annual financial report

Transcription

2015
ANNUAL FINANCIAL
REPORT
On the cover page:
Darfo B.T. - hydroelectric plant - Linea Energia Gruppo LGH
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INDEX
INTRODUCTION
Corporate bodies...............................................................5
Activity, vision and mission of the LGH Group..................6
Group highlights and key financial indicators...................7
Structure and details of the companies in the Group......10
IAS/IFRS accounting policies..........................................12
II. CONSOLIDATED FINANCIAL
STATEMENTS 2015..................................51
Consolidated statement of Financial position..................52
Explanatory notes...........................................................59
Accounting policy............................................................59
Explanatory notes to the financial statement..................79
I. DIRECTORS’ BUSINESS REPORT..............13
III. ANNUAL REPORT 2015.............................115
Significant events occurred during the year...................14
Background and market scenario...................................14
Overview of the Group’s Financial Position
and Performance..................................................17
Regulatory framework....................................................25
Responsible management for sustainability...................34
Quality, Safety and the Environment..............................38
Corporate risk management...........................................41
Other disclosures............................................................48
Directors’ proposals to the General Assembly...............50
Explanatory notes.........................................................121
Explanatory notes to the financial statements..............121
Other disclosures..........................................................157
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RELAZIONE FINANZIARIA
ANNUALE: 2013
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CORPORATE BODIES
Board of Directors
Chairman
Alessandro Giuseppe Conter
Deputy Chairman
Massimo Mustarelli
Chief Executive Officer
Franco Mazzini
Board members
Dino Martinazzoli
Salvatore Nupieri
Board of Statutory Auditors
Chairman
Mario Minoja
Statutory auditors
Umberta Bianchessi
Vittorino Orione
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Activity, vision and mission of the LGH group
The LGH Group is a multi-utility company founded in
October 2006 following the merger of five local utility
companies. Its organisational structure is characterised
by the concentration of corporate functions in the
parent company, Linea Group Holding S.p.A. and by the
management of the business units through dedicated
companies or special-purpose companies.
Linea Group Holding S.p.A. deals with all the Group’s
ENVIRONMENT
COLLECTION
(Urban Hygiene)
FACILITIES
(Brokerage,
Treatment, Disposal)
ENERGY
PRODUCTION
(Electricity)
SALE AND TRADING
(Electricity,
Natural Gas)
The LGH Group’s vision is to grow, create value and
remain a benchmark for its stakeholders.
The LGH Group’s mission is to maintain and develop
activities and services of general economic interest by:
•offering customers quality services and meeting their
needs as far as possible;
•optimising shareholders’ investments through time, by
means of combinations or partnerships;
•encouraging employee involvement, empowerment
and development;
•adapting the organisation to new technological and
market challenges;
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strategic, development, co-ordination and control
activities and policies.
The customer base accounts for over a million inhabitants
in 250 municipalities in the provinces of Bergamo, Brescia,
Cremona, Lodi and Pavia.
The companies in the Group mainly operate in the
following business sectors:
NETWORKS
DISTRICT HEATING
(Co-generation, Network,
Sale of Heat)
OTHER
INFORMATION
&
COMUNICATION
TECHNOLOGY
•operating to safeguard the environment, the local area,
health and safety in the workplace and ethical values,
based on a model of sustainable development, with
particular emphasis on the production and use of energy
from renewable resources.
The facilities run by the companies in the Group are
mainly located in the municipalities holding a stake, in
addition to the waste disposal facility in Apulia, and two
biogas electricity production plants and a waste disposal
facility in Sicily.
These are complemented by gas, electricity and district
heating networks, most of which are located in Lombardy.
Group’s main plants
Hydroelectric plant - Resio
Hydroelectric plant - Mazzunno
Hydroelectric plant - Darfo
Hydroelectric plant - Lozio
Hydroelectric plant - Corna
AEM photovoltaic power stations
Biogas plant - Provaglio d’Iseo
Biogas plant - Rovato
Biogas plant - Malagnino
Biogas plant - Augusta
Biogas plant - Castrezzato
Biogas plant - Ragusa
Wood biomass plant - Cremona
Wood biomass plant - Rodengo
Waste-to-energy plant - Parona
Waste-to-energy plant - Cremona
Waste treatment plant / landfills
Co-generator plant - Cremona
Co-generator plant - Rovato
Co-generator plant - Lodi
Co-generator plant - Rho (North)
Co-generator plant - Rho (South)
Co-generator plant - Crema
Group highlights
and key financial indicators
The tables below illustrate LGH Group’s key figures and
indicators resulting from the financial statements, as well
as quantitative data reflecting the business trend.
Operating figures
(e,000)
Net revenues
Gross operating margin - EBITDA
Operating result - EBIT
Income before taxes
Net result from ongoing operations
Net result from discontinued operations
Net result for the year
2015
550,008
77,116
27,940
10,901
3,353
1,054
4,407
% on revenues
100.00%
14.02%
5.08%
1.98%
0.60%
0.19%
0.80%
2014
608,216
94,867
27,215
6,516
-2,777
0
-2,777
% on revenues
100.00%
15.60%
4.47%
1.07%
-0.45%
0%
-0.46%
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2015 was characterised by a decline of about 10% in
overall turnover, as detailed in the following pages,
accompanied by a more-than-proportional reduction
of costs (-18.7%), with a resulting EBITDA of € 77.1m
(14.02% against 15.60% in 2014).
Amortisation and depreciation allowances and provisions
declined considerably compared to 2014 (-27.3%), thus
contributing to a significant improvement in the operating
income and the net operating result, which came to
€ 4.4m.
The 2015 results were affected by unfavourable climate
conditions, with above-average temperatures (although
improving on the previous year) and low rainfall (following
the record values in 2014), in addition to the somewhat
unfavourable trend in energy markets (drop in energy
market prices) and the discontinuity of incentives for
electric power plants.
In compliance with the provisions of international
accounting standards, it is stated that Linea Gestioni’s
business unit regarding the municipal waste management
service in the town of Lodi and some adjacent
municipalities was classified as held for sale, and the
related results should therefore be recognized in income
statement in one summary line. In the absence of such a
reclassification, actual EBITDA generated in 2015 would
increase from € 77.1 m to € 78.9 m.
The € 41.1m increase in overall net cash flow between
2014 and 2015 is due mainly to the following extraordinary
transactions, which were finalized at the end of the first six
months and consolidated by the Group in the second half
of the year:
1)the acquisition of Linea Distribuzione S.r.l.’s stake
transferred by ASM Mortara S.p.A., amounting to
€ 0.7m;
2)100% takeover of Società Cremasca Calore S.r.l.’s
share capital, amounting to € 5.0m;
3)early repayment of two loans and bank overdraft
granted by Sparkasse to Società Cremasca Calore,
amounting to € 19.0m;
4) the takeover of the gas sales unit of Alma Energy
trading S.r.l., amounting to € 5.1m;
5) acquisition of 55% of Franciacorta Rinnovabili S.r.l.’s
share capital, amounting to € 1.5m;
6) consolidation of the net cash flow of Franciacorta
Rinnovabili S.r.l., amounting to € 5.7m.
In the 4th quarter of the year, the Group implemented a new
gas and electricity billing system, which entailed some
delays in the billing cycles, right at the time of greatest
gas consumption, with consequent less bill collections
and net cash flow estimated at around € 17m. Despite
the reduced consolidated EBITDA, the adjusted operating
cash flow is in line with that recorded in the previous year.
Equity data
(e,000)
NIC (Net Invested Capital)
NFP (Net Financial Position)
GE (Group’s Equity)
MIE (Minority Interest’s Equity)
CE (Consolidated Equity)
CNR (Group’s Net Result)
MIR (Minority Interest’s Result)
CNR (Consolidated Net Result)
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2015
627,064
393,743
204,221
27,200
231,421
8,050
-3,643
4,407
2014
585,592
352,563
201,553
31,477
233,030
2,347
-5,124
-2,777
Main performance indicators
2015
ROE (Return On Equity) = CNR / GE
ROI (Return On Investment) = EBIT / NIC
Debt ratio = NFP / E
2014
3.94%
4.45%
1.70
0.77%
4.42%
1.52
Quantitative data
Unit of
measurement
Waste disposed of
Gas distributed
Gas sold
Heat sold
Electricity produced
Low-voltage current distributed
Electricity sold
Ton.
m3/1000
m3/1000
KWh/1000
KWh/1000
KWh/1000
KWh/1000
The main assets of the Group are:
•waste-to-energy plants in Parona (PV) and Cremona,
with an overall potential of approximately 444,000
tonnes/year;
•2 waste separation, sorting and treatment plants in
Coccaglio (Brescia) and Fombio (Lodi);
•Landfills in Grottaglie (TA) and the post-management
landfills in Rovato (BS), Malagnino (CR), Augusta (SR);
•Landfills in Grottaglie (TA) and the post-management
landfills in Rovato (BS), Malagnino (CR), Augusta (SR);
•hydroelectric power stations in Valle Camonica
(Brescia), approximately 39 MW of installed power;
•biogas electricity production plants (Brescia, Cremona
and Syracuse), approximately 12 MW of installed
power;
•five cogeneration power stations and three district heating
2015
987,927
652,657
352,275
212,965
399,731
456,033
709,480
2014
958,926
567,092
323,858
174,765
521,797
454,885
630,989
% change
3.02%
15.1%
8.8%
21.9%
-23.4%
0.3%
12.4%
networks in the provinces of Cremona, Lodi and Milan;
•the Cremona electricity distribution network;
•2 biomass energy-generation plants, installed power 2
MW.
Furthermore, in 2015 the LGH Group:
•handled 987,927 thousand tonnes of mainly urban and
non-hazardous special waste, and ranks among the
leading five operators in the sector at a national level,
serving more than 150 local municipalities;
•produced approximately 400 GWh of electricity,
exclusively from renewable and assimilated sources
such as hydroelectric power, waste-to-energy,
cogeneration, biogas and biomass plants;
•distributed 653 million cubic metres of gas and sold
324 million cubic metres;
•produced and distributed 213 GWh of heat.
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Structure and details of the companies
in the Group
The process of reorganising the equity investments held
directly or indirectly by LGH, which started in May 2007,
continued throughout 2015 with a few transactions that
finally contributed to create n business model organized by
business units controlled directly by the holding company.
These mainly consisted of:
1)the total demerger of Astem Gestioni S.r.l., which
envisaged the transfer of the central district heating
unit to Linea Reti e Impianti S.r.l., and the business
unit regarding the urban hygiene and other minor
operations to Linea Gestioni S.r.l.;
2)the demerger of Linea Reti Impianti S.r.l.’s urban
hygiene line of business into Linea Gestioni S.r.l., and
the electricity sales line of business into Linea Più
S.p.A.;
3) the acquisition of the gas sales business unit from
Alma Energy Trading S.p.A.;
4) 100% takeover of SCCA S.r.l., a company managing
the district heating network of the town of Crema,
effective from 1st July 2015, and subsequent merger
by incorporation into Linea Reti Impianti in December
2015;
5) The acquisition of the remaining 55% of the minority
interest in the share capital of Franciacorta Rinnovabili
S.r.l., effective from 1st July 2015.
The Group’s scope of consolidation is illustrated in the
highlighted section of the diagram below.
Other
interests
SOB (business operating companies)
Special-purpose companies
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Other
interests
Below are some highlights of the Group’s main subsidiaries
and associates.
Subsidiaries
Linea Reti e Impianti S.r.l.
Linea Gestioni S.r.l.
Linea Distribuzione S.r.l.
Linea Più S.p.A.
Linea Energia S.p.A.
Linea Com S.r.l.
Linea Ambiente S.r.l.
MF Waste S.r.l.
Greenambiente S.r.l.
Rovato Energia Scarl
Lomellina Energia S.r.l.
S.Te.A.M. S.r.l.
Franciacorta Rinnovabili
Associates
Bresciana Infrastrutture
Gas S.r.l.
Blugas Srl in liquidazione
Ecofert in liquidazione S.r.l.
Asm Codogno S.r.l.
Stake held by
%
LGH S.p.A.
LGH S.p.A.
LGH S.p.A.
LGH S.p.A.
LGH S.p.A.
LGH S.p.A.
LGH S.p.A.
LGH S.p.A.
LGH S.p.A.
Linea Enegia S.p.A.
MF Waste S.r.l.
Linea Più S.p.A.
Stake held by
Share capital
100
100
90.85
100
100
96.17
100
51
80
100
80
99.61
100
%
7,793,962
5,000,000
23,980,952
5,000,000
3,968,600
5,832,761
3,000,000
750,000
50,000
15,000
160,000
1,010,000
100,000
Share capital
50
100,000
LGH S.p.A.
Linea Più S.p.A.
48.22
48
49
10,000
100,000
1,897,600
•Linea Reti e Impianti S.r.l.: (formerly named AEM
Gestioni) a company with headquarters in Cremona,
which manages local public services such as the
production and distribution of electricity and heating
through the district heating network in the city of
Cremona, the collection and disposal of solid urban and
assimilated waste, through waste-to-energy processes
and mostly sent in landfills, in the city of Cremona and
parts of the province, and other services such as public
lighting, road signs, parking bays, etc.;
•Linea Distribuzione S.r.l.: a company with
headquarters in Lodi, which deals with methane gas
management in the area covered by the Group for a
total of 99 municipalities;
•Linea Più S.p.A.: a company with headquarters in
Pavia, which deals with the supply, purchase and sale
of raw materials and end user customer management in
the gas and electricity sectors;
•Linea Energia S.p.A.: an engineering company with
headquarters in Rovato, Brescia, which specialises in
the development and activities relating to energy, from
design to implementation and management of energy
production plants;
•Linea Com S.r.l.: a company with headquarters in
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Cremona, which supplies mobile and landline telephone
and web services through broadband fibre optic and
WiMAX networks in the cities of Cremona and Pavia and
parts of the province. It also provides services and offer
ICT technological support to LGH Group companies,
information system service and management activities
for the municipalities and deals with special projects for
local authorities;
•Linea Ambiente S.r.l.: company with headquarters
in Rovato, Brescia, which manages urban and special
waste collection, transportation, treatment and disposal
activities. It carries out design activities to implement
services and systems, and business management of
the flows of waste generated and managed by all the
companies belonging to the LGH Group;
•Linea Gestioni S.r.l.: a company with headquarters in
Crema, Cremona, which manages Environmental health
services for 133 municipalities in the city of Crema and
other municipalities in the Franciacorta area and in the
province of Lodi;
•MF Waste S.r.l.: a company with headquarters in
Rovato, Brescia, which holds 80% stake in Lomellina
Energia S.r.l.;
•Franciacorta Rinnovabili S.r.l.: based in Rodengo
Saiano, Brescia, this company produces electricity from
wood biomasses;
•Greenambiente S.r.l.: a company with headquarters
in Priolo Gargallo, Syracuse, which owns and run the
waste disposal plant in Augusta, Syracuse;
•Lomellina Energia S.r.l.: a company with headquarters
in Parona, Pavia, which manages the LGH Group’s most
important waste-to-energy plant;
•S.T.e.A.M. S.r.l.: company with headquarters in Rho,
Milan, which manages the cogeneration plant and the
district heating network for the city of Rho.
ASSOCIATES:
•Blugas S.r.l. in liquidazione: a company with
headquarters in Mantua. Since 31st December 2010 it
has been operated as an investment holding company
with a 30.94% stake in the share capital of Sinit (in
liquidation);
•Bresciana Infrastrutture Gas S.r.l.: a company with
Headquarters in Roncadelle, Brescia, which was set up
in 2013 by Linea Distribuzione, which holds a 50% stake,
for the management of the gas distribution network of
the city of Palazzolo sull’Oglio;
•Ecofert in liquidazione S.r.l.: an associate operating
in the field of the recovery and the preparation for
recycling of urban and industrial solid waste and
biomasses in San Gervasio Bresciano;
•Asm Codogno S.r.l.: a multi-service company based in
Codogno operating in the field of the environment and
energy.
IAS/IFRS accounting policies
The financial statements are prepared in accordance
with the International Financial Reporting Standards
(IFRS) since 31st December 2009, in compliance with the
procedure under art. 6 of EC Regulation no. 1606/2002 of
the European Parliament and Council of 19th July 2002 on
the application of the IFRS.
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Starting from 2014, the financial statements of most of
the subsidiaries and the holding company are prepared in
accordance with international accounting standards.
Further details are provided in the notes to the consolidated
financial statements and the notes to the separate financial
statements.
I.
Directors’ business report
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Significant events occurred during the year
The following facts of note, extraordinary transactions
and business reorganisation took place during 2015:
•complete demerger of the company Astem Gestioni
S.r.l., with consequent dissolution and transfer into
Linea Reti e Impianti S. r. l. and Linea Gestioni S.r.l.;
•the demerger of Linea Reti Impianti S.r.l. with the
transfer of the electricity sales business unit into Linea
Gestioni S.r.l. and the electricity sales unit into Linea Più
S.p.A.;
•the acquisition from Alma Energy Trading S.p.A. of the
gas sales business unit;
•the takeover of 100% interest in SCCA S.r.l., a company
managing the district heating network of the town of
Crema and subsequent merger by incorporation into
Linea Reti e Impianti S.r.l.;
•the acquisition of the remaining 55% minority interest in
the share capital of Franciacorta Rinnovabili S.r.l.;
•re-negotiation of Lomellina Energia’s project loan
funding.
Background and market scenario
THE MULTI-UTILITIES MARKET
Italian multi-utilities are still characterised by a significant gap
in terms of dimensions compared to European big operators
and the market for local public services is now fragmented
into several enterprises, most of which small size.
Public shareholders, especially the municipalities, have
suffered repeated cuts of the resources allocated in
support of local public services and are subject to the
constraints of the Internal Stability Pact.
In this connection, the Government encourages
consolidation of this sector, in order to overcome the
fragmentation that characterizes Italy compared to other
European countries.
BUSINESS SUPPLY CHAINS
ENERGY
Natural Gas
The demand of natural gas increased by 9.0% in 2015,
compared to 2014, achieving 66,944 Mm3 (source: Snam
Rete Gas). The climatic factor remains the main driver,
with an increase in demand in the summer months, due
mainly to the production of energy from thermoelectric
sources, and a decline in the last quarter, which was
mainly due to a milder climate compared to previous year.
The growth in 2015 was fuelled by the residential and
commercial sectors, while the industrial sector continues
to show signs of weakness.
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The average 2015 price at the VEP was 22.00 €/MWh,
down 4.8% on 2014, while the TTF price was €19.8 €/
MWh, down 5.1% on the previous year.
Electricity
Net domestic electricity demand in 2015 amounted to
315,234 GWh (source: Terna), 1.5% up on 2014 (310,535
GWh). In normalized terms for the calendar, the change
came to +1.3%.
Net electricity production in 2015 came to 270,703 GWh,
0.6% up on 2014. The normalization of rainfall led to a
sharp decline in the generation of hydroelectricity at
44,751 GWh, with a 24.9% decline compared to 2014,
in favour of thermoelectric production, which increased
to 180,871 GWh, up 8.3% on 2014. There was also an
increase in photovoltaic and geothermal production of
13.0% and 4.5%, respectively. Wind electricity production
decreased by 3.3% on 2014.
The PUN Base Load Single Nationwide price increased
slightly (+0.384%) to 52.3 €/MWh in 2015, compared to
52.1 €/MWh in 2014.
The PUN Peak Load decreased by 0.3% on the previous
year (at 58.7 €/MWh compared to 58.9 €/MWh in 2014),
while the PUN Off-Peak increased by 1.0% compared to
the corresponding period in 2014 (48.73 €/MWh vs 48.26
€/MWh).
NETWORKS
Gas distribution
Following the reform identifying the criteria through which
natural gas distribution tenders are to be awarded, the
Ministerial decrees of 19th January 2011 and 18th October
2011 identified the 177 Municipalities belonging to
Minimum Geographical Areas (Ambiti Territoriali Minimi)
for awarding gas distribution services in accordance with
so-called Tender Criteria decree (Ministerial Decree no.
226 of 12th November 2011, as amended).
Over the last few years, several provisions were approved
to amend Legislative Decrees no. 164/2000 and 226/2011,
with particular reference to the methods of determining a
fair compensation to be paid to the outgoing operator and
the timing for the call of tenders.
In particular, Legislative Decree no. 210/2015 (so-called
Milleproroghe 2016) provided a further extension of
deadlines for the publication of calls for tender by
the Contracting Stations and eliminated the penalties
previously envisaged on defaulting Contracting
Stations.
By Resolutions 573/2013/R/gas and 574/2013/R/gas,
the Authority approved the regulation of tariffs for
municipal and supra-municipal management operators
and the quality for gas distribution and metering services,
respectively, for the 4th regulatory period (2014-2019).
The Weighted Average Cost of Capital (WACC) recognised
for the years 2014-2015 was 6.9% for the distribution
service and 7.2% for the metering service, while, based on
the new integrated text (Annex A to Resolution 583/2015/R/
com) the WACC will come to 6.1% for distribution and
6.6% for metering for the 2016-2018 period.
Electricity distribution
By Resolutions 583/2015/R/com and 654/2015/R/eel
the Regulatory Authority for Electricity Gas and Water
(AEEGSI) determined the tariff regulation for the supply of
electricity transmission, distribution and metering services
for the 5th regulatory period 2016-2020. The WACC is
fixed at 5.6% for the 2016-2018 period. The effect of
reduced WACC will be partially offset by some changes
to the method of recognition of capital expenditure and a
decrease in the X-factor applied to recognized operating
costs.
By Resolution 296/2015/R/com of 23rd June, the authority
provided for (measure common to Gas Distribution):
the mandatory separation of brand and communication
policies between distribution companies and sales
companies (including company name, business, signs
and other distinguishing feature); the requirement for
commercial activities relating to electricity distribution,
namely those interfacing with end user customers, to
be carried using information channels, physical space
and staff other than those relating to sales activities; the
mandatory use of separate communication policies and
corporate brands in performing protection services and
greater protection compared to the free market, while
respecting the uniqueness of the corporate distinguishing
signs; the requirement for commercial activities relating
to the sale of electricity in the free market and greater
of protection service to be performed using separate
information channels, physical space and personnel.
Co-Generation and District Heating
Central district heating in Italy mainly consists of small and
medium-size networks, which are mostly supplied by gasfuelled co-generation plants. However, renewable energy
plants (biomass) and systems powered by heat generated
from incineration of waste have acquired an increasingly
important market share, while the use of industrial heat
is still limited to a few cases. Most of existing networks
are operated by companies controlled or owned by
municipalities.
In 2015 the market continued to adopt the tariff mechanisms
of a free market based on specific agreements and/or
concessions at a local level.
In consideration of the foregoing and in the light of recent
opinions expressed by the Competition and Market
Authority (AGCM) and judgements of the Council of State,
this sector is expected to be regulated in the near future
with the enactment of a specific discipline providing a
framework of clear rules shared at a national level for the
supply of district heating services.
With reference to regulatory developments, it is worth
noting that by Decree of the Ministry of Economic
Development of 22nd December 2015 entitled “Revocation
and updating of the technical data sheets of the incentive
mechanism for white certificates”, said ministry revoked
data sheets 40E, 47E, 36E and 21T, by excluding some
interventions from the incentive mechanism for energy
efficiency. The ministry also amended data sheet 22T
on district heating to adapt it to the Authority’s energy
Resolution 9/10, as amended by Resolutions EEN 14/10
and EEN 9/11, incorporating the indications provided in
the aforesaid Decree no. 102/2014.
ENVIRONMENT
The waste disposal business in Italy is highly fragmented.
Hera, through its subsidiary Hera Ambiente, is the first
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operator in the country followed by A2A. The five main
operators account for 25% of the market.
At the end of 2014, Decree Law 133/2014 (the so-called
Unblock-Italy Decree), containing rules governing this
sector and intended to overcome the historical waste
disposal policy confined to regional landfills (one of the
main obstacles in the past was the fact that regional
authorities were not allowed to exchange the waste
produced).
It is worth noting that the provisions of Art. 35 on waste-toenergy management policy, in relation to which a Prime
Minister’s Decree is expected to identify plants, either
existing or to be constructed, for the recovery of energy
and the disposal of urban waste required to implement an
integrated modern system to manage this type of waste
and meet the goal of guaranteeing national safety in terms
of self-sufficiency and, as a result, avoiding infringement
procedures due to failure to comply with European
regulations in this sector.
These plants are intended to be infrastructures of
primary national importance. Under current regulations
the existing WTE plants should be run until saturation
of their capacities, with consequent amendment of
16
the authorisation provisions. The new plants shall be
constructed in accordance with the classification of energy
recovery plants.
Last but not least, there being no constraints in terms
of catchment area, priority is given to the treatment
of regional urban waste and, only to the extent of the
residual authorised capacity, for urban waste produced in
other regions.
Most of the waste-to-energy (WTE) and waste treatment
plants are located in northern Italy, but changes in
regulations could help to partly solve the waste emergency
situation in southern Italy.
As regards direct assignments for the waste collection
service, Law no. 115 of 29th July 2015 sets out new rules
regarding companies that have become subsidiaries
controlled by listed companies after 31st December 2004,
following corporate operations carried out in the absence
of procedures compliant with the principles and rules of
the European Union applicable to cessation of specific
assignment as at 31st December 2018 or at the expiry
provided for in previously entered service contracts or
other deeds governing the relationship.
Overview of the Group’s Financial
Position and Performance
The LGH Group’s 2015 consolidated financial statements,
which were prepared according to the international
financial reporting standards (IAS/IFRS), shows a net
loss of €4,407 thousand (compared to €2,777 thousand
profit in 2014), net of €7,548 thousand amortization,
depreciation and provisions for the overall amount of
€49,176 thousand. The profit attributable to the Group
came to €8,050 thousand.
Financial Performance (€,000)
CONSOLIDATED INCOME STATEMENT
2015
Revenues from sales
Other income
Total net revenues
Consumables and services
Personnel expenses
Other operating expenses
Other net income (expenses)
Gross operating margin (EBITDA)
Amortisation, depreciation and write-down
Operating result (EBIT)
Net financial income (expenses)
Portion pertaining to associates’ results
Gains (losses) on equity investments
Pre-tax result for the year (EBT)
Income tax
Profi/(loss) from continuing operations
Profit for the year from discontinued operat.
of which:
Net result attributable to the group
Net result attributable to non-controlling interests
2014
*restated
Absolute
change
% change
536,169
13,839
550,008
-400,499
-65,267
-7,239
113
77,116
-49,176
27,940
-17,281
204
38
10,901
-7,548
3,353
1,054
4,407
582,250
25,966
608,216
-437,755
-67,299
-7,753
-542
94,867
-67,652
27,215
-20,864
152
13
6,516
-9,293
-2,777
-2,777
-46,081
-12,127
-58,208
-37,256
-2,032
-513
654
-17,751
-18,476
725
-3,583
52
25
4,385
-1,745
6,130
1,054
7,184
-7.91%
-46.70%
-9.57%
-8.51%
-3.02%
-6.61%
120.66%
-18.71%
-27.31%
2.66%
-17.17%
34.21%
192.31%
67.30%
-18.78%
220.74%
n.a.
258.70%
8,050
-3,643
2,347
-5,124
5,703
-1,481
242.99%
-28.90%
* The 2014 figures were restated. See paragraph 2 of the Note to the Financial Statements for a detailed analysis.
Net revenues amounted to €550,008 thousand, compared
to €608.216 thousand (-9.57%) in 2014.
Costs for raw materials, supplies, consumables and
goods for sale, and for services came to €400,499
thousand, down €37,256 thousand (-8,51%) on 2014.
Personnel expenses amounted to €65,267 thousand,
down 3.02% on 2014.
Costs under other net income and charges amounted
to €113 thousand, compared to €-542 thousand in 2014.
This item mainly comprises extraordinary management.
The situation in the energy sectors, which were affected by
the unfavourable climate and the energy markets, as well
as the cessation of some incentives, led to an operating
gross margin (EBITDA) of €77,116 thousand (-18.71%).
Amortisation, depreciation and write-down decreased
from €67.652 thousand in 2014 to €49,176 thousand in
2015, down 27.31% following the joint effect of:
•a decrease in amortisation and depreciation, from
€54,968 thousand in 2014 to €42,142 thousand in 2015,
mainly attributable to completion of the amortisation
17
plan of some assets;
•a decrease in write-downs and allocation to
provisions, from €12.684 thousand in 2014 to €7,034
thousand in 2015, basically attributable to minor
allocation to the risk provision.
The result of cash flow management (financial income
and expenses) in 2015 came to €-17,281 thousand, a
clear improvement on the previous year.
The pre-tax result came to €10,901 thousand, up
€4,385 thousand on 2014.
Consolidated taxes came to €7,548 thousand, down
€1,745 thousand on 2014.
The net result for the year was €4,407 thousand. The
portion pertaining to the Group in 2015 totalled €8,050
thousand.
Below is an analysis of the results of the single business
units. They are expressed net of structural costs directly
and indirectly attributable to the business units themselves
(full-cost configuration).
Upon the establishment of Linea Reti e Impianti, a
company dealing with electricity and district heating
networks, it was decided, effective from 1st July, to review
the make-up of some business units, which involved a
reclassification of the results of co-generation plants from
Energy Production into District Heating business unit. This
principle, which was adopted for better consistency in
technical and financial terms, was also applied to the 2014
figures to allow a comparison.
It is worth noting that the 2014 figures were restated to
allow a comparison with 2015, by reclassifying some
items in the income statement.
(€,000)
NATURAL GAS DISTRIBUTION
2015
Revenues
Costs
EBITDA
Amortisation, depreciation and
accruals for provisions
EBIT
2014 restated
% change
39,563
22,563
17,000
39,849
20,435
19,414
-0.7%
10.4%
-12.4%
8,289
7,418
11.7%
8,711
11,996
-27.4%
Revenues from sales are virtually in line with the previous
year’s figures, as the result of two opposing trends: an
increase of around €500 thousand in the VRT1 tariff
(according to the investment trend over the last few
years) and a decrease of the same amount in revenues
from ancillary services, resulting from a market downturn
(network code and user works).
The increase in costs and consequent impact on the
margin is mainly attributable to contingent liabilities for
fees paid to municipalities, adjustments to previous years’
VAT and TOSAP2, increased structural costs (€1.2 million)
and costs (€662 thousand) relating to bank guarantees
issued to cover the European Investment Bank loan.
(€,000)
NATURAL GAS SALES
Revenues
Costs
EBITDA
allocations to provisions
EBIT
2015
2014 restated
191,295
170,670
20,626
201,396
191,887
9,509
-5.0%
-11.1%
116.9%
2,291
2,818
-18.7%
18,335
6,690
174.0%
VRT = Vincolo sui Ricavi Total → Total limitation on revenues admitted to cover network distribution costs
2
TOSAP = Tassa Occupazione Suolo Aree Pubbliche → Tax for the occupation and public areas
1
18
% change
The gas sales Business Unit comprises sales to the
domestic market and corporates, as well as trading
operations.
2015 was characterised by an increase in sales volumes
as the result of a more favourable climatic situation,
compared to the previous year, though still unusual with
temperatures above the average for the period. The
increase in volumes is also attributable to the acquisition
of the domestic client business unit from Alma Energy
(approx. €26.5 thousand).
Nevertheless, revenues decreased in absolute terms due
to the trend in market prices.
EBITDA grew significantly, an improvement attributable to
the non-delivery of Gazprom supplies in the first quarter
of the year (due to supplies procured on the market at
more favourable prices) and the consolidation of storage
and trading activities, which started in June 2014 as part
of a plan aimed at improving procurement policies.
A positive non-recurring component associated with
the recovery of APR (€4.3 million), partly offset by the
balance of gas accruals (€-2.9 million), contributed to the
decrease in 2015 costs.
(€,000)
ELECTRICITY PRODUCTION
Revenues
Costs
EBITDA
EBIT
2015
2014 restated
% change
13,532
8,513
5,019
28,310
13,511
14,799
-52.2%
-37.0%
-66.1%
3,939
4,009
-1.7%
1,080
10,790
-90.0%
The electricity production Business Unit is active in the
management of power plants fuelled by renewable
sources, including river hydroelectric, biomass, biogas and
photovoltaic plants, with Linea Energia and Franciacorta
Rinnovabili, the latter, which runs the biomass plant in
Rodengo Saiano, was entirely acquired and included in
the consolidation scope in July 2015 - a resolution having
been passed regarding the merger by incorporation into
Linea Energia effective from 2016.
The 2015 result, which decreased compared to 2014, is
mainly attributable to the hydroelectric sector; reduced
rainfalls in 2015 led to a 52.1% decrease in the amount
of electricity produced, compared to the previous year,
which benefited from extremely favourable climatic
conditions.
The effect of reduced production was also worsened by
the continuous decline in electricity market prices, which
resulted in a drop in electricity sales revenues of €5.0
million. In addition, the discontinuation of incentives in
favour of the Mazzunno facility (€-3.4 million) and the
reduction in energy efficiency certificates, associated with
less production at the Resio plant (€-2.4 million) further
affected the operating result for the year.
A further negative factor on revenues and costs, of the
same amount, without affecting the margin, was the
cessation of operations of the Rovato Energia consortium
in 2015, which accounted for about €5 million.
The performance of the biomass plant in Cremona
increased, compared to the previous year, with an
improvement in the operating margin of €0.7 million.
The biogas sector was also slightly down following the
physiological decline in the amount of biogas produced
by landfills, while the photovoltaic sector continued its
steady trend, though its impact in the income statement
is marginal.
19
(€,000)
ELECTRICITY DISTRIBUTION
2015
Revenues
Costs
EBITDA
EBIT
2014 restated
% change
12,616
8,005
4,611
12,688
7,755
4,933
-0.6%
3.2%
-6.5%
3,537
3,537
0.0%
1,074
1,396
-23.1%
The activity of this Business Unit cover the technical and
operational management of the electricity distribution
networks managed by the city of Cremona.
(€,000)
ELECTRICITY SOLD
Revenues
Costs
EBITDA
EBIT
2015
2014 restated
163,538
163,212
326
160,115
159,167
948
2.1%
2.5%
-65.6%
730
1,491
-51.0%
-404
-543
-25.6%
The Business Unit dealing with the sale of electricity
comprises the most captive market, the free market and
trading activities.
The year 2015 was characterised by an increase in sales
on the free market (+80 GWh), despite the decline in
sales prices. The granting of the most captive market to
the sales company led to improved margins, thanks to an
increase in the RCV3 component, which was recognized
for the separation of the distribution company.
3
The increased volumes sold were associated with an
increase in the procurement costs, which also felt the
impact of the loss of an extraordinary income recorded in
2014 (€1.1 million following the judgement of the Council of
State on the recalculation of Terna imbalances); increased
labour costs (change in the number of employees and
wage increases) and structural costs (€700 thousand
overall) also had an impact on performance.
RCV = Remunerazione Commercializzazione Vendita - Remuneration of Selling Costs
20
% change
(€,000)
DISTRICT HEATING
2015
Revenues
Costs
EBITDA
EBIT
2014 restated
% change
22,931
19,733
3,198
19,665
17,703
1,962
16.6%
11.5%
63.0%
3,989
3,574
11.6%
-791
-1,612
-50.9%
Following the process of corporate rationalisation of the
Group, co-generation operations in the second half of
2015 were moved from the Electricity Production to the
District Heating Business Unit. This change was introduced
to create increased consistency with the technical and
economic situation. To this end, 2014 figures have been
presented to allow a comparison with the new layout.
This Business Unit comprises the sale of heat and
electricity produced by owned co-generation plants. The
plants in Cremona, Lodi and Rho were complemented with
the addition in July 2015 of the plant in Crema, following
the acquisition of SCCA S.r.l.
Revenues increased by €3.2 million (+16.6%), compared
to 2014, mainly as the result of:
•increased revenues (€+5 million) due to the sale of heat
as the result of more favourable climatic conditions,
despite still below the average for the period, and
the effect of the acquisition of the Crema distribution
network and the connection of new customers in the
Lodi area, following completion of the new network;
•decreased revenues due to the sale of electricity
generated by co-generation plants as the result of
declining market prices (€-370 thousand).
The increase of €2 million in costs is attributable to the
procurement of sources of energy for running the cogenerators and of heat to feed the network, as well as
other plants belonging to the Group and third parties,
plus costs for €163 thousand associated with the bank
guarantee granted on the EIB loan.
Amortisation, depreciation, allocations to provisions and
write-downs increased, compared to 2014, mainly as the
result of the acquisition of the plant and the network of
SCCA (€+383 thousand).
(€,000)
ENVIRONMENT
Revenues
Costs
EBITDA
EBIT
2015
2014 restated
% change
147,538
120,201
27,337
168,165
126,246
41,919
-12.3%
-4.8%
-34.8%
24,558
43,227
-43.2%
2,779
-1,308
312.4%
21
The business unit dealing with the Environment comprises
financial figures attributable to urban hygiene, waste
treatment, disposal and recovery, and commercial brokerage.
Below are the main factors behind the economic
performance of the BU, divided by area of activity:
Waste-to-energy plants:
•The plant in Parona (PV) in 2015 was affected by the
considerable decrease in revenues from the sale of
energy and the volumes of waste delivered, mainly
attributable to:
-discontinuation since March 2015 of the incentive
period of the second line involved in the CIP6
agreement (€-11.5 million);
-trend in the fossil fuel market, with consequent
reduction of the CEC (avoided fuel cost) tariff
component, recognized on the production of two
processing lines (€-2.2 million);
-Worst performance of the boilers with consequent
reduced electricity produced (€-2.3 million);
-Less volumes of waste delivered due to plant
downtimes and the disposal of stocks (€-2 million).
On the other hand, major actions were implemented on
the management processes of the plant, which resulted
in a considerable reduction of costs (€-3.9 million),
including the in-house processing of the Stabilised
Organic Fraction of waste, the reduction of energy
consumption and the renegotiation of external costs.
Last but not least, the considerable decrease of the
incidence of amortisation and depreciation (€-12.5
million), associated with the useful life of various assets,
in accordance with IAS, as well as the provisions that in
2014 discounted the risks associated with litigation on
self-consumption pending with the GSE4 (€-3.8 million).
•The EBITDA at the waste-to-energy plant in Cremona
came to €2.68 million, in line with the 2014 figures.
Revenues decreased due to reduced incoming waste
and a decrease in the urban solid waste disposal tariff
(€-620 thousand); conversely, increased revenues
(€+700 thousand) came from the negotiation of the White
Certificates.
Landfills:
•At the plant in Grottaglie, near Taranto, the increase of
incoming waste (+13.7%) and the rise in the unit disposal
price generated additional revenues for €3.9 million.
In contrast, frequent rainfalls and the simultaneous
GSE = Gestore Servizi Energetici - Energy Service Provider
TAR - Tribunale Amministrativo Regionale - Regional Administrative Court
6
PAP = Porta a Porta → curbside collection
4
5
22
opening of two compartments of most of 2015 led to an
increase of the amount of leachate with an increase in
disposal costs (€+1.1 million).
•The post-closure management of the plant in Augusta,
near Syracuse, continued, with costs covered by the
provisions accrued during active management, pending
the permit for enlargement aimed at resuming disposal
activities. The partial operation of the plant in the first
half of 2014 resulted in less revenues in 2015 for €2.8
million; an element of an extraordinary nature was also
recognized in 2015 in connection with an adverse decision
of the TAR5 court due to the non-recognition of the
adjustment on the waste delivery tariff, in consideration
of the expected revenues recognized in previous years’
income statements (€1.1 million contingent liabilities).
•A positive difference was recorded, compared to 2014,
for the Malagnino post-management landfill, which took
into account a write-down of capitalized costs relating
to the second basin project, as the result of a negative
judgment appealed against the Council of State (€1.3
million).
Urban hygiene:
In the statement by Business Unit, the results relating to
the management of this service in Lodi and some adjacent
municipalities have been recognized in full to the income
statement for this sector, despite they have been included
in abbreviated form under the item EBITDA in Linea
Gestioni’s statutory financial statements and the Group’s
consolidated financial statements, as it refers to selling
activities (€+1.5 million euros).
The economic performance in 2015 reflects the
discontinuity of the area managed compared to the
previous year, namely:
•the cessation of the service in the Lodi area, which
involved 5 municipalities;
•the worsening of the economic conditions of some
services rendered to municipalities, following renegotiations and/or call for tender procedures
(Ospitaletto, Lodi and Casalpusterlengo);
•a decrease in revenues resulting from the disposal of
generic waste and an increase disposal costs following
the extension of PAP6 services (town of Cremona,
complete since October, and Chiari since June 2015).
The assignment of material as a result of a better quotation
of waste in all the areas has improved compared to the
previous year.
(€,000)
ICT SERVICES
2015
Revenues
Costs
EBITDA
EBIT
2014 restated
% change
14,866
14,013
853
16,371
14,375
1,996
-9.2%
-2.5%
-57.3%
1,696
2,027
-16.3%
-843
-31
-2619.4%
The area managed did not change compared to the
previous year. The decrease in margins is mainly
attributable to some factors of an extraordinary nature,
which contributed to impact the operating result for 2015.
First and foremost, following the outcome of the
negotiations with AEM S.p.A. as part of a larger redefinition of the relations within AEM and with the LGH
Group, in discontinuity on the previous years, the works
to extend the fiber-optic network in Cremona were
capitalized as leasehold improvements, instead of being
resold to AEM S.p.A., which resulted in a decrease in
revenues and the related contribution to margin for about
€400 thousand. For the same reasons, the network rental
fee decreased accordingly (€-250 thousand versus 2014).
The adjustment of the service contract (€550 thousand)
and contingent liabilities (€150 thousand) associated with
costs pertaining to third-party TLC services contributed to
the decrease in the operating result for the year.
(€,000)
OTHER SERVICES
2015
Revenues
Costs
EBITDA
EBIT
This business unit comprises minor residual services
managed by the Group, which include public lighting,
district heating management, mobility, billboards and
2014 restated
% change
4,449
4,549
-100
5,730
5,757
-27
-22.4%
-21.0%
-270.4%
150
137
9.5%
-250
-164
-52.4%
public land use, public green management, installation of
photovoltaic systems, gas post-meter services.
23
Financial position
The LGH Group’s financial position as at 31st December
2015, compared with those as at 31st December 2014, is
summarised in the table below:
(€,000)
LGH GROUP BALANCE SHEET
31/12/2015
Current assets
Current liabilities
Net working capital
Net non-current assets
Provisions for plant renovation and contrib.
Net fixed assets
Other net assets and liabilities
Assets held for sale
NET INVESTED CAPITAL
Short-term net financial position
Medium/long-term net financial position
Total net financial position
Equity
TOTAL SOURCES
NET INVESTED CAPITAL
267,766
-190,508
77,258
674,535
-91,944
582,591
-34,149
1,364
627,064
22,819
370,924
393,744
231,422
1,898
627,064
%
42.70%
-30.38%
12.32%
107.57%
-14.66%
92.91%
-5.45%
0.22%
100.00%
3.64%
59.15%
62.79%
36.91%
0.30%
100.00%
31/12/2014
*restated
255,839
-180,089
75,750
638,154
-88,797
549,357
-39,515
%
585,592
-68,728
421,290
352,562
233,030
43.69%
-30.75%
12.94%
108.98%
-15.16%
93.81%
-6.75%
0.00%
100.00%
-11.74%
71.94%
60.21%
39.79%
585,592
100.00%
* 2014 was restated. See paragraph 2 of the Note to the Financial Statements for a detailed analysis
The financial statement of the LGH Group, which was
prepared in accordance with the pattern of sources and
utilisations, shows a net invested capital of 627.06 million.
Shareholders’ equity, one of the sources, presented a
balance of €231 million.
Net Financial Position came to €393.74 million, so the
incidence of NFP on total sources remained stable at
around 60%.
Further details are provided in the statement of cash flows
and the equity movement table (Part III - Consolidated
Financial Statements).
Below is a list of the main alternative performance
indicators and the main reclassified or grouped items not
immediately related to the financial statements.
•Gross Operating Margin/EBITDA: equivalent to
operating income before deducting asset amortisation
and depreciation allowances from the income statement
and the provisions for bad debts and for contingencies
and liabilities. Senior Management considers this
indicator, combined with EBIT, to be an important tool
24
for the evaluation of the Group’s/Company’s operating
performance;
•EBIT: coincides with the operating result, calculated
as the difference between operating income and
charges recognised in the income statement. Senior
Management considers this indicator to be an important
tool for the evaluation of the Group’s/Company’s
operating performance, because it takes into account
every kind of cost;
•Net financial (Expenses)/Income: the algebraic sum of
financial expenses recognised to the income statement
as interest expense, financial charges of different
nature, financial income recognised as interest income,
financial gains and losses associated with equity
investments and/or securities owned;
•Net fixed assets: all tangible and intangible assets,
goodwill and financial assets;
•Provisions for plant restoration and subsidies: values
recognised to the balance sheet to cover future
decommissioning costs related to net fixed assets.
This item also incorporates subsidies received for
connections up to the reporting date but relating to
future years;
•Current assets: the sum of items relating to inventories,
trade receivables and other short-term receivables;
•Current liabilities: the sum of items relating to trade
payables, other short-term payables and current tax
liabilities;
•Net financial position: the sum of cash and cash
equivalents (bank and postal current account deposits
and cash-pooling balances), (short- and long-term)
loans and borrowings and financial assets and liabilities
relating to derivatives;
•Other net assets and liabilities: any residual items in the
balance sheet;
•Net invested capital: is calculated as the difference
between fixed assets and the provisions for equipment
restoration and subsidies;
•ROE (Return on Equity): is calculated as the ratio of
the net income to shareholders’ equity. It indicates
the profitability of the capital invested by partners or
shareholders;
•ROI (Return on Investment): is calculated as the ratio of
EBIT and net invested capital. It indicates the return on
invested capital;
•Indebtedness index: is calculated as the ratio of net
cash flow to shareholders’ equity. It indicates the
burden of external loans to capital contributions by the
shareholders and the company’s ability to finance itself;
•Disposability index: is calculated as the ratio of current
assets to current liabilities. It indicates, when positive,
the ability of the company to offset short-term liabilities
with its current assets;
•Liquidity index: is calculated as the ratio of current
liquidity and current liabilities. It indicates the company’s
immediate sources to cover its short-term liabilities.
Regulatory framework
The Group, through LGH-controlled subsidiaries, is mainly
active in the following sectors: natural gas, electricity,
environment, district heating, IT and telecommunications.
These sectors are heavily regulated by national legislation,
some of which derive from EU and regional legislation,
which affects service performance and business operation
procedures significantly with regard to some aspects
and elements of the sector. The holding company, which
is 100% indirectly owned by local public capital, is also
regulated by the legislation on public holdings, although
since November 2013, the impact of this legislation
has been significantly reduced as a result of the profile
acquired by LGH as the issuer of financial instruments
listed on the captive market.
Local public services in general
Legislation on public services can be found today
principally in the EU principles and rules, as well as in
the following regulations: i) art. 113 of Italian legislative
decree no. 267/2000, as applicable; ii) art. 3-bis of Decree
Law no. 138/2011, converted with amendments by
Law no. 148 of 14th September 2011, as amended, and
amended by art. 1, subsection 609 et seq., of Law no. 190
of 23rd December 2014, “Provisions for the statement of
annual and multi-annual government budgets (Stability
Act 2015)”; iii) art. 34, subsections 20 et seq. of Decree
Law no. 179/2012; iv) art. 1, subsections 550 et seq. of
Law no. 147/2013; v) art. 13 of Decree Law no. 150/2013
(enacted by law no. 15/2014); vi) regulations for the
specific sector (see, by way of an example, Legislative
Decree no. 152/2006); vii) Lombardy regional regulations
no. 26/2003, as amended by Regional Law no. 29 of
26th November 2014, concerning “Provisions relating to
integrated water service. Amendments to Title V, Sections
I, II and III of Regional Law no. 26 of 12th December 2003
(Regulations for local services of general economic
interest. Rules on the management of waste and energy
and the use of surface and underground waters and water
resources).
Moreover, by virtue of Law no. 124 of 7th August 2015
referring to “Powers delegated to the Government on the
reorganization of the public administrations”, published
in Official Journal no. 187 of 13th August 2015, legislative
powers were granted to the Government, to be exercised
in the twelve months following the approval of said law,
with the aim - in the case of local public services of a
general economic importance - to reorganize the relevant
regulations (under arts. 16 and 19 of said Law), through
the development of a consolidated text on local public
services, which is currently still in draft form.
The aforementioned regulatory framework derives from
a particularly complex legislative and jurisprudential
25
development, which is likely to be subject over time to
referendum repeals and declarations of unconstitutionality.
There being no general regulations on the awarding of
local services of economic importance, the doctrine and
case law clarified that the matter should be considered
directly governed by European rules and principles, as
well as those asserted by the European Court of Justice
and national case law, and to applicable national (e.g.
Legislative Decree 152/2006) and regional (Regional Law
26/2003) legislation.
It should also be noted that, as from 1st January 2014 the
service can be awarded directly in accordance with inhouse-providing procedures with no limitation in terms of
amount, subject to compliance with the legal requirements
covering this type of management. In fact, the provision
under subsection 27 of art. 34 suppressed the wording
“and provided that the overall economic value of the
service or goods to be awarded is equal to or less than
€200,000 per year” in art. 4, subsection 8, of Law Decree
no. 95/2012 (converted into law no. 135/2012).
More specifically, Law no. 190/2014 (Stability Act 2015)
introduced some provisions (art. 1, subsection 609 et seq.)
covering “the rationalisation of local subsidiaries” through
amendment 3-bis of decree law 138 of 13th August 2011,
which was converted with amendments by law no. 148 of
14th September 2011.
As regards local public services, the aforesaid law
introduced, following subsection 6 of art. 3-bis of
decree law no. 138 of 13th August 2011, the addition of
subsection 6-bis, reading “The provisions of this article
and other provisions, including special ones, regarding
economically-relevant local networked public utility
services are understood to apply, subject to express
exceptions, to urban solid waste sector and sectors subject
to regulation by an independent authority”.
Distribution of natural gas and electricity
Distribution of natural gas
The gas distribution sector is regulated by Legislative
Decree 164/2000, which envisages public tenders as the
only procedure for awarding gas distribution concessions.
The Ministry later issued some ministerial decrees to
regulate all the issues related to public tenders for socalled “Ambiti”, i.e. municipalities grouping together to
make invitations to tender for concessions, by defining the
number and composition of the minimum geographical/
territorial areas (so-called ATEM) (Ministerial Decrees
of 10.01.2011 and 28.10.2011) and public tender criteria
(Ministerial Decree no. 226/2011).
26
A decree was issued in 2014 containing the “Guidelines
regarding the criteria and means of application for
determining the reimbursement value for natural gas
distribution facilities” (Ministerial Decree of 22nd May
2014), followed by Decree Law no. 91 of 24th June
2014, to substantially provide legislative coverage to the
Guidelines.
Several appeals before administrative courts have been
risen by operators against this decree, as it is considered
of dubious constitutionality, since it introduced a new
method for determining the value of reimbursement to the
outgoing operator, other than the method provided by art.
24 of Consolidated Act no. 2578/1925.
In connection with the refund value to be recognized in the
outgoing operator, art. 30-bis, subsection 1, of Ministerial
Decree of 22.5.2014, amending art. 15, subsection 5,
of Legislative Decree no. 164/2000, establishes that
the determination of the value of reimbursement to
the outgoing operator in the first period should follow
the method specified in the contracts only if they
were stipulated before 11th February 2012, the date
of effectiveness of Ministerial Decree no. 226 of 11th
November 2011, otherwise reference should be made
to the Guidelines provided by the Ministry for Economic
Development and approved by Ministerial Decree of 22nd
May 2014.
The following resolutions were issued by the Authority
in 2014 to complement the regulatory framework on
the procedures regarding calls for tender for catchment
areas:
•Resolution 310/2014/R/gas of 26th June 2014 set out
the methodological aspects for the identification of
the cases showing more than 10% deviation between
VIR and RAB and introduced the procedures for the
verification of deviations between VAR and RAB in
excess of 10%.
•Resolution 326/2014/R/gas of 3rd July 2014 set out the
method for the reimbursement to outgoing operators
of the sums paid to cover tender costs, as per decree
no. 226 of 12th November 2011, providing for the
application of an interest rate equal to the rate of return
on debt capital used for the determination of the WACC
for gas distribution and metering services in the fourth
regulatory period and the adoption of the compound
basis for the calculation of interest.
•Resolution 571/2014/R/gas of 20th November 2014
amended the service contract framework originally
defined in Resolution 514/2012/R/gas.
During the year 2015, the rules governing the tender
criteria underwent major amendments, which led to
delays in the preparation of the calls for tenders by the
awarding entities within the statutory deadlines. The
legislator intervened once again to postpone the deadlines
for the announcement of the calls of tenders set out by
ATEM groups, with the following provisions:
•Ministerial Decree no. 106 of 20th May 2015, (published
on 14th July 2015) which, in view of the announcement
of calls for tenders for the new territorial districts
(ATEMs), amended Ministerial Decree no. 226 of 12th
November 2011 “Regulations on the tender criteria and
for the evaluation of the bid for the concession of the
natural gas distribution service”.
The resolution introduces amendments to Ministerial
Decree no. 226/2011 to make it consistent with the
legislative changes that have occurred since its
enactment and with the tariff adjustment of the fourth
period (2014-2019), sets out the operational methods to
be followed to comply with the tender invitation criteria
relating to the energy efficiency measures in territorial
districts and clarifies art. 5 on the calculation of the
redemption value, already provided with the Guidelines
on criteria and application procedures for the evaluation
of the reimbursement value of natural gas distribution
plants, which were approved by Ministerial Decree on
22nd May 2014.
•Law Decree no. 210 of 30th December 2015, converted
with amendments by Law no. 21 of 25th February 2016
“Extension of deadlines set by law”.
Article 3 of said Law Decree no. 201 of 30th December
2015 provided an extension of the deadlines for the
publication of calls for tenders in territorial districts and
the suspension of sanctions to municipalities, by adding
the following subsections 2-bis and 2-ter:
2-bis: The terms referred to art. 3, subsection 1, of
the regulation under the decree no. 226 issued on
12th November 2011 by the Minister of Economic
Development and the Minister for Relations with the
Regional Authorities and Territorial Cohesion, relating
to the non-publication of the invitation to tender set out
in annex 1 attached to said regulation, are extended by
twelve months for territorial districts in the first group,
fourteen months for those in the second group, thirteen
months for those in the third, fourth and fifth groups,
nine months for those in the sixth and seventh groups
and five months for those in the eighth group, in addition
to the extension in force on the date of enactment of the
law converting this decree.
2-ter: the following amendments were made to article
4 of Law Decree no. 69 of 21st June 2013, which was
converted, with amendment, by law no. 98 of 9th August
2013:
a) Subsection 2, the second period is replaced by the
following: «Said deadlines being expired, the Regional
Authority competent in the territorial district grants
additional six months to comply with the provisions of
said decree, after which the bidding process starts and
a commissioner ad acta is appointed, pursuant to art.
14, subsection 7, of Legislative Decree no. 164 of 23rd
May 2000. If the Regional Authority fails to appoint
said Commissioner ad acta within two months of the
deadline, the Minister for the Economic Development,
after consulting the Regional Authority, shall intervene
to launch the call for tend and appoint the Commissioner
ad acta. Any amounts anticipated by the outgoing
providers to cover bidding costs, in accordance with
art. 1, subsection 16-quarter, of law decree no. 145 of
23rd December 2013, converted with amendments by
law no. 9 of 21st February 2014, is transferred from
the awarding entity to the Commissioner ad acta within
one month of his appointment, net of the amount of
disbursements previously made for the preparation of
the tender documents.”
b) subsections 4 and 5 (sanctions for municipalities) are
repealed.
Gas distribution and metering tariffs 4th Regulatory Period (2014-2019)
By resolution 367/14, the Authority set out the new tariff
regulation for gas distribution and metering services for
2014-2019 (4th Regulatory Period).
The tariff system provides for the calculation of a
mandatory tariff, actually applied to customers being
billed, that produces actual revenues, and a reference tariff
that determines the allowed revenues of the individual
distribution operator (VRT) to cover the cost recognised,
which reflects the actual revenues for the company.
An equalisation mechanism is also provided to cover any
differences between the revenues admitted and those
actually obtained by applying the mandatory tariff.
The reference tariff comprises:
a)the operating costs, consisting mainly of costs for
outsourced services, personnel expenses and the cost
of purchased materials;
b) the depreciation of fixed assets and the invested capital
remuneration rate, calculated by multiplying the net
invested capital (NIC) by the WACC (the invested
capital remuneration rate for 2014-2015 has been set
at 6.9% for the distribution service and 7.2% for the
metering service).
Within the tariff scheme envisaged by Resolution 367/14
during 2015, by Resolution 583/2015, the Regional Authority
amended the WACC of the sector, by establishing 6.1% for
distribution and 6.6% for metering for the years 2016-2017.
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Electricity distribution
The regulatory framework for electricity distribution is
outlined in Legislative Decree 79/99, more specifically
article 9. The main measures regarding electricity
distribution were those taken by the Regulation Authority,
which in 2011 issued the Integrated Rules on the subject
of tariff regulations for the transmission, distribution,
metering and sale of energy, updated for the regulated
period 2012-2015, and the Integrated Text relating to the
tariff regulation of transmission, distribution, metering
and sale of energy, as well as the Integrated Text on the
regulation of the quality of electricity distribution and
metering services by resolutions ARG/elt 198/11 and
199/11.
Partial regulatory updates in this sector did not entailed
significant changes to the electricity distribution business
in 2015, the last year of the third regulatory period.
Regulations on operational and accounting
separation (unbundling)
With decisions no. 11/07 and 253/07, the Authority issued
the Integrated Rules on administrative and accounting
separation for companies operating in the electricity and
gas sectors.
In particular, the decision introduced obligations for
vertically integrated groups with regard to the operational
separation of activities relating to the management of
infrastructures that are essential for deregulation and the
activities carried out on the free market.
With regard to activities concerning the distribution
of natural gas and electricity, Group members Linea
Distribuzione and AEM Gestioni have complied with the
legal requirements by appointing an Independent Provider
and drawing up a Compliance Plan.
The unbundling legislation, in both functional and
accounting terms, underwent significant changes during
the year 2015.
By Resolution 231/2014/R/com of 23rd May 2014, the
Italian Regulatory Authority for Electricity Gas and Water
approved the Integrated Text on Authority provisions
for obligations as regards the accounting separation
(unbundling) for companies operating in the electricity
and gas sectors and disclosure obligations (referred to as
TIUC).
In the light of the innovations contained in the regulatory
framework and on the basis of new regulatory and
improvement requirements relating to the quality of
accounting separation information, the Regulatory
Authority:
•reviewed the structure and contents of operations and
departments of electricity and gas sectors;
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•simplified disclosure obligations regarding accounting
separation;
•changes some general provisions.
By Resolution 296/2015/R/com of 22nd June 2015, the
Regulatory Authority introduced the Integrated Text
on Functional Unbundling (TIUF), which reformed,
supplemented and extended the previous regulations,
by implementing EU Directives 2009/72/EC and 2009/73/
EC and Legislative Decree no. 93/11, for operators of the
electricity and natural gas sector.
The new TIUF is much more complex than the previous
TIU, and introduces regulations that:
• prescribed new obligations for gas distributors with over
100,000 connection points and all electricity distributors,
regardless of their size;
•confirmed and redefined the requirements for gas
distributors with less than 100,000 connection points,
by granting administrative simplifications;
•confirmed and redefined the obligations concerning the
separation of brand and communication policies;
•redefined the treatment of commercially sensitive
information.
Electricity production
Noteworthy is art. 1 of Legislative Decree no. 145/2013,
converted with amendments by law no. 9/2014 and
Ministerial of Economic Development decree of 6th
November 2014 on incentives recognised on electricity
generated by existing renewable sources.
The environmental sector
The reference standards in the waste sector are the
Community “self-executing” measures and the national
measures implementing community directives, at an
international level, and Part IV of Italian Legislative Decree
no. 152/06 as amended (known as the Environmental
Code), which expressly repealed Legislative Decree no.
22/97 (Ronchi Decree) at a national level.
Noteworthy is Legislative Decree no. 36/2003 governing
landfills and Legislative Decree no. 133/2005 regulating
waste incineration and co-incineration.
Legislative Decree no. 152/06 (Environmental Code)
provided for a rationalisation of the regulatory system on
waste management.
With regard to waste and its specific relevance to this
document, the Environmental Code mainly provides for the
following: i) definition of waste (cfr. art. 183 of Legislative
Decree no. 152/2006 and Annex A in particular) and the
distinction between urban and special waste; ii) rules
governing waste management (by defining the role of the
State and local governments); iii) the authorisation regime
(cfr. art. 208 laying down the rules of the single authorisation
for new waste disposal and recycling facilities), and in
particular the integrated environmental authorisation
rules (art. 213); iv) the simplified authorisation procedures
(cfr. arts. 215 and 216); v) the waste monitoring system;
vi) the waste separate collection rules (art. 183, lett. p));
vii) the administrative sanctions (arts. 255 et seq. as part
of the general provision of national law no. 689/1981).
Since its enactment, Legislative Decree 152/06 has
been subject to a series of amendments including those
introduced in 2014 by Decree Law no. 133/2014 (the socalled “Unlock Italy” decree) and the relevant Conversion
Law no. 164/2014.
Decree Law 133/2014 (Sblocca Italia), as amended by Law
no. 164/2014, introduced measures regarding integrated
water services and the environmental impact assessment
(VIA), and also new regulations regarding the remediation
of contaminated sites, by amending Part III of Legislative
Decree no. 152/2006 on the protection of water, Part II on
environmental impact assessment and, with Legislative
Decree 163/2006 (Tender Law), revised the rules on the
remediation of contaminated sites.
Lastly, as a result of the effect of Decree Law 91 of
24th June 2014 (the so-called “Competitiveness Decree
Law”) and Conversion Law 116, which was enacted on
21st August 2014, new rules were introduced regarding
the waste classification procedure, with the provision of
new instructions - in force since February 2015 - for the
assignment of CER codes and determination of the waste
hazard level, which were introduced at the start of Annex
D, Part IV, of Legislative Decree 152/2006.
For the Lombardy Regional Authority, which chose not to
set up the Area Authority, the awarding of urban waste
management contracts is also regulated by Regional Law
no. 26/2003 as amended. This regulation stipulates that
contracts for these services must be awarded by prior call
for public tender or procedures compatible with national
and EU provisions, issued by individual or joint local
authorities.
By law no. 221 of 28th December 2015, covering
“Provisions on the environment to promote the green
economy and to restrict the excessive use of natural
resources” (so-called “Collegato Ambientale” published
on Italian Official Gazette no. 13 of 18th January 2016,
a series of general measures were envisaged for the
protection of nature and the promotion of sustainable
development, environmental assessments, energy, green
procurement, waste management and reclamation, soil
conservation and water resources with an impact on
various aspects of environmental legislation and the green
economy, focusing on the simplification and promotion of
the reuse of resources and environmental sustainability.
Further changes were introduced as a result of Decree
Law no. 210 of 30th December 2015, covering “Extension
of deadlines set by law” (so-called “Milleproroghe”),
containing art. 11-bis (inserted by Conversion Law no. 21
of 25th February 2016), which envisaged the extension of
the deadlines for environmental issues.
The main updates by the Regulatory Authority
are detailed here below by business unit.
Gas distribution
By implementing the provisions of Legislative Decree
no. 28/11, in 2015 the Regulatory Authority introduced
connections of bio-methane plants to natural gas networks
and related injections. By Resolution 46/2015/R/
gas, the Regulatory Authority defined the directives to
guarantee safety and technical efficiency in gas network
management, in compliance with transparent procedures
and cost-effectiveness of the connections. Resolution
208/2015/R/gas and following Resolution 210/2015/R/
gas envisage incentive coverage and the market process
rules governing the injection of bio-methane into gas
distribution networks, respectively.
By Resolution 117/2015/R/gas, the Regulatory Authority
introduced a comprehensive reform regarding natural gas
metering, which became gradually effective throughout
2015, with the last effective date on 1st January 2016. The
resolution establishes amendments and additions to the
existing rules as regards metering frequency, disclosure of
the values read and any adjustments made by the distribution
companies; changes the method of self-reading the nonavailability of actual measurement data and establishes
new detection procedures and timing and the availability
of switching reading. For these new commitments, no
remuneration is provided by the tariff system.
With reference to tariff regulation, by Resolution
280/2015/R/gas, the Regulatory Authority introduced
changes to the rules regarding the recognition of costs
relating to remote-reading/remote management of meters
and concentrators, by establishing the confirmation of the
pre-existing regulation on the subject and extending it until
2016, and the possibility, also for 2016, for distributors to
submit an application for recognition of the costs sustained
if they have opted for buy-type solutions.
As part of the reform process associated with the
situation of arrears on the part of end users, which has
occurred since the implementation of Resolution ARG/gas
99/11, by Resolution 258/2015/R/com, the Regulatory
Authority redefined the responsibilities of the distributor,
by determining the compensation for the user in the
29
event of failure on the part of the distribution company to
comply with the terms and conditions envisaged by the
regulation and the distribution company’s obligation to
discontinue billing or cancel any bills issued with reference
to the points for which the company did discontinued
or interrupted the supply within the term provided by
the regulation until the date of implementation of the
action. Resolution 258/2015/R/com also made substantial
changes to long-established procedure (Resolution
138/04) regarding supplier switching, in view, among
other things, of protecting the sales companies against the
risk of acquiring potentially defaulting clients.
By Resolution 296/2015/R/com of 22nd June 2015,
the Regulatory Authority introduced the Integrated
Text on Functional Unbundling (TIUF), which reformed,
supplemented and extended the previous regulations,
by implementing EU Directives 2009/72/EC and 2009/73/
EC and Legislative Decree no. 93/11, for operators of the
electricity and natural gas sector. The new TIUF is much
more complex than the previous TIU, and introduces
regulations that:
•redefined and extended the scope of application of the
standard;
•prescribed new obligations for gas distributors with over
100,000 connection points and all electricity distributors,
regardless of their size;
•confirmed and redefined the requirements for gas
distributors with less than 100,000 connection points,
by granting administrative simplifications;
•confirmed and redefined the obligations concerning the
separation of brand and communication policies;
•redefined the treatment of commercially sensitive
information.
In 2015, the Regulatory Authority launched the first
implementations of the Integrated Information System
(IIS) in the natural gas sector. By Resolution 418/2015/R/
com, the Regulatory Authority confirmed the obligation,
effective from 2016, on the part of the distributor to
communicate to the IIS the results of the switching
procedures according to stringent deadlines and, in the
event of failure to meet said deadlines, the automatic
compensation to the seller.
By Resolution 554/2015/R/gas, covering provisions on
the obligation on the part of suppliers to install gas smart
meters and amendments and additions to RTDG, the
Regulatory Authority updated:
•the plan covering the use of smart gas meters, previously
defined by Resolution 631/2013/R/gas;
•the method for calculating the penalties levied against the
distribution companies in the event of non-compliance
with the installation and user of smart meters.
30
Taking into account Resolutions 597/2014/R/com and
367/2014/R/gas (RTDG), among other things, the
Regulatory Authority issued Resolution 583/2015/R/
com, which provides for the approval of the criteria for the
determination and updating of the remuneration rate of the
capital invested for infrastructural services in the electricity
and gas sectors for the period 2016-2021 (TIWACC 20162021) and the establishment of a regulatory period of the
WACC (PWACC) divided into sub-periods, each lasting
three years and consequent adjustments to the RTFG. The
measure also defined the WACC values referring to the
gas distribution and metering activities for each year in
the 2016-2018 period, envisaging the possibility for the
specific parameters used by the Regulatory Authority in
defining the WACC value to be modified when the tariff
regulation will be revised.
Compared to the values defined in the RTDG in 20142015, there has been a reduction of the value of the
WACC, which decreased from 6.9% to 6.1% in the case
of gas distribution and from 7.2% to 6.6% in the case of
gas metering.
Electricity retail market
By Resolution 268/2015/R/eel, the Regulatory Authority
approved the first provisions relating the Grid Code (CRDE)
for the electricity transport service in order to regulate
the methods for the management of relations between
distribution companies and transport service users.
The CRDE was subject to partial negotiation. The
Regulatory Authority actually restricted the scope to:
•contractual guarantees;
•billing and payment of the shipping service.
Below is a list of recent normative rules adopted by the
Regulatory Authority for the Electricity Distribution sector.
In 2015 the Regulatory Authority consolidated the
application of the features of the Integrated Information
System (IIS) in the electricity sector. By Resolution
402/2015/R/eel, the Regulatory Authority introduced
the experimentation concerning the metering data
management process for points of delivery (POD) not
processed on a hourly basis, starting from January 2016
data, made available in February 2016. By Resolution
419/2015/R/eel, the Regulatory Authority has definitively
introduced the process for acquiring the ownership of an
active point of delivery on the part of an end client (title
transfer), already governed by Resolution 398/2014/R/
eel, given the positive results obtained in the previous
experimentation in April-July 2015. The Regulatory
Authority then extended the contents of the Official Central
Register (Resolution 628/2015/R/eel), by changing the
data update methods in order to simplify the exchange of
information and facilitate the retail market reform process.
As stated for the natural gas distribution service,
Resolution 583/2015/R/com provides for the approval
of the criteria for the determination and updating of the
remuneration rate of the capital invested for infrastructural
services in the electricity sector for the period 20162021 (TIWACC 2016-2021). By the following Resolution
654/2015/R/eel, the Regulatory Authority defined the
WACC values for the electricity distribution and metering
service at 5.6% for each year in the 1016-2018 period;
the WACC value decreased/increased compared to that
applied in 2014-2015 (6.4%).
Gas and electricity sale
As already mentioned in the section regarding the
novelties in the natural gas distribution service, Resolution
258/2015/R/com has introduced further interventions in
the electricity and natural gas retail markets, by modifying
the switching times in the natural gas sector.
This resolution introduced new precautionary measures
to reinforce the current discipline to combat arrears
and complemented existing ones. The most important
aspect is the introduction of conditioned switching, which
allows the provider, after checking the data disclosed
by the distributor, to refrain from acquiring a client with
accrued arrears even with another provider. Resolution
487/2015/R/eel provides to update the discipline with the
aid of the Integrated Information System (IIS) in the case
of active delivery points, together with the management of
contract termination and activation of last resort services.
The purpose of the resolution is to achieve shorter
lead times in switch management, in order to facilitate
competition in the free market.
By Resolution 269/2015/R/com, the Regulatory
Authority introduced additional provisions to adapt the
code of business conduct and regulation to Legislative
Decree no. 21/2014.
The resolution has further specified that the right to
reconsider contracts stipulated outside business premises
must always be guaranteed, even when the client has
declared that he does not with to make use of this right
and the relevant to be borne by the client if he exercise
the right of reconsideration despite request for execution
of the contract prior to expiration of the term allowed for
reconsideration.
The Regulation on Energy Market Integrity and
Transparency (REMIT) requires the operators to disclose
the following, after the registration, according to specific
data and information:
•new contracts;
•changes to already reported contracts;
•termination of already reported contracts.
In order to implement the Bill 2.0 reform process, which
was launched in 2014 (Res. 501/2014/R/com), in 2015 the
Regulatory Authority issued 3 separate provisions aimed
to:
•approve the Glossary of terms and definition of the
aggregation level of amounts invoiced to clients supplied
under the protection scheme (Res. 200/2015/R/com);
•approve the Guide to Reading and definition of the
concise bill form (Res. 330/2015/R/com);
•quantify the discount for the bills in electronic form
for clients supplied under protection schemes (Res.
610/2015/R/com).
As for the updating of the value of the Retail Sale Cost
(QVD) component, by Resolution 575/2015/R/gas, in
connection with the hypotheses to re-modulate the QVD
put forward in DCO 449/2015/R/gas, the Regulatory
Authority has opted to maintain the current structure,
effective from 1st January 2016, namely:
•one QVD at a national level (no geographical
differentiation);
•QVD consisting of a variable component and a fixed
component, the latter differentiated by type of redelivery
point (PDR);
with a slight increase of the fixed component:
•Domestic PDR from 57.76 €/PDR/year to 58.83 €/PDR/
year;
•Condos domestic PDR from 75.86 €/PDR/year to 77,26
€/PDR/year.
The variable component was maintained at the current
levels (0.7946 €/Sm3) for all types of PDR entitled to
the protection service, while the new values in the fixed
rate fees were increased compared to those that the
Regulatory Authority had prospected during the recent
consultation (DCO 449/2015/R/gas).
As to the frequency regarding the update of the QVD,
the Regulatory Authority has amended art. 7.2 TIVG, as
it expects a possible yearly update effective on the 1st
January each year, with reference among other things to
costs other than arrears (for which current updating was
expected every two years).
In 2015, the Regulatory Authority passed resolutions on
the Reform of grid tariffs and tariff components to cover
general system fees for electricity domestic clients.
Simultaneous update of expenditure offsets for domestic
clients in financial hardship. Resolution 582/2015/R/eel
(taking into account also Legislative Decree no. 102/2014,
Resolution 205/2014/R/eel and Resolution 402/2013/R/
com - TIBEG) provided the following:
•the introduction from 1st January 2016 of the new tariff
structure for network services to domestic clients,
31
with an impact on progressive reduction according to
consumption and an increase in fixed rates;
•effective from 1st January 2017, the complete
overcoming of the tariff progressivity for network
services for domestic clients;
•the maintenance of the current differentiation between
resident and non-resident clients and not as regards
to system fees, by introducing here, too, a process
aimed at overcoming progressivity, with effect from 1st
January 2017;
•the maintenance of a high level of consumption, so as to
encourage virtuous behaviours on the part of clients;
•the increase from January 2017 of contractually
committable power levels and simultaneous zeroing (at
least for 24 months) of connection fees and costs for
changes in contractually committable power levels so
as to encourage a more careful and conscious choice;
•the updating of values associated with social bonuses
already from 2016 (not lower than those of 2015) so as
to contain distorting effects and needy clients, not acting
on the value of the AS component;
•the extension until 31st December 2016 of the deadline
to subscribe to tariff experimentation by the end users
who use heat pumps as the main heating system in the
house of residence;
•the start of a consultation phase in view of extending the
experimentation of progressive D1-pdc tariffs (D1 - heat
pumps).
The approval of the energy client Conciliation Service
“bridge” project and the associated 2016 budget
concerning the continuity and first 2017-2019 project
preparatory activities was the subject matter of Resolution
598/2015/E/com, which confirms the need to ensure,
via the Conciliation Service, an efficient procedure for the
amicable settlement of disputes with end user customers.
The resolution approved the “bridge” project proposal,
which was sent by the Single Buyer to the Authority, to
continue in 2016 the Conciliation Service and preparatory
activities associated with the development of the 20172019 three-year plan. As part of this proposal, the Single
Buyer identified the following:
•for 2016 a 50% increase in the input volumes to the
Conciliation Service compared to the end-of-2015
projection and adaptation to procedure activation
methods other than the telematic (offline) method;
•a revision of the IT platform in 2016, so as to have it
operational from 1st January 2017.
Resolutions common to services
By Resolution 377/2015/R/com, the Regulatory
Authority introduced changes to the conventional loss
32
percentage factors on distribution grids applicable to
2016-2019, and the related equalisation mechanisms.
With reference to the fact the loss factors, the resolution
confirmed those referring to low-voltage supplies
(10.4%) and high and very high voltage supplies (0.7%
for voltages up to 380kV; 1.1% for voltages up to 220kV;
1.8% for voltages not exceeding 150kV). The conventional
valorisation of the factor relating to medium-voltage
supplies remains unchanged, with 3.8% compared to the
previous 4%.
By Resolution 593/2015/R/efr, the Regulatory
Authority approved the proposal for 2016 put forward by
GME, the Italian electricity market operator, regarding the
confirmation of the fees that electricity vendors, operating
in the market of Guarantees of Origin (GO) are required
to pay to GME for transactions ended. The Resolution
confirms the fee of €0.004, already envisaged in 2015,
for each GO transacted on the regulated market of GOs
(M-GOs) or registered bilaterally on the platform of GO
(PB-GO) bilateral exchanges, and the fee of €0.1, already
envisaged in 2015, for each TEE transacted on the M-TEE
or the covered by bilateral transactions entered into with
the TEE Register.
also approved the Integrated Text on the output-based
regulation of electricity transmission and metering (new
TIQE) for the 2016-2023 regulatory period. In particular,
it established for the 2012-2015 TIQE to continue to be
applied as necessary to implement the 1016-2023 TIQE
and to define cost recognition for 2015, regarding the
regulation of the reward/penalty system of the duration
and number of interruptions without notice, the individual
regulation of MT users, the regulation of prolonged or
extended interruptions, to be intended repealed from 1st
January 2017.
Resolution 653/2015/R/eel, regarding the Integrated
Text on the output-based regulation of the electricity
transmission service for the 2016-2023 regulatory period,
foresees, as far as distribution companies are concerned,
a mitigation service supplied by the distribution
companies following power outage, which does not
represent relevant accidents, or voltage asymmetry
conditions following a phase loss on the National
Transmission Grid (NTG) which affect VHV/MV or HV/MV
transformation plants directly connected to the National
Transmission Grid (NTG).
By Resolution 654/2015/R/eel on tariff regulation for the
transmission, distribution and measurement services for
the period 2016-2019, the Regulatory Authority approved,
effective from 1st January 2016, the new Integrated Text
regarding:
•EE transmission and distribution (TIT);
•EE metering (TIME);
•EE connections (TIC).
In all three cases, partial changes were made to the
former regulation.
By Resolution 659/2015/R/eel, the Regulatory
Authority updated the fees of energy marketing
components effective from 1st January 2016 (PCV, RCV
and DIPSbt). It also amended TIV7 provisions addressing
the compensation mechanism for end user customers’
arrears, transitionally until 31st December 2015, and
introduced provisions regarding the transitional operating
cost adjustment mechanism for the years 2014 and 2015.
As regards to the updating of marketing components,
including those downstream the Consultation Process
started with D.CO. 514/2015/R/eel, the Regulatory
Authority:
•retained a single national value for the PCV, though
divided by type of customer; compared to D.CO.’s
proposals, the Regulatory Authority refined its
assessments, taking into account a revision of the
unpaid ratio, the recognition of the NIC and an alignment
with the customer acquisition and marketing costs
recognised in defining the QVD8 component for natural
gas.
•confirmed the geographical differentiation currently
envisaged in connection with the RCV component, by
introducing a further dimensional differentiation due to
the number of PODs and/or presence of corporation
separation.
In implementing EU regulation 1227/2011 on
Wholesale Energy Market Integrity and Transparency
(REMIT), the Regulatory Authority established, through
resolution 86/2015/E/com, the Italian Register of Market
Operators, namely those finalising electricity and natural
gas transactions subject to reporting to the European
Agency for the Cooperation of Energy Regulators (ACER).
The deadline for signing in the Register was established:
•on 7th October 2015 for operators active on regulated
wholesale electricity and natural gas markets;
•on 7th April 2016 for operators that are non-active on
regulated markets but procure/trade electricity and
natural gas under over-the-counter (OTC) bilateral
contracts.
The registration requirement does not apply to operators
carrying out transactions only in connection with:
•contracts for the physical delivery of electricity produced
by a plant or production unit with a capacity less than
7
8
or equal to 10MW or several plants or production units
with an overall capacity less than or equal to 10MW;
•contracts for the physical supply of natural gas produced
by a single production plant with a production capacity
less than or equal to 20MW.
Resolution 620/2015/E/com established the list of ADR
(Alternative Dispute Resolution) agencies, pursuant to art.
141-decies of the Consumer Code, and approval of the
rules governing initial implementation.
It also established, pursuant to the Consumer Code, the list
of ADR agencies delegated to handle voluntary amicable
settlement proceedings of domestic and cross-border
disputes between consumers and professionals resident
in the European Union, subject to provisions regarding the
mandatory requirement of making attempts to reach an
amicable settlement as condition of admissibility of legal
proceedings.
The Regulatory Authority approved the relevant “Initial
implementation rule” and amended the rule on Energy
Customer Conciliation Service (Res. 260/2012/E/com),
according to which the domestic end user customer can
make a request to activate the offline procedure, by fax,
mail or otherwise, subject to online processing.
The new rule also requires the Energy Customer
Conciliation Service to be entered into the ADR list.
finally amended the rules previously introduced by
Resolution 286/2015/R/eel, the effective date of which
had already been postponed by Resolution 447/2015/R/
eel to 1st January 2016, by providing, with reference to
the contractual guarantees that the transport user has
to issue in favour of the distributor.
District heating
In accordance with the performance of regulation,
control and enforcement tasks regarding district
heating, district cooling and domestic hot water
activities assigned by Legislative Decree no. 102/14, the
Regulatory Authority started the first forms of regulation
in this regard in 2015.
By Resolution 19/2015/R/tlr, the Regulatory Authority
first identified, after the recognition performed in
accordance with Resolution 411/2014/R/com, the priority
areas of intervention, in particular:
•the methods used by the network operators to publicly
disclose the prices for the supply of heat, connection,
disconnection and ancillary equipment;
•the criteria used to determine the connection tariffs of
TIV → Testo Integrato delle Attività di Vendita - Integrated Text on Sales Activities
QVD → The portion representing sales costs for supplies to the retail market.
33
utilities to the network and the procedures to be followed
in the exercise of the right of disconnection;
•the safety, continuity and commercial quality of the
service, including metering equipment and systems;
•billing of consumption and billing information;
•metering and accounting of consumption.
By Resolution 339/2015/R/tlr, the Regulatory Authority
then established mandatory disclosure of registration
in the Operators Master File and the transmission of
information and data relating to district heating and
cooling infrastructures, and, by Resolution 578/2015/R/
tlr, started to gather data and information on prices
charged to users.
Responsible management for sustainability
Number of employees
As at 31st December 2015 the Group’s employees totalled
1.282, A breakdown, compared to 31st December 2014, is
given in the table below, by position.
POSITION
Executives and managers
White-collar staff
Blue-collar staff
Total
31.12.2015
31.12.2014
26
600
656
1,282
27
587
659
1,273
and by the national collective bargaining agreement applied:
CCNL
National Collective Bargaining Agreements
Executives Industry
Executives Confservizi
Gas-Water Sector
Federambiente - Environmental Services
FISE Urban Hygiene - Environmental Services
Electricians
Public transport workers
Road haulage
Telecommunications
Metalworkers (Franciacorta Rinnovabili until 31.12.2015, then National Labour Agreement
- Gas/Water)
Total
34
Employees as at
31st December 2015
4
22
500
399
131
156
12
4
46
8
1,282
Since 1st January 2016 Linea Energia has acquired 8
employees from Franciacorta Rinnovabili, following the
merger by incorporation: the consolidated cost of labour
and the average number of employees for 2015 take into
account the relevant cost starting from 1st July 2015, the
date on which the Group acquired control of the Company.
The Group’s average number of employees (excluding
resources on leave, replacements of absent workers with
the right to retain their post, and including secondments
from companies outside the Group) is 1,269.58 against
1.273.92 in 2014, a decrease of 0.34%.
Personnel expenses
Consolidated personnel expenses calculated according to
IAS principles for the LGH Group are given in the table
below.
(€,000)
31.12.2015
Personnel expenses
Cost of sales personnel
TOTAL PERSONNEL EXPENSES
Personnel expenses (employees and personnel hired
under a staff-leasing agreement) is 2015 is basically in
line with those in 2014, with a slight decrease of 0.04%.
Expenses for employees (not counting personnel
hired under a staff-leasing agreement) totalled €65,710
thousand in 2015, compared to €65,562 thousand in
2014, with a 0.23% increase, against a 0.34% decrease in
the average number of employees.
Average per capita personnel cost in 2015 increased
by 0.57 % vs 2014, and totalled €51,757.
This increase in the cost of personnel is basically associated
with the normal remuneration dynamics, namely:
•the expected increase associated with the renewal of
the national labour agreement for the Gas-Water sector,
effective since January 2015 and July 2015
•the expected increase associated with the renewal of
the national labour agreement for the electricity sector,
effective since July 2015 and December 2015
•one-off contract allocations for 2015 arrears in relation
to Federambiente and Fise national labour agreements,
both expired, as a result of contract renewal negotiations
•seniority annual increases
•normal remuneration and incentive policy
It should also be noted that efficient turnover measures,
including the hiring of junior resources to cover retirement
leaves and a few employees hired by taking advantages
of the jobs act benefits, contributed to a reduction of the
yearly increase of personnel expenses, usually in the
1.5%-2% range.
31.12.2014
65,267
1,989
67,256
67,299
67,299
Organisation chart
In December 2015, the Group’s organisational structure
encompasses, alongside with Business Operating
Companies (SOB - Società Operative di Business) and
the Local Operating Companies (SOT - Società Operative
Territoriali), the holding company LGH S.p.A., which
provides staff services in favour of the Group, by setting
out and implementing management and coordination
rules governing the various processes handled.
In the course of 2015, some extraordinary transactions
have been implemented since 1st July 2015 to complement
the Group’s structure so as to represent it by business
area, thereby overcoming the SOT model definitively, and
more specifically:
•the transfer of the urban hygiene business unit of Astem
Gestioni and Aem Gestioni to Linea Gestioni;
•the transfer of Astem Gestioni’s district heating business
unit to Aem Gestioni, which simultaneously changed its
name to Linea Reti e Impianti
•the transfer of Aem Gestioni’s electricity captive market
customer management business unit to Linea Più
Moreover, always effective from 1st July 2015, Linea Più
has acquired Alma Energy Trading’s domestic customer
gas sales business unit.
Since 1st January 2016 Linea Più has acquired 8 employees
from Franciacorta Rinnovabili, following the merger by
incorporation.
Trade unions relations
Relations with Trade Unions are centralised and managed
35
by the Personnel & Organisation division at LGH, in
accordance with the Group’s Protocol on industrial
relations issued on 18th April 2007. This protocol, which
was one of the first agreements signed in Italy in the
utilities sector, establishes the different relational levels
for the Group, the Business Operating Companies and
the Local Operating Companies, thus creating clear rules
in the identification of the subjects entitled to handle
relations with trade unions in the Group and their tasks.
The Gas-Water National Collective Bargaining Agreement
is adopted by LGH and that applicable in the industry is
adopted by the Business Companies for newly hired staff
members.
Relations with the trade unions continued smoothly within
the whole Group: the three-year 2014-2016 performance
bonus agreement was implemented in the group
companies; the availability agreement in the gas-water
sector was reviewed following the renewal of the National
Collective Bargaining Agreement; all intercompany
personnel transfers are examined and handled under joint
agreement, effective from 1st July 2015.
Human Capital: personnel management
and development systems
All the processes that have an impact on the human
capital, personnel recruitment and selection, training,
labour relationships, personnel assessment, incentive
and development policies and personnel budget are
coordinated by the holding company’s Personnel &
Organisation department, in compliance with the groupwide rules for personnel management and coordination.
In line with the Group’s integrated Quality, Safety and
Environmental policy and the QAS principles, specific
standardised procedures and templates have been
defined for each process. Personnel are recruited and
selected in accordance with the new regulation; further
focus was placed on the processes put in place to better
respond to objectivity requirements in a labour market
characterised by considerable uncertainty, in accordance
with the provisions of the code of ethics.
Personnel is administered centrally by the LGH’s
Personnel and Organisation department for all companies
in the group. All employees have access to a dedicated
web portal, where pay slips can be viewed, all internal
information and communications are posted and tax
documentation is filed. A management report showing
the main personnel indicators and indices is automatically
uploaded every month to the Group’s software system.
Much emphasis was placed on encouraging intra-group
mobility to meet internal and organisational requirements,
through various means, including the internal job-posting
36
system linked to the dedicated employee portal, thus
allowing all employees to view and apply for current inhouse openings.
In 2015 the Group Talent Management project continued;
13 of the resources involved, for whom the assessment
was made in 2014, attended either an external training
course or an individual coaching programme, the aim being
to strengthen some basic skills. Most of the programmes
were funded by the Group’s inter-professional fund.
Charter of LGH key principles
On the initiative of the HR Department and in agreement
with the management of all the Group companies, LGH
has decided to launch an initiative aiming at putting
together the DNA of the individual companies and
redefine and harmonize the vision, mission and establish
the new corporate values within the LGH Group. Mission,
Vision and Corporate Values are the key principles in all
businesses, the guidelines that direct the strategy and
behaviour needed to achieve the set goals. The clarity
with which they are represented, communicated and
witnessed is of great importance to establish the identity
of the Group and channel the positive energies at a
company-wide level, in the belief that the possession of
shared key principles allow the Group to inspire correct
corporate culture for the satisfaction of customers and
stakeholders. This process was completed in 2014 and the
new Charter of Key Principles, including Mission, Vision
and Corporate Values was posted in all Group’s locations.
A series of initiative regarding internal communication,
engagement and the strengthening of Group identity has
been implemented in support of the Charter of LGH Key
Principles, with the aim of encouraging useful change
management to accompany the evolution of the Group.
As part of this process is the second edition of the training
course entitled “Meet the Change”, which was held in
June at Linea Energia’s wood biomass plant in Cremona,
an event organized as a regular system of direct alignment
to facilitate engagement of all the managers within the
Group, and the launch of Noi Lgh, the Group’s online
community fed by specially-trained editor colleagues, the
aim being to make the change programme known, share
information on projects and results, facilitate integration
and improve reciprocal knowledge. Last but not least, the
Group’s Christmas celebration event, which gathered
all employees at one location, was held in 2015 as well.
2015 also saw the launch of the Value Prize, an initiative
intended to evaluate and award the best projects and
concrete contributions from employees who best
represent our values, and the Engagement Survey,
which measures the degree of “engagement” of LGH
colleagues, compared to the company to which they
belong and the Group.
Training
Training plays a key role at LGH as it contributes to the
growth of the human capital, ensures the updating and
professional growth of the employees, and it provides
the tools to analyse and improve personnel skills and
organisation. The entire process has been managed at a
Group level since 2008 and is constantly monitored - from
planning to reporting and evaluation of effectiveness - to
make it more efficient and appropriate to meet the needs
of the Group.
In addition to specific training for each function, specific
cross-training schemes were implemented during the
year in relation to technical, managerial and safety issues.
In 2015 cross-training was provided also via the Moodle
e-learning platform.
Some of the above training courses were subsidised
by Fondo Interprofessionale Formazienda, to which the
Group subscribes.
The following tables show the number of hours of training
in 2015 for all companies in the Group.
Overall training hours
HOURS OF
IN-HOUSE TRAINING
(E-LEARNING INCLUDED)
HOURS OF
EXTERNALLEARNING
TOTAL HOURS
(I + EL + E)
NO. OF PARTICIPANTS
2015
6,280
7,511
13,791
1,588
Number of training hours per capita
2015
2014
TOTAL HOURS
TOTAL
AVERAGE
NO. OF
EMPLOYEES
AVERAGE
HOURS PER
CAPITA
13,791
1,266
11
TOTAL HOURS
TOTAL
AVERAGE
NO. OF
EMPLOYEES
AVERAGE
HOURS PER
CAPITA
12,097
1,253
10
The table below contains a breakdown of training hours
by area of intervention.
AREA OF INTERVENTION
Quality and safety training
Managerial training
Technical training
Normative training
Computer science/language training
TOTAL
HOURS
3,676
525
5,110
1,335
3,146
13,792
37
Quality, Safety and the Environment
Operations in 2015 in this field focused on the
harmonisation of organisational practices and structures.
Investments were aimed at improving specific skills.
The Parent Company’s QSE staff maintained the
regulatory supervision and provided advice to all Group
companies.
LGH completed its 2015 Sustainability Report as a reporting
tool to provide its internal and external stakeholders with
useful information regarding the economic, environmental
and social performance of the company. Information and
data are reported as at 31st December 2015.
CERTIFICATIONS
The main activities in 2015 related to certifications by
geographical area were as follows.
Denomination
Linea Reti Impianti
Malagnino landfill
Linea Reti Impianti
Linea Com S.r.l.
Linea Group Holding
Cremona
Maintenance of the following management system
certifications was guaranteed for the Cremona area.
The management systems certified for urban hygiene,
co-generation and district heating operations were
transferred from Linea Reti e Impianti S.r.l. to Linea
Gestioni S.r.l. and from Astem Gestioni S.r.l. to Linea Reti
e Impianti S.r.l.
In addition to maintaining OHSAS 18001 and UNI EN ISO
9001 certification, Linea Group Holding S.p.A. obtained
accreditation from the Lombardy Regional Authority for
training activities and the new ISO 3001 certification for
road safety.
With the accreditation it was possible to internalize
numerous training activities, namely those concerning
safety and management systems.
Reference system
Environmental Management System
Quality and Occupational Health &
Safety Management System
Quality Management System for Training
Activities only
Road Safety Management System
Reference standard
UNI EN ISO 14001:2004
CE 1221:2009 (EMAS) Regulation
UNI EN ISO 9001:2008
OHSAS 18001:2007
OHSAS 18001:2007
OHSAS 18001:2007
ISO 39011: 2012
NB: Audits carried out by the Certification Body pursuant to Directive 2003/87/EC on Emission Trading for the Cremona and Lodi co-generation plant must the
added to the certifications listed in the table above.
38
Lodi
The companies in the municipality of Lodi maintained all
three 9001, 14001 and OHSAS 18001 certifications.
Denomination
The certifications referring to Astem Gestioni S.r.l.’s splitoff business units were transferred to Linea Reti e Impianti
S.r.l. and Linea Gestioni S.r.l.
Reference system
Reference standard
Integrated Quality, Occupational Health &
Safety and Environmental Management
System
UNI EN ISO 14001:2004
OHSAS 18001:2007
Pavia
Maintenance of the following management system
certifications was guaranteed for the Pavia area as well.
Denomination
Linea Più
Lomellina Energia
Reference system
Reference standard
System
Quality and Environmental Management
System
UNI EN ISO 14001:2004
Reference system
Reference standard
System
UNI EN ISO 14001:2004
OHSAS 18001:2007
EC regulation1221/2009 (EMAS)
OHSAS 18001:2007
Crema
Denomination
For Linea Gestioni S.r.l. the certificate was renewed in
2015 and extended to Urban and Hygiene activities in
Cremona and Lodi.
39
Rovato
The maintenance, extension and updating of the certified
management systems were guaranteed for the Rovato
area.
The integration of the management systems of Linea
Denomination
Ambiente S.r.l. and Linea Energia S.p.A. with those
acquired from Ecolevante S.p.A. and LGH Rinnovabili
S.r.l., following incorporation by merger, was also
completed.
Reference system
Reference standard
System
System
Integrated Occupational Health & Safety
and Environmental Management System
UNI EN ISO 14001:2004
OHSAS 18001:2007
UNI EN ISO 14001:2004
OHSAS 18001:2007
UNI EN ISO 14001:2004
OHSAS 18001:2007
SAFETY
The 2015 injury figures for the companies within the scope
of consolidation are detailed in the table below.
INJURIES
Frequency index
(no. of injuries/total hours worked x 1,000,000)
Severity index
(total days of absence/ total hours worked x 1000)
Injury incidence
(no. of injuries/average workforce x 1000)
Average duration (days of absence/no. of injuries)
2013
2014
29.58
28.91
27.39
0.81
0.83
0.74
47.15
47.15
46.51
27.23
28.60
27.12
N.B. The calculation methods are as follows:
Frequency index = number of in-house accidents / total number of hours worked in house * 1,000,000
Severity index = total number of days of absence / total number of hours worked in house* 1,000
40
2015
QUALITY
In 2015 LGH conducted the now familiar Customer
Satisfaction survey related to the main services provided
in the reference geographic areas.
The survey involved over 8,000 interviews to the users
of the main services provided by the companies of the
Group. The survey sample taken into consideration varied
SERVICE
in terms of type of service and reference area, and
assured uniform quantitative distribution of the interviews
in different services and areas.
Like in previous years, the 2015 results confirmed
the positive trend in line with the national and regional
standards.
NATIONAL
STANDARD
TOTAL LGH
HYGIENE
GAS DISTRIBUTION
ENERGY DISTRIBUTION
87.3
95.3
96.7
LOMBARDY
STANDARD
83.7
94.8
92.8
87.4
96.9
93.1
Corporate risk management
The LGH Group is in the process of identifying and
implementing an integrated Enterprise Risk Management
(ERM) model that meets the specificity of the business in
which the Group operates. This model aims to achieve a
thorough and comprehensive view of the main corporate
risks, by developing increased awareness in order to
strengthen the Internal Control and Risk Management
System (ICRMS), and make it suitable for transversal
applications.
Risk scenarios are evaluated with reference to the relevant
areas since the in-house control system must be perfectly
correlated with the four categories of business objectives
(operational, strategic, compliance and financial/reporting)
identified by the ERM CoSO Report framework indicated
as reference best practice for the architecture of control
systems at both a national and international level.
The Group is exposed to various types of risk associated
with the above business objectives:
The Governance model implemented by the Group in
connection with corporate risks involves the following:
•the Board of Directors plays a role in guiding and
assessing the adequacy of the internal risk control and
management system;
•the Chairman supervises internal risk control and
management activities;
• the Chief Executive Officer coordinates the Risk Committee;
•the Risk Committee assists the Board of Directors in
defining the guidelines of the internal risk control and
management system connected with trading activities.
The Risk Committee is composed of the Head of
Administration, Finance and Audit, the Chief Executive
Officer, the Head of Enterprise Risk Management, the
General Manager and the Risk Manager of Linea Più.
•the Internal Audit provides and independent, objective
activity to assess and improve control, risk management
and Corporate Governance processes.
Below is a description of the main risks and uncertainties
to which the Group is exposed:
•Operational risks (i.e. risks associated with business
interruption, regulations, information technology)
•Market risk
•Environmental risk
•Financial risks (i.e. risk associated with credit, interest
rates, liquidity, commodity and use of financial
instruments, default and covenants).
INFORMATION TECHNOLOGY RISK
Information systems play a crucial role in the main
business processes. In general, information technology
risks are one of the most relevant classes of risk in the
broader universe of corporate risks, in consideration of
both the increasingly pervasive presence of technology
41
resources within the LGH Group and the growing cyber
threat.
The impact of IT risks also depends on the Group’s
organisational structure and business characteristics, and
on the applicable legal/regulatory requirements, the most
important being:
•the “Provisions for the protection of savings and
the regulation of financial markets” (Law no. 262
of 28th December 2005), applicable to Italian companies
listed in regulated markets in Italy and other EU
countries. Information and Communication Technology
(ICT), and more specifically the IT control system,
becomes relevant in ensuring the reliability of business
information systems used in processing and producing
company’s management and accounting data.
•
Italian Legislative Decree 231/2001 governs the
corporate administrative liability (legal entities,
companies or associations, including those without legal
identity). In particular, law no. 48 dated 18th March 2008
concerning the “Ratification and implementation of the
European Council Convention on Cybercrime, signed in
Budapest on 23rd November 2001, and the regulations
concerning adaptation of internal rules” included art.
24-bis in Legislative Decree 231/01, thus extending the
administrative liability also to so-called “Cyber crimes
and unlawful use of data”. Law no. 99 of 23rd July
2009 regarding “Provisions for the development and
internationalisation of companies, as well as in the field of
energy”, added art. 25-nonies to Legislative Decree no.
231/01, thus extending corporate administrative liability
to so-called “Crimes involving copyright infringement”.
•The Code regarding the protection of personal
data (Legislative Decree no. 196 of 30th June 30 2003,
published in the Official Gazette, General Series no. 174,
ordinary Supplement no. 123/L), which came into force
on 1st January 2004, reorganizes into one text previous
law no. 675/96 and all the provisions and opinions issued
by the Privacy Authority over the years, by rationalizing
existing rules and establishing a set of general principles
valid for the processing of personal data.
•By Resolution 296/2015/R/COM, the Regulatory
Authority and the system approved the “Rules on
functional separation (unbundling) obligations for
companies operating in the electricity and gas sectors
(TIUF”). For the purpose of this document, this measure
introduced in this resolution is important in that it
amply revises the treatment of commercially sensitive
information (CSI), namely it:
-defines the minimum perimeter of commercially
sensitive information relating to electricity and natural
gas distribution activities;
42
- provides specific methods for the treatment of CSI,
giving priority, where applicable, to tools made
available by Regulatory Authority’s regulations,
including the Integrated Information System (IIS);
-
the databases regarding distribution activities
compared to the databases of the vertically integrated
company and other group companies must be
separated by using infrastructures that are separated
physically or using logical procedures that ensure
a segregation level equivalent to that obtained with
physical separation.
As part of the compliance with the Privacy law and
the process of consolidation and development of the
Management System and protection of personal data
of subjects involved in LGH Group’s data processing, a
number of specific initiatives were launched in 2015 to this
effect. The model identified by the LGH Group forms an
integral part of the Corporate Governance model and aims
to ensure that Privacy-related regulatory requirements
and associated risks are properly monitored and provide
support to the business units in their specificities and
provide added value in the process of growth of the
organisation as a whole.
BUSINESS INTERRUPTION RISK
The Group operates in various fields of the core
business, including the management of networks and
production sites that are operationally and technologically
complex. The Group is subject to risks associated with
the malfunction of plants, equipment or control systems
due to accidental failures/external events (e.g. fires and
explosions) that may temporarily or permanently affect
the production capacity and/or functional operation,
generating economic losses and possible damage to
corporate image.
The risk management strategy has led to the adoption
of planned maintenance policies aimed at identifying,
monitoring and preventing possible criticalities. In
particular, monitoring activities, spare parts restocking
and the definition of contracts with external suppliers by
intervention and, in some cases, “mutual aid agreements”
are carried out to collect waste in the event of prolonged
disruption of the Group’s waste disposal plants.
With reference to the electricity grid disruption risk, in
periods characterised by particular climatic conditions in
past years, the company started to upgrade its systems
and planned actions to rationalize the power grid meshing
zones. Emergency response teams, operating remote
control stations and advanced technical security tools are
also put in place.
The exposure to the risk of business disruption due to
external events is mitigated by taking out insurance
policies and adopting procedures for the prevention,
protection and monitoring of risks.
REGULATORY RISK
Among the risk factors of the parent company and
its subsidiaries there is the constant evolution of the
normative and regulatory framework, with the coexistence
of national, regional and provincial rules. Some of issues
of significance are listed below.
•
The Group operates some services based on
concessions or contracts, the duration of which may be
affected by changes in the law, with the risk of possible,
even unpredictable, changes over time.
•The production of electricity from renewable sources
is supported by various forms of incentives, which are
subject to legislative changes or different interpretations
of law that could reduce the economic benefit.
•With reference to the natural gas distribution service,
the company is subject to the risk of reduced margins
as the result of the effect of the possible increase in
costs that are not included in the tariff regulation, due
to provisions of law or lack of operational efficiency.
As in previous regulatory periods, the tariff system
for the 4th period provides for the determination of a
mandatory tariff (delivery rate) actually applied to end
users at a macroarea tariff level (sales companies) and
a reference tariff that determines the allowed revenues
of the individual operator to cover the recognized cost.
• As regards urban hygiene and waste disposal, the Group
is exposed to risks deriving from continually evolving
environmental regulations (e.g. those governing
environmental emissions), and regulations concerning
the network of economically important public services.
•As regards telecommunications, the company is
exposed to risks associated with AGCOM (Italian
Communication Authority) privacy policy regulations.
In accordance with the tasks related to the regulation and
control of district heating, district cooling and domestic
hot water activities, as assigned by Legislative Decree no.
102/14, in 2015 the Regulatory Authority initiated the first
forms of regulation of these sectors. Such activities will be
subject to regulation and efficiently monitored.
Calls for tenders for awarding gas distribution
concessions
Ministerial Decree no. 106 of 20th May 2015 (Official
Gazette, general series no. 161 of 14th July 2015), which
introduced amendments to Ministerial Decree no.
226/2011 to make it consistent with the legislative changes
that have occurred since its enactment and with the tariff
adjustment of the 4th tariff period (2014-2019), defines the
operational procedures to be followed to comply with the
tender policy regarding energy efficiency interventions in
the territorial area and clarifies art. 5 on the evaluation
of reimbursements already provided by the Guidelines on
the application criteria and procedures for the evaluation
of natural gas distribution plants, approved by Ministerial
Decree of 22nd May 2014.
Legislative Decree 210/2015, converted into law 21/2016
(Milleproroghe Decree) sets out the postponement of
previously identified deadlines for the publication of
territorial calls for tenders for the award of gas distribution
service concessions, with the resulting extension of the
term for executing the tenders and the suppression
of the penalties previously envisaged for latecomer
municipalities.
The postponement of the term differs according to
grouping (from 5 months for the eighth to 14 months for the
second grouping). It was also established that in the event
of inaction on the part of municipalities, and failure on the
part of the Regional Authority to exercise the substitute
power to call for tenders (temporary receivership ad
acta), it will be up the Ministry of Economic Development
to do it within the following 8 months.
Standard supply price reform - Repeal of regulated
and captive market
According to the provisions of so-called “DdL
Concorrenza”, as from 1st January 2018, the regulated
and captive market price mechanisms will be repealed.
In the recent Consultation Document 75/2016/R/eel,
the Regulatory Authority illustrates the new proposals to
reform the current retail energy market in Italy, through
a gradual phase-out process that can be identified as
follows:
•the cessation of price protection but not the cancellation
of customers’ right to have ensured service continuity;
•the consolidation of the free market supply as the only
mode of procurement for all, including small customers.
The Regulatory Authority expressed the intention to
differentiate the reform along two lines:
a. on the one hand, by reforming the current setting of
captive market service that will be effective until 31st
December 2017, while retaining the procurement
function in the hands of the Single Buyer and the
marketing function in the hands of the existing service
operators. The novelties, in this regard, should concern
a revision of the contractual and economic conditions
currently regulated.
b.on the other, assuming the introduction of socalled “Similar Protection” in order to provide small
43
size customers with the opportunity to access the
free market under conditions of transparency and
simplicity, as well as in a context of supply supervised
by the Regulatory Authority, without foreclosing
Similar Protection suppliers the possibility of making
free market offers.
To mitigate the potential source of risk, the Company
adopts a policy of continuous monitoring of reference
legislation in order to assess the implications and ensure
proper application thereof, and pursues trade policies
aimed at encouraging customer migration to the free
market.
COMMODITY PRICE RISK
The Group is exposed to the risk associated with the
price of commodities, which is connected with changes
in the prices of energy raw materials (e.g. electricity and
natural gas), which are the subject of purchase contracts
entered into by the Company and any change associated
therewith.
The Group has defined its own Energy Risk Policy of the
commodity risk limits, i.e. the maximum level of variability
of the result linked to the trend in prices for both hedging
and trading portfolio.
Compliance with these limits is monitored by the Risk
Manager and the Risk Committee, identified at Group level,
by establishing, where necessary, hedging strategies
aimed at containing the risk within set limits.
COMPETITION RISK
The Group operates in sectors that, in recent years,
have undergone a major process of liberalization and
the development of organized markets. This has entailed
an increase in competitive pressure, due to the need to
compete with other national and international producers
and traders. Sales prices in the environmental sector were
particularly affected by the reduced production of waste
caused by the economic crisis and competition between
the various landfills, which caused the company to step up
its marketing efforts.
The Group operates in business sectors with a regulated
tariff regime, for which the Regulatory Authority is
responsible for defining a normative framework with
a direct impact on the profitability of the sector, with an
impact on operations and results.
With reference to the characteristics of the sectors in it
operates, The Group is exposed to market risk associated
with the loss of customers, changes in raw material prices
and sales volumes in the face of economic scenarios and
climate conditions.
The increasing risk of reduced margins is managed
44
through a structured confrontation with organized markets.
Each individual business in the Group also performs an
important activity entailing the supervision of relations with
national and local authorities, which includes, thanks to
the support of renowned independent consultants, active
confrontation with institutions, professional associations
and the Regulatory Authority.
The Group also adopts, where possible, sales strategies
targeted to reduce risks, by expanding the target customer
base of commercial activities and profiling sales in such a
way as to naturally offset all risks underlying the various
products sold. In particular, targeted recovery actions,
both at a preventive stage - so-called active defence - and
a contract renewal stage, are envisaged to mitigate the
risk of customer loss, and customer management services
are developed aimed at increasing customer loyalty.
The risks associated with a reduction in the profit margins
are mitigated by systematic cost control.
CONTEXT RISK
The Company could be exposed to the social risk associated
with the degree of social acceptability of its plants. This
risk is mitigated and governed by constant relations with
local institutions, control-dedicated commissions and
Environmental Defence Committees created or deeply
rooted in the geographical area.
ENVIRONMENTAL RISK
The LGH Group, through its subsidiaries, deals with the
management of the integrated waste cycle (from collection
to disposal/recovery) and the production and distribution
of energy.
It is therefore exposed to environmental risk, which
is managed by a technical working team, following a
detailed implementation of the complex and articulated
environmental legislation, in compliance with UNI EN ISO
14001:2004 international standards and, in some cases,
with CE 1221:2008 (EMAS).
In conclusion, in 2015 there were no environmental
criticalities because the main risk aspects are kept under
control.
PREVENTION AND PROTECTION RISK
The prevention and protection risk present in the operations
of the Group companies is handled by adopting a safety
management system complying with OHSAS 18001:2007.
This system provides for the establishment of specific
procedures and practices to manage the risk and aimed
at the prevention and continuous improvement of safety
of workers. The system ensures constant verification of
legal compliance.
The implementation of preventive measures is verified
internally by a team of auditors and externally by an
independent entity at least once a year.
In 2015 the Group organised training courses for most of
its personnel in accordance with mandatory regulations. A
Prevention and Protection Service is created to guarantee
constant updating and monitoring. It comprises LGH
personnel who systematically conducts internal audits
and inspections, monitors the occurrence of accidents,
plans any corrective actions and verifies compliance of
equipment.
All the Group companies have also taken out specific
liability insurance policies to cover damage to own
employees and third parties.
FINANCIAL RISKS
Credit risk
Exposure to credit risk is predominantly related to the
commercial activities carried out by the Group. In order
to control this risk, the operational management of which
is delegated to the credit management function of the
holding company and the corresponding functions of
some operating companies, a credit-standing assessment
activity has been implemented in recent years for certain
types of customers.
The Group has currently no insurance policies covering the
risk of insolvency of its trade receivables, as it considers
that the methods and procedures adopted for credit
recovery make the insurance costs too high compared to
the resulting economic benefits.
Credit exposure towards customers is therefore controlled
by an improvement of the Group’s commercial and
customer credit-granting policies and credit recovery,
which in the previous years had led to a reduction of
outstanding receivables. In some cases, customers are
required to issue guarantees to cover the risk of default.
The Group also set up a dedicated provision for bad debts
of an amount that is deemed adequate to cover potential
future losses.
The credit risk associated with the Group’s other financial
assets that include cash and cash equivalents and
financial assets held for sale does not exceed the book
value recognised for these assets in the event of default
by the counterparty, which is generally a leading national
and international bank.
Interest rate risk
The Group’s main financial instruments, other than
derivatives, comprise short/medium/long-term bank
loans, leases, and demand and short-term bank deposits.
The main aim of these financial instruments is to fund the
Group’s operations.
The Group’s exposure to the interest rate risk mainly
arises from the volatility of financial expenses related to
debt bearing interest at a floating rate.
The management policy of the risk associated with interest
rates aims at limiting their volatility, primarily through
the identification of a balanced mix of fixed interest and
floating rate loans, and also by using hedging instruments
that mitigate the effects of interest rate fluctuations.
As at 31st December 2015, the structure of loans and
financial leases granted to the Group by banks and other
lenders is illustrated in the table below.
(€,000)
31/12/2015
amount
Fixed rate loan
Floating rate loan with derivatives
Floating rate loan without
derivatives
Financial leases
Total
31/12/2014
percentage
amount
percentage
375,624
93,976
75%
19%
382,916
90,643
76%
18%
27,413
5%
21,634
4%
5,732
502,745
1%
100%
6,273
501,466
1%
100%
45
(€,000)
31/12/2015
amount
Bonds
Liabilities for financial lease
Loans and funding from correlated
parties
Loans and funding from banks and
other lenders
Total
percentage
amount
percentage
297,805
5,732
59%
1%
296,796
6,273
59%
1%
3,794
1%
3,794
1%
195,414
39%
194,603
39%
502,745
100%
501,466
100%
Some of the above loans envisage financial covenants.
For further details in this regard, please refer to Note 17 of
the Explanatory Notes to the Financial Statements.
The Group has 8 interest rate swap contracts, which
provide for a differential swap between a floating rate
and one or more predetermined fixed rates applied to a
reference notional value “combined” with an amortisation
plan of the underlying loans.
These derivatives are valued at fair value, with changes
recognised in the cash flow hedge reserve under
shareholders’ equity.
Given the above-outlined debt structure as at 31st
December 2015, it is estimated that a rise of a percentage
point in interest rates would produce, on an annual basis,
an increase in interest expense of about €151 thousand,
while a decrease of a percentage point in interest rates
would produce a decrease in interest expense of about
€127 thousand.
46
31/12/2014
Liquidity Risk
The liquidity risk is identified as the risk for the Group to be
unable to meet its payment obligations, due to difficulty in
raising new funds or sell its assets on the market.
The objective is to ensure a level of liquidity that allows the
Group to meet its contractual obligations, both in the normal
course of business and in difficult economic conditions,
by maintaining adequate lines of credit, the liquidity and
timely renegotiation of loans approaching expiration,
and optimising the cost of funding in accordance with the
current market conditions and prospects.
The table below shows the worst-case scenario,
where current assets (cash and cash equivalents, loans
receivables and trade receivables) are not taken into
consideration, while financial liabilities, as a principal sum
and interests, trade receivables and interest rate derivative
contracts are reported. The financial credit lines subject
to revocation are made repayable on demand, while the
other loans are made repayable on the date on which they
can be requested for repayment.
(€,000)
As at 31st December 2015
maturity
1-3 months
Bonds*
Borrowings and other financial liabilities*
Trade payables
Total
0
793
166,274
167,067
maturity
3-12 months
11,625
52,936
0
64,561
maturity
1-2 years
11,625
36,537
0
48,162
*principle sum and interests
In order to ensure sufficient liquidity to cover financial
commitments for at least the next two years (time
horizon of the above worst-case scenario), as at 31st
December 2015, the Group had €72 million cash and
cash equivalents, €50 million revolving committed credit
lines, and about €50 million uncommitted credit lines, all
unused.
As at 31st December 2015, the Group is characterised by
a predominantly medium/long-term debt structure (about
90% of loans expiring after one year), of which about
59% is represented by Eurobonds repayable at the end
of 2018. The average residual duration of loans is 4 years
and two months, and about 7.5% of borrowings expire
beyond 5 years.
Default risk and covenants
The risk lies in the possibility that executed financing
contracts contain clauses that provide for the right of
the lender to request early repayment of the loan when
certain events occur, thus generating a potential liquidity
risk.
The €300 million bonded loan is not secured by collateral
and provides, for its duration, a set of clauses, in line with
international practice, that impose certain prohibitions.
The main clauses provide for the Group’s commitment to
equal treatment of debt issued with respect to its other
unsecured debts (pari passu) and commitment towards
the bondholders not to provide better guarantees and/
or privileges on its assets (negative pledge) to other
subsequent lenders of the same status.
The “project loan” taken out by Lomellina Energia with
a syndicate of banks, where Intesa San Paolo acts as
lead bank, is secured by collateral on the company’s real
estate and equipment, and provides among the cases of
non-fulfilment, for a reduction of the Loan Life Coverage
Ratio (resulting from the ratio of the net current value of
the expected cash flow to the amount of the residual debt)
below 1.10.
The current loan taken out by Linea Energia with Unicredit
is secured by collateral on the company’s real estate and
facilities and, for 2015, it provides for the obligation to keep
the ratio of the principal amount of the loan disbursed and
not yet repaid to equity (including deferred shareholders’
loans) equal to or greater than 2.80.
The EIB loan is partly secured by a bank guarantee issued
by SACE.
On 31st December 2015, the company did not comply with
one out of the three original covenants (NFP/EBITDA).
In September 2015 the Company therefore made a
request to EIB and SACE to adapt the financial covenants
accordingly. The request was accepted and formalised as
per communications received on 10th March 2016.
For the purpose of the above adjustment, the financial
covenants to be complied with by 31st December 2015
are:
•NFP to EBITDA < 5.60
•EBITDA to Net financial expenses ratio > 4.30
•NFP to Equity < 1.80
All the above constraints and covenants were complied
with at 31st December 2015 as shown in the financial
statement.
At the date of the preparation of the financial statements,
the procedure of the change of control subsequent to the
agreement signed on 4th march 2016 for the sale of the
51% of LGH shares to A2A is still in place.
With reference to the EIB loan the entire residual debt of
€71.3 million has been recognised to current liabilities, in
accordance with the IAS/IFRS principles.
47
Other disclosures
Transactions with related parties
Transactions between LGH S.p.A. and its subsidiaries with
related parties and associates are detailed in the notes to
the consolidated financial statements (Note 44).
Treasury shares
Pursuant to art. 2428, subsections 3 and 4, of the Civil Code,
in 2015 the Parent Company did not hold nor purchase or
sell any shares or stakes of controlling companies through
trust companies or nominees.
Legal claims
At a Group level the following claims are in progress:
•Following the audit performed by the Electricity and
Gas Authority in July 2012 at the Parona premises,
the Authority issued a resolution, in which the actual
amount of net incentivized energy was contested. The
Company challenged this resolution at the Lombardy
Regional Administrative Court and lodged an appeal
that was rejected in April 2014. Despite a further appeal
was filed with the Council of State, the decision issued in
December 2014 confirmed the first-instance judgement.
Given the above resolution, in December 2013, the
Electricity Equalisation Fund (CCSE) sent the Company
formal notice to pay by the end of January 2014. The
Company totally contested the decision that determined
the sum requested by the CCSE and on 30th January
2014 lodged an appeal with Lombardy Regional
Administrative Court (TAR), which, with judgement of
15th December 2015, stated that it had no jurisdiction
in the matter and referred the case to ordinary
administrative judge.
On 11th March 2016, the appeal with the State Council
proposed by the Energy and Environmental Service
Fund (CSEA, the new name of the CCSE) was served
following the provisions of the 2016 Stability Law, in
order to obtain the annulment of the judgment of the
Regional Administrative Court to the extent that the
Court declined jurisdiction in favour of the administrative
judge.
The lawsuit is covered by a risk provision of €3.5 million
allocated in 2014 and considered adequate to hedge the
risk to which the company is exposed.
•In November 2011, Gestore Servizi Energetici S.p.A.
(GSE) sent the subsidiary Lomellina Energia S.r.l. two
communications concerning the two production lines,
informing it, with no justification, that it had replaced
48
the criterion for calculating discounted energy for the
purpose of awarding green certificates, as provided
by law, agreed on previously with the Company and
applied as from 2007 production, with due issuance,
collection and simultaneous payment of the green
certificates requested by Lomellina Energia. This change
in the criterion, applied prudentially by the Company as
from 2011, led to a reduction in the number of green
certificates due to it. Even the duration of the incentives
for the non-biodegradable portion of line 1 waste
declared by GSE in the aforesaid communications
was shorter than that prescribed by law. In order to
protect its rights, Lomellina Energia lodged an appeal
with the Lazio Regional Administrative Court against
GSE’s measures, the aim being to have them declared
cancelled and receive payment of amounts due. The
cautionary appeal for suspension of the measures was
rejected by the Regional Administrative Court. Following
the appeal against these orders, the Council of State
referred the matter to the Lazio Regional Administrative
Court to decide on the merits, and a hearing was held
in February 2013. On 15th April 2013 the Lazio Regional
Administrative Court published its judgements on the
two production lines, as follows:
- for line 1, the Court upheld Lomellina Energia’s right
to receive incentives for the portion of production
from non-biodegradable waste up until 19th January
2014;
- for line 2, the Court rejected the company’s requests.
•The company lodged an appeal with the State Council
which, in March 2016, issued a favourable judgment
and recognised the company’s submissions. It is worth
noting that the company, pending the final resolution of
the dispute, had since 2011 prudentially entered in the
accounts only the green certificates for the electricity
surplus fed into the grid from line 2. The effect of said
judgments will be quantified in the coming months,
subject to discussions with the other party, to be
recognised for accounting purposes in the 2016 financial
year. As regards Linea Gestioni, it is worth noting
that Bi.Co due S.r.l. joined prosecution in the lawsuit
instituted before the State Council by A.T.I. Aprica S.p.A.
against the judgments issued by the Section branch of
the Regional Administrative Court, relating to the final
awards of urban hygiene services to the municipalities
of Rovato and Gambara, for which the hearing on the
merits is pending.
Subsequent events and outlook
The following events of significance have occurred since
the closing of the financial year:
•On 4th March 2016, LGH shareholders signed an
industrial partnership agreement for the sale of 51% of
the share capital to A2A. This opened up the first stage,
which is still in progress and is expected to last no more
than 3 months, during which some conditions precedent
should be met to complete the transaction.
Among such conditions, there is the obligation on the
part of the partner AEM S.p.A., debtor of a total amount
of €29,964,940 as at 31st December 2015, to submit and
assert a recovery plan containing, among other things,
the repayment on the execution day of 50% of the sum
owed to the LGH Group as at 31st December 2015, i.e.
€14,982,470, as well as a redemption plan within a
maximum of 5 years for the residual 50%. Moreover,
AEM S.p.A. shall waive any claim related, to be related
and/or connected with the contractual relations in being
with the companies in the LGH Group, except for the
lease agreement with Linea Com, covering the fibreoptic network, the main elements of which shall be
redefined.
In consideration of the above, these financial statements
were prepared on the assumption that AEM S.p.A.
effectively submits to LGH a proposal concerning the
full repayment of its debt and a definition of its relations
with LGH and/or other companies in the LGH Group, in
compliance with the provisions of the above-mentioned
agreement of 4th March 2016.
The fact that AEM S.p.A. is formally part of said
agreement, the possibility that its proposal is expected
to be submitted in a short time is more than justified, and
similarly justified, if not right and proper, the accounting
policies adopted by the Board of Directors in preparing
the financial statements.
Furthermore, it is well understood that if the assumption
underlying the financial statements reported herein is
not realised, for any reasons whatsoever, the Board of
Directors reserves the right to adopt any appropriate
corrective action.
•In January 2016 the merger by incorporation of Rovato
Energia Scrl and Franciacorta Rinnovabili S.r.l. into
Linea Energia S.p.A. was finalised.
•In January 2016 the purchase of the full ownership of
Steam S.r.l. by acquiring 0.39% of the share capital
previously held by minority shareholders was finalised.
•In March the State Council issued two judgements in
favour of the Company in connection with disputes
with the Electricity Service Operator - GSE S.p.A.
regarding Green Certificates. This has already been
mentioned in the section on litigation. It is noted that the
company, pending the final settlement of the dispute,
had prudentially entered in the 2011 accounts only
green certificates for the electricity surplus fed into
the grid from line 2. The effect of said judgments will
be quantified in coming months, subject to discussions
with the other party, to be recognised for accounting
purposes in the 2016 financial year.
•In accordance with the provisions of arts. 4 and 24 of
law no. 223 of 23rd July 1991, Lomellina Energia S.r.l.
launched in February 2016 the collective dismissal
procedure for 27 redundant employees out of a total of 87
workers. The first phase of the union procedure started
on 15th February 2016 via an official communication.
The reasons which led Lomellina Energia S.r.l. to
implement a personnel reduction procedure can
be attributed to the following factors, that occurred
simultaneously:
-
following the natural conclusion of CIP6/92
conventions, the associated contributions were no
longer paid; more precisely, the main contribution for
Line 2 ceased in March 2015, the residual contribution
related to the Avoided Fuel Cost (CEC) for Line 1
ceased in January 2016;
-the sharp slump in energy demand, with the
consequent and more than considerable reduction of
energy remuneration on the free market;
- the gradual decrease in the use of the pre-treatment
line compared to the capacity of the company to
treat the waste, linked to the progressive increase in
separate waste collection, which led to a reduction in
the amount of waste.
For all the above reasons, Lomellina Energia S.r.l.
considered it absolutely necessary to reorganise its
production activities and downsize the number of
employees, by re-parameterising the workforce on
what will be the actual need according to the sales
turnover and the resulting production capacity.
Independent audit
The financial statements of Linea Group Holding S.p.A.
and the consolidated financial statements are subject to
auditing by the independent auditors Reconta Ernst &
Young S.p.A., whose appointment was approved by the
shareholders’ meeting and its effective until the approval
of the financial statement for the year 2020.
49
Directors’ proposals to the General Assembly
To the shareholders
In our opinion, the Business Report accompanying the
Linea Group Holding S.p.A.’s Financial Statements the
LGH Group’s Consolidated Financial Statements provides
a true and fair presentation of the business trend and
results achieved during the financial year ended 31st
December 2015.
The Board of Directors
Chairman
Deputy Chairman
Board members
50
Given that the net profit as at 31st December 2015 by Linea
Group Holding S.p.A. amounted to €4,457,428 thousand,
the Board of Directors proposes to allocate the operating
result as follows:
•222,871 to legal reserves;
•4,234,558 to voluntary reserves and/or dividend.
II.
Consolidated Financial Statement 2015
51
Consolidated statement
of Financial position
(€,000)
FINANCIAL POSITION
ASSETS
related
parties
Notes
Non-current assets
Intangible assets
Goodwill
Property, Plant and equipment
investment properties
Investments in associates
Other equity investments
Deferred tax assets
Non-current financial assets
Other non-current assets
Total non-current assets
Current assets
Inventories
Trade receivables
Derivative financial
instruments - assets
Other current financial assets
Other current assets
Cash and short-term deposits
Total current assets
TOTAL ASSETS
31/12/2015
1
2
3
5
5
8
6
7
9
10
225,095
90,270
350,251
0
4,242
4,677
33,087
22,605
2,861
733,088
19,885
22,417
212,200
30,162
11
12
13
14
15
13,287
23,634
1,701
4,190
19,196
33,149
72,038
360,701
1,364
1,095,153
* The 2014 figures were restated. See paragraph 2 in the Note for a detailed analysis.
52
related
parties
2,000
*restated
31/12/2014
31/12/2014
209,939
85,014
332,846
0
5,593
4,762
35,670
37,681
2,623
714,128
208,596
85,014
332,846
0
5,593
4,762
35,894
37,681
2,623
713,009
28,062
195,353
28,062
195,353
2,891
2,891
7,904
32,424
114,290
380,924
0
1,095,052
7,904
32,458
114,290
380,958
0
1,093,967
(€,000)
EQUITY AND FINANCIAL POSITION
SHAREHOLDERS’ EQUITY
AND LIABILITIES
Shareholders’ equity
Share capital
Share premium reserve
Other reserves
Retained earnings (losses)
Result for the year
Equity attributable to equity
holders of the Parent
Non controlling interests
Total shareholders’ equity
Non-current liabilities
Non-current loans and
financial liabilities
Provisions for risks and
charges
Provision for employee leaving
indemnities
Derivatives-related liabilities
Other non-current financial
liabilities
Other non-current liabilities
Deferred tax liabilities
Total non-current liabilities
Current liabilities
Trade payables
Current loans and financial
liabilities
Other current financial
liabilities
Other current liabilities
Current tax liabilities
Total current liabilities
Liabilities directly
associated with the assets
held for sale
Total liabilities
TOTAL SHAREHOLDERS’
EQUITY AND LIABILITIES
related
parties
*restated
31/12/2014
31/12/2014
189,494
0
7,171
-494
8,050
189,494
0
8,461
1,247
2,351
189,494
0
8,461
1,247
1,549
204,221
201,553
200,751
16
27,200
231,421
31,477
233,030
31,396
232,147
17
386,498
450,110
450,110
22
70,690
69,910
69,910
19-20-21
18,140
19,997
19,997
23
7,032
8,862
8,862
24
0
0
0
25
8
45,622
27,590
555,572
44,993
31,705
625,577
44,993
31,705
625,577
156,547
156,547
Notes
26
31/12/2015
17,105
166,274
related
parties
17,400
18
115,754
51,356
51,356
30
0
5,000
5,000
27
28
23,977
257
306,262
22,786
756
236,445
22,640
700
236,243
29
1,898
0
0
863,732
862,022
861,820
1,095,153
1,095,052
1,093,967
53
(€,000)
INCOME STATEMENT
Revenues from sales
Other income
Total net revenues
Personnel expenses
Gross operating margin
(EBITDA)
write-down
Net financial income
(expenses)
Portion pertaining to
associates’ results
Gains (losses) on equity
investments
Pre-tax result
Income tax expenses
Profit for the year from
continuing operations
Profit after tax for the year
from discontinued
operations
Of which:
net result attributable to
the group
net result attributable to
non-controlling interests
related
parties
*restated
31/12/2014
31/12/2014
582,250
25,966
608,216
-437,755
-67,299
-7,753
-542
582,250
28,371
610,621
-440,160
-67,299
-7,753
-542
77,116
94,867
94,867
-49,176
-67,652
-68,995
27,940
27,215
25,872
-17,281
-20,864
-20,864
39
204
152
152
40
38
13
13
8
10,901
-7,548
6,516
-9,293
5,173
-8,833
3,353
-2,777
-3,660
1,054
0
0
4,407
-2,777
-3,660
8,050
2,347
1,549
-3,643
-5,124
-5,209
Notes
31
32
54,903
33
34
35
36
15,146
31/12/2015
37
38
494
41
54
536,169
13,839
550,008
-400,499
-65,267
-7,239
113
related
parties
61,634
13,770
(€,000)
STATEMENT OF
COMPREHENSIVE
INCOME
Notes
1/1 - 31/12/2015
1/1 - 31/12/2014
*restated
1/1 - 31/12/2014
Profit/loss for the year (A)
4,407
-2,777
-3,660
Other comprehensive income to be reclassified to income statement in subsequent period:
Change in the cash-flow
1,136
-1,319
-1,319
hedge reserve
Tax impact on the cash-flow
-502
215
215
hedge reserve
Other components of comprehensive income not to be reclassified to income statement in subsequent periods:
Change in IAS 19 reserve
947
-2,411
-2,411
Tax impact on change in
-286
591
591
IAS 19 reserve
Other components of
1,295
-2,924
-2,924
comprehensive income
Total comprehensive profit/
5,702
-5,701
-6,584
(loss) for the year
of which:
attributable to the group
9,126
-454
-1,256
attributable to
-3,421
-5,247
-5,328
non-controlling interests
55
56
433
2,284
4
2,288
440
2,719
353
3,072
3,728
-1,141
4,869
4,869
430
430
-3,450
-264
-1,209
-2,407
-1,045
-1,045
-1,362
646
646
-2,368
-3,014
-1,760
-1,760
-1,254
2,930
-2,300
176
5,054
-87
5,141
477
-4,400
331
2,350
1,994
202
-8,000
4,930
3,272
-
2,351
-2,805
-454
-6,700
243
8,050
8,050
1,076
8,050
9,126
8,050 204,221
-2,351
-
222
222
30,843
-412
-445
-5,128
36,606
-119
-119
87
-1,206
-2,675
38,297
2,222
-87
-8,000
-
2,351 201,552
2,351
2,351
-5,803
5,803 210,093
-
-3,643
-3,643
-3,643
5,128
-5,128
-5,128
-5,128
2,675
-2,675
Non-conNon-controlling
trolling
interest
interest
capital and result of the
reserves
year
* the amounts changing the scope of consolidation result from the acquisition of Franciacorta Rinnovabili and SCCA and the acquisition of 0.5% of the share capital of Linea Distribuzione.
** other movements refer to the effect of the reclassification as a hedging derivative of Banca Intesa derivative in place with Lomellina Energia as the result of the passing of the effectiveness test.
1,851
2,279
Other
reserves
Profit Group’s
(losses) result GROUP’S
brought for the EQUITY
forward year
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
for the years ended from 31st December 2013 to 31st December 2015
Share
Legal Statutory
FTA
CFH
IAS 19
capital reserve reserves reserve reserve reserve
Balance as at 31st December 2013 189,494
Share capital increases
Allocation of previous years’ profit/
losses.
Distribution of dividends and reserves
Change in the scope of consolidation (*)
Other changes
Result for the year 2014
Other comprehensive income result
Overall financial result
Balance as at - 31st December
189,494
2014 * restated
Allocation of previous years’ profit/
losses
Distribution of dividends and reserves
Change in the scope of consolidation (*)
Other changes
Result for the year 2015
Other comprehensive income result
Balance as at 31st December 2015 189,494
(€,000)
TOTAL
EQUITY
-2,777
-2,924
-5,701
-
-9,206
-
-
-
-412
-7,112
-445
-202
-3,643
4,407
222
1,298
-3,421
5,705
27,200 231,421
-
-
31,478 233,030
-5,128
-119
-5,247
87
-1,206
-
35,622 245,715
2,222
2,222
Non-controlling
interest
equity
(€,000)
CONSOLIDATED CASH FLOWS STATEMENT
2015
2014
2015
Net extraord. Net extraord.
transactions transactions
RESULT FROM OPERATING ACTIVITIES AFTER TAX
3,353
3,763
Profit before tax from discontinued operations
1,054
1,054
Adjustments to reconcile net income with financial cash flows generated from operating activities:
Depreciation and impairment of tangible assets
36,783
36,783
Amortisation and impairment of intangible assets
5,360
5,360
Other impairment of non-current assets
731
731
Bad debt allowance
5,405
5,405
Net difference in provisions for severance indemnity
-1,856
-2,353
Net difference in provisions for risk and charges
1,079
819
Net difference in deferred tax assets and liabilities
-1,832
-1,832
Working capital movements:
(Increase)/decrease in inventories
5,626
5,683
(Increase)/decrease in trade receivables
-22,233
-21,205
(Increase)/decrease in direct tax asset (IRES and IRAP)
728
1,227
(Increase)/decrease in indirect tax asset (VAT and excise duties)
538
538
(Increase)/decrease in other non-financial assets
-3,594
-2,824
Increase/(decrease) in trade payables
9,727
9,354
Increase/(decrease) in direct tax liability (IRES and IRAP)
-499
-566
Increase/(decrease) in indirect tax liability (VAT and excise duties)
-552
-552
Increase/(decrease) in other non-financial liabilities
4,272
3,343
NET CASH FLOWS FROM OPERATING ACTIVITIES
44,090
44,728
Cash flows from investing activities:
Net investments in tangible assets
-54,919
-26,719
(Increase)/decrease in financial assets
-25,772
-25,494
(including derivatives assets)
Increase/(decrease) in financial liabilities
1,436
1,436
(including derivatives liabilities)
Acquisition of subsidiaries, net of cash acquired
-2,792
NET CASH FLOWS FROM INVESTING ACTIVITIES
-79,255
-53,569
-2,777
0
43,768
11,200
1,309
4,940
2,770
13,393
-4,001
159
26,607
6,071
-7,955
1,198
-26,478
473
135
-5,273
65,540
-29,204
-17,529
-109
0
-46,842
(follows)
57
(€,000)
CONSOLIDATED CASH FLOWS STATEMENT
Cash flows from financing activities:
(Increase)/decrease in financial assets
(including derivatives assets)
Increase/(decrease) in financial liabilities
(including derivatives liabilities)
Dividend paid
Increase/(decrease) in share capital
Other differences in Shareholders’ equity and non-controlling
interests
CASH FLOWS FROM FINANCING ACTIVITIES
NET DIFFERENCE OF CASH AND CASH EQUIVALENTS
Net cash and cash equivalents at the beginning of the period
Net cash and cash equivalents at the end of period
ADDITIONAL INFORMATION
Interest received
Interest paid
Income tax paid
Dividend paid
2015
2014
2015
Net extraord. Net extraord.
transactions transactions
4,974
4,974
-7,344
-6,045
-32,369
48,816
-7,112
0
-7,112
0
-9,206
0
1,096
1,096
-3,138
-7,088
-42,252
114,290
72,038
-33,412
-42,252
114,290
72,038
29,128
47,826
66,464
114,290
1,954
18,104
8,526
8,384
1,954
18,104
8,526
8,384
2,553
16,506
8,248
8,839
It should be noted that, for a correct exposure of cash flows, the 2014 statement does not take into consideration the impact on equity resulting from exceptional
transactions (the transfer of the gas line of business from ASM Castelleone to Linea Distribuzione).
58
Explanatory notes
Accounting policy
1. General information
Linea Group Holding S.p.A. is a multi-utility joint-stock
company incorporated and domiciled in Italy.
The consolidated financial statements of Linea Group
Holding S.p.A. and its subsidiaries (referred to herein as
“the Group”) for the year ending 31st December 2015 were
authorised by the Board of Directors on 31st March 2016.
The Group’s operations are detailed in the directors’
business report.
2. Basis of presentation
and accounting policies
The consolidated financial statements of the Linea Group
Holding S.p.A. Group as at 31st December 2015 were
have been prepared in accordance with the International
Financial Reporting Standard (IFRS), issued by the
International Accounting Standards Board (IASB) as
endorsed by the European Commission in accordance
with the procedure referred to in art. 6 of EC Regulation no.
1606/2002 of the European Parliament and the European
Council of 19th July 2002, and the regulations issued to
implement art. 9 of Italian Legislative Decree no. 38/2005.
The consolidated financial statements were prepared
valuing the business as a going concern, using the
historical cost method and taking into account, where
appropriate, any value adjustments, with the exception
of the items that, according to IFRS, must be recognised
at fair value, as explained in the section dealing with
assessment criteria.
The accounting policies applied to these financial
statements are the same as those used in preparing the
31st December 2014 financial statements, except for those
described in the following paragraph entitled “Accounting
policies, amendments and interpretations applicable since
1st January 2015”.
It is worth noting that during the year an abnormality
was found in the configuration of the mechanisms
of calculation of the depreciation of some classes of
assets, which affected the cost of the item Depreciation
recognized almost entirely in the past year and not
recognized at the time due to the strong elements of
discontinuity in 2014, especially due to the large amount
of goods delivered before the end of the previous year. It
was therefore necessary to recalculate the depreciation
allowances recognized in the income statement for the
year 2014 and the associated current and deferred taxes
and recognition of the impact on the net result under the
item “Retained earnings (Losses)”. This change entailed
the need to reinstate the figure for Net Result for the year,
amortization provision for intangible assets, deferred tax
Assets, Tax Assets and current tax Liabilities, as illustrated
in the table below.
(€,000)
Description
Intangible assets
Deferred tax assets
Other current assets
Result for the period
Minority interest
Net value as at
31st December
2014
Note
1
8
13
16
16
27
28
208,596
35,894
32,458
-1,549
-31,396
-22,640
-700
restatement
1,343
-224
-34
-802
-81
-146
-56
Net restated
value
as at
31st December
2014
209,939
35,670
32,424
-2,351
-31,477
-22,786
-756
59
The consolidated financial statements of the LGH Group
as at 31st December 2015 were prepared according to
the accounting records updated as at 31st December 2015
and is complete with the directors’ report on the Group’s
business trend and is subject to audit by independent
auditors Reconta Ernst & Young S.p.A.
In relation to the statements in the consolidated financial
report, the following is highlighted:
• Equity and financial position. The Group presents assets
and liabilities divided into current and non-current,
according to the requirements under subsection 60 et
seq. of “IAS 1, revised”;
•Income statement. The Group provides a classification
of expenses by nature, which is deemed most
representative of the Group’s mainly commercial and
distribution activities and the income statement is thus
named Comprehensive Income Statement. The Group
decided to present it in two statements: one containing
the traditional income statement items and the result for
the period, the other containing the same result for the
period and a detailed list of the other items that had been
previously reflected only in the statement of changes in
shareholders’ equity.
It should also be noted that it was decided to enter the
item “Portion pertaining to associates’ results” after
the “Operating result (EBIT)” to better represent the
contribution of characteristic activities of the Group’s
overall result.
•Cash flow statement. This was prepared using the
indirect method, by adjusting the operating profit of
non-monetary items, as permitted by IAS 7.
•Statement of changes in the Group’s shareholders’
equity. It presents the opening and closing balance
figures of each equity item by reconciling with the
operating profit or loss, any transactions with the
shareholders and other changes in equity.
The consolidated financial statements as at 31st December
2015 were prepared considering the business as a going
concern. The Group estimated that, though in a difficult
economic and financial scenario, there were no significant
uncertainties (as defined under point 25 of IAS 1) for
business continuity, in consideration, among other things,
of the specific sector in which the Group operates that is
characterised by a substantially acyclic demand.
3. New accounting standards, changes to
and/or interpretations of existing principles,
effective on 1st January 2015
The accounting policies adopted in 2015 are consistent
with those of the previous year.
The Group has adopted for the first time some accounting
60
principles and amendments that became effective for
annual periods beginning on or after 1st January 2015.
The Group has not adopted earlier any other principle,
interpretation or amendment published but not yet in force.
The nature and impact of each new accounting principle
and amendment are described below. Although applied
for the first time in 2015, they did not have any material
impact on the Group’s consolidated financial statements.
The nature and impact of individual new principles and
amendments are detailed below.
Amendments to IAS 19 - Defined Benefit Plans:
Employee Contributions
IAS 19 requires an entity to consider contributions from
employees or other parties when accounting for defined
benefit plans. When such contributions are linked to
service, they should be attributed to periods of service
as a negative benefit. The amendment clarifies that, if the
amount of the contributions is independent of the number
of years of service, an entity is permitted to recognise such
contributions as a reduction in the service cost in the period
in which the service is rendered, instead of allocating the
contributions to the periods of service. This amendment is
effective for annual periods beginning on or after 1st July
2014. This amendment is not relevant for the Group, given
that none of the entities belonging to the Group has defined
benefit plans for employees or other parties.
Annual Improvements to IFRS (2010-2012 Cycle)
Except for the improvements to IFRS 2 - Share-based
Payments - applicable to transactions with recognition
date on or after 1st July 2014, these improvements became
effective on 1st July 2014 and the Group applied them for
the first time in these consolidated financial statements.
They include:
IFRS 3 - Business Combinations
This amendment applies prospectively and clarifies that all
the agreements for contingent consideration classified as
liabilities (or assets) resulting from a business combination
to be subsequently measured as fair value with a contraentry in the income statement, regardless of whether or
not it falls within the scope of IFRS 9 (or IAS 39). This
is consistent with the accounting principles applied by
the Group and had no impact on the Group’s accounting
principles.
IAS 16 - Property, Plant and Equipment and IAS 38
- Intangible Assets
The amendment applies retrospectively and clarifies that
under IAS 16 and IAS 38 an asset can be revalued by
reference to observable data, either by adjusting the gross
carrying value to the fair value or by determining the fair
value to the carrying value and proportionally adjusting
the gross carrying value so that the resulting carrying
value is equal to the fair value. Accumulated amortisation,
depreciation and impairments represent the difference
between the gross carrying value and the carrying
value of the asset. This amendment had no impact on
revaluation adjustments recognised by the Group in the
current financial year.
IAS 24 - Related Party Disclosures
This amendment applies retrospectively and clarifies
that a management company (an entity providing key
management personnel services) is a related party subject
to the information on related parties. In addition, an entity
using a management company should disclose the cost
incurred for management services. This amendment is not
relevant to the Group as it does not receive management
services from other entities.
Annual Improvements to IFRS (2011-2013 Cycle)
These improvements are effective from 1st July 2014 and
the Group applied it for the first time in these consolidated
financial statements. They include:
IFRS 3 - Business Combinations
This amendment applies prospectively and clarifies, with
reference to the exceptions within the scope of IFRS 3, that:
•Joint control agreements, and not only joint ventures,
are outside the scope of IFRS 3.
This exception only applies to the accounting of the joint
control agreement in the financial statements.
The LGH Group is not a joint arrangement, therefore
this amendment is not relevant to the Group and its
subsidiaries.
IFRS 13 - Fair Value Measurement
This amendment applies prospectively and clarifies that
the portfolio exception provided for by IFRS 13 can be
applied not only to financial assets and liabilities, but also
to other contracts that fall within the scope of IAS 39. The
Group does not apply the portfolio exception defined in
IFRS 13.
Accounting policies, amendments and
interpretations endorsed by the European Union
but effective after 31st December 2015
Set below are the accounting standards and
interpretations that, on the date of preparation of these
financial statements, had been already issued but had not
yet effective. The Group intends to adopt these standards
when they become effective.
• IFRS 9 - Financial Instruments. This principle represents
the first phase of a process, the aim being to fully
replace IAS 39 Financial Instruments: Recognition
and Measurement, and introduces new criteria in the
classification and measurement of financial assets and
liabilities. The main changes introduced by IFRS 9
can be synthesized as follows: financial assets can be
classified into two categories only - at fair value or at
amortized cost. The existing categories of loans and
receivables, available-for-sale and held-to-maturity
financial assets are removed. The classification inside
the two categories is based on the business model of
the entity and according to the cash flows generated
by the financial assets. A financial asset is measured at
amortized cost if the following requirements are met:
the asset is held in a business model whose objective is
achieved by collecting cash flows (namely not held for
trading) and the asset gives rise to cash flows that are
solely payments of principal and interest. Otherwise,
the financial asset must be measured at fair value. The
rules for embedded derivatives have been simplified:
separate accounting of the embedded derivative and
the financial asset hosting it is no longer required.
Investments in shares of listed or non-listed companies
must be measured at fair value (IAS 39 established that
if fair value cannot be determined reliably, investments in
shares of unlisted companies had to be measured at cost).
The entity has the option of recognizing to Shareholders’
Equity the changes in the fair value of equity instruments
that are not held for trading, for which his option is
prohibited. This designation is permitted at the time of initial
recognition, can be adopted for individual security and is
irrevocable. If this option is chosen, any changes in the
fair value of these instruments can never be reclassified
from Shareholder’s equity to income statement. Dividends
instead continue to be recognized in income statement.
IFRS 9 does not allow reclassification between two
categories of financial assets, except in rare cases in the
presence of a change to the business model of the entity. In
this case the reclassification effects shall apply prospectively.
Lastly, the disclosure required in the notes to the financial
statements has been adapted to the classification and the
measurement rules introduced by IFRS 9.
On 19th November 2013, the IASB issued an amendment
to the IFRS 9 principles, which mainly concerned the
following aspects:
(i) bring into effect a substantial overhaul of hedge
accounting that will allow entities to better reflect risk
management activities in the financial statements;
61
(ii) allow the changes to address the accounting of
liabilities measured at fair value; in particular the
effects of a worsening of the company’s own credit
risk will no longer by recognized in income statement;
(iii)remove the 1st January 2015 mandatory effective date
of IFRS 9.
A partial amendment to IFRS 9 was published in July
2014 in connection with the measurement of financial
instrument classes. It introduced a model based on the
recognition of expected credit losses in replacement of
the impairment model based on realized credit losses.
The amendment in question is effective for annual periods
beginning on or after 1st January 2018.
•IFRS 14 - Regulatory Deferral Accounts. The new
principle, which was issued by the IASB in January
2014, only allows IAS/IFRS first-time adopters, whose
activities are subject to rate-regulation, to continue
applying most of their existing accounting policies. This
standard is effective for annual periods beginning on or
after 1st January 2016. This standard will have no impact
on the LGH Group because it already used IFRSs.
• IFRS 15 - Revenue from Contracts with Customers. The
purpose of the new standard is to establish the criteria
to be adopted in order to provide users of financial
statements with information about the nature, amount
and uncertainties associated with revenue and cash
flows deriving from existing contracts with customers.
The standard in question applies if all the following
conditions are met:
(i) the parties have approved the contract and have
undertaken to perform their respective obligations;
(ii)each party’s rights in relation to the goods or
services to be transferred and the payment terms
have been identified;
(iii)the contract signed has commercial substance (the
risks, timing or amount of the future cash flows of
the entity can change as a result of the contract);
(iv)it is probable that the amounts associated with
performance of the contract will be collected.
The new standard, which will replace IAS 18 “Revenue”
and IAS 11 “Construction Contracts”, will be applicable for
annual periods beginning on or after 1st January 2018, with
full retrospective or modified retrospective application.
Early application is permitted.
During 2015, the Group carried out a preliminary
assessment of the effects of IFRS 15, which is subject to
changes following a more detailed analysis that is currently
in progress. The Group is also taking into consideration
the clarifications issued by the IASB in a draft exposure
in July 2015, and will monitor any further development.
•
Amendments to IFRS 11 - Joint Arrangements:
62
Accounting for Acquisition of Interests. The amendments
require that a joint operator accounting for the
acquisition of an interest in a joint operation, in which
the activity of the joint operation constitutes a business,
must applied the relevant IFRS 3 principles for business
combinations. The amendments also clarify that any
previously held interest in the joint operation is not
remeasured on the acquisition of an additional interest
in the same joint operation while joint control is retained.
Moreover, a scope exclusion from IFRS 11 has been
added to specify that the amendments do not apply
when the parties sharing joint control, including the
reporting entity, are under the common control of the
same ultimate controlling party.
The amendments apply to the acquisition of both the
initial interest and additional interests in the same joint
operation. The amendments will apply prospectively
for the annual periods beginning on or after 1st January
2016. Earlier application is permitted. No impact is
expected on the Group as a result of the application of
these amendments.
• Amendments to IAS 16 and IAS 38 - Clarification of
Acceptable Methods of Depreciation and Amortisation.
The amendments clarify the principle in IAS 16 Property,
Plant and Equipment and IAS 38 Intangible Assets that
revenue reflects a pattern of economic benefits that
are generated from operating a business (of which the
asset is part) rather than the economic benefits that
are consumed through use of the asset. As a result, a
revenue-based method cannot be used to depreciate
property, plant and equipment and may only be used
in very limited circumstances to amortise intangible
assets. The amendments are effective prospectively for
annual periods beginning on or after 1st January 2016.
Early application is permitted. There has been no impact
on the Group.
•Amendments to IAS 27 - Equity Method in Separate
Financial Statements. The amendments will allow entities
to use the equity method to account for investments in
subsidiaries, joint ventures and associates in their separate
financial statements. The entities already applying IFRS
and electing to change their accounting criteria switching
to the equity method in their separate financial statements
shall apply the amendment retrospectively. In the case
of first-time adoption of IFRS, the entity that decides to
use the equity method in its separate financial statements
shall apply that change from the date of transition to
IFRS. The amendments are effective for annual periods
beginning on or after 1st January 2016. Early application
is permitted. No impact is expected on the Group as a
result of the application of these amendments.
•Amendments to IFRS 10 and IAS 28 - Sale or Contribution
of Assets between an Investor and its Associate or Joint
Venture. The amendments address the conflict between
IFRS 10 and IAS 28 in dealing with the loss of control of
a subsidiary that is sold or contributed to an associate
or joint venture. The amendments clarify that the gain
or loss resulting from the sale or contribution of assets
that constitute a business, as defined in IRRS 3, between
an investor and its associate or joint venture, must be
recognized in full. Any gain or loss resulting from the sale
or contribution of assets that do not constitute a business,
however, is recognized only to the extent of unrelated
investors’ interests in the associate or joint venture.
These amendments must be applied prospectively and
are effective for annual periods beginning on or after
1st January 2016, with early adoption permitted. These
amendments are not expected to have an impact on the
Group.
•Annual improvements 2012-2014 Cycle. On 25th
September 2014 the IASB issued a collection of
amendments to some IFRS, applicable for period
beginning on or after 1st January 2016.
They include:
(i)IFRS 5 - Non-current Assets Held for Sale and
Discontinued Operations. Non-current assets (or
disposal groups) are generally disposed of either
through sale or distributed to owners. The amendment
clarifies that changing from one of these disposal
methods to the other would not be considered a
new plan of disposal, rather it is a continuation of the
original plan. There is, therefore, no interruption of
the application of the requirements in IFRS 5. This
amendment must be applied prospectively.
(ii) IFRS 7 - Financial Instruments: Disclosures.
(i) The amendment clarifies that a servicing contract
that includes a fee can constitute continuing
involvement in a financial asset. An entity must
assess the nature of the fee and the arrangement
against the guidance for continuing involvement in
IFRS 7 in order to assess whether the disclosures
are required. The assessment of which servicing
contracts constitute continuing involvement must
be done retrospectively. However, the required
disclosures would not need to be provided for any
period beginning before the annual period in which
the entity first applies the amendments.
(ii) Applicability of the amendments to IFRS 7
to condensed interim financial statements: the
amendment clarifies that the offsetting disclosure
requirements do not apply to condensed interim
financial statements, unless such disclosures provide
a significant update to the information reported in
the most recent annual report. This amendment
must be applied retrospectively.
(iii)
IAS 19 - Employee Benefits. The amendment
clarifies that market depth of high quality corporate
bonds is assessed based on the currency in which
the obligation is denominated, rather than the
country where the obligation is located. When there
is no deep market for high quality corporate bonds in
that currency, government bond rates must be used.
This amendment must be applied prospectively.
(iv)IAS 34 - Interim Financial Reporting. The amendment
clarifies that the required interim disclosures
must either be in the interim financial statements
or incorporated by cross-reference between the
interim financial statements and wherever they are
included within the interim financial report (e.g., in
the management commentary or risk report). The
other information within the interim financial report
must be available to users on the same terms as the
interim financial statements and at the same time.
This amendment must be applied retrospectively.
These amendments are not expected to have any impact
on the Group.
•Amendments to IAS 1 - Presentation of Financial
Statements. The amendments to IAS 1 clarify, rather
than significantly change, existing IAS 1 requirements.
In particular they clarify:
•The materiality requirements in IAS 1.
•That specific line items in the statement(s) of profit or
loss and OCI and the statement of financial position
may be disaggregated.
•That entities have flexibility as to the order in which
they present the notes to financial statements.
•That the share of OCI of associates and joint ventures
accounted for using the equity method must be
presented in aggregate as a single line item, and
classified between those items that will or will not be
subsequently reclassified to profit or loss.
Furthermore, the amendments clarify the requirements
that apply when additional subtotals are presented in the
statement of financial position and the statement(s) of
profit or loss and OCI. These amendments are effective
for annual periods beginning on or after 1st January
2016, with early adoption permitted. These amendments
are not expected to have any impact on the Group.
4. Consolidation principles and method
The consolidated financial statements comprise the
financial statements of Linea Group Holding S.p.A. and
its subsidiaries as at 31st December 2015 and 2014. The
63
accounts of the subsidiaries used for the consolidation
have been prepared using the same accounting principles
as those of the parent company.
In preparing the consolidated financial statements the
assets and liabilities, revenues and expenses of the
consolidated companies were taken as a whole line by
line, attributing to the non-controlling interests, in specific
items under the balance sheet and income statement, the
portion of equity and operating result pertaining to each
of them. The carrying amount of the investment in each
subsidiary is written off against the corresponding portion
Name
Headquarters
Share capital
(€,000)
Linea Group Holding S.p.A.
Cremona
FULLY CONSOLIDATED SUBSIDIARIES
Linea Più S.p.A.
Pavia
STEAM S.r.l.
Rho (MI)
Rovato (CR)
Rovato (BS)
MF Waste S.r.l.
Rovato (BS)
Lomellina Energia S.r.l.
Parona (PV)
Rovato Energia Scarl
Rovato (BS)
Linea Reti e Impianti
Cremona
Crema (CR)
Lodi
Linea Com S.r.l.
Cremona
Priolo Gargallo (SR)
Franciacorta Rinnovabili S.r.l. Rodengo Saiano (BS)
ASSOCIATES MEASURED AT EQUITY METHOD
Bresciana Infrastr. Gas S.r.l. Roncadelle (BS)
Blugas S.r.l. in liquidazione
Mantova
Ecofert S.r.l. in liquidazione
San Gervasio (BS)
ASM Codogno S.r.l.
Codogno (LO)
The following changes occurred in the scope of
consolidation, compared to 2014:
•An increase in the interest held by LGH in Linea
Distribuzione from 90.35% to 90.85%, following the
transfer of the gas line of business by the shareholder
ASM Castelleone S.p.A.
•The acquisition of full ownership of Franciacorta
Rinnovabili S.r.l. in July 2015, by acquiring 55% of the
share capital, previously held by the other shareholders.
64
of equity, including any adjustments to the fair value, on
the acquisition date, of the related assets and liabilities.
Any remaining difference is allocated to difference on
consolidation.
The portion of equity and operating result attributable
to non-controlling interests are shown separately in
the consolidated balance sheet and income statement,
respectively.
A list of group companies as at 31st December 2015 is
given below.
189,494
5,000
1,010
3,000
3,969
750
160
15
7,794
5,000
23,981
5,833
50
100
100
10
100
1,898
% of direct
shares helds
% of indirect
shares held
Parent company
100
99.61
100
100
51
40.8
100
100
100
90.85
96.17
80
100
50
48.22
48
49
•The acquisition of full ownership of Rovato Energia Scrl
by purchasing 5% of the share capital, previously held
by the other shareholders.
All intra-group balances and transactions, including any
unrealised gains and losses arising from intragroup
transactions, recognised under assets or liabilities, are
eliminated in full on consolidation.
5. Significant accounting judgments,
estimates and assumptions
The preparation of financial statements requires the directors
to make judgments, estimates and assumptions that affect
revenues, costs, assets and liabilities and their disclosure,
as well as the disclosure of contingent liabilities. Uncertainty
about these assumptions and estimates could lead to results
that will entail a significant adjustment to the carrying amount
of assets and/or liabilities affected in future periods.
Judgments
In applying group accounting policies, the directors have
taken their decisions based on the following judgments
with a significant effect on the figures recognised in the
financial statements.
The preparation of financial statements in accordance
with IAS/IFRS requires the Group to make estimates
and assumptions that have an impact on the values of
assets and liabilities and on the report on the assets and
liabilities on the date of financial statements. The actual
results might differ from such estimates, which are used
to highlight certain types of revenues, namely estimated
accrued consumption, amortisation and depreciation,
credit and inventory impairments and reinstatement
of equity investments, employee benefits, taxes and
provisions for contingencies and charges.
The estimates of the provisions for bad debts and inventory
impairments are based on the Group’s expected losses.
Estimates and assumptions are reviewed periodically and
the effects of each change are reflected in the income
statement in the period in which the estimate is revised. An
analysis is also made to determine whether the revision
affects only that period or any successive periods, the
current or subsequent years.
Key assumptions regarding the future and other important
sources of uncertainty in year-end estimates that could
lead to significant adjustments in the value of assets and
liabilities within the new year are described below.
Impairment loss on goodwill
Goodwill is examined at least once a year for any impairment.
This test requires an estimate of the value in use of the cashgenerating unit to which the goodwill is attributed, which in
turn is based on an estimate of the anticipated cash flows
from the unit, based on the Industrial Plan in force, and its
discounting based on an appropriate discount rate.
Amortisation and depreciation
(for assets with definite useful life)
For the purposes of determining depreciation, residual
useful lifecycle are reviewed periodically.
Financial instrument fair value
When the fair value of financial assets or liabilities
recognised in balance sheet and cash flow statement
cannot be measured relying on prices quoted in an
active market, the fair value is determined using various
valuation techniques, including the discounted cash flow
model. The inputs entered in this model are taken from
observable markets, if it is possible, otherwise a certain
degree of esteem is required to establish fair values.
The estimates include considerations on such values as
the liquidity risk, the credit risk and volatility. Changes in
assumptions on these elements could affect the fair value
of the financial instrument recognised.
The contingent consideration relating to business
combinations are measured at fair value on the date of
acquisition of the business as a whole. If the contingent
consideration satisfies the definition of a derivative and
hence is a financial liability, its value is recalculated on
each reporting date. Fair value determination is based
on discounted cash flows. The key assumptions take into
consideration the probability of meeting each performance
target and discount factor.
Additional information about the Group’s exposure to risks
and uncertainties are also provided in the following notes:
“risks and uncertainties”, “Sensitivity analysis disclosure”,
“Impairment test”.
6. Summary of significant accounting policies
TRANSLATION OF FOREIGN CURRENCY BALANCES
The consolidated financial statements are presented
in thousands of euros, which is the functional currency
adopted by the Company and its subsidiaries. All
transactions in a foreign currency are initially recorded
at the exchange rate (referred to the functional value)
in effect on the transaction date and any exchange
differences are recognised in the income statement.
PROPERTY, PLANT AND EQUIPMENT LGH has selectively applied, on the transaction date, the
fair value to the main tangible assets in place of cost.
Property, Plant and equipment are accounted for at their
historical cost, less accumulated depreciation and writedown. This item includes the cost for the replacement of
parts of plant and equipment at the time they are incurred
if they meet the recognition criteria. Where a periodic
replacement of significant parts of property, plant and
equipment is required, the Group recognises such parts as
separate assets with a specific useful lifecycle and related
depreciation. Similarly, in the case of major overhauls,
65
the cost is included in the carrying value of the plant
or equipment, as in the case of replacement, provided
that the recognition principle is met. All other repair
and maintenance costs are recognised in the income
statement when incurred. The current value of the cost
for the decommissioning and removal of the asset at the
end of their lifecycle is included in the cost of the asset,
provided the recognition criteria for allocation to provision
are met.
Property, Plant and equipment transferred to customers
are initially recognised at fair value on the date on which
the company acquire control.
Land and buildings are recognised at fair value, net
of depreciation on buildings and impairment losses
recognised after the revaluation date.
Increases in the carrying value relating to revaluation
are recognised in statement of other components
of comprehensive income and accumulated in the
revaluation reserve under shareholders’ equity. However,
value restatement of an asset previously written down as
contra-entry in the income statement is also recognised in
the income statement. The decrease in value of a revalued
asset is recognised in the profit/(loss) statement for the
amount exceeding the revaluation of the asset itself,
which was recognised as contra-entry of the revaluation
reserve.
Depreciation is calculated on a straight-line basis
according to the expected useful life of each asset. The
main rates applied are shown in the table below:
DESCRIPTION BY CATEGORY OF ASSET
Industrial patent and use of intellectual property
Concessions, licences, trademarks and similar rights
Networks, connections and gas distribution plants under concession
Other intangible assets
Industrial and commercial facilities
Motor vehicles
Hardware and electronic devices
Office furniture and equipment
LEASING
Financial lease agreements, which substantially transfer to
the Group all the risks and rewards incidental to ownership
of the leased item, are capitalised under property, plant
and equipment from the date of commencement of the
lease at the fair value of the leased property or, if lower, at
the current lease fees. A debt of the same amount, which
is progressively reduced by the principal sums included in
the agreed fees in accordance with the repayment plan, is
recognised under liabilities.
The lease fees are apportioned between principal sum
and interest, so as to apply a constant interest rate on the
remaining balance of the debt (principal sum). Financial
expenses are recognised in the income statement.
Lease agreements under which the lessor retains
substantially all the risks and rights of ownership are
classified as operating leases.
Initial transaction costs incurred in relation to operating
66
PERCENTAGE APPLIED
20%
8.33%
2% - 2.5% - 5% - 6.66%
20%
10%
20% - 25%
20%
12%
leases are regarded as incremental to the cost of the
leased asset and are recognised over the term of the lease
so that they offset the revenues generated by the lease.
Operating lease fees are recognised in the income
statement on a straight-line basis and apportioned
according to the lease term.
BUSINESS COMBINATIONS AND GOODWILL
All business combinations are accounted for using the
acquisition method. The acquisition cost is determined as
the sum of the amount transferred, measured at fair value
on the acquisition date and the amount of the minority
interest in the acquiree. For each business combination,
the Group determines whether to measure the minority
interest in the acquiree at fair value or in proportion to
the share of the minority interest in the identifiable net
assets. The acquisition costs are recognised in the period
and classified as administrative expenses.
When the Group acquires a business, it classifies or
designates the financial assets acquired or liabilities taken
on in accordance with the contract terms, economic
conditions and other relevant conditions existing at
the date of acquisition. This includes the assessment of
whether an incorporated derivative should be separated
from the host contract.
If the business combination is achieved in stages, the
interest previously held is attributed the fair value on
the acquisition date and any resulting profit or loss is
recognised in the income statement. It is then considered
in the determination of the goodwill.
Any contingent consideration to be recognised is entered
into at fair value by the acquirer at the acquisition date. The
change in fair value of contingent consideration classified
as an assets or liability, being a financial instrument within
the scope of IAS 39 - Financial instruments: recognition
and measurement - it is recognised either in profit or loss
or in other components of comprehensive income. If the
contingent contribution is not within the scope of IAS 39,
it is measured in accordance with IFRS, as appropriate.
If the contingent consideration is classified as equity, its
value is not restated and its subsequent adjustment is
accounted for under shareholders’ equity.
Goodwill is initially measured at cost being the excess of
the whole consideration paid and the amount recorded
for minority interests compared to net identifiable
assets acquired and liabilities assumed by the Group. If
the fair value of net assets acquired exceeds the whole
consideration paid, the Group verifies whether it has
properly identified all the assets acquired and the liabilities
assumed, and reviews the procedures used to determine
the amounts to be recognised at the acquisition date. If
the new assessment reveals that the fair value of the
net assets acquired still exceed the consideration, the
difference (gain) is recognised in the income statement.
After initial recognition, goodwill is measured at cost
less accumulated impairment losses. For the purpose of
measuring the impairment, the goodwill acquired in a
business combination is allocated from the acquisition date
to individual cash-generating business units of the Group
which is expected to benefit from the synergies of the
combination, regardless of whether other assets or liabilities
of the acquired entity are allocated or not those units.
If the goodwill is allocated to a cash-generating business unit
and the entity divests part of the assets of that unit, the goodwill
associated with the divested asset is included in the carrying
amount of the asset when determining the divestment gain
or loss. The goodwill associated with the divested asset is
measured based on the relative values of the divested asset
and the remaining part of the cash-generating unit.
INTANGIBLE ASSETS
Intangible assets acquired separately are initially
recognised at cost, while those acquired as a result of
business combinations are recognised at fair value at the
acquisition date. Intangible assets are then recognised
at cost net of accumulated amortisation and impairment
losses. Intangible assets produced internally, with the
exception of development costs, are not capitalised and
are recognised in the income statement of the year in
which they were acquired.
The useful life of intangible assets is assessed as definite
and indefinite.
Intangible assets with definite life are amortised over their
useful life and subject to impairment testing if there is an
indication of impairment of the asset. The amortisation
period and method applied to intangible assets with a
definite useful life is restated at least at the end of each
financial year. Any changes in the expected useful life or
the manner in which future economic benefits related to
intangible assets are achieved by the Group are accounted
for by modifying the amortisation period or method,
as appropriate, and treated as changes in accounting
estimates. Amortisation allowances of intangible assets
with a definite useful life are recognised in the profit/loss
account for the period in the cost category consistent with
the function of the intangible asset concerned.
Indefinite-lived intangible assets are not amortized.
They are annually subject to impairment testing, both
at an individual level and as a cash-generating unit.
The assessment of the indefinite useful life is reviewed
annually to determine whether such classification always
applies, otherwise the change from indefinite-lived to
definite-lived asset is applied prospectively.
Gains or losses resulting from the disposal of intangible
assets are measured as the difference between the net
proceeds from disposal and the carrying amount of the
intangible asset, and they are recognised in the profit/
(loss) account for the period in which it was disposed of.
Costs related to the acquisition of the rights deriving from
the CIP 6/92 scheme are amortised over the term of the
in-feed tariff agreement.
Intangible assets transferrable to the assigning body
were regulated by the IASB in 2006 following approval
of interpretation no. 12 (IFRIC 12) “Service Concession
Arrangements”. This document details the method for
recognising and measuring concession arrangements
between a public subject and a private company, with
particular reference to the method of recognising
transferrable assets, the management of such assets and
the obligation to reinstate and maintain them.
For construction and/or improvement services rendered
67
by the assignee, the assignor pays the assignee a fee,
recognised at its fair value, which can consist of rights on:
•a financial asset (financial asset method), or
•an intangible asset (intangible asset method).
The financial asset method applies when the assignee has
an unconditional right to receive contractually guaranteed
cash flows for construction services, regardless of the
actual use of the infrastructure.
The intangible asset method applies when, for
infrastructure construction and improvement services, the
assignee acquires the right to charge users for utilisation
of the infrastructure.
The intangible asset method applies to the Group’s gas
distribution network, so amounts invested on assets on
concession are recognised under intangible assets.
ENVIRONMENTAL CERTIFICATES
(GREEN CERTIFICATES, ETC.)
The Group holds various environmental certificates,
mainly grey (emission trading) and green certificates,
partly to meet its industrial requirements (own use) and
partly for trading purposes (trading activities).
Different valuation criteria are applied depending on the
purpose pursued at the time of purchase. Emission rights
or allowances and green certificates can be included in
other intangible assets. They are entered at their purchase
cost if, on the date of the financial statements, the Group
holds excess allowances or certificates compared to the
needs identified on the basis of the emissions released
during the year or the green certificates produced.
Emission allowances and green certificates assigned free
of charge are initially recorded at a nil value. Being an
asset of immediate use, it is subject to impairment testing
but not to amortisation. The salvage value is identified as
either the value in use or the market value, whichever
the greater. If the amount of the emissions released
exceeds, on the date of the financial statements, the
amount of the emissions assigned, including any acquired
emissions, a specific provision is created to cover the
excess amount. The allowances and certificates returned
annually in connection with the amount of polluting gas
emissions released into the atmosphere during the year
or productions effected will be offset by using the risk
provision set up in the previous year.
Any emission allowances and green certificates owned
and held during the year of trading are recognised as
inventories and assessed at fair value.
EQUITY INVESTMENTS IN ASSOCIATES
Equity investments in associates and joint ventures, which
were initially measured using the cost and the carrying
68
value method, were then increased or reduced to measure
the portion of the associate’s post-acquisition gain or loss
pertaining to the investor. The portion of associate’s gain
or loss for the year pertaining to the Group is identified
with the operating profit (loss) for the year. The value
of the equity investment is reduced for impairment in
accordance with IAS 36. In the event of write-down due
to impairment losses, the cost is recognised to income
statement. The original value is reinstated in subsequent
years if the reasons for the write-down no longer exist.
When the Group loses significant influence on a subsidiary
or joint control on a joint venture, it measures and
recognises the residual interest at fair value. The difference
between the carrying value of the investment on the date
of the loss of significant influence or joint control and the
fair value of the residual interest, and the consideration
received is recognised to income statement.
IMPAIRMENT OF ASSETS
At each reporting date, the Group assesses whether there
are any indicators that assets may be impaired. In such
a case, or in cases where an annual impairment test is
required, the Group estimates the recoverable amount.
The recoverable amount of an asset or a cash-generating
unit is the greater of its ‘fair value less costs to sell’ and
its ‘value in use’. The recoverable amount is determined
for an individual asset, unless the asset does not generate
cash inflows that are not largely independent of those from
those of other assets or groups of assets. It the carrying
amount of an asset is greater than its recoverable amount,
this asset has suffered a loss in value and is consequently
written down to its recoverable amount.
In determining the value in use, the Group discounts the
present value of the estimated future cash flows using
a discount rate before tax that reflects current market
assessments of the time value of money and the risks
specific to the asset. In determining the fair value less
selling costs recent transactions occurred in the market
are taken into account. If these transactions cannot be
identified, an appropriate valuation model is used. These
calculations are supported by valuation multipliers, prices
of listed shares to affiliates whose securities are traded on
the market, and other fair value indicators available.
The Group bases its impairment test on detailed financial
budgets and forecasts, which are prepared separately for
each cash-generating to which the individual assets are
allocated. These financial budgets and forecasts generally
cover a 5-year period. In the case of longer periods, a longterm growth rate is calculated for cash flow projections
over 5 years.
Impairment losses of continuing operations, including
impairment losses on Inventories, are recognised in
operating profit/(loss) for the year under the cost categories
consistent with the destination of the asset showing the
impairment loss. Exceptions are assets previously revalued
where the revaluation was recognised under other
components of comprehensive income. In such cases,
the loss of value is reversed in the other components of
comprehensive income up to previous revaluation.
For assets other than goodwill, at each reporting date,
the Group assesses whether there are indications of
previously recognised impairment loss (or reduction), if
these indications exist, estimates the recoverable amount
of the asset or the cash-generating unit. The value of a
previously written-down asset can be restated only if
changes in the assumptions on which the calculation of
the recoverable value was based occurred subsequent to
the last impairment loss. The reversal cannot exceed the
carrying amount that would have been determined, net
of depreciation, in the hypothesis that no impairment loss
had been recognised in previous years. Such reversal is
recognised in profit/(loss) for the period unless the asset is
carried at a revalued amount, in which case the reversal
is treated as a revaluation increase.
The following criteria are used for the recognition of
impairment losses relating to specific types of assets.
CURRENT AND NON-CURRENT CLASSIFICATION
Assets and liabilities are classified according to the
current/non-current criteria. An asset is classified as
current when it:
•is supposed to be realized in, or is held for sale or
consumption in, the normal operating cycle;
•is held primarily for the purpose of trading;
• is supposed to be completed within twelve months from
the balance sheet date;
•consists of cash or cash equivalents unless it cannot be
exchanged or used to settle a liability for at least twelve
months after the reporting date.
All the other assets are classified as non-current.
A liability is classified as current when:
•is expected to be extinguished during its normal
operating cycle;
•is held primarily for the purpose of trading;
•is to be settled within twelve months of the reporting
date; or
•the entity has not an unconditional right to defer the
settlement of the liability for at least twelve months after
the reporting date.
The Group classifies all the other liabilities as non-current.
Assets and liabilities for pre-paid and deferred taxes are
classified as non-current.
Goodwill
Goodwill is subject to impairment test at least once a year
and, more frequently, when there are indications that the
carrying value might be subject to any impairment loss.
Impairment of goodwill is determined by measuring the
recoverable amount of the cash-generating unit (or group
of cash-generating units) to which the goodwill relates. An
impairment loss is recognised whenever the recoverable
amount of the cash-generating unit was less than the
carrying amount of the cash-generating unit to which
the goodwill was allocated. Goodwill impairment losses
cannot be restated in future years.
FINANCIAL ASSETS
Upon initial recognition, financial assets are classified, as
appropriate, at the recognised fair value in the income
statement, loans and receivables, financial assets held
to maturity, financial assets held for sale or among the
derivatives designated as hedging instruments, where the
hedge is effective.
All financial assets are initially recognised at fair value, to
which are added transaction costs directly attributable to
the acquisition, except in the case of financial assets at fair
value recognised in the income statement.
The purchase or sale of a financial asset that requires
delivery within a time frame generally established by
regulations or market conventions (e.g. standardised
sales e regular way trades) is recognised on the trade
date, i.e. the date on which the Group has committed to
purchase or sell the asset.
For the purpose of subsequent measurement, financial
assets are classified in four categories:
•Financial assets at fair value recognised in the income
statement;
•Loans and receivables;
•Investments held up to maturity;
•Financial assets held for sale.
Intangible assets
Intangible assets with indefinite useful lives are tests for
impairment at least once a year, at a level of cash-generating
unit and when there exist indications of an impairment loss.
CASH AND SHORT-TERM DEPOSITS
Cash and short-term deposits comprise cash on hand and
demand and short-term bank deposits of a maturity of
maximum three months.
For the purposes of the consolidated statement of cash
flows, cash and cash equivalents are defined as specified
above, net of bank overdrafts.
69
FINANCIAL ASSETS AT FAIR VALUE RECOGNISED
TO INCOME STATEMENT
This category includes assets held for trading and
assets designated, upon initial recognition, as financial
assets at fair value with changes recognised in the
income statement. Assets held for trading are all those
assets acquired for sale or repurchase in the short term.
Derivatives, including those separated out, are classified
as financial instruments held for trading unless they are
designated as effective hedging instruments, as defined
in IAS 39.
The Group has not classified any financial assets at the
fair value recognised in the income statement. Financial
instruments at fair value with changes recognised in the
income statement are recorded in the balance sheet and
cash flow statement at fair value, while changes in fair
value are recognised as financial income or expenses in
the profit/(loss) statement.
The embedded derivatives contained in the main contract
are accounted for as separate derivatives and recognised
at fair value if their economic characteristics and risks
are not closely related to those of the host contract, and
the latter is not held for trading and recorded at fair value
with changes recognised in the income statement. These
derivatives are measured at fair value with changes in fair
value recognised in the income statement. A recalculation
is done only when there is a change of the terms of
the contract that significantly modifies the cash flows
otherwise expected or a reclassification of a financial
asset to a category other than fair value in the income
statement.
RECEIVABLES AND LOANS
This category includes non-derivative financial assets
with fixed or determinable payments, which are not listed
on an active market. After initial recognition these assets
are measured at amortised cost, using the actual interest
rate (AIR) criteria, net of any impairment losses. The
amortised cost is calculated by measuring any discounts,
purchase premiums, fees or costs that form an integral
part of the actual interest rate. The AIR is recognized as
financial income to operating profit (loss) for the year.
The write-downs resulting from impairment losses are
recognized as financial expenses to operating profit (loss)
for the year. This category normally includes trade and
other receivables.
Trade receivables are measured at the nominal value
shown on the invoice, net of allowance for bad debts. This
provision is made when there is objective evidence that
the Group will not be able to collect the receivable. Bad
debts are written off when they are identified.
70
FINANCIAL ASSETS HELD TO MATURITY
Financial assets that are other than derivative instruments
and are characterized by payments at a fixed or
determinable maturity, are classified as “investments
held to maturity” whenever the Group has the intention
or the capability of holding them to maturity. After initial
recognition, financial investment held to maturity are
measured at amortised cost, using the actual interest
rate method, less any impairment losses. The amortised
cost is calculated by measuring any discounts, purchase
premiums, fees or costs that form an integral part of the
actual interest rate. The actual interest rate is recognized
as financial income to operating profit (loss) for the year.
The write-downs are recognized as financial expenses to
operating profit (loss) for the year.
FINANCIAL ASSETS AVAILABLE FOR SALE
Financial assets available for sale include stocks and
bonds. Stocks classified as available for sale are those that
have not been classified as held for trading nor recognized
at fair value to income statement. Bonds coming under
this category are those held for an indefinite period of
time and those that could be sold in response to liquidity
needs or changes in market conditions.
After initial recognition, financial assets held for sale are
measured at fair value and their non-realised gains and
losses are recognised to OCI in the reserve of assets
available for sale, until the investment is derecognized,
i.e. when cumulative gain or loss is recognized in other
operating income or expenses - namely until such time
as there is an impairment loss - i.e. when the cumulative
loss is reversed from reserve and reclassified as financial
expense to operating profit (loss). Interest received during
the period in which financial assets available for sale
are held is recognized in financial gains, using the actual
interest rate (AIR) method. The Group verifies whether the
capability and intent to sell in the short term own financial
assets held for sale are still appropriate. Where, in rare
cases, the Group is unable to sell these financial assets due
to inactive markets, it may elect to reclassify these financial
assets if the management has the ability and intent to hold
them for the foreseeable future or until maturity.
For financial assets reclassified out of the available-forsale category, the previously recognized profit or loss
is recognized in income statement based on the residual
useful life of the investment, using the actual interest rate.
The difference between the new amortised cost and the
expected cash flows is amortized over the residual useful
life of the asset, by applying the actual interest rate. Is the
asset is subsequently impaired, the amount recognized in
shareholders’ equity is reclassified to operating profit (loss).
DERIVATIVES
Initial recognition and subsequent measurement
The Company uses derivative financial instruments such
as: exchange forward contracts, interest rate swaps and
forward contracts for the purchase of commodities to
cover, respectively, their currency exchange risks, interest
rate risks and price commodity risks. These derivative
financial instruments are initially recognised at fair value
at the date the derivative contract is entered into and are
subsequently re-measured at fair value. Derivatives are
recorded as financial assets when the fair value is positive
and as financial liabilities when the fair value is negative.
The purchase contracts that meet the definition of a
derivative in IAS 39 are recognised in profit/(loss) for the
year under the cost of sales item. The commodity contracts
entered into and maintained for receipt or delivery of a
non-financial item in view of expected purchase, sale or
use by the Company, are stated at cost
Any gains or losses arising from changes in fair value
of derivatives are recognised directly in the income
statement, except for the effective portion of cash flow
hedges, which is recognised in the other components of
comprehensive income and subsequently reclassified
to profit/(loss) account for the period, when the hedging
instrument has an impact on profit or loss.
For the purpose of hedge accounting, hedges are
classified as:
•fair value hedges, if they hedge the risk of changes in
fair value of the underlying asset or liability or against a
firm commitment not recognised;
•cash flow hedges, when hedging exposure to variability
in cash flows attributable to a particular risk associated
with a recognised asset or liability or a highly probable
forecast transaction or a currency risk related to an
irrevocable commitment not recognised;
•hedges of a net investment in a foreign operation.
When a hedging transaction is entered into, the Company
designates and formally documents the hedging relationship
to which it intends to apply the hedge accounting, its
risk management objectives and the strategy pursued.
The documentation includes identification of the hedging
instrument, the item or transaction being hedged, the nature
of the risk and how the company intends to assess the hedge
effectiveness in offsetting the exposure to changes in the fair
value of hedged item or cash flows attributable to the hedged
risk. It is expected that these hedges are highly effective in
offsetting the exposure of the hedged item against changes
in fair value or cash flows attributable to the hedged risk and
are evaluated on an ongoing basis to determine whether
these hedges are demonstrated to be highly effective in
periods for which they are designated as hedges.
Hedging transactions complying with strict hedge
accounting standards are state as follows:
Fair value hedges
The change in fair value of derivatives hedging interest
rates is recognised in profit/(loss) account for the period
under financial expenses. The change in fair value of
hedging instruments attributable to the hedged item is
recognised as part of the carrying value of the hedged
item and is also recognised in profit/(loss) for the year in
financial expenses.
As for fair value hedges relating to items recognised at
amortized cost, any adjustment to the carrying value is
amortized in the profit/(loss) account for the year over
the period to maturity with the effective interest rate (EIR)
method. Depreciation thus determined may begin as soon
as an adjustment exists but not after the date when the
hedged item ceases to be adjusted for changes in its fair
value attributable to the hedged risk.
If the hedged item is deleted, the unamortized fair value is
recognised immediately in profit/(loss) for the year.
When an unrecognised firm commitment is designated as
a hedged item, the subsequent cumulative changes in its
fair value attributable to the hedged risk are recognised as
assets or liabilities and the corresponding gains or losses
recognised in profit/(loss) for the year.
Cash flow hedging
The portion of the gain or loss on the hedging instrument
relating to the effective portion of the hedge is recognised
in other components of comprehensive income in the
reserve “cash flow hedges”, while the ineffective portion
is recognised directly among other operating expenses in
the profit/(loss) account for the year.
The ineffective portion of forward contracts on currencies
is recognised in financial expenses and the ineffective
portion of forward contracts on commodities is recognised
in other operating expenses or income.
The amounts recognised in the other components of
comprehensive income are transferred in profit/(loss) in
the period in which the hedged transaction affects the
income statement, for example when it detects the loss
or gain on the hedged item or when there is an expected
sale. When the hedged item is the cost of a non-financial
asset or liability, the amounts recognised in the other
components of comprehensive income are transferred
to the initial carrying amount of a non-financial asset or
liability
If the hedging instrument reaches maturity or is sold,
terminated or exercised without replacement (as part of
the hedging strategy), or if its designation of the hedging
71
instrument is revoked, or when the hedge no longer
meets the criteria for hedge accounting, any profit or
loss previously recorded under other components of
comprehensive income is recorded separately in equity
until the planned transaction is made or commitment
established on the foreign currency occurs.
Hedging of a net investment in a foreign operation
Hedges of a net investment in foreign operations,
including hedges of a monetary item recorded as part
of a net investment, are accounted for similarly to cash
flow hedges. Gains or losses on the hedging instrument
are recorded under other components of comprehensive
income for the effective portion of the hedge, while the
remaining part (ineffective) are recognised in profit/(loss)
for the year. On disposal of the foreign operation, the
cumulative value of these gains or losses are moved to
the profit/(loss) account for the year.
FAIR VALUE ASSESSMENT
The Group recognises financial instruments, such as
derivatives, and non-financial assets, such real estate
investments, at fair value at the end of each financial year.
The fair value is the price that would be received for the
sale of an asset, or that would be paid for the transfer of a
liability, in a normal transaction between market operators
on the date of assessment.
A fair value assessment assumes that the sale of the asset
or the transfer of the liability takes place:
•in the main market for the asset or liability; or, in the
absence of the main market,
• in the market most advantageous for the asset or liability.
The main market or the most advantageous market must
be accessible to the Group.
The fair value of an asset or liability is assessed by
adopting the assumptions the market operators would use
in determining the price of the asset or liability, assuming
that they act in their own economic interest.
An assessment of the fair value of a non-financial asset
considers the ability of a market operator to generate an
economic benefit by using the asset in the best possible
way or by selling it to another market operator who would
use it in the best possible way.
The Group uses assessment techniques to suit the
circumstances and for which it has sufficient data to
determine the fair value, maximising the use of significant
observable inputs and minimising the use of nonobservable inputs.
All assets and liabilities the fair value of which is assessed
or recognised in the financial statements are classified
according to the following fair value hierarchy:
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•Level 1 - (not adjusted) prices quoted on active markets
for identical assets or liabilities that are available on the
assessment date;
• Level 2 - inputs other than level 1 prices that are directly
or indirectly observable for the asset or liability;
•Level 3 - assessment methods for which inputs cannot
be observed for the asset or liability.
The fair value assessment is classified entirely at the
same level as the fair value of the lowest level input used
for the assessment.
For assets and liabilities recognised on a recurring
basis, the Group determines whether transfers occurred
between different levels by reviewing the classification
(based on the lowest level input that is significant for the
purpose of assessing the fair value in its entirety) at the
end of each financial year.
INVENTORIES
Inventories are valued at the cost and the net estimated
realisable value.
Cost is determined using the weighted average cost
method. The value of obsolete and slow-moving stock is
impaired in relation to the possible use or realisation, by
means of the provision of a specific materials obsolescence
allowance.
Inventories of work in progress are valued on the basis of
the cost incurred. Long-term work in progress are stated
on the basis of the percentage of completed work, and
the contract margin is recognised in the income statement
according to the state of progress of supplies.
FINANCIAL LIABILITIES
Financial liabilities are classified, on initial recognition,
including the financial liabilities at fair value recognised in
the income statement, including mortgages and loans, or
among the derivatives designated as hedging instruments.
All financial liabilities are initially recognised at fair value
plus, in the case of mortgages, loans and borrowings, and
transaction costs directly attributable to them.
Financial liabilities include Trade Payables and other debts,
mortgages and loans, including bank current overdrafts,
guarantees and derivative financial instruments.
The assessment of financial liabilities depends on their
classification, as described below.
Financial liabilities at fair value recognised
in the income statement
The financial liabilities at fair value with changes
recognised in the income statement include liabilities held
for trading and financial liabilities initially recognised at
fair value in the income statement.
Liabilities held for trading are those incurred for the
purpose of reselling them in the short term. This category
also includes derivative financial instruments entered
into by the Group that are not designated as hedging
instruments in a hedging relationship as defined by IAS
39. Derivatives are classified as financial instruments
held for trading unless they are designated as effective
hedging instruments. Gains or losses on liabilities held for
trading are recognised in profit/(loss) for the year
The financial liabilities are measured at fair value with
changes recognised in the income statement from the
date of initial recognition, only if IAS 39 requirements are
met. Upon initial recognition, the Group did not designate
financial liabilities at fair value with changes recognised in
the income statement.
Loans
After initial recognition, loans are measured at amortised
cost, using the actual interest rate method. Gains and
losses are recognised to income statement either when
the liability is written off or through the amortisation
process.
Amortised cost is calculated by recognising the discount
or acquisition premium and fees or expenses that form an
integral part of actual interest rate. Amortisation at actual
interest rate is recognised as financial expenses to profit/
(loss) statement.
DE-RECOGNITION OF FINANCIAL ASSETS
AND LIABILITIES
Financial assets
A financial asset (or, where applicable, part of a financial
asset or parts of a group of similar financial assets) is
derecognised primarily (i.e. removed from the balance
sheet / cash flow statement) when:
•the contractual rights to receive cash flows from the
asset have expired;
•the Group has transferred to a third party its rights to
receive cash flows from the asset or has assumed an
obligation to pay them in full without material delay and
either (a) has substantially transferred all the risks and
rewards of the asset, or (b) has neither transferred nor
substantially retained all the risks and rewards of the
asset, but has transferred control of the asset.
When the Group has transferred its rights to receive cash
flows from an asset or has entered into an agreement
under which it has contractual rights to receive the cash
flows of the financial asset, but assumes a contractual
obligation to pay the cash flows to one or more recipients
(pass-through), it assesses whether and to what extent
has retained the risks and benefits inherent to the
possession. In the event that it has neither transferred
nor retained substantially all the risks and benefits or
has not lost control of the asset, the asset continues to
be recognised in the financial statements of the Group’s
residual involvement in the asset. In this case, the Group
also recognises an associated liability.
The asset transferred and the associated liability are
measured so as to reflect the rights and obligations
pertaining to the Group. When the entity’s continuing
involvement is a guarantee on the transferred asset, the
involvement is measured based on the amount of the
asset or the maximum consideration received, and that
the entity could be required to repay, whichever the lesser.
Financial liabilities
A financial liability is derecognised when the obligation
under the liability is discharged, cancelled or expired.
When an existing financial liability is replaced by another
from the same lender on substantially different terms or
the terms of an existing liability are substantially modified,
such an exchange or modification is treated as a derecognition of the original liability and recognition of a
new liability, and the difference between the respective
carrying amounts is recognised in profit/(loss) for the year.
FINANCIAL INSTRUMENT OFFSETTING
DISCLOSURE
Financial assets or liabilities can be offset and the net
balance entered in the statement of equity and financial
position, provided that there exists a current legal right
to offset the recognized amounts and the intention to
settle the net residual amount or to recover the asset and
simultaneously discharge the liability.
IMPAIRMENT OF FINANCIAL ASSETS
At the end of each reporting period the Group assesses
whether there is any objective evidence that a financial
asset or a group of financial assets is impaired. There
is a loss of value when after initial recognition one or
more loss events intervene and have a reliably estimable
impact on the expected future cash flows of the financial
asset or group of financial assets. Evidence of impairment
may include indications relating to a financial difficulty on
the part of a debtor or group of debtors, inability to meet
obligations, inability or delay in payment of interest or of
substantial payments, likely to be submitted to bankruptcy
or other financial reorganization proceedings, and
observable data indicating a measurable decrease in the
estimated future cash flows, such as changes in scenarios
or economic conditions that are related to a financial crisis.
73
Financial assets carried at amortised cost
For financial assets carried at amortized cost, the Group
first considered whether there was an impairment loss
for each individually significant asset or collectively nonsignificant financial assets. Where there is no evidence of
significant or non-significant impairment of financial assets
evaluated individually, the asset is included in a group of
financial assets with similar credit risk characteristics and
is assessed collectively for the purpose of measuring the
impairment loss. The activities, which are considered
individually in the determination of impairment losses
and for which impairment is detected or persists, are not
included in the collective assessment of impairment.
The amount of any impairment loss identified is measured
by calculating the difference between the asset’s carrying
amount and the present value of estimated future cash
flows (excluding future expected credit losses that have
not yet occurred). The present value of cash flows is
discounted at the original effective interest rate of the
financial asset.
The value of the asset is reduced through the recognition
of an allowance for doubtful accounts and the amount of
the loss is recognised in profit/(loss) for the year. Interest
income (recorded as financial income in the profit/(loss)
for the year) continues to be accrued on the reduced
carrying amount and is calculated using the interest rate
used to discount the future cash flows for the evaluation
the loss of value. The loans and the allowance for doubtful
accounts are written off when there is no realistic prospect
of future recovery and all collateral has been realized or
have been transferred to the Group. If, in a subsequent
period, the amount of the estimated impairment loss
increases or decreases as a result of an event occurring
after the recognition of impairment, the impairment loss
is increased or reduced by adjusting the allowance. If a
reversed asset is subsequently recovered, the recovered
value is credited to profit/(loss) for the year as a reduction
in financial expenses.
FINANCIAL ASSETS AVAILABLE FOR SALE
The Group assesses on each reporting date whether there
is objective evidence of impairment of an asset or group
of financial assets available for sale.
In the case of equity instruments classified as available
for sale, objective evidence would include a significant
or prolonged decline in the fair value of the instrument
below its cost. The term “significant” is evaluated
against the original cost of the instrument and the term
“extended” against the period during which the fair value
has remained below the original cost. Where there is
evidence of impairment, the cumulative loss - measured
74
as the difference between the acquisition cost and the
current fair value, less any impairment losses on the
value of that financial asset previously recognized in the
statement of profit or loss - is removed from the OCI and
recognized in the statement of profit or loss. Losses due
to impairment of equity instruments are not restated with
effect recognized in income statement; any increase in
their fair value subsequent to impairment are recognized
directly to comprehensive income statement.
FINANCIAL ASSETS RECOGNISED AT COST
If there is objective evidence of impairment of an unlisted
equity instrument that is not recognised at fair value,
because its fair value cannot be measured reliably, or
a derivative instrument that is linked to that investment
instrument and must be settled by delivery of such
an instrument, the amount of the impairment loss is
measured as the difference between the asset’s carrying
amount and the current value of expected future cash
flows discounted at the current market rate of return of a
similar financial asset.
DIVIDENDS AND DISTRIBUTION OF ASSETS
OTHER THAN CASH AND CASH EQUIVALENTS
The Parent Company recognises a liability associated
with the distribution to its shareholders of cash and
cash equivalents or assets other than cash when the
distribution is appropriately authorized and is no longer at
the company’s discretion. Under the applicable company
law in Europe, a distribution is authorised when approved
by shareholders. The corresponding amount is recognized
directly in equity.
Distributions of assets other than cash and cash
equivalents are measured at fair value of the assets to be
distributed. The restatements of fair value are recognized
directly to shareholders’ equity. At the time of payment of
the dividend, any difference between the carrying amount
of the assets distributed and the carrying amount of the
dividend payable is recognized in the statement of profit
or loss.
PROVISIONS FOR CONTINGENCIES AND CHARGES
General
Provisions for contingencies and charges are recognised
when the Group has to settle a present obligation (legal or
constructive) originated from a past event and it is probable
that a future outflow of resources will be required to fulfil
that obligation, provided that a reliable estimate can be
made of its amount. When the Group deems that any
allowances allocated to a provision for contingencies and
charges will be partially or fully reimbursed, for example
in the case of risks covered by insurance policies, the
reimbursement is recognised distinctly and separately
under assets if, and only if, it is virtually certain. In
this case, the income statement shows the cost of the
related allowance, net of the amount recognised for the
reimbursement.
Allocation for decommissioning costs
This item relates to the allocation of site decommissioning
and renovation costs recognised as direct increment of the
assets to which they refer. This amount was calculated on
the basis of specific appraisals conducted by independent
experts. The type of activity carried out at the different sites
and the cost of reclamation of the area where the plant is
located were taken into consideration in the calculation of
the decommissioning costs. Decommissioning costs are
allocated based on the present value of expected costs
to settle the obligation, using estimated cash flows and a
discount rate before tax that reflects the risks specific to the
asset retirement obligations, and entail a corresponding
increase in the cost the asset item to which they relate.
The effect of the discounted liability is included in profit/
(loss) for the period as a financial expense. The estimated
future costs of decommissioning and reclamation is
reviewed annually. Changes in estimates of future costs
or in the discount rate applied are included to increase or
decrease the cost of the asset.
Contingent liabilities recognised
in a business combination
A contingent liability recognised in a business combination
is initially measured at its fair value. Subsequently it
is measured at the higher of the amount that should
be recognised in accordance with the requirements of
recognition of contingent liabilities (see above) and the
amount initially recognised less, where appropriate,
cumulative amortization recognised in accordance with
the requirements for the recognition of revenues.
EMPLOYEE BENEFITS
Employee benefits to be paid out subsequent to the
termination of the employment relationship (TFR) and
pension funds are valued using an actuarial method.
The benefits accrued in the year by employees are
recognised in the income statement under Personnel
expenses whereas the financial burden that the company
would incur if it asked the market for a loan of an amount
equal to the TFR is recognised as net financial income
(expenses). Following the enactment of Finance Act no.
296 of 27th December 2006, in accordance with IAS 19,
only the liability related to accrued TFR retained by the
company is valued, as the accruing amounts are paid to
a separate entity (supplemental pension scheme or INPS
social security funds). As a result, the Company will have
no obligations related to the future labour of the employee
(the so-called “Defined contribution plan”).
Costs related to the present value of the severance
indemnity, arising from the change of actuarial estimates
(on the trend of rates and actuarial assumptions) about
the assumptions made in previous years, are included in
other comprehensive income and recorded in a specific
reserve in equity (IAS 19 Reserve).
ASSETS HELD FOR SALE AND LIABILITIES
ASSOCIATED WITH ASSETS HELD FOR SALE
The Group classifies its non-current assets held for sale or
for distribution to shareholders of the parent company if
their carrying amount will be recovered principally through
a sale or distribution rather than through continuing use.
These Non-current assets classified as held for sale or
for distribution to shareholders are valued at the lower
of carrying amount and fair value less costs of sale or
distribution. Distribution costs are costs directly attributable
to the distribution, excluding financial expenses and taxes.
The condition for classification as held for distribution is
considered to be met only when the distribution is highly
probable and the asset or group being discontinued is
available for immediate distribution as is. The actions
required to complete the distribution should indicate that
the occurrence of significant changes in the distribution
or its cancellation are unlikely to occur. Management
is required to be committed to the distribution, the
completion of which should be expected within one year
from the date of classification. Similar considerations also
apply to operations and groups being discontinued and
held for sale.
Depreciation of property, plant and equipment and
amortisation of intangible assets ceases when these
assets are classified as held for sale or distribution to
shareholders.
Assets and liabilities classified as held for sale or
distribution to shareholders are disclosed separately
under current assets.
A group being decommissioned qualifies as discontinued
operation if it is:
•a component of the Group representing a CGU or a
group of CGUs;
•classified as held for sale or distribution to shareholders
or has already been disposed of in this way;
•a major independent line of business or geographical
area of operations.
Assets held for sale are excluded from the calculation of
75
the result for operating activities and are recognised in
profit/(loss) for the year on one row as net profit/(loss)
resulting from assets held for sale.
REVENUE RECOGNITION
Revenues are recognised to the extent that it is probable
that the economic benefits to be achieved by the Group
and the revenue can be measured reliably, regardless of
the date of collection. Revenues are measured at the fair
value of the consideration received or receivable, taking
into account contractually defined terms of payment and
excluding taxes and duties. The Group concluded that it is
working on own account in all contracts of sale as it is the
primary debtor, it has discretional powers on the pricing
policy and is also exposed to the inventory and credit risk.
For the purpose of revenue recognition, the following
specific recognition requirements should be complied with:
•Sale of goods
The revenue is recognised when the company has
transferred all the risks and property ownership-related
benefits to the acquirer, which generally coincides with
the date of delivery of the goods.
•Provision of services
The revenue is recognised at the time of completion of
customer service as specified in the supply contract.
When the outcome of a contract cannot be measured
reliably, revenue is recognised only to the extent that is
believed that the costs incurred meet the recoverability
requirements.
•Interest income
For all financial instruments measured at amortized
cost and interest-bearing financial assets classified as
available for sale, interest income is recognised using
the effective interest rate (EIR), which is the rate that
exactly discounts the future payments and receipts,
estimated over the expected lifecycle of the financial
instrument or a shorter period, if necessary, with
respect to the carrying amount of the financial asset or
liability. Interest income is classified as financial income
in the profit/(loss) for the year.
•Dividends
Dividends are recognised when the Group has earned
the right to receive payment, which is usually upon
approval by the shareholders at the Annual General
Meeting.
•Rental income
Rental revenues from property investments are
recognised on a straight-line basis over the duration
of the lease contract in effect at the reporting date and
are classified under revenues, taking into account their
operational nature.
76
GOVERNMENT GRANTS
Government grants are recognised when there is
reasonable certainty that they are received and that all
the conditions attaching to them are satisfied. Grants
related to cost components are recognised as revenue
but are systematically allocated to each period so as to
be commensurate with the recognition of costs that are
intended to offset. The contribution related to an asset is
recognised as revenue on a straight-line basis, over the
useful life of the asset concerned.
Where the Group receives non-monetary contribution, the
activity and its contribution are recognised at face value
and released to the income statement on a straight-line
basis over the expected useful life of the asset concerned.
In the case of loans or similar forms of aid provided by
government agencies or similar institutions, presenting
an interest rate lower than the current market rate, the
effect linked to the favourable interest rate is considered
a government grant. Financing, or the form of assistance,
is initially recognised and measured at fair value and a
government grant is measured as the difference between
the initial carrying value of the loan and the proceeds
received.
INCOME TAXES
•Current taxes
Current tax assets and liabilities are valued in the amount
expected to be recovered or paid to the tax authorities.
The tax rates and tax laws used to compute the amount
are those that are enacted or substantively enacted on
the reporting date.
Current taxes relating to items recognised directly in
equity are also recognised in equity and not in the profit/
(loss) for the year. Management periodically evaluates
positions taken in the tax return where the tax rules are
subject to interpretation and, where appropriate, shall
allocate provisions.
•Deferred taxes
Deferred taxes are calculated using the “liability
method” on temporary differences on the reporting
date between the tax bases of assets and liabilities and
the corresponding carrying values.
Deferred tax liabilities are recognised on all taxable
temporary differences, with the following exceptions:
- deferred tax liabilities arises from the initial recognition
of an asset or goodwill or liability in a transaction that
is not a business combination and, at the time of the
transaction, affects neither the operating result nor
the fiscal result;
-the reversal of taxable temporary differences
associated with investments in subsidiaries, associates
and joint ventures, can be controlled, and it is likely
that it will not occur in the foreseeable future.
Deferred tax assets are recognised for all deductible
temporary differences, tax credits and unused tax
losses carried forward, to the extent that it is probable
that sufficient future taxable income will be available,
permitting the use of the differences and deductible
temporary tax credits and tax losses carried forward,
except in cases where:
- the deferred tax asset related to deductible temporary
differences arises from the initial recognition of an
asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects
neither the operating result nor the fiscal result;
-deductible temporary differences associated with
investments in subsidiaries, associates and joint
ventures, deferred tax assets are recognised only to
the extent that it is probable that they will reverse in
the foreseeable future and that there will be sufficient
taxable income against which allow recovery of these
temporary differences.
The carrying amount of deferred tax assets is reviewed
on each reporting date and reduced to the extent
that it is no longer likely that sufficient future taxable
income will be available to allow all or part of the use
of such credit. Deferred tax assets not recognised are
reviewed on each reporting date and are recognised
to the extent that it becomes likely that taxable income
will be sufficient to allow recovery of these deferred tax
assets.
Deferred tax assets and liabilities are measured at the
tax rates that are expected to be applied in the year
when the asset is realized or the liability is settled, based
on tax rates that have been enacted, or substantively
enacted, on the reporting date.
Deferred taxes relating to items recognised outside
the income statement are also recognised outside the
income statement and, therefore, in equity or in other
comprehensive income statement, in line with the
element to which they refer.
Deferred tax assets and deferred tax liabilities are offset
where there is a legal right that allows compensation
of current tax assets and current tax liabilities, and the
deferred taxes refer to the same taxpayer and the same
tax authority.
Tax benefits acquired in a business combination, but
which do not meet the criteria for separate recognition
at the acquisition date, are recognised possibly later,
when new information are available on changes in facts
and circumstances. The adjustment is recognised as a
reduction of goodwill (up to the value of goodwill), in the
event that is detected during the measurement period,
or in the income statement, if detected later.
•Indirect taxes
Costs, revenues, assets and liabilities are recognised
net of indirect taxes, such as value added tax, with the
following exceptions:
- the tax applied to the purchase of goods or services is
non-deductible; in which case it is recognised as part
of the acquisition cost of the asset or part of the cost
recognised in the income statement
- Trade receivables and payables include the applicable
indirect tax.
The net amount of indirect taxes to be recovered from
or paid to the Treasury is included in the balance sheet
under receivables or payables.
7. Business combinations
The year 2015 saw the acquisition of Franciacorta
Rinnovabili and SCCA (Società Cremasca Calore), as
specified below.
FRANCIACORTA RINNOVABILI S.R.L.
In order to streamline business processes and optimise
the management of the plant, given the intention of the
majority shareholder Paradello Ambiente to sell its shares,
Franciacorta Rinnovabili decided to internationalise all its
biomass processing activities and adapt its administrative
management to comply with LGH Group’s standards by
implementing the SAP system. By notarial deed covering
the transfer of shares prepared and registered by notary
public Lesandrelli under no. 107.736/37.783 on 27th July
2015, Linea Energia acquired the stake of shareholders
Paradello Ambiente and CAUTO, equivalent to the
remaining 55% of the share capital, and became the sole
shareholder of Franciacorta Rinnovabili. On 15th December
2015 Franciacorta Rinnovabili was incorporated into
the controlling company by deed of merger registered
by notary public Lesandrelli under no. 108.234/38.053,
effective from 1st January 2016.
The purchase price at fair value amounted to €1,529,686.
The overall fair value of the investment amounts to
€2,781,427. Assets and liabilities are measured at fair
value at the acquisition date.
SOCIETÀ CREMASCA CALORE
On 1st July 2015, the LGH Group acquired 100% stake in
the share capital of Società Cremasca Calore, the owner
of the plant and district heating network of the town of
Crema, the aim being to strengthen the Group’s District
Heating line of business.
The purchase price, equal to fair value, amounted to
77
€4,994,285, thus generating €5,515,128 consolidation
difference. Assets and liabilities are measured at fair
value at the acquisition date.
8. Assets and liabilities held for sale
On 9th September 2015, it was resolved to sell part of
the urban hygiene business in the Lodi area to SOGIR.
As a result, the values pertaining to relevant assets and
liabilities held for sale were reclassified and the economic
values presented in summary form as the result of assets
held for sale. The fair value of this line of business is in
line with the carrying values. A summary of the figures
expressed in euros is given in the table below.
(€,000)
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
CURRENT ASSETS
Inventories
Tax and other assets
TOTAL ASSETS
SHAREHOLDERS’ EQUITY AND LIABILITIES
Operating result for the period
Total shareholders’ equity
NON-CURRENT LIABILITIES
Severance pay and other personnel-related provisions
Provisions for risks and charges and liabilities for landfills
Loans and current borrowings
CURRENT LIABILITIES
Loans and current borrowings
Tax and other current liabilities
TOTAL LIABILITIES
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES
78
31/12/2015
346,232
929,395
15,938
1,291,565
36,945
35,984
72,929
1,364,494
1,053,577
1,053,577
938,764
26,000
398,086
81,780
1,444,630
95,867
357,529
453,396
1,898,026
2,951,603
Explanatory notes to the financial statement
1. 1. Intangible assets
The table below provide a summary of movements in
intangible assets between 1st January and 31st January
Type of asset
Patents and intellectual
property rights
Concessions, licences,
trademarks and similar
rights
Assets not yet available
for use and advances
Total intangible assets
Net value
2014
Net
increase/
decrease
2015, including the effect of extraordinary transactions
that occurred during 2015, as described in previous
sections.
Amortisation
and
impairment
Impairment
effect
Transfers,
reclass.
and other
changes
Net value
2015
91
13
-49
0
55
21,298
15
-2,285
0
19,028
185,847
6,559
-9,411
0
15,948
198,943
2,703
20,314
0
-15,948
7,069
209,939
26,901
0
0
225,095
-11,745
* increases and/or decreases include extraordinary transactions described in the section on business combinations.
The item Patents and intellectual property rights
includes expenses incurred for the acquisition of software
and licences.
The item Concessions, licences, trademarks and
similar rights refers to one-time expenses incurred by
some group companies for the acquisition of concessions
relating to the distribution of natural gas in some
municipalities. These expenses are amortised over the
contractual term specified in the agreements.
This item also includes costs for the purchase of CIP6
rights applied to the National Transmission Grid Operator
on electricity tariffs and in connection with the entry into
operation during the year of the second waste-to-energy
plant in Parona.
The item Other intangible assets mainly refers to
the net carrying amount of assets given in concession
by municipalities and public bodies to individual group
companies by municipalities and public entities for
operating gas distribution (Linea Distribuzione) and district
heating (Steam).
Intangible assets not yet available for use mainly relate
to value of works carried out on natural gas networks,
connections and distribution plant in concession.
The residual amount refers to the cost of software
currently used by the group companies.
The depreciation rates are consistent with those applied
in 2014.
2. Goodwill
The residual value refers to an intangible asset with
an indefinite useful life and, hence, it is not subject to
systematic amortisation but, at least annually, it subject to
an impairment test.
This item was tested for impairment in accordance
with IAS 36, as specified in the relevant note 4, which
revealed the need to recognize an impairment loss of the
goodwill of Linea Ambiente for €731 thousand. Goodwill
as at 31st December 2015 increased as the result of the
extraordinary transactions described above.
In previous years there were no significant write-downs.
3. Property, plant and equipment
The following statement summarises the changes in
tangible assets between 1st January and 31st December
2015, including the effect of exceptional transactions in
2015, as described in previous sections.
79
Type of asset
Lands and buildings
Plant and equipment
Industrial and commercial
equipment
Work in progress and
advances
Other tangible assets
Total tangible assets
Net value
2014
Net
increase/
decrease*
Depreciation
and
write-down
Impairment
effect
Transfers,
reclassifications
and other
changes
Net value
2015
78,717
223,411
6,024
39,450
-4,434
-20,449
80,307
242,412
8,095
991
-1,942
7,144
10,808
960
11,815
332,846
379
47,804
11,768
-3,574
-30,399
0
0
8,620
350,251
* increases and/or decreases include extraordinary transactions described in the section on business combinations.
The increases related to the acquisition of SCCA and
Franciacorta Rinnovabili, as described in the section
on business combinations and the expansion and
modernization of existing plants.
In 2015 the Group did not sell assets of a particular
relevance.
The depreciation rates are consistent with those applied
in 2014.
4. Impairment test on goodwill and tangible
and intangible assets
According to IAS 36, since goodwill is an intangible
asset with an indefinite useful life, it is not amortised, but
it must be tested for impairment at least annually (the
so-called “impairment test”). Since goodwill does not
generate independent cash flows nor can it be transferred
80
separately, IAS 36 requires a test of its recoverable
amount, by determining the cash flows generated by a
group of assets to which the goodwill relates: the cashgenerating units (CGU).
According to the Group’s decisions in terms of corporate
policy and organisation, in measuring the goodwill,
reference was made to the various cash-generating units.
The Group identified the CGUs at subsidiary level.
This analysis was performed using the cash flows
obtainable from the Group’s Long-term Projections
plan, which was approved by the Board of Directors
and extended for subsequent periods according to the
foreseeable useful life of the assets and any changes in
their intended use and/or profitability.
The table below compares the goodwill in 2014 and 2015
by cash-generating unit.
CGU
as at 31st December 2015
Linea Group Holding
Linea Più
Linea Ambiente
Ecolevante
Astem Gestioni
Linea Gestioni
Linea Distribuzione
Linea Energia
Linea Com
Greenambiente
Franciacorta Rinnovabili
Total goodwill
During the year the Group launched a process of internal
reorganisation and rationalisation, which led to the total
spin off of Astem Gestioni into Linea Reti e Impianti, for the
part concerning the district heating business in Lodi, and
Linea Gestioni for the rest, with consequent re-allocation
of the related consolidation difference to the two target
companies.
The consolidation difference related to Linea Reti e Impianti
increased due to, among other things, to the acquisition of
the stake in SCCA, as described in the section relating to
business acquisitions, to which reference is made.
In order to determine the recoverable value of each CGU
as value in use, an estimate of the actual value of operating
cash flows was made for each CGU (as explicitly required
by the reference standards), over the business planning
period, as well as of a terminal value beyond period
covered by the business plan, according to the type of
investment and the operating sectors.
The period covered by the Plan for all the CGUs identified
is 2015-2020, with the exception of Greenambiente,
Ecolevante and Lomellina Energia, for which a longer
period has been used.
A terminal value was also estimated, by adopting the
following two methods, according to the specific business
sector pertaining to each CGU:
•capitalisation of the average prospective cash flow
•liquidation value
as at 31st December 2014
3,196
6,038
39,798
0
0
7,004
305
16,581
1,658
9,634
276
5,780
90,270
3,196
6,038
40,529
0
1,764
5,505
109
16,581
1,658
9,634
0
0
85,014
The Group carried out a sensitivity analysis of the
recoverable value of the various CGUs, by changing the
CGU cash flow discount rate and the average annual
growth rate in the long term. While maintaining the same
assumptions underlying the business plans, this analysis
did not show substantial deviations from the results
obtained. Even changing the “g” and WACC parameters
up to +1% applied to all rates, there would be no indicators
of impairment.
The discount rates, consistent with the flows described
above, were estimated by determining the average
weighted cost of capital. In particular, an average rate
of 5.4% was estimated for CGUs dealing in the gas
sector, 5.6% for those in the energy sector, 5.7% for
those in the environmental sector, 5.6% for those in the
telecommunications sector and 5.8% for multi-utilities.
The “g” parameter used is 1.5% for all CGUs, except for
the CGUs in the energy sector, where a parameter of 1%
was used.
5. Investments in associates
and other investments
As at 31st December 2015 the Group held the following
interests in associates (valued using the equity method)
and other minority interests, as detailed in the table below.
81
Company name
ASM Codogno S.r.l.
Ecofert S.r.l. in liquidazione
Franciacorta Rinnovabili S.r.l.
Bresciana Infrastrutture Gas S.r.l.
Total investments in associates
Inn.Tec. S.r.l.
Camuna Energia S.r.l.
Casalasca Servizi S.p.A.
Isfor 2000 S.p.A.
SABB S.p.A.
Gestione Multiservice Scarl
Cassa Padana Scarl
Crit
Idroenergia Scarl
Confidi Toscana Scarl
Blugas Infrastrutture S.r.l.
Total other investments
Total Equity Investments
It is worth noting that in 2015, the company Franciacorta
Rinnovabili was 100% taken over by the subsidiary Linea
Energia S.p.A.
The decrease in the value of the interest in ASM Codogno
is due to the distribution of reserves made during the year,
which led to a reduction in equity.
The investment in the company Inn.tec was entirely
written off in order to adjust the carrying amount to the
82
0
3,311
819
0
112
4,242
1
130
121
10
82
61
1
2
0
0
4,269
4,677
8,919
0
3,540
819
1,074
160
5,593
86
130
121
10
82
61
1
2
0
0
4,269
4,762
10,355
value of the equity pertaining to the Group, while Blugas
Infrastrutture was reclassified among the other equity
investments because, following the decrease in the % held
by the Group, from 45.74% to 27.51%, the company does
not exercise any significant influence over the investment.
Below is a summary of the financial and equity figures
referring to investments in the various associates,
resulting from their latest financial statements.
Blugas S.r.l.in
liquidazione *
Portion of the associate’s
balance sheet:
Current assets
Non-current assets
Current liabilities
Net assets
Portion of the associate’s
revenues and result for the
year:
Revenues
Result for the year
Ecofert S.r.l. in
liquidazione*
ASM Codogno
S.r.l.**
Bresciana Gas
Infrastrutture***
48.22%
48.00%
49.00%
50.00%
3,239
0
-2,724
-686
-171
67
1,829
-108
-82
1,706
4,185
6,736
-1,291
-2,872
6,758
1,626
5,503
-5,589
-1,411
129
48.22%
48.00%
49.00%
50.00%
0
-25
0
0
3,589
327
976
0
* Figures taken from the financial statements as at 31st December 2014
** Figures taken from the draft financial statements as at 31st December 2015
*** Figures taken from the financial statements as at 30th June 2015
6. Non-current financial assets
As at 31 December 2015 non-current financial assets
amounted to €22,605 thousand, down €15,076 on the
2014 figure (€37,681 thousand), partly due to payments
received in 2015.
This item comprises:
•€1,361 thousand medium/long-term loans granted by
Linea Distribuzione to some municipalities as part of gas
distribution agreements;
•the amount due after one year (equal to €12,532
thousand) of the financial recovery plan concerning
LGH and the shareholder AEM S.p.A. In this regard, it
is worth noting that the residual principal sum as at 31st
December 2015 of said AEM S.p.A.’s debt amounted to
€17,532 thousand, and that during the year the debtor
only paid the instalments of accrued interest up to 30th
June 2015, while the instalments due relating to the
principal sum have not been paid since 31st December
2014.
On 4th March 2016, LGH shareholders signed a
partnership agreement for the sale of 51% of the share
capital to A2A; completion is conditional on some
conditions being satisfied on or before 3 months from
the date of the agreement Among such conditions,
there is the obligation on the part of the partner AEM
S.p.A., debtor of a total amount of €29,964,940 as at
31st December 2015, to submit and assert a recovery
plan containing, among other things, the repayment on
st
the execution day of 50% of the sum owed to the LGH
Group as at 31st December 2015, i.e. €14,982,470, as
well as a redemption plan within a maximum of 5 years
for the residual 50%.
Moreover, AEM S.p.A. shall waive any claim related,
to be related and/or connected with the contractual
relations with each member of the LGH Group, except
for the lease agreement with Linea Com, covering the
fibre-optic network, the main elements of which shall be
redefined.
In consideration of the above, these financial statements
were prepared on the assumption that AEM S.p.A.
effectively submits to LGH a proposal concerning the
full repayment of its debt and a definition of its relations
with LGH and/or other member of the LGH Group, in
compliance with the above-mentioned agreement of 4th
March 2016.
Considering that AEM S.p.A. is formally part of said
agreement, the possibility that its proposal is expected
to be submitted in a short time is more than justified, and
similarly justified, if not right and proper, the accounting
policies adopted by the Board of Directors in preparing
the financial statements.
•the portion due after one year (€4,164 thousand) of
the financial recovery plan concerning LGH and the
shareholder Cogeme S.p.A. for the settlement of all
outstanding commercial balance between the two
groups;
83
•the residual value of the advance payment for a total of
€4,548 thousand paid by Linea Più to Sinit and aimed at
supporting its financial activity during its liquidation. The
advance was partially repaid during the year and it will
be repaid in full within 5 years.
and advance payments for fees to municipalities for the
amount of €759 thousand), and €2,102 thousand multiyear pre-paid expenses.
8. Taxes
7. Other non-current assets
DEFERRED TAXES
A year-on-year comparison of deferred tax assets and
liabilities entered in the 2015 financial statements is given
in the table below.
Receivables and other non-current financial assets
amounted to €2,861 thousand. They include non-financial
receivables due after 12 months (guarantee deposits
DESCRIPTION
Deferred tax liabilities:
amortisation and depreciation
financial assets
TFR and pension funds
derivatives, leases and loans
Prov. for taxes, liabilities and
charges
dividends
others
Deferred tax assets
amortisation and
depreciation
financial assets
TFR and pension funds
derivatives, leases and loans
provisions for contingencies
and charges
provisions for plant subsidies
others
others
TOTAL DEFERRED TAXES
84
Balance sheet as at
OCI
31st December 31st December
2015
2014
2015
33,087
6,715
659
986
2,388
35,670
9,252
659
1,464
3,231
12,384
Income statement
2015
158
2014
-2,425
-2,537
0
-420
-743
-1,127
815
542
861
5
11,493
891
-1,085
6.340
700
2,915
6,891
598
2,082
-551
102
833
-214
-1,844
-207
-27,590
-31,705
4,115
5,260
-24,957
-379
-446
-27,141
-158
-313
2,184
-221
-133
5,262
-8
-33
-1,078
-2,105
1,027
-1,197
-516
-37
-177
-1,367
-135
-486
851
98
309
1,690
1,443
-159
-272
3,909
58
100
0
TAXES FOR THE YEAR
A breakdown of income taxes for the years ended 31st
December 2015 and 2014 is given in the table below.
Description
2015
Total current taxes
IRES - Corporate income tax
IRAP - Regional business tax
Total deferred tax assets/liabilities
(related to the recognition and reversal of
temporary differences)
TOTALE
The €3,965 thousand drop in current assets from 2014
to 2015 is mainly due to the elimination of the Robin tax,
which was declared unconstitutional effective from 2015.
The decrease in deferred tax assets, after tax liabilities, is
the result of both temporary increases in taxable amount
and consolidation adjustments, and also of the effect of
the release of calculated deferred and prepaid taxation
2014
-9,238
-7,175
-2,063
-13,202
-9,159
-4,043
1,690
3,909
-7,548
-9,293
starting from 2017, with a 3.5% reduction in the rate (from
27.5% to 24%). This change did not entail any significant
impact on the Group.
The reconciliation between effective taxes and theoretical
taxes resulting from the application on profit before taxes
of the average rate for the years ending 31st December
2015 and 2014 is illustrated below.
2015
2014
IRES/corporate income tax
Amounts
Applicable average tax rate *
Income before taxes *
Theoretical tax liability
Total taxable amount
adjustments
CURRENT IRES
Rate
Amounts
Rate
27.50%
34.00%
10,901
2,998
6,516
2,215
15,194
20,422
7,175
65.83%
9,159
140.56%
* in the calculation of current taxes, it should be noted that the Robin Tax - at 6.5% in some business areas - had no impact on the 2015 result.
85
2015
2014
IRAP/regional income tax
Amounts
Applicable average tax rate
Income before taxes *
Theoretical tax liability
Total taxable amount
adjustments
CURRENT IRAP
Rate
Amounts
4.00%
4.00%
77,116
3,085
162,166
6,487
- 25,541
- 61,091
2,063
2.68%
Rate
4,043
2.49%
9. Inventories
The table below compares the figures as at 31st December
2015 and 2014.
31/12/2015
Raw materials
Provision for obsolete raw material inventory
Net raw materials
Semi-finished products and work in progress
Net semi-finished products
Green Certificates
Energy Efficiency Certificate (TEE) Buying Fund
Green Certificates
Total inventory at the lower of the cost and
realisation value
It is worth highlighting that the Group’s inventory stocks
are made up almost exclusively of materials purchased
for the construction of facilities or intended for ordinary
maintenance and repairs; those kept available as spare
parts for existing systems have been reclassified as
tangible assets and are subject to depreciation based on
their useful life.
The increase in raw materials mainly relates to the
natural gas storage plant, which was purchased for the
86
31/12/2014
Difference
13,216
-268
12,948
1,482
1,482
8,518
-531
7,987
11,723
-290
11,433
215
215
17,523
-1,109
16,414
1,493
-22
1,515
1,267
1,267
-9,005
-578
-8,427
22,417
28,062
-5,645
procurement of winter-time supplies to be delivered to
end users, and did not exist in 2014.
The increase in work in progress to order relates to
the construction of assets to order, in relation to waste
collection management operations.
The significant reduction in green certificates entered
under inventories and measured at fair value is to be
associated with the decrease in energy production.
10. Trade receivables
The following table presents a comparison of trade
receivables as at 31st December 2015 and 2014.
31/12/2015
Trade rec. from third parties for invoices issued
Trade rec. from third parties for invoices to issue
Total gross trade receivables
Provision for bad debts
Total net trade receivables
31/12/2014
153,220
97,978
251,198
-38,998
212,200
171,177
61,506
232,683
-37,330
195,353
A breakdown of amounts due from customers by maturity
(before deduction of the provision for bad debts) is
presented in the table below.
31/12/2015
Receivables current
Receivables overdue since 180 days
Receivables overdue since 360 days
Receivables overdue over 360 days
Total gross trade receivables
31/12/2014
153,702
32,507
12,196
52,792
251,198
The significant increase in current receivables is
attributable solely to the change in the billing system on
the part of the subsidiary Linea Più, which entailed delays
in the billing plans and the resulting increase (€+36,472
thousand) in the provision for invoices to be issued.
The transition to the new billing system also resulted
138,700
34,099
10,995
48,890
232,683
11%
-5%
11%
8%
8%
in a slowdown of credit management at Linea Più, and
a worsening of the ageing of receivables past due, with
particular impact on the oldest positions.
The table below shows the changes in the allowance for
doubtful accounts during the year.
31/12/2015
Opening balance of provisions for bad debts
Allocations
Uses
Closing balance
Delta %
37,330
5,387
-3,719
38,998
31/12/2014
34,103
4,790
-1,564
37,330
87
More details on the terms and conditions relating to
receivables from related parties are provided in the
specific note.
Trade receivables are non-interest bearing and the
average maturity is around 150 days.
11. Derivative financial instruments
This item reflects the positive fair value of derivative
contracts on interest rates and electricity prices as at 31st
December 2015.
31/12/2015
Derivative hedging contracts:
Interest rate swap
Commodity price swap
Derivative non-hedging contracts:
Interest rate swap
Commodity price swap
Total assets for derivative instruments
More details on the type and characteristics of contracts
are provided in Note 23 below.
12. Other current financial assets
As at 31st December 2015 current financial assets totalled
€19,196 thousand, compared to €7,904 thousand as at
31st December 2014. This figure includes:
•€10,969 thousand receivables from Seca S.p.A.,
resulting from the exercise of the put option and the
formalisation of the related recovery plan, which will
expire at the end of 2016. This resulted in the need to
classify all the above amount as current asset, with
88
31/12/2014
0
0
0
0
0
1,701
1,701
0
2,891
2,891
a consequent increase in the balance of this item,
compared to 2014;
•€5,311 thousand relating to the current portion of the
financial recovery plan established with AEM S.p.A.,
which also includes the instalments covering the principal
sum and accrued interest, which were unpaid at year end;
•€1,190 thousand relating to the current portion of the
loan granted to Cogeme S.p.A.
•€49 thousand relating to a current portion of the financial
borrowing granted to Ecofert S.r.l. in liquidazione.
•€1,677 thousand relating to a current portion of the
loan granted to Bresciana Gas Infrastrutture S.r.l.
13. Other current assets
The table below compares current assets as at 31st
December 2015 and 2014.
31/12/2015
VAT, duties and other indirect taxes
IRES an IRAP receivables
Advances and down payments
Non-financial receivables from associates
Accrued income and prepaid expenses
Other current receivables
Total other current assets
18,100
4,117
1,561
694
2,916
5,761
33,149
The increase, mainly related to the item Other current
receivables, is due to higher prepaid expenses and
advances to suppliers for activities not yet concluded and
invoiced in 2016.
Bank current account deposits earn interest at floating
rates. Refer to the cash flow statement at the beginning of
the explanatory notes for a more dynamic analysis of the
financial movement during the year.
15. Assets held for sale
As at 31st December 2015, Assets held for sale amounted
to €1,364 million and was made up of the assets relating
to the urban hygiene line of business in the Lodi area.
Difference
18,381
4,811
1,021
1,530
2,694
3,987
32,424
-281
-694
540
-836
222
1,774
691
14. Cash and Short-term deposits
Cash and short-term deposits amounted to €72.04 million
and include group’s bank and post-office current account
deposits and cash on hand.
31/12/2015
Bank and post-office current account
deposits
Cheques
Cash on hand
Total cash and short-term deposits
31/12/2014
31/12/2014
Difference
72,017
114,273
-42,256
0
21
72,038
0
17
114,290
0
-4
-42,252
16. Shareholders’ equity
The Group’s equity as at 31st December 2015 amounted to
€204.2 million, increasing by €3 million compared to the
31st December 2014 figure, as a result of the combined
effect of the 2015 result and the distribution of dividends.
The equity attributable to non-controlling interest
amounted to €27.2 million, down €4.2 million compared
to 31st December 2014,
For further details, reference is made to the movements in
the equity statement.
89
17. Current loans and borrowings (maturing within 12 months)
Beneficiary
Lender
Linea Group Holding
Institutional
investors
BCC Cremona
Cassa DDPP
Cassa DDPP
Lombardy Reg.
Auth.
BEI
Lomellina Energia
Pool di banche
Linea Energia
Unicredit
Linea Energia
Unicredit
Franciacorta
Rinnovabili
Mediocred.
Trentino
Linea Ambiente
Ex soci
Steam
Steam
Intesa S.Paolo
BP Milano
Lombardy Reg.
Auth.
Linea Group Holding
Linea Group Holding
Linea Group Holding
Linea Group Holding
Linea Group Holding
Steam
Linea Distribuzione
Linea Distribuzione
Linea Distribuzione
Linea Gestioni
UBI
Original
amount
(k€)
90
Rate
Current
portion
as at 31st
December
2014
300,000 28/11/2018 Fixed 3.875%
286,615
285,605
8,000 26/02/2019 Fixed 4.67%
5,164 31/12/2022 Fixed 5.25%
5,216 31/12/2022 Floating
Non-interest
765 30/06/2022
bearing
80,000 30/06/2020 Fixed 2.033%
Floating with
215,000 31/12/2024
derivative
Floating with
114,500 30/05/2021
derivative
Floating with
6,800 31/03/2027
derivative
Floating with
6,000 30/06/2026
derivative
Non-interest
32 31/12/2016
bearing
10,000 30/06/2019 Floating
800 30/06/2017 Floating
2,136
2,139
1,565
3,017
2,435
1,825
242
282
0
70,318
48,292
39,097
21,238
24,970
5,736
6,204
5,155
0
-
32
2,500
60
3,500
176
375
375
4,535
5.548
186
8
0
330
217
17
166
371
375
0
4,414
385,901
597
597
386,498
5,359
449,514
596
596
450,110
375 30/06/2025 Fixed 0.5%
13,000 30/12/2020
Cassa DDPP
620
Cassa DDPP
80
BCC Laudense
225
BCC Laudense
450
Lombardy Reg.
375
Auth.
Diversi
Leasing
9,924
Total bank borrowings and other loans
Steam
Tesi
597
Total shareholders’ loan
TOTAL CURRENT LOANS AND BORROWINGS
* with hedging derivative
Maturity
date
Current
portion
as at 31st
December
2015
31/12/2022
31/12/2017
31/12/2020
31/12/2023
Floating with
derivative
Floating
Fixed 7.5%
Floating
Floating
06/12/2021 Fixed 0.5%
diverse Floating
31/12/2016 Floating
No new loans were taken out during the year and the
Group has regularly paid the instalments due of existing
loans.
The following financial transactions of a certain
significance took place in 2015:
a) 100% takeover of SCCA S.r.l.’s share capital, which
was later incorporated into Linea Reti e Impianti, with
consequent write-off of its short and medium/longterm financial debts, for an overall amount of €19
million;
b)Acquisition of 55% of the stake in Franciacorta
Rinnovabili S.r.l., which was later incorporated into
Linea Energia, with consequent consolidation of its
financial debt, for an amount of €5.7 million;
c)Negotiation with Unicredit of a new €50 million
committed cash line at 24 months, which became
available for all effects and purposes in January 2015,
when the related contract was officially signed; e) Renegotiation of Lomellina Energia’s project loan.
In connection with current loans, the following is worth
of note:
•The “project financing” taken out by Lomellina Energia
with a syndicate of banks, where Intesa San Paolo
acts as lead bank, provides, among the cases of nonfulfilment, for a reduction of the Loan Life Coverage
Ratio (resulting from the ratio of the net current value
of the expected cash flow to the amount of the residual
debt) below 1.10.
•The loan taken out by Linea Energia with Unicredit
provides, for the year 2015, for the obligation to keep
the ratio of the principal amount of the loan, disbursed
and not yet repaid, to equity (including deferred
shareholders’ loans) equal to or greater than 2.80.
•The EIB loan is partly secured by a bank guarantee
issued by SACE.
In September 2015 it therefore made a request to EIB
and SACE to adapt the financial covenants accordingly.
The request was accepted and formalised as per
communications received on 10th March 2016.
are:
•NFP to EBITDA < 5,60
•EBITDA to Net Financial Expenses ratio > 4,30
•NFP to Equity ratio < 1,80
With reference to the financial statements closed on 31st
December 2015, all the above constraints and covenants
were complied with.
The following page shows a breakdown of all current
loans, with a timetable of the principal sum and interest
maturing over the next five years.
91
92
Cash and cash equivalents
Bank current account overdrafts
Intesa bank loan - e8m
UBI bank loan - e13m *
Cassa DDPP loan - e5.22m
Cassa DDPP loan - e620 thousand
Unicredit bank loan - e4m
Unicredit bank loan - e6m
Mediocred.Italiano bank loan e7.2m
BPER bank loan - e3m
Floating rate
Cassa DDPP loan - e5.16m
BCC CR bank loan - e8m
European Investment Bank loan e80m
LGH Eurobond e300m
LGH Regional Loan e765 thousand
Steam Regional Loan - e375 thousand
Linea Reti e Impianti Regional Loan e375 thousand
Fixed rate
> 1 < 2 years
> 2 < 3 years
> 3 < 4 years
> 4 < 5 years
> 5 years
642
11,625
0
0
0
15,775
0
40
0
0
11
11,625
0
11
493
108
84
1
0
> 1 < 2 years
75
0
40
75
15,924
312
922
8
0
92
40
0
0
2
11,625
0
2
343
> 2 < 3 years
75
300,000
40
75
16,074
0
329
966
74
3
0
0
1
0
0
1
192
> 3 < 4 years
75
0
40
75
16,225
346
248
0
0
> 4 < 5 years
75
0
40
75
8,170
364
0
0
0
1
0
0
1
38
56
0
0
0
> 5 years
75
0
82
75
0
788
0
0
0
0
0
0
0
0
52
0
0
0
0
126
0
0
30
45
25
0
72,038
110
0
1,013
261
31
4,000
6,000
7,221
0
0
0
0
1,059
261
31
0
0
0
0
0
109
0
0
0
0
0
0
0
1,107
261
31
0
0
0
0
0
96
0
0
0
0
0
0
0
1,158
261
31
0
0
0
0
0
78
1
0
0
0
0
0
0
1,211
261
31
0
0
0
0
0
58
2
0
0
0
0
0
0
0
521
62
0
0
(follows)
0
0
0
37
4
1
0
0
principal interest principal interest principal interest principal interest principal interest principal interest
< 1 year
124
126
1
0
296
880
8
0
< 1 year
93
* including instalments for derivatives
BCC Laudense bank loan e225 thousand
BCC Laudense bank loan e450 thousand
Unicredit bank loan - e114.5m*
Unicredit bank loan - e6.8m*
Mediocred.Trentino bank loan e6m*
Lomellina project loan - e215m*
BCC Crema bank loan e700 thousand
Intesa bank loan - e10m
BPMI bank loan - e800 thousand
MF Waste shareholders’ loan e3.6m
Steam shareholders’ loan e596 thousand
Other minor loans - e32 thousand
Factoring
Financial leasing
Floating rate
> 1 < 2 years
> 2 < 3 years
> 3 < 4 years
> 4 < 5 years
> 5 years
0
11
801
204
264
2,371
0
13
1
8
0
0
0
230
0
41
4,114
495
365
2,721
0
1,000
116
3,197
0
32
0
991
0
0
927
596
0
1,000
60
0
5,621
388
4,418
509
43
0
0
0
184
0
0
10
0
0
2,107
251
667
187
9
0
0
0
903
0
0
1,000
0
0
7,830
412
4,682
523
44
0
0
0
146
0
0
7
0
0
1,814
226
524
171
8
0
0
0
736
0
0
500
0
0
6,371
437
4,932
538
46
0
0
0
110
0
0
2
0
0
1,417
200
373
154
7
0
0
0
524
0
0
0
0
0
4,935
464
5,275
553
47
0
0
0
81
0
0
0
1,141
180
214
136
6
0
0
0
1,324
0
0
0
0
0
24,150
3,454
2,782
3,819
150
0
0
0
140
0
0
0
0
0
2,074
553
44
438
9
0
< 1 year
18. Current loans and borrowings (within 12 months)
Beneficiary
Lender
Gruppo LGH
Various
Linea Group Holding
Linea Group Holding
Linea Group Holding
Linea Group Holding
Linea Group Holding
Institut. investors
Intesa S.Paolo
BCC Cremona
Cassa DDPP
Cassa DDPP
Lombardy Reg.
Authority
BEI
Syndicate of
banks
Linea Group Holding
Linea Group Holding
Lomellina Energia
Linea Energia
Unicredit
Linea Energia
Unicredit
Franciacorta
Rinnovabili
Steam
Steam
Mediocred.
Trentino
Intesa S.Paolo
BP Milano
Former
shareholders
Linea Ambiente
Linea Distribuzione
Linea Distribuzione
Linea Distribuzione
Linea Distribuzione
Linea Distribuzione
UBI
Original
amount
(K€)
Bank
overdraft
300,000
8,000
8,000
5,164
5,216
Until
revocations
28/11/2018
31/12/2015
26/02/2019
31/12/2022
31/12/2022
Rate
Floating
Fixed 3.875%
Floating
Fixed 4.67%
Fixed 5.25%
Floating
765 30/06/2022 Zero
80,000 30/06/2020 Fixed 2.033%
Floating with
215,000 31/12/2024
derivative
Floating with
114,500 30/05/2021
derivative
Floating with
6,800 31/03/2027
derivative
Floating with
6,000 30/06/2026
derivative
10,000 30/06/2019 Floating
800 30/06/2017 Floating
Non-interest
32 31/12/2016
bearing
Floating with
13,000 30/12/2020
derivative
70 31/12/2015 Fixed 7.5%
620 31/12/2022 Floating
80 31/12/2017 Fixed 7.5%
6,000 31/12/2016 Floating
Cassa DDPP
Cassa DDPP
Cassa DDPP
Unicredit
Mediocredito
7,221
Linea Distribuzione
Italiano
Linea Com
Sparkasse
2,000
Linea Com
BP Emilia Rom.
3,000
Linea Gestioni
BCC Laudense
225
Linea Reti e Impianti BCC Laudense
450
Linea Reti e Impianti BCC Crema
700
Linea Più
Unicredit
4,000
Miscellaneous
Leasing
9,924
Total bank borrowings and other loans
MF Waste
Foster Wheeler
3,638
Total shareholders’ loans
94
Maturity
date
30/04/2016 Floating
31/03/2015
31/10/2015
31/12/2020
31/12/2023
30/12/2015
31/12/2016
Various
Floating
Floating
Floating
Floating
Floating
Floating
Floating
31/12/2016 Floating
Current
portion as
at 2015
Current
portion as
at 2014
110
2,032
11,190
0
880
296
261
11,191
800
840
281
261
40
40
71,320
8,467
2,720
15,641
4,270
4,170
652
539
365
0
1,000
116
1,000
110
32
-
1,013
969
0
31
8
6,000
9
31
7
0
7,221
0
0
0
0
41
0
4,000
991
112,557
3,197
3,197
115,754
107
600
30
40
79
0
915
48,159
3,197
3,197
51,356
Bank borrowings due within one year relate to both
overdrafts (€110 thousand) and the portion of medium/
long-term loans maturing by the end of 2016.
It is worth noting that the Group has put in place a cash
pooling zero balance system, according to which the bank
current accounts of the majority of the subsidiaries are
daily zeroed and the balance is transferred to “master”
current accounts held by the parent company. This makes
it possible to optimize cash flows within the Group.
19. Provision of employee leaving indemnities
31/12/2015
Employee leaving indemnities
Provision for extra-month’s salary
Provision for electricity discount
indemnities
31/12/2014
Difference
15,131
1,295
1,714
16,834
1,312
1,851
-10%
-1%
-7%
18,140
19,997
-9%
20. Provision for employee leaving
indemnities (TFR)
A breakdown of the provision for employee leaving
indemnities is given below.
31/12/2015
Opening Employee Leaving Indemnities (TFR)
Entry in the scope of consolidation
Liabilities held for sale
Current service cost
Financial expenses
Actuarial (gains)/losses
(benefits paid)
Closing Employee Leaving Indemnities (TFR)
The provision for employee leaving indemnities is part of
the Group’s defined benefit plans.
The Projected Unit Credit Cost (PUC) method was used
to determine this liability. A projection was made, based
on a series of financial assumptions (increase in the cost
of living, salary increases, etc.) of possible future benefits
that could be paid to each employee enrolled in the scheme
in the event of retirement, death, disability or resignation.
16,834
107
-931
532
338
-685
-1,057
15,131
31/12/2014
14,626
0
0
469
459
1,884
-604
16,834
The estimate of future benefits shall include any increases
in the length of service accrued and the presumed increase
in the salary level on the valuation date:
•the current average value for future benefits was
calculated on the valuation date on the bases of the
annual interest rate and the probability that each benefit
has to actually be paid;
•the liability for the Company was calculated by
95
identifying the portion of the current average value of
future benefits referring to the service already accrued
by the employee on the valuation date;
•the reserve recognised under IAS was identified on
Demographic assumptions
Mortality
Disability
Turnover rate
Early-retirement frequency
Financial assumptions
Increase in the cost of living
Discount rate
TFR increase
Discounting rate
Salary increase
Discount rate
TFR increase
Salary increase
31/12/2015
31/12/2014
Mortality rate index for Italian
population published by the General
Accounting Office, called RG48
Separate indices by age and gender,
adopted by the Italian Social Security
Institute (INPS)
2.00% each year
2.00% each year
Institute (INPS)
2.00% each year
2.00% each year
31/12/2015
31/12/2014
1.50% in 2016
1.80% in 2017
1.70% in 2018
1.60% in 2019
2.0% in and after 2020
2.30%
2.625% in 2016
2.850% in 2017
2.775% in 2018
2.700% in 2019
1.00% annual
21. Other employee benefits
The categories of employee benefits that are regulated
by IAS 19 comprise those paid after termination of
the employment relationship by some of the Group
companies (LGH, Linea Reti e Impianti, Linea Com and
96
the basis of the liability determined as above and the
provision recognised in the financial statements for
Italian statutory purposes.
The assumptions adopted are detailed in the table below.
0.60% in 2015
1.20% in 2016
1.50% in 2017 and 2018
1.86% annual
1.950% in 2015
2.400% in 2016
2.625% in 2017 and 2018
1.00% annual
Linea Distribuzione), known as “Energy Discount” and
“Extra month’s Salary”. Both benefits are regulated by the
Collective Bargaining Agreement, which establishes the
procedures for payment.
31/12/2015
Opening provision for “Energy Discount”
Financial expenses
(benefits paid)
Closing provision for “Energy Discount”
1,851
32
34
-142
-61
1,714
The provision for “Energy Discount” envisages the supply
of electricity for household use at a reduced rate for
employees who have been hired prior to 8/7/1996, have
terminated their service and their surviving spouses. The
Mortality
Disability
Family data / remarriage / family
leave
Retirement
Turnover rate
Discount rate
Actual change in energy cost
31/12/2014
1,433
23
47
417
-69
1,851
Projected Unit Credit (PUC) method was used to calculate
this liability and the assumptions set out in the table below
were taken into consideration.
31/12/2015
31/12/2014
INPS indices by age and gender
Achievement of the first retirement
requirement
1.00%
requirement
1.00%
31/12/2015
1.50% in 2016
1.80% in 2017
1.70% in 2018
1.60% in 2019
2.30% annual
0.50% annual
31/12/2014
0.60% in 2015
1.20% in 2016
1.50% 2017 and 2018
2.64% annual
0.50% annual
97
31/12/2015
Opening provision for “Extra month’s salary”
Financial expenses
(benefits paid)
Closing provision for “Extra month’s salary”
1,312
53
16
-55
-31
1,295
Under this employee benefit plan, a sum equivalent to 4
or 5 months’ salary (in addition to the employees’ leaving
indemnities) is paid in the event of termination of the
employment relationship on reaching the retirement age
or seniority in service.
Mortality
Disability
Retirement
Turnover rate
Discount rate
Discount rate
Salary increase
98
31/12/2014
The Projected Unit Credit (PUC) method was used to
calculate this liability and the assumptions set out in the
table below were taken into consideration.
31/12/2015
requirement
2.00%
31/12/2015
1.50% in 2016
1.80% in 2017
1.70% in 2018
1.60% in 2019
1.79% annual
1.00% annual
1,117
48
31
0
116
1,312
31/12/2014
requirement
2.00%
31/12/2014
0.60% in 2015
1.20% in 2016
1.50% 2017 and 2018
1.25% annual
1.00% annual
Employee benefit sensitivity analysis
As required by IAS 19R, the table below shows the
sensitivity analysis for each end-of-year actuarial
Sensitivity analysis
Turnover frequency
Inflation rate
Discount rate
Service cost 2015
Plan duration
assumption, an indication of the contribution for the year,
an indication of the average maturity of the obligation for
defined benefit plans and disbursements under the plan:
Change in assumptions
1,070
1%
1,106
1.40%
1,042
1.40%
1,087
-1%
1,051
-1.40%
1,116
-1.40%
111
19.72
Expected disbursements (years)
2016
2017
2018
2019
2020
73
48
51
54
58
99
22. Provisions for risks and charges
Provisions for risk and charges set up to cover potential
liabilities amount to €70.7 million, as against €69.9
million in 2014. A breakdown is given in the table below.
31/12/2015
Provision for asset dismantling and
restoration costs
Provision to cover subsidiaries’ losses
Provisions for claims with independent
consultants
Provision for royalties
Electricity tariff equalisation fund
Provision for INPS legal cases and claims
Provision for energy efficiency bonds, green
certificates and other contingencies
Provision for gas distribution concession fees
Other provisions
TOTAL PROVISIONS FOR RISKS AND
CHARGES
An overview of the main provisions by type is provided
here below.
a) The provision for asset dismantling and
restoration, totalling €62,485 thousand, relates to
the allocation of site dismantling and renovation costs
recognized as direct increment of the assets to which
they refer. This amount was calculated on the basis of
specific appraisals conducted by independent experts.
The type of activity carried out at the different sites
and the cost of reclamation of the area where the
plant is located were taken into consideration in the
calculation of the dismantling costs. The cost estimate
was based on current market prices, land reclamation
costs, the costs for demolishing and dismantling the
plant and machinery and other related charges.
The increase on the previous year is due to recognition
of the estimates resulting from the appraisals
conducted on the plants of Franciacorta Rinnovabili
S.r.l., Linea Energia S.p.A., the plants transferred from
LGH Rinnovabili S.r.l., incorporated by merger, and
Linea Reti e Impianti, for the plants transferred from
SCCA S.r.l., also incorporated by merger. A change is
100
31/12/2014
Difference
62,485
60,001
2,484
348
265
83
0
200
-200
0
722
210
1,513
846
210
-1,513
-124
0
0
154
-154
1,275
5,650
1,320
5,401
-45
249
70,690
69,910
780
also due to the discounting of the estimated values of
said appraisals at the end of 2015.
b) The provision to cover associates’ losses, totalling
€348 thousand, relates to the amount set aside
to reflect the presumable negative impact of the
liquidation procedure on Sinit S.r.l., as expressed
in liquidator’s projections, and of Blugas S.p.A. in
liquidazione, though to a lesser extent. The increase
during the year was due to the allocation related to
Blugas.
c) The provision to cover disputes with professionals
was related to potential tax litigation and it was written
off due to the elimination of the hedged risk.
d) The provision for landfill royalties was related to the
quantification of risk on environmental contributions to
be paid to the town of Augusta regarding the tariffs
on the waste delivered to the landfill. Following final
judgement order, the amount set aside was reclassified
under liabilities.
e) The provision for electricity distribution and sales
tariff equalisation, totalling €722 thousand as at
31st December 2015, hedges risks associated with the
distribution and metering of electricity.
f) The provision for INPS legal cases and claims,
totalling 210 thousand, was set up to cover costs arising
from a dispute in being with the Italian social security
institute (INPS) concerning unified family allowance
(CUAF) and maternity leave benefits accruing from
December 2001 to August 2002 (excluding February
2002), estimated at €210 thousand, which had been
set aside in previous years.
g) The provision for energy efficiency bonds, green
certificates and other contingencies, now zeroed
(€154 thousand in 2014), was set up to cover the
estimated difference between the hypothetical bond
purchase price and their repayment value established
by Regulatory Authority’s resolutions. This provision
was used during the year.
h) The provision for gas distribution concession
fees, totalling €1,275 thousand, relates to contract
obligations established in concession tenders of some
municipalities for the construction of networks or
facilities with free transfer at the end of the concession.
In calculating this provision, the requirements of IFRIC
12 were taken into account.
i) Other provisions for contingencies and charges
mainly consists of €3.5 million appropriation relating to
the recognition of the unfavourable outcome of a claim
regarding electricity tariff adjustment for the Lomellina
plant, details of which are provided in the litigation
section; it refers to a better estimate of liabilities in
consideration of the fact that the exact economic
impact has not yet been defined. It also includes
appropriations to cover interest expense on guarantee
deposits from customers, a provision to cover litigation
and appropriations relating to adjustments on urban
hygiene contracts and disputes with employees.
23. Derivatives-related liabilities
This item represents the fair value of derivative contracts on
interest rates and electricity and gas prices involving some
Group companies as at 31st December 2015. Derivative
contracts relating to interest rates and most of those
relating to commodity prices have all the requirements to
be classified as hedging instruments under the reference
principles. For these contracts, the annual change in fair
value is recognised directly in the cash flow hedge reserve
under equity (€634 thousand positive effect in 2015, net
of taxes), while for the remaining contracts, which do not
feature such requirements, the annual change in fair value
is recognised directly in financial income/expenses under
income statement (€71 thousand negative effect in 2015,
net of taxes).
The key figures of these derivatives are summarised in
the table below
31/12/2015
Derivative hedging contracts:
Interest rate swaps
Commodity price swaps
Derivative non-hedging contracts:
Interest rate swaps
Total liabilities for derivative instruments
31/12/2014
-5,818
-250
-4,259
-339
0
-964
-7,032
-2,103
-2,161
-8,862
101
A breakdown of derivative contracts as at 31st December
2015 is given in the table below.
DERIVATIVES TO HEDGE
INTEREST RATE RISK
Execution date
Effective date
Maturity date
Instalment frequency rate
Reference notional value
Residual notional value as at
31st December 2015
Fixed interest rate (company)
Floating interest rate (bank)
Mark-to-market value as
at 31st December 2015
DERIVATIVES TO HEDGE
INTEREST RATE RISK
Execution date
Effective date
Maturity date
Instalment frequency rate
Reference notional value
Residual notional value as at
31st December 2015
Fixed interest rate (company)
Floating interest rate (bank)
Mark-to-market value as
Hedging contract
for
Intesa-Lomellina
(1)
Hedging contract
for
BNL-Lomellina
(2)
Hedging contract
for
BNL-Lomellina
(1)
Hedging contract
for
BNL-Lomellina
(2)
22/12/2005
22/12/2005
30/06/2022
Semi-annual
48,822
29/06/2015
01/07/2015
28/06/2024
Semi-annual
4,337
22/12/2005
31/12/2007
30/06/2022
Semi-annual
48,822
29/06/2015
01/07/2015
28/06/2024
Semi-annual
4,337
13,264
6,096
13,264
6,096
3.8825%
Euribor 6m/360
1.045%
Euribor 6m/360
3.9125%
Euribor 6m/360
1.115%
Euribor 6m/360
-1,579
-196
-1,597
-205
Hedging contract
for
UBI-LGH
Hedging contract
for
Unicredit-Linea
En. (1)
Hedging contract
for
Unicredit-Linea
En. (2)
Hedging contract
for
Unicredit-F.Rinnov.
20/12/2011
01/07/2011
31/12/2021
Semi-annual
9,946
15/02/2013
29/11/2013
31/05/2021
Semi-annual
33,706
23/04/2015
31/12/2015
28/03/2024
Semi-annual
6,437
27/02/2014
31/12/2014
28/03/2028
Semi-annual
5,535
2,145
26,203
6,437
5,190
4.690%
Euribor 6m/360
da 1.05% a 1.85%
Euribor 6m/360
0.576%
Euribor 3m/360
1.98%
Euribor 3m/365
-394
-1,399
-42
-407
Non-hedging contracts are entered into by the Group
mainly for energy trading purposes and they periodically
adjust the difference between a fixed price and the average
value of the National Single Price (PUN) measured during
the reporting period.
102
24. Other non-current financial liabilities
As in the previous year, this liability was equal to zero as
at 31st December 2015.
25. Other non-current liabilities
These mainly relate to contributions for the creation of new
connections and guarantee deposits paid by customers
in relation to the supply of electricity, gas and water and
waste management contracts. A breakdown of this item is
given in the table below.
31/12/2015
Guarantee deposits for electricity services
Guarantee deposits for environment & waste
management
Multi-year accrued expenses and plant
contributions
Total other non-current liabilities
Multi-year accrued expenses more or less entirely
comprise contributions for networks and facilities made
by customers/user in accordance with the applicable
regulations concerning public services.
31/12/2014
8,610
9,104
-494
413
679
-266
36,600
35,210
1,390
45,622
0
44,993
0
630
26. Trade payables
A year-on-year comparison of this item is given in the
table below.
31/12/2015
Trade payables to third parties for invoices
received
Trade payables to third parties for invoices to
the received
Trade payables due to shareholders
Trade payables due to subsidiaries
Total trade payables
Difference
31/12/2014
Difference
86,833
89,708
-2,875
76,910
65,976
10,934
2,531
863
0
156,547
1,668
0
9,727
166,274
This item comprises amounts of a commercial nature
owed by the LGH Group to third parties and shareholders.
More details on the terms and conditions regarding related parties are given in the specific note.
103
27. Other current liabilities
31/12/2015
Annual deferred income and accrued
expenses
Payables to social security and welfare
institutions
VAT and other tax liabilities
Non-financial liabilities due to shareholders
Payables to employees
Deferred income and accrued expenses totalled €481
thousand and €1,661 thousand, respectively. They
were earmarked according to the accrual principal, and
represents portions of expenses and revenues over the
two periods.
Other short-term liabilities amounted to €8,526 thousand
and relate to non-trade payables due to the municipalities
- shareholders of LGH’s members (Cremona, Lodi, Pavia,
Rovato, Crema, etc.), amounts due to customers for
repayments and credit notes to issue, and amounts of a
fiscal nature due to ATO (Optimal Territorial Authority),
the Electricity Equalisation Fund and other public bodies.
31/12/2014
Difference
2,142
2,018
124
3,001
3,461
-460
4,634
10
5,664
8,526
23,977
4,737
1,272
5,990
5,308
22,786
-103
-1,262
-326
3,218
1,191
from tax calculations pertaining to the year, net of the
advances paid.
29. Available-for-sale liabilities
As at 31st December 2015, this item amounted to €1,898
million and relates to the liabilities of the urban hygiene
line of business in the Lodi area.
30. Liabilities directly associated
with the assets held for sale
28. Current tax liabilities
The €5 million amount recognised in 2014 relates to the loan
payable to the minority shareholder subsidiary Ecolevante
in connection with the put & call option on its 15% stake,
which was exercised in 2014 and fully paid in 2015.
Current tax liabilities relate to amounts due to fiscal
authority for IRES and IRAP (€700 thousand), arising
31. Revenues from sales
2015
Revenues from electricity prod., distr. & sales
Revenues from gas distribution/sales
Revenues from waste mgmt & environmental
hygiene
Revenues from district heating
Revenues from IT and telecom. services
Other revenues
Total revenues from sales
104
2014
% change
191,140
194,184
202,373
209,434
-5.55%
-7.28%
112,112
119,383
-6.09%
17,746
10,011
10,976
536,169
17,012
9,635
24,413
582,250
4.31%
3.90%
-55.04%
-7.91%
Compared to 2014, revenues from electricity activities
declined by 14.3%, mainly due to the decrease in the
selling prices, in line with the market trend, the cessation
of some incentives (CIP6 and green certificates on
production), a decline in production due to low rainfalls
and the termination of operations of the Rovato Energia
consortium.
Revenues from the gas sector declined by 4.8%, mainly
due to the decrease in selling prices.
Revenues from the environment sector dropped by 8.9%,
mainly due to interruption of deliveries to the Augusta
landfill and the demerger of the urban hygiene line of
business in Lodi in view of the planned transfer.
Revenues from heat management and district heating
increased by 5.7%, thanks to a more favourable climate,
though with milder temperatures compared to historical
averages, and the acquisition of the plant in Crema.
Revenues from IT and TLC services dropped by 11.0%,
due to the decrease in the turnover associated with the
works on the Cremona network, which were used to
recapitalize leasehold assets.
Other revenues dropped by 55.04%, mainly due to the
cessation of side businesses in the Lodi area and nonrecurring income items recorded in 2014.
Further details and an analyses on revenues from sales
are given in the business report.
32. Other income
2015
Contributions
Leases and rentals
Insurance indemnities
Refunds, credit notes and expenses
recovered
Gain on disposal of assets
Capital gains on assets
Other income
Other income
Contributions cover both the portion accrued in the year
for systems paid by users for new connections, and socalled “succession rights” paid on the transfer of existing
contracts. This item also includes contributions paid for
the production of electricity from renewable sources.
2014
% change
5,961
434
220
11,888
467
226
-49.86%
-7.07%
-2.65%
2,072
5,565
-62.77%
551
1,020
3,581
13,839
118
3,856
3,846
25,966
366.95%
-73.55%
-6.89%
-46.70%
The decrease is mainly due to a less number of Green
Certificates accrued by hydroelectric plants due to heavy
rainfalls in 2014 and low rainfalls in 2015.
105
33. Consumables and services
2015
Goods in stock
Electricity
Natural gas
Goods for resale
Fuels and lubricants
Stationery and printouts
Other goods
Maintenance and repair services
Banking charges and commissions
Insurance
Bill and parcel mailing and courier delivery
services
Waste transportation and disposal services
Advisory services and other outsourced
professional services
Telephone, computer & IT services
Energy carriage/transport services
Gas carriage/transport services
Advertising and promotion services
Personnel services
Services from shareholders
Subcontracted services
Other outsourced services
Fees and leases of municipality-owned
companies
Fees and leases of municipality-owned
assets
Fees and leases of third-party assets
Change in stock
Internal increases for capitalised assets
Other outsourced services
Total consumables and services
Further details and an analysis of the costs of consumption
of materials and services are given in the business report.
106
2014
% change
-6,988
-84,716
-125,402
-132
-4,386
-190
-11,870
-16,034
-3,089
-4,390
-4,500
-97,096
-131,435
-477
-4,748
-316
-12,409
-13,862
-2,943
-4,949
55.29%
-12.75%
-4.59%
-72.33%
-7.62%
-39.87%
-4.34%
15.67%
4.96%
-11.30%
-1,170
-1,519
-22.98%
-36,247
-42,173
-14.05%
-3,490
-3,726
-6.33%
-2,442
-60,597
-14,575
-959
-1,322
-118
-675
-4,155
-2,750
-53,705
-31,463
-1,035
-1,739
0
-3,271
-11,361
-11.20%
12.83%
-53.68%
-7.34%
-23.98%
nd
-79.36%
-63.43%
-2,898
-3,019
-4.01%
-10,126
-9,980
1.46%
-9,005
1,515
-2,963
-400,499
-8,017
1,002
5,331
-2,405
-437,755
12.32%
51.20%
-100.00%
23.16%
-8.51%
34. Personnel expenses
2015
wages and salaries
social security and welfare contributions
employees’ leaving indemnity
benefit pension and similar funds
other personnel expenses
Total personnel expenses
2014
-45,879
-14,810
-2,914
-90
-1,574
-65,267
The difference in personnel expenses is basically due to
the €2 million portion reclassified under assets held for
sale for the SOGIR line of business. Further details on
this item are given in the dedicated section of the business
report.
It should be noted that the provision for employee leaving
indemnities (TFR) and pension funds were determined
using the actuarial method. The amount of employees’
benefits accrued during the year was recognised in
Contingent liabilities relate to costs accrued in previous
years the exact amount of which could not be predicted.
The item “Other operating expenses” includes the
-47,020
-15,119
-3,062
-70
-2,028
-67,299
-2%
-2%
-5%
29%
-22%
-3%
the income statement under the relevant item, and the
figurative financial charge the Company would sustain if it
took out a loan on the market of an amount equal to the TFR
is recognised in net financial income (expenses). Actuarial
profit and losses that reflect the effects of changes in
the actuarial assumptions adopted are recognised in
shareholders’ equity for €661 thousand.
35. Other operating expenses
2015
Taxes and duties
Losses on receivables
Capital losses on assets
Characteristic contingent liabilities
Compensation and indemnities to third parties
Total other operating expenses
% change
2014
-3,000
-223
-350
-1,570
-542
-1,554
-7,239
% change
-3,099
-331
-2,243
-513
-1,567
-7,753
-3.19%
100%
5.74%
-30.00%
5.65%
-0.83%
-6.63%
administrative, legal and fiscal costs necessary for proper
operation of the various group companies, as well as
membership fees and donations.
107
36. Other net income (expenses)
2015
Capital gains and other extraordinary income
Capital losses and other extraordinary charges
Total other net income (expenses)
2014
1,386
-1,274
113
The amount of extraordinary charges is mainly attributable
to the adjustment of previous years’ revenues.
Noteworthy is the reversal of invoices to be issued for
about €1.1 million, as the result of the final judgement of
the Greenambiente litigation.
The figure regarding extraordinary income is mainly
Impairment of trade receivables took the following
variables into account:
• type and degree of discontinuity of underlying services
(energy, gas and waste management, etc.);
• type of underlying contracts (active, terminated, etc.)
• age of receivables
• credit status (in bonis, contested, subject to bankruptcy
proceedings, etc.)
• type of customer (individual, business, public authority,
etc.)
108
758
-1,300
-542
82.85%
-2.08%
-120.85%
attributable to the adjustment of previous years’ expenses
(namely in relation to Linea reti e Impianti).
37. Amortisation, depreciation
and write-down
2015
Amortisation of intangible assets
Depreciation of tangible assets
Other impairments of assets
Trade receivables impairment
Inventory impairment
Impairment of securities in current assets
Allocation to provisions for risks
Total amortisation, depreciation and
write-down
% change
2014
% change
-11,745
-30,399
-731
-5,387
-19
0
-897
-11,200
-43,768
-1,309
-4,790
-150
-6,435
4.87%
-30.55%
-44.16%
12.46%
100.00%
-100.00%
-86.06%
-49,176
-67,652
-27.31%
Details on the impairment effect are provided in the
relevant note.
The decrease in amortisation and depreciation allowances
is attributable to a revision of the estimated useful life of
the Lomellina Energia and Linea Distribuzione plants in
order to adapt them to actual expected lifecycle, as well as
to completion of the depreciation of assets put into service
in previous years.
38. Net financial income and expenses
2015
2014
cash
Positive change in derivatives fair value
Interest income for discounting
Interest income on bank and postal
accounts
Interest income on repayment plans
Overdue interest income
Other interest and financial income
Foreign exchange gains
Total financial income
Negative change in fair value of
derivatives
Interest expense for discounting
Interest expense and charges on bank
overdraft
Interest expense on medium/long-term
loans*
Financial expenses due to loan early
repayment
Financial expenses due to derivatives
early repayment
Interest expense on financial leases
Interest expense on factoring
Interest expense on customer guarantee
deposits
Overdue interest expense
Other interest expense and financial
expenses
Exchange losses
Total financial expenses
Total Net financial income (expenses)
not cash
% change
total
1,438
0
1,438
0
2,702
0
-47%
0%
708
0
708
930
-24%
800
444
2
0
1,954
310
3.092
0
0
4,840
1.110
3.536
2
0
6,794
1.150
830
183
0
5,795
-3%
326%
-99%
0%
17%
-1,509
-1,509
-1,824
-17%
-2,054
-2,054
-3,962
-48%
-598
0
-598
-672
-11%
-16,573
-2,213
-18,786
-18,043
4%
-130
0
-130
-49
165%
0
0
0
-448
-100%
-230
-429
0
0
-230
-429
-265
-607
-13%
-29%
0
-91
-91
-118
-23%
-132
-103
-235
-281
-16%
-10
-11
-390
-97%
-2
-18,104
-16,150
-2
-24,075
-17,281
0
-26,659
-20,864
0%
-10%
-17%
-5,970
-1,130
* including swap instalments
The overall result of financial management improved by
€3,583 thousand, compared to 2014, as the result of the
combination of various factors, the most significant of
which are detailed below.
•€+2,706 thousand overdue interest income, relating to
the allocation of invoices to be issued in the name of the
municipalities of the province of Syracuse for accrued
interest on overdue receivables;
•€+1,908 thousand increase resulting from the net
economic effect deriving from the discounting of
provisions for the recovery of non-current assets and
pension funds;
109
•€+93 thousand relating to less lease and factoring
interest expenses, as a result of the Group’s decision in
2015 to abandon this type of funding;
•€+367 thousand relating to less expenses resulting
from early repayment of loans and derivative contracts;
•€+74 thousand relating to less financial expenses on
bank current accounts, as the result of the waiver to
certain uncommitted cash lines and the renegotiation of
the terms and conditions of other lines;
•€-949 thousand relating to the net economic effect
resulting from the measurement at fair value of
derivatives designate as “pure hedge”, which only
applies to the purchase of commodities; •€-222 thousand interest income on banks, due to
reduced average cash on hand, mainly in the second
part of the year, following the completion of several
extraordinary transactions;
•€-743 thousand due to increased interest expenses on
medium/long-term loans, as the result of an increase of
about €39 million in the average value (€497 million
against €458 million in 2014), which was only partially
offset by a decrease of about 20 bps in the average cost
of borrowing;
•€+349 thousand relating to the net economic effect of
other financial income and expenses.
Further details on the interest rates expense and the
hedging instruments are provided in the Note 18.
39. Portion pertaining to associates’ results
2015
Revaluation of investments in associates
Impairment of investments in associates
Portion of results attributable to
associates
The above adjustments are attributable to the evaluation
of associates according to the equity method, using the
“normalised” equity value of the associates on the date
of closing of the consolidated financial statements, in
accordance with the accounting policy adopted by the
Group.
2014
337
-133
225
-73
50%
82%
204
152
34%
The revaluations basically refer to the step acquisition of
Franciacorta Rinnovabili since the evaluation at fair value
resulted in the recovery of write-downs recognised in
previous years. For further details, see Note 5.
40. Gains (losses) on equity investments
2015
Dividends from equity investments
Income from equity investments
Total gains (losses) on equity investments
110
% change
2014
% change
38
0
13
0
192%
0%
38
13
192%
41. Profit after tax for the year from
discontinued operations
As at 31st December 2015, the net result from assets held
for sale came to €1,054 million. It mainly refers to income
from the urban hygiene line of business in the Lodi area.
Other commitments
It is worth noting that as at 31st December 2014, the Group
had pledged the shares in Lomellina Energia S.p.A. (80%)
and MF Waste S.r.l. (51%).
43. Guarantees issued
42. Commitments
Commitments for investments
As at 31st December 2015 the amount of commitments for
investments was not significant.
Below is a summary table of the guarantees and
commitments assumed by LHG Group towards third
parties and in being as at 31st December 2015.
31/12/2015
Bank guarantee issued for loans to Franciacorta
Rinnovabili*
Bank guarantee for credit lines to Blugas
Joint-liability issued on bank guarantee for Blugas VAT
assets
Joint-liability issued on bank guarantee for
Blugas Infrastrutture VAT assets
Bank guarantee issued for credit lines to SINIT
31/12/2014
0
6,000
1,400
2,411
1,233
0
4,348
3,684
16,072
16,072
* as at 31st December 2014 Franciacorta Rinnovabili was outside the scope of consolidation
It is highlighted that, as to the reporting date, no requests
for payment of the bank guarantees granted for Sinit had
been received from the beneficiaries.
111
44. Related Party disclosures
The statement below lists the data relating to the Group’s
main transactions with related parties during 2015:
(€,000)
RELATED PARTIES
COGEME Rovato S.p.A.
Gandovere Depurazione S.r.l.
Cogeme STL
AOB2 S.r.l.
Chiari Servizi
AEM Cremona S.p.A.
KM S.p.A.
Aem Service S.r.l.
ASTEM Lodi S.p.A.
ASM Pavia S.p.A.
Line-Servizi
ASM Lavori S.r.l.
Infracom Italia S.p.A.
Tesi S.r.l.
ASM Codogno S.p.A.
ASM Isa S.p.A.
ASM Energia S.p.A.
ASM Vigevano e Lomellina S.p.A.
AMEC Foster Wheeler S.p.A.
Ekotrans S.r.l.
SCRP S.p.A.
Total Shareholders and their
subsidiaries
Municipality of Cazzago
Municipality of Crema
Municipality of Cremona
Municipality of Lodi
Municipality of Pavia
Municipality of Rovato
Total Shareholders and
municipality-owned companies
Ecofert S.r.l.
Bresciana Infrastrutture Gas S.r.l.
Total Associates
Topcom snc di Corsini Rafaele & C.
Legnoedilizia
Bonatti S.p.A.
Itec
BLS Consulting
Consorzio Informatica Territorio
Total Directors and Executives
TOTAL
112
RECEIVABLES
PAYABLES
EXPENSES
INCOME
7,352
32
153
4,525
42
33,828
61
1,164
1,541
2,414
39
3
3
8
661
3,272
0
0
0
0
193
658
0
55
49
0
3,209
2
2,414
544
495
1
595
5
7
11
0
1,563
8
5,907
64
514
1,523
0
117
81
0
1,803
0
376
528
655
0
219
101
58
51
0
1,781
2
15
58
1,781
4,236
329
737
5,583
494
6,914
68
470
1,544
2,316
387
37
5
14
325
2,524
1,018
0
0
0
544
55,291
16,101
9,149
27,545
322
387
3,218
4,288
17
554
93
1,978
1,129
428
1,612
0
65
852
1,630
371
1,170
102
828
3,878
9,727
6,359
59
1,555
8,786
5,240
4,190
22,406
49
1,864
1,913
0
135
135
4
484
484
1
8
66
75
66,065
15
2
17
21,358
65
5
74
13,548
2
5
20
47
74
50,509
Transactions established by the Group, LGH S.p.A. and its
subsidiaries with all the municipalities that are members
of municipality-owned companies, which are identified as
related parties, are mainly of a commercial nature and are
defined and regulated on the basis of specific agreements
or individual contracts that set out the conditions for the
performance of different services by each company of the
Group.
Disclosures regarding equity, economic and financial
transactions are shown, where relevant, in the various
items of the explanatory notes.
Relations with companies linked with some of the directors
and executives of the Group are listed at the bottom of the
table.
Terms and conditions of related party transactions
Sales with related parties are carried out at the market price
and conditions. The end-of-year balances are not secured
by collateral nor do they generate an interest, except for
those relating to the repayment plans established with
AEM S.p.A. and Cogeme S.p.A.
Transactions with subsidiaries and associates
Within the Group, Linea Group Holding S.p.A. provides
its subsidiaries and associates with general services (staff
services), namely ones relating with administrative and
legal affairs, personnel, purchasing, risk management,
communication, quality and safety, by pursuing
optimisation of the available human resources and
ensuring the use of their skills, with special emphasis on
the economies of scale in view of achieving economic
benefits for the entire Group. All the transactions are
regulated by specific service contracts based on market
conditions.
LGH S.p.A. also provides financial services linked to
short-term financing activities, acts as guarantor in favour
of the Group companies that take out loans directly with
credit institutions and provides central treasury services
under contracts established between the parties involved.
All these services are rendered at market conditions.
LGH S.p.A. and all its subsidiaries decided to opt for the
tax regime contemplated in art. 117 et seq. of Presidential
Decree no. 917/1986 as amended (the Tax Consolidation
Act). Under this law, the holding company is required to
submit the annual tax return for its subsidiaries and pay
the related corporate income tax (IRES). On the basis of
the estimated taxable income, the subsidiaries determine
the balance of their tax position and transfer their taxable
income to the holding company that has recorded an
amount receivable from or payable to the subsidiaries.
The resulting economic relations, mutual liabilities and
obligations are regulated by specific contracts.
45. Fair value
The statement below presents a comparison of the
carrying amount and fair value by category of the Group’s
financial instruments included in the financial statements.
Carrying amount
31/12/2015
Financial assets:
Interest rate swaps
Financial liabilities:
Non-current loans and borrowings
Current financial liabilities and loans
Interest rate swaps
Fair value
31/12/2014
31/12/2015
31/12/2014
72,038
0
1,701
114,290
0
2,891
72,038
0
1,701
114,290
0
2,891
-385,608
-54,840
-5,819
-1,214
-450,110
-51,356
-6,362
-2,500
-385,608
-54,840
-5,819
-1,214
-450,110
-51,356
-6,362
-2,500
113
The fair value of derivatives and loans was calculated
by discounting estimated future cash flows at prevailing
interest rates.
In compliance with the provisions of IFRS 13 and IFRS
7, a breakdown of the fair value valuation hierarchy for
Group’s assets and liabilities is given below.
31/12/2015
Financial assets / liabilities
measured at fair value
Assets
Total assets
Liabilities
Interest rate swaps
Total liabilities
Level 1
Level 2
31/12/2014
Level 3
Level 1
Level 2
Level 3
0
0
1,701
1,701
0
0
0
0
2,891
2,891
0
0
0
0
0
-5,819
-1,214
-7,033
0
0
0
0
0
0
-6,362
-2,500
-8,862
0
0
0
46. Remuneration of corporate bodies
The table below shows the fees paid to the directors, internal auditors and independent auditors of the parent
company in 2015.
2015
Corporate body
Directors
Internal auditors
Independent auditors
Total
114
Amount paid by
the parent
company
275
109
41
425
2014
Amount paid by
other Group
companies
560
443
267
1,270
Amount paid by
the parent
company
228
105
84
417
Amount paid by
other Group
companies
664
510
298
1,472
III.
Annual Report 2015
115
Statements of comprehensive income
(€,000)
STATEMENT OF
COMPREHENSIVE INCOME
Revenues from sales
Other income
Total revenues
Personnel expenses
Total costs
Gross operating margin
(EBITDA)
write-down
Financial income
Financial expenses
Portion relating to the operating
results from associates and joint
ventures
Income (expenses) from equity
investments
Pre-tax result from continuing
operations
Income tax expenses
Net results from continuing
operations
Net result of assets for discontinued
operations/held for sale
Net result
Other comprehensive income
statement items not to be
reclassified to separate income
statement in subsequent periods:
Change in IAS 19 reserve
Tax impact on change in IAS 19
reserve
Total comprehensive income/
(loss) after tax
116
related
parties
NOTES
1
2
1,309,045
3
4
5
6
-1,094,967
31.12.2015
14,663,280
8,962,449
23,625,729
-12,497,000
-9,906,360
-1,410,491
298,462
-23,515,389
related
parties
999,508
-1,730,727
31.12.2014
14,141,016
8,386,238
22,527,254
-12,005,742
-9,806,578
-1,209,141
-592
-23,022,053
110,340
-494,799
7
-7,338,572
-6,960,314
8
9
-7,228,232
6,096,762
-15,268,963
-7,455,113
6,265,728
-15.027.514
891,078
10
11
12
13
864,015
0
17,438,212
19,634,248
1,037,779
3,417,349
3,419,649
3,639,633
4,457,429
7,056,982
0
0
4,457,429
7,056,982
0
89,587
-369,264
-39,032
98,031
4,507,984
6,785,749
(€,000)
BALANCE SHEET AND
FINANCIAL POSITION
NON-CURRENT ASSETS
Intangible assets
- Goodwill
- Other Intangible assets
Property, plant and equipment
Investments in associates
Investments in associates and JVs
Deferred tax assets
CURRENT ASSETS
Inventories
Trade receivables
Derivative financial instruments assets
Current financial assets
TOTAL ASSETS
related
parties
NOTES
14
15
16
17
18
12
20
21
22
23
17,289,976
2,185,051
31.12.2015
3,195,111
619,863
118,112,395
254,463,997
4,269,053
6,544,152
92,579,082
69,579
479,853,232
62,906
13,321,058
related
parties
19,884,768
1,768,067
31.12.2014
3,195,111
977,571
109,259,652
247,235,977
4,269,053
7,172,492
86,046,581
69,579
458,226,112
26,652
10,683,338
24
25
26
27
0
5,594,793
96,330,384
18,567,657
61,510,028
189,792,033
28
669,645,265
4,189,586
70,007,722
16,249,798
104,812,824
201,780,334
0
660,006,446
117
(€,000)
EQUITY AND FINANCIAL
POSITION
(shareholders’ equity
and liabilities)
Share capital
Share premium reserve
Other reserves
Retained earnings (losses)
Result for the year
Total Shareholders’ equity
NON-CURRENT LIABILITIES
Provisions for employee leaving
indemnities
Provisions for risks and charges
Non-current loans and other
liabilities
Other non-current financial
liabilities
CURRENT LIABILITIES
Provisions for risks and charges
liabilities
Other current financial liabilities
Trade payables
Liabilities directly associated with
the assets held for sale
TOTAL LIABILITIES
TOTAL SHAREHOLDERS’
EQUITY AND LIABILITIES
118
related
parties
NOTES
31.12.2015
related
parties
31.12.2014
189,494,116
189,494,116
29
4,991,408
3,780,399
4,457,429
202,723,352
4,876,199
3,488,353
7,056,982
204,915,650
30
2,155,063
2,133,747
31
7,132,497
6,442,053
32
292,697,465
363,527,564
33
0
34
0
12
35
4,339,900
11,376,943
317,701,868
4,761,216
10,733,360
387,597,940
31
0
36
37
38
39
40
118,461,011
1,857,750
22,115,470
8,643,564
149,220,045
41
46,130,626
1,337,874
0
15,166,844
6,195,386
0
67,492,856
0
466,921,913
455,090,796
669,645,265
660,006,446
(€,000)
CASH FLOWS STATEMENT
31/12/2015
31/12/2014
INCOME FROM OPERATING ACTIVITIES AFTER TAX
4,457,429
7,056,982
Income from divested assets after tax
Adjustments to reconcile net income with financial cash flows generated from operating activities:
Depreciation and write-down of tangible assets
6,841,072
6,445,388
Amortisation and impairment of intangible assets
414,500
434,926
Other impairment of non-current assets
265,346
146,528
Allocation to the provision for employee leaving indemnities
461,798
391,491
Financial income/expenses
38,382
250,793
Allocation to the provision for contingent liabilities
-197,000
80,000
Allocation to the provision for contingent liabilities
Bad debt allowance
Net difference in provisions for severance indemnity
-428,591
-430,364
Net difference in provisions for risk and charges
887,444
-136,623
Net difference in deferred tax assets and liabilities
-421,316
1,600
Differences in current assets and liabilities:
(Increase)/decrease in inventories
-36,254
-6,740
(Increase)/decrease in trade receivables
-2,637,720
-5,897,386
(Increase)/decrease in other non-financial assets
-1,689,423
12,013,529
Increase/(decrease) in trade payables
9,396,805
4,454,354
Increase/(decrease) in tax liabilities
Increase/(decrease) in other non-financial liabilities
643,583
227,376
NET CASH FLOWS FROM OPERATING ACTIVITIES
13,538,626
17,974,872
Cash flows from investing activities:
Acquisition of tangible assets
-15,693,815
-10,686,568
Divestment of tangible assets
-265,346
-364,945
Net investments in intangible assets
-56,792
384,361
Net (investments)/divestments in financial assets
-2,822,618
Acquisition of subsidiaries, net of cash acquired
-4,405,402
NET CASH FLOWS FROM INVESTING ACTIVITIES
-23,243,973
-10,667,152
Cash flows from financing activities:
(Increase)/decrease in financial assets (including derivatives
-24,182,395
-14,224,666
assets)
Increase/(decrease) in financial liabilities(including derivatives
-7,172,482
61,606,142
liabilities)
(Increase)/decrease in receivables for dividends to receive
Dividend paid
-6,700,000
-8,000,000
Increase/(decrease) in share capital
Other changes in equity
CASH FLOWS FROM FINANCING ACTIVITIES
-38,054,877
39,381,476
NET CHANGE IN CASH AND CASH EQUIVALENTS
-43,302,796
53,746,178
Net cash and cash equivalents at the beginning of the period
104,812,824
51,066,646
Net cash and cash equivalents at the end of period
61,510,028
104,812,824
119
120
OCI=Other comprehensive income
Shareholders’ equity as at
31st December 2013
Allocation of Previous year
result
OCI from conferral
OCI
Result for the year
Other movements
Shareholders’ equity as at
31st December 2014
Allocation of Previous year
result allocation
OCI from conferral
OCI
Result for the year
Other movements
Dividends
Shareholders’ equity as
189,494,116
189,494,116
189,494,116
Share
capital
Statement of changes in equity
3,072,323
352,835
2,719,488
440,454
2,279,034
Legal
reserve
74,712
74,712
74,712
Merger
surplus
2,515,980
-263
4,147
2,512,096
64,560
368,635
2,078,901
Extraordinary reserve
-379,560
263
50,273
-430,096
-271,231
-158,865
IAS 19
reserve
Cash flow
hedge
reserve
0
0
0
0
3,488,351
-6,700,000
6,700,000
3,488,351
2,636,496
8,851,855
Profit
(losses)
brought
forward
0
50,273
4,457,429
0
-6,700,000
0
204,915,650
0
-271,231
7,056,983
64,560
0
206,065,338
Total
Shareholders’
equity
4,457,429 202,723,352
4,457,429
-7,056,982
7,056,982
7,056,982
-3,445,585
3,445,585
Result for
the year
Explanatory notes
I. General information
Publication of Linea Group Holding S.p.A.’s financial
statements for the year ended on 31st December 2015
was authorized by the Board of Directors on 31st March
2016. The Company is registered and domiciled in Italy.
The LGH Group is a multi-utility company founded in
October 2006 following the merger of five local utility
companies. Its organisational structure is characterised
by the concentration of corporate functions in the
parent company Linea Group Holding S.p.A. and by the
management of the business units through dedicated
companies or special-purpose companies.
Linea Group Holding S.p.A. deals with all the Group’s
strategic, development, co-ordination and control
activities and policies.
The customer base accounts for over a million inhabitants
in 250 municipalities in the provinces of Bergamo, Brescia,
Cremona, Lodi and Pavia.
II. Basis of presentation
The financial statements of the Company have been
prepared in accordance with the international accounting
standards issued by the International Accounting
Standards Board (IASB) as endorsed by the European
Commission.
Reference is made to the initial notes to these financial
statements under the consolidation section for the
enunciation of the principles used in preparing this
document and the related normative updates.
Explanatory notes to the financial statements
1. REVENUES FROM SALES - e14,663 thousand (€14,141 thousand in 2014)
(€,000)
REVENUES FROM SALES
2015
Revenues from fleet management
Revenues from service contracts with
subsidiaries
Revenues from service contracts with third
parties
Revenues from the sale of other services
TOTAL REVENUES FROM SALES
Revenues from goods sold and services rendered,
totalling €14,663 thousand as at 31st December 2015,
refer to services provided to other companies in the LGH
Group for €13,068 thousand and municipality-owned
companies, which are LGH’s shareholders, for €1,255
thousand.
The slight increase in revenues from service contracts
2014
% change
2,515
2,834
-11%
10,553
9,982
6%
1,255
1,161
8%
340
14,663
164
14,141
106%
4%
with subsidiaries is due to re-negotiations of contracts in
being.
Revenues also include proceeds from services associated
with the management of the fleet of vehicles of the entire
group, including the recognition of maintenance and
service costs for a total amount of €2,515 thousand.
121
2. OTHER INCOME - e8,962 thousand (e8,386 thousand in 2014)
(€,000)
OTHER REVENUES AND GAINS
2015
Leases and rentals from networks and
facilities
Leases and rentals from real estate property
Portion of annual contributions for facilities
Revenues from personnel secondments
Other operating expense reimbursements
Expense reimbursement
Contingent assets from characteristic
management
Other revenues
TOTAL OTHER INCOME
Other income, totalling €8,962 thousand (€8,386
thousand in 2014), mainly refer to rentals for the use
of the Lodi and Cremona district heating facilities and
the Cremona electricity distribution grid, owned by LGH
but managed by Linea Reti e Impianti, for an amount of
€6,630 thousand.
2014
% change
6,630
6,313
5%
439
556
154
747
401
437
516
154
491
323
0%
8%
0%
52%
24%
33
133
-75%
2
8,962
19
8,386
-89%
7%
Other revenues include €439 thousand rentals charged
back to subsidiaries for Lodi and Pavia, which were
reversed by their municipality-owned companies.
This item also includes the portion of annual contributions
from users for connections, totalling €556 thousand, and
contingent assets and sundry revenues for €33 thousand.
3. CONSUMABLES AND SERVICES - e12.497 thousand (e12.005 thousand in 2014)
(€,000)
CONSUMABLES AND SERVICES
Costs for raw materials, supplies, consumables
and goods
Fees paid to directors, consultants and auditors
Maintenance and repair costs
Insurance, banking and financial service expenses
Commercial and entertainment expenses
SOT/SOB service expenses
Third-party services
Other general services
Subcontracted work and services
Leases and rentals
TOTAL CONSUMABLES AND SERVICES
122
2015
2014
% change
-2,348
-2,016
16%
-981
-1,362
-1,143
-598
-2,112
-390
-2,205
-283
-1,074
-12,497
-1,121
-1,309
-880
-628
-2,428
-457
-1,876
-122
-1,168
-12,005
-12%
4%
30%
-5%
-13%
-15%
18%
132%
-8%
4%
The costs for the purchase of raw materials and service
came to €12,497 thousand (€12,005 thousand in 2014).
The €492 thousand increase on the previous year is
mainly due to:
•the increase of €332 thousand in costs for raw
materials, €263 thousand in costs for insurance and
bank services for and €329 thousand in costs for other
general services;
•a decrease of €140 thousand in costs for remuneration
paid to directors and employees, and of €316 thousand
in costs for services from SOTs/SOBs.
4. PERSONNEL EXPENSES - e9,906 thousand (e9,806 thousand in 2014)
(€,000)
PERSONNEL EXPENSES
2015
Wages and salaries
Social security and welfare contributions
Employee leaving indemnity
Other expenses
TOTAL PERSONNEL EXPENSES
2014
-6,799
-2,085
-462
-561
-9,906
Personnel expenses relate to Linea Group Holding’s
employees and include €144 thousand other expenses
referring to temporary work.
% change
-6,810
-2,095
-391
-510
-9,806
0%
0%
18%
-5%
0%
For more information on personnel expenses, reference
is made to the relevant section of the Directors’ Business
Report.
5. OTHER OPERATING EXPENSES - e1,410 thousand (e1,210 thousand in 2014)
(€,000)
OTHER OPERATING EXPENSES
2015
Membership fees
Charitable donations and gratuities
Taxes and duties
Fines, penalties and sanctions
Capital losses and contingent liabilities
Other operating costs and expenses
TOTAL OTHER OPERATING EXPENSES
Other operating costs amounted to €1,410 thousand as at
31st December 2015, with an increase of €200 thousand
on the previous year.
This increase is mainly due to the increase in various
taxes and duties, as the result of non-deductible VAT for
2014
-170
-60
-708
-11
-409
-52
-1,410
% change
-237
-65
-310
-65
-410
-123
-1,210
-28%
-8%
128%
-83%
0%
-58%
17%
€529 thousand, compared to the previous year (€118
thousand).
Other operating expenses also include administrative, legal
and fiscal costs that are necessary for the establishment
and correct operation of the company.
123
6. OTHER NET INCOME (EXPENSES) - e298 thousand (e-1 thousand in 2014)
(€,000)
OTHER NET INCOME (EXPENSES)
2015
Utilisation of provisions for electricity supply
discount to employees
Utilisation of provisions for inventory
write-down
Release of provisions for risk and charges
Previous years’ taxes and duties
Other income
TOTAL OTHER NET INCOME (EXPENSES)
This item includes extraordinary activity and inventory
write-downs.
Changes on 2014 are justified by the utilisation of the
provision relating to risks associated with disputes with
2014
% change
0
4
-100%
0
12
-100%
280
18
-1
298
0
-17
0
-1
100%
-206%
0%
n.s.
employees for €80 thousand, which was set aside in
2014, and the provision relating to legal disputes for €200
thousand.
7. AMORTISATION, DEPRECIATION AND WRITE-DOWN - e7,339 thousand
(e6,960 thousand in 2014)
(€,000)
AMORTISATION, DEPRECIATION AND
WRITE-DOWN
2015
Depreciation of tangible assets
Amortisation of intangible assets
Allowance of provisions for risks and charges
TOTAL AMORTISATION, DEPRECIATION
AND WRITE-DOWN
The increase in amortisation and depreciation compared
to the previous year is attributable to the new assets that
were put into service in 2015.
The €83 thousand allocation to the provision for
124
2014
% change
6,841
415
83
6,445
435
80
6%
-5%
4%
7,339
6,960
7%
contingencies refers to the expected cancellation of the
interest in Blugas S.p.A. in liquidazione (in liquidation), as
envisaged in the liquidation financial statements.
8. FINANCIAL INCOME - e6,097 thousand (e6,265 thousand in 2014)
(€,000)
FINANCIAL INCOME
2015
Interest income from bank and post office
accounts
Interest income from shareholders’
repayment plans
Interest income from Seca put repayment
plans
Interest income from loans to subsidiaries
Interest income from cash pooling current
accounts
Other interest and financial income
TOTAL FINANCIAL INCOME
For the sake of clarity, it was decided to provide a
breakdown of this item for the previous year.
The amount of €610 thousand stands out among financial
income figures. It refers to interest on loans granted to
subsidiaries, due to new disbursements made in 2015 in
favour of Linea Distribuzione to fund the investments of
2014
% change
700
909
-23%
891
1,123
-21%
212
259
-18%
2.466
1,856
33%
1,827
2,099
-13%
1
6.,097
19
6,265
-95%
-3%
the EIB plan, and of Linea Rete e Impianti for the early
repayment of financial loans in being at the time of the
acquisition of SCCA.
The other types of income are all declining, due to the
decrease in short-term rates and the underlying financial
assets.
9. FINANCIAL EXPENSES - e15,269 thousand (e15,027 thousan in 2014)
(€,000)
FINANCIAL EXPENSES
2015
Interest expense on bank overdrafts
Interest expense on cash pooling current
accounts
Interest expense for provision discounting
Interest expense on medium/long-term loans*
Sundry interest and financial expenses
TOTALE FINANCIAL EXPENSES
2014
% change
-457
-947
-52%
-472
-570
-17%
-257
-14,079
-4
-15,269
-257
-13,248
-5
-15,027
0%
6%
-20%
2%
* Including the amortised cost effect
For the sake of clarity, it was decided to provide a
breakdown of this item for the previous year.
The increase in interest expense on medium/long-term
loans is due to the fact that interest referring to the EIB
loan was accounted for over the entire financial, since the
disbursement took place in the second half of 2014. It is
125
worth noting that the second bond coupon for the amount
of €11.6 million was paid in November 2015.
The considerable reduction in expenses relating to bank
overdrafts is the result of the waiver to some uncommitted
cash lines and the renegotiation of the terms and conditions
of other credit lines.
Interest expenses on cash pooling also decreased, as the
result of a decline in short-term loan rates.
Interest expenses for the discounting of provisions derive
from the adjustment of provisions covering employee
leaving indemnities (TFR), supplementary TFR and
electricity discounts.
Among sundry interest expenses, noteworthy is the
recognition of financial expenses resulting from the
discounting of provisions covering employee leaving
indemnities (TFR), supplementary TFR and electricity
discounts, for an amount of €260 thousand.
10. PORTION RELATING TO THE OPERATING RESULTS FROM ASSOCIATES AND JOINT
VENTURES - e0 thousand (e0 thousand in 2014)
In the 2015 financial statements the item entitled “Portion of result attributable to associates and joint ventures”
show a zero value.
11. INCOME (EXPENSES) FROM EQUITY INVESTMENTS - e17.438 thousand
(e19.634 thousand in 2014)
(€,000)
2015
Dividends from subsidiaries
TOTAL
2014
17,438
17,438
19,634
19,634
Income from equity investments came to €17,438
thousand. It refers to dividends on income earned by
subsidiaries in 2014 and approved in April 2015.
(€,000)
DIVIDENDS
2015
Linea Ambiente
Aem Gestioni
Linea Energia
Astem Gestioni
Greenambiente
Linea Più
Linea Distribuzione
TOTAL
126
2014
3,100
8,800
900
550
4,088
17,438
3,730
2,550
1,590
1,540
3,384
2,540
4,300
19,634
12. INCOME TAX EXPENSES - e3,420 thousand (e3,640 thousand in 2014)
The amount recognised consists of €3,588 thousand
current taxes calculated on the taxable income for IRES
purposes and €-168 thousand relating to the 2015
economic effect of the recognition of deferred taxation on
temporary tax differences.
The following tables summarize the main components
that led to the determination of taxable income for IRES
and IRAP purposes, by reconciling the theoretical tax
burden and the actual charge recognised in the financial
statements.
(€,000)
STATEMENT OF RECONCILIATION BETWEEN EFFECTIVE
AND THEORETICAL TAX RATE
Determination of taxable income for IRES purposes
Operating result before taxation
Theoretical tax burden – tax rate:
Temporary differences taxable in subsequent years:
- accrued dividends
Total
Temporary differences deductible in subsequent years:
- amortisation
- employee leaving indemnity allowance - Provisions for personnel
- others
- utilisation of the provision for inventory write-down
Total
Reversal of temporary differences from previous years:
- goodwill amortisation
- subsidiaries’ dividends received during the year
Total
Permanent differences not reversed in subsequent years:
- costs for vehicles
- entertainment expenses
- donations
- non-deductible contingent expenses
- non-deductible expenses
- partially deductible expenses (car and telephone)
- previous years’ taxes
- non-deductible interest
- others
Total
Taxable income (net of donations)
Deductible interests for consolidation benefit
Effective taxable income
Actual tax benefit - tax rate:
Current taxes on income
Actual tax burden relating to pre-tax income
1,121
27.50%
-17,438
-17,438
1,478
678
191
-200
2,147,00
-340
0
-340,00
176
3
60
-18
7
77
86
10,247
203
10,841,00
-3,669,00
27.50%
-3,669,00
-1,008,98
-90.01%
(follows)
127
(€,000)
STATEMENT OF RECONCILIATION BETWEEN EFFECTIVE
AND THEORETICAL TAX RATE
Calculation of taxable income for IRAP purposes
Production value for IRAP purposes prior to adjustments
(carrying value)
Theoretical tax rate:
Net decremental changes (COSTS)
- contribution rediscount for connections
Other decremental changes
- goodwill amortisation reversal
Total
Incremental net changes (COSTS)
COST FOR SERVICES
- other personnel expenses in costs for services
- fees to collaborators
- non-deductible expenses
Total costs for services
DEDUCTIONS
- INAIL - National Insurance Institution for Industrial Accidents
- lump sum deduction for the disabled, trainees and apprentices
- lump sum allowance
- social security and welfare contributions
Total deductions
Recovery of off-book deductions
Taxable amount for IRAP purposes
Effective tax burden - tax rate
Current taxes on the production value
for IRAP purposes - actual tax burden:
Comparison with pre-tax income
Pre-tax income
Actual tax burden referred to pre-tax income (IRAP)
Effective tax rate (IRES + IRAP)
Deferred taxes reflect the significant fiscal effect deriving
from temporary differences between taxable amounts of
assets and liabilities and the corresponding values in the
128
-5,571
5.57%
-1,426
-340
-1,766
274
589
863
27
205
1,065
1,655
-2,952
-9,426
5.57%
-525,03
9.42%
1,121
-46.84%
-136.84%
129
DESCRIPTION
indemnities
Discounting of provision for
restatement
Advances on Directors’
undisbursed fees
Goodwill amortisation
Provisions for generic risks
Provision for user contributions
for facilities - IRES
Provision for user contributions
for facilities - IRAP
Taxed portion of statutory EE
asset depreciation (20%) IRES
Taxed portion of statutory EE
asset depreciation (20%) IRAP
Deferred charge amortisation
for bonds
Leasing FTA
Not IAS- compliant FTA costs
OCI FTA - Prov. for empl.
leaving indemn. and EE disc.
(€,000)
-200
-556
37
833
1,200
93
1,015
200
10,734
-89
10
3,674
575
42,459
-3,378
-4
8
74
4
42,755
496
82
0
10,560
-1,491
12,051
2,706
1,346
-491
3,197
4,592
11,378
1,848
0
47
9,153
547
31/12/2015
Balance
1,346
-299
4,891
-83
-119
1,561
7,711
-46
Difference
-
25
Difference
+
Changes 2015
568
01-01-15
Balance
Equity differences
63
6,676
158
2
1
906
879
2,952
12
55
26
1,622
IRES
3
4
498
0
144
75
272
IRAP
Balance 1/1/2015
7
-5
-586
-39
1
-1
-125
-213
-202
59
-55
-13
IRES
14
0
-43
-0
-40
-17
IRAP
Va Changes 2015 riazioni 2015
Deferred tax assets (prepaid)
58
6,091
119
3
1
781
0
666
0
2,750
71
0
13
1,629
IRES
0
16
0
0
0
4
453
0
0
0
103
75
0
255
IRAP
Balance 31/12/2015
130
DESCRIPTION
indemnities
FV assets
Discounting of provision for
restatement
Dividend recognised on an
accrual basis
Goodwill amortisation
Portion of fewer taxation on
goodwill (2010)
Deferred charge amortisation
for bonds
Provision for early amortisation
(tax reversal)
Deferred tax liabilities for
revaluation of transferred assets
Greenambiente equity inv. reval.
Revaluation of equity investments
Valuation of associates using
the equity method
Leasing FTA
(€,000)
Balance
8
2,427
1,126
0
-31
-1,876
1,126
31
74
27,913
82
28,464
546
546
1,555
1,623
-68
600
600
10,560
12,051
-1.491
62
62
1,848
1,015
833
135
9,153
2,250
547
135
-119
1,561
7,711
-46
-121
25
Difference Difference
31/12/2015
+
-
Changes 2015
2,371
568
01-01-15
Balance
Balance sheet differences
90
4,344
10
310
150
446
165
1,700
17
267
37
499
652
IRES
4
418
90
33
3
54
101
132
IRAP
Balance 1/1/2015
-475
-10
-39
-19
-71
-21
-365
-2
107
-5
74
-108
-16
IRES
IRAP
Changes 2015
0
53
-4
33
31
-7
74
0
3,869
0
271
131
375
144
1,335
15
374
32
573
544
IRES
0
4
471
0
0
0
86
33
0
3
87
0
132
125
IRAP
Balance 31/12/2015
13. Net result of discontinued operations/
assets held for sale
No net result for discontinued operations is accounted for
in 2015, because no transfers and/or discontinuation of
lines of business are expected in the short/medium-term.
14. GOODWILL - e3,195 thousand (e3,195 thousand in 2014)
(€,000)
AccuGross
mulated
value as
amortiat 31st
sation
December
2014
2014
Goodwill
TOTAL
5,557
5,557
-2,362
-2,362
Net
value as
at 31st
December
2014
Movements in 2015
Direct
purchases and
cost
recognition
3,195
3,195
The residual value of goodwill is an intangible asset
with an indefinite life and, therefore, it is not subject to
systematic amortisation but it is tested for impairment at
least annually.
Goodwill as at 31st December 2015 remains unchanged at
€3,195 thousand and relates to the electricity distribution
line of business transferred in 2010 from AEM Cremona
S.p.A.
Impairment test on goodwill, tangible and intangible
assets and interests in subsidiaries
According to IAS 36, since goodwill is an intangible
asset with an indefinite useful life, it is not amortised, but
it must be tested for impairment at least annually (the
Reversals
Gross
value as
at 31st
DeAmort./wricember
te-downs
2015
Accumulated
amortisation
2015 Net value as at
31st December
2015
5,557
5.,557
-2,362
-2,362
3,195
3,195
so-called “impairment test”). Since goodwill does not
generate independent cash flows nor can it be transferred
separately, IAS 36 requires a test of its recoverable
salvage value, by determining the cash flows generated by
a series of assets that identify corporate complex to which
the goodwill has been allocated: the cash-generating units
(CGU).
According to the Group’s decisions in terms of corporate
policy and organisation, in measuring the goodwill,
reference was made to the various cash-generating
units. It is worth noting that no signs of impairment were
detected during the impairment test. For further details,
please refer to the dedicated note in the consolidated
131
15. OTHER INTANGIBLE ASSETS - e620 thousand (e978 thousand in 2014)
(€,000)
Movements in 2015
Accu- Net value
Gross
value as mulated as at 31st Direct
amorti- December purchases
at 31st
2014
December sation
and cost
2014
2014
recognition
R&D and advertising costs
Ind. Patents and intel. prop.
rights
trademarks & similar rights
Intangible assets in progr.
& adv.
TOTAL
Divestments
Transfer
Amort.
of line of Reversals and imbusiness
pairment
Gross
AccuNet value
value as
mulated
as at 31st
at 31st
amortiProv. for
December
December
sation
tr. line of
2015
2015
2015 business
Prov.
divest.
0
0
0
0
0
0
4
0
4
4
0
4
68
-32
36
68
-33
35
4,744
-3,806
938
43
-9
0
21
-414
2
0
4,799
-4,218
581
4,816
-3,838
978
43
-9
0
21
-415
2
0
4,871
-4,251
620
-1
Intangible assets as at 31st December 2015 came to
€620 thousand, net of the €415 thousand amortisation
allowance, relating mainly to basic software and
applications for €348 thousand to be amortised over 5
years, and costs for improvements on leased assets at
the Company’s administrative headquarters for €138
thousand to be amortised over 6 years, depending on the
duration of the lease agreement.
The main increases in the year refer to the upgrade of
the SAP BPC system for €16 thousand and the purchase
of software to manage split payment billing to the public
administration for Group companies, for the amount of
€14 thousand.
For further details on the movement of the above
intangible assets, reference is made to Annex 1 to these
supplementary notes.
16. PROPERTY, PLANT AND EQUIPMENT - e118.112 thousand (e109.260 thousand in 2014)
(€,000)
Movements in 2015
Gross
AccuNet value
value as mulated
as at 31st Direct
at 31st
amortiDecember purch.
December sation
2014
and cost
2014
2014
recogn.
Land and buildings
Plant and machinery
Ind. and commercial equipment
Under construction
TOTAL
132
14,094 -3,665 10,429
175,998 -80,978 95,020
25
-3
22
779
-393
386
3,403
3,403
194,299 -85,039 109,260
376
12,955
10
27
2,681
16,049
Divestments
-99
-830
0
-18
-165
-1,112
Transf.
Prov. for
of line of Reversals
divest.
business
20
2,276
4
738
12
-2,293
3
754
Gross
AccuNet value
value as
mulated
st
as at 31st
at 31
amortiDeprec.
December
December
sation
and wri2015
2015
2015 te-downs
-273 14,391 -3,934 10,457
-6,460 190,399 -86,700 103,699
-3
35
-6
29
-105
788
-486
302
3,626
0 3,626
-6,841 209,239 -91,126 118,112
As at 31st December 2015, tangible assets amounted to
€118,112 thousand.
The change compared to the previous year is mainly
due to the effect of the extension of own networks for
€-15,057.
These tangible assets were depreciated systematically by
€6,841 thousand.
Main highlights:
•The value of land, totalling €1,323 thousand, includes
€1,164 thousand relating to a contribution that occurred
in 2010 and €146 thousand relating to a plot of land
purchased in 2015 in Lodi.
•The value of buildings, totalling €9,134 thousand,
mainly relates to contributions that occurred in 2010.
This item comprises €5.4 million referring to the
building of the waste-to-energy plant in Cremona and
electrical substations for the remaining part.
Type of asset
Buildings
Plant and machinery
Plant and machinery under finance leases
Other tangible assets under finance leases
Industrial and commercial equipment
Plant and machinery stated at the carrying amount of
€103,699 thousand mainly refer to the waste-to-energy
plant and cogeneration plant, MV and HV underground
and overhead power lines. The investments mainly
refer to extension works on the electricity distribution
grid and the waste-to-energy plant.
Other tangible assets, totalling €302 thousand, mainly
refer to hardware and machinery;
Work in progress, totalling €3,626 thousand, mainly
refers to extension works not yet completed and for
which the depreciation allowance will be recognised in
the following year.
The depreciation rates used, which reflect the useful life
generally attributed to the various categories of assets
and were unchanged compared to the previous year, are
summarised below.
Min.
depreciation rate
3%
5%
8%
10%
5%
9%
Max. depreciation
rate
4%
8%
8%
20%
10%
20%
133
17. EQUITY INVESTMENT IN SUBSIDIARIES - e254,464 thousand (e247,235 thousand in 2014)
(€,000)
Subsidiaries
Linea Reti e Impianti S.r.l.
Astem Gestioni S.r.l.
Mf Waste S.r.l.
Linea Più S.p.A.
Linea Com S.r.l.
TOTAL SUBSIDIARIES
% stake
100%
100%
100%
51%
100%
100%
80%
100%
90.85%
96,17%
Linea Reti e Impianti S.r.l., with registered office in
Cremona, share capital €7,793,962, 100% owned by
Linea Group Holding S.p.A. The financial statements
as at 31st December 2015 show a production value of
€63,954 thousand, total assets €80,009 thousand, a
profit of €1,328 thousand and shareholders’ equity of
€11,409 thousand. This stake is recognised in the balance
sheet for €18,098 thousand. The change in the carrying
amount and shareholders’ equity is due to perspective
management trends. The negative difference is not
considered a permanent impairment loss.
Linea Più S.p.A., with registered office in Pavia, share
capital €5,000 thousand, 100% owned directly by Linea
Group Holding S.p.A. The financial statements as at 31st
December 2015 show a production value of €352,075
thousand, total assets €158,685 thousand, a profit of
€11,989 thousand and shareholders’ equity of €19,492
thousand. This stake is recognised in the balance sheet for
€39,795 thousand, with a change compared to 2014 due
to the effect of the extraordinary transactions described
in the business report. The change in the carrying
amount and shareholders’ equity is due to perspective
management trends. The negative difference is not
considered a permanent impairment loss.
Linea Gestioni S.r.l., with registered office in Crema (CR),
share capital €5,000 thousand, 100% owned directly by
Linea Group Holding S.p.A. The financial statements as at
31st December 2015 show a production value of €39,835
thousand, total assets €37,394 thousand, a profit of €432
134
31/12/2015
18,098
0
29,656
33,433
4,606
17,584
2,396
39,795
102,215
6,681
254,464
31/12/2014
14,318
9,219
19,056
33,433
4,606
17,584
2,396
38,462
101,480
6,681
247,235
% change
26%
-100%
56%
0%
0%
0%
0%
3%
1%
0%
3%
thousand and shareholders’ equity of €16,500 thousand.
This stake is recognised in the balance sheet for €29,656
thousand, with a change compared to 2014 due to the
effect of the extraordinary transactions described in the
business report. The change in the carrying amount and
shareholders’ equity is due to perspective management
trends. The negative difference is not considered a
permanent impairment loss.
MF Waste S.r.l., with registered office in Rovato (BS),
share capital €750 thousand, 51% owned directly by
31st December 2015 show a production value of €0 (the
company only has income from interest in the subsidiary
Lomellina Energia S.r.l.) total assets €63,928 thousand, a
loss of €15 thousand and shareholders’ equity of €51,742
thousand. This stake is recognised in the balance sheet for
€33,433 thousand. The value of the equity investment is
deposited as a pledge on the Lomellina Energia loan. The
change in the carrying amount and shareholders’ equity
is due to perspective management trends. The negative
difference is not considered a permanent impairment loss.
Linea Energia S.p.A., with registered office in Rovato
(BS), share capital €3,969 thousand, 100% owned directly
by Linea Group Holding S.p.A. The financial statements
€12,475 thousand, total assets €90,719 thousand, a profit
of €25 thousand and shareholders’ equity of €11,850
thousand. This stake is recognised in the balance sheet
for €4,606 thousand;
Linea Ambiente S.r.l., with registered office in Rovato
(BS), share capital €3,000 thousand, 100% owned directly
€53,356 thousand, total assets €82,045 thousand, a
profit of €4,737 thousand and shareholders’ equity of
21,090 thousand. This stake is recognised in the balance
sheet for €17,584 thousand;
Linea Distribuzione S.r.l., with registered office in Lodi,
share capital €23,980 thousand, 90.85% owned directly
€40,540 thousand, total assets €238,540 thousand,
a profit of €6,083 thousand and shareholders’ equity
of €115,492 thousand. This stake is recognised in the
balance sheet for v102,215 thousand;
Greenambiente S.r.l., with registered office at Priolo
Gargallo, share capital €50 thousand, 80% owned directly
by Linea Group Holding S.p.A. The financial statements as
at 31st December 2015 show a production value of €221
thousand, total assets €22,718 thousand, a loss of v912
thousand and shareholders’ equity of 5,248 thousand.
This stake is recognised in the balance sheet for €2,396
thousand.
Linea Com S.r.l., with registered office in Cremona,
share capital €5,833 thousand, 96.17% owned directly by
31st December 2015 show a production value of €14,855
thousand, total assets €19,166 thousand, a loss of €661
thousand and shareholders’ equity of €5,592 thousand.
The change in the carrying amount and shareholders’
equity is due to perspective management trends. The
negative difference is not considered a permanent
impairment loss. This stake is recognised in the balance
sheet for €6,681 thousand.
The table below presents a summary of the changes that
occurred in equity investments in subsidiaries:
(€,000)
Movements 2015
Description
Linea reti e Impianti S.r.l.
Astem Gestioni
Amico Gas
Mf Waste S.r.l.
Linea Energia
Linea Ambiente
Rovato Energia*
Cogeme Gestioni S.r.l.
Greenambiente
Linea Più S.p.A.
Linea Com
TOTAL
31/12/14
14,318
9,219
0
19,056
33,433
4,606
17,584
0
0
2,396
38,462
101,480
6,681
247,235
Acquisitions
/increments
reversals
transfers /
impairments
repayments
3,780
-9,219
10,600
0
1,333
736
7,229
0
0
0
31/12/15
18,098
0
0
29,656
33,433
4,606
17,584
0
0
2,396
39,795
102,215
6,681
254,464
135
The change in the overall value of equity investments in
subsidiaries during the year is attributable to the following
factors:
•Total demerger of Astem Gestioni into Linea Reti e
Impianti and Linea Gestioni, effective as of 1st July 2015,
with relative redistribution of the interest held;
•Partial demerger of Linea Reti e Impianti into Linea Più
and Linea Gestioni, effective as of 1st July 2015, with
relative redistribution of the interest held;
• Acquisition of 0.5% of the interest in Linea Distribuzione
by ASM Mortara.
In previous years there were no significant write-downs.
18. EQUITY INVESTMENTS IN ASSOCIATES AND OTHER COMPANIES - e4,269 thousand
(e4.269 thousand in 2014)
The value of equity investments in associates and other
companies as at 31st December 2015 totals €4,269
thousand. A breakdown of this item is given in the table
below.
(€,000)
Associates
TOTAL ASSOCIATES
% stake
31/12/2015
48.22%
31/12/2014
0
0
% change
0
0
0%
0%
La partecipazione è stata interamente svalutata nell’anno
2011 per un importo pari a 612 mila €.
(€,000)
Other companies
Blugas Infrastrutture S.r.l.
TOTAL OTHER
COMPANIES
% stake
27.51%
Blugas Infrastrutture was reclassified among other
companies because, following a reduction from 45.74% to
27.51% of the stake held, the company does not exercise
any significant influence over the equity investment.
136
31/12/2015
31/12/2014
% change
4,269
4,269
0%
4,269
4,269
0%
19. REAL ESTATE INVESTMENTS
The Company does not hold any real estate investments.
20. NON-CURRENT FINANCIAL ASSETS - e92,579 thousand (e86,046 thousand in 2014)
(€,000)
Financial receivables from third
parties
Financial receivables from
subsidiaries
TOTAL NON-CURRENT
FINANCIAL ASSETS
31/12/2015
31/12/2014
% change
17,290
30,837
-44%
75,289
55,209
36%
92,579
86,046
8%
As at 31st December 2015, non-current financial assets
amounted to €92,579 thousand. They include portions of
loans granted to third parties and subsidiaries, falling due
beyond the end of the next financial year.
Financial receivables from third parties comprise:
•Loan granted to Cogeme S.p.A.: outstanding balance
as at 31st December 2015 of €5,353 thousand, of
which €594 thousand due within one year and €4,759
thousand due after one year.
•Loan granted to AEM S.p.A.: outstanding balance as at
31st December 2015 of €17.532 thousand, of which
€5m due within one year and €12,532 thousand due
after one year. On 4th March 2016, LGH shareholders
signed a partnership agreement for the sale of 51% of
the share capital to A2A.; completion is conditional on
some conditions being satisfied on or before 3 months
from the date of the agreement. Among such conditions,
there is the obligation on the part of the partner AEM
S.p.A., debtor of a total amount of €29,964,940 as at
31st December 2015, to submit and assert a recovery
plan containing, among other things, the repayment on
the execution day of 50% of the sum owed to the LGH
Group as at 31st December 2015, i.e. €14,982,470, as
well as a redemption plan within a maximum of 5 years
for the residual 50%.
Financial non-current assets also comprise receivables
from subsidiaries for the amount of €75,289 thousand
(€55,209 thousand in 2014), referring to loans granted to
subsidiaries, as specified below:
•loan to the subsidiary Linea Energia of the amount of
€13,000 thousand increased by €3,500 thousand as at
31st December 2015 plus capitalised interest receivables
for €4,014 thousand, expiring in one instalment on
30th June 2021, with accrued interest calculated at a
6-month Euribor floating rate +1%. This interest will be
paid semi-annually in arrears.
•A €3,786 thousand loan granted to the subsidiary MF
Waste, with a residual amount of €3,328 thousand as
at 31st December 2015, deadline extended until 31st
December 2016 under a specific agreement. Interest
on the residual sum is calculated at a 1-month Euribor
floating rate +1%. This interest will be paid semiannually in arrears.
•A €1,350 thousand loan to the subsidiary Linea Gestioni
S.r.l., repayable in 5 years starting from 1st July 2012.
The balance as at 31st December 2014 amounts to €750
thousand, of which €300 falling due after the end of the
next financial year, with accrued interest calculated at a
3-month Euribor floating rate +1.85%. This interest will
be paid quarterly in arrears.
•A €22,125 thousand loan granted to the subsidiary
Linea Ambiente on 31st December 2013 and repayable
by quarterly instalments in arrears, maturity on 31st
December 2019. A 4.25% accrued interest is paid
quarterly. The balance as at 31st December 2015
amounted to €14,750 thousand, of which €11,062
thousand falling due after the end of the next financial
year.
•A €8,937 thousand loan granted to the subsidiary Linea
Distribuzione on 31st December 2013 and repayable
by quarterly instalments in arrears, maturity on 31st
December 2018. A 4.25% accrued interest is paid
quarterly. The balance as at 31st December 2015
year.
•A €20,000 thousand loan granted to the subsidiary
Linea Distribuzione in 2014 and repayable by quarterly
137
instalments in arrears, maturity on 31st December 2022.
A 4.25% accrued interest is paid quarterly. The balance
as at 31st December 2015 amounted to €17,500
thousand, of which €15m falling due after the end of
the next financial year.
•A €8,500 thousand loan granted to Linea Distribuzione
in 2015 and repayable by quarterly instalments in
arrears, maturity on 31st December 2023. The balance as
at 31st December 2015 amounted to €8,500 thousand,
of which €7,438 falling due after the end of the next
financial year.
•A €21,000 thousand loan granted to Linea Reti e
Impianti, former SCCA, in 2015 and repayable by
quarterly instalments in arrears, maturity on 31st
December 2025. The balance as at 31st December 2015
year.
21. OTHER NON-CURRENT ASSETS - e70 thousand (e70 thousand in 2014)
Receivables and other non-current financial assets
amounted to €70 thousand, and relate to the portion of
guarantee deposits falling due after the end of the next
financial year. There were no receivables falling due after
5 years.
22. INVENTORIES - e63 thousand (e27 thousand in 2014)
(€,000)
Inventories
31/12/2015
Raw materials
Total gross inventories
Provision for inventory write-down
TOTAL NET INVENTORIES
31/12/2014
63
63
0
63
As at 31st December 2015, inventories referring to the
management of vehicles for the whole Group amounted
% change
27
27
0
27
133%
133%
0%
133%
to €63 thousand. This value reflects the state of the yearend stocks of spare parts for motor vehicles.
23. TRADE RECEIVABLES - e13,321 thousand (e10,683 thousand in 2014)
(€,000)
Trade Receivables
Trade receivables from third parties for
invoices issued
Trade receivables from parent companies
Trade receivables from subsidiaries
TOTAL NET TRADE RECEIVABLES
138
31/12/2015
31/12/2014
% change
295
267
10%
2,094
10,932
13,321
1,732
8,684
10,683
21%
26%
25%
As at 31st December 2015, Trade receivables amounted to
€13,321 thousand, of which:
•€295 thousand from third parties for invoices issued
•€2,094 thousand from parent companies;
•€10,932 thousand from subsidiaries, for invoices issued
and to be issued.
It should be noted that receivables from subsidiaries
comprise invoices issued and to be issued in connection
with service contract and network rentals.
24. DERIVATIVE FINANCIAL INSTRUMENTS
- ASSETS
As at 31st December 2015 the Company did not hold any
derivative financial instruments - assets
25. OTHER CURRENT FINANCIAL ASSETS - e96,330 thousand (e70.008 thousand in 2014)
(€,000)
Other current financial assets
Financial receivables from third
parties
Financial receivables from
subsidiaries
Receivables from subsidiaries Cash pooling
TOTAL CURRENT FINANCIAL
ASSETS
31/12/2015
31/12/2014
% change
16,564
5,880
182%
14,615
11,753
24%
65,152
52,375
24%
96,330
70,008
38%
As at 31st December 2015, current financial assets
amounted to €96,330 thousand, comprising:
•Financial receivables from third parties for the amount
of €16,564 thousand, comprising:
-Setramar loan/repayment plan: €9,000 thousand
with final repayment on 31st December 2016, with
accrued interest calculated at a Euribor rate +1.75%.
As at 31st December 2015, all accrued interest was
recognised from the time of exercise of the put until
that date and the remaining balance thus came to
€6,458 thousand falling due within one year.
-
Siderpiombino loan/repayment plan: €4,500
thousand with final repayment on 31st December
2016, with accrued interest calculated at a Euribor
rate +1.75%. As at 31st December 2015, all accrued
interest was recognised from the time of exercise of
the put until that date and the remaining balance thus
came to €4,510 thousand falling due within one year.
- €595 thousand loan to Cogeme S.p.A.
- €5m loan to AEM S.p.A.
•Financial receivables from subsidiaries amounted to
€14,615 thousand, relating to the portion of the loans
granted to subsidiaries, maturing within one year:
- €3,328 thousand loan to MF Waste
- €300 thousand loan to Linea Gestioni
- €3,687 thousand loan to Linea Ambiente
- €5,350 thousand loan to Linea Distribuzione
- €1,950 thousand loan to Linea Reti e Impianti.
•Receivables from subsidiaries under cash pooling for
the amount of €65,152 thousand.
139
26. TAX AND OTHER ASSETS - e18,568 thousand (e16,249 thousand in 2014)
(€,000)
Prepaid expenses
Sundry receivables from
shareholders
Sundry receivables from
subsidiaries
Tax assets from subsidiaries
Receivables from employees
IRES from tax consolidation
IRAP
VAT
Other short-term receivables
TOTAL TAX AND OTHER
ASSETS
31/12/2015
31/12/2014
% change
175
179
-2%
0
0
0%
2,704
2,704
0%
12,354
2
1,841
55
1,322
113
10,647
9
2,594
55
37
24
16%
-78%
-29%
0%
3473%
371%
18,568
16,249
14%
Tax and other assets as at 31st December 2015 amounted
to €18,568 thousand (€16,249 thousand in 2014).
The main changes refer to:
•an increase in tax assets from subsidiaries with a
€1,707 difference on the previous year;
•a €753 thousand decrease in tax assets from the
Inland Revenue regarding IRES under the consolidated
accounts;
•€1,285 thousand increase in VAT receivables.
27. CASH AND CASH EQUIVALENTS - e61,510 thousand (e104,813 thousand in 2014)
(€,000)
Bank and postal current account
deposits
Cheques
Cash on hand
TOTAL CASH AND CASH
EQUIVALENTS
31/12/2015
% change
61,509
104,810
-41%
1
3
-67%
61,510
104,813
-41%
Compared to 31st December 2014, cash and cash
equivalents decreased by €43,303 thousand. Details of
the movements during 2015 are shown in the statement
of cash flows at the beginning of these explanatory notes.
As at 31st December 2015, the interest accrued on the
Company’s bank and postal deposit was in line with
market conditions.
140
31/12/2014
28. DISCONTINUED OPERATIONS/ ASSETS
HELD FOR SALE
This item was nil as at 31st December 2015.
29. SHAREHOLDERS’ EQUITY - e202,723 thousand (e204,916 thousand in 2014)
The share capital as at 31st December 2015 amounted to
€189,494 thousand and was fully paid up. It consists of
€189,116 ordinary shares of €1 each.
For the year ended 31st December 2015, the profit came
to €4,457 thousand.
A breakdown of shareholders’ equity over the last three
financial years is provided in the relevant statement.
In accordance with the provisions of art. 2427, no. 7-bis, of
the Italian Civil Code, an analysis of shareholders’ equity
in terms of availability and distribution is given below.
(€,000)
Possible utilisation
Amount
Capital increase
Share capital
Legal reserve
Merger reserve
Reserve under IAS 19
Extraordinary reserve
Other reserves
Total
189,494
3,072
75
-380
2,516
4,009
198,786
A brief qualitative description of the Company’s
shareholders’ equity is given below.
•Share capital - It is made up of 189,494,116 shares of a
par value of €1 each.
• Legal reserve - It consists of the mandatory allocation of
an amount not less than one twentieth of the annual net
profits, to make up an amount equal to one fifth of the
share capital.
•Extraordinary reserve - It has been made up gradually
since 2008 as destination of operating end-year results.
As at 31st December 2015, it amounted to €2,288
thousand (€2,284 thousand as at 31st December 2014).
The €4 thousand increase year-on-year is attributable
Amount
Capital increase
75
4,009
4,084
2,516
4,009
6,525
4,009
4,009
to the allocation of the 2014 profit, as decided by general
assembly resolution on 29th June 2015.
• Merger reserve - Unchanged compared to the previous
year, it is the result of the merger of Asm Servizi and
Astem Servizi, which occurred in 2008.
•Valuation reserve for actuarial gains and losses - This
valuation reserve includes actuarial components
regarding the valuation of defined benefit plans,
recognised directly in shareholders’ equity for €-380
thousand.
•Other reserves - This item came to €4,009 thousand
(€3,488 thousand as at 31st December 2014).
141
30. PROVISION FOR EMPLOYEE LEAVING INDEMNITIES AND OTHER EMPLOYEE-RELATED
PROVISIONS - e2,155 thousand (e2,134 thousand in 2014)
(€,000)
indemnities (TFR)
and other employee-related
provisions
31/12/2015
Provision for employees,
collaborators and agents
Supplementary provision for
employee leaving indemnities
Provision for electricity supply
discount to employees
Total provision for employee
leaving indemnities (TFR) and
other employee-related
provisions
31/12/2014
% change
1,873
1,849
1%
170
169
1%
112
116
-3%
2,155
2,134
1%
A breakdown of the provision for employee leaving indemnities is given below.
(€,000)
TFR
31/12/2015
Opening provision for TFR
Financial expenses
(benefits paid)
Total TFR
The provision for employee leaving indemnities is part of
the Group’s definite benefit plans.
The Projected Unit Credit Cost (PUC) method was used
to determine this liability. A projection was made, based
on a series of financial assumptions (increase in the cost
of living, salary increases, etc.) of possible future benefits
that could be paid to each employee enrolled in the scheme
in the event of retirement, death, disability or resignation.
The estimate of future benefits shall include any increases
in the length of service accrued and the presumed increase
in the salary level on the valuation date:
•the current average value for future benefits was
142
31/12/2014
1,849
114
38
-72
-56
1,873
% change
1,594
86
47
312
-190
1,849
16%
33%
-19%
-123%
-71%
1%
calculated at the valuation date on the bases of the
annual interest rate and the probability that each benefit
has to actually be paid;
•the liability for the Company was calculated by
identifying the portion of the current average value of
future benefits referring to the service already accrued
by the employee at the valuation date;
•the reserve recognised under IAS was identified on
the basis of the liability determined as above and the
provision recognised in the financial statements for
Italian statutory purposes.
The assumptions adopted are detailed in the table below.
Mortality
Disability
Turnover rate
Early-retirement frequency
Discount rate
TFR increase
Salary increase
31/12/2015
31/12/2014
Institute (INPS)
2.00% each year
2.00% each year
Institute (INPS)
2.00% each year
2.00% each year
31/12/2015
31/12/2014
1.50% in 2016
1.80% in 2017
1.70% in 2018
1.60% in 2019
2.30%
2.625% in 2016
2.850% in 2017
2.775% in 2018
2.700% in 2019
1.00% annual
The categories of employee benefits that are regulated
by IAS 19 comprise those paid after termination of
the employment relationship by some of the Group
companies (LGH, AEM Gestioni and Linea Distribuzione),
0.60% in 2015
1.20% in 2016
1.50% in 2017 and 2018
1.86% annual
1.950% in 2015
2.400% in 2016
2.625% in 2017 and 2018
1.00% annual
known as “Energy Discount” and “Extra month’s Salary”.
Both benefits are regulated by the Collective Bargaining
Agreement, which establishes the procedures for
payment.
143
2015
Opening provision for “Energy
Discount”
Transfers to and from the Group
Financial expenses
(benefits paid)
Closing provision for “Energy
Discount”
The provision for “Energy Discount” envisages the supply
of electricity for household use at a reduced rate for
employees who have been hired prior to 8/7/1996, have
terminated their service, and for their surviving spouses.
Mortality
Disability
Family data / remarriage /
family leave
Retirement
Tasso turnover
Discount rate
Actual change in energy cost
144
2014
% change
116
90
29%
4
0
2
-10
3
-15
3
35
33%
-100%
-33%
-129%
112
116
-3%
table below were taken into consideration:
31/12/2015
31/12/2014
Achievement of the early-retirement
requirement
1.00%
Achievement of the early-retirement
requirement
1.00%
31/12/2015
31/12/2014
1.50% in 2016
1.80% in 2017
1.70% in 2018
1.60% in 2019
2.30% annual
0.50% annual
0.60% in 2015
1.20% in 2016
1.50% in 2017 and 2018
2.64% annual
0.50% annual
Under the “extra month’s salary” employee benefit plan,
a sum equivalent to 4 or 5 months’ salary (in addition to
the employee leaving indemnities) is paid in the event of
Provision for extra-month’s
salary
termination of the employment relationship on reaching
the retirement age or seniority in service.
2015
Opening provision for
extra-month’s salary
Transfers to and from the Group
Financial expenses
(benefits paid)
Provision for extra-month’s
salary
2014
% change
169
170
-1%
7
0
2
-8
6
-33
4
22
17%
-100%
-50%
-136%
170
169
1%
table below were taken into consideration.
Mortality
Disability
Retirement
Turnover rate
Increase in the cost of leaving
Discount rate
Salary increase
31/12/2015
31/12/2014
Achievement of the early- retirement
requirement
2.00%
Achievement of the early- retirement
requirement
2.00%
31/12/2015
31/12/2014
1.50% in 2016
1.80% in 2017
1.70% in 2018
1.60% in 2019
1.79% annual
1.00% annual
0.60% in 2015
1.20% in 2016
1.50% in 2017 and 2018
1.25% annual
1.00% annual
145
Employee benefit sensitivity analysis
As required by IAS 19R, the table below shows the
sensitivity analysis for each end-of-year actuarial
assumption, an indication of the contribution for the year,
an indication of the average maturity of the obligation for
defined benefit plans and disbursements under the plan:
Sensitivity analysis
Change of hypotheses
1,070
1%
1,106
1.40%
1,042
1.40%
Turnover frequency
Inflation rate
Discount rate
Service cost 2015
Plan duration
1,087
-1%
1,051
-1.40%
1,116
-1.40%
111
19,72
Expected disbursements (years)
2016
2017
2018
2019
2020
73
48
51
54
58
31. PROVISIONS FOR RISKS AND CHARGES AND PROVISION FOR DECOMMISSIONING
- e7,132 thousand (e6,442 thousand in 2014)
(€,000)
Provisions for risks
and charges
Provision for risks and charges
Provision for decommissioning
Total provisions for risks
and charges
146
31/12/2015
31/12/2014
% change
348
6,784
545
5,897
-36%
15%
7,132
6,442
11%
A breakdown of this item is given in the table below.
(€,000)
Provisions for risks
and charges
31/12/2014
Provision for contingent
liabilities and charges
Provision for
decommissioning
Total provisions for risks
and charges
Contribution
Allocation
545
Utilisation
83
5,897
887
6,442
887
The provision for risks and charges as at 31st December
2015, which totalled €348 thousand, mainly relates to
the amount set aside to reflect the presumable impact
of the liquidation procedure involving the associate Sinit
S.r.l., as expressed in liquidator’s projections. During
the year €200 thousand were taken from this provision
in connection with the dispute being settled and €80
thousand set aside the previous year in connection with
some legal claims with employees.
31/12/2015
-280
348
6,784
83
-280
7,132
The €83 thousand were set aside in relation to the interest
in Blugas S.r.l. in liquidazione, as described in the chapter
on provisions, to which reference is made.
The provision for decommissioning relates to the
dismantling and restoration of sites recognised as
direct increment of the assets to which they refer. This
amount was calculated on the basis of specific appraisals
conducted by independent experts. The change is mainly
due to a drop from 4.75% to 3.29% in the discount rate.
32. NON-CURRENT LOANS AND BORROWINGS - e292,697 thousand
(e363,528 thousand in 2014)
(€,000)
Beneficiary
Lender
Original
amount
Institutional
300,000
investors
Linea Group Holding
BCC Cremona
8,000
Linea Group Holding
Cassa DDPP
5,164
Linea Group Holding
Cassa DDPP
5,216
Lombardy Reg.
765
Linea Group Holding
Authority
Linea Group Holding
BEI
80,000
Linea Group Holding
Lease company
Total banm and other loans
Linea Group Holding
Sundry
Total loans from subsidiaries
TOTAL NON-CURRENT LOANS AND BORROWINGS
Linea Group Holding
Maturity
date
Rate
28/11/2018 fixed 3.875%
26/02/2019
31/12/2022
31/12/2022
fixed 4.67%
fixed 5.25%
various
non-interest
30/06/2022
bearing
30/06/2020 fixed 2.033%
various
various
Current
balance
2015
Current
balance
2014
286,615
285,606
2,136
2,139
1,565
3,017
2,435
1,825
242
282
0
0
292,697
0
0
0
292,697
70,318
45
363,528
0
0
0
363,528
147
The EIB loan was granted for the financing of investments
under the 2013-2017 industrial plan involving the
electricity grids, gas and district heating networks of Lodi.
The EIB loan is partly secured by a bank guarantee issued
by SACE.
In September 2015 it therefore made a request to EIB
and SACE to adapt the financial covenants accordingly.
The request was accepted and formalised as per
communications received on 10th March 2016.
are:
•NFP to EBITDA ratio < 5,60
•EBITDA to Net Financial Expenses ratio > 4,30
•NFP to Equity ratio < 1,80
With reference to the financial statements closed on 31st
December 2015, All the above constraints and covenants
were complied with.
33. DERIVATIVE FINANCIAL
INSTRUMENTS - LIABILITIES
As at 31st December 2015 the Company had no derivativesrelated liabilities.
34. OTHER NON-CURRENT FINANCIAL
LIABILITIES
As at 31st December 2015, liabilities relating to this item
was nil.
35. OTHER NON-CURRENT LIABILITIES - e11.377 thousand (e10.733 thousand in 2014)
(€,000)
Other non-current
liabilities
Provision for subsidies for facilities
Total other non-current
liabilities
31/12/2015
% change
11.377
10.733
6%
11.377
10.733
6%
Other non-current liabilities as at 31st December 2015,
which came to €11,377 thousand, comprises deferred
income relating to contributions received from users for
new connections, of which the Company has sustained and
capitalized the entire cost. The change compared to the
previous year is attributable to the release to the income
148
31/12/2014
statement of the accrued portion and the recognition of
the contributions received and not yet accrued. These
contributions are rediscounted for the full amount billed
and recognised to the income statement on a straight-line
basis, calculated at the rate applied to amortize the cost of
the related assets.
36. CURRENT LOANS AND BORROWINGS - e118.461 thousand (e46.131 thousand in 2014)
(€,000)
Beneficiary
Linea Group Holding
Linea Group Holding
Linea Group Holding
Linea Group Holding
Linea Group Holding
Linea Group Holding
Linea Group Holding
Linea Group Holding
Original
amount
Lender
Rate
Sundry
Institutional
investors
Intesa S.Paolo
BCC Cremona
Cassa DDPP
Cassa DDPP
Lombardy Reg.
Authority
Overdrafts
On notice
300,000
28/11/2018
8,000
8,000
5,164
5,216
31/12/2015
26/02/2019
31/12/2022
31/12/2022
Floating
Fixed
3.875%
Floating
Fixed 4.67%
Fixed 5.25%
Floating
765
30/06/2022
Infruttifero
BEI
80,000
30/06/2020
Linea Group Holding
Lease company
Total bank and other loans
Linea Group Holding
Maturity
date
Sundry
various
c/c cash
indeterminate
pooling
Total loans from subsidiaries
Bank borrowings falling due by the end of the following
financial year relate to portions of medium and long-term
loans expiring by the end of the year for the amount of
€84,040 thousand and €34,421 loans lent to subsidiaries
under the reciprocal current account.
It should be noted that the group operates a cash-pooling
zero balance system, whereby bank current accounts
opened with most of the group’s subsidiaries are reset daily
and the balance is transferred to the parent company’s
master current accounts. This optimises the group’s cash
Fixed
2.033%
Floating
Floating
Current
balance
2014
Current
balance
2015
0
0
11,190
11,191
0
880
296
261
800
840
281
261
40
40
71,320
8,467
53
84,040
15
21,895
34,421
24,236
34,421
0
118,461
24,236
0
46,131
flows and limit recourse to the banking system.
The reasons for the significant increase in the value of this
item compared to 2014 are the same as described in Note
34 herein, regarding the EIB loan.
37. OTHER CURRENT FINANCIAL
LIABILITIES
As at 31st December 2015, liabilities relating to this item
was nil.
149
38. TRADE PAYABLES - e22.115 thousand (e15.166 thousand in 2014)
(€,000)
Trade payables
Trade payables due to third parties
for invoices received
Trade payables due to third parties
for invoices to be received
Trade payables due to
shareholders
Trade payables due to subsidiaries
Trade payables due to associates
TOTAL TRADE PAYABLES
31/12/2015
31/12/2014
% change
-4,074
-3,536
15%
-1,027
-1,370
-25%
-606
-863
-30%
-16,408
0
-22,115
-9,419
22
-15,166
74%
-100%
46%
Changes year on year are mainly attributable to the
increase in trade payables due to subsidiaries. This item
comprises liabilities relating to services received from
subsidiaries and payables due to recharging on the
increase of electricity distribution grids and district heating
in the towns of Lodi and Cremona.
The increase in trade payables due to subsidiaries is
mainly reflected in the amount of invoices to receive for
investments made on LGH networks by Linea Reti, which
amounted to €15,058 thousand as at 31st December 2015,
compared to €5,264 thousand for Linea Reti and €2,507
thousand for Astem Gestioni as at 31st December 2014.
39. TAX AND OTHER CURRENT LIABILITIES - e8.644 thousand (e6.195 thousand in 2014)
(€,000)
Other payables due to
shareholders
Other payables due to subsidiaries
Tax liabilities due to subsidiaries
Tax liabilities due to the Inland
Revenue
Payables due to social security
institutes
Payables due to employees
Accrued expenses
Other liabilities
TOTAL TAX AND OTHER
CURRENT LIABILITIES
150
31/12/2015
31/12/2014
% change
-2,322
-1,272
83%
-4
-4,275
-24
-2,780
-83%
54%
-339
-326
4%
-489
-503
-3%
-1,144
-24
-47
-1,240
-20
-30
-13%
20%
57%
-8,644
-6,195
38%
As at 31st December 2015 this item amounted to €8,644
thousand, with an increase of €2,449 on the previous
year. This increase is mainly attributable to the increase
of payables due to shareholders for €1,050 thousand and
tax liabilities due to subsidiaries for €1,495 thousand.
40. Current tax liabilities
For further details, please refer to Note 12.
41. Liabilities related to discontinued
operations/assets held for sale
As at 31st December 2015, liabilities related to assets held
for sale was nil.
42. Guarantees and commitments towards
third parties
The table below shows a summary of the guarantees and
commitments taken out by the company with third parties
as at 31st December 2015.
(€,000)
Memorandum accounts
To secure obligations assumed by Lomellina
Energia under the loan agreement renegotiated
in 2015, for max. €6,000 thousand.
To secure obligations assumed by Linea Più
Parent company guarantee to
with ENEL Trade under an electricity purchase
cover Linea Più electricity trading
agreement.
with A2A under an electricity purchase
cover Linea Più electricity trading
agreement.
with Alma under an agreement covering the
cover the acquisition of a line of
purchase of the gas sales line of business.
business by Linea Più
Bank guarantee issued in favour of Bank guarantee issued by LGH to secure the
ING LEASE
lease granted for former LGH Rinnovabili S.r.l.
Bank guarantee issued for the loan To secure the loan granted to former
to Linea Energia (former LGHR)
LGH Rinnovabili by Unicredit
Bank guarantee issued for
To secure the credit line for VAT granted by
credit line in favour of former
Cassa Padana to former LGH Rinnovabili.
LGH Rinnovabili
Bank guarantee issued for a
To secure the loan granted by Mediocredito
Franciacorta Rinnovabili’s loan
Trentino to Franciacorta Rinnovabili.
Mandato di Credito* on Linea Più
To secure the short-term loan granted to
hot money line
Linea Distribuzione by Unicredit.
Mandato di Credito* on
with Alma in connection with the agreement for
Linea Distribuzione hot money line
the purchase of the gas sales line of business.
Bank guarantee issued for Sinit
To secure credit lines granted to Sinit by
credit lines
Unicredit
Bank guarantee issued for Sinit
To secure credit lines granted to Sinit by BPER
credit lines
Lomellina Energia contract for
treasury share payment
31/12/2015
31/12/2014
6,000
0
2,700
7,000
2,000
2,000
553
3,000
2,326
2,527
6,437
6,800
0
1,852
5,520
6,000
4,000
0
6,000
0
8,037
8,037
8,035
8,035
(Follows)
151
(€,000)
Memorandum accounts
Co-obligation insurance on Blugas
Infrastrutture bank guarantee
Co-obligation in favour of SACE
co-obligations and/or Mandati di
credito on bank guarantees
co-obligations and/or Mandati di
credito on insurance guarantees
TOTAL
152
31/12/2015
To secure a bank guarantee issued by SACE BT
in favour of the Inland Revenue in the interest
of Blugas Infrastrutture
Co-obligation by LGH S.p.A. in favour of SACE
for the issuance of 2010 VAT reimbursement
guarantee regarding Blugas Infrastrutture
guarantee regarding Blugas
guarantee regarding Blugas
To secure guarantees issued by banks in favour
of third parties in the interest of subsidiaries
To secure guarantees issued by insurance
companies in favour of third parties in the
interest of subsidiaries
31/12/2014
1,400
2,411
1,504
1,504
2,180
2,180
664
0
73
0
1,160
0
64,705
63,598
34,710
20,434
158,004
135,378
43. Additional disclosures on financial
instruments and risk management policies
Classes of financial instruments
The table below gives details of the financial assets
and liabilities required by IFRS 7 within the categories
established by IAS 39 for both the current year and the
previous one.
(€,000)
Items in the 2015 balance sheet
Non-current assets
Current assets
Trade receivables
Derivative financial
instruments - assets
Current financial assets
liabilities
Other financial liabilities
Current liabilities
Current loans and financial liabilities
Other financial liabilities
Trade payables
Financial instruments
at fair value held for
trading
Receivables and loans
Carrying value
92,579
92,579
96,330
96,330
-292,697
-292,697
-118,461
-118,461
153
44. Fair value
The statement below presents a comparison of the
carrying amount and fair value by category of the Group’s
financial instruments included in the financial statements.
The fair value of derivatives and loans was calculated
by discounting estimated future cash flows at prevailing
interest rates.
(€,000)
Carrying amount
31/12/2015
Financial assets:
Interest rate swaps
Financial liabilities:
liabilities
liabilities
Interest rate swaps
Fair value
31/12/2014
31/12/2014
31/12/2014
61,510
0
0
104,813
0
0
61,510
0
0
104,813
0
0
-292,697
-363,528
-292,697
-363,528
-118,461
-46,131
-118,461
-46,131
0
0
0
0
0
0
0
0
A breakdown of the carrying amount and fair value of
financial instruments is also provided by method and
calculation models used.
(€,000)
Item
Bank borrowings
Debenture loans
Derivatives not designated
as hedges
Derivatives designated as
hedges
154
Carrying
amount
-78,879
-297,805
Mark to market
DCF model
-78,879
-297,805
Other
Total fair
value
-78,879
-297,805
Related party disclosures
The statement below lists the data relating to the Company’s main transactions with related parties during 2015.
(€,000)
Related parties
COGEME Rovato S.p.A.
Cogeme STL
AOB2 Srl (73.49%)
AEM Cremona S.p.A.
Aem Service S.r.l. (100%)
ASTEM Lodi S.p.A.
ASM Pavia S.p.A.
ASM Codogno S.p.A.
Total shareholders and their
subsidiaries
Municipality of Cremona
Municipality of Rovato
Total shareholders of
municipality-owned
companies
TOTAL
Receivables
Payables
6,037
5
37
18,749
5
188
6
3
25,030
Costs
Revenues
84
209
255
996
338
184
156
155
339
224
1,857
1,083
42
895
4
25
1,086
2
181
6
2
2,201
5
6
42
0
11
0
25,072
1,857
1,095
2,201
Transactions established by the Company with parent
company’s shareholders and all the municipalities that are
members of municipality-owned companies, which are
identified as related parties, are mainly of a commercial
nature and are defined and regulated on the basis of
specific agreements or individual contracts that set out
the conditions for the performance of different services
by each company of the Group.
Disclosures regarding equity, economic and financial
relations transactions are shown, where relevant, in the
various items of the explanatory notes.
Relations with companies linked with some of the directors
and executives of the Group are listed at the bottom of the
table.
Terms and conditions of related party transactions
Sales with related parties are carried out at the market
price and conditions. The end-of-year balances are not
secured by collateral nor do they generate an interest,
except for those referring to repayment plans entered into
with AEM S.p.A. and Cogeme S.p.A.
155
Relationships with subsidiaries, associates,
companies subject to the control of associates
A summary of the main economic relationships maintained
during the year with group companies and the main
receivables and payables involving these companies as at
31st December 2015 is given below (figures expressed in
thousands of euros).
The transactions took place at market values.
(€,000)
lationships within the
LGH Group
Astem Gestioni
Mf Waste S.r.l.
Linea Energia
Linea Ambiente
Greenambiente
Linea Più S.p.A.
Franciacorta Rinnovabili S.r.l.
Linea Com
Total subsidiaries
Rovato Energia
Lomellina Energia
Steam S.r.l.
Total other Group companies
Total
156
Receivables
31,571
0
2,508
6,191
29,117
27,022
89
46,859
35,581
29
1,850
180,817
1
198
29
228
181,045
Payables
-16,104
0
-9,766
-25
-613
-177
-7,497
-374
-20,944
0
-1,228
-56,728
-33
-850
0
-883
-57,611
Costs
-15,207
-2,290
-415
0
0
-2
-163
-12
-86
0
-2,196
-20,371
-2
-12
0
-14
-20,385
Revenues
8,654
1,243
4,168
21
1,043
2,572
182
3,635
2,880
29
1,063
25,490
15
455
40
510
26,000
Other disclosures
The gross remuneration paid to the members of the Board
of Directors in 2015 amounted to €275 thousand for the
position of directors.
The remuneration of independent auditors in 2015
amounted to €41 thousand.
The gross remuneration of the board of auditors in 2015
amounted to €109 thousand.
Details on significant events occurring after the closing
date are given in the business report.
These financial statements give a true and fair view of
the assets and liabilities and financial position of Linea
Group Holding S.p.A., as well as the result for the year,
and correspond to the information in the account ledgers
and books.
Cremona, 31st march 2016
The Board of Directors
Chairman
Deputy Chairman
Board members
157
Certification of the consolidated financial statements
pursuant to art. 81-ter of CONSOB Regulations no.
11971 of 14 May 1999, as amended.
1. We, the undersigned, Alessandro Giuseppe Conter, in
my capacity as Chairman of the Board of Directors,
and Claudio Benelli, in my capacity as Financial
Reporting Officer of Linea Group Holding S.p.A.,
hereby declare, in accordance with the provisions of
art. 154-bis, subsections 3 and 4, of Italian Legislative
Decree on. 58 of 24 February 1998:
•the adequacy in relation to the characteristics of the
company and actual application of administrative
and accounting procedures for the preparation of
the consolidated financial statements, during the
year 2015;
•
due compliance with the administrative and
accounting procedures for the preparation of the
company’s financial statements and consolidated
financial statements for 2015.
2. We also confirm that:
2.1 the consolidated financial statements:
a) correspond to the ledgers and accounting entries;
b)have been prepared in accordance with the
applicable International Financial Reporting
Standards endorsed by the European Union
pursuant to Regulation 1606/2002 of the European
Parliament and the Council of 19 July 2002;
c) rovide a true and fair view of the financial position
and results of operations of the issuer and of the
companies included in the consolidation.
2.2The directors’ report contains a reliable description
of the performance and financial position of the
issuer and the entities in the scope of consolidation,
along with the main risks and uncertainties to which
they are exposed.
Cremona, 31st March 2016
Chairman of the Board of Directors
158
Financial Reporting Officer
159
160
161
162
163
164

annual financial report

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