione for Euro 2,270 thousand and Steritek S.p.A. for Euro 154 thousand.
The balance at 31 December 2017 consists primarily of trade payables to Società Steril Piemonte S.c.r.l. for Euro 1,107 thousand, Ekolav S.r.l. for Euro 558 thousand, AMG S.r.l. for Euro 542 thousand, Arezzo Servizi S.c.r.l. for Euro 253 thousand, Piemonte Servizi Sanitari S.c.r.l. per Euro 217 thousand, Co.Se.S. S.c.r.l. for Euro 154 thousand and PSIS S.r.l. for Euro 46 thousand.
Trade payables due to the parent company Coopservice S.Coop.p.A. amounted to Euro 3,904 thousand.
Trade payables to companies under the control of the parent company Coopservice S.Coop.p.A. amounted to Euro 913 thousand of which Euro 557 thousand due to Focus S.p.A., Euro 248 thousand due to Archimede S.p.A., Euro 106 thousand due to Gesta S.p.A. and Euro 2 thousand due to Adpersonam S.r.l.
With regard to 2017, the balance is stated in the item "Current tax receivables" since the net value is a credit.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Payables to shareholders Ankateks Turizm Inşaat Tekstil Temizleme San. Ve Tic. Ltd. Şti | - | 7,625 |
| Payable to Area S.r.l. | 1,000 | - |
| Payable to Steritek S.p.A. shareholders | 225 | - |
| Payable to Finanza e Progetti S.p.A. | 2,460 | - |
| Total | 3,685 | 7,625 |
The change in the item is connected, in particular, with the balance of the amount due for the payment of the deferred price for the purchase of the 40.0% shareholding in Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi. The item takes into account the payable to Finanza e Progetti S.p.A. for the capital increase of Euro 2,460 thousand, the payable for the instalment of price connected to the acquisition of the 70% of the share capital of Steritek S.p.A.. and the payable due to Area S.r.l. for the acquisition of shares in Brixia S.r.l.
The table below provides a breakdown of other current payables.
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Accrued liabilities | 199 | 115 |
| Deferred income | 435 | 612 |
| Social security contributions | 4,742 | 4,427 |
| Other payables | 10,678 | 9,887 |
| Total | 16,054 | 15,041 |
Amounts due to social security institutions include contributions to INPS/INAIL/INPDAI (National Social Security Institution/Italian Institution for Insurance Against Workplace Accidents/National Welfare Institute for Industrial Managerial Employees) totalling Euro 4,742 thousand, all falling due within the year.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Due to employees | 8,183 | 7,818 |
| Employee/professional IRPEF (personal income tax) payable | 2,160 | 1,843 |
| Other payables | 335 | 226 |
| Total | 10,678 | 9,887 |
The table below lists the guarantees given by the company, existing as at 31 December 2017:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Guarantees issued by banks and insurance companies for tenders | 59,397 | 63,841 |
| Guarantees issued by banks and insurance companies for lease agreements and utilities | 602 | 603 |
| Guarantees issued by banks and insurance companies in favour of third parties | 42,821 | 38,331 |
| Owned assets held by third parties | 49 | 49 |
| Pledge on Asolo Hospital Service shares to back loans granted to the Project Companies | 464 | 464 |
| Pledge on Sesamo shares to back loans granted to the Project Companies | 237 | 237 |
| Pledge on Prog.Este shares to back loans granted to the Project Companies | 1,212 | 1,212 |
| Pledge on Progeni shares to back loans granted to the Project Companies | 380 | 380 |
| Total | 105,162 | 105,117 |
Guarantees issued by banks and insurance companies for tenders: these were issued on behalf of the company in favour of customers or potential customers for participation in tenders, to guarantee the correct execution of the service.
Guarantees issued by banks and insurance companies for lease agreements and utilities: these were issued on behalf of the company to guarantee the payment of lease instalments and invoices for the supply of electricity and gas.
Guarantees issued by banks and insurance companies in favour of third parties: these are guarantees issued to back the payment of the company's portion of the project financing and guarantees issued in favour of PSIS S.r.l., Steril Piemonte S.c.r.l., I.P.P. S.r.l., Ekolav S.r.l., Saniservice Sh.p.k. and Shubhram Hospital Solutions Private Limited to back loan agreements.
Mortgage loans on owned property: the company has not granted liens on owned property and has no mortgage loans.
Pledge on shares Asolo Hospital Service, Sesamo, Progeni and Prog.Este. to back the loans granted to project companies: this pledge was granted to the banks providing the project financing on the shares representing the company's shareholding in the special purpose entity.
The item is broken down as follows by business:
| (thousands of Euros) | Year ended as at 31 December | ||
|---|---|---|---|
| 2017 | 2016 | ||
| Wash-hire | 150,151 | 141,126 | |
| Steril B | 20,479 | 19,165 | |
| Steril C | 40,569 | 38,466 | |
| Total | 211,199 | 198,757 |
The revenues of Servizi Italia rose by 6.3% since last year. This increase is primarily due to the effectof the merger by incorporation of Tintoria Lombarda Divisione Sanitaria S.r.l. on the washhire line and of the merger by incorporation of Servizi Italia Medical S.r.l. on the linen sterilisation line. Turnover in the surgical instrument sterilisation segment grew by 5.5% compared to the previous year. This increase is due primarily to the gradual increase in turnover from customers such as Azienda Ospedaliera Careggi (Florence), ASST of Valle Olona for the hospital of Busto Arsizio and Azienda Ospedaliera Universitaria Policlinico Messina "G. Martino". As regards the revenues of the linen sterilisation line, the increase in turnover for disposable supplies to "Ente per la Gestione Accentrata dei Servizi Condivisi di Udine" has positively impacted the results.
| (thousands of Euros) | 31 December 2017 | % | 31 December 2016 | % | Changes |
|---|---|---|---|---|---|
| Abruzzo | 3 | - | 5 | - | - |
| Basilicata | 430 | 0.2% | 415 | 0.2% | 3.6% |
| Campania | 55 | - | 50 | - | 10.0% |
| Emilia Romagna | 31,732 | 15.0% | 32,098 | 16.2% | -1.1% |
| Friuli Venezia Giulia | 19,624 | 9.3% | 17,658 | 8.9% | 11.1% |
|---|---|---|---|---|---|
| Latium | 11,988 | 5.7% | 11,676 | 5.9% | 2.7% |
| Liguria | 26,809 | 12.7% | 28,183 | 14.2% | -4.9% |
| Lombardy | 50,958 | 24.1% | 40,584 | 20.4% | 25.6% |
| Marches | 3,786 | 1.8% | 3,481 | 1.8% | 8.8% |
| Piedmont | 6,628 | 3.1% | 7,620 | 3.8% | -13.0% |
| Sicily | 3,782 | 1.8% | 3,217 | 1.6% | 17.6% |
| Tuscany | 26,936 | 12.8% | 26,089 | 13.1% | 3.2% |
| Trentino Alto Adige | 6,024 | 2.9% | 5,665 | 2.9% | 6.3% |
| Umbria | 258 | 0.1% | 253 | 0.1% | 2.0% |
| Valle D'Aosta | 499 | 0.2% | 1,031 | 0.5% | -51.6% |
| Veneto | 21,223 | 10.0% | 20,564 | 10.3% | 3.2% |
| NON-EEC revenues | 464 | 0.2% | 168 | 0.1% | 176.2% |
| Total | 211,199 | 100.0% | 198,757 | 100.0% | 6.3% |
This balance comprises recoveries of costs and personnel attributable to third parties for Euro 5,567 thousand, charge-backs of Euro 2,446 thousand for consortium costs, non-recurring income of Euro 1,006 thousand, ordinary capital gains from disposal of assets for Euro 514 thousand and other income of Euro 1,174 thousand.
Consumption of raw materials, amounting to Euro 20,229 thousand, increased with respect to the previous year (Euro 18,213 thousand in 2016). The increase in this item is due particularly to the increase in the purchase of the new disposable supply for Ente per la Gestione Accentrata dei Servizi Condivisi di Udine and the effect of the merger by incorporation of Servizi Italia Medical S.r.l.
The item is broken down as follows:
| (thousands of Euros) | Year ended as at 31 December | |||
|---|---|---|---|---|
| 2017 | 2016 | |||
| External laundering and other industrial services | (19,071) | (17,088) | ||
| Travel and transport | (11,115) | (10,980) | ||
| Utilities | (8,709) | (9,167) | ||
| Administrative costs | (1,868) | (2,186) | ||
| Consortium and sales costs | (19,930) | (20,203) | ||
| Personnel expense | (1,372) | (1,318) | ||
| Maintenance | (5,060) | (4,444) | ||
| Use of third-party assets | (6,581) | (7,035) | ||
| Other services | (2,190) | (1,501) | ||
| Total | (75,896) | (73,922) |
The increase in the item costs for services was basically linked to the effect of the merger of Tintoria Lombarda Divisione Sanitaria S.r.l. and Servizi Italia Medical S.r.l.
External laundering and other industrial services rose by Euro 1,983 thousand compared to 2016. The item was impacted by the increase in the external laundry service and the linen store service (Euro 2,468 thousand) for customers of the former company Tintoria Lombarda Divisione Sanitaria S.r.l. These increases are offset by a contraction in the costs of the surgical instrument sterilisation service at the facilities of third parties amounting to Euro 239 thousand and of the personnel of third parties amounting to Euro 212 thousand.
Travel and transport costs increased by Euro 135 thousand. The increase is to be attributed to the management of the new customers acquired with the merger of Tintoria Lombarda Divisione Sanitaria S.r.l., limited by the termination of some contracts and the reduction in costs for the reorganisation of some sections and a reduction in tariffs.
Costs of utilities fell 5% from Euro 9,167 thousand in 2016 to Euro 8,709 thousand in 2017. This decrease is due to a reduction in gas tariffs for the renegotiation of contracts and a contraction in consumption made possible by greater production efficiencies.
Administrative costs fell by Euro 318 thousand compared to 2016, due to lower costs for extraordinary transactions. Costs for the acquisition of the company Tintoria Lombarda Divisione Sanitaria S.r.l. impacted the previous year.
Consortium and sales costs were down by Euro 273 thousand from Euro 20,203 thousand as at 31 December 2016 to Euro 19,930 thousand as at 31 December 2017. The decrease in the item is mainly due to the lower consortium costs of the subsidiary San Martino 2000 S.c.r.l. for the management of the service at IRCCS Azienda Ospedaliero Universitaria San Martino of Genoa.
The item maintenance was mainly impacted by the increase in the maintenance of surgical instruments, amounting to Euro 255 thousand.
The item 'use of third party assets' showed a decrease of Euro 454 thousand. This reduction is connected, in particular, with the new contracts with some customers, which do not make provision for the supply of anti-decubitus mattresses.
The item is broken down as follows:
| (thousands of Euros) | Year ended as at 31 December | |||
|---|---|---|---|---|
| 2017 | 2016 | |||
| Costs for directors' fees | (1,240) | (1,284) | ||
| Salaries and wages | (46,239) | (42,949) | ||
| Temporary work | (2,465) | (1,303) | ||
| Social security charges | (14,251) | (13,399) | ||
| Employee severance indemnity | (3,039) | (2,900) | ||
| Other costs | (242) | (229) | ||
| Total | (67,476) | (62,064) |
Personnel expense increased by Euro 5,412 thousand from Euro 62,064 thousand in 2016 to Euro 67,476 thousand in 2017. The increase in personnel expense was impacted, as regards the Italian area, by the restructuring of the production sites in the North-West, where a plan was drafted for the handling of excess staff, following the termination of activities of the Barbariga (BS) site, which was confirmed through the transfer of personnel to the neighbouring production sites and incentivised exits.
The table below shows the average breakdown of personnel:
| As at 31 December | ||
|---|---|---|
| 2017 | 2016 | |
| Executives | 8 | 8 |
| Middle managers | 25 | 20 |
| White-collar staff | 155 | 151 |
| Blue-collar staff | 1,663 | 1,612 |
| Total | 1,851 | 1,791 |
The item is broken down as follows:
| (thousands of Euros) | Year ended as at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Tax-related expense | (363) | (377) |
| Contingent liabilities | (388) | (34) |
| Membership fees | (185) | (175) |
| Gifts to customers and employees | (128) | (113) |
| Other | (705) | (376) |
| Total | (1,769) | (1,075) |
Contingent liabilities and tax expense are composed of one-off costs for the payment of registration tax and accessory charges for the acquisition of Lavanderia Industriale Z.B.M. S.p.A. for Euro 361 thousand. In the year also the indemnity of Euro 408 thousand was recorded, due to Focus S.p.A. in connection with the renovation of the complex in Castellina di Soragna (PR).
The item is broken down as follows:
| (thousands of Euros) | Year ended as at 31 December | |||
|---|---|---|---|---|
| 2017 | 2016 | |||
| Amortisation of intangible assets | (1,579) | (1,253) | ||
| Depreciation of property, plant and equipment | (40,582) | (37,164) | ||
| Impairment and provisions | (843) | (562) | ||
| Total | (43,004) | (38,979) |
The change in amortisation of intangible assets is due to the impact of the customer portfolio of Tintoria Lombarda Divisione Sanitaria S.r.l. The increase in the item depreciation of property, plant and equipment, up from Euro 37,164 thousand to Euro 40,582 thousand, is due primarily to the investments in linen owing to the increase in equipment at the new customers.
The increase in the item impairment and provisions is due to more allocations for the write-down of the receivables from customers.
The item is broken down as follows:
| (thousands of Euros) | Year ended as at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Bank interest income | - | 1 |
| Default interest | 742 | 634 |
| Interest income on loans to third-party companies | 692 | 594 |
| Exchange rate earnings and losses | 145 | - |
| Other financial income | 172 | 114 |
| Total | 1,751 | 1,343 |
Interest on arrears recorded an increase due to the delays accumulated by some private customers. Interest income on loans to third party companies rose as a result of the new loans granted to the companies Saniservice Sh.p.K. and Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi. The item other financial income mainly includes interest income on tax refunds of previous years.
The item is broken down as follows:
| (thousands of Euros) | Year ended as at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Interest expense and bank commission | (809) | (1,040) |
| Interest and expense to other lenders | (240) | (255) |
| Financial expense on severance indemnities | (87) | (131) |
| Other financial expenses | (62) | (147) |
| Total | (1,198) | (1,573) |
The fall in the item "Interest expense and bank commission" is essentially linked to the reduction in the rates applied by banks to the credit facilities used. The decrease in the item "Interest and expense to other lenders" is a result of the reduction in the spreads renegotiated with the banks.
The item includes a gain of Euro 1,212 thousand relating to the measurement at fair value of the 40% share in the Turkish company Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi, which in turn controls the company Ergülteks Temizlik Tekstil Ltd. Sti. (Ankara Group), compared to the cost value posted previously, consequently to the acquisition of control and the consequent application of the equity method for the recognition of the equity investment. The item also includes dividends collected in 2017 for Euro 670 thousand. More specifically, Euro 317 thousand were collected from the subsidiary Ankateks Turizm İnsaat Tekstil Temizleme Sanayi VE, Euro 157 thousand from the investee company Sesamo S.p.A., Euro 132 thousand from the investee company Prosa S.p.A. and Euro 62 thousand from the subsidiary AMG S.rl.
The item is broken down as follows:
| (thousands of Euros) | Year ended as at 31 December | |||
|---|---|---|---|---|
| 2017 | 2016 | |||
| Current taxes | (2,699) | (3,089) | ||
| Deferred tax assets/(liabilities) | 251 | 247 | ||
| Total | (2,448) | (2,842) |
The incidence of the taxes on the pre-tax result is reconciled with the theoretical rate in the table below:
| (thousands of Euros) | Year ended as at 31 December | ||||
|---|---|---|---|---|---|
| 2017 | Incidence | 2016 | Incidence | ||
| IRES (company earnings tax) reconciliation | |||||
| Profit before tax from Income statement | 16,270 | 13,838 | |||
| Theoretical taxes | 3,905 | 24.0% | 3,806 | 27.5% | |
| Tax effects of the permanent differences: | |||||
| on increases | 794 | 5.4% | 552 | 4.0% | |
| on decreases | (3,486) | -23.7% | (2,755) | -19.9% | |
| foreign taxes | 36 | 0.2% | - | - | |
| substitute taxes | 458 | 3.1% | 298 | 2.2% | |
| Total effective IRES taxes | 1,707 | 10.5% | 2,143 | 15.5% | |
| IRAP (regional business tax) | 741 | 4.6% | 699 | 5.1% | |
| Total effective IRES and IRAP taxes | 2,448 | 15.0% | 2,842 | 20.5% |
The tax rate declined by 5.5 percentage points from 20.5% in 2016 to 15.0% in 2017. The decrease in tax burden was mainly determined by the decrease in the IRES rate and by the benefit deriving from the deduction from the taxable income of the so-called "super-depreciations", as set forth in the Budget Law of 2017 (Law 232/2016).
The transactions of Servizi Italia S.p.A. related parties are conducted in compliance with the applicable Regulations governing transactions with related parties and concern primarily:
From an economic, equity and financial point of view, the group of main transactions constitute ordinary transactions conducted under conditions equivalent to market or standard conditions and are regulated by the appropriate contracts. These transactions are basically a set of combined operations of a homogeneous nature carried out starting from the beginning of the reference year, not qualifiable individually as being of greater importance, not even their combination, activated in the reference year. The amount exposed in the financial statements, in the reference year was generated by the renewal of existing contracts or contracts stipulated in the year.
Income statement, statement of financial position and financial transactions with related companies in 2017 are presented below:
| (thousands of Euros) | 31 December 2017 | ||||||
|---|---|---|---|---|---|---|---|
| Purchases of |
|||||||
| Economic transactions | Sale of goods and services |
Purchases of goods and services |
Personnel expense |
property, plant and equipment and intangible assets |
Other costs |
Income from equity investments |
Financial income |
| Coopservice S.Coop.p.A. (parent company) | 123 | 10,279 | - | 1 | - | - | - |
| Aurum S.p.A. (parent company) | - | - | - | - | - | - | - |
| Consorzio San Martino 2000 S.c.r.l. (subsidiary) | 3,895 | 4,858 | - | - | - | - | - |
| Consozio Se.Sa.Tre. S.c.r.l. in liquidazione (subsidiary) | 5,848 | 6,865 | - | - | - | - | 5 |
| Steritek S.p.A. (subsidiary) | - | 105 | - | - | - | - | - |
| Ankateks Turizm İnsaat Tekstil Temizleme Sanayi VE (subsidiary) |
- | - | - | - | - | 317 | 66 |
| SRI Empreendimentos e Participacoes LTDA (subsidiary) | 788 | - | - | - | - | - | - |
| Brixia S.r.l. (associate) | 3,713 | - | - | - | - | - | - |
| Arezzo Servizi S.c.r.l. (associate) | 19 | 1,160 | - | 1 | - | - | 3 |
| Consorzio Co.Se.S. (associate) | - | 573 | - | - | - | - | - |
| SE.STE.RO. S.r.l. in liquidazione (associate) | 15 | - | - | - | - | - | - |
| PSIS S.r.l. (associate) | 330 | 3 | - | 25 | - | - | 44 |
| Amg S.r.l. (associate) | 308 | 650 | - | - | - | 62 | - |
| Ekolav S.r.l. (associate) | 56 | 1,281 | - | 1 | - | - | 2 |
| Steril Piemonte S.c.r.l. (associate) | 309 | 1,361 | - | - | - | - | 1 |
| Piemonte Servizi Sanitaria S.c.r.l. (associate) | - | 336 | - | - | - | - | - |
| Iniziative Produttive Piemontesi S.r.l. (associate) | 23 | 39 | - | 1 | - | - | - |
| SAS Sterilizasyon Servisleri A.Ş. (associate) | - | - | - | - | - | - | - |
| Shubhram Hospital Solutions Private Limited (associate) | - | - | - | - | - | - | - |
| Saniservice Sh.p.k. (associate) | 645 | - | - | - | - | - | 480 |
| Servizi Sanitari Integrati Marocco S.a.r.l. (associate) | - | - | - | - | - | - | - |
| Finanza & Progetti (associate) | 58 | - | - | - | - | - | - |
| Elettrica Gover S.r.l. (affiliated) | - | 12 | - | - | - | - | - |
| Focus S.p.A. (affiliated) | - | 2,403 | - | - | 422 | - | - |
| Archimede S.p.A. (affiliated) | - | 3 | 1,472 | - | - | - | - |
| Gesta S.p.A. (affiliated) | 7 | - | - | 870 | - | - | - |
| New Fleur S.r.l. (affiliated) | 28 | 1,560 | - | 1 | - | - | - |
| Ad Personam S.r.l. (affiliated) | - | 2 | - | - | - | - | - |
| Padana Emmedue S.r.l. (related party) | - | 101 | - | - | - | - | - |
| Everest S.r.l. (related party) | - | 286 | - | - | 2 | - | - |
| Total | 16,165 | 31,877 | 1,472 | 900 | 424 | 379 | 601 |
| (thousands of Euros) | 31 December 2016 | ||||||
|---|---|---|---|---|---|---|---|
| Economic transactions | Sale of goods and services |
Purchases of goods and services |
Personnel expense |
Purchases of property, plant and equipment and intangible assets |
Other costs |
Income from equity investments |
Financial income |
| Coopservice S.Coop.p.A. (parent company) | 201 | 10,296 | - | 8 | - | - | - |
| Aurum S.p.A. (parent company) | - | - | - | - | - | - | - |
| Consorzio San Martino 2000 S.c.r.l. (subsidiary) | 3,874 | 5,147 | - | - | - | - | - |
| Consozio Se.Sa.Tre. S.c.r.l. (subsidiary) | 5,973 | 6,901 | - | - | - | - | 14 |
| Servizi Italia Medical S.r.l. (subsidiary) | 147 | 1,294 | - | 1 | - | - | - |
| Tintoria Lombarda Divisione Sanitaria S.r.l. (subsidiary) | 14 | 227 | - | - | - | - | 45 |
| SRI Empreendimentos e Participacoes LTDA (subsidiary) | 147 | - | - | - | - | - | - |
| Centro Italia Servizi S.r.l. in liquidazione (associate) | 3 | 156 | - | - | - | 182 | - |
| Arezzo Servizi S.c.r.l. (associate) | 17 | 733 | - | - | - | - | 1 |
| Consorzio Co.Se.S. (associate) | - | 695 | - | - | - | - | - |
| SE.STE.RO. S.r.l. in liquidazione (associate) | 2 | - | - | - | - | - | - |
| PSIS S.r.l. (associate) | 123 | 14 | - | 32 | - | - | 47 |
| Amg S.r.l. (associate) | 299 | 701 | - | - | - | - | 1 |
| Ekolav S.r.l. (associate) | 7 | 1,273 | - | 3 | - | - | 2 |
| Steril Piemonte S.c.r.l. (associate) | 318 | 1,393 | - | 8 | - | - | 3 |
| Piemonte Servizi Sanitaria S.c.r.l. (associate) | - | 355 | - | - | - | - | - |
| Iniziative Produttive Piemontesi S.r.l. (associate) | 8 | 369 | - | 3 | - | - | - |
| SAS Sterilizasyon Servisleri A.Ş. (associate) | - | - | - | - | - | - | - |
| Shubhram Hospital Solutions Private Limited (associate) | - | - | - | - | - | - | - |
| Ankateks Turizm Insaat Tekstil Temizleme Sanayi Ve (associate) | - | - | - | - | - | - | 47 |
| Saniservice Sh.p.k. (associate) | 287 | - | - | - | - | - | 185 |
| Finanza & Progetti (associate) | 69 | - | - | - | - | - | - |
| Elettrica Gover S.r.l. (affiliated) | - | 4 | - | - | - | - | - |
| Focus S.p.A. (affiliated) | - | 2,736 | - | - | 13 | - | - |
| Archimede S.p.A. (affiliated) | - | - | 918 | - | - | - | - |
| Gesta S.p.A. (affiliated) | 1 | - | - | - | - | - | - |
| New Fleur S.r.l. (affiliated) | 25 | 974 | - | - | - | - | - |
| Ad Personam S.r.l. (affiliated) | - | 13 | - | - | - | - | - |
| Padana Emmedue S.r.l. (related party) | - | 109 | - | - | - | - | - |
| Padana Emmedue S.p.A. (related party) | - | 287 | - | - | - | - | - |
| Total | 11,515 | 33,677 | 918 | 55 | 13 | 182 | 345 |
Aside from the figures shown above, as at 31 December 2017 income statement transactions with related parties include directors' fees of Euro 1,308 thousand and executive personnel expense of Euro 1,703 thousand (including Euro 270 thousand as settlement agreement for the termination of employment of Mr. Marco Marchetti). As at 31 December 2016, directors' fees amounted to Euro 1,352 thousand, while executive personnel expense came to Euro 1,487 thousand.
| (thousands of Euros) | 31 December 2017 | ||||
|---|---|---|---|---|---|
| Statement of financial position | Amount of trade receivables |
Amount of trade payables |
Amount of financial receivables |
Amount of financial payables |
Amount of other liabilities |
| Coopservice S.Coop.p.A. (parent company) | 184 | 3,904 | - | - | - |
| Aurum S.p.A. (parent company) | - | - | - | - | - |
| Consorzio San Martino 2000 S.c.r.l. (subsidiary) | 4,422 | 2,468 | - | - | - |
| Consozio Se.Sa.Tre. S.c.r.l. in liquidazione (subsidiary) | 4,529 | 2,270 | 5 | - | - |
| Steritek S.p.A. (subsidiary) | - | 154 | - | - | - |
| Ankateks Turizm İnsaat Tekstil Temizleme Sanayi VE (subsidiary) | 59 | - | 660 | - | - |
| SRI Empreendimentos e Participacoes LTDA (subsidiary) | 935 | - | - | - | - |
| Brixia S.r.l. (associate) | 1,371 | - | - | - | - |
| Arezzo Servizi S.c.r.l. (associate) | 6 | 253 | 403 | - | - |
| Consorzio Co.Se.S. (associate) | - | 154 | - | - | - |
| SE.STE.RO. S.r.l. in liquidazione (associate) PSIS S.r.l. (associate) |
- 342 |
- 46 |
- 3,891 |
- - |
- - |
| Amg S.r.l. (associate) | 252 | 542 | - | - | - |
| Ekolav S.r.l. (associate) | 71 | 558 | 172 | - | - |
| Steril Piemonte S.c.r.l. (associate) | 279 | 1,107 | 651 | - | - |
| Piemonte Servizi Sanitaria S.c.r.l. (associate) | - | 217 | - | - | - |
| Iniziative Produttive Piemontesi S.r.l. (associate) | - | - | 90 | - | - |
| SAS Sterilizasyon Servisleri A.Ş. (associate) | - | - | - | - | - |
| Shubhram Hospital Solutions Private Limited (associate) | 11 | - | - | - | - |
| Saniservice Sh.p.k. (associate) | 811 | - | 4,666 | - | - |
| Servizi Sanitari Integrati Marocco S.a.r.l. (associate) | - | - | 5 | - | - |
| Finanza & Progetti (associate) | 127 | - | - | 2,460 | - |
| Elettrica Gover S.r.l. (affiliated) | - | 4 | - | - | - |
| Focus S.p.A. (affiliated) | - | 557 | - | - | - |
| Archimede S.p.A. (affiliated) | - | 248 | - | - | - |
| Gesta S.p.A. (affiliated) | 1 | 106 | - | - | - |
| New Fleur S.r.l. (affiliated) | 122 | 1,005 | - | - | - |
| Ad Personam S.r.l. (affiliated) | - | 2 | - | - | - |
| Padana Emmedue S.r.l. (related party) | - | 41 | - | - | - |
| Everest S.r.l. (related party) | - | 235 | - | - | - |
| Total | 13,522 | 13,871 | 10,543 | 2,460 | - |
| (thousands of Euros) | 31 December 2016 | |||||
|---|---|---|---|---|---|---|
| Statement of financial position | Amount of trade receivables |
Amount of trade payables |
Amount of financial receivables |
Amount of financial payables |
Amount of other liabilities |
|
| Coopservice S.Coop.p.A. (parent company) | 366 | 4,259 | - | - | - | |
| Aurum S.p.A. (parent company) | - | - | - | - | - | |
| Consorzio San Martino 2000 S.c.r.l. (subsidiary) | 2,276 | 1,053 | - | - | - | |
| Consozio Se.Sa.Tre. S.c.r.l. (subsidiary) | 7,548 | 2,199 | 785 | - | - | |
| Servizi Italia Medical S.r.l. (subsidiary) | 73 | 899 | - | - | - | |
| Tintoria Lombarda Divisione Sanitaria S.r.l. (subsidiary) | 14 | 1,192 | 7,945 | - | - | |
| SRI Empreendimentos e Participacoes LTDA (subsidiary) | 147 | - | - | - | - | |
| Centro Italia Servizi S.r.l. in liquidazione (associate) | - | - | - | - | - | |
| Arezzo Servizi S.c.r.l. (associate) | 9 | 192 | 150 | - | - | |
| Consorzio Co.Se.S. (associate) | - | 234 | - | - | - |
| SE.STE.RO. S.r.l. in liquidazione (associate) | 82 | 418 | - | - | - |
|---|---|---|---|---|---|
| PSIS S.r.l. (associate) | 150 | 11 | 3,847 | - | - |
| Amg S.r.l. (associate) | 144 | 347 | 1 | - | - |
| Ekolav S.r.l. (associate) | 13 | 481 | 174 | - | - |
| Steril Piemonte S.c.r.l. (associate) | 160 | 671 | 1,153 | - | - |
| Piemonte Servizi Sanitaria S.c.r.l. (associate) | - | 135 | - | - | - |
| Iniziative Produttive Piemontesi S.r.l. (associate) | 9 | 161 | 91 | - | - |
| SAS Sterilizasyon Servisleri A.Ş. (associate) | - | - | - | - | - |
| Shubhram Hospital Solutions Private Limited (associate) | 11 | - | - | - | - |
| Ankateks Turizm Insaat Tekstil Temizleme Sanayi Ve (associate) | - | - | 857 | - | - |
| Saniservice Sh.p.k. (associate) | 249 | - | 4,143 | - | - |
| Finanza & Progetti (associate) | 69 | - | - | - | - |
| Elettrica Gover S.r.l. (affiliated) | - | 4 | - | - | - |
| Focus S.p.A. (affiliated) | - | 97 | - | - | - |
| Archimede S.p.A. (affiliated) | - | 190 | - | - | - |
| Gesta S.p.A. (affiliated) | 2 | - | - | - | - |
| New Fleur S.r.l. (affiliated) | 82 | 645 | - | - | - |
| Ad Personam S.r.l. (affiliated) | - | 6 | - | - | - |
| Padana Emmedue S.r.l. (related party) | - | 43 | - | - | - |
| Padana Emmedue S.p.A. (related party) | - | 263 | - | - | - |
| Total | 11,404 | 13,500 | 19,146 | - | - |
Shown below are the most significant relationships broken down by Companies where the transactions related to the individual contracts actually fall within the Company's ordinary business:
Revenues from sales and the associated trade receivables as at 31 December 2017 refer primarily to linen and textile washing services within the cleaning activities provided to the parent company.
Servizi Italia S.p.A. purchases from the parent company (i) road-based transport services for textiles and/or surgical instruments, for Euro 8,250 thousand; (ii) services for the management of wardrobes at customer sites, for Euro 1,028 thousand; (iii) use of third party staff for Euro 12 thousand; (iv) technical cleaning services that are carried out at some production/operating sites of Servizi Italia and surveillance/security services provided to some facilities, through night patrols and alarm-based interventions, for Euro 720 thousand.
As at 31 December 2017, revenues from the sale of goods and services and related trade receivables due from Consorzio San Martino 2000 S.c.r.l. refer to the services provided by Servizi Italia S.p.A. for the performance of the contract existing with the IRCCS Az. Osp. Univ. San Martino of Genoa. By contrast, purchase costs and the related trade payables regard the chargeback of costs incurred by the Consortium, which are divided amongst the shareholders on the basis of their shareholdings.
As at 31 December 2017, the revenue of Consorzio Se.Sa.Tre. S.c.r.l. in liquidazione refers to the services provided by Servizi Italia S.p.A. for the performance of the existing contract with Azienda ULSS n. 2 Marca Trevigiana of the Veneto Region. By contrast, purchase costs and the related trade payables regard the charge-back of costs incurred by the Consortium, which are divided amongst the shareholders on the basis of their shareholdings. The value of the financial receivables refers to the portion of the interest accrued during the year for the interest-bearing loan that had been granted pro rata by the shareholders Servizi Italia S.p.A. and Servizi Ospedalieri S.p.A., in order to guarantee to the Consortium the economic means necessary for carrying out its business activities, which was extinguished on 31 December 2017. With the end of the previous tender contract executed with Azienda ULSS no. 2 Marca Trevigiana, Consorzio Se.Sa.Tre. S.c.r.l. with deed of 18 December 2017 was put in liquidation as of 1 January 2018.
The company Steritek S.p.A., acquired by Servizi Italia S.p.A. on 5 September 2017, is a leading Italian operator in providing validation services and systematic control of sterilisation processes and of surgical instrument washing systems. The costs and trade payables due in relation to the subsidiary Steritek S.p.A. refer to the validation services for the sterilisation centres.
At 31 December 2017, financial income of Euro 66 thousand referred to the interest income accrued and not yet paid by the company Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi for the loan granted to the subsidiary for Euro 660 thousand, while the income from equity investments of Euro 317 thousand refers to the dividends collected from the subsidiary.
At 31 December 2017, revenues from the sale of goods and services, and related trade receivables due to SRI Empreendimentos e Participacoes LTDA, refer to charge-backs of the seconded personnel working at the subsidiary and the charge-back of the costs for services referring to the Formal Notice of Assessments of 30 September 2016.
As at 31 December 2017, the revenues from the sale of goods and services to Brixia S.r.l., related primarily to the wash-hire service at ASST Spedali Civili of Brescia, amounting to Euro 3,713 thousand.
The company's purpose is the provision of wash-hire services to "Aziende dell'Area Vasta Sud-Est" and, to a lesser extent, to the hospital AUSL of Arezzo. As at 31 December 2017, revenues from sales of goods and services and the related trade receivables due from Arezzo Servizi S.c.r.l. refer to the sale of assets used in the wash-hire business. On the other hand, purchase costs and the relative trade payables regard the charge-back of costs incurred by Arezzo Servizi S.c.r.l., which are divided amongst the shareholders on the basis of their shareholdings. The financial receivable is for a Euro 403 thousand loan granted to the associate.
As at 31 December 2017, revenues from the sale of goods and services and purchase costs concerning Consorzio CO.SE.S S.c.r.l. refer to the charge-back of costs incurred by the Company and by the Consortium for surgical instrument sterilisation services provided at Azienda Ospedaliera - Complesso Ospedaliero - San Giovanni Addolorata of Rome.
As at 31 December 2017, revenues from the sale of goods and services due from PSIS S.r.l. refer to the administrative management service charge-back. The financial receivable relates to a loan granted for Euro 3,891 thousand to support current investments.
At the end of 2017, economic transactions were mainly for external laundering services at the Asti, Casale Monferrato and Turin 3 LHAs (Euro 650 thousand); the revenues derive from linen sterilisation services and the supply of disposable medical devices for surgical procedures.
Purchases of goods, services, and the related trade payables due in relation to Ekolav S.r.l. are primarily for laundering (Euro 1,015 thousand) and transport (Euro 84 thousand) services. The financial receivable is for a Euro 172 thousand loan granted to the associate.
As at 31 December 2017, revenues from the sale of goods and services and purchase costs linked to Steril Piemonte S.c.r.l. refer to the chargeback of costs incurred by the Company and by the Consortium for surgical instrument sterilisation activities at ASL (Local Health Authority) AL Piedmont Region. The financial receivable is for a Euro 651 thousand loan granted to the associate.
As at 31 December 2017, income statement and statement of financial position transactions with Piemonte Servizi Sanitari S.c.r.l. refer to the handling of tender relating the Novara ASL (Local Health Authority).
The financial receivable is for a Euro 90 thousand loan granted to the associate.
Saniservice Sh.p.k.
On 31 December 2017, the revenues from the sale of goods and services to Saniservice Sh.p.k. referred primarily to the supply of materials for the operations of the sterilisation facilities in Albania for Euro 464 thousand and trade management services for Euro 181 thousand. The financial receivable is for a Euro 4,423 thousand loan granted to the associate.
Revenues from the sale of goods and services to Finanza & Progetti S.p.A. Iniziative Produttive Piemontesi S.r.l. as at 31 December 2017 primarily relate to the reimbursement of the cost of the surety issued in favour of Ospedal Grando S.p.A. for Euro 58 thousand. The amount of other liabilities refers to the commitment to the future capital increase for Euro 2,460 thousand.
Transactions with Focus S.p.A. relate to lease agreements on the Castellina di Soragna (PR), Montecchio Precalcino (VI), Ariccia (RM) and Genoa Bolzaneto (GE) properties. The first agreements are for six years and renewable for another six, while the Genoa Bolzaneto (GE) agreement is for fourteen years and renewable for another six. During 2017 the new lease agreement was signed for the Management headquarters of Castellina di Soragna (PR) for a term of six years, renewable for another six.
The total consideration for leased properties amounted to Euro 2,403 thousand in 2017. In the year an indemnity of Euro 408 thousand was also recorded in connection with the renovation of the complex in Castellina di Soragna (PR).
Transactions with Archimede S.p.A. are associated with temporary staff leasing service agreements.
Transactions with Gesta S.p.A. are related to the purchase, for Euro 870 thousand, of the cogeneration system at the production site in Castellina di Soragna (PR).
Transactions with New Fleur S.r.l. are primarily for laundry services rendered.
Servizi Italia S.p.A. uses the linen wash services provided by Padana Emmedue S.r.l. In 2017, the relative consideration amounted to Euro 99 thousand.
Transactions with Everest S.r.l. relate to six-year lease agreements on the Travagliato and Podenzano properties, which are renewable for another six years. The total consideration for leased properties amounted to Euro 287 thousand in 2017. Servizi Italia S.p.A.'s transactions with Everest S.r.l. in relation to lease agreements are entered into in compliance with the Regulations for related party transactions in force.
During the year, income components were recorded deriving from non-recurring transactions, due to greater costs of Euro 557 thousand relating to incentives, indemnities and Naspi (acronym for Italian monthly compensation for unemployment) to employees, as a result of the company restructuring and reorganisation activities, which concerned the termination of the activities of the Barbariga (BS) facility.
The impacts of these components were outlined in the income statement and in the comments on the individual items in this document.
During the year, there were no atypical and/or unusual transactions as defined in Consob communication No. 6064293 dated 28 July 2006.
The Shareholders' Meeting of 20 April 2017 authorised the Board of Directors to purchase and sell treasury shares, subject to revocation of the resolution of 20 April 2016.
The approved own share purchase and placement plan meets the need to gain access to opportunities for the efficient investment of company liquidity and to have the possibility of using it for strategic transactions and/or to complete subsequent share purchase and sale transactions, to the extent allowed by permitted market practices. The plan has a maximum duration of 18 months as from 20 April 2017, date of issue of the authorisation by the Shareholders' Meeting.
The maximum number of shares that can be purchased, not exceeding 20% of the share capital of the company, as at the date of the Shareholders' Meeting resolution, is 6,361,890.00 and it results from the difference between the maximum number of own shares that the Company may purchase and the number of own shares which, at the date of the resolution of 19 April 2017, were held by Servizi Italia S.p.A., in implementing the resolution issued on 20 April 2016, and totalled 101,629 shares. The purchases and sales of treasury shares will be carried out on the organised market, in compliance with the applicable legislative and regulatory provisions, according to the operating formalities established by Article 132 of the CFL, Article 144 bis of the Issuers' Regulations, in compliance with the EC Regulation 2273/2003 dated 22 December 2003 and in observance of the shareholders' meeting resolution dated 20 April 2017. Treasury shares are purchased for a maximum equivalent value to the extent to which can be covered by distributable reserves and available reserves as set forth in the latest duly approved financial statements. The purchase of own shares is carried out at a minimum purchase price no less than 20% of the weighted average of the official prices of the shares as recorded by Borsa Italiana in the 3 days preceding each single operation, and a maximum price of purchase no greater than 20% of the weighted average of the official prices of shares recorded by Borsa Italiana in the 3 days preceding each single operation.
The intermediary appointed to carry out the purchase of own shares is INTERMONTE SIM S.p.A.
As at 31 December 2017, the number of treasury shares in the portfolio amounted in total to 10,550 shares, corresponding to 0.03% of the share capital.
As regards:
please see the Remuneration Report, drawn up pursuant to article 123-ter of CFL for 2017.
There were no Payment plans based on financial instruments as at 31 December 2017.
The fees for the services provided by the Independent auditing firm Deloitte & Touche S.p.A. and the authorities belonging to the network of the same are illustrated below:
| Type of services | Party providing the services | Recipient | Fees |
|---|---|---|---|
| Accounts audit | Deloitte & Touche S.p.A | Servizi Italia S.p.A. | 90,700 |
| Accounts audit | Deloitte & Touche S.p.A | Subsidiaries | 19,900 |
| Accounts audit | Deloitte & Touche S.p.A. network | Subsidiaries | 69,902 |
| Certification services | Deloitte & Touche S.p.A | Servizi Italia S.p.A. | 6,000 |
| Other services | Deloitte & Touche S.p.A | Servizi Italia S.p.A. | 25,000 |
| Advisory services | Deloitte & Touche S.p.A. network | Servizi Italia S.p.A. | 25,000 |
| Advisory services | Deloitte & Touche S.p.A. network | Subsidiaries/associates | - |
| Total | 236,502 |
Please see the related section of the Directors' Report on Operations.
On 19 January 2018, the Company communicated the resignation tendered by director Emil Anceschi on 17 January 2018. The Board of Directors found that, despite the Director's resignation, the composition of the Board of Directors is in any case in line with the current provisions regarding the gender and number of the directors who meet the independence requirements. In consideration of the above and of the imminent expiry of the mandate of the current administrative body with the approval of the financial statements as at 31/12/2017, the Board, with the favourable opinion of the Board of Statutory Auditors, deemed appropriate not to proceed with the co-optation pursuant to the articles of association and Art. 2386 of the Italian Civil Code, but to submit the resolution regarding the appointment of the entire administrative body directly to the next Meeting. For more details and information, refer to the documents available on the Company's website.
On 31 January 2018, the Company communicated the termination of employment of Mr. Maurizio Casol, an executive with strategic responsibilities and related party pursuant to the Regulations approved with Consob resolution no. 17221/2010 and the RPT Regulations adopted by Servizi Italia. For more details and information, refer to the documents available on the Company's website.
The Chairman of the Board of Directors
(Roberto Olivi)
Castellina di Soragna, 13 March 2018
In consideration of the provisions of Art. 154-bis, paragraphs 3 and 4 of Italian Legislative Decree No. 58 of 24 February 1998, the undersigned Enea Righi, in his capacity as "CEO", and Ilaria Eugeniani, in her capacity as "Financial Reporting Manager" of Servizi Italia S.p.A., certify:
It is also hereby stated that the separate financial statements as at 31 December 2017:
The Directors' Report on Operations includes a reliable analysis of the operating performance and result, as well as of the issuer's situation, together with a description of the main risks and uncertainties it is exposed to.
The CEO
Enea Righi
The Financial Reporting Manager
Ilaria Eugeniani
Independent auditors' report on the separate financial statements of the Servizi Italia Group
SERVIZI ITALIA S.p.A. Registered Offices: Via S. Pietro, 59/B 43019 Castellina di Soragna (PR) – ITALY Share Capital: Euro 31,809,451 fully paid-up Tax Code and Parma Register of Companies no.: 08531760158 Certified email: [email protected] Tel. +39 0524 598511 Fax +39 0524 598232 www.si-servizitalia.com
| (thousands of Euros) | of which | of which | |||
|---|---|---|---|---|---|
| Note | 31 December 2017 | with related parties (Note 8) |
31 December 2016 | with related parties (Note 8) |
|
| ASSETS | |||||
| Non-current assets | |||||
| Property, plant and equipment | 6.1 | 124,172 | - | 125,795 | - |
| Intangible assets | 6.2 | 4,638 | - | 6,028 | - |
| Goodwill | 6.3 | 70,784 | - | 55,234 | - |
| Equity-accounted investments | 6.4 | 22,257 | - | 28,764 | - |
| Equity investments in other companies | 6.5 | 3,612 | - | 3,629 | - |
| Financial receivables | 6.6 | 6,987 | 4,660 | 7,826 | 4,809 |
| Deferred tax assets | 6.7 | 2,112 | - | 2,351 | - |
| Other assets | 6.8 | 5,281 | - | 7,651 | - |
| Total non-current assets | 239,843 | 237,278 | |||
| Assets held for sale | 6.9 | 334 | - | - | - |
| Current assets | |||||
| Inventories | 6.10 | 5,915 | - | 5,011 | - |
| Trade receivables | 6.11 | 74,539 | 3,872 | 71,141 | 1,613 |
| Current tax receivables | 6.12 | 1,972 | - | 2,865 | - |
| Financial receivables | 6.13 | 7,946 | 5,599 | 8,188 | 5,606 |
| Other assets | 6.14 | 10,703 | - | 12,203 | - |
| Cash and cash equivalents | 6.15 | 7,999 | - | 5,463 | - |
| Total current assets | 109,074 | 104,871 | |||
| TOTAL ASSETS | 349,251 | 342,149 | |||
| SHAREHOLDERS' EQUITY AND LIABILITIES | |||||
| Group shareholders' equity | |||||
| Share capital | 6.16 | 31,799 | - | 31,461 | - |
| Other reserves and retained earnings | 6.16 | 93,506 | - | 95,299 | - |
| Profit (loss) for the year | 13,770 | - | 10,451 | - | |
| Total shareholders' equity attributable to shareholders of the parent | 139,075 | 137,211 | |||
| Total shareholders' equity attributable to non-controlling interests | 2,564 | 545 | |||
| TOTAL SHAREHOLDERS' EQUITY | 6.16 | 141,639 | 137,756 | ||
| LIABILITIES | |||||
| Non-current liabilities | |||||
| Due to banks and other lenders | 6.17 | 40,210 | - | 45,237 | - |
| Deferred taxes liabilities | 6.18 | 2,645 | - | 2,633 | - |
| Employee benefits | 6.19 | 10,322 | - | 11,218 | - |
| Provisions for risks and charges | 6.20 | 2,447 | - | 2,798 | - |
| Other financial liabilities | 6.21 | 6,076 | - | 4,172 | - |
| Total non-current liabilities | 61,700 | 66,058 | |||
| Current liabilities | |||||
| Due to banks and other lenders | 6.16 | 51,383 | - | 48,031 | - |
| Trade payables | 6.21 | 69,854 | 9,106 | 63,544 | 8,365 |
| Current tax payables | 6.22 | 157 | - | 22 | - |
| Employee benefits | 6.18 | 877 | - | - | - |
| Other financial liabilities | 6.23 | 5,176 | 2,460 | 8,072 | - |
| Other payables | 6.24 | 18,465 | - | 18,666 | - |
| Total current liabilities | 145,912 | - | 138,335 | - | |
| TOTAL LIABILITIES | 207,612 | 204,393 | |||
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 349,251 | 342,149 |
| (thousands of Euros) | Note | 31 December 2017 |
of which with related parties (Note 8) |
31 December 2016 |
of which with related parties (Note 8) |
|---|---|---|---|---|---|
| Sales revenues | 7.1 | 252,102 | 6,318 | 237,716 | 991 |
| Other income | 7.2 | 4,657 | 772 | 4,377 | 688 |
| Raw materials and consumables | 7.3 | (25,946) | (57) | (25,123) | (9) |
| Costs for services | 7.4 | (76,866) | (20,520) | (74,591) | (20,624) |
| Personnel expense | 7.5 | (81,964) | (5,148) | (76,819) | (4,378) |
| - of which non-recurring | (557) | - | |||
| Other costs | 7.6 | (2,154) | (424) | (1,537) | (13) |
| Depreciation, amortisation, impairment and provisions | 7.7 | (53,453) | - | (50,278) | - |
| Operating profit | 16,376 | 13,745 | |||
| Financial income | 7.8 | 2,059 | 553 | 1,760 | 286 |
| Financial expenses | 7.9 | (2,442) | - | (2,473) | - |
| Income/(expense) from equity investments in other companies | 7.10 | 750 | - | 105 | 30 |
| Revaluation/impairment of equity-accounted investments | 6.4 | 1,018 | - | (65) | - |
| Profit before tax | 17,761 | 13,072 | |||
| Income taxes | 7.11 | (3,397) | (2,557) | ||
| - of which non-recurring | (134) | - | |||
| Profit (loss) for the year | 14,364 | 10,515 | |||
| of which: Attributable to shareholders of the parent | 13,770 | 10,451 | |||
| Attributable to non-controlling interests | 594 | 64 | |||
| Basic earnings per share (in Euros) | 7.12 | 0.435 | 0.335 | ||
| Diluted earnings per share (in Euros) | 7.12 | 0.435 | 0.335 |
| (thousands of Euros) | 31 December | ||
|---|---|---|---|
| Note | 2017 | 2016 | |
| Profit (loss) for the year | 14,364 | 10,515 | |
| Other comprehensive income that will not be reclassified to the Income Statement | |||
| Actuarial gains (losses) on defined benefit plans | 6.18 | 22 | (242) |
| Income taxes on other comprehensive income | 6.7 6.17 | (5) | - |
| Other comprehensive income that may be reclassified to the Income Statement | |||
| Gains (losses) from translation of foreign financial statements | (7,068) | 6,627 | |
| Income taxes on other comprehensive income | - | - | |
| Total other comprehensive income after taxes | (7,051) | 6,385 | |
| Total comprehensive income for the period | 7,313 | 16,900 | |
| of which: Attributable to shareholders of the parent | 6,946 | 16,734 | |
| Attributable to non-controlling interests | 367 | 166 |
| (thousands of Euros) | of which | of which | |||
|---|---|---|---|---|---|
| Note | As at 31 December 2017 |
with related parties (Note 8) |
As at 31 December 2016 |
with related parties (Note 8) |
|
| Cash flow generated (absorbed) by operations | |||||
| Profit (loss) before tax | 17,761 | - | 13,072 | - | |
| Payment of current taxes | (1,492) | - | (3,633) | - | |
| Amortisation | 7.7 | 52,607 | - | 49,499 | - |
| Impairment and provisions | 7.7 | 846 | - | 778 | - |
| (Revaluation)/impairment of equity investments | 6.4 7.10 | (1,767) | - | (39) | - |
| Gains/losses on disposal | 7.2 7.6 | (708) | - | (308) | - |
| Interest income and expense accrued | 7.8 7.9 | 382 | - | 713 | - |
| Interest income collected | 7.8 | 987 | - | 906 | - |
| Interest expense paid | 7.9 | (1,683) | - | (1,924) | - |
| Provisions for employee benefits | 6.18 | 229 | - | 502 | - |
| 67,162 | 59,566 | ||||
| (Increase)/decrease in inventories | 6.9 | (805) | - | (166) | - |
| (Increase)/decrease in trade receivables | 6.10 | (2,993) | (2,259) | 6,498 | (474) |
| Increase/(decrease) in trade payables | 6.21 | 8,050 | 741 | (3,558) | (242) |
| Increase/(decrease) in other assets and liabilities | 6.8 6.13 6.19 6.20 6.23 6.24 |
(3,370) | - | (4,907) | - |
| Settlement of employee benefits | 6.18 | (777) | - | (533) | - |
| Cash flow generated (absorbed) by operations | 67,267 | 56,900 | |||
| Net cash flow generated (absorbed) from investment activities in: | |||||
| Intangible assets | 6.2 | (708) | - | (471) | - |
| Property, plant and equipment | 6.1 | (48,236) | - | (40,797) | - |
| Dividends received | 7.10 | 291 | - | 182 | - |
| Acquisitions | 3.3 | (4,214) | - | (12,822) | - |
| Equity investments | 6.4 6.5 | (1,448) | - | (2,127) | - |
| Net cash flow generated (absorbed) by investment activities | (54,315) | (56,035) | |||
| Cash flow generated (absorbed) from financing activities in: | |||||
| Financial receivables | 6.6 6.12 | 1,266 | 156 | (4,558) | (4,474) |
| Dividends paid | 6.15 | (4,713) | - | (4,728) | - |
| Net (purchase)/sales of treasury shares | 6.15 | 1,620 | - | (334) | - |
| Share Capital increase | 6.15 | - | - | 4,000 | - |
| Shareholders' equity | 6.15 | (1,755) | - | - | - |
| Current liabilities to banks and other lenders | 6.16 | 448 | - | (3,543) | - |
| Non-current liabilities to banks and other lenders | 6.16 | (6,561) | - | 5,922 | - |
| Cash flow generated (absorbed) from financing activities | (9,695) | (3,241) | |||
| (Increase)/decrease in cash and cash equivalents | 3,257 | (2,376) | |||
| Opening cash and cash equivalents | 6.14 | 5,463 | 7,082 | ||
| Effect of exchange rate fluctuations | 721 | (757) | |||
| Closing cash and cash equivalents | 6.14 | 7,999 | 5,463 |
| (thousands of Euros) | Share capital |
Share premium reserve |
Legal reserve |
Retained earnings |
Translation reserve |
Profit (loss) for the year |
Reserves and profit (loss) of non controlling interests |
Total Shareholders' Equity |
|---|---|---|---|---|---|---|---|---|
| Balance as at 1 January 2016 | 30,444 | 49,318 | 4,186 | 32,431 | (7,392) | 12,728 | 379 | 122,094 |
| Allocation of profit from the previous year | - | - | 586 | 7,414 | - | (8,000) | - | - |
| Distribution of dividends | - | - | - | - | - | (4,728) | - | (4,728) |
| Share Capital increase | 1,110 | 2,890 | - | - | - | - | - | 4,000 |
| Treasury share transactions | (93) | (241) | - | - | - | - | - | (334) |
| Change in translation reserve | - | - | - | - | 6,525 | - | 102 | 6,627 |
| Other changes | - | - | - | (234) | - | - | - | (234) |
| Comprehensive income for the year | - | - | - | (184) | - | 10,451 | 64 | 10,331 |
| Balance as at 31 December 2016 | 31,461 | 51,967 | 4,772 | 39,427 | (867) | 10,451 | 545 | 137,756 |
| Allocation of profit from the previous year | - | - | 594 | 5,144 | - | (5,738) | - | - |
| Distribution of dividends | - | - | - | - | - | (4,713) | - | (4,713) |
| Change in the consolidation area | - | - | - | (1,990) | - | - | 1,439 | (551) |
| Share Capital increase | - | - | - | - | - | - | 213 | 213 |
| Treasury share transactions | 338 | 1,282 | - | - | - | - | - | 1,620 |
| Change in translation reserve | - | - | - | - | (6,840) | - | (227) | (7,067) |
| Other changes | - | - | - | - | - | - | - | - |
| Comprehensive income for the year | - | - | - | 17 | - | 13,770 | 594 | 14,381 |
| Balance as at 31 December 2017 | 31,799 | 53,249 | 5,366 | 42,598 | (7,707) | 13,770 | 2,564 | 141,639 |
The Consolidated Statements of Servizi Italia S.p.A. comprising the Statement of Financial position, Income Statement, Statement of Comprehensive Income, Cash Flow Statement, Statement of Changes in Shareholders' Equity and Explanatory Notes, have been draw up in compliance with the international accounting standards "International Financial Reporting Standards IFRS" issued by the International Financial Reporting Standards Board and the interpretations issued by the IFRS Interpretations Committee, based on the text published in the Official Journal of the European Communities (O.J.E.C.).
These financial statements were approved by the Board of Directors on 13 March 2018; the latter authorised the publication of the same.
The accounting standards illustrated below have been applied on a consistent basis to all the periods presented.
The amounts shown in the explanatory notes are expressed in thousands of Euros, unless specified otherwise.
The financial statement schedules adopted by the group have the following characteristics:
The following IFRS accounting principles, amendments and interpretations were applied for the first time by the Group starting on 1 January 2017:
assets for unrealised losses in the measurement of financial assets "Available for Sale", under certain circumstances and on the estimation of taxable income for future periods.
The option of these amendments did not impact the financial statements of the Company.
Accounting standards, amendments and IFRS and IFRIC interpretations endorsed by the European Union, still not applicable on a mandatory basis and not adopted early by the Company as at 31 December 2017
This standard applies as from 1 January 2018. The amendments to IFRS 15, Clarifications to IFRS 15 – Revenue from Contracts with Customers, have been approved by the European Union on 6 November 2017.
Based on the analyses carried out, the directors expect the application of IFRS 15 not to have a significant impact on the amounts posted as revenue and on the relevant information reported in the financial statements of the Group.
o it introduces new criteria to classify and measure financial assets and liabilities (together with the assessment of the negligible changes in financial liabilities);
o with reference to the impairment model, the new standard requires the losses on receivables to be estimated based on the expected losses model (instead of the incurred losses model of IAS 39) using information that can be evidenced, available free of charge or without unreasonable effort and including historic, current and forecast data;
The new standard must be applied in the financial statements beginning on 1 January 2018 or later.
Based on the analyses carried out, the directors expect the application of IFRS 9 not to have a significant impact on the amounts and on the relevant information reported in the financial statements of the Group. In particular, the application of the accounting standard will have an overall negative impact on the Shareholders' equity as at 31 December 2017 of Euro 151 thousand to be attributed to the recognition of trade receivables according to the provisions of the new standard.
Standard IFRS 16 – Leases (issued on 13 January 2016), intended to replace IAS 17 – Leases, as well as the IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases—Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease.
The new standard provides a new definition of lease and introduces a criterion based on control (right of use) of an asset to differentiate between leasing and service agreements, by identifying the following distinguishing factors: asset identification, right of replacement of the asset, right to obtain substantially all the economic benefits deriving from the use of the asset and right to control the use of the asset underlying the agreement.
The standard introduces a single lessee accounting model for the recognition and measurement of lease agreements, which provides for the recording of the leased asset, under assets with a counter entry under financial liabilities, with the possibility of not recognising as leasing the contracts that have "low-value assets" and the leasing with a contract duration of up to 12 months. On the other hand, the Standard does not include significant changes for the lessor.
The standard applies for reporting period beginning on or after 1 January 2019. Early application is only allowed for early adopters of IFRS 15 - Revenue from Contracts with Customers.
With reference to IFRS 16 described above, the Group is evaluating the implementation criteria and the impacts on its financial statements, however, it is not possible to estimate the effects until the Group has completed a detailed analysis; the application of the new standard will mainly concern lease agreements on properties and operating lease agreements on vehicles.
With reference to the other standards and interpretations detailed above, it is not expected that the adoption will lead to significant impacts on the measurement of the assets, liabilities, costs and revenues of the Group.
At the reference date of this Annual Report, the competent bodies of the European Union have still not concluded the approval process needed for the adoption of the amendments and standards described below.
Interpretation of IFRIC 22 "Foreign Currency Transactions and Advance Consideration" (issued on 8 December 2016). This interpretation provides guidelines on foreign currency transactions when non-monetary advance consideration paid or received is recognised before recognition of the relating asset, expense or income. This document clarifies how an entity has to determine the date of the transaction and consequently the spot exchange rate to be used for foreign currency transactions whose consideration is paid or received in advance. IFRIC 22 applies as from 1 January 2018.
Amendment to IAS 40 "Transfers of Investment Property" (issued on 8 December 2016). These amendments provide clarifications on the transfer of properties to, or from, investment properties. Specifically, an entity should only reclassify a property asset to or from investment property when there is evidence of a change in use of that asset. Such change in use must be supported by a specific event occurred in the past. A change in intention by the entity's management alone is not sufficient. These amendments apply as from 1 January 2018.
This interpretation applies as from 1 January 2019, though early adoption is allowed.
Document "Annual Improvements to IFRSs 2015-2017 Cycle", issued on 12 December 2017 (including IFRS 3 Business Combinations and IFRS 11 Joint Arrangements – Remeasurement of previously held interest in a joint operation, IAS 12 Income Taxes – Income tax consequences of payments on financial instruments classified as equity, IAS 23 Borrowing costs Disclosure of Interests in Other Entities – Borrowing costs eligible for capitalisation), which acknowledges the amendments to some standards as part of the annual improvement process. The amendments apply as from 1 January 2019, though early adoption is allowed.
Amendment to IFRS 10 and IAS 28 "Sales or Contribution of Assets between an Investor and its Associate or Joint Venture" (issued on 11 September 2014). The purpose of these amendments was to resolve the conflict between IAS 28 and IFRS 10 concerning the measurement of profit or loss arising from transfers or assignments of a non-monetary asset to a joint venture or associate in return for its shares. The IASB has suspended the application of these amendments for the time being.
The Group primarily works in the domestic market as well as in the State of São Paulo (Brazil), Albania, India, Morocco, and Turkey, in supplying integrated rental, washing and sterilisation services for textiles and surgical instruments to social/welfare and public and private hospital facilities. In particular, the Company offers the following Services: (a) Wash-hire, including (i) planning and provision of integrated rental, reconditioning (disinfection, washing, finishing and packaging) and logistics (pick-up and distribution to usage centres) services for textile items, mattresses and accessories (pillowcases, curtains), (ii) rental and washing of high visibility "118" emergency service items and (iii) logistics and management of hospital wardrobes; (b) Linen sterilisation services, including the planning and rental of sterile medical devices for operating theatres (linens for operating theatres and scrubs) packed in sets for the operating theatre, in cotton or in re-usable technical fabric, as well as personal protection equipment (gloves, masks); and (c) Surgical instrument sterilisation services including (i) planning and provision of washing, packaging and sterilisation services for surgical instruments (owned or rented) and accessories for operating theatres and (ii) planning, installation and renovation of sterilisation centres.
Servizi Italia S.p.A. is a subsidiary of the Coopservice S.Coop.p.A. group, with registered offices in Reggio Emilia, which holds a controlling shareholding via the Company Aurum S.p.A., the same, therefore, indirectly controls the Servizi Italia Group.
The consolidated financial statements include the financial statements of Servizi Italia S.p.A. and of the companies, over which it exercises direct or indirect control, beginning on the date on which it is acquired and until the date on which it is no longer held. Servizi Italia S.p.A. controls a company when, in exercising the power it holds on it, is exposed and is entitled to its variable returns, getting involved in its management, and has, at the same time, the possibility to impact the variable returns of the subsidiary. The exercise of rights on the subsidiary is based on: (i) of the voting rights, also potential, held by the Group and by virtue of which the Group can exercise the majority of the votes exercisable during the company's ordinary shareholders' meeting; (ii) of the content of any agreements between shareholders or the existence of particular article of association clauses, which assign the Group the power to govern the company; (iii) of the control by the Group of a number of votes sufficient to exercise the de facto control of the company's ordinary shareholders' meeting.
Investments in associates and jointly controlled companies (joint ventures) are measured using the equity method. On the basis of the equity method, the equity investment is recognised in the statement of financial position at purchase cost, adjusted, upwards or downwards, for the portion pertaining to the Group of the changes in the net assets of the subsidiary. The goodwill pertaining to the subsidiary is included in the book value of the equity investment and is not amortised. The transactions generating internal gains realised by the Group with associates and companies under joint control are eliminated limited to the holding owned by the Group. Adjustments are made to the financial statements of companies carried at equity, necessary for bringing the accounting standards into line with those adopted by the Group. Jointly controlled assets (joint operations) are recorded by recognising the portion of asset and liability, cost and revenue that pertain thereto, directly into the financial statements of the company, which is part of the agreements.
Joint control agreements in which the parties hold rights on the net assets of the agreement are defined as jointly controlled companies, while the jointly controlled agreements in which the parties hold rights on the assets and obligations related to the agreement are defined as jointly controlled assets. Joint control is the sharing, on a contractual basis, of the control of an agreement, which exists solely when due to decisions relating to the significant activities the unanimous consent of all the parties, which share the control, is required.
The companies, in which Servizi Italia is able to participate in the definition of the operating and financial policies despite the same not being subsidiaries or jointly controlled parties, are associates.
The financial statements consolidated line-by-line were prepared as at 31 December 2017 and have been adjusted as required to bring them into line with the accounting standards of Servizi Italia S.p.A.:
for the consolidated financial statements. All the assets and liabilities of foreign companies in currency other than Euros, which fall within the scope of consolidation, are converted using the exchange rates existing as of the financial statement reference date (current exchange rate method). Income, costs and cash flows are converted at the average exchange rate for the period. The exchange differences deriving from the comparison between the opening shareholders' equity converted using the current rates and the same converted using the historical rates, as well as the difference between the profit/loss expressed using the average rates and that expressed using the current rates, are booked to other comprehensive income and recorded in a specific reserve;
| Currency | Exchange rate as at 31 December 2017 |
Average exchange rate for 2017 |
Exchange rate as at 31 December 2016 |
Average exchange rate for 2016 |
|---|---|---|---|---|
| Brazilian Real (R\$) | 3.9729 | 3.6041 | 3.4305 | 3.8561 |
| Turkish Lira (TL) | 4.5464 | 4.1214 | 3.7072 | 3.3433 |
| Albanese Lek | 133.58 | 134.11 | 135.23 | 137.32 |
| Indian Rupee (INR) | 76.6055 | 73.5324 | 71.5935 | 74.3717 |
| Moroccan Dhiram (MAD) | 11.236 | 10.993 | - | - |
* The average exchange rate for the consolidation of the Ankara Laundry group is 4.32274 (average from 19 July 2017 - date of acquisition of control to 31 December 2017)
** The average exchange rate used for the valuation using the equity method of the company Servizi Sanitari Integrati Marocco is the average from 22 February 2017 - the date of acquisition - to 31 December 2017
The scope of consolidation includes the following subsidiaries (consolidated line-by-line):
| (thousands) | Registered office | Currency | Share capital as at 31 December 2017 |
Percentage shareholding as at 31 December 2017 |
Percentage shareholding as at 31 December 2016 |
|---|---|---|---|---|---|
| San Martino 2000 S.c.r.l. | Genoa | Eur | 10 | 60% | 60% |
| Se.Sa.Tre. S.c.r.l. in liquidazione | Genoa | Eur | 20 | 60% | 60% |
| Steritek S.p.A. | Malagnino (CR) | Eur | 134 | 70% | - |
| Ankateks Turizm İnsaat Tekstil Temizleme Sanayi Ve | Ankara, Turkey | TRY | 5,000 | 55% | 40% |
| Ergülteks Temizlik Tekstil Ltd. Sti.** | Smirne - Turkey | TRY | 1,700 | 57.5% | - |
| SRI Empreendimentos e Participacoes LTDA | São Paulo (Brazil) | R\$ | 146,798 | 100% | 100% |
| Lavsim Higienização Têxtil S.A.* | São Roque, State of São Paulo (Brazil) | R\$ | 550 | 100% | 100% |
| Maxlav Lavanderia Especializada S.A.* | Jaguariúna, State of São Paulo (Brazil) | R\$ | 2,825 | 50.1% | 50.1% |
| Vida Lavanderias Especializada S.A.* | Santana de Parnaíba SP (Brazil) | R\$ | 3,600 | 50.1% | 50.1% |
| Aqualav Serviços De Higienização Ltda* | Vila Idalina, Poá, State of São Paulo (Brazil) | R\$ | 15,400 | 100% | 100% |
| *Held through SRI Empreendimentos e Participações Ltda |
On 19 July 2017, Servizi Italia S.p.A. exercised the call option targeted at acquiring an additional 15% of the share capital of the Turkish company Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi, which owns 57.5% of the company Ergülteks Temizlik Tekstil Ltd Sti (Ankara Group); the latter was already owned by Servizi Italia S.p.A. as of 15 October 2015. Servizi Italia S.p.A., following the acquisition of an additional 15%, now owns 55% of the Turkish company and has thereby obtained control of the Ankara Group. On 5 September 2017, Servizi Italia S.p.A. also acquired 70% of the share capital of Steritek S.p.A., the primary Italian company offering validation services and systematic control of sterilization processes as well as of surgical instruments washing systems.
Investments in associates and jointly controlled companies are measured using the equity method and are as follows:
| (thousands) | Registered office | Currency | Share capital as at 31 December 2017 |
Percentage shareholding as at 31 December 2017 |
Percentage shareholding as at 31 December 2016 |
|---|---|---|---|---|---|
| CO.SE.S S.c.r.l. | Perugia | Eur | 10 | 25% | 25% |
| PSIS S.r.l. | Padua | Eur | 10,000 | 50% | 50% |
| Ekolav S.r.l. | Lastra a Signa (FI) | Eur | 100 | 50% | 50% |
| AMG S.r.l. | Busca (CN) | Eur | 100 | 50% | 50% |
| Steril Piemonte S.c.r.l. | Turin | Eur | 4,000 | 50% | 50% |
| Iniziative Produttive Piemontesi S.r.l. | Turin | Eur | 2,500 | 37.63% | 37.63% |
| SE.STE.RO. S.r.l. in liquidazione | Castellina di Soragna (PR) | Eur | 400 | 25% | 25% |
| Piemonte Servizi Sanitari S.c.r.l. | Turin | Eur | 10 | 30% | 30% |
| Finanza & Progetti S.p.A. | Padua | Eur | 550 | 50% | 50% |
| Arezzo Servizi S.c.r.l. | Arezzo | Eur | 10 | 50% | 50% |
| Brixia S.r.l. | Milan | Eur | 10 | 23% | 18.3% |
| Saniservice Sh.p.k. | Tirana – Albania | Lek | 2,746 | 30% | 30% |
| Shubhram Hospital Solutions Private Limited | New Delhi - India | INR | 270,172 | 51% | 51% |
| SAS Sterilizasyon Servisleri A.Ş. | Istanbul, Turkey | TRY | 3,502 | 51% | 51% |
| Servizi Sanitari Integrati Marocco S.a.r.l. | Casablanca, Morocco | MAD | 122 | 51% | - |
On 13 February 2017, Servizi Italia purchased 51% of Servizi Sanitari Integrati Marocco S.a.r.l., a company that on 10 February 2017 signed a preliminary contract for the establishment of Servizi Italia Marocco S.a.r.l, which will be 50% owned by Servizi Sanitari Integrati Marocco S.a.r.l. and 50% owned by local partner Blue Field Healthcare S.a.r.l.
It should be noted that, during the course of the year, an increase was attained in the shareholding held in Brixia Srl, a company managing Facility Management services within the hospital facilities of ASST Spedali Civili of Brescia.
With reference to Shubhram Hospital Solutions Private Limited and SAS Sterilizasyon Servisleri A.Ş., the governance and the handling of the operating and strategic policies are disciplined by agreements entered into with local partners, which assign the shareholders joint control over the two companies.
On 19 July 2017, Servizi Italia S.p.A. exercised the call option targeted at acquiring an additional 15% of the share capital of the Turkish company Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi, in which Servizi Italia S.p.A. had held a 40% stake since 15 October 2015.
Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi – with the subsidiary Ergülteks Temizlik Tekstil Ltd. Sti. (Ankara Group) is a leading company subject to Turkish law, based in Ankara and active through the brand "Ankara Laundry" in the laundry washing sector for healthcare facilities mainly located in central-western Turkey.
Servizi Italia S.p.A., following the acquisition of an additional 15% for a consideration of Euro 4,189 thousand, now holds 55% and has obtained control of the Ankara Group, significantly consolidating its presence in the Turkish market.
Servizi Italia S.p.A., at the same time, proceeded to define and pay sellers for the final price connected to the purchase of the initial 40% stake. Both the definition of the final price and the exercising of the call were defined on the basis of the 2016 results reviewed by the Ankara Group. Given that this is a business combination operation carried out in stages, in accordance with the provisions of IFRS 3, the interest previously held in the Ankara Group - equal to Euro 13,909 thousand at the date of acquisition of control - was recalculated at fair value, recording an income equal to Euro 458 thousand compared to the previous valuation at cost.
After comparing the fair value of the assets, liabilities acquired with respect to the total consideration paid, equal to Euro 18,058 thousand, a goodwill of Euro 17,068 thousand was generated
The following is a comparison between the current value (fair value) and the book value of the assets and liabilities acquired and the determination of the goodwill generated by the acquisition:
| 19 July 2017 | ||
|---|---|---|
| Fair value | Book value | |
| (thousands of Euros) | (thousands of Euros) | |
| Property, plant and equipment | 3,468 | 3,468 |
| Intangible assets | 3 | 3 |
| Deferred tax assets | 50 | 50 |
| Inventories | 210 | 210 |
| Trade and other receivables | 3,518 | 3,518 |
| Employee severance indemnity and risk fund | (105) | (105) |
| Deferred tax liabilities | (214) | (214) |
| Non-current financial payables | (1,676) | (1,676) |
| Current financial payables | (3,403) | (3,403) |
| 18,058 | |
|---|---|
| 4,149 | |
| 13,909 | |
| (1,017) | (1,017) |
| 2,037 | 2,037 |
| (30) | (30) |
| (855) | (855) |
| (131) | (131) |
| (894) | (894) |
On the closing date of these financial statements, the price allocation process was completed.
On 5 September 2017, the Company acquired a 70% stake in Steritek S.p.A., a leading Italian operator in providing validation services and systematic control of sterilisation processes and of surgical instrument washing systems, for a total consideration, net of price adjustment components, of Euro 3,105 thousand and including a part of the deferred price for Euro 450 thousand, retained by Servizi Italia to guarantee any indemnities and contingent liabilities.
The acquisition involved the recognition of a liability for the part of the deferred price and for the commitments assumed which will involve probable future cash outlays connected with the mutual put/call options relating to 30% of Steritek S.p.A., exercisable in 2022. The options will be valued on the basis of a formula connected with the economic performance of the company in the years 2020 and 2021 and in consideration of the actual net financial position. Taking into account the specific characteristics of the options, a corresponding liability was recorded for € 1,990 thousand, adjusting the Group's shareholders' equity for the same amount.
The comparison between the fair value of the net assets of Steritek S.p.A. as at 5 September 2017, weighted for the 70% stake acquired, and the total cost incurred, amounting to 3,105 thousand Euro, led to the determination of goodwill totalling 2,121 thousand Euro.
The following is a comparison between the current value (fair value) and the book value of the assets and liabilities acquired and the determination of the goodwill generated by the acquisition:
| 05 September 2017 | |||
|---|---|---|---|
| Fair value | Book value | ||
| (thousands of Euros) | (thousands of Euros) | ||
| Property, plant and equipment | 123 | 122 | |
| Intangible assets Equity investments in other companies |
3 - |
8 - |
|
| Deferred tax assets | 17 | 16 | |
| Inventories | 18 | 18 | |
| Trade and other receivables | 1,482 | 1,554 | |
| Employee severance indemnity and risk fund | (374) | (374) | |
| Deferred tax liabilities | (1) | (1) |
| Non-current financial payables | (74) | (74) |
|---|---|---|
| Current financial payables | (64) | (64) |
| Trade payables | (167) | (167) |
| Current tax payables | (64) | (151) |
| Other current payables | (185) | (169) |
| Other current payables | 713 | 715 |
| Cash and cash equivalents as at the acquisition date | 693 | 693 |
| Consideration already paid at the time of acquisition | 2,795 | |
| Deferred price | 450 | |
| Adjustments for price definition | (140) | |
| Total compensation paid for the acquisition of Steritek (70%) | 3,105 | |
| Goodwill deriving from the acquisition | 2,121 |
On the closing date of these financial statements, the price allocation process was completed.
The consolidated financial statements have been drawn up in accordance with the criterion of cost, except in the cases specifically described in the following notes, for which the current value ("fair value") has been applied.
Tangible fixed assets include land and buildings, machinery and plant, returnable assets, industrial and commercial equipment, linen and other assets benefiting future periods.
The fixed assets are stated at purchase or production cost, inclusive of the related costs and costs necessary for making the asset available for use, net of accumulated depreciation. The costs subsequent to purchase are included in the value of the asset or recorded as a separate asset only if it is probable that the Company will receive future economic benefits associated with the assets and the cost can be measured. Maintenance and repairs are recognised in the income statement in the period in which they are incurred.
The depreciation of tangible fixed assets is calculated on a straight-line basis so as to spread the value of the assets over the estimated useful life according to the following categories:
| Years | |
|---|---|
| Industrial buildings | 33 |
| Plant and machinery | 12 |
| General plant | 7 |
| Industrial and commercial equipment | 4 |
| Specific equipment | 8 |
| Linen | 3 |
| Furniture and fixtures | 8 |
| Electronic machinery | 5 |
| Cars | 4 |
| Other vehicles | 5 |
The useful lives are reviewed, and adjusted if necessary, at the end of each period.
The individual components of an asset, which are characterised by a different useful life, are depreciated separately and on a consistent basis with their duration according to an approach by components. Returnable assets are depreciated over the residual duration of the contract within the sphere of which they are realised.
If there are indicators of impairment, the assets are subject to an ("Impairment test") as per the following section E; any impairments may be subject to subsequent value write-backs if the reasons for the impairment cease to exist. These fixed assets include the costs for the creation of the sterilisation and washing installations at the customer sites, which are used exclusively by the Group. These assets are depreciated over the useful life of the assets or the residual duration of the wash-hire contract, whichever is the shorter. The ownership of the asset is transferred to the customer on termination of the contract.
The financial expense is capitalised if directly attributable to the purchase, construction or production of an asset.
B. Leasing
A lease agreement is defined to be financial if it involves the substantial transfer of all risks and benefits arising from owning the asset. Assets acquired via financial lease agreements are recognised under property, plant and equipment with the recognition under the liabilities of a financial payable for the same amount. The payable is progressively reduced on the basis of the repayment plan for the principal amounts included in the fees contractually envisaged, while the value of the assets recorded among property, plant and equipment is systematically depreciated in relation to the economic-technical life of said asset.
For operating lease agreements, instead, the instalments are recorded in the Income Statement on a straight-line basis over the life of the contract.
Only identifiable assets, controlled by the enterprise, which are able to produce future economic benefits, can be defined as intangible assets.
These assets are recorded in the financial statements at purchase or production cost, inclusive of the related charges as per the criteria already indicated for property, plant and equipment. The development costs are also capitalised provided that the cost can be reliably determined and that it can be demonstrated that the asset is able to produce future economic benefits.
The intangible assets with a defined useful life are amortised systematically as from the moment the asset is available for use over the envisaged period of utility. They are mainly represented by software licences acquired for a consideration capitalised on the basis of the cost incurred. These costs are amortised on a straight-line basis according to their estimates useful life (3 years). The value attributed, upon an acquisition, to the contract portfolio is amortised based on the residual duration of the related contracts and proportional to the time of the distribution of the benefit flow resulting therefrom.
Goodwill represents the additional costs incurred with respect to the fair value of the net assets identified at the time of acquisition of a subsidiary, associate or business. In the consolidated financial statements, the goodwill relating to the acquisition of associates and jointly controlled companies is included in the item "Equity-accounted investments".
All the goodwill is checked annually to identify any impairment losses ("impairment test") and is recognised net of the impairments made.
The impairments possibly recognised are not reinstated.
For the purposes of the Impairment test the goodwill is allocated to the individual cash generating units ("CGUs") or groups of CGUs, which it is believed, will provide the benefits relating to the acquisition to which the goodwill refers.
E. Impairment test
In the presence of situations that may potentially generate impairment losses, the property, plant and equipment and intangible assets are subject to Impairment tests, through the measurement of the recoverable value of the asset and a comparison with the related net accounting value. If the recoverable value is less than the carrying value, the latter is adjusted accordingly. This reduction represents a loss in value, which is recognised in the Income Statement. If a write-down, previously carried out, no longer has a reason to exist, except for the goodwill, its book value is written back using the new value deriving from the estimate, provided that this value does not exceed the net carrying value that the asset would have had if no write-down was ever carried out. The write-back is also recorded in the Income Statement.
The goodwill and the assets with an indefinite useful life or assets not available for use are subject at least once a year to an Impairment test so as to check the recoverability of the value. The assets, which are amortised/depreciated, are subject to the Impairment test on the occurrence of events and circumstances, which indicate that the book value might not be recoverable. In such cases, the book value of the asset is written down until reaching the recoverable value. Contrary to the rules applied to other intangible assets, write-backs are not permitted for the goodwill.
The recoverable value is the greater between the fair value of the assets net of selling costs and the value in use. For the purposes of the Impairment test, the assets are grouped together at cash generating units ("CGUs") or groups of CGUs level.
As of each financial statement date, steps are taken to check any recovery of the impairments made on the non-financial assets further to impairment tests.
Investments in associates and jointly controlled companies are measured using the equity method.
In application of the equity method, the investment is initially recognised at cost and the book value is increased or decreased to recognize the investor's share of the subsidiary's profits or losses. The quota pertaining to the subsidiary's profit (loss) for the financial year is recognised in the separate income statement. The dividends received reduce the book value of the equity investment. Adjustments to the book value may also be necessary as a result of changes in the equity investment, deriving from changes in the items of the statement of comprehensive income of the subsidiary (e.g. changes deriving from foreign currency translation differences). The quota attributable to the investing firm of these changes is recorded among the other items of the statement of comprehensive income.
If the quota of losses of a subsidiary company is equal to or exceeds the value of the equity investment, after having eliminated the value of the interest, the additional losses are set aside and recognised as liabilities, only to the extent that there are legal or implicit obligations or payments have been made on behalf of the subsidiary company. If the subsidiary subsequently realizes profits, the investing firm will book the portion of profits pertaining to it only after it has equalled its share of unrealised losses.
Profits and losses deriving from transactions between an entity and associated firm or joint venture are booked in the entity's financial statements only for the portion of minority interests in the associate or joint venture. If a company valued with the equity method retains subsidiaries, associates or joint-ventures, the profit (loss) for the year, the other items of the statement of comprehensive income statement and the net assets considered during the application of the equity method are those recorded in the consolidated financial statements of the subsidiary company.
If there is objective evidence of a value loss, the shareholding is subject to an Impairment test, according to the same procedures previously described for intangible and tangible fixed assets in the paragraph "Impairment test".
These include the equity investments available for sale and the other non-current financial assets such as securities held with the intention of maintaining them in the portfolio until maturity, non-current loans and receivables, trade receivables and other receivables originating from the company and the other current financial assets such as cash and cash equivalents.
Cash and cash equivalents are bank and post office deposits, marketable securities, which represent temporary investments of liquidity and financial receivables due within three months.
They also include financial payables, trade payables and other payables and the other financial liabilities as well as derivative instruments.
The financial assets and liabilities are initially recognised at fair value. Their initial recognition takes into account the transaction costs directly attributable to the purchase or the issue costs, which are included in the initial recognition of all the assets and liabilities, which can be defined as financial instruments. Subsequent recognition depends on the type of instrument. In detail:
derivative instruments are recorded in the statement of financial position and are recognised at fair value and the gains and losses determined are respectively recorded in the income statement if the derivatives cannot be defined as hedges as per IAS 39 or they hedge a price risk (fair value hedge) or under other comprehensive income if they hedge a future cash flow or a future contractual commitment already undertaken as at the financial statement date (cash flow hedge);
trade receivables and payables and other receivables and payables are recorded under current or non-current assets/liabilities in relation to the envisaged date of collection or payment.
Other current assets are recorded, at the time of initial recognition, at fair value and subsequently at amortised cost on the basis of the effective interest rate method. If there is objective evidence of impairment indicators, the asset is written down to an extent so that it is equal to the discounted back value of the flows, which can be obtained in the future.
Impairment losses are recognised in the income statement. If, in subsequent periods, the reasons for the previous impairments cease to exist, the value of the assets is reinstated up to the extent of the value, which would have derived from the application of the amortised cost if the impairment had not been made.
The white certificates are allocated in relation to the achievement of energy savings via the application of efficient systems and technologies.
The white certificates are recognised in the accounts on an accruals basis under "Other income", in proportion to the TOE (tonne of oil equivalent) savings effectively made in the period.
The recognition of the same is carried out at the average annual market value unless the yearend market value is significantly lower. The decreases due to sales of white certificates matured during the period or in previous periods are valued at the disposal price. The capital gains and losses deriving from the sales of certificates in periods different to those of maturity are recorded respectively under "Other income" or "Other costs".
Non-current assets (and disposal groups) classified as held for sale are valued at the lower of their previous book value and fair value net of sales costs. Non-current assets (and groups of assets being disposed) are classified as held for sale when their book value is expected to be recovered through a sale transaction rather than through their use in the company's operations. This condition is only met when the sale is considered highly probable and the asset (or group of assets) is available for immediate sale in its current conditions. The first condition exists when Management has made a commitment to the sale; this should take place within twelve months from the date of classification under this item. From the date in which these assets are classified in the category of non-current assets held for sale, the relative depreciation is suspended.
Inventories are recognised at purchase or production cost, inclusive of accessory charges, determined by applying the weighted average cost method or the estimated realisable value calculated on the basis of the market trend net of the sales costs, whichever is the lower.
Consequent to the changes made to the employee severance indemnity (TFR) by Italian Law No. 296 dated 27 December 2006 ("2007 Finance Bill") and subsequent Decrees and Regulations issued in the first few months of 2007, within the sphere of the supplementary welfare reform the related Provision is recognised as follows:
Termination indemnity fund accrued as of 1 January 2007: falls within the category of defined-contribution plans both in the event of opting for supplementary welfare and in the case of assignment to the Treasury Fund of INPS. The accounting treatment is similar to that existing for other kinds of contributory payments.
Termination indemnity fund accrued as of 31 December 2006: this remains a definedbenefits plan determined by applying an actuarial-type method; the amount of the rights accrued in the period by the employees is booked to the Income statement under the item payroll and related costs while the figurative financial expense which the company would incur if a loan was requested from the market for an amount equal to the severance indemnity is booked to net financial income (expense). The actuarial gains and losses which reflect the effects deriving from changes in the actuarial hypotheses used are recognised under other comprehensive income in accordance with the matters envisaged by IAS 19 Employee benefits, section 93A.
IFRS 2 sets forth that the stock options are to be classified within the scope of "share-based payments" and provides, for the type classified as equity-settled" (where the payment is regulated using instruments representative of equity), for the determination - as of the date of assignment of the fair value - of the option rights issued and the related recognition as personnel expense to be spread in a linear manner over the period of accrual of the rights (the so-called vesting period) with the recording of a matching balance under shareholders' equity reserves. This treatment is carried out on the basis of the estimate of the rights, which will effectively accrue in favour of the employees, taking into consideration the conditions of availability of the same not based on the market value of the rights.
The accounting treatment of other long-term benefits is similar to that for the postemployment benefit plans, with the exception of the fact that the actuarial gains and losses and costs deriving from prior employment services are recognised in the income statement in full in the period they accrue.
Provisions for risks and charges are allocated exclusively in the presence of a current obligation, consequent to past events, which can be legal, contractual in type or derive from declarations or conduct of the company such as to lead third parties to validly expect that the company itself is responsible or assumes responsibility for fulfilling an obligation (so-called implicit obligations). If the financial effect of time is significant, the liability is discounted back; the effect of this discounting back is recorded under financial expense.
Conversely, no allocation is made against risks for which the onset of a liability is only possible. In this case, a mention is entered into the appropriate information section regarding commitments and risk, and no allocation is made.
Revenues and income, costs and expense are recognised net of returns, discounts, allowances and premiums as well as the taxes directly associated with the sale of the goods and the provision of the services.
Sales revenues are recognised at the time ownership is transferred, which as a rule takes place on delivery or shipment of the goods. Revenues for the provision of services are recognised with reference to the stage of completion of the activities to which they refer; in particular, revenues for washing, wash-hire, sterilisation and other services are recognised in the period in which they were provided, even if not yet invoiced, and are determined by supplementing those recognised by means of advance payment invoicing with appropriate estimates.
The revenues are recognised at fair value in consideration of what has been received and represent the amount of the goods supplied and/or services provided.
The costs are correlated to goods and services sold or consumed in the period or deriving from systematic allocation, or when it is not possible to identify the future utility of the same, they are recognised and booked directly to the income statement.
Financial income and expense is recognised on an accruals basis. Financial expense is capitalised as part of the cost of property, plant and equipment and intangible assets to the extent it refers to the purchase, construction or production of the same. Dividends are recognised when the right to collection by the shareholder arises; this normally takes place in the period the shareholders' meeting of the investee company, which resolves the distribution of profits or reserves, is held.
N. Income taxes
Current income taxes are recognised on the basis of an estimate of the taxable income in compliance with the rates and current provisions, or essentially approved at the year-end date.
Prepaid and deferred taxes are calculated on the timing differences between the value assigned to an asset or liability in the financial statements and the corresponding values recognised for tax purposes, on the basis of the rates in force at the time the timing differences will reverse. Prepaid taxes are only recorded to the extent that it is probable that there is taxable income available against which they can be used. The recoverability of the prepaid taxes recorded in previous years is valued as of closure of each set of financial statements.
When the changes in the assets and liabilities to which they refer are directly recognised under other comprehensive income, the current taxes, prepaid tax assets and deferred tax liabilities are also directly booked to other comprehensive income.
Deferred tax assets and liabilities are offset only if there is a legal right to exercise the offset operation and if it is intended to settle the items on a net basis, or realise the asset and simultaneously extinguish the liability.
The basic earnings per share are calculated by dividing the profit/loss of the Servizi Italia Group by the weighted average of the ordinary shares in circulation during the period, excluding treasury shares. For the purpose of calculating the diluted earnings per shares, the weighted average of the shares in circulation is altered undertaking the conversion of all the potential shares, which have a dilutive effect.
The drafting of the financial statements requires the directors to apply accounting standards and methods, which, under certain circumstances, rest on difficult and subjective valuations and estimates based on past experience and assumptions, which are from time to time considered reasonable and realistic in relation to the related circumstances. The application of these estimates and assumptions influences the amounts shown in the financial statement schedules as well as the disclosure provided. The final results of the financial statement items for which the afore-mentioned estimates and assumptions have been used, may differ from those shown in the financial statements, which reveal the effects of the occurrence of an event subject to estimation, due to the uncertainty, which characterises the assumptions, and conditions on which they are based.
The accounting standards, which, more than others, require greater subjectivity by the directors when making the estimates and for which a change in the conditions underlying the assumptions used could have a significant impact on the consolidated financial data restated, are briefly described below.
Goodwill: in accordance with the accounting standards adopted for the drafting of the financial statements, the Group checks the goodwill each year so as to ascertain the existence of any impairment to be recognised in the income statement. In detail, the check in question involves the allocation of the goodwill to cash flow generating units and the subsequent determination of the related recoverable value. If it should emerge as lower than the book value of the cash flow generating units, steps shall have to be taken to impairment the goodwill allocated to the same. The allocation of the goodwill to the cash flow generating units and the determination of the latter leads to the adoption of estimates which depend on factors, which may change over time with consequent effects, possibly significant, with respect to the valuations made by the directors.
Laundry asset: the economic life of the Company's linen used in the production process has been estimated taking into consideration numerous factors that may affect it, such as for example the wear and tear deriving from the use and from the washing cycles. These factors are liable to changes over time and could significantly affect the depreciation of the linen.
The management of the financial risks within the Servizi Italia Group is carries out centrally within the sphere of precise organisational directives, which discipline the handling of the same and the control of all the transactions, which have strict relevance in the composition of the financial and/or trade assets and liabilities.
The Servizi Italia Group's activities are exposed to various risk types, including interest rate fluctuations and credit, liquidity, cash flow risks and currency-type risks.
To minimise such risks, the Servizi Italia Group has adopted timescales and control methods, which allow the company management to monitor this risk and inform the Board of Directors so that it may approve all transactions involving a commitment by the Company with respect to third parties.
When carrying out its activities, the Group is exposed to the following financial risks:
This is the risk associated with the volatility of the prices of the raw materials and the energy commodities, with particular reference to electricity and gas used in the primary production processes and of cotton to which the purchase cost of the linen is linked. Within the sphere of the tenders, the Group avails itself of clauses, which permit it to adjust the price of the services provided in the event of significant cost changes. The price risk is also controlled by means of the entering into of purchase agreements with price blocks and on-average annual timescales, joined by constant monitoring of the performance of the prices so as to identify opportunities for making savings.
The Group's net financial debt primarily comprises short-term payables which, as at 31 December 2017, represent approximately 56.10% of its debt, at an average annual rate of around 0.45%. In relation to the global financial crisis, the Company is monitoring the market and assessing the appropriateness of taking out hedging transactions on the rates in order to limit the negative impacts of changes in interest rates on the company's income statement. The table below demonstrates the effect that would be generated by a 0.5% increase or decrease in rates (in thousands of Euros).
| (thousands of Euros) | 0.5% rate increase 0.5% rate decrease |
||||
|---|---|---|---|---|---|
| 31 December 2017 | 31 December 2016 | 31 December 2017 | 31 December 2016 | ||
| Financial receivables | +72 | +90 | (72) | (90) | |
| Financial payables | +520 | +487 | (520) | (487) | |
| Transfer without recourse of the receivable | +458 | +428 | (458) | (428) |
Credit risk
The receivables, since they are essentially due from public bodies, are deemed certain in terms of collectability and, due to their nature, are not subject to the risk of loss. The collection times depend on the loans received, the Local Health Authorities, the Hospitals and the Regional Authorities and at present average collection days are 105.
A summary of the trade receivables net and gross of the related bad debt provisions and the stratification by maturity of receivables not written down is presented below:
| (thousands of Euros) | As at 31 December | ||
|---|---|---|---|
| 2017 | 2016 | ||
| Gross trade receivables | 80,432 | 76,643 | |
| Bad debt provisions | (5,893) | (5,502) | |
| Net trade receivables | 74,539 | 71,141 | |
| Guarantees in portfolio | None | None | |
| Falling due | 37,649 | 32,879 | |
| Past due by less than 3 months | 11,901 | 13,416 | |
| Past due by more than 3 months | 4,643 | 7,146 | |
| Past due by more than 7 months | 20,346 | 17,700 |
The credit risk is constantly monitored by means of periodic processing of past due situations which are subject to the analysis of the Group's financial structure. The Group is also equipped with recovery procedures for problem receivables and avails itself of the assistance of legal advisors in the event of disputes being established. Having taken into account the characteristics of the credit, the risk in question could become more significant in the event of an increase in the private customer component, however this aspect is mitigated by a careful selection and financing of the customers. The predominant presence of receivables due from public bodies makes the credit risk absolutely marginal and shifts attention more towards the collection times rather than the possibility of losses.
In relation to the Group, the liquidity risk is linked to two main factors:
Concentrating its business on orders contracted with the Public Administration Authorities, the Group is exposed to risks associated with delays in the payments for the receivables. In order to balance this risk, factoring agreements have been entered into with the without recourse formula, renewed also for 2017.
To correctly manage the liquidity risk, an adequate level of cash and cash equivalents must be maintained. In light of the predominantly public nature of the group's customers and the average collection times, cash and cash equivalents are mainly obtained from accounts receivable financing and medium-term loans. The Group has entered into covenants relating to the mortgage loans with Cassa di Risparmio in Bologna S.p.A., Banca Nazionale del Lavoro S.p.A., Cassa di Risparmio di Parma e Piacenza S.p.A., Banca Popolare di Milano S.Coop.a r.l.; therefore, the possibility of early repayment of these loans with respect to the repayment plan, is envisaged. As at 31 December 2017, the Group had observed the covenants that were undersigned.
The following table analyses the "worst case" scenario with reference to the financial liabilities (including trade payables and other payables) in which all the flows indicated are un-discounted future nominal cash flows, determined with reference to the residual contractual maturities, both for the principal portion and the interest portion. The loans have been included on the basis of the first maturity on which the repayment can be requested and the non-revolving loans are considered callable on demand. The financial payables with a maturity of less than or equal to 3 months are almost entirely characterised by self-liquidating bank loans for invoice advances which, in as such, are replaced on maturity by new advances on newly-issued invoices. It should also be considered that the Group only partially uses the short-term bank credit facilities available.
| (thousands of Euros) | Financial payables | Trade and other payables | Total | |||
|---|---|---|---|---|---|---|
| 31 December 2017 |
31 December 2016 |
31 December 2017 |
31 December 2016 |
31 December 2017 |
31 December 2016 |
|
| Less than or equal to 3 months | 30,944 | 19,581 | 68,507 | 61,995 | 99,451 | 81,576 |
| 3 to 12 months | 25,502 | 28,849 | 19,180 | 19,267 | 44,682 | 48,116 |
| 1 to 2 years | 23,005 | 20,264 | - | - | 23,005 | 20,264 |
| More than 2 years | 24,424 | 30,989 | - | - | 24,424 | 30,989 |
| Total | 103,875 | 99,683 | 87,687 | 81,262 | 191,562 | 180,945 |
Investments in Brazil, Turkey, India, Albania and recently Morocco have positioned the Group in an international context, exposing it to risks generated by fluctuations in the Euro/Real, Euro/Turkish Lira, Euro/Indian Rupee, Moroccan Euro/Mad and Euro/Albanese Lek exchange rates.
The exchange rate risk must only be hedged if it has a significant impact on the cash flows with respect to the reference currency. The costs and risks associated with a hedging policy must be acceptable both from a financial and commercial standpoint and accordingly the Group has decided not to enter into hedging transactions on exchange rates since no inflows of capital are envisaged over the short term.
It should be noted that the scope of consolidation includes subsidiary and associated companies that prepare their financial statements in a currency other than the Euro, the latter being used for the consolidated financial statements. This exposes the Group to translation risks, due to the conversion into Euro of the assets and liabilities of the subsidiaries and associated companies that operate with currencies other than the Euro. The main exposures to foreign exchange translation risk are constantly monitored and, at present, it is not believed necessary to adopt specific hedging policies covering these exposures. The following is a sensitivity analysis of the impacts on consolidated shareholders' equity of the two main currencies other than the Euro used within the scope of consolidation of the Servizi Italia group.
| (thousands of Euros) | 10% depreciation | |||
|---|---|---|---|---|
| 31 December 2017 | 31 December 2016 | 31 December 2017 | 31 December 2016 | |
| Brazilian Real | 3,482 | 3,885 | (2,849) | (3,179) |
| Turkish Lira | 283 | 159 | (231) | (130) |
|---|---|---|---|---|
| Total relative to consolidated shareholders' equity | 3,765 | 4,044 | (3,080) | (3,309) |
IFRS 13 requires that the classification of the financial instruments at fair value be determined on the basis of the quality of the sources of the inputs used in the valuation of the fair value.
The classification of IFRS 13 involves the following hierarchy:
The types of financial instruments present in the financial statement items are shown in the following table, with indication of the accounting treatment applied. Note that no financial instrument has been valued at fair value. With regard to the financial instruments valued at amortised cost, it is believed that the book value also represents a reasonable approximation of their valuation at fair value. With regard to equity investments in other companies, prices listed on active markets are not available. Therefore, their fair value cannot be measured reliably. For the same reason, they are measured at cost, possibly written down due to impairment.
| (thousands of Euros) | Financial assets | Financial liabilities | ||||
|---|---|---|---|---|---|---|
| At fair value in the income statement |
held to maturity |
loans and receivables |
available for sale |
At fair value in the income statement |
at depreciated cost |
|
| Measurement criteria | fair value | amortised cost |
amortised cost |
cost | fair value | amortised cost |
| Non-current assets | ||||||
| Equity investments in other companies |
3,612 | |||||
| Financial receivables | 6,987 | |||||
| Other assets | 5,281 | |||||
| Current assets | ||||||
| Trade receivables | 74,539 | |||||
| Current tax receivables | 1,972 | |||||
| Financial receivables | 7,946 | |||||
| Other assets | 10,703 | |||||
| Non-current liabilities | ||||||
| Due to banks and other lenders | 40,210 | |||||
| Other financial liabilities | 6,076 | |||||
| Current liabilities | ||||||
| Due to banks and other lenders | 51,383 |
| Trade payables | 69,854 |
|---|---|
| Current tax payables | 157 |
| Other financial liabilities | 5,176 |
| Other payables | 18,465 |
The Group's objectives, in relation to the management of the capital and the financial resources, involve safeguarding the ability of the Group to continue to operate with continuity, remunerate the shareholders and the other stakeholders and at the same time maintain an optimum capital structure so as to minimise the related cost.
For the purpose of maintaining or adapting the structure of the capital, the Group may adjust the amount of the dividends paid to the shareholders, reimburse or issue new shares or sell assets to reduce the debt. On a consistent basis with other operators, the Group controls capital on the basis of the debt ratio (gearing) calculated as the ratio between the net financial debt and net invested capital.
| (thousands of Euros) | Year ended as at 31 December | |||
|---|---|---|---|---|
| 2017 | 2016 | % | ||
| Shareholders' equity (B) | 141,639 | 137,756 | 3,883 | 2.8% |
| Net financial debt (a) (A) | 75,648 | 79,617 | (3,969) | -5.0% |
| Invested capital (C) | 217,287 | 217,373 | (86) | - |
| Gearing (A/C) | 34.8% | 36.6% |
a) The management has defined net financial debt as the sum of amounts Due to banks and other lenders net of Cash and cash equivalents and Current financial receivables.
With regard to the main dynamics, which have affected the debt, see section 6.25.
The Servizi Italia Group's segment reporting is defined as follows:
sterilization centres and, (iii) system validation and control services for sterilization processes and surgical instrument washing systems.
In terms of geographical areas, please note that the Servizi Italia Group:
As a result, information is not presented by geographical area, with the exception of revenue, which is broken down by region in paragraph 7.1.
The segment reporting reflects the structure of the reporting periodically analysed by management so as to manage the business, and is subject to periodic HQ reporting.
| (thousands of Euros) | Year ended as at 31 December 2017 | |||
|---|---|---|---|---|
| Wash-hire | Steril B | Steril C | Total | |
| Revenues from sales and services | 190,162 | 20,479 | 41,461 | 252,102 |
| Other income | 2,010 | 209 | 2,438 | 4,657 |
| Raw materials and materials | (16,010) | (7,036) | (2,900) | (25,946) |
| Costs for services | (58,900) | (5,001) | (12,965) | (76,866) |
| Personnel expense | (64,373) | (4,458) | (13,133) | (81,964) |
| Other costs | (1,726) | (128) | (300) | (2,154) |
| EBITDA (a) | 51,163 | 4,065 | 14,601 | 69,829 |
| Depreciation, amortisation and impairment | (44,004) | (2,002) | (7,447) | (53,453) |
| Operating profit EBIT | 7,159 | 2,063 | 7,154 | 16,376 |
| Financial income and expense and income and expense from equity investments in other companies | 1,385 | |||
| Profit before tax | 17,761 | |||
| Taxes | (3,397) | |||
| Profit (loss) for the year | 14,364 | |||
| Of which portion attributable to non-controlling interests | 594 | |||
| Of which portion attributable to shareholders of the parent | 13,770 |
| (thousands of Euros) | Year ended as at 31 December 2016 | |||
|---|---|---|---|---|
| Wash-hire | Steril B | Steril C | Total | |
| Revenues from sales and services | 180,085 | 19,165 | 38,466 | 237,716 |
| Other income | 2,116 | 294 | 1,967 | 4,377 |
| Raw materials and materials | (17,553) | (5,004) | (2,566) | (25,123) |
| Costs for services | (55,549) | (6,150) | (12,892) | (74,591) |
| Personnel expense | (60,544) | (4,346) | (11,929) | (76,819) |
| Other costs | (1,285) | (66) | (186) | (1,537) |
| EBITDA (a) | 47,270 | 3,893 | 12,860 | 64,023 |
| Depreciation, amortisation and impairment | (40,741) | (1,940) | (7,597) | (50,278) |
| Operating profit EBIT | 6,529 | 1,953 | 5,263 | 13,745 |
| Financial income and expense and income and expense from equity investments in other companies | (673) | |||
| Profit before tax | 13,072 |
| Taxes | (2,557) |
|---|---|
| Profit (loss) for the year | 10,515 |
| Of which portion attributable to non-controlling interests | 64 |
| Of which portion attributable to shareholders of the parent | 10,451 |
(a) EBITDA is not an accounting measurement under the IFRSs endorsed by the European Union. The Company management has defined EBITDA as the difference between the value of sales and services and operating costs before depreciation, amortisation, impairment and provisions.
The wash-hire line which in absolute terms represents 75.4% of the revenue of the Group, increased by 5.6% compared with 2016. The consolidation of Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi and the acquisition, on 7 July 2016, of Tintoria Lombarda Divisione Sanitaria S.r.l. in addition to growth in Brazil (+ 17.8%) - due to the increase in turnover on new orders and the 6.5% revaluation of the average real / euro exchange rate compared to 2016 - positively affected the line. Given the same scope of consolidation, the decrease in revenues within the Wash-hire line would have been about 0.6% in relation to the Italian area, where the renegotiation of contracts in the portfolio for the application of the spending review and the conclusion of the contractual relationship had a negative effect with some customers.
In terms of margins, the wash-hire EBITDA was 26.9% compared to 26.2% in the previous year, and EBIT decreased from 3.6% to 3.8%, with an increase of Euro 3,263 thousand in amortisation/depreciation, impairment and provisions. In terms of EBIT, the portion of amortisation/depreciation, impairment and provisions increased due to the higher depreciation of linen of the Brazilian companies and of Servizi Italia S.p.A., which, in addition to the effect of the merger of Tintoria Lombarda Divisione Sanitaria S.r.l., has been affected by the investments in linens with integrated traceability system for the new customers. On a like-for-like basis, EBITDA would amount to roughly 26.7% and EBIT approximately 3.3%. It should also be noted that the line was impacted in full by the one-off relating to the cessation of activities at the Barbariga (BS) facility.
Revenue from linen sterilisation services increased by 6.9% to Euro 20,479 thousand, accounting for 8.1% of total sales. The trend in revenues of the linen sterilisation line affects the choice of more and more hospitals to move from the use of reusable technical fabrics to disposable ones. The line was positively affected by the increase in the sales volume of disposable products to the Entity for the Centralized Management of Joint Services in Udine. In terms of margins, the EBITDA margin of the linen sterilisation business stood at 19.8% compared to 20.3% in the previous year, and EBIT margin increased to 10.1% from 10.2%.
Turnover in the surgical instrument sterilisation segment grew by 7.8% compared to the previous year. The line was impacted not only by the gradual increase in turnover from customers such as Azienda Ospedaliera Careggi (Florence), ASST of Valle Olona for the hospital of Busto Arsizio, Azienda Ospedaliera Universitaria Policlinico Messina "G. Martino", but also by the positive impact of the consolidation of Steritek S.p.A. for Euro 893 thousand. On a like-for-like basis, the growth in turnover would be 5.5%.
Surgical instrument sterilisation is the segment with the highest profitability both in terms of EBITDA, at 35.2%, and EBIT, which amounted to 17.3%. The greater incidence of amortisation of the surgical instrument sterilisation activities is linked to the nature of the business, which requires high investments for the creation, adaptation of the structural and plant engineering works and the purchase of surgical instruments. These investments are usually reimbursed over the duration of the contract by the customer.
The information in the tables below represents the assets directly attributable to investments by business segment.
| (thousands of Euros) | Year ended as at 31 December 2017 | |||
|---|---|---|---|---|
| Wash-hire | Steril B | Steril C | Total | |
| Total revenues from sales and services | 190,162 | 20,479 | 41,461 | 252,102 |
| Investments in property, plant and equipment and intangible assets | 42,955 | 1,888 | 4,718 | 49,561 |
| Depreciation of property, plant and equipment and amortisation of intangible assets | 43,161 | 2,002 | 7,444 | 52,607 |
| Net book value of property, plant and equipment and intangible assets | 98,394 | 3,804 | 26,612 | 128,810 |
| (thousands of Euros) | Year ended as at 31 December 2016 | |||
|---|---|---|---|---|
| Wash-hire | Steril B | Steril C | Total | |
| Total revenues from sales and services | 180,085 | 19,165 | 38,466 | 237,716 |
| Investments in property, plant and equipment and intangible assets | 36,920 | 2,175 | 3,925 | 43,020 |
| Depreciation of property, plant and equipment and amortisation of intangible assets | 39,963 | 1,939 | 7,597 | 49,499 |
| Net book value of property, plant and equipment and intangible assets | 96,847 | 4,764 | 30,212 | 131,823 |
As things stand, the disclosure regarding the book value of the segment assets and liabilities is deemed insignificant.
Changes in property, plant and equipment and the associated accumulated depreciation are shown in the table below.
| (thousands of Euros) | Land and buildings |
Plant and machinery |
Returnable assets |
Equipment | Other assets |
Assets under construction |
Total |
|---|---|---|---|---|---|---|---|
| Historical cost | 2,289 | 119,299 | 35,775 | 59,045 | 112,993 | 2,857 | 332,258 |
| Accumulated amortisation | (1,075) | (73,038) | (21,910) | (38,923) | (76,576) | - | (211,522) |
| Balance as at 1 January 2016 | 1,214 | 46,261 | 13,865 | 20,122 | 36,417 | 2,857 | 120,736 |
| Translation differences | 13 | 1,840 | 310 | 16 | 727 | 8 | 2,914 |
| Change in the scope of consolidation | 3,349 | 898 | 119 | 140 | 3,355 | - | 7,861 |
| Increases | 43 | 4,311 | 1,585 | 2,854 | 30,766 | 2,964 | 42,523 |
| Decreases | - | (211) | (4) | (61) | (257) | (27) | (560) |
| Amortisation | (154) | (8,201) | (3,836) | (5,732) | (29,756) | - | (47,679) |
| Reclassifications | 4 | 731 | 1,229 | 667 | 47 | (2,678) | - |
| Balance as at 31 December 2016 | 4,469 | 45,629 | 13,268 | 18,006 | 41,299 | 3,124 | 125,795 |
| Historical cost | 6,356 | 129,852 | 39,110 | 62,383 | 129,449 | 3,124 | 370,274 |
| Accumulated amortisation | (1,887) | (84,223) | (25,842) | (44,377) | (88,150) | - | (244,479) |
| Balance as at 31 December 2016 | 4,469 | 45,629 | 13,268 | 18,006 | 41,299 | 3,124 | 125,795 |
| Translation differences | (91) | (1,525) | (201) | (37) | (589) | (156) | (2,599) |
| Change in the scope of consolidation | 728 | 1,669 | 1 | 88 | 386 | 720 | 3,592 |
| Increases | 35 | 5,696 | 1,755 | 3,803 | 36,088 | 1,813 | 49,190 |
| Decreases | - | (212) | (1) | (112) | (706) | (51) | (1,082) |
| Amortisation | (201) | (8,237) | (3,616) | (5,737) | (33,097) | - | (50,888) |
|---|---|---|---|---|---|---|---|
| Write-downs (reinstatements) | - | 164 | (2) | - | - | 2 | 164 |
| Reclassifications | - | 2,222 | 822 | 86 | 24 | (3,154) | - |
| Balance as at 31 December 2017 | 4,940 | 45,406 | 12,026 | 16,097 | 43,405 | 2,298 | 124,172 |
| Historical cost | 7,088 | 131,312 | 32,137 | 62,106 | 136,051 | 2,298 | 370,992 |
| Accumulated amortisation | (2,148) | (85,906) | (20,111) | (46,009) | (92,646) | - | (246,820) |
| Balance as at 31 December 2017 | 4,940 | 45,406 | 12,026 | 16,097 | 43,405 | 2,298 | 124,172 |
Notes on the main changes:
The variation in the scope of consolidation relates to the acquisition of the Turkish companies Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve and Ticaret Ltd Şirketi andErgülteks Temizlik Tekstil Ltd. Sti, and the Italian company Steritek S.p.A.
The item Land and Buildings reported a variation of Euro 728 thousand relating to the Turkish companies, as well as an increase in investment of Euro 35 thousand by Servizi Italia S.p.A.
The change in the scope of consolidation, equal to Euro 1,669 thousand, refers for Euro 1,662 thousand to the Turkish companies and for Euro 7 thousand to Steritek S.p.A.
The increases in plant and machinery amounted to Euro 5,696 thousand. The latter primarily refer to the following:
In addition, the item includes reclassifications of Euro 2,222 thousand, of which Euro 1,425 thousand realised by Servizi Italia S.p.A, Euro 161 thousand relating to the Brazilian companies and Euro 636 thousand realised by the Turkish companies in the period.
These mainly refer to investments made at customers to construct and renovate existing plants used for washing and sterilisation activities. Therefore, the Company maintains control over, obtains benefits from and bears the operating risks of these plants. The entity maintains ownership of the plants at the end of the wash-hire/washing/sterilisation contract. On the basis of contractual commitments, the Group bore the cost of the partial renovation and expansion of the industrial laundry facilities owned by the contracting entities, to increase the efficiency of the rented linen washing and sanitation service. These costs have been amortised in accordance with the amortisation schedules linked to the duration of the existing contract with the contracting entities, which is less than the useful life of the works completed.
The item shows reclassifications for Euro 822 thousand, increases for Euro 1,755 thousand and changes in the consolidation scope equal to Euro 1 thousand related to the company Steritek S.p.A.
In particular, Euro 658 thousand relate to the start-up of the new Ariccia plant, Euro 490 thousand relating to the upgrading of the Castellina di Soragna plant, Euro 124 thousand for work carried out at the Montecchio Precalcino plant, Euro 88 thousand realised at the Arco plant of Trento, Euro 47 thousand for the expansion carried out at the Careggi Hospital, Euro 248 thousand for interventions carried out at ASST Spedali Civili of Brescia, Euro 119 thousand for interventions carried out for the Messina plant and Euro 425 thousand realised by the Brazilian companies for adjustments to comply with local regulations.
The change in the scope of consolidation (Euro 88 thousand) relates to the consolidation of the company Steritek S.p.A.
The increase in investments for 2017, equal to Euro 3,803 thousand, is mainly related to the purchase of surgical instruments for Euro 2,010 thousand (Euro 1,937 thousand from Servizi Italia S.p.A. and Euro 73 thousand from the subsidiary Se.Sa.Tre Scrl in liquidazione) and the purchase of equipment for use by Italian (Euro 1,537 thousand) and Brazilian (Euro 255 thousand) production sites.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | As at 31 December |
|---|---|---|
| 2017 | 2016 | |
| Linens and mattresses | 41,032 | 39,488 |
| Furniture and fixtures | 391 | 134 |
| Electronic machinery | 1,178 | 923 |
| Cars | 33 | 32 |
| Motor vehicles | 642 | 649 |
| Telephone switchboards | 79 | 73 |
| Other | 50 | - |
| Total | 43,405 | 41,299 |
At 31 December 2017, the item "Other assets" showed a balance of Euro 43,405 thousand, of which Euro 386 thousand concerning the consolidation of Steritek S.p.A. (Euro 28 thousand) and Turkish companies (Euro 358 thousand).
The investments made during the year mainly derive from purchases of linen and mattresses, which totalled Euro 34,982 thousand, of which Euro 5,077 thousand in Brazil and Euro 29,905 thousand in Italy. These investments allow for increasingly efficient management of the warehouse supplied, so as to deal with both a partial renewal of contracts and a first supply for contracts acquired during the year in question.
These are primarily investments under way at the end of the year.
During the year there were increases of Euro 1,813 thousand and reclassifications of completed investments for Euro 3,154 thousand.
The item in question is broken down as follows as at 31 December 2017:
| (thousands of Euros) | as at 31 December 2017 |
|---|---|
| Sterilisation centre investments | 749 |
| Laundering facility investments | 503 |
| Investments on contracts | 807 |
| Investments at the production sites of the subsidiaries Lavsim Higienização Têxtil S.A., Maxlav L.E. S.A. and Aqualav Serviços De Higienização Ltda |
231 |
| Total | 2,290 |
Investments for sterilization plants mainly concern the construction or renovation of sterilization centres for surgical instruments. In particular, these investments were made by Servizi Italia S.p.A. and, in 2017, referred to the construction of the new sterilization plant for surgical instruments at ASST della Valle Olona for the hospital facilities in Busto Arsizio (Euro 519 thousand).
The investments for laundries are related not only to the interventions carried out on laundries and premises owned by the contracting entities (Euro 50 thousand), but also to the acquisition of new plants and machinery and / or adjustments to existing ones (Euro 453 thousand).
Investments for orders reported an increase of Euro 650 thousand during the year and reclassifications of Euro 788 thousand. These investments mainly relate to the reading machines for linen tracking systems allocated to different wardrobes.
There is no property, plant and equipment under guarantee in favour of third parties.
A breakdown as at 31 December 2017 and 2016 of the commitments for operational leasing fees is provided below:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Within 12 months | 3,861 | 3,528 |
| Between one and five years | 13,387 | 10,978 |
| Beyond 5 years | 11,549 | 11,226 |
| Total | 28,797 | 25,732 |
This item changed as follows:
| (thousands of Euros) | Trademarks and software |
Customer contracts portfolio |
Other intangible assets | Assets under construction and payments on account |
Total |
|---|---|---|---|---|---|
| Historical cost | 3,317 | 3,613 | 1,016 | 374 | 8,320 |
| Accumulated amortisation | (2,855) | (1,639) | (353) | - | (4,847) |
| Balance as at 1 January 2016 | 462 | 1,974 | 663 | 374 | 3,473 |
| Translation differences | (4) | - | - | 51 | 47 |
| Change in the scope of consolidation | 12 | 3,822 | - | - | 3,834 |
| Increases | 454 | - | - | 43 | 497 |
| Decreases | (3) | - | - | - | (3) |
| Amortisation | (490) | (822) | (508) | - | (1,820) |
| Reclassifications | 395 | - | - | (395) | - |
| Balance as at 31 December 2016 | 826 | 4,974 | 155 | 73 | 6,028 |
| Historical cost | 4,466 | 7,435 | 1,016 | 73 | 12,990 |
| Accumulated amortisation | (3,640) | (2,461) | (861) | - | (6,962) |
| Balance as at 31 December 2016 | 826 | 4,974 | 155 | 73 | 6,028 |
| Translation differences | (44) | - | - | - | (44) |
| Change in the scope of consolidation | 6 | - | - | - | 6 |
| Increases | 349 | - | - | 22 | 371 |
| Decreases | (4) | - | - | - | (4) |
| Amortisation | (504) | (1,060) | (155) | - | (1,719) |
| Write-downs (reinstatements) | - | - | - | - | - |
| Reclassifications | 47 | - | - | (47) | - |
| Balance as at 31 December 2017 | 676 | 3,914 | - | 48 | 4,638 |
| Historical cost | 4,662 | 7,435 | 1,016 | 48 | 13,161 |
| Accumulated amortisation | (3,986) | (3,521) | (1,016) | - | (8,523) |
| Balance as at 31 December 2017 | 676 | 3,914 | - | 48 | 4,638 |
Investments in intangible assets mainly relate to software.
The item reports a variation in consolidation of Euro 6 thousand relative for Euro 3 thousand to the company Steritek S.p.A. and for Euro 3 thousand to the Turkish companies, increases of Euro 349 thousand (of which Euro 295 thousand for Servizi Italia S.p.A., Euro 52 thousand for Brazilian companies and Euro 2 thousand for Turkish companies), as well as reclassifications for Euro 47 thousand.
Goodwill is allocated to the Servizi Italia Group's cash generating units identified on the basis of geographical area, which reflects the areas of operation of the companies acquired over the years.
Goodwill is allocated by geographical area as follows:
| (thousands of Euros) | As at 31 December 2016 | Increases /(decreases) | Translation differences | As at 31 December 2017 |
|---|---|---|---|---|
| CGU Italy | 43,243 | 2,121 | - | 45,364 |
| CGU Turkey | - | 17,067 | (2,001) | 15,066 |
| CGU Brazil | 11,991 | - | (1,637) | 10,354 |
| Total | 55,234 | 19,188 | (3,638) | 70,784 |
The change in the value of the goodwill of CGU Italy is due to the process for the book allocation of the purchase price for Steritek S.p.A. Therefore, as of the current year, the Italian CGU is in turn made up of CGU Servizi Italia and CGU Steritek. With regard to CGU Brazil and CGU Turkey, the change is due to the foreign currency translation difference resulting from the change in the respective exchange rates (respectively Brazilian Real and Turkish Lira). With the exception of the portion of goodwill relating to CGU Steritek (surgical instrument sterilization operating segment), all other goodwill is included in the wash hire operating segment, as defined for the purposes of the sector reporting required by IFRS 8.
The impairment test is carried out by comparing the overall book value of each goodwill and total net assets, that are autonomously able to produce cash flows (CGU) and to which said value can be reasonably allocable, with the greater value between the one used for the CGU and the value that is recoverable through sale. In detail, the value in use was determined by applying the "discounted cash flow" method discounting back the operating flows emerging from economicfinancial projections relating to a period of five years. The long-term plans which have been used for the impairment tests were approved by advance by the Boards of Directors of the subsidiaries and/or by the parent company Servizi Italia S.p.A. The underlying hypotheses of the plans used reflect past experience and the information gathered at the time of purchase for the Brazilian/Turkish market, and are consistent with the external sources of information available. The Company has taken into consideration, with reference to the period in question, the expected performance resulting from the industrial plan set up for the 2018-2022 period.
The terminal value is calculated by applying to the operating cash flow pertaining to the last year of the plan appropriately normalised, a percentage growth factor of 1.40% for CGU Italy, 4.02% for CGU Brazil and 7.51% for CGU Turkey, substantially representative, on the one hand, of the inflation rate expected in Italy, Brazil and Turkey, based on which the service prices of the offer have been index-linked, and, on the other hand, of the uncertainties that characterise the various reference markets, particularly the Brazilian and Turkish markets which have macroeconomic risks. The discounting rates used to discount the cash flows of the CGUs located in Italy are 5.87% (5.08% the previous year), 10.94% for CGU Brazil (11.47% in the previous year) and 14.22% for the CGU Turkey (not present in the previous year). These rates reflect the current valuations of the market with reference to the current value of money and the specific risks associated with the activities. The discount rates have been estimated, after taxes, on a consistent basis with the cash flows considered, by means of the determination of the weighted average cost of the capital (WACC).
A sensitivity analysis was carried out about the recoverability of the accounting value of the goodwill according to the changes in the main assumptions used to determine the book value also considering a conservative approach to the choice of the financial parameters above. The analysis carried out showed that, to make the book value equal to the recoverable value, it would be necessary to:
~ For CGU Servizi Italia: (i) a reduction in the growth rate of the terminal values of 3.0 percentage points or (ii) an increase of 39% of the WACC adopted or (iii) an annual reduction of the reference EBIT of 35%, all while maintaining unchanged, from time to time, the other assumptions of the plan.
With reference to 31 December 2017 and the previous years, the impairment tests carried out did not reveal any impairments to be booked to the recorded goodwill.
| 6.4 | Equity-accounted investments | |
|---|---|---|
| ----- | ------------------------------ | -- |
This item changed as follows:
| (thousands of Euros) | Change in 2017 | ||||||
|---|---|---|---|---|---|---|---|
| 1 January 2017 |
Increases | Decreases | Revaluations | Impairment | 31 December 2017 | ||
| Associates and jointly controlled companies | |||||||
| Saniservice Sh.p.k. | (296) | - | - | 251 | - | (45) | |
| Ankateks Turizm Insaat Tekstil Temizleme Sanayi Ve | 13,441 | - | (13,767) | 326 | - | - | |
| Finanza & Progetti S.p.A. | 5,194 | 3,060 | - | 996 | - | 9,250 | |
| Brixia S.r.l. | - | 3,002 | - | - | (12) | 2,990 | |
| Arezzo Servizi S.c.r.l. | 5 | - | - | - | - | 5 | |
| CO.SE.S S.c.r.l. | 3 | - | - | - | - | 3 | |
| PSIS S.r.l. | 4,201 | - | - | - | (303) | 3,898 | |
| Ekolav S.r.l. | 69 | - | - | 46 | - | 115 | |
| Steril Piemonte S.c.r.l. | 1,973 | - | - | - | - | 1,973 | |
| AMG S.r.l. | 2,329 | - | (62) | 128 | - | 2,395 | |
| Iniziative Produttive Piemontesi S.r.l. | 1,127 | - | - | 27 | - | 1,154 | |
| SE.STE.RO. S.r.l. in liquidazione | 112 | - | - | 2 | - | 114 | |
| Piemonte Servizi Sanitari S.c.r.l. | 3 | - | - | - | - | 3 | |
| Servizi Sanitari Integrati Marocco S.a.r.l. | - | 89 | - | - | (5) | 84 | |
| SAS Sterilizasyon Servisleri A.Ş. | 266 | 153 | - | 47 | - | 466 | |
| Shubhram Hospital Solutions Private Limited | 337 | - | - | - | (485) | (148) | |
| Total | 28,764 | 6,304 | (13,829) | 1,823 | (805) | 22,257 |
For the Indian company Shubhram Hospital Solutions Private Limited, a sensitivity analysis was carried out on the recoverability of the accounting value of the investment based on a change in the main assumptions used to calculate the use value, although in consideration of the conservative approach applied to the choice of financial parameters (the discount rate used for discounting the cash flows of the CGUs located in India is 10.75%). The terminal value is calculated by applying to the operating cash flow, related to the last year of the plan adequately normalised, a perpetual growth factor of 4.95% for the CGU, substantially representative, on the one hand, of the expected inflation rate in India based on which the prices of the services offered were index-linked and, on the other hand, of the uncertainties that characterise the reference market. The analysis carried out has shown that, to make the carrying value the same as the recoverable value, the following would be necessary for CGU India: (i) a reduction in the growth rate of the terminal values of 1.99 percentage points or (ii) an increase of 20.2% of the WACC adopted or (iii) an annual reduction of the EBIT of reference of 20.3%, all of this in order to maintain unchanged, from time to time, the other assumptions of the plan.
The total values of the current and non-current assets, current and non-current liabilities, revenues, costs and profit/loss of the equity investments carried at equity are shown below:
| (thousands) | As at 31 December 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Company name | Currency | Non current assets |
Current assets |
Non current liabilities |
Current liabilities |
Shareholders' equity |
Revenues | Costs | Profit/(Loss) |
| SAS Sterilizasyon Servisleri A.Ş. | TL | 1,897 | 2,544 | - | 282 | 4,159 | 2,996 | 1,950 | 1,046 |
| Saniservice Sh.p.k. | Lek | 1,266,616 | 833,056 | 1,231,942 | 887,913 | (20,183) | 945,820 | 832,274 | 113,546 |
| Shubhram Hospital Solutions Private Limited | INR | 916,912 | 118,008 | 558,098 | 499,008 | (22,186) | 326,222 | 392,797 | (66,575) |
| Finanza & Progetti S.p.A.* | Eur | 18,469 | 16,370 | 13 | 23,840 | 10,986 | 23,059 | 21,539 | 1,520 |
| Arezzo Servizi S.c.r.l. | Eur | 1,064 | 638 | 267 | 1,425 | 10 | 2,349 | 2,349 | - |
| CO.SE.S S.c.r.l.** | Eur | 1 | 1,170 | 129 | 1,032 | 10 | 2,794 | 2,794 | - |
| PSIS S.r.l. | Eur | 21,523 | 4,034 | 2,884 | 14,876 | 7,797 | 8,223 | 8,828 | (605) |
| Ekolav S.r.l. | Eur | 2,087 | 1,300 | 843 | 2,313 | 231 | 2,867 | 2,775 | 92 |
| Steril Piemonte S.c.r.l. | Eur | 4,558 | 2,279 | - | 2,892 | 3,945 | 2,721 | 2,721 | - |
| AMG S.r.l. | Eur | 1,900 | 2,681 | 545 | 1,339 | 2,697 | 4,074 | 3,819 | 255 |
| SE.STE.RO S.r.l. in liquidazione | Eur | - | 456 | - | 1 | 455 | - | (8) | 8 |
| Iniziative Produttive Piemontesi S.r.l. | Eur | 690 | 3,174 | 247 | 1,801 | 1,816 | 3,606 | 3,535 | 71 |
| Brixia S.r.l. | Eur | 2 | 5,294 | - | 5,249 | 47 | 18,591 | 18,599 | (8) |
| Servizi Sanitari Integrati Marocco S.a.r.l. | Mad | 500 | 390 | - | 78 | 812 | - | 86 | (86) |
| Piemonte Servizi Sanitari s.c.r.l. | Eur | 15 | 686 | - | 691 | 10 | 1,120 | 1,120 | - |
* The reported data refer to the consolidated figures with the subsidiary Ospedal Grando S.p.A.
** Balance as at 31 December 2016
The overall values of cash and cash equivalents, current and non-current financial liabilities, impairments and amortisation/depreciation, interest income, interest expense and income taxes of the jointly controlled companies as at 31 December 2017, are presented below:
| (thousands) | As at 31 December 2017 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Company name | Currency | Cash and cash equivalents |
Current fin. liabilities |
Non current fin. liabilities |
Impairments and amortisation/ depreciation |
Receivable Interest |
Interest expense |
Income taxes |
||
| SAS Sterilizasyon Servisleri A.Ş. | TL | 745 | - | - | 292 | 18 | - | 109 | ||
| Shubhram Hospital Solutions Private Limited | INR | 4,455 | 424,775 | 558,098 | 143,218 | 437 | 17,167 | - | ||
| Saniservice Sh.p.k. | Lek | 96,812 | 138,368 | 1,231,942 | 199,309 | - | 123,087 | 42,154 | ||
| Servizi Sanitari Integrati Marocco S.a.r.l. | Mad | 285 | - | - | - | - | 3 | - | ||
| Finanza & Progetti S.p.A.* | Eur | 6,830 | 14,571 | - | 3,187 | - | 3 | 173 | ||
| Arezzo Servizi S.c.r.l. | Eur | 1 | 800 | - | 632 | - | 9 | 13 | ||
| PSIS S.r.l. | Eur | 172 | 10,537 | 2,007 | 2,785 | 3 | 225 | 12 | ||
| AMG S.r.l. | Eur | 974 | 1,000 | - | 527 | 5 | - | 86 | ||
* The reported data refer to the consolidated figures with the subsidiary Ospedal Grando S.p.A.
| (thousands of Euros) | Change in 2017 | |||
|---|---|---|---|---|
| 1 January 2017 | Increases | Impairment losses/Decreases |
31 December 2017 | |
| Asolo Hospital Service S.p.A. | 464 | - | - | 464 |
| Prosa S.p.A. | 462 | - | - | 462 |
| PROG.ESTE S.p.A. | 1,212 | - | - | 1,212 |
| Progeni S.p.A. | 380 | - | - | 380 |
| Sesamo S.p.A. | 353 | - | - | 353 |
| Synchron Nuovo San Gerardo S.p.A. | 344 | - | - | 344 |
| SPV Arena Sanità | 278 | - | - | 278 |
| Futura S.r.l. | 25 | - | - | 25 |
| Brixia S.r.l. | 2 | - | (2) | - |
| Other | 109 | - | (15) | 94 |
| Total | 3,629 | - | (17) | 3,612 |
The item in question changed as follows in 2017:
During the year, the shares (equal to Euro 15 thousand) of the C.C.F.S. Consortium were sold.
Shareholdings in other companies relate to investments of a strategic and production nature, all of which are in fact held in relation to the management of contracts or licenses. These shareholdings have been valued at purchase or founding cost, since there is no active market for these securities which, for the most part, cannot even be freely transferred to third parties given that they are subject to rules and agreements which in fact prevent free circulation. However, it is considered that this valuation method approximates the fair value of the security.
The total values of the assets, liabilities, revenues and profit/loss, on the basis of the last set of available financial statements, of the main equity investments in other companies held by the Company are presented below, along with related shareholding held as at 31 December 2017:
| (thousands of Euros) | Financial statement figures as at 31 December 2016 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Registered office |
Assets | Liabilities | Revenues | Profit/(Loss) | Shareholding as at 31 December 2017 |
||||
| Asolo Hospital Service S.p.A. | Asolo (TV) | 101,476 | 95,763 | 43,007 | 467 | 7.03% | |||
| Prosa S.p.A. | Carpi (MO) | 9,580 | 4,267 | 1,979 | 1,052 | 13.20% | |||
| Progeni S.p.A. | Milan | 298,032 | 304,581 | 44,258 | 999 | 3.80% | |||
| Sesamo S.p.A. | Carpi (MO) | 38,137 | 30,643 | 18,113 | 1,040 | 12.17% | |||
| Prog.este. S.p.A. | Carpi (MO) | 217,220 | 218,366 | 35,015 | 307 | 10.14% |
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Prosa S.p.A. | 189 | 255 |
| Sesamo S.p.A. | 353 | 353 |
| Total | 6,987 | 7,826 |
|---|---|---|
| Futura S.r.l. | 158 | 158 |
| Synchron Nuovo San Gerardo S.p.A. | 296 | 275 |
| SPV Arena Sanità | 476 | 461 |
| Ankateks Turizm Insaat Tekstil Temizleme Sanayi Ve | - | 809 |
| Summano Sanità S.p.A. | 2 | 2 |
| Saniservice Sh.p.K. | 4,000 | 4,000 |
| Prog.Este S.p.A. | 531 | 531 |
| Progeni S.p.A. | 982 | 982 |
Financial receivables refer to interest-bearing loans granted to Prosa S.p.A. (rate equal to 3.50% plus 3-month Euribor), Sesamo S.p.A. (rate equal to 3% plus 20-year IRS), Progeni S.p.A. (rate at 7.31%), Prog.Este. S.p.A. (rate at 6.96%), Summano Sanità S.p.A. (rate at 6.25%), Arena Sanità S.p.A. (rate 3.4% plus 6-month Euribor) and Synchron S.p.A. (rate 8%) and with a duration equal to the global service contracts for which the companies were established (deadlines respectively on 21 February 2031, 31 December 2037, 31 December 2033, 31 December 2031, 31 December 2035, 20 August 2032, 14 June 2042), as well as the loans granted to the company Futura S.r.l. (expiration on 31 December 2035) and to the Albanian subsidiary company Saniservice Sh.p.K. The loan granted to Prosa S.p.A. decreased due to a partial repayment occurred in 2017, while the loans granted to the companies Arena Sanità S.p.A. and Synchron S.p.A. increased due to the capitalisation of the interest accrued during the year. The reduction in the item with respect to 31 December 2016 is attributable to the acquisition of control of the company Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi.
This item changed as follows:
| (thousands of Euros) | Share Capital increase costs |
Property, plant and equipment |
Employee benefits |
Previous tax losses |
Other costs with deferred deductibility |
Total |
|---|---|---|---|---|---|---|
| Deferred taxation as at 1 January 2016 | 48 | 784 | 134 | 416 | 418 | 1,800 |
| Change in the consolidation area | - | - | 12 | - | 7 | 19 |
| Changes recognised in the income statement | (36) | (28) | - | 502 | 32 | 470 |
| Changes recognised under shareholders' equity | - | - | - | - | - | - |
| Changes recognised in other comprehensive income | - | - | 62 | - | - | 62 |
| Deferred taxation as at 31 December 2016 | 12 | 756 | 208 | 918 | 457 | 2,351 |
| Change in the consolidation area | - | - | - | - | 67 | 67 |
| Changes recognised in the income statement | (9) | 34 | (21) | (116) | (189) | (301) |
| Changes recognised under shareholders' equity | - | - | - | - | - | - |
| Changes recognised in other comprehensive income | - | - | (5) | - | - | (5) |
| Deferred taxation as at 31 December 2017 | 3 | 790 | 182 | 802 | 335 | 2,112 |
Deferred tax assets referring to property, plant and equipment represent the deferred taxation related to the ordinary process of depreciation of the linen.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Substitute tax Italian Decree Law 185/2008 subsequent years | 2,885 | 3,313 |
| Receivables for IRES reimbursement request pursuant to Art. 2 par. 1-quater Italian Decree Law No. 201 | 175 | 1,833 |
| Aqualav receivable, in escrow account | 2,019 | 2,343 |
| Other non-current assets | 202 | 162 |
| Total | 5,281 | 7,651 |
Other non-current assets fell from Euro 7,651 thousand as at 31 December 2016 to Euro 5,281 thousand as at 31 December 2017. The reduction in the item is due to the collection, in June 2017, of part of the receivable of the IRES refund request pursuant to art. 2, paragraph 1-quater Decree Law no. 201. The drop in substitute tax is due to the release to the income statement for the pertinent deduction of the goodwill released in 2016 and previous years. This substitute tax was recognised as prepaid current taxes and is released to the income statement over the period of time in which the Group benefits from the tax deductions connected with the goodwill. The reduction in the receivable in escrow account of Aqualav Serviços De Higienização Ltda is due to the devaluation of the Real.
At 31 December 2017, non-current assets held for sale totalled Euro 334 thousand and refer to linen and surgical instruments of the company Se.Sa.Tre. S.c.r.l. in liquidazione, reclassified to the balance sheet item given that their book value is recoverable through a transfer, and carried out in the first few months of 2018.
Inventories at year-end primarily included disposable washing products, chemical products, packaging, spare parts and consumables. No impairments were made to the value of the inventories in the current and previous years.
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Due from third parties | 71,000 | 69,878 |
| Due from associates | 3,353 | 896 |
| Due from parent companies | 184 | 366 |
| Receivables from companies under the control of the parent companies | 2 | 1 |
| Total | 74,539 | 71,141 |
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Due from customers | 76,893 | 75,380 |
| Bad debt provision | (5,893) | (5,502) |
| Total | 71,000 | 69,878 |
The Company took part in a number of transactions concerning the transfer of receivables described below:
The bad debt provision changed as follows in 2017 and in 2016:
| (thousands of Euros) | |
|---|---|
| Balance as at 1 January 2016 | 5,531 |
| Uses | (533) |
| Adjustments | (81) |
| Provisions | 585 |
| Balance as at 31 December 2016 | 5,502 |
| Uses | (51) |
| Adjustments | (252) |
| Provisions | 694 |
| Balance as at 31 December 2017 | 5,893 |
The balance as at 31 December 2017 of trade receivables due from associates and jointly controlled companies, amounting to Euro 3,353 thousand, is essentially represented by trade receivables due from Companies towards the Brixia S.r.l. for Euro 1,371 thousand, Saniservice Sh.p.k. for Euro 811 thousand, PSIS S.r.l. for € 342 thousand, Steril Piemonte S.c.r.l. for Euro 278 thousand, AMG S.r.l. for Euro 252 thousand, Finanza & Progetti S.p.A. for Euro 127 thousand and Akan & Ankateks JV for Euro 84 thousand. The change when compared to the 31 December 2016 figure is primarily attributable to the company Brixia S.r.l. and services contracted with ASST Spedali Civili of Brescia. Furthermore, there is a credit balance due from the parent company Coopservice Soc.Coop. p.A. for Euro 184 thousand.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Tax receivables | 6,289 | 5,859 |
| Tax payables | (4,317) | (2,994) |
| Total | 1,972 | 2,865 |
This item includes primarily the amount exceeding the receivable for advances on the current taxes of 2017, net of related tax payables of the Parent Company.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Asolo Hospital Service S.p.A. | 1,777 | 1,673 |
| P.S.I.S. S.r.l. | 3,891 | 3,847 |
| Ekolav S.r.l. | 172 | 174 |
| Arezzo Servizi S.c.r.l. | 403 | 151 |
| Steril Piemonte S.c.r.l. | 651 | 1,153 |
| Iniziative Produttive Piemontesi S.r.l. | 90 | 90 |
| Gesteam S.r.l. | 313 | 313 |
| Other | 649 | 787 |
| Total | 7,946 | 8,188 |
Financial receivables are for loans granted to the companies indicated above, which are due within the year or repayable on demand. The decrease compared to 31 December 2016 is substantially due to the decrease in the loan granted to the company Steril Piemonte S.c.r.l. for Euro 500 thousand, the increase in the loan granted to the company Arezzo Servizi S.c.r.l. for Euro 250 thousand and interest accrued on individual loans and not yet collected.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Due from others | 9,623 | 11,223 |
| Prepayments | 956 | 836 |
| Guarantee deposits receivable | 120 | 137 |
| Accrued income | 4 | 7 |
| Total | 10,703 | 12,203 |
The item Receivables from others is composed of the receivables of the subsidiaries Se.Sa.Tre. S.c.r.l. in liquidazione and San Martino 2000 from the consortium Servizi Ospedalieri S.p.A. in the amount of Euro 2,120 thousand, the VAT receivable for Euro 4,509 thousand and, for the remaining part, mainly by advances and receivables toward welfare institutions, all collectable within the year.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Bank and postal deposits | 7,950 | 5,434 |
| Cheques | - | 1 |
| Cash al bank and in hand | 49 | 28 |
| Total | 7,999 | 5,463 |
The item in question increased by Euro 2,536 thousand compared to 31 December 2016. This increase is essentially due to the cash and cash equivalents of the Turkish subsidiary Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi.
The share capital (fully underwritten and paid up) of Servizi Italia S.p.A. is equal to Euro 31,809,451, represented by n. 31,809,451 ordinary shares with a par value of € 1.00 each.
During 2017, the Company purchased 53,750 treasury shares with a value of Euro 220 thousand, equivalent to 0.17% of the share capital, at the average book price of Euro 4.09 per share and sold 391,420 treasury shares for a value of Euro 1,840 thousand, equating to 1.23% of the share capital at an average sales price of Euro 4.70 per share. Following these transactions, the Company held 10,550 treasury shares amounting to 0.03% of the share capital as at 31 December 2017. The countervalue of treasury shares held on 31 December 2017, equal to Euro 49 thousand, was classified as a reduction of the share capital for the nominal value of the same, equal to Euro 11 thousand, and as a reduction of the share premium reserve for the excess of purchase value compared to the nominal value, equal to Euro 38 thousand.
The Legal reserve and Other reserves increased due to the allocation of the 2016 profit of the Company as per the resolution of the shareholders' meeting held on 20 April 2017, along with the payment of dividends for Euro 4,713 thousand equating to 15 euro cents per share.
There was also a negative effect of Euro 7,707 thousand on the conversion reserves, with Euro 5,569 thousand deriving from the foreign currency translation of the net assets of the Brazilian companies and Euro 2,138 thousand deriving from the foreign currency translation of the net assets of the Turkish companies.
| (thousands of Euros) | As at 31 December 2017 | As at 31 December 2016 | ||||
|---|---|---|---|---|---|---|
| Current | Non-current | Total | Current | Non-current | Total | |
| Bank borrowing | 51,255 | 40,172 | 91,427 | 47,368 | 45,237 | 92,605 |
| Payables due to other lenders | 128 | 38 | 166 | 663 | - | 663 |
| Total | 51,383 | 40,210 | 91,593 | 48,031 | 45,237 | 93,268 |
The item is broken down as follows:
The portion of the payable falling due within 12 months relating to the item Due to banks as at 31 December 2017 increased with respect to 31 December 2016 by Euro 3,887 thousand due to instalments due within 12 months of the new loans undersigned net of the repayment of the loan instalments expired during the year.
The quota of debt with a maturity of over 12 months relating to the item Due to banks at 31 December 2017 decreased by Euro 5,065 thousand compared to 31 December 2016 as a result of the repayment of mortgage instalments due in the period, net of the undersigning of new loans with Unicredit Banca S.p.A. worth Euro 10,000 thousand (debt remaining over 12 months for Euro 5,000 thousand) on 9 May 2017, with a duration of three years, and with Banca Popolare dell'Emilia Romagna S.p.A. valued at Euro 10,000 thousand (debt remaining over 12 months for Euro 7,529 thousand) on 23 November 2017, with a duration of four years. The signing of new loans was necessary in order to support the financing of the planned investments and the payment of both the deferred price for the first 40% stake and the acquisition of the additional 15% of share capital of the Turkish company Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi, while keeping the ratio between short and medium term debt balanced. The portion of debt with a maturity of over 12 months also includes the loan signed with the Cassa di Risparmio in Bologna S.p.A. for Euro 15,000 thousand (debt remaining over 12 months equal to Euro 3,000 thousand) on 22 December 2014 with a duration of five years, Banca Carige Italia S.p.A .for Euro 10,000 thousand (residual debt over 12 months for Euro 2,552 thousand) on 31 March 2015 with a duration of five years, Cassa di Risparmio di Parma and Piacenza S.p.A. for Euro 10,000 thousand (debt remaining over 12 months for Euro 1,271 thousand) on 27 April 2015 with a fouryear term, Banca Popolare di Milano S.Coop.a r.l. for Euro 15,000 thousand (debt remaining over 12 months for Euro 6,847 thousand) on 2 November 2015 with a five-year term, Banca Popolare dell'Emilia Romagna S.p.A. worth Euro 7,000 thousand (residual debt over 12 months for Euro 592 thousand) on 28 January 2016, with a duration of three years, Cassa di Risparmio di Parma and Piacenza S.p.A. for Euro 10,000 thousand (residual debt over 12 months for Euro 4,000 thousand) on 1 July 2016 with a duration of four years, Banca Nazionale del Lavoro S.p.A. for Euro 14,000 thousand (debt remaining over 12 months for Euro 8,400 thousand) on 21 July 2016 with a duration of five years.
The loan stipulated with Banca Nazionale del Lavoro S.p.A. requires the maintenance of a net financial position of less than 1.5 times the value of shareholders' equity and less than 2.0 times the Ebitda (covenant), conditions which had been met as at 31 December 2017. The loans stipulated with Cassa di Risparmio in Bologna S.p.A., Unicredit S.p.A. and Cassa di Risparmio di Parma e Piacenza S.p.A. require the maintenance of a net financial position of less than 1.5 times the value of shareholders' equity and less than 2.5 times the Ebitda (covenant), conditions which had been met as at 31 December 2017. The loan stipulated with Banca Popolare di Milano S.Coop.a r.l. requires the maintenance of a net financial position of less than 2 times the value of shareholders' equity and less than 2 times the Ebitda (covenant), conditions which had been met as at 31 December 2017.
The portion of debt with a maturity of over 12 months also includes the medium-term debt of the subsidiary Steritek SpA. for an amount of Euro 46 thousand, of the Brazilian subsidiaries for an amount of Euro 45 thousand and of the Turkish subsidiaries for an amount of Euro 890 thousand.
Amounts due to banks are shown below by maturity:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Less than or equal to 6 months | 36,809 | 37,991 |
| 6 to 12 months | 14,446 | 9,377 |
| 1 to 5 years | 40,172 | 45,237 |
| More than 5 years | - | - |
| Total | 91,427 | 92,605 |
Non-current amounts due to banks are broken down by maturity as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| 1 to 2 years | 21,927 | 18,524 |
| 2 to 5 years | 18,245 | 26,713 |
| More than 5 years | - | - |
| Total | 40,172 | 45,237 |
| As at 31 December | ||
|---|---|---|
| 2017 | 2016 | |
| Advances on invoices | 0.45% | 0.76% |
| Bank loan | 1.56% | 1.32% |
Payables to other lenders as at 31 December 2017, for the current portion, include the payable to the hospital of Viterbo for Euro 50 thousand relative to a double payment made to our firm, the debt incurred by the subsidiary Se.Sa.Tre. S.c.r.l. in liquidazione towards the company Servizi Ospedalieri S.p.A. for Euro 3 thousand (Euro 524 thousand as at 31 December 2016) and the debt of foreign subsidiaries for a total of Euro 75 thousand.
The non-current portion of the balance as at 31 December 2017 is attributable to the debt incurred by the Turkish subsidiary Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi.
Payables to other lenders are broken down by maturity below:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Less than or equal to 6 months | 109 | 663 |
| 6 to 12 months | 19 | - |
| 1 to 5 years | 38 | - |
| More than 5 years | - | - |
| Total | 166 | 663 |
Non-current amounts due to other lenders are broken down by maturity as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| 1 to 2 years | 28 | - |
| 2 to 5 years | 10 | - |
| More than 5 years | - | - |
| Total | 38 | - |
The following table shows the breakdown of the amounts due to other lenders by type of rate:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Floating rate | 113 | 613 |
| Fixed rate | 53 | 50 |
| Total | 166 | 663 |
Deferred tax liabilities are broken down below by nature of the timing differences that generated them:
| (thousands of Euros) | Leasing | Property, plant and equipment and intangible assets |
Goodwill | Other | Total |
|---|---|---|---|---|---|
| Deferred tax liabilities as at 1 January 2016 | 108 | 585 | 1,174 | - | 1,867 |
| Change in the consolidation area | - | 1,320 | - | - | 1,320 |
| Changes recognised in the income statement | (64) | (593) | 103 | - | (554) |
| Changes recognised in other comprehensive income | - | - | - | - | - |
| Deferred tax liabilities as at 31 December 2016 | 44 | 1,312 | 1,277 | - | 2,633 |
| Change in the consolidation area | - | 158 | - | 58 | 216 |
| Changes recognised in the income statement | (19) | (237) | 101 | (49) | (204) |
| Changes recognised in other comprehensive income | - | - | - | - | - |
| Deferred tax liabilities as at 31 December 2017 | 25 | 1,233 | 1,378 | 9 | 2,645 |
There are no deferred taxes which have not been recognised, since the related payment is deemed unlikely.
This item changed as follows:
| (thousands of Euros) | Year | |
|---|---|---|
| 2017 | 2016 | |
| Opening balance | 11,217 | 9,989 |
| Change in the consolidation area | 479 | 882 |
| Provision | 217 | 502 |
| Financial expenses | 85 | 135 |
| Actuarial (gains)/losses | (22) | 242 |
| Transfers (to)/from other provisions | - | - |
| (Uses) | (777) | (533) |
| Reclassification | (877) | - |
| Closing balance | 10,322 | 11,217 |
The item includes the Provision for Employee Severance Indemnity recognised to the employees of Italian group companies and identified as a defined benefit plan.
Worth mentioning about this item is the reclassification of Euro 877 thousand of the amounts accrued on the LTI-Cash 2015-2017 variable remuneration plan for Directors, Managers, Senior Managers and Executives, based on which a bonus is disbursed in 2018 if certain economic and financial targets are met and in relation to the Servizi Italia share price, as well as the severance for termination of the office accrued by the CEO.
With the approval of the financial statements as at 31 December 2017, the vesting period concluded relating to the 2015-2016-2017 LTI Cash Plan for Directors with special duties identified by the Board of Directors, Managers with strategic responsibilities, Senior Managers and special / key figures. The Remuneration Committee, together with the Board of Statutory Auditors, on March 13, 2018, provided in-depth disclosure and support to the Board of Directors, highlighting the achievement of the target performance expected for the group net result cumulated during the vesting period. The Board of Directors approved the disbursement of the bonus to the Beneficiaries, within the terms and conditions established in the regulation, of the target monetary premium, which, moreover, benefited from the positive value of the Total Shareholder Return linked to the value of the Company's share and to the dividends distributed. The amount set aside during the vesting period (including the company's social security contributions for each beneficiary), for Euro 877 thousand and allocated to the 2015-2016-2017 LTI Cash Plan, has therefore been expensed in the 2017 financial statements.
The valuation techniques were carried out on the basis of the hypotheses described by the following table:
| Year | ||
|---|---|---|
| 2017 | 2016 | |
| Technical annual discounting back rate | 0.88% | 0.86% |
| Annual inflation rate | 1.50% | 1.50% |
| Annual growth rate of the severance indemnity | 2.63% | 2.63% |
With regard to the discount rate, the iBoxx Eurozone Corporates AA 7 - 10 index as of the valuation date was taken as reference for the valuation of this parameter. The duration of the liability is 10 years.
Further to the supplementary welfare reform as per Italian Legislative Decree No. 252 dated 5 December 2005, for employees who have decided to allocate the indemnity as from 1 January 2007 to the INPS Treasury Fund, the advances as per Article 2120 of the Italian Civil Code are calculated on the entire value of the severance indemnity accrued by the worker.
These advances are disbursed by the employer within the limits of the capacity of the amounts accrued by virtue of the provisions made up until 31 December 2006. If the amount of the advance is not covered by the amount accrued care of the employer, the difference is disbursed by the Treasury Fund set up care of INPS.
With regard to the matters set forth above and for just the employees who have complied with the Treasury Fund and who have not requested advances on the indemnity, corrections have been made in the actuarial valuations increasing the requested percentage to be applied to the Fund accrued as at 31 December 2006 and revalued until the calculation date.
In accordance with the matters required by the reviewed version of IAS 19, sensitivity analysis is presented below in line with the change in the main actuarial hypotheses included in the calculation model.
| (thousands of Euros) | Discount rate | Inflation rate | Duration | |||
|---|---|---|---|---|---|---|
| 0.50% | -0.50% | 0.25% | -0.25% | +1 year | -1 year | |
| Change in liabilities | (341) | 363 | 102 | (100) | (119) | 116 |
The item is broken down as follows:
| (thousands of Euros) | Year | |
|---|---|---|
| 2017 | 2016 | |
| Opening balance | 2,798 | 2,277 |
| Provisions | 25 | 52 |
| Uses | (4) | (67) |
| Other changes | (372) | 536 |
| Closing balance | 2,447 | 2,798 |
The reduction in the item is due to the devaluation of the Real/Euro exchange rate on the provision set aside for disputes with employees in 2015 by the Brazilian company Aqualav Serviços De Higienização Ltda.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Payable due to Area S.r.l. | 1,000 | - |
| Payable to Steritek S.p.A. shareholders | 225 | - |
| Deferred price Aqualav Serviços De Higienização Ltda | 217 | 354 |
| Payable for put put options on Maxlav Lavanderia Especializada S.A. and Vida Lavanderias Especializada S.A. | 2,638 | 3,724 |
| Payable for Steritek S.p.A. put options | 1,996 | - |
| Other payables | - | 94 |
| Total | 6,076 | 4,172 |
The increase compared to 31 December 2016 derives from the recognition of the payable to Area S.r.l. for the acquisition of the shares of Brixia S.r.l., the recognition of the put option, equal to Euro 1,996 thousand, for the acquisition of the remaining 30% of Steritek S.p.A., while the reclassification - in current financial liabilities - decreased the value of the debt for the put options linked to the purchase of the remaining 49.9% of the companies Maxlav Lavanderia Especializada SA and Vida Lavanderias Especializada S.A.
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Due to suppliers | 62,051 | 56,156 |
|---|---|---|
| Due to associates | 2,877 | 2,649 |
| Due to parent companies | 4,013 | 4,445 |
| Payables to companies under the control of the parent companies | 913 | 294 |
| Total | 69,854 | 63,544 |
The balance as at 31 December 2017 refers entirely to trade payables due within 12 months.
The balance as at 31 December 2017 is composed mainly of trade-related payables due to the associates Steril Piemonte S.c.r.l. for Euro 1,107 thousand, Ekolav S.r.l. for Euro 558 thousand, AMG S.r.l. for Euro 542 thousand, Arezzo Servizi S.c.r.l. for Euro 253 thousand, Piemonte Servizi Sanitari S.c.r.l. for Euro 217 thousand, Co.Se.S. S.c.r.l. for Euro 154 thousand and PSIS S.r.l. for Euro 46 thousand.
Trade payables due to the parent company Coopservice S.Coop.p.A. amount to Euro 4,013 thousand.
Trade payables to companies under the control of the parent company Coopservice S.Coop.p.A. amounted to Euro 913 thousand of which Euro 248 thousand due to Archimede S.p.A., Euro 106 thousand due to Focus S.p.A. and Euro 2 thousand due to Adpersonam S.r.l..
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Tax receivables | 2,103 | 1,767 |
| Tax payables | (2,260) | (1,789) |
| Total | (157) | (22) |
The amount refers to current tax payables of the subsidiaries included in the consolidation area.
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Payables to shareholders Ankateks Turizm Inşaat Tekstil Temizleme San. Ve Tic. Ltd. Şti | - | 7,625 |
| Payable due to Area S.r.l. | 1,000 | - |
|---|---|---|
| Payable to Steritek S.p.A. shareholders | 225 | - |
| Payable due to Finanza e Progetti S.p.A. | 2,460 | - |
| Deferred price Aqualav Serviços De Higienização Ltda | 375 | 375 |
| Payable for earn-out on Maxlav Lavanderia Especializada S.A. and Vida Lavanderias Especializada S.A. | 1,116 | 72 |
| Total | 5,176 | 8,072 |
The change in the item is connected, in particular, with the balance of the amount due for the payment of the deferred price for the purchase of the 40.0% shareholding in Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi. The item also includes the payable to Finanza & Progetti S.p.A. for the share capital increase equal to Euro 2,460 thousand, the debt for the acquisition of the remaining 30% of the capital of Steritek S.p.A. and the debt to Area S.r.l. for the acquisition of the shares of Brixia S.r.l. The item also includes the reclassification in the short term of a portion of the earn-out debt of Maxlav Lavanderia Especializada S.A. and Vida Lavanderias Especializada S.A. for the expiry of the first put option linked to the acquisition of a further 15% of the share capital of the two Brazilian companies.
The table below provides a breakdown of other current liabilities:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Accrued liabilities | 202 | 115 |
| Deferred income | 435 | 712 |
| Social security contributions | 5,359 | 5,319 |
| Other payables | 12,469 | 12,520 |
| Total | 18,465 | 18,666 |
Amounts due to social security include contributions to INPS/INAIL/INPDAI (National Social Security Institution/Italian Institution for Insurance Against Workplace Accidents/National Welfare Institute for Industrial Managerial Employees) totalling Euro 5,359 thousand, all falling due within the year.
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Due to employees | 9,457 | 9,502 |
| Employee/professional IRPEF (personal income tax) payable | 2,219 | 2,031 |
| Other payables | 793 | 987 |
| Total | 12,469 | 12,520 |
The Group's net financial debt as at 31 December 2017 and as at 31 December 2016 is shown below:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Cash and cash equivalents in hand | 49 | 29 |
| Cash at bank | 7,950 | 5,434 |
| Cash and cash equivalents | 7,999 | 5,463 |
| Current financial receivables | 7,946 | 8,188 |
| Current liabilities to banks and other lenders | (51,383) | (48,031) |
| Current net financial debt | (43,437) | (39,843) |
| Non-current liabilities to banks and other lenders | (40,210) | (45,237) |
| Non-current net financial debt | (40,210) | (45,237) |
| Net financial debt | (75,648) | (79,617) |
The decrease in net financial debt was basically caused by careful cash flow management.
In particular, analyzing the individual items, there was an increase in cash and cash equivalents for an amount of Euro 2,536 thousand, as a result of the consolidation of the liquid assets of the Turkish subsidiary Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi, also offset by increase in bank debt assumed to finance its acquisition.
The decrease in financial receivables compared to 31 December 2016 and equal to Euro 242 thousand is substantially due to the decrease in the loan granted to the company Steril Piemonte S.c.r.l. for Euro 500 thousand, net of the increase in the loan granted to the company Arezzo Servizi S.c.r.l. for Euro 250 thousand and interest accrued on individual loans and not yet collected.
Payables to banks and other current lenders increased by Euro 3,352 thousand due to the instalments due within 12 months of the new loans undersigned net of the repayment of the loan instalments expired during the year.
Non-current payables to banks and other lenders decreased by Euro 5,027 thousand, as a result of the repayment of loan instalments over the course of the year, net of the portion expiring after the end of the new loans signed with Unicredit Banca S.p.A. worth Euro 10,000 thousand (debt remaining over 12 months for €Euro 5,000 thousand) on 9 May 2017, and with Banca Popolare dell'Emilia Romagna S.p.A. worth Euro 10,000 thousand (debt remaining over 12 months for Euro 7,529 thousand) on 23 November 2017. The signing of new loans was necessary in order to support the financing of the planned investments and the payment of both the deferred price for the first 40% stake and the acquisition of the additional 15% of share capital of the Turkish company Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi while keeping the ratio between short and medium term debt balanced.
The net financial position below has been prepared in accordance with CESR, now ESMA, recommendation of 10 February 2005, and reports the value of "Other current financial liabilities" in "Other current financial payables" and the value of "Other non-current financial liabilities" in "Other non-current payables".
| (thousands of Euros) | As at 31 December 2017 |
of which with related parties |
As at 31 December 2016 |
of which with related parties |
|---|---|---|---|---|
| A. Cash | 49 | - | 29 | - |
| B. Other cash equivalents | 7,950 | - | 5,434 | - |
| C. Securities held for trading | - | - | - | - |
| D. Cash and cash equivalents (A)+(B)+(C) | 7,999 | 5,463 | ||
| E. Current financial receivables | 7,946 | 5,630 | 8,188 | 5,606 |
| F. Current bank borrowings | (18,856) | - | (28,558) | - |
| G. Current portion of non-current borrowings | (32,527) | - | (19,473) | - |
| H. Other current financial payables | (5,176) | - | (8,072) | - |
| I. Current financial debt (F) + (G) + (H) | (56,559) | (56,103) | ||
| J. Current net financial debt (I) - (E) - (D) | (40,614) | (42,452) | ||
| K. Non-current bank borrowings | (40,210) | - | (45,237) | - |
| L. Bonds issued | - | - | - | - |
| M. Other non-current payables | (6,076) | - | (4,172) | - |
| N. Non-current financial debt (K) + (L) + (M) | (46,286) | (49,409) | ||
| O. Net financial debt (J)+(N) | (86,900) | (91,861) |
The table below lists the guarantees given, existing as at 31 December 2017:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Guarantees issued by banks and insurance companies for tenders | 59,454 | 66,448 |
| Guarantees issued by banks and insurance companies for lease agreements and utilities | 613 | 603 |
| Guarantees issued by banks and insurance companies in favour of third parties | 42,821 | 40,417 |
| Owned assets held by third parties | 82 | 49 |
| Third party assets held at our facilities | 14 | - |
| Pledge on Asolo Hospital Service shares to back loans granted to the Project Companies | 464 | 464 |
| Pledge on Sesamo shares to back loans granted to the Project Companies | 237 | 237 |
| Pledge on Prog.Este shares to back loans granted to the Project Companies | 1,212 | 1,212 |
| Pledge on Progeni shares to back loans granted to the Project Companies | 380 | 380 |
| Total | 105,277 | 109,810 |
Guarantees issued by banks and insurance companies for tenders: these were issued on behalf of the company in favour of customers or potential customers for participation in tenders, to guarantee the correct execution of the service.
Guarantees issued by banks and insurance companies for lease agreements and utilities: these were issued on behalf of the company to guarantee the payment of lease instalments and invoices for the supply of electricity and gas.
Guarantees issued by banks and insurance companies in favour of third parties: these are guarantees issued to back the payment of the company's portion of the project financing and guarantees issued in favour of PSIS S.r.l., Steril Piemonte S.c.r.l., I.P.P. S.r.l., Ekolav S.r.l. and Shubhram Hospital Solutions Private Limited to back loan agreements.
Mortgage loans on owned property: the company has not granted liens on owned property and has no mortgage loans.
Pledge on shares Asolo Hospital Service, Sesamo, Progeni and Prog.Este. to back the loans granted to project companies: this pledge was granted to the banks providing the project financing on the shares representing the company's shareholding in the special purpose entity.
The item is broken down as follows by business:
| (thousands of Euros) | Year ended as at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Wash-hire | 190,162 | 180,085 |
| Steril B | 20,479 | 19,165 |
| Steril C | 41,461 | 38,466 |
| Sales revenues | 252,102 | 237,716 |
| (thousands of Euros) | 31 December 2017 | 31 December 2016 |
|---|---|---|
| Abruzzo | 4 | 5 |
| Basilicata | 431 | 415 |
| Calabria | 2 | - |
| Campania | 63 | 50 |
| Emilia Romagna | 31,865 | 32,254 |
| Friuli Venezia Giulia | 19,627 | 17,658 |
| Latium | 12,088 | 11,676 |
| Liguria | 26,851 | 28,420 |
| Lombardy | 51,270 | 46,986 |
| Marches | 3,795 | 3,481 |
| Molise | 1 | - |
| Piedmont | 6,644 | 7,733 |
| Apulia | 12 | - |
| Sicily | 3,783 | 3,217 |
| Tuscany | 26,938 | 26,441 |
| Trentino Alto Adige | 6,050 | 5,665 |
| Umbria | 266 | 253 |
| Valle D'Aosta | 499 | 1,031 |
| Veneto | 24,916 | 24,926 |
| NON-EU revenues | 524 | 168 |
| NON-EU revenues (TURKEY) | 4,270 | - |
| NON-EU revenues (BRAZIL) | 32,203 | 27,337 |
| Total | 252,102 | 237,716 |
Revenue and services by geographical area are broken down as follows:
This balance comprises ordinary gains of Euro 656 thousand from the disposal of assets, recoveries of costs and personnel attributable to third parties for Euro 612 thousand, charge-backs of Euro 1,175 thousand for consortium costs, non-recurring income of Euro 1,171 thousand, income for Euro 994 thousand and rents receivable for Euro 49 thousand.
Acquisitions of raw materials and consumables changed from Euro 25,123 thousand at 31 December 2016 to Euro 25,946 thousand at 31 December 2017. This increase is due in particular to the consolidation of Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi which weighs on the item for Euro 513 thousand, due to the increase in the purchase of detergents and spare parts in the Brazilian area and in the Italian area as a result of the increase of disposable purchases and consumables for supplies to new customers.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| External laundering and other industrial services | (22,551) | (20,823) |
| Travel and transport | (13,981) | (13,290) |
| Utilities | (11,397) | (11,903) |
| Administrative costs | (2,314) | (2,970) |
| Consortium and sales costs | (8,629) | (8,691) |
| Personnel expense | (2,514) | (2,419) |
| Maintenance | (6,137) | (5,421) |
| Use of third-party assets | (7,254) | (7,576) |
| Other services | (2,089) | (1,498) |
| Total | (76,866) | (74,591) |
The item Costs for services increased by Euro 2,275 thousand compared with the previous year, while the relative incidence on revenues fell by 0.9%. This increase was impacted by the acquisition of Tintoria Lombarda Divisione Sanitaria S.r.l., Steritek S.p.A. and Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi. On a like-for-like basis, the costs for services would have amounted to Euro 73,270 thousand, therefore a decrease compared with 2016.
External laundering and other industrial services rose by Euro 1,728 thousand compared to 2016. The item was impacted by the increase in the external laundry service (Euro 557 thousand), especially in Brazil and Turkey, and the linen store service for customers of the former company Tintoria Lombarda Divisione Sanitaria S.r.l. (Euro 1,408 thousand). These increases are offset by a decrease in costs for third-party personnel, equal to Euro 568 thousand, and the costs of the service of sterilization of surgical instruments at third party facilities equal to Euro 243 thousand.
Costs for travel and transport showed an increase of Euro 691 thousand compared with 2016 due to the outsourcing of the transport service of the Brazilian company Lavsim Higienização Têxtil S.A. following the redefinition of the production logistics and the increase in the services due to the awarding of new contracts, as well as the purchase of Tintoria Lombarda Divisione Sanitaria S.r.l.
Costs of utilities fell from Euro 11,903 thousand to Euro 11,397 thousand, despite the consolidation of the Turkish companies which had an impact of Euro 393 thousand. This decrease is due, in the Italian area, to a reduction in gas and lighting tariffs for the renegotiation of contracts and a contraction in consumption made possible by greater production efficiencies.
Administrative costs fell by Euro 656 thousand compared with the previous year, due to lower costs for extraordinary transactions. Costs for the acquisition of the company Tintoria Lombarda Divisione Sanitaria S.r.l. impacted the previous year.
The item maintenance was mainly impacted by the increase in the maintenance of surgical instruments, amounting to Euro 348 thousand, in the Italian area, and the maintenance of Turkish production sites for Euro 80 thousand. Brazilian production sites recorded a reduction in spending.
The item 'use of third party assets' showed a decrease of Euro 322 thousand. This reduction is connected, in particular, with the new contracts with some customers, which do not make provision for the supply of anti-decubitus mattresses.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Costs for directors' fees | (1,782) | (1,646) |
| Salaries and wages | (56,562) | (53,421) |
| Temporary work | (2,465) | (1,584) |
| Social security charges | (17,830) | (16,887) |
| Employee severance indemnity | (3,080) | (3,043) |
| Other costs | (245) | (238) |
| Total | (81,964) | (76,819) |
Personnel expense increased from Euro 76,819 thousand as at 31 December 2016 to Euro 81,964 thousand as at 31 December 2017. The year was impacted by the consolidation of Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi amounting to Euro 1,115 thousand and the consolidation of Steritek S.p.A. for Euro 412 thousand. Furthermore, the personnel expense was impacted by the restructuring of the production sites in North-West Italy, where a plan was drafted for the handling of excess staff, following the termination of activities of the Barbariga (BS) site, which was confirmed through the transfer of personnel to the neighbouring production sites and incentivised exits. Within the Brazilian area, an increase in personnel costs was registered, due primarily to the effects of the adjustments to the inflation rate of the labour agreements of the state of São Paulo, and to the increase in labour units following growth in the laundry services thanks to the awarding of new contracts and the revaluation of the Real exchange rate.
The table below shows the average breakdown of personnel:
| As at 31 December | ||
|---|---|---|
| 2017 | 2016 | |
| Executives | 17 | 16 |
| Middle managers | 25 | 25 |
| White-collar staff | 229 | 201 |
| Blue-collar staff | 3,223 | 3,022 |
| Total | 3,494 | 3,264 |
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Tax-related expense | (365) | (380) |
| Contingent liabilities | (388) | (35) |
| Membership fees | (185) | (175) |
| Gifts to customers and employees | (128) | (113) |
| Other | (1,088) | (834) |
| Total | (2,154) | (1,537) |
Deferred tax assets and tax charges include the one-off costs for the settlement of registration tax and accessories for the acquisition of the Industrial Laundry Z.B.M. SpA for Euro 361 thousand. In addition, during the year the indemnity of Euro 408 thousand to the company Focus S.p.A. relative to the redevelopment of the complex of Castellina di Soragna (PR) - was booked.
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Amortisation of intangible assets | (1,719) | (1,820) |
| Depreciation of property, plant and equipment | (50,888) | (47,679) |
| Write-down of financial assets | - | (210) |
| Impairment and provisions | (846) | (569) |
| Total | (53,453) | (50,278) |
The change in amortisation of intangible assets is due to the decrease in the customer portfolio of Lavanderia Industriale ZBM S.p.A. and at the closing, during the year, of the non-competition agreement signed with the previous CEO. The increase in the item amortisation of intangible assets, up from Euro 47,679 thousand to Euro 50,888 thousand, is due primarily to the investments in linen owing to the increase in equipment at the new customers in both the Italian and Brazilian areas. Under the item Impairments of fixed assets, the loss concerning the loan granted by the Brazilian subsidiary SRI Empreendimentos e Participações L.t.d.a. to Ospedale Irmandade de Santa Casa de Misericordia de São Paulo was recorded in the previous year.
The increase in the item impairment and provisions is due to more allocations for the write-down of the receivables from private customers.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Bank interest income | 358 | 327 |
| Default interest | 742 | 634 |
| Interest income on loans to third-party companies | 655 | 535 |
| Other financial income | 304 | 264 |
| Total | 2,059 | 1,760 |
This increase in receivable interest is primarily derived from consolidation of the Turkish subsidiary Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi. Default interest, despite the general improvement in collections, showed an increase following delayed payments by certain private customers. Interest income on loans rose as a result of the new financing granted to the companies Saniservice Sh.p.K. and Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi. The item other financial income mainly includes interest income on tax refunds of previous years.
The item is broken down as follows:
| (thousands of Euros) | As at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Interest expense and bank commission | (1,314) | (1,383) |
| Interest and expense to other lenders | (254) | (310) |
| Financial expense on employee benefits | (88) | (137) |
| Exchange rate earnings and losses | (63) | (41) |
| Other financial expenses | (723) | (602) |
| Total | (2,442) | (2,473) |
The decrease in interest expense and bank commissions is the consequence of the renegotiation of the rates applied by banks, net of the increase due to the consolidation of the payable interest of the Turkish subsidiaries. "Interest and expense to other lenders" decreased as a result of the reduction in the spreads renegotiated with the banks, on without recourse factoring transactions. Foreign exchange losses primarily include Euro 149 thousand from the conversion in Euro at 31 December 2017 of the value of the loan in Turkish Lira granted to Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi, Euro 107 thousand from the negative exchange rate difference on the payment of machinery and equipment purchased in foreign currency by the Brazilian and Turkish subsidiaries, Euro 339 thousand from the positive exchange difference generated by the devaluation of the Turkish Lira recorded at the time of payment to the shareholders of the purchase differential of 40% of the share of share capital of the company Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi. Other financial charges derive mainly from financial charges on liabilities for the put options linked to the purchase of the remaining 49.9% of the companies Maxlav Lavanderia Especializada S.A. and Vida Lavanderias Especializada S.A., equal to Euro 526 thousand.
The item income and expenses from equity investments is composed of dividends collected in 2017 and income amounting to Euro 459 thousand, recognised as a result of the recalculation of the interest held previously in Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi at the fair value on the acquisition date, given this involved a business combination carried out in several stages, in accordance with IFRS 3.
The item is broken down as follows:
| (thousands of Euros) | Year ended as at 31 December | |
|---|---|---|
| 2017 | 2016 | |
| Current taxes | (3,410) | (3,434) |
| Deferred tax assets/(liabilities) | 13 | 877 |
| Total | (3,397) | (2,557) |
The incidence of the taxes on the pre-tax result is reconciled with the theoretical rate in the table below:
| (thousands of Euros) | Year ended as at 31 December | |||||
|---|---|---|---|---|---|---|
| 2017 | Incidence | 2016 | Incidence | |||
| IRES (company earnings tax) reconciliation | ||||||
| Profit before tax from Income statement | 17,762 | 13,072 | ||||
| Theoretical taxes | 4,263 | 24.0% | 3,595 | 27.5% | ||
| Tax effects of the permanent differences: | ||||||
| on increases | 926 | 5.2% | 583 | 4.5% | ||
| on decreases | (3,986) | -22.4% | (2,817) | -21.6% | ||
| substitute taxes | 458 | 2.6% | 298 | 2.3% | ||
| differential on foreign taxes | 967 | 5.4% | 198 | 1.5% | ||
| Total effective IRES taxes | 2,628 | 14.8% | 1,856 | 14.2% | ||
| IRAP (regional business tax) | 769 | 4.3% | 701 | 5.4% | ||
| Total effective taxes | 3,397 | 19.1% | 2,557 | 19.6% |
The tax rate decreased from 19.6% in 2016 to 19.1% in 2017. The decrease in the tax burden was mainly caused, in the Italian area, by the decrease in the IRES rate and the benefit deriving from the deduction from business income of so-called "super and hyper-depreciation", as required by the 2017 Budget Law (L. 232 / 2016), and partly offset by the increase in income taxes produced abroad and resulting from the positive contribution of the Turkish group on the profit before taxes.
Basic and diluted earnings per share are calculated in the tables below.
| (thousands of Euros) | Year ended as at 31 December | |||||
|---|---|---|---|---|---|---|
| 2017 | 2016 | |||||
| Profit/loss attributable to shareholders of the parent company | 13,770 | 10,451 | ||||
| Average number of shares | 31,680 | 31,227 | ||||
| Basic earnings per share | 0.435 | 0.335 | ||||
| (thousands of Euros) | Year ended as at 31 December | |||||
| 2017 | 2016 | |||||
| Profit/loss for the year attributable to the Group: | 13,770 | 10,451 | ||||
| Average number of shares outstanding | 31,680 | 31,227 | ||||
| Number of shares with dilutive effect | - | - | ||||
| Average number of shares used to calculate diluted EPS | 31,680 | 31,227 | ||||
| Diluted earnings per share | 0.435 | 0.335 |
The transactions of Servizi Italia S.p.A. with associates are conducted in compliance with the applicable Regulations governing transactions with related parties and concern primarily:
From an economic, equity and financial point of view, the group of main transactions constitute ordinary transactions conducted under conditions equivalent to market or standard conditions and are regulated by the appropriate contracts. These transactions are basically a set of combined operations of a homogeneous nature carried out starting from the beginning of the reference year, and are qualifiable individually as being of greater importance, not even their combination in the year of reference. The amount exposed in the financial statements, in the reference year, was generated by the renewal of existing contracts or contracts stipulated in the year.
Income statement, statement of financial position and financial transactions with associated companies in 2017 are presented below:
| (thousands of Euros) | 31 December 2017 | |||||||
|---|---|---|---|---|---|---|---|---|
| Economic transactions | Purchases | |||||||
| Sale of goods and services |
Other income |
Purchases of goods and services |
Personnel expense |
of property, plant and equipment and intangible assets |
Other costs |
Financial income |
Income from equity investments |
|
| Coopservice S.Coop.p.A. (parent company) | 85 | 38 | 10,599 | - | 1 | - | - | - |
| Aurum S.p.A. (parent company) | - | - | - | - | - | - | - | - |
| Arezzo Servizi S.c.r.l. (associate) | 9 | 9 | 1,160 | - | 1 | - | 3 | - |
| Consorzio Co.Se.S. (associate) | 8 | - | 573 | - | - | - | - | - |
| SE.STE.RO. S.r.l. in liquidazione (associate) | - | 15 | - | - | - | - | - | - |
| PSIS S.r.l. (associate) | 265 | 140 | 4 | - | 29 | - | 44 | - |
| Amg S.r.l. (associate) | 303 | 5 | 650 | - | - | - | - | - |
| Ekolav S.r.l. (associate) | 45 | 10 | 1,281 | - | 1 | - | 2 | - |
| Steril Piemonte S.c.r.l. (associate) | 15 | 304 | 1,361 | - | - | - | 1 | - |
| Piemonte Servizi Sanitari S.c.r.l. (associate) | - | - | 336 | - | - | - | - | - |
| Iniziative Produttive Piemontesi S.r.l. (associate) | 40 | 3 | 39 | - | 1 | - | - | - |
| SAS Sterilizasyon Servisleri A.Ş. (associate) | - | - | - | - | - | - | - | - |
| Shubhram Hospital Solutions Private Limited (associate) | - | - | - | - | - | - | - | - |
| Saniservice Sh.p.k. (associate) | 512 | 181 | - | - | - | - | 480 | - |
| Servizi Sanitari Integrati Marocco S.a.r.l. (associate) | - | - | - | - | - | - | - | - |
| Finanza & Progetti S.p.A. (associate) | - | 59 | - | - | - | - | - | - |
| Brixia S.r.l. (associate) | 3,713 | - | - | - | - | - | - | - |
| Elettrica Gover S.r.l. (affiliated) | - | - | 12 | - | - | - | - | - |
| Focus S.p.A. (affiliated) | - | - | 2,403 | - | - | 422 | - | - |
| Archimede S.p.A. (affiliated) | - | - | 3 | 1,472 | - | - | - | - |
| Gesta S.p.A. (affiliated) | - | 7 | - | - | 870 | - | - | - |
| New Fleur S.r.l. (affiliated) | 26 | 1 | 1,560 | - | 1 | - | - | - |
| Ad Personam S.r.l. (affiliated) | - | - | 2 | - | - | - | - | - |
| Padana Emmedue S.r.l. (related party) | - | - | 101 | - | - | - | - | - |
| Everest S.r.l. (related party) | - | - | 286 | - | - | 2 | - | - |
| Akan & Ankateks JV (associate) | 611 | - | - | - | - | - | - | - |
| Akan (associate) | 623 | - | 2 | 39 | - | - | - | - |
| Nimetsu & Ankateks JV (associate) | 45 | - | - | - | - | - | - | - |
| Atala (associate) | 18 | - | - | - | - | - | - | - |
| Ankor (associate) | - | - | 22 | - | - | - | - | - |
| Ozdortler (associate) | - | - | - | - | - | - | - | - |
| Oguzalp Ergul (associate) | - | - | - | - | - | - | 22 | - |
| Feleknaz Demir (associate) | - | - | - | - | - | - | 1 | - |
| Limpar Serviços Especializados e Comércio de Produtos Ltda (related party) |
- | - | 133 | - | - | - | - | - |
| Lilian Promenzio Rodrigues Affonso (related party) | - | - | 50 | - | - | - | - | - |
| Total | 6,318 | 772 | 20,577 | 1,511 | 904 | 424 | 553 | - |
| (thousands of Euros) | 31 December 2016 | |||||||
|---|---|---|---|---|---|---|---|---|
| Economic transactions | Sale of goods and services |
Other income |
Purchases of goods and services |
Personnel expense |
Purchases of property, plant and equipment and intangible assets |
Other costs |
Financial income |
Income from equity investments |
| Coopservice S.Coop.p.A. (parent company) | 165 | 36 | 10,655 | - | 8 | - | - | - |
| Total | 991 | 688 | 20,633 | 918 | 67 | 13 | 286 | 30 |
|---|---|---|---|---|---|---|---|---|
| Lilian Promenzio Rodrigues Affonso (related party) | - | - | 47 | - | - | - | - | - |
| Limpar Serviços Especializados e Comércio de Produtos Ltda (related party) |
- | - | 114 | - | - | - | - | - |
| Padana Emmedue S.p.A. (related party) | - | - | 287 | - | - | - | - | - |
| Padana Emmedue S.r.l. (related party) | - | - | 109 | - | - | - | - | - |
| Ad Personam S.r.l. (affiliated) | - | - | 13 | - | - | - | - | - |
| New Fleur S.r.l. (affiliated) | 26 | - | 974 | - | - | - | - | - |
| Gesta S.p.A. (affiliated) | - | 1 | - | - | - | - | - | - |
| Archimede S.p.A. (affiliated) | - | - | - | 918 | - | - | - | - |
| Focus S.p.A. (affiliated) | - | - | 2,736 | - | - | 13 | - | - |
| Elettrica Gover S.r.l. (affiliated) | - | - | 4 | - | - | - | - | - |
| Finanza & Progetti (associate) | - | 69 | - | - | - | - | - | - |
| Saniservice Sh.p.k. (associate) | 167 | 120 | - | - | - | - | 185 | - |
| Ankateks Turizm Insaat Tekstil Temizleme Sanayi Ve (associate) | - | - | - | - | - | - | 47 | - |
| Shubhram Hospital Solutions Private Limited (associate) | - | - | - | - | - | - | - | - |
| SAS Sterilizasyon Servisleri A.Ş. (associate) | - | - | - | - | - | - | - | - |
| Iniziative Produttive Piemontesi S.r.l. (associate) | 98 | 8 | 369 | - | 3 | - | - | - |
| Piemonte Servizi Sanitari S.c.r.l. (associate) | - | - | 355 | - | - | - | - | - |
| Steril Piemonte S.c.r.l. (associate) | 15 | 318 | 1,393 | - | 8 | - | 3 | - |
| Ekolav S.r.l. (associate) | 2 | 5 | 1,273 | - | 3 | - | 2 | - |
| Amg S.r.l. (associate) | 296 | 3 | 701 | - | - | - | 1 | - |
| PSIS S.r.l. (associate) | 210 | 118 | 19 | - | 45 | - | 47 | - |
| SE.STE.RO. S.r.l. in liquidazione (associate) | - | 2 | - | - | - | - | - | - |
| Consorzio Co.Se.S. (associate) | - | - | 695 | - | - | - | - | - |
| Arezzo Servizi S.c.r.l. (associate) | 10 | 7 | 733 | - | - | - | 1 | - |
| Centro Italia Servizi S.r.l. in liquidazione (associate) | 2 | 1 | 156 | - | - | - | - | 30 |
| Aurum S.p.A. (parent company) | - | - | - | - | - | - | - | - |
In relation to economic transactions with related parties, and in addition to the above, at 31 December 2017, the following were considered: remuneration for directors for Euro 1,485 thousand and costs relating to senior management personnel for Euro 2,152 thousand (including Euro 270 thousand as settlement agreement for termination of the employment relationship of Mr. Marco Marchetti). As at 31 December 2016, directors' fees amounted to Euro 1,438 thousand, while executive personnel expense came to Euro 2,022 thousand.
| (thousands of Euros) | 31 December 2017 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Statement of financial position | Amount of trade receivables |
Amount of trade payables |
Amount of financial receivables |
Amount of financial payables |
Amount of other liabilities |
|||||
| Coopservice S.Coop.p.A. (parent company) | 184 | 4,013 | - | - | - | |||||
| Aurum S.p.A. (parent company) | - | - | - | - | - | |||||
| Arezzo Servizi S.c.r.l. (associate) | 6 | 253 | 403 | - | - | |||||
| Consorzio Co.Se.S. (associate) | 1 | 154 | - | - | - | |||||
| SE.STE.RO. S.r.l. in liquidazione (associate) | - | - | - | - | - | |||||
| PSIS S.r.l. (associate) | 408 | 49 | 3,891 | - | - | |||||
| Amg S.r.l. (associate) | 252 | 542 | - | - | - | |||||
| Ekolav S.r.l. (associate) | 71 | 558 | 172 | - | - |
| Steril Piemonte S.c.r.l. (associate) | 279 | 1,107 | 651 | - | - |
|---|---|---|---|---|---|
| Piemonte Servizi Sanitari S.c.r.l. (associate) | - | 217 | - | - | - |
| Iniziative Produttive Piemontesi S.r.l. (associate) | 6 | - | 90 | - | - |
| SAS Sterilizasyon Servisleri A.Ş. (associate) | - | - | - | - | - |
| Shubhram Hospital Solutions Private Limited (associate) | 11 | - | - | - | - |
| Saniservice Sh.p.k. (associate) | 862 | - | 4,666 | - | - |
| Servizi Sanitari Integrati Marocco S.a.r.l. (associate) | - | - | 5 | - | - |
| Finanza & Progetti S.p.A. (associate) | 127 | - | - | - | 2,460 |
| Brixia S.r.l. (associate) | 1,371 | - | - | - | - |
| Elettrica Gover S.r.l. (affiliated) | - | 4 | - | - | - |
| Focus S.p.A. (affiliated) | - | 557 | - | - | - |
| Archimede S.p.A. (affiliated) | - | 248 | - | - | - |
| Gesta S.p.A. (affiliated) | 1 | 106 | - | - | - |
| New Fleur S.r.l. (affiliated) | 122 | 1,005 | - | - | - |
| Ad Personam S.r.l. (affiliated) | - | 2 | - | - | - |
| Padana Emmedue S.r.l. (related party) | - | 41 | - | - | - |
| Everest S.r.l. (related party) | - | 235 | - | - | - |
| Akan & Ankateks JV (associate) | 84 | - | - | - | - |
| Akan (associate) | 84 | - | - | - | - |
| Nimetsu & Ankateks JV (associate) | - | - | - | - | - |
| Atala (associate) | 3 | - | - | - | - |
| Ankor (associate) | - | 2 | 99 | - | - |
| Ozdortler (associate) | - | - | - | - | - |
| Oguzalp Ergul (associate) | - | - | 270 | - | - |
| Feleknaz Demir (associate) | - | - | 12 | - | - |
| Limpar Serviços Especializados e Comércio de Produtos Ltda (related party) | - | 9 | - | - | - |
| Lilian Promenzio Rodrigues Affonso (related party) | - | 4 | - | - | - |
| Total | 3,872 | 9,106 | 10,259 | - | 2,460 |
| (thousands of Euros) | 31 December 2016 | |||||
|---|---|---|---|---|---|---|
| Statement of financial position | Amount of trade receivables |
Amount of trade payables |
Amount of financial receivables |
Amount of financial payables |
Amount of other liabilities |
|
| Coopservice S.Coop.p.A. (parent company) | 366 | 4,445 | - | - | - | |
| Aurum S.p.A. (parent company) | - | - | - | - | - | |
| Centro Italia Servizi S.r.l. in liquidazione (associate) | - | - | - | - | - | |
| Arezzo Servizi S.c.r.l. (associate) | 9 | 192 | 150 | - | - | |
| Consorzio Co.Se.S. (associate) | - | 234 | - | - | - | |
| SE.STE.RO. S.r.l. in liquidazione (associate) | 82 | 418 | - | - | - | |
| PSIS S.r.l. (associate) | 400 | 19 | 3,847 | - | - | |
| Amg S.r.l. (associate) | 144 | 347 | 1 | - | - | |
| Ekolav S.r.l. (associate) | 13 | 481 | 174 | - | - | |
| Steril Piemonte S.c.r.l. (associate) | 160 | 671 | 1,153 | - | - | |
| Piemonte Servizi Sanitari S.c.r.l. (associate) | - | 135 | - | - | - | |
| Iniziative Produttive Piemontesi S.r.l. (associate) | 26 | 161 | 90 | - | - | |
| SAS Sterilizasyon Servisleri A.Ş. (associate) | - | - | - | - | - | |
| Shubhram Hospital Solutions Private Limited (associate) | 11 | - | - | - | - | |
| Ankateks Turizm Insaat Tekstil Temizleme Sanayi Ve (associate) | - | - | 857 | - | - | |
| Saniservice Sh.p.k. (associate) | 249 | - | 4,143 | - | - | |
| Finanza & Progetti (associate) | 69 | - | - | - | - | |
| Elettrica Gover S.r.l. (affiliated) | - | 4 | - | - | - |
| Focus S.p.A. (affiliated) | - | 97 | - | - | - |
|---|---|---|---|---|---|
| Archimede S.p.A. (affiliated) | - | 190 | - | - | - |
| Gesta S.p.A. (affiliated) | 2 | - | - | - | - |
| New Fleur S.r.l. (affiliated) | 82 | 645 | - | - | - |
| Ad Personam S.r.l. (affiliated) | - | 6 | - | - | - |
| Padana Emmedue S.r.l. (related party) | - | 43 | - | - | - |
| Padana Emmedue S.p.A. (related party) | - | 263 | - | - | - |
| Limpar Serviços Especializados e Comércio de Produtos Ltda (related party) |
- | 10 | - | - | - |
| Lilian Promenzio Rodrigues Affonso (related party) | - | 4 | - | - | - |
| Total | 1,613 | 8,365 | 10,415 | - | - |
Shown below are the most significant relationships broken down by Companies where the transactions related to the individual contracts actually fall within the Company's ordinary business:
Revenues from sales and the associated trade receivables as at 31 December 2017 refer primarily to linen and textile washing services within the cleaning activities provided to the parent company.
From the parent company, the Servizi Italia Group purchases: (i) road-based transport services for textiles and/or surgical instruments, for Euro 8,480 thousand; (ii) services for the management of wardrobes at customer sites, for Euro 1,028 thousand; (iii) use of third party staff for Euro 12 thousand; (iv) technical cleaning services that are carried out at some production/operating sites of Servizi Italia and surveillance/security services provided to some facilities, through night patrols and alarm-based interventions, for Euro 809 thousand.
The company's purpose is the provision of wash-hire services to "Aziende dell'Area Vasta Sud-Est" and, to a lesser extent, to the hospital AUSL of Arezzo. As at 31 December 2017, revenues from sales of goods and services and the related trade receivables due from Arezzo Servizi S.c.r.l. refer to the sale of assets used in the wash-hire business. On the other hand, purchase costs and the relative trade payables regard the charge-back of costs incurred by Arezzo Servizi S.c.r.l., which are divided amongst the shareholders on the basis of their shareholdings. The financial receivable is for a Euro 403 thousand loan granted to the associate.
As of 31 December 2017, revenues from the sale of goods and services and purchase costs relative to Consorzio CO.SE.S. refer to the charge-back of costs incurred by the Company and by the Consortium for surgical instrument sterilisation services provided at Azienda Ospedaliera - Complesso Ospedaliero - San Giovanni Addolorata of Rome.
As at 31 December 2017, revenues from the sale of goods and services to PSIS S.r.l. mainly refer to the charge-back of administrative management services for Euro 76 thousand and validation services for Euro 75 thousand. The financial receivable relates to a loan granted for Euro 3,891 thousand to support current investments.
At the end of 2017, economic transactions were mainly for external laundering services at the Asti, Casale Monferrato and Turin 3 LHAs (Euro 650 thousand); the revenues derive from linen sterilisation services and the supply of disposable medical devices for surgical procedures.
Purchases of goods, services, and the related trade payables due in relation to Ekolav S.r.l. are primarily for laundering (Euro 1,015 thousand) and transport (Euro 84 thousand) services. The financial receivable is for a Euro 172 thousand loan granted to the associate.
As at 31 December 2017, revenues from the sale of goods and services and purchase costs associated with Steril Piemonte S.c.r.l. refer to the charge-back of costs incurred by the Company and by the Consortium for surgical instrument sterilisation activities at ASL (Local Health Authority) AL of the Piedmont Region. The financial receivable is for a Euro 651 thousand loan granted to the associate.
At 31 December 2017, revenues from the sale of goods and services for the company Società Iniziative Produttive Piemontesi S.r.l., are primarily due to validation services for Euro 20 thousand. The financial receivable is for a Euro 90 thousand loan granted to the associate.
On 31 December 2017, the revenues from the sale of goods and services to Saniservice Sh.p.k. referred primarily to the supply of materials for the operations of the sterilisation facilities for Euro 464 thousand as well as validation services Euro 48 thousand and trade management services for Euro 181 thousand. The financial receivable is for a Euro 4,423 thousand loan granted to the associate.
As of 31 December 2017, revenues from sales and services to Finanza & Progetti S.p.A. refer mainly to the reimbursement of the cost of the surety issued to Ospedal Grando S.p.A. and equal to Euro 58 thousand. The value of other liabilities relates to the commitment to the future increase in share capital of Euro 2,460 thousand.
As at 31 December 2017, the revenues from the sale of goods and services to Brixia S.r.l., related primarily to the wash-hire service at ASST Spedali Civili of Brescia, amounting to Euro 3,713 thousand.
Financial and equity relationships with Focus S.p.A. relate to lease agreements on the Castellina di Soragna (PR), Montecchio Precalcino (VI), Ariccia (RM) and Genoa Bolzaneto (GE) properties. The first agreements are for six years and renewable for another six, while the Genoa Bolzaneto (GE) agreement is for fourteen years and renewable for another six. In 2017, a new lease agreement was signed for the six-year renewable office in Castellina di Soragna (PR), which can be renewed for a further six years.
In 2017, the total consideration for leased properties amounted to Euro 2,403 thousand. In addition, during the year the indemnity of Euro 408 thousand - following the redevelopment of the complex of Castellina di Soragna (PR) - was booked.
Servizi Italia S.p.A. uses the linen wash services provided by Padana Emmedue S.r.l.. In 2017, this amounted to Euro 99 thousand.
The business and equity relationships with Everest S.r.l. concern the lease agreements of the properties of Travagliato and Podenzano, the duration of which is six years, renewable for an additional six years. The total consideration for leased properties amounted to Euro 287 thousand in 2017. Servizi Italia S.p.A.'s transactions with Everest S.r.l. in relation to lease agreements are entered into in compliance with the Regulations for related party transactions in force.
Company 49% owned by Ankateks Turizm İnsaat Tekstil Temizleme Sanayi VE and set up for participation in a hospital contract in the city of Ankara. Purchases of goods and services and the related trade payables to the Akan & Ankateks JV Company mainly refer to laundry services for Euro 611 thousand.
Company controlled by one of the minority shareholders of Ankateks Turizm İnsaat Tekstil Temizleme Sanayi VE and active in the laundry sector for the hotel market in the Ankara area. Purchases of goods and services and the related trade payables to the Akan Company mainly refer to laundry services for Euro 623 thousand.
Ankor
Related party as a minority shareholder of Ankateks Turizm İnsaat Tekstil Temizleme Sanayi VE. The financial receivable is for a Euro 99 thousand loan granted to the company.
Related party as a minority shareholder of Ergülteks Temizlik Tekstil Ltd. Sti. The financial receivable is for a Euro 270 thousand loan granted to the company.
The purchase of goods and services and related trade payables to Limpar Serviços Especializados e Comércio de Produtos Ltda refer primarily to cleaning services for Euro 103 thousand at the facility of Maxlav Lavanderia Especializada S.A. and Euro 30 thousand at the plant Vida Lavanderias Especializada S.A.
Financial and equity relationships with Lilian Promenzio Rodrigues Affonso concern primarily the lease agreement of the properties of Maxlav Lavanderia Especializada S.A., with a 10-year duration. In 2017, the total consideration for leased properties amounted to Euro 50 thousand.
During the year, income components were recorded deriving from non-recurring transactions, due to greater costs of Euro 557 thousand relating to incentives, indemnities and Naspi to employees, as a result of the company restructuring and reorganisation activities, which concerned the termination of the activities of the Barbariga (BS) facility.
The impacts of these components were outlined in the income statement and in the comments on the individual items in this document.
During the year, there were no atypical and/or unusual transactions as defined in Consob communication No. 6064293 dated 28 July 2006.
The Shareholders' Meeting of 20 April 2017, authorised the Board of Directors to purchase and sell treasury shares, subject to revocation of the resolution of 20 April 2016.
The approved own share purchase and placement plan meets the need to gain access to opportunities for the efficient investment of company liquidity and to have the possibility of using it for strategic transactions and/or to complete subsequent share purchase and sale transactions, to the extent allowed by permitted market practices. The plan has a maximum duration of 18 months as from 20 April 2017, date of issue of the authorisation by the Shareholders' Meeting.
The maximum number of shares that can be purchased, not exceeding 20% of the share capital of the company, as at the date of the Shareholders' Meeting resolution, is 6,361,890.00 and it results from the difference between the maximum number of own shares that the Company may purchase and the number of own shares which at the date of the resolution of 19 April 2017, were held by Servizi Italia S.p.A., in implementing the resolution issued on 20 April 2016, and totalled 101,629 shares. The purchases and sales of treasury shares are carried out on the organised market, in compliance with the applicable legislative and regulatory provisions, according to the operating formalities established by Article 132 of the CFL, Article 144 bis of the Issuers' Regulations, in compliance with the EC Regulation 2273/2003 dated 22 December 2003 and in observance of the shareholders' meeting resolution dated 20 April 2017. Treasury shares are purchased for a maximum equivalent value to the extent to which can be covered by distributable reserves and available reserves as set forth in the latest duly approved financial statements. The purchase of own shares is carried out at a minimum purchase price no less than 20% of the weighted average of the official prices of the shares as recorded by Borsa Italiana in the 3 days preceding each single operation, and a maximum price of purchase no greater than 20% of the weighted average of the official prices of shares recorded by Borsa Italiana in the 3 days preceding each single operation. The intermediary appointed to carry out the purchase of own shares is INTERMONTE SIM S.p.A. As at 31 December 2017, the number of treasury shares in the portfolio amounted in total to 10,550 shares, corresponding to 0.03% of the share capital.
As regards:
please see the Remuneration Report, drawn up pursuant to article 123-ter of CFL for 2016.
There were no Payment plans based on financial instruments as at 31 December 2017.
Please see the related section of the Directors' Report on Operations.
15 On 19 January 2018, the Company communicated the resignation tendered by director Emil Anceschi on 17 January 2018. The Board of Directors found that, despite the Director's resignation, the composition of the Board of Directors is in any case in line with the current provisions regarding the gender and number of the directors who meet the independence requirements. In consideration of the above and of the imminent expiry of the mandate of the current administrative body with the approval of the financial statements as at 31/12/2017, the Board, with the favourable opinion of the Board of Statutory Auditors, deemed appropriate not to proceed with the co-optation pursuant to the articles of association and Art. 2386 of the Italian Civil Code, but to submit the resolution regarding the appointment of the entire administrative body directly to the next Meeting. For more details and information, refer to the documents available on the Company's website.
On 31 January 2018, the Company communicated the termination of employment of Mr. Maurizio Casol, an executive with strategic responsibilities and related party pursuant to the Regulations approved with Consob resolution no. 17221/2010 and the RPT Regulations adopted by Servizi Italia. For more details and information, refer to the documents available on the Company's website.
The Chairman of the Board of Directors (Roberto Olivi)
In consideration of the provisions of Art. 154-bis, paragraphs 3 and 4 of Italian Legislative Decree No. 58 of 24 February 1998, the undersigned Enea Righi, in his capacity as "CEO", and Ilaria Eugeniani, in her capacity as "Financial Reporting Manager" of Servizi Italia S.p.A., certify:
It is also hereby stated that the consolidated financial statements as at 31 December 2017:
The Directors' report includes a reliable analysis of the operating performance and result, as well as of the issuer's position and that of all the companies included in the scope of consolidation, together with a description of the main risks and uncertainties it is exposed to.
The CEO
Enea Righi
The Financial Reporting Manager Ilaria Eugeniani
Independent auditors' report on the consolidated financial statements of the Servizi Italia Group
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