CDP - Bilancio2014_Cover-eng 8:Layout 1 25/06/15 16:37 Pagina 1 Cassa ANNUAL REPORT depositi Rome Milan Brussels e prestiti Via Goito, 4 Palazzo Busca Square de Meeûs, 37 00185 Rome Corso Magenta, 71 (7th floor) Italy 20123 Milan 1000 Bruxelles Tel +39 06 4221.1 Italy Belgium Tel +39 02 4674.4322 Tel +32 2 2131950 ANNUAL REPORT www.cdp.it 2014 (Translation from the Italian original) Contents 5 Introduction Role and mission of the CDP Group 6 Company Officers 12 Letter from the Chairman 16 Letter from the CEO 18 21 Report on operations of the Group 1. Overview of 2014 22 2. Macroeconomic scenario and the market 27 3. Composition of the CDP Group 36 4. Financial position and performance 48 5. Operating performance 66 6. Outlook 119 7. Corporate Governance 120 8. Relations of the Parent Company with the MEF 141 9. Proposed allocation of net income for the year 144 145 Allocation of net income for the year 149 Separate Financial Statements 327 Annexes 337 Report of the Board of Auditors 343 Report of the independent auditors 347 Certification of the separate financial statements pursuant to Article 154-bis of Legislative Decree 58/1998 351 Consolidated Financial Statements 621 Annexes 631 Report of the independent auditors 635 Certification of the consolidated financial statements pursuant to Article 154-bis of Legislative Decree 58/1998 Role and mission of the CDP Group PRESENTATION OF THE CDP GROUP The CDP Group (the “Group”) works to support growth in Italy. It employs its resources – mainly fund- ed through its management of postal savings (postal savings bonds and postal passbook savings ac- counts) – in accordance with its institutional mission, in its capacity as a: • leader financier of investments by the public administration; • catalyst for infrastructure development; • key player in supporting the Italian economy and business system. The CDP Group promotes local development, financing investment by public entities, assisting local au- thorities in leveraging their real estate holdings, investing in social housing and supporting energy effi- ciency policies. In its role as catalyst for infrastructure development, the Group – using corporate and project finance arrangements – supports public-interest projects and enterprises for investments for the delivery of pub- lic services. It also performs this role by taking direct equity stakes in infrastructure companies and sub- scribing units in domestic and international infrastructure equity funds. The Group also uses debt and equity instruments to provide support to strategic domestic companies and small and medium-sized enterprises (“SMEs”), thereby fostering their growth, efficiency, interna- tional expansion and investment in research. COMPOSITION OF THE CDP GROUP In addition to the Parent Company and its associates, the Group includes: CDP GAS S.r.l. (“CDP GAS”), CDP Immobiliare S.r.l. (“CDP Immobiliare”), CDP Reti S.p.A. (“CDP Reti”), CDP Investimenti Società di Gestione del Risparmio S.p.A. (“CDPI SGR”), Fintecna S.p.A. (“Fintecna”), Fondo Strategico Italiano S.p.A. (“FSI”), Quadrante S.p.A. (“Quadrante”), SACE S.p.A. (“SACE”), Simest S.p.A. (“SIMEST”), and their subsidiaries and associates, as well as the Plus and Extra segments of the real estate fund Fondo Investi- menti per la Valorizzazione (“FIV”). CDP performs management and coordination activities intended to coordinate the actions of the sub- sidiaries and CDP in the interest of the Group with regard to the following companies: CDP GAS, CDP 6 001-152 IMP INGL 2014:1 - Indice Q6 02/09/15 10:10 Pagina 7 Introduction Immobiliare, CDP Reti, CDPI SGR, Fintecna, FSI, Quadrante, SACE and SIMEST. The companies subject to the management and coordination of the Parent Company are shown below. CDP is also the main shareholder in listed and non-listed companies, and has significant stakes in private equity funds. A list of CDP’s main equity investments are shown below. CDP - 2014 Annual Report 7 001-152 IMP INGL 2014:1 - Indice Q6 15/09/15 07:31 Pagina 8 For information on transactions with related parties, refer to the appropriate section of the notes to the consolidated financial statements. For a breakdown of the companies included in the scope of consolidation, refer to the relevant annex to the consolidated financial statements. The change in the scope of consolidation over the period refers mainly but not exclusively to the com- pletion of transactions set out in the Group’s 2013-2015 Business Plan. In particular: • the transfer of CDP’s entire equity investment in Terna S.p.A. (“Terna”) to CDP Reti and the dispos- al to third parties of a 40.9% stake in the vehicle; • the transfer of CDP GAS’s entire equity investment in TAG GmbH (“TAG”) to SNAM S.p.A. (“SNAM”) via contribution in kind as part of a reserved share capital increase; • the admission as of 3 July 2014 of the shares of Fincantieri S.p.A. (“Fincantieri”) to the Mercato Telematico Azionario, an electronic stock market managed by Borsa Italiana, through a public sale and subscription offer (OPVS). Fintecna’s stake in the share capital of Fincantieri therefore fell to 72.51% and may be further reduced in 2015 to 71.3% (in the event of full exercise of the share bonus); 8 Introduction • the full line-by-line consolidation of SNAM in accordance with the requirements of IFRS 10 - “Con- solidated Financial Statements”; • the first time consolidation of the earnings of Ansaldo Energia S.p.A. (“Ansaldo Energia”), 40% of which was sold to Shanghai Electric Corporation (“SEC”); • the formation in the month of May of FSIA Investimenti S.r.l. (“FSIA”), an investment vehicle owned 100% by FSI, through which the 42.255% interest in SIA S.p.A. (“SIA”) was acquired; • the formation in the month of June of FSI Investimenti S.p.A. (“FSI Investimenti”), a co-investment joint-stock company, 77% of which is held by FSI and 23% of which is held by the Kuwait Invest- ment Authority (“KIA”); • the conclusion on 20 May 2014 of the agreement for the acquisition by Terna Plus S.r.l. of the entire share capital of Tamini Trasformatori S.r.l. and the companies it controls; • the formation on 23 July 2014 by Terna and the subsidiary Terna Rete Italia S.p.A. of the company Terna Interconnector S.r.l. HISTORY OF THE CDP GROUP CDP was established in Turin in 1850 – more than 160 years ago – in the form of an Institution. Initial- ly, its function was to receive deposits as a “place of public trust”. From 1857, its activities were expanded by Royal Decree to include funding of public entities. Postal savings passbooks were created in 1875, whose proceeds were used by CDP to finance invest- ments in public works and pay down the existing debts of local authorities. In 1898, Cassa depositi e prestiti was transformed into a Directorate General of the Italian Treasury. In 1923, postal savings bonds were introduced for the first time. In 1983, in response to profound changes in the legal and institutional frameworks of the Company’s reference markets, the process of separating CDP from the state began. This was concluded on 12 De- cember 2003 with its transformation into a joint-stock company (CDP S.p.A.) and its exit from the realm of the public administration. CDP’s new legal form strengthened its powers of initiative, made its man- agement more flexible and efficient, and gave it greater administrative, organisational, ownership and accounting autonomy, but its public purpose and pursuit of the general interest were left unchanged. With its transformation into a joint-stock company, the bank foundations became shareholders of CDP. Today, 64 foundations hold a total of 18.4% of its share capital. The Ministry for the Economy and Fi- nance (“MEF”) is CDP’s main shareholder, with 80.1% of share capital1. 1 The remaining 1.501% was bought back by CDP after two banking foundations exercised their right of withdrawal arising from the conversion of preference shares. CDP - 2014 Annual Report 9 CDP is subject to the Italian Banking Act (TUB) and, since 2006, to the reserve requirement regime es- tablished by the monetary authorities for the banking system. Over the last decade, CDP has assumed a central role in supporting Italy’s industrial policies. In fact, since 2009 CDP has been able to finance initiatives that are in the public interest, including alongside private entities, without having an effect on the public finances. Financing is directed towards operations that present adequate creditworthiness and economic and financial sustainability. CDP also supports the na- tional economy by financing SMEs (which have a significant weighting in the national economy) via the banking channel and by covering the requirements of the market in relation to the availability of medi- um and long-term funding. Finally, 2012 saw the formation of the CDP Group, comprising Cassa de- positi e prestiti S.p.A. and the companies subject to management and coordination. CDP’s scope has therefore expanded in recent years and been matched by changes to how it operates, in order to ensure (i) the provision of credit for public investment, infrastructure and enterprises to re- verse the economic cycle in the medium/long term, (ii) direct investment in risk capital, strategic net- works and assets, and (iii) indirect investment (through FSI and FII - Fondo Italiano d’Investimento) aimed at supporting the growth and international expansion of SMEs and strategic enterprises. In the Public Entities and Territory segment, efforts to build the value of the Company’s real estate hold- ings have been stepped up by integrating the resources and skills of CDP Immobiliare, making invest- ments in social housing through the Fondo Investimenti per l’Abitare (“FIA”) and adding value to the properties owned by entities through the FIV.