Consistent with the applicable policies adopted by the Group, transactions with related and significant parties affecting the income statement, balance sheet and cash flow that were outstanding at December 31, 2010 are reviewed below. The information provided is sufficient to meet the disclosure requirements of IAS 24. These transactions were executed in the normal course of business and on contractual terms that were consistent with standard market practices.
Further to the publication by the CONSOB, on September 24, 2010, of a Communication setting forth provisions governing related-party transactions in accordance with CONSOB Resolution No. 17221 of March 12, 2010, as amended, the Board of Directors of Edison Spa approved a Procedure Governing Related-Party Transactions, which went into effect on January 1, 2011.
| (in millions of euros) | Related Parties | Significant Parties |
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With unconsolidated Group companies | With the controlling company | EdF Group | A2A Group | Sub total | IREN Group | SEL Group | Dolomiti Energia Group | Banca Popolare di Milano | Medio-banca | Sub total | Total for related and significant parties | Total for financial statem. line item | % Impact |
| Balance sheet transactions |
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| Investments in associates | 48 | - | - | - | 48 | - | - | - | - | - | - | 48 | 48 | 100% |
| Trade receivables | 3 | - | 71 | 26 | 100 | 10 | - | 2 | - | - | 12 | 112 | 2,375 | 4.7% |
| Other receivables | 8 | 58 | 12 | 5 | 83 | - | - | - | - | - | - | 83 | 655 | 12.7% |
| Trade payables | 4 | - | 39 | 37 | 80 | 3 | 7 | - | - | - | 10 | 90 | 2,153 | 4.2% |
| Other payables | - | 17 | - | 2 | 19 | - | - | - | - | - | - | 19 | 380 | 5.0% |
| Other financial assets | 6 | - | - | - | 6 | - | - | - | - | - | - | 6 | 69 | 8.7% |
| Short-term financial debt | 15 | - | - | - | 15 | - | 30 | - | 16 | 65 | 111 | 126 | 1,073 | 11.7% |
| Long-term financial debt and other financial liabilities | - | - | - | - | - | - | - | - | - | 84 | 84 | 84 | 942 | 8.9% |
| Income statement transactions |
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| Sales revenues | 41 | - | 257 | 70 | 368 | 6 | 16 | 7 | - | - | 29 | 397 | 10,446 | 3.8% |
| Other revenues and income | - | - | 13 | 38 | 51 | 19 | - | - | - | - | 19 | 70 | 638 | 11.0% |
| Raw material and services used | 9 | - | 66 | 102 | 177 | 5 | 41 | - | - | - | 46 | 223 | 9,462 | 2.4% |
| Financial expense | - | - | - | - | - | - | - | - | - | 3 | 3 | 3 | 248 | 1.2% |
| Income from equity investments 1 | - | - | - | 1 | - | - | - | - | - | - | 1 |
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3 | 33,3% |
| Commitments and contingent risks |
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| Guarantees provided | - | - | - | - | - | - | - | - | 38 | - | 38 | 38 | 1,379 | 2.8% |
| Collateral provided | - | - | - | - | - | - | - | - | - | 42 | 42 | 42 | 1,390 | 3.0% |
| Other commitments and risks | - | - | 29 | - | 29 | - | - | - | - | - | - | 29 | 580 | 5.0% |
A) Intercompany Transactions
Transactions between Edison Spa and its subsidiaries and affiliated companies and its controlling company consist primarily of:
- commercial transactions involving the buying and selling of electric power, natural gas, green certificates and CO2 certificates;
- transactions involving the provision of services (technical, organizational and general) by headquarters staff;
- financial transactions involving lending and current account facilities established within the framework of the Group’s centralized cash management system;
- transactions required to file a consolidated VAT return for the Group (so-called VAT Pool);
- transactions with its controlling company required to file the consolidated IRES return.
All of the transactions listed above are governed by contracts with conditions that are consistent with market terms (i.e., terms that would have been agreed upon by two independent parties), with the exception of those related to the VAT Pool and the consolidated corporate income tax (IRES) return, which were executed pursuant to law.
Consolidated VAT Return
Edison Spa files a consolidated VAT return (so-called VAT Pool) that includes those companies of the Edison Group that meet the requirements of Article 73, Section 3, of Presidential Decree No. 633/72. The VAT Group return for December 31, 2010 showed an overpayment of about 6 million euros.
Consolidated IRES Return
Following the renewal by Transalpina di Energia Srl, the Group’s controlling company, of the option to file a consolidated income tax return for three years from 2009 to 2011, Edison Spa and its principal subsidiaries expect to determine their corporate income tax (IRES) liability in coordination with Transalpina di Energia Srl, the Group’s controlling company, within the framework of the existing arrangements for a consolidated IRES return. The relationships between the filers of the consolidated tax return are governed by special agreements. Group companies that engage in the exploration for and production of hydrocarbons and in the production and distribution of electric power are subject to the 6.5% corporate income tax (IRES) surcharge. This surcharge must be paid independently by each company, even if the company in question is included in the consolidated IRES return.
B) Transactions with Other Related Parties
An analysis of the main transactions with other related parties is provided below.
1) Commercial Transactions
EdF Group
Transactions executed with the EDF Group included the following:
- Revenues from the sale of electric power totaling about 3 million euros and electric power purchases and transmission costs for 5 million euros with ENBW.
- With Fenice Spa, sales revenues of about 49 million euros, mainly from sales of natural gas, recovery of maintenance costs for about 13 million euros and services used and miscellaneous costs for about 3 million euros.
- With EDF Trading Ltd, sales revenues from electric power of 96 million euros and from natural gas for 2 million euros and costs of 56 million euros stemming from sales and purchases of commodities.
- With EDF Trading Ltd revenues of 367 million euros and costs of 247 million euros and with ENBW revenues of 47 million euros and costs of 60 million euros from transactions executed during the year as part of the trading activity; these amounts are included in sales revenues on a net basis.
- Transmission costs and other costs for 2 million euros with other Group companies.
- The preceding table shows the impact on the balance sheet of the various transactions reviewed above; in addition, dividend payments totaled 43 million euros in 2010.
- With EDF Trading Ltd, commitments of up to 29 million euros within the EDF Carbon Fund to purchase CER/ERU.
A2A Group
The transactions carried out with the A2A Group resulted in the following:
- Sales revenues of 84 million euros from contracts to supply electric power and steam to A2A Trading Srl and A2A Spa.
- Other revenues and income of 38 million euros from A2A Trading Srl for managing fuel procurement for some production sites, pursuant to the Tolling Agreement.
- Materials and services used totaling 102 million euros, broken down as follows: 27 million euros for purchases of electric power, 15 million euros for dispatching services by A2A Trading Srl, 16 million euros for purchases of natural gas by Plurigas Srl and 44 million euros for electric power and natural gas transmission services by A2A Spa.
- With A2A Trading Srl, revenues of 30 million euros and costs of 44 million euros from transactions executed during the year as part of the trading activity; these amounts are included in sales revenues on a net basis.
- The table provided above shows the impact on the balance sheet of the various transactions reviewed above.
IREN Group
The transactions carried out with the IREN Group, created by the merger of Enìa and Iride, resulted in the following:
- Sales revenues of 6 million euros from contracts to supply electric power to Iren Mercato and Enìa Energia.
- Other revenues and income of 19 million euros from IREN Mercato for managing fuel procurement for some production sites, pursuant to the Tolling Agreement.
- Raw material and services used of 5 million euros mainly from the purchase of green certificates.
- The table provided above shows the impact on the balance sheet of the various transactions reviewed above.
SEL Group
Transactions with the SEL Group resulted in revenues of about 16 million euros from the sale of electric power and costs of about 41 million euros for purchases of electric power.
The table provided above shows the impact on the balance sheet of the various transactions reviewed above, in addition, dividend payments totaled 4 million euros in 2010.
Dolomiti Energia Group
Transactions executed pursuant to contracts for the supply of electric power resulted in revenues of 7 million euros.
The preceding table shows the impact on the balance sheet of the transactions reviewed above; in addition, dividend payments totaled 3 million euros in 2010.
2) Financial Transactions
The main financial transactions executed by the Group in which some other significant parties played a remarkable role are reviewed below:
- Banca Popolare di Milano was one of the lenders in a syndicated financing facility, originally totaling 2 billion euros, provided to Edipower in January 2007. At December 31, 2010, the portion of the facility underwritten by Banca Popolare di Milano was 36 million euros (18 million euros attributable to Edison) that had been drawn for 32 million euros (16 million euros attributable to Edison). Banca Popolare di Milano also provided Edison Spa with a 70-million-euro revocable line of credit. At December 31, 2010, this credit line was being used only in sureties for about 37.6 million euros, this amount is booked in guarantees provided.
- In 2004, Mediobanca provided Edison Spa with 120 million euros in financing against EIB funds. A portion of this loan has been repaid in accordance with the amortization schedule and a balance of about 93 million euros was outstanding at December 31, 2010. Mediobanca was also one of the banks that provided Edipower with the abovementioned syndicated loan originally amounting to 2 billion euros. At December 31, 2010, Mediobanca’s share of the loan was 122 million euros (61 million euros attributable to Edison), drawn, by Edipower, for 105 million euros (52.5 million euros attributable to Edison). Furthermore, Gever, an Edison Group company, holds lines of credit in a financing pool totaling about 4.7 million euros, of which about 4 million euros have been drawn down.
Lastly, Mediobanca is a party to interest risk hedging transactions executed by Group companies. A 30-million-euro financing facility provided by SEL Spa to Hydros Srl was outstanding at December 31, 2010. In addition, Edison Spa provided about 6 million euros in short-term financing to EL.IT.E. Spa, an affiliated Group company.