Related Party Transactions

ACEA GROUP AND ROMA CAPITALE

Trading relations between ACEA Group companies and Roma Capitale include the supply of electricity and water and provision of services to the Municipality.

Among the principal services are the management, maintenance and upgrading of public lighting facilities and, with regard to environmental–water services, the maintenance of fountains and drinking fountains, the additional water service, as well as contract work.

Such relations are governed by appropriate service contracts and the supply of water and electricity is conducted on an arm’s length basis.

ACEA and ACEA Ato 2, respectively, provide public lighting and integrated water services under the terms of two thirty–year concession agreements. Further details are provided in the section “Service concession arrangements”.

With regard to public lighting, the Group provides public lighting services on an exclusive basis within the Rome area. As part of the thirty-year free concession granted by the Municipality of Rome in 1998, the economic terms of the concession services are currently governed by a service contract signed by the parties, effective as of May 2005 until the concession expiry (31 December 2027). On 15 March 2011, ACEA and Roma Capitale signed a supplemental agreement effective as of the beginning of the year.

The supplements regard the following elements:

  • alignment of the term of the service contract with the expiry of the concession (2027), given that the contract is merely additional to the agreement;
  • annual update of the compensation concerning consumption of electricity and maintenance;
  • annual increase in the lump-sum payment with regard to the new lighting points installed.

Moreover, the investments for the service can be (i) required and financed by the Municipality or (ii) financed by ACEA: in the first case, such works will be paid based on a price list agreed by the parties (and subject to review every two years) and will result in a percentage decrease in the ordinary fee. In the second case, the Municipality is not bound to pay surcharge; however, ACEA will be awarded all or part of the saving expected in both energy and economic terms according to pre-established methods.

Moreover, it has been established that qualitative/quantitative parameters shall be renegotiated in 2018.

Upon natural or anticipated expiry, ACEA will be awarded an allowance corresponding to the residual carrying amount, which will be paid by the Municipality or the incoming operator if this obligation is expressly set out in the call for tenders for the selection of the new operator.

The contract sets out a list of events that represent a reason of early termination of the concession and/or resolution of contract by the will of the parties. Among these events, reference is made to newly arising needs attributable to the public interest including that set out in Article 23-bis of Law Decree 112/2008, repealed following the referenda of 12 and 13 June 2011, according to which ACEA has the right to receive an allowance according to discounted result of a defined percentage of the annual contractual amount multiplied by the number of years until expiry of the concession.

Based on the fact that the supplementary agreement exceeds the reference thresholds set out by the Company with regard to Related party transactions, it was analysed by the Board of Directors and approved during the meeting held on 1 February 2011, having obtained the favourable opinion of the Committee for related party transactions.

The current contract, as amended by the supplemental agreement, involves a lump-sum payment which pays a compensation for ordinary operations, ongoing and extraordinary maintenance and the supply of electricity.

The annual payment, calculated on the basis of lighting points as at 31 December 2011, amounts to 49.1 million euros and is billed in monthly instalments with payment set at 60 days.

The new constructions and investments contribute to the increase in the lump-sum figure due to the annual accrual calculated according to the capital allowance mechanism envisaged for the plants underlying the specific operation as well as the percentage reduction of the ordinary fee due by Roma Capitale, the amount of which is defined in the technical-economic project document.

A variable interest rate is applied to the invested capital.

As a local authority, Roma Capitale has the power to regulate municipal taxes and duties that the Group companies are required to pay and which fall under its territorial jurisdiction. However, the Group is not solely liable for any such taxes and duties with respect to other companies operating in the municipality.

The reciprocal receivables and payables – with regard to payment terms and conditions – are governed by each single contract:

a)   for the public lighting service contract, payment shall take place within sixty days of receipt of the invoice and, in case of delayed payment, the legal interest rate will be applied for the first sixty days, after which the default interest rate will be applied, as set out from year to year by a Decree of the Ministry of Public Works and the Ministry of Economy and Finance,

b)   with reference to all other service contracts, the payment term for Roma Capitale as regards service contracts is sixty days of receipt of an invoice, and in case of late payment the parties have agreed to apply the current bank rate at the time,

c)    for the supply of electricity and water to Roma Capitale (solely with reference to regulated market users), it is envisaged that Roma Capitale makes an advance payment of 90% within 40 days of receiving a summary list of the invoices issued by Group companies. Moreover, Roma Capitale must settle the remaining balance by June of the following year. In the case of late payment for electricity or water, interest is payable to the extent permitted under the terms of prevailing AEEG provisions,

d)   the prices applied to sales of electricity to free market users are in line with the commercial policies of Acea Energia. Payment terms are sixty days and, in case of delay, a default interest rate will be applied,

e)   the terms of payment for the ACEA Group relating to fees for the water services concession and the rental on its head office premises are set at thirty days from receipt of the invoice, and in the case of late payment interest shall be paid in accordance with the current bank rate at the time.

For further information regarding relations between the ACEA Group and Roma Capitale, reference should be made to the disclosures regarding receivables and payables in note 23.

The following table shows details of revenues and costs for 2012 of the ACEA Group (compared with those for the same period of the previous year) deriving from the most significant financial relations.

€ thousand Revenues Costs
  31.12.2012 31.12.2011 31.12.2012 31.12.2011
Supply of fresh water 30,646 28,821    
Sewerage service 0 0    
Supply of electricity 28,881 18,655    
Public lighting service contract 49,136 44,002    
Public lighting contract interest 1,513 3,484    
Water maintenance service contract 1,140 615    
Monumental fountain service contract 1,140 615    
Concession fee     20,655 20,297
Rental expenses     253 54
Taxes and duties     5,223 3,108

2012 was a year of discontinuity with respect to the past since, following the joint works and analyses with the Roman government offices, it was possible to achieve a significant overall reduction in amounts receivable and payable, with reference to both ordinary management and the Administration established by the Central Government (a Settlement Agreement was executed with the latter on 21 December 2012). Please see the notes for details on the impacts of those transactions, while a summary statement of the movements in receivables and payables is provided below.

€ thousand 31.12.2011 Settlement with admin. established by Central Govt Collections/ Payments Accruals 2012 Total
Receivables 292,737 (81,856) (174,937) 152,609 188,553
Payables 148,785 (36,483) (104,937) 54,248 61,613

 

ACEA GROUP AND ROMA CAPITALE GROUP

The ACEA Group also maintains trading relations with other companies, special companies (aziende speciali) and bodies owned by Roma Capitale, concerning the supply of electricity and water.

The supply of services to entities owned by the Roma Capitale Group is conducted on an arm’s length basis. The prices applied to sales of electricity to free market users are in line with the sales policies of Acea Energia.

In 2012, transactions were implemented with ATAC and AMA to reconcile the respective receivables and payables. Those activities led to (i) signing a 12.9 million euro repayment plan with AMA, for the net balance of credit and debit positions at 31/10/2012 and (ii) reaching an agreement with ATAC on a 46.3 million euro repayment plan.

After these negotiations, in December the Group collected a total of 10.6 million euros (5.4 million euros from ATAC and 5.2 million euros from AMA) and, on the basis of the agreement signed, paid AMA 1.4 million euros in payables for TARI.

Please note that ATAC paid 2.6 million euros in January.

With regard to the electricity supply, please recall that ATAC is no longer served by Acea Energia as of 1 February 2012 while, for AMA, the repayment plan envisages a termination of the supply on 31/03/2013.

The following table shows amounts (in thousands of euros) for revenues, costs, receivables and payables deriving from relations between the ACEA Group and entities owned by the Roma Capitale Group.

€ thousand  Revenues Costs Receivables Payables
31.12.12 31.12.11 31.12.12 31.12.11 31.12.12 31.12.11 31.12.12 31.12.11
Cotral Group 180 50 0 0 112 196 0 0
Trambus 0 0 0 0 0 135 7 77
AMA 9,913 3,974 1,485 1,248 10,517 7,377 0 1,813
ATAC 5,718 8,836 0 4 43,410 42,429 1 19
Palaexpò 0 0 0 0 0 0 0 0
Musica per Roma 45 43 50 0 77 62 61 0
Risorse per Roma 14 10 0 0 598 208 0 0
Rome Opera House 21 23 0 0 0 0 0 0
Bioparco S.p.A. 15 17 0 0 1 8 0 0
Total 15,905 12,953 1,535 1,252 54,715 50,415 69 1,909

The following table summarises receivables and payables due from and to entities owned by the Roma Capitale Group.

€ thousand  31.12.2012 31.12.2011  Increase/ (Decrease)
Trade receivables 149,065 210,475 (59,928)
Trade payables 60,812 134,705 (96,171)
Net balance of trade items 88,253 75,770 36,243
Loans 94,203 132,678 (41,332)
Borrowings 869 15,989 5,784
Net balance of financial items 93,333 116,689 (47,116)
NET BALANCE 181,586 192,459 (10,873)

 

THE ACEA GROUP AND ITS MAIN ASSOCIATES

Up until 31 December 2011, i.e. the natural expiry date of the business unit lease, Marco Polo carried out facility management services. From 1 January 2012 the aforementioned business unit returned to ACEA, including the staff and the facility management activities involved.

The following table shows amounts (thousands of euros) for revenues, costs, receivables and payables deriving from relations between the ACEA Group and the company Marco Polo.

€ thousand Revenues Costs Receivables Payables
31.12.2012 31.12.2011 31.12.2012 31.12.2011 31.12.2012 31.12.2011 31.12.2012 31.12.2011
Marco Polo 1,056 2,363 95 11,611 2,135 3,138 8,504 15,946

 

ACEA GROUP AND MAIN GdF-Suez GROUP COMPANIES

At the reporting date, essentially all purchase and supply agreements signed under the terms of the Framework Agreement had expired, although they continued to have some effects in 2012 with regard to energy and gas purchases.

Furthermore, on 18 February 2013, ACEA and GSEI also signed a Settlement Agreement aimed at settling, pursuant to art. 1965 of the Italian Civil code, the reciprocal positions generated by the closing of debt and credit items, some of which resulted from the termination of the joint venture agreement in March 2011. As a result of that Agreement, the items recognised and subject to the settlement were finally and definitively settled between the parties.

The following table shows amounts (in thousands of euros) of the most significant revenues, costs, receivables and payables deriving from relations between the Acea Group and principal companies in the GdF-Suez Group.

  Revenues Costs Receivables Payables
€ thousand 31.12.12 31.12.11 31.12.12 31.12.11 31.12.12 31.12.11 31.12.12 31.12.11
Electrabel 0 4,146 0 14,907 0 0 250 228
Gas de France Suez Energia I. 1,426 53,166 45,910 953,038 4,057 5,247 11,648 160,429
Gas de France Suez Energia Italia loans 0 0 0 547 0 0 0 0
Rosen 0 6 0 74 0 0 0 0
Laborec 0 0 0 0 0 0 0 0
Gas de France 0 0 0 16 0 0 103 383
Gas de France Suez Produzione 73 4,045 0 137 73 1,539 0 0
Roselectra 419 321 0 0 5 130 0 0
Tirreno 0 204 14,969 0 0 60 0 0
Total 1,918 61,887 60,879 968,720 4,135 6,976 12,000 161,040