separate financial statements 2007 financial statements 2007 separate separate Separate Financial Statements – Year 2007 Contents 0.1 Financial statements 4 Balance sheet 6 Income statement 8 Cash flow statement 10 Statement of changes in shareholders’ equity 12 Net financial position 0.2 Notes 16 Accounting principles and policies 29 Other information 33 Notes to the balance sheet items 80 Notes to the income statement items 0.3 Attachments 102 1. Statement of changes in intangible assets 104 2. Statement of changes in tangible assets 108 3. List of investments in subsidiaries and affiliates 112 4. List of significant investments at December 31, 2007 CONSOB Resolution no. 11971/1999 116 5. List of Loans 118 6. Separate annual accounts AEEG Resolution no. 310/01 126 7. Information on financial instruments and risks 132 8. IFRS 5 for extraordinary operations 134 Certification of the financial statements pursuant to article 81-ter of CONSOB Regulation no. 11971 of May 14, 1999 and subsequent amendments 137 0.4 Independent Auditors’ Report This is a translation of the Italian original “Bilancio separato 2007” and has been prepared solely for the convenience of international readers. In the event of any ambiguity the Italian text will prevail. The Italian original is available on the website www.a2a.eu. 1 0.1 Financial statements Separate Financial Statements – Year 2007 Balance sheet Assets Thousand of euro Notes 12 31 2007 12 31 2006 NON-CURRENT ASSETS Intangible assets 1.01 14,710,461 16,819,430 Goodwill 1.02 55,480,080 101,181,983 Tangible assets 1.03 724,740,715 997,185,154 Investments in subsidiaries and affiliates 1.04 1,209,536,221 902,093,309 Investments in other companies 1.05 20,211,168 19,973,427 Other investments 1.06 29,770,984 31,101,436 of which affiliates 29,770,984 31,101,436 Assets for derivative valuations 1.07 29,828 560,214 Deferred tax assets 1.08 21,234,920 28,163,379 Other assets 1.09 12,179,444 44,837,544 of which affiliates 500,000 36,215,894 Total non-current assets 2,087,893,821 2,141,915,876 NON-CURRENT ASSETS HELD FOR SALE 1.10 101,500 1,265,580 CURRENT ASSETS Inventories 1.11 16,319,746 19,553,603 Receivables from customers 1.12 99,028,809 104,770,400 Trade receivables from affiliates 1.13 366,326,349 236,542,156 Financial receivables from affiliates 1.14 224,868,530 30,714,349 Current taxes 1.15 1,641,326 3,314,422 Miscellaneous receivables 1.16 42,560,289 46,801,371 Current financial assets 1.17 5,726 7,942 Cash and cash equivalents 1.18 103,373,170 197,435,159 Total current assets 854,123,945 639,139,402 TOTAL ASSETS 2,942,119,266 2,782,320,858 4 Separate Financial Statements – Year 2007 Balance sheet Shareholders’ equity and liabilities Thousand of euro Notes 12 31 2007 12 31 2006 SHAREHOLDERS’ EQUITY Share capital 2.01 774,305,358 774,305,358 Capital reserves 2.02 213,684,631 205,841,457 Other reserves 2.03 132,670,206 205,034,549 Derivative valuation reserve 2.04 (6,592,977) (9,111,033) IFRS 1 reserve 2.05 533,065 553,331 Profit for the period 185,654,268 137,351,749 TOTAL SHAREHOLDERS’ EQUITY 1,300,254,551 1,313,975,411 LIABILITIES NON-CURRENT LIABILITIES Staff severance fund and pension reserve 2.06 26,456,963 34,167,040 Deferred tax liabilities 2.07 109,178,344 105,643,563 Fund for risks and future liabilities 2.08 21,756,447 27,519,971 Liabilities for derivative valuations 2.09 9,093,761 13,786,674 Bonds 2.10 594,130,953 593,685,284 Payables and other financial liabilities 2.11 164,150,809 189,806,694 Landfill liabilities 2.12 – 75,114,785 Long-term payables to affiliates 2.13 753,824 2,311,316 Other liabilities 2.14 3,710,967 10,905,503 Total non-current liabilities 929,232,068 1,052,940,830 CURRENT LIABILITIES Current financial payables 2.15 108,275,150 26,331,828 Payables to suppliers 2.16 149,245,043 157,151,243 Trade payables to affiliates 2.17 90,962,794 79,448,743 Financial payables to affiliates 2.18 171,312,703 37,693,892 Current tax payables 2.19 17,954,055 34,529,495 Miscellaneous payables 2.20 174,882,902 80,249,416 Total current liabilities 712,632,647 415,404,617 TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 2,942,119,266 2,782,320,858 5 Separate Financial Statements – Year 2007 Income statement Thousand of euro Notes 01 01 2007 01 01 2006 12 31 2007 12 31 2006 Revenues Revenues from sales and services 3.1 1,054,382,876 1,095,407,622 of which affiliates 712,032,891 719,337,704 Other income 3.2 163,213,188 117,550,629 of which affiliates 40,719,591 26,538,105 Total revenues 1,217,596,064 1,212,958,251 Operating costs Raw material costs 3.3 626,211,853 678,480,265 of which affiliates 337,951,459 300,028,615 Service costs 3.4 161,255,989 140,441,780 of which affiliates 36,199,308 36,265,987 Labour costs 3.5 86,173,239 80,295,067 of which affiliates (2,092,697) (1,569,113) of which non-recurring 8,043,072 – Other miscellaneous costs 3.6 42,051,080 30,580,104 of which affiliates 8,741,642 8,639,684 Total operating costs 915,692,161 929,797,216 EBITDA 301,903,903 283,161,035 Depreciation, amortisation and write-downs 3.7 80,139,554 90,168,165 Provisions 3.8 5,785,303 16,039,186 Valuation at fair value of non-current assets held for sale 3.9 467,860 174,420 EBIT 215,511,186 176,779,264 6 Separate Financial Statements – Year 2007 Income statement Thousand of euro Notes 01 01 2007 01 01 2006 12 31 2007 12 31 2006 Financial income and charges Financial income 3.10 8,606,174 6,493,756 of which affiliates 835,578 903,071 Financial charges 3.11 (45,109,449) (39,065,188) of which affiliates (3,262,215) (1,970,458) Exchange rate gains 267,119 137,044 Total financial income and charges (36,236,156) (32,434,388) Income/expenses from equity investments 3.12 73,735,672 65,851,401 of which affiliates 73,744,909 65,568,331 PROFIT BEFORE TAX 253,010,702 210,196,277 Income tax 3.13 (67,356,434) (72,844,528) NET PROFIT 185,654,268 137,351,749 7 Separate Financial Statements – Year 2007 Cash flow statement Thousand of euro 12 31 2007 12 31 2006 CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 197,435 57,192 Operating activities Net result of the year 185,654 137,352 Non-cash flows: Depreciation of tangible assets 76,630 86,793 Amortization of intangible assets 3,510 2,796 Change in the allocations of the reserves for employee benefits (7,710) 297 Change in other risk funds (5,764) 13,996 Change in deferred taxes 3,534 7,582 Change in liabilities for landfills (75,115) (938) Change in circulating capital: Change in trade receivables and other short-term receivables 78,982 (34,353) Change in inventories 3,234 (1,202) Change in trade payables and other short-term payables 62,771 (6,082) Change in assets to related parties (129,784) 34,567 Change in liabilities to related parties 11,514 7,089 Change in assets held for sale 1,164 174 Net financial flows from operating activities 208,620 248,071 Investments Investments in tangible assets (99,889) (46,167) Changes in real estate investments – – Investments in intangible assets and goodwill (7,615) (3,892) Tangible assets conferred to subsidiaries 295,703 91,969 Intangible assets and goodwill conferred to subsidiaries 51,916 2,055 Sale of real estate investments – – Change in investments: (307,680) (153,564) – acquisitions (119,739) (23,140) – acquisitions related to sale of divisions (219,824) (134,004) – sales 1,659 3,580 – write-ups – – – write-downs – – – other changes 30,224 – Purchase/sale of own shares (4,836) (326) Net financial flows employed in the investment activity (72,401) (109,925) Free cash flow 136,219 138,146 8 Separate Financial Statements – Year 2007 Cash flow statement Thousand of euro 12 31 2007 12 31 2006 Financing activity Payables to banks 56,637 10,888 Financial receivables from third parties (25,865) (90) Financial receivables from related parties (194,155) (16,052) Assets for financial derivatives (12) (18) Liabilities for financial derivatives (4,505) 13,534 Financial payables to related parties 134,477 (21,222) Financial payables in non-current liabilities held for sale – – Payables to other financers (350) (392) Payables for bond loan 446 97,908 Financial payables to parent company (2,415) (1,143) Changes in shareholders’ equity 10,436 19,344 Dividends paid (*) (204,975) (100,660) Net financial flows employed in the financing activity (230,281) 2,097 Cash flows absorbed by sold assets – – CHANGE IN CASH AND CASH EQUIVALENTS (94,062) 140,243 CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 103,373 197,435 (*) It includes ex-date of the extraordinary dividend of December 28, 2007. 9 Separate Financial Statements – Year 2007 Statement of changes in shareholders’ equity Description - Thousand of euro Capital reserves Share Share Reserve Reserve capital premium for the for Valgas reserve valuation merger at fair value of capital increase generated by BAS Balance at December 31, 2006 774,305 146,965 58,876 – Ordinary meeting (April 20, 2007): – carry-over of the profit for 2006 –––– – to dividend –––– Ordinary meeting (October 22, 2007): – to dividend –––– Cash flow hedge derivatives valuation –––– Purchase of own shares –––– Reserves from Valgas merger – – – 7,844 Profit of the period –––– Balance at December 31, 2007 774,305 146,965 58,876 7,844 213,685 10 Separate Financial Statements – Year 2007 Statement of changes in shareholders’ equity Retained profits Conferment Legal Designated Reserve Other Reserve IFRS1 Reserves Profit for Total reserve reserve reserve for own reserves for cash the year Listing Other shares flow hedge derivatives expenses reserves for IAS first application 28,456 27,995 12,911 (326) 135,999 (9,111) (13,578) 14,131 137,352 1,313,975 – 6,868 – – 10,467 – – – (17,335) – ––––––––(120,017) (120,017) ––––(84,959)––––(84,959) –––––2,518–––2,518 – – – (4,836) –––––(4,836) ––––95––(20) – 7,919 ––––––––185,654185,654 28,456 34,863 12,911 (5,162) 61,602 (6,593) (13,578) 14,111 185,654 1,300,254 132,670 11 Separate Financial Statements – Year 2007 Net financial position Details and changes - Thousand of euro 12 31 2007 12 31 2006 1.