2020 Consolidated Financial Statements
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2020 Consolidated Financial Statements 16152 Genoa - Italia Via N. Lorenzi, 8 - Tel. +39 010 6551 - Fax +39 010 655 3411 [email protected] www.ansaldoenergia.com (*) This document has been translated into English from the Italian original solely for the convenience of international readers ANSALDO ENERGIA 2020 Consolidated Financial Statements Contents 7 SIGNIFICANT DATA 8 REPORT ON OPERATIONS 9 COVID-19 and its impacts on Ansaldo Energia Group’s consolidated financial statements 11 Main events of 2020 13 The Group and the Market 17 Financial results 18 Analysis of the financial position 23 Financial situation 25 Alternative “non-GAAP” performance indicators 26 Management performance 27 Production activities 30 Commercial activities 33 Organisational and process/product developments 35 Investments 37 Research and Development activities 39 Intellectual Property Rights 2020 40 Human resources 42 Environment, health and safety in the workplace 44 Quality 45 Information required as per Law 124/2017 46 Risk management 46 Guarantees given as part of the agreement for the sale of the Parent Company’s shares 47 Related party transactions 47 Performance outlook 48 CONSOLIDATED FINANCIAL STATEMENTS AS OF 31.12.2020 49 Consolidated Income Statement 50 Consolidated statement of comprehensive income 51 Consolidated Statement of financial position 52 Consolidated Statement of cash flows 53 Consolidated Statement of Changes in Equity 54 Reconciliation of the Parent’s equity and net result with consolidated figures as at 31 December 2020 55 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED ON 31 DECEMBER 2020 55 1. General Information 56 2. Form, contents and accounting standards applied 57 3. Accounting Standards adopted 75 4. Accounting standards and approved interpretations in force as of 1 January 2020 76 5. International accounting standards and/or interpretations issued but not yet in force in 2020 76 6. Use of estimates 78 7. Risk management 80 8. Capital management 81 9. Financial assets and liabilities by category 82 10. Fair value measurement 83 11. Segment reporting 84 12. Intangible assets 87 13. Property, plant and equipment 88 14. Equity investments 90 15. Receivables and other non-current assets 91 16. Inventories 91 17. Contract work in progress and advances from customers 92 18. Trade receivables 93 19. Financial receivables 93 20. Tax liabilities and credits 94 21. Other current assets 94 22. Cash and cash equivalents 95 23. Shareholders’ Equity 97 24. Current and non-current financial payables 101 25. Employee benefits 103 26. Provisions for current and non-current risks and charges 105 27. Other current and non-current liabilities 106 28. Trade payables 106 29. Derivative financial assets and liabilities 106 30. Revenues 107 31. Other operating income and expenses 108 32. Purchases and services 108 33. Personnel expenses 109 34. Amortization, depreciation and impairment losses 109 35. Change in finished goods, work-in-progress and semi-finished products 110 36. Internal work capitalised 110 37. Financial income and expenses 111 38. Income taxes 111 39. Profit (loss) connected to discontinued operations 112 40. Impact of related party transactions 112 40.1. Impact of related party transactions on assets and liabilities 116 40.2 Impact of related party transactions on profit or loss 118 41. Guarantees and other commitments 118 42. Remuneration to the independent auditing firm 119 Parent Company Corporate Bodies 120 KEY EVENTS OCCURRED AFTER THE END OF THE REPORTING PERIOD 121 INDEPENDENT AUDITORS’ REPORT Significant data 2020: € 1,464.7 M 2020: € 4,697.7 M ORDERS ORDER BACKLOG 2019: € 1,374.8 M 2019: € 4,396.4 M 2020: € 1,089.1 M 2020: € 1.4 M REVENUE EBIT 2019: € 984,1 M 2019: € (233.5) M 2020: € (102.8) M FREE OPERATING 2020: € 36.0 M NET RESULT 2019: € (255.7) M CASH FLOW 2019: € (106.8) M 2020: € (896) M HEADCOUNT (AT THE 2020: 3,308 NET FINANCIAL DEBT 2019: € (1,162.5) M END OF THE YEAR) 2019: 3,451 ANSALDO ENERGIA 2020 Consolidated Financial Statements 7 Report on operations Dear shareholders economic and social standpoint, as it had dramatic effects on unemployment, social inequalities, and entire production The year 2020 was unfortunately dominated by the develop- sectors. ment and spread of the COVID-19 pandemic, with no area The pandemic led to one of the worst recessions in world of the world being spared. history, with alarming drops in the GDPs of various countries. Your Group swiftly responded in every country in which it The governments of these countries reacted by approving operates, with all its components, in an effort to minimise major support measures for businesses and households, the negative impacts of this crisis. although these were unable to prevent the ensuing Nonetheless, as will be described in detail below, the econo- phenomena of unemployment and market decline. mic and financial results were satisfactory. But, more impor- Due to the COVID-19 pandemic, the range of possible tantly, the health of all the workers was able to be protected assumptions underlying the estimates has become broader, thanks to the enactment of strict health protocols and mea- and a detailed disclosure indicating the management’s sures to contain the risk of contagion, and the provision of opinions, in application of accounting policies, as well as personal protective equipment immediately during the first the main risks characterising the financial statements, in few days of the March lockdown. accordance with the provisions of IAS 1, has therefore been All the workers were provided with specific types of masks provided in the explanatory notes to the financial statements. based on the risk assessment, and gloves wherever required, In this specific case, if there are significant changes in the and workplace sanitation and safety measures were imple- strategies, objectives and management and control policies mented, complete with the positioning of plexiglass barriers as a result of the pandemic crisis, adequate information will in the crowded offices and in the canteen, and the placement be provided in the notes to the risks section. of special signs indicating the appropriate measures and con- Ansaldo Group responded swiftly and decisively to the duct to be adopted. Also, in order to ensure increased social difficulties posed by the crisis, and, after English a lockdown distancing, and therefore greater safety for the workers, new period that lasted for about 50 days between March and locker rooms were built to help disperse the influx of people April 2020, the Parent Company was among the first in Italy onto the company’s premises, thus allowing the factories to to resume its production activities, while at the same time be reopened earlier than expected after the lockdown. guaranteeing extremely high safety standards for its workers and staff. Thanks to the efforts made, the full use of the For all the workers who had the possibility, the use of available workforce was able to be restored in just a few smart working was greatly encouraged, with a significant weeks’ time, also as a result of agreements made with the effort being made in terms of the provision of individual IT Trade Unions. equipment. In particular, thanks to the efforts made by all the operators, All this allowed us to limit the number of worker infections who worked during the weekends, and the reduction of the as much as possible, and to avert any potential outbreaks. As summertime closure period to just one week instead of two, explained below, Ansaldo has adhered to the Biosafety Trust the Genoa production site managed to recover most of the Readiness programme. hours lost due to the lockdown. As required by the new regulations on financial statements The effects of the pandemic were naturally extremely issued by the competent international bodies after the onset prominent during the first half of the year, and led to: of the pandemic, the following disclosure contains specific • a slowdown in internal production, which was almost information about the pandemic’s possible impacts on the entirely recovered during the second half; Group’s business, risks, operating results, and operations. • significant limitations or an inability to access con- struction sites; • delays in the procurement of materials on the part of COVID-19 and its impacts on Ansaldo suppliers, who were also impacted by the lockdown. Energia Group’s consolidated financial statements The effects described under the second and third points reap- peared again during the last quarter of the year due to the se- The COVID-19 pandemic has been characterised as a critical cond wave of the pandemic. The Group responded proactively event, not only from a health perspective, but also from an in this case as well, limiting the negative effects to a minimum. ANSALDO ENERGIA 2020 Consolidated Financial Statements 9 Before addressing the possible impacts that this crisis might mic’s progression and the vaccination campaigns underway have had on the Group’s business, several considerations around the globe, the Group nevertheless believes that its must be taken in to account. future economic and financial performance will manage to The main negative effect of the COVID-19 pandemic was a meet the positive goals set by the Management. slowdown in the negotiations for the sale of certain entities, As required by the directives issued by the European supervi- or rather the subsidiaries Power Systems Mfg., LLC, Ansaldo sory authority (the ESMA) impacts that the issue in question Thomassen B.V., Ansaldo Energia Holding USA Corporation, has had on certain specific elements of Ansaldo Group’s con- and four other minor companies. solidated financial statements are reported below. This sale was originally planned to take place in late 2020, In the various recommendations that it has issued, the au- but was postponed to the first few months of the 2021 fi- thority requires adequate disclosure to be given, especially nancial year.