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Independent auditor’s report in accordance with article 14 of Legislative Decree No. 39 of 27 January 2010 and article 10 of Regulation (EU) No. 537/2014 Alperia SpA Financial Statements as of 31 December 2017
Independent auditor’s report in accordance with article 14 of Legislative Decree No. 39 of 27 January 2010 and article 10 of Regulation (EU) No. 537/2014 To the shareholders of ALPERIA SPA Report on the Audit of the Financial Statements Opinion We have audited the financial statements of ALPERIA SPA (the Company), which comprise the statement of financial position as of 31 December 2017, the income statement, statement of comprehensive income, statement of changes in shareholders’ equity, statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the financial statements give a true and fair view of the financial position of the Company as of 31 December 2017, and of the result of its operations and cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union, as well as with the regulations issued to implement article 9 of Legislative Decree No. 38/05. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISA Italia). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of this report. We are independent of the Company pursuant to the regulations and standards on ethics and independence applicable to audits of financial statements under Italian law. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the
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context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matters Auditing procedures performed in response to key audit matters
Recoverability of equity investments in subsidiaries Note 9.3 to the financial statements “Equity investments” As of 31 December 2017 about 56% of total assets is comprised of the value of controlling equity investments, equal to Euro 939 million, mainly in entities operating in power generation and sale. In a market characterised by a significant volatility of electricity prices and a consequent reduction of the investees’ performance the Company, in accordance with IAS 36 as adopted by the European Union, carried out an impairment test, using the discounted cash flow method, to estimate the recoverable amounts of equity investments. In consideration of the magnitude of the balances and the complexity of the process of estimation of the recoverable amounts based on the future cash flows that the investees will generate, we identified the measurement of equity investments as a key audit matter with reference to the existence of possible impairment losses and consequently their appropriate recognition in the financial statements.
The auditing procedures performed involved verifying the procedures adopted by management to identify possible impairment losses of equity investments in accordance with IAS 36 – Impairment of Assets. In detail, we obtained the impairment test carried out by management, which we verified also with the support of valuation experts belonging to the PwC network. Our tests concerned the key assumptions used in the application of the impairment test, which is based on estimating the cash flows the assets are expected to generate in future. Specifically, we verified the reasonableness of (i) the power price curve used, (ii) the estimated production capacity, which depends mostly on weather conditions, and (iii) the discount rate applied to the estimated future cash flows. Moreover, we verified management’s ability to prepare estimates by comparing actual performance data with past business plans, the consistency of projections used with the current business plans, as well as the mathematical accuracy of the calculation of the estimated future cash flows based on the above-mentioned assumptions.
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Key Audit Matters Auditing procedures performed in response to key audit matters We discussed with management the conclusions reached by it following the valuation procedure. In that context we verified that any adjustments to the carrying amounts of equity investments in the financial statements were consistent with the outcome of the impairment test verified as stated above. Finally, we verified the completeness and accuracy of disclosures provided in the notes to the financial statements.
Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union, as well as with the regulations issued to implement article 9 of Legislative Decree No. 38/05 and, in the terms prescribed by law, for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Management is responsible for assessing the Company’s ability to continue as a going concern and, in preparing the financial statements, for the appropriate application of the going concern basis of accounting, and for disclosing matters related to going concern. In preparing the financial statements, management uses the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing, in the terms prescribed by law, the Company’s financial reporting process. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with International Standards on Auditing (ISA Italia) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
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and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. As part of an audit conducted in accordance with International Standards on Auditing (ISA Italia), we exercised our professional judgement and maintained professional scepticism throughout the audit. Furthermore: • we identified and assessed the risks of material misstatement of the financial statements,
whether due to fraud or error; we designed and performed audit procedures responsive to those risks; we obtained audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
• we obtained an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control;
• we evaluated the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;
• we concluded on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern;
• we evaluated the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicated with those charged with governance, identified at an appropriate level as required by ISA Italia, regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identified during our audit.
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We also provided those charged with governance with a statement that we complied with the regulations and standards on ethics and independence applicable under Italian law and communicated with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determined those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We described these matters in our auditor’s report. Additional Disclosures required by Article 10 of Regulation (EU) No 537/2014 On 23 March 2016 and 12 May 2017, the shareholders of ALPERIA SPA in general meeting engaged us to perform the statutory audit of the Company’s and consolidated financial statements for the years ending 31 December 2016 to 31 December 2024. We declare that we did not provide any prohibited non-audit services referred to in article 5, paragraph 1, of Regulation (EU) No. 537/2014 and that we remained independent of the Company in conducting the statutory audit. We confirm that the opinion on the financial statements expressed in this report is consistent with the additional report to those charged with governance, in their capacity as audit committee, prepared pursuant to article 11 of the aforementioned Regulation. Report on Compliance with other Laws and Regulations Opinion in accordance with Article 14, paragraph 2, letter e), of Legislative Decree No. 39/10 and Article 123-bis, paragraph 4, of Legislative Decree No. 58/98 Management of ALPERIA SPA is responsible for preparing a report on operations and a report on the corporate governance and ownership structure (with reference to the information requested by article 123bis, paragraph 2, letter b) of Legislative Decree 58/1998) of ALPERIA SPA as of 31 December 2017, including their consistency with the relevant financial statements and their compliance with the law. We have performed the procedures required under auditing standard (SA Italia) No. 720B in order to express an opinion on the consistency of the report on operations and of the specific information included in the report on corporate governance and ownership structure referred to in article 123-bis,
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paragraph 4, of Legislative Decree No. 58/98, with the financial statements of ALPERIA SPA as of 31 December 2017 and on their compliance with the law, as well as to issue a statement on material misstatements, if any. In our opinion, the report on operations and the specific information included in the report on corporate governance and ownership structure mentioned above are consistent with the financial statements of ALPERIA SPA as of 31 December 2017 and are prepared in compliance with the law. With reference to the statement referred to in article 14, paragraph 2, letter e), of Legislative Decree No. 39/10, issued on the basis of our knowledge and understanding of the Company and its environment obtained in the course of the audit, we have nothing to report. Trento, 20 April 2018 PricewaterhouseCoopers SpA Alberto Michelotti (Partner)
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ALPERIA S.P.A.
FINANCIAL STATEMENTS AT 31 DECEMBER 2017
Alperia S.p.A. - Financial Statements at 31 December 2017
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Alperia Spa
Share Capital Euro 750,000,000 fully paid up
Via Dodiciville, 8
39100 Bolzano
Register of Companies of Bolzano No.
Tax Code and VAT no. 02858310218
Management Board
Chairman Sparber Wolfram
Deputy Chairman Martelli Giuseppina
Director and General Manager Wohlfarter Johann
Director and Deputy General Manager Acuti Paolo
Director König Renate
Director Pohl Siegfried
Supervisory board
Chairman Marchi Mauro
Deputy Chairman Spögler Luitgard
Member Fischer Sabine
Member Mayr Manfred
Member Moroder Helmuth
Member Peluso Maurizio
Independent Auditors
PricewaterhouseCoopers Spa
Alperia S.p.A. - Financial Statements at 31 December 2017
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CONTENTS
Report on operations at 31 December 2017 P.
Domestic energy data .............................................................................................................................. 5
National and provincial industry scenario ........................................................................................... 7
Significant events in 2017 ...................................................................................................................... 9
Events occurring after the close of the financial year ....................................................................... 18
Company situation and operating performance ............................................................................... 23
Outlook ................................................................................................................................................... 23
Report pursuant to art 123bis, paragraph 2, letter b) of Legislative Decree 58/1998, on the
risk management and internal control system ................................................................................... 24
Financial Statements at 31 December 2017
Statement of financial position ............................................................................................................ 30
Income statement .................................................................................................................................. 31
Statement of changes in shareholders' equity .................................................................................... 32
Statement of Cash Flows ...................................................................................................................... 33
Notes ....................................................................................................................................................... 35
Alperia S.p.A. - Financial Statements at 31 December 2017
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ALPERIA S.P.A.
REPORT ON OPERATIONS FOR THE FINANCIAL
STATEMENTS AT 31 DECEMBER 2017
Alperia S.p.A. - Financial Statements at 31 December 2017
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Domestic energy data
In 2017, there was a 2.0% increase in demand for electricity due to the recovery in industrial
consumption and in the macroeconomic environment; see, in this regard, the following table.
Energy balance in Italy (GWh)
2017
2016
Change %
Hydroelectric 37,530 43,785 -14.3% Thermal 199,500 190,771 4.6% Geothermal 5,785 5,867 -1.4% Wind 17,492 17,523 -0.2% Photovoltaic 24,811 21,757 14.0%
Total net production 285,118 279,703 1.9%
Import 42,892 43,181 -0.7% Export 5,132 6,155 -16.6% Foreign balance 37,760 37,026 2.0% Pumping consumption (2,441) (2,468) -1.1%
Electricity demand (GWh) 320,437 314,261 2.0%
(Source Terna Spa, Monthly Report, December 2017)
Net production in 2017 increased by 1.9% (+ 5.4 TWh) to 285.1 TWh; there was, in particular,
a decline in hydroelectric power production (-14.3%, down by about 6.3 TWh), offset by the
increase in photovoltaic energy production (+ 14.0%); as regards rainfall trends, 2017 will
certainly be remembered for the severe drought that characterised it.
In this regard, the National Research Council states that "From December 2016 (the first month of the
2017 meteorological year) the months that followed almost always recorded a loss: with the exception of January,
September and November, all the others recorded a negative sign, almost always with a deficit of more than 30%
and, in six months, more than 50%. On balance, the annual accumulations at the end of 2017 were more than
30% lower than the average for the reference period 1971-2000, making this year the driest from 1800 to the
present” (Source: Press note of 4 December 2017).
Concerning the trend of the single purchase price of electricity, there was a noticeable increase
during the year in question (+ 26.1%): The single national price (PUN) rose from an average of
about 43 €/MWh in 2016 to about 54 €/MWh in 2017.
Single Purchase Price (PUN) - Monthly Average (€/ MWh)
2017
2016
Change %
January 72.24 46.47 + 55.5% February 55.54 36.97 + 50.2% March 44.46 35.22 + 26.2% April 42.86 31.99 + 34.0% May 43.06 34.78 + 23.8% June July August September October November December
48.86 50.31 55.77 48.59 54.66 65.77 65.10
36.79 42.85 37.08 42.89 53.08 58.33 56.44
+ 32.8% + 17.4% + 50.4% + 13.3% + 3.0% + 12.8% + 15.3%
Annual average 53.94 42.78 + 26.1%
(Source Gestore Mercati Energetici Spa, Statistics)
Alperia S.p.A. - Financial Statements at 31 December 2017
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This upward trend marked all the months of the year and was concentrated in particular in the
first two months, which were characterised by continuing tensions on the French market, and in
August due to exceptional levels of demand as a result of the high temperatures.
The growth in the Single Purchase Price (PUN) reflects a scenario characterised by an increase
in the prices of the main commodities, including - in particular - natural gas, and a recovery in
volumes traded at the highest levels in the last five years.
The Single Purchase Price (PUN) recorded in 2017 therefore returned to grow with respect to
the historical minimum of 2016, realigning with the values of the two-year period 2014 - 2015;
see, in this regard, the following table.
Single Purchase Price (PUN) - annual average (€/MWh) 2004 (April to December) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
51.60 58.59 74.75 70.99 86.99 63.72 64.12 72.23 75.48 62.99 52.08 52.31 42.78
2017 53.94
(Source Gestore Mercati Energetici Spa, Statistics)
As regards natural gas in Italy, consumption recorded a further increase (+ 6.4%) reaching 74.7
billion cubic meters, confirming the reversal of the trend that started in 2015.
Growth was driven above all by consumption in the thermoelectric sector, which, favoured by
the increase in demand for electricity and the fall in renewable hydraulic production, rose to the
highest levels since 2012, equal to 25.4 billion cubic metres. Consumption in the industrial sector
also reached its highest level in the last nine years, rising to 14.3 billion cubic meters, contributing
+ 7.2% to growth and showing signs of recovery after a long period of production crisis.
Consumer spending was up less sharply (+ 3.5%), rising to 32.7 billion cubic meters, driven
mainly by an increase in January 2017, when average temperatures were colder. Exports also grew
to 2.3 billion cubic meters (+ 16.2%), but were still modest, accounting for about 3% of total
consumption.
On the supply side, imports of natural gas continued to be the main source of supply (80.8% of
the total), rising to 69.2 billion cubic meters (+ 7%). By contrast, domestic production fell to an
all-time low of 5.2 billion cubic metres. On the other hand, injections from storage systems
recovered reaching their highest level (11.2 billion), while injections fell (11.0 billion).
Alperia S.p.A. - Financial Statements at 31 December 2017
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As regards prices, the annual price of natural gas at the Virtual Trading Point (PSV) reversed the
downward trend of recent years, rising to 19.96 €/MWh and recording an upward change of 4.11
€/MWh compared to the minimum level of 2016 (+26%).
National and provincial industry scenario
With regard to the national scenario, it should be noted that - with the Decree of the Ministry of
Economic Development and of the Ministry of the Environment and Protection of Land and
Sea dated 10 November 2017 - the 2017 National Energy Strategy (NES) was adopted, i.e., the
ten-year plan of the Italian Government to anticipate and manage change in the energy system.
Italy has reached its European targets ahead of time - with a penetration of renewables of 17.5%
of total consumption in 2015 compared to the target of 17% in 2020 - and important
technological advances have been made that offer new possibilities for reconciling energy price
containment and sustainability.
The Strategy aims to make the national energy system more:
• competitive: improving the competitiveness of the country, continuing to reduce the
energy price and cost gap with Europe, in a context of rising international prices;
• sustainable: achieving in a sustainable manner the environmental and de-carbonisation
objectives set at European level;
• safe: continuing to improve the security of supply and the flexibility of energy systems
and infrastructure, consolidating Italy's energy independence.
The quantitative targets set by the NES include:
• energy efficiency: reduction of final consumption from 118 to 108 Mtoe with savings of
about 10 Mtoe by 2030;
• renewable sources: 28% renewables at 2030 compared to 17.5% in 2015; in terms of
sectors, the objective is broken down into a share of renewables in electricity consumption
that goes from 33.5% in 2015 to 55% in 2030, of renewables in heating that goes from
19.2% in 2015 to 30% in 2030 and of renewables in transport that goes from 6.4% in
2015 to 21% in 2030;
• reduction of the energy price differential: contain the cost gap between Italian and
northern European gas (in 2016 equal to about 2 €/MWh) and electricity prices compared
to the EU average (equal to about 35 €/MWh in 2015 for the average household and 25%
on average for businesses);
• stop of electricity production from coal with the aim of expediting the process by 2025,
to be achieved by means of a detailed plan infrastructural interventions;
Alperia S.p.A. - Financial Statements at 31 December 2017
8
• rationalisation of the downstream oil sector, with a shift towards biorefineries and increasing
use of sustainable biofuels and LNG in heavy and maritime transport instead of oil
derivatives;
• doubling of investments in research and technological development in the clean energy
sector: from 222 million euros in 2013 to 444 million euros in 2021;
• promotion of sustainable mobility and shared mobility services;
• new network investments for greater flexibility, adequacy and resilience; closer integration
with Europe; diversification of sources and routes of gas supply and more efficient
management of flows and peaks in demand;
• reduction of energy dependence on imports from 76% in 2015 to 64% in 2030 (ratio of
the import/export balance of primary energy needed to cover demand to gross domestic
consumption), thanks to strong growth in renewables and energy efficiency.
The NES is a driving force for major investments, increasing the trend scenario with additional
total investments of 175 billion euros by 2030, broken down as follows:
• 30 billion euros for gas and electricity networks and infrastructures;
• 35 billion euros for renewable sources;
• 110 billion euros for energy efficiency.
More than 80% of investments are therefore aimed at increasing the sustainability of the energy
system; these are sectors with a high impact on employment and technological innovation.
With regard to the provincial scenario, it should be noted that within the scope of Law No. 205
of 27 December 2017 concerning the "State Budget for the 2018 financial year and long-term budget for
the 2018-2020 three-year period" ("2018 Budget Law"), in force since 1 January 2018, a provision was
introduced - in Article 1, paragraph 833 - to replace Article 13 of Presidential Decree 670/1972,
concerning concessions for large hydroelectric plants.
This provision can be summarised as follows:
a) the attribution to the Autonomous Provinces of Trento and Bolzano - in compliance with
European Union law and international agreements, as well as the fundamental principles of State
law - of the legislative competence to regulate by provincial law the methods and procedures for
the assignment of concessions for large hydroelectric plants, establishing, in particular, "procedural
rules for the conduct of tenders, the terms for calling them, the admission and award criteria, the financial,
organisational and technical requirements of participants", as well as "the duration of the concessions, the criteria
for determining the concession fees for the use and exploitation of government-owned water resources and the assets
of the facilities that make up large hydroelectric power plants, the development parameters of the plants and the
methods used to assess landscape and environmental impact, determining the resulting environmental and territorial
compensation measures, including financial ones.”;
b) the ownership regime and the criteria for calculating the indemnity due to the outgoing
concessionaire on expiry of the concession, with reference to the so-called dry and wet works;
Alperia S.p.A. - Financial Statements at 31 December 2017
9
c) the right to extend concessions for large hydroelectric plants granted in the two Autonomous
Provinces, pursuant to regulatory or administrative provisions that provide for a deadline prior
to 31 December 2022, even though expired, for the period necessary to carry out public tender
procedures and in any case no later than that date.
Significant events in 2017
Group reorganization
On 1 January 2017, the reorganisation of the entire corporate group became fully operational,
initially divided - as is well known - into four Business Units: Production, Sales and Trading,
Networks, Heat and Services; In the first area in particular, the merger by incorporation of SEL
Srl and Hydros Srl into SE Hydropower Srl (whose corporate name was changed to Alperia
Greenpower Srl as from 1 January 2017) took effect at the beginning of the year, as did the
transfer of the "Production" Business Unit from Alperia SpA to the latter.
With regard to Production, on 14 June 2017, the Extraordinary Shareholders' Meeting of SEL-
Edison SpA, 77% owned by Alperia Greenpower Srl, approved the adoption of new Articles of
Association and the change of the company name to Alperia Vipower SpA.
On 7 November 2017, the extraordinary shareholders' meeting of Gaderwerk Srl approved the
dissolution of the company, while the subsequent shareholders' meeting on 15 December 2017
approved the final liquidation financial statements and the related plan for distribution to
shareholders.
As regards the Heat and Services Business Unit, the merger by incorporation of
Teleriscaldamento Sesto Srl and Teleriscaldamento Chiusa Srl into Alperia Ecoplus Srl also took
effect on 1 January 2017.
The fifth Business Unit of the Group, called Smart Region, which currently includes the companies
Alperia Fiber Srl and Alperia Smart Mobility Srl, was established in May. the new company
Alperia Bartucci (which is discussed further below) will also join this BU.
On 20 September 2017, the deed of sale of the interest in WPP Uno SpA was signed, in
accordance with the provisions of a binding agreement subject to conditions signed in June 2017;
the sale of the interest, no longer considered strategic in the 2017-2021 Business Plan of the
Alperia Group, had positive effects on the Group's economic and financial results of Alperia
SpA reported in these present financial statements.
With regard to the two companies of the Alperia Group operating in Sardinia, in December 2017
the parent company became the sole shareholder of the company Biopower Sardegna Srl, as it
was the only shareholder to have participated in the operation to cover the accrued losses and to
reconstitute the share capital.
Alperia S.p.A. - Financial Statements at 31 December 2017
10
From 1 January 2018, Alperia Energy Srl has been a dispatching user of the energy produced by
BPS.
With regard to Ottana Solar Power SpA, on 22 December 2017 Alperia Greenpower Srl acquired
the remaining 10% of the shares from PC Holding Srl for 1.75 million euros, thus becoming the
sole shareholder of the company.
Both these transactions are preliminary steps in view of the disposal of the interests held in these
companies and are already included in the 2017-2021 Group Business Plan.
Finally, - again on 22 December 2017 - Alperia SpA acquired the shares held by the Autonomous
Province of Bolzano in the company IIT Bolzano Scarl, equal to 21.99% of the share capital for
a nominal value of 200 thousand euros, becoming the holder of 43.97% of the latter.
With regard to the statutory bodies of the parent company, Mr. Mauro Marchi - after his
resignation, for professional reasons, with effect from 1 February 2017 from his position as
member and Chairman of the Supervisory Board - was reappointed on 12 May 2017 by the
shareholders' meeting as a member thereof and, again on that same date, Chairman.
With regard to the Management Board, on 31 May 2017 Mr. Karl Michaeler resigned with
immediate effect - for professional reasons - from his position as member of the Management
Board; On 13 October 2017, the Supervisory Board appointed Mr. Siegfried Pohl as the new
member of the Board.
Group Business Plan
On 20 March 2017, the Management Board and the Supervisory Board of Alperia Spa examined
and approved the 2017-2021 Business Plan of the Alperia Group; The main objective of the Plan
is to confirm and strengthen the value of the Alperia Group in the light of the modified energy
scenario compared to the pre-merger expectations and the rapid change of traditional models;
the goal is to turn Alperia from a traditional multiutility into a modern player at the forefront in
intelligent networks and in new energy models, with a more balanced business portfolio, as well
as to make it more profitable and capable of seizing new opportunities in the New Downstream,
Smart City and intelligent networks areas, confirming its 100% green approach to the energy
business.
The Plan has 4 strategic objectives:
• + Growth
• + Efficiency
which are at the centre of the activities and the strategic development of the current assets and
Business Units areas ("Core");
Alperia S.p.A. - Financial Statements at 31 December 2017
11
• + Territory
• + Investments
which are at the centre of the activities and the strategic development focused on growth in new
business areas (“Acceleration");
Specifically, in the + Territory section, the value creation for the reference territory is specified:
the Autonomous Province of Bolzano. Over the Plan five-year horizon it is expected that the
Group will generate added value of about 1.2 billion euros, of which approximately 120 million
euros in the implementation of the Smart Region project. The Smart Region project is the proposal
of Alperia to the municipalities of the Alto Adige region for the implementation of a large
infrastructure enabling the technological development and the upgrading of networks such as:
Public lighting, fiber optics (in FTTH architecture), district heating networks and high value
added services.
Upon completion of the Plan, the group will be less risky and less vulnerable to price and weather
volatility as regards hydroelectric production, with growing and less volatile profitability.
All the actions envisaged in the plan will be carried out in full accordance with environmental,
social and financial sustainability.
As part of aforementioned Plan, in order to achieve greater efficiency, the Group offices are to
be rationalised and - as provided for in the Framework Agreement signed on 21 February 2015
between the shareholders of Alperia SpA and the former AE SpA and SEL SpA companies - a
single head office is to be built in Merano for approximately 300 people, which is expected to be
completed over a number of years, from design to construction.
Group management immediately took action to implement the various initiatives provided for in
the plan, the main of which can be summarised below (in more detail below in the report):
- review and efficiency improvement of the investment plan through the "Capex Excellence"
project, which has allowed the various activities that will be carried out by the various
Business Units to be optimised, creating synergies and cost savings over a period of time
- on a like-for-like basis - of around 40 million euros to the benefit of shareholders (out
of a total amount of investments, originally planned, of over 450 million euros);
- the creation of the "Innovation Board" working group, made up of representatives of the
various BUs and departments of the parent company, with the aim of developing ideas
for innovative projects: the projects presented so far cover topics such as artificial
intelligence, the development of production forecasting models, building automation, the
involvement of prosumers and the interest of things, as well as the development of process
digitisation;
- new Green Bond issue, based on the EMTN programme of Alperia SpA;
- consolidation of relations with the European Investment Bank for the granting of an
additional loan to support investments in the hydroelectric sector;
Alperia S.p.A. - Financial Statements at 31 December 2017
12
- development of the Smart Region with the presentation to the municipality of Bolzano of
the PPP (Private/Public Partnership) project;
- start of activities for the rating of the Alperia Group;
- start of the process for the sale of equity investments deemed no longer strategic;
- search for an Energy Efficiency player to be acquired to make the group a reference partner
for the creation of the Smart Region and PPPs;
New Green Bond issue
On 27 July 2017 the Management Board and the Supervisory Board of Alperia SpA approved
the updated EMTN programme approved in June 2016 for the issue of bonds for a total amount
of up to 600 million euros (of which - as is well known - 375 million euros have already been
placed in three different tranches in the period from June to December 2016 and listed on the
regulated market of the Irish Stock Exchange) and approved the issue of a further tranche of
Green Bonds up to a maximum amount of 100 million euros with a maturity of not less than
seven years and in any case not more than ten years. These too were listed on the Irish market.
On 26 September 2017, the Management Board approved the issue of the fourth tranche,
providing that it could also be issued in a currency other than the euro, namely pound sterling,
Swiss francs, Norwegian kroner, Swedish kroner and Danish kroner.
This last tranche was subscribed by a Norwegian fund in October 2017 and includes the
Norwegian krone (NOK) as its currency, an amount of NOK 935 million, and a 10-year maturity;
In order to hedge the NOK/EUR exchange rate risk, on 11 October 2017 the company signed
a Cross Currency Swap derivative contract with Goldman Sachs, which provides for the payment -
by Alperia SpA - of a fixed rate of 2.204%.
The funding provided by the bond issue enabled the company to refinance its debt and business
operations, with a positive impact on the average cost of debt and on cash and cash equivalents.
Alperia S.p.A. - Financial Statements at 31 December 2017
13
New EIB loan
On 18 July 2017, the EIB Board and the EFSI Committee (European Fund for Strategic Investments)
approved the granting of a loan to Alperia SpA to allow the Group to make investments in the
Production sector: the loan, totalling 80 million euros, provides for a fixed-rate credit line with
repayment at 16 years, of which 4 years as grace period 12 years as amortizing.
The closing took place between the end of November and the beginning of December 2017.
PPPproject
In 2017, the Group's management presented the Municipality of Bolzano with a project financing
proposal for services pursuant to Article 183, paragraph 15, of Legislative Decree no. 50/2016
on “Comprehensive management of the public lighting system in the Municipality of Bolzano and innovative
services consistent with the Smart City paradigm".
This project has the ambitious objective of optimizing and innovating public services to make
Bolzano a smart city that will be a model at national level and to create real added value for
citizens; the fields of application range from public lighting to fibre optics, from air quality
sensors to the energy efficiency of various municipal buildings, from Free WIFI to video
surveillance, from smart traffic lights to assistance for senior citizens, from the sale of electricity
and heating to the creation of smart mobility infrastructure.
The planned investments are in the order of approximately 40 million euros for a concession
period of 20 years.
The municipal authorities asked the parent company for additional information and clarification
on the offer submitted, reserving the right to comment on its public interest, following which, if
it were to be approved, a European call for tenders would be issued for the award of the contract.
Rating of Alperia SpA
At the beginning of August 2017, the international rating agency Fitch, after completing the
assessment process, announced that it had given the parent company a long-term rating at "BBB"
with a "Stable" outlook; the agency informed that it positively judged the solid business profile of
the Group and the EBITDA diversification strategy over the next few years to reduce the weight
of hydroelectric power in the group's business mix. The cash generating capacity and structure
of the debt, mainly medium/long-term and at fixed rate, were also positively evaluated.
This rating implies an Investment Grade profile of the Group's medium-long term debt and has a
positive effect on financial charges.
Alperia S.p.A. - Financial Statements at 31 December 2017
14
Establishment of Alperia Bartucci
On 22 December 2017 a contract was signed transferring 60% of the company Bartucci SpA to
Alperia SpA. Bartucci SpA is one of the major operators in the Italian energy efficiency and
advanced energy services market.
This acquisition is one of a series of initiatives designed to help achieve the important company
goals set forth by the 2017-2021 strategic plan of the Alperia Group. This operation allows the
latter to accelerate the transformation of Alperia from a traditional utility to an energy service
provider; in addition, it contributes to strengthening the Group’s market share in the services field
in South Tyrol and also gives us the opportunity to extend our range of services to the entire
domestic market, in view of the excellent positioning held for over a decade by Bartucci SpA for
consultancy regarding energy matters and the management of EPC projects and of the high
degree of digitisation of the offered solutions.
The operation reinforces the role of the Smart Region BU, which can now add advanced energy
services to the electric mobility services offered by Alperia Smart Mobility and the fibre optic
connectivity of Alperia Fiber.
The agreement which is subject to conditions precedent was signed based on an assessment of
the assets of Bartucci SpA which estimated them at 24.5 million euros (with an Enterprise Value of
100%) and also envisages an option to buy the remaining 40% share 36 months after the closing
of the operation, which took place on 28 February 2018.
In particular, the acquisition involved 100% of the share capital of the company Bartucci Medio
Ambiente Srl, which - in turn - controls 60% of Bartucci SpA.
New company for electric mobility
In early 2017, Alperia SpA formed a new company, called Alperia Smart Mobility Srl, exclusively
dedicated to “sustainable mobility”.
Through this project, the Alperia Group seeks to play the role as driving engine of electric
mobility in South Tyrol.
In May 2017, the company presented the "smart mobility" package of measures, with different
offers for charging stations (home, business, destination and fast charging), customised tariff systems
and electricity charging options, as well as emergency services, training and call centres. The
provincial network of electric vehicle charging points will also be massively boosted, including
with fast charging stations.
In 2017, Alperia continued to expand the network of public and private charging stations,
reaching 105 electric car charging points throughout South Tyrol; sufficient charging sessions
were made to cover 696,000 kilometres, i.e., 17 times the CO2-neutral round-the-world trip.
Alperia S.p.A. - Financial Statements at 31 December 2017
15
To facilitate charging, Alperia has equipped its stations with public access with the new Direct
Payment system, through which the payment of charging sessions takes place online directly at the
stations with credit card or a Paypal account, simply by reading the QR code on the columns with
a smartphone.
An innovative initiative is the agreement signed by Alperia, the Cassa Centrale Raiffeisen of South
Tyrol, and Car Server, the Italian leader in car rentals, offering - from November 2017 -
individuals and businesses the long-term rental of electric cars (called "Drive Different"); with a
modest one-off initial contribution and a monthly instalment at particularly favourable
conditions, customers have a new electric car at their disposal, in addition to the possibility of
taking advantage of a whole series of additional services. There has been a great deal of interest
in this offer and a number of contracts have already been signed. Alperia Smart Mobility Srl has
actively participated in the development of this offer and benefits from the intermediation
between Car Server and customers through its website.
Another important step towards the spread of electric mobility is represented by the agreement
signed in 2018 by the parent company with Enel X, company of the Enel Group dedicated to
the development of electric mobility and digital services, which provides for carrying out a
technological "interoperability" test on the charging stations; as a result, both Enel and Alperia
customers will be able to use the charging stations for electric vehicles of both operators and
thus travel over a wider range, thanks to the more than a thousand Enel charging stations
scattered throughout Italy and to the more than fifty Alperia charging stations distributed
throughout the Province.
The group also intends to replace its own fleet, now consisting of about 340 vehicles, in order
for electric or hybrid vehicles to account for 120 vehicles within three years; therefore, the
Group's current fleet of 30 electric vehicles will be quadrupled.
The development of sustainable mobility in South Tyrol can benefit from a series of economic
incentives made available by the Autonomous Province of Bolzano both for the purchase of
electric cars and for the installation of electric charging stations.
Alperia and Huawei
At CeBIT 2017 in Hanover, the world’s most important trade fair dedicated to Information and
Communication Technology (ICT) held in March, the global giant Huawei (with which - as
already reported - Alperia Spa and Alperia Fiber Srl signed a five-year MoU in 2016 to develop
synergies aimed at creating an innovative ultra-wideband network and projects in the energy field,
Smart City and Smart Grid) presented, together with Alperia, the pilot project implemented in
South Tyrol. The project envisages a last generation ultra-broadband network ready to be
developed towards the Software Defined Network (SDN) model, conceived to deliver advanced
digital services to citizens and businesses in South Tyrol. This is an innovative, secure, highly
Alperia S.p.A. - Financial Statements at 31 December 2017
16
scalable solution implemented in Europe for the first time, that uses an integrated platform to
handle multiple different technologies through a single management system.
Thanks to the close collaboration with Huawei, an ultra-broadband network has been
implemented in a very short time; this is the core element for transforming the South Tyrol region
into a Smart Region.
Non-Financial Statement (NFS)
Italian Legislative Decree no. 254 of 30 December 2016 introduced - with effect from “reporting
periods starting from 1 January 2017" - the obligation for companies classified as "Public Interest
Entities" that exceed certain size limits (i.e., for large groups) to draw up a non-financial statement
(hereinafter also referred to as DNF) that must contain, "to the extent necessary to ensure an
understanding of the business activity, its performance, results and impact", in addition to a description of
the company’s business model of management and organisation, information regarding the main
risks arising from the business activity of the company and its products and services, as well as
the policies implemented and the results achieved by it with reference to environmental and social
issues, personnel issues, respect for human rights and the fight against active and passive
corruption.
The aforementioned decree specifies that the responsibility for ensuring that the report is drawn
up and published in compliance with its provisions lies with the directors of the public interest
entity, while the supervisory body is called upon to monitor compliance with the provisions of
the decree and reports on it in its annual report to the shareholders' meeting.
In addition, the decree provides for control functions over the fulfilment of disclosure obligations
by the entity entrusted with the statutory audit of the entity's financial statements or by another
entity authorised to carry out the statutory audit designated for this purpose by the company.
The non-financial statement may either form an integral part of the annual report or constitute a
separate report.
The Alperia Group has opted for the latter option and therefore presents the consolidated NFS
in a separate report.
Alperia S.p.A. - Financial Statements at 31 December 2017
17
OMM, certifications, social protocol and accidents at work
On 26 September 2017 the Management Board approved the complete version of the
Organisation, Management and Control Model (OMM) for Alperia SpA; this document contains
the set of rules and organisational procedures of the company aimed at preventing the offences
provided for by Legislative Decree no. 231/2001 from being 231/2001.
The drafting of the models for the other Group companies is carried out following an analysis
of priorities and urgency conducted by an external consulting firm; for the Group companies
most exposed to the aforementioned regulations (Alperia Energy Srl, Alperia Greenpower Srl,
Alperia Ecoplus Srl, Edyna Srl and Alperia Vipower Srl), the drafting of the models began during
the second half of 2017 and should be completed by the end of the first half of 2018.
An important certification obtained by the Group in June 2017 concerns the Family and Work
audit assigned by the Family Agency of the Autonomous Province of Bolzano and the Chamber
of Commerce; the certificate demonstrates the Group's efforts to pursue a staff policy that aims
to reconcile family and working life. Flexible working hours and part-time work are just some of
the measures to support employees with family needs.
In terms of certification, in 2017 the parent company, as well as the companies Alperia Ecoplus
Srl, Alperia Energy Srl, Alperia Greenpower Srl, Alperia Vipower Srl and Edyna Srl, completed
the annual audits for all processes and for all their sites with upgrade to the 2015 versions of ISO
9001 and ISO 14001. Alperia SpA has also obtained the extension of ISO 27001 certification,
already obtained for the IT Department, to the TT - Teleconduction & Telecommunication - Service.
On 9 August 2017 a trade union agreement was signed on the Social Protocol for Group
employees; the agreement provides for the payment of occasional subsidies to workers who find
themselves in situations of need worthy of protection in terms of welfare. The assessment of the
cases deserving attention is carried out by a joint committee composed of trade union and
company representatives.
In 2017 there was a significant drop in accidents in the Alperia Group: from 25 accidents with
228 days of lost work (data 2016) to 13 accidents with 192 days of lost work (last year's data).
This demonstrates the efforts made at all levels to take preventive action, and the data highlighted
above are all the more important as there has been an increase in accidents at work at national
level. In any case, the goal of the Group remains that of not having to record any accident.
Alperia S.p.A. - Financial Statements at 31 December 2017
18
Events occurred after the close of the financial year
Update of 2017-2021 Business Plan
The parent company updated the 2017-2021 Business Plan with new assumptions for the
remaining 2018-2021 period; essentially, the 4 strategic guidelines of the original business plan were
confirmed and renewed (+ growth, + efficiency, + M&A investments, + value creation in the
territory).
Sale of Mini Hydro Plants
First of all, we point out the legislative changes made with Provincial Law no. 22 of 20 December
2017 (“Provisions connected with the 2018 Stability Law"), which came into force on 1 January 2018,
which concerned, among other things, the management reform of the electricity industry in South
Tyrol.
In particular, Article 18 amended the heading of Article 2 of Provincial Law no. 14/1997 and
replaced paragraph 1/ter of the same provision with the following: “To complete the reform referred
to in paragraph 1/bis and by 31 December 2018, the shares or interests - also indirectly held by the Autonomous
Province of Bolzano - of companies that own exclusively small or medium-sized plants for the production of
hydroelectric power are transferred to other shareholders, which are local entities other than those referred to in
paragraph 1/bis, or companies wholly owned by local entities. The sale takes place at the price of the total
investment expenses (contributions, capital payments and shareholder loans) including ASTAT revaluation. The
local shareholding entities referred to in paragraph 1/bis, adhere to these initiatives, agreeing the compensation
within the limits of their shareholding with the Autonomous Province of Bolzano”.
More specifically, the aforementioned completion of the management reform in the energy
sector, as required by the aforementioned provision of law, involves the sale of nine
shareholdings held by the Alperia Group in the following concessionaire companies
small/medium-sized plants (with a capacity of less than 3 MW): Goege Energia Srl, Centrale
Elettrica Dun Scarl, Centrale Elettrica Winnebach Scarl, Centrale Prati Scarl, E-Werk Breien
Scarl, E-Werk Eggental Scarl, Energia Senales Scarl, Energy Welsperg Scarl and Puni Energia
Scarl, with the clarification that the shareholding in Goege Energia Srl is held directly by Alperia
SpA, while the other shareholdings are held by the subsidiary Alperia Greenpower Srl.
The shareholders' meeting at the meeting of 22 February 2018, invited and expressly authorised
its competent bodies of the parent company to start and conclude the activities relating to the
sale of the group's shareholdings in the aforesaid companies, taking all the measures considered
necessary for this purpose, also with regard to the subsidiary Alperia Greenpower Srl, in order to
proceed with the completion of the aforesaid management reform of the energy sector in South
Tyrol.
Alperia S.p.A. - Financial Statements at 31 December 2017
19
The sale transactions described above, which will in any case take place at values higher than
those of the equity investments recorded in the financial statements of the companies concerned,
will begin in March and will necessarily be completed - in accordance with the provisions of the
aforementioned Provincial Law no. 22/2017 – by the end of this year.
Litigation and contingent liabilities
With respect to the disputes and potential liabilities reported in the financial statements at 31
December 2016, the following should be noted.
Contingent liabilities in relation to corporate transactions
With regard to the dispute between the parent company and Edison SpA, at the end of 2016 the
latter filed claims for damages pursuant to a contract executed on 25 January 2016 by which
Alperia Spa and Edison Spa purchased and sold shares in Cellina Energy Srl (as amended and
supplemented by an addendum dated 31 May 2016) in connection with alleged liabilities incurred
by facilities owned by Cellina Energy Srl; Alperia promptly replied and challenged those requests;
however, a specific risk provision was conservatively recognized for part of the claims.
In response to the above requests, Alperia - in turn - filed claims for compensation against A2A
SpA, alleging liabilities - almost totally coinciding with those reported by Edison - incurred in
connection with the same plant covered by the Framework Agreement entered into on 26
October 2015 Between SEL SpA and A2A SpA and, as far as relevant, between Cellina Energy
SpA and Edipower SpA. A2A replied and challenged the above requests pursuant to the terms
of the framework agreement.
As regards the payment by Edison of the residual price for the sale of Cellina Energy Srl (25
million euros), Alperia collected the payment of about 19.3 million euros from Edison in July
2017; the latter partially offset the aforesaid amount of 25 million euros with the amount - in its
opinion - due to it for the aforesaid alleged liabilities relating to the Cellina plants. Although
Alperia does not agree with the above liabilities, these were prudently already taken into account
in the preparation of the financial statements at 31 December 2016.
Tax Disputes
With reference to the appeal of the Italian Revenue Agency before the Supreme Court of
Cassation against ruling no. 73/2016 of the Bolzano Second Instance Tax Commission rejecting
the appeal filed by the Italian Revenue Agency against the favourable ruling of first instance no.
141/02/2014 concerning the notice of adjustment and demand for payment of proportional
registration, mortgage and cadastral taxes, issued on 17/12/2013, against which Alperia Spa and
Alperia S.p.A. - Financial Statements at 31 December 2017
20
Edyna Srl filed its defence and conditional cross-appeal, as also E-Distribuzione SpA, the date
for the hearing to discuss the case is yet to be set.
With regard to ICI, IMU and IMI taxes, after the filing of the necessary appeals/complaints,
respectively, for the purposes of mediation - where required - by Alperia Spa and Alperia
Greenpower Srl, with regard to both SE Hydropower Srl and Hydros Srl, against the notices of
assessment for previous years by which the tax authorities in question alleged the failure to
register their hydroelectric plants, hearings have not yet been scheduled. Alperia Greenpower Srl
has recognized a special provision that is considered sufficient to cover the potential liability
estimated in case of adverse outcome of the proceedings.
Disputes relating to hydroelectric concessions
The following proceedings are pending, even though they are of greater importance with regard
to the Production area:
• before the TSAP:
(i) appeal under TSAP case no. 258/2015 brought by Alpine Energy S.r.l., Michael Kirchner and
Aurino Energia versus the Autonomous Province of Bolzano and the former Hydros S.r.l.
company (now Alperia Greenpower Srl), which promptly appeared in court, with regard to the
decree of the Councillor in charge of the Electrification Office no. 12153/2015 dated
25/09/2015 concerning the water derivation concession GS/1273 (Lasa plant); a hearing has
been scheduled for 30 May 2018 to clarify the conclusions;
(ii) appeal under TSAP case no. 186/2015 brought by Alpine Energy Srl and Mr Michael Kirchner
for the annulment of the measures by which the Province had reviewed the concessions (Tel,
Sarentino, Valburga, Ponte Gardena, Molini di Tures, Lana, Cardano, Bressanone, Pancrazio,
and Lasa) assigned to the concerned parties, confirming the relevant terms and challenging the
previous measures, i.e., provincial resolution no. 562 of 15 March 2013, as well as the note of the
start of the review process. At a hearing held on 26 July 2017, the hearing was adjourned to 3
October 2018 for the purpose of filing motions and rebuttal arguments;
• before the United Civil Sections of the Supreme Court of Cassation:
(i) appeal filed by Alpine Energy S.r.l. and Michael Kirchner asking the Court to quash ruling no.
110/2014 TSAP, filed under case no. 26290/2014, dismissing the appeal filed by the appellants
versus the renewal/release procedures for the award of concessions for the renewal/issuance of
hydro-electric concessions to the companies Sel SpA and Azienda Energetica Sa (now Alperia
Spa), and to SE Hydropower Srl and Hydros Srl (now Alperia Greenpower Srl), which had
already filed separate counter-claims and joined the proceedings. At the hearing of 19 December
2017, following the filing of a motion for adjournment in order to wait for the prior definition
of the different proceedings, which are also pending before the Court of Cassation under case
no. 23240/2016, the ruling was postponed under a new case number.
Alperia S.p.A. - Financial Statements at 31 December 2017
21
(ii) against TSAP ruling no. 225/2016 filed on 6 July 2016, rendered in the Joined Cases no.
235/2011 and no. 77/2013, concerning, inter alia, the two large hydroelectric plant concessions
of Molini di Tures and Lappago, an appeal was timely lodged with to the Court of Cassation
under case no. 23240/2016 by the Autonomous Province of Bolzano, as well as by SE
Hydropower Srl (now Alperia Greenpower Srl) together with Alperia SpA (former SEL SpA).
The parties to the dispute filed a joint motion for the early discussion of the proceedings, with
the aim of declaring the matter of the dispute to be null and void by virtue of an agreement. At
the hearing of 19 December 2017, the lawsuit was suspended for decision.
With regard to the disputes with Alpine Energy Srl, Alperia SpA has entered into a settlement
agreement with the company and its sole shareholder, with the payment of related compensation
- subject to the occurrence of certain conditions precedent - by Alperia Greenpower Srl, a party
directly involved in the settlement of the outstanding disputes.
Other contingent liabilities
The Energy Services Operator (GSE) has completed the controls following the audit and onsite
inspection carried out in November 2015 for the cogeneration plant combined with the district
heating of Merano and the allocation of Green certificates for the years 2008 to 2014. By
communication dated 7 August 2017, the GSE requested Alperia Ecoplus Srl to return part of
the green certificates it had issued at the time and, in the opinion of the GSE, which it was not
entitled to, for the above plant. Against this final measure of the potentially detrimental audit
procedure, as well as the separate measure to recover the incentive, Alperia Ecoplus Srl filed an
appeal wit the Lazio Regional Administrative Court (TAR) under case no. 10189/2017, claiming,
in addition to the unlawfulness of the measures challenged also in their substance, that Alperia
Ecoplus is not liable for the request of the GSE. Following the GSE’s nullification by internal
review, with ruling no.11738/2017 dated 24.11.2017, the Lazio Regional Administrative Court
ruled that the dispute is no longer relevant. In order to protect its rights and interests, Alperia
Spa also deemed it necessary to file an appeal for the nullification of the note of the GSE dated
7 August 2017 before the Lazio Regional Administrative Court (TAR) under case no. 11460/2017,
which is still awaiting a hearing to be scheduled.
Considering that the audit by the GSE refers to years prior to the transfer of the related business
unit to Alperia Ecoplus Srl, the latter has conservatively recognized a specific risk provision.
Following the measure by internal review, with a notice of outcome dated 15 December 2017
and a slavish note dated 31 January 2018, the GSE has now requested Alperia SpA to refund the
portion of the green certificates - in its opinion - not due for the same plant in Merano, thus
forcing Alperia SpA to lodge an appeal before the Lazio Regional Administrative Court under
case no. 2060/2018 for the nullification of the challenged acts and measures. A hearing on the
merits of this case has not yet been scheduled.
Alperia S.p.A. - Financial Statements at 31 December 2017
22
Transactions with related parties
Related parties are those that share the same controlling entity with the company, the companies
that directly or indirectly control it, are controlled, or are jointly controlled by the parent company
and those in which the parent company holds a stake enabling it to exercise a significant influence.
In accordance with the provisions of IAS 24, "Disclosure on Related Party Transactions", paragraph
26, the company is exempted from the information requirements set out in paragraph 18
(according to which the entity must specify the nature of the relationship with the related party,
in addition to providing information on such transactions, on outstanding balances, including
commitments, which is necessary for financial statements users to understand the potential
effects of those transactions on the financial statements) in case it carries out transactions with
another entity that is a related party because the same local public entity controls both the entity
that prepares the annual accounts and the other entity.
We note, however, that during the year under review, (i) related party transactions were carried
out at arm’s length (ii) the main details of transactions with group companies are highlighted in
the individual sections of the notes (iii) the main transactions with the shareholders concerned:
• the dividends approved in favour of the shareholders for Euro 15,158 thousand.
Number and nominal value of treasury shares and of shares of parent companies held by the company With reference to the provisions of the article 2428, paragraph 2, nos. 3 and 4 of the Italian Civil
Code, it is pointed out that, at 31 December 2017, the company did not own treasury shares nor
did it made acquisitions or disposals of such shares during the year, either directly or through
trust companies or third parties.
Research and development
During the year, the company carried out research and development activities through the
Innovation Board (which was briefly mentioned above).
Alperia S.p.A. - Financial Statements at 31 December 2017
23
Company situation and operating performance
Operating data
In 2017, Alperia SpA (unlike in 2016) only provided services to Group companies and financed
and managed equity investments. For this reason, the comparison between 2017 and 2016 figures
is not homogeneous.
Performance indicators (in thousands of Euros)
Performance indicators Formula
2016
2017
EBITDA
Operating income net of amortization, depreciation, provisions and write-downs
6,845
37,419
EBIT
Operating income
3,111
7,852
Net debt
Cash and cash equivalents + Financial receivables - Financial payables
(179,350)
(150,820)
ROE
Net profit/total equity
2.9%
1.9%
ROS
EBIT / Total Revenues
6.8%
2.4%
Outlook
As mentioned above, Alperia SpA provides services to Group companies and finances and
manages equity investments; the company's results therefore depend, to a large extent, on
dividends from Group companies.
Alperia S.p.A. - Financial Statements at 31 December 2017
24
Report pursuant to article 123bis, paragraph 2, letter b) of Legislative Decree 58/1998, on
the risk management and internal control system
Alperia Spa was formed on 1 January 2016 as a result of the merger of the two former SEL and
former AEW groups; during 2017 it continued to develop the activities to establish an internal
control and risk management system (the "Internal control system") capable of managing the
risks inherent in the activities of the company and the group; this effort is still being implemented.
The internal control system is a set of rules, procedures and organizational structures aimed at
monitoring compliance with the strategies and the achievement of the following goals:
(i) efficacy and efficiency of processes and business operations;
(ii) quality and reliability of economic and financial information;
(iii) compliance with laws and regulations, as well as with the company's articles of association
and corporate rules and procedures;
(iv) safeguarding the value of corporate activities and assets and preventing losses.
The following bodies are currently involved in control, monitoring and surveillance processes:
- the Supervisory Board;
- the Control and Risk Committee;
- the Management Board;
- the Internal auditmanager;
- the Head of Enterprise Risk;
- the Supervisory Body.
Given the dual management and control model adopted by the company, both the Supervisory
Board and the Management Board are actively involved in risk control activities and specifically:
- the Supervisory Board, pursuant to article 16, paragraph 1, lett. (xii) of Alperia Spa's Articles of
Association, the Supervisory Board "assesses the degree of efficiency and adequacy of the internal control
system, with specific regard to the monitoring of risks, the functioning of internal audit and the accounting
information system." Pursuant to article 17, paragraph 1, lett. (v) of the Articles of Association, the
Chairman of the Supervisory Board, chairing the Control and Risk Committee, “supervises and
activates the procedures and systems in place for the control of the Company’s and Group’s activities...... ... ".
Pursuant to article 17, paragraph 1, lett. (vi) of the Articles of Association, the Chairman of the
Supervisory Board "in accordance with the budget established by the Management Board and approved by the
Supervisory Board, also activates the information tools necessary to monitor the correctness and adequacy of the
organizational structure and of the accounting and administration system adopted by the Company and the
Group";
Alperia S.p.A. - Financial Statements at 31 December 2017
25
- pursuant to art. 28, paragraph 1 of the Articles of Association, the Management Board “is vested,
on an exclusive basis, with the broadest powers for the management and administration of the Company .........".
In addition, pursuant to art. 29, paragraph 1 of the Articles of Association, the Management
Board “submits a special report to the Supervisory Board on the overall performance of the company’s operations
and on major transactions in terms of size and characteristics performed by the Company or its subsidiaries and,
in any case, it reports on transactions in which members of the Management Board have an interest on their own
or on behalf of third parties.”
Within the Supervisory Board, the Committee for Control and Risk has been set up, which has
the task of assisting the Committee in its responsibilities with regard to the internal control system
with non-binding recommendation, investigation and advisory functions.
The task of verifying the adequacy and the effective functioning of the internal control systems,
which is assigned to the Supervisory Board, involves conducting meetings and analyses with the
main stakeholders, including - in particular - the Supervisory Body, the Internal Audit Manager,
the Head of the Enterprise Risk Management function and the controlling bodies of the subsidiaries;
it also involves the activation of periodic reporting and monitoring systems.
The Internal Audit Manager has no operating responsibility; he/she reports to the Chairman of
the Management Board and, functionally, to the Chairman of the Supervisory Board.
The Internal Audit Manager, who is responsible for the adequacy of the internal control system
at all times, has direct access to all the information necessary to carry out his/her duties and
adequate means to carry out the function assigned to him/her.
The Internal Audit Manager reports the results of his/her activity, which is defined in a specific
Audit Plan, including any identified deficiencies and the corrective actions identified, through
appropriate Audit Reports that are submitted to the Supervisory Board, the Management Board,
the General Manager of the company and the head of the function that is being audited; if the
audit concern the group companies, the Audit Reports are also sent to the relevant bodies of the
company concerned.
In addition, annual summary reports of the activities carried out during the reference period are
drawn up, which are sent to the Supervisory Board and to the Management Board.
Upon invitation, the Internal Audit Manager participates in the Supervisory Board, Control and
Risk Committee and Management Board meetings.
The Internal Audit function assists the Supervisory Body, of which the Internal Audit Manager is
a member.
In 2017, the Manager carried out his activities based on a specific Audit Plan, which was approved
by the Management Board at the meeting of 23 February 2017.
In his annual report for 2017, dated 19 February 2018, and containing a summary of the activities
carried out in the period under review, the Manager pointed out that “Based on the audits carried out
Alperia S.p.A. - Financial Statements at 31 December 2017
26
in 2017, there were no "elements that might lead to a negative assessment of the adequacy and effectiveness of the
internal control system".
With regard to the Enterprise Risk implementation process, this is constantly evolving in order to
develop tools that meet the ever increasing risk control and management requirements imposed
by the organizational complexity of the company and the group, the status as issuer of listed
bonds and the developments that are typical of a multi-business group. Alperia Spa has initiated a
risk assessment and reporting process, in keeping with the Enterprise Risk Management
methodology and with the best practices in Risk Management, which aims to make risk management
an integral and systematic part of management processes. The main assumptions considered in
the model specifically refer to the group business plan pending approval.
An important feature of the methodology adopted is the possibility of comparing risks, in order
to focus on risks that are considered as more significant; Another element is the involvement of
risk owners through an operating approach that enables them to clearly identify the risks that
concern them, their causes and how to manage them. The risk assessment is based on the
introduction of two essential variables: The impact on company performance if the risk event
occurs and the probability of occurrence of the uncertain event.
The methodology adopted is modular and allows for a gradual approach that leverages on the
refinement of experience and of the methods of analysis used by the group. The Enterprise Risk
function is, therefore, continuing to pursue the development plan that is intended - on the one
hand - to identify and assess other types of risk, such as those linked to the conduct of operations
and - on the other hand - to introduce monitoring and mitigation activities within the process in
order to develop management skills and make the function increasingly more integrated with
business processes.
The operating Risk Management function set up within Alperia Energy Srl has the task of
monitoring market risk (especially, price risk) and credit risk when acquiring new
customers/renewing contracts.
The overall process of detecting and analysing risk areas also includes the financial reporting
process.
In this respect, it is noted, for example, that the annual financial reporting process, and, especially,
the description of the main risks and uncertainties to which Alperia and the group are exposed,
is linked to the flow of information coming from the Enterprise Risk processes of the companies
and the group.
For a description of the main risks inherent in the company and the group, see the respective
notes to the separate and consolidated financial statements.
As already mentioned above, on 26 September 2017 the Management Board approved the
complete version of the Organisation, Management and Control Model (OMM) for Alperia SpA.
Alperia S.p.A. - Financial Statements at 31 December 2017
27
The purpose of the Model is to define guidelines, rules and principles of conduct governing the
company’s activities, which all the recipients must comply with in order to prevent, within the
specific "sensitive" activities carried out by Alperia, the commission of the offences envisaged by
Legislative Decree no. 231/2001 and to ensure fairness and transparency in the conduct of
business activities.
The implementation of the Model provides that activities considered "sensitive" must be carried
out in accordance the provisions of the Model; any non-compliance may lead to sanctions by the
company.
As regards the other Group companies most exposed to the aforementioned regulations (Alperia
Greenpower Srl, Alperia Energy Srl, Alperia Ecoplus Srl, Alperia Vipower Spa and Edyna Srl),
the drafting of the models began during the second half of 2017 and should be completed by the
end of the first half of 2018.
With regard to the Supervisory Body of the company, it is made up of the Internal Audit Manager
and two external professionals.
The Internal Audit Manager is also a member of the Supervisory Bodies of other Group
companies, such as Alperia Greenpower Srl, Alperia Energy Srl, Alperia Ecoplus Srl, Alperia
Vipower Spa, Edyna Srl and Biopower Sardegna Srl, as well as other investee companies, such as
SF Energy Srl and Teleriscaldamento Silandro Srl.
The composition and functions of the Supervisory Body comply with the characteristics
identified by Legislative Decree no. 231/2001 and the related guidelines issued by Confindustria.
Specifically, the Supervisory Body has autonomous powers of initiative and control and the
independent exercise of such powers is ensured (i) by the fact that the members of the Body are
not subject to hierarchical constraints in the performance of their function, as they report directly
to the highest operating level, namely the Chairman of the Management Board and (ii) by the
presence of an external member as Chairman of the Body.
The members of the Supervisory Body are adequately trained and have a consolidated and
qualified experience in accounting, auditing, organizational activities and in criminal law; in
addition, they can rely on internal staff within Alperia and on external consultants to carry out
any technical activities as may be necessary to ensure the control function is properly performed.
The Body is entrusted with the task of monitoring the operation and observance of the Model
and of keeping it up to date. The Supervisory Body reports on the implementation of the Model,
the detection of any critical aspects and the need for modifications.
The Supervisory Body reports to the Management Board, informing it, whenever it deems
appropriate, about significant matters or events related to the conduct of its activities.
A fundamental element of the Model, as well as a component of the preventive control system,
is the Group Code of Ethics, which sets out the ethical and professional principles that Alperia
Alperia S.p.A. - Financial Statements at 31 December 2017
28
recognizes as its own and the guidelines and principles of conduct designed to prevent the
offences referred to in Legislative Decree 231/2001. The Code is an essential element of the
Model as it constitutes a systematic corpus of internal rules designed to disseminate a culture of
ethics and corporate transparency. The Code calls for the observance of the principles and rules
contained therein, by the corporate bodies, by all the employees of the group and by all those
who, permanently or temporarily, interact with the group.
Each group company is required to endorse the principles of the Code of Ethics adopted by
Alperia and to put in place the most appropriate measures in order to ensure their respect.
The Code of Ethic is available on the company website.
Finally, PricewaterhouseCoopers Spa is the independent auditor of the company Alperia Spa and
the Alperia group.
Alperia S.p.A. - Financial Statements at 31 December 2017
29
ALPERIA S.P.A.
FINANCIAL STATEMENTS AT 31 DECEMBER 2017
Alperia S.p.A. - Financial Statements at 31 December 2017
30
Statement of financial position
(in Euro) Notes At 31 December 2017 At 31 December 2016
ASSETS
Non-current assets
Intangible assets 9.1 4,329,347 4,530,999
Tangible assets 9.2 47,309,488 132,071,222
Investments 9.3 939,680,836 776,101,191
Deferred tax assets 9.4 7,584,059 8,553,636
Other non-current receivables and financial assets 9.5 420,251,444 101,480,326
Total non-current assets 1,419,155,174 1,022,737,374
Current assets
Trade receivables 9.6 11,925,812 99,701,402
Inventories 9.7 1,468,232 1,117,447
Cash and cash equivalents 9.8 173,318,016 37,324,812
Other current receivables and financial assets 9.9 67,784,484 409,647,981
Total current assets 254,496,544 547,791,642
Assets held for sale and Discontinued Operations -
TOTAL ASSETS 1,673,651,717 1,570,529,016
SHAREHOLDERS' EQUITY
Share capital 9.10 750,000,000 750,000,000
Other reserves 9.10 84,257,300 83,459,181
Accumulated losses 9.10 - (4,064,872)
Net profit 9.10 25,242,005 15,956,142
Total shareholders’ equity 859,499,305 845,350,451
LIABILITIES
Non-current liabilities
Provisions for risks and charges 9.11 10,915,333 15,756,826
Employee benefits 9.12 6,417,345 6,872,111
Deferred tax liabilities 9.4 1,610,512 353,344
Non-current borrowings from banks and other lenders 9.13 571,194,625 513,064,565
Other non-current payables 9.14 0 9,236,301
Total non-current liabilities 590,137,815 545,283,147
Current liabilities
Trade payables 9.15 14,468,514 36,545,654
Current borrowings from banks and other lenders 9.13 14,212,242 37,499,175
Current tax liabilities - -
Other current payables 9.14 195,333,842 105,850,589
Total current liabilities 224,014,597 179,895,418
Liabilities held for sale and Discontinued Operations -
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES
1,673,651,717 1,570,529,016
Alperia S.p.A. - Financial Statements at 31 December 2017
31
Income statement
(in Euro) Notes 2017 2016
Revenues 10.1 27,454,662 299,517,029
Other revenues and income 10.2 18,043,321 29,512,451
Total revenues and other income 45,497,982 329,029,479
Costs for raw materials, consumables and goods 10.3 2,895,960 (233,014,503)
Cost of services 10.4 (18,280,430) (28,975,104)
Personnel costs 10.5 (19,570,492) (24,699,728)
Amortization, depreciation, provisions and write-downs 10.6 (3,734,865) (29,567,218)
Other operating costs 10.7 (3,697,642) (4,920,966)
Total costs (42,387,469) (321,177,519)
Operating income 3,110,513 7,851,960
Gains (losses) on valuation of investments 10.8 (492,965) (4,698,000)
Financial income 10.8 41,097,607 28,043,319
Financial charges 10.8 (20,637,156) (14,872,453)
Earnings before tax 23,077,999 16,324,826
Taxes 10.9 2,164,006 (368,684)
Net profit (A) from continuing operations 25,242,005 15,956,142
Discontinued operations - -
Net profit (B) from Discontinued Operations - -
Year's result 25,242,005 15,956,142
Statement of comprehensive income recognized during the year
2017 2016
Profit for the year (A) 25,242,005 15,956,142
Income Statement items that may subsequently be reclassified to the income
statement (net of taxes)
Gains / (losses) on cash flow hedges 1,620,156 656,640
Total Income Statement items that may subsequently be
reclassified to the income statement (B)
1,620,156 656,640
Income Statement items that cannot subsequently be reclassified to the income
statement (net of taxes)
Actuarial gains / losses on employee defined benefit plans 216,243 894,520
Total Income Statement items that cannot subsequently be
reclassified to the income statement (C)
216,243 894,520
Total other gains (losses) not recognized in profit or loss 1,836,399 1,551,160
net of tax effect (B) + (C)
Total comprehensive income (A)+(B)+(C) 27,078,404 17,507,302
Alperia S.p.A. - Financial Statements at 31 December 2017
32
Statement of changes in shareholders' equity
(in thousands of Euros) Share
capital Statutory
reserve
Reserve pursuant to
art. 5.4.2 Framework Agreement
Merger reserve First Time Adoption
reserve
Cash flow hedge reserve
IAS 19 Reserve
Retained profits (accumulated
losses)
Net profit for
the year
Total shareholders’
equity
At 31 December 2016 750,000 71,432 21,370 1,421 (4,816) (3,291) (2,657) (4,065) 15,956 845,350
- to cover prior losses (2,644) (1,421) 4,065 0
- Allocation of the share of profit to statutory reserve
798 (798) 0
- Allocation of the share of profit to dividends
(15,158) (15,158)
Shareholders' equity post resolution on the allocation of profits(losses)
750,000 72,230 18,726 - (4,816) (3,291) (2,657) - 0 830,192
Supplementation of First Time Adoption reserve
2,229 2,229
Change in cash flow hedge reserve 1,620 1,620
Change in IAS 19 Reserve 216 216
Profit reported in the income statement for the year
25,242 25,242
At 31 December 2017 750,000 72,230 18,726 - (2,587) (1,671) (2,441) - 25,242 859,499
The dividend per share approved in FY 2017 amounted to Euro 0.02021
Alperia S.p.A. - Financial Statements at 31 December 2017
33
Statement of Cash Flows
(in Euro) Notes 2017 2016
Cash flow from operating activities
Earnings before tax 23,077,999 16,324,826
Adjustments to earnings before taxes to obtain the cash flow from operating activities:
Gains on disposal of assets 9.2 (3,464) -
Gains on disposal of equity investments 9.6 (2,110,500) -
Amortization and Depreciation 9.6 3,595,641 20,913,531
Provisions 9.6 5,665 8,653,687
Loss on disposal of assets 9.8 64,668 -
Gains (losses) on valuation of investments 9.8 492,965 4,698,000
Net financial charges /(income) 9.8 10,739,194 (13,170,865)
Collected dividends 9.8 (31,199,644) (24,414,089)
Cash flow from operating activities before changes in working capital (18,415,476) (3,319,736)
Changes in working capital
- Inventories (350,785) 8,111,553
- Trade and other receivables 116,276,723 (223,907,621)
- Trade and other payables (41,452,887) 18,976,524
Cash flow from changes in working capital 74,473,050 (196,819,544)
Change in the provision for risks and charges (4,847,157) 420,139
Change in employee benefit provision (238,523) (1,534,889)
Interest paid 9.8 (12,834,631) (14,871,111)
Collected interests 9.8 2,316,200 3,627,887
Collected dividends 9.8 125,652 24,414,089
Cash flow generated by operating activities (A) 63,657,113 (171,758,339)
of which discontinued operations 0
Cash flow from investing activities and merger
Net expenditures in
- intangible, tangible and financial assets (121,576,057) 212,375,623
Cash flow from disinvestment activities
Disposal and net contribution of equity investments 71,157,828 14,857,819
Cash flow generated by investing activities (B) (50,418,228) 227,233,442
of which discontinued operations 71,157,828 14,857,819
Cash flow from financing activities
Dividends paid (15,158,335) (22,287,517)
Change in financial payables 137,912,654 (79,289,989)
Alperia S.p.A. - Financial Statements at 31 December 2017
34
Dividends paid 0
Cash flow generated by financing activities (C) 122,754,319 (101,577,506)
of which discontinued operations 0 0
Net cash flow for the year (A + B + C) 135,993,204 (46,102,403)
of which discontinued operations 71,157,828 14,857,819
Cash and cash equivalents at the beginning of the year 37,324,812 -
Cash and cash equivalents from the merger - 83,427,215
Cash and cash equivalents at the end of the year 173,318,016 37,324,812
Alperia S.p.A. - Financial Statements at 31 December 2017
35
NOTES
1. General information
Alperia Spa (the "Company" or "Alperia”) is a company incorporated under the Italian law,
domiciled in Italy, with duration until 31 December 2050; its registered office is in Bolzano, via
Dodiciville 8.
At 31 December 2017 the share capital of the Company was held by:
Description No. of Shares Nominal value (Euro
thousands) % of share capital
Autonomous Province of Bolzano 408,380,656 408,381 54.45%
Municipality of Bolzano 157,500,000 157,500 21.00%
Municipality of Merano 157,500,000 157,500 21.00%
Selfin Srl 26,619,344 26,619 3.55%
Total 750,000,000 750,000 100.00%
Alperia and its subsidiaries (the "Alperia Group" or the "Group") are engaged in five different
operating segments, which are summarized below:
• Production (Hydropower and photovoltaic);
• Sale and Trading (electricity and natural gas);
• Networks (distribution and transmission of electricity, natural gas distribution);
• Heat and Services (cogeneration, district heating and biomass plants);
• Smart Region (fibre optic network management and electric mobility).
2. Summary of the accounting principles adopted
The accounting policies and principles applied in the preparation and drafting of the Company’s
financial statements (the "Financial Statements”) are presented below. These accounting
standards have been applied consistently in the periods presented in this document.
Alperia S.p.A. - Financial Statements at 31 December 2017
36
2.1 Basis of preparation
EU Regulation (EC) No. 1606/2002 of 19 July 2002 introduced the obligation for companies
with equity and/or debt securities listed in one of the regulated markets of the European
Community to apply the International Financial Reporting Standards ("IFRS”) issued by the
International Accounting Standards Board ( "IASB") and adopted by the European Union ("EU IFRS"
or "International Accounting Standards") in the preparation of their financial statements as of
the 2015 financial year. On 23 June 2016, the Company approved a "Euro Medium Term Note
Programme" ("EMTN") listed on the Irish Stock Exchange for a maximum amount of Euro 600
million. On 27 June 2016, the Company issued the first two tranches of Notes, for a nominal value
of Euro 125 million and Euro 100 million, which were admitted to trading on 30 June 2016; On
23 December 2016, the Company issued the third tranche of Notes for a nominal value of Euro
150 million. During 2017, the company finally issued the fourth tranche of bonds for a value of
NOK 935 million.
Since 2016, Alperia qualifies as a Public Interest Entity ("EIP") and is therefore required to
prepare the separate and consolidated financial statements in accordance with EU IFRS.
These Financial Statements have been prepared in accordance with the international accounting
standards and on a going concern basis.
The EU IFRS are all the “International Financial Reporting Standards”, all the “International Accounting
Standards” (IAS), all the interpretations of the “International Reporting Interpretations Committee”
(IFRIC), previously referred to as "Standing Interpretations Committee" (SIC) which, on the date of
approval of the Financial Statements, have been approved by the European Union in accordance
with the procedure laid down in Regulation (EC) No. 1606/2002 of the European Parliament
and of the Council of 19 July 2002.
These Financial Statements have been drawn up on the basis of the best knowledge of IFRSs
and in the light of the best academic writings on this matter; Any future guidelines and updated
interpretations will be reflected in subsequent years, in the manner as set out in the relevant
accounting standards.
These draft Financial Statements have been approved by the Company's Management Board on
29 March 2018 and will be submitted to the Supervisory Board of Alperia SpA for approval on
7 May 2018.
Alperia S.p.A. - Financial Statements at 31 December 2017
37
2.2 Financial statements
2.2.1. Form and content of the financial statements
With regard to the form and content of the financial statements, the Company has made the
following choices:
i) The statement of financial position separately shows current and non-current assets and,
likewise, represents current and non-current liabilities;
ii) the income statement shows a classification of costs and revenues by nature;
iii) The comprehensive income statement includes, in addition to the profit for the period, the
other cost and income items that are not directly recognized in profit or loss but which, by
express provision of the International Accounting Standards, are reported as changes in
shareholders' equity; this statement is called Comprehensive Income Statement or OCI
(Other Comprehensive Income);
iv) the cash flow statement is presented according to the indirect method;
v) the statement of changes in Shareholders' equity.
The formats used, as specified above, are those that best represent the financial position and
operating performance of the Company.
These financial statement have been drawn up in Euro, which is the functional currency of the
Company. The amounts shown in the statement of financial position and in the income statement
are expressed in Euro while the tables are in thousands of Euro, unless otherwise stated.
The Financial Statements are audited by the auditing firm PricewaterhouseCoopers Spa, which is
the independent auditor of the Company and of the Group.
2.2.2. Method for presenting financial information
These Financial Statements make it possible to compare the statement of financial position and
income statement balances at 31 December 2017 with those of the prior year. Reference should
Alperia S.p.A. - Financial Statements at 31 December 2017
38
be made, however, to the information provided in the "Operating Data" section of the Report
on Operations.
2.3 Accounting policies
Intangible assets
Intangible assets consist of non-monetary, identifiable and non-physical elements that are
controllable and capable of generating future economic benefits. Intangible assets are recognized
at purchase and/or production cost, including directly attributable expenses incurred to prepare
the asset for use, net of accumulated amortization and any impairment losses.
Amortization of the intangible assets begins when the asset is available for use, and is
systematically allocated in relation to the residual possibility of use, i.e. on the basis of the asset
estimated useful life.
The useful life of intangible assets has been estimated by the Company as follows:
% rate
Industrial patents and software 20%
Tangible assets
Tangible fixed assets are measured at purchase or production cost, net of accumulated
depreciation and any impairment losses. The cost includes the expenses directly incurred to make
the asset ready for use, as well as any dismantling and removal charges that will be incurred as a
result of contractual obligations that require the asset to be returned in its original conditions.
Financial charges directly attributable to the acquisition, construction or production of an asset
to be capitalized pursuant to IAS 23, are capitalized on the asset as part of its cost.
The costs incurred for ordinary and/or cyclical maintenance and repairs are directly charged to
the income statement when incurred. The capitalization of costs associated with the expansion,
Alperia S.p.A. - Financial Statements at 31 December 2017
39
modernization or improvement of structural elements owned by the entity or of third parties is
carried out to the extent they meet the requirements for being separately classified as an asset or
part of an asset.
Improvements on third party assets include the costs incurred for fitting and upgrading property
held other than based on ownership.
Depreciation is charged on a straight-line basis using rates that enable the asset to be depreciated
according to its useful life.
The useful life of each category of tangible assets has been estimated by the Company as follows:
% rate
Commercial and industrial equipment
5%
Office furniture 6%
Buildings used in operations 1.5%
Technical installations 5% - 10%
Investments
Investments in subsidiaries, associates or other companies are valued at purchase cost. The cost
is adjusted to take account of any impairment losses; impairment losses are reversed if the
conditions which determined them no longer apply.
If the loss attributable to Alperia Spa exceeds the carrying amount of the investment and the
investor is legally or implicitly required to fulfil the obligations of the investee or to cover its
losses, any difference with respect to the carrying amount is recognized in a special provision for
risks and charges.
Dividends from equity investments are recognized in the income statement in the year in which
the shareholders’ right to receive payment of the dividend has accrued.
Alperia S.p.A. - Financial Statements at 31 December 2017
40
Impairment of non-financial assets
At each reporting date, non-financial assets are analysed to assess whether there is any indication
of impairment. When events occur that indicate a likely impairment of non-financial assets, the
recoverability of those assets is verified by comparing the carrying amount with the recoverable
amount which is the higher of fair value, net of selling costs, and the value in use. The value in use
is determined by discounting the expected cash flows arising from use of the asset and, if
significant and reasonably determinable, as of its disposal until the end of its useful life, net of
disposal costs. Expected cash flows are determined on the basis of reasonable and demonstrable
assumptions representative of the best estimate of future economic conditions that will occur
during the residual useful life of the asset, giving greater importance to external indications. The
expected future cash flows used to determine the value in use are based on the most recent
business plan approved by management and containing revenue, operating cost and capital
expenditure projections. For assets that do not generate highly independent cash flows, the
recoverable amount is determined in relation to the cash generating unit of which they are part (that
is, the smallest identifiable set of assets that generates autonomous revenue streams arising from
continued use). Discounting is carried out at a rate that reflects current market valuations of the
time value of money and the specific business risks that are not reflected in cash flow estimates.
More specifically, the discount rate used is the Weighted Average Cost of Capital (WACC). The value
in use is determined net of the tax effect as this method produces substantially equivalent
amounts to those obtainable by discounting the cash flows before tax at a pre-tax discount rate
obtained, iteratively, from the result of the after-tax evaluation. The evaluation is carried out for
each asset or cash generating unit. When the reasons for the write-downs no longer apply, the asset
value is restored and the adjustment is recognized in the income statement as value reversal. The
value is reinstated at the lower of the recoverable amount and the carrying amount before the
write-downs previously made, less the depreciation charges that would have been recognized if
the write-down had not been made.
Alperia S.p.A. - Financial Statements at 31 December 2017
41
Trade receivables and other current and non-current receivables
Trade receivables and other current and non-current receivables are non-derivative financial
instruments, mainly related to receivables from customers, not listed in an active market, from
which fixed or determinable payments are expected. Trade receivables and other receivables are
recognized as current assets, except for those with a contractual maturity of more than twelve
months from the reporting date, which are recognized as non-current assets.
These financial assets are recognized as assets when the Company becomes a party to the related
contracts and are derecognized when the right to receive cash flows is transferred together with
all the risks and rewards associated with the transferred asset.
Trade receivables and other current and non-current receivables are initially recognized at their
fair value and subsequently at amortized cost, using the effective interest rate, reduced for
impairment.
Impairment losses on receivables are recognized in the income statement when there is objective
evidence that the Company will not be able to recover the receivable on the basis of the
contractual terms.
The amount of the impairment loss is measured as the difference between the carrying amount
of the asset and the present value of the expected future cash flows.
Receivables are stated in the financial statements net of the provision for bad debt.
Alperia S.p.A. - Financial Statements at 31 December 2017
42
Financial assets held to maturity
Financial assets held to maturity are non-derivative financial assets with fixed or determinable
payments that are not listed in an active market, which the company intends to keep until
maturity. These financial assets are recognized as current assets if their maturities are within 12
months, otherwise they are recognized as non-current assets.
Financial assets are initially recognized at fair value, including transaction costs. After initial
recognition, financial assets held to maturity are valued at amortized cost using the effective
interest rate criterion and are tested for impairment.
At each reporting date the Company assesses whether there is objective evidence that a financial
asset or group of financial assets has been impaired. A financial asset or a group of financial assets
has been impaired and must be written-down if and only if there is objective evidence of
impairment as a result of events subsequent to the first recognition of the asset and the loss has
an impact on future cash flows that can be reliably estimated. The objective evidence of asset
impairment may result from the following circumstances:
i) significant financial difficulties of the debtor;
ii) contractual breaches, such as non-payment of interest or principal;
iii) the creditor, for financial or legal reasons connected with the financial difficulties of the
debtor, grants forbearance measures to the debtor which otherwise it would not have taken
into account;
iv) the debtor is likely to become insolvent or be subject to insolvency proceedings; or
v) disappearance of an active market for the financial assets.
Inventories
Inventories of raw materials, semi-finished goods and finished products are valued at the lower
of weighted average cost and market value at the date of the closing of the accounts. The
weighted average cost is determined for the reference period for each inventory code. The
weighted average cost includes the direct costs of materials and labour and the indirect costs
(variable and fixed). Inventories are constantly monitored and, if necessary, obsolete inventories
are written-down with contra-entry to the Income Statement.
Alperia S.p.A. - Financial Statements at 31 December 2017
43
Financial derivatives
All derivative financial instruments (including any embedded derivatives) are measured at fair value.
Consistent with the provisions of IAS 39, derivative financial instruments may be accounted for
using hedge accounting only when:
• the hedging relationship is documented and the hedge has been designated since its
inception;
• the hedge is expected to be highly effective;
• the effectiveness can be reliably measured;
• the hedge is highly effective during the various accounting periods for which it is
designated.
When derivative instruments meet the requirements to be accounted for under hedge accounting,
the following accounting treatment applies:
i) Fair value hedge - if a derivative financial instrument is designated to hedge the exposure to
changes in the fair value of a recognised asset or liability, the change in the fair value of the hedging
derivative is recognized in the income statement, consistently with the fair value measurement of
the hedged assets and liabilities.
(ii) Cash flow hedge - if a derivative financial instrument is designated to hedge the exposure to the
cash flow variability of an asset or liability or a highly probable transaction that could have an
effect on the income statement, the effective portion of the gain or loss on the financial
instrument is recognized in equity; the cumulative gain or loss is reversed from equity and
recognized in profit or loss in the same period in which the hedged transaction is recognized; the
gain or loss associated with a hedge, or that part of the hedge that has become ineffective, is
recognized in profit or loss when the ineffectiveness is detected.
If hedge accounting is not applied, the fair value changes of the derivative financial instrument are
recognized in profit or loss.
Alperia S.p.A. - Financial Statements at 31 December 2017
44
Determination of the fair value of financial instruments
The fair value of financial instruments listed in an active market is based on market prices at the
reporting date. The fair value of financial instruments not quoted in an active market is determined
using valuation techniques that are based on methods and assumptions related to market
conditions at the reporting date.
Cash and cash equivalents
Cash and cash equivalents include cash, bank current accounts, demand deposits and other short-
term and highly liquid financial investments that are readily convertible into cash, or that can be
converted into cash within 90 days of the original acquisition date and are exposed to a non-
significant risk of a change in value.
Financial liabilities, trade payables and other payables
Financial liabilities (excluding financial derivative instruments), trade payables and other payables
are initially recognized at fair value, net of direct ancillary costs and subsequently measured at
amortized cost, applying the effective interest rate criterion. If there is a significant change in the
expected cash flows, the liability value is recalculated to reflect this change on the basis of the
present value of the expected new cash flows and the initial rate of return.
Financial liabilities are recognized as current liabilities unless the Company has an unconditional
right to defer their payment for at least 12 months after the reference date.
Financial liabilities are derecognized when they are discharged and when the Company has
transferred all the risks and charges related to the instrument.
Alperia S.p.A. - Financial Statements at 31 December 2017
45
Provisions for risks and charges
Provisions for risks and charges are recognized with respect to losses or charges of a definite
nature, which are certain or probable, whose amount and/or date of occurrence cannot however
be determined.
Provisions are recognized only when there is a current (legal or implied) obligation for a future
outlay as a result of past events and it is likely that such outlay is required to fulfil the obligation.
This amount represents the best estimate of the cost for discharging the obligation. The rate used
in determining the present value of the liability reflects current market values and takes into
account the specific risk associated with each liability.
When the financial effect of time is significant and the payment dates of the obligations are
reliably estimated, the provisions are measured at the present value of the expected outlay using
a rate that reflects market conditions, the change in the cost of money over time and the specific
risk associated with the obligation. The increase in the value of the provision determined by
changes in the cost of money over time is accounted for as a financial expense.
Those risks for which the occurrence of a liability is only possible are indicated in the relevant
information section on contingent liabilities and no provision is made for them.
Personnel provisions - Employee benefits
Personnel provisions include the following defined benefit plans:
• Employee severance indemnities accrued prior to 31 December 2007, as governed by art.
2120 of the Italian Civil Code;
• Energy Discount governed by the previous collective bargaining agreements, which
consists in an 80% reduction in electricity tariffs granted to employees or former
employees hired before a given date, reversible benefit;
• Additional four or five monthly payments, under the applicable CCNL, for employees or
former employees at the time they leave the company;
Alperia S.p.A. - Financial Statements at 31 December 2017
46
• Company loyalty award, to be paid to employees who have been in service for more than
20 years.
With reference to defined benefit plans, the net liabilities of the Company are determined
separately for each plan, estimating the present value of future benefits that employees have
accrued in the current and previous financial years and deducting the fair value of any assets of
the plan. The present value of the obligations is based on actuarial techniques that attribute the
benefit deriving from the plan to the periods in which the payment obligation arises (Credit Unit
Projection Method) and is based on actuarial assumptions that are objective and mutually
compatible. Plan assets are recognized and measured at fair value.
If the calculation results in a potential asset, the amount to be recognized is limited to the present
value of any economic benefit available in the form of future redemptions or reductions of future
contributions to the plan (asset limit).
The cost components of defined benefits are recognised as follows:
• service costs are recognized in the income statement under "personnel costs" while
• net financial charges on the defined benefit asset or liability are recognized in the income
statement as "financial income / (charges)" and are determined by multiplying the net liability
/ (asset) value by the rate used to discount the obligations, taking into account the payments
of contributions and the benefits received during the period;
• the remeasurement components of net liabilities, which include actual gain and losses, the
return on assets (excluding interest income recognised in profit or loss) and any change in
the limit of the assets, are immediately recognised as "Other total profits (losses). These
components must not be reclassified to the income statement in a subsequent period.
Alperia S.p.A. - Financial Statements at 31 December 2017
47
Public grants
Public grants are recognized at their fair value when there is reasonable assurance that all the
conditions necessary for their obtainment will be met and that they will be received.
Grants received for specific expenses are recognized as liabilities and credited to the income
statement using a systematic criterion in the years in which they can be matched to the related
expenses.
Grants received for capital expenditures are recognized as a decrease in the tangible assets to
which they relate and are then recognized in the income statement as a reduction to the
depreciation/amortization charge.
Assets and liabilities held for sale and Discontinued Operations
Non-current assets and current and non-current assets of disposal groups are classified as held
for sale if the related book value will be recovered principally through a sale. This condition is
considered to be met when the sale is highly probable and the disposal group or asset is available
for immediate sale under its current conditions. Non-current assets held for sale, current and
non-current assets of disposal groups and the directly associated liabilities are recognized in the
statement of financial position separately from other assets and liabilities.
Non-current assets held for sale are not depreciated and are valued at the lower of their carrying
amount and the related fair value, net of selling costs.
Any difference between the carrying amount and the fair value less selling costs is recognized in
the income statement as a write-down; Any subsequent write-backs are recognized up to the
amount of the previously recognized write-downs, including those recognized prior to the
designation of the asset as held for sale.
Alperia S.p.A. - Financial Statements at 31 December 2017
48
Non-current assets and current and non-current assets of disposal groups classified as held for
sale constitute a discontinued operation if, alternatively:
• they constitute a significant autonomous business division or a significant geographical area
of activity; or
• they are part of a divestment program of a significant autonomous business division or a
significant geographical area of activity; or
• they are a subsidiary exclusively acquired for the purpose of being sold.
The results of discontinued operations as well as any gains / losses on disposal are shown separately
in the income statement in a separate item, net of the related tax effects; the income statement
values of discontinued operations are also shown for comparative years.
If there is a plan to sell a subsidiary which results in loss of control, all assets and liabilities of that
subsidiary are classified as held for sale.
Recognition of revenues
Revenues from the sales of goods are recognized in the income statement at the time the risks
and benefits of the transferred product are transferred to the customer, which normally coincides
with the delivery or shipment of the goods to the customer; revenues from services are
recognized in the accounting period in which the services are rendered.
Revenues are recognized at fair value of the consideration received. The Company recognizes
revenues when their amount can be reliably estimated and their future economic benefits are
likely to be recognized.
Revenues from services are recognized when provided or according to contractual clauses.
Alperia S.p.A. - Financial Statements at 31 December 2017
49
Recognition of costs
Costs are recognized at the time of purchase of the good or service.
Taxes
Current taxes are calculated on the basis of taxable income for the year, by applying the tax rates
applicable at the reporting date.
Deferred tax assets and liabilities are calculated on the basis of all the differences that arise
between the tax value of an asset or liability and the related book value. Deferred tax assets,
including those relating to losses carried forward, for the portion not offset by deferred tax
liabilities, are recognized to the extent that it is probable that future taxable income will be
available through which they can be recovered. Deferred tax assets and liabilities are determined
using the tax rates that are expected to apply in the years in which the differences will be
recovered or paid, on the basis of the tax rates in force or substantially in force at the reporting
date.
Current and deferred taxes are recognized in the income statement, except for those relating to
items directly debited or credited to equity, in which case the related tax effect is also directly
recognized in equity. Taxes are offset when they are levied by the same tax authority and there is
a legal right to offset.
The company has exercised the option for the National Tax Consolidation Scheme - pursuant to
art. 117 of the Consolidated Income Tax Law (TUIR) - through which the IRES tax is calculated
on a tax base that is the algebraic sum of the positive and negative taxable incomes of the
individual participating companies alongside the consolidating company Alperia Spa.
The financial relationships and the mutual responsibilities and obligations between the
consolidating company and the subsidiaries are defined in the consolidation agreement.
Alperia S.p.A. - Financial Statements at 31 December 2017
50
3. Estimates and assumptions
The preparation of financial statements requires the directors to apply accounting principles and
methodologies that, under certain circumstances, are grounded on assessments and estimates
based on historical experience and on assumptions that are from time to time considered
reasonable and realistic depending on the relevant circumstances. The application of such
estimates and assumptions affects the amounts reported in the financial statements and the
information provided. The final results of financial statement items for which the above estimates
and assumptions have been used may differ from those reported in the financial statements that
reflect the effects of the estimated event, due to the uncertainty characterizing assumptions and
the conditions on which estimates are based.
The items that, in relation to the Company, require the greatest degree of subjectivity from the
Directors in preparing the estimates, and for which a change in the underlying assumptions could
have a significant impact on the Company's financial results are briefly listed below.
a) Impairment Test: The book value of intangible and tangible assets, and especially of equity
investments, is subject to periodic assessment and whenever the circumstances or events
require more frequent verification.
If it is considered that the carrying amount of a non-current asset group has been impaired,
the group is depreciated to its recoverable amount, estimated by reference to its use
(intended as the ability to generate income, e.g. from equity investments) or its future sale,
in relation to the provisions of the most recent business plans. The estimates of such
recoverable amounts are believed to be reasonable, but any variation in the estimate factors
underlying the calculation of the recoverable values could result in different valuations.
b) Provisions for bad debts The provision for bad debts reflects the best estimate of the
directors regarding the losses of the portfolio of customer receivables. This estimate is
based on the Company's expected losses, determined on the basis of past experience of
similar receivables, current and historic past-due receivables, careful monitoring of credit
quality and projections of economic and market conditions.
c) Deferred tax assets: Deferred tax assets are accounted for on the basis of the expected
taxable income in future periods necessary for their recovery. The assessment of the
expected taxable income for the purposes of deferred tax asset recognition depends on
Alperia S.p.A. - Financial Statements at 31 December 2017
51
elements that may vary over time and that may have significant effects on the recoverability
of deferred tax assets.
d) Provisions for risks and charges: in relation to legal risks, provisions are recognized that
represent the risk associated with an adverse outcome. The value of the provisions
recognized in the financial statements in relation to these risks represents the best estimate
to date made by the directors. This estimate is based on assumptions that depend on factors
that may change over time and that may therefore have a significant effect on the current
estimates made by the directors in the preparation of the Company’s financial statements.
e) Fair value of derivative financial instruments: The fair value measurement of non-listed
financial assets, such as derivative financial instruments, is based on commonly used
financial valuation techniques that require basic assumptions and estimates. These
assumptions may not occur according to the expected timing and manner. As a result, the
estimates made by the Company may differ from the final figures.
4. Accounting standards endorsed at 31 December 2017 by the European Commission
and in force from 2017
With regulations no. 2017/1989 and 2017/1990, the European Commission endorsed specific
amendments to the accounting standards IAS 12 "Taxes" and IAS 7 “Statement of Cash Flows";
these amendments are not particularly significant for Alperia SpA.
5. Accounting standards endorsed at 31 December 2017 by the European Commission
and applicable after that date
By Regulation no. 2016/1905 issued by the European Commission on 22 September 2016, IFRS
15 "Revenues from Contracts with Customers" (hereinafter IFRS 15) was endorsed; the standard
defines the criteria for the recognition and measurement of revenues from contracts with
Customers (including construction contracts). By Regulation no. the European Commission
subsequently endorsed several amendments to IFRS 5. More specifically, IFRS 15 requires
revenue recognition to be based on the following 5 steps: (i) identify the contract with a customer;
(ii) identification of the performance obligations (i.e. the contractual promises to transfer goods and
/ or services to a customer); (iii) Determine the transaction price; (iv) Allocate the transaction
price to the performance obligations in the contract identified on the basis of the stand-alone sale price
Alperia S.p.A. - Financial Statements at 31 December 2017
52
of each good or service; and (v) Recognise revenue when the entity satisfies a performance obligation.
In addition, IFRS 15 establishes further disclosure requirements as information on the nature,
amount, timing and uncertainty of revenues and cash flows must be provided. The provisions of
IFRS 15 will be applicable for years commencing on or after 1 January 2018. The retroactive
application of the principle is permitted, and the effect may be recognized in equity as of 1 January
2018, taking into account the specific circumstances at such date.
In 2017, specific analyses were carried out to identify the types of revenue potentially impacted
by the implementation of IFRS 15 for the Company's revenues, to assess their potential impact
on the financial statements and to verify any adjustments necessary to the financial reporting
process. Based on the work carried out, at present, there are no significant effects on the Financial
Statements of the Alperia SpA in connection with the entry into force of the international
accounting standard in question.
By Regulation no. 2016/2067 issued by the European Commission on 22 November 2016, the
full version of IFRS 9 "Financial Instruments" (hereinafter IFRS 9) was endorsed. In particular,
the new provisions of IFRS 9: (i) modify the classification and valuation model of financial assets
based on the characteristics of the financial instrument and the business model adopted by the enterprise;
(ii) introduce a new method for writing down financial assets, that takes account of expected credit
losses; and (iii) amend hedge accounting provisions. The provisions of IFRS 9 will be applicable for
years commencing on or after 1 January 2018.
During the 2017 reporting period, activities were carried out to compare the current method of
classifying and measuring the financial instruments held by the Company with the new provisions
of the accounting standard in question.
Based on the in-depth analyses carried out and considering the type of sectors in which Alperia
SpA operates and of the business model prevalently identifiable with regard to the financial assets
held by the Company and falling within the scope of application of the new standard ("Hold to
collect"), at present, no significant effects have been recorded on the Financial Statements of
Alperia SpA in connection with the entry into force of IFRS 9.
By Regulation no. 2017/1988, the European Commission also endorsed some amendments to
the international accounting standard IFRS 4 "Insurance Contracts".
Alperia S.p.A. - Financial Statements at 31 December 2017
53
Finally, on 9 November 2017, the European Commission adopted Regulation 2017/1986
endorsing IFRS 16 "Leases" (hereinafter IFRS 16) issued on 13 January 2016 by the IASB to
replace IAS 17, together with the related interpretations. More specifically, according to IFRS 16,
a contract is a lease if it gives the customer (lessee) the right to use an asset for a period of time in
exchange for consideration. The new accounting principle eliminates the distinction between
operating and financial leases for the lessee in the preparation of financial statements; for all lease
contracts with a term of more than 12 months, an asset, representing the right to use, must be
recognized as well as a liability, representing the obligation to make the payments under the
contract. Conversely, from the lessor point of view, the distinction between operating and financial
leases is maintained in the preparation of the financial statements. IFRS 16 strengthens the
disclosure requirements for both the lessee and the lessor. The provisions of IFRS 16 will be
applicable for years commencing on or after 1 January 2019.
The Company has begun mapping and contractual analysis activities which will be completed in
2018 to verify the impact of the new accounting standard on its financial statements, which at
present are therefore not yet quantifiable.
6. Accounting standards and interpretations issued by the IASB / IFRIC and not yet
approved by the European Commission
On 11 September 2014, the IASB issued amendments to IFRS 10 and IAS 28 "Sale or Contribution
of Assets between an Investor and its Associate or Joint Venture" (hereafter amendments to IFRS 10 and
IAS 28), which has defined how to recognize the economic effects associated, mainly, with loss
of control on an investee due to its transfer to an associate or joint venture. On 17 December
2015, the IASB published an amendment that postpones for an indefinite period the entry into
force of the amendments
to IFRS 10 and IAS 28.
On 19 January 2016, the IASB issued amendments to IAS 12 “Recognition of Deferred Tax Assets for
Unrealised Losses”, which provide clarification on the recognition and measurement of deferred
tax assets. The amendments to IAS 12 will be applicable for years commencing on or after 1
January 2017.
Alperia S.p.A. - Financial Statements at 31 December 2017
54
On 29 January 2016, the IASB issued amendments to IAS 7 "Disclosure Initiative", which
strengthens disclosure requirements in the event of monetary and non-monetary changes in
financial liabilities. The amendments to IAS 7 will be applicable for years commencing on or after
1 January 2017.
On 12 April 2016, the IASB issued the document "Clarifications to IFRS 15 Revenue from Contracts
with Customers" (hereinafter amendments to IFRS 15) clarifying some aspects of the
implementation of the new accounting principle. The amendments to IFRS 15 will be applicable
for years commencing on or after 1 January 2018.
On 8 December 2016, the IASB issued IFRIC Interpretation 22 "Foreign Currency Transactions and
Advance Consideration" (hereinafter IFRIC 22), according to which the exchange rate to use on
initial recognition of an asset, cost or revenue related to an advance consideration, previously paid
/ incurred, in foreign currency is the one applicable at the date of recognition of the non-
monetary asset / liability related to that advance. The IFRIC 22 will be applicable for years
commencing on or after 1 January 2018.
On 8 December 2016, the IASB issued the document "Annual Improvements to IFRS Standards
2014-2016 Cycle", containing essentially technical and editorial changes to international
accounting standards. The amendments to the standards will be applicable for years commencing
on or after 1 January 2018.
As regards 2017, the IASB issued:
• On 18 May 2017, the accounting standard IFRS 17 "Insurance Contracts";
• On 7 June 2017, the interpretation IFRIC 23 "Uncertainty over Income Tax Treatments”;
• On 12 October 2017, amendments to IFRS 9 ("Prepayment Features with Negative
Compensation") and IAS 28 ("Long-term Interest in Associates and Joint Ventures");
• On 12 December 2017, amendments to IFRS 3 ("Business Combination”);IFRS 11 ("Joint
Arrangement"), IAS 12 ("Income taxes") and IAS 23 ("Borrowing Costs").
Alperia S.p.A. - Financial Statements at 31 December 2017
55
At the date of preparation of this document, the Company is analysing the implications arising
from the application of the new accounting standards described above and is assessing whether
their adoption will have any significant impact on its financial statements in the future.
7. Information on financial risks
Within the scope of business risks, the following main risks are identified, monitored and, as far
as specified below, actively managed by the Company:
• Market risk (defined as interest rate risk and risk of change in commodity prices);
• Credit risk (both in relation to normal business relationships with customers and financing
activities);
• Exchange rate risk (with reference to the Cross Currency Swap hedging derivative contract
entered into by the Company in October 2017);
• Liquidity risk (with reference to the availability of financial resources and access to the credit
market and the market of financial instruments in general);
• Operating risk (with reference to the ability to produce products and services efficiently
and effectively);
• Regulatory risk (with reference to regulatory changes to the regulated services in which the
Company is engaged).
The Company's objective is to maintain a balanced management of its financial exposure over
time, to ensure its liabilities are in balance with respect to the composition of its assets and the
Company has the necessary operational flexibility through the use of liquidity generated from
current operating activities and the use of borrowings from banks.
The management of the related financial risks is centrally guided and monitored. Specifically, the
function in charge of assessing and approving expected financial requirements, monitors the
progress and, if necessary, takes appropriate corrective actions.
The following section provides qualitative and quantitative information on how these risks affect
the Company.
Alperia S.p.A. - Financial Statements at 31 December 2017
56
7.1 Market Risk
7.1.1 Interest rate risk
The Company uses external financial resources in the form of debt and uses the liquidity on bank
deposits. Changes in interest rates levels affect the cost and return of the various forms of
financing and investments, thereby affecting the Company’s financial charges and income. The
Company, which is exposed to interest rate fluctuations that affect the extent of borrowing costs,
regularly assesses its exposure to interest rate risk and manages it by using less costly forms of
financing.
At 31 December 2016, the Company's financial debt consisted, inter alia, of three tranches of
Notes issued under the EMTN programme, listed on the Irish Stock Exchange. The first tranche
of Notes, admitted to listing on 30 June 2016 for a nominal value of Euro 100 million and
expiring on 30 June 2023, has a fixed interest rate of 1.41%. The second tranche of Notes,
admitted to listing again on 30 June 2016 for a nominal value of Euro 125 million and expiring
on 28 June 2024, has a fixed interest rate of 1.68%. The third tranche of Notes, admitted to listing
on 23 December 2016 for a nominal value of Euro 150 million and expiring on 23 December
2026, has a fixed interest rate of 2.50%. Finally, the fourth tranche of Notes, admitted to listing
on 18 October 2017 for a nominal value of NOK 935 million and expiring on 18 October 2027,
has a fixed interest rate of 2.204% as a result of hedging by a derivative.
In addition, the Company has a floating rate loan in place, linked to the Euribor rate plus a spread.
The spread applied is comparable to the best market standards. In order to cope with the risk of
interest rate fluctuations, the Company uses an interest rate swap; the objective is to mitigate, at
financially acceptable terms, the potential impact of interest rates fluctuations on profits.
The main features of the interest rate swap subscribed by the Company at 31 December 2017 to
hedge interest rate risk are summarized below:
Alperia S.p.A. - Financial Statements at 31 December 2017
57
(in thousands of Euros)
At 31 December 2017
11/03/2011 Transaction date
Maturity 30/12/2022
Notional amount in Euro 35,334
Floating rate EURIBOR 6M
Fixed rate 3.35%
Negative fair value 2,945
Interest rate risk Sensitivity Analysis
The Company exposure to interest rate risk was measured through a sensitivity analysis that
considered current and non-current financial liabilities and bank deposits. Under the assumptions
made, we assessed the effects on the Company’s income statement and equity for the year ended
31 December 2017 of an hypothetical upward or downward change in market rates of 50 bps.
According to the calculation method adopted, the assumed change was applied to the balances
of gross borrowings from banks at year-end and to the interest rate paid during the year to
remunerate these floating rate liabilities. The analysis is based on the assumption of a general and
instantaneous change in the level of the reference interest rates.
The results of this hypothetical, instantaneous and favourable (unfavourable) change in the level
of short-term interest rates applicable to the Company's floating rate financial liabilities are shown
in the table below:
(in thousands of Euros)
For the year ended 31 December 2017
Impact on profit net of tax effect Impact on equity net of tax effect
- 50 bps + 50 bps - 50 bps + 50 bps Current and non-current bank loans 129 (129) 129 (129)
Total 129 (129) 129 (129)
Alperia S.p.A. - Financial Statements at 31 December 2017
58
7.1.2 Commodity risk
The commodity price risk associated with the price volatility of energy commodities (electricity, gas,
fuel oil, etc.) and environmental certificates consists in the potential adverse effects that a change
in the market price of one or more commodities may have on the Company’s cash flows and
expected profits.
The assessment of this risk involves managing and monitoring market and commodity risk,
developing and evaluating structured energy products, proposing financial hedging strategies for
energy risk, and supporting the management in defining appropriate management policies for
this risk.
7.2 Credit risk
Credit risk represents the Company’s exposure to potential losses arising from the non-fulfilment
of the obligations assumed by counterparties.
The Company manages this type of risk through appropriate procedures and ad hoc mitigation
actions aimed at assessing in advance the counterparty's creditworthiness and at constantly
verifying compliance with the exposure limit as well as through the request for adequate
guarantees.
Trade receivables are recognized net of the provision for bad debt that is calculated on the basis
of the counterparty’s default risk, determined on the basis of the information available on
customer solvency and on historical data.
The overall exposure to credit risk at 31 December 2017 is the sum of the financial assets
recognized in the financial statements, which are summarized below:
(in thousands of Euros) At 31 December 2017 At 31 December 2016
Trade receivables 11,926 99,701
of which from subsidiaries (11,445) (93,816)
Other receivables and other assets (current and non-current) 488,037 511,128
of which from subsidiaries (464,972) (446,367)
Provisions for bad debts (2,302) (2,560)
Total 497,661 608,270
Alperia S.p.A. - Financial Statements at 31 December 2017
59
7.3 Exchange rate risk
Exchange rate risk is defined as the possibility that fluctuations in market exchange rates may
produce significant changes, both positive and negative, in the value of the Company's assets.
Alperia SpA is potentially exposed to exchange rate risk only with reference to the bullet bond
denominated in Norwegian kroner (NOK) issued on 18 October 2017, as illustrated in the
paragraph "New Green Bond issue" of the Report on Operations.
In order to completely neutralise the exchange rate risk relating to the aforementioned liability,
on 11 October 2017 the Company stipulated a "Cross Currency Swap” derivative financial
instrument, with effective date 18 October 2017. This instrument transforms - at the same due dates
as the payments related to the bond issue - the coupon flows of the liability, due at a rate of
3.116% and the final flow related to the payment of the principal amount to be paid in Norwegian
kroner for a total of NOK 935,000 thousand, respectively in coupon flows in Euro to be paid at
2.204% and in a final flow related to the payment of the principal amount of Euro 99,733
thousand.
7.4 Liquidity risk
Liquidity risk may consist in the inability to find, at financially viable conditions, the financial
resources necessary for the Company's operations. The two main factors that influence the
Company’s liquidity are:
• the financial resources generated or absorbed by operating and investing activities;
• the maturities of financial debt.
Prudent management of liquidity risk arising from normal operations implies maintaining an
adequate level of liquidity, short-term securities and the availability of funds that can be obtained
Alperia S.p.A. - Financial Statements at 31 December 2017
60
through an adequate amount of credit lines. The Company’s liquidity requirements are monitored
by a central function to ensure efficient funding and adequate investment of/return on liquidity.
The Company's objective is to establish a financial structure that, consistent with business
objectives, ensures adequate liquidity, while minimizing its opportunity cost and maintaining a
balance in terms of maturities and type of financing.
At July 2016, the Company has established a centralized treasury system with subsidiaries.
The following table analyses the financial liabilities (including trade payables and other payables),
the repayment of which is expected within or after the financial year:
(in thousands of Euros) Years to maturity
< 1 > 1
Borrowings from banks and other lenders 14,212 571,195
Trade payables 14,469 -
Other payables and other liabilities 195,335 0
Total 224,016 571,195
Alperia S.p.A. - Financial Statements at 31 December 2017
61
7.5 Operating risk
Operating risk is represented by the ability of Group companies to produce and offer their
services and products on an ongoing basis and with high quality standards.
The Group seeks to ensure a high performance of its plants by adopting the most modern control
methods.
The production of photovoltaic, but especially hydroelectric energy, is inevitably subject to
weather conditions, and specifically to the rainfall and snowfall index that will characterize the
coming years.
7.6 Regulatory risk
With reference to the regulated sectors in which the Group companies are engaged, there are
specific functions dedicated to monitoring changes in sectoral legislation, to ensure its timely and
correct application.
7.7 Fair value measurement
With regard to financial instruments measured at fair value, the following table provides
information on the method chosen for determining the fair value. The applicable methods can
be broken down in the following levels, which depend on the source of available information, as
described below:
• Level 1: Fair value calculated on the basis of quoted prices (unadjusted) on active markets
for identical financial instruments;
• Level 2: Fair value calculated using valuation techniques that make use of variables
observable on active markets;
• Level 3: Fair value calculated using valuation techniques that make use of unobservable
market variables.
The Company’s financial instruments measured at fair value are classified in Level 2 and the
general criterion used to calculate fair value is the present value of the expected future cash flows
of the instrument being assessed.
Alperia S.p.A. - Financial Statements at 31 December 2017
62
The table below shows the assets and liabilities measured at fair value at 31 December 2017 (these
all have negative fair value):
(in thousands of Euros) At 31 December 2017
Level 1 Level 2 Level 3
Derivative financial instruments (interest rate swap) - 2,945 -
Financial derivatives (cross currency swap) - 7,692 -
With reference to the above table:
• The first row refers to the only derivative financial instrument entered into by the
company as part of a hedging transaction designed to hedge the interest rate risk arising
from fluctuations in the Euribor 6M parameter (cash flow hedging) in relation to a loan
granted to Alperia Spa by a leading bank. Both the hedging item and the hedged item are
measured at amortized cost.
• The second row refers to the only derivative financial instrument entered into by the
Company as part of a hedging transaction designed to hedge the exchange rate rate risk
arising from fluctuations in the NOK quotation parameter (cash flow hedging) in relation to
a bond issued by Alperia SpA and listed on the Irish Stock Exchange. Both the hedging
item and the hedged item have a bullet profile.
Trade receivables and payables have been measured at their nominal value as it approximates the
current value.
The following table provides a breakdown of financial assets and liabilities by category at 31
December 2017:
Alperia S.p.A. - Financial Statements at 31 December 2017
63
(in thousands of Euros)
Financial assets /
liabilities measured
at fair value
through profit or
loss
Financial assets /
liabilities measured
at fair value
recognized in equity
Loans and receivables
Held to maturity
Available for sale
Liabilities measured
at amortized
cost
Total
Current assets
Cash and cash equivalents - - 173,318 - - - 173,318
Trade receivables - - 11,926 - - - 11,926
Other current receivables and financial assets
- - 67,784 - - - 67,784
Non-current assets Other non-current receivables and financial assets
- - 420,251 - - - 420,251
Current liabilities
Trade payables - - - - - 14,469 14,469
Current borrowings from banks and other lenders
- - - - - 14,212 14,212
Other current payables - - - - - 195,334 195,334
Non-current liabilities Non-current borrowings from banks and other lenders
10,637 - - - 560,558 571,195
Other non-current payables - - - - - 0 0
8. Operating segment reporting
As mentioned in the Report on Operations, in 2017, Alperia SpA (unlike in 2016) only provided
services to Group companies and financed and managed equity investments.
For this reason, the results of the operating segments are not reported, which are instead shown
in the Group Consolidated Financial Statements.
Alperia S.p.A. - Financial Statements at 31 December 2017
64
9. Notes to the Statement of Financial Position
9.1 Intangible assets
The changes in the items “Intangible assets” for the year 2017 are reported below:
Industrial patents Licenses and
software Goodwill
Assets under construction and
advances Other
Intangible
assets (in thousands of Euros)
Balance at 31 December
2016 - 4,299 - 232 - 4,531
Of which:
Historical cost - 11,948 24,041 232 - 36,221
Accumulated amortisation - (7,649) (24,041) - - (31,690)
Provisions for write-down - - - - - 0
Increases / Decreases - historical
cost - 844 - 129 - 973
Assets contributed - historical
cost - (221) - - - (221)
Decreases - accumulated
amortization - 50 - - - 50
Contributed assets - accumulated
amortization - 156 - - - 156
Amortization and Depreciation - (1,161) - - - (1,161)
Use of write-down provision - - - - - 0
Balance at 31 December
2017 - 3,968 - 361 - 4,329
Of which:
Historical cost - 12,571 24,041 361 - 36,973
Accumulated depreciation - (8,603) (24,041) - - (32,644)
Provisions for write-down - - - - - -
The incremental changes during the reporting period are mainly due to the purchase of licenses,
while the decremental changes relate to the transfer to the subsidiary Alperia Greenpower Srl of
the “Production" Business Unit of Alperia Spa.
9.2 Tangible assets
The changes in the items “Tangible assets” for the year 2017 are reported below:
Alperia S.p.A. - Financial Statements at 31 December 2017
65
Land and building Plants and machinery
Industrial and
commercial equipment
Other assets Assets under construction
and advances
Total tangible
assets
(in thousands of Euros)
Balance at 31 December 2016
46,537 77,011 382 5,764 2,377 132,071
Of which:
Historical cost 66,527 263,093 1,411 20,418 2,378 353,827
Accumulated depreciation (19,960) (186,075) (1,029) (14,654) 0 (221,718)
Reclassification of deferred income
(30) (6) 0 0 0 (36)
Increases / Decreases - historical cost
3,284 1,585 1 500 161 5,531
Assets contributed - historical cost
(15,098) (262,873) (782) (895) (1,064) (280,712)
Decreases - accumulated amortization
3 23 0 397 0 422
Contributed assets - accumulated depreciation
4,973 186,045 657 719 0 192,394
Reclassification of deferred income
30 6 0 0 0 36
Amortization and Depreciation
(860) (37) (21) (1,517) 0 (2,435)
Balance at 31 December 2017
38,870 1,761 236 4,968 1,474 47,309
Of which:
Historical cost 54,714 1,805 629 20,024 1,474 78,646
Accumulated depreciation (15,844) (44) (393) (15,056) 0 (31,337)
Reclassification of deferred income
0 0 0 0 0 0
The incremental changes during the reporting period are mainly due to the recognition of an
asset under finance lease, while the decremental changes relate to the transfer to the subsidiary
Alperia Greenpower Srl of the “Production" Business Unit of Alperia SpA.
9.3 Investments
The breakdown of the item "Equity investments" is provided below:
(in thousands of Euros) At 31 December 2017 At 31 December 2016
Investments in subsidiaries 933,209 769,236
Investments in associates 5,284 5,677
Other equity investments 1,188 1,188
Total investments 939,681 776,101
Alperia S.p.A. - Financial Statements at 31 December 2017
66
The changes in investments in subsidiaries are presented below:
(in thousands of Euros)
% of share
capital at
31
December
2017
At 31
December
2016
Merger
effect
Transfer
effect
Other
changes
At 31
December
2017
Edyna Transmission Srl 100 7,292 7,292
Alperia Energy Srl 100 10,872 10,872
Azienda Energetica Reti Spa in liquidation 100 2,007 2,007
Biopower Sardegna Srl 100 839 2,913 3,752
Ottana Solar Power Spa 100 3,450 (3,450) -
Teleriscaldamento Sesto Srl - 2,137 (2,137) -
Teleriscaldamento Chiusa Srl - 3,900 (3,900) -
Alperia Ecoplus Srl 100 47,788 6,037 53,825
SEL Srl - 55,504 (55,504) -
Edyna Srl 100 264,776 264,776
Alperia Fiber Srl 100 5,832 5,832
Alperia Smart Mobility Srl 100 0 500 500
Alperia Greenpower Srl (former SE Hydropower Srl) 100 355,338 55,504 173,511 584,353
Alperia Vipower SpA (former SEL-Edison Spa) - 9,500 (9,500) -
Total investments in subsidiaries 769,235 - 160,561 3,413 933,209
As can be seen from the table above, equity investments in subsidiaries were the subject of
various transactions; specifically:
• The company Alperia Greenpower Srl saw the transfer of the “Production” Business Unit
by Alperia SpA;
• The company SEL Srl was merged by incorporation into Alperia Greenpower Srl, with
effect for accounting and tax purposes from 1 January 2017;
• The companies Teleriscaldamento Chiusa Srl and Teleriscaldamento Sesto Srl were
merged by incorporation into the company Alperia Ecoplus Srl, with effect for accounting
and taxation from 1 January 2017;
• On 1 February 2017 the company Alperia Smart Mobility Srl was incorporated;
• Alperia SpA acquired the minority interest in Ottana Solar Power SpA (10%); it also
became the sole shareholder of Biopower Sardegna Srl, following a transaction to re-
establish its share capital.
The changes in investments in associates are reported below:
Alperia S.p.A. - Financial Statements at 31 December 2017
67
(in thousands of Euros)
% of share
capital at
31
December
2017
At 31
December
2016
Transfer
effect
Other
changes
Write-backs/
Write-downs
At 31
December
2017
Göge Energia Srl 30 18 18
Teleriscaldamento di Silandro Srl 49 2,817 2,817
I.I.T. Bolzano Scarl 44 200 200 400
PVB Power Bulgaria Spa 23 2,542 (493) 2,049
WPP Uno Spa - - -
Enerpass Scarl 10 100 (100) -
Total investments in associates 5,677 (100) 200 (493) 5,284
As can be seen from the table above, equity investments in associates were the subject of various
transactions; specifically:
• The investment in PVB Power Bulgaria Spa was written down by Euro 493 thousand as
a result of a specific impairment test;
• As indicated in the Report on Operations, in the relevant paragraph "Significant events in
2017", on 20 September 2017 Alperia SpA sold its equity investment in WPP Uno Spa
for a consideration of Euro 2,380 thousand, following a waiver of financial receivables
for capital purposes of Euro 270 thousand, the carrying amount of which had been fully
written down in previous financial years, thus achieving a net gain of Euro 2,110 thousand;
• Alperia SpA acquired an additional shareholding (21.99%) in the company I.I.T. Bolzano
Scarl from its shareholder Autonomous Province of Bolzano, for consideration of Euro
200 thousand.
The balance of investments in other companies did not fluctuate during 2017:
(in thousands of Euros) % of share
capital at 31
December 2017
At 31
December
2016
Merger
effect
Acquisitions
/ Disposals Write-backs/Write-downs
At 31
December
2017
CONAI N.A. - - - - -
Medgas Italia Srl 10% 1,150 - - - 1,150
BIO.TE.MA Srl 11% 37 - - - 37
Südtiroler Energieverband N.A. 1 - - 1
Total investments in other
companies 1,188 - - - 1,188
Alperia S.p.A. - Financial Statements at 31 December 2017
68
9.4 Deferred tax assets and liabilities
For details of deferred tax assets and liabilities at 31 December 2017 and 2016, reference should
be made to the item Taxes.
9.5 Other non-current receivables and financial assets
The breakdown of the item “Other non-current receivables and financial assets” at 31 December
2017 and 31 December 2016 is provided below:
(in thousands of Euros) At 31 December 2017 At 31 December 2016
Amounts due from subsidiaries 419,011 93,457
Amounts due from associates - 4,274
Loans granted by the company 182 2,690
Miscellaneous receivables 1,058 1,059
Total 420,251 101,480
With reference to the above table:
• Receivables from subsidiaries include Euro 31,074 thousand in dividend receivables and
Euro 387,937 thousand in financial receivables from the companies Alperia Greenpower
Srl, Edyna Srl, Biopower Sardegna Srl and Selsolar Rimini Srl (the latter, indirectly,
through the subsidiary Alperia Greenpower Srl). The significant increase in this sub-item
is mainly due to the consolidation of the financial debt of the subsidiary SEL Srl, merged
by incorporation into the subsidiary Alperia Greenpower Srl in 2017, which led to its
rescheduling in the long term;
• The write-off of the balance of the sub-item Amounts due from associates is related to
the sale of the interest held in the company WPP Uno Spa commented in the section
"Significant events in 2017" of the Report on Operations;
• The sharp decrease in the balance of the sub-item Loans granted is due to the transfer to
the company Alperia Greenpower Srl of receivables from some municipalities in South
Tyrol for past sales of shares in the company Alperia Vipower SpA (formerly Sel-Edison
SpA).
Alperia S.p.A. - Financial Statements at 31 December 2017
69
9.6 Trade receivables
The breakdown of the item “Trade receivables” at 31 December 2017 and 31 December 2016 is
provided below:
(in thousands of Euros) At 31 December 2017 At 31 December 2016
Trade receivables 2,413 7,088
Amounts due from subsidiaries 11,445 93,816
Credits towards associated 270 1,046
Receivables due from parent companies 100 312
Provisions for bad debts (2,302) (2,560)
Total 11,926 99,702
The significant decrease in trade receivables compared to the balance at the end of 2016 is strictly
related to the fact that from 2017 the Company is no longer operational from an
industrial/commercial point of view, but only carries out service activities with Group
companies, financing and management of equity investments.
The criteria for adjusting receivables to their expected realizable value take into account different
assessments according to the state of litigation.
The provision for bad debts showed the following movements in 2017:
(in thousands of Euros) Provisions for bad debts
At 31 December 2016
2,560
Merger effect
Provisions
Releases of surplus provision
Applications
(258)
At 31 December 2017 (2,302)
9.7 Inventories
The breakdown of the item “Inventories” at 31 December 2017 and 31 December 2016 is
provided below:
Alperia S.p.A. - Financial Statements at 31 December 2017
70
(in thousands of Euros) At 31 December 2017 At 31 December 2016
Raw, ancillary and consumable materials - 212
Works in progress to order 1,324 695
Work in progress and semifinished products 144 210
Total 1,468 1,117
Contract work in progress, amounting to Euro 1,324 thousand, refers to contracts in place with
various companies of the Alperia Group in the production sector.
9.8 Cash and cash equivalents
The breakdown of the item “Cash and cash equivalents” at 31 December 2017 and 31 December
2016 is provided below:
(in thousands of Euros) At 31 December
2017
At 31 December
2016
Bank and postal deposits 173,316 37,322
Cash on hand 2 3
Total 173,318 37,325
9.9 Other current receivables and financial assets
The breakdown of the item “Other current receivables and financial assets” at 31 December 2017
and 31 December 2016 is provided below:
(in thousands of Euros) At 31 December 2017 At 31 December 2016
VAT receivable 1,864 3,799
Receivables from GSE for incentives and environmental certificates 2,957 3,018
Receivables from Edison SpA 5,733 25,000
Amounts due from subsidiaries cash pooling 4,288 39,495
Amounts due from subsidiaries for short-term loans 17,113 303,012
Amounts due from subsidiaries for tax items 24,560 10,403
Other short-term loans - 518
Alperia S.p.A. - Financial Statements at 31 December 2017
71
Miscellaneous tax receivables 9,552 20,914
Advances and deposits to suppliers 341 556
Other miscellaneous receivables 1,376 2,933
Total 67,784 409,648
Receivables from GSE for incentives and environmental certificates, amounting to Euro 2,957
thousand at 31 December 2017, refer to contributions due to the Company for the production
of renewable energy.
Receivables from Edison Spa, which totalled Euro 25,000 thousand at 31 December 2016, were
down significantly, since Alperia SpA collected about Euro 19,267 million from Edison in July
2017; as illustrated in the paragraph “Contingent liabilities in relation to corporate transactions”
in the Report on Operations, the latter partially offset an amount of Euro 25,000 thousand with
the amount - in its opinion - due to it for the aforesaid alleged liabilities relating to the Cellina
plants.
The “Amounts due from subsidiaries - Cash pooling" refer to the balance on the master current
account in relation to the cash pooling arrangement in place with other group companies.
The significant decrease in the sub-item Amounts due from subsidiaries is mainly due to the
consolidation of the financial debt of the subsidiary SEL Srl, merged by incorporation into the
subsidiary Alperia Greenpower Srl in 2017, which led to its rescheduling in the long term.
The “Amounts due from subsidiaries for tax items” mainly refer to the effects from applying the
tax consolidation regime.
Miscellaneous tax receivables, amounting to Euro 9,552 thousand at 31 December 2017, include
mainly IRAP tax receivable of Euro 2,276 thousand, IRES tax receivable for Euro 5,209
thousand, withholding tax receivable for Euro 69 thousand and additional IRES receivable for
Euro 1,829 thousand.
9.10 Shareholders' equity
The changes in equity reserves are presented in these financial statements.
Alperia S.p.A. - Financial Statements at 31 December 2017
72
At 31 December 2017, the Company's share capital amounted to Euro 750,000 thousand,
consisting of 750 million ordinary shares with a par value of Euro 1 each.
The table below summarizes the availability and permitted types of distribution of equity reserves
(in thousands of euros) 31 December 2017 Permitted types of
distribution Distributable share
Share capital 750,000
Statutory reserve 72,230 B 72,230
Reserve pursuant to art. 5.4.2 Shareholders’ Agreement (*)
18,726 A, B (*) 18,726
First Time Adoption reserve (2,587)
Cash flow hedge reserve (1,671)
IAS 19 Reserve (2,441)
Profit for the year 25,242 25,242
Total shareholders’ equity 859,499 116,198
of which non distributable (90,956)
of which distributable (*) 25,242
A: share capital increase
B: to cover losses
C: to allocate to shareholders
(*) Comparable to the share premium reserve and therefore distributable only as provided for in article 2431
(Statutory reserve equal to 1/5 of the share capital)
9.11 Provisions for risks and charges
The item "Provisions for risks and charges" amounted to Euro 10,915 thousand at 31 December
2017; it changed as follows:
(in thousands of Euros) At 31 December 2016 Provisions Applications Releases At 31 December 2017
Performance bonus provision 1,335 1,207 (1,335) 1,207
Provision for pending disputes 1,564 139 (297) (99) 1,307
Other provisions for risks and charges
12,858 (4,457) 8,401
Total 15,757 1,346 (1,632) (4,556) 10,915
The “Performance bonus provision” was aside to cover the best estimate for bonuses to
employees.
The "Provision for pending disputes" refers to the amount set aside to cover various pending
disputes, including disputes that are individually of modest amount.
Alperia S.p.A. - Financial Statements at 31 December 2017
73
"Other provisions for risks and charges" are prudentially set aside to cover contingent liabilities
in respect of the disputes described in the section on “Litigation and contingent liabilities". The
release of Euro 4,457 thousand in the period relates to a provision for risks set aside in previous
years, no longer considered necessary in the light of recent developments.
9.12 Employee benefits
The item "Employee Benefits" at 31 December 2017 consists, for Euro 2,477 thousand, of the
provision for Employee Severance Indemnities (TFR) and, for Euro 3,940, of the provision for
personnel expenses that covers the actuarial valuation of liabilities associated with defined benefit
plans present within the Company relating to: (i) loyalty bonus, due to employees remaining in
service for a certain number of years (ii) additional monthly payments due to employees recruited
before 24 July 2001 and (iii) electricity discount, due to employees recruited before 8 July 1996.
The changes in the provision for Employee Severance Indemnities at 31 December 2017 are
presented below:
Balance
(in thousands of Euros)
At 31 December 2016 3,164
Provisions - Income Statement 43
Actuarial (profits) / losses - NCIs (216)
Transfers (*) (310)
Advances/reimbursements (204)
At 31 December 2017 2,477
(*) This row includes the increases in provisions described below, which are attributable to the
transfer from/to the Company of personnel of other Alperia Group companies.
The table below contains the detailed economic and demographic assumptions used for the
actuarial valuations of the employee severance indemnities:
Alperia S.p.A. - Financial Statements at 31 December 2017
74
Discount rate 1.30%
Inflation rate 1.50%
Mortality tables State General Accounting Department RG48 Mortality Table
Annual rate of overall salary increase 2.50%
Annual rate of increase in employee severance indemnity 2.63%
The table below contains a sensitivity analysis of the liability at 31 December 2017, in which the
above assumptions are taken as base scenario and a 0.5% increase and a 2% decrease in the
turnover rate and discount rate are subsequently applied. The results obtained are summarized in
the following tables:
(in thousands of Euros)
At 31 December 2017
Turnover rate
2% -2%
Provision for Post-employment benefits 2,452 2,510
(in thousands of Euros)
At 31 December 2017
Discount rate
0.5% -0.5%
Provision for Post-employment benefits 2,366 2,599
The changes in the provision personnel expenses at 31 December 2017 are presented below:
(in thousands of Euros) At 31 December 2016 Provisions Application
s Transfers (*) At 31 December 2017
Loyalty bonus 325 49 (47) (20) 307
Additional monthly payments 494 17 (20) (71) 420
Electricity discount 2,889 495 (114) (57) 3,213
Total 3,708 561 (181) (148) 3,940
(*) This column includes the increases in provisions described below, which are attributable to
the transfer from/to the Company of personnel of other Alperia Group companies.
Alperia S.p.A. - Financial Statements at 31 December 2017
75
9.13 Borrowings from banks and other lenders (current and non-current)
The table below shows the current and non-current financial liabilities at 31 December 2017 and
31 December 2016:
(in thousands of Euros) At 31 December 2017 At 31 December 2016
Current Non-
current Total Current
Non-current
Total
Borrowings from banks and other lenders 13,623 93,845 107,468 36,927 139,426 176,353
Debenture loan - 467,302 467,302 - 369,880 369,880
Interest rate and foreign exchange derivative contracts
589 10,048 10,637 572 3,759 4,331
Total 14,212 571,195 585,407 37,499 513,065 550,564
Amounts due to banks
The breakdown of borrowings from banks at 31 December 2017 with reference to both the non-
current and the current portion is presented below:
(in thousands of Euros) Date taken
out Expiration
date Rate Spread
Amount disbursed
At 31 December
2017 BEI 21/10/2014 21/10/2026 1.80% 25,000 25,088 BEI 21/10/2014 21/10/2025 2.00% 50,000 47,482 CDP 30/06/2011 31/12/2023 Euribor 6 M 0.38% 80,000 35,200
Total 107,770
Incidental expenses on loans (amortized cost) (302)
Borrowings from banks and other lenders (short and long term)
107,468
In line with commonly accepted market practice, some financial liabilities provide for financial
covenants, constraints and obligations to be complied with by the Company, mainly related to the
change in control over Alperia, the issue of negative pledges or constraints on the sale of business
assets, which in case of breach would entail their early repayment. At the date of preparation of
these financial statements, no issues with respect to these requirements had been identified and,
at the monitoring date of 31 December 2017, the covenants were complied with. Based on the
2018 budget, formerly approved by the relevant bodies, the covenants are complied with also
prospectively.
Alperia S.p.A. - Financial Statements at 31 December 2017
76
Debenture loan
At 31 December 2017, the Company issued bonds for a total amount of Euro 467,302 thousand,
as detailed below:
(in thousands of Euros) Date taken out Maturity date Rate Amount
Tranche 1 30/06/2016 30/06/2023 1.41% 100,000
Tranche 2 30/06/2016 28/06/2024 1.68% 125,000
Tranche 3 23/12/2016 23/12/2026 2.50% 150,000
Tranche 4 18/10/2017 18/10/2027 2.20% 99,920
474,920
Incidental expenses (amortized cost) (2,716)
Foreign exchange effect (*) (4,902)
467,302
(*) The fourth bond issue carried out in October 2017 by Alperia SpA as part of the current
EMTN programme took place in Norwegian kroner (NOK). As described in paragraph "7.3
Exchange rate risk" of this report, the risk of fluctuations in the issue exchange rate of the tranche
in question and therefore the impact on the income statement of the Company deriving from the
translation of the liability due to fluctuations in the Norwegian krone have been neutralised by
subscription of a Cross Currency Swap financial derivative instrument.
The breakdown of the net financial debt of the Company at 31 December 2017 and 31 December
2016, determined in accordance with Consob Communication of 28 July 2006 and in accordance
with ESMA/2013/319 Recommendations, is presented below:
(in thousands of Euros) 31 December 2017 31 December 2016
A. Cash 2 3
B. Cash equivalents 173,316 37,322
C. Securities held for trading - -
D. Liquidity (A+B+C) 173,318 37,325
E. Current financial receivables 21,134 362,025
F. Current borrowings from banks and other lenders - (19,035)
G. Current portion of non-current debt (13,623) (17,892)
H. Other current financial payables (176,514) (75,634)
I. Current debt position (F + G + H) (190,137) (112,561)
J. Net current financial position (D+E+I) 4,315 286,789
K. Non-current financial receivables 388,119 76,028
L. Non-current borrowings from banks and other lenders (93,845) (139,426)
M. Bonds issued (467,302) (369,880)
No. Other non-current payables - -
N1. Fair value of financial derivative instruments (10,637) (4,331)
O. Non-Current debt position (L + M + N) (571,784) (513,637)
P. Net non-current financial position (K+O) (183,665) (437,609)
Q. Net financial position (J+P) (179,350) (150,820)
Alperia S.p.A. - Financial Statements at 31 December 2017
77
9.14 Other payables (current and non-current)
The breakdown of the item “Other payables - current and non-current” at 31 December 2017
and 31 December 2016 is provided below:
(in thousands of Euros) At 31 December 2017 At 31 December 2016
Non-current Current Total Non-current Current Total
Amounts due to parent companies under cash pooling
- 176,513 176,513 - 75,634 75,634
Tax payables to subsidiaries - 5,810 5,810 - 9,084 9,084
Payables to employees - 1,364 1,364 - 1,508 1,508
Payables to pension and social security institutions
- 629 629 - 1,247 1,247
Tax payables - 9,703 9,703 8,783 12,860 21,643
Accrued liabilities and deferred income - 106 106 - 2,770 2,770
Other - 1,209 1,209 453 2,748 3,201
Total 0 195,334 195,334 9,236 105,851 115,087
Current payables mainly comprise amounts due to subsidiaries under the cash pooling arrangement
and payables to the Tax Authorities following the signing by former SEL Spa of the settlement
in court with the Revenue Agency pursuant to art. 48 of Legislative Decree no. Legislative Decree
no. 546/1992.
9.15 Trade payables
The item "Trade payables" includes payables for the supply of goods and services amounting -
at 31 December 2017 - to Euro 14,468 thousand (Euro 36,546 thousand at 31 December 2016).
The significant decrease compared to the balance at the end of 2016 is due to the reasons already
commented in the item "Trade receivables".
Notes to the Income Statement
Generally speaking, it should be noted once again that from 2017 the Company is no longer
operational from an industrial/commercial point of view, but only carries out service activities
with Group companies, financing and management of equity investments.
10.1 Revenues
The breakdown of the item “Revenue” for the year 2017 and 2016 is provided below:
Alperia S.p.A. - Financial Statements at 31 December 2017
78
(in thousands of Euros) 2017 2016
Electricity revenues (2,945) 236,115
Heat and district heating revenues - 3,051
Revenue from sales of green certificates 43 35,475
Industrial and commercial services 46 2,035
Intercompany services 30,311 22,841
Total 27,455 299,517
Electricity revenues comprise an contingent liability, attributable to adjustments to the 2016
estimate, of Euro 2,945 thousand.
10.2 Other revenues and income
The breakdown of the item “Other Other revenues and income” for the year 2017 and 2016 is
provided below:
(in thousands of Euros) 2017 2016
Non-recurring income 8,572 4,214
Sale of materials 184 721
Reimbursements from insurance 137 258
Leases 1,505 13,252
Capital gain on disposal of investment 2,111 1,642
Chargeback of expenses and bills 252 206
Revenues from intercompany reimbursements 2,399 6,115
Capital gains on disposals of assets 3 135
Compensation for damage - 24
Royalties 2,333 -
Revenues from incentive tariffs 239 2,581
Other 308 364
Total 18,043 29,512
The item “Other revenues and income” mainly include:
• Euro 8,572 thousand for contingent assets, mainly relating to the release of provisions for
risks and charges considered excessive and adjustments to estimates referring to previous
years;
Alperia S.p.A. - Financial Statements at 31 December 2017
79
• Euro 2,333 thousand in royalties from the license agreement for the use of the "Alperia"
and "Alperia Green Energy Südtirol Alto Adige" trademarks stipulated with some
companies of the Alperia group;
• Euro 2,399 thousand for intragroup reimbursements referring to the charge-back of
goods and services to subsidiaries such as insurance, fuel, IT costs, and postal services.
• Euro 2,111 thousand relating to income from the sale of the interest held in the company
WPP Uno Spa, illustrated in paragraph "9.3 Equity Investments" of these notes.
10.3 Costs for raw materials, consumables and goods
The breakdown of the item “Costs for raw materials, consumables and goods” for the year 2017
and 2016 is provided below:
(in thousands of Euros) 2017 2016
Electricity - 186,536
Natural Gas - 4,652
Green Certificates - 24,399
Consumables 706 1,549
Changes in inventories and in-house production (3,601) 15,879
Total (2,895) 233,015
10.4 Cost of services
The breakdown of the item “Costs for services” for the year 2017 and 2016 is provided below:
(in thousands of Euros) 2017 2016
Fees and extra-fees - 5,011
Environmental project contributions - 402
Costs for works and maintenance 5,812 8,304
Professional, legal and tax services 2,908 4,010
Insurance 2,038 2,360
Leases 1,133 1,722
Charges and commissions for banking services 198 803
Recruiting, training and other personnel expenses 785 685
Remuneration to the corporate bodies and the independent auditor 510 549
Post, telephone and internet expenses 597 484
Other 4,299 4,645
Total 18,280 28,975
Alperia S.p.A. - Financial Statements at 31 December 2017
80
With reference to the above table, maintenance expenses, amounting to Euro 5,812 thousand,
mainly concern: works and ordinary maintenance on plants, vehicle maintenance, software
updates, and ) system and network maintenance services, while other costs for services, equal to
Euro 4,299 thousand, essentially consist of commercial/billing services, housekeeping expenses,
sponsorships, marketing and public relations expenses.
10.5 Personnel costs
The breakdown of the item “Personnel costs” for the year 2017 and 2016 is provided below:
(in thousands of Euros) 2017 2016
Salaries and wages 13,430 17,039
Social security contributions 3,919 5,198
Post-employment benefits 1,164 1,224
Retirement benefits and other costs 1,057 1,239
Total 19,570 24,700
The Company had 249 employees at 31 December 2017 (the average headcount in the reporting
period amounted to approx. 246 staff).
10.6 Amortization, depreciation, provisions and write-downs
The breakdown of the item “Amortization, depreciation, provisions and write-downs” for the
year 2017 and 2016 is provided below:
(in thousands of Euros) 2017 2016
Amortization of intangible assets 1,161 1,304
Depreciation of tangible assets 2,435 19,609
Allocation to risk provisions 139 8,654
Total 3,735 29,567
10.7 Other operating costs
The breakdown of the item “Other operating costs” for the year 2017 and 2016 is provided
below:
Alperia S.p.A. - Financial Statements at 31 December 2017
81
(in thousands of Euros) 2017 2016
Non-recurring expenses 1,657 2,250
Other tax charges 33 53
Taxes on real estate property 321 580
Capital losses on disposals 65 814
Miscellaneous refunds 586 111
Registration tax 201 150
Authority-related costs 115 144
Membership costs 289 255
Fees for occupation of public land - 2
Other licenses and fees 7 73
Donations 357 416
Other 66 73
Total 3,697 4,921
Contingent liabilities mainly refer to adjustments to estimates referring to previous years.
10.8 Gains (losses) on valuation of investments and financial income and charges
Gains (losses) on valuation of investments
With regard to the valuation of equity investments, as already commented in point 9.3, during
the reporting period a partial write-down of Euro 493 thousand was made to the equity
investment held in the company PVB Power Bulgaria SpA, as a consequence of an analysis based
on specific impairment tests regarding the recoverable amount of the equity investments held at 31
December 2017.
Financial income and charges
The breakdown of the item “Financial income” and “Financial charges” for the year 2017 and
2016 is provided below:
(in thousands of Euros) 2017 2016
Dividends 31,200 24,414
Interest income from associates 35 57
Interest income on amounts due from subsidiaries 4,810 3,388
Alperia S.p.A. - Financial Statements at 31 December 2017
82
Interest income on receivables from others - 71
Interest income on current accounts 98 100
Default interest 3 1
Foreign exchange gains 4,903 -
Other 49 12
Total financial income 41,098 28,043
Interest expense on loans (2,084) (6,562)
Interest expense on bank current accounts (4) (2)
Other (4,971) (6,353)
Interest on debenture loan (8,374) (1,946)
Interest expense with subsidiaries (115) (9)
Charges on foreign exchange differences (5,089) -
Total financial charges (20,637) (14,872)
Dividends refer to the allocation of profits for 2016 by Alperia Energy Srl for Euro 13,348
thousand, Edyna Srl for Euro 17,047 thousand, Alperia Ecoplus Srl for Euro 400 thousand,
Edyna Transmission Srl for Euro 279 thousand and Göge Energia Srl for Euro 126 thousand.
As for the sub-item "Other" of financial charges, it mainly refers to the net negative difference
of outstanding derivative contracts.
With regard to the sub-items “Foreign exchange gains" and "Charges on foreign exchange
differences", these essentially refer to the positive exchange rate difference recorded during the
conversion of the last tranche of bond issues in NOK, at year-end exchange rates, and to the
specular trend of the effective portion of the change in the fair value of the related cross currency
swap hedging financial derivative instrument recorded in 2017.
10.9 Taxes
Taxes for the reporting period amounted to a negative Euro 2,164 thousand and are made up of
the income from the tax consolidation generated by the negative income of Euro 3,102 thousand,
adjusted by prepaid and deferred taxes of Euro 938 thousand.
The detailed table follows below.
Alperia S.p.A. - Financial Statements at 31 December 2017
83
Alperia S.p.A. - Financial Statements at 31 December 2017
84
The distortive effect of the final tax rate is mainly due to significant amount of dividends which
are taxed at 1.38% (27.50% on 5%).
11. Commitments and guarantees
This item includes comfort letters issued by the Company to third parties in the interest of
subsidiaries (mainly Alperia Energy Srl and Biopower Sardegna Srl ) and associates (mainly PVB
Power Bulgaria) for a total amount of Euro 123,276 thousand.
The item also includes guarantees issued by banks in favour of third parties for Euro 6,382
thousand.
12. Transactions with related parties
Related parties are those that share the same controlling entity with the Company, the companies
that directly or indirectly control it, are controlled, or are jointly controlled by the parent company
and those in which the parent company holds a stake enabling it to exercise a significant influence.
In accordance with the provisions of IAS 24, "Disclosure on Related Party Transactions",
paragraph 26, the company is exempted from the information requirements set out in paragraph
18 (according to which the entity must specify the nature of the relationship with the related
party, in addition to providing information on such transactions, on outstanding balances,
including commitments, which is necessary for financial statements users to understand the
potential effects of those transactions on the financial statements) in case it carries out
transactions with another entity that is a related party because the same local public entity controls
both the entity that prepares the annual accounts and the other entity.
In the year under review, the main transaction with related parties regarded the dividends
approved in favour of the shareholders for Euro 15,158 thousand.
Alperia S.p.A. - Financial Statements at 31 December 2017
85
13. Remuneration of directors and supervisory board members
The breakdown of the remuneration of Directors and Statutory Auditors of the Company for
the year 2017 and 2016:
(in thousands of Euros)
2017
2016
Management Board 156 166
Supervisory board 195 216
Remuneration Committee 12 13
Control and Risk Committee 22 25
Nomination Committee 11 13
Total 396 433
14. Remuneration of Key Managers
The overall remuneration paid to Key Managers for the duties performed in 2017 amounted to
approximately Euro 648 thousand (taxable amount); The amount for 2016 was the same.
No short-term or long-term benefits accruing over time are currently envisaged for the above
Key Managers, with the exception of some executives who have signed a non-competition
agreement for an amount of approximately Euro 150 thousand. There are no stock-based
payments (stock options).
15. Remuneration of the independent auditors
The table below shows the fees received by the independent auditor PricewaterhouseCoopers
SpA for auditing and accounting control services provided for the Financial Statements at 31
December 2017, as well as for other services.
Alperia S.p.A. - Financial Statements at 31 December 2017
86
Company Type of service Entity
(in
thousands
of Euros)
Alperia SpA/Ltd Statutory audit on the financial statements PricewaterhouseCoopers SpA 15
Statutory audit on the consolidated financial
statements PricewaterhouseCoopers SpA 16
Audit on half-year consolidated financial
statements PricewaterhouseCoopers SpA 17
Accounting unbundling PricewaterhouseCoopers SpA 3
Other services PwC Network Entities 15
16. Significant events occurred after the close of the financial year
Reference should be made to the Report on Operations for disclosure on "Events occurring after
the close of the financial year" and the progress of pending disputes.
17. Proposed allocation of profit for the year
The Management Board proposes the following allocation of profit for the year 2017 amounting
t Euro 25,242,005:
- Euro 1,262,100 to the statutory reserve, corresponding to 5% of such reserve;
- Euro 2,979,905 to retained earnings;
- the remaining Euro 21,000,000 to be distributed as dividends to the Shareholders in
proportion to the number of shares held and for an amount of Euro 0.028 per share.
Bolzano, 29 March 2018
The Chairman of the Management Board
Sparber Wolfram