6. Amortisation, depreciation, impairment charges and provisions - 395,919 thousand euros

 € thousand 31.12.2012 31.12.2011 Absolute increase/ (Decrease) Increase/ (decrease) %
Amortisation and depreciation of intangible and tangible assets 257,866 252,692 5,174 2.0%
Provisions for impairment of receivables 83,537 55,059 28,478 51.7%
Provisions for liabilities 54,516 113,487 (58,971) -52.0%
TOTAL 395,919 421,238 (25,319) -6.0%

Amortisation and depreciation of intangible and tangible assets

These amounted to 257,866 thousand euros, of which 147,548 thousand euros property, plant and equipment and 110,318 thousand euros intangible assets. The breakdown by industrial area is provided below:

€ thousand 31.12.2012 31.12.2011 Absolute increase/ (Decrease) Increase/ (decrease) %
Networks 107,391 100,403 6,988 7.0%
Energy 19,585 21,353 (1,768) -8.3%
Water 91,880 89,941 1,939 2.2%
Environment 26,444 28,983 (2,539) -8.8%
Parent Company 12,565 12,012 553 4.6%
Amortisation and depreciation of intangible and tangible assets 257,866 252,693 5,173 2.0%

The increase in amortisation/depreciation refers to:

  • 6,988 thousand euros from Network area companies: in particular, there was higher amortisation/depreciation for ACEA Distribuzione (+5,416 thousand euros) due to the combined effect of amortisation/depreciation caused by new investments and the initiation of the “Volta” IT re-engineering project and the completion of the amortisation/depreciation process of other assets;
  • 1,939 thousand euros from Water area companies due to the combined effect of investments during the year and the entry into operation of some assets, partially offset by the use of economic-technical rates for publicly owned assets under concession used by the Company for integrated water service management, previously depreciated for the length of the concession period, as a result of the amendments introduced by the AEEG in resolution no. 585/2012;
  • 553 thousand euros from the parent company largely resulting from the purchase of the registered office at Piazzale Ostiense in January 2012;

 

In contrast, the following decrease should be noted:

  • 1,768 thousand euros from the Energy Area companies; in particular Acea Produzione amortisation/depreciation decreased by 4,569 thousand euros and was partially offset by the increase for Acea Energia (+3,305 thousand euros) due to the completion of IT projects.
    Please note that amortisation and depreciation in the Area was also affected by Law 134/2012, which introduces significant amendments to the timing and criteria for awarding tenders for hydroelectric concessions, affecting article no. 12 of Legislative Decree 79/99 (Bersani Decree). As a result of that change, beginning in 2012 hydroelectric plants shall be depreciated on the basis of the technical residual useful life, since that law requires payment of an indemnity in favour of the outgoing operator.
    That change leads to an approximately 8 million euro decrease in amortisation and depreciation for Acea Produzione.
  • 2,539 thousand euros to companies operating in the Environment segment. That change is the result of the recognition in 2011 of impairment charges for parts of the plant subject to revamping (8,336 euros), partially offset by the increase in amortisation and depreciation following the operational start-up in April and July last year of the second and third lines, respectively, at the San Vittore plant.

 

Impairment charges and losses on receivables

This item amounts to 83,537 thousand euros, up 28,478 thousand euros including: (i) 15,622 thousand euros for companies in the Energy segment, particularly Acea Energia (+14,433 thousand euros), of which 2,960 thousand euros attributable to the change in the consolidation percentage; (ii) 3,580 thousand euros for watercompanies operating in Lazio and Campania, particularly ACEA Ato2 (+8,844 thousand euros) and ACEA Ato5 (+1,073 thousand euros), (iii) 3,662 thousand euros for the parent company. Please note that that item is influenced by the outcome of the settlement signed in December with the Extraordinary Commissioner of the Roma Capitale Administration established by the Central Government, for a total of 14 million euros.

The breakdown by industrial area is provided below:

€ thousand 31.12.2012 31.12.2011 Absolute increase/ (Decrease) Increase/ (decrease) %
Networks 3,210 3,286 (77) -2.3%
Energy 35,745 20,123 15,622 77.6%
Water 35,585 27,014 8,571 31.7%
Environment 1,207 518 689 133.1%
Parent Company 7,791 4,129 3,662 88.7%
Impairments 83,537 55,070 28,467 51.7%

 

Provisions

As at 31 December 2012 these amounted to 54,516 thousand euros, recording a decrease of 58,971 thousand euros largely referring to:

  • the recognition as at 31 December 2011 of 24,471 thousand euros in costs generated by resignations and voluntary redundancy procedures terminating in December 2012,
  • the provision for risk allocated in the previous year in relation to GORI (44,100 thousand euros) and ACEA Ato5 (4,900 thousand euros).
  • provisions made in 2012, including the estimate (7,927 thousand euros) of charges from the return of the portion of the return on invested capital for the year 2011. On 25 January 2013, the Council of State issued the opinion requested by AEEG concerning the effects of the June 2011 abrogative referendum, specifying that the component remunerating investments recognised to operators should not include the “return on invested capital” already beginning from 21 July 2011, and that that requirement must be taken into consideration already when determining the Temporary Method. To cover that risk, the company allocated a dedicated Provision for charges calculated on the basis of the instructions provided by AEEG during the consultation phase in the second half of 2012.
    On 31 January 2013, AEEG approved resolution no. 38/2013/R/idr with which it launches a procedure to determine:
    • the criteria based on which Area Authorities will have to identify, without prejudice to the full cost recovery principle, the amounts unduly paid by each user for return on invested capital in the period 21 July 2011 - 31 December 2011, to be returned to the user,
    • procedures and tools to ensure that the aforementioned amounts are actually returned to end users,
    • the methods that the Authority will use to verify and approve the Area Authority decisions,

The proceeding duration has been set at 120 days, beginning on the publication date.

A breakdown of allocations by type is shown in the table below.

€ thousand 31.12.2012 31.12.2011 Increase/ (Decrease)
Legal 13,274 9,338 3,937
Tax 3,152 784 2,368
Regulatory risks 10,403 52,366 (41,963)
Investees 6,986 11 6,975
Contribution risks 6,150 8,004 (1,854)
Redundancy and retirement 152 27,471 (27,319)
Contracts and supplies 2,683 2,132 550
Insurance excesses 850 1,077 (226)
Other liabilities and charges 958 634 324
TOTAL 44,609 101,816 (57,208)
Restoration charges - IFRIC12 9,907 11,670 (1,763)
TOTAL PROVISIONS 54,516 113,487 (58,971)

Provisions in the Water segment amounted to 30,860 thousand euros, of which 9,907 thousand euros attributable to costs required to keep the infrastructure used for water service management in good repair. The remainder refers to:

  • ACEA Ato2 (10,684 thousand euros) mainly for the aforementioned risk of refunds to users following the June 2011 referendum (5,164 thousand euros) and potential liabilities concerning work-related disputes,
  • GORI (2,873 thousand euros) essentially for: the dispute with the Campania Regional Government, insurance excess and operating expenses of the Area Authority, for which the ATO3 tariff system could be made liable with a view to reducing costs recognisable on the tariff,
  • Publiacqua (3,692 thousand euros) in relation to the investigation into the correct preparation of the standard review of the Area Plan performed by senior management as an area and water resource protection measure in relation to the tariff review and as a result of costs to cover the risk of legal disputes, and also 1,676 thousand euros relative to the potential risk of recovering the Return on invested capital relative to the post-referendum period (July-December 2011) in the 2012 and 2013 tariff.

Provisions for the Networks segment amounted to 4,954 thousand euros and are mainly attributable to ACEA Distribuzione (3,054 thousand euros) due to social security issues.

Provisions for the parent company amounted to 5,666 thousand euros for legal liabilities and potential disputes with suppliers and the remainder is attributable to risks relative to staff, particularly in terms of social security issues.

The provisions of the Energy segment companies are mainly attributable to risks relating to the closure of the subsidiary ACEA Energia Vendita (5,000 thousand euros) and legal risks.

The table below illustrates the breakdown of provisions by industrial area:

in €/thousand 31.12.2012 31.12.2011 Absolute increase/ (Decrease) Increase/ (decrease) %
Networks 4,954 16,852 (11,897) -70.6%
Energy 6,862 2,255 4,608 204.4%
Water 30,860 42,160 (11,300) -26.8%
Environment 2,652 1,694 958 56.5%
Parent Company 9,187 50,533 (41,346) -81.8%
Provisions 54,516 113,493 (58,977) -52.0%

Further information is provided in the section “Update on major disputes and litigation”.