Annual Report 2014

Transcription

Annual Report 2014

ANNUAL REPORT 2014
1
Maire Tecnimont Group
Table of Contents
Report on Operations
1.
7
Board of Directors, Board of Statutory Auditors and Independent
Auditors
8
2.
Investor Information
9
3.
Significant Events in the Fiscal Year
11
4.
Group Business Performance
15
5.
Financial Results by Business Unit
18
6.
Backlog by Business Unit and Geographical Area
23
7.
Group Financial Performance
38
8.
Human Resources
44
9.
Training, Incentive Programs, Organization and Security
47
10. Industrial Relations
51
11. IT Systems and General Services
52
12. Health, Safety and Environment
54
13. Innovation and Research & Development
56
14. Information on Risks and Uncertainties
60
15. Financial Risk Management
63
16. Legal Matters and Disputes
66
17. Report on Corporate Governance and Ownership Structure
75
18. Treasury Shares and Parent Company Shares
75
19. Going Concern
76
20. Subsequent Events and Business Outlook
77
21. Parent Company Operating Performance
80
22. Proposal of the Board of Directors
82
Consolidated Financial Statements and Explanatory Notes
83
23. Consolidated Financial Statements
85
23.1. Consolidated Income Statement
85
23.2. Consolidated Statement of Comprehensive Income
86
2
23.3. Consolidated Statement of Financial Position
87
24. Consolidated Statement of Changes in Equity
89
25. Consolidated Statement of Cash Flows (indirect method)
90
26. Explanatory Notes as at 31 December 2014
91
27. Consolidated Income Statement
118
27.1. Revenues
118
27.2. Other operating revenues
119
27.3. Information by business segment
119
27.4. Raw materials and consumables
123
27.5. Cost of services
124
27.6. Personnel expense
125
27.7. Other operating expenses
127
27.8. Amortization/depreciation and impairment
127
27.9. Provisions for bad debts and risks and charges
128
27.10. Financial income
129
27.11. Interest expense
130
27.12. Gains/(losses) on equity investments
130
27.13. Income taxes
131
27.14. Earnings (losses) per share
131
28. Consolidated Statement of Financial Position
133
28.1. Property, plant and equipment
133
28.2. Goodwill
134
28.3. Other intangible assets
137
28.4. Investments in associated companies
138
28.5. Financial instruments – Non-current derivatives
140
28.6. Other non-current financial assets
140
28.7. Other non-current assets
144
28.8. Deferred tax assets and liabilities
144
28.9. Inventories and advances to suppliers
145
28.10. Construction contracts - Receivables
146
28.11. Trade receivables
146
28.12. Current tax assets
147
28.13. Financial instruments - Derivatives
148
28.14. Other current financial assets
149
28.15. Other current assets
149
28.16. Cash and cash equivalents
150
28.17. Non-current assets classified as held for sale
151
3
28.18. Group shareholders’ equity
152
28.19. Financial debt net of current amount
154
28.20. Provisions for charges over 12 months
155
28.21. Post-employment and other employee benefits
156
28.22. Other non-current liabilities
157
28.23. Financial instruments – Non-current derivatives
157
28.24. Other non-current financial liabilities
157
28.25. Short-term debt
159
28.26. Tax payables
161
28.27. Financial instruments - Derivatives
162
28.28. Other current financial liabilities
162
28.29. Client advance payments
163
28.30. Construction contracts - Payable
163
28.31. Trade payables
164
28.32. Other current liabilities
165
29. Commitments and Contingent Liabilities
166
30. Transactions with Related éarties
167
31. Independent Auditor Fees
168
32. Information on Financial Risks
169
32.1. Credit risk
169
32.2. Liquidity risk
171
32.3. Market risks
172
32.4. Interest rate risk
174
32.5. Default and debt covenant risk
175
32.6. Classification of financial instruments
177
33. Positions or Transactions deriving from Atypical or Unusual Operations
179
34. Non-Recurring Significant Events and Transactions
179
35. Significant Events after 31 December 2014
179
36. Attestation to the Consolidated Financial Statements Pursuant to
article 154-bis, paragraph 5, of Italian Legislative Decree 58/98 and
Subsequent Amendments and Supplements
180
Financial Statements and Explanatory Notes
181
37. Financial Statements
182
4
37.1. Income Statement
182
37.2. Statement of Comprehensive Income
183
37.3. Statement of Financial Position
183
38. Statement of Changes in Equity
185
39. Statement of Cash Flows (indirect method)
186
40. Explanatory Notes as at 31 December 2014
187
40.1. Measurement criteria
195
41. Income Statement
205
41.1. Revenues
205
41.2. Other operating revenues
205
41.3. Raw materials and consumables
205
41.4. Cost of services
206
41.5. Personnel expense
206
41.6. Other operating expenses
207
41.7. Amortization/depreciation and impairment
207
41.8. Provisions for bad debts
208
41.9. Financial income
208
41.10. Interest expense
209
41.11. Gains/(losses) on equity investments
209
41.12. Income taxes
209
41.13. Earnings (losses) per share
211
42. Statement of Financial Position
212
42.1. Property, plant and equipment
212
42.2. Other intangible assets
212
42.3. Investments in subsidiaries
213
42.4. Other non-current assets
216
42.5. Other non-current financial assets
217
42.6. Deferred tax assets and liabilities
217
42.7. Trade receivables
219
42.8. Current tax assets
219
42.9. Other current assets
220
42.10. Cash and cash equivalents
220
42.11. Shareholders’ equity
221
42.12. Financial debt net of current amount
223
42.13. Provision for risks and charges over 12 months
223
42.14. Post-employment and other employee benefits
223
42.15. Other non-current financial liabilities
224
42.16. Short-term debt
226
42.17. Tax payables
227
42.18. Trade payables
227
5
42.19. Other current liabilities
228
43. Commitments and Contingent Liabilities
229
44. Transactions with Related Parties
230
45. Information on Financial Risks
232
46. Independent Auditor Fees
238
47. Non-Recurring Significant Events and Transactions
239
48. Transactions deriving from Atypical or Unusual Operations
239
49. Significant Events after 31 December 2014
239
50. Attestation to the Financial Statements Pursuant to article 154-bis,
paragraph 5, of Italian Legislative Decree 58/98 and Subsequent
Amendments and Supplements
240
51. Report of the Independent auditors on the Consolidated Financial
Statements
242
52. Report of the Independent Auditors on the Financial Statements
245
6
7
1. Board of Directors, Board of Statutory Auditors and
Independent Auditors
Board of Directors
Chairman
Fabrizio DI AMATO
CEO
Pierroberto FOLGIERO
Director
Luigi ALFIERI
Independent Director
Gabriella CHERSICLA
Nicolò DUBINI
Director
Stefano FIORINI
Vittoria GIUSTINIANI
Patrizia RIVA (***)
Andrea PELLEGRINI
(*)
(**Chairman) (*** Chairman)
(**)
(*)
(****)(***) (**)(* Chairman)
The Board of Directors was appointed by the Shareholders’ meeting on 30 April 2013 and shall remain in office until approval of the Financial Statements as at 31 December 2015.
(*)
Member of the Remuneration Committee
(**)
Member of the Control and Risk Committee
(***)
Member of the Related Parties Committee
(****) Appointed by the Board of Directors of 11 June 2014. On 18 February 2015, the Shareholders’ Meeting appointed as Director Andrea Pellegrini, who will remain in office until
approval of the financial statements at 31 December 2015.
Board of Statutory Auditors
Chief Statutory Auditor
Pier Paolo PICCINELLI
Acting Auditor
Roberta PROVASI
Acting Auditor
Giorgio LOLI
Alternate Auditor
Andrea BONELLI
Alternate Auditor
Marco PARDI
(*)
(**)
The Board of Auditors was appointed by the Shareholders’ meeting held on 30 April 2013 and shall remain in office until approval of the Financial Statements as at 31 December 2015.
(*)
took over as Statutory Auditor 11 June 2014. The Meeting of 18 February 2015 integrated the Board of Auditors with the appointment of Roberta Provasi as Statutory Auditor, who
(**)
the Meeting of 30 April 2014 integrated the Board of Auditors with the appointment of Marco Pardi as Alternate Auditor, who will remain in office until approval of the financial
will remain in office until approval of the financial statements at 31 December 2015.
statements at 31 December 2015..
Independent Auditors
DELOITTE & TOUCHE S.p.A.
The Shareholders’ meeting of 10 July 2007 resolved to entrust the task of statutory audit to the audit firm Deloitte & Touche S.p.A. for the years 2007 - 2015
8
2. Investor Information
SHARE CAPITAL OF MAIRE TECNIMONT S.P.A. AT 31 DECEMBER 2014
Share capital
Euro 19,689,550
Number of ordinary shares
no. 305,527,500
Market float, number of shares
no. 106,875,000
% Market float of share capital
34.980%
MAIRE TECNIMONT STOCK PERFORMANCE
In FY 2014, there was a positive change (10.8%) in the issuer’s capitalisation, which went
from Euro 498,009,825 for 2013 to Euro 551,782,665 for 2014.
During 2014, the share performance was significantly influenced by various factors:
•
The announcement in March 2014 of the positive results of 2013, the great success of
the convertible bond for Euro 80 million in February 2014, and the general increase of
recommendations and target prices by the analyst community positively influenced the
stock, especially in the first part of 2014.
•
On the contrary, an unfavourable macroeconomic situation in some of the geographies
where the group has an established presence, penalized the stock from mid-2014.
•
Though the falling price of oil does not directly impact the Group’s business, given the
focus on the activities of downstream and fertilizers, the negative sentiment towards
the sector in which the Group operates also had a negative impact on the stock
performance, especially between September and November 2014.
The number of ordinary shares of the issuer at 31/12/2014 was 305,527,500 and did not
change in the year.
The daily average trading volume in 2014 was 2,032 million shares with an average unit price
of Euro 2,024.
Ordinary share stock price on the Milan Stock Exchange, in Euro
01/01 - 31/12/2014
Maximum (07 April 2014)
2.870
Minimum (04 February 2014)
1.485
Average
2.024
End of period (31 December 2014)
1.806
Market capitalization (at 31 December 2014)
551,782,665
9
Maire Tecnimont Share Price Performance versus Bloomberg EMEA Oil & Gas Services Index
(BEUOILS) and the Italian FTSE Mid Cap Index (ITMC) in 2014.
The chart shows that Maire Tecnimont stock overperformed the FTSE Italia MIB MID CAP
Index, composed of the first 60 stocks by Company capitalization outside the FTSE MIB index,
by 8.3%. Maire Tecnimont stock overperformed Bloomberg’s Oil & Gas services, comprising
the main shares of Europe, the Middle East and Africa, by 83.1%.
10
3. Significant Events in the Fiscal Year
In 2014, the main management events involving the Group were as follows:
LISTING OF AN EQUITY-LINKED DEBENTURE LOAN FOR A TOTAL OF EURO 80 MILLION,
RESERVED TO QUALIFIED INVESTORS
On 13 February 2014, Maire Tecnimont S.p.A. announced that following approval by the Board
of Directors on 11 February 2014, it had started and successfully completed on that same
date the listing of an equity-linked debenture loan (the “Listing”) with a 5-year term, for a
total nominal figure of Euro 70 million (the “Bonds”). This amount would have subsequently
been able to be increased up to Euro 20 million (for a maximum total of Euro 90 million) in
the event of the increase option being exercised by the Company before the pricing date, and
by a further Euro 10 million (for a general total of up to Euro 100 million) in the event of the
full exercise of the over-allotment option by the Joint Bookrunners within 3 working days prior
to the payment date, scheduled for 20 February 2014.
On 17 February 2014, the Joint Bookrunners exercised their over-allotment option in full.
Consequently, the total nominal value of the bonds was increased from Euro 70 million to
Euro 80 million.
The Bonds were settled on 20 February 2014.
The offer was for qualified investors on the Italian and international market only, excluding
the USA, Canada, Japan and Australia or any other jurisdiction in which the offer or sale of
Bonds is subject to authorisation by local authorities or in any case prohibited by the law.
The initial Bond conversion price has been established as Euro 2.1898, which includes a
premium of 35% over the weighted average price of the Company’s ordinary shares as
recorded on the MTA, between the time of launch and transaction pricing.
The Bonds were issued at par, for a unit nominal value of Euro 100,000; they have a term of
5 years and a fixed annual coupon of 5.75%, payable six-monthly in arrears. If not previously
converted, redeemed, purchased or cancelled, the Bonds will be redeemed at par on 20
February 2019.
On 30 April 2014, during an extraordinary meeting the Shareholders’ also authorized the
convertibility of the above-mentioned bond. The extraordinary Shareholders’ meeting
therefore approved the proposed divisible share capital increase in exchange for cash
payment, with the exclusion of stock options pursuant to Art. 2441, paragraph 5 of the Italian
Civil Code, for a total of up to Euro 80 million (including the premium). This will be paid in one
or more tranches by means of the issue of up to 36,533,017 ordinary shares with the same
characteristics as the ordinary shares already in issue, reserved exclusively and irrevocably for
the conversion of said debenture loan, according to the terms of the related regulation. The
price per share is Euro 2,1898 (of which Euro 0.01 to be allocated to share capital and Euro
2,1798 as premium), subject to any adjustments to the conversion price as established by the
Loan Regulation, consequently amending Art. 6 of the Company’s Articles of Association.
Following that approval, the Company issued a specific bond-holder notice (the “Physical
Settlement Notice”). In accordance with the Bond regulation (the “Regulation”) and as from
the date specified on the Physical Settlement Notice, the Company will fulfil any exercise of
conversion rights by delivering shares obtained from the Share Capital Increase.
Specifically, on 29 May 2014 Maire Tecnimont S.p.A. announced that the Company submitted
to the bondholders of the equity linked bond called “€80 million 5.75 percent. Unsecured
Equity-Linked Bonds due 2019” a physical settlement notice - by delivery of the same to
Euroclear and Clearstream, Luxembourg - the effect of which is attributed to the Bondholders,
as from 27 June 2014, the right to convert into existing or newly-issued ordinary shares of the
Company.
On 13 June 2014 - the Company announced the initiation of the trading phase of the Bonds at
the “Third Market” (MTF), unregulated market of the Vienna Stock Exchange.
11
CLOSING OF THE SALE OF SOFREGAZ S.A.
As envisaged in the disposal plan, on 31 March 2014, the subsidiary Tecnimont S.p.A.
finalized the valuation of the assets of the French company Sofregaz S.A. The transaction
included the sale of the Sofregaz BU (name, organisation and various contracts in progress) to
a French newco incorporated by the buyer for Euro 5 million. Assets worth approximately Euro
13 million, mainly comprising receivables, remain within the Group together with the rights
attached to them. Given that the Sofregaz S.A. trademark has also been sold, the Company
that has remained within the Group to manage the residual business, has changed its name to
TCM FR S.A.
AGREEMENT SIGNED FOR A PETROCHEMICAL COMPLEX IN EGYPT
On 26 March 2014, through some of its subsidiaries and in association with the Archirodon
Group, Maire Tecnimont S.p.A. signed an agreement with Carbon Holdings, for the
development of auxiliary installations and structures for the Tahrir Petrochemical Complex in
Ain Sokhna, Egypt. The agreement was awarded by direct negotiation; it comprises the
Engineering, Procurement, Construction and Commissioning (EPCC) to be carried out by a
consortium comprising the Maire Tecnimont Group and the Archirodon Group for an estimated
value of between approximately USD 1.7 billion and USD 1.95 billion; approximately 50% of
this pertains to the Maire Tecnimont Group. Following financial closing, Maire Tecnimont will
add its share of the project to the backlog.
MEMORANDUM OF UNDERSTANDING SIGNED WITH FATIMA GROUP FOR A FERTILIZER
COMPLEX IN INDIANA, USA
On 21 July 2014 Maire Tecnimont S.p.A. (“MET”) declared that it had signed a Memorandum
of Understanding (“MoU”) with Fatima Group Principals (“FGP”) and Midwest Fertilizer
Corporation (“MFC”) in order to negotiate and finalise the strategic collaboration aimed at
developing a new mega MFC fertiliser complex in Mount Vernon, Posey County, Indiana (USA).
Subject to financial closing by the client, to date expected in 2015, MET will include the
project in the backlog. Following definition of the Scope of Work and the agreement on the
terms and conditions of the Engineering, Procurement and Construction (“EPC”) contract, EPC
business to be carried out by MET or its subsidiaries will be approximately USD 1.6 billion. FGP
has already secured a tax exempt loan for USD 1,259 billion by the United States Midwest
Disaster Relief Program and will acquire a shareholding in the ownership structure of the
project along with other investors. At the same MFC awarded to Tecnimont (a subsidiary of
MET) a contract for engineering services with the aim to finalize and agree on terms and
conditions, Scope of Work and consequent final price of the EPC LSTK contract. The MFC
project involves the construction of: an ammonia plant (2,200 tons/day) based on KBR
technology; a urea synthesis plant (2,200 tons/day), a urea granulation plant (1,200
tons/day), a urea and ammonium nitrate solution plant (4,300 tons/day), a urea solution
plant (AdBlue, 900 tons/day) based on Stamicarbon technology, the licensing and intellectual
property center of MET, the market leader in urea technology; a nitric acid plant (1,530
tons/day) based on Borealis/GPN technology, in addition to all auxiliary structures and
installations. For the realization of the project MET will establish partnerships with leading
American players active in construction. The completion of the project - expected within 36
months from the Notice-to-Proceed - is scheduled for Q4 2017.
MEMORANDUM OF UNDERSTANDING SIGNED WITH CRONUS CHEMICALS LLC FOR A
FERTILIZER COMPLEX IN ILLINOIS, USA
On 01 December 2014 Maire Tecnimont S.p.A. (“MET”) communicated that its main subsidiary
Tecnimont S.p.A. (“Tecnimont”) signed a Memorandum of Understanding with Cronus
Chemicals, LLC (“Cronus”) which will be converted into an EPC contract for the realization of a
new ammonia and urea plant in Tuscola, Illinois.
12
Subject to financial closing by the client, to date expected in 2015, MET will include the
project in the backlog. The value of the Engineering, Procurement, and Construction (“EPC”)
activities to be executed by Tecnimont through one of its subsidiaries shall be of
approximately USD 1.5 billion; the EPC contract was subsequently signed in the first months
of
2015
subject
to
the
financial
closing
by
the
client.
The project shall consist of an ammonia and urea plant with a production capacity of 2,200
tons/day of ammonia, 3,850 of urea, as well as the equipment necessary to produce DEF
(Diesel Exhaust Fluid). The plant intends to use KBR’s technology for ammonia and
Stamicarbon’s – Maire Tecnimont Group’s licensing and IP centre – for urea.
For the execution of the project Tecnimont will establish partnerships with leading American
players active in construction. The completion of the project is expected within 37 months
from entry into force of the EPC contract.
ISSUE APPROVED OF A BOND RESERVED TO QUALIFIED INVESTORS
The Maire Tecnimont Board of Directors met on 16 July 2014 and had approved the issue of
an unsecured guaranteed 5-year bond for a total minimum amount of Euro 300 million. The
transaction could have been performed, subject to market conditions, for implementation by
31 December 2014. If completed, the proceeds from the bond would have been used to
refinance the Company’s bank debt and that of Tecnimont S.p.A., in order to diversify sources
of finance, extend the average term of borrowings and increase the overall Group’s financial
flexibility. The combination of adverse macroeconomic events in the Eurozone along with
geopolitical events still suitable to influence the financial markets, had led to the decision to
temporarily suspend the placement of the bond. The year 2015 opened with prospects for
significant improvement over the previous year, although in the context of a geopolitical
situation still characterized by strong tensions. However, financial markets are characterized
by the presence of strong liquidity and express a significant demand for medium to long term
financial products also referable to issuers in line with the Group’s standing.
The Board of Directors met on 18 February 2015 and approved the issue of an unsecured
guaranteed bond for a minimum of 5 years to a maximum of 7 years for a reduced total
minimum amount of Euro 100 million, in consideration of the extraordinary proceeds expected
from the transactions in the early months of 2015 related to the positive closing of the
Enel/Endesa dispute and the agreement for the sale of the investment in Biolevano.
NEW CONTRACTS
In 2014, the Maire Tecnimont Group was awarded new contracts and contract extensions of
existing projects for a total of approximately Euro 2,775.8 million, almost exclusively in the
Technology, Engineering & Construction sector in line with the commercial focus pursued. For
further details refer to the section “Backlog by Business Unit and Geographical Area”.
In particular, new awards of 2014 include the important Sonara refinery Phase II Expansion
project in Cameroon, worth approximately Euro 456 million and the ROG project for the
Antwerp Total refinery, worth approximately Euro 190 million and an EPC contract worth Euro
1,729 million with Abu Dhabi Company for Onshore Oil Operations (ADCO) for the realization
of phase III of the Al Dabb’iya Surface Facilities project in Abu Dhabi, UAE.
As already mentioned in the previous paragraph, the data on awards does not include the
agreement for the Egyptian petrochemical complex - Carbon Holdings, which will be added to
the backlog following the financial closing by the client, the value of the MoU for a fertiliser
complex in the USA with Fatima Group Principals and Midwest Fertilizer Corporation for
approximately USD 1.6 billion and the one related to the fertilizer complex in Illinois with
Cronus Chemicals for approximately USD 1.5 billion.
13
Below are the main corporate events of 2014:
MAIRE TECNIMONT SHAREHOLDERS’ MEETING
On 30 April 2014, as an ordinary session, the Shareholders’ meeting approved the financial
statements as at 31 December 2013 of Maire Tecnimont S.p.A. It also ruled in favour of
approving the first section of the Remuneration Report prepared in accordance with Art. 123ter of Italian Legislative Decree no. 58/98. The Shareholders’ meeting continued its ordinary
session by integrating the Board of Auditors with the appointment of Marco Pardi as alternate
auditor. He will remain in office for FYs 2014 and 2015, i.e. until approval of the financial
statements as at 31 December 2015. As an extraordinary session, the Shareholders’ meeting
authorised the convertibility, in accordance with Art. 2420-bis, paragraph 1 of the Italian Civil
Code, of the equity-linked bond named “€80 million 5.75 percent. Unsecured Equity- Linked
Bonds due 2019” for Euro 80 million with maturity 20 February 2019.
CORPORATE GOVERNANCE DECISIONS
On 11 June 2014, the Board of Directors of Maire Tecnimont S.p.A., appointed by co-option,
to replace the Director Paolo Tanoni, the Director Andrea Pellegrini who will remain in office
until the next Shareholders’ meeting. The Board of Directors has verified that the Director
Andrea Pellegrini meets the independence requirements laid down by the Consolidated Law on
Finance and the Corporate Governance Code. The Board of Directors integrated the
Committees in the Board and, in particular: the Audit and Risk Committee, composed of the
Directors Gabriella Chersicla (acting as Independent Chair), Andrea Pellegrini (independent)
and Stefano Fiorini; the Remuneration Committee, composed of the Directors Andrea
Pellegrini (acting as Independent Chair), Vittoria Giustiniani (Independent) and Luigi Alfieri;
the Related Parties Committee, composed of independent Directors Gabriella Chersicla
(Chair), Patrizia Riva and Andrea Pellegrini. It has also accepted the resignation of Antonia di
Bella, who had been appointed Regular Auditor by the Shareholders’ meeting on 30 April
2013, drawn from the majority slate. In accordance with the law and the Articles of
Association, Roberta Provasi has been drawn from the majority slate to take over as Regular
Auditor and shall remain in office until the next Shareholders’ meeting.
CALL OF THE ORDINARY AND EXTRAORDINARY SHAREHOLDERS’ MEETING
On 17 December 2014, the Board of Directors of Maire Tecnimont S.p.A. resolved to call for
20 January 2015 on first call and, if necessary, for the following day 21 January 2015 on
second call, the ordinary and extraordinary Shareholders’ meeting to resolve on the following
agenda:
Ordinary Part (1. Appointment of a Director. 2. Integration of the Board of Auditors. 3.
Amendment of the Meeting Regulation; related and consequent resolutions. 4. Authorization
to exercise competitive activity pursuant to art. 2390 of the Civil Code to a Director; related
and consequent resolutions).
Extraordinary part (1. Proposal to amend the following articles 9, 16, 17, 20, 21 and 23 of the
Articles of Association; replacement in the Articles of Association of the references to the
issuer which will be referred to as the “Company”; related and consequent resolutions.)
Subsequently, on 13 January 2015, the Board of Directors of Maire Tecnimont S.p.A. resolved
to revoke the convening of the Ordinary and Extraordinary Shareholders’ meeting scheduled
for 20 and 21 January 2015 and also resolved to convene a new ordinary and extraordinary
shareholders’ meeting for 18 February 2015 on first call and, if necessary, for the following
day 19 February 2015 on second call, with the same agenda of the ordinary part and the
integration of the agenda of the extraordinary part aimed at the introduction in the Articles of
Association of the institution of the vote increase.
14
4. Group Business Performance
Following the entry into force of accounting principles IFRS 10 and IFRS 11 the consolidation
rules of the Maire Tecnimont Group’s investments were redefined. In particular, IFRS 11
provides that investments in Joint Ventures with effect from 1 January 2014 are consolidated
using the equity method; previously these holdings were consolidated using the proportional
method. Balance sheet and income statement figures of the Group are presented in
accordance with new consolidation rules; the figures for previous periods have been restated
to fulfil a comparative information purpose.
The table below shows Maire Tecnimont Group financial highlights at 31 December 2014
against the previous year:
(Values
YTD
thousands)
in
Euro
December
2014
%
December
2013
(***)
%
December
2013
Published
Change
%
Financial
indicators:
Revenues
84,943
5.7%
1,656,173
Business profit (*)
210,308
13.3%
199,131
13.3%
11,177
5.6%
199,131
12.0%
EBITDA (**)
126,887
8.0%
116,099
7.7%
10,788
9.3%
116,099
7.0%
EBIT
103,406
6.5%
89,964
6.0%
13,442
14.9%
89,964
5.4%
61,382
3.9%
50,117
3.3%
11,265
22.5%
50,117
3.0%
Income taxes
(10,739)
(0.7%)
(32,774)
(2.2%)
22,035
(67.2%)
(32,774)
(2.0%)
Tax rate
(17.5%)
(65.4%)
(0.0%)
Pre-tax income
1,583,191
1,498,248
(65.4%)
N/A
Profit/(Loss) for the
year
50,643
3.2%
17,343
1.2%
33,300
192.0%
17,343
1.0%
Group net income
50,297
3.2%
16,952
1.1%
33,345
196.7%
16,952
1.0%
(*) Business profit means the industrial margin before the allocation of overhead and administrative costs and
research and development expenses; the percentage incidence on income is defined as the business margin.
(**) EBITDA is defined as the net income for the year before tax (current and advance/deferred), net of interest
expense, only foreign exchange financial income and charges, gains and losses in the valuation of holdings, fixed
asset amortization/depreciation, and provisions. Corporate management uses EBITDA to monitor and evaluate
business operating performance. Management believes EBITDA is an important parameter for measuring Group
performance because it is not influenced by the impact of the different criteria used to determine taxable amounts,
the amount and nature of the capital employed, and amortization/depreciation. Given that EBITDA is not an indicator
determined and regulated by the Group reference accounting principles, the criteria used by the Group to determine
EBITDA might not be the same as that adopted by other groups and, therefore, is not comparable.
(***) Recalculated for the retroactive application of IFRS 11.
The table below gives key data for the Maire Tecnimont Group business as at 31 December
2014, as compared with 31 December 2013 - Pro-Forma. To allow for comparison, all figures
relating to the orders of the Infrastructure & Civil Engineering BU, Milan-Genoa High Speed
“Cociv” and Copenhagen Metro have been eliminated, as these were sold respectively in the
third and fourth quarter of 2013. It also describes other one-off legal events involving the
Infrastructure & Civil Engineering BU. Indeed, the positive results at 31 December 2013
reflected the significant impact of the disposal of the entire interest held in the COCIV
Consortium and related rights and obligations, partially offset by the revision of the estimates
of completion of some projects and provisions for personnel costs following the restructuring
process still underway in this BU.
15
(Values in Euro thousands)
December
2014
%
December
2013-Pro
Forma
(***)
%
Change
%
Financial Indicators:
Revenues
199,384
14.4%
Business profit (*)
1,583,191
210,308
13.3%
1,383,807
172,866
12.5%
37,442
21.7%
EBITDA (**)
126,887
8.0%
89,833
6.5%
37,054
41.2%
EBIT
103,406
6.5%
73,698
5.3%
29,708
40.3%
Profit/(Loss) for the year
50,643
3.2%
9,325
0.7%
41,318
443.1%
Group net income
50,297
3.2%
8,934
0.6%
41,363
463.0%
Below are the comments on the comparison between the data at 31 December 2014 and
those at 31 December 2013 restated following the retrospective application of IFRS 11.
The P&L performance of the Maire Tecnimont Group in 2014 features revenues of Euro
1,583.2 million, a figure that has increased by 5.7% compared to the previous year (Euro
1,498.2 million). The increased volumes are mainly due to progress made on new awards, in
addition to the recovery some delays recorded in the previous year.
Revenues from 2013 included approximately Euro 114.4 million related to Cociv and Metro
Copenhagen projects and other one-off effects within the Infrastructure & Civil Engineering
BU. Net of these, their increase as at 31 December 2014 would be more than 14.8%.
The main production volumes are related to the Technology, Engineering & Construction BU in
respect of the Tempa Rossa, Sadara, OPAL, AGRP Kuwait, IOWA, LDPE Mexico and Punta
Catalina in Santo Domingo projects.
As at 31 December 2014, the Group recorded positive Business Profit of Euro 210.3 million,
up 5.6% compared to the Business Profit of Euro 199.1 million in the previous year. The
Business Profit for the year was affected by the positive effect of closing of the agreement
with the Enel-Endesa GRoup relative to the known issue for the Bocamina dispute, net of
related costs. If the projects sold off by the Infrastructure & Civil Engineering BU and the
associated net one-off income are also excluded, a considerable increase of +21.7% is
recorded over the previous year.
The consolidated Business Margin at 31 December 2014 is 13.3%, in line with as recorded
December in 2013.
In December 2014, general and administrative costs were Euro 77.7 million, down
approximately 1 million from last year.
Taking into account the R&D costs of approximately Euro 5.7 million, the Group recorded
positive EBITDA of Euro 126.9 million on 31 December 2014, recording an increase of 9.3%
compared to prior year EBITDA (Euro 116.1 million). The consolidated EBITDA margin at 31
December 2014 was 8%, here too an improvement on the previous year. These trends are
due to the profitability of the business of the Technology, Engineering & Construction BU and
the effect of the agreement with the Enel-Endesa Group, net of related costs.
Eliminating also the data from the positive and non-recurring effects at 31 December 2013 in
the Infrastructure & Engineering BU, related to EBITDA there was a significant improvement
of +41.2% over the previous year.
Amortization, depreciation and impairment was Euro 10.5 million, down on last year
(approximately Euro 23.2 million). As at 31 December 2013, this item included the partial
impairment of goodwill for the Infrastructure & Civil Engineering BU (approximately Euro 10
million). Provisions for Euro 12.9 million relate to provisions for charges related to lawsuits,
pending litigation and charges related to the staff reduction procedure that is part of the
16
ongoing processes of optimization of human capital and progressive adjustment of the
Company functions to the changed business needs.
The net result of financial management from the analysis of financial income and expenses
also from investments was negative for Euro 42 million compared to 2013, a deterioration of
Euro 2.1 million, mainly due to the effects of the write-down of investments in some real
estate initiatives; eliminating this effect, pure financial management recorded an improvement
of about 0.5 million as a result of the financial manoeuvre completed in the second half of last
year.
Due to the positive results achieved at the operational level, the pre-tax result is Euro 61.4
million, an increase on previous year (Euro 50.1 million).
Year tax is estimated at Euro 10.7 million. The effective tax rate as at 31 December 2014 is
approximately 17.5%, an improvement on last year’s 65.4%, when the figure had been
influenced by the non-deductible impairment of goodwill.
The effective tax rate in 2014 was influenced by the effects of the closing of the agreement
with the Enel-Endesa Group, since in the past years the Group had not set aside deferred tax
assets on losses carried forward and now at the close of the agreement, were recognized and
contextually used for a portion.
The Group’s net result as at 31 December 2014 is Euro 50.3 million, an improvement on last
year’s Euro 16.9 million. If stripped of the positive one-off events recorded for the period in
the Infrastructure & Civil Engineering BU, it is instead approximately Euro 8.9 million.
Considering minorities, the consolidated net result at 31 December 2014 is Euro 50.6 million,
up 443.1%, excluding the Cociv and Copenhagen projects.
Technology, Engineering & Construction sector in line with the commercial focus pursued. For
further details refer to the section “Backlog by Business Unit and Geographical Area”. The
figure registered in the same period of 2013 (Euro 1,173.9 million) increased by Euro 1,601.8
million (+136,4%) thanks to the improved group equity position.
The Backlog of Maire Tecnimont Group at 31 December 2014 was Euro 4,9515 million, an
increase of approximately Euro 1,4695 million over the same period of 2013 in particular,
thanks to the new awards of 2014 of the Sonara refinery Phase II Expansion project in
Cameroon, the ROG project for the Antwerp Total refinery, and especially the EPC contract
with Abu Dhabi Company for Onshore Oil Operations (ADCO) for the realization of phase III of
the Al Dabb’iya Surface Facilities project in Abu Dhabi.
The backlog as at 31 December 2014 does not include the value of the agreement for the
petrochemical complex in Egypt - Carbon Holdings, as outlined in the main events of the year;
nor the value of the memorandum of understanding for the two fertilizer complex in the USA
with Fatima Group Principals and Midwest Fertilizer Corporation, of approximately USD 1.6
billion, and with Cronus Chemicals for USD 1.5 billion. Subject to financial closing by the
clients, Maire Tecnimont will include the projects in the backlog.
17
5. Financial Results by Business Unit
INTRODUCTION
Maire Tecnimont S.p.A. is the parent company of an integrated industrial group that operates
in Italy and the world markets, providing engineering and construction services and products
to the following sectors:
- (I) Technology, Engineering & Construction;
- (II) Infrastructure & Civil Engineering.
It shall be noted that the results of the BUs are in line with the new internal reporting
structure adopted by the Company’s top management. As from financial year 2014, the data
relating to the ‘Oil & Gas and Petrochemicals’ and ‘Power’ BU has been brought together, in
line with the new internal reporting structured used by the company’s top management that
also reflects the Group’s current organizational structure in the new ‘Technology, Engineering
& Construction’ BU.
Below is a summary of the key characteristics of these markets.
I.
‘Technology, Engineering & Construction’ BU, designs and constructs plants and
systems mainly for the natural gas industry (separation, treatment, liquefaction,
transportation, storage, regasification, and compression/pumping stations); it designs
and constructs plants and systems for the chemicals and petrochemicals industry,
especially those for the production of polyethylene and polypropylene (polyolefins),
ethylene oxide, ethylenic glycol, purified terephthalic acid (PTA), ammonia, urea and
fertilizers; in the fertilizer sector, it grants patented technology and intellectual
property licenses to current and potential urea producers. Other important activities
are linked to the sulphur recovery process, hydrogen production units and hightemperature furnaces. Also designs and constructs hydrocarbon-based power
generation plants (simple or combined-cycle electric power plants and co-generation
plants), power plants fuelled by renewable resources (hydroelectric or biomass plants),
waste-to-energy and district heating plants, the re-powering of electric power plants,
and the construction of energy transformation and transmission systems with
progressive growth in E and EP services.
II.
‘Infrastructure & Civil Engineering’ BU designs and executes large-scale
infrastructure works (such as roads and highways, railways, underground and surface
metro lines, tunnels, bridges and viaducts), facilities and buildings for the industrial,
commercial and service sectors; it provides ‘environmental services’ environmental
support for projects in the infrastructure, civil and industrial construction, energy and
general plant sectors. Also active in maintenance services, facility management,
provision of general services related to temporary construction facilities, Operation &
Maintenance activities.
This joining is due to the fact that the results of the two BUs “Oil, Gas & Petrochemicals” and
“Power” are pervasively affected by a unitary management and running. Senior level and
operative powers of attorney are centralised, result from a unitary management of the main
business units (Engineering, Procurement, Sales and Operations) and in the corporate
structure there are not managers or staff directly dedicated to and responsible for the two BUs
separately; staff also works indiscriminately in the two BUs. Providing the foregoing, this
suffices to mean that the income of the individual BUs is not significant.
Following the entry into force of accounting principles IFRS 10 and IFRS 11 the consolidation
rules of the Maire Tecnimont Group’s investments were redefined. In particular, IFRS 11
provides that investments in Joint Ventures with effect from 1 January 2014 are consolidated
18
using the equity method; previously these holdings were consolidated using the proportional
method. Balance sheet and income statement figures of the Group are presented in
accordance with new consolidation rules; the figures for previous periods have been restated
to fulfil a comparative information purpose.
The table below shows Maire Tecnimont Group financial highlights by Business Unit at 31
December 2014 against the previous year:
(Values
in
thousands)
Euro
Technology, Engineering &
Construction
Value
% on Revenues
Infrastructure & Civil Eng.
Value
Total
% on Revenues
Value
% on Revenues
31/12/2014
Revenues
1,448,942
134,249
1,583,191
Business Profit
215,030
14.8%
(4,722)
(3.5%)
210,308
13.3%
EBITDA
138,161
9.5%
(11,274)
(8.4)%
126,887
8.0%
31/12/2013 (*)
Revenues
Business Profit
EBITDA
1,196,921
301,327
1,498,248
168,621
14.1%
30,510
10.1%
199,131
13.3%
95,048
7.9%
21,051
7.0%
116,099
7.7%
21.1%
(167,078)
(55.4%)
84,943
5.7%
Year on year variations (2014 vs 2013)
Revenues
252,021
Business Profit
46,409
27.5%
(35,232)
(115.5%)
11,177
5.6%
EBITDA
43,113
45.4%
(32,325)
(153.6%)
10,788
9.3%
Published on 31/12/2013
Revenues
Business Profit
EBITDA
1,354,846
301,327
1,656,173
168,622
12.4%
30,510
10.1%
199,131
12.0%
95,048
7.0%
21,051
7.0%
116,099
7.0%
(*) Redetermined due to effect of the retroactive application of IFRS 11 and the grouping of the ‘Oil, Gas &
Petrochemicals’ and ‘Power’ BUs.
TECHNOLOGY, ENGINEERING & CONSTRUCTION BUSINESS UNIT
Revenues at 31 December 2014 were Euro 1,448.9 million (Euro 1,196.9 million at 31
December 2013) and show an increase of 21.1% on last year. The main projects in production
in 2014 were Tempa Rossa, Sadara, OPAL, AGRP Kuwait, IOWA, LDPE Mexico and Punta
Catalina in Santo Domingo projects. The increased volumes are mainly due to progress made
on new awards, in addition to the recovery some delays recorded in the previous year.
Business Profit at 31 December 2014 was Euro 215 million (Euro 168.6 million at 31
December 2013), increasing in absolute terms. These trends are due to the profitability of the
business of the Technology, Engineering & Construction BU and the effect of the agreement
with the Enel-Endesa Group, net of related costs.
In addition, the business margin as a percentage of revenues, at 31 December 2014 was
14.8%, an increase compared to 2013 when it stood at 14.1%; last year it had also benefited
from the final phase of some important projects.
19
EBITDA at 31 December 2014 was Euro 138.2 million (Euro 95.1 million in 2013),
representing a 9.5% margin on revenue (7.9% as at 31 December 2013). Here too, the
absolute and percentage increase on last year was due to the improvements in Business
Profit.
Revenue for the year also include the production of the biomass plant in Olevano di Lomellina,
an integral part of the aforementioned program for the sale of non-strategic assets for which a
binding offer was received for the purchase of the majority interest in February 2015.
INFRASTRUCTURE & CIVIL ENGINEERING BUSINESS UNIT
Revenues at 31 December 2014 were Euro 134.2 million, a decrease of 55.4% over the
previous year (in December 2013, revenues were Euro 301.3 million). This change is mainly
driven by the sale of the share in the COCIV Consortium and the Copenhagen Metro projects,
both completed during H2 2013. Net of revenues for these two projects, the reduction would
have been 28.2%.
Business Profit at 31 December 2014 was negative and equal to Euro -4.7 million (Euro 30.5
million at 31 December 2013), and was influenced by the revision of the budget values of
certain contracts.
EBITDA at 31 December 2014 was negative for Euro -11.3 million after deducting G&As. Last
year, on the other hand, EBITDA was positive for Euro 21.1 million, whilst the pro-forma
figure would have recorded a negative Euro 5.2 million.
Indeed, the positive results at 31 December 2013 reflect the significant impact of the disposal
of the entire interest held in the COCIV Consortium and related rights and obligations,
partially offset by the revision of the estimates of completion of some projects and provisions
for personnel costs following the restructuring process still underway in this BU.
Overall, EBITDA in 2014 then discounted a revision of the budget values of certain contracts
and the commercial and structure efforts aimed at achieving the new strategy of refocusing
the business.
The results shown above also reflect on the other hand the positive impact deriving from the
recognition not only of contractually agreed amounts, but also variations of work, incentives
and possible claims recorded at the updated value of the probable amount that will be
recognized by clients that can reliably be evaluated. At present, these claims are at an
advanced stage of negotiation.
The tables below show revenues, Business Profit and EBITDA by Business Unit.
20
Ricavi perby
business
unit
(Mil.€)
Revenues
business
unit
(€ millions)
1,600
1.600
1.449
1,449
1,400
1.400
1,197
1.197
1,200
1.200
1,000
1.000
800
800
600
600
400
400
301
134
200
200
00
Technology, Engineering
Technology,
Engineering&&
Construction
Construction
2014
Infrastructure
& Civil
Infrastrutture
& Ing.
civile
Engineering
2013
Business
per business
(Mil.€)
Business
profitProfit
by business
unitunit
(€ millions)
250
215
215
200
169
169
150
100
50
50
31
31
00
-5
-5
-50
-50
Engineering &&Construction
Technology,
Construction
Infrastructure
& Civil
Infrastrutture
& Ing.
civile
Engineering
2014
2014
2013
2013
per business
(Mil.€)
EBITDAEBITDA
by business
unit (€unit
millions)
160
160
140
140
138
120
120
100
95
95
80
60
60
40
21
20
0
-20
-20
Technology,
Construction
Engineering &&Construction
-11
-11
Infrastrutture
& Ing.
civile
Infrastructure
& Civil
Engineering
2014
2014
2013
2013
21
REVENUES BY GEOGRAPHICAL AREA
The table below indicates revenues generated by each geographical area at 31 December
2014 and the previous year data for comparison:
December 2014
Italy
December 2013 (***)
Variation
Value
%
Value
%
Value
%
236,205
14.9%
244,017
12.6%
(7,813)
(3.2)%
Overseas
•
European Union
163,922
10.4%
230,919
11.5%
(66,997)
(29.0)%
•
Non-EU European countries
123,067
7.8%
90,243
5.3%
32,823
36.4%
•
Middle East
445,215
28.1%
547,613
44.1%
(102,398)
(18.7%)
•
Americas
441,602
27.9%
170,283
12.9%
271,318
159,3%
•
Other
173,181
10.9%
215,172
13.6%
(41,992)
(19.5%)
84,944
5.7%
Total consolidated revenues
1,583,191
1,498,248
(*) Recalculated for the retroactive application of IFRS 11
Ricavi per area geografica (Mil.€)
Revenues by geographical area (€ millions)
600
600
548
548
500
500
445
445
442
442
400
400
300
300
244
236
236 244
200
200
231
231
215
215
170
170
164
164
173
173
123
123
90
90
100
100
00
Italy
Italia
European
Europa
UE
Union
Non-EU
Europa
extra Medio
Oriente
Middle
East
European
UE
countries
2014
2014
Americhe
Americas
Altri
Others
2013
2013
The table above shows the percentage weight of Revenues generated by geographical area
where the greatest share of total revenues was produced by Middle East (28.1%), Italy
(14.9%) and the Americas (27.9%); while the volumes produced in Europe (excluding Italy),
represent 18.2% of total revenues produced by the Group.
As clearly evidenced in the table of Revenues by Business Unit, this value confirms the
substantial contribution of the ‘Technology, Engineering & Construction’ BU in the Middle East,
where the Group has an established presence.
In South America there was a significant production value due to the new contracts awarded
in the USA, Mexico and Santo Domingo.
22
6. Backlog by Business Unit and Geographical Area
The following tables illustrate the Group Backlog value, broken down by Business Unit at 31
December 2014, net of third-party quotas, and showing the comparative data from the
previous year:
BACKLOG BY BUSINESS UNIT
Technology,
Engineering &
Construction
Infrastructure &
Civil Engineering
Total
2,979,775
502,258
3,482,033
271,994
(1,167)
270,827
Backlog value at 01/01/2014
Adjustments/Elisions (**)
Contracts awarded in 2014
2,740,298
35,541
2,775,839
Revenue
net
portions (*)
1,447,166
130,034
1,577,200
4,544,900
406,598
4,951,499
of
third-party
Backlog value at 31/12/2014
(*) Backlog revenues are expressed net of third-party quotas for a total of Euro 6 million.
(**) 2014 adjustments/elisions mainly reflect portfolio exchange rate adjustments.
Technology,
Construction
Engineering
Variation December
2014 vs December
2013
Value
%
Backlog at
31/12/2014
Backlog at
31/12/2013
4,544,900
2,979,775
1,565,125
52.5%
406,598
502,258
(95,660)
(19,0%)
4,951,499
3,482,033
1,469,465
42.2%
&
Infrastructure & Civil Engineering
Total
Portafoglio
ordini perunit
business
unit (Mil.€)
Backlog
by business
(€ millions)
5,000
5.000
4,545
4.545
4,500
4.500
4,000
4.000
3,500
3.500
2.980
2,980
3,000
3.000
2,500
2.500
2,000
2.000
1,500
1.500
1,000
1.000
407
500
500
0
0
Technology,
Technology,Engineering
Engineering&&
Construction
Construction
2014
502
502
Infrastructure
& Civil
Infrastrutture
& Ingegneria
Civile
Engineering
2013
23
The Backlog of Maire Tecnimont Group at 31 December 2014 was Euro 4,9515 million, an
increase of approximately Euro 1,4695 million over the same period of 2013 in particular,
thanks to the new awards of 2014 of the Sonara refinery Phase II Expansion project in
Cameroon, the ROG project for the Antwerp Total refinery, and especially the EPC contract
with Abu Dhabi Company for Onshore Oil Operations (ADCO) for the realization of phase III of
the Al Dabb’iya Surface Facilities project in Abu Dhabi.
BACKLOG BY GEOGRAPHICAL AREA
The following tables illustrate the Group backlog value by Geographical Area as at 31
December 2014, along with the comparative data as of the previous year:
Italy
Total
Overseas
European
Union
Non-EU
European
countries
Middle
East
Americas
Others
980,825
209,409
255,484
719,699
736,266
580,349
3,482,033
Adjustments/Elisions (**)
2,360
3,983
(15,797)
24,468
175,572
80,241
270,827
Contracts awarded in 2014
46,480
197,147
61,591
1,831,208
92,018
547,394
2,775,839
234,429
163,922
123,067
440,999
441,602
173,182
1,577,200
795,236
246,617
178,212
2,134,377
562,255
1,034,802
4,951,499
Backlog
01/01/2014
value
Revenue net
portions (*)
of
Backlog
31/12/2014
value
at
third-party
at
(*)
Revenues in the backlog are net of minority interest for a value of Euro 6 million.
(**) 2014 adjustments/elisions mainly reflect portfolio exchange rate adjustments.
Backlog at
31/12/2014
Backlog at
31/12/2013
Variation 2014 vs 2013
Value
%
Italy
795,236
980,825
(185,588)
(18.9%)
European Union
246,617
209,409
37,209
17.8%
178,212
255,483
(77,272)
(30.2%)
2,134,377
719,699
1,414,678
196.6%
562,255
736,266
(174,011)
(23.6%)
Others
1,034,802
580,349
454,453
78.3%
Total
4,951,499
3,482,033
1,469,469
42.2%
Middle East
Americas
24
Backlog by ordini
geographical
area
(€ millions)
Portafoglio
per area
geografica
(Mil.€)
2.500
2,500
2.134
2,134
2.000
2,000
1.500
1,500
981
1.035
1,035
1.000
1,000
795
795
736
736
720
720
562
562
580
580
500
500
247 209
247
209
00
Italy
Italia
European
Europa
UE
Union
178
178
255
255
Non-EU
Europa
extra
European
UE
Medio
Oriente
Middle
East
Americhe
Americas
Altri
Others
countries
2014
2013
2013
AWARDS BY BUSINESS UNIT AND GEOGRAPHICAL AREA
The table below shows the value of the awards to the Group by Business Unit and by
geographical area at 31 December 2014 and 2013:
December 2014
December 2013 (***)
% of Total
Variation 2014 vs 2013
% of Total
Awards by Business Unit:
Technology,
Construction
Engineering
&
2,740,298
98.7%
1,139,830
95.2%
1,600,468
140.4%
35,541
1.3%
34,135
5.1%
1,406
4.1%
2,775,839
100.0%
1,173,965
100.0%
1,601,874
134.4%
46,480
1.7%
122,493
18.2%
(76,013)
(62.1%)
197,147
7.1%
7,358
1.1%
189,789
2579.4%
61,591
2.2%
191,815
28.5%
(130,224)
(67.9%)
1,831,208
66.0%
156,562
23.2%
1,674,646
1069.6%
92,018
3.3%
569,039
10.2%
(477,020)
(83.8%)
Others
547,394
19.7%
126,698
18.8%
420,696
332.0%
Total
2,775,839
100.0%
1,173,965
100.0%
1,601,875
136.4%
Infrastructure & Civil Eng.
Total
Awards by Geographical Area:
Italy
European Union
Middle East
Americas
Technology, Engineering & Construction sector in line with the commercial focus pursued.
25
In particular, new awards of 2014 include the important Sonara refinery Phase II Expansion
project in Cameroon, worth approximately Euro 456 million and the ROG project for the
Antwerp Total refinery, worth approximately Euro 190 million and an EPC contract worth Euro
1,729 million with Abu Dhabi Company for Onshore Oil Operations (ADCO) for the realization
of phase III of the Al Dabb’iya Surface Facilities project in Abu Dhabi, UAE.
The data on awards as at 31 December 2014 as illustrated in significant events in the year,
does not include the agreement for the Egyptian petrochemical complex - Carbon Holdings,
the value of the MoU for the two fertiliser complexes in the USA with Fatima Group Principals
and Midwest Fertilizer Corporation, approximately USD 1.6 billion and with Cronus Chemicals,
approximately USD 1.5 billion. Subject to financial closing by the clients, MET will include the
projects in the backlog.
The other awards relate to the Infrastructure BU and relate mainly to change orders in
contracts nearing completion.
Compared to the total number of new projects reported for the same period in 2013 (Euro
1,173.9 million) an increase of about Euro 1,601.9 million (+136.4%) was recorded;
Technology, Engineering & Construction awards in 2014 also showed a significant increase of
+140.4%, following the allocation of some important projects.
BREAKDOWN OF THE ‘TECHNOLOGY, ENGINEERING & CONSTRUCTION’ BU BACKLOG
The table below shows the Backlog value of the Oil, Gas & Petrochemicals BU at 31 December
2014 and the comparison with the prior year reclassified values:
Technology, Engineering & Construction
Backlog at
31/12/2014
4,544,900
Backlog at
31/12/2013
2,979,775
Variation December 2014
Value
%
1,565,125
52.5%
Engineering
Technology
backlog
(€ millions)
Portafoglio&ordini
'Engineering
& Technology'(Mil.€)
5,000
5.000
4.545
4,545
4,500
4.500
4,000
4.000
3,500
3.500
2,980
2.980
3,000
3.000
2,500
2.500
2,000
2.000
1,500
1.500
1,000
1.000
500
500
00
2014
2014
2013
2013
The Backlog of the ‘Technology, Engineering & Construction’ BU at 31 December 2014 was
Euro 4,544.9 million, an increase in absolute terms, almost in line with the value of the
previous year, Euro 1,565.1 million. In 2014, new contracts were awarded and change orders
and project variations were accepted and formalized for a total of approximately Euro 2,740.3
26
million and compared to the same period in 2013 showed a significant increase of +140.4%,
following the allocation of some important projects.
MAJOR PROJECTS AWARDED:
ADCO
(UAE) In December 2014, Tecnimont signed an EPC contract with Abu Dhabi Company for
Onshore Oil Operations (ADCO) for the realization of phase III of the Al Dabb’iya Surface
Facilities project in Abu Dhabi, UAE. The Lump Sum Turn Key contract has a “total” value of
USD 2.254 billion of which 111.1 million Provisional Element and 44.5 million Optional
Element. The duration of activities is 34 months from the Contract Commencement Date to
the Ready for Commissioning which will be followed by services on a reimbursable basis for
commissioning and start-up and the 18-month guarantee period from the RFC.
ADCO, company of the ADNOC Group, one of the largest oil companies in the world, is the
operator of the field in Al Dabb’iya, 40 km south-west of Abu Dhabi. Phase III of the Al
Dabb’iya project is part of the development program of North East Bab (NEB) of ADCO. The
purpose of the project consists in EPC activities up to the Performance Tests for expansion of
the existing plant, in particular including: the collection of crude oil through a pipeline
network; a Central Process Plant - CPP; relative export pipeline for the associated oil and gas.
For magnitude and technical content, this can be considered the flagship project of the Maire
Tecnimont Group regarding the Oil & Gas business, downstream of the success of the
Habshan 5 project recently completed for the client GASCO. Moreover, the Al Dabb’iya project
will consolidate the historical presence of Maire Tecnimont in the country in addition to
establishing one of the most important references for the Group.
PHASE II EXPANSION PROJECT - SONARA
On 10 February 2014, Maire Tecnimont S.p.A. has announced that the consortium established
between some of its subsidiaries (86%) and the Turkish company Ustay A.S. (14%) has been
awarded stage II of the Sonara complex expansion project in Camerun. The project involves
the development of a new hydrocracker complex within the refinery in Limbè (in the southwest of the country). It aims to improve the quality of the refined products, as well as
increase plant flexibility overall. The client is SOciété NAtionale de RAffinage (SONARA), the
State entity that owns and manages the country’s only refinery. Total contract value is
approximately USD 715 million, of which around USD 612 million pertains to the Maire
Tecnimont Group, whose work concerns engineering services for the entire project,
procurement, construction of part of the plant and construction supervision and
commissioning services. The remainder of the construction works will be carried out by Ustay
A.S. Project completion is expected for the second half of 2017.
ROG – REFINERY OFF GAS
(Belgium) On 3 April 2014, Maire Tecnimont S.p.A. announced the award, through its
subsidiary KT - Kinetics Technology S.p.A. - of two contracts by Total Olefins Antwerpen (Total
Group). These involve the implementation of the Refinery Off Gas (ROG) project at the Total
refinery in Antwerp, Belgium. The ROG project aims to recover considerable volumes of
hydrocarbons currently used as combustion gas and to treat these in the existing naphtha
cracker. The total value of the two contracts will be approximately Euro 190 million. The first
contract is for the EPC development of the new ROG unit for the treatment of refinery offgases and recovery of hydrocarbons. The new ROG unit will be entirely modular, thereby
minimising construction works in the refinery. The second contract is for the EPCa
(Engineering, Procurement and Construction assistance) development of changes to the
existing naphtha cracker needed to treat hydrocarbon currents recovered in the new ROG
unit, and inter-connection works. The Antwerp Total refinery is one of the world’s six largest
Total platforms and provides an essential connection within the integrated Total petrochemical
27
complex in Belgium. The project is part of one of the largest investment plans in a European
refinery.
NH3 KINGISEPP
(Russia) In January 2014, the client Eurochem MCC awarded an engineering services contract
to Tecnimont required for the preparation of the Project Documentation for the construction of
an ammonia production plant with a capacity of 2700 TPD in Kingisepp, in the region of Saint
Petersburg. The lump sum contract has a value of approximately Euro 14 million and will
terminate upon the positive conclusion of the authorization procedure of the Project
documentation. For the same plant Tecnimont was also awarded the status of “preferred
bidder” for the direct negotiation of the EPC contract.
NH3 UREA NEVINNOMYSSK
(Russia) In January 2014, the client Eurochem MCC awarded an engineering services contract
to Tecnimont required for the preparation of the Project Documentation for the construction of
an ammonia production plant with a capacity of 2700 PC and granular urea production plant
with a capacity of 3500 MTPD in Nevinnomyssky. The lump sum contract has a value of
approximately Euro 16 million and will terminate upon the positive conclusion of the
authorization procedure of the Project documentation.
PTA PET UFA (RU) FEED+CE - RUSPET
(Russia) In April 2014, the client RusPet, a joint venture between UPC (United Petrochemical
Company) and GPT (Grupo Petrotemx), awarded to Tecnimont S.p.A. and its subsidiary TCM
Russia an engineering services and procurement contract for the construction of a PTA
(purified terephthalic acid) plant and a PET (Polyethylene Terephthalate Plant) plant in Ufa,
Bashkortostan, Russia. The lump sum contract has a value of approximately Euro 12 million
and a duration of approximately 12 months.
Other awards:
In addition to the contracts described above, the Group was awarded additional projects and
change orders for contracts in progress in Europe and in the Middle East, South Asia and the
Far East, for Licensing, design and maintenance services, as well as Technology Packages.
Through its subsidiaries Tecnimont, Stamicarbon and KT the Group was also awarded a series
of contracts in the United States, Saudi Arabia, Russia, Azerbaijan, India and China, with
some of the most prestigious public and private international clients, in line with the new
development lines that involve a de-risking strategy.
PROJECTS UNDERWAY:
Operations are proceeding on the projects awarded in earlier years, the most important of
which are outlined below:
GASCO (Abu Dhabi, United Arab Emirates), awarded on 15 July 2009 jointly with Japan Gas
Corporation (JGC), is one of the largest gas development projects in the world. The project
was formally awarded to Tecnimont by Abu Dhabi Gas Industries Ltd. (GASCO). The contract
is for the provision of EPC and start-up services for the Habshan 5 process plant, part of the
Integrated Gas Development (IGD) complex at Abu Dhabi (United Arab Emirates). Activities
have been completed on schedule. Engineering operations have been completed and the final
“as built” documentation has been delivered to GASCO. The “home office” is only involved in
providing assistance with site activities, in relation to work under warranty. Procurement has
sent all of the material to be assembled and ordered the 2 Year Spare Parts, for which delivery
to the Site is expected to be completed by the second half of 2015. Construction operations
have been completed. All key milestones have been reached (Mechanical Completion and
Provisional Acceptance (PAC) both in Phase 1 and Phase 2). The mechanical warranty period,
extended for 12 months, will end in November 2015.
28
BOROUGE 3 (United Arab Emirates) awarded in May 2010, in a joint venture with Samsung
Engineering Co. Ltd., led by Tecnimont with an interest of 55%, two turn-key projects. The
Client, Borouge, is a joint venture between the Abu Dhabi National Oil Company (ADNOC) and
Borealis. The two EPC contracts call for, respectively: 2 polypropylene (PP) and 2 polyethylene
(PE) plants. 1 low density polyethylene plant (LDPE). The physical advancement of the two
projects is over 99% Engineering operations have been completed. The purchase of “itemized”
and “bulk” materials has been completed. Construction operations started in February 2011
are essentially complete. Commissioning operations of the plants are nearing completion and
some units have already been delivered to the client. Works completion, in line with recent
agreements reached with the client, in exchange for which important additional fees have
been recognized for additional variants with respect to the basic order, is envisaged for the
third quarter of 2015 (Provisional Acceptance Certificate).
TOBOLSK (Russia) awarded in December 2009 by the client Sibur Holding JSC – Tobolsk
Polymer LLC. The project involves construction of a propane dehydrogenation plant (PDH)
with a capacity of 510,000 TPY. Engineering, procurement and construction operations have
been completed. Mechanical completion was achieved on 23 August 2013. Provisional
acceptance is envisaged by the first half of 2015. It will be followed by a warranty period of 12
months.
HDPE AL JUBAIL EPC SABIC (Saudi Arabia) In January 2012, Tecnimont S.p.A., in
conjunction with its subsidiary Tecnimont Arabia Ltd, was awarded an EPCC turnkey contract
(Engineering - Procurement - Construction - Commissioning) for the construction of a
polyolefin pilot plant to be built in Al-Jubail. The project involves the construction of a High
Density Polyethylene (HDPE) pilot grass root plant with a capacity of 100 kg/H. The Client is
Saudi Basic Industries Corporation (SABIC), Saudi Arabia’s largest chemical and
petrochemicals company. Project activities are substantially completed also following a
revision of the work scope decided by the client in summer 2014. Only the management
activities of the closing phase of the Contract remain.
LDPE BRATISLAVA - SLOVNAFT (Slovakia) On 3 April 2012 Tecnimont S.p.A. and its
subsidiary Tecnimont Planning and Industrieanlagenbau Gmbh were awarded an EPCC lump
sum contract (Engineering Procurement - Construction - Commissioning) for the construction
of a 220 KTY LDPE plant to be built in Bratislava.
The client is Slovnaft Petrochemicals s.r.o., a Slovak petrochemical company, part of the
Hungarian MOL Group. Engineering activities have achieved a progress of 99.9%,
procurement activities have reached 98.8%, while manufacturing activities have reached
98.4%. Civil works started in July 2013 and mechanical works in late 2013 and are continuing
as scheduled. The overall project is 83.7% complete. Mechanical Completion (MC) is
scheduled for 31 July 2015 while the Provisional Acceptance Certificate (PAC) is scheduled for
30 November 2015.
TEMPA ROSSA (Italy) On 5 April 2012, the Associazione Temporanea d’Impresa - Temporary
Consortium (ATI) consisting of Tecnimont S.p.A. and KT S.p.A. was awarded a contract for the
execution of the Engineering, Procurement, Supply, Construction and Commissioning of the
“Tempa Rossa” Oil & Gas treatment plant, located in the vicinity of Corleto Perticara
(Potenza). The client is Total E&P Italia S.p.A., the Italian subsidiary of the Total group. The
overall project has reached 35% progress. Engineering activities have reached 87% progress
while material procurement, manufacturing and delivery to the site have reached 47%
progress. Only in the areas provided by the Client, the execution of poles and civil works is
ongoing and assembly of the first metallic structures (pipe-rack) has started. The Client is
continuing preparation activities (earthworks and other works) in other areas of the site,
which could be delayed much like other work expected by the Client as part of the Tempo
Rossa (Taranto et al.) initiative. The performance tests are expected in 2017, followed by a
mechanical warranty period of 24 months.
HP-LDPE SADARA (Saudi Arabia) On 23 July 2012 Tecnimont S.p.A. and its subsidiary
Tecnimont Arabia Limited were awarded a contract for the construction of a 350-HP-LDPE kty
(DOW technology) to be built at Al-Jubail, Saudi Arabia. The Client is Sadara Chemical
29
Company, a joint venture between Saudi Aramco and Dow Chemical Company. The contract
includes EPC activities on lump sum basis up to the Mechanical Completion (including precommissioning) for a period of 28 months. Possible assistance to commissioning, start-up and
test run will be provided on a reimbursable basis. Engineering activities are 99.9% complete,
material purchases are 91.9% complete, while construction activities are 61.1% complete.
The overall project is 80.4% of completion. Mechanical completion of the works is scheduled
for the third quarter of 2015, which will be followed by an 18-month mechanical warranty.
FERTILIZZANTI IOWA (United States) On 5 September 2012 Tecnimont S.p.A. was
awarded a contract relating to the provision of engineering and procurement services for the
construction of a new ammonia plant with a capacity of 2,200 tons/day (MTPD) in Wever
(USA). The scope of work includes Construction Supervision services and commissioning and
start up. The client is Iowa Fertilizer Company (IFCo). Engineering activities reached a
progress level of 99.95% while material procurement reached a progress level of 99.1%. The
overall project is 88.6% of completion. The delivery to the site of all the materials is expected
by May 2015; plant completion is scheduled by the end of 2015, which will then be followed
by an 18-month warranty period.
LDPE MEXICO (Mexico) awarded in December 2012 by the client Etileno XXI Services B.V.
The contract provides for Engineering & Procurement activities for the construction of a low
density polyethylene (LDPE) unit with a capacity of 300 thousand tons per year, to be built as
part of the petrochemical complex Etileno XXI in Coatzacoalcos (MX). The overall progress
level of the project is 99% (home office 100%; purchase of materials 100%; and
manufacturing 98%). The on-site assistance contract has been formalized. The Ready for
Start Up (RFSU) of the plant is scheduled for 30 September 2015.
PP DAHEJ GUJARAT (OPAL) (India) The Lump Sum Turn Key (LSTK) contract was acquired
in June 2011 from the client OPAL (ONGC Petro Additions Ltd.) and includes the construction
of a plant consisting of one polypropylene line (PP) with a capacity 340 KTPA; the use of Ineos
technology adopted in this specific project represents a new reference that allows broadening
our already rich technology portfolio. Detailed engineering activities, the purchase of materials
and construction activities are essentially complete. Only minor pre-commissioning and
commissioning activities have started due to the delay of the client OPAL in the provision of
utilities and feed that affect completion of the work.
LLDPE/HDPE DAHEJ GUJARAT (OPAL) (India) The Lump Sum Turn Key (LSTK) contract
was acquired in June 2011 from the client OPAL (ONGC Petro Additions Ltd.) and includes the
construction of a plant consisting of two polyethylene lines LLDPE/HDPE with a capacity 360
KTPA; the use of Ineos technology adopted in this specific project represents a new reference
that allows broadening our already rich technology portfolio. Both detailed Engineering
activities and the purchase of materials are essentially complete. Construction activities have
achieved 97% progress. Only minor pre-commissioning and commissioning activities have
started due to the delay of the client OPAL in the provision of utilities and feed that affect
completion of the work.
NANGAL (India) awarded in January 2010 by National Fertilizer Limited (NFL). The project
involves the conversion of the existing fertilizer plant in Nangal, replacing the fuel system
from fuel oil to natural gas and upgrading the related infrastructure. Engineering activities, the
purchase of materials and construction activities are completed. The overall project is 99.9%
of completion. Mechanical completion of the work was reached on 15 February 2013, while the
start-up of the plant was on 9 April 2013. The performance tests were completed with positive
outcome. The plant is scheduled for delivery to the client by the end of April 2015.
LDPE NOVY URENGOY (Russia) acquired in May 2010 by the Client C.S. Construction
Solution (UK) Limited with end Client Novy Urengoy GCC (Gas and Chemical Complex). The
contract is for the procurement of materials and assistance by Tecnimont personnel. All 27
orders have been placed and related supplies are in an advanced state of manufacture and
some have been completed and delivered. Completion of service and delivery operations
(comprising site reconditioning of materials) is expected in 2015. The presence of our
30
personnel at the site according to the supervision contract for Tecnimont Russia will continue
until 2016.
NAGRP Kuwait (Kuwait) acquired in July 2010 from the client Kuwait National Petroleum
Company (KNPC). The EPC contract provides for the supply of three portions of the plant: a
new process plant (New AGRP) a plant for steam generation (Utilities) and the upgrading of an
existing plant (Revamping AGRP). At the end of December 2014, the overall progress of the
project was 85% (Engineering 94%; Procurement 97%; Construction 60%). Civil, mechanical
and electro-instrumental works are underway at the site. The client recognized additional
execution times and higher costs compared to as initially expected. Works are expected to be
completed by the first quarter of 2017.
UGS Wierzchowice (Poland) awarded in November 2008 by the client PGNiG (a Polish
energy distribution company). The project is developed as a consortium with the companies
PBG (Poland) and Plynostav (Czech Republic); it involves the development of the surface
facilities of an underground gas storage plant with a capacity of 1.2 billion std cubic metres.
The Client PGNiG unduly ended the contract with the Consortium on 2 April 2014. The claim
by the Client has been challenged by the Consortium completely rejecting justifications. On 21
November 2014, the client requested the Court of Poznan (Poland) to open a settlement
proceeding which allows a closing settlement. To date, the request has not yet been issued by
the Court. The Consortium also supported by its consultants does not consider the
performance of the Client as shareable and believes that as there are strong arguments in its
favour.
KIMA (Egypt) The Lump Sum Turn Key contract was awarded on 30 October 2011 by the
client Egyptian Chemical & Fertilizers Industries - KIMA, Egyptian group active in the chemical
industry. The contract involves the construction of a new fertilizer complex for the production
of ammonia with production capacity of 1,200 tons per day, of urea with production capacity
of 1,575 tons per day and related services. The plant will be built within the existing industrial
area in the region of Aswan (Northern Egypt). Because of the political/social situation in
Egypt, there has been a significant slowdown in activities to be carried out by the client in
terms of procurement of funding sources for the initiative. The client finalized the financing
process with banks in September 2014 while the starting date of the project was in 2014. The
Provisional Acceptance Certificate (PAC) is expected in the second half of 2017.
PP Sumgayit (AZ), SOCAR (Azerbaijan) awarded in January 2012 by the client SOCAR
which subsequently transferred the contract to its subsidiary SOCAR Polymer in July 2013.
The contractor is a Consortium composed of TECNIMONT and IPIP, a Romanian company of
the Baran group. The project involves the dismantling, reconditioning and transportation in
Azerbaijan of two plants purchased by the client. The PP is in Varennes (Canada) and the
HDPE is in Schwechat (Austria). In May 2014 SOCAR Polymer notified the consortium about
the decision to not recover the HDPE plant located in Schwechat (Austria), giving instruction
to proceed with its demolition recovering only a limited amount of equipment. By Q1 2015,
the Consortium will complete the engineering, purchasing and procurement activities in
preparation of the finalization for an EPC bid for the construction of the PP plant in Azerbaijan
including its auxiliaries plus those of a new HDPE plant (not covered by the current contract
between the Consortium and SOCAR Polymer), including the purchase of missing parts and
utilities/facilities required for the operation of both plants. Dismantling and transport to
Azerbaijan of the PP plant in Varennes (Canada) have been completed, while the inspection is
underway for reconditioning of recovered materials. Regarding the HDPE plant in Schwechat
(Austria), demolition has been completed and the equipment recovered is ready for delivery to
Azerbaijan.
TOMSK (Russia) by the client Tomskneftekhim (TNH), subsidiary of the SIBUR group. The
project involves the provision of engineering, procurement and technical advisory services for
the revamping of an LDPE plant for an increase of the production capacity from 240 KTA to
270 KTA. Engineering activities have achieved 67.9% progress. Procurement services have
achieved 41.9% progress and material manufacturing 16.7%. The overall project has
achieved 24.9% progress. Engineering activities are expected to be completed by May 2015
31
and completion of arrival of materials to the site by the end of 2015. For engineering services,
the guarantee period is 24 months from the signing of the last Milestone Completion
Certificate or 18 months from the Mechanical Completion of the plant (whichever is first shall
be valid). For the provision of materials, the guarantee period is 24 months from the last date
of delivery of the material or 18 months from the Mechanical Completion of the plant
(whichever is first shall be valid).
OOO LUKOIL - PERMNEFTEORGSINTEZ HYDROGEN PRODUCTION PLANT for OIL
RESIDUE PROCESSING PLANT (Russia) The LS-based EP contract was signed on
30/01/2013. The “provisional acceptance date” is 30/07/2014. The “final acceptance date” is
30/07/2016. With the above mentioned contract, the Client OOO LUKOIL PERMNEFTEORGSINTEZ has entrusted KT with the task of carrying out Engineering Services
and supply of Materials as part of the implementation of a hydrogen plant with a capacity of
40,000 Nm3/h (purity of 99.9% by min. vol.) for the Perm Refinery. In order to minimize
construction activities (outside the scope of the KT work), the project execution is based on a
fast track approach, thereby looking to minimize construction works, making the plant
modular; the modules will be delivered to the client mechanically complete and “precommissioned”. Certification will be supplied in accordance with “Russian requirements”. The
“Certificate of Compliance” (formerly GOST-R) will be supplied together with the plant unit
with all other certificates required for applicability of the “Russian Regulation”. The total
contract value is Euro 44.5 million. All activities have been completed, except for the delivery
of a part of the Bulk material that the Client is not collecting from suppliers, due to the delay
in mounting activities.
EPC HYDROGEN PLANT-PEMEX REFINACTION (Mexico) KT, together with the Spanish
industrial division of Obrascón Huarte Laín (“OHL”) and the Mexican company Costrucciones
Industriales TAPIA, will develop for the client PEMEX Refinación a new hydrogen production
unit on a turnkey basis at the Cadereyta refinery in Mexico. The contract was awarded to a
purpose company - of which KT holds a share of around 40% - which was established in
Mexico. The total value of the project is approximately USD 72 million (approximately Euro 56
million), of which approximately Euro 22 million is attributable to KT, with completion
expected by the third quarter 2015. The project involves the development of a new hydrogen
production unit with a capacity of 25,000 Nm3/h, as well as the completion of the related
pipeline. It is thanks to this contract that KT has begun working with its new client PEMEX,
among the leaders in Latin America in the Oil & Gas industry. This award consolidates the
Company’s track record in hydrogen units on a turnkey basis and allows the Company to
participate in the plan to modernize the refineries set up by PEMEX. Engineering activities are
in line with the rescheduled program. The purchase campaign is nearing completion. The Civil
Works contract was issued in May 2014; the progress of civil works is about 30%. The
Mechanic contract was issued by OHL with KT assistance in mounting equipment and
prefabrication / piping mounting. The piping prefabrication began on 20/10/2014.
DAURA REFINERY HYDROGEN (MRC) (Iraq) KT, in collaboration with STC SAL, has
received an order from the Ministry of Oil Midland Refinery Company (MRC) for the LSTK
(EPC) supply of a 4,000 NM3/h HPU plant and services at the Daura refinery. The scope of the
supply consists of an HPU unit with a capacity of 4,000 Nm3/h; a hydrogen storage tank with
a capacity of 50 m3 and a compressor for filling it. The plant is modular in order to optimize
construction on the field. The collaboration between KT and STC appoints KT as leader and
responsible for managing the entire project. The total contract value is USD 18.5 million. The
project duration is 24 months from the date on which the contract comes into force
(02/01/2013). The provisional acceptance date is expected for 31/03/2015 as limit date, and
the final acceptance is expected for 31/03/2016. Engineering activities are limited to supplier
document management. The purchase campaign is complete. The client awarded the contract
for civil works in January; works on the piling and foundations of the Reformer, process Skid,
PSA and substation have been completed; work for the construction of pavements is in
progress. A part of the first batch of materials (interconnecting piping) was delivered to
destination.
32
LUKOIL BURGAS PROJECT (Bulgaria) KT has been selected by Lukoil as assignee of the EPC
turnkey contract for the construction of a new sulfur unit called SRU-4, to be installed in the
refinery in Burgas, Bulgaria. The date of provisional acceptance is scheduled 30 November
2014 with a two-year mechanical warranty. The plant consists of the following sections: - Two
150-ton/day Claus trains as liquid sulfur product, - A 300-ton/day TGT train equivalent, Three lines of sulfur solidification of 110 tons per day each, - Storage section solid sulfur of
10,000 tons, - Bagging systems and sulfur loading on trucks, - Solid sulfur loading system on
ships. The project duration is 30 months and the total value is approximately Euro 53 million.
The completion of construction activities following plant commissioning is currently in
progress.
SRU, OGA, SWS PROJECT FOR RAFFINERIA MILAZZO (RAM) (Italy) The project, worth a
total of about Euro 42 million, is related to the LSTK execution of engineering, procurement,
construction and commissioning of the new complex consisting of a sulfur recovery plant, a
plant for the removal of acidic water and an amino regeneration plant, called “SRU2, SWS3
and OGA2” assigned to KT from Milazzo Refinery S.p.A. On 11 May 2012 KT received the
Letter of Intent (LOI) for the construction of the plant and subsequently the final contract was
formally signed in August. In December, the Company received a contractual amendment that
provides for the construction of the interconnection with existing units for Euro 3.7 million.
The project duration of 24 months initially, however, is subject to the opening date of the site,
originally scheduled for April, but which has not yet occurred due to the client’s responsibility.
Change orders were formalized for an amount of approximately Euro 2.0 million, including an
extension of the project. After a period of suspension of activities, the permissions related to
Civil works arrived; for the other construction activities, the contract is being revised with the
client.
GS – ERC PROJECT (Egypt) KT was selected as the assignee of the Engineering and
Procurement contract for the construction of a new hydrogen unit (HPU) 100,000 Nm3/h and
three sulfur recovery units (SRU), a unit of tail gas treatment (TGT) and a unit of amino
treatment, to be implemented in the new refinery of Egyptian Refinery Company (ERC) in
Mostorod - Cairo (Arab Republic of Egypt). The total value of the Main Contractor’s project is
approximately USD 3.7 billion. The agreement was signed in mid-September 2012, and the
project, whose value for KT is about Euro 99.5 million, will run for 27 months. GS has officially
announced the full force recovery of the project in February/March. Consequently, supplies of
critical materials have been unblocked. The project has been rescheduled with an impact of
about 6 months for engineering activities and about 8 months for delivery of materials. The
completion of engineering activities is expected by March 2015 with the issuance of isometrics
and stress calculations. Deliveries of some materials will be postponed with respect to the
program rescheduled due to delays in manufacturing. GS has completed Piling works.
Punta Catalina – Santo Domingo (Santo Domingo) Tecnimont S.p.A., in a consortium with
Construtora Norberto Odebrecht S.A. and Ingenieria Estrella S.R.L., was awarded a project for
the development of a strategically-important industrial complex for the country’s development
(a carbon thermal plant, an offshore terminal and other related structures) in November 2013.
The client is CDEEE, the national electricity entity of the Dominican Republic. The project
involves the construction of two coal-fired 360 MW plants in Punta Catalina in the Dominican
Republic. The EPC contract was signed in April 2014, with the start date (effective date) set
retroactively to 7 February 2014. The scope of work of Tecnimont includes the entire
engineering (except for offshore marine works and the transmission line), the purchase of
equipment of the power island, the commissioning and delivery of the plant and related
acceptance tests. Engineering activities have reached 29.65% progress, material purchases
have reached 19.47% progress, while construction activities have reached 10.74% progress.
The goodwill of the two units is expected respectively 42/44 months from the start date of the
plant, followed by a mechanical warranty period of 12 months.
Other projects: all actions required for projects that are not yet complete and other minor
engineering and services contracts are being managed.
33
BREAKDOWN OF THE ‘INFRASTRUCTURE & CIVIL ENGINEERING’ BU BACKLOG
Backlog at
31/12/2014
406,598
Backlog at
31/12/2013
502,258
Variation December 2014
Value
%
(95,660)
(19.0%)
Portafoglio ordini
'Infrastrutture
& Ingegneria
Civile'(Mil.€)
Infrastructure
& Civil
Engineering backlog
(€ millions)
600
600
502
502
500
500
407
407
400
400
300
300
200
200
100
100
00
2014
2014
2013
2013
The value of the Infrastructure & Civil Engineering BU Backlog at 31 December 2014 was Euro
406.6 million, and showed a decrease compared to the prior-year figure of Euro 95.7 million.
The total backlog is mainly related to the Etihad railway network, the hospital in Alba-Brà,
“construction and management” contract and the Fiumetorto – Cefalù railway doubling. In
2014 new contracts were awarded and change orders and project variants were formalized for
a value of Euro 35.5 million.
The Infrastructure & Civil Engineering BU is currently implementing its turn-around process
begun last year and continued in 2014 through the reorganization of its structures in order to
both increase its ability to adapt to changing production volumes and enable a more targeted
focus with consequent improved ability to respond to the demand for engineering services.
PROJECTS UNDERWAY:
Activities are continuing on previously acquired major projects such as:
Ethihad Railway Project - (Ruwais, United Arab Emirates), the contract was awarded to
Tecnimont in October 2011 in a consortium with Saipem S.p.A. and Dodsal Engineering and
Construction Pte and transferred for the portion pertaining to Tecnimont S.p.A., to Tecnimont
Civil Construction S.p.A. with effect from 1 July 2013. The client is Etihad Rail Company, the
developer and operator of the United Arab Emirates’ national railways. The project envisages
the development of a railway line connecting Ruwais/Habshan (section 1) and Habshan/Shhah
(section 2) for the transport of around seven million tons of granulated sulfur per year. The
scope of the work includes the design, provisioning and construction, testing and
commissioning of the infrastructures. The general progress of the project at 31 December
2014 is 90%. The completion of the project is expected by June 2015, followed by a warranty
period of 24 months.
34
OTHER MINOR PROJECTS:
RAIL PROJECTS:
Railway Line Doubling – (Cefalù, Italy), awarded in September 2005, the contract involves
the doubling of the railway line between Fiumetorto and Cefalù Ogliastrillo, on which work is
progressing for Rete Ferroviaria Italiana S.p.A. (RFI). The economic advancement of the
production is 64% complete. Tunnel excavation work has made physical progress of
approximately 95%, while civil works and technology activities continue. The physical
progress of the production is 55% complete. The 3rd Addendum signed 3 June 2013, has
extended the contract term for the completion of works in April 2015 and has reshaped the
intermediate activation stages, the first of which is related to the new odd track which took
place in January 2014. It should also be noted that with regard to “provision 17” of the ANSF
substantial delays are being accumulated in the dismantling of the historic track and the work
alongside the existing track. The Company has submitted a formal request in accordance with
Art. 54.4 of the Agreement, obtaining a first deferment of the contractual terms, as
reformulated by AIM III. A new redefinition of contractual terms will be the subject of a
forthcoming AIM IV. In May 2014 the first amicable settlement was signed ex art. 240 of
Legislative Decree 163/2006 for the definition of reserves presented; a portion of the reserves
presented to date, has already been recognized in the financial statements to the extent that
it is probable that they can be recognized by the client and reliably assessed also on the basis
of advice from its legal representatives as well as technical assessments, where deemed
appropriate.
Lamezia – Catanzaro Railway Line (Lamezia Terme, Italy), awarded in February 2005 to
ATI Tecnimont Civil Construction (65%) and S.E.L.I. S.p.A. (35%). Work on the Lamezia
Terme - Settingiano railway line assigned by the Rete Ferroviaria Italiana S.p.A. (Italian
Railway Network) are almost complete in contract terms, thus allowing the achievement of
intermediate and final acceleration awards. The Commission established in accordance with
art. 240 of Italian Legislative Decree no. 163/2006 to examine the reservations submitted, for
a total of Euro 90 million, issued its opinion. Faced with the Commission proposal considered
as unacceptable by the ATI, R.F.I. was notified of the application for arbitration, against which
the Client declined in compliance with the provisions of the General Conditions of the
Contract. Although the ATI intended to protect its rights before the Ordinary Judge
establishing a civil judgment concerning both the reserves involved in the procedure pursuant
to art. 240 Legislative Decree no. 163/2006 and the reserves subsequently recorded by the
ATI, on the other hand it is continuing dialogue with the client, which reached an advanced
state on the basis of ongoing negotiations with the client. It is noted that the partner S.E.L.I.
S.p.A. requested activation of composition proceedings. In particular, in February 2014, the
partner S.E.L.I. submitted an application for composition proceedings with creditors pursuant
to art. 161, sixth paragraph, Bankruptcy Law, with “reserve” of subsequent submission of the
“complete” application of composition proceedings with creditors, pursuant to art. 161, first
paragraph of the Bankruptcy Law, or of a restructuring agreement pursuant to art. 182-bis of
the Bankruptcy Law. The application was accepted by decree dated 25/02/2014. In June 2014
SELI subsequently submitted the plan and the certification required pursuant to art. 161 c.2
l.f. In regard to the above the related risks have been evaluated in the financial statements.
TURIN - LYON DESIGN PROJECT (Val di Susa, Italy – Maurienne, France) project awarded in May
2009 by LTF – Lyon-Turin Ferroviaire s.a.s. Awarded in May 2009, the contract of strategic
importance calls for the design of the civil and geological work, overall coordination and the
safety of the line from the Italian-French border to Chiusa San Michele for L.T.F. The activities
are being carried out by a temporary business association of French, Swiss and Italian
engineering companies. The first preliminary design phase of the line in Italy was completed
in July 2010. Subsequent phases of the final design, which also concerned the line in France,
were completed at the end of 2014. The assistance phase to the Client is currently underway
until approval of the final project, which will be followed by the final review of the project
following the instructions received during the approval.
35
UNDERGROUND RAIL PROJECTS:
Rome Underground Railway – B1 Line Extension – (Rome, Italy), awarded in 2005. The
contract is being executed on behalf of Roma Metropolitane (Municipality of Rome) by the
company grouping which is currently composed of Salini-Impregilo S.p.A., Tecnimont Civil
Construction S.p.A. and ICOP S.p.A. Tecnimont Civil Construction S.p.A., designer identified
as part of the Integrated Contract, drafted the Executive Design of the work. With regard to
the contract for the Bologna – Conca d’Oro line, for which works were delivered to the Client
on 13 June 2012, in February 2013 the test report was issued.
Work is being finalized on the further extension of line B1, the section between Conca D’Oro
and Ionio stations. At 31 December 2014, the project had reached progress of more than
95%. The structures of Ionio station are complete and external viability and arrangements are
being completed. Considering the redefinition of the projects for external viability and
commercial buildings, the term of completion of the works, scheduled for 30 April 2015 has
also been restated.
Turin Underground Railway – System Works (Turin, Italy). The activities relating to
technological works of the automatic metro system for the line Porta Nuova - Lingotto,
awarded in 2008, through TRANSFIMA GEIE (Tecnimont Civil Construction S.p.A. – Siemens),
were completed in accordance with the terms of the contract and the warranty period of 24
months ended. In February 2013, the contract for the system works for the extension of the
Lingotto - Bengasi section was awarded and the extension of the maintenance contract for the
Collegno-Lingotto section for the five year period between 2013 and 2017 was confirmed. The
delay by the client in awarding the civil works contract led to a slowdown in executive activity
by Transfima EEIG. In December 2014, another contract was signed with INFRATO worth Euro
750 thousand, for the final design of the Cascine Vica - Fermi line, preparatory activities for
attainment of the financing of the new line and the subsequent allocation of work.
MOTORWAY PROJECTS:
Alternative Routing – Florence–Bologna Motorway Section (Rioveggio, Italy) awarded
in May 2005. Construction of the motorway section is underway for Autostrade S.p.A..
Tecnimont Civil Construction S.p.A.’s share of the work as a member of the business grouping
formed with Consorzio Infrastrutture is 15%. On 18 June 2013 the works completion
certificate was signed and the acceleration award defined by Supplementary Amending Deed
of March 2012 was achieved. The procedure for an amicable settlement is currently being
negotiated, pursuant to art. 240 of Italian Legislative Decree 163/2006 for the definition of
the claims presented.
CIVIL AND INDUSTRIAL PROJECTS:
Alba-Brà Hospital (Verduno, Italy), awarded in November 2005 through a “construction and
management” contract signed with ASL CN2. The contract is being managed by the project
engineering company MGR Verduno S.p.A. (Tecnimont Civil Construction 96% and Gesto 4%).
The work is roughly 50% complete. After successful conclusion of the amicable settlement ex
art. 240 of Legislative Decree 163/2006 and subsequent addendum work was fully resumed
for the conclusion of the Work; a new works completion date has been agreed upon as 30
September 2015. Negotiations are underway with the client to define the variants and
rebalance the Financial Business Plan.
REAL ESTATE PROJECTS:
Initiatives and relations with other partners aimed at disposing of the interests in real-estate
development projects with CDP Immobiliare held by the Company are continuing. In
particular, for the “Torri dell’Eur” project in Rome, all Shareholders agreed with the decision to
36
confer on an advisor of primary standing an assistance and consulting assignment aimed at
finding a buyer of the entire Real Estate Complex. Meanwhile, design activities and
interventions were suspended on the existing real estate complex.
In the same way, for the “Cinque Cerchi” project in Turin, negotiations are underway with a
view to possibly selling off the investment. The commercialization of the first lot, equal to
approximately 25% of the entire initiative, is in any case continuing.
In the case of the Florence Campus project, a concession under project financing from the
University of Florence to the subsidiary Birillo 2007 Scarl, it was necessary to commence an
arbitration procedure aimed at restoring financial equilibrium to the initiative pursuant to the
terms of the agreement in August 2011. In October 2013, the arbitration panel ruled in favour
of the concession holder, acknowledging an amount aimed at restoring the economic-financial
balance of the initiative. The area has not been delivered to the Group, meaning that the
situation of deadlock that has resulted for the initiative does not have detrimental
consequences for the Company.
37
7. Group Financial Performance
The table below shows the key balance sheet indicators for Maire Tecnimont Group at 31
December 2014 and 2013:
Maire Tecnimont: Consolidated
Financial Position (Summary)
Statement
of
31 December
2014
31 December
2013 (*)
Variation 20142013
31 December 2013
Published
Non-current assets
517,644
516,877
767
516,878
Inventories/Advances to suppliers
153,668
136,572
17,096
140,134
Construction contracts
416,380
281,315
135,065
293,896
Trade receivables
476,801
409,942
66,859
413,031
Cash and cash equivalents
160,242
167,012
(6,770)
194,187
Other current assets
290,376
282,556
7,820
282,787
1,497,467
1,277,397
220,070
1,324,035
12,099
17,027
(4,928)
17,027
2,027,210
1,811,301
215,909
1,857,940
Shareholders’ equity
92,199
33,057
58,692
33,507
Minorities
1,506
1,688
(182)
1,688
Borrowings net of current portion
4,035
362,766
(358,731)
362,766
Other non-current financial liabilities
71,292
(0)
71,292
0
Other non-current liabilities
118,254
93,903
24,351
87,462
Non-current liabilities
193,581
456,669
(263,088)
450,229
Short-term financial liabilities
468,889
152,707
316,182
152,707
2,378
9,741
(7,363)
9,741
Advance payments from clients
161,390
105,605
55,785
114,681
Construction contract payables
246,958
289,849
42,891
289,849
Trade payables
755,896
635,426
120,470
660,791
Other current liabilities
99,123
120,590
(21,467)
139,229
1,734,634
1,313,919
420,715
1,366,998
5,291
5,518
(227)
5,517
2,027,210
1,811,301
215,909
1,857,940
Current assets
Non-current assets classified as held for sale
Total assets
Other financial liabilities
Current liabilities
Non-current liabilities classified as held for sale
Total shareholders’ equity and liabilities
The slight increase in total “Non-current assets” on last year, mainly due to the increase in
deferred tax assets, net of the reduction of trade receivables due beyond 12 months for
performance bonds. The item also includes tangible and intangible assets; the latter were
reduced for amortization for the year.
“Current assets” had increased by Euro 220,070 thousand on last year. The increases mainly
concern the items “Inventories/Advances to suppliers, ”Construction contracts”, ”Trade
receivables” and “Other current assets”, “Cash” decreased.
The inventories item refers mainly to advances paid to suppliers and subcontractors for
materials in transit for the construction of plants, and work in progress. The increase in
advances to suppliers is the direct consequence of the performance of contracts awarded
38
during the previous year and for which the issue phase of the main equipment orders was
intense and there were also more materials in stock for delivery.
Backlog work in progress, shown as assets (construction contracts receivable), is the net
positive value of each individual contract resulting from the advancement in production and
the relative invoicing on account and contractual risk provision.
The increase in the value of construction contracts receivables of Euro 135,065 thousand is
substantially linked to the growth in production volume during the year, which was also higher
than
the
invoices
on
account
compared
to
31
December
2013.
The change is also linked to the advancement of projects and to the related contractual terms
and was affected by the positive effect of the closing of the agreement with the Enel-Endesa
Group.
Trade receivables at 31 December 2014 were Euro 476,801 thousand, up Euro 66,859
thousand against 31 December 2013. The increase in trade receivables is mainly due to the
higher volume of business during the year. These changes are also related to the contractual
terms of the projects and also the effect linked to invoicing higher than the collections of the
period.
Assets and liabilities held for sale (“Assets held for sale”) have a net positive value of Euro
6,808 thousand and are attributable to the company Biolevano - Biomass plant in Olevano di
Lomellina, for which a binding offer was received in February 2015 for the sale, whose closing
is expected by 31 March 2015.
Cash and cash equivalents as at 31 December 2014 were Euro 160,242 thousand, a decrease
of Euro 6,770 thousand vs. 31 December 2013.
Group cash and cash equivalents allocated to joint operations were approximately Euro
23,044 thousand at 31 December 2014. JO cash in 2014 recorded a significant decrease,
mainly due to the JO Gasco project’s natural progress.
Cash flows from operating activities showed a positive flow of Euro 5,221 thousand, a
significant improvement compared to the same indicator in 2013 which reported instead an
absorption of Euro 136,036 thousand; the improvement is mainly due to the result for the
year and the overall change in working capital.
Despite the positive result for the year, cash flows from operations were still negatively
affected by the changes in working capital. In fact, the changes in receivables and
construction contracts receivables and payables recorded a significant absorption of cash
primarily related to payments made and in general the final phase of the Joint Operations;
these changes were partially mitigated by the increase in trade payables and advances
received from client during the year.
Cash flow from investment absorbed Euro 5,237 thousand mainly due to the new technologies
and intellectual property rights (patents and licenses) developed and filed during the year by
Stamicarbon B.V. and the Maire Tecnimont Innovation Centre (MTIC), the implementation of
software and the purchase of minor assets, net of the disposals of investments and the
collection of dividends from affiliated companies.
Financial management also absorbed cash of Euro 4,707 thousand mainly due to the year’s
financial costs, the repayment of advances on invoices related to the working capital
management of specific contracts and the repayment of bank account overdrafts net of the
collection of the equity-linked bond, net of financial expenses for the period.
39
The table below shows the main cash flows:
Statement of Cash Flows
31
December
2014
31
December
2013 (*)
Delta
31 December
2013
Published
167,012
349,749
(182,737)
433,347
5,221
(136,036)
141,257
(192,468)
Cash flow from investments (C)
(5,237)
(1,391)
(3,846)
(1,382)
Cash flow from financing (D)
(4,707)
(44,195)
39,488
(44,195)
Increase/(Decrease) of cash and cash equivalents (B+C+D)
(4,722)
(181,622)
176,900
(238,045)
Cash and cash equivalents at the end of the year (A+B+C+D)
162,290
168,128
(5,838)
195,302
of which: cash and cash equivalents included in assets held for sale and
discontinued
2,048
1,115
933
1,115
Cash and cash equivalents shown in the financial statements at
year end
160,242
167,012
(6,770)
194,187
Cash and cash equivalents in the beginning of the year (A)
Cash flow from operations (B)
The net financial position is shown in the following table:
31 December
2014
31 December
2013 (*)
Delta
31 December 2013
Published
468,889
152,707
316,182
152,707
Other current financial liabilities
2,378
9,741
(7,363)
9,741
Financial instruments, derivatives
4,327
6,909
(2,582)
6,909
Financial liabilities net of the current share
4,035
362,766
(358,731)
362,766
8
81
(73)
81
71,292
0
71,292
0
Total financial debt
550,929
532,204
18,725
532.204
(160,242)
(167,012)
6,770
(194,187)
Temporary cash investments
(3,900)
(4,557)
657
(4,557)
Other current financial assets
(4,410)
(12,623)
8,213
(12,725)
Financial instruments, derivatives
(574)
(415)
(159)
(415)
Financial instruments, non-current derivatives
(10)
(263)
253
(263)
Other non-current financial assets
(13,998)
(15,086)
1,088
(15,086)
Total current financial assets
(183,132)
(199,957)
16,825
(227,233)
0
1,715
(1,715)
1,715
Other financial assets of assets held for sale
(2,788)
(1,673)
(1,115)
(1,673)
Net financial position
365,008
332,290
32,718
305,013
NET FINANCIAL POSITION
Financial instruments, non-current derivatives
Other financial liabilities of assets held for sale
40
Since the net financial position measurement is not determined and regulated by the Group’s accounting principles of reference, the
criteria used to compute this indicator might differ from those adopted by other groups and, therefore, it is not comparable.
The net financial position at 31 December 2014 was negative for Euro 365 million, up Euro
32.7 million on 31 December 2013 (a negative Euro 332 million). The change is affected by
the physiological reduction of available cash in the joint operation related to the project
evolution; gross debt has increased as a result of the equity-linked bond issue, partially offset
by the repayment of loan portions during the year.
Short-term financial liabilities were Euro 468,889 thousand, up Euro 316,182 thousand
against the previous year. The change is mainly due to the reclassification from long to short
of borrowings, in line with the requirements of IAS 1 as further described in the notes to the
financial statements, the combined effect of the extinction of partial funding amounts and
reimbursement of advances of invoices related to the management of the working capital of
specific contracts. The reclassification as a result of the renegotiation that the Group is
finalizing with the syndicate of banks regarding the terms and conditions of the new loan
agreement which provides, among other things, the extinction of the previous loans and the
disbursement of a new medium/long term loan.
Financial liabilities net of the current share are Euro 4,035 thousand, down by Euro 358,731
thousand, following the reclassification from long- to short-term of financial liabilities, as
indicated above.
Other non-current financial liabilities include the financial component of the equity-linked
bond, net of related ancillary costs; the equity component of the same instrument was
reclassified to “other reserves” in shareholders’ equity; for more details refer to the same
section of this note.
A breakdown of other current financial liabilities is Euro 2,378 thousand and includes financial
liabilities not to the banking system but relate mainly to funding received from the consortia
Cavet for Euro 2,130 thousand, the share of the loan granted by Ghella S.p.A. (minority
shareholder) against the company ML 3000 S.c.a.r.l. for Euro 248 thousand. The reduction of
the year is a direct result of offsetting respectively of financial creditors and debtors of the
Group to the Cavet Consortium.
As at 31 December 2014, there are no overdue payables to report.
The Group’s Shareholders’ Equity booked at 31 December 2014 is Euro 92,199 thousand, up
Euro 58,692 thousand on 31 December 2013. The total consolidated equity, considering the
minorities, is Euro 93,705, thousand, up Euro 58,510 thousand on 31 December 2013. The
overall change in the Group’s Shareholders’ Equity is mainly due to the result for the year and
registration of the “equity” component of the convertible bond of Euro 6,960 thousand,
partially offset by the decreases in the reserve for Cash Flow Hedges of derivative hedging
instruments and reserve for currency translation of foreign financial statements in currencies
other than the functional currency (Euro). Minority shareholders’ equity is Euro 1,506
thousand and was negative for Euro 182 thousand.
At 31 December 2014, advances from customers are Euro 161,390 thousand, up Euro 55,785
thousand on 31 December 2013. Client advance payments relate to contractual payments on
account received from clients on the date of signing of construction contracts. The increase is
mainly due to advance payments in the Kima and Punta Catalina contracts collected during
2014 while the decrease reflects the higher reabsorption through invoices on account, of
advance payments collected in previous years.
Contract work in progress under liabilities (construction contracts) reflects the net negative
balance for each individual contract of the sum of progressive production, advance invoicing
and the provision for contractual risks. The Euro 42,891 thousand decrease is linked to the
advancement of work and the contractual terms, for which the work carried out in the year
was higher than invoices on account.
41
Trade payables were Euro 755,896 thousand at 31 December 2014, an increase of Euro
120,470 thousand over 31 December 2013. This change is mainly due to the advancement of
projects and the increase in production volumes in 2014. In fact, the purchase of materials
and services increased substantially as the major contracts awarded in 2010 completed the
procurement phase and the shipment of materials got underway; net of the Gasco JO that has
reached a very advanced stage and for which there were significant payments to suppliers
during the year.
In this respect, as at 31 December 2014, the Group has payables to third parties, of which
Euro 39.03 million were 90 days or more overdue (basically in line with 31 December 2013);
this value considers payment plans negotiated with suppliers. The Group has stipulated
repayment plans resulting in a gradual reduction of the older trade items and with the positive
effects envisaged by the evolution of the business plan, according to the cash flow timing set
out therein. In 2014, payment reminders were received as part of ordinary administrative
management.
With regard to the individual financial statements of Maire Tecnimont S.p.A. the net financial
position of the Company is shown in the following table:
31 December
31 December
2014
2013
Delta
79,321
17,886
61,435
0
76,064
(76,064)
Equity-Linked Bond
71,292
0
71,292
240,650
217,614
23,036
Total financial debt
391,264
311,564
79,700
(1,091)
(620)
(471)
0
0
0
(108,171)
(41,696)
(66,475)
Total current financial assets
(109,262)
(42,316)
(66,946)
282,002
269,248
12,754
NET FINANCIAL POSITION (MET S.p.A.)
Financial liabilities net of the current share
Since the net financial position measurement is not determined and regulated by the Group’s accounting principles of reference, the
criteria used to compute this indicator might differ from those adopted by other groups and, therefore, it is not comparable.
Short-term financial liabilities were Euro 79,321 thousand, up Euro 61,435 thousand against
31 December 2013 mainly due to the reclassification from long to short-term of financial
liabilities and the combined effect of the partial settlement of loans. The reclassification is
considered temporary as a result of the renegotiation that the Group is finalizing with the
syndicate of banks regarding the terms and conditions of the new loan agreement which
provides, among other things, the extinction of the previous loans and the disbursement of a
new medium/long term loan.
Financial debts, net of the current portion, were all reclassified in the short term as indicated
above.
bond, also net of the related accessory expenses.
Other non-current financial liabilities are Euro 240,650 thousand for payables due to
subsidiaries for inter-company loans. Other non-current financial assets are Euro 108,171
thousand for receivables due from subsidiaries for inter-company loans. The increase is
connected with a loan granted following proceeds from the bond issue.
42
TRANSACTIONS WITH RELATED PARTIES
With reference to the disclosure on related parties, it is reported that all related party
transactions have been conducted based on market conditions. At 31 December 2014, the
breakdown of the Company’s receivables/payables (including financial receivables/payables)
and cost/revenue transactions with related parties, is shown in the tables below. The tables
also show the equity positions resulting from transactions that took place last year and are
still being defined:
Esperia Aviation S.p.A (*)
G.L.V. Capital S.p.A (*)
Total
Trade
receivables
Trade
payables
Financial
receivables
Costs
Revenues
940
0
0
0
0
0
(1,135)
0
(433)
0
940
(1,135)
0
(433)
0
(*)
For the following receivable (Esperia) and payable (GLV) positions in question, new repayment plans have been defined,
which will allow for the gradual reduction of the respectively positive and negative commercial entries.
More specifically, payable contracts still in place relate to the lease of property used as offices
by the Group companies, the use of the “Maire” trademark (relations with GLV Capital S.p.A.)
and other minor charge backs.
Relations with other non-consolidated and/or non-associated companies of the Group are
purely commercial and relate to specific activities linked to contracts; moreover, as some
consortia have substantially concluded activities, they are in liquidation phase.
Trade
receivables
Trade
payables
Financial
receivables
Costs
Revenues
MCM Servizi Roma S.c.a.r.l.
0
(432)
480
(58)
0
Studio Geotecnico Italiano
0
(1,352)
0
(904)
0
Villaggio Olimpico MOIS.c.a.r.l. In
liquidation
0
(2)
70
0
0
Ravizza S.c.a.r.l In liquidation
0
(124)
0
(205)
0
Parco Grande S.c.a.r.l. In liquidation
80
(37)
0
(69)
0
Program International Consulting
Engineers S.r.l in liquidation
734
(668)
900
0
34
KTI Star
6
0
0
0
33
UCC Engineering LLP
88
0
0
0
88
Desimont Contracting
Total
312
0
0
0
312
1,220
(2,615)
1,450
(1,236)
467
As required by IAS 24, the remuneration of Directors, Auditors and key managers are
contained in the 2014 Report on corporate governance and ownership structure and 2014
Remuneration Report both available on the company website www.mairetecnimont.it. under
“Governance”.
43
8. Human Resources
At 31 December 2014, the Maire Tecnimont Group workforce amounted to 4,259 resources,
compared to 4,295 the previous year, with a delta of 36 resources resulting from the 666 new
hires and 702 outgoing employees of the period.
Even in 2014, the Human Resources policy was aimed at providing support to the strategic
and operational development of the Group, through the optimization of human capital and the
process of change in the mix of resources, nationally and internationally. The process of staff
retraining and realignment of corporate functions continued in support of the evolution of the
business and the strengthening of productivity and skills necessary to achieve the goal of
relaunching the Group, defined in the Strategic Plan 2013-2017.
In fact, most of the outgoing employees involved professionals that are no longer functional to
the current activities and the new organizational structure. In this respect it should be noted
that, of the 702 total outgoing employees, 216 are related to Italy, a third of which related to
the procedures for staff reduction initiated by the subsidiaries Tecnimont Civil Construction
S.p.A. and Tecnimont S.p.A. (in figures, respectively 41 and 29 employees).
The reduction of the workforce by geographical area “Rest of Europe” (109 resources) is
instead mainly due to the sale, to a new company under French law, of the business unit and
related staff of the Company Sofregaz S.A., which occurred in the first half of the year.
Even most of new hires of the period are attributable to investments aimed at reproportioning between professional groups and roles, and the consolidation process of
specialist technical skills of the Group, pursued through the inclusion of resources and specific
professionals qualified in the field of Engineering and Construction. The foregoing is attested
to by the 201 new national hires, mainly in the technical area, plus 386 new hires in Asia,
where in particular the Indian Subsidiary TICB was confirmed as fundamental recruitment
basin for resources in the Engineering and Construction.
The number of University graduate employees working in the Maire Tecnimont Group, at
31/12/2014, is equal to 2,496 (59% of the overall workforce); the average age is around 40
years old.
The presence of women, representing 13.1% of management, is equivalent to 18.4% of the
total workforce.
The following tables show the workforce of the Maire Tecnimont Group at 31/12/2014, with
changes over 31/12/2013 and the average workforce during the year:
The changes to the workforce by category are shown in the table below (31/12/201331/12/2014):
Workforce
31/12/2013
Hires
Outgoing
employees
Reclassification
of staff category
(*)
Workforce
31/12/2014
∆ Workforce
31/12/2014
vs.
31/12/2013
Executives
426
43
(51)
33
451
25
Middlemanagers
1534
183
(273)
55
1499
(35)
White collars
1932
416
(269)
(87)
1992
60
403
24
(109)
(1)
317
(86)
Total
4,295
666
(702)
0
4,259
Average no.
of employees
4,320
Title
Blue collars
4,276
(*) include promotions, changes in qualification following intra-group transfers.
The classification “Managers” and “Middle-managers” does not reflect Italian contracts, but responds to national and international
identification parameters of Management and Middle Management managerial used for Italian and foreign managerial resources.
44
The changes in the workforce by geographical area are shown in the table below
(31/12/2013-31/12/2014):
Geographica
l area
Italy
Rest
Europe
Hires
Outgoing
employees
∆ resources by
geographical
area
Workforce
31/12/2014
∆ Workforce
31/12/2014
vs.
31/12/2013
1,903
201
(216)
0
1,888
(15)
386
79
(169)
(19)
1,978
386
(306)
19
26
0
(11)
0
2
0
0
0
2
4,295
666
(702)
0
4,259
Workforce
31/12/2013
of
Asia
South
America
Africa
Total
(109)
277
99
2,077
(11)
15
0
Average
workforce
Average
workforce
FY 2013
FY 2014
84
91
7
2
2
0
0
2
2
105
120
15
5
0
(5)
372
384
12
1,386
1,483
97
9
8
(1)
MST S.r.l.
100
88
(12)
TCM FR SA
103
24
(79)
18
41
23
1,617
1,626
9
4
3
(1)
43
42
(1)
182
136
(46)
31
17
(14)
193
147
(46)
1
0
(1)
65
62
(3)
4,320
4,276
(44)
Maire Tecnimont S.p.A.
Met NewEn S.p.A.
MET T&S Limited
Stamicarbon
(*)
(*)
Noy Engineering
KT
(*)
Tecnimont S.p.A.
(*)
Tecnimont Russia
Tecnimont Arabia
Tecnimont-ICB
(*)
Tecnimont Chile
TPI
TWS
Tecnimont do Brasil-Contruçao de projetos LTDA
Tecnimont Civil Construction
Corace
Cefalù 20
Total
Difference
This data also includes branches and representative offices.
45
Average workforce
FY 2013
Average
workforce
Difference
FY 2014
of which, by professional categories:
Engineering
2,119
2,081
(38)
Operations
958
1,013
55
Rest of technical area
409
401
(8)
Sales area
126
129
3
Staff area
709
652
(57)
4,320
4,276
(44)
1,964
1,930
(34)
427
318
(109)
1,892
2,007
115
35
20
(15)
2
2
0
4,320
4,276
(44)
1,892
1,883
(9)
72
47
(25)
1,964
1,930
(34)
Total
of which, by geographical area:
- Italy
- Rest of Europe
- Asia
- South America
- Africa
Total
Of which:
Italians open-ended
Italians fixed-term
Total
46
9. Training, Incentive Programs, Organization and Security
HUMAN RESOURCES TRAINING AND DEVELOPMENT
During 2014, investment in training was mainly addressed to the spread and consolidation of
technical and managerial skills, with the activation of activities and initiatives aimed at the
development of qualified resources, the enhancement of internal know-how and the
development of critical roles.
The strong interest of the Group for training on Project Management was confirmed, with the
provision of 3,644 hours of training for a total of 236 employees. In addition to the training
proposals to promote the strengthening of a corporate culture that conforms to international
logics and standards was initiated in fact, in collaboration with the Operations Department and
the support of the consulting firm Towers Watson Italy, the initiative called “Stakeholder
Management”, aimed at highlighting the benefits, in project management, deriving from the
timely identification and careful management of stakeholders, recognized as fundamental
assets.
In close connection with this project, the professional certification campaign continued
according to the IPMA methodology, in collaboration with ANIMP. Project Managers and key
figures of the projects were the recipients of such training programs, with the aim to facilitate
and strengthen, both nationally and internationally, the recognition, the possible use and the
relative value of these skills towards stakeholders, and increase the overall level of
competitiveness of the company with respect to its competitors.
Also in the period of reference, three editions of the “Engineering & Construction Risk
Management” course were held, organized by the Company ECRI. The Group, which
sponsored the training initiative dedicated to discussing Risk Management issues, hosted the
April edition at the headquarters of Milan, which was attended by major companies, including
international, of the sector.
With reference to the issues of economic and financial company and project management and,
in particular, long-term projects, we note the two sessions of the “Economics & Finance”
course already successfully proposed in the 2010-2012 three-year period.
In 2014, various initiatives were also organized (3,355 attendees for a total of 13,602 hours)
devoted to safety at the company and apprentices of the Italian companies were involved in
cross-divisional training courses provided by the institutional bodies responsible. For the latter
and other newly-hired young graduates, the courses “Introduction to Group” were also
successfully replicated, aimed at facilitating their integration in the company and increasing
knowledge of the business (257 participants, for a total of 3,280 hours).
The collaboration of expert consultants in the presentation and reporting of training projects
has made it possible to activate different training plans financed, with leading interprofessional company funds, in terms of Project Management, Economics & Finance, QHSE
and, more generally, in specialized training.
Finally, with regard to language training, 3,014 hours were provided for individual and group
courses.
Even in 2014, the Group renewed its partnership with the “Politecnico di Milano”, aimed at
students and recent graduates; this collaboration with the Milan University was a prime
opportunity for contact and interaction with the university world, as well as to promote the
brand and corporate image.
In addition, it should be noted that preliminary activities to the activation of the performance
management process were completed, defined on the basis of the Group Leadership Model,
with the assignment to Ernst & Young Business School of the task to provide the IT system to
support the process.
The project “Your Voice” ended in the early months of the year; it is the first survey of
company climate, with the creation of several workshops among employees, in order to
47
disseminate the results of the survey and gather tips on actions to be taken to promote the
process of improving the quality of the work experience and the company-employee relation.
COMPENSATION AND INCENTIVES
In 2014, implementation and monitoring continued of new compensation tools adopted
following the approval in 2013 of the Remuneration Policy for the Group’s Senior Managers.
This Policy, in addition to ensuring the full implementation of the recommendations contained
in art. 6 of the Code of Conduct for Listed Companies in December 2011, as updated in July
2014, and allowing aligning corporate policies to the best practices of the market, aims to
support the management with respect to the strategic objectives defined in the Group’s
Business Plan 2013 -2017. In this regard, on 14 May 2014, the Board of Directors of the
Company, following the favourable opinion of the Remuneration Committee, approved the
partial amendments to some of the above instruments, further strengthening the bond with
the long-term perspective of the Business Plan.
In the first months of the year, the Top Management was assigned the 2014 targets and, in
parallel, the figures of those set in 2013 in relation to the incentive systems in the short
(MBO) and medium term (Performance Plan).
In the same period, in accordance with the provisions of the Group Incentive Standard
STDGRHRO-003-rev 001, the process was restarted for setting goals for non-Senior
Executives and profiles considered strategic in the management of contracts, in order to
strengthen the commitment of these resources while supporting management motivation and
loyalty, establishing a close connection between objectives, performance and incentives.
In the first half of the year, the Corporate also established the Remuneration Policy guidelines
for the various Group companies, based on the principles of selection and merit, as well as on
the business economic performance and local market needs. According to these indications
and on the basis of the provisions contained in the Group Remuneration Policy standard
STDGR-HRO-002, in coordination with the parent company, the individual companies
managed the implementation of their management incentive internal processes.
In compliance with the obligations under art. 123-ter of Legislative Decree no. 58/1998 and
art. 84-quater of the Consob Issuers Regulation, the “2014 Remuneration Report” was
prepared and approved by the Board of Directors on 13 March 2014.
ORGANIZATION
In the year covered by this report, the Organization function focused on consolidating and
optimizing the overall Group structure, including the organizational review and the review of
models and processes, along the following lines: consolidation of the role of policy and
coordination performed by the Parent, rationalization of organizational structures and
strengthening the Group’s presence in the geographical areas of strategic interest.
With reference to the Parent Company, we note the reorganization of Legal Affairs and
Contracts, with the strengthening of the structure of Contracts Negotiation and the passage of
the activities of Contract Management to the Operations Department of the Subsidiary
Tecnimont. At the same time we note the creation, within the Department of Human
Resources, Organization and ICT, of special Group standards for the administration and
management of personnel, Development & Compensation, Information Technology and
General Services. Moreover, we note the creation of the Project Management & Business
Development Department, with the aim of promoting investments and initiatives aimed at
identifying new business opportunities and supporting the Group’s involvement in technical,
economic and financial feasibility studies in favor of Clients and Investors. Lastly, we note the
reorganization of the Finance Department aimed at rationalizing the structure and
strengthening the role of policy and coordination.
48
With regard to the operating companies, the reorganization of Project Control, Construction,
Contract Management, Procurement, Human Resources and ICT of the Subsidiary Tecnimont,
and the creation of a structure dedicated to the identification and assessment of risks and
opportunities associated with projects were completed.
In the same period, the gradual upgrading of the presence in geographic areas of strategic
interest gave a further contribution to the Group’s regionalization process, enhancing
synergies between headquarters and regions and optimizing the logistic presence in different
geographical areas. This process includes the strengthening of the role of the Region Vice
President, and the related allocation of responsibility for cost optimization and reduction of
local structures, as well as the coordination of the Area Managers of their respective
competence. Moreover, presence was introduced in Sub-Saharan Africa, in addition to those
already present in the Americas, Russia and Caspian Region and Middle East. In order to
provide greater support to these initiatives, the Region Coordination Committee was formed
with the task of coordinating the activities for the Region and assisting the Chief Executive
Officer of the Parent Company in the evaluation of decisions in terms of commercial
development, implementation of investments and optimization of the Group’s presence in
terms of local corporate structures and related logistics aspects.
With regard to the project activities, we note the start of the change management phase
linked to the “Process revision” project, with the activation of thematic workshops, dedicated
to the changes introduced and the description of the relevant procedures in order to facilitate
the assimilation and effective application in everyday working life. Among the topics
addressed, we note the analysis of the theme of organizational size and mix of related skills,
the assessment of the validity of the model in force for project monitoring with respect to the
identified needs of changing the overall monitoring model, identification of main KPIs to
monitor the productivity of the Subsidiary Tecnimont and, finally, the communication flow with
the Management and evaluation of the Operation & Maintenance sector, in light of a thorough
market analysis.
As part of the project, by virtue of the centrality recognized to the role of the Project Manager
for the success of projects, a development program has been defined and initiated aimed at
enhancing the growth and expertise of this professional figure, through the activation of
development plans and customized training.
In 2014, activities also continued related to the “G&A Project”, with the aim of creating a
management and control system of potentially reducible structural costs, through the
identification and implementation of preventive and/or corrective actions and planning of
medium/long term structural actions.
Finally, we note the revision of the Group Standard “Document system management”, to
define the rules for the preparation and management of documents distributed within the
Group, and the issue of the Standard “Risk management during prospect, proposal and
execution phases”, aimed at defining principles, responsibilities and activities relating to the
identification, assessment, management and communication of uncertainties identified during
the prospect, proposal and execution phases.
SECURITY
The activity of the dedicated function was carried out in line with the Group Security model,
and as part of the general governance system materialized, on the one hand, in the usual
activities of support and guidance to the various business senior management and operational
functions and on the other, in the management of “critical” situations and/or potentially able
to affect, even temporarily, the operational capacity of the Group.
The social-political-economic and security conditions of the countries of interest were regularly
monitored, particularly where there is a lesser degree of economic stability or where there are
internal social conflicts or with other countries, periodically reporting to the senior
management functions and responsibilities to ensure constant updating. An adequate Security
organization was also ensured during missions and operations in countries considered at risk.
49
Special attention in terms of information and support was paid to ongoing activities and
projects in Iraq, Iran, Egypt, Saudi Arabia, Maghreb and Middle Eastern countries, Cameroon,
Mexico and Nigeria, to minimize the possible negative impact on the Group’s interests of
unstable local social, political and economic security conditions. In particular, the
Department’s work was structured as follows in the various areas of reference:
• Iraq: info/operational support to business functions is substantiated, in the organization
and direct participation in site survey missions, and the identification of possible solutions and
security providers, as well as in the characterization and evaluation of organizational solutions
proposed, pending the particularly critical phase of the country, relevance of the costs and the
need to ensure the safety of personnel exposed to said risks.
• Iran: in view of the persistence of the restrictions deriving the associated increase of the
embargo, after the tight emergency phase, the survey continues to be focused on better
organization of protective measures for the limited number of expatriate personnel engaged in
the final stages of the project, as well as constant verification of the various issues related to
the embargo itself.
• Egypt: with specific reference to the new office of the Egypt Branch, Cairo (KT) refinery
and Kima (TCM) projects, careful monitoring, even on-site, has ensued for the recovery of
activities, given the great political instability.
• Algeria: competence support was guaranteed to the various business initiatives, given the
presence of criminal groups and Islamic terrorist especially in the peripheral areas of the
country (border with Libya, Mali and Niger).
•
Mexico: where TCM and KT have ongoing operating activities assistance consists of
constant observation of the security conditions in the areas in the project, and competent
support during missions in the country also ensuring operational links with similar security
structures of the Client/partner of the project, in order to ensure the best synergies for the
protection of personnel safety.
• Nigeria: where there are several initiatives, not yet operational and mostly located in the
area of Port Harcourt, the area of endemic and consolidated insecurity in terms of public order
and security, in a context where the country is heavily subject - currently in northern regions
and in Abuja, to terrorist acts of unprecedented and singular ferocity.
Nationally, the necessary support was provided to the projects in Italy, in order to facilitate
the complete implementation of corporate policies relating to the organization, and the
management of offices/operating sites, with specific focus on infrastructural projects being
implemented in the critical areas of Sicily (Cefalù 20 project) and Basilicata (Tempa Rossa
project) seeking contacts and/or meetings with the competent local institutions.
Information actions, with a view to business security, were also dedicated to research and
disclosure of information regarding various kinds of issues (political, diplomatic, etc.), which
can temporarily or permanently affect operations or the possibility of business of the Group
(Russia-Ukraine crisis, Russia/USA/EU crisis, etc.).
50
10.
Industrial Relations
In 2014, the Group confirmed a model of Industrial Relations designed to ensure continuity for
the proper and transparent relationship established with the trade unions, industry employers’
associations and institutions.
It should be emphasized that, on 20 October 2014, the Subsidiary Tecnimont S.p.A. initiated a
reduction procedure of staff for a total of 150 workers, in accordance with articles 4 and 24 of
Law 223/91, which is part of the ongoing processes of optimization of human capital and the
gradual adjustment of the company functions to the changed business needs.
The meetings between Company Management and the territorial unions, also in order to
determine criteria and methods able to contain the social impact of this operation, led to the
signing, on 9 December 2014, of a union agreement concerning a total of 130 employees. In
this respect, it should be noted that such procedure involved workers that are retired and
close to retirement, as well as business managers and employees, with professionalism no
longer appropriate to the current activities and organizational structure of the company.
The above agreement was ratified on 15 December 2014 at the Regional Agency for
Education, Training and Employment (ARIFL) of Lombardy, with the formal commitment of the
Company to maintain the current level of employment, proceeding in the biennium 20152016, even in the face of terminations of employment relationships attributable to it,
permanent hires for the technical and organizational needs and the optimization process of
the mix of skills underway. Company Management has also undertaken the commitment to
periodic programming of meetings with the RSU trade unions, to allow timely and constant
monitoring of the redundancy management process and the commitment to the protection of
the employment level.
At 31 December 2014, there were 29 employees whose employment ended following this
redundancy procedure, which will end 31 July 2015.
Even the Industrial Relations of the Subsidiary Tecnimont Civil Construction were based on
analysing business performance and reorganization issues resulting from the state of the CIGS
redundancy for company crisis. After this period of extraordinary redundancy (CIGS), which
lasted from 19 December 2013 to 18 December 2014, a staff redundancy procedure was
initiated concerning 40 redundant workers, which ended positively with the Agreement of 13
November 2014 and the formalization of 39 lay-offs, effective from 19 December 2014.
Regarding Cefalù 20 Scarl, in a letter dated 7 February 2014, a staff redundancy procedure
was initiated, pursuant to articles 24 and 4 of Law 223/91, subsequently amended, through
an agreement signed with the category unions on 21/03/2014, on a voluntary redundancy
basis with term expected on 30/09/2014. As a result of non-adherence by workers to the
above redundancy procedure on a voluntary basis, there were no outgoing employees in the
period.
51
11.
IT Systems and General Services
In 2014, operational synergies were strengthened between information systems and general
services that combined in a single function, achieved important results in terms of
effectiveness of the management and control processes, as well as cost optimization.
In this regard, it should be noted that a series of measures were implemented aimed at the
efficient management of structural G&A costs, the subject of the eponymous Group project.
These initiatives resulted in the rationalization of the use of the spaces of the main
headquarters of the Group, Torri Garibaldi, and all activities regarding the related general
services, such as the maintenance and operation of the plants. Also in this respect, we
highlight the significant savings from renegotiation of the Group contracts for the main
services, or business travel agency, AMEX and CWT, purchases of consumables, Building
Maintenance and printing, with the implementation of a centralized model in the Italian
offices.
Optimization actions continued of both national space related to the Garibaldi complex in Milan
and the new KT offices in Rome and abroad, with particular reference to the United States,
Brazil, Mexico, Nigeria, Egypt and Russia.
Lastly, we note the release into production the InfoFacilities application, used to manage user
requests and program interventions, with a view to tracking, monitoring and efficiency of the
activities.
With reference to information systems, the contractual conditions of the main services were
redefined, including telecommunications and the agreement on the operational funding of IT
supplies.
As part of the Project IT area and competence support to the business, we note the activation
of the sites in Slovnaft (Bratislava) and Iowa (United States), and services to ongoing projects
(in particular, Tempa Rossa); in addition, we note the set-up of task forces of ADCO, Borouge
5, Qapco and Qapco client, Kima, Ruspet, Kingisepp and Nevinnomyssk, of the operational
headquarters of the Tecnimont USA (Houston) and Nigeria (Lagos) branches and offices in
Moscow.
A development and IT investments plan was defined that, in line with and in support of
organizational and business strategies, allows identifying and selecting initiatives and areas of
action, in view of the related impact on processes and systems. This program includes the
start of activities for the SRM (Supplier Relationship Management) project, focused on the
optimization of tender processes, and MACOS (Management Construction System), at the
base of the Construction estimation processes.
A further and significant impetus was also given to projects to improve the document platform
for projects, with the release of the new Documentum EPFM system - verticalization for the
sector - which was accompanied by a “light document” for small medium size projects
developed on Sharepoint platform; we note the extension to KT of the platform for recording
and archiving invoices payable.
In particular, the new Documentum EPFM system allows considering the Tecnimont Group
completely aligned with industry best practices and the specific process, having introduced
significant functionality such as digital signature, massive import and export of documents,
their correlation to the project plan (WBS), the query on the entire archive of projects and full
text retrieval, with a solution that is now supported by a new distributed architecture, which
simplifies and speeds access, regardless of geography, optimizing bandwidth usage on the
geographic network.
With reference to the promotion and development of the Group’s management systems, we
note the completion of the new target architecture (MET2.0), which includes software
infrastructure components necessary for the operation of the entire system on the basis of the
needs of the business, taking advantage of web modern technology and collaboration. The
guiding principles of the new architecture, already adopted and tested for the review of the
52
Travel business processes, are greater flexibility, availability and quality of systems, together
with the possibility of timely availability of certified company data.
Regarding the web, we proceeded to substantial revision of the template of intranet sites with
the aim of further improving maintainability, “usability” and effectiveness, and departmental
of Construction, Client Assistance, and Project Control were released.
Regarding applications, additional developed activities concerned consolidated systems in the
Group such as the management of the procurement process, with the revision of order
approval procedures and logics, the extension of the use of the SAP system to the new
Branches of KT in Bulgaria and Belgium, Tecnimont in Egypt and TICB Italian Branch,
according to a reusable operational model in all Branches. Finally, support was provided to the
carve out of TCM FR, already Sofregaz S.A., with reference to the application and
infrastructure components.
As for the IT infrastructure, we completed the migration of user workstations to Windows
Seven and updated the server and call management virtualization platform, and we are
completing the migration activities of the CED of Rome to Milan.
53
12.
Health, Safety and Environment
The systemic setting of the monitoring of HSE (Health, Safety and Environment) aspects
continued to be an element of corporate identity and criteria consistent with the principles of
the HSE Policy, aimed at supporting corporate operational and strategic visions.
The Group strongly believes in the importance of the continued reliability of results and
stakeholder satisfaction emphasizing priority of the protection of safety, hygiene and health of
its employees and of those involved in various capacities in the design and implementation
phase of works or a plant.
The Group’s corporate policies define the objectives, roles, responsibilities and management
criteria necessary to the systemic approach dedicated to HSE monitoring. These objectives are
shared across the organization, through the involvement of all staff and each task.
The Group has long structured its organization according to the principles of integrated
management systems and for many years has obtained the OHSAS 18001:2007 certification
(occupational safety management system) and ISO 14001 certification (environmental
management system) as recognition of the completeness and correctness implemented
throughout the multinational operational scenario of its business. This allows ensuring
compliance with applicable legislation, meeting the demands of clients and orienting the
development of the organization in terms of continuous improvement. The integrated HSE
(Health, Safety and Environment) management systems make it possible to adopt prevention
and protection methods and practices to minimize accidents or work injuries in every project
and every site of the Group as much as possible.
The Group seeks to achieve the objectives in this area through:
•
•
•
•
•
•
careful selection of contractors (required to ensure the sharing of the Group’s policies
in the field of health and safety);
hazard systematic identification and risk assessment, up to the direct involvement of
work teams and their members;
training and information activities carried out at the premises and building sites;
the creation of incentive systems that reward both individuals and groups of workers
that have helped to ensure or improve safety and health in the workplace;
widespread and extensive communication to overcome language barriers at multiethnic construction sites; and
the activities of regular updating and training of personnel in charge of supervision.
The monitoring and analysis of the HSE management system results make it possible to
ensure ongoing supervision of the achievement processes of identified targets and redirect
additional improvement targets in terms of effectiveness and reliability of compliance with
applicable laws, reference standards and business requirements.
The HSE management system continued to consolidate its characteristic of organizational
contribution for each of the workplaces in which the Group’s activities are organized and
carried out.
The company’s prevention and protection service, which operates hand in glove with the HSE
management system, ensures the implementation of shared approaches and methods for
representation in every place and activity, consistent with the system references and in
accordance with the relevant legislative requirements.
The HSE management system adopts a permanent internal audit plan aimed at verifying the
results and monitoring of the operation of the management system in order to identify issues
or opportunities, outline strengthening or consolidation strategies to allow an increase in
shared knowledge and the adoption of effective solutions.
The importance of the management value of prevention involved professionalism and
resources for the implementation of system tools that ensure compliance over time and at
each location with the applicable legislation on occupational safety and to take adequate steps
54
to achieve continuous improvement in the culture of safety and the results obtained in terms
of accident statistics.
For example, the monitoring of construction activities confirms significant results that are in
line with the positive trend seen over the last few years and are significantly better than
industry averages.
The data relative to the Group’s main operating company at 31 December 2014 are shown
below, expressed as:
•
LTIF: Lost Time Injury Frequency;
•
TRIR: Total Recordable Injury Rate.
Both these indicators are computed and monitored according to the United States
Occupational Safety and Health Administration (OSHA) regulations, reflecting accepted
international practices, and are compared with the relevant averages in the international Oil &
Gas and Industrial Construction sectors.
Tecnimont S.p.A.
Safety – 2014
(based on 44.15 million site hours worked)
KPI
(*)
Tecnimont S.p.A.
Total projects
International comparison
Oil & Gas Producers - 2013
Contractor data
Construction Industries
Institute - CII
(**)
(***)
LTIF
(Lost Time Injury Frequency rate OSHA)
0.005
0.09
0.06
TRIR
Total Recordable Injury Rate OSHA)
0.03
0.35
0.45
(*)
KPI - Key Performance Indicator
(**)
Source: International Association of Oil & Gas Producers - Report No 2013s july 2014 - Safety Performance
indicators - 2013 data - Contractor aggregated data
(***)
Source: CII – Benchmarking & Metrics Program – 2011 Safety Report – Aggregated data Contractors 2010 (BMM
2011 02 October 2012)
55
13.
Innovation and Research & Development
Maire Tecnimont pays close attention to research and development in order to develop and
market new technologies and intellectual property rights (patents).
The MTIC also provides guidance and coordination of the Group’s research and development
activities, with particular attention to the Group’s engineering centers located in Italy, India,
the Netherlands and Germany.
In order to speed up the process of innovation and monitor its progress, in 2010 the MTIC
developed the Innovation Pipeline (IPL) methodology. Since then more than 100 project ideas
have been transformed into 42 different patent families and projects being marketed.
The research and development are being carried out in the following areas:
Oil & Gas;
Polymers;
Urea and fertilizers;
Hydrogen and Sulphur Recovery;
Renewable energies.
Maire Tecnimont is well aware of the social and environmental trends that will impact the
petrochemical and fertilizer industry in the near future: concerns about climate and energy
use along with the challenge of global population growth. Amongst other aspects, the world is
demanding environmentally-friendlier processes and high-performance fertilizers. The Group
believes in open innovation, co-creation and collaboration as the only methods truly effective
in facing up to the environmental and technological challenges of the global context.
One clear example of the open innovation philosophy brandished by Maire Tecnimont is its
collaboration with Milan University. The aim of this collaboration is to extend the proprietary
technologies of the Maire Tecnimont Group in the Oil, Gas & Petrochemicals, Fertilizer and
Energy sectors. The project will initially involve the new technologies to improve fertilizer
(urea) effectiveness and the recovery and conversion of CO2.
Other examples include the Stamicarbon agreements for joint development with the Russian
company Uralchem with regards to the conversion of 100& of CO2 in urea plants and the new
“MicroMist™ Venturi scrubber” technology recently launched and developed by Stamicarbon in
collaboration with the US EnviroCare International. This technology reduces particle emissions
of urea granulation, making them amongst the lowest worldwide.
The Venturi scrubber technology was also commercialized quickly and 2 contracts have
already been signed.
The Maire Tecnimont Group is also developing innovations related to the standardization of
the design and unique collaborations with suppliers that are part of the supply chain of the
plant so as to provide very competitive offers on the market.
An example of
suppliers and
manufacturing
from a current
this type of innovative Business model is the collaboration of Stamicarbon with
manufacturers of materials that may improve the timing of design,
and logistics by reducing the timing of delivery of high pressure equipment
average of 18 months to 12 months.
Intellectual Property
The Group owns more than 90 families of patents registered in many countries around the
world for over 1000 specific patents and patent applications (refer to table).
56
Technology
Licensor
Urea Technologies
Stamicarbon
Polymer Technologies
(Nylon 6, Nylon 6.6 and PET)
MTIC/Tecnimont
Oil & Gas
MTIC/TCM FR
Infrastructure & Power generation
MTIC/Tecnimont
Production of synthesis gases & basic
chemistry
MTIC/Kinetics Technology
Number of
Patents/patent
applications
908
12
10
8
82
Licenses
The Group licenses its technologies mainly through its subsidiary Stamicarbon.
The Group’s Technology & Licensing division offers a wide range of proprietary technologies
and related engineering services. The Group boasts over 60 years of experience in the
development and licensing of urea technology and over 40 years of experience in the
production processes of hydrogen and synthesis gas, gas treatment and sulfur recovery.
The Group has a diversified portfolio of licenses for both the construction of plants and
revamping projects, and can boast long-standing relations with leading licensors of
technologies in the areas in which the Group operates.
STAMICARBON
Stamicarbon is a world leader in the licensing of technology and services for the production of
urea, with a market share of over 50% in synthesis production and with a market share of
approximately 35% in urea granulation technology. Stamicarbon boasts more than 60 years
of experience in licensing, combining minimal environmental impact, safety, reliability and
productivity. Over 250 plants for the production of urea use Stamicarbon technology. In
addition, the Company has completed more than 90 revamping projects regarding plants that
it licensed and those of other operators.
Stamicarbon has its operational headquarters in Sittard (Netherlands), Beijing (China) and
Moscow (Russia) and its main areas of activity are:
•
licensing of new plants for the production of urea (including AVANCORE® processes and
Urea 2000plus™ technology);
•
revamping of existing plants;
•
provision of material for the production of urea (including Safurex® stainless steel
materials);
•
provision of services for the lifecycle of the plant.
These services consist of feasibility studies for revamping and commissioning projects, plant
inspections, maintenance and repair, optimization of operating conditions and plant operator
training.
The Group maintains its leading position through a continuous process of high-quality
innovation in close collaboration with research institutes, suppliers and clients. This has led to
the development of many innovations that have resulted in reduced investment and operating
costs. Many technologies were patented, as outlined below: Avancore®, Urea 2000plus® Pool
Reactors, Urea 2000plus® Pool Condensers, Stamicarbon Fluid-Bed Granulation, and Safurex®
duplex stainless steel.
57
Stamicarbon’s business is currently focused on:
•
increase in the efficiency of nitrogen absorption;
•
“zero ammonia and dust emissions” resulting from alternative formulations of ureabased fertilizers;
•
reduction of carbon emissions, for example, using renewable raw materials for the
production of urea;
•
urea production in developing countries.
KT – Kinetics Technology S.p.A.
KT is the Group Company that operates in the international arena in the field of process
engineering, with over 35 years of experience in the design and construction of plants for the
chemical, petrochemical and refining industries. KT also operates as a provider of proprietary
technologies and as an EPC contractor for medium size plants and has completed over 500
projects around the world, gaining significant references in the field of sulfur recovery and gas
treatment, hydrogen units and synthesis gas production, as well as in combustion furnaces for
refineries and petrochemical plants.
KT is a leader in licensing and providing SRU support units, with more than 60 projects
worldwide in the last 10 years, ranging from small units to large scale plants for the
production of sulfur.
KT has developed its own technology for the purification of gas, tail gas treatment (RAR
technology) and also provides personalized engineering solutions. KT is developing a new and
revolutionary catalytic process, transforming H2S (sulphuric acid) in sulfur and hydrogen with
zero emissions. Having designed and supplied more than 60 steam-reforming (SR) units, KT is
a leading supplier of synthesis gas and hydrogen production units based on steam reforming
technology, able to supply plants with capacity of up to 180,000 Nm3/h per production line,
with designs also tailored to minimize emissions of steam and carbon dioxide (CO2).
The new technology of Catalytic Partial Oxidation (CPO) offers a valid alternative in order to
minimize the investment and operating costs, not only for the production of hydrogen but also
for any application of synthesis gas.
Since 1971, the Group has provided more than 1,700 boiler plants, including vertical and
horizontal, topping or empty furnaces, and advanced plants for ethylene crackers and steam
reformers of considerable size, including their use in direct iron reduction.
Based on its solid understanding of engineering processes, KT boasts significant experience in
the implementation of projects in these areas, which enable it to provide services and
projects, based also on third-party technologies.
TECNIMONT
As a primary Engineering and Construction Contractor, Tecnimont is specialized in the
construction of hydrocarbon treatment plants and plants for the management of large,
complex integrated E&C projects in the Oil, Gas & Petrochemicals, fertilizer, power generation
and infrastructure sectors.
The services and know-how offered by Tecnimont and its subsidiaries range from conceptual
design and the selection of technologies to process engineering and detailed design.
Moreover, Tecnimont is able to provide proprietary technological solutions and ad hoc service
packages, adapting them to the specific needs of clients.
Research and Development at Tecnimont focuses mainly on two aspects: the first is the
development of proprietary technologies in collaboration with MTIC and with leading academic
institutions; the second is the constant and continuous innovation of standards and
58
methodologies of engineering design. In both cases, Tecnimont supplies not only the
undisputed technical skills but also specific project management services for R&D projects, as
this is a distinctive competence of Tecnimont in the Group.
As for the new technologies, we recall the projects being developed under the Framework
Agreement for Breakthrough Innovation signed with the Politecnico di Milano and coordinated
by MTIC; and in particular the “Urea In Vivo” project, which aims to produce new types of
urea able to modify and control the availability in vivo in the ground. The objective of the “CO2
to Olefins” project is to develop a catalytic process able to complete a “one-step” conversion
of CO2/H2 mixes into light, valuable olefins.
As part of the same Agreement, Tecnimont is also participating in the development of an
innovative process for the removal of CO2 and other components in field acid gas, to separate
them from natural gas, which will then be released into the network. This new technology,
developed in conjunction with the Politecnico di Milano and with MTIC, will represent an
innovative solution compared to “traditional” methods of separating CO2/H2S through
alkanolamines, and economically competitive when the amount of acid components in the gas
to be treated is high.
The project program involves the start of the experimental campaign (the pilot plant for
laboratory testing is under construction) in Q4, 2015.
As for the design and engineering, in response to the urgent need to adopt innovative
methods for the design and development of technical solutions in engineering, the “Design To
Cost” project was developed by all engineering disciplines of Tecnimont. The project also
included improvements in corporate workflow and an important activity in the field of
technical standards. In the year 2014, more than 50 innovative ideas were developed in detail
and involved all engineering sectors. In addition, a radical and continuous review program of
corporate technical regulations allowed an in-depth optimization of methodologies and
engineering activities. Because of its high innovative impact, the “Design To Cost” approach
has become a common practice for all technicians, and new ideas are generated continuously
and included in the so-called “funnel”, typical of all the strategies for the collection and
selection of innovative ideas.
TECNIMONT ICB PVT Ltd (TICB)
TICB, subsidiary of Tecnimont, is among the biggest companies operating in India in the field
of engineering & construction and is able to provide, also on the basis of turnkey contracts,
EPC services to the various Group companies around the world. It operates through highly
qualified personnel, consisting of approximately 1,200 employees, many of which are
engineers and specialized technicians.
TICB has also participated in the “Design to Cost” project, supervised by Tecnimont.
All technical departments of TICB have participated in the project, in complete synergy with
the same departments of Tecnimont.
59
14.
Information on Risks and Uncertainties
This section highlights the major potential risks and uncertainties relating to the Maire
Tecnimont Group, and the sectors in which it operates. It has the purpose of analyzing the
overall causes of business risk that could have an impact on the Company’s situation in the
foreseeable future.
The core business of Maire Tecnimont Group is the design and construction of plants for the
Engineering & Technology sector and the design and construction of large-scale public works.
In addition, the Group grants licenses for patented technology and intellectual property to
urea producers.
BACKLOG RISKS
The Group’s backlog was Euro 4,965.8 million at 31 December 2014. The timing of the
revenue stream or expected cash flows is subject to uncertainty related to unforeseeable
events that could have an impact on the contracts in the Backlog (e.g., the delay, late start or
stoppage of work or other events). To mitigate that risk, the Company has stipulated special
termination/cancellation clauses in the contracts that call for adequate reimbursement in the
event of such circumstances.
RISKS
RELATED TO BACKLOG CONCENTRATION AND RELIANCE ON A SMALL NUMBER OF
CONTRACTS OR SIGNIFICANT CLIENTS
At 31 December 2014, approximately 76% of the Group’s consolidated revenue was derived
from 15 major contracts, corresponding to approximately 96% of the backlog value. Any
interruption or cancellation of even one of the relevant contracts, subject to the applicable
statutory and contractual remedies, might adversely affect the Group’s economic, equity and
financial position. In addition, the Group works with a small number of clients. At 31
December 2014, consolidated revenues from the 10 principal clients accounted for 73% of
total consolidated revenues. One of the main guidelines followed during 2013 was that of
spreading more initiatives over a larger number of customers and thus opening up to new
markets and clients.
RISK
RELATED TO THE CAPACITY OF THE
GROUP
TO EXECUTE ORDERS IMPLEMENTING
THE NEW STRATEGY
The Group has prepared a new strategy under the scope of which the industrial plan has been
prepared, aimed at re-launching the Group’s business in the various sectors, in view of a
careful analysis of the current market and competition. The industrial plan effectively and fully
implements the actions envisaged within the terms hypothesized and in particular the success
of the interventions aimed at ensuring the strategic repositioning of the Group in engineering
and engineering and procurement and overall repositioning of margins, in compliance with the
terms described by the industrial plan. In order to support this strategy in the future, the
Group has implemented a number of organizational actions to support the changes underway.
The Group could encounter difficulties on several fronts, which may have a negative effect on
the Group’s operations and its economic, financial and equity situation. These are: technical
(e.g. meeting the scheduled delivery dates of new installations); operational (e.g. lower profit
margins, cost increases, difficulty in recruiting and retaining qualified personnel); and financial
(e.g. the inability to obtain the guarantees requested by clients or deliver contracts by the due
date). Maire Tecnimont considers all these risks typical for its businesses, as they express the
very essence of its capacity to work; over time, the Group has adopted operating procedures
aimed at highlighting, and therefore minimizing said risks. Indeed, the Group regularly
monitors and checks its work flows, as well as its ability to execute the new projects for which
it has submitted bids, both in terms of the availability of the suitable professionals and the
technical and financial risks.
60
RISKS
RELATED TO INVESTMENT PERFORMANCE IN THE AREAS IN WHICH THE
GROUP
OPERATES AND THE FINANCIAL CRISIS
The markets in which the Group operates are characterized by cyclical trends related mainly
to the performance of the investments, which are influenced in turn: i) economic growth; and
ii) a high number of economic-financial variables (e.g. interest rates or crude oil prices) and
political-social factors (economic policies, public spending, infrastructural allocations). As a
result, a downturn in the economic cycle could have a negative impact on the Group’s
economic, financial and equity situation. The persistence or escalation of the current global
financial crisis could lead to negative consequences on the Group’s economic, equity and
financial position. The geographical diversification and that of business lines will help mitigate
this risk.
RISKS RELATED TO JOINT LIABILITY TO THE CLIENT
The Group companies either execute the orders awarded directly or in association with other
operators by forming, for example, consortia in Italy or joint control agreements abroad.
Generally, in the latter case, each party is jointly liable to the client for the design and
construction of the whole scope of work subject to the applicable legislation in the public
domain or otherwise by contract. In the event a client suffers damage because of the actions
of an associated operator, the Group Company involved could be asked to replace the subject
liable for the damage and pay the full cost of the damage caused to the client, without
affecting the right to recourse in respect of the defaulting associate. Exercising the right of
recourse between associated operators is normally governed between partners through
appropriate contractual arrangements (usually referred to as cross indemnity agreements).
The Company has a track record of entering agreements and associations with operators with
proven industry experience and whose financial solidity it has duly verified. This approach has
ensured that, at the reporting date, none of the Group companies have ever been replaced in
the obligations of the partner part of the agreement, that has become defaulting against the
client.
RISKS
RELATED TO LIABILITY TO THE CLIENT FOR NON-COMPLIANCE OR DAMAGES
CAUSED BY SUBCONTRACTORS OR SUPPLIERS
In carrying out its business, the Group uses the services of third parties, including
subcontractors to produce, supply and assemble part of the installations constructed and
suppliers of raw materials, semi-finished products, sub-systems, parts and services. The
Group’s ability to comply with its obligations to the client therefore is influenced also by the
ability of both the subcontractors and the suppliers to successfully fulfil their contractual
obligations. In the event those subcontractors and suppliers default, even in part, on their
obligations to the Group, supplying it with products and/or services in breach of the agreed
delivery dates or which fail to meet the quality standards required or are defective, the Group
could incur additional costs due to delays or the need to provide alternative services or supply
equipment or materials at a higher price. In addition, the Group may in turn, be held in
breach of contract by the client. In such an event, the Group could be subject to damage
claims from the client, without affecting its right to seek recourse from the defaulting
subcontractors and suppliers. However, in the event that the Group is not able to pass on to
these subjects the entire compensation through the right of recourse, there could be negative
effects on the Group’s economic, equity and financial position. The system set up by the
Group to evaluate and select the subcontractors, who are assessed not only on price but also
on their technical capabilities and financial structure, calls for these entities to provide
performance bank guarantees. The Group companies are also the beneficiaries of insurance
policies especially designed to cover any particularly negative situations that may arise.
61
RISKS RELATED TO FOREIGN BUSINESS
Given that the Group operates in approximately 30 countries, it is exposed to various risk
factors, including possible restrictions on international trade, market instability, limitations on
foreign investment, infrastructural deficiencies, fluctuations in exchange rates, currency
restrictions and controls, and legislative changes, natural catastrophic events (such as
earthquakes and violent weather events) or other extraordinary negative events (such as, for
example, wars and acts of terrorism, major disruptions in supplies of raw materials or semifinished goods or energy, fire, sabotage or terrorist attacks and kidnapping). The Group is also
exposed to risks inherent in the difficulties related to carrying out its business in regions
located far from the markets and the traditional sources of workforce and materials
procurement and which often may be disadvantaged and unstable in political-social terms
(e.g. the Middle East, Iran, the Russian Federation, Latin America and Nigeria). To mitigate
this risk, the Group always takes out insurance and/or hedges according to the type of
potential risk envisaged to cover any economic consequences that may arise from the
aforementioned instabilities.
RISKS RELATED TO INCORRECT COST ESTIMATES FOR THE EXECUTION OF PROJECTS
Almost all of the Group’s consolidated revenues derive from long-term contracts where the
payment (for the Group) is fixed at the date of participation in the tender or award of any
thereof in particular, concerning lump sum-turn key contracts. With respect to these
contracts, the margins originally estimated by the Group may be reduced as a consequence of
the costs incurred by the Group in the course of implementation of the project. If the policies
and procedures of the Group to identify, monitor and manage the costs incurred by the Group
during the execution of the contracts did not prove to be adequate in relation to the duration
and degree of complexity of these contracts, or at least no longer updated following the
occurrence of unforeseeable events, the Group could be subject to possible adverse effects on
its economic, equity and/or financial situation. However, it is noted that during the
preparation of tenders, the Group carries out a careful analysis of the risks pertaining to each
job paying particular attention to the allocation of specific contingencies to cover contract risks
already identified.
RISKS RELATED TO DELAYED SUPPLIER PAYMENTS
The characteristics of the industry in which the Group operates require careful financial
management, which could cause delayed or missed payments to suppliers. The Group has a
significant level of overdue debt to suppliers. In this regard it should be noted that among the
immediate effects of the deterioration of relations with suppliers there are increases in
borrowing costs for obtaining bank and/or insurance guarantees in relation to recent projects
awarded, the inability and/or difficulty of replacing suppliers, litigation increases, delays in
delivery of projects, increased costs for goods and services, and possible promotion of legal
action by the suppliers themselves. However, the financial plan also provides for a return of
the expired outstanding supplier receivables in order to reach a more organic relationship with
suppliers and mitigate the risks associated with delayed payment on business operations.
62
15.
Financial Risk Management
Following is a breakdown of the main risks to which the Group is exposed in its normal
business operations:
MARKET RISK
The Group operates in an international arena and is exposed to the risk of fluctuations in
interest rates, foreign exchange rates, and the prices of goods. There is also a risk of shifts in
the economic and cash flows implicit in the nature of its businesses, which can only be partly
mitigated through appropriate management policies.
RISK OF VARIATIONS IN PRICES AND CASH FLOWS
The Group’s results are influenced by variations in the price of some raw materials, finished
products and insurance costs. That risk is mitigated through a policy of cautious and timely
procurement. Maire Tecnimont also adopts a strategy designed to minimize transaction risk by
using derivative contracts.
EXCHANGE RATE RISK
The currency of the Group’s consolidated financial statements is the Euro. As mentioned, the
Group operates in diverse world markets and part of its cash flows and payments are
denominated in non-Euro currencies. A significant part of the projects executed are
denominated in or linked to the US dollar. That, combined with a temporal mismatch between
the accrual of costs and revenue denominated in currencies other than the operating currency
and the realization of the associated cash flows, exposes the Group to exchange rate risks
(transaction risk).
Maire Tecnimont’s strategy is aimed at minimizing the exposure to transaction risk through
the use of derivative contracts. The finance department is responsible for planning,
coordinating and managing this activity at Group level by monitoring the correct correlation
between derivative instruments and underlying cash flows and providing an accurate
accounting representation in accordance with international accounting standards.
The Group also holds investments in subsidiaries located in areas outside the European
Monetary Union area, and the changes in equity arising from fluctuations in exchange rates of
the local currency against the euro are recognized temporarily in a reserve in shareholders’
equity called “conversion reserve”.
INTEREST RATE RISK
The risk of fluctuations in interest rates in the Maire Tecnimont Group is essentially linked to
medium/long-term loans negotiated at floating rate. The interest rate risk on the residual
portion of floating rate debt and not covered by derivative instruments, however, is partially
mitigated by the presence of liquidity, especially related to the Joint Operations and with
interest rates indexed to the same parameter as its debt (Euribor). Fluctuations in interest
rates could produce a similar result on cash generated from inventories, but of opposite sign,
compared to those produced on the flows linked to loans.
CREDIT RISK
Credit risk represents the Group’s exposure to potential losses arising from a counterparty’s
failure to fulfil its obligations. Credit risk is associated with the ordinary business of
commercial transactions and is monitored by both the operational and the administration
functions on the basis of formal procedures and periodic reporting. Receivables are written
down individually for significant single positions, which ended up being partially or totally
63
irrecoverable. Collective provisions were set aside for those receivables not subject to
individual write-downs based on historical experience and statistical data.
LIQUIDITY RISK
Liquidity risk represents the risk that, due to the difficulty of securing financial resources or
liquidating market positions, the Company is unable to cover obligations that come due and
might be subject to additional costs to secure the funds it needs. In an extreme case, liquidity
risk would involve potential insolvency that would place the continuity of the business at risk.
Maire Tecnimont Group went through a period of understandable financial stress and tension
especially related to the losses pertaining to certain contracts that are now complete, in the
former Power BU in Latin America. The projects mentioned above have caused a significant
absorption of cash produced by draining liquidity produced within the Group and contributing
to the increase in the financial debt. The increase in financial debt also coincides with the
liquidity crisis in the national and international banking system that generally has resulted in a
decrease in medium-long term loans to companies, an increase in the cost of funding the
banking system and the consequent increase in the cost of borrowing.
Last year on 26 July 2013, Maire Tecnimont S.p.A. announced that following the early
conclusion of the share capital increase, rescheduling agreements have become effective for
Euro 307 million of debt with the main lending banks of the Group and Euro 50 million of new
finance was paid. These agreements provide for the rescheduling of Euro 307 million of the
Group’s indebtedness over five years, with a grace period of two years and the repayment by
half-year instalments from 2015 to 31 December 2017. In addition, our lenders Intesa
Sanpaolo, UniCredit and Monte dei Paschi di Siena have provided new financing in an
aggregate amount of Euro 50 million under the same conditions. Finally the certain facilities in
an aggregate amount of Euro 245 million have been confirmed by all the banks, as well as
guarantees for Euro 765 million in order to support the business.
On 20 February 2014 Maire Tecnimont S.p.A. successfully completed the placement of a socalled equity-linked bond with a duration of 5 years, for a total nominal amount of Euro 80
million. The initial Bond conversion price has been established as Euro 2.1898, which
constitutes a premium of 35% over the weighted average price of the Company’s ordinary
shares as recorded on the MTA, between the time of launch and transaction pricing. The
Bonds were issued at par, for a unit nominal value of Euro 100,000; they have a term of 5
years and a fixed annual coupon of 5.75%, payable six-monthly in arrears. If not previously
February 2019.
The listing enabled the Company to obtain a more extensive diversification of the financial
resources and optimization of the Company’s financial structure through the collection of
funds on the capital market.
The Maire Tecnimont Board of Directors met on 16 July 2014 and approved the issue of an
unsecured guaranteed 5-year bond for a total minimum amount of Euro 300 million. The
On 18 February 2015 the Group revised the economic forecasts for the year (Budget 2015)
and also updated the Group Business Plan; in this context, the intention was confirmed to
64
issue an unsecured guaranteed bond for a minimum of 5 years to a maximum of 7 years for a
reduced total minimum amount of Euro 100 million, in consideration of the extraordinary
proceeds expected from the transactions in the early months of 2015 related to the positive
closing of the Enel/Endesa dispute and the agreement for the sale of the investment in
Biolevano.
RISKS
RELATED TO COMPLIANCE WITH THE FINANCIAL PARAMETERS SET OUT IN
FINANCING CONTRACTS
This risk relates to the possibility that loan agreements contain provisions giving the lending
banks the right to claim immediate repayment of principal from the borrower should certain
events occur, thereby generating liquidity risk.
On 26 July 2013, following the early termination of the share capital increase, rescheduling
agreements have become effective for Euro 307 million of debt with the main lending banks of
the Group and Euro 50 million of new finance was paid.
The loans are secured by covenants in line with the standards for this type of operation, of
which the first measurement will take place in 2015 with reference to the figures at 31
December 2014. More specifically, these financial parameters provide for the maintenance of
a certain level of shareholders’ equity, liquid funds and gross financial position, as well as
keeping a certain ratio of net financial position to shareholders’ equity. Reference is made to
as included in the notes to the financial statements, for the results of the measurement of the
above parameters at year-end 2014.
In the first part of April, collections are expected related to the transaction for the Bocamina
project and the sale of the Biolevano plant and the attainment of a loan by Stamicarbon,
whose term sheet is already duly signed, as a step preparatory to the subsequent valorization
of a minority share of the same, through a market transaction for financial investors.
The combination of the transactions described above allows concluding an overall refinancing
transaction of existing bank debt, whose course of approval by the lenders is however being
finalized, with a significant reduction of medium to long term bank debt, as well as a
significant improvement of the terms and conditions of the remaining debt.
The conclusion of this transaction, as commented above, also allows overcoming the
covenants in the loan agreements at year-end 2014.
RISKS
RELATED TO THE
GROUP’S
ABILITY TO OBTAIN AND MAINTAIN GUARANTEED
CREDIT LINES AND BANK GUARANTEES
In the normal course of its activities and, in particular, to be able to participate in bidding,
enter into contracts with clients or receive from these advances and payments during the
execution of the project, the Group companies are required to issue bank and/or insurance
guarantees in favour of the client.
The Group’s ability to obtain such guarantees from banks and/or insurance companies
depends on the assessment of the Group’s economic, equity and financial position and, in
particular, the Group companies involved, the project risk analysis, experience and the
competitive positioning of the Group companies involved in the sector. The situation of
financial stress that the Group faced has determined an increase in costs related to obtaining
such warranties or, in certain cases, increasing difficulties in their issuance.
In the broadest renegotiations that the Group is finalizing with the syndicate of relation banks
regarding the terms and conditions of the new loan agreement, the existing credit lines were
confirmed.
65
16.
Legal Matters and Disputes
Prior to outlining the main disputes, we point out that the Directors have set aside adequate
provisions to the risk reserves. The proceedings for which the sum in dispute is potentially
Euro 5 million or more are outlined below.
CIVIL, ADMINISTRATIVE AND ARBITRATION PROCEEDINGS
J&P Avax S.A.: this is an arbitration proceeding initiated by Tecnimont in August 2002
against the company J&P Avax S.A. (“J&P”), for damages resulting from the late execution of
subcontracting entrusted to J&P as part of the implementation by Tecnimont of a plant for the
production of polypropylene in Thessaloniki, Greece, commissioned by the Greek developer
Helpe. The value of the Tecnimont arbitration claim is Euro 17.4 million, while J&P has filed a
counterclaim for Euro 28.5 million. In December 2007 the Arbitration Board issued a
preliminary award attributing 75% responsibility for the four-month delay in the execution of
works to J&P and 25% to Tecnimont. On 28 December 2008, J&P appealed the preliminary
award before the Court of Appeal in Paris, which, in its judgment of 12 February 2009,
annulled the award on the basis of an alleged lack of independence and impartiality of the
Chairman of the Arbitration Board. Tecnimont subsequently appealed against that decision
before the Court of Cassation in Paris, which, on 4 November 2010, ruled in favour of
Tecnimont, repealing the appeal decision. The Arbitration Board therefore decided to resume
the arbitration proceedings, but J&P appealed the partial award to the Court of Appeal of
Reims, which, on 2 November 2011, annulled the partial award again for alleged irregular
constitution of the Arbitration Board. Tecnimont therefore decided to submit a new appeal to
the French Court of Cassation which again overturned the appeals sentence postponing the
issue to said session. Currently, the arbitration procedure is still suspended pending the
decision of the Court of Appeal which is not expected before the end of 2015.
Mainka: in December 2010, Tecnimont was notified by the Court of Arbitration that an
arbitration proceeding had been brought against it by Mainka, a German construction
company engaged for the Münchsmünster project. The subcontract, signed in August 2007, is
for the construction of civil works of the polyethylene production plant in Münchsmünster,
Germany. The request by Mainka relates to the recognition of alleged higher costs incurred in
carrying out works for an amount of approximately Euro 16.7 million. Tecnimont has
submitted a formal response to the request for arbitration, rejecting all requests by Mainka
and submitting a counterclaim for Euro 7.9 million. According to the Terms of Reference, filed
in September 2011, the arbitration panel was called upon to decide in the first instance, on
the preliminary issue concerning the applicability of German law which considers invalid the
clauses contained in forms and questionnaires. On this basis, Mainka has sustained the nullity
of the provision relating to liquidated damages and the performance bond. In parallel
Tecnimont began proceedings through the German courts for execution of the performance
bond through two actions: i) in respect of Mainka, at the court of Ingolstadt with subsequent
appeal to the Munich court of appeal that had a positive outcome for Tecnimont (for reasons
of territorial incompetence); ii) in respect of the insurance company at the court of
Wiesbaden. On 5 December 2011, the hearing was held before the ICC for the partial award
and it was decided to postpone any receipt of the performance bond until the end of the
arbitration proceeding. It was also decided to continue the proceeding on the point of
termination. The parties’ depositions were filed between February and April of 2012 and in
early May 2012 an ICC hearing was held on the Termination. The arbitration panel, without
issuing a formal pronouncement on the issue of Termination, then began assessing the claim
by Mainka and counterclaim by Tecnimont. The parties submitted new depositions on the
claim and counter claim between August and December 2012. In January 2013 a hearing was
held on the “final invoice” where it was decided to resubmit to the arbitrators, a shared list of
outstanding issues with the indication of whether the arguments that the Court will submit to
the expert appointed by the same are strictly of legal or technical nature. In May 2014, a
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hearing was held in which the Court set new dates for the additional pleadings and an
additional hearing held in July 2014. During this hearing, the Chairman of the Arbitration
Board suggested the occurrence of a potential conflict of independence and impartiality. The
parties have therefore expressly requested the replacement of the Chairman and the ICC
accepted this request. In the fall of 2014, a new Chairman was appointed and in February
2015, there was a hearing during which the role of facilitator was assigned, in a first phase, to
an expert appointed by the Court. This phase will be developed with a maximum of three
meetings between the parties, mainly technical in the absence of the Court, to be completed
by 31 May 2015. Once this phase is completed and the parties have not reached a settlement
agreement and once the expert report is issued in September or November 2015, the final
hearing will be held. After the final hearing the Court, approximately at the beginning of 2016,
will issue the arbitration award
Juruena: in May 2009, Maire Sapezal Ltda (now Tecnimont Sapezal, a subsidiary of Maire
Engineering do Brasil, now Tecnimont do Brazil Ltda) cancelled the contract with the client
company Juruena for the construction of five hydroelectric power stations in the region of
Mato Grosso. The termination of the contract was the result of serious economic and financial
conditions that have arisen in the course of the project, caused by some events beyond the
responsibility of Tecnimont Sapezal that have influenced time and costs including: a
suspension of over one-year due to non-renewal of environmental licenses by the client, a
work suspension order issued by the local judiciary, errors in the basic design by the client,
destruction and fires on construction sites caused by indigenous peoples, flooding of sites due
to exceptional rainfall and missed payments of invoices issued and approved by the client.
Following the termination of the contract, Maire Sapezal blocked legal action by the other
party at the Court of Cuiabá (Mato Grosso) in stark contrast to the arbitration clause and the
attempt of enforcement of the performance insurance guarantee and completed regular
transfer operations of the site. Maire Sapezal therefore filed an application for international
arbitration (ICC) to obtain payment of approximately Real 115 million for: i) non-adjustment
of the contractual price following delays caused by failure on the part of Juruena to renew
environmental licenses; ii) non-adjustment of the contractual price following additional costs
due to errors by Juruena in the basic design; iii) non-compliance with the obligations signed
by the parties in the Operational Agreement to restore the balance of the price on an open
book basis; iv) liability of Juruena with regards to incursions of the local populations that
destroyed the sites and failure to recognize the damages caused to Tecnimont; v) failure to
pay approved invoices in exchange for services provided by Tecnimont; vi) unlawful recourse
to the Court of Mato Grosso in breach of the arbitration clause in the contract; and vii) breach
of the principle of good faith. The client responded by filing an arbitration petition for Real 346
million. The arbitration tribunal was established and during the ICC proceedings, pleadings
and technical, economic and market reports were filed by the parties and written testimony
was collected. On 9 June 2013, the Group received from its Brazilian lawyers a copy of the
arbitration award (partial), subsequently amended on 17 October 2013, not immediately
enforceable, which contained the following: i) liability for termination of the contract was
considered to be borne by both parties; ii) the award shall determine all issues of Tecnimont
do Brasil Ltda recognizing them for about Real 44 million iii) the award shall determine all
issues of Juruena recognizing them for about Real 37 million. Fees of the proceedings will be
decided with the final award. The ICC procedure now involves a second phase relating to the
costs for redoing the works requested by Juruena. The final award is expected in spring 2015.
Tecnimont/TCM FR (formerly Sofregaz) – STMFC (Société du Terminal Méthanier de
Fos Cavaou): the contract concerns the construction of a regasification terminal and it was
signed in September 2004 between the client STMFC - Société du Terminal Méthanier de Fos
Cavaou (70% Gaz de France, 30% Total) subsequently awarded to Fosmax LNG - and STS
(société en participation) formed by: 1% Sofregaz, 49% Tecnimont, 50% Saipem France
(hereinafter “STS”). During the implementation of the contract there have been agreed some
contractual changes that have increased the value of the contract and extended the date for
the acceptance of the plant to 15 September 2008. On 21 January 2010, FOSMAX declared
STS in default for the completion of the work. On 19 February 2010, the client notified STS its
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intention to perform directly “mise en régie” of certain processes. On 22 March 2010, Fosmax
has requested the execution of the bank guarantees provided by STS for an amount of Euro
36,247,721, 50% of which was paid directly by Tecnimont. On 31 March 2010, the plant was
accepted with reservations by the client comprising a series of “punch list” closing activities
attributable to the consortium and a series of activities managed directly by the client as
“mise en règie”. Finally, the client also requested the application of the liquidated damages for
a total amount of approximately Euro 48,000,000. On 11 July 2011 a “Protocole de Médiation”
was signed between the parties for a mediation attempt at the International Chamber of
Commerce in Paris, expiring on 31 December 2011, which did not have a positive outcome.
On 17 January 2012 Fosmax filed a request for arbitration at the ICC advancing a claim to the
Court of Arbitration for Euro 263,830,440. Subsequently, on 19 October 2012, Fosmax
presented its detailed pleading to the court requesting the recognition of Euro 247,311,993.
On 28 January 2013, STS presented its defence completely opposing the claim and
formulating its counterclaim estimated, first and foremost, at Euro 327,848,339 and based,
among other things, on the right that STS expects to obtain extension of the delivery terms of
the plant and the recognition of the higher costs incurred and compensation for damages. The
reply of FOSMAX was issued 22 May 2013, while that of STS was issued 24 July 2013. The
investigative hearings were held from 18 to 21 November 2013 and the final hearing for
discussion (“plaidoiries”) was held 1 April 2014. The award ruling was held on 13 February
2015 by which it was decided that STS shall compensate Fosmax for penalty charges for the
delay; by way of costs related to accidents and disorder and illicit acts on the construction site
and as a residual amount realized by Fosmax; instead, Fosmax shall compensate STS for the
increase of the contract value, the repayment of bank guarantees and additional costs; plus
interest as provided in the Judgement.
Endesa Chile: as part of the EPC contract for the construction of the Bocamina II power
plant, in Chile, signed between the chilean client Endesa Chile (Enel Group) (the “Client”) and
the business grouping formed by Tecnimont Group companies and companies in the SES
slovak group (the “Consortium”). In November 2011, the Consortium requested an 11.5
month extension of the contractual delivery deadline and a higher price of USD 136 million on
the basis of proven force majeure (riots by the civilian population against the plant as well as
the high magnitude earthquakes in the region in February 2010 and February 2011). In
response to this request, on 4 June 2012 Endesa Chile agreed to sign a partially agreement,
recognizing an extension of the delivery deadline of at least 77 days and a price at least USD
22 million higher. The plant was successfully completed on 12 October 2012, the Consortium
thus announced that it had reached the requirements for a provisional acceptance of the plant
(so-called PAC). In this situation, without any notice and completely unexpectedly, on 16
October 2012 Endesa Chile unilaterally initiated enforcement execution of all bank guarantees
in place to ensure completion of the work, claiming that the Consortium was responsible for
the delay. The amount for which Endesa Chile requested enforcement only in respect of
Tecnimont was approximately USD 94 million. Tecnimont S.p.A. challenges any liability of the
Consortium and considers absolutely unlawful and rather fraudulent the proceeding started by
Endesa Chile since the delays in the work completion are definitely not attributable to the
Consortium and in addition the work has been completed despite the very critical events of
force majeure that occurred over time. The Bocamina II plant has been in commercial
operation since October 2012. The Consortium announced on 7 December 2012 defeasance of
the contract following forced expulsion from the Bocamina II plant as of 26 October 2012. In
turn, Endesa announced termination of the contract on 4 January 2013. On 17 October 2012,
Endesa filed Application for Arbitration. On 15 January 2013, the consortium presented its
defence in the ICC arbitration started by Endesa, formulating a counter-claim for damages. On
14 June 2013, the “Terms of Reference” was filed. On 2 July, the first two proceeding orders
were issued clarifying the aspects of the procedure to be followed and set the timetable for
the exchange of pleadings and hearings. The Consortium and Endesa simultaneously filed
their respective first briefs in December 2013. On 2 May 2014, the reciprocal claims against
the briefs were filed. At the end of December 2014, the parties initiated negotiations to
resolve the dispute; subsequently, a few days after the filing of the reply, on January 2015,
the parties signed a settlement agreement under which Endesa will pay the parties of the
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Consortium a total amount of USD 140 million including VAT within April 2015. With regard to
such payment and related to the Bocamina II project, no additional compensation shall be due
between the parties.
Mapfre Compania de Seguros Generales de Chile S.A.: this is an ICC arbitration
proceeding against the Chilean insurance company Mapfre to obtain insurance reimbursement
for damages to the Bocamina II plant as a result of the earthquake on 27 February 2010. The
amount of compensation requested in the arbitration was USD 76.9 million. Mapfre responded
to the request for arbitration by filing delaying objections by means of its own defence
deposition filed on 10 December 2012. On pending litigation the insurance company paid USD
15.7 million. The additional request to Mapfre is as follows: Tecnimont Chile USD 51.9 million,
(ii) Tecnimont S.p.A. USD 4.9 million (net of a deductible of 5%). A conciliation attempt by
the arbitrator is underway. If an agreement will not be found, the judgment would be
expected to finish by the first half of 2015.
Kesh: Maire Engineering S.p.A. (now Tecnimont S.p.A.) signed an EPC contract in February
2007 for the construction of a power plant located in Vlore, Albania, with the client Kesh Dh.
Albanian Power Corporation, an albanian public law company. The initial value of the contract
“lump sum” was Euro 92 million, which was then increased by a further Euro 4.1 million. Since
the beginning of the project, Tecnimont has faced considerable difficulties that have adversely
affected the timely performance of the work resulting in additional costs and damages. Initial
difficulties were mainly due to the fact that the tender for the award of the contract took place
in a period when the market conditions were very different from those that Tecnimont faced
two years following the award of the contract. Apart from the increase of the contract value
for Euro 4.1 million, Kesh without any reason has never acknowledged either a further
adjustment of the contract value or an extension of the deadline for the completion of the
work. In addition, apart from the deterioration of market conditions, there have been other
events that have contributed to the increase of the costs incurred by Tecnimont and the delay
in the completion of the work including among others: repeated storms, requests to perform
temporary rather than permanent repairs. In 2009, Tecnimont presented an Interim Report
for review of the date of the Operational Acceptance and in the event that such request had
not been accepted, the payment of additional costs incurred in an attempt to speed up
activities in order to reduce the delay, meaning that Kesh would not have otherwise been
entitled to demand payment of penalties for delay. In July 2009, change proposals were then
submitted to Kesh. Despite all this, Kesh in September 2011 made a request to Tecnimont for
the payment of penalties of Euro 9.2 million. In November 2011 Tecnimont sent a Supplement
report on the events that occurred between February 2009 and October 2011 that would have
entitled the same to request an extension of the completion dates compared to those already
required by the Interim Report and additional claims for reimbursement of damages and
costs. In particular, it was requested the recognition of aapproximately Euro 56 million and
approximately USD 22.5 million. The Operational Acceptance Certificate was then issued in
November 2011 but with retroactive effect in late October 2011. Apart from the unjustified
delay in the issuance of the certificate, Kesh has not released the remaining 5% of the
contract price, of Euro 4.7 million, and has not reduced the amount of the Performance Bond
from 10 to 5% of the contract value. In addition, Kesh has not extended beyond 31 December
2011, the duration of the letter of credit set as security for its payment obligations, therefore
not meeting its contractual and legal obligations. As a direct result of this, Tecnimont sent to
Kesh the first Notice of Termination in April 2012, followed by a second Notice in May and a
third one in September 2012. Regardless of these circumstances, Kesh has subsequently
threatened to enforce the full amount of the Performance Bond of Euro 9.6 million. In January
2012 and thus after obtaining the Operational Acceptance and after the transfer of the plant
under the responsibility of custody by Kesh, a storm struck the plant damaging the pipe outlet
in the sea. Tecnimont believes that the damage that occurred to the pipe is entirely due to
events outside its responsibility, such as the mismanagement of the plant by Kesh staff. To
prevent the enforcement of the full amount of the Performance Bond of Euro 9.6 million
requested by Kesh in September 2012, Tecnimont demanded and obtained from the Court of
Milan a precautionary measure, the outcome of which being that the enforcement of half of
the Performance Bond was recognized as illegitimate; the bank issuing the guarantee
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therefore paid to Kesh only half of the Performance Bond. In October 2012, Tecnimont then
filed a request for arbitration at the ICC against Kesh to obtain payment of the remaining 5%
of the contract value, the return of half of the Performance Bond that had been enforced, and
Euro 51 million plus USD 22 million of additional costs for damages suffered, as well as a
declaration of non-liability for penalties due to delay. In addition, Tecnimont requested that
the EPC contract was deemed terminated for default by Kesh, reserving the right to submit
requests for additional compensation in the same proceeding arbitration. On 4 January 2013
Kesh presented a succinct reply requesting that the matter be preliminarily remitted prior to
the evaluation of an adjudicator. This assuming that the EPC contract includes this preliminary
step before the matter is dealt with by the arbitration panel. The ICC gave the parties the
opportunity to reach an agreement to discontinue arbitration and put it under the evaluation
of the adjudicator. The contract also foresees that the part which is not satisfied by the
adjudicator evaluation can still initiate the arbitration. In February 2014, Tecnimont therefore
filed a first application for the adjudicator in relation to the failure by Kesh to fulfil its
obligations in connection to the reduction of the Performance Bond, whilst the preparation of a
second application for the adjudicator in connection with the requests submitted during the
previous ICC arbitration is currently underway. On 2 April 2014, the adjudicator’s decision on
the first request was positive for Tecnimont and on 28 April 2014, Kesh communicated its
intention to challenge this decision in arbitration based on the contract. The adjudicator’s
decision will be therefore subject to an ICC arbitration that has initiated in June 2014. At the
same time, on 18 February 2014, Tecnimont was summoned to the court in Albania, in
proceedings initiated in October 2012 by Kesh against Intesa Sanpaolo Bank Albania for the
payment of Performance Bond residual amount of Euro 4,830,000 which was prevented by the
Court of Milan. The first instance ended with the rejection of requests of Kesh that has
challenged this decision within the following thirty days.
TCM FR (formerly Sofregaz) – NGSC/Iranian Bank of Mines and Industry: on 16
January 2014, Sofregaz (now TCM FR) submitted a request for arbitration to the International
Arbitration Court of the ICC against the client NGSC (Natural Gas Storage Company) to obtain
the rejection of various compensation claims previously made by NGSC, the payment of the
overdue amount of Euro 1,286,339.06 plus interest and withdrawal of the request for
payment (or, if payment should already have been made, the reimbursement of the relevant
amount) of the Performance Bond concerned by the above-mentioned proceedings in France,
and on 27 January it appointed an arbitrator.
The arbitration is suspended for reasons related to embargo restrictions because the
defendant is a Company established under Iranian law.
Immobiliare Novoli: on 7 July 2007, in relation to the construction of the real estate
complex at Novoli (Florence), Tecnimont requested to the client Immobiliare Novoli (real
estate) the payment of the balance of the work performed, in addition the compensation for
damages and additional costs incurred during work, for a total of more than Euro 30 million.
Immobiliare Novoli formulated in turn a claim for damages of approximately Euro 52.7 million.
On 27 February 2012, the arbitration award issued granted to Tecnimont the right to be paid
by Euro 10.4 million plus interest, for a total of Euro 16.1 million. In papers served on 18 June
2012, Immobiliare Novoli challenged the award in front of the Court of Appeal in Florence. On
15 July 2014, the Sentence was issued by the same Court that essentially declared the partial
invalidity of the arbitration award which condemned Immobiliare Novoli to pay Euro
6,441,248.24. Actually , Tecnimont mandated its attorney in order to appeal to the Supreme
Court the revocation of the Sentence and alternatively, the appeal for cassation of the same
sentence. Immobiliare Novoli has already paid to Tecnimont in overall the amount of Euro
5,274,064.61.
Comune di Venezia – Manifattura Tabacchi: by a writ of summons on 5 June 2010, the
City of Venice sued the Associazione Temporanea di Imprese (“ATI”, Temporary Association of
Companies) composed of Tecnimont (mandate at 59%), Progin and others, as planner of the
new law courts in Venice (former Manifattura Tabacchi, Tobacco Factory), asking that ATI be
obliged to pay damages to the City of Venice claimed to have incurred for alleged
shortcomings and alleged omissions in the working drawing and specifications (involving in
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particular, the lack of chemical analysis of the soil, errors/omissions in the project, buildings
and plant, and omitted archaeological surveys). The value of damages claimed is Euro 16.9
million. Before the court ATI strongly disputed the matters alleged by the City of Venice.
Actually, as a result of the observations made by the parties on the final expert report
submitted on 30 August 2014, the Judge has ordered the expert witness to respond within the
first half of 2015.
UNITER Consorzio Stabile a r.l. in liquidation: this is a dispute that arose with an
application for arbitration on 19 August 2013 made by Uniter Consorzio Stabile a r.l. in
liquidation against Tecnimont, in order to obtain compensation for damages it allegedly
suffered following the renunciation by the agent Tecnimont, for and on behalf of the
temporary grouping of businesses Tecnimont - Consorzio Stabile Uniter, of the award of the
tender awarded to General Contractor called by Anas S.p.A. in 2007 to modernize a segment
of the A3 Salerno - Reggio Calabria motorway (Macro lot 3, part 2). The claim was initially
quantified as approximately Euro 150 million. Tecnimont filed an appearance first and
foremost claiming lack of capacity to be sued, following the partial spin-off of Tecnimont
completed on 31 March 2011, by virtue of which it assigned the Business Unit concerning civil
infrastructures and works to a different company of the Group, and this conferral also included
the contracts concerned by the dispute. Subordinately, with respect to the declared lack of
capacity to be sued, Tecnimont radically disputed the legitimacy and grounds of the claims
made by Uniter, noting that not only were they lacking in grounds but, by contrast, it was
Tecnimont that had suffered damages due to the severe breach for which Uniter was liable
with respect to the commitments and obligations made between the parties. Moreover, in
Uniter’s filing of the brief specifying the requests, five acts of intervention were filed in the
interests of ing. Beomonte, Arch. Vermiglio, Avv. Lenoci, Avv. Sgobba and Cilento Ingegneria
S.r.l. Tecnimont asked the Arbitration Panel to declare the inadmissibility and/or impossibility
to proceed with the interventions brought by the third parties specified above. The Panel
established its proper constitution and set the terms for the conduct of the entire arbitration
proceeding. The parties have filed their own briefs and preliminary motions. At the hearing on
7 May 2014, the Panel considered the need for some analyses before making a decision, both
regarding prejudicial and preliminary exceptions and the preliminary motions. To this end, the
Panel assigned terms on 9 June and 23 June 2014 for an exchange of briefs on specific issues.
In addition, the Panel requested the drafting of the ‘‘economic offer submitted”. The parties
drafted the defensive briefs and the economic offer submitted in the tender. By order dated
22 October 2014, the Arbitration Panel set the discussion of the case and statement of
conclusions for 21 November 2014. At the meeting of the arbitration panel held 21 November
2014, the parties stated their conclusions and the Panel was reserved.
With the Award of 09.02.15, the Arbitration Panel dismissed the claims for damages by Uniter
against Tecnimont and due to the effect ousted from the judgement the participants
Eng. Beomonte, Arch. Vermiglio and Cilento Ingegneria S.r.l.
The Panel also rejected the counter-claim filed by Tecnimont and ordered the compensation of
court fees between the parties.
CRIMINAL PROCEEDINGS
Tecnimont S.p.A. and KT – Kinetics Technology S.p.A.: on 21 June 2011, the Public
Prosecutor of Milan served at the premises of Tecnimont and KT - Kinetics Technology: (i) two
warrants to search the offices of two (then) Tecnimont and KT - Kinetics Technology
executives and (ii) at the same time notices of investigation to the same and to Tecnimont
and KT - Kinetics Technology, for alleged illegal activities pursuant to article 25, paragraphs 2
and 3, of Legislative Decree no. n. 231/2001. The investigations are at a preliminary stage
and are subject to investigation confidentiality. The executives subject to the search were
immediately suspended from their respective positions and, subsequently, both executives
resigned. With reference to these proceedings a board of criminal lawyers was appointed to
represent the two companies involved, protecting their interests.
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TAX LITIGATION
Tax litigation of the Maire Tecnimont Group relates to current tax proceedings in the ordinary
course of business activities by the companies of our Group. In the face of such litigation, the
Directors have created provisions in the financial statements which are considered
appropriate. The following is a summary of the main cases at 31 December 2014, based on
information currently available.
TECNIMONT S.P.A.: audits for FYs 2006, 2007, 2008
On 24 March 2011, upon conclusion of a tax audit by the Financial Police, for IRES, IRAP and
VAT, an Official Report of Findings was drawn up for the years 2006, 2007, 2008 and 2009
(“PVC2011”). The findings contained in PVC2011 subject of current dispute concern: the costs
for intra-group services, the loss on the FOS contract.
The first point concerns the costs of intra-group services for the tax years 2006, 2007, 2008
and 2009, in particular the costs charged to Tecnimont by the parent company, considered by
the inspectors as not deductible for IRES and IRAP.
The second point stems from the transfer to Tecnimont, involving assignment to its
permanent establishment located in France, of the subjective positions belonging to its
subsidiary Sofregaz and arising from a contract (“FOS Contract”) and an agreement under
French law (SEP Agreement) established for the management of the FOS Contract.
In relation to said findings, the Revenue Agency has notified the Company:
•
assessment notice for the year 2006 concerning the IRAP and VAT treatment of the
cost for the intra-group services that were the object of the first PVC2011, subjecting
the whole amount of deduced costs (Euro 5,109 thousand) to IRAP taxation while
observing the alleged non-deductibility of the VAT applied to expenses for intra-group
services (for Euro 1.021 thousand), and imposing sanctions for Euro 2,470 thousand.
With separate further notice, the presumed non-deductibility of expenses was
assessed (Euro 5,116 thousand including other minor amounts) also for the purposes
of IRES, with penalties of Euro 2,195 thousand applied;
•
assessment notice for the year 2007 concerning the treatment for IRAP and VAT
purposes of costs for intra-group services and the FOS loss as covered under the first
two points of the PVC2011 (Euro 12,346 thousand and Euro 17,354 thousand
respectively), subjecting to IRAP the full amount of the costs deducted and noting the
presumed non deductibility of VAT applied to the costs of intra-group services for
Euro 2,469 thousand, and by applying penalties relating to IRAP and VAT for a total
of Euro 8,387 thousand. With separate further notice, the presumed non-deductibility
of expenses was assessed (Euro 12,346 thousand and Euro 17,354 thousand) also for
the purpose of IRES, with sanctions for Euro 16,470 thousand applied. The latter was
also notified to Maire Tecnimont S.p.A. as the consolidating parent entity for IRES.
Tecnimont S.p.A. (and Maire Tecnimont S.p.A., as IRES consolidating party, have submitted
an appeal against all these notices of assessment (pending discussion before the Provincial
Tax Commission of Milan).
It is also noted that the Company has met the Revenue Agency - Regional Directorate of the
Lombardy Office, to evaluate the possibility of conciliation. Following the positive evaluation
on the existence of such a possibility, the parties submitted a request to defer discussion of
the petition to the Milan expert witnesses; the court looked upon the petition favourably and
deferred discussion of the appeals to new role.
On 29 July 2013, at the conclusion of a tax audit by the Revenue Agency - Regional
Directorate of the Lombardy Office, a Formal Notice of Assessment (PVC2013) was drawn up
for the years 2008 (extended to 2009, 2010, 2011 for a limited number of cases). The
findings presented by the auditors regard the deductibility of losses relating to certain orders,
mainly the FOS Contract, costs considered as not pertinent and/or not related, costs relating
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to staff, and other of minor amount.
In relation to said findings, the Revenue Agency notified the Company in December 2014:
• assessment notice for the year 2008, disregarding expenses totalling Euro 34,528
thousand for IRES (also relevant for IRAP for 31,664), imposing penalties for a total
of Euro 10,543 thousand;
•
assessment notice for the year 2009, disregarding expenses totalling Euro 8,061
thousand for IRES and IRAP, imposing penalties for a total of Euro 2,536 thousand;
On 9 February 2015, the Company (together with Maire Tecnimont S.p.A., as IRES
consolidating company) proposed request for assessment with adhesion pursuant to
Legislative Decree 218/1997: it is noted that the meetings with the Revenue Agency Regional Revenue Directorate of Lombardy, are ongoing.
The Company, with the support of a major law and tax firm, has analysed the main findings of
the PVC 2013 and subsequent assessments received, considering that it does not agree with
these findings and that the work of the Company is supported by valid defence arguments.
Moreover, it is considered that the maximum aggregated liability emerging from said findings
and the charges of PVC 2011 and PVC 2013 is covered by the provision for risks and charges
allocated by the Company.
TECNIMONT S.P.A.: Notice of assessment related to IRPEG - IRAP - VAT and
withholding taxes for the year 2003
With notice of assessment IRPEG - IRAP - VAT and withholdings for the year 2003, notified to
Maire Engineering (merged with Tecnimont S.p.A.), the Revenue Agency has assessed higher
IRPEG (Corporate Income Tax) of Euro 4,656 thousand, additional IRAP of Euro 577 thousand,
additional VAT of Euro 3,129 thousand, higher withholding tax of Euro 10 thousand, additional
regional tax of Euro 700 and imposed a fine totalling Euro 6,988 thousand. The judgement of
the Provincial Tax Commission of Turin (almost entirely favourable to the Company) was
modified by the judges of the Regional Commission, who allowed the appeal of the Revenue
Agency (judgement dated 19 November 2008). Among the points cancelled by the Provincial
Tax Commission, but then confirmed by the Regional Tax Commission of Turin, attention is
drawn to point number 2 (IRPEG), relating to the windfall gain of Euro 12,022 thousand
deriving from the issuance of the UNCITRAL arbitration award. An appeal challenging the
judgement of the Regional Tax Commission of Turin has been filed before the Supreme Court
(to date a hearing date has not been set).
The Company paid to the tax authorities Euro 12,130 thousand provisionally equal to the
amount due following the negative outcome in the Tax Commissions responsible for the case.
It is also pointed out that on 24 November 2009 an appeal was presented to the Revenue
Agency of Turin for the refund of taxes already paid in 2005 as a result of the earnings of the
Quetta Fund (Euro 2,329 thousand, plus interest). The Company reserves the right to initiate
an appeal before the Tax Commission.
INGENIERIA Y CONSTRUCCION TECNIMONT CHILE Y COMPANIA LIMITADA: tax
assessment (FY 2009)
It should be noted that in May 2013 of the current year Ingenieria y Construccion Tecnimont
Chile y Compania Limitada (“Tecnimont Chile”) has been served notification by the Chilean tax
authorities of assessments and allegations of a fiscal nature. In particular, the tax authorities
have challenged the determination of the taxable profit at 31 December 2011 refusing to
recognize the cumulative tax losses at that date (approximately Chilean pesos 71.9 billion),
restating the taxable income and demanding tax for about Chilean pesos 4.9 billion.
Tecnimont Chile acted promptly to request the annulment of the notification considered
unlawful and unfounded, providing new and extensive documentation not previously taken
into consideration by the tax authorities.
On the basis of this documentation, on 8 August 2013, the Chilean financial administration
partially cancelled the deed, acknowledging the validity of part of the tax losses and almost
entirely cancelled all claims for payment made by way of greater tax and interest, previously
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notified to the Company. Tecnimont Chile has in any case submitted a legal petition to have
the deed cancelled in full.
TWS SA: tax assessment (years 2004-2009)
It should be noted that in December 2014, the Revenue Agency - Provincial Directorate Milan
I - notified the Swiss Company TWS SA separate assessments challenging the tax residence in
Italy of the Company for the tax years 2004 to 2009. The taxes assessed were Euro 3,198
thousand (issuing penalties totalling Euro 3,838 thousand).
The company, backed by a leading legal and tax firm, performed an analysis of the
assessments received; as the company deemed the assessments illegitimate/disagreed and
that the risk of an unfavourable outcome is remote, on 6 February 2015, it challenged all of
the above acts before the Provincial Tax Commission.
KT – KINETICS TECHNOLOGY: Tax audit in Croatia (FY 2009)
On 24 October 2012, following a tax assessment by the local financial administration at the
Company’s permanent establishment in Croatia in relation to FY 2009, a report was issued
which requested additional direct taxes for Euro 235 thousand and additional VAT for Euro 170
thousand plus interest and penalties of Euro 200 thousand (a total of Euro 605 thousand). In
January 2013, KT challenged the claims before the competent authority. The Company,
supported by the opinion of a leading international law firm, believes the request is totally
illegitimate and unfounded.
74
17. Report on Corporate Governance and Ownership
Structure
In compliance with the regulatory obligations provided by article 123-bis of the Italian
Consolidated Finance Act, every year the Company prepares the “Report on Corporate
Governance and Ownership Structure”, containing a general description of the corporate
governance system adopted by the Group and reporting information on ownership structure,
including the main governance practices implemented and the characteristics of the internal
control and risk management system relating to the financial information process.
The Report is
“Governance”.
18.
available
on
the
Company’s
website
www.mairetecnimont.it.
under
Treasury Shares and Parent Company Shares
The Group companies do not own, either directly or indirectly, any treasury shares or shares
in the parent companies. Further, none of the Group companies have purchased or sold
directly or indirectly any treasury shares or parent company shares during the year.
75
19.
Going Concern
The Group has achieved a positive result for the year ended 2014 of Euro 50.6 million (Euro
17.3 million for the year ended 31 December 2013), and as at 31 December 2014 the
consolidated shareholders’ equity amounts to Euro 93.7 million (Euro 35.2 million as at 31
December 2013). At the same date, gross financial debt amounts to Euro 550.9 million (of
which Euro 468.9 million is short-term), while the financial position net of cash amounts to
Euro 365 million.
On 20 February 2014, the Group has concluded a financing transaction through the issue of
an equity-linked bond of Euro 80 million, resulting in a wider diversification of financial
resources and optimization of the financial structure through the collection of the funds in the
capital market.
The financial reorganization plan of the Group was also based on an industrial plan (2013 2017) approved by the Board of Directors on 5 April 2013 and subsequently updated on 13
March 2014, which included both the economic and financial forecasts. On 9 July 2014, the
Group had reviewed its Business Plan extending the time horizon to 2019, subsequently
updated on 18 February 2015; on the same date, the Group reviewed the economic forecast
for the year 2015 (Budget 2015), subsequently updated on 19 March 2015 based on the
figures as at 31 December 2014.
The forecasts included in the Plan confirmed that the assumptions are in line with the strategic
requirements of the Group, both in relation to the forecasted acquisitions of new projects and
also with the implementation of the disposal plan of certain non-strategic assets of the Group.
In 2014, the Group successfully completed acquistions for an approximate value of Euro
2,775.8 million increasing the Backlog that at 31 December 2014 was Euro 4,951.5 million, an
increase of approximately Euro 1,469.5 million compared to 2013.
Regarding the disposal plan of non-strategic assets included in the broader business plan on
17 June 2013, the Group has signed agreements for the diposal of investments in two projects
such as CMT (Copenhagen Metro Team I/S) and Consorzio COCIV operating in the
Infrastructure & Civil Engineering business. Both the disposals were later completed with a
complesive amount substantially in line with the cash-inflows forecasted in the disposal plan.
Moreover, during the first months of 2014, there were finalized the evaluation operation of the
French company Sofregaz S.A.’s assets and the sale of a real estate asset, both for a
countervalue substantially in line with cash inflows under the disposal plan. The disposal
activities has continued and were principally focused on the sale of the investment of owner
the company of Biomass Plant in Olevano di Lomellina, for which a binding offer for the sale
was received in February 2015. The whose closing is expected in the upcoming weeks.
Financial planning forecasts also a recovery of overdue supplier account balances. In this
regard, it shall be noted that as at 31 December 2014, the Group had overdue payables to
suppliers of Euro 39.03 million; (substantially in line with the figure at 31 December 2013)
non including the payment plans negotiated with suppliers. The Group has stipulated
repayment plans resulting in a gradual reduction of the older trade balances , compatibly with
the positive effects envisaged by the evolution of the business plan and according to the cash
inflow timing set out therein, considering also the contribution expressed by the transactions
described below.
In fact, in the first part of April, ther are expected cash inflows related to the transaction for
the Bocamina project, the sale of the Biolevano plant and the attainment of a loan by
Stamicarbon, whose term sheet is already duly signed, as a preparatory step to the
subsequent valuation of a minority share of the same, through a market transaction for the
financial investors.
transaction of the existing bank debt, whose approval process by the lenders is however being
finalized, with a significant reduction of medium- long term bank debt (as at 31 December
76
2014 the balance is temporarily classified under current liabilities as illustrated in the notes to
the financial statements), a significant improvement of the terms and conditions of the
remaining debt, as well as a contribution to the normalization process of working capital. The
conclusion of this transaction also allows overcoming the covenants in the loan agreements at
the date of financial statements 2014.
In light of the results achieved, the initiatives that the Group has already undertaken and
implemented, those under developed and as well as those prospected and highly probable
deemed, allow to the Board of Directors to support that there are no doubt on going concern
assumption.
20.
Subsequent Events and Business Outlook
The main management events were as follows:
GENERAL AND FINAL TRANSACTION SIGNED FOR ARBITRATION OF THE TECNIMONT/SES
CONSORTIUM WITH ENDESA CHILE (ENEL GROUP)
On 30 January 2015 - Maire Tecnimont S.p.A. announced that its subsidiaries Tecnimont,
Tecnimont Chile and Tecnimont do Brasil (Tecnimont Group) signed with the partners of the
SES and SES Chile (SES Group) consortium, a general and final transaction of common
satisfaction with the counterparty Endesa Chile. The agreement was subject to approval by
the governing bodies of each signing party, that at the date of the notification were all
obtained, as well as the completion of other formalities relating to said resolutions in the
following days.
This agreement puts an end to all disputes and legal proceedings pending between the same
parties in relation to the EPC contract for the construction of the Bocamina II project in Chile
signed 25 July 2007, including the arbitration pending before the International Chamber of
Commerce Paris, permanently solving every reason for possible dispute between the parties.
With this agreement, Endesa Chile compensated the consortium an amount of USD 125
million (plus VAT where applicable), of which USD 118.5 million to the Tecnimont Group and
USD 6.5 million to the SES Group. The collection for the Group Tecnimont, approximately USD
139.4 million including VAT, as agreed with the other party, is expected no later than 6 April
2015.
BINDING OFFER RECEIVED FOR THE PURCHASE OF THE BIOMASS PLANT IN OLEVANO
LOMELLINA
On 5 February 2015 - Maire Tecnimont S.p.A. announced that it had received a binding offer
for the purchase of the majority interest, equal to 66% of the share capital of BiOlevano S.r.l.
(BiOlevano), owner of the biomass plant located in Olevano Lomellina.
The Board of Directors resolved to proceed exclusively to the finalization of the transaction.
The transaction, from which a total of approximately Euro 80 million is expected, provides for:
collection at closing of an amount of approximately Euro 56 million, including the repayment
of the receivables claimed by Maire Tecnimont group companies, a portion of Euro 6 million to
be paid over three years from the closing date, as well as an additional portion of
approximately Euro 18 million, subject to the fulfilment of certain conditions. The transaction
closing is subject, among other things, to the disbursement to BiOlevano of a loan with nonrecourse project financing, currently being structured by a syndicate consisting of some of the
leading national banks. The disbursement of the loan will allow BiOlevano to liquidate existing
intra-group debts to companies of the Maire Tecnimont Group. The transaction is also subject
to certain corporate obligations within the Maire Tecnimont Group, as well as other typical
precedent conditions for this type of transaction. The closing of the transaction is expected in
the coming weeks.
77
CONSORTIUM LED BY TECNIMONT AWARDED EPC CONTRACT FOR USD 490 MILLION IN ABU
DHABI BY ADGAS
On 9 February 2015 - Maire Tecnimont S.p.A. announced that its main subsidiary Tecnimont
S.p.A. in consortium with Archirodon received a Letter of Award to sign an EPC contract with
ABU DHABI GAS LIQUEFACTION COMPANY LTD. (ADGAS) for the realization of Package 1 IGD
Expansion Project, in Abu Dhabi, EAU.
The total value of the project amounts to about USD 490 million, of which about USD 225
million (46% of the total value) pertains to the Maire Tecnimont Group. Tecnimont is the
leader of the partnership. Completion is expected within 40 months from the date of execution
scheduled on 17 February 2015.
ADGAS is one of the ADNOC Group companies, one of the largest oil companies in the world,
and operates on Das Island, located 100 km north of Ruwais.
The purpose of the project pertaining to Tecnimont consists mainly in the expansion of the gas
drying plant with the installation of an additional unit and related structures, while the
purpose of Archirodon consists in the work of preparing the site with backfill, in civil works and
works in the sea along the west coast of Das Island for the aforementioned expansion,
including further site preparation work with backfill for the IGD-E2 package (next expansion
project of the plant).
The main corporate events were as follows:
SHAREHOLDERS’ MEETING - CORPORATE GOVERNANCE RESOLUTIONS AND APPROVAL OF
THE INTRODUCTION OF THE VOTING INCREASE
On 18 February 2015, the Shareholders’ Meeting of Maire Tecnimont S.p.A. met as both an
ordinary and extraordinary session, at its first call. Chaired by Fabrizio Di Amato, it approved
all items on the agenda.
In detail, the Shareholders’ Meeting, in ordinary session appointed pursuant to art. 2386 of
the Italian Civil Code, as independent component of the Board of Directors, Andrea Pellegrini.
The latter confirmed to be in possession of the independence requirements pursuant to the
law and the Corporate Governance Code for listed companies. The meeting also integrated the
Board of Auditors with the appointment of Roberta Provasi as statutory auditor. Andrea
Pellegrini and Roberta Provasi will remain in their respective positions until approval of the
financial statements at 31 December 2015.
Also in the ordinary session, the Shareholders’ Meeting approved some amendments to the
Meeting Regulations, in order to adapt the same to best practices on the matter and eliminate
overlaps with the statutory provisions governing the operation of the Shareholders’ Meeting.
Lastly, in ordinary session, the Shareholders’ Meeting resolved to authorize as far as
applicable and pursuant to and for the effects of art. 2390 of the Italian Civil Code, Director
Gabriella Chersicla to maintain the office of Director and Chairwoman of the Board of Directors
of the company Impresa Costruzioni Giuseppe Maltauro S.p.A.
In extraordinary session, the Shareholders’ Meeting resolved to amend some articles of the
by-laws. In particular, the amendments concerned art. 9 in order to clarify that the
Shareholders’ Meeting may meet in multiple calls rather than single call; art. 16 to facilitate
the convening of the Board of Directors in cases of urgency; art. 17 to eliminate the provision
on advisory committees, since the same repeated as already provided in art. 15; articles 20
and 21 in order to explain more clearly some aspects of the mechanism for the appointment
and replacement of Auditors; and, finally, art. 23 in order to provide that the remuneration
payable to the Executive in charge is determined by the Board of Directors, after consultation
with the Remuneration Committee.
78
Finally, the extraordinary Shareholders’ Meeting, with the presence of shareholders
representing a percentage equal to 76.14% of the share capital, approved by the favourable
vote of 87.62% of participants the amendments to the by-laws to introduce the mechanism of
the voting right increase. The introduction of this scheme is intended to encourage investment
in the medium to long term and thus the stability of the shareholding structure. In fact, in
particular the regulations introduced provide for the allocation of two votes to each ordinary
share of the same shareholder for a continuous period of not less than two years from the
date of registration in a special List, established and maintained by the Company.
OUTLOOK
In light of the positive results and awards achieved in 2014, the maintenance of a positive
margin is also expected for 2015. This objective will continue to be achieved mainly thanks to
the activities with high technological content, in line with the strategic direction of the Group.
Specifically, the Group expects new awards in the next few quarters in the core business, as
confirmation of the industrial repositioning which has already generated new contracts in 2014
and the early months of 2015.
In the Licensing area the business is expected to grow, which will lead to registration requests
for several new patents, and in parallel a broader marketing of proprietary technologies.
In detail, the development of the business in 2015 is in line with the strategic assumptions of
the Group based on a consolidation of the traditional EPC activities, with greater focus on the
E and EP components and appropriate leverage on the value of technology and customer
service activities, through the exploitation of core competencies that have been a constant
characteristic of the Group’s position on the market.
The Group also continues to pursue a cost containment policy in line with the positive results
already achieved in 2013 and 2014.
The Infrastructure & Civil Engineering BU is currently implementing its turn-around process
begun last year and continued in 2014 through the reorganization of its structures in order to
both increase its ability to adapt to changing production volumes and enable a more targeted
focus with improved ability to respond to the demand for engineering services.
finalized, with a significant reduction of medium to long term bank debt, a significant
improvement of the terms and conditions of the remaining debt, as well as a contribution to
the normalization process of working capital.
79
21.
Parent Company Operating Performance
Maire Tecnimont S.p.A. is a joint-stock company incorporated in Italy registered with the
Companies Registrar of Rome as the holding company of Maire Tecnimont Group. Maire
Tecnimont S.p.A. closed the financial year ending 31 December 2014 with net loss of Euro 2.1
million, EBITDA of Euro 27.9 million and net equity of Euro 397.9 million.
The main increase of non-current assets is a result of new loans granted to the subsidiary
Tecnimont S.p.A. for Euro 59 million, and the subsidiary Tecnimont Civil Construction for a net
of Euro 6.4 million, net of the write-down of the investment in the subsidiary Tecnimont Civil
Construction for Euro 18.3 million.
Current assets are mainly composed of tax credits from the Revenue Agency for excess IRES
and VAT receivable, as well as trade receivables from subsidiaries.
Shareholders’ equity was Euro 397.930 thousand Euro as at 31 December 2014, up 4,831
thousand Euro with respect to the previous year for the change in reserves, mainly for the
equity component of the equity linked bond net of loss for the year. Non-current liabilities
increased by Euro 79,314 thousand, mainly due to the financial component of the equitylinked bond, net of related ancillary costs.
The current liabilities item mainly refers to payables due to subsidiaries for tax and VAT
consolidation, the amount is the net balance of advance payments and of tax receivables and
payables transferred to the consolidating company by subsidiaries under tax and VAT
consolidation. The remaining part relates to the short-term portion of loans and trade
payables due to third party suppliers and Group companies.
Statement of financial position
2014
2013
823,408
765,285
Current assets
81,919
74,922
Total assets
905,327
840,207
397,930
393,099
320,209
296,821
Current liabilities
187,188
150,287
Shareholders’ equity and liabilities
905,327
840,207
Non-current assets
Revenues for the year mainly relate to dividends collected in 2014 from subsidiaries and
earnings from “intra-group services” provided to the direct subsidiaries.
Financial expenses were Euro 22,555 thousand and increased significantly over the previous
year; they are related to interest expense on intercompany loans, interest expense on bank
loans that increased significantly following the refinancing in July 2013, with which new
financing was obtained for Euro 60 million. For Euro 5,373 thousand, the item also includes
the monetary and non-monetary component of interest on the equity-linked bond for Euro 80
million issued in February 2014.
Total expenses on investments for Euro 18,300 thousand relate to the write-down of the
investment in Tecnimont Civil Construction S.p.A.; this write-down was made following the
results of the impairment test performed on the carrying value of the same.
80
Tax assets reported a positive value of Euro 6,175 thousand with an increase of Euro 1,196
thousand compared to the previous year and mainly relate to the recognition of deferred tax
assets relating to tax losses and non-deductible interest expense transferred to the tax
consolidation and used in determining the taxable income of the tax consolidation, net of
releases for uses in the period and allocation differences with respect to the previous year.
Income Statement
2014
2013
66,540
44,318
(38,591)
(28,352)
27,949
15,966
(210)
(2,861)
27,739
13,105
Financial income
4,857
4,441
Interest expense
(22,555)
(7,585)
Gains/(charges) on investments
(18,300)
(20,300)
(8,259)
(10,339)
6,175
4,979
Profit (loss) for the year
(2,084)
(5,361)
Earnings per share
(0.0068)
(0.018)
Diluted earnings (loss) per share
(0.0061)
(0.016)
Total revenues
Total costs
Gross operating margin
Amortization, depreciation and provisions
Operating profit (loss)
Income before tax
Income taxes, current and deferred
The “Reconciliation between the net income of Maire Tecnimont S.p.A. and the Group net
income” and the “Reconciliation between the shareholders’ equity of Maire Tecnimont S.p.A.
and the Group shareholders’ equity” is included in the explanatory notes to the consolidated
financial statements.
81
22.
Proposal of the Board of Directors
Dear Shareholders,
We believe we have fully illustrated the Company’s Financial Statements and trust that you
agree with the presentation and criteria adopted to prepare the Financial Statements for the
fiscal year 2014, which we invite you to approve along with the proposal to carry forward the
year’s net loss of Euro 2,084,013.34.
Milan, 19 March 2015
The Board of Directors
The Chairman
82
Consolidated Financial
Statements and
Explanatory Notes
at 31 December 2014
83
23.
Consolidated Financial Statements
23.1.
Consolidated Income Statement
Notes
31
December
2014
31
December
2013 (*)
Revenues
27.1
1,545,383
1,413,260
Other operating revenues
27.2
Total revenues
37,808
84,988
1,583,191
1,498,248
Raw materials and consumables
27.4
(667,689)
(487,519)
Cost of services
27.5
(439,988)
(564,460)
Personnel expense
27.6
(264,979)
(249,479)
Other operating expenses
27.7
(83,648)
(80,690)
Total costs
(1,456,304) (1,382,149)
126,887
116,099
Amortization, depreciation and write-downs
27.8
(9,498)
(20,339)
Write down of receivables included in working capital and cash in
hand
27.9
(1,045)
(2,889)
Provisions to the funds for risks and charges
27.9
(12,938)
(2,907)
103,406
89,964
Operating profit
Financial income
27.10
1,957
4,221
Interest expense
27.11
(42,076)
(44,777)
27.12
(1,905)
709
61,382
50,117
27.13
(10,739)
(32,774)
50,643
17,343
Group
50,297
16,952
346
391
0.165
0.055
0.147
0.050
Income before tax
Income taxes, current and deferred
Minorities
Base earnings per share
Diluted earnings per share
27.14
(*) recalculated for the retroactive application of IFRS 11
The analysis of related party transactions, in accordance with Consob Resolution no. 15519 of 27 July 2006 is
provided in the specific disclosure section “Transactions with Related Parties”.
85
23.2.
Consolidated Statement of Comprehensive Income
31
December
2014
31
December
2013
50,643
17,343
(676)
(829)
186
228
(490)
(601)
28.18
(215)
(2,606)
28.18
(746)
629
205
(173)
(756)
(2,150)
Total other comprehensive income for the year, net of the tax effect
(1,246)
(2,751)
Comprehensive income (loss)
49,397
14,592
49,051
14,202
345
391
Notes
Other comprehensive income that will not be subsequently
reclassified under profit/(loss) for the period:
Actuarial gains (losses)
28.18
Tax impact
Total other comprehensive income that will not be subsequently
reclassified under profit/(loss) for the period
Other comprehensive income that will be subsequently reclassified
under profit/(loss) for the period:
Translation differences
Net valuation of derivatives:
•
carrying amount of derivative instruments
•
related tax effect
Total other comprehensive income that will be subsequently
Attributable to:
•
Group
•
Minorities
86
23.3.
Consolidated Statement of Financial Position
Notes
31
December
2014
31
December
2013 (*)
01 January
2013 (*)
Property, plant and equipment
28.1
33,490
34,969
45,337
Goodwill
28.2
291,754
291,754
301,754
Other intangible assets
28.3
26,022
25,223
28,798
Investments in associated companies
28.4
3,048
2,750
5,772
Financial instruments – Derivatives
28.5
10
263
10
28.6
13,998
15,086
13,065
Other non-current assets
28.7
58,404
60,122
60,510
Deferred tax assets
28.8
90,918
86,710
99,883
517,644
516,877
555,128
Assets
Non-current assets
Total non-current assets
Current assets
Inventories
28.9
1,866
1,846
1,911
Advances to suppliers
28.9
151,802
134,725
128,794
28.10
416,380
281,315
242,013
Trade receivables
28.11
476,801
409,942
421,769
Current tax assets
28.12
141,095
125,464
137,475
Financial instruments – Derivatives
28.13
574
415
866
28.14
8,309
17,181
43,922
28.15
140,398
139,497
151,103
28.16
160,242
167,012
349,749
1,497,467
1,277,397
1,477,602
Total current assets
28.17
94,565
101,916
169,934
Elimination of assets to and from assets/liabilities held for
sale
28.17
(82,466)
(84,889)
(96,153)
2,027,210
1,811,301
2,106,511
Total assets
87
Notes
31
December
2014
31
December
2013 (*)
01 January
2013 (*)
Share capital
28.18
19,690
19,690
16,125
Share premium reserve
28.18
224,698
224,698
83,045
Other reserves
28.18
66,223
59,477
61,730
Valuation reserve
28.18
(2,770)
(1,737)
(1,592)
307,841
302,128
159,307
Total shareholders’ equity and reserves
Profits/(losses) carried forward
28.18
(265,940)
(285,573)
(73,464)
Profit/(loss) for the year
28.18
50,297
16,952
(207,609)
92,199
33,507
(121,766)
1,506
1,688
1,089
93,705
35,195
(120,677)
Total group shareholders’ equity
Minorities
Total shareholders’ equity
Financial debt net of current amount
28.19
4,035
362,766
0
Provisions for risk and charges - over 12 months
28.20
63,588
39,549
40,403
28.8
20,658
21,854
21,219
Post-employment and other employee benefits
28.21
14,767
15,213
15,436
28.22
19,233
17,206
18,994
Financial instruments – derivatives
28.23
8
81
1,024
28.24
71,292
0
0
193,581
456,669
97,076
Deferred tax liabilities
Total non-current liabilities
Current liabilities
Short-term debt
28.25
468,889
152,707
687,890
Tax payables
28.26
36,629
38,321
44,345
Financial instruments – derivatives
28.27
4,327
6,909
9,829
28.28
2,378
9,741
10,738
Client advance payments
28.29
161,390
105,605
242,864
28.30
246,958
289,849
300,262
Trade payables
28.31
755,896
635,426
672,833
28.32
58,167
75,361
100,669
1,734,634
1,313,919
2,069,581
28.17
87,757
90,407
156,684
28.17
(82,466)
(84,889)
(96,153)
2,027,210
1,811,301
2,106,511
Total current liabilities
Liabilities directly associated with non-current assets
classified as held for sale
Elimination of liabilities to and from assets/liabilities held for
sale
88
24.
Consolidated Statement of Changes in Equity
Balances at 31 December 2012
Share
capital
Share
premium
reserve
16,125
83,045
Other
reserves
67,982
Translation
reserve
Valuation
reserve
(6,253)
(1,592)
3,565
Charges related to capital
increase net of tax impact
Group
shareholders’ Minorities
equity
(207,609)
(121,766)
(207,609)
207,609
-
-
146,417
149,982
149,982
(4,764)
(4,764)
(4,764)
355
Option rights sale
1,089
Consolidated
shareholders’
equity – group
and minorities
(73,465)
Allocation of profit
Capital increase
Income and
Profit (loss)
loss from
for the year
previous years
355
355
-
Change in scope of consolidation
(4,499)
Other changes
(120,677)
-
(4,499)
209
(4,290)
16,952
14,198
392
14,590
Dividend distribution
Total profit (loss) for the year
(2,606)
(145)
19,690
224,698
68,337
(8,859)
(1,737)
(285,573)
16,952
33,507
1,689
35,195
19,690
224,698
68,337
(8,859)
(1,737)
(285,573)
16,952
33,507
1,689
35,195
16,952
(16,952)
Equity component of the
convertible bond
6,960
Change in scope of consolidation
-
Other changes
2,681
Dividend distribution
19,690
224,698
75,297
(215)
(1,032)
(9,074)
(2,770)
50,297
16,952
(16,952)
(265,940)
50,297
0
0
6,960
6,960
-
-
2,681
(284)
2,397
-
(244)
(244)
345
49,397
1,506
93,705
49,051
0
92,199
0
89
25. Consolidated Statement of Cash Flows (indirect
method)
31 December
2014
167,012
31 December
2013 (*)
349,749
50,643
17,343
2,614
6,884
13,983
1,905
40,119
10,739
(20)
13,613
6,725
5,797
(709)
40,555
32,774
(218)
(17,096)
(65,815)
(135,065)
(20,653)
(2,482)
176,255
(42,891)
8,566
(22,466)
(5,867)
11,827
(43,502)
(28,487)
4,587
(174,666)
(10,413)
(2,823)
(2,571)
5,221
(136,036)
(1,886)
(3,413)
(259)
321
(567)
(2,537)
891
824
(5,237)
(1,391)
(18,923)
(63,746)
658
(456)
77,759
-
(136,024)
(60,949)
(4,557)
14,118
143,217
(4,707)
(44,195)
Increase/(decrease) in cash and cash equivalents (B+C+D)
(4,722)
(181,622)
162,290
168,128
2,048
1,115
160,242
167,012
Cash and cash equivalents at the beginning of the year (a)
Operations
Net income of group and minorities
Adjustments:
-
Amortization and impairment losses of intangible assets
Depreciation and impairment losses of non-current tangible assets
Provisions
(Revaluation)/impairment losses
Financial (income)/charges
Income taxes
(Capital gains)/losses
-
(Increase)/decrease in inventories/advances to suppliers
(Increase)/decrease in trade receivables
(Increase)/decrease in receivables for construction contracts
Increase/(decrease) in other liabilities
(Increase)/decrease in other assets
Increase/(decrease) in trade payables/advances from clients
Increase/(decrease) in payables for construction contracts
Increase/(decrease) in provisions (including post-employment benefits)
Income taxes paid
Investments
(Investments)/disposal of non-current tangible assets
(Investments)/disposals of intangible assets
(Increase)/decrease in other investments
Financing
Increase/(decrease) in bank overdrafts
Change in financial liabilities
(Increase)/decrease in securities/bonds
Change in other financial assets and liabilities
Net income from convertible bond
Capital increase - net of charges
Cash and cash equivalents at year end (A+B+C+D)
of which: cash and cash equivalents included in assets held for sale and discontinued
CASH AND CASH EQUIVALENTS SHOWN IN THE FINANCIAL STATEMENTS AT YEAR END
recalculated for the retroactive application of IFRS 11
(*)
90
26.
Explanatory Notes as at 31 December 2014
PREPARATION CRITERIA
INTRODUCTION
Maire Tecnimont S.p.A. is a joint-stock company incorporated in Italy, registered with the
Rome Business Register. The addresses of the registered office and the places in which the
Group conducts its principal business activities are listed in the introduction to the Financial
Statements.
The consolidated financial statements for 2014 have been prepared in accordance with
International Accounting Principles (IFRS) issued by the International Accounting Standards
Board (IASB) and approved by the European Union, as well as with the provisions issued in
implementation of Article 9 of Law 38/2005. IFRS mean also all the revised accounting
principles (IAS) and all the interpretations of the International Financial Reporting
Interpretations Committee (IFRIC), formerly the Standing Interpretations Committee (SIC).
The financial statements have been prepared according to the historical cost principle,
modified as required for the valuation of some financial instruments. The consolidated
financial statements as at 31 December 2014 presented herein are denominated in Euros as
this is the currency in which most of the Group’s transactions are performed. Foreign
operations are included in the Consolidated Financial Statements in accordance with the
principles described hereunder.
GOING CONCERN
The Group and the Company deem it appropriate to use the going concern basis for the
preparation of the consolidated financial statements ended 31 December 2014.
ACCOUNTING STATEMENTS
The formats of the Financial Statements adopted by the Group reflect the additions and
changes introduced with the application of IAS 1 revised, as described below:
The items on the Statement of Financial position are classified as current and non-current,
while those of the Consolidated Income Statement and Consolidated Statement of
Comprehensive Income are classified by type. The Consolidated Statement of Cash Flows has
been prepared using the indirect method, adjusting net income for the year for non-monetary
components. The Statement of Changes in Equity shows the total income (charges) for the
year and other changes in the shareholders’ equity.
ACCOUNTING PRINCIPLES, AMENDMENTS
FROM JANUARY 2014
AND
IFRS INTERPRETATIONS STARTING
The following accounting principles, amendments and interpretations were applied for the first
time by the Group from 1st January 2014:
•
On 12 May 2011, the IASB issued IFRS 10 - Consolidated Financial Statements
which will replace IAS 27 - Consolidated and separate financial statements for the
part relating to the consolidation and SIC-12 Consolidation - Special purpose
entities (SPV). The previous IAS 27 has been renamed Separate Financial
Statements and regulates the accounting of investments in the separate financial
statements. The main changes established by the new standard are the following:
according to IFRS 10 there is a single basic standard to consolidate all the types of
entities, and this standard is based on control. This change removes the perceived
inconsistency between the previous IAS 27 (based on control) and SIC 12 (based
on the transfer of risks and benefits); a more solid definition of control than in the
91
past has been introduced based on three elements: (a) power on the company
acquired; (b) exposure, or rights, to variable returns from involvement with the
same; (c) ability to use the power to influence the amount of such returns; IFRS 10
requires that for an investor to assess whether it has control over the company
acquired, focus shall be on activities that significantly affect the returns of the
same; IFRS 10 requires that, when assessing whether the existence of control, only
the substantial rights are considered, i.e. those that can be exercised in practice
when important decisions shall be taken regarding the company acquired; IFRS 10
provides practical guides to aid in assessing whether control exists in complex
situations, such as the de facto control, the potential voting rights, the situations in
which it is necessary to establish whether the party that has the power of decision
is acting as agent or principal, etc.
In general terms, the application of IFRS 10 requires a significant degree of
judgement on a certain number of application aspects.
The standard is applicable retrospectively starting from 1st January 2014. The
adoption of this new standard had no significant impact on the consolidation area of
the Group.
92
•
On 12 May 2011, the IASB issued IFRS 11 - Joint Arrangements, which will replace
IAS 31 - Interests in Joint Ventures and SIC-13 - Jointly Controlled Entities Contributions in joint control by the stockholders. The new standard, subject to the
criteria for the identification of the presence of a jointly controlled entity, provides
the criteria for the accounting of joint arrangements by focusing on the rights and
obligations deriving from these arrangements, rather than its legal form,
distinguishing between joint ventures and joint operations. According to IFRS 11,
the existence of a separate vehicle is not a sufficient condition for classifying a joint
arrangement as a joint venture. For joint ventures, where the parties have rights
only on shareholders’ equity of the agreement, the standard establishes the equity
method as the only method of accounting the consolidated financial statements. For
joint operations, where the parties have rights to the assets and obligations for the
liabilities of the agreement, the standard involves the direct inclusion in the
consolidated financial statements (and in the separate financial statements) of the
pro-quota of the assets, liabilities, costs and revenues from the joint operation. The
standard is retrospectively applicable starting from 1st January 2013. In general
terms, the application of IFRS 11 requires a significant degree of judgement in
certain areas of the company with regard to the distinction between joint venture
and joint operation. Following the adoption of the new standard IFRS 11, IAS 28 Investments in associated companies has been amended to include within its scope
of application, from the effective date of the standard, also the investments in
jointly controlled entities. The adoption of this new standard had no significant
impact on the consolidation area of the Group to which reference is made.
•
On 12 May 2011 the IASB issued IFRS 12 – Disclosures of Interests in Other
Entities, a new and comprehensive standard on the disclosures that are to be
provided about any type of holdings, including investments in subsidiaries, joint
arrangements, associates, special purpose entities and other non-consolidated
special purpose vehicles. The standard is applicable retrospectively starting from
1st January 2014. The adoption of this new standard had no impact on the
information provided in the notes to the consolidated financial statements of the
Group.
•
On 16 December 2011 the IASB issued some amendments to IFRS 32 – Financial
Instruments: presentation in the financial statements, to clarify the implementation
of some requirements for offsetting the financial assets and liabilities included in
IAS 32. The amendments are retrospectively applicable starting from 1st January
2014. The adoption of this new standard had no impact on the consolidated
financial statements of the Group.
•
On 29 May 2013, the IASB issued some amendments to IAS 36 - Impairment of
Assets - Additional information on the recoverable value of non-financial assets.
The changes are intended to clarify that the disclosures to be provided on the
recoverable amount of the assets (including goodwill) or cash-generating units, in
case the recoverable amount is based on fair value less costs of disposal, relate
only to the assets or cash-generating unit for which a loss in value was recognized
or reversed during the financial year. The amendments are retrospectively
applicable starting from 1st January 2014. The adoption of said amendments had
no impact on the consolidated financial statements of the Group.
•
On 27 June 2013, the IASB published amendments to IAS 39 “Financial
Instruments: Recognition and Measurement - Novation of derivatives and
continuation of hedge accounting”. The amendments include the introduction of
certain exemptions from the requirements of hedge accounting as defined by IAS
39 in the circumstance in which an existing derivative is to be replaced with a new
derivative in a specific case in which said substitution is against a Central
Counterparty (CCP) following the introduction of a new law or regulation. The
amendments are retrospectively applicable starting from 1st January 2014. The
adoption of said amendments had no impact on the consolidated financial
statements of the Group.
ACCOUNTING PRINCIPLES, AMENDMENTS AND IFRS INTERPRETATIONS
EUROPEAN UNION, NOT OBLIGATORILY APPLICABLE
ADOPTED BY THE GROUP IN ADVANCE AT 31 DECEMBER 2014.
APPROVED BY THE
NOT YET
AND NOT
At the date of this document the EU competent authorities have not yet completed the
standardisation process required to adopt the accounting principles and amendments
described below.
• On 20 May 2013 the interpretation IFRIC 21 – Levies, was published, which
provides clarification on when recognition of a liability related to taxes (other than
income taxes) imposed by a government agency. The standard addresses both the
liabilities for taxes that fall within the scope of IAS 37 – Provisions, contingent
liabilities and assets, both for the taxes where the amount and timing are certain.
The interpretation is applied retrospectively for annual periods commencing no later
than 17 June 2014 or later. The directors are currently assessing the possible
impacts of the introduction of said interpretation on the Group’s consolidated
•
On 12 December 2013, the IASB published the “Annual Improvements to IFRSs:
2010- 2012 Cycle”, covering modifications to some principles as part of the annual
process of improving them. The main changes are:
IFRS 2 Share Based Payments – Definition of Vesting Condition. Changes
have been made to the definitions of “vesting condition” and “market
condition” and additional definitions of “performance condition” and “service
condition” given (previously included under the definition of “vesting
condition”).
IFRS 3 Business Combination – Accounting for contingent consideration. The
change clarifies that a “contingent consideration” as part of business
combinations classified as a financial asset or liability must be remeasured
at fair value at each year-end date and the changes in fair value shall be
noted on the income statement or amongst the items of the comprehensive
income statement according to the requirements of IAS 39 (or IFRS 9).
IFRS 8 Operating segments – Aggregation of operating segments. The
changes require an entity to provide information on management’s
93
considerations in applying the aggregation criteria of operating segments,
including a description of the operating segments that have been aggregated
and the economic indicators considered in determining whether or not said
operating segments have similar economic characteristics.
IFRS 8 Operating Segments – Reconciliation of total of the reportable
segments’ assets to the entity’s assets. The changes clarify that the
reconciliation of total assets of operating segments and total overall assets
of the entity must only be presented if the total assets of the operating
segments are regularly revised by the higher operating decision-making
level.
IFRS 13 Fair Value Measurement – Short-term receivables and payables.
The Basis for Conclusions of said standard have been amended to clarify
that with the issue of IFRS 13 and the consequent amendments to IAS 39
and IFRS 9, the possibility of booking current receivables and payables
without needing to book the effects of discounting remains valid, if said
effects are immaterial.
IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets –
Revaluation
Method:
proportionate
restatement
of
accumulated
depreciation. The changes have eliminated the incoherency in the recording
of amortization/depreciation provisions when a tangible or intangible asset is
increased in value. The requirements of the amendments clarify that the
gross book value shall be adjusted consistently with the increase in value of
the asset’s book value and that the provision for amortization/depreciation
shall be the difference between the gross book value and the book value net
of impairment recorded.
IAS 24 Related Parties Disclosures – Key Management Personnel. It is
clarified that if the services of key managers are provided by an entity (i.e.
not by a natural person), said entity shall however be considered as a
related party.
The changes shall apply at the latest beginning the years that start 1 February
2015 or after. The directors are currently assessing the possible impacts of the
introduction of said amendments on the Group’s consolidated financial
statements.
•
IFRS 3 Business Combinations – Scope exception for joint ventures. The
amendment states that paragraph 2 (a) of IFRS 3 excludes from the scope
of IFRS 3 the formation of all types of joint arrangements, as defined by
IFRS 11.
IFRS 13 Fair Value Measurement – Scope of portfolio exception (par. 52).
The amendment clarifies that the portfolio exception included in paragraph
52 of IFRS 13 applies to all contracts included within the scope of IAS 39 (or
IFRS 9) regardless of whether they meet the definition of financial assets
and liabilities provided by IAS 32.
IAS 40 Investment Properties – Interrelationship between IFRS 3 and IAS
40. The amendment clarifies that IFRS 3 and IAS 40 are not mutually
exclusive and that, in order to determine whether or not the purchase of a
property falls within the scope of application of IFRS 3 or IAS 40, reference
shall be made respectively to the specific indications IFRS 3 or IAS 40.
94
The changes shall apply beginning the years that start 1 January 2015 or after.
The directors are currently assessing the possible impacts of the introduction of
said amendments on the Group’s consolidated financial statements.
•
On 21 November 2013, the IASB issued the amendment to IAS 19 “Defined Benefit
Plans: Employee Contributions”, which aims to present the contributions (relating
only to the service provided by the employee during the year) made by employees
or third parties to defined benefit plans to reduce the service cost for the year in
which the contribution is paid. The need for this proposal stems from the
introduction of the new IAS 19 (2011), which states that such contributions are to
be interpreted as part of a post-employment benefit, rather than a short-term
benefit and, therefore, that this contribution shall be spread over the years of
service of the employee. The changes shall apply at the latest beginning the years
that start 1 February 2015 or after. The directors are currently assessing the
possible impacts of the introduction of said amendment on the Group’s consolidated
ACCOUNTING
PRINCIPLES,
AMENDMENTS
AND
IFRS
INTERPRETATIONS NOT YET APPROVED BY THE EUROPEAN UNION
At the date of reference of this document the EU competent authorities have not yet
completed the standardisation process required to adopt the accounting principles and
amendments described below.
•
On 30 January 2014, the IASB published the standard “IFRS 14 Regulatory Deferral
Accounts” that allows only those that adopt IFRS for the first time to continue to
recognize the amounts related to activities subject to regulated tariffs (“Rate
Regulation Activities”) under previous accounting principles adopted. As the
Company/Group is not a first-time adopter, said standard is not applicable.
•
On 6 May 2014, the IASB issued amendments to “IFRS 11 Joint Arrangements –
Accounting for acquisitions of interests in joint operations” relating to the
accounting for the purchase of interests in a joint operation whose activity
constitutes a business in the meaning provided by IFRS 3. The amendments require
that for these cases the principles set out in IFRS 3 apply related to the effects of a
business combination.
The changes are applicable starting from 1 January 2016. However, earlier application
is permitted. The directors are currently assessing the possible impacts of the
introduction of said amendments on the Group’s consolidated financial statements.
•
On 12 May 2014, the IASB issued amendments to IAS 16 Property, plant and
Equipment and IAS 38 Intangibles Assets – “Clarification of acceptable methods of
depreciation and amortization”. The amendments to IAS 16 require that the
amortization criteria based on revenues are not appropriate, since, according to the
amendment, the revenues generated by an activity that includes the use of the
amortized asset generally reflect different factors only from the consumption of the
economic benefits of the asset. The amendments to IAS 38 introduce a related
presumption, according to which a depreciation method based on revenues is
normally considered inappropriate for the same reasons laid down by the
amendments made to IAS 16. In the case of intangible assets, this presumption can
be exceeded, however only in limited and specific circumstances.
95
The amendments are applicable starting from 1 January 2016. However, earlier
application is permitted. The directors are currently assessing the possible impacts
of the introduction of said amendments on the Group’s consolidated financial
statements.
•
On 28 May 2014, the IASB published the standard IFRS 15 – Revenue from
Contracts with Customers which is destined to replace IAS 18 – Revenue and IAS
11 – Construction Contracts, as well as the interpretations of IFRIC 13 – Customer
Loyalty Programmes, IFRIC 15 – Agreements for the Construction of Real Estate,
IFRIC 18 – Transfers of Assets from Customers and SIC 31 – Revenues-Barter
Transactions Involving Advertising Services. The standard establishes a new model
of revenue recognition shall apply to all contracts with clients except those that fall
within the scope of application of other IAS/IFRS principals such as leasing,
insurance contracts and financial instruments. The basic steps for the recognition of
revenue under the new model are: the identification of the contract with the client;
the identification of performance obligations of the contract; pricing; the allocation
of the price to the performance obligations of the contract; the criteria for
registration of revenue when the entity fulfils each performance obligation.
The standard is applicable starting from 1 January 2017, but earlier application is
permitted. However, it is not possible to provide a reasonable estimate of the effect
until the Group has completed a detailed analysis.
•
On 30 June 2014, the IASB issued some amendments to IAS 16 Property, plant and
equipment and IAS 41 Agriculture – Bearer Plants. The amendments require that
the bearer plants, or fruit trees that shall produce annual crops (such as screws,
plant nuts) shall be accounted for in accordance with the requirements of IAS 16
(rather than IAS 41). This means that such assets shall be valued at cost rather
than at fair value less costs to sell (however, the use of the revaluation method
proposed by IAS 16 is permitted). The proposed amendments are confined to the
trees used to produce seasonal fruits and not to be sold as living plants or subject
to crop such as agricultural products. Said trees fall into the scope of IAS 16 also
during the phase of biological maturation, that is until they are able to generate
agricultural products.
statements.
•
96
On 24 July 2014, the IASB published the final version of IFRS 9 – Financial
Instruments. The document includes the results of the phases relating to
Classification and measurement, impairment and hedge accounting, of the IASB’s
project aimed at replacing IAS 39. The new standard, which replaces the previous
version of IFRS 9, shall be applied for financial statements beginning on 1 January
2018 or later. Following the financial crisis of 2008, at the request of the main
financial and political institutions, the IASB started the project aimed at the
replacement of IFRS 9 and proceeded in phases. In 2009, the IASB published the
first version of IFRS 9 that only covered the Classification and measurement of
financial assets; later, in 2010, the criteria were published for the classification and
measurement of financial liabilities and derecognition (the latter topic was
transposed unchanged by IAS 39). In 2013, IFRS 9 was amended to include the
general model of hedge accounting. Following the current publication, which also
includes impairment, IFRS 9 shall be considered completed with the exception of
criteria regarding macro hedging, for which the IASB has undertaken an
independent project. The standard introduces new criteria for classifying and
measuring financial assets and liabilities. More specifically, for financial assets the
new standard takes a single approach based on the financial instrument
management methods and on the characteristics of contractual cash flow of the
financial assets in order to determine the measurement criteria, replacing the
alternative rules established by IAS 39. In terms of financial liabilities, the main
modification introduced concerns the recognition of variations in the fair value of
financial liabilities measured at fair value in the income statement whenever these
changes are due to a change in the issuer’s creditworthiness of the liability.
According to the new standard, these amendments must be recognized in the
statement of “Other comprehensive income”, and no longer in the income
statement. With reference to the impairment model, the new standard requires the
estimate of losses on receivables to be made on the basis of the model of expected
losses (and not on the model of incurred losses) using supportable information,
available without unreasonable effort or expense that include current and
prospective historical data. The standard requires that the impairment model apply
to all financial instruments, i.e. financial assets measured at amortized cost, those
measured at fair value through other comprehensive income, receivables arising
from lease agreements and trade receivables. Finally, the standard introduces a
new model of hedge accounting in order to adapt the requirements of the current
IAS 39 that sometimes were considered too stringent and unsuitable to reflect the
risk management policies of the company. The main amendments of the document
concern: increase of the types of transactions eligible for hedge accounting, also
including the risks of non-financial assets/liabilities eligible to be managed in hedge
accounting; change in accounting method for forward contracts and options when
included in a hedge accounting relation in order to reduce the volatility of the
income statement; changes to the effectiveness test through the replacement of
the current methods based on the parameter of 80-125% with the standard of
“economic relation” between the hedged item and the hedging instrument; in
addition, an evaluation of the retrospective effectiveness of the hedging relation
shall no longer be required; the greater flexibility of the new accounting standards
is offset by additional requests for information on the risk management activities of
the company. However, it is not possible to provide a reasonable estimate of the
effect until the Group has completed a detailed analysis.
•
On 12 August 2014, the IASB published the amendment to IAS 27 - Equity Method
in Separate Financial Statements. The document introduces the option of using, in
the separate financial statements of an entity, the equity method for the evaluation
of investments in subsidiaries, jointly ventures and associates. Consequently,
following the introduction of the amendment an entity can record these investments
in its separate financial statements either: at cost; or as required by IFRS 9 (or IAS
39); or using the equity method.
of the introduction of said amendments on the Company’s separate/annual financial
statements.
•
On 11 September 2014, the IASB published an amendment to IFRS 10 and IAS 28
– Sales or Contribution of Assets between an Investor and its Associate or Joint
Venture. The document was published in order to resolve the current conflict
between IAS 28 and IFRS 10. According to the provisions of IAS 28, the gain or loss
resulting from the sale or transfer of a non-monetary asset to a joint venture or
associate in exchange for a share in the capital of the latter is limited to the
shareholding in the joint venture or associate by other investors extraneous to the
transaction. In contrast, IFRS 10 requires the recording of the entire gain or loss in
the event of loss of control of a subsidiary, even if the entity continues to hold a
non-controlling interest in it, including in this case also the sale or transfer of a
subsidiary to a joint venture or associate. The amendments introduced require that
for a sale/transfer of an asset or a subsidiary to a joint venture or associate, the
97
measure of the gain or loss to be recognized in the financial statements of the
seller/transferor depends on whether the asset or subsidiary sold/transferred
constitute a business, under the meaning of IFRS 3. If the assets or the subsidiary
sold/transferred represent a business, the entity shall recognize the gain or loss on
the entire investment held; otherwise, the portion of the gain or loss related to the
share still held by the entity shall be eliminated.
statements.
98
•
On 25 September 2014, the IASB published the “Annual Improvements to IFRSs:
2012-2014 Cycle”. The amendments introduced by the document shall be applied
beginning the years that start 1 January 2016 or after. The document introduces
amendments to the following standards:
IFRS 5 – Non-current Assets Held for Sale and Discontinued Operations. The
amendment introduces specific guidelines to the standard in the case in which an
entity reclassifies an asset (or disposal group) from the held-for-sale category to
the held-for-distribution category (or vice versa), or when the classification
requirements no longer apply of an asset as held-for-distribution. The amendments
define that (i) such reclassification shall not be considered as a change to a sales
plan or a distribution plan and that the same criteria for the classification and
evaluation shall remain valid; (ii) the assets that no longer meet the classification
criteria for the held-for-distribution shall be treated the same way as an asset no
longer classified as held-for-sale;
IFRS 7 – Financial Instruments: Disclosure. The amendments govern the
introduction of additional guidelines to clarify whether a servicing contract
constitutes continuing involvement in a transferred asset for the purposes of the
disclosure required in relation to the assets transferred. Moreover, it is clarified that
the disclosure on the compensation of financial assets and liabilities is normally not
explicitly required for interim financial statements. However, said disclosure may be
necessary to fulfil the requirements of IAS 34, in the case of significant information;
IAS 19 – Employee Benefits. The document introduces amendments to IAS 19 to
clarify that the high quality corporate bonds used to determine the discount rate of
post-employment benefits shall be in the same currency used for the payment of
the benefits. The amendments clarify that the scope of the market of high quality
corporate bonds to be considered shall be the one in terms of currency;
IAS 34 – Interim Financial Reporting. The document introduces amendments in
order to clarify the requirements to be met in the event that the disclosure required
is presented in the interim financial report, however outside of the interim financial
statements. The amendment specifies that said disclosure is included through a
cross-reference from the interim financial statements to other parts of the interim
financial report and that said document is available to readers of the financial
statements in the same manner and with the same timing of the interim financial
statements.
•
On 18 December 2014, the IASB published the amendment to IAS 1 - Disclosure
Initiative. The objective of the amendments is to provide clarification to disclosure
elements that may be perceived as impediments to a clear and intelligible drafting
of financial statements. The main amendments are as follows:
Materiality and aggregation: it is clarified that a company shall not obscure
information aggregating or disaggregating it and that the considerations of
materiality shall apply to the financial statements, notes and specific disclosure
requirements of the IFRS. The disclosures specifically required by IFRS shall be
provided only if the information is significant;
Statement of financial position and statement of comprehensive income: it is
clarified that the list of items specified by IAS 1 for these statements may be
disaggregated and aggregated as appropriate. A guideline on the use of subtotals
within the prospectuses is also provided;
Presentation of items of Other Comprehensive Income (“OCI”): it is clarified that
the share of OCI of associates and joint ventures consolidated using the equity
method shall be presented in aggregate form in a single item, in turn divided
between components susceptible or not to future reclassifications to the income
statement;
Notes: it is clarified that entities have flexibility in defining the structure of the
notes and a guideline is provided on how to set up a systematic order of the notes
themselves, for example:
Giving prominence to those that are most relevant for the purposes of
understanding the economic and financial position (ex. grouping information on
particular activities);
Regrouping elements measured according to the same criteria (ex. assets
measured at fair value);
Following the order of the elements presented in the statements.
The amendments introduced by the document shall be applied beginning the years
that start 1 January 2016 or after.
SCOPE OF CONSOLIDATION
In addition to the parent company Maire Tecnimont S.p.A., the companies directly or indirectly
controlled by it are included in the consolidation. In particular, entities are
consolidated when Maire Tecnimont S.p.A. exercises control over them, either through the
direct or indirect share ownership of the majority of votes exercisable in the Shareholders’
meeting or when it exercises a significant influence expressed by the power to determine the
financial and management decisions of the company/entity, obtaining the related benefits
regardless of the existence of any share ownership. Entities are excluded from line-by-line
consolidation if the inclusion thereof, in terms of operating dynamics (for example, companies
not yet or no longer operating and companies for which the liquidation process appears nearly
concluded), would be irrelevant to the accurate presentation of the Group’s earnings, cash
flow and financial position from both the qualitative and the quantitative perspective. Joint
Operations, in which two or more parties start a business enterprise subject to joint control,
are consolidated using the proportionate method. All subsidiaries are included in the scope of
consolidation from the date on which the Group acquires control. Companies are excluded
from the scope of consolidation as from the date on which the Group transfers control.
Compared to 31 December 2013, we note the consolidation of Tecnimont USA INC and
Tecnimont Mexico SA de CV as a result of operations achieved in 2014 and also the
consolidation of the newly formed MET T&S Ltd.
The purchase of the remaining 45% of Tecnimont Nigeria Ltd has only changed the Group’s
interest without changing the consolidation method. None of the aforementioned changes had
a significant effect on the Group.
The effect retrospective adoption of IFRS 11 resulted in the change the deconsolidation of TSJ
Limited, previously proportionately consolidated.
As mentioned previously, in considering them irrelevant in terms of the truthful and correct
representation of the Group’s economic, equity and financial position and of no particular use
to the financial statement users (as qualified by the “Framework for the Preparation and
Presentation of Financial Statements” published by the IFRS), the subsidiaries listed below
have not been consolidated, considering their current state of inoperativeness, or economic
irrelevance, or the liquidation procedures underway:
99
•
Svincolo Taccone S.c.a.r.l., Ravizza S.c.a.r.l., Parco Grande S.c.a.r.l., Program
International S.r.l., KT Cameroun S.A., Tecnimont Illinois LLC and Exportadora de
Ingegnieria y Servicios TCM S.p.A.
For the purpose of preparing the consolidated information in accordance with IFRS, all the
consolidated companies have prepared a specific reporting package based on the IFRS
principles adopted by the Group, as illustrated below, restating and/or adjusting the
accounting data approved by the competent corporate bodies of the respective companies.
Consolidation is based on the following criteria and methods:
a) adoption of the line-by-line method, which considers all assets, liabilities, costs and
revenues, regardless of the percentage of ownership;
b) adoption of the proportionate consolidation method, consisting of the full incorporation
of the assets, liabilities, costs and revenue, according to the percentage owned;
c) elimination of the intra-group items arising from financial transactions between Group
companies, including the elimination of any potential gains or losses not yet realised
arising from transactions between consolidated companies and recognising the ensuing
deferred tax implications;
d) elimination of intra-group dividends and subsequent reallocation to the initial
shareholders’ equity reserves;
e) elimination of the book value of the holdings in companies included in the scope of
consolidation, along with the corresponding share of net equity and the allocation of
the positive and/or negative differences arising in relation to the various items affected
(assets, liabilities and shareholders’ equity), defined according to the acquisition date
of the holding and the subsequent changes occurring;
f) the presentation of that part of the equity, reserves, and profits or losses attributable
to minority shareholders in specific items of the income statement and shareholders’
equity;
g) the adoption of the translation method at current exchange rates for foreign companies
preparing their financial statements in an operating currency other than the euro,
involving the translation of all monetary assets and liabilities at year-end exchange
rates and income statement items at the average exchange rate for the year. The
balance arising from conversion is recognized among the shareholders’ equity reserve.
The exchange rates used for the translation of the Financial Statements prepared in foreign
currencies are those published by UIC (Italian Foreign Exchange Office), as shown in the table
below:
Exchange rates
JanuaryDecember ‘14
31.12.2014
JanuaryDecember ‘13
31.12.2013
Euro/U.S. Dollar
1.3285
1.2141
1.32812
1.3791
Euro/Brazil Real
3.12113
3.2207
2.86866
3.2576
Euro/Indian Rupee
81.0406
76.719
77.930
85.366
Euro/Nigerian Naira
219.163
223.692866
211.551
220.886092
Euro/New Chilean Peso
756.933
737.296656
658.324
724.768766
Euro/Russian Rouble
50.9518
72.337
42.337
45.3246
Euro/Saudi Riyal
4.98307
4.557329
4.98086
5.17242
Euro/Polish Zloty
4.18426
4.2732
4.19749
4.1543
Euro/Yen
140.306
145.23
129.663
144.72
100
At 31 December 2014 the scope of consolidation was as follows:
Companies consolidated using the line-by-line method:
Consolidated Company
Consolidati
on method
HQ/Country
Currency
Share
capital
% Group
ownership
Through:
Line-by-line
Italy (Rome)
EUR
19,689,550
–
Parent Company
Tecnimont S.p.A.
Line-by-line
Italy (Milan)
EUR
1,000,000
100%
100%
S.p.A.
Line-by-line
Italy
EUR
6,000,000
100%
100%
Met NewEN S.p.A.
Line-by-line
Italy
EUR
3.807549
100%
Met T&S Ltd
Line-by-line
UK
GBP
100,000
100%
BiOlevano S.r.l.
Line-by-line
Italy
EUR
5,000,000
100%
99%
S.p.A.
1%
Met NewEN S.p.A.
100%
Met NewEN S.p.A.
90%
Protecma S.r.l.
10%
Stamicarbon B.V.
Line-by-line
Netherlands
EUR
9,080,000
100%
100%
Noy Engineering S.r.l.
Line-by-line
Italy
EUR
100,000
100%
Stamicarbon B.V.
100%
KT S.p.A.
Line-by-line
Italy
EUR
6,000,000
100%
100%
Processi Innovativi S.r.l.
Line-by-line
Italy
EUR
45,000
56.67%
KT S.p.A.
56.67%
KTI Immobiliare S.r.l.
Line-by-line
Italy
EUR
100,000
100%
KT S.p.A.
100%
K.T Iberia S.L
Line-by-line
Spain
EUR
10,000
100%
KT S.p.A.
100%
KTI Arabia LLC
Line-by-line
Saudi Arabia
Rial
500,000
70%
KT S.p.A.
70%
MST S.r.l.
Line-by-line
Italy
EUR
400,000
100%
Tecnimont S.p.A.
100%
TCM FR S.A. (formerly
Sofregaz S.A.)
Line-by-line
France
EUR
3,000,000
100%
Tecnimont S.p.A.
100%
TPI Tecnimont Planung und
Industrieanlagenbau Gmbh
Line-by-line
Germany
EUR
260,000
100%
Tecnimont S.p.A.
100%
Tws S.A.
Line-by-line
Switzerland
EUR
507,900
100%
T.P.I.
100%
Imm.Lux. S.A.
Line-by-line
Luxembourg
EUR
780,000
100%
Tecnimont S.p.A.
100%
Protecma S.r.l.
Line-by-line
Italy
EUR
3,000,000
100%
Tecnimont S.p.A.
100%
Empresa Madrilena de
Ingegnerìa y Construcciòn S.A.
Line-by-line
Spain
EUR
60,110
100%
Tecnimont S.p.A.
100%
Tecnimont Poland Sp.Zo.o
Line-by-line
Poland
Plz
50,000
100%
Tecnimont S.p.A.
100%
Tecnimont Arabia Ltd.
Line-by-line
Saudi Arabia
Rial
5,500,000
100%
Tecnimont S.p.A.
100%
Tecnimont Nigeria Ltd.
Line-by-line
Nigeria
Naire
10,000,000
100%
Tecnimont S.p.A.
100%
Tecnimont S.p.A.
99%
Tecnimont Russia
Line-by-line
Russia
RUR
18,000,000
100%
T.P.I.
1%
Tecnimont S.p.A.
100%
Tecnimont S.p.A.
98.87%
Maire Engineering France S.A.
1.13%
Tecnimont S.p.A.
95.71%
Tecnimont do Brasil Ltda.
4.28%
T.P.I.
0.01%
Tecnimont ICB Pvt. Ltd.
Line-by-line
India
Indian
Rupee
13,968,090
100%
Line-by-line
Brazil
Real
356,819,230
100%
Tecnimont Chile Ltda.
Line-by-line
Chile
Pesos
6,483,322,07
2
100.00%
Consorcio ME Ivai
Line-by-line
Brazil
Real
12487308.97
65%
65%
Maire Engineering Sapezal
Line-by-line
Brazil
Real
1,500,000
100%
100%
Tecnimont S.p.A.
90.00%
Tecnimont Mexico SA de CV
Line-by-line
Mexico
MXN
50,000.00
100%
TWS S.A,
10.00%
101
Maire Engineering France S.A.
Line-by-line
France
EUR
680,000
99.98%
Tecnimont S.p.A.
99.98%
Tecnimont USA INC.
Line-by-line
Texas (USA)
USD
10,000
100.00%
Tecnimont S.p.A.
100.00%
Transfima S.p.A.
Line-by-line
Italy
EUR
1,020,000
51%
S.p.A.
51%
S.p.A
43%
Transfima G.E.I.E.
Japigia 2000 S.r.l.
Line-by-line
Line-by-line
Italy
Italy
EUR
250,000
EUR
0
50.65%
Transfima S.p.A.
15%
95%
S.p.A
95%
99.99%
Cefalù 20 S.c.a.r.l.
Line-by-line
Italy
EUR
20,000,000
99.99%
S.p.A
Corace S.c.a.r.l.
Line-by-line
Italy
EUR
10,000
65%
S.p.A
65%
MGR Verduno 2005 S.p.A.
Line-by-line
Italy
EUR
600,000
95.95%
S.p.A
95.95%
51%
S.p.A
51%
S.p.A
98.4%
ML 3000 S.c.a.r.l.
Line-by-line
Birillo 2007 S.c.a.r.l.
Line-by-line
Italy
Italy
EUR
EUR
10,000
600,000
100%
MST S.r.l.
Coav S.c.a.r.l.
Line-by-line
Italy
EUR
25,500
51%
S.p.A
TCC Denmark Aps
Line-by-line
Italy
EUR
10,728
100%
S.p.A
1.6%
51.0%
100.0%
Companies consolidated on a proportionate basis:
Consolidated Company
Consolidation
Method
HQ/Country
Currency
JTS Contracting Company Ltd
Proportionate
Malta
EUR
Sep FOS(*)
Proportionate
Consorzio Turbigo 800
France
EUR
Share
capital
100,000
-
% Group
ownership
45%
50%
Through:
Tecnimont S.p.A.
35%
Sofregaz S.A.)
10%
Tecnimont S.p.A.
49%
Sofregaz S.A.)
1%
Tecnimont S.p.A.
50%
Proportionate
Italy
EUR
100,000
50%
Proportionate
United Arab
Emirates
USD
-
50%
Tecnimont S.p.A.
50%
JO Saipem-Dodsal-Tecnimont (*)
Proportionate
United Arab
Emirates
AED
-
32%
S.p.A.
32%
KT-Hidrogeno Cadereyta (*)
Proportionate
Spain
EUR
6,000
43%
KT S.p.A
43%
Jo Gasco(*)
(*)
These are joint venture agreements set up to manage a specific project and evaluated as joint operation in light of the
introduction of IFRS 11.
CHANGES
IN ACCOUNTING PRINCIPLES
- IFRS 11 - SUMMARY
OF THE EFFECTS OF
THE RESTATEMENT
As also mentioned in the previous paragraph entitled “Evaluation Criteria”, the application of
IFRS 11, subject to the criteria for the identification of the presence of a jointly controlled
entity, provides the criteria for the accounting of joint arrangements by focusing on the rights
and obligations deriving from these arrangements, rather than their legal form, distinguishing
between joint ventures and joint operations. The standard is retrospectively applicable
starting from 1st of January 2013. The adoption of this new standard had no significant impact
on the consolidation area of the Group. It shall also be noted that because of its nature, the
above changes did not result in changes to either the Group net profit of the previous year
and 2013, nor to the value of the Shareholders’ Equity of the Group as at 31 December 2013.
The table below outlines the aforementioned effects of the application of IFRS 11 on the
balance sheet as at 1 January 2013 and 31 December 2013:
102
Values in Euro thousands
STATEMENT OF FINANCIAL POSITION - ASSETS
PROPERTY, PLANT AND EQUIPMENT
1 January 2013 Published
IFRS 11
1 January 2013 Restated
31 December 2013 Published
IFRS 11
31 December 2013 Restated
45,342
(5)
45,337
34,970
(1)
34,969
301,754
0
301,754
291,754
0
291,754
28,803
(5)
28,798
25,223
(0)
25,223
5,772
0
5,772
2,750
0
2,750
10
0
10
263
0
263
OTHER NON-CURRENT FINANCIAL ASSETS
13,065
0
13,065
15,086
0
15,086
OTHER NON-CURRENT ASSETS
60,510
0
60,510
60,122
0
60,122
DEFERRED TAX ASSETS
TOTAL NON-CURRENT ASSETS
99,890
555,146
(7)
99,883
555,128
86,710
516,878
0
(1)
86,710
516,877
GOODWILL
OTHER INTANGIBLE ASSETS
SHAREHOLDINGS IN AFFILIATES
FINANCIAL INSTRUMENTS – DERIVATIVES
INVENTORIES
1,911
(19)
1,911
1,846
128,794
138,288
(3,562)
0
242,013
293,896
(12,581)
281,315
(29,245)
421,769
413,031
(3,088)
409,942
137,475
125,477
(14)
125,464
866
415
43,922
17,282
(0)
ADVANCES TO SUPPLIERS
160,106
CONSTRUCTION CONTRACTS
242,013
TRADE RECEIVABLES
451,014
CURRENT TAX ASSETS
137,484
(9)
OTHER CURRENT FINANCIAL ASSETS
OTHER CURRENT ASSETS
CASH AND CASH EQUIVALENTS
TOTAL CURRENT ASSETS
866
44,017
151,203
433,347
1,621,960
(31,312)
0
(94)
(100)
(83,598)
(144,358)
151,103
139,613
349,749
1,477,602
194,187
1,324,035
0
0
(101)
(116)
(27,175)
(46,638)
1,846
134,725
415
17,181
139,497
167,012
1,277,397
NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE
169,934
0
169,934
101,916
0
101,916
ELIMINATION OF ASSETS TO AND FROM ASSETS/LIABILITIES
HELD FOR SALE
(96,153)
0
(96,153)
(84,889)
0
(84,889)
2,250,887
(144,377)
2,106,511
1,857,940
TOTAL ASSETS
(46,639)
1,811,301
STATEMENT OF FINANCIAL POSITION - LIABILITIES
TOTAL SHAREHOLDERS’ EQUITY
FINANCIAL DEBT NET OF CURRENT AMOUNT
1 January 2013 Published
IFRS 11
1 January 2013 Restated
31 December 2013 Published
IFRS 11
31 December 2013 Restated
(120,677)
0
(120,677)
35,195
0
35,195
0
0
0
362,766
0
362,766
PROVISIONS FOR RISK AND CHARGES - OVER 12 MONTHS
35,047
5,356
40,403
33,109
6,440
39,549
DEFERRED TAX LIABILITIES
21,219
0
21,219
21,854
0
21,854
POST-EMPLOYMENT AND OTHER EMPLOYEE BENEFITS
15,436
0
15,436
15,213
0
15,213
OTHER NON-CURRENT LIABILITIES
18,995
(1)
18,994
17,206
0
17,206
1,024
0
1,024
81
0
81
0
0
0
(0)
0
OTHER NON-CURRENT FINANCIAL LIABILITIES
TOTAL NON-CURRENT LIABILITIES
0
91,721
5,355
97,076
450,229
6,440
456,669
687,890
0
687,890
152,707
0
152,707
150
0
150
0
0
0
44,345
0
44,345
38,321
0
38,321
9,829
0
9,829
6,909
0
6,909
OTHER CURRENT FINANCIAL LIABILITIES
10,738
0
10,738
9,741
0
CLIENT ADVANCE PAYMENTS
279,916
(37,051)
242,864
114,681
310,006
(9,744)
300,262
289,849
0
289,849
TRADE PAYABLES
771,636
(98,803)
672,833
660,791
(25,365)
635,426
SHORT-TERM DEBT
PROVISIONS FOR RISK AND CHARGES - WITHIN 12 MONTHS
TAX PAYABLES
OTHER CURRENT LIABILITIES
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES CLASSIFIED AS HELD FOR SALE
ELIMINATION OF LIABILITIES TO AND FROM ASSETS/LIABILITIES
HELD FOR SALE
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES
104,803
2,219,313
156,684
(96,153)
2,250,887
(4,134)
(149,732)
(0)
0
(144,377)
(9,076)
9,741
105,605
100,669
93,999
(18,638)
75,361
2,069,581
1,366,998
(53,079)
1,313,919
156,684
90,407
(96,153)
2,106,511
(84,889)
1,857,940
0
0
(46,638)
90,407
(84,889)
1,811,302
103
The effects on the comparative income statement at 31 December 2013 are reported in the
following summary table:
CONSOLIDATED INCOME STATEMENT
REVENUES
31 December
2013 Published
IFRS 11
31 December
2013 Restated
1,572,928
(159,668)
1,413,260
83,245
1,743
84,988
TOTAL REVENUES
1,656,173
(157,925)
1,498,248
RAW MATERIALS AND CONSUMABLES
(526,884)
39,364
(487,519)
COST OF SERVICES
(679,801)
115,341
(564,460)
PERSONNEL EXPENSE
(252,151)
2,671
(249,479)
OTHER OPERATING EXPENSES
(81,238)
548
(80,690)
(1,540,074)
157,926
(1,382,149)
GROSS OPERATING MARGIN
116,099
0
116,099
AMORTIZATION, DEPRECIATION AND WRITE-DOWNS
(20,339)
0
(20,339)
WRITE DOWN OF RECEIVABLES INCLUDED IN WORKING CAPITAL AND
CASH IN HAND
(2,889)
0
(2,889)
PROVISIONS TO THE FUNDS FOR RISKS AND CHARGES
(2,907)
0
(2,907)
OPERATING PROFIT
89,964
0
89,964
FINANCIAL INCOME
4,221
0
4,221
INTEREST EXPENSE
(44,777)
0
(44,777)
709
0
709
OTHER OPERATING REVENUES
TOTAL COSTS
GAINS/(CHARGES) ON INVESTMENTS
50,117
0
50,117
(32,774)
0
(32,774)
17,343
0
17,343
0
0
0
PROFIT (LOSS) FOR THE PERIOD
17,343
0
17,343
GROUP
16,952
0
16,952
391
0
391
INCOME BEFORE TAX
INCOME TAXES, CURRENT AND DEFERRED
PROFIT (LOSS) FROM CONTINUING OPERATIONS
PROFIT (LOSS) FROM DISCONTINUED OPERATION AFTER TAXES
MINORITIES
DATA PER SHARE
BASE EARNINGS PER SHARE
0.055
0.055
DILUTED EARNINGS PER SHARE
0.050
0.050
104
The effects on the comparative financial statements at 31 December 2013 are reported in the
following summary table:
Cash and cash equivalents at the beginning of the year (A)
31 December
2013 Published
31 December
2013 - Restated
IFRS 11
433,347
(83,598)
349,749
17,343
0
17,343
Operations
Net income of group and minorities
Adjustments:
-
13,613
0
13,613
-
6,725
0
6,725
-
Provisions
5,797
(0)
5,797
-
(Revaluation)/impairment losses
(709)
0
(709)
-
40,555
0
40,555
-
Income taxes, curent and deferred
32,774
(0)
32,774
-
(Capital gains)/losses
(218)
(0)
(218)
-
(Increase)/decrease in inventories/advances to suppliers
21,883
(27,750)
(5,867)
-
37,984
(26,157)
11,827
-
(Increase)/decrease in receivables for construction contracts
(56,083)
12,581
(43,502)
-
(13,982)
(14,505)
(28,487)
-
4,572
15
4,587
-
Increase/(decrease) in trade payables/advances from clients
(276,080)
101,414
(174,666)
-
Increase/(decrease) in payables for construction contracts
(20,156)
9,743
(10,413)
-
Increase/(decrease) in provisions (including post-employment benefits)
(3,907)
1,084
(2,823)
-
Income taxes paid
(2,579)
8
(2,571)
(192,468)
56,432
(136,036)
Investments
(565)
(2)
(567)
(2,533)
(4)
(2,537)
892
(1)
891
824
(0)
824
(1,382)
(9)
(1,391)
(136,024)
0
(136,024)
(60,949)
0
(60,949)
(Increase)/decrease in securities/bonds
(4,557)
(0)
(4,557)
14,118
0
14,118
143,217
(0)
143,217
(44,195)
0
(44,195)
(238,045)
56,423
(181,622)
195,302
(27,174)
168,128
1,115
(0)
1,115
194,187
(27,175)
167,012
(Investments)/disposals of intangible assets
Financing
Increase/(decrease) in bank overdrafts
of which: cash and cash equivalents included in assets held for sale and
discontinued
CASH AND CASH EQUIVALENTS SHOWN IN THE FINANCIAL STATEMENTS
AT YEAR END
105
MEASUREMENT CRITERIA
The most significant measurement criteria used to prepare the consolidated financial
statements are described below.
BUSINESS COMBINATIONS
The acquisition of subsidiaries is accounted for according to the acquisition method. The
purchase price is the sum of the current values, on the date of acquisition, of the assets
acquired, the liabilities incurred or undertaken and the financial instruments issued by the
Group in exchange for management of the acquired company.
When the identifiable assets, liabilities and contingent liabilities of the acquired company meet
recognition requirements under IFRS 3, these are recognised at their fair values at the
acquisition date, except for non-current assets (and disposal groups) which are classified as
held for sale in accordance with IFRS 5 and measured at fair value less costs to sell.
Goodwill arising from the award is recognized as an asset and initially valued at cost,
calculated as the excess of purchase price over the Group’s share of the current value of
recorded assets, liabilities and identifiable contingent liabilities. If, after these values are
recalculated, it is the case that the Group’s share of the current values of assets, liabilities and
identifiable contingent liabilities exceeds the purchase price, the difference is immediately
charged to the Income Statement.
Minority interests in the acquired entity are initially recognised in proportion to their interest in
the fair values of recognised assets, liabilities and contingent liabilities.
INVESTMENTS IN AFFILIATES
An affiliate is an entity in which the Group has significant influence, but not control or joint
control, by participating in the investee’s financial and operating policy decisions.
The share of profit/(loss) for the year and assets and liabilities of affiliated companies are
recognised in the consolidated financial statements by using the equity method, unless they
are classified as held for sale, in which case they are recognised separately, in accordance
with the provisions of IFRS 5 - Non-current Assets Held for Sale and Discontinued Operations.
Under this method, investments in affiliated companies are recognised in the consolidated
balance sheet at cost, adjusted to consider changes following the acquisition of net assets of
affiliated companies, net of any impairment losses on individual investments. Any losses of
affiliated companies exceeding the Group’s interest (including medium/long-term interests
which are a substantial part of the Group’s net investment in the associate) are not
recognised, unless the Group has an obligation to cover them.
INVESTMENTS IN JOINT VENTURES AND JOINT OPERATIONS
A joint operation is a contractual arrangement whereby the Group undertakes with other
investors an economic activity which is subject to joint control. Joint control is understood as
the contractually shared control over a business activity and exists solely when strategic,
financial and operational decisions connected to the business require the full consent of all the
parties that share such control.
When a Group company undertakes its activities directly through joint operations agreements,
the assets and liabilities that are jointly controlled with other investors are recognised in the
consolidated financial statements on the basis of the percentage attributable to the Group.
They are classified by nature. Liabilities and costs incurred directly for jointly controlled assets
are recognised on an accruals basis. The portion of profit deriving from the sale or use of
resources generated by the joint operation, net of the relevant portion of costs, is recognized
when it is probable that the Group will benefit from the economic rewards of such transactions
and their amount can be reliably calculated.
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Joint venture agreements that entail the creation of a separate entity in which each investor
has an investment are considered jointly controlled entities. The Group recognizes
investments in joint ventures using the equity method. Under this method, joint ventures are
recognised in the consolidated statement of financial position at cost, adjusted to consider
changes following the acquisition of net assets of affiliated companies, net of any impairment
losses on individual investments. Any losses of affiliated companies exceeding the Group’s
interest (including medium/long-term interests which are a substantial part of the Group’s net
investment in the associate) are not recognised, unless the Group has an obligation to cover
them.
In transactions between a Group company and a jointly-controlled venture, unrealized profits
and losses are eliminated to the extent of the Group’s percentage share in the jointlycontrolled venture, except in cases where unrealized losses constitute evidence of a reduction
in value in the transferred asset.
GOODWILL
Goodwill arising from the acquisition of a subsidiary or jointly-controlled entity reflects the
excess acquisition cost above the percentage of the Group’s interest in the fair value of the
subsidiary’s or jointly controlled entity’s identifiable assets, liabilities and contingent assets at
the acquisition date. Goodwill is recognized as an asset and tested annually for impairment.
Impairment losses are immediately booked to the income statement and are never reversed,
in accordance with the provisions of IAS 36 - Impairment of Assets.
For the purpose of impairment testing, goodwill acquired in a business combination
transaction must be allocated to each cash-generating unit in the acquiring company, or
groups of cash generating units, that are expected to benefit from aggregation synergies.
When the recoverable amount of cash-generating units (or groups of cash-generating units) is
lower than the book value, goodwill is written down.
In the event of disposal of a subsidiary or jointly-controlled venture, the portion of goodwill
attributable to it is included in the calculation of gains or losses arising from the disposal.
Goodwill arising from acquisitions performed before the date of transition to IFRSs is
maintained at the amounts calculated under Italian GAAP at that date and tested for
impairment at the same date.
Non-current assets (and disposal groups) are classified as held for sale when it is expected
that their book value will be recovered by selling the asset rather than using it for the
Company’s operations. This condition is only met when the sale is highly probable, the asset
(or disposal group) is available for immediate sale in its current state and management is
committed to the sale, which should take place within twelve months of classification as held
for sale.
Non-current assets (and groups of assets being disposed of) that are classified as held for sale
are valued at the lower of the previous book value and the market value less disposal costs.
RECOGNITION OF REVENUES
Revenues from transactions are recognised at the fair value of the consideration received, net
of returns, discounts, allowances and premiums, as follows:
•
sale revenues: when the risks and rewards of ownership are effectively transferred;
•
service revenues: at the time the service is provided.
The Group includes translation differences on commercial operations among operating profit
or loss and, more specifically, under the items “Other operating revenues” or “Other operating
107
costs” according to whether the net effect is positive or negative, with a breakdown provided
in the Notes.
When the profit or loss on a construction contract can be reliably estimated, the revenues and
costs relating to the contract are recognised as revenue and costs in relation to the status of
completion at the reporting date, based on the ratio of costs incurred for work performed up
to the reporting date and total estimated contract costs (the cost-to-cost method).
Given the technical complexity, the size and the duration of construction projects, the
additional compensations, contract changes, price revisions and incentives are included to the
extent that they have been agreed upon with the client. In evaluating these elements, the
Group recognises revenues only if it has reached an advanced stage of negotiations, making it
probable that the customer will agree and possible to reliably calculate the amount that the
customer will pay.
When the profit or loss on a construction contract cannot be reliably estimated, revenues
related to the contract are recognised only to the extent of contract costs incurred that are
likely to be recovered. Contract costs are recognized as expenses in the financial period in
which they are incurred.
When it is probable that total contract costs will exceed contract revenues, the loss is
expensed immediately.
Property, plant and equipment used for the production or the supply of goods and services are
recognized at their historical cost, inclusive of any additional charges and direct costs required
to make the asset available for use.
Property, plant and equipment are recognized
amortization/depreciation and any impairment losses.
at
cost,
net
of
accumulated
Property is recorded at fair value at the date of the revaluation less any subsequent
accumulated amortization/depreciation and any subsequent accumulated impairment, and is
depreciated over its estimated useful life. Annually, property values are recalculated based on
an independent expert appraisal. The positive/negative difference is recorded in revaluation
surplus under equity.
Amortization/depreciation is calculated on a straight-line basis by applying the following rates
on the cost of the assets over their estimated useful life, which is reviewed annually:
Asset category
Land
Buildings
Plant and equipment
Depreciation rate
0%
from 2% to 10%
from 7.5% to 15%
Industrial and commercial equipment
15%
Furniture and fittings
12%
IT equipment
20%
Vehicles
from 20% to 25%
Gains and losses arising from the transfer or disposal of assets are calculated as the difference
between sales revenue and the net carrying amount of the asset. They are booked to the
income statement for the year.
Ordinary maintenance costs are fully expensed.
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Interventions to improve an asset with respect to its original verified condition are capitalized
and depreciated in proportion to the residual useful life thereof.
Leasehold improvements that meet capitalisation requirements are recognised under property,
plant and equipment and depreciated over the shorter of the residual concession term and the
asset’s useful life.
Leased assets
Lease agreements in which all risks and rewards of ownership are not transferred to the
Group are considered operating leases.
Payments for operating leases are recognized on a straight-line basis over the duration of the
contract.
Grants
Public grants are recognised when it is reasonably certain that they will be received and when
all conditions for attaining them have been met.
Any capitalized government grants towards items of property, plant and equipment are
recognised as direct deductions from the value of the assets to which they refer. The value of
the asset is adjusted for systematic depreciation, calculated according to the residual possible
use of the asset over its useful life.
INTANGIBLE ASSETS
Intangible assets purchased separately are shown at cost less amortization/depreciation and
impairment. Amortization is calculated on a straight-line basis over the asset’s residual useful
life. The amortization method and residual useful lives are reviewed at the end of each
accounting period. The effects of changes in the amortization/depreciation method and the
residual useful life are reflected in the accounting treatment going forward rather than
retrospectively.
Internally Generated Intangible Assets – Research and Development Costs
Research costs are charged to the Income Statement in the period in which they are incurred.
Internally generated intangible assets arising from the development stage of an internal
Group project are capitalised as assets if, and only if, all of the following conditions have been
met:
•
it is technically feasible to complete the intangible asset so that it will be available for
use or sale;
•
the Group intends to complete the asset for use or sale;
•
the Group is capable of using or selling the asset;
•
it is probable that the asset will generate future economic benefits; and
•
the Group has the technological, financial and other resources to complete the
development and use or sell the asset during the development stage.
The initially recognised amount of internally generated intangible assets corresponds to the
sum of expenses incurred from the date in which the asset first meets the above
requirements. When internally generated intangible assets cannot be recognised, the
development expenses are booked to the income statement when incurred.
Following their initial recognition, internally generated intangible assets are accounted for at
cost less accumulated impairment, as is the case for intangible assets purchased separately.
109
Intangible Assets Acquired in a Business Combination
Intangible assets acquired in a business combination are identified and recognised separately
from amortization if they meet the definition of intangible assets and their fair value can be
reliably determined. The cost of such intangible assets is their fair value on the date of award.
After initial recognition, intangible assets acquired in a business combination are measured at
cost, net of accumulated impairment losses, as for intangible assets acquired separately.
IMPAIRMENT
ASSETS
OF
PROPERTY, PLANT
AND
EQUIPMENT, INTANGIBLE
AND
FINANCIAL
At each reporting date, the Group reviews the carrying amount of its property, plant and
equipment, intangible assets and financial assets to determine whether there are any
indications that they have become impaired. Should it be impossible to estimate the
recoverable value of an individual asset, the Group estimates the recoverable value of the
cash-generating unit to which the asset belongs. If there are signs of impairment, the Group
estimates the recoverable amount of the assets to calculate any impairment losses.
Intangible assets with indefinite useful lives such as goodwill are tested for impairment each
year and whenever there is an indication of a possible impairment loss.
The recoverable amount is the higher of the fair value net of selling expenses and the value in
use. In calculating the value in use, estimated future cash flows are discounted to present
value using a pre-tax rate that reflects current market valuations of the cost of money and the
specific risks connected to the business. Various cash flow scenarios (sensitivity analyses) are
utilised in determining this value.
If the recoverable amount of an asset (or of a cash-generating unit) is estimated to be lower
than the relative book value, it is reduced to the lower recoverable value. An impairment loss
is recognized immediately in the Income Statement.
If an impairment loss on an asset subsequently ceases to exist or is reduced, the carrying
amount of the asset is increased to the level of the new estimate of recoverable amount,
which may not exceed the value which would have resulted if no impairment loss had
occurred. Reversals of impairment losses are immediately recognised in the income
statement.
INVENTORIES
Inventories are measured at the lower of cost and net realisable value. The cost is composed
of direct materials and, where applicable, direct labor, general production costs and other
expenses incurred to bring inventories to their current location and state. The cost is
calculated using the weighted average cost method. The net realizable value is the estimated
sale price less estimated completion costs and selling expenses.
FINANCIAL INSTRUMENTS
Financial assets and liabilities are recognized in the Statement of Financial Position at the
moment when the Group becomes a party to the relative contractual clauses.
FINANCIAL ASSETS
Receivables
Receivables are initially recognised at fair value and subsequently measured at amortised
cost, according to the effective interest method, net of impairment losses that reflect amounts
deemed non-recoverable and which are taken to specific provisions adjusting receivables.
Amounts considered uncollectable are estimated on the basis of the realizable cash flows.
110
These flows consider expected recovery times, estimated realisable value, any guarantees and
costs that the Group expects to incur to recover the receivables. The original value of the
receivables is restored in subsequent financial years if the reasons for impairment cease to
exist. In this case, the reversal is recognised in the income statement and may not exceed the
amortised cost that the receivable would have had if it had not been impaired.
Trade receivables with a maturity falling within normal commercial terms are not adjusted to
present value. Receivables denominated in a currency other than the operating currency of
the individual companies are valued at the year-end exchange rate.
Other financial assets
Financial assets which the Group has the intention and ability to hold until maturity in
accordance with the requirements of IAS 39 are recognised at cost at the trade date, which
equals the fair value of the initial consideration, plus any transaction costs (e.g.: commissions,
advisory fees, etc.) directly related to the acquisition of the asset. Subsequent to the initial
assessment, such assets are valued at amortized cost, using the original effective interest rate
method.
Any financial assets held in order to generate revenues in the short term are recognised and
measured at fair value through profit or loss. Any other financial assets are classified as
available-for-sale financial assets and are recognised and measured at fair value through
equity. These gains or losses are recorded in the Income Statement as soon as the asset is
sold or impaired. This latter category includes investments in companies other than
subsidiaries, jointly controlled entities and affiliates.
This item includes cash, bank current accounts and deposits that are refundable on demand,
as well as other short-term highly liquid investments that can be easily converted into cash
with minor risks in terms of change in value.
FINANCIAL LIABILITIES AND EQUITY INSTRUMENTS
Financial liabilities and the Group’s equity instruments are classified in accordance with the
substance of the underlying contractual agreements and in compliance with the respective
definitions of liabilities and equity instruments. The latter are defined as contracts attributing
the right to benefit from the residual interest in the Company’s assets after deducting all of its
liabilities. The accounting standards adopted in relation to specific financial liabilities and
equity instruments are described below.
Payables
Payables are initially recognised at cost, which corresponds with the fair value of liabilities, net
of directly related transaction costs.
After initial recognition, these liabilities are measured at amortised cost, using the effective
interest method. This category includes interest-bearing bank loans and bank overdrafts.
Trade payables with normal commercial maturities are not adjusted to present value. Payables
denominated in currencies other than the operating currency of the individual companies are
valued at the year-end exchange rates.
FAIR VALUE MEASUREMENT
Fair value is the value at which an asset (or a liability) can be exchanged in a transaction
between independent parties having a reasonable degree of knowledge of market conditions
and other meaningful elements related to the object of the negotiation. The definition of fair
111
value implies the assumption that an entity is fully operating and that there is no necessity to
liquidate or materially reduce business activities, or carry out transactions at unfavorable
conditions. The fair value reflects the financial standing of the instrument as it incorporates
the counterparty risk.
Receivables and payables
The fair value of receivables and payables recognised in the financial statements at cost or
amortised cost is provided in the Notes for disclosure purposes, calculated as follows:
•
for short-term receivables and payables, it is held that the cashed-out/cashed-in value is
reasonably close to their fair value;
•
for long-term receivables and payables, the fair value assessment is mainly carried out
through the future cash flow discounting method. Each future cash flow is discounted at a
rate based on the zero-coupon yield increased by a margin representing the specific risk
level of the counterparty.
Other Financial Instruments (Bonds and Securities)
The fair value of this category of financial assets is determined by taking into account the
market prices at the Statement of Financial Position date, where these exist, or alternatively
by using other valuation methods based exclusively on market data.
EQUITY INSTRUMENTS
Equity instruments issued by the Company are recognized on the basis of the amounts
received in exchange for them, net of direct issuing costs.
CONVERTIBLE BONDS
In accordance with IAS 32 – “Financial Instruments: Presentation”, convertible bonds are
accounted for as compound financial instruments, consisting of two components which are
accounted for separately only if relevant: a liability and a conversion option. The liability
corresponds to the present value of future cash flows, based on the current interest rate at
the date of issue for an equivalent non-convertible bond. The option value is defined as the
difference between the net amount received and the amount of the liability and is recognized
in equity. The value of the conversion option into shares is not changed in subsequent
periods. In contrast, if the characteristics of the bond involve, upon exercise of the conversion
right, the right for the company to deliver shares or offer a combination of shares and cash,
the option is accounted for as a financial liability for the embedded derivative, measured at
fair value through the income statement while the differential with respect to the original
nominal value or the financial liability (host) is recorded at amortized cost.
In consideration of the placement of the convertible bond issued in February 2014 by Maire
Tecnimont S.p.A., it is configured as a compound financial instrument the accounting methods
of which are outlined above.
DERIVATIVES AND HEDGE ACCOUNTING
The Group uses derivatives (swap, option and forward contracts) to hedge risks arising from
changes in interest rates on bank loans and exchange rate risks on cash flows of contracts
denominated in foreign currencies.
The structure of existing contracts complies with the Group’s hedging policy.
Derivatives are measured at their fair value by booking changes in fair value within the
income statement if they do not meet the conditions to be qualified as hedges or due to the
typology of instrument or due to the choice of the company to not implement the so-called
112
efficacy test. Derivatives are classified as hedges when the relation between the derivative
and the object of the hedge is formally documented and the efficacy of the hedge, tested
periodically, is high pursuant to IAS 39. The booking of derivative instruments differs as a
function of the objective of the hedge: whether they are cash flow hedges or fair value
hedges.
Cash flow hedge
Fair value variations in derivative instruments which, if they are effective, are designated as
hedges of future cash flows on the Group’s contractual commitments, are recognised directly
in equity, while the ineffective portion is booked immediately to the income statement.
Amounts directly recorded through shareholders’ equity are included in the Income Statement
in the same period in which the commitments under the hedge contract impact the Income
Statement.
Fair value hedge
For the effective hedging of exposures to “changes in fair value”, the hedged item is adjusted
by the fair value changes linked to the hedged risk with a counter item in the Income
Statement. Gains and losses arising from the valuation of derivative contracts are also
recognized through the Income Statement.
Changes in the fair value of derivatives that are not designated as hedge instruments are
recognized through the Income Statement of the period in which they occur.
Embedded derivatives
Embedded derivatives in contracts are accounted for as separate derivatives only if:
•
the characteristics and risks of the embedded derivative are not closely related to
those of the host contract;
•
a separate instrument with the same terms would meet the definition of a derivative;
•
the hybrid instrument is not accounted for at fair value with changes in fair value
reported in the income statement.
If an embedded derivative is separated, the host contract is accounted for under the
provisions of IAS 39 if it is a financial instrument, and in accordance with other appropriate
standards if it is not a financial instrument.
Measurement of fair value
The fair value of financial instruments corresponds with current market price or, if it is not
available, the value resulting from the application of the appropriate financial measurement
models, which consider all factors adopted by market operators and prices obtained in a real
market transaction. In particular, the fair value of interest rate swaps is determined by
discounting expected cash flows, whereas the fair value of forward exchange transactions is
calculated on market exchange rates at the reporting date and on differential exchange rates
between the related currencies.
DERECOGNITION OF FINANCIAL INSTRUMENTS
Financial assets are derecognised when the right to receive the cash flows ceases and
substantially all of the risks and rewards associated with the ownership of assets have been
transferred or an item is considered definitively non-recoverable after all the necessary
recovery procedures have been completed. Financial liabilities are derecognised when the
113
specific contractual obligation has been discharged. Receivables transferred in factoring
operations are only derecognised if substantially all the risks and rewards of ownership have
been transferred to the factor. Receivables transferred with and without recourse that do not
meet the above requirement continue to be carried by the Company even though they have
been legally transferred; in this case, a financial liability of equal amount is recognised in
connection with the advance received.
SHAREHOLDERS’ EQUITY
Share capital
The share capital is represented by the Parent Company’s subscribed and paid-up capital.
Costs directly related to the issuance of shares are classified as a reduction in share capital
when they are directly related to the equity transaction.
Treasury shares
These are presented as a decrease in Group equity. Costs incurred by the Parent to issue new
shares are treated as a decrease in equity, net of any deferred tax effect. Gains and losses on
the acquisition, sale, issue or cancellation of treasury shares are not recognised in the income
statement.
Profits (losses) carried forward
These include profits for previous years that were not distributed or allocated to reserves and
losses for previous years that have not yet been covered. This item also includes transfers
from other equity reserves when the restrictions to which amounts were previously subject no
longer apply, as well as the recognition of the effects of changes in accounting policies and
material errors.
Other reserves
These include, but are not limited to, the fair value reserve relating to items recognised
through equity, the treasury share reserve, legal reserve and translation reserve.
Valuation reserve
This reserve includes, but is not limited to, the cash flow reserve for the recognition of the
effective portion of hedges and the reserve for actuarial gains (losses) on defined-benefit
plans recognised directly in equity.
CONTRACTUAL LIABILITIES DERIVING FROM FINANCIAL GUARANTEES
Contractual liabilities deriving from financial guarantees are initially recognized at fair value
and subsequently at the higher of:
114
•
the amount of the contractual obligation, determined in accordance with IAS 37 –
Provisions, Contingent Liabilities and Contingent Assets;
•
the initially recorded amount net, where appropriate, of any accumulated
depreciation/amortization, recognised in accordance with the recognition of revenues
as described above.
PROVISIONS FOR RISKS AND CHARGES
Provisions are recognised when the Group has present obligation (legal or constructive) as a
result of a past event and it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation. Provisions are accrued on the basis of the
best estimate of costs to be incurred to settle the obligation at the reporting date. They are
discounted when the effect of the time value of money is material.
When the Group believes that a provision made for risks and charges has to be in part or
entirely refunded or compensated, the indemnity is reported under assets only when the
refund is virtually certain and the related amount can be reliably determined.
Onerous contracts
If the Group has a contract that can be considered onerous, the present contract obligation is
recognised and measured as a provision.
An onerous contract is a contract in which the non-discretional costs required to meet the
obligation exceed the economic rewards expected from the contract itself.
Restructuring provision
A restructuring provision is recognized only if the Group has developed a detailed and formal
plan for such a restructuring, and has given rise to a valid expectation among third parties
that the Group will perform such a restructuring, either because it has already started the
related activities or because it has key elements to the interested third parties.
A restructuring provision should only include direct restructuring costs that are not associated
with the Group’s current operations.
Warranties
Provisions for warranty costs are recognized when it is probable that an intervention under
guarantee on completed works is requested. Provisions are calculated on the basis of
management’s best estimate of the costs to be incurred to settle the obligation.
POST-EMPLOYMENT BENEFITS
Payments for defined-contribution plans booked to the income statement in the period when
they are due.
The cost of benefits recognised under defined-benefit plans is calculated using the projected
unit credit method based on actuarial calculations performed at each year end. Actuarial gains
and losses are fully recognised when they arise and are taken directly to a specific equity
reserve. Past service cost is immediately recognised to the extent that benefits have already
vested.
Recognized liabilities for post-employment benefits reflect the present value of liabilities for
defined-benefit plans, adjusted to consider unrecognised actuarial gains and losses and
unrecognised prior service costs, less the fair value of plan assets. Any net assets arising from
such calculation are limited to the value of non-recognized actuarial losses and costs of past
service, plus the current value of any repayments and reductions in future contributions to the
plan.
115
Other long-term benefits
The treatment of other long-term benefits is analogous to that of post-employment benefit
plans, except that the actuarial gains and losses, as well as the costs deriving from past
employment service, are recognised in the income statement in their entirety during the year
in which they accrue.
FINANCIAL INCOME AND EXPENSE
Interest is recognised on an accruals basis using the effective interest method, i.e., the
interest rate that renders all inflows and outflows (including any premiums, discounts,
commissions, etc.) that comprise a specific transaction financially equivalent. The Group
classifies translation differences deriving from financial operations to this item, whereas
operating translation differences deriving from commercial operations are included among
operating profit or loss and, more specifically, under “Other operating revenues” or “Other
operating costs” according to whether the net effect is positive or negative, with a breakdown
provided in the Notes.
INCOME TAXES
Income taxes for the year are determined as the sum of current and deferred taxes.
Current taxes
Current taxes of the current and previous years are recognised at the amount expected to be
paid to the tax authorities.
Current tax liabilities are calculated using the tax rate applicable in the individual countries
where the Group is operating at the reporting date.
Deferred taxes
Deferred taxes are taxes that the Group expects to settle or recover on the temporary
differences between the carrying amounts of assets and liabilities in the financial statements
and their corresponding tax values for the purpose of calculating the tax base. They are
recognised using the balance sheet liability method. Deferred tax liabilities are generally
recognised on all taxable temporary differences, whereas deferred tax assets are recognised
only if it is probable that there will be future taxable profit against which the deductible
temporary differences can be used. Such assets and liabilities are not recognized if the
temporary differences derive from goodwill or from initial recognition (not in business
combinations) of other assets and liabilities referring to operations that have no impact on
financial results or taxable income.
The book value of deferred tax assets is revised at each Financial Statements date and
reduced when it is no longer probable that sufficient taxable income will be achieved to allow
the full or partial recovery of such assets.
Deferred taxes are calculated at the tax rate that is expected to be effective when the asset is
realized or the liability settled. Deferred taxes are booked directly to the income statement,
unless they are taken directly to equity because they relate to items also recognised directly
in equity.
Deferred tax assets and liabilities are offset when it is legally possible and when such deferred
taxes are linked to taxes due to the same tax authority and the Group intends to settle
current tax assets and liabilities on a net basis.
Deferred taxes are taken directly to profit or loss, unless they are taken directly to equity
because they relate to items also recognised directly in equity.
116
USE OF ESTIMATES
The preparation of the consolidated financial statements and Notes in accordance with IFRSs
requires that management makes use of estimates and assumptions that affect the carrying
amounts of assets and liabilities and disclosures of contingent assets and liabilities at the
reporting date. The estimates and assumptions made are based on experience and other
relevant factors. Therefore, the actual results achieved may differ from those estimates.
Estimates and assumptions are periodically reviewed and the effects of any adjustments
booked to the income statement in the period when the estimate is revised, if the revision has
effects in that period only, and in subsequent periods as well, if the revision effects both the
current and future periods. We underscore that the recent financial and economic crisis has
led the Company to formulate new assumptions for its future economic and financial
developments due to the high level of uncertainty. Therefore, based on the information
currently available, it is reasonably possible that next year’s financial results may differ from
the Company’s estimates and could lead to even significant adjustments in the book values of
the relative items.
The main financial statement items affected by such situations of uncertainty are:
•
construction contracts: nearly all consolidated revenue is generated by long-term
contracts, the consideration of which is set at the date when the Group participates in
the tender or wins the tender. Accordingly, the originally estimated margins on these
contracts could decrease following a rise in costs incurred during the performance of
the contract (such as, for example, costs for raw materials, contract penalties for
delays in delivery, the occurrence of unforeseeable events in construction or litigation
with customers, subcontractors and suppliers);
•
goodwill, other fixed assets, financial assets: these are tested for impairment once a
year and whenever there is indication of a possible impairment loss to determine their
recoverable amount;
•
derivatives: they are initially recognised at cost and adjusted to fair value at
subsequent reporting dates. Fair value corresponds with current market price or, if it
is not available, the value resulting from the application of appropriate financial
measurement models;
•
provisions for risks and charges: these are set aside based on the best estimate of
costs required for complying with the obligation on the date of the financial report and
the net present value determined when the relative impact is material;
•
employee benefits: service cost is calculated on the basis of the best actuarial
calculations at the estimate date.
CHANGES TO ACCOUNTING ESTIMATES AND ERRORS
The Group applies IAS 8 in selecting and applying its accounting principles and to account for
changes to accounting principles, changes to accounting estimates and corrections of any
errors made in earlier financial years.
SUBSEQUENT EVENTS
Subsequent events are events that occur after the reporting date but before the date on which
the financial statements are authorised for publication. The date of authorisation of publication
refers to the date of approval by the Board of Directors. Such subsequent events can refer to
information concerning situations that existed on the reporting date (adjusting subsequent
events) or situations arising after the reporting date (non-adjusting subsequent events). The
effects of the former are recognised in the financial statements and the disclosures are
updated accordingly, whereas the latter are only disclosed appropriately in the Notes,
provided that they are material.
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27.
Consolidated Income Statement
27.1.
Revenues
The revenue generated in 2014 was Euro 1,545,383 thousand recording an increase of Euro
132,123 thousand against the previous year. A breakdown is shown in the table below:
2014
2013 (*)
268,867
619,853
Change orders for contracts in progress
1,276,516
793,407
Total
1,545,383
1,413,260
Revenues from sales and services
Specifically, such variation in the year is partly due to the decrease in “Revenue from sales
and services” by Euro (350,986) thousand, mainly as a result of the higher income from the
major contracts closed in the previous year. This change is more than offset by the increase in
the item “Change orders for contracts in progress” which instead recorded an increase of Euro
483,109 thousand.
The increased volumes reflect the evolution of the projects in the backlog and are mainly due
to progress made on new awards in addition to the recovery of some delays in the previous
years. During the previous year, by contrast, the main projects were at a very advanced stage
and not yet offset by new awards.
Revenues from 2013 included approximately Euro 114.4 million related to Cociv and Metro
Copenhagen projects and other one-off effects within the Infrastructure & Civil Engineering
BU. Net of these, their increase as at 31 December 2014 would be more than 14.8%.
Given the above, it is noted that the largest share is related to the ‘‘Technology, Engineering
& Construction” BU which represented approximately 91.5% (79.9% in 2013) of Group
revenues, an increase over the previous year in terms of percentage of consolidated volumes
as a result of the advancement of new awards in recent years and in line with the Group’s
strategic assumptions that are based on a consolidation of the traditional EPC activities, with
greater focus on the E and EP components and a suitable lever on the value of technology and
customer service activities, through the exploitation of the distinctive competences that have
constantly marked the Group’s position in the market. The main production volumes of the
“Technology, Engineering & Construction” BU in respect of the Tempa Rossa, Sadara, OPAL,
AGRP Kuwait, IOWA, LDPE Mexico and Punta Catalina in Santo Domingo projects.
Lastly, the Infrastructure & Civil Engineering BU accounted for approximately 8.5% (20.1% in
2013) in revenues with a decrease in absolute terms of about Euro 167.1 million.
This change is mainly driven by the sale of the share in the COCIV Consortium and the
Copenhagen Metro projects, both completed during H2 2013 and lower volumes generated by
the Etihad Rail project, now in the final phase.
The changes in work in progress also take into account the positive impact deriving from the
recognition of not only the prices stipulated by contract, but also any changes, incentives and
other claims recognised after relevant reasonable updates in the works, which are considered
possibly acceptable by customers as accurately valued.
In particular, the assessment of claims was made on the basis of positive outcomes that are
reasonably foreseeable through the ongoing negotiations with customers for recognition of the
higher costs incurred.
118
27.2.
“Other operating revenues” at 31 December 2014 is Euro 37,808 thousand, a decrease of
Euro (47,180) thousand against the previous year. The breakdown is shown in the table
below:
2014
2013 (*)
Capital gain on disposal
6,181
38,677
Revenues from green certificates
22,376
17,778
0
17,515
7,010
3,690
Contract penalties receivable
725
2,048
Insurance claims
12
171
Use of risk provisions
665
132
Income from the sale of materials
497
17
0
0
Other
342
4,960
Total
37,808
84,988
Operational foreign exchange differences
Extraordinary income
Operating gains on exchange rate fluctuations
Other operating revenues include items that do not directly relate to the Group’s production
activities, but are inherent to its core business. Other operating revenues mainly include:
•
gains on disposals of Euro 6,181 thousand; due mainly to the sale of the business of
Sofregaz S.A.; the previous year the item mainly included the positive economic effects
of the fee associated with the sale of the entire interest in the COCIV Consortium and
related rights and obligations, and even in a residual manner the sale of the
Copenhagen Metro project;
•
revenues for green certificates equal to Euro 22,376 thousand; the item includes the
value of green certificates, annual titles of renewable production, on the basis of
production at the Biomasse Olevano plant;
•
extraordinary income was Euro 7,010 thousand, are mainly related to the higher
allocation of costs relating to previous years;
•
use of risk provisions of Euro 665 thousand relating to the release of risk provisions
mainly related to credit risk where the risk of occurrence has failed;
•
insurance claims, contractual penalties and other miscellaneous income.
•
“Operational foreign exchange differences” were reclassified under “Other operating
costs” since at 31 December 2014 they had a negative value, while in the previous
period, this item showed a net positive value.
27.3.
Information by business segment
Maire Tecnimont S.p.A. is the parent company of an integrated industrial group that operates
in Italy and the world markets, providing engineering and construction services and products
to the following sectors:
- (I) Technology, Engineering & Construction;
- (II) Infrastructure & Civil Engineering.
119
The Group’s operating segments have been determined based on the reporting system used
by the Group’s CEO and the Top Management for strategic decisions. It shall be noted that the
results of the BUs are in line with the new internal reporting structure adopted by the
Company’s top management. As from financial year 2014, the data relating to the Oil, Gas &
Petrochemicals and Power BU has been brought together, in line with the new internal
reporting structured that reflects the Group’s current organizational structure in the new
‘Technology, Engineering & Construction’ BU. This report is drafted using the same accounting
standards used for the drafting of the Consolidated Financial Statements. Due to said
reorganization of the Management view, reflected in the reporting structure, the comparative
figures for the previous year were restated.
Below is a summary of the key characteristics of these markets.
I.
‘Technology, Engineering & Construction’ BU designs and constructs plants and
systems mainly for the natural gas industry (separation, treatment, liquefaction,
transportation, storage, regasification and compression/pumping stations); it designs
and constructs plants and systems for the chemicals and petrochemicals industry,
especially those for the production of polyethylene and polypropylene (polyolefins),
ethylene oxide, ethylenic glycol, purified terephthalic acid (PTA), ammonia, urea and
fertilizers; in the fertilizer sector, it grants patented technology and intellectual
property licenses to current and potential urea producers. Other important activities
are linked to the sulphur recovery process, hydrogen production units and hightemperature furnaces. Also designs and constructs hydrocarbon-based power
generation plants (simple or combined-cycle electric power plants and co-generation
plants), power plants fuelled by renewable resources (hydroelectric or biomass plants),
waste-to-energy and district heating plants, the re-powering of electric power plants,
and the construction of energy transformation and transmission systems with
progressive growth in E and EP services.
III.
‘Infrastructure & Civil Engineering’ BU designs and executes large-scale
infrastructure works (such as roads and highways, railways, underground and surface
metro lines, tunnels, bridges and viaducts), facilities and buildings for the industrial,
commercial and service sectors; it provides ‘environmental services’ environmental
support for projects in the infrastructure, civil and industrial construction, energy and
general plant sectors. Also active in maintenance services, facility management,
provision of general services related to temporary construction facilities, Operation &
Maintenance activities.
This joining is due to the fact that the results of the two BUs ‘Oil, Gas & Petrochemicals’ and
‘Power’ are pervasively affected by a unitary management and running. Senior level and
operative powers of attorney are centralised, result from a unitary management of the main
business units (Engineering, Procurement, Sales and Operations) and in the corporate
structure there are not managers or staff directly dedicated to and responsible for the two BUs
separately; staff also works indiscriminately in the two BUs. Providing the foregoing, this
suffices to mean that the income of the individual BUs is not significant.
A more detailed description of the operations of each Business Unit can be found in the
“Report on Operations”.
The Group evaluates the performance of its business segments based on the performance
achieved by each unit. The Business Unit revenue shown is that directly achieved by or
attributable to the operations typically carried out by the Business Unit and includes income
generated by transactions with third parties. The Business Unit costs are the operating
expenses incurred by the Business Unit payable to third parties. The way the Group is
managed, amortization/depreciation, risk provisions, financial income and charges, and
120
taxation remain the responsibility of the corporate unit as these are not part of operating
activities and are shown in the “total” column.
Sector reporting is presented in the following table:
REVENUES AND PROFIT BY BUSINESS SECTOR AS OF 31.12.2014:
Revenues
Total
EBITDA by segment
2014
2013 (*)
2014
2013 (*)
1,448,942
1,196,921
138,161
95,048
134,249
301,327
(11,274)
21,051
1,583,191
1,498,248
126,887
116,099
(*) Redetermined due to effect of the retroactive application of IFRS 11 and the grouping of the ‘Oil, Gas & Petrochemicals’ and ‘Power’
BUs.
INCOME STATEMENT BY BUSINESS SECTOR AS OF 31.12.2014:
Technology,
Engineering &
Construction
Infrastructure &
Civil Engineering
Total
Sector revenue
1,448,942
134,249
1,583,191
Business Profit
215,030
(4,722)
210,308
EBITDA
138,161
(11,274)
126,887
Amort., deprec., impairment losses and risk provisions
(23,481)
Operating income (loss)
103,406
Financial income (charges)
(42,024)
Pre-tax profit
Income taxes for the year
61,382
(10,739)
Net income/(loss)
50,643
Profit/(loss) attributable to the Group
50,297
Profit/(loss) attributable to minorities
346
121
INCOME STATEMENT BY BUSINESS SECTOR AS OF 31.12.2013:
Technology,
Engineering &
Construction
Infrastructure &
Civil Engineering
Total (*)
Sector revenue
1,196,921
301,327
1,498,248
Business Profit
168,622
30,510
199,131
EBITDA
95,048
21,051
116,099
Amort., deprec., impairment losses and risk provisions
(26,134)
Operating income (loss)
89,964
Financial income (charges)
(39,847)
Pre-tax profit
50,117
Income taxes for the year
(32,774)
Net income/(loss)
17,343
Profit/(loss) attributable to the Group
16,952
Profit/(loss) attributable to minorities
391
BUs.
STATEMENT OF FINANCIAL POSITION BY BUSINESS SECTOR AS OF 31.12.2014
Segment assets
& Construction
Infrastructure & Civil
Engineering
TOTAL
1,117,988
465,300
1,583,289
Unallocated assets (**)
443,921
Total assets
Segment liabilities
Unallocated liabilities (**)
Total liabilities
2,027,210
-1,090,612
-269,257
-1,359,869
-667,341
-2,027,210
(**) Unallocated assets and liabilities mainly relate to treasury and tax assets and liabilities handled by the corporate entity.
They are not allocated to the segments because they fall beyond the scope of their operations.
122
STATEMENT OF FINANCIAL POSITION BY BUSINESS SECTOR AS OF 31.12.2013
& Construction (*)
Infrastructure & Civil
Engineering
TOTAL
1,031,809
388,024
1,419,833
Segment assets
Unallocated assets (**)
391,468
Total assets
Segment liabilities
1,031,809
388,024
1,811,301
-960,535
-190,654
-1,151,189
Unallocated liabilities (**)
-660,113
Total liabilities
-960,535
-190,654
-1,811,301
(**) Unallocated assets and liabilities mainly relate to treasury and tax assets and liabilities handled by the corporate entity. They are
not allocated to the segments because they fall beyond the scope of their operations.
BUs.
GEOGRAPHICAL AREAS
The Group’s activities are mainly located in the following areas: the Middle East, EU and nonEU Europe, the Americas and Italy.
The table below analyses group sales on the various geographical markets, regardless of the
origin of the goods and services, for FYs 2014 and 2013:
Italy
December 2014
December 2013 (*)
Change
Absolute
%
Absolute
%
Absolute
%
236,205
14.9%
244,017
12.6%
(7,812)
(3.2%)
Overseas
•
Europe EU
163,922
10.4%
230,919
11.5%
(66,997)
(29.0%)
•
Europe non-EU
123,067
7.8%
90,243
5.3%
32,824
36.4%
•
Middle East
445,215
28.1%
547,613
44.1%
(102,398)
(18.7%)
•
Americas
441,601
27.9%
170,283
12.9%
271,318
159.3%
•
Others
173,181
10.9%
215,172
13.6%
(41,991)
(19.5%)
84,943
5.7%
Total consolidated revenues
1,583,191
1,498,248
BUs.
27.4.
Costs incurred for raw materials and consumables in 2014 are Euro 667,689 thousand, up
Euro 180,169 thousand on the previous year.
The breakdown is as follows:
123
2014
2013 (*)
(663,584)
(470,855)
Consumables
(4,167)
(10,507)
Fuel
(1,069)
(2,524)
1,131
(3,633)
(667,689)
(487,519)
Raw materials purchased
Change in inventories
Total
In particular, in 2014 the item “Raw materials purchased” shows a significant increase of Euro
192,729 thousand which reflects the intense phase of materials purchase (metal structures,
cables and primary equipment such as valves, pumps, compressors, heaters and key
machinery) for the major contracts awarded in the previous years, and for which the emission
phase of the main equipment orders has been completed and the implementation phase is
underway.
In the previous year, “Consumables” were driven by the higher demand for office equipment
and other materials required by the expansion of activities at the new premises and the need
for specific consumables for the opening of new construction sites.
The change in inventories increased by Euro 4,764 thousand and is primarily related to the
establishment of an appropriate level of the wood warehouse of the Olevano biomass plant.
27.5.
Cost of services
The cost of services in FY 2014 was Euro 439,988 thousand, down Euro 124,472 thousand.
2014
2013 (*)
Sub-contracting to third parties
(200,961)
(350,575)
Turnkey plant design costs
(85,824)
(76,190)
Charge backs
(7,505)
(16,451)
Utilities
(5,771)
(5,493)
Transportation costs
(26,701)
(13,480)
Maintenance
(2,147)
(2,643)
Consulting and services
(27,721)
(24,721)
2,867
1,989
Bank and surety fees
(25,216)
(23,716)
Sales and advertising costs
(4,774)
(2,031)
Additional employee costs
(21,824)
(21,733)
(759)
(639)
Increase in assets for internal work
Telegraph and similar costs
Insurance
(6,947)
(8,838)
Other
(26,705)
(19,940)
Total
(439,988)
(564,460)
The general decrease of the items that make up the “cost of services” reflects the evolution of
the projects in the backlog, in line with the new business plan oriented to growth in terms of
124
product mix with higher margins, with progressive growth of E (Engineering), EP (Engineering
and Procurement) services and concurrent reduction in EPC projects (Engineering,
Procurement, Construction). In fact, in particular the variation mainly concerned “Subcontracting to third parties,” mainly related to costs for subcontracts related to the
construction phase; the variations are also a result of the achievement of a very advanced
stage of significant contracts, not yet fully offset by new contracts awarded.
“Charge backs” recorded a significant decrease in 2014; this item refers to costs charged back
by non-consolidated consortium companies associated with the Infrastructure & Civil
Engineering BU and the reduction is a result of the conclusion of activities related to HighSpeed.
“Transportation costs” increased significantly over the previous year also in this case due to
the different mix of activities carried out.
“Consulting and services” includes the costs for the use of freelance technicians charged on an
hourly basis, costs for professional fees, primarily for assistance for out of court settlements,
audit fees, business consulting and services and consulting related to the projects initiated
during the year.
“Other” mainly refers to non-capitalised costs for information technology services, the
maintenance costs of the application packages and other miscellaneous services incurred by
the other consolidated companies.
Other cost items are substantially in line with the same period of the previous year.
27.6.
Personnel expense
Personnel expense in 2014 was Euro 264,979 thousand, down Euro 15,500 thousand on
previous year.
2014
2013 (*)
Wages and salaries
(207,195)
(193,991)
Social security costs
(44,303)
(44,154)
Employee severance indemnity
(9,929)
(9,449)
Other expenses
(3,552)
(1,886)
(264,979)
(249,479)
Total
Even in 2014, the Human Resources policy was aimed at providing support to the strategic
and operational development of the Group, through the optimization of human capital and the
process of change in the mix of resources, nationally and internationally. The process of staff
retraining and realignment of corporate functions continued in support of the evolution of the
business and the strengthening of productivity and skills necessary to achieve the goal of
relaunching the Group, defined in the Strategic Plan.
At 31 December 2014, the Maire Tecnimont Group workforce amounted to 4,259 resources,
compared to 4,295 in 2013, with a delta of 36 resources resulting from the 666 new hires and
702 outgoing employees of the period. The average number of the current year also
decreased slightly, reaching 4,276 resources, a reduction compared to the previous year’s
figure of 4,320 resources.
125
In fact, most of the outgoing employees involved professionals that are no longer functional to
the current activities and the new organizational structure. The reduction of the workforce by
geographical area “Rest of Europe” (109 resources) is instead mainly due to the sale, to a new
company under French law, of the business unit and related staff of the Company Sofregaz
S.A., which occurred in the first half of the year.
Even most of new hires of the period are attributable to investments aimed at reproportioning between professional groups and roles, and the consolidation process of
specialist technical skills of the Group, pursued through the inclusion of resources and specific
professionals qualified in the field of Engineering and Construction. The foregoing is attested
to by the 201 new national hires, mainly in the technical area, plus 386 new hires in Asia,
where in particular the Indian Subsidiary TICB was confirmed as fundamental recruitment
basin for resources in the Engineering and Construction.
Social security costs are in line with the previous year and the incidence of social security
contributions on total compensation is lower than the theoretical Italian rate because many
employees are hired abroad.
The changes to the workforce by title are shown in the table below (31/12/2013-31/12/2014):
Hires
Outgoing
employees
Reclassification
of staff category
(*)
Workforce
at
31/12/2014
∆ Workforce
31/12/2014
vs.
31/12/2013
43
(51)
33
451
25
183
(273)
55
1,499
(35)
1,932
416
(269)
(87)
1,992
60
403
24
(109)
(1)
317
(86)
Total
4,295
666
(702)
0
4,259
Average no.
of employees
4,320
Workforce
at
31/12/2013
Managers
426
Middlemanagers
1,534
White collars
Title
Blue collars
4,276
(*) include promotions, changes in qualification following intra-group transfers.
The classification “Managers” and “Middle-managers” does not reflect Italian contracts, but responds to national and international
identification parameters of Management and Middle Management used for Italian and foreign managerial resources.
The changes to the workforce by geographical area are shown in the table below
(31/12/2013-31/12/2014):
Geographical
area
Italy
Rest of Europe
Asia
South America
Africa
Total
Workforce
at
31/12/2013
Hires
Outgoing
employees
∆ resources
by
geographical
area
Workforce
at
31/12/2014
∆ Workforce
31/12/2014
vs.
31/12/2013
1,903
201
(216)
0
1,888
(15)
386
79
(169)
(19)
277
(109)
1,978
386
(306)
19
2,077
99
26
0
(11)
0
15
(11)
2
0
0
0
2
0
4,295
666
(702)
0
4,259
It shall be pointed out that the use of labour services varies according to the phase and
schedule of works, which may call for direct construction work using the Group materials and
workforce or for the use of third party services. In particular, Group policy provides for the
contracting of the labor required to execute the individual orders to meet completion
deadlines.
126
27.7.
Other operating expenses in 2014 are 83,648 thousand Euro, up 2,958 thousand Euro with
respect to the previous year.
2014
2013 (*)
Contract penalties payable
(1,485)
(20,234)
Leases
(26,878)
(27,204)
Rentals
(10,197)
(11,446)
Charges on exchange rate derivatives
(3,796)
(910)
(764)
(1,066)
Operational foreign exchange differences
(17,215)
(0)
Other expenses
(23,313)
(19,830)
Total
(83,648)
(80,690)
Losses on receivables
“Contract penalties payable” is a consequence of settlement deeds due to failure to achieve
certain plant performances. The previous year, the item included the amounts of the fines
charged in relation to the UGS Wierzchowice project and other minor fines.
“Rentals” refers to the cost of renting office buildings for the Group’s business operations and
is slightly lower than the previous year following some optimizations.
The item “Leases” is related to the cost of leasing the capital goods needed for the Group’s
operating activities and the leasing installments payable on vehicles and marked a decrease of
Euro 1,249 over the same period last year.
“Charges on exchange rate derivatives” of Euro 3,796 thousand refers to the cash flow hedges
related to the Group’s contractual obligations that had an impact on the Income Statement in
the year. The increase is linked to the trend of the Forex markets and the expiry of the hedges
on exchange rate risks on contracts completed in the year.
“Operational foreign exchange differences” were Euro 17,215 thousand representing the net
negative value between profits and losses resulting from foreign exchange operations. In the
previous year this item had a positive net value. The change is related to the trend of the
Forex markets and the foreign currencies of projects underway;
“Other expenses” is mainly due to indirect and local taxes related primarily to some foreign
companies, membership dues, losses, contingent liabilities, payments for the use of licenses
and patents, and other general costs.
27.8.
Amortization/depreciation and impairment
Amortization/depreciation and impairment is Euro 9,498 thousand in FY 2014, down Euro
10,841 thousand against the previous year.
127
The breakdown is shown below:
2014
2013 (*)
Amortization of intangible assets
(2,614)
(3,613)
Depreciation of tangible assets
(3,181)
(6,209)
Other impairment of fixed assets
(3,703)
(10,516)
Total
(9,498)
(20,339)
Amortization decreased due to the completion of the amortization of certain intangible assets,
a change in the scope of consolidation as a result of the deconsolidation of the company CMT
(Copenhagen Metro contract) in Q3 2013, and the disposal of some specific site equipment.
Impairments of fixed assets decreased as the previous year included the partial impairment of
goodwill related to the Infrastructure & Civil Engineering BU for about Euro 10 million as a
result of the impairment test carried out during 2013.
The amortization of intangible assets relates primarily to:
•
•
•
the amortization of patent rights for Euro 1,157 thousand of which Euro 1,126
thousand related to the amortization of the urea licenses patented by Stamicarbon,
recorded and valued at the time of allocating the goodwill deriving from the acquisition,
as well as the new ones developed over the years;
the amortization of concessions and licenses for Euro 355 thousand and mainly
referred to the Group’s SAP, Tagetik, Zucchetti and other software application licenses.
the amortization of other intangible assets for Euro 1,102 thousand. The item refers to
other various intangibles recognised at the acquisition date of Tecnimont ICB and to
the amortization of the exclusive client agreements signed at the time of the
acquisition of Stamicarbon B.V., for which the prospective profitability had been
estimated. The residual amortization refers to the consulting costs for the
implementation and operational start-up of other Group software applications.
The depreciation of tangible assets relates primarily:
•
•
•
to the depreciation of buildings owned for Euro 449 thousand related to the surplus
value of the buildings in the financial statements after the acquisition of Tecnimont
ICB, and the remaining part in other assets owned;
to the depreciation of plant and equipment for Euro 511 thousand and industrial
equipment for Euro 279 thousand (assets functional to construction site work);
for Euro 1,943 thousand to the depreciation of other assets, including office furniture,
electronic machinery, vehicles and industrial vehicles, mechanical diggers and metal
shovels. This item decreased over the previous year.
“Other impairment of fixed assets” for Euro 3,703 thousand mainly refers to write-downs of
certain fixed assets of the Group.
27.9.
Provisions for bad debts and risks and charges
Accruals to the provision for bad debts and the provisions for charges in 2014 were Euro
13,983 thousand.
This item consists of the following:
128
2014
2013 (*)
Accrual to the provision for bad debts
(1,045)
(2,889)
Accrual to the provision for risks and charges
(12,938)
(2,907)
Total
(13,983)
(5,796)
Total provisions for bad debts decreased by Euro 1,844 thousand against the previous year.
Receivables were subject to individual impairment for individually significant positions, for
which there are objective conditions of partial or total uncollectibility. The amount of the
impairment loss considers an estimate of recoverable cash flows and the date of their
collection, as well as future recovery costs and expenses. Collective provisions were set aside
for those receivables not subject to individual write-downs based on historical experience and
statistical data.
Provisions for risks and charges increased by Euro 10,031 thousand against the previous year.
The item includes provisions for charges related to lawsuits, pending litigation and charges
related to the staff reduction procedure that is part of the ongoing processes of optimization of
human capital and progressive adjustment of the Company functions to the changed business
needs.
27.10.
Financial income
Income from subsidiaries
Other income
Gains on derivatives
Total
2014
2013 (*)
26
32
1,931
3,313
0
876
1,957
4,221
Financial income is 1,957 thousand Euro, down 2,264 thousand Euro compared to the
previous year.
“Income from subsidiaries” refers to interests to the unconsolidated subsidiary Program
International.
“Other income” was generated mainly by interest income on temporary cash investments,
current accounts, financial instruments classified as financing, and receivables valued at
amortized cost. Financial income generated by interest income is down against 31 December
2013. In fact, despite the averagely lower liquidity versus 2013, the market offered slightly
lower yields.
The income generated by derivatives the previous year referred to income on interest rate
derivatives with maturity on the contract expiry terms and the positive “time-value”
component of exchange rate hedging derivatives.
129
27.11.
Interest expense
2014
2013 (*)
(31)
(40)
Other expense
(34,956)
(41,570)
Interest/Other expense Equity-Linked Bond
(5,373)
0
Charges on derivatives
(1,716)
(3,167)
Total
(42,076)
(44,777)
Charges from associated companies
Interest expense was Euro 42,076 thousand, down Euro 2,701 thousand with respect to the
previous year.
Expenses from associated companies for Euro 31 thousand include expenses related to loans
payable to the consortium companies Cavet and Cavtomi.
“Other expense” which mainly includes loan interest, interest payable on current accounts, on
factoring transactions and bank and ancillary charges, on financial liabilities valued on the
amortised cost criterion using the effective interest rate method for Euro 34,956 thousand
decreased by Euro 6,614 thousand. The decrease is primarily a result of the refinancing ended
in the second half of 2013 which reduced the average rate of Group indebtedness, in addition
to a reduction in average indebtedness.
“Other expense” also includes financial charges for the discounting of financial assets and
liabilities, interest expenses on employee severance indemnities and other employee benefits,
and other charges.
“Interest Equity-Linked Bond” for Euro 5,373 thousand includes the monetary and nonmonetary component of interest on the equity-linked bond for Euro 80 million issued in
February 2014.
Charges on derivatives for Euro 1,716 thousand decreased by Euro 1,451 thousand over the
previous year and refer to the time-value quota of exchange rate risk hedging derivatives. As
the hedging component is not considered, the change in its fair value is entered in the Income
Statement. This component is decreasing against the previous year as a result of the
performance of the forward points trend (which reflect the ratio between rates in the Euro
area and in the US dollar area) and of the expected exchange rate trend between the two
currencies.
27.12.
Gains/(losses) on equity investments
2014
2013 (*)
312
747
(228)
(13)
Revaluation/(write-down) of other companies
(1,989)
(25)
Total
(1,905)
709
Gains from investments in other companies
Revaluation/(write-down) of associated companies
130
The balance of gains and losses on equity investments is negative and of Euro 1,905
thousand, showing a decrease of Euro 2,614 thousand against the previous year.
Gains from investments in other companies include the dividends received from Kafco LTD, a
company participated by Stamicarbon B.V.
The write-downs of associated companies relate to the equity valuation of the associates KT
Star and Hidrogeno Cadereyta S.A.P.I.
The write-downs of other companies refer for Euro 1,968 thousand to the write-down of the
investment in the subsidiary Progetto Alfiere S.p.A.; this investment was increased during the
year as a result of the subscription of the capital increase with partial waiver of the receivable;
subsequently, as a result of further losses, the carrying value of the same was written down.
Residual write-downs of other companies refer to the losses covered in the CAVET and
CAVTOMI consortia.
27.13.
Income taxes
2014
2013 (*)
Current income taxes
(12,846)
(4,383)
Income taxes related to previous years
(4,110)
(1,923)
5,838
(24,154)
379
(2,314)
(10,739)
(32,774)
Deferred tax assets
Total
Estimated taxes were Euro 10,739 thousand, a decrease of Euro 22,035 thousand as a result
of a lower tax rate compared to the previous year. The effective tax rate as at 31 December
2014 is approximately 17.5%, an improvement on last year’s 65.4%, when the figure had
been influenced by the non-deductible impairment of goodwill.
The effective tax rate in 2014 was instead influenced by the effects of the closing of the
agreement with the Enel-Endesa Group, since in the past years the Group had not set aside
deferred tax assets on losses carried forward and in the year due to the closing of the
agreement, they were recognized and contextually used for a portion.
Current taxes comprise mainly the burden for income taxes of foreign companies and the
burden related to IRAP that, due to deductibility of labor costs from its tax base, generates a
significant imposition; the remaining part is related to other various taxes.
Income taxes related to previous years mainly include a provision for potential tax risks
relating to previous years and extra costs that arose with the submission of the Unico tax
return in 2014.
The net amount of deferred tax assets and liabilities reflects the effect of the use of deferred
tax assets on tax losses realized in prior years accounted as a reduction in the year of the
group’s taxable amount and uses on taxable temporary differences in previous years
deductible in the current year.
27.14.
Earnings (losses) per share
Maire Tecnimont S.p.A. share capital is comprised of ordinary shares for which the basic
earnings (loss) per share is calculated by dividing the FY 2014 net loss attributable to the
Group by the weighted average of the number of outstanding shares of Maire Tecnimont
131
S.p.A. in the financial year in question. At the reporting date the number of shares
outstanding was 305,527,500. This figure was used to calculate the basic earnings per share
at 31 December 2014. Basic earnings were Euro 0.165.
(Values in Euro)
2014
2013
305,527,500
305,527,500
0
0
Number of shares for the calculation of the earnings per share
305,527,500
305,527,500
Net income attributable to the Group
50,297,369
16,951,840
Number of shares Reserved Capital Increase Equity-Linked Bond
36,533,017
36,533,017
Net earnings per base share attributable to the Group in Euro
0.165
0.055
Net earnings per diluted share attributable to the Group in Euro
0.147
0.050
Number of shares outstanding
(Treasury shares)
(*)
Data per share (Euro)
(*)
(*) Adjusted for comparative purposes only
It shall also be noted that in February 2014 the parent company closed a financing transaction
through equity-linked bond loan of Euro 80 million, placed with qualified Italian and foreign
investors. The bonds may be convertible at a conversion price set at Euro 2.1898, in newly
issued ordinary shares of the Company. In fact, on 30 April 2014, during an extraordinary
meeting the Shareholders authorized the convertibility of the equity-linked bond. For effect,
the Shareholders’ Meeting approved the proposal for a divisible share capital increase in
exchange for cash payment, with exclusion of the option right pursuant to art. 2441,
paragraph 5 of the Italian Civil Code, for a total maximum amount of Euro 80 million
(including the premium), to be paid in one or more tranches by issuing up to 36,533,017
shares having the same characteristics of the ordinary shares in issue. The increase is
exclusively and irrevocably for the conversion of the said bond, according to the terms of the
relevant regulations, at a price per share equal to Euro 2.1898 (of which Euro 0.01
attributable to capital and Euro 2.1798 to premium). At the date of this annual financial report
the calculation of the diluted earning of this component has been considered, as the
conversion would have been “in the money”. Diluted earnings would thus be Euro 0.147.
132
28.
Consolidated Statement of Financial Position
28.1.
2013 (*)
Changes in the
year
2014
Land
3,947
111
4,058
Buildings
22,613
(468)
22,145
Plant and equipment
1,511
(506)
1,005
0
28
28
853
(153)
700
Other assets
6,045
(491)
5,554
Total
34,969
(1,479)
33,490
Work in progress and advances
The following table outlines the changes in the historical cost, depreciation and net book value
of the Company’s intangible assets:
Industrial
and
commercial
equipment
Other
assets
Work in
progress and
advances
Total
Land
Buildings
Plant and
equipment
3,947
22,613
1,511
853
6,045
0
34,969
Increases
0
35
0
51
1,262
28
1,376
Disposals
0
0
0
0
0
0
0
Amortization
Reclassifications/cost
adjustments
Changes due to scope of
consolidation
Impairment losses/increase
in value
0
(448)
(511)
(279)
(1,943)
0
(3,181)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
(195)
0
0
0
0
(195)
111
140
5
75
190
0
521
4,058
22,145
1,005
700
5,554
28
33,490
Net book value at 31
December 2013
Other changes
Net book value at 31
December 2014
Historical cost
Accumulated amortization
4,058
27,526
4,585
3,470
37,630
28
77,297
0
(5,381)
(3,580)
(2,770)
(32,076)
0
(43,807)
Changes during the year are mainly related to the depreciation of the year, net of
acquisitions. The main changes in the year of reference refer to:
•
Land, with a net increase of Euro 111 thousand, mainly a consequence arising from the
translation of foreign currency balances;
•
Buildings, with a net decrease of Euro 468 thousand, mainly due to amortization for the
year. The increases are mainly related to the purchase of small site buildings and as a
result of the translation of foreign currency balances;
•
Plant and equipment, with a net decrease of Euro 506 thousand, mainly due to
amortization for the year;
133
•
Industrial and commercial equipment, with a net decrease of Euro 153 thousand, mainly
due to amortization for the year;
•
Other assets, with a net decrease of Euro 491 thousand, primarily due to the amortization
for the year, net of increases primarily related to improvements to buildings for rent, office
furniture, electronic equipment, motor vehicles, industrial transport. The other variations
are the result of foreign currency conversion.
28.2.
Goodwill
2013 (*)
Changes in
the year
2014
Goodwill
291,754
(0)
291,754
Total
291,754
(0)
291,754
The balance of Goodwill of Euro 291,754 thousand has not incurred any changes during 2014
and it includes the consolidation differences relating to:
•
the acquisition of Tecnimont Group of Euro 135,249 thousand ;
•
the acquisition and subsequent merger of Maire Engineering S.p.A. in Maire
Investimenti S.p.A. of Euro 63,852 thousand (following the merger Maire Investimenti
S.p.A. changed its name to Maire Engineering S.p.A.);
•
the acquisition and subsequent merger by Maire Engineering of the companies Tecno
Impianti di Di Amato & Orlandi S.p.A., SIL Società Italiana Lavori S.p.A. and Calosi e
Del Mastio S.p.A. of Euro 18,697 thousand;
•
the acquisition of Tecnimont ICB subsidiary of Euro 55,284 thousand;
•
the acquisition of the capital of Noy Engineering S.r.l. of Euro 137 thousand;
•
the acquisition of subsidiary Stamicarbon B.V. of Euro 2,184 thousand;
•
the acquisition of the KT Group of Euro 26,351 thousand.
In accordance with the method provided by IAS 36 to calculate potential impairment losses,
Maire Tecnimont Group has identified cash generating units (CGUs), which are the smallest
identifiable groups of assets capable of generating largely independent cash flows, within the
consolidated financial statements. The maximum level of CGU aggregation is represented by
the operating segments in accordance with IFRS 8.
Goodwill has been allocated in a timely manner to the CGUs that are expected to generate
cash flows related to the business combinations that originated the goodwill.
The CGUs were not identified with uniform criteria with respect to the previous year also even
in line with that done for the representation of the operating sectors.
The Group’s operating sectors were restated on the basis of the reports used by the CEO of
the Group and by the Top Management of the Company, to take strategic decisions; In fact,
starting from 2014, the data relating to the ‘Oil, Gas & Petrochemicals’ and ‘Power’ BUs has
been aggregated in line with the new internal reporting structure used which also reflects the
current organizational structure of the Group, in the new ‘Technology, Engineering &
Construction’ BU
Following this, the two CGUs in question were also aggregated. This aggregation is due to the
fact that the results of the two BUs ‘Oil, Gas & Petrochemicals’ and ‘Power’ are pervasively
134
affected by a unitary management and running. Senior level and operative powers of attorney
are centralised and it results in a unitary management of the main business units
(Engineering, Procurement, Sales and Operations) and in the corporate structure there are not
managers or staff directly dedicated to and responsible for the two CGUs separately; staff also
works both in the two CGUs. Therefore, the income and financial flows of the individual CGUs
are not significant.
It should however be noted that the test was carried out according to the previous and
current perimeter with no impairment losses, if the two ‘Oil, Gas & Petrochemicals’ and
‘Power’ CGUs were not aggregated, the result achieved in line with the method would have
not resulted in impairment.
The table below summarizes the value of goodwill broken down by sector of activity:
Goodwill
Aggregation
Goodwill
(values in Euro millions)
2013
2014
2014
51.0
Power
21.5
(21.5)
0
217.1
(217.1)
0
0
238.6
238.6
Oil, Gas & Petrochemicals
Licensing
Total
51.0
2.2
291.8
2.2
0
291.8
The Group tests the recoverability of goodwill and other tangible and intangible fixed assets at
least once a year, also in the absence of impairment loss indicators. The recoverable value of
the CGUs to which the individual goodwill has been allocated is tested by determining the
value in use, defined as the present value of the expected cash flows using a discount rate
that reflects the specific risks of each CGU at the valuation date. The CGU carrying amount
includes the carrying value of non-current assets which can be allocated to the CGUs either
directly or according to a reasonable and standardized criteria. The items under net working
capital are not included in the calculation of the carrying amount and the recoverable value.
Components of working capital are tested separately for impairment, in accordance with
applicable principles. The analysis in question was carried out with the help of an independent
expert, using the cash flows of 2015 based on the budget approved on 18 February 2015, and
for 2016-2019 on the revision of the forecasts of the industrial and financial plan, approved by
the Board of Directors on 9 July 2014 and updated on 18 February 2015 and supplemented by
specific Plans relating to the Infrastructure & Civil Engineering CGU of Tecnimont Civil
Construction S.p.A. Said flows confirm the assumptions and strategic basis of the Group plan
approved by the Board of Directors on 5 April 2013 and subsequently updated on 13 March
2014. Such documents reflect the Top Management’s best projections in relation to the main
assumptions concerning the Company performance (macro-economic and pricing trends,
development and business outlooks). The assumptions and corresponding financials are
considered suitable for the purpose of impairment testing.
The Plan also includes the possibility of fund generation through the sale of corporate assets
which are no longer considered strategic for the Group. For the purpose of impairment testing
of goodwill, where available, the plan in the event of permanence in the CGU has been
considered for the assets being disposed of in the Plan. In addition to contract margins and
commercial, general and administrative costs, the plan provisions include savings relative to
the cost of direct and indirect staff, whose reorganization is underway by the Management. In
performing the impairment test only there were considered only the savings included in the
plan that have already been achieved, in order to reflect the current conditions of the CGU for
impairment.
135
The use value was determined based on the estimated discounted future cash flows that the
CGUs will be able to produce in the future. The estimated revenue flows include the reversal
of general and administrative expenses (G&A) of the Group for all CGUs. The value of the cash
flows has been shown net of notional taxation, considering the tax benefit relating to the
possible tax deductibility of amortization/depreciation. There have been no assumptions with
respect to changes in net working capital or with respect to investments in fixed capital.
In order determine the recoverable amount, the income flows are referred to the Company’s
planning period, as well as a final value (terminal value) over the planning horizon, consistent
with the nature of the investments and areas of operation. With respect to the estimate of
terminal value, it was chosen not to consider the flow for the last year of the forecasting
period as an expression of the “normalized” flow; rather, in the interest of prudence, the
mathematical average of the prospective flows under the plan was considered. The
“normalized” flow was capitalized considering a growth rate between 0% and 2% for the
“Technology, Engineering & Construction” and “Licensing” CGUs, and between 0% and 1% for
the “Infrastructure & Civil Engineering “ CGU characterized by negative results.
For the purpose of discounting operating flows, the post tax WACC was identified as a rate of
reference. The parameters used for the estimate of the discounting rates (Beta and Net
Financial Position) have been determined based on a sample of comparable companies
operating in the “Infrastructure” sector for the E&IC CGU and “Engineering” for all the other
CGUS, assessing financial highlights and the most important market values for each of them.
For the determination of the the riskfree rate, the yield of 10 year Interest Rate Swap
contracts denominated in Euro was taken into account. With regard to cost of equity, such
rate was increased by the credit spread between the yield of 10 year Italian Treasury bonds
and IRSs of the Euro area with the same maturity, considering an average of 2014 values.
The market risk premium was estimated to be 5.8%. Regarding the component of the cost of
equity, the rates were prudently increased by 2 percentage points for the “Technology,
Engineering & Construction” and “Licensing” units, following the postponement in the process
of some new project awards, and 7 points for the “Infrastructure & Civil Engineering” CGU,
following the gradual deterioration of the economic performances of the same CGU over the
past two years and taking into account the expected volumes in the related plan.
The analyses carried out on the basis of the above parameters have not highlighted any
impairment.
Sensitivity analyses have also been carried out on the basis of changes to the following
parameters: i) discounting rate; and ii) growth rate for the estimate of terminal value; on the
basis of these analyses, the range of recoverable value of the CGUs has been defined.
Discount rate (post-tax WACC)
Lower bound
Upper bound
Technology, Engineering & Construction CGU
10.1%
12.1%
Infrastructure & Civil Engineering CGU
11.2%
13.2%
Licensing CGU
10.1%
12.1%
Lower bound
Upper bound
CGU Technology, Engineering & Construction
0.0%
2.0%
Infrastructure & Civil Engineering CGU
0.0%
1.0%
Licensing CGU
0.0%
2.0%
Growth rate beyond the planning horizon
136
The results of these sensitivity analyses have not highlighted any impact on the values of for
the “Technology, Engineering & Construction” and “Licensing” CGUs. In the event of a greater
discounting rate and lower growth rate, an insignificant amount of impairment results for the
Infrastructure & Civil Engineering CGU.
In applying this method, the management uses assumptions, including the estimate of future
increases in the backlog, revenues, gross margin, operating costs, terminal value growth rate,
investments and WACC (discount rate). Cash flow projections refer to current operation
conditions and, therefore, they do not include financial flows correlated with extraordinary
events.
Lastly, it is necessary to specify that the Group management is in charge of developing
estimates and projections based on the past experience and expectations about the future
outlook of the market in which the Group operates. However, the estimate of the recoverable
value of the cash generating unit requires the use of prudent estimates by the management.
The Group cannot assure that there shall be no loss of value of goodwill in the future periods.
In fact, various factors linked to the evolution of the market may request a reassessment of
the value of goodwill. The circumstances and the events that could lead to an additional
impairment test shall be monitored by the Group on an ongoing basis.
28.3.
2013 (*)
Changes in the
year
2014
19,554
1,271
20,825
731
(360)
371
Others
2,342
(185)
2,157
Work in progress and advances
1,468
73
1,541
Backlog
1,128
0
1,128
Total
25,223
799
26,022
Patent rights
Concessions, licenses, trademarks and similar rights
The following table outlines the changes in the historical cost, amortization and net book value
of the Company’s intangible assets:
Patent
rights
Concessions,
licenses,
trademarks
and similar
rights
Others
Work in
progress and
advances
Backlog
Total
Net book value at 31 December 2013
19,554
731
2,342
1,468
1,128
25,223
Increases
2,428
191
257
713
0
3,589
0
(196)
0
0
0
(196)
(1,157)
(355)
(1,102)
0
0
(2,614)
Reclassifications/cost adjustments
0
0
641
(641)
0
0
Changes due to scope of consolidation
0
0
0
0
0
0
Impairment losses/increase in value
0
0
0
0
0
0
Other changes
0
0
19
0
0
19
Disposals
Amortization
20,825
371
2,157
1,541
1,128
26,022
Historical cost
30,733
7,602
49,874
1,541
40,694
130,444
(9,908)
(7,231)
(47,717)
0
(39,566)
(104,422)
137
The value of “Other intangible assets” as at 31 December 2014 results Euro 26,022 thousand,
increased by Euro 799 thousand in comparision with 31 December 2013. This increase is
mainly due to the recognition of new patents mitigated by amortization of the year.
The main changes in the year were:
•
Patent rights increased Euro 1,271 thousand net of amortization of the year, mainly
related to new technologies and intellectual property rights (patents and licenses)
developed and deposited during the year by Stamicarbon B.V. and Maire Tecnimont
Innovation Center (MTIC),;
•
Concessions, licenses and trademarks, recorded a net decrease of Euro 360 thousand
related primarily to amortization of the year and the disposal of the “Sofregaz” trademark
because of the sale of the business; the increases are related to the costs incurred for the
purchase of software licenses related to the performance of business activities;
•
Other intangible fixed assets with a total net decrease of Euro 182 thousand, essentially
related to the entry into operation of the new system of management and digitization of
documents and thus its reclassification from work in progress, and by increases related to
consulting costs incurred for the implementation and commissioning of the new software;
the reduction is related to the amortization of the year;
•
Work in progress and advances recorded a net increase of Euro 73 thousand mainly due to
the reclassification to other intangible fixed assets of costs for the implementation project
of a new management and document scanning system now operating; the remaining
amount mainly includes costs of some new software and related implementation that are
still underway.
28.4.
2013 (*)
Changes in the
year
2014
1,021
0
1,021
4
0
4
181
0
181
Shareholdings in associated companies:
•
•
MCM servizi Roma S.c.a.r.l.
•
UCC Engineering LLP – Kazakistan
•
Desimont Contracting Nigeria
0
26
26
•
Stazioni Metro Val S.c.a.r.l.
4
(4)
0
•
Villaggio Olimpico Moi S.c.a.r.l. in liquidation
3
0
3
•
Consorzio FEIC
5
0
5
•
Consorzio CO.RI.RE.
10
(10)
0
•
Consorzio Libya Green
25
(25)
0
•
Tecnimont Construction Co WLL-Qatar
20
0
20
•
KT Star Co. S.A.E.
1,476
172
1,648
•
HIDROGENO CADEREYTA – S.A.P.I. de C.V.
0.2
135
135
•
JV TSJ Limited (*)
0
0
0
•
Baltica S.c.a r.l.
Total
0.0
5
5
2,750
298
3,048
(*) The investment was written off and a provision for accumulated losses was recognized under provisions for risks and charges.
138
The overall increase in investments in associated companies was Euro 298 thousand due to
new investments in the companies Desimont Contracting Nigeria and Baltica S.c.a.r.l. and the
effects of the equity valuation of KT Star and Hidrogeno Cadereyta. The decreases were due
to the liquidation of the consortiums Lybian Green Way, Metro Val and CO.RI.RE.
The details of the associated companies and joint ventures are as follows:
Company
HQ/Country Currency Share capital % owned
Through:
%
EUR
1,550,000
44%
Tecnimont S.p.A.
44%
KZT
KZT
20,000,000
30%
Tecnimont S.p.A.
30%
Nigeria
NGN
45%
Tecnimont S.p.A.
45%
MST S.r.l.
33.33%
ITA
UCC Engineering LLP - Kazakistan
Desimont Contracting Nigeria
MCM servizi Roma S.c.a.r.l.
ITA
EUR
12,000
33.33%
Villaggio Olimpico Moi S.c.a.r.l. in liquidation
ITA
EUR
10,000
33.33% Tecnimont C.C. S.p.A.
33.33%
Consorzio FEIC
ITA
EUR
15,494
33.85% Tecnimont C.C. S.p.A.
33.85%
Tecnimont Construction Co WLL-Qatar
Qatar
QAR
42,000
49%
Tecnimont C.C. S.p.A.
49%
KT Star CO. S.A.E.
Egypt
USD
1,000
40%
KT S.p.A.
40%
Messico
MXN
10.000
40.7%
KT S.p.A.
40,7%
MALTA
USD
123,630
55%
Tecnimont S.p.A.
55%
ITA
EUR
10,000
50%
KT S.p.A.
50%
HIDROGENO CADEREYTA
C.V.
– S.A.P.I. de
JV TSJ Limited
BALTICA S.c.a r.l.
A summary of the financial data of the main associates and joint ventures and the
reconciliation of the carrying amount of the investment is as follows:
KEY FINANCIAL DATA
Studio
Geotecnico
79
KT Star Co.
S.A.E.
0
TSJ
Limited
0
CURRENT ASSETS
7,074
4,118
67,823
FINANCIAL ASSETS
471
455
7,758
TOTAL ASSEST
7,623
4,573
75,582
2,774
4,337
(18,814)
755
0
0
CURRENT LIABILITIES
FINANCIAL LIABILITIES
3,955
139
235
0
94,396
0
TOTAL EQUITY AND LIABILITIES
7,623
4,573
75,582
REVENUES
NON-CURRENT ASSETS
NON-CURRENT LIABILITIES
5,476
207
172,520
GROSS OPERATING MARGIN
165
12
(6,427)
TOTAL STATEMENT OF COMPREHENSIVE INCOME
69
10
(5,038)
KT Star Co.
S.A.E.
40%
TSJ
Limited
55%
RECONCILIATION OF THE CARRYING AMOUNT OF THE INVESTMENT
Studio
Geotecnico
GROUP’S PORTION
44%
PORTION OF NET EQUITY
OTHER ADJUSTMENTS (**)
1,221
(199)
1,735
(87)
(10,348)
10,348
BOOK VALUE
1,021
1,648
0
(**) “Other adjustments” in relation to the JV TSJ Limited are related to the recognition of the risk provisions for losses accumulated under provisions for
risks and charges.
Regarding the other investments held by the Group in associates and joint ventures, there
were no individually significant holdings with respect to both the total of consolidated assets
and the operating activities and geographical areas and, therefore, the additional information
required in said cases by IFRS 12 was not provided.
139
28.5.
Financial instruments – Non-current derivatives
2013 (*)
Changes in the
year
2014
Financial instruments - Derivatives
263
(253)
10
Total
263
(253)
10
Non-current financial instruments, derivatives, were Euro 10 thousand at 31 December 2014,
down Euro 253 thousand against 31 December 2013. The item refers to the valuation of the
derivatives used to hedge the exchange rate risk related to the cash flows generated by
contract revenue and costs. For further information and an analysis of the fair value hierarchy,
reference should be made to the section “INFORMATION ON FINANCIAL RISKS”.
28.6.
2013 (*)
Changes in the
year
2014
36
69
105
Other companies
7,066
(337)
6,729
Total holdings
7,102
(268)
6,834
Financial receivables due from related companies
7,978
(1,632)
6,346
6
812
818
Total financial receivables
7,984
(820)
7,164
Total
15,086
(1,088)
13,998
Holding in:
Non-consolidated subsidiaries
Other receivables
INVESTMENTS IN NON-CONSOLIDATED SUBSIDIARIES
2013 (*)
Changes in the
year
2014
Investments in non-consolidated subsidiaries:
•
Federico due Scarl in liquidation
8
(8)
0
•
Svincolo Taccone S.c.a.r.l. in liquidation
8
0
8
•
Ravizza S.c.a.r.l. in liquidation
5
0
5
•
Parco Grande S.c.a.r.l. in liquidation
5
0
5
•
Tecnimont Mexico
3
(3)
0
•
Exportadora de Ingegniería y Servicios TCM S.p.A.
0
67
67
•
Tecnimont USA Inc.
7
(7)
0
•
Tecnimont Illinois Llc.
0
8
8
•
KT Cameroun S.A.
0
12
12
36
69
105
Total
140
In 2014, there were the following changes:
•
The companies Tecnimont Mexico and Tecnimont USA were included in the scope of
consolidation following the start of operations of the same;
•
The new companies Exportadora de Ingegniería y Servicios TCM S.p.A. in Chile,
Tecnimont Illinois LLC in the United States, the subsidiary of Tecnimont USA, KT
Cameroun SA subsidiary of KT were formed are all not operational yet; it was therefore
decided not to consolidate them;
•
The company Federico due Scarl was liquidated in 2014.
The table below provides information on the non-consolidated subsidiaries:
Company
Ravizza S.c.a.r.l. in liquidation
Program International
liquidation
C.E.
S.r.l
HQ /
Country
Currency
%
owned
ITA
EUR
Through:
%
50%
Tecnimont C.C.
S.p.A.
50%
Tecnimont C.C.
S.p.A.
50%
ITA
EUR
50%
ITA
EUR
100%
in
KT Cameroun S.A.
KT
S.p.A.
KT
S.p.A.
Camerun
XAF
75%
Svincolo Taccone S.c.a.r.l. in liquidation
ITA
EUR
80%
Tecnimont S.p.A.
Exportadora de Ingegniería y Servicios
TCM SpA
Cile
CLP
100%
Tecnimont S.p.A.
Tecnimont Illinois Llc.
USA
USD
100%
Tecnimont USA
Inc.
100%
75%
80%
100%
100%
Investments in non-consolidated subsidiaries relate mainly to the consortia established to
execute specific orders whose lifecycle is linked to the duration of the orders, which had either
expired or had yet to start at the reporting date. Investments in non-consolidated subsidiaries
are classified as available-for-sale financial instruments, which should be valued at fair value.
However, because the investment relates to shares not listed on an active market, the fair
value cannot be reliably measured, although we do not expect it to change from the cost.
Therefore, these holdings are carried at cost and adjusted for possible impairment.
Regarding the investments held by the Group in non-consolidated subsidiaries, there were no
individually significant holdings with respect to both the total of consolidated assets and the
operating activities and geographical areas and, therefore, the additional information required
in said cases by IFRS 12 was not provided.
INVESTMENTS IN OTHER COMPANIES
2013 (*)
Changes in the
year
2014
Investments in other companies:
•
Metrofiera S.c.a.r.l.
2
0
2
•
Bata S.p.A. in liquidation
38
0
38
•
R.C.C.F. S.p.A. – Nodo di Torino
4
0
4
•
Finenergia S.p.A. in liquidation
26
0
26
•
Società Interporto Campano S.p.A.
1,653
0
1,653
•
Penta Domus S.p.A
2,095
0
2,095
•
Consorzio Cavtomi
150
0
150
•
Consorzio Cavet
434
0
434
141
•
Lotto 5A S.c.a.r.l.
2
0
2
•
Metro B1 S.c.a.r.l.
352
0
352
•
RI.MA.TI. S.c.a.r.l.
40
0
40
•
Consorzio Sirio
0.3
0
0.3
•
Lybian Joint Company
9
0
9
•
Consorzio Ponte Stretto di Messina
4
0
4
•
Polis
1
(1)
0
•
Progetto Alfiere Costruzione
1,206
(336)
870
•
Aminex Chemicals Ltd
0.5
(1)
0.0
•
Cisfi S.p.a.
1,008
0
1,008
•
Fondazione ITS
10
0
10
•
Consorzio contratto di programma Aquila (*)
0
0
0
•
Consorzio parco scientifico e tecnologico Abruzzo (*)
0
0
0
•
Tecnosanità S.c.a.r.l.
17
0
17
•
Consorzio Tecnoenergia Nord S.c.a.r.l.
12
0
12
•
Consorzio Tecnoenergia Sud S.c.a.r.l.
2
0
2
7,066
(335)
6,729
Total
(*) These investments have been fully written down
In 2014, there were liquidations of the investments in Polis and Aminex Chemicals Ltd. The
holding in the subsidiary Progetto Alfiere S.p.A was increased by Euro 1,632 thousand during
the year as a result of the subscription of the capital increase with partial waiver of the
receivable; subsequently, as a result of further losses, the carrying value of the same was
written down for a total of Euro 1,968 thousand.
Investments in other companies refer primarily to the consortia formed to execute specific
contracts, the life cycles of which are linked to the duration of the contracts themselves.
These investments should be valued at fair value, but given that the investments are in shares
that are not traded on an active market, the fair value cannot be reliably determined,
although we do not expect any value changes. Therefore, these holdings are carried at cost
and adjusted for possible impairment. Investments in other companies are classified as
available for-sale financial instruments.
The key data of the investments in other companies is as follows:
Company
Office/Country Currency
Group
%
Through:
%
Consorzio contratto di programma Aquila
ITA
EUR
5.50%
KT S.p.A.
5.50%
Fondazione ITS
ITA
EUR
10%
KT S.p.A.
10%
Consorzio Parco scientifico e tecnologico
Abruzzo
ITA
EUR
11.10%
KT S.p.A.
11.10%
Consorzio Tecnoenergia Nord S.c.a.r.l.
ITA
EUR
12.50%
MST S.r.l
12.50%
Consorzio Tecnoenergia Sud S.c.a.r.l.
ITA
EUR
12.50%
MST S.r.l
12.50%
Tecnosanità S.c.a.r.l.
ITA
EUR
17%
MST S.r.l
17%
Consorzio Cavtomi
ITA
EUR
3%
3%
Società Interporto Campano S.p.A.
ITA
EUR
3.08%
3.08%
R.C.C.F. SC.p.A. – Nodo di Torino
ITA
EUR
4%
4%
Consorzio Ponte Stretto di Messina
ITA
EUR
5.99%
5.99%
Consorzio Sirio
ITA
EUR
0.23%
0.23%
142
Bata S.r.l. in liquidation
ITA
EUR
4.41%
4.41%
RI.MA.TI. S.c.a.r.l.
ITA
EUR
6.15%
6.15%
Consorzio Cavet
ITA
EUR
8%
8%
Lotto 5°A S.c.a.r.l.
ITA
EUR
15%
15%
Progetto Alfiere Costruzione
ITA
EUR
19%
19%
Metro B1 S.c.a.r.l.
ITA
EUR
19.30%
19.30%
Penta Domus S.p.A
ITA
EUR
13.52%
13.52%
Metrofiera S.c.a.r.l.
ITA
EUR
99.99%
99.99%
Cisfi S.p.a
ITA
EUR
0.69%
0.69%
Libya
Libyan
dinar
0.33%
Tecnimont S.p.A.
0.33%
ITA
EUR
1.25%
Tecnimont S.p.A.
1.25%
Lybian Joint Company
Finenergia S.p.A. in liquidation
NON-CURRENT FINANCIAL RECEIVABLES FROM ASSOCIATED COMPANIES
Receivables from associated companies were Euro 6,346 thousand and are related for Euro
4,736 thousand to the financial receivable that the company Tecnimont C.C. S.p.A. has from
the associated company Progetto Alfiere S.p.A to finance the activities of the latter in the
initiative “Torri Eur” and Euro 1,610 thousand for the financial receivable of Tecnimont C.C.
S.p.A. from the company Penta Domus S.p.A., necessary to finance the activities of the latter
in the initiative “Ex Area Vitali”. The decrease for the year of Euro 1,632 thousand is a result
of the subscription of the capital increase in the associate Progetto Alfiere S.p.A with partial
waiver of the receivable.
NON-CURRENT FINANCIAL RECEIVABLES FROM OTHERS
Financial receivables from other businesses relate to the financial receivable due to Tecnimont
C.C. S.p.A. from RCCF Nodo di Torino S.C.P.A. in liquidation and accrued financial liabilities
due over 12 months.
The fair value estimate of non-current financial receivables on 31 December 2014 is
essentially in line with the relevant book value.
143
28.7.
2013 (*)
Changes in the
year
2014
Trade receivables beyond 12 months
46,534
(1,999)
44,535
Other trade receivables beyond 12 months
13,588
281
13,869
Total
60,122
(1,718)
58,404
Other non-current assets were Euro 58,404 thousand, down Euro 1,718 thousand against 31
December 2013.
The item “Trade receivables beyond 12 months” refers to receivables of Tecnimont S.p.A.,
Tecnimont Civil Construction and KT for warranties to customers for the success of the work
during construction. The decrease of Euro 1,999 thousand is the net effect due partly to the
collection of guarantee withholdings and partly to the reclassification to short-term of the
receivables as a consequence of the closure of orders subject to withholding as at the date of
this note, net of those accrued during the year.
Other trade receivables beyond 12 months are Euro 13,868 thousand and mainly refer to
receivables under dispute against J&P and other miscellaneous receivables due after 12
months, including security deposits.
28.8.
Deferred tax assets and liabilities
Deferred tax assets
Total
2013 (*)
Changes in the
year
2014
86,710
4,208
90,918
(21,854)
1,196
(20,658)
64,856
5,404
70,260
Deferred tax assets and liabilities showed a positive net balance of Euro 70,260 thousand, up
Euro 5,404 thousand against 31 December 2013, mainly reflecting the combined effect of the
increase in deferred tax assets and the decrease of deferred tax liabilities.
The positive change in deferred tax assets was due mainly to the allocation of deferred tax
assets on risk provisions taxed, tax losses and other temporary differences deductible in
future years.
The deferred tax provision decreased following temporary differences that became taxable in
the year and due mainly to intercompany dividends not yet received at 31 December 2013
and received in 2014.
The determination of prepaid tax assets was carried out critically evaluating the existence of
the basis for the future recovery of these assets on the basis of the capacity of the company
and the Maire Tecnimont Group, by virtue of the financial year of the option relative to the
“tax consolidation” to generate positive taxable income in future periods.
The Group enjoys theoretical tax benefits for tax losses that can be carried forward for
approximately Euro 20.3 million not posted in the statement of financial position as an asset.
The composition of deferred tax assets and liabilities and changes during the year are shown
in the table below:
144
2012
Provision Utilisation Reclassifications
2014
Deferred tax assets
Provisions for risks and charges
23,099
9,093
(6,103)
(12)
26,077
Tax losses
44,075
11,194
(13,410)
0
41,860
MTM derivatives
3,414
587
(4)
3,997
Value differences in intangible fixed assets
3,208
(42)
3,166
296
Post-employment benefits – IAS 19
241
85
(30)
Other consolidation items
12,674
9,192
(6,345)
0
15,522
Total deferred tax assets
86,711
30,151
(25,934)
(12)
90,918
Bad debt provisions
MTM derivatives
(447)
(1,485)
Amortized cost of financing
Present values of financial assets and liabilities
(2,216)
56
(4)
(50)
4
0
174
(612)
(353)
353
0
(5,053)
115
(4,938)
(135)
135
0
(676)
IFRS 3 Acquisition of Tecnimont S.p.A.
IFRS 3 Acquisition of KT-Kinetics Technology S.p.A.
(731)
(106)
Post-employment benefits – IAS 19
IFRS 3 Acquisition of Tecnimont ICB
(447)
(110)
Value differences in intangible fixed assets
(4,037)
(115)
Other consolidation items
(9,558)
(6,618)
7,932
Total deferred tax liabilities
(21,854)
(7,574)
8,769
0
(20,658)
64,857
22,577
(17,165)
(12)
70,260
Total deferred tax assets and liabilities
28.9.
(4,152)
(8,244)
Inventories and advances to suppliers
Inventories and Advances to Suppliers
2013 (*)
Changes in the
year
2014
1,846
20
1,866
Advance payments
134,725
17,077
151,802
Total
136,571
17,097
153,668
Finished products and goods
The item “Finished products and goods” refers to consumables and finished products used
mainly by the companies Transfirma and Consorzio Cefalù 20 for the conduct of their site
activities.
Advance payments, of Euro 151,802 thousand, refer to the advance payments made to Italian
and foreign suppliers and subcontractors against the shipment of materials needed for the
construction of plants and work in progress.
145
The increase in advances to suppliers for Euro 17,077 thousand is the direct consequence of
the performance of contracts awarded during the previous year and for which the issue phase
of the main equipment orders was intense and there were also more materials in stock for
delivery.
28.10.
Construction contracts - Receivables
2013 (*)
Changes in the
year
2014
Work in progress - Advance payments
281,315
135,065
416,380
Total
281,315
135,065
416,380
Backlog work in progress, shown as assets (construction contracts receivable), is the net
positive value of each individual contract resulting from the advancement in production and
the relative invoicing on account and contractual risk provision.
The increase in the value of construction contracts receivables of Euro 135,065 thousand is
substantially linked to the growth in production volume during the year, which was also higher
than the invoices on account compared to 31 December 2013. The change is also linked to the
advancement of projects and to the related contractual terms and was affected by the positive
effect of the closing of the agreement with the Enel-Endesa Group.
The main construction contracts refer to infrastructure contracts including the FiumetortoCefalù railway line and the new railway network of Etihad Railways. For the Technology,
Engineering & Construction sector, the main ones refer to the projects IOWA, AGRP Kuwait,
Eni Ravenna, LDPE Coatzacoalcos (Etileno XXI), LDPE Novy Urengoy, HDPE Al Jubail and
Sadara and LLDPE HDPE Dahej Gujarat (OPAL).
The value of construction contracts includes the additional requirements relating to contracts
in an advanced stage of negotiation for the portion likely to be accepted by the customer. At
present such requests have an impact on the values of the contracts concerned of
approximately 3.1% of the same for the Technology, Engineering & Construction BU and
about 3.7% for the Infrastructure BU.
28.11.
Trade receivables
2013 (*)
Changes in the
year
2014
391,669
58,091
449,760
Subsidiary trade receivables within 12 months
783
(4)
779
Associated trade receivables within 12 months
1,538
10,216
11,754
41
(41)
(0)
Affiliated trade receivables within 12 months
15,911
(1,403)
14,508
Total
409,942
66,859
476,801
Trade receivables within 12 months
Parent company trade receivables within 12 months
Trade receivables at 31 December 2014 were Euro 476,801 thousand, up Euro 66,859
thousand against 31 December 2013.
146
The increase in trade receivables of Euro 58,092 thousand is mainly due to the higher volume
of business during the year. These changes are also related to the contractual terms of the
projects and also the effect linked to invoicing higher than the collections of the period.
Receivables from subsidiaries refer to receivables from non-consolidated subsidiaries. This
item mainly includes receivables from Program International Consulting Engineers S.r.l. for
Euro 699 thousand and Parco Grande for Euro 80 thousand.
Trade receivables from associates were Euro 0.2 thousand from Stazioni Metroval, Euro 6
thousand from KT Star, Euro 312 thousand from Desimont Contracting Nigeria and Euro
11,435 from TSJ Limited. The increase in the year is related to greater activities carried out
for TSJ Limited, vehicle that manages the Borouge 3 project.
Trade receivables from parent companies, due to GLV CAPITAL S.p.A. at 31 December 2013,
were offset in the year.
Receivables from subsidiaries refer to receivables from Cavet of Euro 56 thousand, Cavtomi
for Euro 5,637 thousand, Metro B1 for Euro 5,555 thousand, Interporto Campano for Euro
2,361 thousand for engineering services provided and Euro 546 thousand refer to receivables
from Progetto Alfiere S.p.A. for asset management services regarding the “Torri EUR” project,
Euro 353 thousand from the company Penta Domus S.p.A. for asset and project management
services in the “Ex Area Vitali” project.
Trade receivables are shown net of the provision for bad debts, which was Euro 10,689
thousand as of 31 December 2014 (31 December 2013: Euro 9,962 thousand).
2013 (*)
Provisions
Utilisations
Change in scope
of consolidation
Other
changes
2014
Bad debt provision
9,962
1,044
(665)
0
348
10,689
Total
9,962
1,044
(665)
0
348
10,689
Provisions made mostly relates to projects of the Technology, Engineering & Construction BU,
and the residual part to projects of the Infrastructure BU. The decreases are related to uses in
the year following the final accounting of losses on receivables previously provisioned.
Receivables from past due clients are primarily related to the Infrastructure & Civil
Engineering BU and are from entities belonging to the Italian Public Administration; in relation
to the Technology, Engineering & Construction BU, they relate to a few positions and are
constantly monitored. Both case studies do not raise concerns about the solvency status of
clients (Italian and foreign government agencies), and related collection.
The carrying amount of all trade receivables substantially corresponds with fair value, which is
calculated as indicated in the section on measurement criteria.
28.12.
Current tax assets
2013 (*)
Changes in the
year
2014
Tax receivables
125,464
15,631
141,095
Total
125,464
15,631
141,095
147
Tax receivables were Euro 141,095 thousand, up Euro 15,631 thousand against 31 December
2013. The item primarily includes VAT receivables for Euro 60,731 thousand, of which Euro
36,968 thousand relating to the foreign subsidiary Tecnimont Chile and other tax receivables
for Euro 74,593 thousand.
The amounts of VAT receivables related to Tecnimont Chile are considered recoverable in part
as a result of the closing of the transaction with Endesa/Enel in February 2015, and through
the prospects of new work awards from the South American group, but also in light of the
recognition in the possible sale of the company.
Other tax receivables for Euro 74,593 thousand mainly refer to:
•
•
•
Tax receivables of foreign companies for Euro 27,174 thousand related to tax
receivables of the subsidiaries Tecnimont ICB, Stamicarbon, Tecnimont Chile,
Tecnimont Arabia, UTE - Hidrogeno Cadereyta, T.P.I. and Imm. Lux;
Receivables for excess IRES paid by Maire Tecnimont S.p.A. heading the tax
consolidation, in the amount of Euro 24,482 thousand;
Residual tax receivables for Euro 22,665 thousand related to Euro 4,212 thousand for
the excess of IRES advances compared to current taxes of other Group companies,
IRAP advances for Euro 975 thousand, tax receivables from tax authorities for various
reimbursements and receivables for other taxes for Euro 12,321 thousand, and
receivables for taxes paid abroad to be recovered for from 5,213, the latter relating to
the Company KT for Euro 2,581 thousand and Tecnimont for Euro 2,631 thousand.
Maire Tecnimont S.p.A. and its subsidiaries Tecnimont S.p.A., MST S.r.l., Protecma S.r.l.,
Tecnimont Civil Construction S.p.A., Met Newen S.p.A, Tecnimont KT S.p.A. have chosen to
apply the National Tax Consolidation Regime that allows to calculate IRES income taxes based
on a taxable base resulting from the algebraic sum of the positive and negative taxable
income amounts of each individual Group company.
The companies Tecnimont S.p.A., Tecnimont Civil Construction S.p.A, Protecma S.r.l,
Consorzio Cefalù 20, Consorzio Corace, M.S.T. S.r.l. also adhered to the Group VAT
consolidation regime.
28.13.
2013 (*)
Changes in the
year
2014
415
159
574
Total
415
159
574
At 31 December 2014, Derivative instruments were Euro 574 thousand (up Euro 159
thousand over 31 December 2013). This is mainly due to the fair value measurement of
derivative contracts in place; for details, please refer to the measurement criteria section. As
at 31 December 2014, the item includes the valuation of derivative instruments hedging
exchange rate risk on future contract revenue and backlog costs. The positive mark-to-market
value was due to the Forex trend, which saw the dollar weaken against the euro from the
derivatives transaction date to the end of the year. The positive mark-to-market value is
offset by future operating cash outflows of equal amount.
For more information and an analysis of the fair value hierarchy, please refer to the section
entitled “INFORMATION ON FINANCIAL RISKS”.
148
28.14.
2013 (*)
Changes in the
year
2014
1,009
(109)
900
673
(124)
549
From affiliated companies
9,259
(7,581)
1,678
Other securities
4,557
(657)
3,900
From others
1,683
(401)
1,282
Total
17,181
(8,872)
8,309
Financial receivables due within 12 months:
From subsidiaries
From associated companies
At 31 December 2014, “Other current financial assets” was Euro 8,309 thousand, down Euro
8,872 thousand over 31 December 2013.
Receivables from subsidiaries refer to receivables from non-consolidated subsidiaries; said
item includes receivables from Program International Consulting Engineers S.r.l. for Euro 900
thousand; the change is related to Tecnimont USA included in the scope of consolidation
during the year.
Financial receivables from associates relate to Villaggio Olimpico Moi for Euro 69 thousand and
MCM Servizi Roma for Euro 480 thousand. The reduction is mainly due to the collection of part
of the receivable from the MCM Servizi Roma.
Financial receivables from affiliated companies refer solely to CAVET consortium. The
reduction of the year is a direct result of offsetting respectively of financial creditors and
debtors of the Group to the Cavet Consortium.
“Other securities” for Euro 3,900 thousand mainly consist of temporary liquidity investments
in SICAV of the subsidiary TCM FR S.A.; these financial instruments are classified as assets
held to maturity and measured at the amortised cost that is close to their face value.
Other receivables for Euro 1,283 thousand decreased by 401 thousand; this item mainly
includes accrued financial income for Euro 462 thousand and financial receivables from
factoring companies for Euro 821 thousand for the residual portions of advances received, and
other miscellaneous receivables.
The book values of all the above financial assets are in line with their fair value, measured in
accordance with the methods set out in the section “Valuation Criteria”.
28.15.
Other receivables due within 12 months
Trade accrued charges and deferred income
Total
2013 (*)
Changes in
the year
2014
134,227
(1,612)
132,615
5,270
2,513
7,783
139,497
901
140,398
149
Other current assets are Euro 140,398 thousand at 31 December 2014, a net increase of Euro
901 thousand against 31 December 2013. This item mainly consists of receivables from
companies being disposed, insurance premiums, receivables from employees, various
prepayments and other miscellaneous receivables.
The main item relates to receivables due from companies for sale, with particular reference to
the trade receivable due to Tecnimont S.p.A. and MST S.r.l. from Biolevano S.r.l., as the
accounting representation of the effect of reclassifying the “Biolevano – Biomass plant” project
under “Assets for sale”.
The carrying amount of all current assets substantially corresponds with their fair value.
The table below shows the breakdown of other receivables due within 12 months:
2013 (*)
Changes in the
year
2014
Receivable due from companies classified IFRS 5
78,442
4,024
82,466
Receivables due from other consortium partners
12,850
383
13,233
Other receivables
13,346
12,442
25,788
Receivables due from other partner JGC-Gasco
14,954
(14,954)
0
VAT receivables (foreign countries)
5,390
(2,391)
2,999
299
137
436
Receivables due from other partner Samsung-Borouge 3
2,671
(2,671)
0
Guarantee deposits
2,372
(603)
1,769
Other prepayments (rents, commissions, assistance)
5,356
2,427
7,783
Receivables from employees
1,614
2,588
4,202
Advances paid to suppliers
101
(100)
1
Social security receivables
1,783
(381)
1,402
319
0
319
139,497
901
140,398
2013 (*)
Changes in the
year
2014
166,769
(7,698)
159,071
243
928
1,171
167,012
(6,770)
160,242
Insurance premiums
Receivable from shareholders for share capital not yet paid up
Total
28.16.
Bank and post office accounts
Cash-in-hand and cash equivalents
Total
Cash and cash equivalents as at 31 December 2014 were Euro 160,242 thousand, a decrease
of Euro 6,770 thousand compared to 2013.
Group cash and cash equivalents allocated to joint operations were approximately Euro
23,044 thousand at 31 December 2014. JO cash in 2014 recorded a significant decrease,
mainly due to the JO Gasco project’s natural progress.
150
significant improvement compared to the same indicator in 2013 which reported instead an
absorption of Euro 136,036 thousand; the improvement is mainly due to the result for the
year and the overall change in working capital.
Despite the positive result for the year, cash flows from operations were still negatively
affected by the changes in working capital. In fact, the changes in receivables and
construction contracts receivables and payables recorded a significant absorption of cash
primarily related to payments made and in general the final phase of the Joint Operations;
these changes were partially mitigated by the increase in trade payables and advances
received from client during the year.
Cash flow from investment absorbed Euro 5,237 thousand mainly due to the new technologies
and intellectual property rights (patents and licenses) developed and filed during the year by
Stamicarbon B.V. and the Maire Tecnimont Innovation Centre (MTIC), the implementation of
software and the purchase of minor assets, net of the disposals of investments and the
collection of dividends from affiliated companies.
Financial management also absorbed cash of Euro 4,707 thousand mainly due to the year’s
financial costs, the repayment of advances on invoices related to the working capital
management of specific contracts and the repayment of bank account overdrafts net of the
collection of the equity-linked bond.
The estimated fair value of the bank and post office deposits on 31 December 2014
approximated their book value.
28.17.
2013 (*)
Changes in the
year
2014
Assets held for sale
101,916
(7,351)
94,565
Elimination of assets from and to assets held for sale
(84,889)
2,423
(82,466)
17,027
(4,928)
12,099
(90,407)
2,650
(87,757)
Elimination of liabilities from and to liabilities held for sale
84,889
(2,423)
82,466
Total liabilities
(5,518)
227
(5,291)
Total
11,509
(4,701)
6,808
Total assets
Liabilities directly associated with non-current assets classified as
held for sale
The change in the year is a result of the sale of a building owned by the Group and the
activities of the company Sofregaz SA also sold in 2014.
Assets and liabilities held for sale had a net positive value of Euro 6,808 thousand mainly
related to Biolevano - Olevano di Lomellina Biomass Plant. With reference to the sale of the
above company that has lasted for more than a year, at year-end 2014, the same was
considered “highly likely” on the basis of ongoing negotiations with the counterparties
concerned in February 2015, which led to the receipt of a binding offer for the sale of the
company, whose closing is expected in the coming weeks. For further details, reference shall
be made to as outlined in the Report on Operations.
The effect of the exposure according to IFRS 5 of the assets and liabilities of Biolevano has
involved the fact that they were not subject to amortization/depreciation.
151
The Group has ongoing negotiations for the sale of such additional assets, but the assets and
liabilities related to them are not shown among those held for sale because, while considering
the sale transaction highly probable, at 31 December 2014 all the conditions required
according to IFRS 5 had not yet been complied with.
In the income statement, the relevant income is classified separately from other continued
assets, since disposals do not represent a major business line.
Non-current assets classified as held for sale related to the company BiOlevano were valued at
the lower of carrying amount and fair value net of selling costs, based on the Binding Offer
received, in accordance with the requirements of IFRS 5.
Below is a summary table for this item:
ASSETS AND LIABILITIES HELD FOR SALE
31/12/2014
28.18.
of which to
Continuing
Operations
NON-CURRENT ASSETS
CURRENT ASSETS
FINANCIAL ASSETS
72,939
18,838
2,788
TOTAL ASSETS HELD FOR SALE
94,565
0
NON-CURRENT LIABILITIES
CURRENT LIABILITIES
FINANCIAL LIABILITIES
6,777
80,980
0
75,689
TOTAL LIABILITIES HELD FOR SALE
87,757
6,777
0
82,466
Group shareholders’ equity
The Group’s shareholders’ equity booked at 31 December 2014 is Euro 92,199 thousand, up
Euro 58,692 thousand on 31 December 2013. The total consolidated equity, considering the
minorities, is Euro 93,705, thousand, up Euro 58,510 thousand on 31 December 2013.
The overall change in the Group’s shareholders’ equity is mainly due to the result for the year
and registration of the “equity” component of the convertible bond of Euro 6,960 thousand,
partially offset by the decreases in the reserve for Cash Flow Hedges of derivative hedging
instruments and reserve for currency translation of foreign financial statements in currencies
other than the functional currency (Euro).
Minority shareholders’ equity is Euro 1,506 thousand and was negative for Euro 182 thousand.
SHARE CAPITAL
The share capital at 31 December 2014 for Euro 19,689,550 thousand was made up of
305,527,500 shares, without nominal value and accruing regular dividend.
SHARE PREMIUM RESERVE
The reserve was made up of Euro 25,000 thousand paid before 26 November 2007 and Euro
58,045 thousand generated by the premium on the share capital increase made in 2007, net
of charges for listing costs, equal to Euro 3,971 thousand net of the tax effect.
152
The 2013 change was Euro 141,653 thousand, comprising the premium paid following the
reserved share capital increase and other shareholders totalling Euro 146,417 thousand, offset
for Euro 4,167 thousand by expenses for the share capital increase, net of the tax effect.
This capital reserve can be freely used either for a free share capital increase and/or to cover
losses. In accordance with article 2431 of the Civil Code, the reserve can also be distributed to
the shareholders on approval of the Shareholders’ meeting.
OTHER RESERVES
Other reserves at 31 December 2014 total Euro 64,324 thousand and are broken down as
follows:
•
Legal reserve of parent company Maire Tecnimont S.p.A. of Euro 5,328 thousand on
31 December 2013;
•
Asset revaluation reserve, of Euro 9,722 thousand, recognized after the acquisition of
the remaining 50% of Tecnimont ICB and the revaluation of other buildings;
•
Foreign currency conversion reserve, which at 31 December 2014 was negative for
Euro 10,973 thousand, made up of the temporary conversion differences of currencydenominated financial statements of foreign companies. The negative change in the
year is equal to Euro 2,114 thousand and was influenced by currency performance;
•
Extraordinary reserves were Euro 46,554 thousand at 31 December 2014 and did not
change against the previous year;
•
Other reserves of Euro 6,732 thousand at 31 December 2014;
•
“Equity” reserve component of the convertible bond - equity linked - of Euro 80 million
issued in February 2014 for Euro 6,960 thousand. This value expresses the option of
conversion into shares of the convertible bond, with reference to which, regarding the
accounting method, reference is made to the paragraph “Other non-current financial
liabilities” in the Notes.
VALUATION RESERVE
The valuation reserve shows a negative balance of Euro -2,770 thousand at 31 December
2014 and is made up of the cash flow hedge reserve and the actuarial gains and losses
reserve. The table below shows the changes in the valuation reserve:
Cash flow
hedge reserve
Actuarial
gains/losses
Total
(1,396)
(341)
(1,737)
Actuarial gains/(losses)
0
(676)
(676)
Tax impact
0
186
186
(746)
0
(746)
205
0
205
(1,937)
(831)
(2,770)
Net carrying amount at 31 December 2013
Net carrying amount of derivative instruments:
Carrying amount of derivative instruments
Tax impact
The tables below show the “Reconciliation between the Net Income of Maire Tecnimont S.p.A.
and the Group Net Income” and the “Reconciliation between the Shareholders’ Equity of Maire
Tecnimont S.p.A. and Group Shareholders’ Equity”.
153
RECONCILIATION BETWEEN
GROUP NET INCOME
THE
NET INCOME
OF
MAIRE TECNIMONT S.P.A.
AND THE
2013
2014
Net income of Maire Tecnimont S.p.A.
(5,361)
(2,084)
Intra-group dividend eliminated from the consolidated financial statements
(28,198)
(41,252)
30,049
68,834
Net income of subsidiaries
Elimination of intra-group earnings
Other consolidation adjustments
Deferred and advanced income taxes
Group net income
RECONCILIATION BETWEEN THE SHAREHOLDERS’ EQUITY
S.P.A. AND GROUP SHAREHOLDERS’ EQUITY
OF
965
0
18,508
24,519
988
280
16,952
50,297
MAIRE TECNIMONT
2013
2014
393,099
397,929
(714,651)
(706,351)
Recognition of net equity of consolidated companies
207,093
248,013
Other consolidation adjustments
147,966
152,608
Group shareholders’ equity
33,507
92,199
Minority interests
1,688
1,506
Consolidated shareholders’ equity
35,195
93,705
Shareholders’ equity of Maire Tecnimont S.p.A
Elimination of the carrying amounts of consolidated investments
28.19.
2013 (*)
Changes in the
year
2014
Bank debt due beyond 12 months
362,766
(358,731)
4,035
Total
362,766
(358,731)
4,035
Financial debt net of current amount amounts to Euro 4,035 thousand, and is decreased by
Euro 358,731 thousand in comparision with 31 December 2013 due to the reclassification
from medium/long to short term. The reclassification is considered temporary as a result of
the renegotiation that the Group is finalizing with the syndicate of banks regarding the terms
and conditions of the new loan agreement which provides, among other, the extinction of the
previous loans and the disbursement of a new medium/long term loan.
The remaining portion of Euro 4,035 thousand is related to the loan received by Credito
Valtellinese that was not covered by the 2013 refinancing. The repayment of this loan is
expected to be done in eight quarterly instalments starting from 31.03.2015 and with a
maturity as at 31.12.2016.
154
At 31 December 2014, there were no overdue financial payables. Please refer to the
paragraph on short-term financial debt for further details,.
28.20.
Provisions for charges over 12 months
2013 (*)
Changes in the
year
2014
Provisions for charges over 12 months
39,549
24,039
63,588
Total
39,549
24,039
63,588
The breakdown and changes made during the period are detailed below:
2013 (*)
Provisions
Utilisations
Reclassifications/Change
in consolidation scope
2014
Provisions for employee-related charges
6,143
31,954
(6,108)
36
32,025
Other provisions
4,992
21,295
(4,974)
(18)
21,295
Dispute risks
1,151
10,659
(1,134)
54
10,730
Provisions for tax risks
10,315
1,051
(3)
0
11,363
Other provisions for charges:
23,091
6,102
(6,333)
(2,660)
20,200
Risks associated with legal action
2,394
2,150
(446)
(900)
3,198
Provisions for client contract risks
17,703
3,952
(4,204)
(2,624)
14,827
Other
2,994
0
(1,683)
864
2,175
Total
39,549
39,107
(12,444)
(2,624)
63,588
Provisions for charges amount to Euro 63,588 thousand,increased with Euro 24,039 thousand
in comparision with 31 December 2013.
The main increases in provisions for charges are attributable to charges related to personnel
for Euro 31,954 thousand, in particular to the estimated costs related to remuneration policies
and incentives for employees and Euro 10,659 thousand to charges related to the reduction
procedure of staff of certain subsidiaries that are included in the ongoing processes of
optimization of human capital and progressive adaptation of the company functions to the
changed business needs. The utilizations of Euro 6,108 thousand of employee provisions are
attributable to charges that have a financial effect in the current year.
The changes in the other provisions for charges relates primarily to the provision for
contracts; the increase is mainly due to the provision made in order to cover losses
accumulated by the associate TSJ Ltd on the Borouge 3 project; the uses of the provision
mainly refer to expenses that had their economic effects in the year related to contractual
risks on completed contracts, and particularly following the signing of a transaction with
Efacec for past activities. With regard to the Efacec transaction, the remaining balance of Euro
2,624 thousand was reclassified under other current liabilities.
Other residual changes are related to other charges for various legal disputes and litigations.
155
28.21.
2013 (*)
Changes in the
year
2014
15,213
(446)
14,767
Total
15,213
(446)
14,767
All employees of Italian Group companies have post-employment benefits known as severance
indemnity (“TFR”). In addition, the employees of the former Fiat Engineering are also given a
“Loyalty Bonus Plan” – which is similar to a defined-benefit plan – while employees of some
foreign companies of the Tecnimont Group enjoy other benefit plans defined as “defined
contribution plans”.
In accordance with IAS 19 - Employee Benefits, the Group has estimated the liabilities for the
defined-benefit plans at 31 December 2014, a breakdown of which is shown in the table
below.
Balance at 31 December 2013
Changes in the year
POSTEMPLOYMENT
INDEMNITY
PROVISION
LOYALTY
PREMIUM
OTHER
PLANS
Total
14,408
88
716
15,213
(208)
5
(242)
(446)
14,200
93
474
14,767
The current service cost has been booked within the income statement under “Personnel
expense”. Interest expense on assumed obligations is booked to the income statement under
“Interest expense - other expense”. Actuarial gains and losses are shown in a specific
valuation reserve under shareholders’ equity. The parameters used to value the postemployment benefits are:
• First assumption: it was decided to adopt a rate of 1% as average scenario of the planned
inflation from the “Document of Economics and Finance 2014”, and the subsequent “Update
Note of Economics and Finance 2014”;
• Salary increases: the Company’s remuneration policy takes into account contractual and
meritocratic components and inflation adjustments, and is used to estimate the future
provisions for the post-employment benefits accrued by employees until they leave the
Company. In particular, the Company has chosen to apply a net increase per year equal to
inflation of 1%;
• Discounting rate: this is determined using the market yields on corporate bonds issued by
primary companies at the valuation date, based on the Euro Composite AA (source:
Bloomberg) interest rate curve on 31 December 2014;
• Collective reference: with reference to the entire collective subject of analysis of Maire
Tecnimont Group the average age and average seniority (TFR base) were considered.
The main decreases in post-employment benefits and other provisions refer to personnel who
have left.
156
With regard to the calculation of the loyalty bonus, the collectivity that has been the subject of
evaluation refers to employees as at the valuation date, in possession of the requirements for
receiving such bonuses.
28.22.
Trade payables due beyond 12 months
Tax payables due beyond 12 months
Total
2013 (*)
Changes in the
year
2014
16,759
1,985
18,744
447
42
489
17,206
2,027
19,233
Other non-current liabilities amount to Euro 19,233 thousand as at 31 December 2014 and
mainly relate to the supplier/subcontractor contractual guarantees held by the Group to
ensure the good outcome of the works. The increase was mainly due to the progress of works
and contractual terms with suppliers, against which the deductions were higher than on 31
December 2014 also as a result of the increase of production volumes in 2014.
Tax payables beyond 12 months are substantially in line compared with the previous year.
28.23.
Financial instruments – Non-current derivatives
(Euro thousands)
2013 (*)
Changes in the
year
2014
81
(73)
8
Total
81
(73)
8
“Financial Instruments – Non-current Derivatives” recorded as liabilities at 31 December 2014
amounts to Euro 8 thousand with a decrease of Euro 73 thousand compared to 31 December
2013. These hedging liabilities refer to the fair-value valuation of the derivative contracts in
place. This amount in the long-term relates to the valuation of derivative instruments hedging
exchange rate risk for the revenue and costs of some contracts. The change is attributable to
the foreign exchange market trend. The negative mark-to-market value of the hedge positions
is offset by future incoming operative cash flows for an equal amount.
28.24.
2013 (*)
Changes in the
year
2014
Other lenders
0
71,292
71,292
Total
0
71,292
71,292
157
bond, net of the related accessory expenses. The equity component of the same instrument
has been reclassified under “Other reserves” in shareholders’ equity.
In this regard it is noted as follows:
On 20 February 2014 the parent company Maire Tecnimont S.p.A. closed a financing
transaction through equity-linked bond loan for Euro 80 million, placed with qualified Italian
and foreign investors.
The initial conversion price of the bonds has been set at 2.1898; the bonds were issued at
par, for a unit nominal value of Euro 100,000; a 5 years duration and a fixed annual coupon
of 5.75%, payable six-monthly in arrears. If not previously converted, redeemed, purchased
or cancelled, the bonds will be redeemed at par on 20 February 2019.
On 30 April 2014, during an extraordinary meeting the Shareholders also authorized the
convertibility of the equity-linked bond. The extraordinary shareholders’ meeting therefore
approved the proposal of share capital increase in exchange of cash payment, with the
exclusion of stock options pursuant to Art. 2441, paragraph 5 of the Italian Civil Code, for a
total of up to Euro 80 million (including the premium). This will be paid in one or more
tranches by means of the issue of up to 36,533,017 ordinary shares with the same
price per share is Euro 2.1898 (of which Euro 0.01 to be allocated to share capital and Euro
2.1798 as premium), subject to any adjustments to the conversion price as established by the
Beginning from 7 March 2018, Maire Tecnimont would have had the right to settle all
conversions by making cash payment of an amount up to the nominal value of the bonds and
deliver a number of shares calculated according to the methods specified in the Regulation
(the “Net Share Settlement Election”). In addition, at the date of maturity of the bonds, the
Company still had the right to deliver a combination of shares and cash, instead of regulating
the conversion of the Bonds solely in cash, in accordance with the procedures set out in the
Regulations.
On 9 July 2014, the Board of Directors of the Company approved the Revised Budget for the
year 2014 and the update of the Group’s Business Plan 2013-2019, as well as all the forecasts
contained therein with particular reference to the year concerning the extinction methods of
the convertible bond.
Even on the basis of these assumptions and after careful and thorough evaluation made by
Board of Directors of the data thus adopted, the same (thereby exercising the prerogatives
and rights assigned to the same in the regulation of newly issued bonds and thus reaffirming
the initial evaluations, referred to the Council of 14 May 2014, as part of the quarterly
reporting) has confirmed its decision not to proceed, taking into account these assumptions
and renouncing, to the extent possible, to the exercise of the right to net share settlement
election expected residually in the terms of the loan and has opted instead, as of now, and
always on the basis of the foregoing for the settlement in shares only in relation to the bond
itself.
right, the right for the company to deliver shares, pay the amount in cash or offer a
combination of shares and cash, the option is accounted for as a financial liability for the
embedded derivative, measured at fair value through profit anf loss while the differential with
158
respect to the original nominal value or the financial liability (host) is recorded at amortized
cost.
As indicated above, in consideration of the irrevocable waiver regarding the Net Share
Settlement Election by the Company, the option is (in fact) “cancelled” in substance. In
theory, therefore, it is believed that, should there be the possibility of a proposal for a cash
payment portion calculated under the option, the bondholders may demand fulfilment through
the delivery of shares. As said waiver involves the maintenance of a fixed ratio of conversion
into shares over the term of the bond, it identifies a compound financial instrument the
accounting methods that are outlined above.
28.25.
Short-term debt
2013 (*)
Changes in the
year
2014
Bank debt
130,792
308,298
439,090
Other lenders
18,847
(1,249)
17,598
Accrued financial liabilities
3,068
9,133
12,201
152,707
316,182
468,889
Total
The short-term debt equlals to Euro 468,889 thousand with an increase of Euro 316,182
thousand compared to 31 December 2013, mainly as a result of the reclassification from
medium/long term. The reclassification is considered temporary as a result of the
renegotiation that the Group is finalizing with the syndicate of banks regarding the terms and
conditions of the new loan agreement which provides, among other things, the extinction of
the previous loans and the disbursement of a new medium/long term loan.
At 31 December 2014, the short-term debt to banks mainly refers to:
- Euro 345,014 thousand relating to the rescheduling and new finance agreements stipulated
with the Group’s main lenders in 2013. These loans are being renegotiated with the banking
system thanks to the transactions outlined below.
Under these agreements, the debt has been completely rescheduled to five years, with a
grace period of two years as of 2013 and the repayment by half-year instalments from 30
June 2015 to 31 December 2017. The loans are secured by covenants in line with the
standards for this type of transaction. At 31 December 2014, the covenants were not fulfilled.
In view of the current negotiations being finalized and transactions expected in the coming
weeks, the Group Management therefore considers that non-fulfilment of the above
parameters shall have no consequences.
In fact, in the first part of April, there are expected the inflows related to the transaction for
the Bocamina project and the sale of the Biolevano plant and the attainment of a loan by
Stamicarbon, whose term sheet is already duly signed, as a step preparatory to the
subsequent valorization of a minority share of the same, through a market transaction for
finalized, with a significant reduction of medium to long-term bank debt, as well as a
significant improvement of the terms and conditions of the remaining debt. The conclusion of
this transaction, as described above, also allows overcoming the covenants in the loan
agreements at year-end 2014.
159
In accordance with the accounting treatment under IAS 1, as a result of as outlined above,
commencing from the next accounting period these debts will be classified under medium-long
term liabilities:
- for Euro 17,092 Intesa San Paolo and Unicredit loans held by Maire Tecnimont S.p.A. that
were not part of the 2013 refinancing and have followed their natural maturity, at 31
December 2014 Euro 9,168 thousand were reclassified to short term as accounting treatment
required by IAS 1 following as outlined above;
- for Euro 3,705 the short-term capital portion of a loan not part of the 2013 refinancing and
in particular received by Credito Valtellinese;
- for Euro 73,279 thousand the negative current account balances due to the use of facilities
granted and advances on trade flows related to contracts in progress.
Short-term debt to other lenders is Euro 17,598 thousand and is mainly connected with the
mobilisation of accounts receivables and factoring operations.
Accrued expenses on loans and interest on overdrafts accrued and not yet paid amount to
Euro 12,201 thousand.
The net financial position at 31 December 2014 was negative for Euro 365 million, with an
increase of Euro 32.7 million compared with 31 December 2013 (Euro 332.3 million when it
was a negative). The change is affected by the physiological reduction of available cash in the
joint operation related to the project evolution; gross debt has increased as a result of the
equity-linked bond issue, partially offset by the repayment of loan portions during the year.
The breakdown of the net financial position is indicated in the paragraph “financial
performance of the Group” in the Report on Operations, to which reference should be made
for further details on changes from the previous period.
The table below shows the net financial debt of the Group as at 31 December 2014 and for the
year ended 31 December 2013 in line with the Consob Communication No. DEM/6064293 of
28 July 2006:
MAIRE TECNIMONT GROUP NET FINANCIAL DEBT
A.
B.
C.
D.
E.
F.
G.
H.
I.
J.
K.
L.
M.
N.
O.
160
Cash
Bank and post office deposits
Securities
31.12.2014 31.12.2013 (*)
(1,171)
(316)
(159,070)
(166,696)
(3,900)
(4,557)
(164,141)
(171,569)
Current financial recevaibles
(4,983)
(13,038)
Current bank debts
468,889
136,650
-
16,057
Liquidity (A+B+C)
Current part of non-current borrowings
Other current financial debts
6,705
16,650
Current financial debt (F+G+H)
475,594
169,357
Net current financial debt (I-E-D)
306,469
(15,250)
4,035
362,766
Non-current bank debts
Bonds issued
Other non-current debts
Non-current financial debt (K+L+M)
Net financial debt (J+N)
71,292
-
8
81
75,335
362,848
381,804
347,597
The following table provides a reconciliation of net financial debt and net financial position of
the Group at 31 December 2014 and for the year ended 31 December 2013:
NFD AND NFP RECONCILIATION
O. Net financial debt
Net financial debt of assets on disposal
31.12.2014
381,804
347,597
(2,788)
42
(13,998)
(15,086)
Financial instruments - derivatives (non consistent portion)
31.12.2013
(*)
(10)
(263)
365,008
332,290
The fair value estimate of these financial instruments at 31 December 2014, measured using
the method indicated in the section “Measurement criteria”, was substantially in line with their
book value. The breakdown by expiry date of the gross financial liabilities is shown in the
section “Information on Financial Risks”.
28.26.
Tax payables
2013 (*)
Changes in the
year
2014
Tax payables
38,321
(1,692)
36,629
Total
38,321
(1,692)
36,629
“Tax payables” of Euro 36,629 thousand declined in comparision with the balance recorded as
at 31 December 2013 of Euro 1,692 thousand.
The item mainly includes tax payables of foreign companies, including VAT of Euro 24,063
thousand, mainly relating to the foreign companies Tecnimont ICB, TCM FR S.A. and
Stamicarbon B.V.
The other tax payables relate to IRES and IRAP of companies not included in the tax
consolidation, VAT payables which refer mainly to VAT deferred payment that will be paid at
the time of payment by the public sector client.
The balance relates to employee IRPEF income tax deductions, withholding tax due on
payments to external professionals and other various tax payables.
At 31 December 2014, there were no overdue tax and social security positions.
161
28.27.
2013 (*)
Changes in the
year
2014
6,909
(2,582)
4,327
Total
6,909
(2,582)
4,327
Financial derivatives amount to Euro 4,327 thousand at 31 December 2014, decreased by
Euro 2,582 thousand versus 31 December 2013 as a result of the fair-value measurement of
the derivative contracts held. The item refers to the valuation of the derivatives used to hedge
the exchange rate risk related to the cash flows generated by contract revenue and costs. The
decrease is attributable to the foreign exchange market performance in relation to the “US
dollar” and “JPY” currencies and the closure of certain contracts during the year. The negative
mark-to-market value is due to the appreciation of the US dollar against the Euro from the
time in which the derivative contracts were stipulated up to closing. The negative mark-tomarket value of the hedge positions is offset by future incoming operative cash flows for an
equal amount.
28.28.
2013 (*)
Changes in the
year
2014
9,741
(7,363)
2,378
Total
9,741
(7,363)
2,378
“Other current financial liabilities” of Euro 2,378 thousand includes financial liabilities not
related to the banking system but mainly to funding received from the consortia Cavtomi of
Euro 2,130 thousand, the share of the loan granted by Ghella S.p.A. (minority shareholder)
against the company ML 3000 S.c.a.r.l. of Euro 248 thousand.
The reduction of the year is a direct result of the offsetting respectively of financial creditors
and debtors of the Group to the Cavet Consortium.
162
28.29.
2013 (*)
Changes in the
year
2014
105,605
55,785
161,390
Total
105,605
55,785
161,390
As at 31 December 2014, advance payments from clients are Euro 161,390 thousand,
increased by Euro 55,785 thousand compared with 31 December 2013. Client advance
payments relate to contractual payments on account received from clients on the date of
construction contracts signature.
The main contractual advances refer to the Kima, Punta Catalina, IOWA, AGRP Kuwait and
Total projects. The increase is mainly due to advance payments in the Kima and Punta
Catalina contracts collected during 2014, partially offset by the higher reabsorption through
invoices on account, of advance payments collected in previous years.
28.30.
Construction contracts - Payable
2013 (*)
Changes in the
year
2014
Work in progress - Advance payments
289,849
(42,891)
246,958
Total
289,849
(42,891)
246,958
Contracts work in progress included under liabilities (construction contracts) reflect the net
negative balance for each individual contract from the sum of progressive production, advance
invoicing and the provision for contractual risks.
The decrease of Euro 42,891 thousand is linked to the advancement of work and the
contractual terms, for which the work carried out in the year resulted higher than that
invoiced.
The main construction contracts payables refer to the CDEEE Punta Catalina, EPC - Tempa
Rossa, LDPE Bratislava (SK) EPC - Slovnaft, Borouge 3 projects.
163
28.31.
Trade payables
2013 (*)
Changes in the
year
2014
600,480
126,243
726,723
Subsidiary trade payables within 12 months
704
611
1,315
Associated trade payables within 12 months
3,094
(1,303)
1,791
944
191
1,135
Affiliated trade payables within 12 months
30,206
(5,274)
24,932
Total
635,426
120,470
755,896
Trade payables due within 12 months
Parent company trade payables within 12 months
Trade payables were Euro 755,896 thousand as at 31 December 2014, an increase of Euro
120,470 thousand compared with 31 December 2013.
This change is mainly due to the advancement of projects and the increase in production
volumes in 2014. In fact, the purchase of materials and services increased substantially as the
major contracts awarded in 2010 completed the procurement phase and the shipment of
materials got underway; net of the Gasco JO that has reached a very advanced stage and for
which there were significant payments to suppliers during the year.
In this respect, as at 31 December 2014, the Group has payables to third parties, of which
Euro 39.03 million were 90 days or more overdue (basically in line with 31 December 2013);
this value considers payment plans negotiated with suppliers. The Group has stipulated
repayment plans resulting in a gradual reduction of the older trade balances and with the
positive effects envisaged by the evolution of the business plan, according to the cash flow
timing set out therein. In 2014, payment reminders were received as part of ordinary
administrative management.
Trade payables to subsidiaries refer to payables due to unconsolidated companies and,
specifically: Ravizza S.c.a.r.l. for Euro 124 thousand, Parco Grande S.c.a.r.l. for Euro -37
thousand and Program International Consulting Engineers S.r.l. for Euro 1,228 thousand.
Trade payables to associates were Euro 1,791 thousand and are due to MCM Servizi Roma for
Euro 431 thousand, Studio Geotecnico Italiano for Euro 1,358 thousand and Villaggio Olimpico
Moi for Euro 2 thousand.
Payables to parent companies were Euro 1,135 thousand and refer to payables to GLV S.p.A.
for the use of trademarks and lease of office space.
Amounts due to affiliates of Euro 24,932 thousand mainly refer to amounts due to Cavtomi for
Euro 715 thousand, Consortium Ponte sullo stretto for Euro 2 thousand, Consortium Cavet for
Euro 49 thousand, Lotto 5A S.c.a.r.l. in liquidation for Euro 11,948 thousand, Consortium
Metro B1 for Euro 11,580 thousand, Metrofiera Scarl in liquidation for Euro 642 thousand and
R.C.C.F. Nodo di Torino S.p.A. for Euro 5 thousand.
164
28.32.
2013 (*)
Changes in the
year
2014
7,100
(7,100)
0
0
2,624
2,624
Employee salaries accrued but not yet paid
14,485
5,271
19,756
Pension and social security payables
10,559
158
10,717
Expropriation payables
7,671
(96)
7,576
Tax payables (foreign countries)
7,016
(6,005)
1,011
Accrued charges and deferred income
10,351
(9,550)
801
Other payables (various creditors)
18,179
(2,497)
15,682
Total
75,361
(17,194)
58,167
Residual debt MABE closing
Residual debt Efacec transaction
As of 31 December 2014, “Other current liabilities” are Euro 58,167 thousand, down Euro
17,194 thousand with respect to 31 December 2013.
The change is mainly related to residual payables related to the Mabe closing that were paid in
2014, a reduction in foreign taxes payable mainly for VAT payables of some foreign branches
and accruals and deferrals.
The items in other current liabilities mainly refer to payables due to social security institutions,
accrued but not paid amounts due to employees, expropriation payables and other sundry
payables.
“Expropriation payables” includes the amount due for expropriation accrued to date and linked
to the “Fiumetorto-Cefalù” project managed by Cefalù 20 s.c.a.r.l. This payable amount will be
reimbursed by client.
At 31 December 2014, there were no overdue tax and social security positions.
165
29.
Commitments and Contingent Liabilities
The table below shows financial guarantees of Maire Tecnimont Group at 31 December 2014
and at 31 December 2013:
MAIRE TECNIMONT GROUP FINANCIAL GUARANTEES
2014
2013
GUARANTEES ISSUED ON THE GROUP’S BEHALF
Bank guarantees on behalf of third parties, of which:
Guarantees issued to clients for orders in progress
Performance bonds (with banks and insurance companies)
712,359
719,305
Advance bonds (with banks and insurance companies)
221,113
196,698
Others
221,616
229,967
1,155,088
1,145,970
9,217,743
8,131,685
Performance
8,068,865
7,590,257
Others
1,148,878
541,428
44,970
257,454
9,262,713
8,389,139
10,417,801
9,535,109
Total personal guarantees
OTHER PERSONAL GUARANTEES
Parent company guarantees on behalf of subsidiaries, of which:
Parent guarantees on own behalf
Total other personal guarantees
Total financial guarantees
“Guarantees issued on the Group’s behalf” of Euro 1,155,088 thousand refers to the
guarantees issued by banks and/or insurers on behalf of the Group operating companies in
the sphere of the core business. In particular:
•
•
“Performance Bonds”: these guarantee the performance of the contract. In issuing this
type of guarantee, the bank undertakes an obligation to repay the client up to a certain
amount in the event the contractor’s execution of the work fails to fulfill the contractual
terms.
Clients with large-scale orders could request SACE insurance coverage for some risks with
an obligation to the bank.
“Advance Bonds”: these are guarantees of repayment for contractual advances. In issuing
this type of guarantee, the bank undertakes an obligation to repay the client a set amount,
as the reimbursement of payments on account, in the event of contractual default by the
guarantee applicant (the contractor). Clients with large-scale orders could request SACE
insurance coverage for some risks with an obligation to the bank.
“Other personal guarantees” of Euro 9,262,713 thousand refer to the “Parent Company
guarantees” issued to clients by Group companies on behalf of subsidiaries, mainly Maire
Tecnimont S.p.A, in relation to the obligations undertaken as part of their core business and,
therefore, contract execution. The increase for the year is related to the Parent Company
guarantees issued for new orders, mainly Kima and Rog, net of discharges for the year.
“Other personal guarantees” residually relate to other guarantees (letters of Patronage) in
favour of banks on behalf of certain subsidiaries, mainly Tecnimont S.p.A.
166
30.
Transactions with Related Parties
transactions have been conducted based on market conditions. At 31 December 2014, the
breakdown of the Company’s receivables/payables (including financial receivables/payables)
and cost/revenue transactions with related parties, is shown in the tables below. The tables
also show the equity positions resulting from transactions that took place last year and are
still being defined:
Esperia Aviation S.p.A (*)
G.L.V. Capital S.p.A (*)
Total
Trade
receivables
Trade
payables
Financial
receivables
Costs
Revenues
940
0
0
0
0
0
(1,135)
0
(433)
0
940
(1,135)
0
(433)
0
(*)
For the following receivable (Esperia) and payable (GLV) positions in question, new repayment plans have been defined,
which will allow for the gradual reduction of the respectively positive and negative commercial entries.
More specifically, payable contracts still in place relate to the lease of property used as offices
by the Group companies, the use of the “Maire” trademark (relations with GLV Capital S.p.A.)
and other minor charge backs.
Relations with other non-consolidated and/or non-associated companies of the Group are
purely commercial and relate to specific activities linked to contracts; moreover, as some
consortia have substantially concluded activities, they are in liquidation phase.
Trade
receivables
Trade
payables
Financial
receivables
Costs
Revenues
MCM Servizi Roma S.c.a.r.l.
0
(432)
480
(58)
0
0
(1,352)
0
(904)
0
Villaggio Olimpico MOI S.c.a.r.l. in
liquidation
0
(2)
70
0
0
Ravizza S.c.a.r.l in liquidation
0
(124)
0
(205)
0
80
(37)
0
(69)
0
Program International Consulting
Engineers S.r.l in liquidation
734
(668)
900
0
34
KTI Star
6
0
0
0
33
UCC Engineering LLP
88
0
0
0
88
Desimont Contracting
312
0
0
0
312
1,220
(2,615)
1,450
(1,236)
467
Total
“Governance”.
167
31.
Independent Auditor Fees
The table below has been prepared in compliance with article 149-duodecies of the “Consob
Regulations for Issuers” to show the fees paid in FY 2014 for audit services and fees paid for
other non-audit services carried out by the same Independent Auditors.
2014 Fees
Type of service
Service provider
Client
Deloitte & Touche S.p.A.
270
847
Deloitte network
344
225
Attestation services (*)
58
Other services
65
Deloitte network
63
Audit
(Values in Euro
thousands)
Prices do not include VAT, expenses or, where applicable, the reimbursement of the Consob reporting
contribution.
* Attestation services include the signing of tax declarations and services provided under the issuance of bonds.
168
32.
Information on Financial Risks
In the performance of its ordinary activities, the Group is exposed to financial risks. More
precisely:
•
credit risk related to normal business relationships with clients and financing
transactions;
•
liquidity risk, related to the difficulty of liquidating market positions in the desired time
frame or of securing the financial resources needed to continue the operations;
•
market risk, related to fluctuations in interest rates, exchange rates and the price of
goods, since the Group operates internationally in areas with different currencies and
uses interest-bearing financial instruments;
•
risk of default and debt covenants related to the possibility that the loan contracts
contain clauses that entitle lending banks to request from the borrower immediate
repayment of the loan amounts should specific circumstances arise, that, consequently,
would generate a liquidity risk.
The Maire Tecnimont Group constantly monitors the financial risks to which it is exposed in
such a way as to evaluate the potential negative effects of such risks in advance and to take
suitable actions to mitigate them.
The following section provides qualitative and quantitative benchmark indicators on the
incidence of such risks on Maire Tecnimont Group. The quantitative data presented below are
not predictive values. In particular, the market risk sensitivity analysis cannot reflect the
complexity and the related reactions of markets that could derive from each hypothetical
change.
32.1.
Credit risk
Credit risk represents the Maire Tecnimont Group’s exposure to potential losses arising from a
counterparty’s failure to fulfill its obligations. Credit risk associated with the ordinary business
of commercial transactions is monitored by both the operational and the administrative
functions on the basis of formal procedures that define the client risk quantification and
control methods.
The Group also has procedures in place to manage credit collection operations and possible
disputes.
Currently, the Group is not exposed to significant concentrations of credit risk either by
geographical area or by client as it has diversified its operations into several geographical
markets and business lines.
The Group’s maximum theoretical exposure to credit risk at 31 December 2014 corresponded
to the book value of the financial assets shown in the statement of financial position, as well
as the nominal value of the guarantees issued for third-party loans or commitments.
The accounts receivables reported in the Statement of Financial Position at 31 December 2014
are net of bad debt provisions, which are calculated on the hypothetical default risk of the
counterparty based on their reliability (third parties, related parties and public entities).
Trade receivables from third-party clients due within and over 12 months at 31 December
2014 were Euro 462,988 thousand (Euro 391,669 thousand at 31 December 2013) and Euro
44,535 thousand (46,534 thousand at 31 December 2013), respectively, less the provision for
bad debts of Euro 10,689 thousand (Euro 9,962 thousand at 31 December 2013) for
receivables subject to write down. Amounts considered uncollectable are estimated on the
basis of the realizable cash flows. These flows consider expected recovery times, estimated
realisable value, any guarantees and costs that the Group expects to incur to recover the
receivables.
169
The tables below provide a breakdown of third-party trade receivables by expiry date and
Business Unit:
Overdue at 31/12/2013
Other
Total third-party trade receivables
Not
expired
From 0
to 90
days
From 91
to 365
days
From
366 to
731 days
More
than 731
days
Total
201,717
43,736
40,187
39,116
52,950
377,706
66,637
9,592
17,276
10,009
2,898
106,412
179
7
78
4,041
5,874
10,179
268,532
53,334
57,542
53,165
61,722
494,295
Of which:
449,760
Within 12 months
44,535
Over 12 months
Not expired
Up to 365
days
151,191
77,990
38,069
79,962
347,212
47,725
37,488
3,677
6,531
95,421
-35
248
121
-160
173
198,880
115,726
41,867
86,333
442,807
Other
Total third-party trade receivables
From 366 More than
to 731
731 days
days
Total
Of which:
396,273
Within 12 months
46,534
Over 12 months
Trade receivables which are overdue for 366 days and more than 731 days for the
Infrastructure & Civil Engineering BU are mainly related to subjects belonging to the Italian
Public Administration, with respect to the Technology, Engineering & Construction BU, and
also related to a few locations and constantly monitored; both cases do not give rise to
concern regarding solvency of customers (Italian and foreign government bodies), and the
collectability of the same.
Trade receivables are shown net of the provision for bad debts, which was Euro 10,689
thousand as of 31 December 2014 (31 December 2013: Euro 9,962 thousand).
2013 (*)
Provisions
Utilisations
Change in scope
of consolidation
Other
changes
2014
Bad debt provision
9,962
1,044
(665)
0
348
10,689
Total
9,962
1,044
(665)
0
348
10,689
170
Provisions mostly relates to projects of the Technology, Engineering & Construction BU, and
the residual part to projects of the Infrastructure BU. The decreases are related to uses in the
year following the final accounting of losses on receivables previously provisioned.
32.2.
Liquidity risk
half-year instalments from 2015 to 31 December 2017. In addition, Intesa Sanpaolo,
UniCredit and Monte dei Paschi di Siena have provided new financing in an aggregate amount
of Euro 50 million under the same conditions. Finally, the certain facilities in an aggregate
amount of Euro 245 million have been confirmed by all the banks, as well as guarantees for
Euro 765 million in order to support the business.
million. The initial bond conversion price has been established as Euro 2.1898, which
bonds were issued at par, for a unit nominal value of Euro 100,000; a 5 year duration and a
fixed annual coupon of 5.75%, payable six-monthly in arrears. If not previously converted,
redeemed, purchased or cancelled, the Bonds will be redeemed at par on 20 February 2019.
The Maire Tecnimont Board of Directors met on 16 July 2014 approved the issue of an
unsecured guaranteed 5-year bond for a total minimum amount of Euro 300 million. The
171
On 18 February 2015 the Group revised the economic forecasts for the year 2015 (Budget
2015) and also updated the Group Business Plan; in this context, the intention was confirmed
to issue an unsecured guaranteed bond for a minimum of 5 years to a maximum of 7 years
for a reduced total minimum amount of Euro 100 million, in consideration of the extraordinary
inflows expected from the transactions in the early months of 2015 related to the positive
Biolevano.
The table below shows the breakdown of financial debt by expiry date:
31/12/2014
Due in 2 to
5 years
Due over
5 years
Total
Due
within 1
year
Bank debt
451,291
4,035
0
455,326
17,598
0
0
17,598
2,378
0
0
2,378
0
71,292
0
71,292
4,327
8
0
4,335
Total current and non-current financial liabilities
475,594
75,335
0
550,929
31/12/2013
Due in 2 to
5 years
Due over
5 years
Total
Due
within 1
year
Bank debt
133,860
362,766
0
496,626
18,847
0
0
18,847
9,741
0
0
9,741
Derivative instruments
6,909
81
0
6,990
169,357
362,847
0
532,204
Other lenders
Derivative instruments
Other lenders
Short-term bank debt were up compared to 31 December 2013, mainly due to the
reclassification from medium to long-term; for more information reference shall be made to as
included in the paragraph on short-term debt. The reclassification is considered temporary as
a result of the renegotiation that the Group is finalizing with the syndicate of banks regarding
the terms and conditions of the new loan agreement which provides, among other things, the
extinction of the previous loans and the disbursement of a new medium/long term loan.
32.3.
Market risk
Exchange rate risk
The Group is exposed to risks arising from changes in exchange rates, which can affect the
profit/(loss) for the year and shareholders’ equity. In particular, when Group companies incur
172
costs in a currency that differs from that in which the respective revenue will be generated, a
change in exchange rates could affect their operating profit/(loss).
The Group is exposed to the following main exchange rates:
•
EUR/USD, in relation to sales in US dollars made in markets that use the dollar as
currency for trade flows and sales/purchases in the sector in which Maire Tecnimont
Group operates;
•
EUR/JPY, in relation to Yen-denominated trade flows and sales/purchases of some
orders in the sector in which Maire Tecnimont Group operates.
Other minor exposures relate to EUR/BRL and EUR/PLN exchange rates.
Maire Tecnimont Group has adopted the following strategies to reduce exchange rate risk:
•
upon signing individual contracts, it stipulates exchange rate derivative contracts to
hedge the differences between receipts and payments denominated in foreign
currencies, throughout the entire duration of the contract. Such transactions may be
defined as cash flow hedges;
•
where possible, the contracts are signed in the currencies of expenditure to reduce
hedging costs.
The assets and liabilities of consolidated companies whose accounting currency is not the euro
may be subject to different countervalues in euro depending on exchange rate fluctuations. In
accordance with the Group’s accounting principles, the impact of said fluctuations are reflected
directly through shareholders’ equity in “Foreign currency translation reserve”.
Raw material price fluctuation risk
The Group is exposed to risks arising from changes in the prices of commodities which can
affect the profit/(loss) for the year and shareholders’ equity. In particular, such changes may
impact the operating results of the Group companies when such companies sustain costs for
procurement of semi-finished or finished products (e.g. machinery, pipes, cables) in which the
contents of raw material has a significant effect on overall margin of projects. The change in
the price of these commodities can affect the operating results of these companies.
Sensitivity analysis
The potential loss in fair value (see table below) of derivative instruments that hedge
exchange rate risk (currency swap/forward) and raw material price fluctuation (commodity
swap), held by the Group at 31 December 2014, would lead to a negative impact on net
equity of about Euro (7,267) thousand net of the tax impact, in the event of an unfavourable
and immediate 10% fluctuation in exchange rates of the principal foreign currencies against
the euro.
173
Financial instrument
Book value at
31/12/2014
(values in Euro thousands)
Financial assets
Impact on
profit/(loss)
Impact on
shareholders’
equity
Impact on
profit/(loss)
+ 10%
“Foreign Currency
Options”
Impact on
shareholders’
equity
- 10%
-
-
-
-
-
(2,672)
(2)
8,264
24
(10,024)
-
-
-
-
-
(2)
8,264
24
(10,024)
27.5%
27.5%
27.5%
27.5%
Impact on financial assets
net of the fiscal effect
(1)
5,991
17
(7,267)
Total
(decrease)
(1)
5,991
17
(7,267)
“Forward Currency Swap”
(*)
”Commodity Swap”
Impact on financial assets
pre-tax
Tax rate 27.5%
(*)
increase
Fair-Value “Level 2”
The analysis does not take into account future trade receivables and payables against which
the Group has entered into the hedging transactions referred above. It may be reasonably
assumed that the exchange rate fluctuations would cause an opposite effect of equal amount
on the hedged underlying transactions.
The table below shows the periods in which the cash flows associated with the cash flow
hedge derivatives in place at the reporting date are expected to have an impact on the income
statement.
(Values
in
thousands)
Euro
“FX Forward /
Swap”(*)
(*)
31/12/2014
Book value
Estimated
flows
Less than 1
year
From 2 to 5
years
Beyond 5 years
(2,672)
124,054
123,570
485
-
32.4.
Interest rate risk
The Maire Tecnimont Group is exposed to fluctuations in interest rates with respect to the
measurement of borrowing costs.
Financial debt
Total
Hedged portion
Portion not
hedged
471,267
0
471,267
4,035
0
4,035
475,302
0
475,302
Short-term debt
Medium-long term debt
Total debt
174
The Tecnimont Group does not use derivatives for speculative purposes. Its primary aim is to
reduce the risks of fluctuations in borrowing costs. These hedging transactions have the
purpose of mitigating the impact of increases in the Euribor rate on interest expense, while
maintaining part of the benefits connected to any reductions in the rate.
The risk associated with fluctuations in interest rates as part of the Tecnimont Group was
managed in previous years – as mentioned – with the purpose of hedging transactions with
Zero Cost Collar transactions. However, for accounting purposes, these instruments were
classified as held for trading and recognised at fair value through profit/(loss). At 31/12/2014,
the Group no longer has any outstanding derivative contracts on rates.
In fact, on 23 April 2014, the collar was closed on residual notional rates of Euro 7,500
thousand, signed in 2007 by Tecnimont S.p.A. with Portigon AG (formerly WestLB), with the
payment of a differential in favor of the bank of Euro 129,333.75 for the period 23 October
2013 - 23 April 2014, of which Euro 80,300.62 for the year 2014.
The risk on the residual portion of the floating-rate debt is currently partly nullified as the
Group’s cash deposits bear interest at rates indexed at the same Euribor rate applied to the
debt.
32.5.
Default and debt covenant risk
December 2014. More specifically, these financial parameters provide for the maintenance of
a certain level of shareholders’ equity, liquid funds and gross financial position, as well as
keeping a certain ratio of net financial position to shareholders’ equity. Reference is made to
as included in the paragraph on the short-term debt, of the notes to the financial statements,
for the results of the measurement of the above paragraphs at year-end 2014.
this transaction, as commented above, also allows overcoming the covenants in the loan
Analysis of forward transactions and derivatives
The Group has verified compliance with the requirements of IAS 39 and the possible
application of hedge accounting in the recognition of hedge transactions in the financial
statements. In particular:
•
transactions eligible for hedge accounting under IAS 39: the two types are cash flow
hedges and fair value hedges. When realized, the accrued result of cash flow hedges
for exchange rate transactions – the only hedge transactions currently in place – is
included in the gross operating margin; any change in fair value is recognized under
175
shareholders’ equity for the effective part and in the income statement for the
ineffective part;
•
transactions eligible for hedge accounting under IAS 39.
The accrued result and the change in fair value are recognized below the gross operating
margin line among financial income and expense.
IFRS 7 requires that the classification of financial instruments at their fair value be determined
on the basis of the quality of the input sources used in measuring fair value. IFRS 7 sets out
the following fair-value disclosure hierarchy:
•
Level 1: determination of the fair value on the basis of prices from quotations on an
active market. The instruments with which the Group operates do not fall within this
category;
•
Level 2: determination of the fair value on the basis of prices from quotations on an
active market of similar assets or by means of valuation techniques for which the
significant factors are directly or indirectly deduced from data observable on the
market. The instruments used by the Group fall into this category;
•
Level 3: determination of the fair value on the basis of valuation models whose inputs
are not significantly based on unobservable inputs. At the present time, the Group has
no instrument whose value is determined using models with inputs not based directly
on observable market data.
The fair value of all derivative instruments used by the Group is determined on the basis of
valuation methods that incorporate observable market parameters (Level 2). No transfers
from Level 1 to Level 2 or vice versa were made in financial year 2014.
Derivative instruments at 31 December 2014
The tables below show the following information:
•
the outstanding amount of the derivative contracts in place at the reporting date, by
maturity;
•
the portion of fair value of the above registered in the income statement.
Any difference between the value in the Statement of Financial Position and the fair value
recognized in the Income Statement represents the fair value of contracts that may be
defined as cash flow hedges, which, in accordance with the Group’s accounting principles, is
directly recognized among shareholders’ equity reserves.
Exchange rate derivatives
The Group uses exchange rate hedges to mitigate any risk of future potential fluctuations in
the cash inflows and/or outflows of the contracts, attributable to unfavorable changes in the
exchange rate.
The derivatives held at 31 December 2014 related to forward financial transactions and, in
particular, to contracts hedging the exchange rate risk inherent in Maire Tecnimont Group
orders denominated in foreign currencies.
Exchange rate derivatives are stipulated with primary Italian and foreign bank corporations for
the purposes of managerial hedging and also for accounting purposes; these instruments are
qualified as hedging instruments. Changes in the fair value of the derivatives held to hedge
future cash inflows generated by the Group’s contractual commitments are directly reported
under shareholders’ equity when effective, whereas the ineffective portion is immediately
recorded in the income statement.
176
Amounts directly not recognized under shareholders’ equity are included in the income
statement in the same period in which the hedged cash flow generated its effect on the
income statement.
Notional value
due within 1 year
Notional value
due within 2 to 5
years
Effect on the
balance sheet at
31 December
2014
Effect on the
income
statement at 31
December 2014
risk
123,570
485
(2,672)
130
Transactions eligible for
hedge accounting under
IAS 39 (*)
123,570
485
(2,672)
130
Exchange
rate
management
(*)
32.6.
Classification of financial instruments
In accordance with IFRS 7, the tables below show the types of financial instruments included
in the Statement of Financial Position items and the valuation criteria applied:
The book value of the financial assets and liabilities is substantially in line with their fair value.
31/12/2014
(Values
in
thousands)
Euro
Loans and
Receivables
Financial assets
at fair value
through profit or
loss
7,164
-
58,404
-
476,801
Other non-current
financial assets
Other non-current
assets
Trade receivables
Financial instruments
- Derivatives
Other current financial
assets
Cash and cash
equivalents
Total financial
assets
(*)
Hedge
derivatives
Assets held
to maturity
Assets held
for sale
Total
-
6,834
13,998
-
-
-
58,404
-
-
-
-
476,801
-
-
583 (*)
-
-
583
8,309
-
-
-
-
8,309
140,399
-
-
-
-
140,399
160,242
-
-
-
-
160,242
851,319
0
583
0
6,834
858,736
31/12/2013
Loans and
receivables
Financial assets
at fair value
through profit or
loss
Assets
held to
maturity
Assets
held for
sale
Total
7,984
-
-
7,102
15,086
60,122
-
-
-
-
60,122
409,942
-
-
-
-
409,942
-
-
415 (*)
-
-
415
17,181
-
-
-
-
17,181
139,497
-
-
-
-
139,497
167,012
-
-
-
-
167,012
Other non-current financial
assets
Trade receivables
Financial instruments Derivatives
Other current financial
assets
Hedge
derivatives
177
Total financial assets
(*)
801,738
0
415
0
7,102
809,255
31/12/2014
Financial
liabilities
measured at
amortised cost
Fair value
liabilities held for
trading
recognised in
income
statement
Financial instruments – Non-current
derivatives
Hedge
derivatives
Total
8 (*)
8
4,035
4,035
71,292
71,292
468,889
468,889
2,378
2,378
Short-term debt
Trade payables
Total financial liabilities
(*)
4,327 (*)
4,327
755,896
755,896
58,166
58,166
1,360,656
0
4,335
1,364,991
Hedge
derivatives
Total
81(*)
81
31/12/2013
Financial
liabilities
measured at
amortised
cost
Fair value liabilities
held for trading
recognised in
income statement
Financial instruments – Non-current
derivatives
362,766
362,766
Short-term debt
152,707
152,707
9,741
9,741
Trade payables
Total financial liabilities
(*)
178
6,909(*)
6,909
635,426
635,426
75,361
75,361
1,236,001
0
6,990
1,242,991
33. Positions or Transactions deriving from Atypical or
Unusual Operations
In accordance with Consob Communication no. DEM/6064293 dated 28 July 2006, it is
specified that during the year the Group did not implement any atypical and/or unusual
transactions, as defined by the Communication.
34.
Non-Recurring Significant Events and Transactions
In FY 2014, the Group did not enter into any of the non-recurring significant transactions
pursuant to Consob Communication no. DEM/6064293 of 28 July 2006 except as set forth in
the section of the Report on Operations “Significant events in the fiscal year”.
35.
Significant Events after 31 December 2014
Information on the significant events occurring after 31 December 2014 is provided in the
“Report on Operations” presented earlier in this Annual Report.
179
36. Attestation to the Consolidated Financial Statements
Pursuant to article 154-bis, paragraph 5, of Italian
Legislative Decree 58/98 and Subsequent Amendments
and Supplements
1. The undersigned Pierroberto Folgiero in his capacity as Chief Executive Officer and Dario
Michelangeli in his capacity as “Executive responsible for preparing the Corporate
Accounting Documents” of MAIRE TECNIMONT S.p.A., taking into account the contents of
article 154-bis, paragraphs 3 and 4, of Italian Legislative Decree 58 of 24 February 1998,
attest to:
•
the consistency with the Company’s characteristics; and
•
the effective application of the administrative and accounting procedures as the basis
for preparation of the Consolidated Financial Statements in Fiscal Year 2014.
2. In addition, we attest that the Consolidated Financial Statements:
•
have been prepared in accordance with the applicable international accounting
standards approved by the European Community pursuant to Commission Regulation
(EC) No. 1606/2002 of 19 July 2002 of the European Parliament and of the Council;
•
correspond to the information contained in the accounting ledgers and records;
•
have been prepared in accordance with article 154-ter of the aforementioned Italian
Legislative Decree 58/98 and subsequent amendments and supplements and provide a
true and fair representation of the equity, economic and financial situation of the issuer
and the whole of the companies included in the scope of consolidation.
3. The Report on Operations provides a reliable analysis of the performance, the operating
result and the situation of the issuer, and the whole of the consolidated companies, as well
as a description of the principal risks and uncertainties to which they are exposed.
The present attestation is provided also pursuant to and for the purposes of article 154-bis,
paragraph 2, of Italian Legislative Decree 58 of 24 February 1998.
180
The Chief Executive Officer
The Executive in Charge of Preparation
of the Company Accounting Documents
Pierroberto Folgiero
Dario Michelangeli
Financial Statements and
Explanatory Notes
at 31 December 2014
181
37.
Financial Statements
37.1.
Income Statement
Notes
2014
2013
Revenues
41.1
64,199
42,334
41.2
2,341
1,984
66,540
44,318
Total revenues
41.3
(40)
(41)
Cost of services
41.4
(15,661)
(11,787)
Personnel expense
41.5
(21,268)
(13,975)
41.6
(1,622)
(2,549)
(38,591)
(28,352)
27,949
15,966
41.7
(210)
(511)
41.8
(0)
(2,350)
27,739
13,105
Total costs
Amortization, depreciation and write-downs
Write down of receivables included in working capital and cash
in hand
Operating profit (loss)
Financial income
41.9
4,857
4,441
Interest expense
41.10
(22,555)
(7,585)
41.11
(18,300)
(20,300)
(8,259)
(10,339)
6,175
4,979
(2,084)
(5,361)
Income before tax
Income taxes
41.12
Earnings (loss) per share
41.13
0.0068
(0.018)
Diluted earnings (loss) per share
41.13
0.0061
(0.016)
182
37.2.
Statement of Comprehensive Income
Notes
2014
2013
(2,084)
(5,361)
Other comprehensive income that will not be subsequently
reclassified under profit/(loss) for the period:
Actuarial gains (losses)
41.12
(63)
(21)
Tax impact
41.12
17
6
(46)
(15)
(2,130)
(5,376)
Total other comprehensive income that will not be subsequently
Comprehensive income (loss)
37.3.
Statement of Financial Position
Notes
2014
2013
42.1
83
108
42.2
3,327
3,709
Investments in subsidiaries
42.3
706,351
714,651
42.4
1,100
1,100
42.5
108,171
41,696
Deferred tax assets
42.6
4,376
4,021
823,408
765,285
Assets
Non-current assets
Total non-current assets
Current assets
Trade receivables
42.7
31,437
22,207
Current tax assets
42.8
35,446
27,769
42.9
13,945
24,327
42.10
1,091
619
81,919
74,922
905,327
840,207
Total current assets
Total assets
183
Notes
2014
2013
Share capital
42.11
19,690
19,690
42.11
224,698
224,698
Other reserves
42.11
159,452
152,492
Valuation reserve
42.11
(39)
7
Total shareholders’ equity and reserves
42.11
403,801
396,887
Profit (loss) from previous years
42.11
(3,787)
1,573
Profit/(loss) for the year
42.11
(2,084)
(5,361)
397,930
393,099
Shareholders’ equity and liabilities
Total shareholders’ equity
42.12
0
76,064
Provisions for risks and charges - over 12 months
42.13
7,420
2,357
42.6
367
252
42.14
479
534
42.15
311,943
217,614
320,209
296,821
Total non-current liabilities
Current liabilities
Short-term debt
42.16
79,321
17,886
Tax payables
42.17
476
1,135
Trade payables
42.18
76,710
87,014
42.19
30,681
44,252
Total current liabilities
187,188
150,287
905,327
840,207
184
38.
Statement of Changes in Equity
Income
Share
capital
Share
Statutory
premium
reserve
reserve
and loss
Other Treasury
from
reserves shares
previous
Profit
Sharehold
(loss) for
ers’
the year
equity
years
16,125
83,045
5,328
146,809
22
18,156
(16,583)
252,903
(16,583)
16,583
0
(5,361)
(5,376)
19,690
224,698
5,328
147,164
(15)
7
1,573
(5,361)
393,099
19,690
224,698
5,328
147,164
7
1,573
(5,361)
393,099
(5,361)
5,361
0
Equity component of the convertible
bond
6,960
6,960
(46)
19,690
224,698
5,328
154,124
(39)
(3,787)
(2,084)
(2,130)
(2,084)
397,930
185
39.
Statement of Cash Flows (indirect method)
2014
2013
619
444
(2,084)
(5,361)
184
463
26
48
0
2,350
17,698
3,144
Income taxes
(6,175)
(4,979)
0
0
Write-downs of investments
18,300
20,300
(9,230)
(2,352)
(13,571)
(5,609)
10,382
(566)
(10,303)
34,749
4,961
1,159
(2,400)
15,801
7,788
59,147
0
0
(Investment)/disposal of intangible assets
197
713
(10,000)
(387,281)
(9,803)
(386,568)
(32,326)
31,779
(42,946)
150,259
0
145,558
77,759
0
2,487
327,596
472
175
1,091
619
Cash and cash equivalents at the beginning of the year (A)
Operations
Net income
Adjustments:
Provisions
Capital (gains)/losses
Increase/(decrease) in trade payables
Increase/(decrease) in provisions (including post-employment
benefits)
Income taxes paid
Investments
Financing
Change in capital and reserves
186
40.
Explanatory Notes as at 31 December 2014
PREPARATION CRITERIA
INTRODUCTION
Maire Tecnimont S.p.A. is a joint-stock company incorporated in Italy, registered with the
Rome Business Register. According to the provisions of the first paragraph of art. 4 of
Legislative Decree 38/2005, the financial statements of Maire Tecnimont S.p.A. (separate
financial statements), whose shares are listed and traded on the Italian Regulated Market,
have been prepared in accordance with the International Financial Reporting Standards (IFRS)
issued by the International Accounting Standards Board (IASB) and adopted by the European
Commission as defined by Article 6 of the EC Regulation 1606/2002 enacted by the European
Parliament and Council on 19 July 2002. The financial statements have been prepared using
the historical cost criterion, modified as required for the valuation of certain financial
instruments, and based on the going concern principle.
The financial statements are denominated in Euro (€) as this is the currency in which most of
the Company’s operations are performed.
ACCOUNTING STATEMENTS
The formats of and disclosures contained in these Financial Statements have been prepared in
line with IAS 1 - REVISED, as called for by CONSOB Communications 1559 and 6064293
issued on 28 July 2006.
The items in the Statement of financial position are classified as current and non-current,
while those of the Income Statement and the Statement of Comprehensive Income are
classified by type.
The Statement of Cash Flows has been prepared using the indirect method, adjusting net
income for the year for non-monetary components.
The Statement of Changes in Equity shows the total income (charges) for the year and other
changes in the shareholders’ equity.
GOING CONCERN
The Group and the Company deem it appropriate to use the going concern basis for the
preparation of the financial statements for the year ended 31 December 2014.
ACCOUNTING PRINCIPLES, AMENDMENTS
FROM JANUARY 2014
AND
IFRS INTERPRETATIONS STARTING
The following standards, amendments and interpretations were applied for the first time by
the Company with effect from 1 January 2013:
•
On 12 May 2011, the IASB issued IFRS 10 - Consolidated Financial Statements
which will replace IAS 27 - Consolidated and separate financial statements for the
part relating to the consolidation and SIC-12 Consolidation - Special purpose
entities (SPV). The previous IAS 27 has been renamed Separate Financial
Statements and regulates the accounting of investments in the separate financial
statements. The main changes established by the new standard are the following:
according to IFRS 10 there is a single basic standard to consolidate all the types of
entities, and this standard is based on control. This change removes the perceived
inconsistency between the previous IAS 27 (based on control) and SIC 12 (based
on the transfer of risks and benefits); a more solid definition of control than in the
past has been introduced based on three elements: (a) power on the company
187
acquired; (b) exposure, or rights, to variable returns from involvement with the
same; (c) ability to use the power to influence the amount of such returns; IFRS 10
requires that for an investor to assess whether it has control over the company
acquired, focus shall be on activities that significantly affect the returns of the
same; IFRS 10 requires that, when assessing whether the existence of control, only
the substantial rights are considered, i.e. those that can be exercised in practice
when important decisions shall be taken regarding the company acquired; IFRS 10
provides practical guides to aid in assessing whether control exists in complex
situations, such as the de facto control, the potential voting rights, the situations in
which it is necessary to establish whether the party that has the power of decision
is acting as agent or principal, etc.
In general terms, the application of IFRS 10 requires a significant degree of
judgement on a certain number of application aspects.
The standard is applicable retrospectively starting from 1st January 2014. The
adoption of this new standard had no impact on the consolidation area of the
Company.
188
•
On 12 May 2011, the IASB issued IFRS 11 - Joint Arrangements, which will replace
IAS 31 - Interests in Joint Ventures and SIC-13 - Jointly Controlled Entities Contributions in joint control by the stockholders. The new standard, subject to the
criteria for the identification of the presence of a jointly controlled entity, provides
the criteria for the accounting of joint arrangements by focusing on the rights and
obligations deriving from these arrangements, rather than its legal form,
distinguishing between joint ventures and joint operations. According to IFRS 11,
the existence of a separate vehicle is not a sufficient condition for classifying a joint
arrangement as a joint venture. For joint ventures, where the parties have rights
only on shareholders’ equity of the agreement, the standard establishes the equity
method as the only method of accounting the consolidated financial statements. For
joint operations, where the parties have rights to the assets and obligations for the
liabilities of the agreement, the standard involves the direct inclusion in the
consolidated financial statements (and in the separate financial statements) of the
pro-quota of the assets, liabilities, costs and revenues from the joint operation. The
standard is retrospectively applicable starting from 1st January 2013. In general
terms, the application of IFRS 11 requires a significant degree of judgement in
certain areas of the company with regard to the distinction between joint venture
and joint operation. Following the adoption of the new standard IFRS 11, IAS 28 Investments in associated companies has been amended to include within its scope
of application, from the effective date of the standard, also the investments in
jointly controlled entities.
•
On 12 May 2011 the IASB issued IFRS 12 – Disclosures of Interests in Other
Entities, a new and comprehensive standard on the disclosures that are to be
provided about any type of holdings, including investments in subsidiaries, joint
arrangements, associates, special purpose entities and other non-consolidated
special purpose vehicles. The standard is applicable retrospectively starting from
1st January 2014. The adoption of this new standard had no impact on the
information provided in the notes to the financial statements of the Company.
•
On 16 December 2011 the IASB issued some amendments to IFRS 32 – Financial
Instruments: presentation in the financial statements, to clarify the implementation
of some requirements for offsetting the financial assets and liabilities included in
IAS 32. The amendments are retrospectively applicable starting from 1st January
2014. The adoption of this new principle had no impact on the financial statements
of the Company.
•
On 29 May 2013, the IASB issued some amendments to IAS 36 - Impairment of
Assets - Additional information on the recoverable value of non-financial assets.
The changes are intended to clarify that the disclosures to be provided on the
recoverable amount of the assets (including goodwill) or cash-generating units, in
case the recoverable amount is based on fair value less costs of disposal, relate
only to the assets or cash-generating unit for which a loss in value was recognized
or reversed during the financial year. The amendments are retrospectively
applicable starting from 1st January 2014. The adoption of said amendments had
no impact on the financial statements of the Company.
•
On 27 June 2013, the IASB published amendments to IAS 39 Financial
Instruments: Recognition and Measurement - Novation of derivatives and
continuation of hedge accounting. The amendments include the introduction of
certain exemptions from the requirements of hedge accounting as defined by IAS
39 in the circumstance in which an existing derivative is to be replaced with a new
derivative in a specific case in which said substitution is against a Central
Counterparty (CCP) following the introduction of a new law or regulation. The
amendments are retrospectively applicable starting from 1st January 2014. The
adoption of said amendments had no impact on the financial statements of the
Company.
ACCOUNTING PRINCIPLES, AMENDMENTS AND IFRS INTERPRETATIONS
EUROPEAN UNION, NOT OBLIGATORILY APPLICABLE
ADOPTED BY THE GROUP IN ADVANCE AT 31 DECEMBER 2014.
APPROVED BY THE
NOT YET
AND NOT
At the date of this document the EU competent authorities have not yet completed the
standardisation process required to adopt the accounting principles and amendments
described below.
• On 20 May 2013 the interpretation IFRIC 21 – Levies, was published, which
provides clarification on when recognition of a liability related to taxes (other than
income taxes) imposed by a government agency. The standard addresses both the
liabilities for taxes that fall within the scope of IAS 37 – Provisions, contingent
liabilities and assets, both for the taxes where the amount and timing are certain.
The interpretation is applied retrospectively for annual periods commencing no later
than 17 June 2014 or later. The directors are currently assessing the possible
impacts of the introduction of said interpretation on the Company’s financial
statements.
•
IFRS 2 Share Based Payments – Definition of Vesting Condition. Changes
have been made to the definitions of “vesting condition” and “market
condition” and additional definitions of “performance condition” and “service
condition” given (previously included under the definition of “vesting
condition”).
IFRS 3 Business Combination – Accounting for contingent consideration. The
change clarifies that a “contingent consideration” as part of business
combinations classified as a financial asset or liability must be remeasured
at fair value at each year-end date and the changes in fair value shall be
noted on the income statement or amongst the items of the comprehensive
income statement according to the requirements of IAS 39 (or IFRS 9).
IFRS 8 Operating segments – Aggregation of operating segments. The
changes require an entity to provide information on management’s
considerations in applying the aggregation criteria of operating segments,
including a description of the operating segments that have been aggregated
189
and the economic indicators considered in determining whether or not said
operating segments have similar economic characteristics.
IFRS 8 Operating Segments – Reconciliation of total of the reportable
segments’ assets to the entity’s assets. The changes clarify that the
reconciliation of total assets of operating segments and total overall assets
of the entity must only be presented if the total assets of the operating
segments are regularly revised by the higher operating decision-making
level.
IFRS 13 Fair Value Measurement – Short-term receivables and payables.
The Basis for Conclusions of said standard have been amended to clarify
that with the issue of IFRS 13 and the consequent amendments to IAS 39
and IFRS 9, the possibility of booking current receivables and payables
without needing to book the effects of discounting remains valid, if said
effects are immaterial.
IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets –
Revaluation
Method:
proportionate
restatement
of
accumulated
depreciation. The changes have eliminated the incoherency in the recording
of amortization/depreciation provisions when a tangible or intangible asset is
increased in value. The requirements of the amendments clarify that the
gross book value shall be adjusted consistently with the increase in value of
the asset’s book value and that the provision for amortization/depreciation
shall be the difference between the gross book value and the book value net
of impairment recorded.
IAS 24 Related Parties Disclosures – Key Management Personnel. It is
clarified that if the services of key managers are provided by an entity (i.e.
not by a natural person), said entity shall however be considered as a
related party.
The changes shall apply at the latest beginning the years that start 1 February
2015 or after. The directors are currently assessing the possible impacts of the
introduction of said amendments on the Company’s financial statements.
•
IFRS 3 Business Combinations – Scope exception for joint ventures. The
amendment states that paragraph 2 (a) of IFRS 3 excludes from the scope
of IFRS 3 the formation of all types of joint arrangements, as defined by
IFRS 11.
IFRS 13 Fair Value Measurement – Scope of portfolio exception (par. 52).
The amendment clarifies that the portfolio exception included in paragraph
52 of IFRS 13 applies to all contracts included within the scope of IAS 39 (or
IFRS 9) regardless of whether they meet the definition of financial assets
and liabilities provided by IAS 32.
IAS 40 Investment Properties – Interrelationship between IFRS 3 and IAS
40. The amendment clarifies that IFRS 3 and IAS 40 are not mutually
exclusive and that, in order to determine whether or not the purchase of a
property falls within the scope of application of IFRS 3 or IAS 40, reference
shall be made respectively to the specific indications IFRS 3 or IAS 40.
The changes shall apply beginning the years that start 1 January 2015 or after.
The directors are currently assessing the possible impacts of the introduction of
said amendments on the Company’s financial statements.
190
•
On 21 November 2013, the IASB issued the amendment to IAS 19 “Defined Benefit
Plans: Employee Contributions”, which aims to present the contributions (relating
only to the service provided by the employee during the year) made by employees
or third parties to defined benefit plans to reduce the service cost for the year in
which the contribution is paid. The need for this proposal stems from the
introduction of the new IAS 19 (2011), which states that such contributions are to
be interpreted as part of a post-employment benefit, rather than a short-term
benefit and, therefore, that this contribution shall be spread over the years of
service of the employee. The changes shall apply at the latest beginning the years
that start 1 February 2015 or after. The directors are currently assessing the
possible impacts of the introduction of said amendment on the Company’s financial
statements.
ACCOUNTING
PRINCIPLES, AMENDMENTS AND
APPROVED BY THE
IFRS
INTERPRETATIONS NOT YET
EUROPEAN UNION
At the date of reference of this document the EU competent authorities have not yet
completed the standardisation process required to adopt the accounting principles and
amendments described below.
•
On 30 January 2014, the IASB published the standard “IFRS 14 Regulatory Deferral
Accounts” that allows only those that adopt IFRS for the first time to continue to
recognize the amounts related to activities subject to regulated tariffs (“Rate
Regulation Activities”) under previous accounting principles adopted. As the
Company/Group is not a first-time adopter, said standard is not applicable.
•
On 6 May 2014, the IASB issued amendments to “IFRS 11 Joint Arrangements –
Accounting for acquisitions of interests in joint operations” relating to the
accounting for the purchase of interests in a joint operation whose activity
constitutes a business in the meaning provided by IFRS 3. The amendments require
that for these cases the principles set out in IFRS 3 apply related to the effects of a
business combination.
application is permitted. The directors are currently assessing the possible impacts of
the introduction of said amendments on the Company’s financial statements.
•
On 12 May 2014, the IASB issued amendments to IAS 16 Property, plant and
Equipment and IAS 38 Intangibles Assets – “Clarification of acceptable methods of
depreciation and amortization”. The amendments to IAS 16 require that the
amortization criteria based on revenues are not appropriate, since, according to the
amendment, the revenues generated by an activity that includes the use of the
amortized asset generally reflect different factors only from the consumption of the
economic benefits of the asset. The amendments to IAS 38 introduce a related
presumption, according to which a depreciation method based on revenues is
normally considered inappropriate for the same reasons laid down by the
amendments made to IAS 16. In the case of intangible assets, this presumption can
be exceeded, however only in limited and specific circumstances.
of the introduction of said amendments on the Company’s financial statements.
191
•
On 28 May 2014, the IASB published the standard IFRS 15 – Revenue from
Contracts with Customers which is destined to replace IAS 18 – Revenue and IAS
11 – Construction Contracts, as well as the interpretations of IFRIC 13 – Customer
Loyalty Programmes, IFRIC 15 – Agreements for the Construction of Real Estate,
IFRIC 18 – Transfers of Assets from Customers and SIC 31 – Revenues-Barter
Transactions Involving Advertising Services. The standard establishes a new model
of revenue recognition shall apply to all contracts with clients except those that fall
within the scope of application of other IAS/IFRS principals such as leasing,
insurance contracts and financial instruments. The basic steps for the recognition of
revenue under the new model are: the identification of the contract with the client;
the identification of performance obligations of the contract; pricing; the allocation
of the price to the performance obligations of the contract; the criteria for
registration of revenue when the entity fulfils each performance obligation.
The standard is applicable starting from 1 January 2017, but earlier application is
permitted. However, it is not possible to provide a reasonable estimate of the effect
until the Group has completed a detailed analysis.
•
On 30 June 2014, the IASB issued some amendments to IAS 16 Property, plant and
equipment and IAS 41 Agriculture – Bearer Plants. The amendments require that
the bearer plants, or fruit trees that shall produce annual crops (such as screws,
plant nuts) shall be accounted for in accordance with the requirements of IAS 16
(rather than IAS 41). This means that such assets shall be valued at cost rather
than at fair value less costs to sell (however, the use of the revaluation method
proposed by IAS 16 is permitted). The proposed amendments are confined to the
trees used to produce seasonal fruits and not to be sold as living plants or subject
to crop such as agricultural products. Said trees fall into the scope of IAS 16 also
during the phase of biological maturation, that is until they are able to generate
agricultural products.
•
192
On 24 July 2014, the IASB published the final version of IFRS 9 – Financial
Instruments. The document includes the results of the phases relating to
Classification and measurement, impairment and hedge accounting, of the IASB’s
project aimed at replacing IAS 39. The new standard, which replaces the previous
version of IFRS 9, shall be applied for financial statements beginning on 1 January
2018 or later. Following the financial crisis of 2008, at the request of the main
financial and political institutions, the IASB started the project aimed at the
replacement of IFRS 9 and proceeded in phases. In 2009, the IASB published the
first version of IFRS 9 that only covered the Classification and measurement of
financial assets; later, in 2010, the criteria were published for the classification and
measurement of financial liabilities and derecognition (the latter topic was
transposed unchanged by IAS 39). In 2013, IFRS 9 was amended to include the
general model of hedge accounting. Following the current publication, which also
includes impairment, IFRS 9 shall be considered completed with the exception of
criteria regarding macro hedging, for which the IASB has undertaken an
independent project. The standard introduces new criteria for classifying and
measuring financial assets and liabilities. More specifically, for financial assets the
new standard takes a single approach based on the financial instrument
management methods and on the characteristics of contractual cash flow of the
financial assets in order to determine the measurement criteria, replacing the
alternative rules established by IAS 39. In terms of financial liabilities, the main
modification introduced concerns the recognition of variations in the fair value of
financial liabilities measured at fair value in the income statement whenever these
changes are due to a change in the issuer’s creditworthiness of the liability.
According to the new standard, these amendments must be recognized in the
statement of “Other comprehensive income”, and no longer in the income
statement. With reference to the impairment model, the new standard requires the
estimate of losses on receivables to be made on the basis of the model of expected
losses (and not on the model of incurred losses) using supportable information,
available without unreasonable effort or expense that include current and
prospective historical data. The standard requires that the impairment model apply
to all financial instruments, i.e. financial assets measured at amortized cost, those
measured at fair value through other comprehensive income, receivables arising
from lease agreements and trade receivables. Finally, the standard introduces a
new model of hedge accounting in order to adapt the requirements of the current
IAS 39 that sometimes were considered too stringent and unsuitable to reflect the
risk management policies of the company. The main amendments of the document
concern: increase of the types of transactions eligible for hedge accounting, also
including the risks of non-financial assets/liabilities eligible to be managed in hedge
accounting; change in accounting method for forward contracts and options when
included in a hedge accounting relation in order to reduce the volatility of the
income statement; changes to the effectiveness test through the replacement of
the current methods based on the parameter of 80-125% with the standard of
“economic relation” between the hedged item and the hedging instrument; in
addition, an evaluation of the retrospective effectiveness of the hedging relation
shall no longer be required; the greater flexibility of the new accounting standards
is offset by additional requests for information on the risk management activities of
the company. However, it is not possible to provide a reasonable estimate of the
effect until the Group has completed a detailed analysis.
•
On 12 August 2014, the IASB published the amendment to IAS 27 - Equity Method
in Separate Financial Statements. The document introduces the option of using, in
the separate financial statements of an entity, the equity method for the evaluation
of investments in subsidiaries, jointly ventures and associates. Consequently,
following the introduction of the amendment an entity can record these investments
in its separate financial statements either: at cost; or as required by IFRS 9 (or IAS
39); or using the equity method.
•
On 11 September 2014, the IASB published an amendment to IFRS 10 and IAS 28
– Sales or Contribution of Assets between an Investor and its Associate or Joint
Venture. The document was published in order to resolve the current conflict
between IAS 28 and IFRS 10. According to the provisions of IAS 28, the gain or loss
resulting from the sale or transfer of a non-monetary asset to a joint venture or
associate in exchange for a share in the capital of the latter is limited to the
shareholding in the joint venture or associate by other investors extraneous to the
transaction. In contrast, IFRS 10 requires the recording of the entire gain or loss in
the event of loss of control of a subsidiary, even if the entity continues to hold a
non-controlling interest in it, including in this case also the sale or transfer of a
subsidiary to a joint venture or associate. The amendments introduced require that
for a sale/transfer of an asset or a subsidiary to a joint venture or associate, the
measure of the gain or loss to be recognized in the financial statements of the
seller/transferor depends on whether the asset or subsidiary sold/transferred
constitute a business, under the meaning of IFRS 3. If the assets or the subsidiary
sold/transferred represent a business, the entity shall recognize the gain or loss on
the entire investment held; otherwise, the portion of the gain or loss related to the
share still held by the entity shall be eliminated.
193
194
•
On 25 September 2014, the IASB published the “Annual Improvements to Firs:
2012-2014 Cycle”. The amendments introduced by the document shall be applied
beginning the years that start 1 January 2016 or after. The document introduces
amendments to the following standards:
IFRS 5 – Non-current Assets Held for Sale and Discontinued Operations. The
amendment introduces specific guidelines to the standard in the case in which an
entity reclassifies an asset (or disposal group) from the held-for-sale category to
the held-for-distribution category (or vice versa), or when the classification
requirements no longer apply of an asset as held-for-distribution. The amendments
define that (i) such reclassification shall not be considered as a change to a sales
plan or a distribution plan and that the same criteria for the classification and
evaluation shall remain valid; (ii) the assets that no longer meet the classification
criteria for the held-for-distribution shall be treated the same way as an asset no
longer classified as held-for-sale;
IFRS 7 – Financial Instruments: Disclosure. The amendments govern the
introduction of additional guidelines to clarify whether a servicing contract
constitutes continuing involvement in a transferred asset for the purposes of the
disclosure required in relation to the assets transferred. Moreover, it is clarified that
the disclosure on the compensation of financial assets and liabilities is normally not
explicitly required for interim financial statements. However, said disclosure may be
necessary to fulfil the requirements of IAS 34, in the case of significant information;
IAS 19 – Employee Benefits. The document introduces amendments to IAS 19 to
clarify that the high quality corporate bonds used to determine the discount rate of
post-employment benefits shall be in the same currency used for the payment of
the benefits. The amendments clarify that the scope of the market of high quality
corporate bonds to be considered shall be the one in terms of currency;
IAS 34 – Interim Financial Reporting. The document introduces amendments in
order to clarify the requirements to be met in the event that the disclosure required
is presented in the interim financial report, however outside of the interim financial
statements. The amendment specifies that said disclosure is included through a
cross-reference from the interim financial statements to other parts of the interim
financial report and that said document is available to readers of the financial
statements in the same manner and with the same timing of the interim financial
statements.
•
On 18 December 2014, the IASB published the amendment to IAS 1 - Disclosure
Initiative. The objective of the amendments is to provide clarification to disclosure
elements that may be perceived as impediments to a clear and intelligible drafting
of financial statements. The main amendments are as follows:
Materiality and aggregation: it is clarified that a company shall not obscure
information aggregating or disaggregating it and that the considerations of
materiality shall apply to the financial statements, notes and specific disclosure
requirements of the IFRS. The disclosures specifically required by IFRS shall be
provided only if the information is significant;
Statement of financial position and statement of comprehensive income: it is
clarified that the list of items specified by IAS 1 for these statements may be
disaggregated and aggregated as appropriate. A guideline on the use of subtotals
within the prospectuses is also provided;
Presentation of items of Other Comprehensive Income (“OCI”): it is clarified that
the share of OCI of associates and joint ventures consolidated using the equity
method shall be presented in aggregate form in a single item, in turn divided
between components susceptible or not to future reclassifications to the income
statement;
Notes: it is clarified that entities have flexibility in defining the structure of the
notes and a guideline is provided on how to set up a systematic order of the notes
themselves, for example:
Giving prominence to those that are most relevant for the purposes of
understanding the economic and financial position (ex. grouping information on
particular activities);
Regrouping elements measured according to the same criteria (ex. assets
measured at fair value);
Following the order of the elements presented in the statements.
The amendments introduced by the document shall be applied beginning the years that start 1
January 2016 or after.
40.1.
Measurement criteria
The most significant measurement criteria used to prepare the consolidated financial
statements are described below.
BUSINESS COMBINATIONS
The acquisition of subsidiaries is accounted for according to the acquisition method. The
purchase price is the sum of the current values, on the date of acquisition, of the assets
acquired, the liabilities incurred or undertaken and the financial instruments issued by the
Company in exchange for management of the acquired company, plus directly attributable
merger costs.
When the identifiable assets, liabilities and contingent liabilities of the acquired company meet
recognition requirements under IFRS 3, these are recognised at their fair values at the
acquisition date, except for non-current assets (and disposal groups) which are classified as
held for sale in accordance with IFRS 5 and measured at fair value less costs to sell.
Goodwill arising from the award is recognized as an asset and initially valued at cost,
calculated as the excess of purchase price over the Group’s share of the current value of
recorded assets, liabilities and identifiable contingent liabilities. If, after these values are
recalculated, it is the case that the Group’s share of the current values of assets, liabilities and
identifiable contingent liabilities exceeds the purchase price, the difference is immediately
charged to the Income Statement.
INVESTMENTS
Investments in subsidiaries, jointly-controlled ventures and associated companies, other than
those held for sale, are valued at the purchase cost inclusive of any other costs directly
related to the asset. When an indication of impairment exists, the recoverability of the book
value of the investment is tested by comparing the book value of the asset with the
corresponding recoverable value represented by the higher of the fair value, net of the cost of
selling the asset, and the value in use. In the absence of a binding sale agreement, the fair
value is estimated on the basis of the values observed in recent transactions in an active
market or on the basis of the best available information to reflect the amount that the
Company can obtain through the sale of the asset. The value in use is generally determined,
within the limits of the corresponding portion of the subsidiary’s equity taken from the
Consolidated Financial Statements, by discounting the asset’s expected cash flows and, if
meaningful and reasonably determinable, by its disposal, net of selling costs. Cash flows are
determined based on reasonable assumptions and with the support of documentary evidence
representing the best estimate of the future foreseeable economic conditions, giving higher
importance to independent information. The discounting of cash flows is made using a rate
that takes account of the implicit business risk of the company. The risk arising from potential
losses exceeding the shareholders’ equity is recognized in a specific provision as long as the
195
controlling company is committed to fulfill the legal or implicit obligations towards the
subsidiary or to cover its losses.
When the reasons for the impairment no longer exist, investments valued at cost are revalued
within the limits of the write-downs previously applied through recognition in the Income
Statement under the item “Gains/losses from investments”. The other investments are valued
at fair value through the Income Statement if held for trading or under “Other reserves” of the
shareholders’ equity. In the latter case, the reserve is recognized through the Income
Statement at the time of the impairment or disposal. When the fair value cannot be reliably
determined, investments are valued at cost, net of impairment; in this case impairment
cannot be reversed.
Investments held for sale are valued at the lower of their book value and their fair value, net
of selling costs.
Non-current assets (and groups of assets being disposed of) are classified as held for sale
when it is expected that their book value will be recovered by selling the asset rather than
using it for the company’s operativity. This condition is only met when the sale is highly
probable, the asset (or disposal group) is available for immediate sale in its current state and
management is committed to the sale, which should take place within twelve months of
classification as held for sale.
Non-current assets (and groups of assets being disposed of) classified as held for sale are
valued at the lower of the previous book value and the market value less selling costs.
RECOGNITION OF REVENUES
Revenues from transactions are recognised at the fair value of the consideration received, net
of returns, discounts, allowances and premiums, as follows:
•
sale revenues: when the risks and rewards of ownership are effectively transferred;
•
service revenues: at the time the service is provided.
The Company classifies the differences in exchange rates arising from commercial transactions
under operating income, and, more specifically, under “Other operating revenue” or “Other
operating costs” according to whether the net effect is positive or negative, with detailed
provided in the notes.
Dividends received
Dividends are recognized when the shareholders are entitled to receive them, which normally
occurs in the period in which the Shareholders’ meeting of the company in which the
investment is held approves the distribution of earnings or reserves.
Property, plant and equipment used for the production or the supply of goods and services are
recognized at their historical cost, inclusive of any additional charges and direct costs required
to make the asset available for use.
Property, plant and equipment are recognized
amortization/depreciation and any impairment.
at
cost,
net
of
accumulated
Amortization/depreciation is calculated on a straight-line basis by applying the following rates
on the cost of the assets over their estimated useful life, which is reviewed annually:
196
Asset category
Land
Buildings
Plant and equipment
Depreciation rate
0%
from 3% to 10%
from 7.5% to 15%
15%
Furniture and fittings
12%
IT equipment
20%
Vehicles
25%
Gains and losses arising from the transfer or disposal of assets are calculated as the difference
between sales revenue and the net carrying amount of the asset. They are booked to the
income statement for the year.
Ordinary maintenance costs are fully expensed.
Interventions to improve an asset with respect to its original verified condition are capitalized
and depreciated in proportion to the residual useful life thereof.
Leasehold improvements that meet capitalisation requirements are recognised under property,
plant and equipment and depreciated over the shorter of the residual concession term and the
asset’s useful life.
Leased assets
Lease agreements in which all risks and rewards of ownership are not transferred to the
Group are considered operating leases.
Payments for operating leases are recognized on a straight-line basis over the duration of the
contract.
Grants
Public grants are recognised when it is reasonably certain that they will be received and when
all conditions for attaining them have been met.
Any capitalized government grants towards items of property, plant and equipment are
recognised as direct deductions from the value of the assets to which they refer. The value of
the asset is adjusted for systematic depreciation, calculated according to the residual possible
use of the asset over its useful life.
INTANGIBLE ASSETS
Intangible assets purchased separately are shown at cost less amortization/depreciation and
impairment. Amortization is calculated on a straight-line basis over the asset’s residual useful
life. The amortization/depreciation method and the residual life are reviewed at the end of
each reporting period. The effects of changes in the amortization/depreciation method and the
residual useful life are reflected in the accounting treatment going forward rather than
retrospectively.
Internally Generated Intangible Assets – Research and Development Costs
Research costs are charged to the Income Statement in the period in which they are incurred.
197
Intangible assets generated internally as a result of development as part of an internal project
within the Group are only recorded as assets when all the following conditions are met:
•
it is technically feasible to complete the tangible asset so that it will be available for
use or sale;
•
the Group intends to complete the asset for use or sale;
•
the Group is capable of using or selling the asset;
•
it is probable that the asset will generate future economic benefits; and
•
the Group has the technological, financial and other resources to complete the
development and use or sell the asset during the development stage.
The initially recognised amount of internally generated intangible assets corresponds to the
sum of expenses incurred from the date in which the asset first meets the above
requirements. When internally generated intangible assets cannot be recognised, the
development expenses are booked to the income statement when incurred.
Following their initial recognition, internally generated intangible assets are accounted for at
cost less accumulated impairment, as is the case for intangible assets purchased separately.
Intangible Assets Acquired in a Business Combination
Intangible assets acquired in a business combination are identified and recognised separately
from amortization if they meet the definition of intangible assets and their fair value can be
reliably determined. The cost of such intangible assets is their fair value on the date of award.
After initial recognition, intangible assets acquired in a business combination are measured at
cost, net of accumulated impairment losses, as for intangible assets acquired separately.
IMPAIRMENT OF TANGIBLE, INTANGIBLE AND FINANCIAL ASSETS
At each reporting date, the Company reviews the book values of its tangible, intangible and
financial assets to determine whether there is any indication of impairments of value. Should
it be impossible to estimate the recoverable value of an individual asset, the Company
estimates the recoverable value of the cash-generating unit to which the asset belongs. If
there are signs of impairment, the Company estimates the recoverable amount of the assets
to calculate any impairment losses.
Intangible assets with an indefinite useful life, such as goodwill and trademarks, are tested for
impairment annually or whenever there is indication of impairment.
The recoverable amount is the higher of the fair value net of selling expenses and the value in
use. In calculating the value in use, estimated future cash flows are discounted to present
value using a pre-tax rate that reflects current market valuations of the cost of money and the
specific risks connected to the business.
If the recoverable amount of an asset (or of a cash-generating unit) is estimated to be lower
than the relative book value, it is reduced to the lower recoverable value. An impairment loss
is recognized immediately in the income statement.
If an impairment loss on an asset subsequently ceases to exist or is reduced, the carrying
amount of the asset is increased to the level of the new estimate of recoverable amount,
which may not exceed the value which would have resulted if no impairment loss had
occurred. Reversals of impairment losses are immediately recognised in the income
statement.
FINANCIAL INSTRUMENTS
Financial assets and liabilities are recognized in the Statement of Financial Position at the
moment when the Company becomes a party to the relative contractual clauses.
198
FINANCIAL ASSETS
Receivables
Receivables are initially recognised at fair value and subsequently measured at amortised
cost, according to the effective interest method, net of impairment losses that reflect amounts
deemed non-recoverable and which are taken to specific provisions adjusting receivables.
Amounts considered uncollectable are estimated on the basis of the realizable cash flows.
These flows consider expected recovery times, estimated realisable value, any guarantees and
costs that the Group expects to incur to recover the receivables. The original value of the
receivables is restored in subsequent financial years if the reasons for impairment cease to
exist. In this case, the reversal is recognised in the income statement and may not exceed the
amortised cost that the receivable would have had if it had not been impaired.
Trade receivables with a maturity falling within normal commercial terms are not adjusted to
present value. Receivables denominated in a currency other than the operating currency of
the individual companies are valued at the year-end exchange rate.
The financial assets that the Company intends or is able to keep until maturity in accordance
with IAS 39 are recognised at cost, reported at the date of the trade, corresponding to the fair
value of the initial amount paid, plus any transaction costs (e.g. commissions, consulting fees,
etc.) directly attributable to the acquisition of the asset. Subsequent to the initial assessment,
such assets are valued at amortized cost, using the original effective interest rate method.
Any financial assets held in order to generate revenues in the short term are recognised and
measured at fair value through profit or loss. Any other financial assets are classified as
available-for-sale financial assets and are recognised and measured at fair value through
equity. These gains or losses are recorded in the Income Statement as soon as the asset is
sold or impaired. This latter category includes investments in companies other than
subsidiaries, jointly controlled entities and affiliates.
This item includes cash, bank current accounts and deposits that are refundable on demand,
as well as other short-term highly liquid investments that can be easily converted into cash
with minor risks in terms of change in value.
FINANCIAL LIABILITIES AND EQUITY INSTRUMENTS
Financial liabilities and the Company’s equity instruments are classified in accordance with the
substance of the underlying contractual agreements and in compliance with the respective
definitions of liabilities and equity instruments. The latter are defined as contracts attributing
the right to benefit from the residual interest in the Company’s assets after deducting all of its
liabilities. The accounting standards adopted in relation to specific financial liabilities and
equity instruments are described below.
Payables
Payables are initially recognised at cost, which corresponds with the fair value of liabilities, net
of directly related transaction costs.
After initial recognition, these liabilities are measured at amortised cost, using the effective
interest method. This category includes interest-bearing bank loans and bank overdrafts.
199
Trade payables with normal commercial maturities are not adjusted to present value. Payables
denominated in currencies other than the operating currency of the individual companies are
valued at the year-end exchange rates.
FAIR VALUE MEASUREMENT
Fair value is the value at which an asset (or a liability) can be exchanged in a transaction
between independent parties having a reasonable degree of knowledge of market conditions
and other meaningful elements related to the object of the negotiation. The definition of fair
value implies the assumption that an entity is fully operating and that there is no necessity to
liquidate or materially reduce business activities, or carry out transactions at unfavorable
conditions. The fair value reflects the financial standing of the instrument as it incorporates
the counterparty risk.
Receivables and payables
The fair value of receivables and payables recognised in the financial statements at cost or
amortised cost is provided in the Notes for disclosure purposes, calculated as follows:
•
for short-term receivables and payables, it is held that the cashed-out/cashed-in value is
reasonably close to their fair value;
•
for long-term receivables and payables, the fair value assessment is mainly carried out
through the future cash flow discounting method. Each future cash flow is discounted at a
rate based on the zero-coupon yield increased by a margin representing the specific risk
level of the counterparty.
Other Financial Instruments (Bonds and Securities)
The fair value of this category of financial assets is determined by taking into account the
market prices at the Statement of Financial Position date, where these exist, or alternatively
by using other valuation methods based exclusively on market data.
EQUITY INSTRUMENTS
Equity instruments issued by the Company are recognized on the basis of the amounts
received in exchange for them, net of direct issuing costs.
CONVERTIBLE BONDS
right, the right for the company to deliver shares or offer a combination of shares and cash,
the option is accounted for as a financial liability for the embedded derivative, measured at
fair value through the income statement while the differential with respect to the original
nominal value or the financial liability (host) is recorded at amortized cost.
In consideration of the placement of the convertible bond issued in February 2014 by Maire
Tecnimont S.p.A., it is configured as a compound financial instrument the accounting methods
of which are outlined above.
200
DERECOGNITION OF FINANCIAL INSTRUMENTS
The Group enters into factoring agreements by which it transfers contractual rights on
receivables to third parties in exchange for the related cash flows. Such transactions may
involve:
•
the substantial transfer of the risks and rewards deriving from the ownership of the
underlying financial asset;
•
the Group maintaining a significant part or all of the abovementioned risks and
rewards.
In the first case, the Group derecognizes the financial asset from its Statement of Financial
Position and separately recognizes under assets and liabilities every right and obligation
deriving from the transfer or maintained after the transaction.
In the second case, the Group continues to recognize the financial asset in its own Financial
Statements.
Share capital
The share capital is represented by the Company’s subscribed and paid-up capital. Costs
directly related to the issuance of shares are classified as a reduction in share capital when
they are directly related to the equity transaction.
Treasury shares
Treasury shares are represented as a negative item of Company shareholders’ equity. The
costs incurred in relation to the issuance of new shares by the Company are deducted from
the shareholders’ equity, net of any potential deferred tax impact. Gains and losses on the
acquisition, sale, issue or cancellation of treasury shares are not recognised in the income
statement.
Profits (losses) carried forward
These include profits for previous years that were not distributed or allocated to reserves and
losses for previous years that have not yet been covered. This item also includes transfers
from other equity reserves when the restrictions to which amounts were previously subject no
longer apply, as well as the recognition of the effects of changes in accounting policies and
material errors.
Other reserves
Other reserves include, among others, the statutory reserve and the extraordinary reserve.
Valuation reserve
The valuation reserve includes, among others, the actuarial reserve on defined benefit plans
recognized in shareholders’ equity.
CONTRACTUAL LIABILITIES DERIVING FROM FINANCIAL GUARANTEES
Contractual liabilities deriving from financial guarantees are initially recognized at fair value
and subsequently at the higher of:
201
•
the amount of the contractual obligation, determined in accordance with IAS 37 –
Provisions, Contingent Liabilities and Contingent Assets;
•
the initially recorded amount net, where appropriate, of any accumulated
depreciation/amortization, recognised in accordance with the recognition of revenues
as described above.
PROVISIONS FOR RISKS AND CHARGES
Provisions are recognized in the Financial Statements when the Company has a current
obligation (legal or constructive) as a result of a past event and will more than likely be
requested to fulfill such obligation. Provisions are accrued on the basis of the best estimate of
costs to be incurred to settle the obligation at the reporting date. They are discounted when
the effect of the time value of money is material.
When the Company believes that a provision for risks and charges has to be in part or entirely
refunded or compensated, the indemnity is reported under assets only when the refund is
virtually certain and the related amount can be reliably determined.
Onerous contracts
If the Company has a contract that can be classified as onerous, the current obligation of the
contract must be recorded and valued in the same way as a provision.
An onerous contract is a contract in which the non-discretional costs required to meet the
obligation exceed the economic rewards expected from the contract itself.
Warranties
Provisions for warranty costs are recognized when it is probable that an intervention under
guarantee on completed works is requested. Provisions are calculated on the basis of
management’s best estimate of the costs to be incurred to settle the obligation.
POST-EMPLOYMENT BENEFITS
Payments for defined contribution plans booked to the income statement in the period when
they are due.
The cost of benefits recognised under defined benefit plans is calculated using the projected
unit credit method based on actuarial calculations performed at each year end. Actuarial gains
and losses are fully recognised when they arise and are taken directly to a specific equity
reserve. Past service cost is immediately recognised to the extent that benefits have already
vested.
Recognized liabilities for post-employment benefits reflect the present value of liabilities for
defined-benefit plans, adjusted to consider unrecognised actuarial gains and losses and
unrecognised prior service costs, less the fair value of plan assets. Any net assets arising from
such calculation are limited to the value of non-recognized actuarial losses and costs of past
service, plus the current value of any repayments and reductions in future contributions to the
plan.
Other long-term benefits
The treatment of other long-term benefits is analogous to that of post-employment benefit
plans, except that the actuarial gains and losses, as well as the costs deriving from past
employment service, are recognised in the income statement in their entirety during the year
in which they accrue.
202
FINANCIAL INCOME AND EXPENSE
Interest is recognised on an accruals basis using the effective interest method, i.e., the
interest rate that renders all inflows and outflows (including any premiums, discounts,
commissions, etc.) that comprise a specific transaction financially equivalent. Provisions are
based on the best possible estimate of costs involved in settling the obligation at the reporting
date and are discounted to present value when the effect is material.
INCOME TAXES
Income taxes for the year are determined as the sum of current and deferred taxes.
Current taxes
Current taxes of the current and previous years are recognised at the amount expected to be
paid to the tax authorities.
Current tax liabilities are calculated using the applicable tax rates and the fiscal rules in force
or substantially approved on the closing date of the financial year. Maire Tecnimont S.p.A. and
the main subsidiaries resident in Italy have exercised the option to adopt the National Tax
Consolidation Regime, which enables the calculation of the IRES corporation tax on a taxable
income base defined as the algebraic sum of the profits and losses of each individual
company. In 2011 Maire Tecnimont S.p.A. and the main Group companies joined the Group’s
VAT consolidation regime.
Deferred taxes
Deferred taxes are taxes that are expected to be paid or recovered on the temporary
differences arising between value of an asset or liability for tax purposes and its carrying
amount in the Statement of Financial Position.
Deferred tax liabilities are generally recognised on all taxable temporary differences, whereas
deferred tax assets are recognised only if it is probable that there will be future taxable profit
against which the deductible temporary differences can be used.
The book value of deferred tax assets is revised at each Financial Statements date and
reduced when it is no longer probable that sufficient taxable income will be achieved to allow
the full or partial recovery of such assets.
Deferred taxes are calculated at the tax rate that is expected to be effective when the asset is
realized or the liability settled. Deferred taxes are booked directly to the income statement,
unless they are taken directly to equity because they relate to items also recognised directly
in equity.
In relation to tax losses, please note that on 15 July 2011, Italian Law no. 111/2011
converting Italian Law Decree no. 98/2011 was approved, incorporating urgent measures for
the country’s financial stabilisation (2011 corrective manoeuvre). In particular, the Legislative
Decree amended article 84 of the Italian Consolidated Act on Income Tax (T.U.I.R.) relating to
the carry over of tax losses, removing the 5-year time limit envisaged for the purposes of the
carry over of the past tax losses (which consequently may be carried over with no time limit),
and introducing a quantitative limit to the use of past tax losses equal to 80% of the income
generated in the subsequent fiscal years. The aforesaid 80% limit shall not apply to tax losses
generated in the first three years after the company’s incorporation, provided that they refer
to a new production activity. The new provisions are applicable already as of FY 2011 and, as
clarified by circular letter 53/E 2011 of the Italian Tax Revenue Office, they also apply to the
tax losses generated before 2011 that are still being carried forward in accordance with the
previous rules.
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USE OF ESTIMATES
The preparation of the Financial Statements and Notes in accordance with IFRSs requires that
management makes use of estimates and assumptions that affect the carrying amounts of
assets and liabilities and disclosures of contingent assets and liabilities at the reporting date.
The estimates and assumptions made are based on experience and other relevant factors.
Therefore, the actual results achieved may differ from those estimates. Estimates and
assumptions are periodically reviewed and the effects of any adjustments booked to the
income statement in the period when the estimate is revised, if the revision has effects in that
period only, and in subsequent periods as well, if the revision effects both the current and
future periods. We underscore that the recent financial and economic crisis has led the
Company to formulate new assumptions for its future economic and financial developments
due to the high level of uncertainty. Therefore, it cannot be excluded that next year’s financial
results may differ from the Company’s estimates and could lead to even significant
adjustments, which cannot possibly be anticipated today, in the book values of the
corresponding items.
The main financial statement items affected by such situations of uncertainty are:
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•
provisions for credit risks;
•
impairment of financial assets;
•
amortization/depreciation;
•
asset write-downs;
•
employee benefits;
•
income taxes;
•
provisions;
•
valuation of derivative instruments and the relative underlying asset.
41.
Income Statement
41.1.
Revenues
Revenue generated in FY 2014 is Euro 64,199 thousand, up Euro 21,865 thousand against the
previous period, and is broken down as follows:
31/12/14
31/12/13
Revenues from sales and services
22,947
14,136
Dividends from subsidiaries
41,252
28,198
Total
64,199
42,334
Dividends from subsidiaries revenues are Euro 41,252 thousand and relate to dividends
received during the year from the subsidiary KT-Kinetics Technology S.p.A. for Euro 6,542
thousand and from the subsidiary Stamicarbon B.V. for Euro 34,710 thousand.
Income for goods and services is Euro 22,947 thousand and relates to income generated by
“Intra-group Services” delivered to the direct subsidiaries.
Specifically, income from services refers to the services provided by the Parent Company in
relation to the direction, coordination and control of legal, administrative, tax, financial and
strategic matters on behalf of the individual Group companies.
41.2.
Cost recovery
31/12/14
31/12/13
2
4
Other
2,339
1,980
Total
2,341
1,984
Other operating revenues in the year were Euro 2,341 thousand of which Euro 2,339 thousand
was generated by the administrative, fiscal and legal services provided by Maire Tecnimont
S.p.A. to some Group companies (Tecnimont S.p.A., Met NewEn S.p.A. and Biolevano S.r.l).
41.3.
The costs of raw materials and consumables were Euro 40 thousand.
31/12/14
31/12/13
Consumables
(25)
(23)
Fuel
(15)
(18)
Total
(40)
(41)
The item mainly refers to the purchase of office equipment for Euro 22 thousand and to
petrol/fuel consumption for Euro 15 thousand, which was used for business cars.
205
41.4.
Cost of services
The total cost of services for the year is Euro 15,661 thousand, up Euro 3,874 thousand
against the previous year.
Utilities
31/12/14
31/12/13
(210)
(223)
(93)
(798)
Consulting and services
(3,095)
(2,264)
Directors and Statutory Auditors remuneration
(2,070)
(1,855)
Cost of bank guarantees and other banking services
(220)
(50)
Sale and advertising costs
(294)
(87)
Additional employee costs
(3,746)
(3,274)
(12)
(13)
(149)
(148)
Other
(5,772)
(3,075)
Total
(15,661)
(11,787)
Maintenance
Telegraph and similar costs
Insurance
Consulting and services includes professional fees, primarily for legal advice, services and
consulting for the projects launched in the year, audit and tax advice fees, and business
consulting.
Directors and Statutory Auditors remuneration refers to the fees accrued by members of the
Board of Directors, the Board of Statutory Auditors, the Supervisory Board, the Remuneration
Committee and the Internal Control Committee and the Related Parties Committee.
Additional employee costs mainly relate to the costs of business travel and other ancillary
costs by personnel.
Other increased significantly over the previous year, as for a better and correct exposure,
costs for intra-group services incurred for the headquarters in Via Gaetano de Castillia (Milan)
was reclassified from “Other operating expenses” and includes the provision of the office,
maintenance and other ancillary activities.
The item Other also includes non-capitalized costs incurred for information technology
services, the maintenance of application packages, printing and reprographic services.
41.5.
Personnel expense
Personnel expense for the year was Euro 21,268 thousand, up Euro 7,293 against the
previous year.
31/12/14
31/12/13
Wages and salaries
(16,001)
(10,786)
Social security costs
(4,555)
(2,626)
(702)
(556)
(10)
(7)
(21,268)
(13,975)
Employee severance indemnity
Other expenses
Total
206
In 2014, there was an increase in wages and salaries due to the increase in the average and
actual number of employees over the previous year. The actual workforce at 31 December
totalled 94 resources, increased by 10 resources compared to the previous year; the average
number of employees during the year went from 84 to 91 resources.
Personnel costs also include costs related to compensation and incentive policies to
employees. Social security costs also increased over the previous year and the incidence of
social security contributions on total compensation is in line with the theoretical rate.
In detail, a breakdown of the Company’s workforce by category with the relevant changes is
shown below:
Title
Workforce at
New hires
31/12/2013
Outgoing
employees
Promotions
Transfers
Workforce
31/12/2014
Managers
29
2
-2
3
1
33
Middle-managers
25
5
-2
2
0
30
White collars
30
5
-3
0
-1
31
0
0
0
0
0
0
Total
84
12
-7
5
0
94
Average no. of employees
84
Blue collars
41.6.
91
Other operating expenses in 2013 are Euro 1,622 thousand, up Euro 927 thousand against
the previous year. The breakdown is as follows:
31/12/14
31/12/13
Leases
(533)
(522)
Rentals
(467)
(1,416)
Other expenses
(622)
(611)
(1,622)
(2,549)
Total
Rentals, primarily related to the rental of application packages and cars, did not change
significantly compared to the previous year.
Leases relate to the leasing of properties for office space, especially for the headquarters in
Piazzale Flaminio (Rome) and Via Castello della Magliana (Rome).
The decrease over the previous year is due to the reclassification to other service costs of
costs for intra-group services incurred for the headquarters in Via Gaetano de Castillia (Milan),
which included the provision of the office, maintenance and other ancillary activities.
Other expenses of Euro 622 thousand include mainly membership dues for Euro 285
thousand, Euro 30 thousand for donations and Euro 41 thousand for company meetings.
41.7.
Amortization/depreciation and impairment
Amortization/depreciation and impairment is Euro 210 thousand in the year, down Euro 301
thousand against the previous year.
207
The breakdown is shown below:
Amortization of intangible assets
Depreciation of tangible assets
Total
31/12/14
31/12/13
(184)
(463)
(26)
(48)
(210)
(511)
Amortization of intangible assets for Euro 184 thousand refers to concessions and licenses
(SAP, Tagetik and other corporate software application packages) and to other intangible fixed
assets related mainly to the consulting costs incurred for the implementation and roll-out of
said applications. The decrease is due to certain assets becoming fully depreciated during the
past year.
The depreciation of tangible assets of Euro 26 thousand refers to office and electronic
machinery and other equipment. The decrease is due to certain assets becoming fully
depreciated during the past year.
41.8.
Provisions for bad debts
31/12/14
31/12/13
Provision for bad debts
0
(2,350)
Total
0
(2,350)
In 2014, there were no provisions for bad debts; in the previous year the amount equivalent
to the loans granted to the subsidiaries Tecnimont do Brasil LTDA and Tecnimont Chile LTDA
were set aside as a result of non-recoverability of the same.
41.9.
Financial income
Income from subsidiaries
31/12/14
31/12/13
3,951
1,183
Other income
407
419
Foreign exchange gains
499
2,839
4,857
4,441
Total
Income from subsidiaries of Euro 3,951 thousand refers to the interest income accrued on
financing, financial instruments classified as financing and receivables valued at amortized
cost, granted mainly to Tecnimont S.p.A, Tecnimont Civil Construction S.p.A. and Met NewEn
S.p.A.
The amount of other income refers to interest income of Euro 407 thousand and relates to
interest on bank current accounts and on a residual basis, interest due from the tax
authorities.
Foreign exchange gains were Euro 499 thousand and refer to both currency adjustments of
foreign currency and profits made.
208
41.10.
Interest expense
31/12/14
31/12/13
Charges from associated companies
(8,471)
(4,415)
Other expense
(8,711)
(3,170)
Interest/other expense equity-linked bond
(5,373)
0
(22,555)
(7,585)
Total
Interest expense was Euro 22,555 thousand and is related for Euro 8,471 thousand to interest
expense on loans received from Stamicarbon B.V., KT-Kinetics Technology S.p.A., Tecnimont
S.p.A., Protecma S.p.A, Tecnimont Russia, Tecnimont Planung und Industrieanlagenbau
GmbH, Imm.Lux S.A. and Maire Engineering France S.A. These expenses are valued at
amortized cost using the effective interest rate method.
Other expense relates to interest expenses on bank loans and increased significantly following
the refinancing in July 2013, by which new financing was obtained for Euro 60 million.
“Interest Equity-Linked Bond” for Euro 5,373 thousand includes the monetary and nonmonetary component of interest on equity-linked bonds for Euro 80 million issued in February
2014.
41.11.
Gains/(charges) on equity investments
31/12/14
31/12/13
Revaluation/(write-down) of subsidiaries
(18,300)
(20,300)
Total
(18,300)
(20,300)
The total write-downs of investments at 31 December 2014 were Euro 18,300 thousand and
relate to the shareholding in Tecnimont Civil Construction S.p.A.
This write-down was carried out following the results of the impairment test performed on the
value of investments held by Maire Tecnimont, as described in the paragraph “Investments in
subsidiaries”.
41.12.
Income taxes
Current income taxes
31/12/14
31/12/13
378
12,103
Income taxes related to previous years
(615)
567
Deferred tax assets
6,528
(7,676)
(116)
(15)
Total
6,175
4,979
This item shows a positive value of Euro 6,175 thousand, up Euro 1,196 thousand against the
previous year.
Current income taxes were Euro 378 thousand and refer to the allocation difference of the
income for the payment of tax losses utilized in the CNM 2014 consolidation - FY 2013 with
respect to as indicated in the financial statements, as well as the remuneration on excess
209
interest expense not deducted by the Company and deducted by the consolidated in line with
the current terms of the consolidation agreement in force.
Maire Tecnimont S.p.A. and its subsidiaries Tecnimont S.p.A., Protecma S.p.A., Tecnimont
Civil Construction S.p.A., Met Newen S.p.A., KT-Kinetics Technology S.p.A. and M.S.T S.r.l.
have chosen to apply the option for the National Tax Consolidation Regime that allows to
calculate IRES income taxes based on a taxable base generated from the algebraic sum of the
taxable income amounts of each individual Group company. Deferred tax assets arising from
tax losses that have been recorded and may be carried forward are recognized to the extent
of the likely future taxable income generated against which they may be set off.
Income taxes related to previous years for Euro 615 thousand refer to an adjustment of the
debt to the companies in the tax consolidation.
Deferred tax assets for Euro 6,528 thousand relate to the recognition of deferred tax assets
relating to tax losses and non-deductible interest expense transferred to the tax consolidation
and used in determining the taxable income of the tax consolidation, net of releases for uses
in the period and allocation differences with respect to the previous year.
Deferred tax liabilities for Euro 116 thousand refer to the fiscally recognized amortization of
the Tecnimont and KT-Kinetics Technology trademarks, which, due to their classification as
fixed assets with an indefinite useful life, are not subject to amortization in the Statutory
Financial Statements, whereas a benefit is instead recognized solely for fiscal purposes.
The table below shows the breakdown of the theoretical and the actual tax charge for the year
under consideration:
IRES
Description
31/12/2014
Income before tax
(8,259)
Theoretical tax rate (*)
27.5%
Theoretical tax charge
(2,271)
Temporary differences deductible in future years
Temporary differences taxable
26,086
Total
26,086
Reversal of temporary differences from previous tax years
Temporary differences deductible
5,079
Total
5,079
Differences that cannot be reversed in future years (**):
Increase
15,406
Decrease
(39,238)
Total
(23,832)
Total changes
Tax loss
Current taxes on income for the year
Actual IRES tax rate
(*)
210
(2,825)
(11,084)
(3,048)
N/A
To enable the users of these Financial Statements to understand better the reconciliation between the tax
charge recognized in the Financial Statements and the theoretical tax charge, IRAP has not been taken into
account, since it is computed on a different taxable base than that of income before tax and would generate
discrepancies between one fiscal year and another. Therefore, theoretical income taxes have been determined
by applying solely the Italian tax rate (IRES of 27.5% in 2014) to the income before tax.
(**) This item relates mainly to dividends received from subsidiaries and to write down of investments.
41.13.
Earnings (losses) per share
Maire Tecnimont S.p.A. share capital is comprised of ordinary shares for which the basic
earnings (loss) per share is calculated by dividing the FY 2014 net loss by the weighted
average of the number of outstanding shares of Maire Tecnimont S.p.A. in the financial year in
question. At the reporting date the number of shares outstanding was 305,527,500. This
figure was used to calculate the basic earnings per share at 31 December 2014. Basic losses
were Euro 0.0068.
2014
2013
305,527,500
305,527,500
0
0
Number of shares for the calculation of the earnings per share
305,527,500
305,527,500
Earnings attributable to Maire Tecnimont S.p.A.
(2,084,013)
(5,360,784)
Number of shares Reserved Capital Increase Equity-Linked Bond
36,533,017
36,533,017 (*)
Number of share outstanding
(Treasury shares)
Data per share (Euro)
Net earnings per base share attributable to Maire Tecnimont – in Euro
(0.0068)
(0.018)
Net earnings per diluted share attributable to Maire Tecnimont – in Euro
(0.0061)
(0.016) (*)
(*)Adjusted merely to allow for comparison
It shall also be noted that in February 2014 Maire Tecnimont closed a financing transaction
through equity-linked bond loan of Euro 80 million, placed with qualified Italian and foreign
investors. The bonds may be convertible at a conversion price set at Euro 2.1898, in newly
issued ordinary shares of the Company. In fact, on 30 April 2014, during an extraordinary
meeting the Shareholders authorized the convertibility of the equity-linked bond. For effect,
the Shareholders’ Meeting approved the proposal for a divisible share capital increase in
exchange for cash payment, with exclusion of the option right pursuant to art. 2441,
paragraph 5 of the Italian Civil Code, for a total maximum amount of Euro 80 million
(including the premium), to be paid in one or more tranches by issuing up to 36,533,017
shares having the same characteristics of the ordinary shares in issue. The increase is
exclusively and irrevocably for the conversion of the said bond, according to the terms of the
relevant regulations, at a price per share equal to Euro 2.1898 (of which Euro 0.01
attributable to capital and Euro 2.1798 to premium).
At the date of this annual financial report the calculation of the diluted earning of this
component has been considered, as the conversion would have been “in the money”. Diluted
losses would thus be Euro 0.0061.
211
42.
Statement of Financial Position
42.1.
31/12/13
Changes in
the year
31/12/14
Other assets
108
(25)
83
Total
108
(25)
83
The following table outlines the changes in the historical cost, amortization and net book
value:
Plant and
equipment
0
Industrial and Other assets
commercial
equipment
Total
0
108
108
Amortization
0
0
(25)
(25)
0
0
83
83
Historical cost
2
20
459
481
(2)
(20)
(376)
(398)
31/12/13
Changes in
the year
31/12/14
The main reductions are due to annual depreciation.
42.2.
Concessions, licenses, trademarks and similar rights
3,438
(246)
3,192
Other
271
(136)
135
Total
3,709
(382)
3,327
The following table outlines the changes in the historical cost, amortization and net book
value:
The value of intangible assets results to Euro 3,327 thousand as at 31 December 2014,
decreased by Euro 382 thousand in comparision the previous year. This decrease is mainly
due to the amortization of the year, the sale of the Sofregaz trademark and the
reclassification of assets under construction and advances, as a result of the finalisation of the
bond issue in February. The increase is related to the cost incurred for the registration of
trademarks in various countries in the world.
The values of the trademarks with an indefinite useful life are shown in the following table:
212
2014
Tecnimont trademark
3,016
KT- Kinetics Technology trademark
70
Total
3,086
The Company tests the recoverability of the trademarks with an indefinite useful life at least
once a year and more frequently in case of the presence of indicators of impairment losses.
The recoverable value of the trademarks with an indefinite useful life has been determined
based on their value in use.
42.3.
Investments in subsidiaries
2013
Changes in
the year
2014
588,510
0
588,510
53,100
(8,300)
44,800
5,940
0
5,940
K.T. S.p.A.
26,972
0
26,972
Stamicarbon B.V.
40,129
0
40,129
714,651
(8,300)
706,351
Subsidiaries:
Tecnimont S.p.A.
Tecnimont Civil Construction S.p.A.
Met Newen S.p.A.
Total
The value of investments in subsidiaries amounted to Euro 706,351 thousand and the change
compared to the previous year is due to the decrease in the value of the investment in
Tecnimont Civil Construction S.p.A. as a result of the waiver of Euro 10,000 thousand of
financial receivables due from the same with simultaneous capital increase and the
subsequent write-down of the investment for Euro 18,300 thousand as a result of the
impairment test performed on the value of investments.
Equity investments held in subsidiaries are measured at cost.
The last column of the table below shows the difference between the book value at cost and
the relative portion of shareholders’ equity:
213
Company
Registered offices
Share
capital
Currency
(Values in Euro
thousands)
Accounting
%
book value
owned
(group share) *
Pro rata
accounting
shareholders’
equity (A)
Book value
(B)
Delta
(A-B)
Tecnimont S.p.A.
Via G. De Castillia 6/A (MI)
1,000
Euro
93,964
100%
93,964
588,510
-494,546
Tecnimont Civil
Construction S.p.A.
6,000
Euro
44,970
100%
44,970
44,800
170
Met Newen S.p.A.
3,807
Euro
7,291
99%
7,218
5,940
1,278
Tecnimont K.T S.p.A
Viale Castello della Magliana
(RM)
6,000
Euro
28,856
100%
28,856
26,972
1,884
Sittard - Netherlands
9,080
Euro
72,391
100%
72,391
40,129
32,262
Stamicarbon B.V (**)
(*)
As resulting from the latest Consolidated Financial Statements approved by the relevant Boards of Directors or,
if not available, from the consolidated reporting packages.
(**) Please note that the loan contract for Euro 50 million, stipulated with UniCredit S.p.A., Intesa Sanpaolo S.p.A.
and Banca Monte dei Paschi di Siena S.p.A. foresee the establishment from the Company of a pledge over
100% of the capital of Stamicarbon as a guarantee of the obligation to repay the new credit facility.
During the year there have been events that indicate the possibility impairment, and therefore
the non-recoverability of the investment in Tecnimont Civil Construction S.p.A. – linked to the
Infrastructure & Civil Engineering BU. In fact, this BU is currently implementing its turnaround process that has begun in 2012 and continued in 2014 through the reorganization of
its structures in order to increase both its ability to adapt to changing production volumes and
enable a more targeted focus with consequent improved ability to respond to the demand for
engineering services. In 2014, there was a delay in the award process of new contracts and
the allocation of personnel costs related primarily to the restructuring process taking place in
this field of activity were recorded.
Also with regard to the investment in Tecnimont S.p.A. an impairment test was performed
because the carrying value of the investment was above the pro-quota shareholders’ equity
amount as at 31 December 2014, as already been recorded in the previous year.
The analysis in question was carried out with the help of an independent expert, using the
cash flows based for 2015 on the budget approved on 18 February 2015, and for 2016-2019
on the revision of the forecasts of the industrial and financial plan, approved by the Board of
Directors on 9 July 2014 and updated on 18 February 2015 and supplemented by specific
Plans relating to the Infrastructure & Civil Engineering CGU of Tecnimont Civil Construction
S.p.A. These cash flows confirm the assumptions and strategic basis of the Group plan that
was approved by the Board of Directors on 5 April 2013 and subsequently updated on 13
March 2014. Such documents reflect the Top Management’s best projections in relation to the
main assumptions concerning the Company performance (macro-economic and pricing trends,
development and business outlooks). The assumptions and corresponding financials are
considered suitable for the purpose of impairment testing.
The Plan also includes the possibility of fund generation through the sale of corporate assets
that are no longer considered as strategic for the Group. For the purpose of impairment
testing on equity investments,where available for the assets being disposed in the Plan, the
continuity plan has been considered. For theassets held for sale no plan is available, a
reference was made to estimated sale value made by Management that is net of selling costs.
.
In addition to contract margins and commercial, general and administrative costs, the Plan
provisions include savings relative to the cost of direct and indirect staff, whose reorganization
is underway by the Management. In performing the impairment test, there were considered
only the savings included in the plan that have already been achieved, in order to reflect the
current conditions of the CGU for impairment.
214
The value of the investments held by Maire Tecnimont was calculated by making an estimate
of the corresponding operating value, the net financial position and the value of the accessory
activities.
With reference to the value of the investment in Tecnimont S.p.A., the operating value was
calculated as the sum of the operating value of each unit of the controlled companies of the
Tecnimont sub-group Technology, Engineering & Construction (formerly Oil, Gas &
Petrochemicals and Power) and Infrastructure & Civil Engineering. The operating value of each
unit was determined based on the estimate of the discounted future cash flows (in the form of
income flow) that the companies are expected to generate in the future. The projected income
flows include the reversal of general and administrative costs (G&A) of the Group for all the
units. The value of the income flows has been shown net of notional taxation, considering the
tax benefit relating to the possible tax deductibility of amortization/depreciation.
To determine the recoverable amount, the income flows are referred to the Company’s
planning period, as well as a final value (terminal value) over the planning horizon, consistent
with the nature of the investments and areas of operation. The “normalized” flow was
capitalized considering a growth rate with different intervals depending on the investment and
the reference sector with regard to Tecnimont S.p.A. In particular, the rate “g” was estimated
in a range between 0% and 2% for the “Technology, Engineering & Construction” sector of
Tecnimont. With regard to the Infrastructures sector of Tecnimont, and the investment in
TCC, the rate “g” has been estimated in a range between 0% and 1%, following the
progressive deterioration of the economic results recorded by the same in the last two
financial years.
For the purpose of discounting the operating flows, the post tax WACC was identified as a rate
of reference. The parameters used for the estimate of the discounting rates (Beta and Net
Financial Position) have been determined based on a basket of comparable companies
operating in the “Infrastructure” sector for the E&IC CGU and for all the other CGUS those
operation in the “Engineering” one, assessing financial highlights and the most important
market values for each of them.
For the purpose of expressing the riskfree rate, the yield of 10 year Interest Rate Swap
contracts denominated in Euro was taken into account. With regard to cost of equity, such
rate was increased by the credit spread between the yield of 10 year Italian Treasury bonds
and IRSs of the Euro area with the same maturity, considering an average of 2014 values.
The market risk premium was estimated to be 5.8%.
As for the component of the cost of equity, the rate was prudently increased by 2 percentage
points for the “Technology, Engineering & Construction” unit, following the postponement in
the process of some new project awards, and 7 points for the “Infrastructure & Civil
Engineering” unit, following the gradual deterioration of the economic performances of said
CGU over the past two years and taking into account the expected volumes in the related
plan.
The main accessory assets/liabilities (ACC) included in the evaluation were: for TCM and TCC:
tax benefits from the utilization of losses carried forward during the Plan; for TCM: tax
benefits from the tax shield arising from borrowing charges of the TCM Group not estimated in
determining the value of the operating result following the use of a discount rate that
coincides with the cost of equity; the expected value of disposal (net of sale cost) of certain
assets that do not have a contribution to the determination of the cash flows of the Plan.
The analyses carried out on the basis of the above-described parameters highlighted the
impairment of the investment in Tecnimont Civil Construction S.p.A., hence impairment of
Euro 18,300 thousand has been recorded as at 31 December 2014.
215
Sensitivity analyses have also been carried out on the basis of changes to the following
parameters: i) discounting rate; and ii) growth rate for the estimate of terminal value; on the
basis of these analyses, the range of recoverable value of the CGUs has been defined.
Discount rate (post-tax WACC)
Lower value
Upper value
Technology, Engineering & Construction CGU - TCM
10.1%
12.1%
Infrastructure & Civil Engineering CGU - TCM
11.2%
13.2%
TCC
11.2%
13.2%
Lower value
Upper value
Technology, Engineering & Construction CGU - TCM
0.0%
2.0%
Infrastructure & Civil Engineering CGU - TCM
0.0%
1.0%
TCC
0.0%
1.0%
Growth rate beyond the planning horizon
Regarding the results of the sensitivity analysis carried out in relation to the investment in
Tecnimont Civil Construction S.p.A., in view of the alignment of the investment to the value in
use applied following the test, the sensitivity analysis would require an immaterial adjustment,
in the hypothesis when a greater discounting rate and lower growth rate is applied.
42.4.
31/12/13
Changes in
the year
31/12/14
Trade receivables beyond 12 months
1,100
0
1,100
Total
1,100
0
1,100
Other non-current assets related to trade receivables beyond 12 months that are under
dispute - specifically, Euro 1,100,000 due from the Regione Calabria.
With reference to this receivable, the arbitration award had upheld much of the demand made
by the Company, thereby allowing the amount booked to be sustainable. The counterparty
has appealed against the arbitration award and in 2013 the decision of the Court of Appeal of
Catanzaro declared the award null purely for flaws in form; the Company has therefore
decided to appeal against the sentence filed on 6 May 2013 and to petition the Supreme Court
of Cassation in this respect. The appeal to the Supreme Court was delivered for notification on
20/6/14; the Region has not filed a counter-claim; the hearing date for the discussion and
then the decision are pending. As at today’s date, we believe that the above amount can be
collected, given the continued reasons of merit, as already expressed in the arbitration award.
This amount was due to the company Protecma S.r.l (Tecnimont S.p.A. subsidiary) by the
aforementioned contractor for works completed in the past. In view of a more effective
management of the litigation, the Company transferred the aforementioned receivable in 2009
to Maire Tecnimont S.p.A. based on an appraisal value. Such receivable is recognized at the
presumed realizable value.
216
42.5.
31/12/13
Changes in
the year
31/12/14
41,289
66,070
107,359
407
405
812
41,696
66,475
108,171
Financial receivables due within 12 months:
From subsidiaries
From others
Total
Other non-current financial assets for Euro 107,359 thousand relate for Euro 59,150 thousand
to receivables from Tecnimont S.p.A., for Euro 45,335 thousand to receivable from Tecnimont
Civil Construction S.p.A., for Euro 2,875 thousand to receivables from Met Newen S.p.A., for
Euro 490 thousand from Tecnimont do Brasil LTDA and for Euro 1,860 thousand from
Tecnimont Chile LTDA.
The amount of loans disbursed to Tecnimont do Brasil LTDA and Tecnimont Chile LTDA was
written off since it is currently deemed they cannot be recovered.
The increase in the year is primarily a result of the loans disbursed to Tecnimont S.p.A.
following the issuance of the equity-linked bond, the income of which was primarily intended
to support the business of Tecnimont S.p.A.
The loans are all interest bearing in line with market rates and are due to expire beyond the
next fiscal year.
“Other” refers to accrued financial income totalling Euro 812 thousand and relating to interest
income accrued from the tax authority for VAT for which a rebate application has been filed
but not yet liquidated.
Other non-current financial assets are classified as financial instruments which, after their
initial recognition, are valued at amortized cost using the effective interest rate method. The
estimated fair value of the loans granted is substantially in line with their book value,
computed as indicated in the section “Valuation Criteria”.
42.6.
Deferred tax assets and liabilities
31/12/13
Changes in
the year
31/12/14
Deferred tax assets
4,021
355
4,376
(252)
(115)
(367)
Total
3,769
240
4,009
The item “Deferred Tax Assets and Liabilities” shows a positive value of Euro 4,009 thousand,
up Euro 240 thousand against the previous year. The item comprises advanced tax
receivables for Euro 4,376 thousand and deferred tax liability provisions for Euro 367
thousand.
Maire Tecnimont S.p.A. and its subsidiaries Tecnimont S.p.A., Protecma S.p.A., Tecnimont
Civil Construction S.p.A., Biolevano S.r.l., Met Newen S.p.A., KT-Kinetics Technology S.p.A.
and M.S.T S.r.l. have chosen to apply the option for the National Tax Consolidation Regime
that allows to calculate IRES income taxes based on a taxable base generated from the
217
algebraic sum of the taxable income amounts of each individual Group company. Deferred tax
assets arising from tax losses that have been recorded and may be carried forward are
recognized to the extent of the likely future taxable income generated against which they may
be set off.
The increase in deferred tax assets is mainly due to the combined effect of the provision of
deferred tax assets on tax losses, on excess interest expense transferred to the tax
consolidation, used in the tax consolidation to reduce the taxable amount of the period, as
well as the allocation of assets on deductible temporary differences in future years for
appropriations of charges related to remuneration policies and staff bonuses and the reversal
for the temporary differences of previous years reversed in the period.
Deferred taxes provision of Euro 367 thousand mainly refers to the fiscally recognized
amortization of the Tecnimont and KT-Kinetics Technology trademarks, which, due to their
classification as fixed assets with an indefinite useful life, are not subject to amortization in
the Statutory Financial Statements, whereas a benefit is instead recognized solely for fiscal
purposes.
The composition of deferred tax assets and liabilities and changes during the year is shown in
the table below:
2013
Provision
Utilization
Reclassifications/
Other
2014
Other
1,460
1,739
(130)
(602)
2,467
Capital increase charges - IAS 32
1,962
(173)
(397)
1,392
Deferred tax assets
Post-employment benefits
85
18
513
6,332
(1,085)
(5,346)
414
4,020
8,089
(1,388)
(6,345)
4,376
Value differences in tangible and intangible fixed assets
(trademarks)
(252)
(115)
(367)
Total deferred tax liabilities
(252)
(115)
(367)
TOTAL
3,768
7,974
Tax losses
Total deferred tax assets
103
218
(1,388)
(6,345)
4,009
42.7.
Trade receivables
31/12/13
Changes in
the year
31/12/14
Customers receivables within 12 months
5
0
5
Subsidiary receivables within 12 months
22,161
9,271
31,432
41
(41)
0
22,207
9,230
31,437
Parent company receivables within 12 months
Total
Customers receivables at 31 December 2014 are Euro 5 thousand and refer to receivables
from the affiliated company Noy Engineering S.r.l for the administrative/fiscal service.
Receivables from subsidiaries were Euro 31,432 thousand, of which Euro 9,693 thousand from
Tecnimont S.p.A. for co-ordination and control activities, fiscal, financial, legal service and
other charge backs; Euro 3,957 thousand refer to receivables from KT-Kinetics Technology
S.p.A. for co-ordination and control activities; Euro 11,223 thousand from Tecnimont Civil
Construction S.p.A. for co-ordination and control activities; Euro 118 thousand from
Stamicarbon BV for charge backs related to the SAP management application; Euro 9
thousand from Met Newen S.p.A. for the coordination and control for administrative/fiscal
services, Euro 36 thousand from MST S.r.l. for services and other charge backs.
The item also includes the excess IRES transferred to the subsidiaries on the basis of the
Presidential Decree 29/09/1973 of Euro 6,297 thousand, which could be used to offset the tax
payables and receivables arising from the fiscal consolidation.
Trade receivables from parent companies, due to GLV CAPITAL S.p.A. at 31 December 2013,
were offset in the year.
42.8.
Current tax assets
31/12/13
Changes in
the year
31/12/14
Tax receivables
27,769
7,677
35,446
Total
27,769
7,677
35,446
“Current tax assets” at 31 December 2014 are Euro 35,446 thousand, up against the previous
year. This change derives from the increase in the balance of group VAT, the increase in tax
receivables from tax authorities for various reimbursements and the increase of excess IRES.
The receivables mainly refer to:
• Receivables for excess IRES paid by Maire Tecnimont S.p.A. heading the tax
consolidation, in the amount of Euro 24,482 thousand;
• Receivables from Tax Authorities for VAT for Euro 1,755 thousand;
• Residual tax receivables for Euro 9,209 thousand relate to the excess of IRAP
advances, tax receivables from tax authorities for various reimbursements and
receivables for other taxes.
In 2014, the Group’s VAT consolidation agreement was renewed and Maire Tecnimont S.p.A.,
as parent company, consolidates the debt and/or credit balances of the subsidiaries adhering
to this scheme.
219
42.9.
Other receivables due within 12 months
Trade accrued charges and deferred income
Total
31/12/13
Changes in
the year
31/12/14
24,102
(12,579)
11,523
224
2,198
2,422
24,327
(10,382)
13,945
“Other current assets” at 31 December 2014 were Euro 13,945 thousand, a decrease of Euro
10,382 thousand compared to the previous year and mainly refers to group VAT and prepaid
charges and expenses.
Also in 2014, certain Group companies have renewed adherence to the Consolidated VAT,
transferring their debit balances of VAT payments to the consolidating Maire Tecnimont S.p.A.
42.10.
Bank and post office accounts
Cash-in-hand and cash equivalents
Total
31/12/13
Changes in
the year
31/12/14
612
474
1,086
7
(2)
5
619
472
1,091
“Cash and cash equivalents” are Euro 1,091 thousand on 31 December 2014, up Euro 472
thousand against the previous year.
decrease compared to the same indicator in 2013 which instead reported a positive flow of
Euro 59,147 thousand. Despite the positive result for the year, cash flows from operations
were still negatively affected by the changes in working capital. In fact, the changes in
receivables and payables recorded a significant absorption of cash primarily related to
payments made.
The flow from investment activities absorbed cash for Euro 9,803 thousand mainly due to the
increase in the value of the investment in Tecnimont Civil Construction S.p.A. following the
waiver of Euro 10,000 thousand of financial receivables due from the same with a
simultaneous capital increase, net of the divestment of the Sofregaz trademark.
Financial operations generated cash for Euro 2,487 thousand mainly due to the collection of
the equity-linked bond, net of financial expenses for the year, the repayments of loans and
the granting of new loans to subsidiaries, primarily Tecnimont S.p.A.
The estimated fair value of the bank and post office deposits on 31 December 2014
approximated their book value.
220
42.11.
Shareholders’ equity was Euro 397.930 thousand Euro as at 31 December 2014, up 4,831
thousand Euro with respect to the previous year for the change in reserves, mainly for the
equity component of the equity linked bond net of loss for the year.
SHARE CAPITAL
Share capital, equal to Euro 19,690 thousand, is made up of 305,527,500 shares.
SHARE PREMIUM RESERVE
The reserve was made up of Euro 25,000 thousand paid before 26 November 2007 and Euro
58,045 thousand generated by the premium on the share capital increase made in 2007, net
of charges for listing costs, equal to Euro 3,971 thousand net of the tax effect.
The 2013 change is Euro 141,653, comprising the premium paid by the shareholder ARDECO
and the other Shareholders totalling Euro 146,417 thousand, offset by Euro 4,764 thousand in
expenses for the share capital increase, net of the tax effect.
This capital reserve can be freely used either for a free share capital increase and/or to cover
losses. In accordance with article 2431 of the Italian Civil Code, the reserve can also be
distributed to the shareholders on approval of the Shareholders’ meeting.
OTHER RESERVES
Other reserves at 31 December 2014 total Euro 159,452 thousand and are broken down as
follows:
• the extraordinary reserve, which on 31 December 2013 was Euro 140,432 thousand,
did not change against the previous year;
• legal reserve of Euro 5,328 thousand at 31 December 2013;
• other reserves for Euro 6,731 thousand, consisting of Euro 6,376 thousand to the
proceeds from the sale of its shares in May 2010 and Euro 355 thousand regarding to
the sale of stock options as a result of the capital increase in July 2013;
• “Equity” reserve component of the convertible bond - equity linked - of Euro 80 million
issued in February 2014 for Euro 6,960 thousand. This value expresses the option of
conversion into shares of the convertible bond, with reference to which, regarding the
accounting method, reference is made to the paragraph “Other non-current financial
liabilities” in the Notes.
VALUATION RESERVE
The valuation reserve was negative for Euro 39 thousand at 31 December 2013 and was made
up of the actuarial gains and losses reserve for IAS 19 valuations. The changes are shown in
the table below:
221
Actuarial
gains/losses
Total
7
7
(63)
(63)
17
17
(39)
(39)
Actuarial gains/(losses)
Tax impact
RETAINED EARNINGS (LOSSES)
This item was Euro 3,787 thousand following the decision of the Shareholders’ meeting to
carry forward the loss of 2013.
Upon review of the items that constitute the equity, the following is specified:
AVAILABILITY OF THE MAIN ITEMS OF SHAREHOLDERS’ EQUITY
Share capital
Legal reserve
Extraordinary reserve
Other reserves
Retained earnings
Legend:
A: for share capital increase
B: to cover losses
C: for dividend distribution
222
2014
Possible
uses
19,690
Available
portion
-
224,698
A,B,C
224,698
5,328
B
-
140,432
A,B,C
140,432
6,731
A,B,C
6,731
(3,787)
A,B,C
(3,787)
SUMMARY OF USES MADE IN THE PAST 3 YEARS
Losses
covered
For
distribution
For
transfer to
other
reserves
Other
Share capital
Legal reserve
Treasury shares
Extraordinary reserve
Valuation reserve
Other reserves
42.12.
31/12/13
Changes in
the year
31/12/14
Bank debt due beyond 12 months
76,064
(76,064)
0
Total
76,064
(76,064)
0
Financial debt net of current amount was reclassified from long to short term. The
reclassification is considered temporary as a result of the renegotiation that the Group is
agreement which provides, among other things, the extinction of the previous loans and the
disbursement of a new medium/long term loan.
At 31 December 2014 there are no overdue debts.
42.13.
Provision for risks and charges over 12 months
31/12/13
Changes in
the year
31/12/14
Provisions for risks and charges over 12 months
2,357
5,063
7,420
Total
2,357
5,063
7,420
The provision for risks and charges over 12 months has increased by Euro 5,063 thousand
compared with the previous year. It is composed mainly of provisions for estimated costs
related to compensation and incentive policies to employees.
42.14.
With reference to post-employment benefits, the Company has established benefits similar to
a defined benefit plan favouring all of its employees.
In accordance with IAS 19 - Employee Benefits, the Company, with the assistance of an
actuary, estimated the liabilities for the defined benefit plans on 31 December 2014. The table
below shows the relevant changes in 2014:
223
Post-employment
benefits
Total
534
534
+ Current employee service costs
0
0
+ Actuarial losses (gains)
64
64
+ Income expense on obligations
2
2
+ Other changes
10
10
(131)
(131)
479
479
- Utilisations
Interest expense on assumed obligations is booked to the income statement under Interest
expense - other expense. Actuarial gains and losses are shown in a specific valuation reserve
under shareholders’ equity. The parameters used to value the post-employment benefits are:
• First assumption: it was decided to adopt a rate of 1% as average scenario of the planned
inflation from the “Document of Economics and Finance 2014”, and the subsequent “Update
Note of Economics and Finance 2014”;
• Salary increases: the Company’s remuneration policy takes into account contractual and
meritocratic components and inflation adjustments, and it is used to estimate the future
provisions for the post-employment benefits accrued by employees until they leave the
Company. In particular, the Company has chosen to apply a net increase per year equal to
inflation of 1%;
• Discounting rate: this is determined using the market yields on corporate bonds issued by
primary companies at the valuation date, based on the Euro Composite AA (source:
Bloomberg) at 31 December 2014;
• Total workforce: Maire Tecnimont S.p.A. employees, their average age corresponding to
43.6 years and seniority (post-employment benefits basis) of 8.2 years.
42.15.
Financial liabilities due to subsidiaries
Financial liabilities due to other lenders
Total
31/12/13
Changes in
the year
31/12/14
217,614
23,037
240,651
0
71,292
71,292
217,614
94,329
311,943
“Other non-current financial liabilities” are Euro 311,943 thousand and refer to amounts due
to subsidiaries for inter-company loans and, in particular, to payables due to Stamicarbon B.V.
for Euro 24,579 thousand, to KT-KINETICS TECHNOLOGY S.P.A. for Euro 45,786 thousand, to
Tecnimont S.p.A. for Euro 154,548 thousand, to Tecnimont Russia for Euro 5,000 thousand, to
Tecnimont Planung und Industrieanlagenbau GmbH for Euro 6,970 thousand, to Imm.Lux S.A.
224
for Euro 298 thousand, to Protecma S.r.l. for Euro 3,270 thousand, to Maire Engineering
France S.A. for Euro 200 thousand.
The loans were granted, primarily, for the purpose of issuing loans to other Group companies
that require liquidity to manage their ordinary operations. The balance also takes into account
the effect of the assumptions of intra-group debt of Tecnimont S.p.A., as part of a broader
recapitalization of the same through the subsequent waiver by the assuming party Maire
Tecnimont S.p.A. of the related receivables occurred during the previous year.
The loans are all interest bearing in line with market rates and are due to expire beyond the
next fiscal year. After their initial recognition, the loans are valued at amortized cost using the
effective interest rate method.
“Other non-current financial liabilities - Other lenders” include the financial component of the
equity-linked bond, net of the related accessory expenses. The equity component of the same
instrument has been reclassified under “Other reserves” in shareholders’ equity.
In this regard it is noted as follows:
On 20 February 2014 the parent company Maire Tecnimont S.p.A. closed a financing
transaction through equity-linked bond loan for Euro 80 million, placed with qualified Italian
and foreign investors.
The initial conversion price of the bonds has been set at 2.1898; the bonds were issued at
par, for a unit nominal value of Euro 100,000; they have a term of 5 years and a fixed annual
coupon of 5.75%, payable six-monthly in arrears. If not previously converted, redeemed,
purchased or cancelled, the bonds will be redeemed at par on 20 February 2019.
On 30 April 2014, during an extraordinary meeting the Shareholders also authorized the
convertibility of the equity-linked bond. The extraordinary shareholders’ meeting therefore
approved the proposed share capital increase in exchange for cash payment, with the
exclusion of stock options pursuant to Art. 2441, paragraph 5 of the Italian Civil Code, for a
total of up to Euro 80 million (including the premium). This will be paid in one or more
tranches by means of the issue of up to 36,533,017 ordinary shares with the same
price per share is Euro 2.1898 (of which Euro 0.01 to be allocated to share capital and Euro
2.1798 as premium), subject to any adjustments to the conversion price as established by the
As from 7 March 2018, Maire Tecnimont would have had the right to settle all conversions by
making cash payment of an amount up to the nominal value of the bonds and deliver a
number of shares calculated according to the methods specified in the Regulation (the “Net
Share Settlement Election”). In addition, at the date of maturity of the bonds, the Company
still had the right to deliver a combination of shares and cash, instead of regulating the
conversion of the Bonds solely in cash, in accordance with the procedures set out in the
Regulations.
On 9 July 2014, the Board of Directors of the Company approved the Revised Budget for the
year 2014 and the update of the Group’s Business Plan 2013-2019, as well as all the forecasts
contained therein with particular reference to the year concerning the extinction methods of
the convertible bond.
Even on the basis of these assumptions and after careful and thorough evaluation by the
Board of Directors of the data thus adopted, the same (thereby exercising the prerogatives
and rights assigned to the same in the regulation of newly issued bonds and thus reaffirming
the initial evaluations, referred to the Council of 14 May 2014, as part of the quarterly
reporting) has confirmed its decision not to proceed, taking into account these assumptions
and renouncing, to the extent possible, to the exercise of the right to net share settlement
election expected residually in the terms of the loan and has opted instead, as of now, and
225
always on the basis of the foregoing, for the settlement in shares only in relation to the bond
itself.
right, the right for the company to deliver shares, pay the amount in cash or offer a
combination of shares and cash, the option is accounted for as a financial liability for the
embedded derivative, measured at fair value through the income statement while the
differential with respect to the original nominal value or the financial liability (host) is recorded
at amortized cost.
As indicated above, in consideration of the irrevocable waiver regarding the Net Share
Settlement Election by the Company, the option is (in fact) “cancelled” in substance. In
theory, therefore, it is believed that, should there be the possibility of a proposal for a cash
payment portion calculated under the option, the bondholders may demand fulfilment through
the delivery of shares. As said waiver involves the maintenance of a fixed ratio of conversion
into shares over the term of the bond, it identifies a compound financial instrument the
accounting methods of which are outlined above.
42.16.
Short-term debt
31/12/13
Changes in
the year
31/12/14
Bank debt
17,886
61,435
79,321
Total
17,886
61,435
79,321
The short-term debt was Euro 79,321 thousand, an increase of Euro 61,435 thousand
compared to 31 December 2013 as a result of the reclassification from medium/long term.
The reclassification is considered temporary as a result of the renegotiation that the Group is
agreement.
At 31 December 2014, the short-term financial debt to banks mainly refers to:
•
for Euro 58,975 thousand the long-term portion of debt relating to the rescheduling
and new finance agreements stipulated with the Group’s main lenders in 2013. These
loans are being renegotiated with the banking system.
Under these agreements, the debt has been completely rescheduled to five years, with a
grace period of two years as of 2013 and the repayment by half-year instalments from 30
June 2015 to 31 December 2017. The loans are secured by covenants in line with the
standards for this type of transaction. At 31 December 2014, the covenants were not fulfilled.
In view of the current negotiations being finalized and transactions expected in the coming
weeks, the Group Management therefore considers that non-fulfilment of the above
parameters shall have no consequences.
In fact, in the first part of April, collections are expected related to the transaction for the
Bocamina project and the sale of the Biolevano plant and the attainment of a loan by
Stamicarbon, whose term sheet is already duly signed, as a step preparatory to the
subsequent valorization of a minority share of the same, through a market transaction for
226
finalized, with a significant reduction of medium to long-term bank debt, as well as a
In accordance with the accounting treatment under IAS 1, as a result of as outlined above,
from the next accounting period this debt will be classified as medium-long term liabilities on
these loans:
•
for Euro 17,092 Intesa San Paolo and Unicredit loans not part of the 2013 refinancing
that followed their normal maturity, at 31 December 2014 Euro 9,168 thousand were
reclassified to short term as accounting treatment required by IAS 1 following as
outlined above;
•
accrued expenses on loans and interest on overdrafts accrued and not yet paid were
Euro 3,254 thousand.
The estimated fair value of the financial instruments was essentially in line with the
corresponding book value.
42.17.
Tax payables
31/12/13
Changes in
the year
31/12/14
Tax payables
1,135
(659)
476
Total
1,135
(659)
476
Tax payables for Euro 476 thousand refer to IRPEF personal income tax for employees. The
decrease compared with the previous year is due to VAT that resulted in debt as at 31
December 2013.
42.18.
Trade payables
Trade payables were Euro 76,710 thousand, down Euro 10,304 thousand against the previous
year.
31/12/13
Changes in
the year
31/12/14
Trade payables within 12 months
11,333
(4,228)
7,105
Subsidiary trade payables within 12 months
73,150
(5,645)
67,505
Associated trade payables within 12 months
650
(354)
296
Parent company trade payables within 12 months
944
192
1,135
Affiliated trade payables within 12 months
937
(268)
669
87,014
(10,304)
76,710
Total
“Trade payables” are Euro 7,105 thousand and refer to ordinary operations.
Trade payables to subsidiaries are Euro 67,505 thousand, of which Euro 30,297 thousand
refers to payables relative to the tax consolidation regime. The amount reflects the net
227
balance of advances and tax credit/debit transferred to the consolidating entity by the
subsidiaries that have adhered to the tax consolidation regime.
Residual payables to subsidiaries for Euro 37,208 thousand relate to various trade payables.
The balance also takes into account the effect of the assumptions of intra-group debt of
Tecnimont S.p.A., as part of a broader recapitalization of the same through the subsequent
waiver by the assuming party Maire Tecnimont S.p.A. of the related receivables occurred
during the previous year.
Payables to parent companies of Euro 1,135 thousand refer to the G.L.V. Capital S.p.A.
payable for the use of trademarks and rents.
Payables due to affiliated companies for Euro 669 thousand and payables due to associates for
Euro 296 thousand respectively refer to amounts due to Program International Consulting
Engineers and Studio Geotecnico Italiano, also in this case arising following the assumption of
the debts of Tecnimont S.p.A. in the previous year.
42.19.
31/12/13
Changes in
the year
31/12/14
Social security payables
534
53
587
Employee salaries accrued but not yet paid
321
155
476
Other liabilities
43,397
(13,779)
29,618
Total
44,252
(13,571)
30,681
Other current liabilities were Euro 30,681 thousand at 31 December 2014, decreased by Euro
13,571 thousand against 31 December 2013.
The item refers to payables due to social security entities, employee salaries accrued and not
yet paid and other liabilities.
Other payables for Euro 29,618 thousand refer to amounts payable to subsidiaries for Group
VAT. Again in 2014, certain Group companies have renewed adherence to the Consolidated
VAT, transferring their balances to the credit of the payments to the consolidating Maire
Tecnimont S.p.A.
228
43.
Commitments and Contingent Liabilities
The table below shows the financial guarantees issued by Maire Tecnimont S.p.A. at 31
December 2014 and 2013 and the other commitments.
2014
2013
64,096
37,524
9,152,204
8,036,861
Performance
8,003,326
7,495,433
Others
1,148,878
541,428
Total commitments
9,216,300
8,074,385
Guarantees issued on the Group’s behalf
Bank guarantees issued by third parties to other third parties
Other memorandum accounts
Other personal guarantees
Parent Company guarantees on behalf of subsidiaries
Of which:
Guarantees issued by third parties on behalf of third parties relates to the guarantee issued in
favor of the Lazio Regional Tax Directorate and Provincial Directorate II of Rome - Large
Taxpayers Office for compensation during the year 2013 for Group VAT and TECNIMONT
S.p.A. disputes.
“Other personal guarantees” of Euro 9,152,204 refer to the “Parent Company guarantees”
issued to clients by on behalf of the subsidiaries in relation to the obligations undertaken as
part of their core business and, therefore, contract execution. The increase for the year is
related to the Parent Company guarantees issued for new orders, mainly Kima and Rog, net of
discharges for the year.
“Other personal guarantees” residually relate to other guarantees (letters of Patronage) in
favour of banks on behalf of certain subsidiaries, mainly Tecnimont S.p.A.
229
44.
Transactions with Related Parties
The related parties with whom Maire Tecnimont carried out transactions in FY 2014 were
mainly the following:
•
from Group companies (Tecnimont S.p.A., KT-Kinetics Technology S.p.A., Tecnimont
Civil Construction S.p.A., M.S.T S.r.l., Met Newen S.p.A., Biolevano S.r.l., Stamicarbon
B.V., Protecma S.r.l, Noy Engineering S.r.l., Transfima S.p.A., Corace S.c.a r.l., Cefalù
S.c.a.r.l.; TICB, TCM do Brasil, TCM Chile, Immlux, TCM Russia, TPI, M.E France,
Sofregaz, Studio Geotecnico Italiano, TSJ Limited, TCM Poland: Program International);
•
companies directly and/or indirectly associated with the majority shareholder of Maire
Tecnimont S.p.A. (Esperia Aviation S.p.A.);
•
from the parent company G.L.V Capital S.p.A.;
More specifically, commercial payable contracts still in place relate to the lease of property
used as offices by the Group companies, the use of the “Maire” trademark (relations with GLV
Capital S.p.A.) and other minor charge backs;
Maire Tecnimont structurally benefits from certain services rendered by Tecnimont, specifically
the availability of spaces within buildings, in addition to providing other related services
(general services, facilities, surveillance, equipment); and other services in the AFC by the
subsidiary KT.
The balance of additional trade payables also takes into account the effect of the assumption
of intra-group debt of Tecnimont S.p.A., as part of the broader recapitalization of the same
through the subsequent waiver by the assuming party Maire Tecnimont S.p.A. of the related
receivables of the previous year (TICB, TCM do Brasil, TCM Chile, Immlux, TCM Russia, TPI,
M.E France, Sofregaz, Studio Geotecnico Italiano, TSJ Limited, TCM Poland, Program
International S.r.l.).
Financial contract expenses relate to liabilities for loans received (Stamicarbon B.V.,
Tecnimont S.p.A., KT S.P.A.); moreover, the balance of the debt in this case also takes into
account the effect of the assumption of intra-group debt of Tecnimont S.p.A. in 2013
(Stamicarbon B.V, Protecma S.r.l, KT S.P.A., Immlux, TCM Russia, TPI, M.E France).
Commercial contracts receivable relate to service activities, performed by Maire Tecnimont
S.p.A. in favour of subsidiaries (Tecnimont S.p.A., KT-Kinetics Technology S.p.A. Tecnimont
Civil Construction S.p.A., Met Newen S.p.A.), the administrative/fiscal/legal service
(Tecnimont S.p.A., Met Newen S.p.A., Biolevano S.r.l.), the charge back of costs incurred on
behalf of the subsidiaries.
Financial contracts receivable refers to granted loans (Tecnimont S.p.A., Tecnimont Civil
Construction S.p.A. and Met Newen S.p.A. TCM do Brasil, TCM Chile) for the management of
their operating activities.
The residual balances are debts arising under the tax consolidation agreement (Tecnimont
S.p.A., Met Newen S.p.A., KT-Kinetics Technology S.p.A., Tecnimont Civil Construction S.p.A.,
Protecma S.r.l., M.S.T S.r.l., Program International) and payables and receivables arising as a
result of the VAT consolidation agreement (M.S.T S.r.l., Tecnimont Civil Construction S.p.A.,
Tecnimont S.p.A., Protecma S.r.l., Corace S.c.a r.l, Cefalù S.c.a r.l).
transactions have been conducted based on market conditions.
“Governance”.
The following table analyses receivables/payables and costs/revenues with related parties by
nature at 31 December 2014:
230
(Values in Euro
thousands)
Tecnimont S.p.A.
Trade
Trade
Trade
Financial Financial Financial Recevibales Recevibales Commercial Commercial Financial Financial
receivables payables payables receivables payables payables (Payables) (Payables)
gains
expenses income expense
from
from
from VAT
from tax
acceptance
acceptance consolidation consolidation
of debts
of debts
9,693
(10,998)
59,150
(154,548)
(29,494)
(23,431)
20,756
(3,248)
1,828
(5,079)
KT S.p.A.
3,957
(378)
Tecnimont Civil
Contruction S.p.A.
11,223
55,334
Met Newen S.p.A.
9
2,875
Stamicarbon B.V.
118
(2,582)
-
(9,991)
(22,286)
(17,579)
(23,500)
-
3,981
4,410
2,850
(9,611)
972
1,963
(94)
37
98
(7,000)
(1,498)
(1,784)
49
Biolevano S.r.l.
(895)
24
G.L.V Capital
S.p.A.(*)
(1,135)
Esperia Aviation
S.p.A.(*)
866
MST S.r.l.
35
(433)
(123)
2,041
(64)
(189)
29
(101)
Protecma S.r.l.
(221)
TCM Russia
(332)
(807)
(5,000)
(203)
(494)
(1,650)
(6,970)
(369)
ME France
(12)
(12)
(200)
(8)
IMMLUX
(16)
(77)
(297)
(10)
TPI
1
TCM Chile
95
MET T&S LIMITED
4
(3,270)
3,697
1,860
7
(10)
4
Transfima S.p.A.
(35)
-
Corace S.c.a.r.l.
4,722
516
Cefalù S.c.a.r.l.
(7)
2,127
Noy Engineering
S.r.l.
5
63
(10)
5
TICB
(8,958)
TCM Do Brasil
1,216
490
TCM France
(678)
Studio Geotecnico
Italiano
(296)
TCM Poland
(18)
Program
International S.r.l
in liquidation
(669)
Total
(123)
26,006
-16,301
-23,156
(559)
119,709
-194,413
-46,237
-18,331
-24,003
26,293
-5,290
3,952
-8,471
231
45.
Information on Financial Risks
A more detailed description of financial risks can be found under “Information on Financial
Risks” in the Notes to the Consolidated Financial Statements of Maire Tecnimont Group.
Maire Tecnimont S.p.A. is exposed to financial risks inherent to its ordinary business
operations. More precisely:
•
•
•
•
credit risk related to normal business relations with clients and financing transactions;
liquidity risk related to the difficulty of liquidating market positions in the desired
timeframe or of securing the financial resources needed to continue operations;
market risk related to fluctuations in interest rates due to the use of financial
instruments that generate interest; and
risk of default and debt covenants related to the possibility that the loan contracts
contain clauses that entitle lending banks to request from the borrower immediate
repayment of the loan amounts should specific circumstances arise, that, consequently,
would generate a liquidity risk.
Maire Tecnimont S.p.A. constantly monitors the financial risks to which it is exposed in such a
way as to evaluate the potential negative effects of such risks and to take suitable actions to
mitigate them.
This section provides qualitative and quantitative information on the impact of these risks on
Maire Tecnimont S.p.A. The quantitative data provided below are not forward-looking and on
market risks cannot reflect the complexity and related market reactions of every change
considered.
IFRS 7 requires that the classification of financial instruments at fair value is determined on
the significance of the inputs used to measure the fair value according to a fair value
disclosure hierarchy (Level 1, Level 2 and Level 3); however, no financial instruments valued
at fair value are contained in the Financial Statements of Maire Tecnimont S.p.A.
CREDIT RISK
Credit risk represents Maire Tecnimont’s exposure to potential losses arising from a
counterparty’s failure to fulfill its obligations. Credit risk associated with the ordinary business
of commercial transactions is monitored by both the operational and the administrative
functions on the basis of formal procedures that define the client risk quantification and
control methods.
The Company also has procedures in place to manage credit recovery activities and possible
disputes.
The Company’s maximum theoretical exposure to credit risk at 31 December 2014
corresponded to the book values of the financial assets shown in the Statement of Financial
Position, as well as the nominal values of the guarantees issued for third-party loans or
commitments.
At 31 December 2014, trade receivables due within and over 12 months were Euro 31,437
thousand and Euro 1,100 thousand respectively. The tables below provide a breakdown of
trade receivables by due date:
232
Breakdown of trade receivables by due date
TRADE RECEIVABLES
Total trade receivables
Not yet
due
Within 365
days
From 366
to 731
days
Beyond
731
days
Total
8,591
17,879
4,820
146
31,437
0
0
0
1,100
1,100
8,591
17,879
4,820
1,246
32,537
Of which:
Due within 12 months (Note 42.6, 42.4)
31,437
1,100
TRADE RECEIVABLES
Total trade receivables
Not yet
due
Within
365 days
From
366 to
731
days
Beyond 731
days
Total
6,069
12,630
3,405
103
22,207
0
0
0
1,100
1,100
6,069
12,630
3,405
1,203
23,307
Of which:
Due within 12 months (Note 42.6, 42.4)
22,207
1,100
Other non-current assets related expired for more than 731 days are to trade receivables
beyond 12 months under dispute; specifically in the amount of Euro 1,100,000 due from the
Regione Calabria.
With reference to this receivable, the arbitration award had upheld much of the demand made
by the Company, thereby allowing the amount booked to be sustainable. The counterparty
has appealed against the arbitration award and in 2013 the decision of the Court of Appeal of
Catanzaro declared the award null purely for flaws in form; the Company has therefore
decided to appeal against the sentence filed on 6 May 2013 and to petition the Supreme Court
of Cassation in this respect. The appeal to the Supreme Court was delivered for notification on
20/6/14; the Region has not filed a counter-claim; the hearing date for the discussion and
then the decision are pending. As at today’s date, we believe that the above amount can be
collected, given the continued reasons of merit, as already expressed in the arbitration award.
This amount was due to the company Protecma S.r.l (Tecnimont S.p.A. subsidiary) by the
aforementioned contractor for works completed in the past. In view of a more effective
management of the litigation, the Company transferred the aforementioned receivable in 2009
to Maire Tecnimont S.p.A. based on an appraisal value. Such receivable is recognized at the
presumed realizable value.
233
LIQUIDITY RISK
half-year instalments from 2015 to 31 December 2017. In addition, our lenders Intesa
Sanpaolo, UniCredit and Monte dei Paschi di Siena have provided new financing in an
aggregate amount of Euro 50 million under the same conditions. Finally, the certain facilities
in an aggregate amount of Euro 245 million have been confirmed by all the banks, as well as
guarantees for Euro 765 million in order to support the business.
million. The initial bond conversion price has been established as Euro 2.1898, which
bonds were issued at par, for a unit nominal value of Euro 100,000; they have a term of 5
years and a fixed annual coupon of 5.75%, payable six-monthly in arrears. If not previously
February 2019.
The Maire Tecnimont Board of Directors met on 16 July 2014 and had approved the issue of
an unsecured guaranteed 5-year bond for a total minimum amount of Euro 300 million. The
On 18 February 2015 the Group revised the economic forecasts for the year (Budget 2015)
and also updated the Group Business Plan; in this context, the intention was confirmed to
issue an unsecured guaranteed bond for a minimum of 5 years to a maximum of 7 years for a
reduced total minimum amount of Euro 100 million, in consideration of the extraordinary
proceeds expected from the transactions in the early months of 2015 related to the positive
234
Biolevano.
31/12/2014
Due within 1
year
Due
between 2
to 5 years
Due over
5 years
Total
79,321
0
0
79,321
Other intercompany lenders
0
240,651
0
240,651
Other lenders
0
71,292
0
71,292
79,321
311,943
0
391,264
Due within 1
year
Due in 2 to
5 years
Due over
5 years
Total
17,886
76,064
0
93,950
0
217,614
0
217,614
17,886
293,678
0
311,564
Bank debt
31/12/2013
Bank debt
Other lenders
These flows have not been discounted and may differ from carrying amounts as a result.
Short-term bank debt was up compared to 31 December 2013, mainly due to the
reclassification from medium to long-term; for more information reference shall be made to as
included in the paragraph on short-term debt. The reclassification is considered temporary as
a result of the renegotiation that the Group is finalizing with the syndicate of banks regarding
the terms and conditions of the new loan agreement which provides, among other things, the
extinction of the previous loans and the disbursement of a new medium/long term loan.
Other non-current liabilities were Euro 240,651 thousand and refer to payables to subsidiaries
for intercompany loans; distribution upon maturity is based on the residual contractual
maturity or the first date in which payment can be requested.
Other lenders include the financial component of the equity-linked bond, net of the related
accessory expenses. The equity component of the same instrument has been reclassified
under Other reserves in shareholders’ equity;
MARKET RISK
EXCHANGE RATE RISK
The Company is exposed to risks deriving from exchange rate fluctuations as it has financial
assets denominated in currencies other than euro that may influence its net income or the
value of shareholders’ equity.
INTEREST RATE RISK
The Company is exposed to interest rate fluctuations that may affect the extent of the interest
expense payable on its debt.
235
The risk on the residual portion of the floating-rate debt is currently partly nullified as the
Group’s cash deposits bear interest at rates indexed at the same Euribor rate applied to the
debt.
DEFAULT AND DEBT COVENANT RISK
December 2014. More specifically, these financial parameters (for the measurement reference
shall be made to as included in the paragraph of short-term financial liabilities of the notes to
the financial statements) provide for the maintenance of a certain level of shareholders’
equity, liquid funds and gross financial position, as well as keeping a certain ratio of net
financial position to shareholders’ equity.
CLASSIFICATION OF FINANCIAL INSTRUMENTS
In accordance with IFRS 7, the tables below show the types of financial instruments included
in the Statement of Financial Position items and the valuation criteria applied:
Values at 31/12/2014
Other non-current financial
assets
Loans and
receivables at
amortized cost
Fair value
assets held
for trading
through
profit or loss
Hedge
derivatives
Assets held
to maturity
Assets held
for sale
Total
1,100
1,100
108,171
108,171
Trade receivables
31,437
31,437
13,945
13,945
1,091
1,091
155,744
155,744
Total
236
Loans and
receivables at
amortized cost
Fair value
assets held
for trading
through
profit or loss
Hedge
derivatives
Assets held
to maturity
Assets held
for sale
Total
1,100
1,100
Trade receivables
22,207
22,207
41,696
41,696
24,327
24,327
Total
619
619
89,949
89,949
Liabilities at
amortized cost
held for trading
through profit or loss
Hedge
derivatives
Total
0
0
311.943
311.943
Short-term debt
79.321
79.321
Trade payables
76.710
76.710
30.681
30.681
498.656
498.656
Total
Liabilities at
amortized cost
held for trading
through profit or loss
Hedge
derivatives
Total
76.064
76.064
217.614
217.614
Short-term debt
17.886
17.886
Trade payables
87.014
87.014
44.252
44.252
442.830
442.830
Total
The book value of the financial assets and liabilities is substantially in line with their fair value.
237
46.
Independent Auditor Fees
The table below has been prepared pursuant to article 149-duodecies of the “Consob
Regulations for Issuers” to show the fees paid in FY 2014 for the audit service.
2014 Fees
Type of service
Audit firm
Client
Audit
270
Attestation services (*)
225
Other services
65
(Values in Euro
thousands)
Prices do not include VAT, expenses or, where applicable, the reimbursement of the Consob reporting contribution.
* Attestation services include the signing of tax declarations and services provided under the issuance of bonds.
238
47.
Non-Recurring Significant Events and Transactions
During 2014, the Group did not enter into any of the non-recurring significant transactions as
defined by Consob Communication No. DEM/6064293 of 28 July 2006.
48. Transactions deriving from Atypical or Unusual
Operations
In FY 2013, the Group did not make any atypical and/or unusual transactions as defined and
pursuant to Consob Communication No. DEM/6064293 of 28 July 2006.
49.
Significant Events after 31 December 2014
Information on the significant events occurring after 31 December 2014 is provided in the
“Report on Operations” presented earlier in this Annual Report.
239
50. Attestation to the Financial Statements Pursuant to
article 154-bis, paragraph 5, of Italian Legislative Decree
58/98 and Subsequent Amendments and Supplements
1. The undersigned Pierroberto Folgiero in his capacity as Chief Executive Officer and Dario
Michelangeli in his capacity as “Executive responsible for preparing the Corporate
Accounting Documents” of MAIRE TECNIMONT S.p.A., taking into account the contents of
article 154-bis, paragraphs 3 and 4, of Italian Legislative Decree 58 of 24 February 1998,
attest to:
•
the consistency with the Company’s characteristics; and
•
the effective application of the administrative and accounting procedures as the basis
for preparation of the Financial Statements at 31 December 2014.
2. In addition, we attest that the Financial Statements:
•
have been prepared in accordance with the applicable international accounting
standards approved by the European Community pursuant to Commission Regulation
(EC) No. 1606/2002 of 19 July 2002 of the European Parliament and of the Council;
•
correspond to the information contained in the accounting ledgers and records;
•
provide a true and fair representation of the equity, economic and financial situation of
the Company in question.
3. The Report on Operations provides a reliable analysis of the performance, the operating
result and the situation of the Company in question as well as a description of the principal
risks and uncertainties to which it is exposed.
The present attestation is provided also pursuant to and for the purposes of article 154-bis,
paragraph 2, of Italian Legislative Decree 58 of 24 February 1998.
240
The Chief Executive Officer
The Executive in Charge of Preparation
of the Company Accounting Documents
Pierroberto Folgiero
Dario Michelangeli
REPORT OF THE INDEPENDENT
AUDITORS ON
STATEMENTS
THE
CONSOLIDATED FINANCIAL
241
51. Report of the Independent auditors on the
Consolidated Financial Statements
242
243
REPORT OF THE INDEPENDENT
AUDITORS ON THE FINANCIAL STATEMENTS
244
52. Report of the Independent Auditors on the Financial
Statements
245
246

Annual Report 2014

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