Quarterly Report • Aug 28, 2015
Quarterly Report
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SERVIZI ITALIA S.p.A. Registered Office Via S. Pietro, 59/b 43019 Castellina di Soragna (PR) Share Capital: € 28,371,486 fully paid-up Tax code and Parma Business Register No.: 08531760158 Certified email: [email protected] Tel. +390524598511 Fax +390524598232 www.si-servizitalia.com
| Company officers and corporate information 3 | |
|---|---|
| Group structure 4 |
| INTERIM REPORT 5 | |
|---|---|
| ------------------- | -- |
| Accounting schedules 19 | |
|---|---|
| Notes 23 |
| INDEPENDENT AUDITORS' REPORT 60 | |
|---|---|
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 | Director |
| Antonio Paglialonga | Director |
| Lino Zanichelli | Director |
| Vasco Salsi | Director |
| Marco Marchetti | 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
Board of Statutory Auditors (in office until approval of the Financial Statements as at 31 December 2016)
| Name and Surname | Position |
|---|---|
| Marco Elefanti | Chairman |
| Anna Maria Fellegara | Effective Statutory Auditor |
| Andrea Spollero | Effective Statutory Auditor |
| Ernestina Bosoni | Alternate Statutory Auditor |
| Lorenzo Keller | Alternate Statutory Auditor |
Supervisory Body (in office until 2 February 2016)
| 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)
|--|--|
Servizi Italia S.p.A. Via S. Pietro, 59/b – 43019 Castellina di Soragna (PR) – Italy Tel. +39 0524598511, Fax +39 0524598232, website: www.si-servizitalia.com; Share Capital: € 28,371,486 fully paid-up Tax code and Parma Business Register No.: 08531760158; PEC (certified e-mail address): [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 Warrant ISIN: IT0004813298
Giovanni Manti –IR, Chiara Peterlini and Elena Abbati – IR assistants
e-mail: [email protected] – Tel. +39 0524598511, Fax +39 0524598232
Servizi Italia S.p.A., registered office in Castellina di Soragna (PR), listed in the STAR segment of the Borsa Italiana S.p.A. MTA stock exchange, is the main Italian operator in the supply of integrated services for the rental, washing and sterilisation of textiles and surgical instruments for hospital facilities. With a technologically advanced production platform broken down into laundry facilities, textile sterilisation centres, surgical instrument sterilisation centres and numerous wardrobes, the Company and its Italian and overseas subsidiaries forming the Servizi Italia Group, mainly provide their broad and diversified range of services for public and private healthcare facilities in central and northern Italy and in the state of São Paulo in Brazil. As at 30 June 2015, the Servizi Italia Group included the following Companies:
| Company Name Parent Company and Subsidiaries |
Registered Offices Share capital |
% interest | ||
|---|---|---|---|---|
| Servizi Italia S.p.A. | Castellina di Soragna (Parma) - Italy | EUR | 28,371,486 | Parent Company |
| SRI Empreendimentos e Participações L.t.d.a. | São Paulo (SP) - Brazil | R\$ | 97,001,002 | 100% |
| Servizi Italia Medical S.r.l. | Castellina di Soragna (PR) - Italy | EUR | 200,000 | 100% |
| Se.Sa.Tre. S.c.r.l. | Genoa - Italy | EUR | 20,000 | 60% |
| San Martino 2000 S.c.r.l. | Genoa - Italy | EUR | 10,000 | 60% |
| Lavsim Higienização Têxtil S.A. | São Roque (SP) - Brazil | R\$ | 550,000 | 100%(*) |
| Maxlav Lavanderia Especializada S.A. | Jaguariúna (SP) - Brazil | R\$ | 2,825,060 | 50.1%(*) |
| Vida Lavanderias Especializada S.A. | Santana de Parnaíba (SP) - Brazil | R\$ | 1,900,000 | 50.1%(*) |
| (*) Held through SRI Empreendimentos e Participações Ltda | |
|---|---|
| ----------------------------------------------------------- | -- |
| Company Name Associates and Jointly Controlled Companies |
Registered Offices | Share capital | % interest | |
|---|---|---|---|---|
| Centro Italia Servizi S.r.l. | Arezzo - Italy | EUR | 10,000 | 50% |
| PSIS S.r.l. | Padua - Italy | EUR | 10,000,000 | 50% |
| Ekolav S.r.l. | Lastra a Signa (FI) - Italy | EUR | 100,000 | 50% |
| Steril Piemonte S.c.r.l. | Turin - Italy | EUR | 4,000,000 | 50% |
| AMG S.r.l. | Busca (CN) - Italy | EUR | 100,000 | 50% |
| Iniziative Produttive Piemontesi S.r.l. | Turin - Italy | EUR | 2,500,000 | 37.625% |
| Piemonte Servizi Sanitari S.c.r.l. | Turin - Italy | EUR | 10,000 | 30%(ˆ) |
| SE.STE.RO. S.r.l. | Castellina di Soragna (PR) - Italy | EUR | 400,000 | 25% |
| CO.SE.S S.c.r.l. | Perugia - Italy | EUR | 10,000 | 25% |
| SAS Sterilizasyon Servisleri A.Ş. | Istanbul - Turkey | TL | 500,000 | 51% |
| Shubhram Hospital Solutions Private Limited | New Delhi - India | INR | 85,200,000 | 51% |
(ˆ) Indirect shareholding of 15.05% through Iniziative Produttive Piemontesi S.r.l.
This half-year financial report as at 30 June 2015 includes the half-year condensed consolidated financial statements as at 30 June 2015 prepared in compliance with IAS 34 on interim financial reporting, as approved by Regulation (EC) No. 1606/2002.
The table below presents a comparison of the main consolidated income statement figures as at 30 June 2015 with the results as at 30 June 2014 (in thousands of Euros).
| (thousands of euros) | 30 June 2015 | 30 June 2014 | Change | Change % |
|---|---|---|---|---|
| Revenue | 117,217 | 115,776 | 1,441 | 1.2% |
| EBITDA (a) | 32,185 | 32,455 | (270) | -0.8% |
| EBITDA % | 27.5% | 28.0% | ||
| Operating profit (EBIT) | 9,709 | 10,754 | (1,045) | -9.7% |
| Operating profit (EBIT)% | 8.3% | 9.3% | ||
| Net profit | 5,936 | 6,168 | (232) | -3.8% |
| Net profit % | 5.1% | 5.3% |
(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 revenue from sales and services and operating costs before depreciation, amortisation, impairment and provisions.
The table below presents a comparison of the main consolidated statement of financial position figures as at
30 June 2015 with the figures as at 31 December 2014 (in thousands of Euros):
| (thousands of euros) | 30 June 2015 | 31 December 2014 | Change | Change % |
|---|---|---|---|---|
| Net operating working capital (a) | 15,456 | 15,789 | (333) | -2.1% |
| Other current assets/liabilities (b) | (11,564) | (25,208) | 13,644 | -54.1% |
| Net working capital | 3,892 | (9,419) | 13,311 | -141.3% |
| Non-current assets - medium/long-term provisions | 176,502 | 179,086 | (2,584) | -1.4% |
| Invested capital | 180,394 | 169,667 | 10,727 | 6.3% |
| Shareholders' equity (B) | 112,009 | 111,588 | 421 | 0.4% |
| Net financial debt (d) (A) | 68,385 | 58,079 | 10,306 | 17.7% |
| Invested capital (c) | 180,394 | 169,667 | 10,727 | 6.3% |
| Gearing [A/(A+B)] | 37.91% | 34.23% | ||
| Debt/Equity (A/B) | 61.05% | 52.05% |
(a) Net operating working capital is not an accounting measurement under the IFRSs endorsed by the European Union. The Company management has defined net operating working capital as the algebraic sum of inventories, trade receivables and trade payables.
The table below presents a comparison between the main consolidated cash flow figures as at 30 June 2015 and as at 30 June 2014 (in thousands of Euros).
| (thousands of euros) | 30 June 2015 | 30 June 2014 | Change |
|---|---|---|---|
| Cash flow generated (absorbed) from operations | 14,488 | 32,287 | (17,799) |
| Cash flow generated (absorbed) from investment activities | (20,441) | (22,749) | 2,308 |
| Cash flow generated (absorbed) from financing activities | 4,862 | (8,230) | 13,092 |
| Increase/(decrease) in cash and cash equivalents | (1,091) | 1,308 | (2,399) |
| Opening cash and cash equivalents | 5,178 | 4,559 | 619 |
| Effect of exchange rate fluctuations | 709 | (207) | 916 |
| Closing cash and cash equivalents | 3,378 | 6,074 | (2,696) |
In the first half of 2015, Servizi Italia Group recorded an increase in consolidated turnover, with revenue from sales and services amounting to a total of Euro 117,217 thousand, therefore marking an increase of 1.2% compared to the interim financial statements as at 30 June 2014. The growth in turnover in the first half of 2015 is due in particular to the Brazilian area, increased 10.0% over the same period in the previous year, accounting for 9.9% of total Group revenue, the start of new contracts and the rise in turnover from contracts already in place in the Italian area.
Please note the following as regards revenue from sales and services by sector in the first half of 2015 and 2014:
The graph below shows the details of revenue by business line.
Consolidated EBITDA rose from Euro 32,455 thousand in the first half of 2014 to Euro 32,185 thousand in the first half of 2015. The growth in turnover in the Brazilian area and in the surgical instrument sterilisation sector managed to contain the reduction in margins to just 0.8%. In relative terms, margins fell slightly from 28.0% to 27.5% due to the increase, during the period, in personnel expense owing to the recognition of the two contractual instalments set forth in the last CCNL (national collective labour agreement) for the sector, the hiring of personnel for the start of new contracts and the costs relating to scheduled maintenance services in the Brazilian area and in the surgical instrument sterilisation sector. Note the positive trend in the reduction of the cost of raw materials and utilities already observed in the first quarter of 2015.
The consolidated operating profit (EBIT) decreased by 3.6% from Euro 10,754 thousand to Euro 9,709 thousand after recognising depreciation, amortisation and impairment of Euro 22,476 thousand. In relative terms, the ratio between EBIT and revenue from sales and services decreased by 1.0%. There was an increase in the impact of depreciation, amortisation and impairment (+0.4%) in the first half of 2015, compared to the first half of 2014. In particular, this rise was realised in the Brazilian area, due to an increase in the depreciation of linen and new production lines, while in the Italian area, depreciation rose particularly with respect to surgical instruments, whose relative impact increased due to the ramp-up phases of the new sterilisation contracts. In addition, should be noted that the amortisation of the intangible assets of the Parent Company includes the effects of the accounting of the non-compete agreement stipulated with the former CEO and the customer portfolio deriving from the company Si.Gi. Servizi Ospedalieri S.r.l. incorporated in the second quarter of 2015.
Profit before tax decreased from Euro 9,401 thousand to Euro 8,439 thousand. Financial management highlighted a reduction in net financial expense compared to the same period in the previous year, mainly as a result of the decrease in the rates applied to credit facilities and the elimination of interest accrued on the debt relating to the put options exercised with the purchase of the remaining 50% of the company Lavsim Higienização Têxtil S.A..
Therefore, the consolidated financial statements as at 30 June 2015 closed with a net profit of Euro 5,936 thousand, a slight decrease compared to Euro 6,168 thousand realised in the first half of 2014, also thanks to the fall in the impact of the tax rate, mainly determined, in the Italian area, by the new IRAP (regional business tax) regulations introduced by the 2015 Stability Law, which allowed, from 1 January 2015, the full deductibility of the entire cost of labour relating to open-ended contracts.
The Servizi Italia Group's transactions with parent companies and associates mainly involve the provision of commercial services and borrowing and lending funds. They are detailed in paragraph 8 of the notes to the half-year consolidated financial statements as at 30 June 2015.
On 22 April 2015, the Company's ordinary shareholders' meeting authorised the Board of Directors to purchase and sell treasury shares. The plan responds to the need to gain access to opportunities for the efficient investment of company liquidity and to have the possibility of using it for strategic transactions and/or to complete subsequent share purchase and sale transactions, to the extent allowed by permitted market practices. The authorisation is for a maximum number of Servizi Italia S.p.A. ordinary shares equating to 20% of the share capital, taking into account the treasury shares already held, for a period of 18 months as of the shareholders' meeting resolution. The purchases may be made at any time, on one or more occasions, effective from 23 April 2015.
As at 30 June 2015, the company held 247,226 treasury shares, equal to 0.87% of share capital, as a result of the purchases and sales made on the market regulated and managed by Borsa Italiana.
On 20 January 2015, the Company announced that the acquisition of the remaining 50% of the share capital of the company Lavsim Higienização Têxtil S.A. ("Lavsim"), already invested in as from 2 July 2012 by Servizi Italia S.p.A. via the subsidiary SRI Empreendimentos e Participações Ltda, had been completed.
On 25 February 2015, the Company announced that it had entered into an agreement for the wash-hire service with the Trento Province Health Services Authority, for a total of around Euro 15.1 million. The agreement has a duration of 52 months, renewable for a further 12, and includes the price review as per the ISTAT index.
On 26 February 2015, the Company disclosed that it had drawn up the deeds for the merger via incorporation of the wholly-owned subsidiaries Si.Gi. Servizi Ospedalieri S.r.l. (sole shareholder company) and Lavanderia Industriale Z.B.M. S.p.A. within Servizi Italia S.p.A. The statutory effectiveness of the merger will apply as from 1 April 2015. As from that date, the incorporating company (Servizi Italia S.p.A.) took over all the income and expense-generating legal relations relating to the merged companies, all the directors and officers of the incorporated companies fell from their office and all the powers of attorney previously issued ceased.
On 22 April 2015, the Shareholders' Meeting approved the financial statements as at 31 December 2014 and the distribution of a gross dividend of Euro 0.16 per share outstanding on the coupon date, excluding treasury shares. Payment took place on 29 April 2015, with a coupon payment on 27 April 2015.
At the same meeting, the Shareholders:
The Shareholders' Meeting authorised the Board of Directors to purchase and sell treasury shares, subject to revocation of the resolution of 22 April 2014.
The Shareholders' Meeting authorised the Board of Directors to purchase and sell treasury shares. The plan responds to the need to gain access to opportunities for efficient investment of company liquidity and to have the possibility of using it for strategic transactions and/or to complete subsequent share purchase and sale transactions, to the extent allowed by permitted market practices. The authorisation is for a maximum number of Servizi Italia S.p.A. ordinary shares equating to 20% of the share capital, taking into account the treasury shares already held, for a period of 18 months as of the shareholders' meeting resolution. The purchase transactions will be carried out on the market at a price of up to 20% more or less than the weighted average official prices in the 3 days preceding the individual transaction.
As announced on 1 April 2015, as of 22 April 2015 Mr Luciano Facchini is no longer director of the Italian subsidiaries. In the interest of the Group, Servizi Italia S.p.A. entered into a non-compete and confidentiality agreement with Mr Facchini, under which he agreed not to carry out any activity and not to do business in competition with the activities carried out by Servizi Italia. The non-compete and confidentiality agreement became effective on 22 April 2015 and will expire after 24 (twenty-four) months. Servizi Italia will pay Luciano Facchini the gross sum of Euro 1,000,000.00 (one million/00), with no interest, in two instalments.
On 22 April, the Board of Directors:
On 13 May 2015, based on the criteria of the Borsa Italiana Corporate Governance Code, the Board of Statutory Auditors and the Board of Directors checked the independence of the directors and also carried out the annual check of the requirements for remaining in the STAR segment pursuant to the Borsa Italiana Issuers Regulation and the instructions to the Issuers Regulation. The Company sent the required information within the terms set forth by Borsa Italiana.
Notice was received on 26 May 2015 of the conclusion of the preliminary investigations of criminal proceedings for an alleged offence pursuant to Italian Legislative Decree 231 of 2001 with which a Company director, a former director and the Company have been charged, relating to the awarding of a tender for the assignment of the nine-year contract of the AOU Policlinico of Modena, so-called "Global Service", which took place by means of resolution of 19 December 2008, to the RTI (temporary joint consortium) established by Coopservice Soc.Coop.p.A., in its capacity as lead contractor, and other companies including Servizi Italia S.p.A., Padana Everest S.r.l. and Lavanderia Industriale ZBM S.p.A. (companies actually merged by incorporation in Servizi Italia S.p.A.). The Company, which is only involved in said proceedings for the purposes of the administrative liability of legal entities pursuant to Italian Legislative Decree 231 of 2001, confirms that it is completely uninvolved in the contested events and promptly appointed a defence counsel to undertake any necessary action to prove this.
As part of these criminal proceedings, the subsidiary Servizi Italia Medical S.r.l. was also investigated for an alleged offence, pursuant to Italian Legislative Decree 231 of 2001, with which a former director has been charged, in relation to the awarding of the supply, based on piecework contracts, of disposable chirurgical kits, which took place by means of resolution dated 28 December 2009. The subsidiary, only involved in said proceedings for the purposes of the administrative liability of the legal entities pursuant to Italian Legislative Decree 231 of 2001, is not involved in the events contested and has appointed a defence counsel to prove its innocence.
The main characteristics of the awarded contracts, 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) |
|---|---|---|---|
| AAS 1 Triestina – Trieste (awarded as part of a temporary joint consortium) |
Wash-hire, laundry and linen store support services. | 1.25 | 107 |
| ASP Opera Pia Coianiz – Tarcento (UD) |
Supply and reconditioning of sanitary linen. | 4 | 129 |
| Istituto Europeo di Oncologia S.r.l. - Milan (awarded as part of a temporary joint consortium) |
Wash-hire service at Istituto Europeo di Oncologia (IEO) and Centro Cardiologico Monzino (CCM) in Milan. |
5 | 843 |
| Azienda Ospedaliera San Carlo di Milano |
Integrated rental, reconditioning and logistics service relating to textile devices and mattresses. |
3 | 1,046 |
| ESTAR - Pisa | Linen wash-hire service. | 5 | 280 |
| Linen wash-hire service, flat and packed linen, mattresses, cushions, Azienda Ospedaliera Ospedali mattress covers, wool blankets, sterile sets in trilaminate and Riuniti Marche Nord Pesaro microfibre fabric. |
3 | 443 | |
| Azienda Ospedaliera Carlo Poma di Mantova |
Integrated rental, reconditioning and logistics service relating to textile devices |
4 | 3,156 |
| ASL 4 Chiavarese | Wash-hire service | 1 | 1,080 |
In July 2015, the company obtained the assignment of the wash-hire service from the customer already in the portfolio, Azienda Ospedaliera della Provincia di Pavia, in compliance with the procedure fulfilled by Azienda Ospedaliera Mellino Mellini located in Chiari (BS). The contract has a duration of 44 months for total taxable amount of around Euro 7 million.
On 27 July, the Company announced the signing of the agreement for the purchase of a stake in Ankateks Turizm Inşaat Tekstil Temizleme San. Ve Tic. Ltd. Şti ("Ankateks" or "Ankateks Group"), a leading Turkish operator operating under the Ankara Laundry brand in the linen washing sector for healthcare structures, predominantly in the Ankara and Izmir areas. The transaction makes provision for the purchase at closing (expected by the end of September 2015) of a stake of 40.0% in Ankateks for a preliminary consideration fixed at 16.5 million Turkish Lira (around Euro 5.5 million at the EUR/TRY exchange rate of 2.9815 at 24 July 2015), which will be recalculated and become final on the basis of a multiplier of 2016 profit of Ankateks and of the subsidiary Ergulteks. On approval of the 2016 results, moreover, Servizi Italia will have the option to obtain control of the Ankateks Group through the acquisition of an additional 15.0% of Ankateks' share capital (rising to a stake of 55.0%) based on said pricing criterion. For more information, please refer to the press release available on the Company's website.
On 3 August 2015, the Company announced that up until 31 July 2015 it had acquired 161,426 treasury shares on the market regulated and managed by Borsa Italiana, equal to 0.57% of the share capital.
The results achieved in the first half of 2015 confirm the planned estimates and forecasted income statement and cash flow projections. This year, the Group is committed to support international development and consolidating investments made, as well as meeting significant operating efficiency targets in order to maintain business margins and profitability.
For the year under way, spending review measures promoted by the Government continue to impact the Italian healthcare market. Therefore, the management's strategic actions remain focused on optimisations in the current industrial segment while also achieving growth by making targeted investments in foreign countries, including Turkey, with appealing market characteristics for business development.
As at 30 June 2015, the Group held no derivatives.
The Company's model is based on integrated and adequate risk management and internal control systems. This model is meant to ensure the Company's continuity and the adequacy of its processes, activities and services in terms of:
business objectives:
achievement of objectives set within company strategies;
effective and efficient use of organisational resources;
governance objectives:
ensuring the reliability, accuracy, trustworthiness and timeliness of financial reporting;
Via the Director responsible for the internal control and risk management system and the Internal Audit Manager, the Board of Directors plans, organises and manages initiatives designed to ensure that company targets are achieved by periodically reviewing objectives, changing processes based on changes within and outside the Company, and promoting and maintaining a culture and climate favourably oriented towards risk management within the company.
With a view to Governance Control, the Company has prepared and implements a series of internal procedures and controls to apply corporate governance at all levels, in terms of operational efficiency and business integrity.
The Enterprise Risk Management (ERM) tool manages risks in an integrated manner.
The primary objectives of ERM are:
The Company has defined a Corporate Risk Model within its ERM policy, which reflects the types of risk expected in light of the company's activities. Updates are approved annually by the Board of Directors. The Risk Model is the foundation and common language of the process of identifying, evaluating, controlling and reporting priority corporate risks.
The primary business risks identified (strategic, operational, financial and compliance) based on the activities of the Company and its subsidiaries are examined by the entire Board of Directors as well as the members of the Board of Statutory Auditors and the Control and Risks Committee. Meanwhile, the Director responsible for the internal control and risk management system, the Financial Reporting Manager, the Internal Audit Manager, the Organisation and Systems Manager, the Supervisory Body and the Control and Risks Committee are responsible for planning, implementing and managing the internal control system. In addition, in line with the ERM policy, a risk mapping and risk scoring methodology has been adopted which identifies the significance of the risk based on an assessment of global impact, likelihood and control level.
The Company also implements the ERM process and the Risk Self-Assessment, the results of which are disclosed to the Control and Risks Committee and the Board of Directors and are used in the preparation of specific risk-based audit plans.
Aside from that reported in the section "Significant events and transactions", the Company is involved in proceedings for an alleged offence pursuant to Italian Legislative Decree 231 of 2001 relating to the AUSL (Local Health Authority) of Viterbo, for which a former director was charged with a predicate offence in relation to the awarding of a tender for the assignment of the supply of wash-hire services, sterilisation and hire of surgical instruments for the aforementioned AUSL of Viterbo; no significant events occurred in the period. Through its lawyers, the Parent Company prepared defence pleadings demonstrating the groundlessness of the accusation and, as a result, the absolute lack of involvement of the company as well as its former director.
Servizi Italia S.p.A.'s activities are exposed to various risk types, including interest rate fluctuations and credit, liquidity and cash flow risks.
To minimise such risks, the Group has adopted timescales and control methods which allow the company Management to monitor risks and inform the Board of Directors so that it may approve all transactions involving a commitment by the Company with respect to third-party lenders.
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.
Pursuant to annex B, point 26 of Italian Legislative Decree No. 196/2003 on the Personal data protection code, the directors acknowledge that the Company has worked to uphold personal data protection measures, also in light of the provisions introduced by Italian Legislative Decree No. 196/2003 and Italian Decree Law No. 207 of 30 December 2008, published in Official Gazette No. 300 of 31 December 2008.
The Company takes an integrated approach to Quality, Safety and Environment matters and promotes the development and use of the system as a fundamental element of prevention and continuous operational improvement, with respect for and in systematic dialogue with the relevant social context and in line with international best practices.
In order to become a market leader in terms of service safety and reliability, the Company's organisational structure aims to demonstrate that the activities carried out:
• guarantee and demonstrate that the process is able to systematically produce services that comply with predetermined specifications defined on the basis of customer requirements and applicable regulatory requirements in force;
• aim to increase the level of customer satisfaction via effective management of the quality, safety and environment system and continuous improvement;
• are geared towards protecting the community and the environment, the health and safety of the population and the prevention of pollution in compliance with current legislation.
During the reference period:
the applicable Managers carried out the audits planned in the company departments as well as at production sites;
accredited third-party Certification Bodies successfully completed the renewal audits to maintain existing certifications and to obtain them for the new production sites.
Several occupational health and safety informational/training/instructional meetings were held during the period involving the top management, the operational managers, the Prevention and Protection Service and the Company Physicians.
In the first half of 2015, the safety team's activities included:
To conduct its business, Servizi Italia S.p.A. is required to observe the provisions of binding environmental regulations (Italian Legislative Decree No. 152 of 3 April 2006, which entered into force on 29 April 2006 the "Consolidated Environmental Law" or, alternatively, "Decree 152/2006"). 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 period, the Company continued with additional energy efficiency actions aimed at primary energy savings, through the reduction of natural gas consumption by production site plants. These energy savings are certified through the issuing of the relative Energy Efficiency Certificates, also referred to as white certificates, established by the Decrees of the Ministry of Productive Activities jointly with the Ministry for the Environment and Land Protection of 20 July 2004 (Ministerial Decree 20/7/04 electricity, Ministerial Decree 20/7/04 gas), as subsequently amended and supplemented by Ministerial Decree 21/12/07 and Ministerial Decree of 28 December 2012, the latter of which sets the national quantitative objectives for the increase in energy efficiency in the 2013-2016 period.
The Servizi Italia Group's total employees, including those of the consolidated companies, were as follows as at 30 June 2015:
| Company | Executives and Middle managers |
White-collar staff |
Blue-collar staff |
Total |
|---|---|---|---|---|
| Servizi Italia S.p.A. | 8 executives and 18 middle managers |
156 | 1,635 | 1,817 |
| Servizi Italia Medical S.r.l. | 1 middle manager | 7 | - | 8 |
| Lavsim Higienização Têxtil S.A. | 2 executives | 13 | 500 | 515 |
| Maxlav Lavanderia Especializada S.A. | 3 executives | 9 | 506 | 518 |
| Vida Lavanderias Especializada S.A. | - | 4 | 162 | 166 |
| TOTAL | 13 executives and 19 middle managers |
189 | 2,803 | 3,024 |
The company's relations with the unions have always been characterised by respect for the roles and prerogatives of all parties and have always resulted in shared agreements. Over the years, this has made it possible to maintain union relations based on reciprocal respect and shared expectations.
With regard to its blue-collar and white-collar staff, Servizi Italia S.p.A. applies the national collective labour Agreement for employees of companies in the integrated industrial system of textile and related medical services entered into by Assosistema and the trade unions Femca-Cisl, Filctem-Cgil and Uiltec-Uil (and also separately with UGL) and expired on 30 June 2015. The Industry Executives national collective labour agreement is applied for the Company's managerial staff.
During the period, 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 line with the annual training Plan, the training activities carried out in the first half of 2015 focused on updating the knowledge of all personnel, supporting professional growth for operating as well as technical positions and strengthening the skills of those with roles of responsibility, with the awareness that training represents a strategic leverage for development and company growth. During the half, training activities also addressed the integrated quality/environment/safety system, the use of IT systems, assessments on groups of employees and regulatory updates applicable to the various company departments.
The Company shares have been traded on the STAR segment of the Borsa Italiana S.p.A. electronic stock market since 22 June 2009. The main share and stock exchange data as at 30 June 2015 are reported below along with share volume and price trends (in Euros):
| Share and stock exchange data | 30 June 2015 |
|---|---|
| No. of shares making up the share capital | 28,371,486 |
| Price at IPO: 4 April 2007 |
8.50 |
| Price as at 30 June 2015 | 4.20 |
| Maximum price during the period | 5.48 |
| Minimum price during the period | 4.01 |
| Average price during the period | 4.71 |
| Volumes traded during the period | 3,380,362 |
| Average volumes during the period | 27,043 |
The "Warrant Servizi Italia S.p.A. 2012-2015" (the "Warrants") began being traded on the stock exchange on 25 July 2012. Please recall that the Warrants attribute the rights and may be exercised under the terms and conditions pursuant to the Warrant Regulation provided in an annex to the prospectus relating to the rights offer of Shares together with the free Warrants and the admission to listing of the Shares and Warrants on the MTA stock exchange organised and managed by Borsa Italiana S.p.A., filed with Consob on 29 June 2012 and available on the Company website: www.si-servizitalia.com/share capital increase. As regards the "Warrant Servizi Italia S.p.A. 2012 - 2015", ISIN IT0004813298, please note that, as already announced on
Servizi Italia Group – Half-year Financial Report as at 30th June 2015 Page 17 of 61
23 July 2012 and 1 August 2012, Warrant holders will be entitled to subscribe 1 share for every 4 warrants during the following period and at the following price:
1 October 2015 to 31 October 2015, at the exercise price of Euro 3.30, including a share premium of Euro 2.30.
Lastly, please note that the Warrant Regulation is available on the Company website at www.siservizitalia.com.
During the period, the investor relations team held several individual and group meetings with analysts and investors and also organised guided tours of the sterilisation centres and industrial laundering sites for shareholders and potential investors who so requested. During the reference period, the Company met with investors at the "STAR Conference" event in Milan organised by Borsa Italiana on 24-25 March 2015.
The Chairman of the Board of Directors
(Roberto Olivi)
| (thousands of euros) | of which with | of which with | |||
|---|---|---|---|---|---|
| Notes | 30 June 2015 | related parties (Note 8) |
31 December 2014 | related parties (Note 8) |
|
| ASSETS | |||||
| Non-current assets | |||||
| Property, plant and equipment | 6.1 | 126,223 | - | 129,724 | - |
| Intangible assets | 6.2 | 4,132 | - | 3,471 | - |
| Goodwill | 6.3 | 41,908 | - | 42,602 | - |
| Equity-accounted investments | 6.4 | 10,088 | - | 9,966 | - |
| Equity investments in other companies | 6.5 | 3,551 | - | 3,551 | - |
| Financial receivables | 6.6 | 3,015 | - | 2,714 | - |
| Deferred tax assets | 6.7 | 1,404 | - | 1,382 | - |
| Other assets | 6.8 | 4,403 | - | 4,067 | - |
| Total non-current assets | 194,724 | 197,477 | |||
| Current assets | |||||
| Inventories | 6.9 | 4,278 | - | 4,295 | - |
| Trade receivables | 6.10 | 76,315 | 1,246 | 76,169 | 1,392 |
| Current tax receivables | 6.11 | 93 | - | 286 | - |
| Financial receivables | 6.12 | 8,272 | 5,823 | 7,791 | 5,710 |
| Other assets | 6.13 | 9,242 | - | 6,397 | - |
| Cash and cash equivalents | 6.14 | 3,378 | - | 5,178 | - |
| Total current assets | 101,578 | 100,116 | |||
| TOTAL ASSETS | 296,302 | 297,593 | |||
| SHAREHOLDERS´ EQUITY AND LIABILITIES | |||||
| Group shareholders' equity | |||||
| Share capital | 6.15 | 28,124 | - | 27,906 | - |
| Other reserves and retained earnings | 6.15 | 77,216 | - | 68,903 | - |
| Profit (loss) for the period | 6,040 | - | 13,077 | - | |
| Total shareholders´ equity attributable to shareholders of the parent | 111,380 | 109,886 | |||
| Total shareholders´ equity attributable to non-controlling interests | 629 | 1,702 | |||
| TOTAL SHAREHOLDERS´ EQUITY | 6.15 | 112,009 | 111,588 | ||
| LIABILITIES | |||||
| Non-current liabilities | |||||
| Due to banks and other lenders | 6.16 | 32,621 | - | 28,258 | - |
| Deferred tax liabilities | 6.17 | 2,173 | - | 2,265 | - |
| Employee benefits | 6.18 | 9,922 | - | 9,805 | - |
| Provisions for risks and charges | 6.19 | 104 | - | 126 | - |
| Other financial liabilities | 6.20 | 6,023 | - | 6,194 | - |
| Total non-current liabilities | 50,843 | 46,648 | |||
| Current liabilities | |||||
| Due to banks and other lenders | 6.16 | 47,414 | - | 42,791 | - |
| Trade payables | 6.21 | 65,137 | 9,423 | 64,675 | 9,095 |
| Current tax payables | 6.22 | 2,879 | - | 1,023 | - |
| Employee benefits | 6.18 | - | - | 1,050 | - |
| Other financial liabilities | 6.23 | 71 | - | 5,799 | - |
| Other payables | 6.24 | 17,949 | - | 24,019 | - |
| Total current liabilities | 133,450 | - | 139,357 | - | |
| TOTAL LIABILITIES | 184,293 | 186,005 | |||
| TOTAL SHAREHOLDERS´ EQUITY AND LIABILITIES | 296,302 | 297,593 |
Servizi Italia Group – Half-year Financial Report as at 30th June 2015 Page 19 of 61
| (thousands of euros) | Notes | 30 June 2015 | of which with related parties (Note 8) |
30 June 2014 | of which with related parties (Note 8) |
|---|---|---|---|---|---|
| Revenue from sales | 7.1 | 117,217 | 549 | 115,776 | 555 |
| Other income | 7.2 | 2,591 | 274 | 2,512 | 357 |
| Raw materials and consumables | 7.3 | (12,529) | (28) | (12,555) | (28) |
| Costs for services | 7.4 | (36,539) | (10,260) | (36,113) | (10,887) |
| Personnel expense | 7.5 | (37,826) | (2,035) | (36,245) | (2,440) |
| Other costs | 7.6 | (729) | (28) | (920) | (17) |
| Depreciation, amortisation, impairment and provisions | 7.7 | (22,476) | - | (21,701) | - |
| Operating profit | 9,709 | 10,754 | |||
| Financial income | 7.8 | 552 | 34 | 1,005 | 44 |
| Financial expense | 7.9 | (1,917) | - | (2,645) | - |
| Income/(expense) from equity investments in other companies | 7.10 | - | - | 123 | - |
| Revaluation/impairment of equity-accounted investments | 6.4 | 95 | - | 164 | - |
| Profit before tax | 8,439 | 9,401 | |||
| Income taxes | 7.11 | (2,503) | (3,233) | ||
| Profit (loss) for the period | 5,936 | 6,168 | |||
| of which: Attributable to shareholders of the parent | 6,040 | 6,026 | |||
| Attributable to non-controlling interests | (104) | 142 | |||
| Basic earnings per share (in Euros) | 7.12 | 0.21 | 0.21 | ||
| Diluted earnings per share (in Euros) | 7.12 | 0.21 | 0.21 |
| (thousands of euros) | 30 June 2015 | 30 June 2014 |
|---|---|---|
| Profit (loss) for the period | 5,936 | 6,168 |
| Other comprehensive income that will not be reclassified to the Income Statement | ||
| Actuarial gains (losses) on defined benefit plans | - | - |
| Income taxes on other comprehensive income | - | - |
| Other comprehensive income that may be reclassified to the Income Statement | ||
| Gains (losses) from translation of foreign financial statements | (1,936) | 794 |
| Income taxes on other comprehensive income | - | - |
| Total other comprehensive income after taxes | (1,936) | 794 |
| Total comprehensive income for the period | 4,000 | 6,962 |
| of which: Attributable to shareholders of the parent | 4,060 | 6,697 |
| Attributable to non-controlling interests | (60) | 265 |
| (thousands of euros) | of which | of which | |||
|---|---|---|---|---|---|
| Notes | as at 30 June 2015 |
with related parties (Note 8) |
as at 30 June 2014 |
with related parties (Note 8) |
|
| Cash flow generated (absorbed) by operations | |||||
| Profit (loss) before tax | 8,439 | - | 9,401 | - | |
| Payment of current taxes | (461) | - | (960) | - | |
| Depreciation and amortisation | 7.7 | 22,230 | - | 20,604 | - |
| Impairment and provisions | 7.7 | 246 | - | 1,097 | - |
| (Revaluation)/impairment of equity investments | 7.10 | (95) | - | (287) | - |
| Gains/losses on disposal | (80) | - | (5) | - | |
| Interest income and expense accrued | 1,365 | - | 1,639 | - | |
| Interest income collected | 133 | - | 293 | - | |
| Interest expense paid | (1,541) | - | (1,952) | - | |
| Provisions for employee benefits | 6.17 | 306 | - | 189 | - |
| 30,542 | 30,019 | ||||
| (Increase)/decrease in inventories | 6.9 | (9) | - | (335) | - |
| (Increase)/decrease in trade receivables | 6.10 | (1,555) | 146 | 1,203 | (38) |
| Increase/(decrease) in trade payables | 6.19 | 1,754 | 328 | 3,100 | 1,313 |
| Increase/(decrease) in other assets and liabilities | 6.23 6.24 | (14,937) | - | (1,306) | - |
| Settlement of employee benefits | 6.17 | (1,307) | - | (394) | - |
| Cash flow generated (absorbed) by operations | 14,488 | 32,287 | |||
| Cash flow generated (absorbed) from investment activities in: | |||||
| Intangible assets | 6.2 | (1,210) | - | (258) | - |
| Property, plant and equipment | 6.1 | (19,204) | - | (22,058) | - |
| Dividends received | 240 | - | 123 | - | |
| Acquisitions | 6.4 6.5 | - | - | (400) | - |
| Equity investments | 6.4 6.5 | (267) | - | (156) | - |
| Cash flow generated (absorbed) by investment activities | (20,441) | (22,749) | |||
| Cash flow generated (absorbed) from financing activities in: | |||||
| Financial receivables | 6.6 6.11 | (702) | (113) | 293 | - |
| Dividends paid | 6.14 | (4,503) | - | (3,781) | - |
| Purchase of treasury shares | 6.15 | 925 | - | (222) | - |
| Current liabilities to banks and other lenders | 6.15 | 4,732 | - | 1,429 | - |
| Non-current liabilities to banks and other lenders | 6.15 | 4,410 | - | (5,949) | - |
| Cash flow generated (absorbed) from financing activities | 4,862 | (8,230) | |||
| (Increase)/decrease in cash and cash equivalents | (1,091) | 1,308 | |||
| Opening cash and cash equivalents | 6.14 | 5,178 | 4,559 | ||
| Effect of exchange rate fluctuations | 709 | (207) | |||
| Closing cash and cash equivalents | 6.14 | 3,378 | 6,074 | ||
| Increase/(decrease) in cash and cash equivalents | (1,091) | - | 1,308 | - |
| (thousands of euros) | Reserves | |||||||
|---|---|---|---|---|---|---|---|---|
| Share capital |
Share premium reserve |
Legal Reserve |
Retained earnings |
Translation reserve |
Profit (loss) for the year |
and profit (loss) of non controlling interests |
Total Shareholders' Equity |
|
| Balance as at 1 January 2014 | 27,032 | 40,297 | 3,126 | 19,623 | (1,342) | 8,830 | 1,742 | 99,308 |
| Allocation of profit from the previous year | - | - | 454 | 4,595 | - | (5,049) | - | - |
| Distribution of dividends | - | - | - | - | - | (3,781) | - | (3,781) |
| Change in the scope of consolidation | - | - | - | (17) | - | - | (383) | (400) |
| Share capital increase | 965 | 3,251 | - | - | - | - | - | 4,216 |
| Treasury share transactions | (91) | (316) | - | - | - | - | - | (407) |
| Comprehensive income for the year | - | - | - | (680) | (88) | 13,077 | 343 | 12,652 |
| Balance as at 31 December 2014 | 27,906 | 43,232 | 3,580 | 23,521 | (1,430) | 13,077 | 1,702 | 111,588 |
| Allocation of profit from the previous year | - | - | 606 | 7,968 | - | (8,574) | - | - |
| Distribution of dividends | - | - | - | - | - | (4,503) | - | (4,503) |
| Change in the scope of consolidation | - | - | - | 1,013 | - | - | (1,013) | - |
| Share capital increase | - | - | - | - | - | - | - | - |
| Treasury share transactions | 219 | 707 | - | - | - | - | - | 926 |
| Change in translation reserve | - | - | - | - | (1,981) | - | 45 | (1,936) |
| Comprehensive income for the year | - | - | - | - | - | 6,040 | (104) | 5,936 |
| Balance as at 30 June 2015 | 28,125 | 43,939 | 4,186 | 32,502 | (3,411) | 6,040 | 630 | 112,011 |
These half-year condensed consolidated financial statements as at 30 June 2015 of the Servizi Italia Group, subject to a review conducted by the Independent Auditor, have been prepared in compliance with Art. 154 ter of Italian Legislative Decree 58/1999 as amended as well as the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), on the basis of the text published in the Official Journal of the European Communities (OJEC). These interim financial statements have been prepared in "condensed" form as established by IAS 34, and therefore must be read together with the Group's consolidated financial statements as at 31 December 2014.
The condensed half-yearly financial report includes the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of financial position, the statement of changes in consolidated shareholders' equity, the cash flow statement and the notes, in line with the requirements of IFRS.
The half-year condensed consolidated financial statements were drafted in compliance with the IFRS issued by the International Accounting Standards Board and approved by the European Union at the time of drafting of these financial statements. IFRS mean also all revised international accounting standards (IAS) and all interpretations of the International (IFRS) Interpretations Committee (IFRIC), previously known as the Standing Interpretations Committee (SIC).
The accounting standards and methods used to prepare the Group's consolidated interim financial statements are the same as those applied in the last annual financial statements. Please also note that the following amendments to standards and interpretations became applicable on 1 January 2015:
scope of application of IFRS 3 or IAS 40, reference must be made respectively to the specific indications provided by IFRS 3 or by IAS 40.
The amendments apply for annual periods starting on or after 1 January 2015.
The application of these new standards did not have any impact on the Servizi Italia Group's consolidated interim financial statements.
o IFRS 13 Fair Value Measurement Short-term receivables and payables. The Basis for Conclusions of said standard was amended in order to clarify that, with the issuing of IFRS 13, and the subsequent amendments to IAS 39 and to IFRS 9, the possibility of accounting for current trade receivables and payables without recognising the effects of discounting remains valid, should these effects be immaterial;
o IAS 16 Property, plant and equipment and IAS 38 Intangible Assets Revaluation method: proportionate restatement of accumulated depreciation/amortisation. The amendments eliminated the inconsistencies in the recognition of accumulated depreciation when a tangible or intangible asset is subject to revaluation. The requirements set forth in the amendments clarify that the gross carrying amount is adjusted in a manner consistent with the revaluation of the carrying amount of the asset and the accumulated depreciation is equal to the difference between the gross carrying amount and the carrying amount net of impairment recorded;
The amendments apply at the latest for annual periods starting on or after 1 February 2015. The directors do not expect the adoption of these amendments to have a significant impact on the Group's consolidated financial statements.
At the reference date of this half-year 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.
The amendments apply as from 1 January 2016 but early application is permitted.
On 12 May 2014, the IASB issued some amendments to IAS 16 Property, Plant and Equipment and to IAS 38 Intangibles Assets – "Clarification of acceptable methods of depreciation and amortisation". The amendments to IAS 16 establish that the depreciation criteria determined on the basis of revenue are not appropriate, given that, according to the amendment, the revenue generated by an asset which includes the use of the asset subject to depreciation generally reflects factors other than solely consumption of the economic benefits of the asset itself. The amendments to IAS 38 introduce a relative presumption, according to which a depreciation criterion based on revenue is normally considered inappropriate for the same reasons established by the amendments introduced to IAS 16. In the case of intangible assets, this presumption can be overcome, but only in limited and specific circumstances.
The amendments apply as from 1 January 2016 but early application is permitted.
On 28 May 2014, the IASB published "IFRS 15 Revenue from Contracts with Customers" which will replace IAS 18 Revenue and IAS 11 Construction Contracts, as well as the interpretations IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agreements for the Construction of Real Estate, IFRIC 18 Transfers of Assets from Customers and SIC 31 Revenue - Barter Transactions Involving Advertising Services. The standard establishes a new revenue recognition model, which will apply to all the contracts entered into with the customers with the exception of those which fall within the scope of application of other IAS/IFRS standards such as leasing, insurance agreements and financial instruments. The fundamental steps for the accounting of revenue as per the new model are:
The standard applies from 1 January 2017 but early application is permitted (in May 2015 the IASB issued an Exposure Draft, proposing to defer the date of first-time application to 1 January 2018).
On 30 June 2014, the IASB issued some amendments to IAS 16 Property, Plant and Equipment and IAS 41 Agriculture – Bearer Plants. The amendments require bearer plants, i.e. fruit trees that will give rise to annual harvests (e.g. grapevines, hazelnut trees) to be accounted for in accordance with IAS 16 (rather than IAS 41). This means that these assets should be valued at cost rather than at fair value less costs to sell (however, the use of the revaluation method proposed by IAS 16 is permitted). The proposed changes are restricted to the trees used to produce seasonal fruits and not to be sold as living plants or harvested as agricultural produce. These trees also fall under the scope of IAS 16 during the phase of biological maturation, i.e. up to the point that they are able to generate agricultural produce.
The amendments apply as from 1 January 2016 but early application is permitted.
On 24 July 2014, the IASB published the final version of IFRS 9 – Financial instruments. The document includes the results of the phases relating to the Classification and measurement, impairment and Hedge accounting, of the IASB project targeted at replacing IAS 39. The new standard, which replaces the previous versions of IFRS 9, must be applied to financial statements for periods starting on or after 1 January 2018.
As a result of the financial crisis of 2008, at the request of the main financial and political institutions, the IASB launched the project aimed at replacing IFRS 9 and proceeded in phases. In 2009, the IASB published the first version of IFRS 9 which dealt solely with the classification and measurement of financial assets; subsequently, in 2010, criteria were published relating to the classification and measurement of financial liabilities and derecognition (the latter theme was carried from IAS 39 unchanged). In 2013, IFRS 9 was modified to include the general model of hedge accounting. As a result of the current publication, which also includes impairment, IFRS 9 is to be considered completed with the exception of criteria concerning macro hedging, in respect of which the IASB has undertaken an autonomous project.
The standard introduces new criteria for the classification and measurement of financial assets and liabilities. In particular, with regard to the financial assets the new standard uses a unique approach based on the methods for handling the financial instruments and on the characteristics of the contractual cash flows of said financial assets for the purpose of determining the accounting policies, replacing the various rules envisaged by IAS 39. By contrast, with regard to the financial liabilities, the main change which has taken place concerns the accounting treatment of the fair value changes of a financial liability, designated as a financial liability valued at fair value through profit and loss, in the event that these are due to the change in the creditworthiness of the issuer of said liability. According to the new standard, these changes must be recognised in the statement of "Other comprehensive income" and no longer in the income statement.
With reference to the impairment model, the new standard requires the estimate of credit losses to be made on the basis of the model of expected losses (and not on the model of incurred losses), by
using supportable information available without undue cost or effort which include historical, current and forecast information. The standard sets out that the same impairment model is to apply to all financial instruments, i.e. to financial assets valued at amortised cost, to those valued at fair value through other comprehensive income, to lease receivables and trade receivables.
Finally, the standard introduces a new hedge accounting model in order to adjust the requirements set out in the current IAS 39, which were sometimes viewed as too stringent and not capable of reflecting companies' risk management policies. The main changes of the document concern:
The greater flexibility of the new accounting rules is counter-balanced by enhanced disclosure requirements about a company's risk management activities.
On 11 September 2014, the IASB published the amendment to IFRS 10 and IAS 28 Sales or Contribution of Assets between an Investor and its Associate or Joint Venture. The document was published in order to resolve the current conflict between IAS 28 and IFRS 10.
According to IAS 28, profit or loss on the sale or transfer of a non-monetary asset to a joint venture or associate in exchange for an interest in the latter is limited to the share held in the joint venture or associate by other investors unrelated to the transaction. In contrast, IFRS 10 requires the entire profit or loss to be recognised in the case of a loss of control over a subsidiary, even if the entity continues to hold a non-controlling interest in the same, including, in said case, also the sale or transfer of a subsidiary to a joint venture or an associate. The amendments introduced set out that, in a sale/transfer of an asset or of a subsidiary to a joint venture or an associate, the extent of any profit or loss to be recognised in the financial statements of the seller/transferor depends on whether the assets or the subsidiary sold/transferred constitute a business or not, as defined by IFRS 3. In the event the assets or the subsidiary sold/transferred constitute a business, the entity must recognise the profit or loss on the entire portion held previously; when the assets or subsidiary do not constitute a business, the entity's share of the profit or loss is eliminated. The amendments apply from 1 January 2016; however, a deferment of the date of first-time application is expected.
On 25 September 2014, the IASB published the document "Annual Improvements to IFRSs: 2012- 2014 Cycle". The amendments introduced by the document must be applied for annual periods starting on or after 1 January 2016.
The document introduces amendments to the following standards:
o IFRS 5 – Non-current Assets Held for Sale and Discontinued Operations. The amendment introduces specific guidance to the standard in the event an entity reclassifies an asset (or a disposal group) from the held-for-sale category to the held-for-distribution category (or vice versa), or when the requirements for classifying an asset as held-for-distribution no longer apply. The amendments define that (i) these reclassifications should not be considered a change in a sale plan or a distribution plan and that the same classification and measurement criteria remain valid; (ii) the assets that no longer meet the classification criteria set out for held-for-distribution should be treated in the same way as an asset that ceases to be classified as held-for-sale;
The amendments introduced by the document must be applied for annual periods starting on or after 1 January 2016.
On 18 December 2014, the IASB published the document "Investment Entities: Applying the Consolidation Exception (Amendments to IFRS 10, IFRS 12 and IAS 28)", containing amendments to issues that emerged following the application of the consolidation exception granted to investment entities. The amendments introduced by the document must be applied for annual periods starting on or after 1 January 2016; in any case, early adoption is permitted. With reference to IFRS 9 and IFRS 15 described above, the Group is evaluating the implementation criteria and the impacts on its consolidated financial statements, while with reference to the other standards and interpretations detailed above, it is not envisaged that the adoption will lead to significant impacts on the measurement of the assets, liabilities, costs and revenues of the Group. The half-year financial report was approved by the Board of Directors of Servizi Italia S.p.A. on 7 August 2015.
The Group primarily works in the domestic market and in the State of São Paulo (Brazil), in India and in Turkey, in supplying integrated rental, washing and sterilisation services for textiles and surgical instruments to social/welfare and public and private hospital facilities. In particular, the Company offers the following services: (a) wash-hire, including (i) planning and provision of integrated rental, reconditioning (disinfection, washing, finishing and packaging) and logistics (pick-up and distribution to usage centres) services for textile items, mattresses and accessories (pillowcases, curtains), (ii) rental and washing of high visibility "118" emergency service items and (iii) logistics and management of hospital wardrobes; (b) linen sterilisation services, including the planning and rental of sterile medical devices for operating theatres (linens for operating theatres and scrubs) packed in sets for the operating theatre, in cotton or in re-usable technical fabric, as well as personal protection equipment (gloves, masks); and (c) surgical instrument sterilisation services including (i) planning and provision of washing, packaging and sterilisation services for surgical instruments (owned or rented) and accessories for operating theatres and (ii) planning, installation and renovation of sterilisation centres.
Servizi Italia S.p.A. is a subsidiary of the Coopservice S.Coop.p.A. Group, registered office in Reggio Emilia, which holds a controlling shareholding via the Company Aurum S.p.A., registered office at Via Rochdale no. 5, Reggio Emilia.
The half-year condensed consolidated financial statements as at 30 June 2015 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. Control is exercised based on a direct or indirect holding of the majority of shares with voting rights, or the exercise of dominant influence, i.e., the power to determine, including indirectly on the basis of contractual or legal agreements, the financial and operating decisions of the entity and obtain the relative benefits, even regardless of shareholding. Control is determined by considering the existence of potential voting rights that may be exercised at the reporting date.
The financial statements consolidated line-by-line were prepared as at 30 June 2015 and have been adjusted as required to bring them into line with the accounting standards of Servizi Italia S.p.A..
The consolidation criteria are the same as those applied in the Group's consolidated financial statements as at 31 December 2014.
The scope of consolidation includes the following subsidiaries (consolidated line-by-line):
| (thousands) | Registered offices | Currency | Share capital as at 30 June 2015 |
Shareholding as at 30 June 2015 |
Shareholding as at 31 December 2014 |
|---|---|---|---|---|---|
| San Martino 2000 S.c.r.l. | Genoa | EUR | 10 | 60% | 60% |
| Se.sa.tre. S.c.r.l. | Genoa | EUR | 20 | 60% | 60% |
| Servizi Italia Medical S.r.l. | Castellina di Soragna (PR) | EUR | 200 | 100% | 100% |
| SRI Empreendimentos e Participacoes LTDA | São Paulo (Brazil) | R\$ | 97,001 | 100% | 100% |
| Lavsim Higienização Têxtil S.A. | São Roque, SP (Brazil) | R\$ | 550 | 100% | 50% |
| Maxlav Lavanderia Especializada S.A. | Jaguariúna, SP (Brazil) | R\$ | 2,825 | 50.1% | 50.1% |
| Vida Lavanderias Especializada S.A. | Santana de Parnaíba SP (Brazil) | R\$ | 1,900 | 50.1% | 50.1% |
Investments in associates and jointly controlled companies are measured using the equity method.
| (thousands of euros) | Registered offices | Currency | Share capital as at 30 June 2015 |
Shareholding as at 30 June 2015 |
Shareholding as at 31 December 2014 |
|---|---|---|---|---|---|
| Centro Italia Servizi S.r.l. | Arezzo | EUR | 10 | 50% | 50% |
| CO.SE.S S.c.r.l. | Perugia | EUR | 10 | 25% | 25% |
| PSIS S.r.l. | Padua | EUR | 10,000 | 50% | 50% |
| Ekolav S.r.l. | Lastra a Signa (FI) | EUR | 100 | 50% | 50% |
| AMG S.r.l. | Busca (CN) | EUR | 100 | 50% | 50% |
| Steril Piemonte S.c.r.l. | Turin | EUR | 4,000 | 50% | 50% |
| Iniziative Produttive Piemontesi S.r.l. | Turin | EUR | 2,500 | 37.63% | 37.63% |
| SE.STE.RO. S.r.l. | Castellina di Soragna (PR) | EUR | 400 | 25% | 25% |
| Piemonte Servizi Sanitari S.c.r.l. | Turin | EUR | 10 | 30% | 30% |
| Shubhram Hospital Solutions Private Limited | New Delhi - India | INR | 85,200 | 51% | 51% |
| SAS Sterilizasyon Servisleri A.Ş. | Istanbul, Turkey | TL | 500 | 51% | 51% |
The following exchange rates were used to consolidate the companies that prepare their financial statements in a currency other than the Euro, which is used in the consolidated financial statements of the Servizi Italia Group:
| Currency | Average exchange rate as at 30 June 2015 |
Final exchange rate as at 30 June 2015 |
Average exchange rate as at 30 June 2014 |
Final exchange rate as at 31 December 2014 |
|---|---|---|---|---|
| Brazilian Real (R\$) | 3.310148 | 3.4699 | 3.1495 | 3.2207 |
| Turkish Lira (TL) | 2.862006 | 2.9953 | 2.9675 | 2.8218 |
| Indian Rupee (INR) | 70.122366 | 71.1873 | - | 76.7190 |
The accounting standards and basis of preparation, reported in the introduction to the Notes to the financial statements, are the same as those used to prepare the consolidated financial statements as at 31 December 2014, which should be referred to for a description.
The condensed consolidated half-year financial statements as at 30 June 2015 were prepared on the basis of the going concern assumption.
Within the Servizi Italia Group, specific organisational directives, centrally issued and managed, govern risk management and control over all transactions relevant to the composition of 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 and cash flow risks.
To minimise such risks, the Servizi Italia Group has adopted timescales and control methods which allow the company management to monitor risks and inform the Board of Directors so that it may approve all transactions involving a commitment by the Company with respect to third parties.
The principal internal and external risks to which the Group is exposed are described in the directors' report accompanying the separate financial statements. A description of market risks and the relative hedging policies is provided below.
The investments in Brazil, Turkey and India launch the Company into an international context, exposing it to risk generated by fluctuations in the Euro/Real, Euro/Turkish Lira and Euro/Indian Rupee exchange rates.
Under the co-ordination of the Administration, Finance and Audit division, the Group handles the exposure to exchange rate risk on currency flows marginally exposed centrally, since there is no significant impact on the cash flows with respect to the reference currency. The same applies to the translation risk with reference to the conversion of the results and assets and liabilities of the financial statements of the foreign subsidiaries. The Company also has decided not to implement hedging transactions for the Euro/Real and Euro/Turkish Lira and Euro/Indian Rupee exchange rates since no inflows of capital are envisaged over the short term, since they are invested to support the growth and development in the respective geographic areas.
There are significant concentrations of credit by customer and geographical area, and extended collection timescales. Around 18.5% of turnover comes from customers in the Lombardy Region, roughly 13.8% from customers in the Emilia Romagna Region, around 12.0% from customers in the Liguria Region, roughly 11.4% from customers in the Tuscany Region and approximately 11.0% from customers in the Veneto Region. In light of the fact that customers are predominantly public companies, default risk is deemed low. However, these customers have extended payment times which depend on loans received by the local health units and hospitals from the Regions. Currently, the average days sales outstanding are 117.
To correctly manage 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 obtained primarily from accounts receivable financing and, to a lesser extent, from medium-term, unsecured credit lines. The Group also uses factoring without recourse.
The Group's net financial debt primarily comprises short-term liabilities which, as at 30 June 2015, represent approximately 59.24% of its debt, at an average annual rate of around 2.10%. Due to the global financial crisis, the Company is monitoring the market and assessing the appropriateness of taking out hedging transactions on the rates. The table below demonstrates the effect that would be generated by a 0.5% increase or decrease in rates.
| (thousands of euros) | 0.5% rate increase | 0.5% rate decrease | ||
|---|---|---|---|---|
| 30 June 2015 | 31 December 2014 | 30 June 2015 | 31 December 2014 | |
| Financial receivables | +34 | +66 | (34) | (66) |
| Financial payables | +217 | +449 | (217) | (449) |
| Factoring of receivables | +192 | +507 | (192) | (507) |
The Group does not hold financial instruments measured at fair value. Therefore, no classification based on input quality is provided. Financial assets and financial liabilities are recognised at amortised cost. For equity investments in other companies, price quotations in active markets are not available. Therefore, their fair value cannot be measured reliably. Such equity investments are measured at cost, if applicable less impairment losses or capital repayments.
The Servizi Italia Group's segment reporting is organised as follows:
Servizi Italia Group – Half-year Financial Report as at 30th June 2015 Page 32 of 61
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 Servizi Italia Group considers the breakdown by business area to be more significant. The core business areas are identified based on how the Group is managed, how management responsibilities are attributed and how business reporting is analysed by the management.
| (thousands of euros) | Half-year ended as at 30 June 2015 | |||
|---|---|---|---|---|
| Wash-hire | Steril B | Steril C | Total | |
| Revenue from sales and services | 88,207 | 10,120 | 18,890 | 117,217 |
| Other income | 1,283 | 122 | 1,186 | 2,591 |
| Raw materials and materials | (8,614) | (2,667) | (1,248) | (12,529) |
| Costs for services | (26,750) | (2,995) | (6,794) | (36,539) |
| Personnel expense | (29,585) | (2,280) | (5,961) | (37,826) |
| Other costs | (582) | (32) | (115) | (729) |
| EBITDA (a) | 23,959 | 2,268 | 5,958 | 32,185 |
| Depreciation, amortisation and impairment | (18,052) | (1,066) | (3,358) | (22,476) |
| Operating profit (EBIT) | 5,907 | 1,202 | 2,600 | 9,709 |
| Financial income and expense and income and expense from equity investments in other companies | (1,270) | |||
| Profit before tax | 8,439 | |||
| Income taxes | (2,503) | |||
| Profit (loss) for the year | 5,936 | |||
| Of which portion attributable to non-controlling interests | (104) | |||
| Of which portion attributable to shareholders of the parent | 6,040 |
| Half-year ended as at 30 June 2014 | |||
|---|---|---|---|
| Wash-hire | Steril B | Steril C | Total |
| 87,921 | 10,464 | 17,391 | 115,776 |
| 1,314 | 137 | 1,061 | 2,512 |
| (8,484) | (2,850) | (1,221) | (12,555) |
| (27,059) | (2,873) | (6,181) | (36,113) |
| (28,657) | (2,279) | (5,309) | (36,245) |
| (672) | (30) | (218) | (920) |
| 24,363 | 2,569 | 5,523 | 32,455 |
| (18,075) | (870) | (2,756) | (21,701) |
| 6,288 | 1,699 | 2,767 | 10,754 |
| (1,353) | |||
| 9,401 | |||
| (3,233) | |||
| 6,168 | |||
(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.
Revenue from wash-hire services increased by 0.3% over the previous period, from Euro 87,921 thousand in the first half of 2014 to Euro 88,207 thousand in the first half of 2015. In absolute value, top-line growth in the wash-hire segment is largely from new contracts such as Frosinone LHA, Turin 3 LHA, Local Health Unit no. 3 Alto - Collinare - Medio Friuli, I.N.M.I. - Lazzaro Spallanzani, Istituto Europeo di Oncologia S.r.l., Centro Cardiologico Monzino S.p.A. and AUSL (Local Health Authority) of Piacenza, the increase in existing contracts (such as Niguarda Ca' Granda Hospital in Milan and Local Health Unit 18 Rovigo) and the rise in the revenue of Brazilian companies (Euro 11,551 thousand as at 30 June 2015 compared to Euro 10,499 thousand as at 30 June 2014; based on the same exchange rate, revenue would have been Euro 589 thousand higher).
In terms of margins, the wash-hire EBITDA was 27.2% compared to 27.7% in the previous year, and EBIT decreased from 7.2% to 6.7%. The increase in operating costs (particularly personnel expense saw an increase of 3.2% in absolute terms) affected turnover to the tune of 74.3%, compared to 73.8% in the first half of 2014. At EBIT level, amortisation, depreciation, impairment and provisions recorded growth over the same period in the previous year, due to higher linen depreciation of the Brazilian companies and due to the accounting of the non-compete agreement stipulated with the previous CEO, as well as the impact of the amortisation of the customer portfolio of the incorporated company Si.Gi. Servizi Ospedalieri S.r.l..
Revenue from linen sterilisation services decreased by 3.3% to Euro 10,120 thousand, accounting for 8.6% of total sales. The fall in line revenue is linked to the end of the contract with the Legnano Hospital and the reduction in the turnover of the customer Careggi Hospital of Florence (in the latter case, the use of sterilised technical textile for the operating theatre decreased since the entity has opted for the single-use product) despite the increase in the turnover of customers such as ESTAV Centro, Udine Hospital and the San Paolo Hospital of Milan. In terms of margins, the EBITDA of the linen sterilisation business stood at 22.4% compared to 24.6% in the previous year, and EBIT increased to 11.9% from 16.2%.
Turnover in the surgical instrument sterilisation segment grew by 8.6% compared to the first half of the previous year. This increase is mainly attributable to the gradual increase in turnover from customers such as the Udine University Hospital, Trieste Hospital and Careggi Hospital in Florence and the new contract for the Spedali Civili Hospital in Brescia. Surgical instrument sterilisation is the segment with the highest profitability in terms of EBITDA, at 31.5%, while its EBIT amounted to 13.8%. With respect to the first half of 2014, margins were affected by greater depreciation of surgical instruments deriving from the ramp-up phases of the new contracts and the maintenance costs on said instruments.
The information in the tables below represents the assets directly attributable to investments by business segment.
| (thousands of euros) | Half-year ended as at 30 June 2015 | |||
|---|---|---|---|---|
| Wash-hire | Steril B | Steril C | Total | |
| Total revenue from sales and services | 88,207 | 10,120 | 18,890 | 117,217 |
| Investments in property, plant and equipment and intangible assets | 17,170 | 1,255 | 2,570 | 20,995 |
| Depreciation of property, plant and equipment and amortisation of intangible assets | 18,052 | 1,066 | 3,358 | 22,476 |
| Net book value of property, plant and equipment and intangible assets | 88,816 | 5,897 | 35,642 | 130,355 |
| (thousands of euros) | Year ended as at 31 December 2014 | |||
|---|---|---|---|---|
| Wash-hire | Steril B | Steril C | Total | |
| Total revenue from sales and services | 176,594 | 20,456 | 37,297 | 234,347 |
| Investments in property, plant and equipment and intangible assets | 34,976 | 1,718 | 5,861 | 42,555 |
| Depreciation of property, plant and equipment and amortisation of intangible assets | 34,879 | 2,065 | 5,987 | 42,931 |
| Net book value of property, plant and equipment and intangible assets | 91,355 | 6,007 | 35,833 | 133,195 |
The Company's economic and financial performance is not affected by particular significant cyclical or seasonal trends.
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 |
Freely transferable assets |
Equipment | Other assets |
Construction in progress |
Total |
|---|---|---|---|---|---|---|---|
| Historical cost | 2,170 | 111,068 | 31,394 | 48,586 | 98,244 | 9,475 | 300,937 |
| Accumulated depreciation | (854) | (58,858) | (16,059) | (30,175) | (65,059) | - | (171,005) |
| Balance as at 1 January 2014 | 1,316 | 52,210 | 15,335 | 18,411 | 33,185 | 9,475 | 129,932 |
| Translation differences | 1 | 88 | 12 | 1 | 71 | 1 | 174 |
| Change in the scope of consolidation |
- | - | - | 4 | 14 | - | 18 |
| Purchases | 84 | 5,711 | 1,138 | 5,485 | 28,727 | 970 | 42,115 |
| Disposals | - | (170) | (6) | (11) | (27) | (161) | (375) |
| Depreciation | (115) | (7,660) | (2,894) | (5,179) | (26,292) | - | (42,140) |
| Reclassifications | - | 1,497 | 2,871 | 3,483 | 72 | (7,923) | - |
| Balance as at 31 December 2014 |
1,286 | 51,676 | 16,456 | 22,194 | 35,750 | 2,362 | 129,724 |
| Historical cost | 2,308 | 117,113 | 37,834 | 56,335 | 91,098 | 2,362 | 307,050 |
| Accumulated depreciation | (1,022) | (65,437) | (21,378) | (34,141) | (55,348) | - | (177,326) |
| Balance as at 1 January 2015 | 1,286 | 51,676 | 16,456 | 22,194 | 35,750 | 2,362 | 129,724 |
| Translation differences | (5) | (593) | (106) | (4) | (291) | (2) | (1,001) |
| Purchases | 10 | 1,318 | 320 | 1,587 | 15,336 | 1,211 | 19,782 |
| Disposals | - | (242) | - | (2) | (109) | (229) | (582) |
| Depreciation | (60) | (3,993) | (1,500) | (2,820) | (13,327) | - | (21,700) |
| Reclassifications | - | 157 | 5 | 699 | 100 | (961) | - |
| Balance as at 30 June 2015 | 1,231 | 48,323 | 15,175 | 21,654 | 37,459 | 2,381 | 126,223 |
| Historical cost | 2,314 | 117,586 | 35,591 | 58,630 | 103,412 | 2,381 | 319,914 |
| Accumulated depreciation | (1,083) | (69,263) | (20,416) | (36,976) | (65,953) | - | (193,691) |
| Balance as at 30 June 2015 | 1,231 | 48,323 | 15,175 | 21,654 | 37,459 | 2,381 | 126,223 |
Notes on the main changes:
The increases in the first half of 2015 mainly concern investments in plant and machinery for the following facilities: Podenzano (Euro 143 thousand), Castellina di Soragna (Euro 110 thousand), Montecchio Precalcino (Euro 76 thousand), Genova Bolzaneto (Euro 62 thousand), Travagliato (Euro 34 thousand) and Pavia di Udine (Euro 20 thousand), for the new contract with Viterbo AUSL (Euro 292 thousand) and for the start of the new contracts of the Piacenza LHU (Euro 61 thousand), the Garbagnate Hospital (Euro 54 thousand) and of Centro Cardiologico Monzino S.p.A. (Euro 26 thousand) as well as for the Brazilian companies Lavsim Higienização Têxtil S.A. (Euro 173 thousand) and Maxlav Lavanderia Especializada S.A. (Euro 152 thousand).
These mainly refer to investments made at customers to construct and renovate existing plants used for washing and sterilisation activities. Therefore, the Company maintains control over, obtains benefits from and bears the operating risks of these plants. The entity maintains ownership of the plants at the end of the wash-hire/washing/sterilisation contract. 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 changes in the half ended at 30 June 2015 relate to the increases of Euro 1,587 thousand, of which Euro 949 thousand relating to the purchase of surgical instruments. The item includes reclassifications of Euro 699 thousand, of which Euro 638 thousand relating to the launch of the latest surgical specialisations of the Udine "Santa Maria della Misericordia" University Hospital.
The item is broken down as follows:
| (thousands of euros) | as at 30 June 2015 | as at 31 December 2014 |
|---|---|---|
| Linens and mattresses | 35,196 | 33,547 |
| Furniture and fixtures | 170 | 174 |
| Electronic machinery | 963 | 885 |
| Cars | 47 | 65 |
| Motor vehicles | 1,022 | 1,012 |
| Telephone switchboards | 52 | 55 |
| Other | 9 | 12 |
| Total | 37,459 | 35,750 |
Purchases amounting to Euro 14,862 thousand in the first half of 2015 refer primarily to investments in linens to ensure increasingly efficient inventory management, both for the partial renewal of contracts and for the first supply relating to contracts acquired during the year in question.
These are investments under way at the end of the first half.
The item is broken down as follows as at 30 June 2015:
| (thousands of euros) | as at 30 June 2015 | as at 31 December 2014 |
|---|---|---|
| Sterilisation centre investments | 1,692 | 1,855 |
| Laundering facility investments | 482 | 362 |
| Investments on contracts | 134 | 118 |
| Investments in the production sites of the subsidiary Lavsim Higienização Têxtil S.A. | 73 | 27 |
| Total | 2,381 | 2,362 |
The increases in the first half of 2015 totalled Euro 1,211 thousand, of which Euro 936 thousand relate to the construction of the new sterilisation facility of the "G. Martino" University Hospital of Messina.
The reclassifications in the first half primarily concern the launch of the latest surgical specialisations with the start of use of the instruments of the "Santa Maria della Misericordia" University Hospital of Udine for a total of Euro 638 thousand.
This item changed as follows:
| (thousands of euros) | Trademarks and Software |
Customer contract portfolio |
Other intangible assets |
Intangible assets in progress and down payments |
Total |
|---|---|---|---|---|---|
| Historical cost | 2,684 | 4,378 | - | 506 | 7,568 |
| Accumulated amortisation | (2,195) | (3,261) | - | - | (5,456) |
| Balance as at 1 January 2014 | 489 | 1,117 | - | 506 | 2,112 |
| Translation differences | - | - | - | 2 | 2 |
| Change in the scope of consolidation | - | 1,708 | - | - | 1,708 |
| Purchases | 80 | - | - | 360 | 440 |
| Disposals | - | - | - | - | - |
| Amortisation | (395) | (396) | - | - | (791) |
| Reclassifications | 302 | - | - | (302) | - |
| Balance as at 31 December 2014 | 476 | 2,429 | - | 566 | 3,471 |
| Historical cost | 2,916 | 3,643 | - | 566 | 7,125 |
| Accumulated amortisation | (2,440) | (1,214) | - | - | (3,654) |
| Balance as at 1 January 2015 | 476 | 2,429 | - | 566 | 3,471 |
| Translation differences | (1) | - | - | (19) | (20) |
| Purchases | 135 | - | 1,016 | 62 | 1,213 |
| Disposals | (1) | - | - | - | (1) |
| Amortisation | (228) | (205) | (97) | - | (530) |
| Rounding | (1) | - | - | - | (1) |
| Reclassifications | 165 | - | - | (165) | - |
| Balance as at 30 June 2015 | 545 | 2,224 | 919 | 444 | 4,132 |
| Historical cost | 3,174 | 6,056 | 1,016 | 444 | 10,690 |
| Accumulated amortisation | (2,629) | (3,832) | (97) | - | (6,558) |
| Balance as at 30 June 2015 | 545 | 2,224 | 919 | 444 | 4,132 |
The increase in intangible assets is essentially due to the accounting of the non-compete agreement stipulated with the previous CEO which provides for the obligation not to carry out, in the areas identified, activities in competition with the Group for a period of two years. This amount is amortised using the pro rata temporis method based on the duration of the agreement which expires on 22 April 2017.
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 30 June 2015 | as at 31 December 2014 |
|---|---|---|
| North Italy area | 22,377 | 22,377 |
| North-East Italy Trentino area | 10,566 | 10,566 |
| Brazil 1 Area (Lavsim) | 3,755 | 4,045 |
| Brazil 2 Area (Maxlav. and Vida) | 5,210 | 5,614 |
| Total | 41,908 | 42,602 |
The change in the first half is entirely attributable to differences from the translation into Euros of goodwill arising from acquisitions in Brazil.
At the date of approval of these half-year consolidated financial statements, no facts or events have taken place that may indicate an impairment loss in the goodwill recognised and tested for impairment at the end of 2014.
The item Equity-accounted investments changed as follows:
| (thousands of euros) | Change during the half as at 30 June 2015 | |||||
|---|---|---|---|---|---|---|
| 1 January 2015 | Increases | Decreases | Revaluations | Impairments | as at 30 June 2015 | |
| Associates | ||||||
| Centro Italia Servizi S.r.l. | 390 | - | (240) | 20 | - | 170 |
| CO.SE.S S.c.r.l. | 3 | - | - | - | - | 3 |
| PSIS S.r.l. | 3,957 | - | - | 87 | - | 4,044 |
| Ekolav S.r.l. | 55 | - | - | 23 | - | 78 |
| Steril Piemonte S.c.r.l. | 1,973 | - | - | - | - | 1,973 |
| AMG S.r.l. | 2,198 | - | - | 37 | - | 2,235 |
| Iniziative Produttive Piemontesi S.r.l. | 1,149 | - | - | - | (1) | 1,148 |
| SE.STE.RO. S.r.l. | 123 | - | - | 5 | - | 128 |
| Piemonte Servizi Sanitari S.c.r.l. | 3 | - | - | - | - | 3 |
| SAS Sterilizasyon Servisleri A.Ş. | 52 | - | - | - | (16) | 36 |
| Shubhram Hospital Solutions Private Limited | 63 | 267 | - | - | (60) | 270 |
| Total | 9,966 | 267 | (240) | 172 | (77) | 10,088 |
This item changed as follows in the first half of 2015:
| (thousands of euros) | Change during the half as at 30 June 2015 | ||||
|---|---|---|---|---|---|
| 1 January 2015 | Increases | Impairment losses/Decreases |
as at 30 June 2015 | ||
| Asolo Hospital Service S.p.A. | 464 | - | - | 464 | |
| Prosa S.p.A. | 462 | - | - | 462 | |
| PROG.ESTE S.p.A. | 1,212 | - | - | 1,212 |
Servizi Italia Group – Half-year Financial Report as at 30th June 2015 Page 38 of 61
| Total | 3,551 | - | - | 3,551 |
|---|---|---|---|---|
| Other | 1 | - | - | 1 |
| SPV Arena Sanità | 278 | - | - | 278 |
| Synchron Nuovo San Gerardo S.p.A. | 344 | - | - | 344 |
| Consorzio Nazionale Servizi | 13 | - | - | 13 |
| Project Ca' Arnaldi S.r.l. | 9 | - | - | 9 |
| Summano Sanità S.p.A. | 11 | - | - | 11 |
| Consorzio Lani Energie | 1 | - | - | 1 |
| Gesteam S.r.l. | 9 | - | - | 9 |
| CCFS Consorzio Coop. Finanziario | 14 | - | - | 14 |
| Sesamo S.p.A. | 353 | - | - | 353 |
| Progeni S.p.A. | 380 | - | - | 380 |
The item is broken down as follows:
| (thousands of euros) | as at 30 June 2015 | as at 31 December 2014 |
|---|---|---|
| Prosa S.p.A. | 434 | 434 |
| Sesamo S.p.A. | 353 | 353 |
| Progeni S.p.A. | 982 | 982 |
| Prog.Este S.p.A. | 531 | 531 |
| Summano Sanità S.p.A. | 6 | 6 |
| Arena Sanità S.p.A. | 188 | 21 |
| Ospedale Irmandade de Santa Casa de Misericordia de São Paulo | 294 | 387 |
| Synchron S.p.A. | 227 | - |
| Total | 3,015 | 2,714 |
Financial receivables relate to interest-bearing loans granted to the companies Prosa S.p.A., Sesamo S.p.A., Progeni S.p.A., Prog.Este S.p.A., Summano Sanità S.p.A., Arena Sanità S.p.A. and Synchron S.p.A. with a term equal to the global service agreements for which they were established (expiring on 21 February 2031, 31 December 2037, 31 December 2033, 31 December 2031 and 31 December 2035, 20 August 2032 and 14 June 2042 respectively), as well as the loans granted to Irmandade de Santa Casa de Misericordia Hospital in São Paulo as part of the activities carried out by the Brazilian subsidiaries. The interest accrued on the loan granted to Arena Sanità S.p.A. was capitalised in the half.
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 tax assets as at 1 January 2014 | 79 | - | - | 574 | 653 |
| Change in the scope of consolidation | - | - | - | 2 | 2 |
| Changes recognised in the income statement | (26) | 430 | - | 143 | 547 |
| Changes recognised under shareholders' equity | 40 | - | - | - | 40 |
| Changes recognised in other comprehensive income | - | - | 140 | - | 140 |
| Deferred tax assets as at 31 December 2014 | 93 | 430 | 140 | 719 | 1,382 |
| Change in the scope of consolidation | - | - | - | - | - |
Servizi Italia Group – Half-year Financial Report as at 30th June 2015 Page 39 of 61
| Changes recognised in the income statement | (18) | 117 | - | (77) | 22 |
|---|---|---|---|---|---|
| Changes recognised under shareholders' equity | - | - | - | - | - |
| Changes recognised in other comprehensive income | - | - | - | - | - |
| Deferred tax assets as at 30 June 2015 | 75 | 547 | 140 | 642 | 1,404 |
There are no deferred tax assets not recognised in the financial statements because they were considered non-recoverable.
The item is broken down as follows:
| (thousands of euros) | as at 30 June 2015 | as at 31 December 2014 |
|---|---|---|
| Substitute tax Italian D.L. 185 subsequent years | 2,010 | 2,139 |
| Receivables for IRES reimbursement request pursuant to Art. 2c.1-quater Italian D.L. 201 | 1,845 | 1,832 |
| Other non-current assets | 548 | 96 |
| Total | 4,403 | 4,067 |
The increase in the item relates mainly to Euro 460 thousand of receivables due from the customers of the subsidiary Lavsim Higienização Têxtil S.A, classified as non-current in line with the expected collection times.
Inventories at year-end primarily included washing products, chemical products, packaging, consumables, single-use materials and procedure kits.
The item is broken down as follows:
| (thousands of euros) | as at 30 June 2015 | as at 31 December 2014 |
|---|---|---|
| Due from third parties | 75,352 | 75,009 |
| Due from associates | 761 | 814 |
| Due from parent companies | 202 | 346 |
| Total | 76,315 | 76,169 |
The item is broken down as follows:
| (thousands of euros) | as at 30 June 2015 | as at 31 December 2014 |
|---|---|---|
| Due from customers | 80,801 | 80,344 |
| Bad debt provision | (5,449) | (5,335) |
| Total | 75,352 | 75,009 |
During the first half, the Servizi Italia Group transferred the receivables described below.
The bad debt provision changed as follows in the first half of 2015 and in 2014:
| (thousands of euros) | |
|---|---|
| Balance as at 1 January 2014 | 5,138 |
| Write-offs | (454) |
| Adjustments | (26) |
| Provisions | 677 |
| Balance as at 31 December 2014 | 5,335 |
| Write-offs | (150) |
| Adjustments | (40) |
| Provisions | 304 |
| Balance as at 30 June 2015 | 5,449 |
The balance of Euro 761 thousand as at 30 June 2015 includes trade receivables mainly from the companies PSIS S.r.l. (Euro 206 thousand), AMG S.r.l. (Euro 278 thousand), Ekolav S.r.l. (Euro 46 thousand), Steril Piemonte S.c.r.l. (Euro 187 thousand) and Se.Ste.Ro. S.r.l. (Euro 32 thousand).
The amount refers to current tax receivables accrued from consolidated companies.
The item is broken down as follows:
| (thousands of euros) | as at 30 June 2015 | as at 31 December 2014 |
|---|---|---|
| Asolo Hospital Service S.p.A. | 1,754 | 1,648 |
| P.S.I.S. S.r.l. | 3,894 | 3,800 |
| Ekolav S.r.l. | 184 | 170 |
| AMG S.r.l. | 501 | 500 |
| Steril Piemonte S.c.r.l. | 1,153 | 1,150 |
| Iniziative Produttive Piemontesi S.r.l. | 91 | 90 |
| Gesteam S.r.l. | 321 | 300 |
| Ospedale Irmandade de Santa Casa de Misericordia de São Paulo | 137 | 133 |
| Sesamo S.p.A. | 126 | - |
| Other | 111 | - |
| Total | 8,272 | 7,791 |
Servizi Italia Group – Half-year Financial Report as at 30th June 2015 Page 41 of 61
Financial receivables are for loans granted to the companies indicated above, which are due within the year or repayable on demand. The increase compared to 31 December 2014 is essentially due to interest accrued on individual loans and still not collected.
The item is broken down as follows:
| (thousands of euros) | as at 30 June 2015 | as at 31 December 2014 |
|---|---|---|
| Due from others | 7,591 | 5,502 |
| Prepayments | 1,521 | 826 |
| Guarantee deposits receivable | 105 | 69 |
| Accrued income | 25 | - |
| Total | 9,242 | 6,397 |
Other current assets rose from Euro 6,397 thousand as at 31 December 2014 to 9,242 thousand as at 30 June 2015. Due from others mainly includes charge-backs of consortium costs to the non-controlling shareholder of the subsidiaries Se.Sa.Tre. S.c.r.l. and San Martino 2000 S.c.r.l.. Prepayments increased primarily as a result of rentals and insurance premiums that will fall due in the second half of the year. The item "Guarantee deposits receivable" includes security deposits for energy utilities and rentals.
The item is broken down as follows:
| (thousands of euros) | as at 30 June 2015 | as at 31 December 2014 |
|---|---|---|
| Bank and postal deposits | 3,336 | 5,110 |
| Cheques | 8 | 25 |
| Cash at bank and in hand | 34 | 43 |
| Total | 3,378 | 5,178 |
Cash and cash equivalents fell by Euro 1,800 thousand as at 30 June 2015 compared to 31 December 2014. The changes in cash and cash equivalents can be analysed by looking at the cash flow statement which shows the positive or negative contribution from the other balance sheet items to the final result, in terms of the creation and absorption of liquidity.
As at 30 June 2015, the fully subscribed and paid-up share capital of Servizi Italia S.p.A. was broken down into 28,371,486 ordinary shares with a nominal amount of Euro 1 each. During the first half of 2015, the Company purchased 78,500 treasury shares with a value of Euro 364 thousand, equivalent to 0.28% of the share capital, at the average purchase price of Euro 4.64 per share and sold 297,000 treasury shares for a value of Euro 1,289 thousand, equating to 1.05% of the share capital at an average sale price of Euro 4.34 per share. Following these transactions, the Company held 247,226 treasury shares amounting to 0.87% of the share capital as at 30 June 2015. The equivalent value of the treasury shares held on 30 June 2015, equal to Euro 1,118 thousand, was classified as decreasing the share capital for the par value of the same, equating to Euro 247 thousand, and as reducing the share premium reserve for the excess of the purchase value with respect to the par value, amounting to Euro 871 thousand. The legal reserve and retained earnings/(losses) increased due to the allocation of the profit from 2014, along with the payment of dividends.
The item is broken down as follows:
| (thousands of euros) | as at 30 June 2015 | as at 31 December 2014 | ||||
|---|---|---|---|---|---|---|
| Current | Non-current | Total | Current | Non-current | Total | |
| Due to banks | 46,592 | 31,397 | 77,989 | 41,667 | 27,013 | 68,680 |
| Due to other lenders | 822 | 1,224 | 2,046 | 1,124 | 1,245 | 2,369 |
| Total | 47,414 | 32,621 | 80,035 | 42,791 | 28,258 | 71,049 |
The portion of the liabilities falling due beyond 12 months relating to the item Due to banks changed as at 30 June 2015 when compared to 31 December 2014, due to the reimbursement of the amounts due in the year and the taking out of two new unsecured loans, the first of which with Banca Carige Italia S.p.A. for Euro 10,000 thousand (residual debt falling due after 12 months of Euro 7,551 thousand), with a duration of five years, and the second with Cassa di Risparmio di Parma e Piacenza S.p.A. for Euro 10,000 thousand (residual debt falling due after 12 months of Euro 7,545 thousand), with a duration of four years; these actions are targeted at maintaining a balanced ratio of short to medium-term borrowing. The item in question also includes unsecured loans taken out with Cassa di Risparmio in Bologna S.p.A. (residual debt falling due after 12 months of Euro 10,500 thousand), with Banca Popolare dell'Emilia Romagna Soc. Coop. (residual debt falling due after 12 months of Euro 5,000 thousand) and the portion of payables falling due after the year of the Brazilian subsidiaries amounting to Euro 801 thousand. The loan taken out with Cassa di Risparmio in Bologna S.p.A. in 2012 requires a net financial position of less than 1.5 times the value of shareholders' equity (covenant) to be maintained. The loans stipulated with Banca popolare dell'Emilia Romagna Soc. Coop. and Banca Nazionale del Lavoro S.p.A. require the maintenance of a net financial position of less than 2 times the value of shareholders' equity and less than 2.5 times the Ebitda (covenant). The loans stipulated with Cassa di Risparmio in Bologna S.p.A. in 2014 and with Cassa di Risparmio di Parma e Piacenza S.p.A. in 2015 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). All of the above covenants have been respected at the reporting date.
Amounts due to banks are shown below by maturity:
| (thousands of euros) | as at 30 June 2015 | as at 31 December 2014 |
|---|---|---|
| Less than or equal to 6 months | 39,520 | 34,285 |
| 6 to 12 months | 7,072 | 7,383 |
| 1 to 5 years | 31,397 | 27,012 |
| More than 5 years | - | - |
| Total | 77,989 | 68,680 |
Non-current amounts due to banks are broken down by maturity as follows:
| (thousands of euros) | as at 30 June 2015 | as at 31 December 2014 |
|---|---|---|
| 1 to 2 years | 9,970 | 9,625 |
| 2 to 5 years | 21,427 | 17,387 |
| More than 5 years | - | - |
| Total | 31,397 | 27,012 |
6.16.2 Due to other lenders
Current payables to other lenders as at 30 June 2015 include the payable due from the subsidiary Se.Sa.Tre. S.c.r.l. to the non-controlling shareholder Servizi Ospedalieri S.p.A. of Euro 697 thousand (Euro 719 thousand as at 31 December 2014), the payable to the Viterbo local health authority of Euro 50 thousand resulting from the double payment of invoices due to customer error and financial payables of the Brazilian subsidiaries amounting to Euro 75 thousand.
As at 30 June 2015, non-current amounts are attributable to the financial payable to the noncontrolling shareholder of the subsidiary Se.Sa.Tre. S.c.r.l. of Euro 1,202 thousand (Euro 1,202 thousand as at 31 December 2014 as well) and financial payables of the Brazilian subsidiaries of Euro 22 thousand.
Payables to other lenders are broken down by maturity below.
| (thousands of euros) | as at 30 June 2015 | as at 31 December 2014 |
|---|---|---|
| Less than or equal to 6 months | 104 | 377 |
| 6 to 12 months | 718 | 747 |
| 1 to 5 years | 1,224 | 1,245 |
| More than 5 years | - | - |
| Total | 2,046 | 2,369 |
Non-current amounts due to other lenders are broken down by maturity as follows:
| (thousands of euros) | as at 30 June 2015 | as at 31 December 2014 |
|---|---|---|
| 1 to 2 years | 707 | 721 |
| 2 to 5 years | 517 | 525 |
| More than 5 years | - | - |
| Total | 1,224 | 1,245 |
Deferred tax liabilities are broken down below by nature of the timing differences that generated them:
| (thousands of euros) | Leasing | Employee benefits |
Property, plant and equipment and intangible assets |
Goodwill | Other | Total |
|---|---|---|---|---|---|---|
| Deferred tax liabilities as at 1 January 2014 | 376 | 125 | 396 | 1,091 | - | 1,988 |
| Change in the scope of consolidation | - | - | 536 | - | - | 536 |
| Changes recognised in the income statement | (138) | (7) | (111) | 115 | - | (141) |
| Changes recognised in other comprehensive income | - | (118) | - | - | - | (118) |
| Deferred tax liabilities as at 31 December 2014 | 238 | - | 821 | 1,206 | - | 2,265 |
| Changes recognised in the income statement | (66) | - | (87) | 58 | 3 | (92) |
| Changes recognised in other comprehensive income | - | - | - | - | - | - |
| Deferred tax liabilities as at 30 June 2015 | 172 | - | 734 | 1,264 | 3 | 2,173 |
Servizi Italia Group – Half-year Financial Report as at 30th June 2015 Page 44 of 61
This item changed as follows:
| (thousands of euros) | as at 30 June 2015 | as at 31 December 2014 |
|---|---|---|
| Opening balance | 10,855 | 9,732 |
| Change in the scope of consolidation | - | 219 |
| Provision net of transfers to pension funds | 306 | 271 |
| Financial expense | 68 | 273 |
| Actuarial (gains)/losses | - | 937 |
| Transfers (to)/from other provisions | - | - |
| (Uses net of transfers to pension funds) | (1,307) | (577) |
| Closing balance | 9,922 | 10,855 |
The item includes the Provision for Employee Severance Indemnity recognised to the employees of Italian group companies and identified as a defined benefit plan.
This item also includes the amount accrued on the LTI-Cash 2015-2017 variable remuneration plan for Directors, Managers, Senior Managers and Executives, based on which a bonus is disbursed at the end of the three-year period if certain economic and financial targets are met and in relation to the Servizi Italia share price.
With the approval of the financial statements as at 31 December 2014, the vesting period of the LTI Cash 2012-2013-2014 Plan was completed. On 12 March 2015, the Remuneration Committee provided in-depth disclosure and support to the Board of Directors, highlighting the achievement of the performance target and therefore proposing the disbursement of the bonus to the Beneficiaries under the terms and as per the formalities established in the regulations. The proposal was approved by the Board of Directors and the Board of Statutory Auditors, in fact decreeing the closure of said plan and disbursement to the beneficiaries of around Euro 1,050 thousand.
The item is broken down as follows:
| (thousands of euros) | as at 30 June 2015 | as at 31 December 2014 |
|---|---|---|
| Opening balance | 126 | 343 |
| Increases | - | 64 |
| Decreases | (22) | (281) |
| Other changes | - | - |
| Closing balance | 104 | 126 |
The item refers to provisions for the risks of labour disputes allocated in previous years in the financial statements of the parent company and of the Brazilian subsidiaries.
The item decreased by Euro 171 thousand from Euro 6,194 thousand to Euro 6,023 thousand. This fall was due to financial liabilities from the put options recognised to the non-controlling shareholders of Maxlav Lavanderia Especializada S.A. and Vida Lavanderias Especializada S.A. with reference to the remaining non-controlling interests.
The item is broken down as follows:
| (thousands of euros) | as at 30 June 2015 | as at 31 December 2014 |
|---|---|---|
| Due to suppliers | 57,212 | 56,477 |
| Due to associates | 3,558 | 3,621 |
| Due to parent companies | 4,367 | 4,577 |
| Total | 65,137 | 64,675 |
The balance as at 30 June 2015 refers entirely to trade payables due within 12 months.
The balance as at 30 June 2015 mainly refers to trade payables due to the associates Steril Piemonte S.c.r.l. (Euro 756 thousand), Centro Italia Servizi S.r.l. (Euro 472 thousand), Ekolav S.r.l. (Euro 541 thousand), AMG S.r.l. (Euro 543 thousand) and SE.STE.RO. S.r.l. (Euro 437 thousand).
Trade payables due to the parent company Coopservice S.Coop.p.A. are mainly for transport services.
The item is broken down as follows:
| (thousands of euros) | as at 30 June 2015 | as at 31 December 2014 |
|---|---|---|
| Advance payments for taxes | 306 | 4,972 |
| Tax payables | (3,185) | (5,995) |
| Total | (2,879) | (1,023) |
The increase in current tax payables is due mainly to the different timing recognition of the payment of advances of current IRES and IRAP taxes compared to 31 December 2014.
| (thousands of euros) | as at 30 June 2015 |
as at 31 December 2014 |
|---|---|---|
| Liability for put options and earn-out on Lavsim Higienização Têxtil S.A. | - | 5,722 |
| Liability for earn-out on Maxlav Lavanderia Especializada S.A. and Vida Lavanderias Especializada S.A. |
71 | 77 |
| Total | 71 | 5,799 |
The change in this item arose from the payment on 16 January 2015 of the amount due for the exercising of the put option relating to the acquisition of the remaining 50% of the share capital of the company Lavsim Higienização Têxtil S.A., in which Servizi Italia S.p.A. has held an equity investment since 2 July 2012 through the subsidiary SRI Empreendimentos e Participações Ltda.
The table below provides a breakdown of other current liabilities.
| (thousands of euros) | as at 30 June 2015 | as at 31 December 2014 |
|---|---|---|
| Accrued liabilities | 29 | 12 |
| Deferred income | 984 | 964 |
| Due to social security and welfare institutions | 4,214 | 4,937 |
| Other payables | 12,722 | 18,106 |
| Total | 17,949 | 24,019 |
The item decreased by Euro 6,070 thousand from Euro 24,019 thousand as at 31 December 2014 to Euro 17,949 thousand as at 30 June 2015. This difference was caused by the decrease in the VAT payable for invoices issued to the public administration due to the application as of 1 January 2015 of the split payment regulation introduced in Italy with the 2015 Stability Law.
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 4,214 thousand, all falling due within the year.
The item is broken down as follows:
| (thousands of euros) | as at 30 June 2015 | as at 31 December 2014 |
|---|---|---|
| Due to employees | 10,318 | 8,980 |
| Employee/professional IRPEF (personal income tax) payable | 1,381 | 1,711 |
| Current and deferred VAT payable | 22 | 6,761 |
| Other payables | 1,001 | 654 |
| Total | 12,722 | 18,106 |
The increase in the item Other payables is due mainly to the recognition of the current payable for the non-compete agreement amounting to Euro 516 thousand described in previous paragraph 6.2.
The Group's net financial debt as at 30 June 2015 and as at 31 December 2014 is shown below.
| (thousands of euros) | as at 30 June 2015 | as at 31 December 2014 |
|---|---|---|
| Cash and cash equivalents in hand | 42 | 68 |
| Cash at bank | 3,336 | 5,110 |
| Cash and cash equivalents | 3,378 | 5,178 |
| Current financial receivables | 8,272 | 7,791 |
| Current liabilities to banks and other lenders | (47,414) | (42,791) |
| Current net financial debt | (39,142) | (35,000) |
| Non-current liabilities to banks and other lenders | (32,621) | (28,257) |
| Non-current net financial debt | (32,621) | (28,257) |
| Net financial debt | (68,385) | (58,079) |
The net financial debt as at 30 June 2015 shows an increase of Euro 10,306 thousand compared to 31 December 2014, as a result of both the payment of the price related to the acquisition of the remaining 50% of the share capital of the company Lavsim Higienização Têxtil S.A., equal to Euro 6,094 thousand, calculated on the basis of and exchange rate of 3.0357 at the payment date of 16 January 2015, and due to lower cash flows generated by the receivables from customers of the public administration due to the introduction of the split payment regulation introduced in Italy with the 2015 Stability Law.
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 payables" and the value of "Other non-current financial liabilities" in "Other noncurrent liabilitiess".
| (thousands of euros) as at 30 June 2015 |
of which with | as at 31 December | of which with | |
|---|---|---|---|---|
| related parties | 2014 | related parties | ||
| A. Cash | 42 | - | 68 | - |
| B. Other cash equivalents | 3,336 | - | 5,110 | - |
| C. Securities held for trading | - | - | - | - |
| D. Cash and cash equivalents (A) + (B) + (C) | 3,378 | 5,178 | ||
| E. Current financial receivables | 8,272 | 5,710 | 7,791 | 5,710 |
| F. Current bank borrowings | (30,868) | - | (26,391) | - |
| G. Current portion of non-current borrowings | (16,546) | - | (16,400) | - |
| H. Other current financial liabilities | (71) | - | (5,799) | - |
| I. Current financial debt (F) + (G) + (H) | (47,485) | (48,590) | ||
| J. Current net financial debt (I) - (E) - (D) | (35,835) | (35,621) | ||
| K. Non-current bank borrowings | (32,621) | - | (28,258) | - |
| L. Bonds issued | - | - | - | - |
| M. Other non-current liabilitiess | (6,023) | - | (6,194) | - |
| N. Non-current financial debt (K) + (L) + (M) | (38,644) | (34,452) | ||
| O. Net financial debt (J) + (N) | (74,479) | (70,073) |
The table below lists the guarantees given by the company, existing as at 30 June 2015 and as at 31 December 2014:
| (thousands of euros) | as at 30 June 2015 | as at 31 December 2014 |
|---|---|---|
| Guarantees issued by banks and insurance companies for tenders | 49,155 | 51,229 |
| Guarantees issued by banks and insurance companies for lease agreements and utilities | 581 | 549 |
| Guarantees issued by banks and insurance companies in favour of third parties | 35,804 | 34,215 |
| Owned assets held by third parties | 49 | 49 |
| Pledge on Asolo Hospital Service shares to back loans granted to the Project Companies | 464 | 464 |
| Pledge on Sesamo shares to back loans granted to the Project Companies | 237 | 237 |
| Pledge on Prog.Este shares to back loans granted to the Project Companies | 1,212 | 1,212 |
| Pledge on Progeni shares to back loans granted to the Project Companies | 380 | 380 |
| Total | 87,882 | 88,335 |
Guarantees issued by banks and insurance companies for tenders: these were issued on behalf of the company in favour of customers or potential customers for participation in tenders, to guarantee the correct execution of the service.
Guarantees issued by banks and insurance companies for lease agreements and utilities: these were issued on behalf of the company to guarantee the payment of lease instalments and invoices for the supply of electricity and gas.
Guarantees issued by banks and insurance companies in favour of third parties: these are guarantees issued to back the payment of the company's portion of the project financing and guarantees issued in favour of PSIS S.r.l., Steril Piemonte S.c.r.l., I.P.P. S.r.l., Ekolav S.r.l. and Shubhram Hospital Solutions Private Limited to back loan agreements.
Mortgage loans on owned property: the company has not granted liens on owned property and has no mortgage loans.
Pledge on Asolo Hospital Service, Sesamo, Progeni and Prog.Este shares to back loans granted to the project companies: this pledge was granted to the banks providing the project financing on the shares representing the company's shareholding in the special purpose entity.
The item is broken down as follows by business:
| (thousands of euros) | Half-year ended as at 30 June | |
|---|---|---|
| 2015 | 2014 | |
| Wash-hire | 88,207 | 87,921 |
| Steril B | 10,120 | 10,464 |
| Steril C | 18,890 | 17,391 |
| Revenue from sales | 117,217 | 115,776 |
Revenue and services by geographical area are broken down as follows:
| (thousands of euros) | Half-year ended as at 30 June | |
|---|---|---|
| 2015 | 2014 | |
| Abruzzo | 7 | 5 |
| Basilicata | 209 | 223 |
| Campania | 21 | 20 |
| Emilia Romagna | 16,168 | 16,215 |
| Friuli Venezia Giulia | 8,679 | 7,180 |
| Lazio | 6,582 | 6,788 |
| Liguria | 14,081 | 13,984 |
| Lombardy | 21,535 | 22,231 |
| Marche | 1,779 | 1,737 |
| Piedmont | 5,244 | 5,094 |
| Sicily | 1,547 | 1,542 |
| Tuscany | 13,363 | 13,456 |
| Trentino Alto Adige | 2,787 | 2,738 |
| Umbria | 130 | 132 |
| Valle D'Aosta | 602 | 639 |
| Veneto | 12,922 | 13,280 |
| EEC Revenue | 11 | 13 |
| Non-EEC Revenue (BRAZIL) | 11,550 | 10,499 |
| Total | 117,217 | 115,776 |
Servizi Italia Group – Half-year Financial Report as at 30th June 2015 Page 49 of 61
This balance mainly includes ordinary gains of Euro 129 thousand from the disposal of assets, recoveries of costs and personnel attributable to third parties for Euro 520 thousand, charge-backs of Euro 1,313 thousand for consortium costs, non-recurring income of Euro 239 thousand and other income of Euro 371 thousand.
As at 30 June 2015, consumption of raw materials amounted to Euro 12,529 thousand, down by Euro 26 thousand compared to the same period of the previous year, primarily associated with washing products, chemical products, packaging, consumables, single-use materials and procedure kits.
The item is broken down as follows:
| (thousands of euros) | Half-year ended as at 30 June | |
|---|---|---|
| 2015 | 2014 | |
| External laundering and other industrial services | (9,949) | (10,166) |
| Travel and transport | (6,085) | (5,968) |
| Utilities | (6,030) | (6,117) |
| Administrative costs | (1,534) | (1,506) |
| Consortium and sales costs | (4,526) | (4,420) |
| Personnel expense | (1,040) | (999) |
| Maintenance | (2,904) | (2,508) |
| Use of third-party assets | (3,926) | (3,881) |
| Other services | (545) | (548) |
| Total | (36,539) | (36,113) |
External laundering and other industrial services fell by Euro 217 thousand compared to the same period of 2014. The reduction in the item is attributable essentially to lower use of the external laundering service, partially offset by the increase in the linen store service at new customers such as the Local Health Unit no. 3 Alto - Collinare - Medio Friuli, Istituto Europeo di Oncologia S.r.l., Centro Cardiologico Monzino S.p.A. and the Niguarda Ca' Granda Hospital of Milan, and the increase in the service at existing customers like the Reggio Emilia Hospital and Reggio Emilia LHU.
Travel and transport costs increased to Euro 117 thousand as a result of the redefinition of the Group's production logistics and new services provided for the customers Frosinone LHA, I.N.M.I. - Lazzaro Spallanzani, Istituto Europeo di Oncologia S.r.l. and Centro Cardiologico Monzino S.p.A..
Utilities fell by Euro 87 thousand, mainly due to a fall in consumption achieved thanks to greater production efficiencies.
Administrative costs rose from Euro 1,506 thousand as at 30 June 2014 to Euro 1,534 thousand as at 30 June 2015 due basically to higher legal expenses including those incurred by SRI Empreendimentos e Participações Ltda for the acquisition of the remaining 50% of the company Lavsim Higienização Têxtil S.A.
Consortium and sales costs rose from Euro 4,420 thousand as at 30 June 2014 to Euro 4,526 thousand as at 30 June 2015. The lower charge-backs of costs received for the temporary joint consortia of the customers LHA AL of Alessandria, San Giovanni Addolorata Hospital in Rome and LHA 8 Arezzo are in contrast to the higher sales consultancy costs.
Maintenance increased by Euro 396 thousand from Euro 2,508 thousand to Euro 2,904 thousand due to greater maintenance expenses at the surgical instrument sterilisation centres and for machinery (particularly in Brazil where plant and machinery were installed as a result of investments made, which increased maintenance expenses by Euro 186 thousand).
Costs for the use of third-party assets rose by Euro 45 thousand compared to the first half of 2014. This increase is due to the Istat adjustments of existing rentals (in particular, in Brazil the increase came to Euro 22 thousand) and the increase, compared to the same period in the previous year, in the rental of anti-decubitus mattresses for existing customers and for the new customer I.N.M.I - Lazzaro Spallanzani.
The item is broken down as follows:
| (thousands of euros) | Half-year ended as at 30 June | |
|---|---|---|
| 2015 | 2014 | |
| Costs for directors´ fees | (566) | (529) |
| Salaries and wages | (26,321) | (24,969) |
| Temporary work | (759) | (1,196) |
| Social security charges | (8,663) | (8,250) |
| Employee severance indemnity | (1,439) | (1,281) |
| Other costs | (78) | (20) |
| Total | (37,826) | (36,245) |
The rise in personnel expense compared to the same period of the previous year is essentially related to the increase in wages and salaries as established in the national collective labour agreement in two contractual instalments: the first in January 2015 and the second in June 2015. In addition to these increases is the hiring of new personnel at the surgical instrument sterilisation centres in Brescia and Udine and the increase of Euro 188 thousand in the personnel expense of the Brazilian companies.
The table below shows the average breakdown of personnel:
| Personnel as at 30 June | ||
|---|---|---|
| 2015 | 2014 | |
| Executives | 12 | 11 |
| Middle managers | 19 | 21 |
| White-collar staff | 174 | 175 |
| Blue-collar staff | 2,746 | 2,761 |
| Total | 2,951 | 2,968 |
The item is broken down as follows:
| (thousands of euros) | Half-year ended as at 30 June | |
|---|---|---|
| 2015 | 2014 | |
| Tax-related expense | (92) | (96) |
| Contingent liabilities | (168) | (303) |
| Membership fees | (105) | (101) |
| Gifts to customers and employees | (6) | (3) |
| Other | (358) | (417) |
| Total | (729) | (920) |
The item is broken down as follows:
| (thousands of euros) | Half-year ended as at 30 June | |
|---|---|---|
| 2015 | 2014 | |
| Amortisation of intangible assets | (530) | (371) |
| Depreciation of property, plant and equipment | (21,700) | (20,233) |
| Provision for Bad Debt | (264) | (282) |
| (Allocations)/Uses of provision for sundry risks | 18 | (815) |
| Total | (22,476) | (21,701) |
The depreciation of property, plant and equipment rose by 7.3%, while the amortisation of intangible assets rose by 42.9%.
The change in the amortisation of intangible assets refers mainly to the effects of the recognition of the non-compete agreement stipulated with the previous CEO and the impact of the amortisation of the customer portfolio of the incorporated company Si.Gi. Servizi Ospedalieri S.r.l..
In particular, the increase in property, plant and equipment rise was realised in the Brazilian area, due to an increase in the depreciation of linen and new production lines, while in the Italian area, depreciation rose with respect to surgical instruments, whose relative impact increased due to the ramp-up phases of the new sterilisation contracts.
The item "provisions for losses" as at 30 June 2014, reflected the allocation of Euro 815 thousand to the provision for risks, relating to a dispute with the Genoa Port Authority, subsequently released on the basis of the opinion of its legal representatives.
The item is broken down as follows:
| (thousands of euros) | Half-year ended as at 30 June | |
|---|---|---|
| 2015 | 2014 | |
| Bank interest income | 87 | 80 |
| Default interest | 304 | 713 |
| Interest income on loans to third-party companies | 116 | 145 |
| Other financial income | 45 | 67 |
| Total | 552 | 1,005 |
Servizi Italia Group – Half-year Financial Report as at 30th June 2015 Page 52 of 61
Bank interest income is basically in line with the amount as at 30 June 2014, while default interest decreased due to the settlement agreement with AUSL (Local Health Authority) of Modena in 2014, entailing the recognition of Euro 423 thousand in interest. Interest income on loans to third-party companies fell as a result of the reduction in the Euribor reference rate. Other financial income was essentially stable.
The item is broken down as follows:
| (thousands of euros) | Half-year ended as at 30 June | ||
|---|---|---|---|
| 2015 | 2014 | ||
| Interest expense and bank commission | (1,158) | (1,350) | |
| Interest and expense to other lenders | (215) | (501) | |
| Financial expense on employee benefits | (78) | (142) | |
| Other financial expense | (351) | (652) | |
| Total | (1,802) | (2,645) |
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" decreased as a result of the reduction in both the spreads renegotiated with the banks and the total amount transferred as part of without recourse factoring transactions. Other financial expense fell primarily due to the decrease in expenses accrued on the payable relating to the put options associated with the acquisition of the remaining 50.0% of the Brazilian company Lavsim Higienização Têxtil S.A., given said entity was acquired on 16 January 2015.
No income and expense from equity investments was recorded as at 30 June 2015.
The item is broken down as follows:
| (thousands of euros) | Half-year ended as at 30 June | |
|---|---|---|
| 2015 | 2014 | |
| Current taxes | (2,633) | (3,525) |
| Deferred tax assets/(liabilities) | 130 | 292 |
| Total | (2,503) | (3,233) |
The tax rate fell from 34.4% as at 30 June 2014 to 29.7% as at 30 June 2015. The decrease in the tax charge was mainly determined, in the Italian area, by the new IRAP regulations introduced by the 2015 Stability Law which makes provision, from 1 January 2015, for the deduction, in addition to flatrate and analytical deductions relating to the cost of labour, of also the amount relating to the difference between the total cost of labour (relating to open-ended contracts) and deductions due.
Basic and diluted earnings per share are calculated in the tables below.
| (thousands of euros) | Half-year ended as at 30 June | ||
|---|---|---|---|
| 2015 | 2014 | ||
| Profit/loss attributable to shareholders of the parent company | 6,040 | 6,026 | |
| Average number of shares | 28,137 | 28,137 | |
| Basic earnings per share | 0.21 | 0.21 |
| (thousands of euros) | Half-year ended as at 30 June | |
|---|---|---|
| 2015 | 2014 | |
| Profit/loss for the year attributable to the Group: | 6,040 | 6,026 |
| Average number of shares outstanding | 28,137 | 28,137 |
| Number of shares with dilutive effect | 698 | 919 |
| Average number of shares used to calculate diluted EPS | 28,835 | 29,056 |
| Diluted earnings per share | 0.21 | 0.21 |
The earnings per share as at 30 June 2014 changed compared to the 2014 half-year report due to the share capital increase in October 2014, involving the subscription of 789,036 "Warrant Servizi Italia S.p.A. 2012 – 2015", equivalent to 197,259 shares. The profit for the previous period is therefore placed in relation to the new number of shares in circulation.
The Servizi Italia Group's transactions with associates, jointly controlled companies, parent companies and other related parties mainly relate to:
All of these transactions are carried out in the ordinary course of business and are governed by arm's length agreements.
Transactions with related parties of the Servizi Italia Group with an impact on the income statement are shown below as at 30 June 2015 and as at 30 June 2014:
| (thousands of euros) | 30 June 2015 | ||||||
|---|---|---|---|---|---|---|---|
| Income statement | Sale of goods and services |
Other income |
Purchase of goods and services |
Personnel expense |
Purchases of property, plant and equipment and intangible assets |
Other costs |
Financial income |
| Coopservice S.Coop.p.A. (parent company) | 177 | 19 | 5,200 | - | 1 | 8 | - |
| Aurum S.p.A. (parent company) | - | - | - | - | - | - | - |
| Centro Italia Servizi S.r.l. (joint control) | 1 | 3 | 482 | - | - | - | - |
| Consorzio Co.Se.S. (associate) | - | - | 314 | - | - | - | - |
| Shubhram Hospital Solutions Private Limited (associate) | - | - | - | - | - | - | - |
| S.A.S. Sterilizasyon Servisleri A.Ş. (associate) | - | - | - | - | - | - | - |
| SE.STE.RO. S.r.l. (associate) | 16 | 32 | 251 | - | - | 2 | - |
| PSIS S.r.l. (associate) | 95 | 62 | 13 | - | 16 | - | 29 |
| Amg S.r.l. (associate) | 167 | - | 446 | - | - | - | 1 |
| Ekolav S.r.l. (associate) | - | - | 673 | - | 1 | - | 1 |
|---|---|---|---|---|---|---|---|
| Steril Piemonte S.c.r.l. (associate) | 7 | 153 | 765 | - | - | - | 3 |
| Piemonte Servizi Sanitaria S.c.r.l. (associate) | - | - | 360 | - | - | - | - |
| Iniziative Produttive Piemontesi S.r.l. (associate) | 65 | - | 260 | - | - | - | - |
| Elettrica Gover S.r.l. (affiliated company) | - | - | 1 | - | 11 | - | - |
| Focus S.p.A. (affiliated company) | - | - | 1,251 | - | - | 11 | - |
| Archimede S.p.A. (affiliated company) | - | 5 | - | 582 | - | - | - |
| New Fleur S.r.l. (affiliated company) | 21 | - | 252 | - | - | 7 | - |
| Ad Personam S.r.l. (affiliated company) | - | - | 19 | - | - | - | - |
| Electric System S.r.l. (affiliated company) | - | - | 1 | - | - | - | - |
| Total | 549 | 274 | 10,288 | 582 | 29 | 28 | 34 |
| (thousands of euros) | 30 June 2014 | ||||||
|---|---|---|---|---|---|---|---|
| Income statement | Sale of goods and services |
Other income |
Purchase of goods and services |
Personnel expense |
Purchases of property, plant and equipment and intangible assets |
Other costs |
Financial income |
| Coopservice S.Coop.p.A. (parent company) | 178 | 20 | 5,063 | - | - | 6 | - |
| Aurum S.p.A. (parent company) | - | - | - | - | - | - | - |
| Electric System S.r.l. (affiliated company) | - | - | 1 | - | - | - | - |
| Si.Gi. S.r.l. (associate) | - | - | 13 | - | - | - | - |
| Centro Italia Servizi S.r.l. (joint control) | 1 | 3 | 497 | - | - | - | - |
| Consorzio Co.Se.S. (associate) | - | - | 325 | - | - | - | - |
| SE.STE.RO. S.r.l. (associate) | 18 | 33 | 271 | - | - | - | - |
| PSIS S.r.l. (joint control) | 115 | 110 | - | - | - | - | 34 |
| Amg S.r.l. (joint control) | 152 | 26 | 505 | - | - | - | 2 |
| Ekolav S.r.l. (associate) | - | - | 576 | - | 1 | - | 1 |
| Steril Piemonte S.c.r.l. (joint control) | 7 | 151 | 825 | - | - | - | 6 |
| Piemonte Servizi Sanitaria S.c.r.l. (associate) | - | - | 361 | - | - | - | - |
| Iniziative Produttive Piemontesi S.r.l. (associate) | 74 | - | 344 | - | - | - | 1 |
| Elettrica Gover S.r.l. (affiliated company) | - | - | 13 | - | 113 | - | - |
| Focus S.p.A. (affiliated company) | - | - | 1,276 | - | - | 10 | - |
| Archimede S.p.A. (affiliated company) | - | - | - | 1,126 | - | 1 | - |
| New Fleur S.r.l. (affiliated company) | 10 | - | 832 | - | - | - | - |
| Ad Personam S.r.l. (affiliated company) | - | - | 13 | - | - | - | - |
| S.A.S. Sterilizasyon Servisleri A.Ş. (joint control) | - | 14 | - | - | - | - | - |
| Total | 555 | 357 | 10,915 | 1,126 | 114 | 17 | 44 |
Aside from the figures shown above, "Personnel expense" as at 30 June 2015 includes directors' fees of Euro 604 thousand (of which Euro 38 thousand for social security charges) and executive personnel expense of Euro 849 thousand. As at 30 June 2014, directors' fees amounted to Euro 563 thousand (of which Euro 34 thousand for social security charges) and executive personnel expense came to Euro 751 thousand.
Transactions with related parties of the Servizi Italia Group with an impact on the statement of financial position are shown below as at 30 June 2015 and as at 31 December 2014:
| (thousands of euros) | 30 June 2015 | ||||||
|---|---|---|---|---|---|---|---|
| Statement of financial position | Amount of trade receivables |
Amount of trade payables |
Amount of financial receivables |
Amount of financial payables |
Amount of other liabilities |
||
| Coopservice S.Coop.p.A. (parent company) | 202 | 4,367 | - | - | - | ||
| Aurum S.p.A. (parent company) | - | - | - | - | - | ||
| Centro Italia Servizi S.r.l. (joint control) | 4 | 472 | - | - | - | ||
| Consorzio Co.Se.S. (associate) | - | 342 | - | - | - | ||
| SE.STE.RO. S.r.l. (associate) | 53 | 437 | - | - | - | ||
| PSIS S.r.l. (associate) | 369 | 67 | 3,894 | - | - | ||
| Amg S.r.l. (associate) | 278 | 543 | 501 | - | - | ||
| Ekolav S.r.l. (associate) | 45 | 542 | 184 | - | - | ||
| Steril Piemonte S.c.r.l. (associate) | 189 | 756 | 1,153 | - | - | ||
| Piemonte Servizi Sanitaria S.c.r.l. (associate) | - | 285 | - | - | - | ||
| Iniziative Produttive Piemontesi S.r.l. (associate) | 46 | 115 | 91 | - | - | ||
| SAS Sterilizasyon Servisleri A.Ş. (associate) | - | - | - | - | - | ||
| Shubhram Hospital Solutions Private Limited (associate) | 10 | - | - | - | - | ||
| Elettrica Gover S.r.l. (affiliated company) | - | 12 | - | - | - | ||
| Focus S.p.A. (affiliated company) | - | 1,017 | - | - | - | ||
| Archimede S.p.A. (affiliated company) | - | 214 | - | - | - | ||
| Electric System S.r.l. (affiliated company) | - | - | - | - | - | ||
| New Fleur S.r.l. (affiliated company) | 50 | 239 | - | - | - | ||
| Ad Personam S.r.l. (affiliated company) | - | 15 | - | - | - | ||
| Total | 1,246 | 9,423 | 5,823 | - | - |
| (thousands of euros) | 31 December 2014 | ||||||
|---|---|---|---|---|---|---|---|
| Statement of financial position | Amount of trade receivables |
Amount of trade payables |
Amount of financial receivables |
Amount of financial payables |
Amount of other liabilities |
||
| Coopservice S.Coop.p.A. (parent company) | 346 | 4,577 | - | - | - | ||
| Aurum S.p.A. (parent company) | - | - | - | - | - | ||
| Centro Italia Servizi S.r.l. (joint control) | 8 | 637 | - | - | - | ||
| Consorzio Co.Se.S. (associate) | - | 314 | - | - | - | ||
| SE.STE.RO. S.r.l. (associate) | 184 | 507 | - | - | - | ||
| PSIS S.r.l. (associate) | 353 | 34 | 3,800 | - | - | ||
| Amg S.r.l. (associate) | 208 | 488 | 500 | - | - | ||
| Ekolav S.r.l. (associate) | 120 | 522 | 170 | - | - | ||
| Steril Piemonte S.c.r.l. (associate) | 109 | 507 | 1,150 | - | - | ||
| Piemonte Servizi Sanitaria S.c.r.l. (associate) | - | 416 | - | - | - | ||
| Iniziative Produttive Piemontesi S.r.l. (associate) | 35 | 196 | 90 | - | - | ||
| SAS Sterilizasyon Servisleri A.Ş. (associate) | - | - | - | - | - | ||
| Shubhram Hospital Solutions Private Limited (associate) | 2 | - | - | - | - | ||
| Elettrica Gover S.r.l. (affiliated company) | 2 | 113 | - | - | - | ||
| Focus S.p.A. (affiliated company) | - | - | - | - | - | ||
| Archimede S.p.A. (affiliated company) | - | 280 | - | - | - | ||
| Electric System S.r.l. (affiliated company) | - | - | - | - | - | ||
| New Fleur S.r.l. (affiliated company) | 25 | 494 | - | - | - | ||
| Ad Personam S.r.l. (affiliated company) | - | 10 | - | - | - | ||
| Total | 1,392 | 9,095 | 5,710 | - | - |
The following paragraphs describe the most significant transactions broken down by company.
Coopservice Soc.Coop.p.A.
Revenue from sales and the associated trade receivables as at 30 June 2015 refer primarily to linen washing services provided to the parent company. The Servizi Italia Group also purchases transport services for linen and surgical instrument pick-up and delivery (Euro 4,479 thousand), cleaning and security services (Euro 379 thousand) and linen store services (Euro 230 thousand) from its parent company.
Transactions with Focus S.p.A. relate to lease agreements on the Castellina di Soragna, Montecchio Precalcino, Ariccia and Genoa Bolzaneto properties. The first agreements are for six years and renewable for another six, while the Genoa Bolzaneto agreement is for fourteen years and renewable for another six. The total consideration for leased properties amounted to Euro 1,251 thousand in the first half of 2015.
Transactions with Archimede S.p.A. are associated with temporary staff leasing service agreements.
Transactions with New Fleur S.r.l. are primarily for laundry services rendered.
As at 30 June 2015, revenue from sales of goods and services and the relative trade receivables due from Centro Italia Servizi S.r.l. refer to the sale of assets to be used in the wash-hire business carried out by this associate at the Arezzo hospital. On the other hand, purchase costs and the relative trade payables regard the charge-back of costs incurred by Centro Italia Servizi S.r.l., which are divided amongst the shareholders on the basis of their shareholdings.
As at 30 June 2015, revenue from the sale of goods and services and purchase costs linked to Steril Piemonte S.c.r.l. refer to the chargeback of costs incurred by the Company and by the Consortium for surgical instrument sterilisation activities at ASL (Local Health Authority) AL Piedmont Region. The financial receivable is for a Euro 1,153 thousand loan granted to the associate.
Revenue from the sale of goods and services to Iniziative Produttive Piemontesi S.r.l. as at 30 June 2015 primarily relates to the sale of single-use Medical Devices for Euro 65 thousand, whereas purchase costs relate to charge-backs of Euro 260 thousand for supplies of sterile kits for the Ordine Mauriziano Hospital in Turin and the Desio e Vimercate Hospital. The financial receivable is for a Euro 91 thousand loan granted to the associate.
Ekolav S.r.l.
Purchases of goods and services and the relative trade payables due to Ekolav S.r.l. are primarily for laundering and transport services. The financial receivable is for a Euro 184 thousand loan granted to the associate.
Revenue from the sale of goods and services and the associated trade receivables due from PSIS S.r.l. are mainly for the administrative management service charge of Euro 38 thousand and sales of singleuse medical devices for Euro 95 thousand. The financial receivables of Euro 3,894 thousand are for internal financing granted to support current investments.
AMG S.r.l.
Economic transactions carried out with AMG S.r.l. are mainly for external laundering services at the Asti, Casale Monferrato, Vercelli and Turin 3 LHAs and (Euro 446 thousand), and revenue derives from linen sterilisation services. The Company has granted A.M.G. S.r.l. a loan of Euro 501 thousand to support current investments.
Purchases of goods and services and the relative trade payables due to Se.Ste.Ro. S.r.l. are primarily for the sterilisation service for Bambino Gesù Paediatric Hospital in Rome.
Economic transactions with the company officers as at 30 June 2015 are summarised below:
During the half, there were no non-recurring, atypical and/or unusual transactions as defined in Consob communication No. 6064293 of 28 July 2006.
The Chairman of the Board of Directors
(Roberto Olivi)
Castellina di Soragna, Italy, 7 August 2015
The CEO
Enea Righi
Financial Reporting Manager
Ilaria Eugeniani
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