DeA Capital S.p.A.
Registered Office at Via Brera, 21 - 20121 Milan
Share Capital of Euro 306,612,100 fully paid up
Tax Code, VAT reg. no. and Milan Register of Companies no. 07918170015
NOTICE OF
SHAREHOLDERS’
MEETING
DeA CApitAl - AnnUAl finAnCiAl StAtementS to 31 DeCemBer 2015
1
DeA Capital S.p.A.
Registered Office at Via Brera 21, 20121 Milan
Share capital of EUR 306,612,100, fully paid up
Tax Code, VAT reg. no. and Milan Register of Companies no. 07918170015, Milan
REA (Administrative Economic Register) 1833926
Company subject to the management and co-ordination of De Agostini S.p.A.
NOTICE OF SHAREHOLDERS' MEETING
All eligible persons are invited to attend the Ordinary Shareholders' Meeting to be held at Spazio Chiossetto, Via
Chiossetto 20, Milan:
− at 10 a.m. on Thursday, 21 April 2016, on first call;
− at 10 a.m. on Monday, 2 May 2016, on second call,
to discuss and resolve upon the following.
AGENDA
1. Approval of the Annual Financial Statements for the year ended 31 December 2015. Partial
distribution of the share premium reserve. Related and consequent resolutions. Presentation of
the Consolidated Financial Statements of the Group headed by DeA Capital S.p.A. for the year
ended 31 December 2015.
2. Appointment of the Board of Directors and Chairman following determination of the number
of members to be appointed; determination of the terms of office and relevant remuneration.
Related and consequent resolutions.
3. Appointment of the Board of Auditors and Chairman; determination of the relevant remuneration.
Related and consequent resolutions.
4. Authorisation to buy and sell treasury shares. Related and consequent resolutions.
5. Approval of a performance share plan reserved for certain employees and/or directors with
specific duties of DeA Capital S.p.A., its subsidiaries and parent company. Related and consequent
resolutions.
6. Presentation of the DeA Capital S.p.A. Remuneration Report and advisory vote by the
shareholders' meeting on the Remuneration Policy of DeA Capital S.p.A. (section I of the
Remuneration Report), in accordance with art. 123-ter of Legislative Decree 58 of 24 February
1998, as subsequently amended and supplemented.
* * *
Presentation of proposals for resolution/addition to the agenda
Shareholders representing, including jointly, at least 2.5% of the share capital may submit a request, within
ten days of this notice being published (i.e. by 21 March 2016), for items to be added to the meeting agenda,
indicating on the request the additional topics suggested, and may also submit proposals for resolutions
concerning items already on the agenda.
The request, together with the share ownership certificate issued, pursuant to the regulations in force, by
the authorised intermediaries holding the ledgers in which the shareholders’ shares are registered, must be
submitted in writing, by hand or by recorded delivery and by the above deadline, to the Company’s registered
office, for the attention of the Investor Relations department, or sent by email to the address deacapital@
legalmail.it, together with information confirming the identity of the shareholders submitting the request (a
contact telephone number should also be provided). Shareholders submitting such requests must also provide,
by the same deadline and by the same means, a report setting out the reasons for the proposals for resolution/
addition to the agenda of the new items or the additional proposals for resolution relating to items already
on the agenda. The Company is responsible for notifying shareholders of the addition to the meeting agenda
of any new items or additional proposals relating to existing items, in the same form as for the publication
of this notice convening shareholders’ meetings, at least fifteen days before the scheduled first-call meeting
date. At the same time as the publication of the notice confirming the addition to the agenda of new items or
additional proposals for resolution on existing items, said proposals for addition/resolution, together with the
corresponding reports submitted by the shareholders concerned and any opinion of the Board of Directors, must
be made public pursuant to art. 125-ter, paragraph 1, of Legislative Decree 58/1998.
With the exception of proposals relating to the issues listed in art. 125-ter, paragraph 1, of Legislative Decree
58/1998, no additions may be made to the agenda if they relate to matters which, by law, must be decided by
the shareholders’ meeting on the proposal of the Board of Directors or on the basis of a plan or report prepared
by same.
Right to ask questions about items on the agenda
Those who are entitled to vote may raise questions about items on the agenda, including in advance of the
meeting. Any questions, together with the share ownership certificate issued, pursuant to the regulations in
force, by the authorised intermediaries holding the ledgers in which shareholders’ shares are registered, must
be sent to the Company’s registered office (see the section “Registered Office” in this notice) for the attention
of the Investor Relations department, by recorded-delivery letter, by fax to the number +39 02 62499599 or by
email to the address [email protected]. Questions must be received by the Company before close of business on
the third day before the scheduled meeting date (i.e. by 18 April 2016). Provided that questions are received
before the meeting and by the requisite deadline, a response will be provided, at the latest, during the meeting
itself; a response is deemed to have been provided at a meeting if it is made available, on paper, to each of
those entitled to vote at the start of the meeting. The Company may provide a single response to questions
with the same content. The Company also reserves the right to provide the information requested by any
questions received prior to the shareholders’ meeting by displaying it on a dedicated “Questions and Answers”
Shareholders’ Meetings). Where this is the case, no response need be given at the meeting.
Entitlement to take part in meetings
Shareholders are eligible to take part in shareholders’ meetings if they are registered as holding voting rights
on the record date - i.e. by the close of business on the seventh trading day before the date scheduled for
the first-call meeting (12 April 2016) - and if the requisite statement has been received from the authorised
intermediary by the Company. Individuals who only become shareholders after that date will not be entitled to
take part or vote in the shareholders’ meeting.
The statement by the authorised intermediary referred to above must be received by the Company before
close of business on the third trading day prior to the date scheduled for the first-call meeting. If the statement
is received by the Company after this date, shareholders will, however, still be entitled to take part in the
meeting and vote provided the statement is received before the start of the first-call meeting. As a reminder,
the statement is communicated to the Company by the authorised intermediary at the request of the individual
holding the voting right.
Representation in meetings
All those entitled to take part in a meeting may appoint a representative by issuing a written proxy in
accordance with the statutory and regulatory provisions in force. In this regard, it should be noted that a proxy
may be granted with an electronically signed digital document, as defined in art. 135-novies, paragraph 6, of
Legislative Decree 58/1998, and that the proxy-letter template provided at www.deacapital.it may be used for
this purpose. The proxy may be sent to the Company by recorded delivery to the Company's registered office or
The proxy holder may provide or send a copy of the proxy to the Company instead of the original, certifying
on his/her own responsibility that it is a true copy and confirming the proxy-giver's identity. Any advance
notification does not release the proxy holder from the obligation to certify that the proxy is a true copy and to
attest to the identity of the proxy-giver when he/she confirms his/her eligibility to take part in the shareholders’
meeting.
Designated proxy holder
Proxies, with voting instructions for the items on the agenda, may be granted to Computershare S.p.A.,
which has its registered office at Via Lorenzo Mascheroni 19, Milan 20145, duly designated by the Company
for this purpose, in accordance with art. 135-undecies of Legislative Decree 58/1998; a printable version of
the relevant form to be signed may be downloaded from the website www.deacapital.it (under Corporate
Governance/Shareholders’ Meetings) or obtained from the Company’s registered office or the registered
office of Computershare S.p.A. The original of the proxy form, with voting instructions, must be received by
Computershare S.p.A., Via Lorenzo Mascheroni 19, Milan 20145, by close of business on the penultimate
trading day before the date scheduled for the first-call meeting or for any second-call meeting (i.e. by 19 April
2016 for the first-call meeting or by 28 April 2016 for the second-call meeting). A copy of the proxy form,
accompanied by a statement confirming that it is a true copy of the original, may be provided to the designated
proxy holder by the above-mentioned deadlines by fax to +39 02 46776850, or attached to an email sent
voting instructions are given. Proxies and voting instructions may be revoked by the deadlines specified above.
Note that the statement to be communicated to the Company by the authorised intermediary, confirming the
shareholder’s eligibility to take part and exercise voting rights in the shareholders’ meeting, is also required if a
proxy is granted to the designated proxy holder. By law, shares for which a proxy is granted, whether in full or
in part, are taken into account in determining whether the shareholders’ meeting is duly constituted, although
proxies without voting instructions do not count for the purposes of calculating the majority and quorum
required to pass resolutions. Details of the proxies granted to Computershare S.p.A. (which can be contacted
for any queries by telephone on +39 02 46776811) are also available on the relevant proxy-letter template
mentioned above.
Share capital and voting shares
The share capital is EUR 306,612,100 divided into 306,612,100 ordinary shares, each with a par value of EUR 1.00.
Each ordinary share carries voting rights at the shareholders' meeting (except ordinary treasury shares, which on 10
March 2016 totalled 43,147,751, on which voting rights are suspended in accordance with the law).
Appointment of corporate bodies
The Board of Directors and Board of Auditors must be appointed in accordance with the procedures laid down in
articles 11 and 18 of the articles of association, to which reference should be made.
Members of the Board of Directors and Board of Auditors are appointed by shareholders’ meetings on the basis of
lists submitted by shareholders.
The Board of Directors and Board of Auditors must be reappointed in accordance with the provisions relating to
gender balance set out in Law 120 of 12 July 2011.
Lists may be presented by shareholders who, individually or jointly, hold at least 2.5% of the share capital.
Ownership of the minimum equity interest required to submit a list is determined on the basis of the shares
registered in the name of the shareholder on the date on which the lists are filed with the Company. No
shareholders, including those belonging to the same group or covered by a relevant shareholders’ agreement, as
defined in art. 122 of Legislative Decree 58/1998, may submit or be involved in the submission of more than one
list, whether directly, through another person or through a trust company, nor may they vote for more than one list
Nominations filed and votes cast in breach of this provision will not be allocated to any list.
The lists of candidates presented by the shareholders, accompanied by the documentation required under articles
11 and 18 of the articles of association, must be filed at least twenty-five days before the date scheduled for the
first-call meeting (i.e. Sunday, 27 March 2016) at the Company’s registered office, from Monday to Friday, 8.00
am to 7.00 pm and on Saturday from 8.00 am to 2.00 pm, or submitted by e-mail to the certified e-mail address
[email protected], together with information confirming the identities of the party submitting the lists. The
lists must also be made available to the public at the Company's headquarters, on the Company's website,
deacapital.it (under Corporate Governance/Shareholders' Meetings), and on the authorised storage system 1info, at
Ownership of the minimum number of shares required to submit a list is determined on the basis of the certificates
issued by the intermediary authorised under the relevant legislation and proving ownership of the number of shares
represented, based on the shares registered in shareholders’ names on the date on which the lists are filed with the
Company.
Appointment of the Board of Directors
Under art. 11 of the articles of association, the office of director may only be held if the criteria laid down by
law and under the applicable regulations are met.
The number of candidates on the lists may not exceed the number of members to be elected and each candidate
must be assigned a sequential number. Candidates may appear on one list only or will be deemed ineligible.
Any list containing three or more candidates may not consist of candidates of one gender only (male or female).
Of the total candidates on the lists, at least one third (rounded up) must be of the gender for which there are
the fewest nominations.
The independent directors are selected from the list that obtains the highest number of votes.
Each list filed must be accompanied by: (i) declarations made by the individual candidates stating that they
accept their nomination and undertake, if appointed to accept office; attesting, on their own responsibility,
to the absence of any grounds for disqualification or ineligibility; and confirming that they satisfy the criteria
for the roles concerned laid down in the legislation in force; (ii) CVs containing detailed information on
the personal and professional characteristics of each candidate, and indicating that the candidate may be
considered as independent; (iii) details of the identities of the shareholders who submitted the lists and their
total shareholding as a percentage; and (iv) a copy of the certificates issued by the authorised intermediaries
confirming ownership of the number of shares required to submit lists.
The recommendations made by Consob in its communication DEM/9017893 of 26 February 2009 also apply
to those who present a “minority list".
Lists submitted that do not comply with the above are deemed to be null and void.
If only one or no lists are submitted, the shareholders’ meeting must pass resolutions by the majority
required by law.
Appointment of the Board of Auditors
At least one of the permanent auditors must be: (a) female, if the majority of the permanent auditors are male;
or (b) male, if the majority of the permanent auditors are female.
Minority shareholders are entitled to appoint one permanent auditor and one deputy auditor.
Members of the Board of Auditors are appointed from lists, submitted by shareholders, in which the nominees
have been assigned a sequential number. The lists must consist of two parts: one for nominees for the office of
permanent auditor and the other for nominees for the office of deputy auditor.
Each list must contain the names of one or more candidates, with each candidate assigned a sequential number.
In lists with three or more candidates for the office of permanent or deputy auditor, at least one of the
candidates for the office of permanent auditor must be different in gender from the other candidates.
The candidates for the office of permanent auditor must meet the requirements laid down by law, the articles of
association and other applicable statutory and regulatory provisions.
Each list filed must be accompanied by: (i) information on the identity of the shareholders who submitted
the lists, stating their total shareholding as a percentage; (ii) a declaration by shareholders other than
those holding a controlling or relative majority interest, individually or jointly, certifying the absence of any
association, as defined in art. 144-quinquies of Consob Issuer Regulation 11971; (iii) CVs containing detailed
information on the personal and professional characteristics of each candidate, showing any director or auditor
roles held in other companies, together with declarations from the individual candidates stating that they
accept their nomination and undertake, if appointed, to accept the office; attesting, on their own responsibility,
to the absence of any grounds for their disqualification or ineligibility; and confirming that they satisfy the
requirements for holding office laid down by law and the articles of association. Shareholders submitting lists
must also file a copy of the certificates issued by the authorised intermediaries confirming that they possess the
number of shares required to submit lists according to the terms and conditions laid down in the legislation in
force.
Lists which do not comply with the above provisions are deemed to be null and void.
If, by the closing date, only one list has been submitted or only lists from shareholders who are related to each
other, as defined in the applicable legislation and regulations, additional lists may be submitted up to three
days after that date (i.e. until 30 March 2016). Where this is the case, the minimum shareholding required
for the submission of lists is reduced by half (i.e. 1.25% of the share capital). In the event that only one list
has been submitted by the latter deadline, the entire Board of Auditors shall be appointed from that list and
the first candidate shall be appointed Chairman of the Board of Auditors. If no lists have been submitted, the
shareholders’ meeting shall pass a resolution by majority vote, excluding abstentions.
Documentation and information
Please note that documentation relating to the items on the agenda that is required by law or under
regulatory provisions will be made available to the public at the Company’s registered office and published
on the Company’s website at www.deacapital.it (under Corporate Governance/Shareholders’ Meetings) and
on the approved storage site www.1info.it , as well as by the means and under the terms and conditions
laid down in the regulations in force; shareholders and other parties entitled to take part in shareholders’
meetings may obtain copies of this documentation. The following, in particular, will be made available to
the public:
- from today, at the same time as the publication of this notice, the Directors’ Report on items 2 and 3;
- from 22 March 2016, the Directors’ Report on item 1 and 5 of the agenda and the information document
pursuant to art. 84-bis of Consob Issuer Regulation no. 11971;
- from 30 March 2016, the financial report and other documents referred to in art. 154-ter of Legislative
Decree 58/1998 and the Remuneration Report, as well as the Directors' Report on item 4 of the agenda.
All eligible persons have the right to read and, on request, obtain a copy thereof.
This notice is published, pursuant to art. 125-bis of Legislative Decree 58/1998, on the Company's website
(www.deacapital.it ), according to the other procedures provided for under existing legislation, and as an
excerpt in the newspaper Milano Finanza.
***
Milan, 11 March 2016
For the Board of Directors
The Chairman of the Board of Directors
(Lorenzo Pellicioli)
CORPORATE BOARDS
Corporate information
AND CONTROLLING
DeA Capital S.p.A. is subject to the management and
coordination of De Agostini S.p.A.
STRUCTURE
Registered office: Via Brera 21, Milan 20121, Italy
Share capital: EUR 306,612,100 (fully paid up), comprising 306,612,100
shares with a nominal value of EUR 1 each (including 42,688,945
treasury shares at 31 December 2015)
Tax code, VAT code and recorded in the Milan Register of Companies
under no. 07918170015
Board of Directors (*)
Chairman
Lorenzo Pellicioli
Chief Executive Officer
Paolo Ceretti
Directors
Lino Benassi
Rosario Bifulco (1 / 4 / 5)
Marco Boroli
Donatella Busso (5)
Marco Drago
Roberto Drago
Francesca Golfetto (1 / 3 / 5)
Severino Salvemini (2 / 3 / 5)
Board of Statutory Auditors (*)
Chairman
Angelo Gaviani
Permanent Auditors
Gian Piero Balducci
Annalisa Raffaella Donesana
Deputy auditors
Annamaria Esposito Abate
Maurizio Ferrero
Giulio Gasloli
Secretary to the Board of Directors
Diana Allegretti
Manager responsible for preparing the
Company’s accounts
Manolo Santilli
Independent Auditors
PricewaterhouseCoopers S.p.A.
(*) In office until the approval of the Financial Statements for the Year Ending 31
December 2015
(1) Member of the Control and Risks Committee
(2) Member and Chairman of the Control and Risks Committee
(3) Member of the Remuneration and Appointments Committee
(4) Member and Chairman of the Remuneration and Appointments Committee
(5) Independent Director
DeA CApitAl - AnnUAl finAnCiAl StAtementS to 31 DeCemBer 2015
9
Letter to the Shareholders
12
Report on Operations
15
1. Profile of DeA Capital S.p.A.
16
2. Information for shareholders
20
3. The DeA Capital Group’s key Statement of Financial Position and
Income Statement figures
23
CONTENTS
4. Significant events during the year
24
5. Results of the DeA Capital Groupl
27
6. Results of the Parent Company DeA Capital S.p.A.
63
7. Other information
66
8. Proposal to approve the Financial Statements of DeA Capital S.p.A.
for the Year Ending 31 December 2015 and the
partial distribution of the share premium reserve
76
Consolidated Financial Statements for the
Year Ending 31 December 2015
77
Certification of the Consolidated Financial
Statements pursuant to art. 154-bis of
Legislative Decree 58/98
138
Information pursuant to art. 149-duodecies of
Consob Issuers Regulation -
Consolidated Financial Statements
139
Financial Statements for the Year Ending 31
December 2015
141
Certification of the Annual Financial
Statementspursuant to art. 154-bis of
Legislative Decree 58/98
194
Information pursuant to art. 149-duodecies of
Consob Issuers Regulation - Annual Financial
Statements
195
Summary of subsidiaries’ Financial Statementsfor
the Year Ending 31 December 2015
197
Independent Auditors’ Report
199
Report of the Board of Statutory Auditors
205
DeA CApitAl - AnnUAl finAnCiAl StAtementS to 31 DeCemBer 2015
11
Letter
“The NAV of the DeA Capital
Group has remained broadly
stable at EUR 2.07 per share,
net of the extraordinary dividend
paid in May. Thanks to the
partial sale of the investment
in Migros, we are now able
to pay another extraordinary
dividend, whilst retaining ample
resources for buybacks and new
investments."
12 DeA Capital - Letter to the Shareholders
to the Shareholders
D
ear Shareholders,
European economic growth remained low in 2015,
scale than the main investments made by DeA
despite the launch of even more expansionary
Capital, they will be carefully considered, in order to
monetary policies. This was partly due to the less
create value in the medium to long term.
favourable global environment and the impact this
had on the prices of the main commodities.
Your Company also expects to benefit from positive
The Italian economy began to expand for the first
cash flows from its own private equity investments
time in four years, but at rates still below 1% and
this year. The Group-managed funds in which the
hence not enough for Italy to shake off, once and
holding company invests made net distributions to
for all, the economic and financial crisis that has
the latter of over EUR 35 million in 2015 (EUR 14
dogged the last few years.
million in 2014) and a positive contribution to the
The European equity markets experienced a positive
NAV. We still have some small investments that may
year in 2015, driven by the liquidity injected into
be sold in the future.
the system by the ECB and bond yields at record
lows. However, the recovery in early 2016 was
In 2015, DeA Capital also continued to focus
sudden and only facilitated by a further intervention
on developing activities in the Alternative Asset
by the monetary authorities, and their toolkits
Management business, which generated revenues
are gradually becoming depleted and in need of
of EUR 85 million and around EUR 18 million in
assistance from fiscal policies.
adjusted net profits.
Conditions for fundraising are still difficult,
DeA Capital has made further progress in its
especially on the Italian market; IDeA Capital Funds
strategy to exit from its "historical" direct
and IDeA FIMIT continue to devote their efforts
investment in private equity. Following the sale of
to identifying market opportunities and launching
its indirect holding in Générale de Santé, which
new products as they pursue the development of
generated proceeds of over EUR 160 million in
their business models. In 2015, the Italian property
2014, half of its investment in Migros was sold to
market at last began to show some clear signs
the Anadolu Group in July 2015, bringing in around
of recovery in terms of both transaction values
EUR 108 million.
and prices, although this must be set against the
continuing lack of Italian institutional investors
This additional inflow of financial resources
and the sector's structural slowness in introducing
has therefore enabled us to propose a new
the necessary changes. In this environment, the
extraordinary dividend of EUR 0.12 per share to
management considers that the conditions are
shareholders, on top of the dividend of EUR 0.30
nevertheless being created for DeA Capital to
per share paid in 2015, by distributing part of
gradually strengthen its competitive positioning,
the share premium reserve. The total cost comes
and this objective will be consistently pursued.
to over EUR 30 million, which allows the holding
company to maintain a very healthy net financial
position in its balance sheet.
It is the intention of DeA Capital's management to
continue with the purchase of treasury shares, with
the aim of creating value for shareholders, and take
advantage of the opportunities offered by the size
of the discount on the NAV at which the shares are
trading.
Some of the cash will also be used for new
investments to support the initiatives launched by
Lorenzo Pellicioli
Paolo Ceretti
the Group's asset management companies, as has
always been done; this is partly aimed at aligning
Chairman
Chief Executive Officer
the interests of DeA Capital and those of external
investors which rely on IDeA Capital Funds and
IDeA FIMIT. Moreover, if any opportunities arise for
co-investment in alternative assets, on a smaller
DeA CApitAl - AnnUAl finAnCiAl StAtementS to 31 DeCemBer 2015
13
REPORT ON
OPERATIONS
DeA CApitAl - AnnUAl finAnCiAl StAtementS to 31 DeCemBer 2015
15
Profile of
With an investment portfolio of around EUR 455 million and assets
under management of EUR 9,500 million, DeA Capital S.p.A. is one
of Italy's largest alternative investment operators.
The Company, which operates in both the Private Equity Investment
and Alternative Asset Management businesses, is listed on the FTSE
Italia STAR section of the Milan stock exchange and heads the De
Agostini Group in the area of financial investments.
In the Private Equity Investment business, DeA Capital S.p.A. has
“permanent” capital, and therefore has the advantage - compared
with traditional private equity funds, which are normally restricted
to a pre-determined duration - of greater flexibility in optimising the
timing of entry to and exit from investments. In terms of investment
policy, this flexibility allows it to adopt an approach based on value
creation, including over the medium to long term.
In the Alternative Asset Management business, DeA Capital S.p.A.
- through its subsidiaries IDeA FIMIT SGR and IDeA Capital Funds
SGR - is Italy’s leading operator in real estate fund management
and private equity funds of funds programmes, respectively. The
two companies are active in the promotion, management and value
enhancement of investment funds, using approaches based on sector
experience and the ability to identify opportunities for achieving the
best returns.
Alternative Asset Management has been the Company's main
focus for strategic development in recent years. In view of this,
DeA Capital S.p.A. is expected to continue to concentrate its asset
allocation in this business, partly through investments in funds
managed by the above-mentioned private equity/real estate platform,
with the aim of generating financial returns.
16 DeA Capital - Profile of DeA Capital S.p.A.
DeA Capital S.p.A.
PRIVATE EQUITY INVESTMENT
Direct investment
in companies mainly operating in Europe and
Emerging Europe.
Indirect Investment
in private equity and real estate funds.
ALTERNATIVE ASSET
MANAGEMENT
IDeA Capital Funds SGR,
which manages private equity funds (funds of
funds, co-investment funds and theme funds).
1.6 Bln €
Assets under management: EUR 1.6 billion
IDeA FIMIT SGR,
which manages real estate funds.
7.9 Bln €
Assets under management: EUR 7.9 billion
IRE/IRE Advisory,
which operates in project, property and facility
management, as well as real estate brokerage.
For further info:
section: Investements and Asset Management
DeA CApitAl - AnnUAl finAnCiAl StAtementS to 31 DeCemBer 2015
17
At 31 December 2015, DeA Capital S.p.A. reported Group
credit for non-specific purposes (salary-backed loans and
consolidated shareholders’ equity of EUR 547.0 million (EUR
personal loans) and services non-performing loans in Italy. The
653.5 million at 31 December 2014, before the extraordinary
investment is held through the Luxembourg-registered company
dividend payout of EUR 79.9 million in May 2015),
Sigla Luxembourg S.A., an associate of the DeA Capital Group
corresponding to a net asset value (NAV) of EUR 2.07
(with a stake of 41.39%).
per share, with an investment portfolio of EUR 454.8 million
(EUR 625.0 million at 31 December 2014).
• Funds
More specifically, the investment portfolio consists of Private
- units in six funds managed by the subsidiary IDeA Capital
Equity Investment shareholdings of EUR 88.0 million, Private
Funds SGR, i.e. in the three funds of funds IDeA I Fund
Equity Investment funds of EUR 194.1 million and net assets
of Funds (IDeA I FoF), ICF II and ICF III, in the co-
relating to the Alternative Asset Management business of
investment fund IDeA Opportunity Fund I (IDeA OF I)
EUR 172.7 million.
and in the theme funds IDeA Efficienza Energetica
e Sviluppo Sostenibile (Energy Efficiency and
Sustainable Development - IDeA EESS) and IDeA
Investment Portfolio
Taste of Italy (IDeA ToI);
December 31, 2015
- a unit in the real estate fund Atlantic Value Added (AVA),
n.
EUR/mln
managed by IDeA FIMIT SGR;
Equity investments
3
88.0
Funds (*)
13
194.1
- units in six venture capital funds.
Private Equity Investment
16
282.1
Alternative Asset Management (*)
4
172.7
Alternative asset management
Investment Portfolio
20
454.8
(*) Fully consolidated Private Equity funds and equity investments
- controlling interest in IDeA Capital Funds SGR (100%),
in subsidiaries relating to Alternative Asset Management are
which manages private equity funds (funds of funds, co-
valued using the equity method in this table.
investment funds and theme funds) with about EUR 1.6 billion
in assets under management and eight managed funds;
- controlling interest in IDeA FIMIT SGR (64.30%), Italy's
largest independent real estate asset management company,
PRIVATE EQUITY INVESTMENT
with about EUR 7.9 billion in assets under management and 37
managed funds (including five listed funds);
• Main investments
- controlling interests in IRE/IRE Advisory (96.99%),
- minority shareholding in Migros, Turkey's leading food retail
which operate in project, property and facility management, as
chain operator, whose shares are listed on the Istanbul Stock
well as real estate brokerage.
Exchange. The investment is held through the Luxembourg-
registered company Kenan Investments S.A., an investment
recorded in the AFS portfolio of the DeA Capital Group (with a
stake of 17.11%);
- strategic shareholding in Sigla, which provides consumer
18 DeA Capital - Profile of DeA Capital S.p.A
At 31 December 2015, the corporate structure of the Group headed by DeA Capital S.p.A. (the DeA Capital Group, or the
Group) was as summarised below:
Holding companies
DeA Capital
S.p.A.
Private Equity Investment
Alternative Asset Management
Shareholdings
and funds
100%
100%
96,99%
IDeA
DeA Capital
Capital Funds
Real Estate
SGR
61,30%
IRE
3,00%
IDeA FIMIT
SGR
100%
100%
IRE
IDeA RE
Advisory
Shareholding
Shareholding
Quota
Quota
Quota
Quota
Quota
Quota
Quota
Kenan
Sigla
IDeA
ICF II
ICF III
IDeA OF I
EESS
ToI
AVA
Investments
Luxembourg
I FoF
Shareholding
Shareholding
Migros
Sigla
Private Equity
Private Equity Investment
Alternative
Investment “Direct”
“Indirect”
Asset Management
DeA CApitAl - AnnUAl finAnCiAl StAtementS to 31 DeCemBer 2015
19
Information for
SHAREHOLDER STRUCTURE - DEA CAPITAL S.P.A. (#)
25.8
%
Free float
58.3
%
2.0
%
De Agostini S.p.A.
Highclere International
Investors LLP
13.9
%
Treasury stock
(#) Figures at 31 December 2015 based on the latest communications available
Note: At 9 March 2016, there were 43,147,751 treasury shares representing approximately 14.1%
of share capital
20 DeA Capital - Information for shareholders
shareholders
SHARE PERFORMANCE *
Period from 11 January 2007, when DeA Capital S.p.A. began operations, to 31 December 2015
3.3
2.8
2.3
1.8
1.3
0.8
0.3
DeA Capital
LPX 50
FTSE All
From 1 January 2015 to 31 December 2015
1,70
1,60
1,50
1,40
1,30
1,20
DeA Capital
LPX 50
FTSE All
(*) Source: Bloomberg
For further info:
section: Investor Relations
DeA CApitAl - AnnUAl finAnCiAl StAtementS to 31 DeCemBer 2015
21
The performance of the DeA Capital
share
The Company's share price declined by 40.8%
The share prices recorded in 2015 are shown
between 11 January 2007, when DEA Capital
below.
S.p.A. began operations, and 31 December 2015.
In the same period, the FTSE All-Share® and
Figures in Euro/Share
2015
LPX50® fell by 45.1% and 15.0% respectively.
Maximum price
1.63
The DeA Capital share rose by 3.6% in 2015, while
Minimum price
1.25
the Italian market index FTSE All-Share® gained
Average price
1.47
15.4%, and the LPX50® 7.6%.
Price at 31 December 2015
1.41
The share’s liquidity was slightly lower than in
2014, with average daily trading volumes of more
than 317,000 shares.
(EUR million)
31 December 2015
Market capitalisation at 31
The prices and performance of the DeA Capital
December 2015 (*)
434
share have been adjusted by the amount paid to
(*) Capitalisation net of treasury shares: approximately EUR 372 million.
Shareholders (EUR 0.30 per share) in May 2015.
Investor Relations
DeA Capital S.p.A. maintains stable and
The research prepared by these intermediaries
structured relationships with institutional and
is available in the Investor Relations/Analyst
individual investors. In 2015, as in previous years,
Coverage section of the website www.deacapital.it.
the Company continued with its communication
activities, including attendance at the STAR
In December 2008, the DeA Capital share joined
Conference held in Milan in March. The Company
the LPX50® and LPX Europe® indices. The LPX®
met with about ten institutional investors at
indices measure the performance of the major
this event. The Company also held meetings
listed companies operating in private equity (Listed
and conference calls with institutional investors,
Private Equity or LPE). Due to its high degree of
portfolio managers and financial analysts from
diversification by region and type of investment, the
Italy and abroad.
LPX50® index has become one of the most popular
benchmarks for the LPE asset class. The method
Research coverage of the share is currently
used to construct the index is published in the LPX
carried out by Equita SIM and Intermonte SIM,
Equity Index Guide. For further information please
the two main intermediaries on the Italian
visit the website: www.lpx.ch. The DeA Capital
market, with Intermonte SIM acting as a
share is also listed on the GLPE Global Listed Private
specialist. In early 2015, Edison Investment
Equity Index created by Red Rocks Capital, a US
Research, an independent equities research
asset management company specialising in listed
specialist based in London, also began covering
private equity companies. The index was created
the share. In 2015, research relating to DeA
to monitor the performance of listed private equity
Capital was read by more than 1,370 institutional
companies around the world and is composed of 40
investors and analysts from more than 34
to 75 stocks. For further information:
countries, including Europe, Australia, North
America and the rest of the world.
For further info:
section: Investor Relations
22 DeA Capital - Report on Operations
In January 2015, the new DeA Capital S.p.A.
3. The DeA Capital Group’s
website was launched with a completely fresh
key Statement of Financial
graphic layout and set of functions. The site can
Position and Income
Italian and English. The new site has a wealth
Statement figures
of information, financial data, tools, documents,
videos and news related to the DeA Capital Group's
activities, strategy and investment portfolio. The
The DeA Capital Group’s key Statement of Financial
social networks where DeA Capital S.p.A. has a
Position and Income Statement figures to 31
presence can also be accessed from the homepage,
December 2015 are shown below, compared with the
and articles, communications and interesting
corresponding figures to 31 December 2014.
sections selected by users can be shared on social
media. DeA Capital S.p.A. has strengthened its
31 12. 2014
31 12.
"adjusted"
2014 "as
presence on Wikipedia and the social networks
(EUR million)
31.12.2015
(*)
reported"
Slideshare and LinkedIn, adding its most recent
NAV/share (EUR)
2.07
2.11
2.41
documents for institutional investors such as reports
Group NAV
547.0
573.6
653.5
and presentations.
Investment portfolio
454.8
625.0
625.0
Since April 2014, DeA Capital S.p.A. has
Net financial position
- Holding companies
90.0
(39.3)
40.6
published an interactive report containing the
annual results; the versions for 2013 and 2014
Consolidated net
financial position
133.8
(22.1)
57.8
are available in the "Financial Statements and
(*) The "adjusted" results at 31.12.2014 take into account the extraordinary
Reports" section of the website.
dividend distribution of 0,30
€ / share, for a total 79,9 million Euro,
which was completed in May 2015
The website has always been the primary mode
of contact for investors. They can subscribe to
(EUR million)
2015
2014
various mailing lists and receive all news on the
Parent Company net profit/(loss)
(18.9)
(4.5)
DeA Capital Group in a timely manner, as well
Group net profit/(loss)
41.1
(57.6)
as send questions or requests for information
Comprehensive income
and documents to the Company's Investor
(Group share)
Relations area, which is committed to answering
(Statement of Performance - IAS 1)
(13.2)
30.1
queries promptly, as stated in the Investor
Relations Policy published on the site. A quarterly
The table below shows the change in the NAV
newsletter is also published for investors to keep
during 2015.
them updated on the main items of news on the
Group, and analyse the quarterly results and
Value
Change in
Total value No. shares
per share
share performance.
Group NAV
(EUR m)
(millions)
(EUR)
Group NAV "as
reported" at
In this way, DeA Capital S.p.A. is continuing with
31.12.2014
653.5
271.6
2.41
its intention to strengthen its presence on the
Extraordinary dividend
distributed
(79.9)
(0.30)
web and to make information for stakeholders
"Adjusted" Group
available through many channels.
NAV at 31.12.2014
573.6
271.6
2.11
Purchase of own
shares
(13.0)
(7.7)
1.69*
Comprehensive
income - Statement of
Performance - IAS 1
(13.2)
Other changes in NAV
(0.4)
Group NAV at
31.12.2015
547.0
263.9
2.07
(*) Average price of purchases in 2015
DeA CApitAl - AnnUAl finAnCiAl StAtementS to 31 DeCemBer 2015
23
The table below provides details of the Group’s statement of financial position at 31 December 2015.
December 31, 2014
December 31, 2015
"adjusted" (*)
M€
% NIC
€/Sh.
M€
% NIC
€/Sh.
Private Equity Investment
- Kenan Inv. / Migros
76.3
17%
0.29
209.1
34%
0.77
- Funds - Private Equity / Real Estate
194.1
43%
0.74
203.0
33%
0.75
- Other (Sigla, ..)
11.7
3%
0.05
11.4
2%
0.04
Total PEI (A)
282.1
62%
1.08
423.5
69%
1.56
Alternative Asset Management
- IDeA FIMIT SGR
121.7
27%
0.46
144.6
24%
0.53
- IDeA Capital Funds SGR
39.7
9%
0.15
49.9
8%
0.18
- IRE / IRE Advisory
11.3
3%
0.04
7.0
1%
0.03
Total AAM (B)
172.7
38%
0.65
201.5
33%
0.74
Investment Portfolio (A+B)
454.8
100%
1.73
625.0
102%
2.30
Other net assets (liabilities)
2.2
0%
0.00
(12.1)
-2%
(0.04)
NET INVESTED CAPITAL ("NIC")
457.0
100%
1.73
612.9
100%
2.26
Net Financial Position Holdings
90.0
20%
0.34
(39.3)
-6%
(0.15)
NAV
547.0
120%
2.07
573.6
94%
2.11
(*) The "adjusted" results at December 31, 2014 take into account the extraordinary dividend distribution of 0,30
€ / share, for a total 79,9 million Euro,
which was completed in May 2015.
4. Significant events during
(EUR 31.3 million), ICF II (EUR 4.7 million), IDeA OF I (EUR
the year
17.0 million) and IDeA EESS (EUR 1.6 million), to be used in
full to reduce the carrying value of the units.
The significant events that occurred in 2015 are reported
below.
Thus, overall, the private equity funds in which DeA Capital
S.p.A. has invested have produced a net positive cash
Private equity funds - paid calls/
balance totalling EUR 34.7 million for the portion relating to
distributions
the Group.
In 2015, the DeA Capital Group increased its investment in the
following funds by a total of EUR 19.9 million: IDeA I FoF (EUR
Share buyback plan
6.0 million), ICF II (EUR 2.5 million), ICF III (EUR 2.7 million),
IDeA OF I (EUR 1.8 million), IDeA EESS (EUR 4.0 million),
On 17 April 2015, the shareholders’ meeting of DeA Capital
IDeA ToI (EUR 1.4 million) and AVA (EUR 1.5 million).
S.p.A. authorised the Board of Directors to buy and sell, on
one or more occasions and on a revolving basis, a maximum
At the same time, the DeA Capital Group received capital
number of ordinary shares in the Company representing a
reimbursements totalling EUR 54.6 million from IDeA I FoF
stake of up to 20% of the share capital.
24 DeA Capital - Report on Operations
The new plan replaces the previous plan approved by
Plan 2015-2017 approved by the shareholders’ meeting, vesting
the shareholders’ meeting on 17 April 2014 (which was
the Chairman of the Board of Directors and the Chief Executive
scheduled to expire with the approval of the 2014 Annual
Officer with all the necessary powers, to be exercised severally
Financial Statements), and will pursue the same objectives
and with full power of delegation; and (ii) to allocate a total of
as the previous plan, including purchasing treasury shares to
515,000 units (representing the right to receive ordinary shares
be used for extraordinary transactions and share incentive
in the Company free of charge, under the terms and conditions
schemes, offering shareholders a means of monetising their
of the plan) to certain employees and/or directors performing
investment, stabilising the share price and regulating trading
particular roles at the Company, its subsidiaries and the Parent
within the limits of current legislation.
Company De Agostini S.p.A.
The authorisation specifies that purchases may be carried
On 27 August 2015, the Board of Directors allocated an
out up to the date of the shareholders’ meeting to approve
additional 150,000 units to a new manager of the Company.
the Financial Statements for the Year Ending 31 December
2015 and, in any case, not beyond the maximum duration
Shares allocated due to the vesting of units will be drawn
allowed by law, in accordance with all the procedures
from own shares already held by the company.
allowed by current regulations, and that DeA Capital S.p.A.
may also sell the shares purchased for the purposes of
In addition, the Plan enables DeA Capital to oblige
trading, without time limits. The unit price for the purchase
beneficiaries to return, in full or in part, shares received
of the shares will be set on a case-by-case basis by the
pursuant to the Plan, should circumstances emerge that
Company's Board of Directors, but must not be more than
clearly show that incorrect data have been used to verify
20% above or below the share’s reference price on the
the achievement of the targets for the vesting of the units
trading day prior to each individual purchase. In contrast,
“claw-back”).
the authorisation to sell treasury shares already held in the
Company’s portfolio, and any shares bought in the future,
The shareholders’ meeting also approved the Company’s
was granted for an unlimited period, to be implemented
Remuneration Policy pursuant to art. 123-ter of the TUF.
using the methods considered most appropriate and at
a price to be determined on a case-by-case basis by the
Board of Directors, which must not, however, be more
Amendments to the performance share
than 20% below the share's reference price on the trading
plan and the stock option plan for
day prior to each individual sale (with certain exceptions
2013-2015, 2014-2016 and 2015-2017
specified in the plan). Sale transactions may also be carried
out for trading purposes.
Pursuant to art. 114-bis of the TUF, on 17 April 2015, the
Shareholders' Meeting approved a number of amendments
On the same date, the Board of Directors voted to
to the following current share-based incentive plans: (i) DeA
implement the plan to buy and sell treasury shares
Capital Performance Share Plan 2013-2015, (ii) DeA Capital
authorised by the shareholders’ meeting, vesting the
Stock Option Plan 2013-2015, (iii) DeA Capital Performance
Chairman of the Board of Directors and the Chief Executive
Share Plan 2014-2016, and (iv) DeA Capital Stock Option
Officer with all the necessary powers, to be exercised
Plan 2014-2016 (together, the Plans).
severally and with full power of delegation, and set the
maximum unit price above which purchases of treasury
The amendments approved concern (i) the introduction
shares may not be made, at the NAV per share indicated
of a second performance target, related to the total
in the most recent statement of financial position approved
shareholder return of the DeA Capital share, and as an
and disclosed to the market. At the same meeting, the
alternative to the target for growth of the Adjusted NAV,
Company's Board of Directors also voted to adopt market
already provided for in the Plans, on which the conversion
practice regarding the acquisition of treasury shares by
into shares of the units and the entitlement to exercise
setting up a "securities warehouse", as permitted by Consob
the options are dependent and (ii) the introduction of
Resolution 16839 of 19 March 2009.
claw-back mechanisms that enable the Company to oblige
beneficiaries to return shares received pursuant to the
New performance share plan
Plans, should circumstances emerge that clearly show that
incorrect data have been used to verify the achievement of
On 17 April 2015, the DeA Capital S.p.A. Shareholders'
the required performance targets.
Meeting approved the DeA Capital Performance Share Plan
2015-2017, under which a maximum of 675,000 units may
Subsequently, on 5 November 2015, in view of the
be allocated. On the same date, in implementation of the
distribution of the extraordinary dividend of EUR 0.30
shareholders’ resolution, the Board of Directors of DeA Capital
approved by the Shareholders' Meeting on 17 April 2015 and
S.p.A. voted (i) to launch the DeA Capital Performance Share
the resulting reduction in the DeA Capital share value, the
DeA CApitAl - AnnUAl finAnCiAl StAtementS to 31 DeCemBer 2015
25
Board of Directors of DeA Capital, as the competent body
Dividends from Alternative Asset
pursuant to the Plans' regulations, approved a number of
Management
amendments to the following incentive-based plans in order
to keep the substance and financial content unchanged.
On 28 April 2015, IDeA Capital Funds SGR paid dividends
Specifically:
totalling EUR 3.5 million, attributable entirely to DeA Capital
S.p.A.
• Performance share plans: the Board voted to
compensate for the lower value of the Plans following
On 6 May 2015, IDeA FIMIT SGR paid dividends totalling
the distribution of the extraordinary dividend, in the
EUR 7.2 million, of which approximately EUR 4.7 million was
event that the vesting conditions are met, by allocating
attributable to the DeA Capital Group.
new units, to be determined on the vesting date. The
new units, which will be valued at the price per share on
In summary, dividends paid during 2015 by the Alternative
the same date, will be allocated pro rata to the portion
Asset Management business to the DeA Capital Group's
of units that have vested, up to the maximum number
holding companies totalled EUR 8.2 million (EUR 12.5 million
of units provided for under the above-mentioned Plans.
in 2014).
The Board also resolved that where the lower value of
the Plans cannot be compensated for by the allocation of
Distribution of the share premium reserve
new units, a one-off bonus will be paid as compensation
in cash, commensurate with the portion of units that has
vested;
On 13 May 2015, in accordance with the vote of the
Shareholders' Meeting on 17 April 2015, DeA Capital S.p.A.
• Stock option plans: the Board voted to adjust the strike
made a partial distribution of the share premium reserve in
price of the options commensurate with the extraordinary
an amount of EUR 0.30 per share, i.e. based on the total
dividend, i.e. EUR 0.30 per share, subject to the lower limit
number of shares net of treasury shares held, totalling
represented by the nominal value of the DeA Capital share.
around EUR 79.9 million.
Specifically, the Board voted to: reduce the strike price (i)
from EUR 1.289 to EUR 1.000 for the Stock Option Plan
2013-2015 and (ii) from EUR 1.32 to EUR 1.020 for the
Sale of stake in Migros and
Stock Option Plan 2014-2016.
subsequent cash distribution by Kenan
Investments
Introduction of an increased voting
On 15 July 2015, after approval from the Turkish antitrust
rights mechanism (loyalty shares)
authorities had been received (last condition precedent
to completion of the transaction), Moonlight Capital S.A.,
Also on 17 April 2015, the Extraordinary Shareholders'
a wholly-controlled special purpose vehicle of Kenan
Meeting of DeA Capital S.p.A. approved the amendment to
Investments S.A. (of which DeA Capital owns approximately
article 9 of the Articles of Association, introducing a loyalty
17%), completed the sale of a 40.25% stake in Migros to
shares mechanism pursuant to article 127-quinquies of the
Anadolu Endüstri Holding, a leading Turkish conglomerate,
TUF. Specifically, the mechanism will permit the allocation
based on the agreements entered into at the end of 2014.
of two voting rights for every ordinary DeA Capital share
held by the same shareholder of the Company for a
Following the receipt of the proceeds from this sale, on 24
continuous period of at least 24 months, starting from
July 2015 Kenan Investments distributed a total of EUR
the registration of the shareholder on a special list,
648.5 million to shareholders; DeA Capital’s share amounted
which will be set up and maintained by the Company.
to EUR 107.7 million, generating a capital gain of EUR 46.3
The introduction of the new mechanism is intended to
million.
encourage shareholders to retain their equity investments
over the long term, and therefore promote the presence
Given the proceeds already realised in previous years (EUR
of long-term shareholders who are not geared towards
79.8 million), the total cash-in from DeA Capital's investment
short-termism and are endowed (through the increased
in Migros is now EUR 187.5 million, in addition to the residual
voting rights) with more effective monitoring powers. This
stake, valued at EUR 76.3 million at 31 December 2015
objective is particularly important for DeA Capital, whose
(corresponding to an indirect stake of approximately 6.9%
business is traditionally characterised by medium- to long-
in Migros' capital), against an initial investment of EUR 175
term cycles.
million (multiple of 1.51x on capital invested).
26 DeA Capital - Report on Operations
Second closing of IDeA Taste of Italy
5. Results of the
private equity fund
DeA Capital Group
On 1 September 2015, the IDeA Taste of Italy fund
The consolidated results relate to the operations of the DeA
completed a second closing for a total of EUR 54 million,
Capital Group in the following businesses:
bringing the fund's total commitment to EUR 140 million.
• Private Equity Investment, which includes the reporting
DeA Capital S.p.A. took part in this closing via the
units involved in private equity investment, broken down
subscription of commitments of up to EUR 5.65 million,
into shareholdings (direct investments) and investments in
taking its total commitment in the fund to EUR 14.25
funds (indirect investments);
million.
• Alternative Asset Management, which includes reporting
units dedicated to asset management activities and related
Definitive repayment of the credit
services, with a focus on the management of private equity
facility with Mediobanca
and real estate funds.
On 2 September 2015, the revolving credit facility in place
with Mediobanca (EUR 40 million), already fully repaid at 31
Private equity
July 2015, was definitively settled.
Investment prospects and the outlook for
On 31 December 2015, the revolving credit facility of EUR
the European and global private equity
40 million with Intesa Sanpaolo, expiring on 30 June 2017,
markets
was still in place. This loan has not been drawn down and is
therefore fully available.
There was keen interest in private equity ("PE") in 2015, with
institutional and private investors increasing their allocation
to this strategy, driven by the search for higher returns
Temporary extension of the credit
compared with traditional asset classes. Despite particularly
facility granted to the Sigla Group
buoyant demand for investment, certain contextual aspects
need to be given careful consideration.
On 12 October 2015, the agreement to extend the
revolving credit facility in place between DeA Capital
Investors' interest (limited partners, LP), fuelled i.a. by a
Group and the associate Sigla from 31 October 2015 to 21
steady flow of distributions received in recent years, has
September 2016 was finalised. This loan is secured by a lien
generated greater flows of capital to managers (general
on 51% of the shares of the borrowing company.
partners, GP); these, in turn, have found themselves having
to manage an increasing amount of dry powder and invest
the significant funds raised within defined timescales, as is
common practice in PE. This has resulted in an increase in
competition, which has pushed up valuations to particularly
high levels and, in some markets in particular, has led to
the need to extend the investment period. The current level
of market multiples reflects this increase in competition,
especially in buy-out strategies.
2015 was also a year of strong growth in the private credit
market; fundraising rose by 10% compared with the previous
year to its highest level since 2008 (USD 85 billion). Private
credit is increasingly replacing loans from the banking sector,
which is still mired in recession, especially in Europe; indeed
the banking sector is proving to be a source of investment
with very attractive risk/return profiles in the non-performing
loans sector.
In the second half of the year, the state of euphoria that
had pushed investments to record highs was dented by
the continuing fall in the price of crude oil. This negatively
impacted loans issued to support transactions funded by
DeA CApitAl - AnnUAl finAnCiAl StAtementS to 31 DeCemBer 2015
27
particularly aggressive financial structures; the high-yield
Investment also increased in 2015 (+10%). At USD 411
bond and leveraged loan markets suffered outflows, with
billion, the total value of transactions in 2015 was the
issues of these instruments slowing sharply. Fundraising by
highest since 2007.
funds specialising in the energy sector slowed dramatically
The level of competition in larger transactions and the
and many companies defaulted.
opportunity for GPs to complete transactions with a high
level of low-cost debt have resulted in record valuations of
At the same time, the slowdown in the Chinese economy
LBO transactions. EV/EBITDA multiples in 2014 and 2015
and, more generally, in all the BRIC countries - for different
topped the previous high in 2007
reasons in each - triggered an outflow of capital from
emerging markets, causing currency depreciation against
Volume of divestments of buy-out funds by region (USD billion)
the dollar and valuation multiples to fall across the board.
460
It also led to valuations of emerging market funds being
8%
416
7%
2%
denominated in dollars but invested in local currency. These
11%
336
327
markets also saw a sharp slowdown in fundraising from
6%
312
4%
4%
6%
38%
9%
7%
34%
250
autumn, which will probably continue in 2016.
5%
35%
11%
45%
35%
31%
Investors honed their selection processes and concentrated
48%
52%
54%
56%
their investments in a smaller number of higher-quality
52%
40%
relationships. In addition, the financial structures of recent
2010
2011
2012
2013
2014
2015
transactions involved a greater equity contribution (40%)
North America
Europe
Asia
RoW
compared with 2005-2007 (30-31%). Lastly, in terms of
Source: Preqin
quality, GPs are increasingly focusing on making companies
efficient using teams of operational partners.
Volume of divestments of venture capital funds (USD billion)
125
Global value of investments in buy-outs (USD billion)
411
81
348
73
308
64
65
275
52
272
239
2010
2011
2012
2013
2014
2015
Source: Preqin
2010
2011
2012
2013
2014
2015
Source: Preqin
The volatility of the financial markets, especially in the
second half of 2015, acted as a brake on disposals in the
Prices and financial structures of LBO transactions
buy-out segment, which saw volumes fall by 10%. In
10.3x
geographical terms, the decline related mainly to Europe.
9.8x
8.8x
8.7x
8.8x
The venture capital segment, however, was more stable,
8.5x
4.0x
4.5x
recording volumes similar to 2014.
3.7x
3.5x
3.4x
3.8x
Total PE fundraising (USD billion)
5.4x
5.8x
5.8x
547
551
548
4.7x
5.1x
5.2x
600
1,500
500
407
1,200
2010
2011
2012
2013
2014
2015
356
400
Total Leverage
Equity/EBITDA
301
900
300
Source: S&P Capital IQ LCD
600
200
300
100
-
0
2011
2012
2013
2014
2015
2016
Amount Raised
Number of Funds
Source: Preqin
28 DeA Capital - Report on Operations
Global PE fundraising by region (USD billion)
Some of the non-performing assets or limited-liquidity
301
356
407
547
551
548
assets might also have to be transferred to specialist
15%
18%
16%
100%
operators. Accordingly, the environment is particularly
26%
28%
24%
24%
23%
favourable for operators in private credit and special
26%
21%
21%
25%
situations. Moreover, mid-market strategies in southern
European countries may benefit from having lower
62%
62%
valuations than comparable companies in continental
53%
51%
51%
56%
Europe;
- The US has attractive strategies with opportunities outside
2009
2010
2011
2012
2013
2014
the competitive arena. Mid-market funds aiming to achieve
North America
Europe
RoW
Source: Preqin
operating improvements in companies with lower-than-
average performance can generate value without the
Volumes of capital raised were very similar to those of
use of leverage. Sector funds also have greater potential
the last two years. The main difference in 2015 was that
to generate and implement investment opportunities in
the number of funds invested fell by 20%. Fundraising
shorter timescales. Lastly, restrictive monetary policies on
is gradually being concentrated in the hands of a small
particularly debt-oriented financial structures could trigger
number of GPs which correspond to the selection criteria
a new cycle of distressed debt. In this regard, defaults are
of the more sophisticated investors. In geographical
already under way in the energy sector, a phenomenon
terms, most capital has been raised for funds focused on
which could create attractive investment opportunities for
North America, and has declined in Europe and emerging
specialist funds.
countries.
- The deteriorating economic situation in emerging
markets is reflected in reduced valuations, which are
exacerbated by the depreciation of local currencies. The
Global capital calls and distributions of PE funds (USD billion)
market favours funds with substantial capital still to
475
invest because it is possible to access companies with
better fundamentals in a less competitive environment.
329
294
The increase in middle-class consumer spending is
277
273
230
248
239
the investment theme that remains the main driver of
217
189
opportunities in these countries.
128
117
Private equity in Italy
2010
2011
2012
2013
2014
1H 2015
Capital Calls (US$ Bn)
Distributions (US$ Bn)
Source: Preqin
Statistics compiled by AIFI (Italian Private Equity and
Venture Capital Association) up to the first half of 2015
As the above chart shows, distributions in the first half
show a sharp increase in fundraising compared with the
of 2015 greatly exceeded capital calls at a global level
same period in 2014. Capital raised in the market was
in 2015. Given the volatility of the financial markets in
EUR 1,328 million, a considerable increase on the EUR 434
the second half and the sustained level of investment
million raised in the same period of 2014. The domestic
activity reported in the current year, the net balance of
component of capital rose to 57% of the total, with
distributions and capital calls may be lower at the end of
individual investors playing a significant role at 30% of
the year.
fundraising.
There were 168 new investments worth a total of EUR 1,787
It is also possible that 2016 will see a slowdown in both capital
million (down by 5% compared with the same period in
calls, given the current weakness of the high-yield debt and
2014). The bulk of the resources invested, as in previous
leveraged loans market, and distributions, where the main
years, went into buy-out transactions, which attracted EUR
uncertainty is the volatility of the financial markets.
1,142 million, on a par with the year-earlier figure.
Divestment activity recovered significantly in the first half of
Lastly, the current investment themes suggested by the
2015: 99 investments were sold, representing an increase
market situation are as follows:
of 45% on the same period in 2014. The amount divested,
calculated at historical acquisition cost, totalled EUR 1,914
- In Europe, the pervasive uncertainty about the solidity of
million, compared with EUR 886 million in the first half of
the financial sector could restrict banks' lending capacity.
2014 (+116%).
DeA CApitAl - AnnUAl finAnCiAl StAtementS to 31 DeCemBer 2015
29
Sales and purchases by institutional investors (in EUR million)
Real Estate
9
8
Real Estate in Europe
7
6
Investment activity in Europe continued its recovery in
5
4
2015, increasing 18% on 2014 to EUR 263 billion; this
3
even surpassed the previous peak of EUR 257 billion in
2
20071.
1
0
2009
2010
2011
2012
2013
2014
2015
Non-residential sales and purchases in Europe (EUR billion)
Source: CBRE
300
In terms of the type of property bought or sold, the offices
250
sector was still the largest in 2015, comprising 37% of the
200
volume invested, followed by the retail sector with 17% (in
150
decline) and hotels with 10%. The industrial/logistics sector
also declined, with 4% of the total.
100
50
Breakdown of non-residential sales and purchases
0
by intended use in 2015
2009
2010
2011
2012
2013
2014
2015
Source: CBRE
%
4
%
10
Industrial
Hotel
Note, however, that activity slowed in the second half of
%
37
17
%
the year, with a fall of 3% in the fourth quarter of 2015
Offices
Retail
compared with the same period in 2014. The biggest falls
were in the UK, Spain, Sweden and eastern European
countries, while Germany continued on its growth path.
32
%
The retail and hotel segments were the year's most dynamic
Other
performers, representing 26% and 8.6% of investment
Source: CBRE
respectively. Investment activity in the US was the main
source of non-European capital.
Prices in the Italian real estate market continued to erode.
Yield compression continued but at a slower rate than in
Since 2008, a significant loss has built up, especially in the
previous years.
13 main markets, with falls of 23.5% for offices, 19.6%
for shops, 21.7% for new builds and 22.6% for existing
property3.
Real Estate in Italy
Real estate investment activity in Italy continued to improve
Average prices in Italy's 13 largest cities (2007=100)
in 2015, with growth of EUR 8.1 billion, a rise of 5% on
110.0
2014. Volumes mainly related to individual assets rather than
105.0
portfolios (which fell to 28% of the total).
100.0
95.0
Foreign investment continued to account for a significant
90.0
proportion of total capital invested, at 75%. This figure is,
85.0
however, down on the 80% recorded in 2014, reflecting the
80.0
75.0
recovery in Italian capital.
70.0
2007
2008
2009
2010
2011
2012
2013
2014
2015
Of foreign investors, the US remains in pole position,
New or renovated
New or renovated
Stores
houses
offices
followed by the Germans and then the Chinese, who were
Source: Nomisma
involved in some significant transactions in the year2.
1 CBRE, European Investment Quarterly - Market View Q4 2015
2 CBRE, Italian Investment Quarterly Q4 2015
3 Nomisma, Third Report on the Property Market 2015
30 DeA Capital - Report on Operations
Given the intense activity by institutional and speculative
In June 2015, the supply of real estate funds comprised
investors alike, together with the depleted stocks of prime
88% reserved funds with assets of around EUR 27 billion
properties, the general compression of prime net yields
and 12% retail funds with assets of approximately EUR 4
continued in 2015. Specifically, yields on offices contracted
billion.
around 100 basis points on the previous year, to 4% in both
Assets managed by various fund types (EUR million)
Milan and Rome; the retail sector suffered too, with yields
on high street shops, shopping centres and retail parks
falling by 3.5%, 5% and 6% respectively compared with the
5,136
previous year4.
Contribution
Reserved Funds
2,924
Real Estate funds in Italy
Retail Funds
With an estimated EUR 48 billion at end-2015, Italian real
22,026
estate funds represent about 10% of European real estate
960
Reserved Funds
Contribution
funds in terms of net assets. The expected increase in NAV
Retail Funds
(net asset value) for 2015 turned out at 11% compared
with the previous year, slightly higher than the European
average (9%)5
The breakdown of assets has changed slightly since 2014:
property and real property rights accounted for 88.3% (a
Eight new property funds for qualified or institutional
rise of 0.3% on December 2014), securities and liquidity
investors become operational in the first half of 2015
7.3% (a fall of 1.7% compared with December 2014), while
(Assogestioni figures). Seven of the eight products plan to
the remaining portion comprised real estate companies
distribute income and their average duration is 20 years.
and financial instruments representing securitisation
Seven were created via a contribution and one in the normal
transactions (down by 12% on December 2014).
manner. Two are speculative funds.
At the end of the first half of 2015, 69% of funds used leverage
Gross fundraising in the first half of 2015 totalled EUR 791
to increase invested assets. The extent of leverage used (i.e.
million, a fall of 49.5% on the year-earlier period.
the ratio of each fund's debt to its debt capacity) was 55.7%,
an increase of 0.7% on the last six months of the year.
With regard to asset allocation, 48.8% of the funds' capital
was invested in the offices sector, 13.4% in residential
Reserved funds, which were responsible for the majority
property, 13% in commercial property, 12.7% in property for
of real estate portfolio movements in the period analysed,
other intended uses and the rest in real estate for the tourist
bought or transferred real estate worth over EUR 1.4 billion
and leisure industry (4.3%), the industrial sector (3.4%),
and sold property worth over EUR 900 million. Retail funds,
logistics (2.9%) and nursing homes (1.5%). The biggest
however, bought or transferred property worth EUR 17
changes relate to real estate for nursing homes and industrial
million and sold property worth EUR 145 million.
use, which rose by 21% and 12% respectively compared with
the second half of 2014.
For the reserved funds, most of the movements in purchases
were attributable to products that called up commitments
By geographical region, the main investments were in
during the period; however, these products were not the
the North West (44%) and Central Italy (33.8%) with the
reason for the bulk of the disposals. Conversely, movements
remainder invested in the North East (12.4%), Southern
in retail funds related exclusively to products which did not
Italy and the Islands (7.5%) and, lastly, abroad (2.4%).
call up commitments6.
4 CBRE, Marketview Q4 2015
5 Source: Scenari Immobiliari - "Real Estate Funds in Italy and Abroad,
6 Source: Assogestioni - Half-year report on Italian real estate funds, H2
2015 Report"
2015
DeA CApitAl - AnnUAl finAnCiAl StAtementS to 31 DeCemBer 2015
31
Private Equity Investment
With regard to funds, at 31 December 2015, the DeA Capital
Group was subscribed to units in:
In terms of shareholdings, at 31 December 2015, the DeA
Capital Group was a shareholder of:
• IDeA I FoF (valued at EUR 77.2 million);
• ICF II (valued at EUR 41.7 million);
• Kenan Investments, the indirect parent company of Migros
• ICF III (valued at EUR 4.8 million);
(valued at EUR 76.3 million);
• IDeA OF I (valued at EUR 48.5 million);
• Sigla Luxembourg, the parent company of Sigla (valued at
• IDeA EESS (valued at EUR 7.3 million);
EUR 11.5 million);
• IDeA ToI (valued at EUR 1.1 million);
• Harvip, which manages funds and investment vehicles used
• AVA (valued at EUR 3.8 million);
to purchase distressed investments (valued at EUR 0.2
• six venture capital funds (with a total value of
million).
approximately EUR 9.7 million).
The DeA Capital Group is also a shareholder in other smaller
Valuations of shareholdings and funds in the portfolio reflect
companies which are not included in the investment portfolio
estimates made using the information available on the date
as they are either dormant or in liquidation and have zero
this document was prepared.
carrying value.
32 DeA Capital - Report on Operations
Investments in associates
SIGLA LUXEMBOURG (PARENT COMPANY OF SIGLA)
INVESTMENT DETAILS:
REGISTERED OFFICE:
On 5 October 2007, the DeA Capital Group
Italy
finalised the acquisition of a stake (currently
41.39%) in Sigla Luxembourg, the holding
SECTOR:
company that fully controls Sigla, which operates
Consumer credit
in Italy and provides consumer credit for non-
In terms of operating performance, Sigla
specific purposes.
WEBSITE:
recorded a net profit in 2015, a marked
improvement on the result in 2014 (which
BRIEF DESCRIPTION:
had been impacted by extraordinary items
Sigla specialises in salary-backed loans (“CQS”)
totalling EUR -2.0 million). This was thanks to
and personal loans. It is a benchmark operator in
growth in salary-backed loans in connection
the provision of financial services to households
with new funding raised in the second half of
throughout Italy, chiefly through a network of
2014 (totalling over EUR 500 million, including
agents.
the additional agreements signed in October
2015), the full effects of which were felt from
The company’s product range of salary-backed
the second quarter of 2015.
loans and personal loans includes the servicing
of portfolios of unsecured non-performing loans
(personal loans and credit cards).
The investment in Sigla Luxembourg, which was
reclassified under “assets held for sale” in light
Innovative operator
of the launch, in the fourth quarter of 2015, of
a process to sell the shareholding, was reported
in credit for non-
at the lower of the initial carrying value and
the estimated realisable value; its value in the
specific purpose
Consolidated Financial Statements for the Year
Ending 31 December 2015 was approximately EUR
11.5 million (EUR 11.2 million at 31 December
2014).
Sigla (mln €)
2015
2014 Change
Loans to customers*
35.0
41.5
(6.5)
Revenues from loans
to customers
0.4
0.8
(0.4)
CQS granted
152.5
96.7
55.8
Revenues from CQS
9.6
5.0
4.6
Group net profit
1.2
(2.2)
3.4
* Receivables for personal loans net of impairment provisions
DeA CApitAl - AnnUAl finAnCiAl StAtementS to 31 DeCemBer 2015
33
Investments in other companies
KENAN INVESTMENTS (HOLDER OF AN INDIRECT STAKE IN MIGROS)
REGISTERED OFFICE:
INVESTMENT DETAILS:
Turkey
In 2008, the DeA Capital Group acquired
about 17% of the capital of Kenan
SECTOR:
Investments, the company heading the
Food retail
structure to acquire the controlling interest in
Migros.
WEBSITE:
As of 15 July 2015, following the sale by
Moonlight Capital, a wholly-controlled
subsidiary of Kenan Investments, of a 40.25%
stake in Migros to Anadolu Endüstri Holding,
a leading Turkish conglomerate, Kenan
systems such as bakkals (small stores typically
Investments jointly controlled Migros with a
run by families) to an increasingly widespread
stake of 40.25%.
organised distribution model driven by
expansion and the modernisation process under
BRIEF DESCRIPTION:
way in Turkey.
Migros was established in 1954 and is the
leading company in the food retail sector in
The stake in Kenan Investments is recorded
Turkey. The company has 1,410 sales outlets
in the Consolidated Financial Statements
(at 31 December 2015), with a total net area
for the Year Ending 31 December 2015 at
of 1,016 thousand square metres.
EUR 76.3 million (compared with EUR 209.1
million at 31 December 2014). This amount
Migros is present in all seven regions of
(indirectly corresponding to approximately
Leading company
Turkey, and has a marginal presence in
6.9% of Migros' capital, i.e. 40.25% of the
in the food retail
Kazakhstan and Macedonia.
latter's capital via the Group's interest in Kenan
Investments) reflects a price per share of
sector in Turkey
The company operates under the
Migros of:
following names: Migros and Macrocenter
(supermarkets), 5M (hypermarkets),
- TRY 26.00 (plus interest of 7.5% p.a. from 30
Ramstore (supermarkets abroad) and
April 2015) for the stake subject to put/call
Kangurum (online store).
options on 9.75% of Migros, as agreed with
Anadolu and exercisable from 30 April 2017;
Growth in the food retail sector in Turkey
- TRY 17.45, being the market price on 31
is a relatively recent phenomenon, brought
December 2015, for the remaining stake (30.5%
about by the transition from traditional
of Migros capital).
34 DeA Capital - Report on Operations
The change in the value of the stake in Kenan
December 2014) and the depreciation of the
Investments at 31 December 2015 compared with
Turkish lira against the euro (3.17 TRY/EUR
31 December 2014 reflects the following:
at 31 December 2015 versus 2.83 TRY/EUR
at 31 December 2014).
• net proceeds (EUR 107.7 million) received on 24
July 2015 following completion of the sale of a
Note that the effect of the measurement of
40.25% stake in Migros;
Migros at fair value on the NAV of the DeA
Capital Group was partially offset by the
• a decrease of EUR 25.2 million in the fair
reversal (EUR 11.4 million) of the payable
value reserve due to the fall in the share price
for carried interest to be paid based on
(TRY 17.45 per share at 31 December 2015
the achievement of certain performance
compared with TRY 22.75 per share at 31
parameters.
Migros (mln YTL)
2015
2014
Change
Revenues
9,390
8,123
15.6%
EBITDA
602
529
13.8%
Group net profit
(371)
96
n.a.
Net financial debt
(1,748)
(1,663)
-85 mln YTL
DeA CApitAl - AnnUAl finAnCiAl StAtementS to 31 DeCemBer 2015
35
Funds
At 31 December 2015, the DeA Capital Group’s Private
carrying amount in the Consolidated Financial Statements
Equity Investment business included investments -
for the Year Ending 31 December 2015 of EUR 194.1 million
other than the investment in the IDeA OF I fund (fully
(corresponding to the estimated fair value calculated using
consolidated in accordance with IFRS 10) and the AVA real
the information available on the date this document was
estate fund (classified under “Investments in associates”,
prepared).
based on the units held) - in three funds of funds (IDeA I
FoF, ICF II and ICF III), two theme funds (IDeA EESS and
Residual commitments for all the funds in the portfolio were
IDeA ToI) and another six venture capital funds, for a total
approximately EUR 92.6 million.
36 DeA Capital - Report on Operations
IDeA OF I
IDEA OPPORTUNITY FUND I >>
INVESTMENT DETAILS:
parameters. In addition to the above-
REGISTERED OFFICE:
IDeA OF I is a closed-end fund under Italian law
mentioned transaction, IDeA OF I invested
Italy
for qualified investors, which began operations
EUR 5.2 million to subscribe to a bond
on 9 May 2008 and is managed by IDeA Capital
convertible into 5% of the shares of Giochi
SECTOR:
Funds SGR.
Preziosi (maturing on 31 December 2018);
Private equity
At its meeting on 20 July 2011, the Board of
- on 22 December 2008, it acquired a 4%
WEBSITE:
Directors of IDeA Capital Funds SGR approved a
stake in Manutencoop Facility Management
number of regulatory changes. These included
S.p.A. by subscribing to a reserved capital
changing the name of the IDeA Co-Investment
increase. This company is Italy’s leading
Fund I to IDeA Opportunity Fund I (IDeA OF
integrated facility management company,
I) and extending investment opportunities to
providing and managing a wide range
qualified minority interests, independently or via
of property management services and
syndicates.
other services for individuals and pubblic
authorities. On 2 July 2013, IDeA OF I sold
The DeA Capital Group has a total commitment of
a 1% stake in the company’s capital to
up to EUR 101.8 million in the fund.
the controlling shareholder (Manutencoop
Società Cooperativa), backed by the issue
BRIEF DESCRIPTION:
of a three-year remunerated vendor note,
IDeA OF I has total assets of approximately
thereby reducing its own stake to 3%;
EUR 217 million. Its objective is to invest,
independently or via syndicates with a lead
- on 31 March 2009, it acquired a 17.43%
Fund size:
investor, by purchasing qualified minority
stake in Grandi Navi Veloci S.p.A. ("GNV"),
interests.
an Italian shipping company that transports
passengers and goods on various routes
217 million
At 31 December 2015, IDeA OF I had called up
around the Mediterranean Sea. On 2 May
81.2% of the total commitment and distributed
2011, with the finalisation of Marinvest's
Euro
22.7% of that commitment, after making nine
entry into the shareholder structure of GNV
investments:
through the subscription of a reserved capital
increase, the stake held by IDeA OF I was
- on 8 October 2008, it acquired a 5% stake in
diluted to 9.21%. Subsequently, IDeA OF I’s
Giochi Preziosi S.p.A., a company active in the
decision not to subscribe, on a pro-rata basis,
production, marketing and sale of children’s
to two further capital increases (August 2012,
games with a product line covering childhood
January 2014) led to a further dilution in its
to early adolescence. In May 2015, IDeA OF I
shareholding to 3.12%; Note that after 31
completed the sale of the entire stake in Giochi
December 2015, the sale of the entire stake
Preziosi for EUR 4.4 million (of which EUR 1.7
held in GNV to a company in the Marinvest
million was deferred until 31 December 2018),
Group, the main shareholder of GNV, was
plus a potential earn-out conditional upon
completed for a purchase price of EUR 3.4
Giochi Preziosi achieving certain performance
million on 25 February 2016;
DeA CApitAl - AnnUAl finAnCiAl StAtementS to 31 DeCemBer 2015
37
IDEA OF I
- on 10 February 2011, it invested in bonds
3 million) and 19 May 2014 (EUR 3 million),
convertible into shares of Euticals S.p.A.,
and the conversion of a bond into shares of
Italian leader in the production of active
Iacobucci, for EUR 6 million, which took place
ingredients for pharmaceutical companies
on 10 October 2014;
that operate in the generics sector. As part
of the extraordinary operation that led to the
- on 9 October 2012, IDeA OF I acquired an
transfer of the controlling share in Euticals
indirect stake of 4.6% in Patentes Talgo S.A.
S.p.A., on 3 April 2012, these bonds were
(Talgo), a Spanish company that designs and
transferred into the acquisition vehicle,
produces solutions for the rail sector, chiefly sold
Lauro 57, which now owns 100% of Euticals
on the international market (high-speed trains,
S.p.A.; in exchange, a stake of 7.77% was
and maintenance vehicles and systems). On 7
acquired in the same acquisition vehicle.
May 2015, a 45% partial stake in the subsidiary
On 2 April 2015, a share capital increase
was sold as part of its listing on the Madrid stock
totalling EUR 12.5 million (of which EUR 1.2
exchange for net proceeds of EUR 24.3 million,
million was for IDeA OF I) was completed;
a return of 3.6 times the investment. After this
this brought the stake held in the company
sale, IDeA OF I holds an indirect stake in Talgo
to 7.8%;
of approximately 2.5%;
- on 25 February 2011, it purchased a 9.29%
- on 12 December 2012, it acquired a stake of
stake in Telit Communications PLC (Telit),
29.34% in 2IL Orthopaedics, a Luxembourg-
the third-largest producer of machine-to-
registered vehicle which, through a public
machine communications systems in the
takeover bid and subsequent delisting of
world. The stake held by IDeA OF I was
previously listed shares, obtained full control
subsequently diluted to 8.53% due to the
(on 15 February 2013) of English company
exercise of stock options by the company's
Corin Group PLC (Corin). Corin is active in
management. The sale of a portion of
the production and marketing of orthopaedic
Telit's shares held by IDeA OF I, which
devices, especially for hips and knees;
began in 2014, continued in 2015 for a
total price of EUR 27.4 million (of which
- on 27 February 2013, the fund acquired a
EUR 11.2 million was recorded at the end
stake of 10% in Elemaster S.p.A. (Elemaster),
of 2014), generating a 3.5 times return on
the leading operator in ODM (original
the original investment. Following the sale,
design manufacturing) and EMS (electronic
IDeA OF I now owns approximately 1.1%
manufacturing services), i.e. the design and
of Telit;
construction of electronic equipment. At the
same time, the IDeA Efficienza Energetica e
- on 11 September 2012, an agreement
Sviluppo Sostenibile Fund, also managed by
was signed with the main shareholder,
IDeA Capital Funds SGR, invested an equal
Filocapital S.r.l., for an investment in
amount.
Iacobucci HF Electronics S.p.A. (Iacobucci),
a company that manufactures trolleys
The units held in IDeA OF I were reported in the
for aeroplanes and trains, and specialises
Consolidated Financial Statements for the Year
in the design, production and marketing
Ending 31 December 2015 at EUR 48.5 million,
of components for aircraft fittings and
versus EUR 56.0 million at 31 December 2014. The
furnishings. At the date of this document,
change is attributable to capital calls of EUR 1.8
the investment in Iacobucci consists of a
million, capital reimbursements of EUR 17.0 million,
stake of 34.85%, following two reserved
a pro-rata net gain for the period of EUR 13.1
capital increases on 7 August 2013 (EUR
million and a EUR 5.4 million decrease in fair value.
38 DeA Capital - Report on Operations
The table below shows a breakdown of the fund’s NAV at 31 December 2015:
(EUR million)
100%
DeA Capital
Investments in Portfolio
Giochi Preziosi
5.2
2.4
Manutencoop Facility Management
18.9
8.9
Lauro Cinquantasette (Euticals)
3.4
1.6
Telit Communications
13.0
6.1
Iacobucci HF Electronics
3.5
1.6
Pegaso Transportation Investments (Talgo)
6.0
2.8
2IL Orthopaedics LTD (Corin)
18.5
8.7
Elemaster
13.6
6.4
Grandi Navi Veloci
8.5
4.0
Total Investments in Portfolio
90.6
42.5
Other long term receivables
9.2
4.4
Other aseets (liabilities)
0.1
0.0
Cash and cash equivalents
3.4
1.6
Net equity
103.3
48.5
The table below shows the key figures for IDeA OF I at 31 December 2015.
% DeA
Registered
Year of
Subscribed
Capital in
IDeA OF I (€)
office commitment
Fund Size commitment
fund
IDeA Opportunity Fund I
Italy
2008
216,550,000
101,750,000
46,99
Residual Commitments
Total residual
commitment in:
Euro
19,129,000
DeA CApitAl - AnnUAl finAnCiAl StAtementS to 31 DeCemBer 2015
39
IDeA I FoF
IDEA I FUND OF FUNDS
REGISTERED OFFICE:
INVESTMENT DETAILS:
Italy
IDeA I FoF is a closed-end fund under Italian
funds in turn hold 369 positions, with varying
law for qualified investors, which began
maturities, in companies active in geographical
SECTOR:
operations on 30 January 2007 and is managed
regions with different growth rates.
Private equity
by IDeA Capital Funds SGR.
The funds are diversified in the buy-out (control)
WEBSITE:
The DeA Capital Group has a total commitment
and expansion (minorities) categories, with
of up to EUR 173.5 million in the fund.
overweighting towards medium- and small-scale
transactions and special situations (distressed
BRIEF DESCRIPTION
debt/equity and turnaround).
IDeA I FoF, which has total assets of
approximately EUR 681 million, invests its
At 31 December 2015, IDeA I FoF had called up
assets in units of unlisted closed-end funds
84.7% of its total commitment and had made
that are mainly active in the local private
distributions totalling 65.6% of that commitment.
equity sector in various countries. It optimises
Fund size:
the risk-return profile through careful
diversification of assets among managers with
a proven track record of returns and solidity,
681 million
different investment approaches, geographical
Euroareas and maturities.
At the date of the latest report available, the
IDeA I FoF portfolio was invested in 41 funds
with different investment strategies; these
40 DeA Capital - Report on Operations
OTHER IMPORTANT INFORMATION:
Below is an analysis of the portfolio, updated to the
year of investment, geographical area, sector
date of the latest report available, broken down by
and type.
Breakdown by vintage(1) (%)
Breakdown by geography(2) (%)
2014
2015
3
0
2013
2000-2006
8
11
Global
21
2012
2007
11
15
Europe
2011
RoW
44
16
14
2008
9
2010
17
2009
9
US
21
Breakdown by industry(1) (%)
Breakdown by type(2) (%)
Cons.
Distressed Portfolio
Discretionary
3
Large
15
Special
Buyout
Situations
Cons.
16
Materials
19
Staples
8
7
Energy
Expansion
12
10
Healthcare
Transportation
6
VC
5
Pharma 2
5
Mid
Industrials
Financials 5
Buyout
9
Asset Based PE
31
Media 4
IT 17
6
Small Buyout
RE 1
Leisure 6
14
Notes:
1. % of the FMV of the investment at 31 December 2015;
2. % of fund size based on paid-in exposure (capital invested + residual commitments) at 31 December 2015
The units in IDeA I FoF had a value of
capital reimbursements of EUR 31.3 million
approximately EUR 77.2 million in the
and an increase in fair value of EUR 9.0
Consolidated Financial Statements for the
million.
Year Ending 31 December 2015 (EUR 93.5
million at 31 December 2014). The change
The table below shows the key figures for IDeA
was due to capital calls of EUR 6.0 million,
I FOF at 31 December 2015.
Registered
Year of
Subscribed
% DeA Capital in
IDeA I FoF (€)
office commitment
Fund Size commitment
fund
IDeA I Fund of Funds
Italy
2007
681,050,000
173,500,000
25.48
Residual Commitments
Total residual
commitment in:
Euro
26,580,192
DeA CApitAl - AnnUAl finAnCiAl StAtementS to 31 DeCemBer 2015
41
ICF II
ICF II
REGISTERED OFFICE:
INVESTMENT DETAILS:
Italy
ICF II is a closed-end fund under Italian law
The fund started building its portfolio by focusing
for qualified investors, which began operations
on funds in the area of mid-market buy-
SECTOR:
on 24 February 2009 and is managed by IDeA
outs, distressed and special situations, loans,
Private Equity
Capital Funds SGR.
turnarounds and funds with a specific sector slant,
targeting in particular opportunities offered in the
WEBSITE:
The DeA Capital Group has a total
secondary market.
commitment of up to EUR 51 million in the
fund.
At the date of the latest report available, the ICF
II portfolio was invested in 27 funds with different
BRIEF DESCRIPTION:
investment strategies; these funds in turn hold
ICF II, with total assets of EUR 281 million,
positions, with varying maturities, in around 348
invests in units of unlisted closed-end funds
companies active in various geographical regions.
that are mainly active in the local private
Fund size:
equity sector of various countries. It optimises
At 31 December 2015, ICF II had called up
the risk-return profile through careful
around 68.8% of its total commitment and
diversification of assets among managers with
had made distributions totalling 21.6% of that
281 million
a proven track record of returns and solidity,
commitment.
different investment approaches, geographical
Euro
areas and maturities.
OTHER IMPORTANT
INFORMATION:
Below is an analysis of the portfolio, updated to
the date of the latest report available, broken
down by year of investment, geographical area,
sector and type.
42 DeA Capital - Report on Operations
Breakdown by vintage(1) (%)
Breakdown by geography(2) (%)
2015
2004-2008 1
5
2009 3
Europe
Global
2010 6
29
16
2014
2011
18
11
RoW
26
2012
2013
30
US
25
29
Breakdown by industry(1) (%)
Breakdown by type(2) (%)
Distressed Portfolio
Cons.
8
Discretionary
Large
18
Buyout
Other
17
0
Special
Situations
Energy
25
7
Cons.
Materials
Staples 4
12
Healthcare
Expansion
10
15
Small /
Financials 4
Mid
Media 7
Buyout
Industrial
38
12
VC
5
RE
0
Leisure 4
IT 14
Notes:
1. % of the FMV of the investment at 31 December 2015;
2. % of fund size based on paid-in exposure (capital invested + residual commitments) at 31 December 2015
The units in ICF II had a value of approximately
million and a fair value increase of EUR 8.6
EUR 41.7 million in the Consolidated Financial
million.
Statements for the Year Ending 31 December
2015 (EUR 35.3 million at 31 December 2014).
The table below shows the key figures for ICF
The increase was due to capital calls of EUR
II at 31 December 2015:
2.5 million, capital reimbursements of EUR 4.7
Registered
Year of
Subscribed % DeA Capital
ICF II (€)
office commitment
Fund Size commitment
in fund
ICF II
Italy
2009
281,000,000
51,000,000
18.15
Residual Commitments
Total residual
commitment in:
Euro
15,891,575
DeA CApitAl - AnnUAl finAnCiAl StAtementS to 31 DeCemBer 2015
43
ICF III
ICF III
REGISTERED OFFICE:
INVESTMENT DETAILS:
Italy
ICF III is a closed-end fund under Italian law
• Credit & Distressed, which invests in special
for qualified investors, which began operations
credit operations (preferred equity, mezzanine,
SECTOR:
on 10 April 2014 and is managed by IDeA
senior loans), turnarounds and other credit
Private Equity
Capital Funds SGR.
strategies;
• Emerging Markets, which focuses on
WEBSITE:
The DeA Capital Group has a total
expansion capital, buy-outs, distressed assets
commitment of up to EUR 12.5 million in the
and venture capital operations in emerging
fund.
markets.
BRIEF DESCRIPTION:
ICF III, which had total assets of approximately
At 31 December 2015, ICF III had called up
EUR 57 million at 31 December 2015, intends
46.4%, 54.3% and 25.0% in the Core, Credit
to invest its assets in units of closed-end
& Distressed and Emerging Markets segments
private equity funds or in schemes that
respectively.
Fund size:
replicate the financial model, either as lead
investor or with other co-investors. After
The units in ICF III have a value of approximately
31 December 2015, on 19 January 2016,
EUR 4.8 million in the Consolidated Financial
57 million
the second and final closing of the fund was
Statements for the Year Ending 31 December
completed for EUR 9.9 million; this brought the
2015 (EUR 1.7 million at 31 December 2014). The
Euro
final commitment of ICF III to EUR 67 million.
increase was the combined effect of capital calls
of EUR 2.7 million and an increase in fair value of
The fund is divided into three segments:
EUR 0.4 million.
• Core, with a focus on buy-outs, expansion
The table below shows the key figures for ICF III
capital and special situations;
at 31 December 2015.
Registered
Year of
Subscribed
% DeA Capital in
ICF III (€)
office commitment
Fund Size commitment
fund
ICF III
Italy
2014
57,050,000
12,500,000
21,91
of which:
Segment Core
25,400,000
1,000,000
3,94
Segment Credit &
Distressed
16,650,000
4,000,000
24,02
Segment Emerging
Markets
15,000,000
7,500,000
50,00
Total residual
commitment in:
Euro
7,989,030
44 DeA Capital - Report on Operations
IDeA EESS
IDEA EFFICIENZA ENERGETICA E SVILUPPO SOSTENIBILE >>
INVESTMENT DETAILS:
REGISTERED OFFICE:
IDeA EESS is a closed-end fund under Italian law
capital increases totalling EUR 1.0 million,
Italy
for qualified investors, which began operating on
investments that were written down in full at
1 August 2011 and is managed by IDeA Capital
31 December 2014. In view of the gradual
SECTOR:
Funds SGR.
deterioration in the company's results and
Private Equity
financial position, it was put into liquidation
The DeA Capital Group has a total commitment of
on 9 March 2015;
WEBSITE:
EUR 15.3 million in the fund.
- on 27 February 2013, the fund invested
BRIEF DESCRIPTION:
EUR 8.5 million to acquire a stake of 10%
IDeA EESS, which has total assets of EUR 100
in Elemaster, a leading operator in ODM
million, is a closed-end mutual fund under Italian
(original design manufacturing) and EMS
law for qualified investors which seeks to acquire
(electronic manufacturing services), i.e.
minority and controlling interests in unlisted
the design and construction of electronic
companies in Italy and abroad, by investing
equipment. At the same time, the IDeA OF
jointly with local partners.
I fund, also managed by IDeA Capital Funds
Fund size:
SGR, invested an equal amount;
The fund is dedicated to investing in small
100 million
and medium-sized manufacturing and service
- on 23 April 2013, the fund invested EUR
companies operating in the field of energy
3.5 million to acquire a 29.9% stake in
savings and the efficient use of natural
SMRE, which specialises in the design and
Euro
resources. It focuses on the development of
construction of industrial systems to cut
solutions that are faster and cheaper in the
and process fabric, and also has know-
use of renewable energy sources without
how in electrical drives with particularly
compromising effectiveness in reducing CO2
innovative technology in integrated electric
emissions, against a backdrop of sustained
transmission. The acquisition was carried
growth in global energy demand.
out via subscription to a reserved capital
increase in SMRE;
At 31 December 2015, IDeA EESS had called up
66.8% of its total commitment from subscribers,
- on 27 December 2013, the fund invested EUR
after making seven investments:
3.9 million in the special purpose acquisition
company (SPAC) GreenItaly 1, as part of
- on 8 May 2012, the fund made its first
the latter's IPO. This investment breaks
investment, acquiring 48% of Domotecnica
down as follows: EUR 3.5 million was in
Italiana (independent Italian franchising of
ordinary shares, which entitle it to 10% of the
thermo-hydraulic installers) for approximately
company, and EUR 0.4 million, in its capacity
EUR 2.6 million, as well as subsequent
as promoter of the vehicle, in special shares
DeA CApitAl - AnnUAl finAnCiAl StAtementS to 31 DeCemBer 2015
45
IDEA EFFICIENZA ENERGETICA E SVILUPPO SOSTENIBILE
without voting rights. In December 2015,
the fund increased its investment by EUR 3.1
- on 5 February 2015, the fund made its sixth
million (of which EUR 0.1 million was for the
investment, acquiring a shareholding in
above-mentioned special shares), bringing it
Baglioni via a first capital increase of EUR 8.0
to a total of EUR 7.0 million, for a holding of
million for a 35.9% stake in the Company.
18.57% in the SPAC. On 31 December 2015,
This was later increased to 41.2% through
in line with the SPAC's objectives, GreenItaly
a further capital increase of EUR 2 million.
1 completed the merger with Prima Vera
Baglioni is a company involved in the design
S.p.A., an Italian leader in the energy
and manufacture of compressed air tanks
efficiency sector and the supply of energy
for applications across a broad spectrum of
services via complex structures. After the
industrial sectors;
merger, GreenItaly 1 held a stake of 8.1% in
the company;
- on 30 July 2015, the fund acquired a 26.81%
stake in Italchimici S.r.l. for EUR 11.3 million.
- During the first half of 2014, the fund invested
Italchimici is a pharmaceutical company
in several further tranches in Meta System
specialising in the sale of respiratory and
totalling EUR 12.5 million, representing a stake
alimentary tract products; it has established
of 16.0% in the company; this subsequently
itself as a leader in Italy in the paediatrics
increased to 21.5% through the reinvestment
segment.
of its pro-rata proceeds of the sale of a
subsidiary of Meta System. Meta System
The units in IDeA EESS had a value of
is active in the production of transmission
approximately EUR 7.3 million in the
equipment, electronic antennas and alarm
Consolidated Financial Statements for the Year
systems for the automotive sector, as well as
Ending 31 December 2015 (EUR 4.3 million at 31
home telematics systems and battery chargers
December 2014). The increase was due to capital
for electric vehicles. On 4 August 2015, an
calls of EUR 4.0 million, capital reimbursements
agreement was signed for the full disposal of
of EUR 1.6 million and a fair value increase of
the company in two tranches. The first tranche
EUR 0.8 million.
has been completed (60% of Meta System)
for EUR 12.2 million, i.e. 1.6 times the initial
The table below shows the key figures for IDeA
investment, and the second tranche will take
EESS at 31 December 2015.
place via put/call mechanisms exercisable
between October 2017 and February 2018;
Registered
Year of
Subscribed
% DeA Capital in
IDeA EESS (€)
office commitment
Fund Size commitment
fund
IDeA Efficienza Energetica
e Sviluppo Sostenibile
Italy
2011
100,000,000
15,300,000
15.30
Residual Commitments
Total residual
commitment in:
Euro
5,076,510
46 DEA CAPITAL - REPORT ON OPERATIONS
IDeA ToI
IDEA TASTE OF ITALY
INVESTMENT DETAILS:
REGISTERED OFFICE:
IDeA ToI is a closed-end fund under Italian law for
a total stake of 70% in a vehicle that wholly
Italy
qualified investors, which began operating on 30
owns Gruppo La Piadineria; IDeA ToI's pro
December 2014 and is managed by IDeA Capital
rata stake was EUR 10.6 million. Gruppo La
SECTOR:
Funds SGR.
Piadineria is Italy's largest chain of shops
Private Equity
selling piadine (traditional flatbread sandwich
The DeA Capital Group has a total commitment of
wraps), with outlets in urban areas across
WEBSITE:
EUR 14.3 million in the fund.
northern and central Italy.
BRIEF DESCRIPTION:
At 31 December 2015, IDeA ToI had called
IDeA ToI, which had total assets of EUR 140
up 10.6% of the total commitment from
million at 31 December 2015, is a closed-end
subscribers.
mutual fund under Italian law for qualified
investors which seeks to acquire minority and
The units in IDeA ToI had a value of
controlling interests in mainly small and medium-
approximately EUR 1.1 million in the
Fund size:
sized enterprises in Italy, either independently or
Consolidated Financial Statements for the
with other co-investors.
Year ending 31 December 2015 (close to zero
at 31 December 2014). The increase was the
140 million
The fund invests in companies operating in the
combined effect of capital calls of EUR 1.4
agricultural foods sector, especially areas involved
million and a decrease in fair value of EUR 0.3
Euro
in the production and distribution of foodstuffs
million.
in the form of both primary and secondary
(processed) products or related services.
The table below shows the key figures for IDeA
ToI at 31 December 2015.
On 15 May 2015, IDeA ToI made its first
investment, acquiring, together with co-investors,
Registered
Year of
Subscribed % DeA Capital in
IDeA ToI (€)
office commitment
Fund Size commitment
fund
IDeA Taste of Italy
Italy
2014
140,000,000
14,250,000
10.18
Residual Commitments
Total residual
commitment in:
Euro
12,746,625
DeA CApitAl - AnnUAl finAnCiAl StAtementS to 31 DeCemBer 2015
47
AVA
ATLANTIC VALUE ADDED
REGISTERED OFFICE:
INVESTMENT DETAILS:
Italy
The “Atlantic Value Added Closed-End
million to purchase/subscribe for units of the
Speculative Real Estate Mutual Fund” is a
Venere fund, receiving capital reimbursements
SECTOR:
mixed-contribution fund for qualified investors
from the fund of EUR 13.9 million. The Venere
Private Equity - Real Estate
that began operations on 23 December 2011.
fund is a closed-end speculative reserved real
estate fund managed by IDeA FIMIT SGR.
WEBSITE:
DeA Capital S.p.A. has a commitment in the
The Venere fund's real estate portfolio consists of
fund of up to EUR 5 million (corresponding
properties primarily for residential use located in
to 9.1% of the total commitment), with
northern Italy.
payments of approximately EUR 4.8 million
already made at 31 December 2015.
The units in the AVA fund had a value of
approximately EUR 3.8 million in the Consolidated
BRIEF DESCRIPTION:
Financial Statements for the Year Ending
The fund, which is managed by the subsidiary
31 December 2015 (compared with EUR 2.6
IDeA FIMIT SGR and has a commitment of
million at 31 December 2014). The increase was
around EUR 55 million, began its operations
the combined effect of net investments of EUR 1.5
with a primary focus on real estate
million and the pro rata share for the period and
investments in the office and residential
other changes (EUR -0.3 million).
markets. The duration of the fund is eight
years.
The table below shows the key figures for the AVA
fund at 31 December 2015.
From 29 December 2011 onwards, the fund
Fund size:
successively invested a total of EUR 73.8
55 million
Registered
Year of
Subscribed
% DeA Capital in
AVA (€)
office commitment
Fund Size commitment
fund
Euro
Atlantic Value Added
Italy
2011
55,000,000
5,000,000
9.08
Residual Commitments
Total residual
commitment in:
Euro
150,000
48 DeA CApitAl - report on operAtionS
UNITS IN VENTURE CAPITAL FUNDS
- Units in venture capital funds
impairment of EUR 0.3 million and an increase
The units in venture capital funds had a total
in fair value of EUR 1.0 million.
value of approximately EUR 9.7 million in the
Financial Statements for the Year Ending 31
The table below shows the key figures for
December 2015 (EUR 9.6 million at 31 December
venture capital funds in the portfolio at 31
2014). The change was the combined effect
December 2015.
of capital reimbursements of EUR 0.6 million,
Venture
Capital Funds
Registered
Year of
Subscribed
% DeA Capital
Dollars (USD)
office commitment Fund Size commitment
in fund
Doughty Hanson & Co
Technology
UK EU
2004
271,534,000
1,925,000
0.71
GIZA GE Venture Fund
Delaware
III
U.S.A.
2003
211,680,000
10,000,000
4.72
Cayman
Israel Seed IV
Islands
2003
200,000,000
5,000,000
2.50
Pitango Venture Capital
Delaware
III
U.S.A.
2003
417,172,000
5,000,000
1.20
Total Dollars
21,925,000
Euro (€)
Nexit Infocom 2000
Guernsey
2000
66,325,790
3,819,167
5.76
Sterlings (GBP)
Amadeus Capital II
UK EU
2000
235,000,000
13,500,000
5.74
Residual
Commitments
Total residual
commitment in:
Euro
5,074,307
DeA CApitAl - AnnUAl finAnCiAl StAtementS to 31 DeCemBer 2015
49
Alternative Asset Management
At 31 December 2015, DeA Capital S.p.A. was the owner of:
• 100% of IDeA Capital Funds SGR;
• 64.30% of IDeA FIMIT SGR (including 61.30% held through DeA Capital Real Estate and the remaining
3.00% directly);
• 96.99% of IRE/IRE Advisory (which operates in project, property and facility management and real
estate brokerage).
IDEA CAPITAL FUNDS SGR
REGISTERED OFFICE:
INVESTMENT DETAILS:
Italy
IDeA Capital Funds SGR operates in the
• industrial sector;
management of private equity funds (funds
• investment strategy and stage (buy-outs,
SECTOR:
of funds, co-investment funds and theme
venture capital, special situations, etc.);
Alternative Asset
funds). At 31 December 2015, the asset
• geographical area (Europe, US and the Rest of
Management -
management company managed eight
the World);
Private Equity
closed-end private equity funds, including
• maturity (commitments with investment periods
four funds of funds (IDeA I FoF, ICF II, ICF
diluted over time).
WEBSITE:
III and IDeA Crescita Globale, which targets
the retail market), a “direct” co-investment
The investment strategies of the “direct” co-
fund (IDeA OF I), two theme funds (IDeA
investment fund focus on minority interests in
EESS, which operates in energy efficiency,
businesses that primarily concentrate on Europe,
and IDeA ToI, in the agricultural foods sector)
and on diversification based on the appeal of
and, since April 2015, Investitori Associati IV
individual sectors, while limiting early stage
(in liquidation).
investments.
Assets under
The investment programmes of IDeA Capital
The investment philosophy of the IDeA EESS
Funds SGR, which are regulated by the
sector fund focuses on growth capital and buy-out
management:
Bank of Italy and Consob, leverage the
private equity to support the growth of small and
1,6 billion Euro
management team's wealth of experience in
medium-sized enterprises with products/services of
the sector.
excellence in the energy efficiency and sustainable
development. Investments in infrastructure for
The investment strategies of the funds
the generation of energy from renewable sources
of funds focus on building diversified
or early-stage investments can be made in
portfolios in private equity funds in the top
compliance with regulatory restrictions.
quartile or that are next-generation leaders
with balanced asset allocation through
The investment target of the IDeA ToI fund is
diversification by:
small and medium-sized enterprises operating in
the agricultural foods industry, through operations
in development capital and early-stage buy-outs.
50 DeA Capital - Report on Operations
The table below summarises the value of assets under management and management fees for IDeA
Capital Funds SGR at 31 December 2015.
Assets under
Management
Management at
fees at
(EUR million)
31 dec. 2015
31 dec. 2015
IDeA Capital Funds SGR
IDeA I FoF
681
4.1
IDeA OF I
217
2.3
ICF II
281
2.2
IDeA EESS
100
2.0
IDeA Crescita Globale
55
1.4
ICF III
57
0.4
Taste of Italy
140
3.2
Investitori Associati IV
112
1.3
Total IDeA Capital Funds SGR
1,643
16.9
With regard to operating performance, IDeA
54 million, bringing the total commitment
Capital Funds SGR posted a year-on-year increase
to EUR 140 million) and the takeover of
of approximately EUR 166 million in assets under
the management of Investitori Associati IV,
management in 2015. This increase was due to
starting in April 2015.
the effects of the second closing of IDeA ToI (EUR
IDeA Capital Funds SGR
(EUR million)
2015
2014
AUM
1,643
1,477
Management fees
16.9
14.4
EBITDA
6.6
5.8
Net profit
4.2
3.6
DeA CApitAl - AnnUAl finAnCiAl StAtementS to 31 DeCemBer 2015
51
IDEA FIMIT SGR
REGISTERED OFFICE:
INVESTMENT DETAILS:
Italy
IDeA FIMIT SGR is the largest independent
real estate asset management company
SECTOR:
in Italy, with around EUR 7.9 billion in
Alternative Asset
assets under management and 37 managed
Management - Real Estate
funds (including five listed funds). This
puts it among the major partners of Italian
WEBSITE:
and international investors in promoting,
creating and managing mutual real estate
investment funds.
IDeA FIMIT SGR undertakes three main lines
of business:
• the development of mutual real estate
investment funds designed for institutional
clients and private investors;
• the promotion of innovative real estate
financial instruments to satisfy investors’
increasing demands;
• the professional management (technical,
administrative and financial) of real-estate
company specialises in “core” and “core plus”
funds with the assistance of in-house
properties, but its major investments also
Assets under
experts, as well as the best independent
include “value added” transactions.
technical, legal and tax advisors on the
management:
market.
Due in part to successful transactions concluded
7.9 billion
in recent years, the asset management
The company has concentrated investments
company is able to rely on a panel of
in transactions with low risk, stable returns,
prominent unit-holders consisting of Italian and
low volatility, simple financial structures and,
international investors of high standing, such as
most importantly, an emphasis on property
pension funds, banking and insurance groups,
value. In particular, the asset management
companies and sovereign funds.
52 DeA Capital - Report on Operations
The table below summarises the value of assets
under management and management fees for
IDeA FIMIT SGR at 31 December 2015:
Assets under
Management
Management at
fees at
(EUR million)
31 dec. 2015
31 dec. 2015
Breakdown of funds
Atlantic 1
604
2.7
Atlantic 2 Berenice
168
0.8
Alpha
376
4.2
Beta
84
0.8
Delta
215
2.5
Listed funds
1,447
11
Reserved funds
6,437
36.7
Total IDeA FIMIT SGR
7,884
47.7
DeA CApitAl - AnnUAl finAnCiAl StAtementS to 31 DeCemBer 2015
53
Some of the key financials of the listed
latest report available, broken down by
funds in the asset management portfolio
geographical area and by intended use, i.e.
are provided below, with an analysis of
Atlantic 1, Atlantic 2, Alpha, Beta and Delta
the real estate portfolio at the date of the
(figures in EUR).
Atlantic 1
31.12.2015
Atlantic 2 - Berenice
31.12.2015
Market value of properties
563,540,000
Market value of properties
148,688,000
Historical cost and capitalised
Historical cost and capitalised
charges
611,870,324
charges
181,327,320
Financing
341,647,526
Financing
66,400,766
Net Asset Value (NAV)
249,104,767
Net Asset Value (NAV)
94,287,707
NAV/unit (EUR)
477.7
NAV/unit (EUR)
157.1
Market price/unit (EUR)
325.1
Market price/unit (EUR)
115.8
Dividend yield from
Dividend yield from
investment*
5.72%
investment*
9.12%
* Ratio of income per unit to annual average nominal
* Ratio of income per unit to annual average nominal
value per unit
value per unit
Atlantic 1:
Atlantic 2:
Diversification by intended use (%)
Diversification by intended use (%)
Commercial
12
Other
8
Offices
Offices
88
77
Atlantic 1:
Atlantic 2:
Diversification by geographical area (%)
Diversification by geographical area (%)
Other
Piemonte/Emilia R.
Lombardia
2
Lombardia
5
67
47
Campania
Piemonte
12
12
Lazio
15
Lazio
39
54 DeA Capital - Report on Operations
Alpha
31.12.2015
Beta
31.12.2015
Market value of properties
321,050,000
Market value of properties
55,938,000
Historical cost and capitalised
Historical cost and capitalised
charges
302,855,224
charges
71,863,316
Financing
21,113,036
Net Asset Value (NAV)
59,528,329
Net Asset Value (NAV)
346,542,613
NAV/unit (EUR)
221,7
NAV/unit (EUR)
3,336,2
Market price/unit (EUR)
137,5
Dividend yield from
Market price/unit (EUR)
1,100,0
investment*
8.12%
Dividend yield from
* Ratio of income per unit to annual average nominal
investment*
5.10%
value per unit
* Ratio of income per unit to annual average nominal
value per unit
Alpha:
Beta:
Diversification by intended use (%)
Diversification by intended use (%)
Commercial
Special
2
use
45
Offices
60
Office
Other
53
40
Alpha:
Beta:
Diversification by geographical area (%)
Diversification by geographical area (%)
Emila
Romagna
Lazio
Lazio
5
62
83
Lombardia
12
Umbria
38
DeA CApitAl - AnnUAl finAnCiAl StAtementS to 31 DeCemBer 2015
55
With regard to IDeA FIMIT SGR's operating
Delta
31.12.2015
performance, management fees in 2015
Market value of properties
200,000,000
were down by EUR 6.4 million compared with
2014. This was mainly due to the revised
Historical cost and capitalised
charges
256,333,538
fees agreed for some managed funds (amid
a general market squeeze on management
Financing
19,421,882
fees). The net result also suffered from the
Net Asset Value (NAV)
193,051,034
impairment, net of the tax effect, of EUR
NAV/unit (EUR)
91.7
14.3 million (impairment of EUR 5.1 million
in 2014) on financial equity instruments
Market price/unit (EUR)
43.3
(strumenti finanziari partecipativi, or SFP),
Dividend yield from
which give entitlement to variable commission
investment*
n.a.
relating to the funds managed by FIMIT at
* No distribution from investment
the date of the merger with FARE SGR (the
value is shown in the Financial Statements
as the effect of the merger of the two asset
management companies).
Delta:
Diversification by intended use (%)
Offices
4
Hotels
IDeA FIMIT SGR
62
(EUR million)
2015
2014
AUM
7,884
8,983
Other
34
Management fees
47.7
54.1
EBITDA
21.8
25.1
Net profit
(7.6)
4.4
- of which:
- Shareolders
6.7
9.5
Delta:
- Owner of financial
Diversification by geographical area (%)
equity instruments
(14.3)
(5.1)
Piemonte
Toscana
3
3
Sardegna
Campania
14
6
Lombardia
7
Veneto
21
Emila R.
14
Abruzzo
Calabria
15
16
56 DeA Capital - Report on Operations
INNOVATION REAL ESTATE
INVESTMENT DETAILS:
REGISTERED OFFICE:
Innovation Real Estate (IRE) operates in property
In terms of IRE's operating performance,
Italy
valuation and is structured along the following
the increase in the net result compared with
strategic lines:
2014 (EUR 1.5 million) was mainly due to
SECTOR:
the dividend received by its subsidiary IRE
Property Services
• project & construction management (property
Advisory (EUR 0.6 million) and one-off items.
planning, development and refurbishment;
WEBSITE:
• property management (administrative and legal
Innovation Real Estate
management of properties);
(EUR million)
2015
2014
• facility & building management (services
Revenues
17.5
17.3
connected with buildings and related
maintenance);
EBITDA
4.9
4.6
• due diligence (technical and environmental
Net profit
4.4
2.9
due diligence, town-planning regularisation
procedures);
• asset management (strategic support for
improving the rental condition of buildings
and optimising associated management costs,
in order to maximise the return on property
investment).
Specialized in
IRE currently manages a property portfolio
comprising 50% offices and the remainder split
real estate services
between commercial, tourist, logistics & industrial
and residential property.
DeA CApitAl - AnnUAl finAnCiAl StAtementS to 31 DeCemBer 2015
57
Consolidated income statement
- impairment of the goodwill relating to IDeA FIMIT SGR,
totalling EUR -27.5 million;
The Group reported net profit of approximately EUR 41.1
- impairment of the goodwill relating to IDeA Capital Funds
million for 2015, compared with a net loss of around EUR
SGR, totalling EUR -9.3 million.
57.6 million in 2014.
The impairment on the goodwill relating to IDeA FIMIT
Revenues and other income break down as follows:
SGR and IDeA Capital Funds SGR was derived via an asset
valuation process carried out on a regular basis by the
- alternative asset management fees of EUR 62.4 million
Company, with the support of a leading Italian consultancy
(EUR 66.0 million in 2014);
company and based on methodology applied consistently
- other investment income, net of expenses, totalling EUR
over the years and in line with accounting standards.
72.5 million (EUR -56.1 million in 2014), due to marking
Specifically, the asset valuation process for IDeA FIMIT SGR
the value of the shareholding in Santé to market (EUR
aligned the equity valuation of the management company to
-59.0 million). This was mainly due to the capital gain of
its shareholders' equity.
EUR 46.3 million arising from the disposal of the stakes
in Migros and the resulting cash distribution by Kenan
Net financial income, which amounted to EUR 5.0 million
Investments, as well as net proceeds of EUR 25.4 million on
at 31 December 2015 (EUR 2.9 million in 2014), mainly
the stakes held by the IDeA OF I fund;
relates to income generated from cash and cash equivalents,
- service revenues of EUR 18.5 million (compared with EUR
exchange rate gains on foreign investments and other
18.7 million recorded in 2014).
financial income.
Operating costs totalled EUR 128.5 million (EUR 88.0 million
The full tax impact for 2015 (EUR 6.5 million, compared
in 2014), of which EUR 120.3 million was attributable to
with EUR 1.7 million in 2014) is the result of taxes of EUR
Alternative Asset Management, EUR 2.4 million to Private
-0.4 million due in respect of Alternative Asset Management
Equity Investment and EUR 5.8 million to holding company
activities and EUR 6.9 million relating to holding activities.
activities. Alternative Asset Management costs include the
effects of:
Of the Group’s net profit of EUR 41.1 million, EUR 63.5
million was attributable to Private Equity Investment, EUR
- the amortisation and write-down of intangible assets,
-20.6 million to Alternative Asset Management and EUR
totalling EUR -25.6 million, recorded when a portion of the
-1.8 million to holding company activities/eliminations.
purchase price of the investments was allocated. Of this
amount, EUR -20.5 million related to impairment, or
EUR -14.3 million excluding the related tax effect;
Summary Consolidated Income Statement
(Dati in migliaia di Euro)
2015
2014
Alternative Asset Management fees
62,416
66,045
Income (loss) from equity investments
(539)
(786)
Other investment income/expense
72,464
(56,149)
Income from services
18,496
18,667
Other income
3,204
509
Other expenses
(128,514)
(87,957)
Financial income and expenses
4,982
2,905
PROFIT/(LOSS) BEFORE TAX
32,509
(56,766)
Income tax
6,452
1,720
PROFIT/(LOSS) FOR THE PERIOD FROM CONTINUING OPERATIONS
38,961
(55,046)
Profit (Loss) from discontinued operations/held-for-sale assets
286
(887)
PROFIT/(LOSS) FOR THE PERIOD
39,247
(55,933)
- Group share
41,072
(57,601)
- Non controlling interests
(1,825)
1,668
Earnings per share, basic (€)
0.154
(0.210)
Earnings per share, diluted (€)
0.154
(0.210)
58 DeA Capital - Report on Operations
Performance by business in 2015
Alternative
Private Equity
Asset
Holdings/
(EUR thousand)
Investment Management Eliminations Consolidated
Alternative Asset Management fees
0
64,672
(2,256)
62,416
Income (loss) from equity investments
(180)
(359)
0
(539)
Other investment income/expense
72,552
(88)
0
72,464
Income from services
3,054
18,549
97
21,700
Other expenses
(2,455)
(120,285)
(5,774)
(128,514)
Financial income and expenses
5,065
616
(699)
4,982
PROFIT/(LOSS) BEFORE TAXES
78,036
(36,895)
(8,632)
32,509
Income tax
0
(409)
6,861
6,452
PROFIT/(LOSS) FOR THE PERIOD FROM
CONTINUING OPERATIONS
78,036
(37,304)
(1,771)
38,961
Profit (Loss) from discontinued operations/held-for-
sale assets
286
0
0
286
PROFIT/(LOSS) FOR THE PERIOD
78,322
(37,304)
(1,771)
39,247
- Group share
63,516
(20,673)
(1,771)
41,072
- Non controlling interests
14,806
(16,631)
0
(1,825)
Performance by business in 2014
Alternative
Private Equity
Asset
Holdings/
(EUR thousand)
Investment Management Eliminations Consolidated
Alternative Asset Management fees
0
68,549
(2,504)
66,045
Income (loss) from equity investments
(262)
(524)
0
(786)
Other investment income/expense
(56,812)
663
0
(56,149)
Income from services
146
18,357
673
19,176
Other expenses
(5,930)
(71,152)
(10,875)
(87,957)
Financial income and expenses
3,006
155
(256)
2,905
PROFIT/(LOSS) BEFORE TAXES
(59,852)
16,048
(12,962)
(56,766)
Income tax
0
(6,584)
8,304
1,720
PROFIT/(LOSS) FOR THE PERIOD FROM
CONTINUING OPERATIONS
(59,852)
9,464
(4,658)
(55,046)
Profit (Loss) from discontinued operations/held-for-
sale assets
(887)
0
0
(887)
PROFIT/(LOSS) FOR THE PERIOD
(60,739)
9,464
(4,658)
(55,933)
- Group share
(62,235)
9,292
(4,658)
(57,601)
- Non controlling interests
1,496
172
0
1,668
DeA CApitAl - AnnUAl finAnCiAl StAtementS to 31 DeCemBer 2015
59
Comprehensive income -
statement of performance (IAS 1)
Comprehensive Income or the Statement of Performance
(EUR thousand)
2015
2014
(IAS 1), in which performance for the period attributable
Profit/(loss)
to the group is reported including results posted directly
for the period (A)
39,247
(55,933)
to shareholders' equity, reflects a net negative balance of
Comprehensive income/
approximately EUR 13.2 million compared with a net positive
expense which might be
subsequently reclassified within
balance of approximately EUR 30.1 million in the same period
the profit (loss) for the period
(60,177)
88,547
of 2014. This comprised:
Comprehensive income/
expense which will not be
• net profit of EUR 41.1 million recorded on the income
subsequently reclassified within
the profit (loss) for the period
41
(320)
statement;
Other comprehensive
• losses posted directly to shareholders’ equity totalling
income, net of tax (B)
(60,136)
88,227
EUR 54.3 million (including the "reversal" to the income
Total comprehensive income
statement of the fair value reserve after the partial disposal
for the period (A)+(B)
(20,889)
32,294
of Migros).
Total comprehensive income
attributable to:
As regards the latter, the largest component was the
- Group Share
(13,165)
30,089
decrease in fair value of Kenan Investments/Migros;
- Non Controlling Interests
(7,724)
2,205
specifically, the change compared with 31 December 2014
was due to the fall in the price per share and the depreciation
of the Turkish lira against the euro.
Note that the effect of the measurement of Migros at fair
value on the NAV of the DeA Capital Group was partially
offset by the reversal (EUR 11.4 million) of the payable for
carried interest to be paid based on the achievement of
certain performance parameters.
60 DeA Capital - Report on Operations
Consolidated statement of financial position
Below is the Group’s statement of financial position at 31 December 2015, compared with 31 December 2014.
December 31,
December 31,
(EUR thousand)
2015
2014
ASSETS
Non-current assets
Intangible and tangible assets
Goodwill
129,595
166,363
Intangible assets
37,539
63,348
Property, plant and equipment
3,119
3,908
Total intangible and tangible assets
170,253
233,619
Investments
Investments valued at equity
11,467
19,066
Investments held by Funds
90,675
111,014
- available for sale investments
52,536
71,209
- invest. in associates and JV valued at FV through P&L
38,138
39,805
Other available-for-sale companies
76,464
209,320
Available-for-sale funds
173,730
176,736
Other avalaible-for-sale financial assets
26
306
Total Investments
352,362
516,442
Other non-current assets
Deferred tax assets
3,676
5,039
Tax receivables from Parent companies
0
546
Other non-current assets
31,795
30,495
Total other non-current assets
35,471
36,080
Total non-current assets
558,086
786,141
Current assets
Trade receivables
17,818
29,039
Available-for-sale financial assets
7,532
5,080
Financial receivables
3,467
2,678
Tax receivables from Parent companies
2,667
3,533
Other tax receivables
4,567
2,892
Other receivables
2,876
18,591
Cash and cash equivalents
123,468
55,583
Total current assets
162,395
117,396
Total current assets
162,395
117,396
Held-for-sale assets
11,487
0
TOTAL ASSETS
731,968
903,537
SHAREHOLDERS' EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY
Share capital
263,923
271,626
Share premium reserve
299,647
384,827
Legal reserve
61,322
61,322
Fair value reserve
62,178
116,415
Other reserves
(11,720)
(11,243)
Retained earnings (losses)
(169,434)
(111,833)
Profit (loss) for the year
41,072
(57,601)
Net equity Group
546,988
653,513
Minority interests
138,172
173,109
Shareholders' equity
685,160
826,622
LIABILITIES
Non-current liabilities
Deferred tax liabilities
10,801
19,696
Provisions for employee termination benefits
4,713
4,618
Long term financial loans
0
5,201
Payables to staff
0
11,397
Total non-current liabilities
15,514
40,912
Current liabilities
Trade payables
15,598
18,180
Payables to staff and social security organisations
7,341
8,122
Current tax
3,384
2,012
Other tax payables
1,571
2,037
Other payables
2,749
5,292
Short term financial loans
651
360
Total current liabilities
31,294
36,003
Held-for-sale liabilities
0
0
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES
731,968
903,537
DeA CApitAl - AnnUAl finAnCiAl StAtementS to 31 DeCemBer 2015
61
At 31 December 2015, Group shareholders’ equity was
approximately EUR 547.0 million, compared with EUR 653.5
million at 31 December 2014. The decrease of about EUR
106.5 million in Group shareholders' equity in 2015 was due
to the extraordinary dividend paid (EUR 79.9 million), the
reasons already discussed in the Statement of Performance
- IAS 1 (EUR -13.2 million) and the effects of the share
buyback plan (EUR -13.0 million).
Consolidated net financial position
At 31 December 2015, the consolidated net financial position
was approximately EUR 133.8 million, as shown in the table
below, which provides a breakdown of assets and liabilities and
a comparison with the same figures at 31 December 2014:
Net financial position
(EUR million)
31.12.2015
31.12.2014
Change
Cash and cash equivalents
123.5
55.6
67.9
Available-for-sale financial assets
7.5
5.1
2.4
Financial receivables
3.5
2.7
0.8
Non-current financial liabilities
0.0
(5.2)
5.2
Current financial liabilities
(0.7)
(0.4)
(0.3)
TOTAL
133.8
57.8
76.0
of which:
- Alternative Asset Management
40.4
16.1
24.3
- Private Equity Investment
3.4
1.1
2.3
- Holdings
90.0
40.6
49.4
The change in the consolidated net financial position in
already subscribed in funds, also taking into account the
2015 was due, in addition to the extraordinary dividend
amounts expected to be called up/distributed by these
paid (EUR -79.9 million), to net receipts following the partial
funds. With regard to these residual commitments, the
disposal of Migros and resulting distribution (EUR +107.7
Company believes that the resources currently available,
million), the share buyback (EUR -13.0 million); net liquidity
as well as those that will be generated by its operating and
generated by investments in private equity funds in the
financing activities, will enable the DeA Capital Group to
portfolio (EUR +34.7 million); and cash flows generated by
meet the financing required for its investment activity and
the asset management platforms.
to manage working capital.
The Company believes that the cash and cash equivalents
and the other financial resources available are sufficient to
meet the requirement relating to payment commitments
62 DeA Capital - Report on Operations
6. Results of the Parent
Company DeA Capital S.p.A.
The Parent Company DeA Capital S.p.A. operates as a holding
A summary of the Income Statement and Statement of
company that carries out activities of coordination, development
Financial Position of DeA Capital S.p.A. for the year ended 31
and strategic management of its subsidiaries, and also acts as
December 2015 is shown below.
an entity that makes financial investments directly.
Income Statement of the Parent Company
(EUR)
Year 2015
Year 2014
Other investment income/expense
(30,601,165)
(3,640,681)
Income from services
1,767,185
1,868,506
Other income
9,106,713
252,730
Personnel costs
(7,155,543)
(10,395,642)
Financial income
(430,150)
(269,622)
PROFIT/(LOSS) BEFORE TAX
(27,312,960)
(12,184,709)
Income tax
8,413,374
7,665,490
PROFIT/(LOSS) FOR THE YEAR FROM CONTINUING OPERATIONS
(18,899,586)
(4,519,219)
Profit (Loss) from discontinued operations/held-for-sale assets
0
0
PROFIT/(LOSS) FOR THE YEAR
(18,899,586)
(4,519,219)
The Parent Company recorded a loss of approximately EUR
mainly due to writedowns on shareholdings, which were
18.9 million for 2015 (a loss of EUR 4.5 million in 2014),
partly offset by dividend flows and the positive tax effect.
DeA CApitAl - AnnUAl finAnCiAl StAtementS to 31 DeCemBer 2015
63
Statement of Financial Position of the Parent Company
The Parent Company's Statement of Financial Position at 31 December 2015, compared with 31 December 2014, is shown below.
(EUR)
31.12.2015
31.12.2014
ASSETS
Non-current assets
Intangible and tangible assets
Intangible assets
14,965
13,609
Tangible assets
469,416
586,918
Total intangible and tangible assets
484,381
600,527
Investments
Subsidiaries and joint ventures
221,680,803
256,900,010
Associates
4,202,710
14,221,021
Available-for-sale investments
76,464,384
209,320,028
Available-for-sale funds
141,803,236
144,383,615
Total Investments
444,151,133
624,824,674
Other non-current assets
Deferred tax assets
Tax receivables from Parent companies
Total other non-current assets
0
546,152
Total non-current assets
444,635,514
625,971,353
Current assets
Trade receivables
140,239
557,069
Financial receivables
3,467,387
1,709,552
Tax receivables from Parent companies
1,263,489
2,782,826
VAT receivables from Parent companies
738,953
115,044
Other tax receivables
616,749
289,382
Other receivables
497,080
538,818
Cash and cash equivalents
88,388,171
37,961,858
Total current assets
95,112,068
43,954,549
Total current assets
95,112,068
43,954,549
Held-for-sale assets
11,486,685
0
TOTAL ASSETS
551,234,267
669,925,902
SHAREHOLDERS' EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY
Share capital
263,923,155
271,626,364
Share premium reserve
299,646,519
384,826,924
Legal reserve
61,322,420
61,322,420
Fair Value reserve
18,758,957
12,908,007
Other reserves
316,409
504,126
Retained earnings (losses)
(75,961,631)
(71,451,400)
Profit/(loss) for the year
(18,899,586)
(4,519,219)
Shareholders' equity
549,106,243
655,217,222
LIABILITIES
Non-current liabilities
Deferred tax liabilities
0
0
Provisions for employee termination benefits
285,844
558,957
Other payables
0
11,396,404
Total non-current liabilities
285,844
11,955,361
Current liabilities
Trade payables
1,200,066
1,325,359
Payables to staff and social security organisations
371,021
828,943
Current tax payables
63,926
63,926
VAT payables vs Parent companies
0
339,690
Other tax payables
198,561
184,324
Other payables
8,606
11,077
Total current liabilities
1,842,180
2,753,319
Held-for-sale liabilities
0
0
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES
551,234,267
669,925,902
64 DeA Capital - Report on Operations
At 31 December 2015, the parent company's shareholders'
share premium reserve of around EUR 79.9 million and to the
equity totalled about EUR 549.1 million compared with EUR
purchase of treasury shares totalling approximately EUR 13.0
655.2 million at 31 December 2014, a decrease of about EUR
million).
106.1 million (due largely to the partial distribution of the
Pursuant to the Consob Communication of 28 July 2006, a reconciliation between the loss and shareholders' equity at
31 December 2015 reported by the Parent Company DeA Capital S.p.A. is shown below together with the corresponding
consolidated figures.
Net
Net
Profit/
Profit/
Net Equity at
(Loss)
Net Equity at
(Loss)
(EUR thousand)
31.12.2015
2015
31.12.2014
2014
Equity and net profit/(loss) for the year, as reported
in the Parent Company financial statement
549,106
(18,900)
655,217
(4,519)
Elimination of book values from consolidated shareholdings:
- Surplus of net equity reported in financial statements compared
to book values of shareholdings in consolidated companies
(2,118)
0
(1,704)
0
- Pro-rata results achieved by shareholdings
0
17,655
0
(45,824)
- Elimination of dividends received by shareholdings
(5,005)
(8,141)
- Pro-rata results achieved by associated companies, valued as
Shareholders’ Equity
0
(540)
0
(1,673)
- Elimination of revaluation / impairment of investments in DeA
Capital S.p.A.
0
53,379
0
193,033
- Elimination of dividend received from DeA Capital S.p.A.
0
(5,517)
0
(190,477)
Equity and Group share of net profit/(loss)
546,988
41,072
653,513
(57,601)
Equity and minority interests share of net profit/(loss)
138,172
(1,825)
173,109
1,668
Equity and net profit for the year, as reported in the
consolidated financial statements
685,160
39,247
826,622
(55,933)
DeA CApitAl - AnnUAl finAnCiAl StAtementS to 31 DeCemBer 2015
65
7. Other information
The treasury shares acquisition plan is aimed to the
setup of a "securities warehouse" as permitted by the
Consob Practice, to be used according to the shareholders’
Treasury shares and Parent Company
meeting decision as a means of payment for extraordinary
shares
corporate transactions (exchange of participations
included).
On 17 April 2015, the shareholders’ meeting of DeA Capital
S.p.A. authorised the Board of Directors to buy and sell, on
According to article 5 of the Regolamento CE n. 2273/2003,
one or more occasions and on a revolving basis, a maximum
the treasury shares purchase price can’t be higher than the
number of ordinary shares in the Company representing a
higher price between (i) the price of the latest independent
stake of up to 20% of the share capital.
transaction and (ii) current independent offer in the trading
venues where the purchase is made. All such price limits are
The new plan replaces the previous plan approved by
subject to the further condition of the price per share being
the shareholders’ meeting on 17 April 2014 (which was
within a -20%/+20% variance range compared to the public
scheduled to expire with the approval of the 2014 Annual
stock quote as of the latest stock market session preceding
Financial Statements), and will pursue the same objectives
every treasury share purchase.
as the previous plan, including purchasing treasury shares to
On top of that the Board of Directors also resolved to set
be used for extraordinary transactions and share incentive
the maximum unit price above which purchases of treasury
schemes, offering shareholders a means of monetising their
shares may not be made at the NAV per share indicated in
investment, stabilising the share price and regulating trading
the most recent statement of financial position approved and
within the limits of current legislation.
disclosed to the market.
The authorisation specifies that purchases may be carried
DeA Capital has a contract with independent authorised
out up to the date of the shareholders’ meeting to approve
intermediary Intermonte SIM S.p.A., granting this company
the Financial Statements for the Year Ending 31 December
a mandate to buy and sell ordinary DeA Capital shares,
2015 and, in any case, not beyond the maximum duration
pursuant to the Consob Practice.
allowed by law, in accordance with all the procedures allowed
For further details please refer to the above mentioned
by current regulations, and that DeA Capital S.p.A. may also
ordinary Shareholders’ meeting notice, to the Directors’
sell the shares purchased for the purposes of trading, without
report and to the press release issued on 17 April 2015
time limits. The unit price for the purchase of the shares will
be set on a case-by-case basis by the Company's Board of
respectively in the Investor Relations/Shareholders’ Meetings
Directors, but must not be more than 20% above or below
and the Investor Relations/Press Releases sections.
the share’s reference price on the trading day prior to each
individual purchase. In contrast, the authorisation to sell
In 2015, DeA Capital S.p.A. purchased around 7,703,209
treasury shares already held in the Company’s portfolio, and
million shares for a price of about EUR 13.0 million.
any shares bought in the future, was granted for an unlimited
period, to be implemented using the methods considered
Taking into account purchases made in previous years for
most appropriate and at a price to be determined on a case-
plans in place from time to time, and the use of treasury
by-case basis by the Board of Directors, which must not,
shares to service purchases of controlling interests in FARE
however, be more than 20% below the share's reference
Holding and IDeA Alternative Investments, at 31 December
price on the trading day prior to each individual sale (with
2015 the Company owned 42,688,945 treasury shares (equal
certain exceptions specified in the plan). Sale transactions
to about 13.9% of share capital).
may also be carried out for trading purposes.
As of the date of this document, based on purchases of
On 17 April 2015, the Board of Directors held following
445,306 shares made after the end of 2015, the Company
the shareholders’ meeting voted to implement the above
had a total of 43,147,751 treasury shares corresponding to
mentioned plan to buy and sell treasury shares according to
about 14.1% of the share capital.
the operating practice as of the so called “Consob Practice”
(the operating practice n. 2 as of the Consob Resolution
During 2015, the Company did not hold, purchase or sell, on
n. 16838 issued on March 19, 2009, as of the article 180,
its own account or through a trust company, any shares in
subparagraph 1, letter c) of the TUF).
the Parent Company De Agostini S.p.A..
66 DeA Capital - Report on Operations
Transactions with parent companies,
this option pursuant to the procedures and terms and
subsidiaries and related parties
conditions set out by law. The option is irrevocable unless
the requirements for applying the scheme are not met.
Transactions with related parties, including those with
other Group companies, were carried out in accordance
The option is irrevocable for DeA Capital S.p.A. for the
with the Procedure for Related Party Transactions
three-year period 2014-2016, for IDeA Capital Funds SGR,
adopted by the Company with effect from 1 January
IRE and IRE Advisory for the three-year period 2015-2017
2011, in accordance with the provisions of the Regulation
and for DeA Capital Real Estate for the three-year period
implemented pursuant to art. 2391-bis of the Italian Civil
2013-2015.
Code with Consob Resolution 17221 of 12 March 2010,
as subsequently amended. During the year, the Company
3) In order to enable more efficient use of liquidity and the
did not carry out any atypical or unusual transactions with
activation of credit lines with potentially better terms and
related parties, only those that are part of the normal
conditions compared with those that may be obtained
business activities of group companies. It also did not
from banks, DeA Capital S.p.A. has signed a framework
carry out any "significant transactions" as defined in the
agreement (Framework Agreement) with the Parent
above-mentioned procedure. Transactions with related
Company De Agostini S.p.A. for the provision of short-
parties during the year were concluded under standard
term intercompany loans/deposits.
market conditions for the nature of the goods and/or
services offered.
Deposit/financing operations falling within this
Framework Agreement shall be activated only subject
With regard to transactions with parent companies, note the
to verification that the terms and conditions, as
following:
determined from time to time, are advantageous,
and will be provided on a revolving basis, and with
1) DeA Capital S.p.A. signed a service agreement with the
maturities of not more than three months. The
controlling shareholder, De Agostini S.p.A., for the latter to
Framework Agreement has a duration of one year and is
provide operating services in the administration, finance,
automatically renewed annually.
control, legal, corporate and tax areas, investor relations,
institutional and press services.
The amounts involved in the deposit/financing operations
will, however, always be below the thresholds defined for
This agreement, which is automatically renewed annually,
“transactions of lesser importance” pursuant to Consob
is priced at market rates and is intended to allow the
Regulation 17221/2010 (Transactions with Related Parties)
Company to maintain a streamlined organisational
and the internal Procedure for Related Party Transactions
structure in keeping with its development policy, while
adopted by DeA Capital S.p.A.
obtaining sufficient operational support.
At the same time, on 1 January 2013, DeA Capital
Equity interests, remuneration,stock
S.p.A. signed an “Agreement to sub-let property for
options and performance shares
use other than residential use” with the controlling
held by directors, auditors, general
shareholder, De Agostini S.p.A. The agreement relates
managers and managers with strategic
to parts of a building located at Via Brera, 21, Milan,
responsibilities
comprising space for office use, warehousing and car
parking.
Information regarding the equity interests held by directors,
auditors, general managers and managers with strategic
This agreement is renewable every six years after an
responsibilities is reported in the relevant sections of the
initial term of seven years.
Annual and Consolidated Financial Statements.
2) DeA Capital S.p.A., IDeA Capital Funds SGR, DeA Capital
Information on remuneration and stock options and
Real Estate, IRE and IRE Advisory have adopted the
performance shares allocated to directors, auditors, general
national tax consolidation scheme of the De Agostini
managers and managers with strategic responsibilities
Group (the Group headed by De Agostini S.p.A., formerly
is provided in the related sections of the Annual and
B&D Holding di Marco Drago e C. S.a.p.a.). This option
Consolidated Financial Statements and in the Remuneration
was exercised jointly by each company and De Agostini
Report pursuant to art. 123-ter of the TUF in accordance with
S.p.A. by signing the “Regulation for participation in the
art. 84-quater of the Issuer Regulation, which is available to
national tax consolidation scheme for companies in the
the public at the headquarters of DeA Capital S.p.A. and on
De Agostini Group” and notifying the tax authorities of
the Company's website www.deacapital.it.
DeA CApitAl - AnnUAl finAnCiAl StAtementS to 31 DeCemBer 2015
67
Management and coordination
Structure” published on the Company’s website (Corporate
Governance section) for information on the degree of
Since 30 January 2007, the Company has been controlled
application of the provisions contained in the Code of Conduct.
by De Agostini S.p.A., which, in accordance with art.
2497-sexies of the Italian Civil Code, carries out
Corporate bodies
management and coordination activities in respect of the
• The Board of Directors consists of ten members, eight
Company. Please see the Notes to the Financial Statements
of whom are non-executive directors, four of whom are
above for key figures from the latest approved Financial
independent directors. It plays a key role in the corporate
Statements of De Agostini S.p.A.
governance system of DeA Capital S.p.A. It has the power
and the duty to manage the operations of the Issuer with
the ultimate and main goal of creating value.
Research and development activities
Pursuant to the articles of association, the Board manages
Pursuant to art. 2428, para. 3 of the Italian Civil Code, the
the Company's business and is invested with all the
Company did not carry out any research and development
administrative powers needed for this purpose, with the
activity in 2015.
exception of those powers reserved for the shareholders'
meeting, pursuant to legislation and the articles of
association. The Board of Directors has conferred on the
Atypical or unusual transactions and
Chairman, Lorenzo Pellicioli, and the CEO, Paolo Ceretti, all
non-recurring significant events and
the powers of ordinary and extraordinary administration,
transactions
with the authority to sign (i) with individual signature,
any deed, document or contract that involves an actual or
Pursuant to Consob Communication 6064293 of 28 July
prospective expenditure commitment or is connected with
2006, in 2015 neither the Company nor the Group carried
an investment of up to and including EUR 20,000,000; (ii)
out any atypical and/or unusual transactions or significant
with joint signature, any deed, document or contract that
transactions that were not a part of its ordinary operations.
involves an actual or prospective expenditure commitment or
is connected with an investment of between EUR 20,000,000
and EUR 100,000,000. The Board of Directors, however,
Corporate Governance
has the exclusive authority for any decision on expenditure
commitments and investments of over EUR 100,000,000.
With regard to the corporate governance system of DeA
Capital S.p.A., adopted to bring the Company in line
In 2015, the Board of Directors met five times.
with the principles of the Code of Conduct approved by
For 2016, the calendar of scheduled meetings has been
the “Committee for the Corporate Governance of Listed
published in both Italian and English (also available on the
Companies” (Code of Conduct), please see the document
entitled “Report on Corporate Governance and Ownership
Structure” (found in the Corporate Governance section
• The Board of Auditors comprises six members (the
of the Company's website). Below is a summary of the
chairman, two permanent auditors and three deputy
main information governing DeA Capital S.p.A.'s corporate
auditors). It monitors compliance with the law and the
governance.
Company’s articles of association, observance of the
principles of proper management, and the suitability and
Issuer profile
proper functioning of the organisational, administrative and
The Issuer's corporate governance structure is based on the
accounting structure. In 2015, the Board of Auditors met
traditional administration and control model, and hinges on
eight times.
the central role played by the Board of Directors, the proper
disclosure of management decisions, an effective internal
• The Remuneration and Appointments Committee
control system, the appropriate regulation of potential
comprises three independent directors. The Committee: (i)
conflicts of interest, and on rigorous standards of conduct for
as part of its remuneration duties, submits proposals to the
carrying out transactions with related parties.
Board of Directors concerning the remuneration of the chief
executive officer, and assesses the chief executive officer’s
Extent of application of the Code of Conduct
recommendations regarding the remuneration of managers
DeA Capital S.p.A. adheres to the Code of Conduct. Please
with strategic responsibilities; (ii) as part of its duties with
see the “Report on Corporate Governance and Ownership
regard to the appointment and composition of the Board
of Directors, submits recommendations to the Board on
68 DeA Capital - Report on Operations
the appropriate professional profile of board members
• The Control and Risks Committee comprises three
in order to ensure its optimal composition and efficient
independent directors. The Committee has a consultative
operation, formulates opinions on the size and composition
role and makes proposals to the Board of Directors. In
of the Board and recommends candidates for the post of
2015, the Control and Risks Committee met six times.
director in cases of co-option. In 2015, the Remuneration
Committee met three times.
Corporate Governance Chart as at 31 December 2015:
Shareholders’ Meeting
Board of Statutory Auditors:
Chairman: ANGELO GAVIANI
Independent
Auditors:
Permanent Auditors: ANNALISA R. DONESANA
PWC
GIAN PIERO BALDUCCI
Deputy Auditors: GIULIO GASLOLI,
ANNAMARIA ESPOSITO, MAURIZIO FERRERO
Board of Directors:
Executive:
LORENZO PELLICIOLI (CHAIRMAN),
PAOLO CERETTI (CEO)
Supervisory Body:
Non-executive: LINO BENASSI, MARCO BOROLI,
Chairman: GIAN PIERO
MARCO DRAGO, ROBERTO DRAGO
BALDUCCI (AUDITOR)
Independent
Members: SEVERINO
Lead Independent
Non-Executive Directors: ROSARIO BIFULCO,
SALVEMINI (INDEP.),
Director:
DONATELLA BUSSO,
DAVIDE BOSSI
ROSARIO BIFULCO
FRANCESCA GOLFETTO,
(INTERNAL AUDIT)
SEVERINO SALVEMINI
Remuneration and Appointments
Control and Risks Committee:
Committee:
Chairman: SEVERINO SALVEMINI (INDEP.)
Chairman: ROSARIO BIFULCO (INDEP.)
Members: ROSARIO BIFULCO (INDEP.),
Members: FRANCESCA GOLFETTO (INDEP.),
FRANCESCA GOLFETTO (INDEP.)
SEVERINO SALVEMINI (INDEP.)
Manager responsible for
preparing the accounting
Internal Audit:
statements:
DAVIDE BOSSI
MANOLO SANTILLI (CFO)
DeA CApitAl - AnnUAl finAnCiAl StAtementS to 31 DeCemBer 2015
69
Main risks and uncertainties to which
may have invested in foreign countries whose social,
the Parent Company and consolidated
political and economic conditions put the achievement of its
Group companies are exposed
investment objectives at risk.
As described in the Report on Operations, the DeA Capital
A.3. Regulatory changes
Group operates through, and is structured as, two business
Many Group companies conduct their operations in
areas, Private Equity Investment and Alternative Asset
regulated sectors and markets. Any changes to or
Management.
developments in the legislative or regulatory framework
that affect the costs and revenues structure of investee
The risks set out below take into account the features of
companies or the tax regime applied could have negative
the market and the operations of Parent Company DeA
effects on the Group’s financial results and necessitate
Capital S.p.A. and the companies included in the Group’s
changes to the Group’s strategy. To combat this risk, the
Consolidated Financial Statements, the main findings of a
Group has established procedures to constantly monitor
risk assessment carried out in 2015, as well as the periodic
sector regulation and any changes thereto, in order to
monitoring conducted partly through the regulatory policies
take advantage of business opportunities and respond
adopted by the Group.
promptly to any changes in the prevailing legislation and
regulations.
The Group has adopted a modern corporate governance
system that provides effective management of the
A.4. Performance of the financial markets
complexities of its operations, and enables both individual
The Company’s ability to meet its strategic and
companies and the Group to achieve their strategic
management objectives could depend on the performance
objectives. Furthermore, the assessments carried out by the
of financial markets. A negative trend in financial markets
organisational units and the directors confirm both the non-
could have an effect on the Private Equity Investment sector
critical nature of these risks and uncertainties, and the DeA
in general, making investment and divestment transactions
Capital Group's financial solidity.
more complex, and on the Group’s capacity to increase the
NAV of investments in particular. The value of shareholdings
With reference to the specific risks relating to Migros, the
held directly or indirectly through funds in which the
main private equity investment, please see the Migros
Company has invested could be affected by factors such as
Annual Report (available on the Migros website).
comparable transactions concluded on the market, sector
multiples and market volatility. These factors that cannot be
directly controlled by the Group are constantly monitored
A. Contextual risks
in order to identify appropriate response strategies that
involve both the provision of guidance for the management
A.1. Risks relating to general economic conditions
of Group companies, and the investment and value
The operating performance and financial position of the DeA
enhancement strategy for the assets held.
Capital Group are affected by the various factors that make
up the macro-economic environment in the countries in
A.5. Exchange rates
which the Group has invested, including GDP performance,
Holding investments in currencies other than the euro
investor and consumer confidence, interest rates, inflation,
exposes the Group to changes in exchange rates between
the costs of raw materials and unemployment.
currencies. The investment in Kenan Investments is
The ability to meet medium- to long-term objectives could
managed as a special case, since although it was made
be affected by general economic trends, which could slow
in euros, the underlying asset is expressed in Turkish lira.
the development of sectors the Group has invested in, and
Taking into account the time horizon of the investment, it
at the same time, the business of the investee companies.
is believed that the expected return on the investment can
absorb any devaluation of the underlying currency, if this is
A.2. Socio-political events
in line with the outlook for the currency.
In line with its own strategic growth guidelines, one of the
DeA Capital Group’s activities is private equity investment in
A.6. Interest rates
companies and funds in different jurisdictions and countries
Financing operations that are subject to variable interest
around the world, which, in turn, invest in a number of
rates could expose the Group to an increase in related
countries and geographical areas. The DeA Capital Group
financial charges, in the event that the reference interest
rates rise significantly.
70 DeA Capital - Report on Operations
B. Strategic risks
managed;
- concentration of the maturities of numerous real estate
B.1. Concentration of the Private Equity
funds within a narrow timeframe, with related high
investment portfolio
availability of property on the market, leading to a decrease
The Private Equity Investment strategy adopted by the Group
in property values and an increase in selling times.
includes:
- Direct investments;
For each of the risk scenarios outlined above, the Group has
- Indirect investments (via funds).
defined and implemented appropriate strategies that include
strategic, operational and management aspects, as well as
Within this strategy, the Group’s overall profitability could be
a system monitoring the level of asset diversification in the
adversely affected by an unfavourable trend in one or a few
Alternative Asset Management business.
investments, if there were insufficient risk diversification,
resulting from the excessive concentration of investment in a
B.3. Key resources (governance/organisation)
small number of assets, sectors, countries, currencies, or of
The success of the DeA Capital Group depends to a large
indirect investments in funds with limited investment targets/
extent on its executive directors and certain key management
types of investment.
figures, their ability to efficiently manage the business and the
ordinary operations of the Group, as well as their knowledge
To combat these risk scenarios, the Group pursues an
of the market and the professional relationships established.
asset allocation strategy intended to create a balanced
The departure of one or more of these key resources, without
portfolio with a moderate risk profile, investing in sectors
a suitable replacement being found, as well as an inability to
and companies with an appealing current and future risk/
attract and retain new and qualified resources, could impact
return ratio. Furthermore, the combination of direct and
growth targets and have a negative effect on the Group’s
indirect investments, which, by their nature, provide a
operating performance and financial results. To mitigate this
high level of diversification, helps reduce the level of asset
risk, the Group has put in place HR management policies that
concentration.
correspond closely to the needs of the business, and incentive
policies that are periodically reviewed, in light of, among other
B.2. Concentration of Alternative Asset
things, the general macroeconomic climate and the results
Management activities
achieved by the Group.
In the Alternative Asset Management business, events
could arise as a result of excessive concentration and hinder
C. Operating risks
achievement of the level of expected returns. These events
could be due to:
C.1. Investment operations
Investment operations conducted by the Group are subject
• Private equity funds
to the risks typical of private equity activities, such as the
- concentration of the management activities of asset
accurate valuation of the target company and the nature of
management companies across a limited number of funds,
the transactions carried out. The Group has implemented a
if a decision were made to cancel the asset management
structured process of due diligence on the target companies
mandate for one or more funds;
and the careful definition of shareholders’ agreements in order
- concentration of the financial resources of the funds
to conclude agreements in line with the investment strategy
managed in a limited number of sectors and/or
and the risk profile defined by the Group.
geographical areas, in the event of a currency, systemic or
sector crisis;
C.2. Compliance with covenants
- for closed-end funds, the concentration of the commitment
Some investment operations were concluded using financial
across just a few subscribers.
leverage to invest in the target companies. For financing
contracts signed by investee companies, specific covenants
• Real estate funds
generally backed by collateral are in place; failure to comply
- concentration of real estate present in the portfolio of
with these could necessitate recapitalisation operations
managed funds in a few cities and/or in limited types of
for investee companies and lead to an increase in financial
property (management/commercial), in the event of a
charges relating to debt refinancing. Failure to comply with
crisis in the property market concerned;
covenants attached to loans could have negative effects
- concentration in respect of certain major tenants, if they
on both the financial situation and operations of investee
were to withdraw from the rental contracts, which could
companies, and on the value of the investment.
lead to a vacancy rate that has a negative impact on the
The Group constantly monitors the significant reference
funds' financial results and the valuation of the properties
parameters for the financial obligations taken on by investee
DeA CApitAl - AnnUAl finAnCiAl StAtementS to 31 DeCemBer 2015
71
companies, in order to identify any unexpected variance in
C.4. Funding risk
good time.
The income flows expected from the Alternative Asset
Management business depend on the capacity of the Group’s
C.3. Divestment operations
asset management companies to stabilise/grow their assets
In its Private Equity Investment business, the Group generally
under management. In this environment, fundraising
invests over a medium-/long-term time horizon. Over the
activity could be harmed both by external factors, such as
investment management period, external situations could
the continuation of the global economic crisis or the trend
arise that might have a significant impact on the operating
in interest rates, and internal factors, such as bad timing in
results of the investee companies, and consequently on the
respect of fundraising activities by the asset management
value of the investment itself. Furthermore, in the case of co-
companies, or the departure of key managers from the
investment, guiding the management of an investee company
companies. The Group has established appropriate risk
could prove problematic or infeasible, and it may ultimately
management strategies in relation to fundraising, with a
prove impossible to dispose of the stakes held owing to
view to both involving new investors and retaining current
lock-up clauses. The divestment strategy could therefore be
investors.
negatively affected by various factors, some of which cannot
be foreseen at the time the investments are made. There is
therefore no guarantee that expected earnings will be realised
given the risks arising from the investments made.
To combat these risk situations, the Group has defined a
process to monitor the performance of its investee companies,
facilitated by its representation on the management bodies of
significant investee companies, with a view to identifying any
critical situations in good time.
72 DeA Capital - Report on Operations
Other information
At 31 December 2015, the Group had 231 employees (224 at
the end of 2014), including 35 senior managers, 65 middle
managers and 131 clerical staff. Of these, 218 worked in
Alternative Asset Management and 13 in Private Equity
Investment/the Holding Company. These staff levels do not
include personnel on secondment from the Parent Company
De Agostini S.p.A.
With regard to the regulatory requirements set out in art. 36
of the Market Regulation on conditions for the listing of parent
companies of companies formed or regulated by laws of non-
EU countries and of major importance in the consolidated
accounts, it is hereby noted that no Group company falls
within the scope of the above-mentioned provision.
Furthermore, conditions prohibiting listing pursuant to art. 37
of the Market Regulation relating to companies subject to the
management and coordination of other parties do not apply.
DeA CApitAl - AnnUAl finAnCiAl StAtementS to 31 DeCemBer 2015
73
Management
Lorenzo Pellicioli, Executive Chairman
Lorenzo Pellicioli (65 years old) is Chairman of the
Board of Directors of DeA Capital.
He started his career as a journalist for the newspaper
Giornale Di Bergamo and afterwards became Vice-
President of Bergamo TV Programmes.
Paolo Ceretti, Chief Executive Officer
From 1978 to 1984 he held different posts in Italian
private television sector: for Manzoni Pubblicità, for
Paolo Ceretti (61 years old) is Chief Executive
Publikompass up to his nomination as Rete 4 General
Officer of DeA Capital since 2007.
Manager.
He gained his professional experience inside the
In 1984 he joined Gruppo Mondadori, the leading Italian
Agnelli Group, holding from 1979 positions of
publishing group. He was initially appointed General
increasing importance at Fiat SpA (Internal Auditing
Manager for Advertising Sales, and Mondadori Periodici
and Finance) and in the Financial Services Sector
(magazines) Deputy General Manager, and afterwards
(Planning, Credit and Control) and subsequently
President and CEO of Manzoni & C. S.p.A, the Group’s
assuming the position of Head of Strategic Planning
advertising representative.
and Development of Ifil (now EXOR).
From 1990 to 1997, he served first as President and CEO
After assuming responsibility for the internet B2C
of Costa Cruise Lines in Miami, which is part of the Costa
sector of Fiat/Ifil in 1999 as CEO of CiaoHolding
Crociere Group operating in the North American market
and CiaoWeb, he was appointed CEO of GlobalValue
(USA, Canada and Mexico) and then became General
SpA, at Fiat/IBM joint venture in the Information
Manager of Costa Crociere S.p.A., based in Genoa.
Technology sector.
From 1995 to 1997 he was also President and CEO of
Since 2004, he has been General Manager of De
Compagnie Française de Croisières (Costa-Paquet), the
Agostini S.p.A., the holding of the De Agostini Group
Paris-based subsidiary of Costa Crociere.
where he is also CEO of De Agostini Editore.
From 1997 onwards he participated in the privatisation of
He is a member of the Board of Directors of IGT,
SEAT Pagine Gialle, which was purchased by a group of
Banijay Group and other companies of the Group.
financial investors. After the acquisition he was appointed
CEO of SEAT.
In February 2000 he also took charge of the Internet
Business unit of Telecom Italia, subsequent to the sale of
SEAT.
In September 2001, following the acquisition of Telecom
Italia by the Pirelli Group, he resigned.
As from November 2005 he became CEO of the De
Agostini Group.
He was Chairman of Gtech from August 2006 until April
2015 and, after the merger with IGT, he became Vice
Chairman of IGT. He is a member of the Board of Directors
of Assicurazioni Generali S.p.A..
He is also member of the Advisory Boards of Wisequity II,
Macchine Italia and Palamon Capital Partners. Since 2006
he has been a member of the Global Clinton Initiative.
For further info:
section: About Us
74 DeA Capital - Report on Operations
Manolo Santilli, Chief Financial Officer
Manolo Santilli (47 years old) is Chief Financial
Officer of DeA Capital since February 2007.
He gained his professional experience starting in 1996
in STET International in the Planning, Controlling and
Initiative Evaluation area, subsequently assuming in
2000 the responsibility of Administration and Control
at IFIL/FIAT of the Internet Start-up Ciaoweb.
In 2002 he became Investment Manager in
Finmeccanica and since 2004 he entered the De Agostini
Group where he is currently also Administration,
Finance and Reporting Manager for De Agostini S.p.A..
In 1994 he graduated in Economics at the Università
Commerciale L. Bocconi of Milan. He is also Auditor
Paolo Perrella, Investor Relations Director
and member of the Professional Accountants register
in Pescara.
Paolo Perrella (50 years old) joined DeA Capital
at the end of 2007 to manage relations with
institutional investors and analysts. He is also
Investor Relations Director at De Agostini S.p.A.,
where he is responsible for monitoring and control of
some large financial investments.
He previously worked 10 years as equity analyst:
member of the ABN AMRO telecoms pan-European
team and, at the beginning of his career, at the finance
department of RAS (Allianz Group).
He also spent 2 years at Interbanca, an Italian merchant
Gianandrea Perco, Head of Strategy and Management
bank, as Senior Manager, Equity Capital Marklets.
of existing shareholdings
From 2003 to 2007 worked for Telecom Italia, firstly as
Gianandrea Perco (42 years) joined DeA Capital in
VP, Investor relations, then as VP of Strategic
August 2015, reporting directly to the Chief Executive
Planning, a function reporting to the CEO.
Officer, and supports top management in strategic
He holds a BA in Business Administration with full marks
investments, divestments and management of
in 1990 at Università Bocconi, in Milan. He earned the
existing shareholdings.
CFA® designation in 2002.
His professional experience began in 1997 in
Mediobanca, in the equity capital market team, and
in 2000, he moved to Lehman Brothers Investment
Banking team.
In 2001, he started his experience in UniCredit
where he developed his carrier for 10 years in the
Corporate and Investment Banking division, heading
the Italian Corporate Finance Advisory team and the
Multinational Financing team.
In 2011 he joined FondiariaSai as Deputy General
Manager with the responsibility of the Real Estate
business, of the diversified businesses and of
the M&A team.
From 2013 to July 2015 he was a Partner at PwC
Italy heading the M&A team. He graduated with full
marks with honors in Management at Università
For further info:
Commerciale Luigi Bocconi in Milan.
section: About Us
DeA CApitAl - AnnUAl finAnCiAl StAtementS to 31 DeCemBer 2015
75
Significant events after the end of
8. Proposal to approve the
2015 and outlook
Financial Statements of DeA
Capital S.p.A. for the Year
Significant events after the end of 2015
Ending 31 December 2015
Private Equity funds - paid calls/capital
and the partial distribution of
distributions
the share premium reserve
After the end of 2015, the DeA Capital Group increased its
investment in the IDeA I FoF, ICF II, ICF III, IDeA OF I,
IDeA EESS and IDeA ToI funds following total payments of
Dear Shareholders,
EUR 2.9 million (EUR 0.5 million, EUR 0.8 million, EUR 0.1
million, EUR 1.3 million, EUR 0.1 million and EUR 0.1 million
In submitting the Financial Statements for the Year Ending
respectively).
31 December 2015 for your approval, the Board of Directors
proposes that you pass the following resolutions:
At the same time, the DeA Capital Group received capital
reimbursements totalling EUR 8.6 million from the IDeA I FoF
“The DeA Capital S.p.A. ordinary shareholders’ meeting,
(EUR 4.5 million) and IDeA OF I (EUR 4.1 million) funds, to
be used in full to reduce the carrying value of the units.
- after reviewing the draft Financial Statements for the Year
Second closing of ICF III private equity fund
Ending 31 December 2015, which show a loss of EUR
On 19 January 2016, the second and final closing of the ICF
18,899,586 (loss of EUR 4,519,219 in 2014);
III fund was completed for EUR 9.9 million; this brought the
- in acknowledgement of the Reports of the Board of Auditors
final commitment of the fund to EUR 67 million.
and of the independent auditors, PricewaterhouseCoopers
S.p.A.;
Outlook
- in acknowledgement that the legal reserve is one-fifth of the
The outlook continues to broadly focus on the strategic
share capital and that the share premium reserve of DeA
guidelines followed last year, with an emphasis on increasing
Capital S.p.A. at 31 December 2015 was EUR 334,338,793;
the value of assets in the Private Equity Investment area and
developing Alternative Asset Management platforms.
resolves
With regard to the Private Equity Investment area, having
1. to approve the Report of the Board of Directors on the
completed the sale of the stake in Générale de Santé and
Group's position and on operating performance;
half the stake in Migros, the Company will continue its efforts
2. to approve the Statement of Financial Position, Income
to increase the value of the investments in its portfolio, and
Statement and Notes to the Financial Statements for the
evaluation new direct investment or co-investment initiatives.
Year Ending 31 December 2015 and the related annexes;
3. to carry forward the loss of EUR 18,899,586 reported in
Turning to Alternative Asset Management, as referred to
the Financial Statements for the Year Ending 31 December
above, the Company will continue to develop platforms for
2015;
both private equity (through IDeA Capital Funds SGR) and
4. to make a partial distribution of the share premium reserve
real estate (through IDeA FIMIT SGR), as well as associated
in an amount of EUR 0.12 per share;
real estate activities (i.e. project, property and facility
5. to grant Chairman Lorenzo Pellicioli and Chief Executive
management and property brokerage via IRE/IRE Advisory).
Officer Paolo Ceretti broad powers to execute these
resolutions, jointly or severally through their agents and in
In order to support the strategic guidelines above, the
compliance with the deadlines and procedures established
Company will continue to maintain a solid asset/financial base,
by law.”
optimised by cash return to shareholders (including through
buy-back operations), based on the available liquidity.
Milan, 9 March 2016
FOR THE BOARD OF DIRECTORS
The Chairman
Lorenzo Pellicioli
76 DeA Capital - Report on Operations
ANNUAL FINANCIAL
STATEMENTS
FOR THE YEAR ENDING
31 DECEMBER 2015
• Consolidated Statement of
Financial Position
• Consolidated Income Statement
• Consolidated Statement of
Comprehensive Income
• Consolidated Cash Flow Statement
• Consolidated Statement of Changes in
Shareholders’ Equity
• Notes to the Financial Statements
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
77
Consolidated Statement of Financial Position
December
December
(Euro thousand)
Note
31, 2015
31, 2014
ASSETS
Non-current assets
Intangible and tangible assets
Goodwill
1a
129,595
166,363
Intangible assets
1b
37,539
63,348
Property, plant and equipment
1c
3,119
3,908
Total intangible and tangible assets
170,253
233,619
Investments
Investments valued at equity
2a
11,467
19,066
Investments held by Funds
2b
90,675
111,014
- available for sale investment
52,536
71,209
- invest. in associates and JV valued at FV through P&L
38,138
39,805
Other available-for-sale companies
2c
76,464
209,320
Available-for-sale funds
2d
173,730
176,736
Other avalaible-for-sale financial assets
26
306
Total Investments
352,362
516,442
Other non-current assets
Deferred tax assets
3a
3,676
5,039
Tax receivables from Parent companies
0
546
Other non-current assets
3b
31,795
30,495
Total other non-current assets
35,471
36,080
Total non-current assets
558,086
786,141
Current assets
Trade receivables
4a
17,818
29,039
Available-for-sale financial assets
4b
7,532
5,080
Financial receivables
4c
3,467
2,678
Tax receivables from Parent companies
4d
2,667
3,533
Other tax receivables
4e
4,567
2,892
Other receivables
4f
2,876
18,591
Cash and cash equivalents
4g
123,468
55,583
Total current assets
162,395
117,396
Total current assets
162,395
117,396
Held-for-sale assets
4h
11,487
0
TOTAL ASSETS
731,968
903,537
SHAREHOLDERS' EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY
Share capital
5a
263,923
271,626
Share premium reserve
5b
299,647
384,827
Legal reserve
5c
61,322
61,322
Fair value reserve
5d
62,178
116,415
Other reserves
5e
(11,720)
(11,243)
Retained earnings (losses)
5f
(169,434)
(111,833)
Profit(loss) for the year
5g
41,072
(57,601)
Net equity Group
546,988
653,513
Minority interests
5h
138,172
173,109
Shareholders' equity
685,160
826,622
LIABILITIES
Non-current liabilities
Deferred tax liabilities
3a
10,801
19,696
Provisions for employee termination benefits
6a
4,713
4,618
Long term financial loans
0
5,201
Payables to staff
0
11,397
Total non-current liabilities
15,514
40,912
Current liabilities
Trade payables
7a
15,598
18,180
Payables to staff and social security organisations
7b
7,341
8,122
Current tax
7c
3,384
2,012
Other tax payables
7d
1,571
2,037
Other payables
7e
2,749
5,292
Short term financial loans
651
360
Total current liabilities
31,294
36,003
Held-for-sale liabilities
0
0
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES
731,968
903,537
Pursuant to Consob Resolution 15519 of 27 July 2006, the impact of dealings with related parties on the Statement of Financial
Position, Income Statement and Cash Flow Statement is explained in the Notes to the Financial Statements.
78 DeA Capital - Annual Financial Statements to 31 December 2015
Consolidated Income Statement
(Euro thousand)
Note
2015
2014
Alternative Asset Management fees
8
62,416
66,045
Income from equity investments
9
(539)
(786)
Other investment income/expense
10
72,464
(56,149)
Income from services
11
18,496
18,667
Other income
12
3,204
509
Personnel costs
13a
(32,519)
(33,579)
Service costs
13b
(22,397)
(30,734)
Depreciation, amortization and impairment
13c
(64,021)
(16,723)
Other expenses
13d
(9,577)
(6,921)
Financial income
14a
6,058
7,313
Financial expenses
14b
(1,076)
(4,408)
PROFIT/(LOSS) BEFORE TAX
32,509
(56,766)
Income tax
15
6,452
1,720
PROFIT/(LOSS) FOR THE PERIOD FROM CONTINUING
OPERATIONS
38,961
(55,046)
Profit (Loss) from discontinued operations/held-for-sale assets
286
(887)
PROFIT/(LOSS) FOR THE PERIOD
39,247
(55,933)
- Group share
41,072
(57,601)
- Non controlling interests
(1,825)
1,668
Earnings per share, basic (€)
16
0.154
(0.210)
Earnings per share, diluted (€)
16
0.154
(0.210)
Pursuant to Consob Resolution 15519 of 27 July 2006, the impact of dealings with related parties on the Statement of Financial
Position, Income Statement and Cash Flow Statement is explained in the Notes to the Financial Statements.
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
79
Consolidated Statement of Comprehensive Income
(Statement of Performance - IAS 1)
Comprehensive Income or the Statement of Performance (IAS 1), in which performance for the period attributable to the group
is reported including results posted directly to shareholders' equity, reflects a net negative balance of approximately EUR 13.2
million compared with a net positive balance of approximately EUR 30.1 million in the same period of 2014. This comprised:
• net profit of EUR 41.1 million recorded on the income statement;
• losses posted directly to shareholders’ equity totalling EUR 54.3 million (including the "reversal" to the income statement of
the fair value reserve after the partial disposal of Migros).
As regards the latter, the largest component was the decrease in fair value of Kenan Investments/Migros; the change
compared with 31 December 2014 was due to the fall in the price per share and the depreciation of the Turkish lira
against the euro.
Note that the effect of the measurement of Migros at fair value on the NAV of the DeA Capital Group was partially offset
by the reversal (EUR 11.4 million) of the payable for carried interest to be paid based on the achievement of certain
performance parameters.
(EUR thousand)
2015
2014
Profit/(loss) for the period (A)
39,247
(55,933)
Comprehensive income/expense which might be subsequently reclassified within
the profit (loss) for the period
(60,177)
88,547
Gains/(Losses) on fair value of available-for-sale financial assets
(60,177)
86,665
Share of other comprehensive income of associates
0
1,882
Comprehensive income/expense which will not be subsequently reclassified within
the profit (loss) for the period
41
(320)
Gains/(losses) on remeasurement of defined benefit plans
41
(320)
Other comprehensive income, net of tax (B)
(60,136)
88,227
Total comprehensive income for the period (A)+(B)
(20,889)
32,294
Total comprehensive income attributable to:
- Group Share
(13,165)
30,089
- Non Controlling Interests
(7,724)
2,205
80 DeA Capital - Annual Financial Statements to 31 December 2015
Consolidated Cash Flow Statement - Direct Method
(EUR thousand)
2015
2014
CASH FLOW from operating activities
Investments in funds and shareholdings
(27,761)
(26,023)
Capital reimbursements from funds
42,099
29,030
Proceeds from the sale of investments
152,679
171,844
Interest received
317
292
Interest paid
(698)
(3,871)
Cash distribution from investments
5,069
6,846
Realized gains (losses) on exchange rate derivatives
16
5
Taxes paid
(4,610)
(14,911)
Dividends received
0
64
Management and performance fees received
66,787
57,658
Revenues for services
24,118
24,537
Operating expenses
(69,524)
(57,052)
Net cash flow from operating activities
188,492
188,419
CASH FLOW from investment activities
Acquisition of property, plant and equipment
(143)
(534)
Sale of property, plant and equipment
337
14
Purchase of licenses
(124)
(956)
Net cash flow from investing activities
70
(1,476)
CASH FLOW from investing activities
Acquisition of financial assets
(4,862)
(1,096)
Sale of financial assets
2,566
1,535
Share capital issued
2,090
3,214
Own shares acquired
(13,030)
(3,720)
Dividends paid
(101,603)
(9,165)
Loan
(1,741)
(27,537)
Quasi-equity loan
0
32,756
Bank loan paid back
(4,000)
(153,743)
Net cash flow from financing activities
(120,580)
(157,756)
CHANGE IN CASH AND CASH EQUIVALENTS
67,982
29,187
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
55,583
26,396
Cash and cash equivalents relating to held-for-sale assets
0
0
Cash and cash equivalents at beginning of period
55,583
26,396
Effect of change in basis of consolidation: cash and cash equivalents
(97)
0
CASH AND CASH EQUIVALENTS AT END OF PERIOD
123,468
55,583
Held-for-sale assets and minority interests
0
0
CASH AND CASH EQUIVALENTS AT END OF PERIOD
123,468
55,583
Pursuant to Consob Resolution 15519 of 27 July 2006, the impact of dealings with related parties on the Statement of Financial
Position, Income Statement and Cash Flow Statement is explained in the Notes to the Financial Statements.
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
81
Consolidated Statement of Changes in Shareholders’ Equity
Share
Share
premium
Legal Fair value
(EUR thousand)
capital
reserve
Reserve
reserve
Total at 31 December 2013
273,975
386,198
61,322
28,725
Allocation of 2013 net profit
0
0
0
Cost of stock options
0
0
0
0
Purchase of own shares
(2,349)
(1,371)
0
0
Other changes
0
0
0
0
Total comprehensive profit/(loss)
0
0
0
87,690
Total at 31 December 2014
271,626
384,827
61,322
116,415
Share
Share
premium
Legal Fair value
(EUR thousand)
capital
reserve
Reserve
reserve
Total at 31 December 2014
271,626
384,827
61,322
116,415
Allocation of 2014 net profit
0
0
0
0
Cost of stock options
0
0
0
0
Purchase of own shares
(7,703)
(5,326)
0
0
Dividend distribution
0
(79,854)
0
0
Other changes
0
0
0
0
Total comprehensive income
0
0
0
(54,237)
Total at 31 December 2015
263,923
299,647
61,322
62,178
Pursuant
to Consob Resolution 15519 of 27 July 2006, the impact of dealings with
related parties on the Statement of Financial Position,
Income Statement and Cash Flow Statement is explained in the Notes to the Financial Statements.
82 DeA Capital - Annual Financial Statements to 31 December 2015
Consolidated
Other
Profit (loss) Profit (loss) for
Group
Non-controlling
shareholders’
Reserves carried forward
the Group
total
interests
equity
(8,898)
(80,703)
(31,130)
629,489
177,070
806,559
0
(31,130)
31,130
0
0
0
18
0
0
18
0
18
0
0
0
(3,720)
0
(3,720)
(2,363)
0
0
(2,363)
(6,166)
(8,529)
0
0
(57,601)
30,089
2,205
32,294
(11,243)
(111,833)
(57,601)
653,513
173,109
826,622
Consolidated
Other
Profit (loss) Profit (loss) for
Group
Non-controlling
shareholders’
Reserves carried forward
the Group
total
interests
equity
(11,243)
(111,833)
(57,601)
653,513
173,109
826,622
0
(57,601)
57,601
0
0
0
(276)
0
0
(276)
0
(276)
0
0
0
(13,029)
0
(13,029)
0
0
0
(79,854)
(2,583)
(82,437)
(201)
0
0
(201)
(24,630)
(24,831)
0
0
41,072
(13,165)
(7,724)
(20,889)
(11,720)
(169,434)
41,072
546,988
138,172
685,160
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
83
NOTES TO THE
FINANCIAL STATEMENTS CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDING
31 DECEMBER 2015
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
85
Notes to the Consolidated Financial Statements for the Year Ending
31 December 2015
A. Structure and content of the Consolidated Financial Statements
The Consolidated Financial Statements for the Year Ending 31 December 2015 include the Parent Company DeA Capital S.p.A.
and all subsidiaries (the Group), and were prepared using the separate financial statements of the companies included in
the basis of consolidation corresponding to the relevant individual statements, restated as necessary, to adapt them to the
accounting standards listed below as dictated by Italian law.
The Consolidated Financial Statements were prepared in accordance with the general principles of IAS 1, and specifically:
- the matching principle: the effect of events and transactions is recorded when they occur, and not when payment is made or
received;
- the going concern principle: the financial statements are prepared under the assumption that business operations will
continue for the foreseeable future. In this regard, the directors have evaluated this assumption with particular scrutiny in
light of the current economic and financial crisis. As indicated in the section “Main risks and uncertainties” in the Report on
Operations, the directors believe that the risks and uncertainties described therein are not critical in nature, confirming the
financial solidity of the DeA Capital S.p.A. Group;
- the materiality principle: when reporting operating events in accounting entries, preference is given to the principle of
economic substance over form;
- the accounting comparability principle: consolidated financial statements must show comparative information for the previous
period.
The Consolidated Financial Statements consist of the Statement of Financial Position, the Income Statement, the Statement of
Changes in Shareholders’ Equity, the Cash Flow Statement, the Statement of Comprehensive Income (Statement of Performance -
IAS 1) and the Notes to the Consolidated Financial Statements. The Consolidated Financial Statements are also accompanied by the
Report on Operations and a Statement of Responsibilities for the Accounts pursuant to art. 154-bis of Legislative Decree 58/98.
The Statement of Financial Position provides a breakdown of current and non-current assets and liabilities with separate
reporting for those resulting from discontinued or held-for-sale operations. In the Income Statement, the Group has adopted
the nature of expense method, whereby costs and revenues are classified according to type. The Cash Flow Statement is
prepared using the “direct method”.
Unless
otherwise indicated, all tables and figures included in these notes to
the Financial Statements are reported in EUR thousand.
The publication of the Consolidated Financial Statements for the Year Ending 31 December 2015 was authorised by resolution
of the Board of Directors dated 9 March 2016.
Statement of compliance with accounting standards
The Consolidated Financial Statements for the Year Ending 31 December 2015 (2015 Consolidated Financial Statements) have
been prepared in accordance with the International Accounting Standards adopted by the European Union and approved by
the date the Financial Statements were prepared (International Accounting Standards, or individually IAS/IFRS, or collectively
IFRS (International Financial Reporting Standards)). IFRS also includes all interpretations of the International Financial
Reporting Interpretations Committee (IFRIC), including those previously issued by the Standing Interpretations Committee
(SIC), and approved by the European Union.
The Consolidated Financial Statements were prepared with a focus on clarity, and provide a true and fair view of the assets,
financial situation, operating result and cash flows for the period.
Accounting standards, amendments and interpretations applied from 1 January 2015
The IASB-approved international accounting standards and interpretations authorised for adoption in Europe that were applied
for the first time from 1 January 2015 are detailed below.
The Group did not apply any IFRS in advance.
86 DeA Capital - Annual Financial Statements to 31 December 2015
FRIC 21 - Levies
On 20 May 2013, the IASB published IFRIC Interpretation 21 - Levies, to describe the accounting of levies imposed by the tax
authorities, as well as current taxes. The interpretation deals with the issue of recognising costs that companies must sustain
for tax payments. IFRIC 21 is an interpretation of IAS 37 (Provisions, Contingent Liabilities and Contingent Assets).
IAS 19 (Employee benefits)
On 21 November 2013, the IASB published some minor amendments to IAS 19 (Employee benefits), entitled “Defined benefit
plans: employee contributions”. The amendments simplify the accounting requirements for contributions to defined benefit
plans from employees or, in certain cases, third parties.
Improvements to IFRS - 2010-2012 and 2011-2013 cycles
On 12 December 2013, the IASB issued a set of amendments to the IFRS (“Annual Improvements to IFRS - 2010-2012 Cycle”
and “Annual Improvements to IFRS - 2011-2013 Cycle”). The most important issues dealt with in these amendments were:
• the changes to the definitions of vesting conditions and market conditions as well as to the definitions of performance
conditions and service conditions (previously included in the definition of vesting conditions) in IFRS 2 (Share-based payment);
• information on estimates and assessments used in aggregating operating segments in IFRS 8 (Operating segments);
• the identification and disclosure of a transaction with a related party that arises when a management entity provides key
management personnel services to the company that prepares the accounts in IAS 24 (Related party transactions);
• the exclusion of all types of joint arrangements from the scope of application of IFRS 3 (Business combinations).
Future accounting standards, amendments and interpretations
Accounting standards, amendments and interpretations that are not yet applicable and have not
been adopted in advance by the Group, but were already approved for adoption in the European
Union as of 28 February 2016
The International Accounting Standards, together with the interpretations and changes to existing IASB-approved accounting
standards and interpretations that were ratified for adoption in the European Union on 28 February 2016, are as follows:
Amendments to IAS 16 (Property, plant and equipment) and to IAS 38 (Intangible assets)
On 12 May 2014, the IASB issued an amendment to IAS 16 (Property, plant and equipment) and to IAS 38 (Intangible
assets). The IASB clarified that the use of revenue-based methods to calculate the depreciation of an asset is not appropriate.
This is because revenue generated by an activity that includes the use of an asset generally reflects factors other than the
consumption of the economic benefits embodied in the asset. The IASB also clarified that revenue is generally not presumed
to be an appropriate basis for measuring the consumption of the economic benefits embodied in an intangible asset. This
presumption, however, can be rebutted in certain limited circumstances.
These amendments are effective for annual periods starting from 1 January 2016.
Amendments to IFRS 11 (Joint arrangements)
On 6 May 2014, the IASB issued some amendments to IFRS 11 (Joint arrangements: accounting for acquisitions of interests in
joint operations) to clarify the accounting requirements for acquisitions in joint operations that constitute a business.
The amendments are applicable retrospectively for annual periods starting from 1 January 2016.
Amendments to IAS 27 Equity Method in Separate Financial Statements
On 12 August 2014, the IASB issued an amendment - “Equity Method in Separate Financial Statements” - to IAS 27.
The objective of the amendment to IAS 27 is to allow parent companies to use the equity method to account for investments
in associates and joint ventures in the separate financial statements.
The amendments will enter into force on 1 January 2016.
Improvements to IFRS - 2012-2014 cycle
On 25 September 2014, the IASB issued a set of amendments to IFRS ("Annual Improvements to IFRS - 2012-2014 Cycle"). The
most important issues dealt with in these amendments were:
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
87
• the amendment that introduces some specific guidance to IFRS 5 for cases in which an entity reclassifies an asset from the
held-for-sale
category to the held-for-distribution category (or vice versa), or when
the requirements for classifying an asset as
held-for-distribution no longer apply. The amendments specify that these reclassifications should not be considered as a change
to a sales plan or to a distribution plan and that the criteria for classification and valuation remain valid;
• as regards IFRS 7, the amendment covers the introduction of further guidance to clarify whether a servicing contract
constitutes a continuing involvement in a transferred asset for the purposes of transfer disclosure requirements;
• the amendment introduced in IAS 19 clarifying that the high-quality corporate bonds used to determine the discount rate for
post-employment benefits should be issued in the same currency in which the benefits are paid;
• the amendments to IAS 34 to clarify the requirements in the event that the information required is presented in the interim
financial report but not in the interim financial statements.
The amendments will enter into force from 1 January 2016.
Amendments to IAS 1 Disclosure Initiative
On 18 December 2014, the IASB issued an amendment - "Disclosure Initiative" - to IAS 1.
The most important issues dealt with in these amendments were:
• clarification that the items on the statement of financial position, the income statement and the statement of comprehensive
income can be disaggregated or aggregated depending on their materiality;
• clarification that the share of OCI (Other comprehensive income) of an associate company or joint venture is shown as a single
item, regardless of its subsequent recycling in the income statement.
The amendment will enter into force from 1 January 2016.
We do not anticipate that the potential adoption of the standards and interpretations noted above will have a material impact on
the valuation of the DeA Capital Group's assets, liabilities, costs and revenues.
Accounting principles, amendments and interpretations that are not yet applicable, have not been
adopted in advance by the Group and are not yet approved for adoption in the European Union as
of 28 February 2016
The International Accounting Standards, interpretations and amendments to existing IASB-approved accounting standards and
interpretations that had not been ratified for adoption in the European Union as of 28 February 2016 are as follows:
IFRS 14 (Regulatory Deferral Accounts)
On 30 January 2014, the IASB published IFRS 14 (Regulatory deferral accounts), which allows only those adopting the IFRS for
the
first time to continue to report amounts relating to rate regulation
according to the previously adopted accounting standards.
In order to improve comparability with companies that already apply the IFRS and that do not report these amounts, the
standard requires the effect of rate regulation to be shown separately from other items.
The standard, which is awaiting ratification by the European Commission, will come into force on 1 January 2016.
IFRS 9 (Financial instruments)
On 24 July 2014, the IASB published IFRS 9 (Financial Instruments). The standard, which introduces changes to both the
recognition and the measurement of financial assets and liabilities, and hedge accounting, will fully replace IAS 39 (Financial
instruments: recognition and measurement).
Specifically,
the standard contains a model for valuing financial instruments based
on three categories: amortised cost, fair value
and fair value with changes recognised in the Statement of Comprehensive Income. It also includes a new impairment model
that is different from the one stipulated in IAS 39, based mainly on the concept of "expected losses".
The standard, which is awaiting ratification by the European Commission, will come into force on 1 January 2018, but can be
applied in advance.
IFRS 15 (Revenue from contracts with customers)
On 28 May 2014, the IASB issued IFRS 15 (Revenue from contracts with customers). The standard replaces IAS 18 (Revenue),
IAS 11 (Construction contracts), and the interpretations SIC 31, IFRIC 13 and IFRIC 15. It requires revenue to be recognised
to depict the transfer of goods or services to customers in an amount that reflects the consideration expected to be received in
exchange for those goods or services.
88 DeA Capital - Annual Financial Statements to 31 December 2015
The new model for reporting revenues defines a new five-step model for recognising revenue from contracts with customers:
• identifying contracts with the customer;
• identifying performance obligations, i.e. contractual commitments to transfer goods or services to a customer;
• determining the transaction price;
• allocating transaction prices to performance obligations;
• reporting the revenues when the relevant performance obligation has been fulfilled.
The standard is applicable for annual periods starting after 1 January 2018, and must be fully or partially applied
retrospectively.
Amendments to IFRS 10, IFRS 12 and IAS 28 (Investment Entities - Applying the Consolidation
Exception)
On 18 December 2014, the IASB issued the amendment - “Investment Entities: Applying the Consolidation Exception
(amendments to IFRS 10, IFRS 12 and IAS 28)” with the objective of clarifying issues relating to the consolidation of an
investment entity. More specifically, the amendment to IFRS 10 specifies that a parent company (an intermediate parent,
i.e. not an investment entity), controlled, in turn, by an investment entity, is not obliged to prepare consolidated financial
statements, even if the investment entity measures subsidiaries at fair value, in accordance with IFRS 10. Prior to this
amendment, under IFRS 10, a parent company was not required to present consolidated financial statements provided that its
parent company drafted consolidated financial statements that comply with IFRS. Following this amendment, the exemption
from preparing consolidated financial statements has been extended to intermediate parent companies, controlled, in turn, by
an investment entity, even if the latter values its subsidiaries at fair value rather than consolidating them.
The standard, which is awaiting ratification by the European Commission, will come into force on 1 January 2016.
Amendments to IFRIC 10 and IAS 28 (Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture)
On 11 September 2014, the IASB published the document "Sale or Contribution of Assets between an Investor and its Associate
or Joint Venture (Amendments to IFRS 10 and IAS 28)".
The objective of the amendments is to clarify the accounting treatment, both in the event of a parent company losing control
of a subsidiary (governed by IFRS 10) and in the case of downstream transactions (governed by IAS 28), according to whether
or not the subject of the transaction is a business, as defined by IFRS 3. If the subject of the transaction is a business, the
profit
must be fully recognised in both cases, whereas if the subject of the
transaction is not a business, only the profit relating
to minority interests must be recognised.
On 10 August 2015, the IASB published the exposure draft, "Effective Date of Amendments to IFRS 10 and IAS 28", in which
it proposed to defer the entry into force of the amendments until such time as any changes that might arise from the research
project into the equity method had been finalised. Any proposed new date for its entry into force will be the subject of public
consultation.
Amendments to IAS 12
On 19 January 2016, the IASB issued some amendments to IAS 12 (Income taxes).
The document aims to clarify how to account for deferred tax assets relating to debt instruments measured at fair value.
The amendments, which are awaiting ratification by the European Union, will enter into force on 1 January 2017.
Amendments to IAS 7
On 29 January 2016, the IASB issued some amendments to IAS 7 (Statement of cash flows: disclosure initiative).
The amendments, which are awaiting ratification by the European Union, will enter into force on 1 January 2017.
IFRS 16 - Leases
On 13 January 2016, the IASB issued IFRS 16 (Leases), which replaces the accounting rules contained in IAS 17.
Under the new accounting standard, all lease agreements must be shown as assets or liabilities whether they are financial
leases or operating leases.
IFRS 16 takes effect on 1 January 2019. Companies adopting IFRS 15 in advance may also apply this standard in advance.
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
89
The Group will adopt these new standards, amendments and interpretations based on the stipulated date of application, and
will assess their potential impact when they have been ratified by the European Union. We do not currently anticipate that the
potential adoption of the standards and interpretations noted above will have a material impact on the valuation of the DeA
Capital Group's assets, liabilities, costs and revenues.
Scope of consolidation
As a result of the events described in the Report on Operations, the scope of consolidation has changed compared
with 31 December 2014: the IDeA FIMIT Sviluppo fund has been removed following the arrival of new investors who,
by contributing capital or land, have diluted the DeA Capital Group's stake in said fund from 50% (held through the
subsidiary IDeA FIMIT SGR) to 8.5%.
Therefore, at 31 December 2015, the following companies formed part of the DeA Capital Group's scope of consolidation:
Registered
Share
% Consolidation
Company
office
Currency
capital
holding
method
DeA Capital S.p.A.
Milan, Italy
Euro
306,612,100
Holding
IDeA Capital Funds SGR
S.p.A.
Milan, Italy
Euro
1,200,000
100.00%
Full consolidation
IDeA OF I
Milan, Italy
Euro
-
46.99%
Full consolidation
Equity accounted
Atlantic Value Added
Rome, Italy
Euro
-
27.27%
(Associate)
DeA Capital Real Estate S.p.A.
Milan, Italy
Euro
600,000
100.00%
Full consolidation
Innovation Real Estate S.p.A.
Milan, Italy
Euro
597,725
96.99%
Full consolidation
Innovation Real Estate
Advisory S.r.l.
Milan, Italy
Euro
105,000
96.99%
Full consolidation
IDeA FIMIT SGR S.p.A.
Rome, Italy
Euro
16,757,574
64.30%
Full consolidation
Idea Real Estate S.p.A.
Milan, Italy
Euro
50,000
100.00%
Full consolidation
The above list meets the requirements of Consob Resolution 11971 of 14 May 1999 and subsequent amendments (art. 126 of the
Regulation).
Consolidation method
Subsidiaries are consolidated on a line-by-line basis from their date of acquisition, i.e. on the date the Group acquires a
controlling interest, and they cease to be consolidated when control is transferred outside the Group.
IFRS 10 defines the concept of control, based on the simultaneous presence of three key elements:
• the power to decide on the entity's significant activities;
• the exposure or right to variable returns from its involvement with the investee;
• the ability to use that power over the investee to affect the amount of the investor's returns due to the parent company
(connection between power and returns).
The financial statements to be consolidated, which were drawn up on 31 December 2015, were prepared and approved by the
Boards of Directors of the individual companies, appropriately adjusted, where necessary, to harmonise them with the parent
company's accounting standards.
The main criteria adopted to apply this method are indicated below:
• the financial statements of the Parent Company and subsidiaries are incorporated on a “line-by-line” basis;
• the carrying value of the investment is offset against the corresponding net equity figure. When a company is included
in the basis of consolidation for the first time, the difference between the acquisition cost and the net equity of the
investee companies is posted, if the conditions apply, to the assets or liabilities included in the consolidation, pursuant
to the provisions of IFRS 3. Any residual portion is taken to the income statement if negative, or recorded as a specific
item, "goodwill", under assets if positive. The latter is subject to an annual impairment test. Alternatively, when
a company is included in the basis of consolidation for the first time, the full amount may be recorded as goodwill
90 DeA Capital - Annual Financial Statements to 31 December 2015
including the portion relating to minority interests (full goodwill approach);
• transactions between consolidated companies are eliminated as are payables and receivables and unrealised profits resulting
from transactions between Group companies net of any tax impact;
• the portions of shareholders' equity pertaining to minority shareholders are reported, along with the respective share of net
profit for the period, in appropriate shareholders' equity items.
Investee companies over which the Group exercises considerable influence ("associates"), which are presumed to exist when a
stake of between 20% and 50% is held, are generally valued at equity.
B. Measurement criteria adopted
The measurement criteria adopted on the basis of International Accounting Standards and reported below are consistent with
the going concern principle and have not changed from those used in the preparation of the Consolidated Financial Statements
for the Year Ending 31 December 2014 and the Summary Consolidated Half-year Financial Statements at 30 June 2015 except
as a result of the application of new IAS/IFRS accounting standards as described above.
Current and non-current assets and liabilities
An asset is considered current if it meets at least one of the following conditions:
• it is expected to be converted during a company's normal operating cycle. The “company's operating cycle” means the period
from the acquisition of an asset to its conversion to cash and cash equivalents. When the company's operating cycle cannot
be clearly identified, its duration is assumed to be twelve months;
• it is held mainly for trading purposes;
• its conversion is expected to occur within 12 months of the end of the financial year;
•
it consists of cash and cash equivalents which have no restrictions
that would limit its use in the 12 months following the end
of the financial year.
All other assets are carefully analysed to separate the "current" portion from the "non-current" portion.
Furthermore, deferred tax assets are recorded under non-current components.
A liability is considered current if it meets at least one of the following conditions:
• it is expected to be settled during the company's normal operating cycle;
• it is held mainly for trading purposes;
• its settlement is expected to occur within 12 months of the end of the financial year;
• the company does not have an unconditional right to defer payment of the liability for at least 12 months after the end of the
financial year.
All other liabilities are carefully analysed to separate the "current" portion from the "non-current" portion.
Furthermore, deferred tax liabilities are recorded under non-current components.
Goodwill
Goodwill
is represented by the excess of the purchase cost incurred and the fair
value of the net assets acquired and liabilities
assumed on the date of acquisition. Goodwill is not amortised on a regular basis but is subject to a periodic impairment test
to assess whether the carrying value is appropriate. Impairment tests are performed on goodwill at least annually. These
tests are performed with reference to the cash generating unit to which goodwill is attributed. Any impairment of the goodwill
value
is reported if its recoverable value is lower than its carrying value.
The recoverable value is the greater of the fair value
of the cash generating unit, less any selling costs, and its value in use. The goodwill value may not be written back if it has
previously been written down due to impairment.
If the write-down arising from the impairment test is higher than the value of goodwill allocated to the cash-generating unit,
the excess amount is allocated to the tangible and intangible assets included in the cash-generating unit in proportion to their
carrying value.
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91
Intangible assets
Intangible assets are those assets with no identifiable physical form, controlled by the Group and which can produce future
economic benefits. They are recorded under assets when it is likely that their use will generate future economic benefits and
when their cost can be reliably determined. The above assets are recorded at purchase cost, or at production cost if they are
generated internally.
The purchase cost is represented by the fair value of the price paid to acquire the asset and all other direct costs incurred in
preparing the asset for use.
The carrying value of intangible assets is maintained in the Financial Statements to the extent that there is evidence that this
value can be recovered through use, or if it is likely that these assets will generate future economic benefits.
The useful life of intangible assets is assessed as finite or indefinite.
Intangible assets with an indefinite useful life are tested to check that their value is still appropriate at any time when
there are indications of possible impairment as required by IAS 36 (Impairment of assets). Intangible assets with an
indefinite useful life are not amortised. The useful life of an intangible asset with an indefinite life is reviewed annually to
check that the underlying conditions for the classification continue to apply. For additional details, please see the section
"Impairment".
Except
for intangible assets involving rights connected with final variable
commissions, intangible assets with a finite useful life
are amortised on a straight-line basis over their useful life.
The amortisation method used for rights connected with final variable commissions reflects changes in future economic
benefits associated with the recognition of the related revenues.
The
useful life of these intangible assets is tested to check that their
value is still appropriate whenever there are indications of
possible impairment.
Impairment - IAS 36
Impairment always occurs when the carrying value of an asset is greater than its recoverable value. On each reporting
date, a company determines whether there are any indications that an asset may be impaired. If such indications exist, the
recoverable value of the asset is estimated (impairment test) and any write-down is recorded. The recoverable value of an
asset is the higher of its fair value less costs to sell the asset and its value in use.
IAS 36 provides instructions on determining fair value less costs to sell an asset, as follows:
• if there is a binding sales agreement, the asset's fair value is the negotiated price;
•
if there is no agreement, but the asset is marketed in an active
market, the fair value is the current bid price (thus, the exact
price on the value date and not the average price);
• if no prices can be found in active markets, fair value must be determined based on valuation methods that incorporate
the best information available including any recent transactions involving the same asset, after verifying that there were
no significant changes in the economic environment between the date of the transactions under consideration and the
valuation date.
IAS 36 defines value in use as the present value of future cash flows that an asset is projected to produce. The estimate of the
value in use must include the items listed below:
• an estimate of future cash flows that the company expects to derive from the asset;
• expectations of potential changes in value and the timing of such cash flows;
• the time value of money;
• other factors such as the volatility of the asset's value and the absence of a liquid market for it.
For more information on determining value in use, please see Appendix A of IAS 36. However, the main elements for
accurately estimating the value in use are: an appropriate calculation of projected cash flows (for which the investee
92 DeA Capital - Annual Financial Statements to 31 December 2015
company's business plan is essential) and their timing, as well as the application of the right discount rate that accounts for
both the present value of money and the specific risk factors for the asset to be valued.
In all cases, when calculating the value it is important to:
• base cash flow projections on reasonable and sustainable assumptions that provide the best estimate of the economic
conditions that are likely to exist over the remaining useful life of the asset;
• base cash flow projections on the most recent budget/plan approved by the investee company, which, however, must exclude
any future inflows or outflows of cash that are expected to come from the future restructuring, improvement or optimisation
of operating performance. Projections based on these budgets/plans must cover a maximum period of five years unless a
longer period of time can be justified;
• estimate higher cash flow projections for the period covered by the most recent budgets/plans by extrapolating projections
based on the budgets/plans taken into consideration, and using a stable or declining growth rate for subsequent years
unless a rising rate can be justified. This growth rate must not exceed the average long-term growth rate for production in
the country or countries in which the investee company operates or for markets in which the asset used is placed, unless a
higher rate can be justified.
The assumptions used to determine cash flow projections must be reasonable, and based partly on an analysis of the
factors that generated differences between projections of past and current cash flows. In addition, the assumptions used to
determine current cash flow projections must be checked to ensure that they are consistent with actual past results, unless in
the meantime changes have occurred in the investee company's business model or in the economic environment in which it
operates that justify changes in respect of the past.
Tangible assets
Tangible assets are recorded at purchase price or production cost adjusted for accumulated depreciation and any impairment.
Their cost includes ancillary costs and direct and indirect costs incurred at the time of purchase necessary to make the
asset usable. The purchase cost is represented by the fair value of the price paid to acquire the asset and all other direct
costs incurred in preparing the asset for use. Tangible assets are depreciated on a straight-line basis over their remaining
useful life, using the depreciation rates indicated in the notes on the item relating to similar groups of assets. If factors
are discovered that lead the company to believe that it may be difficult to recover the net carrying value, an impairment
test is performed. If the reasons for the impairment cease to exist, the carrying value of the asset is increased to its
recoverable amount.
Associates
These are companies in which the Group holds at least 20% of the voting rights or exercises significant influence, but not full
or
joint control over their financial and operating policies. The
consolidated financial statements include the Group’s share of its
associates' results, which are reported using the equity method, starting on the date on which significant influence began until
the significant influence ceases to exist.
If the Group's share of an associate's losses exceeds the carrying value of the equity investment reported in the financial
statements, the carrying value of the equity investment is eliminated, and the share in further losses is not reported unless,
and to the extent that, the Group is legally liable for such losses.
When the equity investment is acquired, any difference between its cost and the Parent Company's stake in the net fair value
of
the associate's identifiable assets, liabilities and contingent
liabilities is recorded as required by IFRS 3, i.e. any goodwill is
included in the carrying value of the equity investment.
As governed by IAS 28.33, since the goodwill included in the carrying value of an equity investment in an associate is not
recorded separately, it is not subject to a separate impairment test pursuant to IAS 36 (Impairment of assets). Instead, the
full carrying value of the equity investment is subject to an impairment test pursuant to IAS 36 by comparing its recoverable
value
(the greater of its value in use and the fair value adjusted for sales
costs) and carrying value whenever there is evidence
indicating the possible impairment of the equity investment as set out in IAS 28.
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93
Financial assets
Based on the classification of financial assets required by IAS 39, the Group classified its financial assets at the time of the
transition to International Accounting Standards, and subsequently when individual financial assets were acquired.
The loans and receivables category includes non-derivative financial instruments that are not listed on an active market,
mainly relating to customer receivables, which have fixed or determinable expected payments. These are included in the
current portion except for those due after one year from the balance sheet date, which are classified under the non-current
portion. These assets are measured at fair value on initial recognition. Subsequently they are valued at amortised cost by
applying the effective interest rate method. Where there is objective evidence indicating impairment, the asset concerned is
written down to a carrying value equal to the discounted value of its future cash flows.
Impairment losses are recorded in the income statement. If in subsequent periods the reasons for the write-down no longer
exist, the write-down is reversed up to the amount that would have resulted from the application of amortised cost had the
asset not been written down.
Minority interests and investments in funds, which constitute the main, predominant area of the Group's operations, are
classified under available-for-sale assets, and are recorded at fair value with a balancing item in shareholders' equity.
IFRS 13.9 provides a "new" definition of fair value. It represents "the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at the measurement date".
The concept of fair value is characterised by the following features:
1. it is fundamentally related to the free market and the values reflected therein;
2. it is calculated using the exit price as the relevant price;
3. it relates to the date on which the measurement is made;
4.
it relates to an "orderly" transaction, i.e. it is not a forced
transaction, such as a compulsory administrative liquidation or a
sale at below cost.
Assets and liabilities measured at fair value may be:
• stand-alone assets or liabilities (financial or non-financial instruments);
• a group of assets, a group of liabilities or a group of assets and liabilities.
In the case of assets not listed in active markets, such as the group's direct investments in companies, investments in venture
capital funds and funds of funds, the fair value reported in financial statements is determined by the directors based on their
best judgment and estimation, using the knowledge and evidence available when the financial statements are prepared.
In these cases, it is provided that:
• if there are recent transactions related to the same financial instrument, these may be used to determine fair value after
verifying that there have been no significant changes in the economic environment between the date of the transactions
being considered and the valuation date;
•
if there are transactions involving similar financial instruments,
these may be used to determine fair value after verifying the
similarity (as a function of the type of business, size, geographic market, etc.) between the instrument for which transactions
have been found and the instrument to be valued;
• if no prices can be found in active markets, fair value must be determined using valuation models that account for all factors
that market participants would consider in setting a price.
However, due to objective difficulties in making assessments and the absence of a liquid market, the values assigned to such
assets could differ, and in some cases significantly, from those that could be obtained when the assets are sold.
Direct investments in companies that are not subsidiaries or associates and in funds are classified as available-for-sale
financial
assets, which are initially reported at fair value on the date of the
original posting. These assets are measured at fair
94 DeA Capital - Annual Financial Statements to 31 December 2015
value when all interim and full-year financial statements are prepared.
Gains and losses from fair value measurement are posted to a special shareholders' equity reserve called the "fair value
reserve" until the investment is sold or otherwise disposed of, or until impairment occurs, in which cases the gain or loss
previously recorded in the fair value reserve is posted to the income statement for the period.
On the date of the annual or interim financial statements (IAS 34), a test is performed as to the existence of objective
evidence of impairment following one or more events that have occurred after the initial recording of the asset, and this event
(or events) has an impact on the estimated cash flow from the financial asset.
For
equity instruments, a significant or prolonged reduction in fair value
below their cost is considered to be objective evidence
of impairment.
Although International Accounting Standards introduced an important reference to quantitative parameters that must be
adhered to, they do not govern quantitative limits to determine when a loss is significant or prolonged.
The DeA Capital Group therefore has an accounting policy that defines these parameters. In particular, “significant” means
there has been an objective reduction in value when fair value is more than 35% below its historical cost. In this case,
impairment is recorded in the Income Statement without further analysis.
The duration of the reduction in value is deemed to be prolonged when the reduction of fair value below historical cost
continues for a period of over 24 months. After exceeding 24 months, impairment is recorded in the Income Statement
without further analysis.
Derivatives
Derivatives are recorded in the Statement of Financial Position at fair value calculated in accordance with the criteria already
stated in the “Financial assets” section.
Fair value changes are reported differently depending on their designation (hedging or speculative) and the nature of the risk
hedged (fair value hedge or cash flow hedge).
For contracts designated for hedging purposes, the Group documents this relationship when the hedge is established. The
documentation incorporates the identification of the hedging instrument, the item or transaction hedged, the nature of
the risk hedged, the criteria used to ascertain the effectiveness of the hedging instrument as well as the risk. The hedge
is considered effective when the projected change in fair value or in the cash flows of the hedged instrument is offset by
the change in fair value or in the cash flows of the hedging instrument, and the net results fall within the range of 80% to
125%.
If the instruments are not, or cannot be, designated as hedging instruments, they must be considered “speculative”; in this
case, fair value changes are posted directly to the Income Statement.
In the case of fair value hedges, changes in the fair value of the hedging instrument and the hedged instrument are posted
to the Income Statement regardless of the valuation criterion used for the hedged instrument. In the case of cash flow
hedges, the portion of the fair value change in the hedging instrument that is recognised as an effective hedge is posted to
shareholders' equity, while the portion that is not effective is posted to the Income Statement.
Trade receivables
If there is objective evidence that a trade receivable has suffered impairment, it must be adjusted down and the loss
posted to the income statement; the write-down is allocated to the item "impairment provisions", as a direct contra item
to the asset item.
The amount of the write-down must take into account recoverable cash flows, the related collection dates, future recovery
charges and expenses and the discount rate to be applied.
Cash and cash equivalents
Cash and cash equivalents include cash at hand, sight deposits and short-term, highly liquid financial investments that are
readily convertible into cash within 90 days and are subject to a negligible risk of price variation. They are reported at fair
value.
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95
Held-for-sale assets
A
non-current asset or disposal group is classified as held for sale if
the carrying value will mainly be recovered from its sale or
disposal
instead of its ongoing use. In order for this to occur, the asset or
disposal group must be available for immediate sale
in
its current condition, and the sale must be highly likely. Assets
meeting the criteria to be classified as held-for-sale assets
are valued at the lower of carrying value and sales value adjusted for any related costs.
Treasury shares
Treasury shares are not considered financial assets of the company that issued the shares. The purchase and sales value of
treasury shares is recorded as a change to shareholders' equity. No gain or loss is reported in the income statement for the
sale, purchase, issue or cancellation of treasury shares.
Fair value reserve
The fair value reserve incorporates fair value changes to entries measured at fair value with a balancing entry in shareholders'
equity.
Financial liabilities
Financial liabilities comprise loans, trade payables and other payment obligations. These are valued at fair value on initial
recognition and subsequently at amortised cost, applying the effective interest rate method. Where there is a change in
the expected future cash flows and these can be reliably estimated, the value of the payables is recalculated to reflect this
change on the basis of the present value of the new expected future cash flows and the internal rate of return originally
determined.
Put options on minority shareholdings
For put options that do not grant actual access to the economic benefits associated with owning the minority shareholdings, the
shares
or shareholdings covered by the options are reported on the date
control is acquired as "minority interests"; the portion of
profits
and losses (and other changes in shareholders' equity) of the entity
acquired is allocated to the minority shareholding after
the
business combination. The minority shareholding is reversed on each
reporting date and reclassified as a financial liability at its
fair
value (equal to the present value of the option's exercise price) as if
the acquisition had occurred on that date. The difference
between
the fair value of the financial liability and the minority interest
reversed on the reporting date is recorded as an acquisition
of
minority shareholdings and reported under the Group's shareholders'
equity. The effect of discounting is not recorded separately.
Any dividends paid to minority shareholders are posted to shareholders' equity.
If the option is not exercised, the minority interest is recognised in the amount that would have been reported if the option
had not been recorded; the difference between the minority interest recognised and the cancelled liability is recorded in the
Group’s shareholders’ equity.
Provisions for risks and future liabilities
As necessary, the Group records provisions for risks and future liabilities when:
• it has a legal or implicit obligation to third parties resulting from a past event;
• it is likely that Group resources will be used to meet the obligation;
• a reliable estimate can be made of the amount of the obligation.
Provisions are recorded based on the projected value and discounted as necessary to present value if the time value is
considerable. Changes in estimates are recognised in the Income Statement of the period in which the change occurs.
Revenues and income
Service revenues are recognised at the time the services are rendered based on the progress of the activity on the reporting
date. Revenues are recorded net of returns, discounts, allowances and premiums, and of directly related taxes.
Income from equity investments for dividends or for their full or partial sale is reported when the right to receive payment
is determined, with a balancing item (receivable) at the time of the sale or decision to distribute dividends by the entity or
appropriate body.
Interest is reported using the effective interest rate method.
96 DeA Capital - Annual Financial Statements to 31 December 2015
Employee benefits
Short-term employee benefits, whether in cash or in kind (meal vouchers) are reported in the income statement in the period
when work is performed.
Employee benefits related to participation in a defined benefit plan are determined by an independent actuary using the
projected unit credit method.
On 16 June 2011, the IASB published a revised version of IAS 19 (Employee benefits). Among other things, this document
modified the accounting rules of defined benefit plans (“Post-employment benefits: defined benefit plans”) and termination
benefits.
Specifically:
• For "Post-employment benefits: defined benefit plans", the option to use the “corridor approach” to account for actuarial
gains and losses was eliminated. These must now be recognised in the Statement of Performance. The resulting
remeasurement effect cannot be recycled through P&L but should be accumulated as a separate account within equity. No
other option is available.
Actuarial gains and losses include profits and losses of a technical nature due to changes in the actuarial assumptions
adopted and/or the fact that experience may differ from the actuarial assumptions adopted (e.g. staff turnover, early
retirement, mortality, change in the discount rate);
• Past service costs and the effects generated by curtailments and/or plan settlement (caused, for example, by a significant
reduction in the number of employees covered by the plan, changes to the plan’s terms and conditions) are recorded
immediately in the income statement under personnel costs;
• The interest cost (resulting from the discounting to present value process) and the expected returns on assets servicing
the plan are replaced by a net interest figure reported in the income statement under financial charges and calculated
by applying a discount rate (based on the high-quality corporate bonds rate at the end of the year) to the balance of the
existing plan at the beginning of the year.
Employee benefits in respect of participation in a defined contribution plan only relate to those plans under mandatory
government administration. The payment of contributions fulfils the Group's obligation to its employees. Thus, contributions
are costs in the period in which they are payable.
Share-based payments
In the Group, benefits were provided in the form of stock options or share-based payments. This applies to all employees
eligible for stock option plans and performance shares.
The cost of these transactions is determined with reference to the fair value of the options on the date allocation is made and
is reported over the period from such date until the expiry date with a balancing entry in shareholders' equity.
Estimating fair value requires determining the most appropriate valuation model for granting equity instruments, which
therefore depends on the terms and conditions under which these instruments are granted. This also requires the identification
of data to input into the valuation model including assumptions on the expected life of the options, volatility and the share
return.
The cost of stock options and performance shares for the Group's directors and employees is determined in the same way.
Income tax
Current income taxes are determined and reported on the basis of a reasonable forecast of the tax liability, as derived by
applying the tax rates in effect in the various countries where Group companies operate to taxable income, and taking into
account any exemptions and tax credits to which such companies are entitled.
Deferred
tax liabilities are allocated for all temporary differences between the
carrying value of the assets and liabilities and
the corresponding amount for tax purposes.
Deferred tax assets are recorded for all deductible temporary differences and for tax assets and liabilities carried forward to
the
extent that it is likely there will be sufficient future taxable profit
against which the deductible temporary differences and
the tax assets and liabilities carried forward can be used.
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
97
Deferred taxes are classified under non-current assets and liabilities and are determined using tax rates expected to be
applicable under the laws in the countries where the Group operates in the years when the temporary differences will be
realised or will expire.
The
carrying values of deferred tax assets are analysed periodically and
reduced if it is not likely that sufficient taxable income
will be generated against which the benefits resulting from such deferred assets can be used.
Earnings per share
In accordance with IAS 33, basic earnings per share is determined as the ratio of net profit for the period attributable to
shareholders owning Parent Company shares to the weighted average number of shares outstanding during the period.
Treasury shares in the portfolio are, of course, not included in this calculation.
Diluted earnings per share is calculated by adjusting the weighted average number of shares outstanding for all potential
ordinary
shares resulting from the potential exercise of assigned stock options,
which may therefore result in a diluting effect.
C. Changes in accounting principles and the treatment of errors
Accounting principles are changed from one year to another only if the change is dictated by an accounting standard or if
it helps provide more reliable information or more complete reporting of the impact of transactions on the Group's assets,
operating result and cash flows.
Changes
in accounting standards are applied retrospectively with the impact
reflected in shareholders' equity in the first of the
periods shown. Comparative reporting is adapted accordingly. The prospective approach is used only when it is not practical to
restate the comparative information. The application of a new or amended accounting standard is recorded as required by the
standard
itself. If the standard does not specify transition methods, the change
is reflected retrospectively, or if impractical,
prospectively.
If there are significant errors, the same treatment dictated for changes in accounting principles is used. If there are minor
errors, corrections are posted to the income statement in the period when the error is discovered.
The adoption of newly issued IAS principles and of any changes in the existing ones has not had any specific and/or cumulative
effect neither on the determination of the Net Equity/Net Result nor on the Profit per Share.
98 DeA Capital - Annual Financial Statements to 31 December 2015
D. Use of estimates and assumptions in preparing the financial statements
The Company's management must make assessments, estimates and assumptions that affect the application of accounting
standards and the amounts of assets, liabilities, costs and revenues recorded in the financial statements.
These estimates and assumptions are reviewed regularly. Any changes resulting from revisions to accounting estimates are
recorded in the period when the revision is made if such revision only affects that period. If the revision affects current and
future periods, the change is recorded in the period in which the revision is made and in related future periods.
Financial statement balances are reported and valued using the valuation criteria described above. At times, the application
of these criteria involves the use of estimates that may have a significant impact on amounts reported in the financial
statements. Estimates and related assumptions are based on past experience and factors deemed reasonable in the case
concerned; these are used to estimate the carrying value of assets and liabilities that cannot be easily obtained from other
sources. However, since these are estimates, the results obtained should not necessarily be considered definitive.
On the understanding that the use of reasonable estimates is an essential part of preparing financial statements, the items
where the use of estimates is most prevalent are stated below:
• valuation of financial assets not listed in active markets;
• valuation of financial assets listed in active markets but considered illiquid on the reference market;
• valuation of investments, goodwill and intangible assets.
The process described above is made particularly complicated by the unusual levels of volatility in the current macroeconomic
and market environment, which affect financial indicators that have a bearing on the above valuations.
An estimate may be adjusted as a result of changes in the circumstances on which it was based, or as a result of new
information. Any change in the estimate is applied prospectively and has an impact on the income statement in the period in
which the change occurred and potentially on income statements in future periods.
As allowed by IAS/IFRS, the preparation of the Consolidated Financial Statements of DeA Capital Group required the use of
significant estimates by the Company's management, especially with regard to the valuations of the investment portfolio
(equity investments and funds).
These valuations are calculated by directors based on their best judgement and estimation using the knowledge and evidence
available at the time the consolidated financial statements are prepared. However, due to objective difficulties in making
assessments and the lack of a liquid market, the values assigned to such assets could differ, perhaps and in some cases
significantly, from those that could be obtained when the assets are sold.
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
99
Information on the fair value hierarchy
IFRS 13 stipulates that financial instruments reported at fair value should be classified based on a hierarchy that reflects the
importance and quality of the inputs
used in calculating fair value. Three levels have been determined:
• Level 1: includes quoted prices on active markets for assets or liabilities identical to those being valued;
• Level 2: includes observable inputs other than those included in level 1, for example:
- quoted prices on active markets for similar assets and liabilities;
- quoted prices on inactive markets for identical assets and liabilities;
- interest rate curves, implicit volatility, credit spreads;
• Level 3: unobservable data. These input data may be used if no observable input data are available. IFRS 13 specifies that
unobservable input data used to measure fair value must reflect the assumptions used by market participants when fixing the
price for the assets or liabilities being valued.
The table below shows assets valued at fair value by hierarchical level at 31 December 2015:
(EUR million)
Note
Level 1
Level 2
Level 3
Total
Available-for-sale equity investments held by funds
2b
3.5
0.0
49.0
52.5
Investments in associates and JVs held by Funds (recognised
on income statement)
2b
0.0
18.5
19.6
38.1
Available-for-sale investments in other companies
2c
0.0
76.3
0.2
76.5
Available-for-sale funds
2d
7.7
166.0
0.0
173.7
Other available-for-sale financial assets - non-current
portion
-
0.0
0.0
0.0
0.0
Available-for-sale financial assets - current portion
4b
7.5
0.0
0.0
7.5
Total assets
18.7
260.8
68.8
348.3
For level 3, a reconciliation of the opening and closing balances is shown in the table below. Income and expenses posted to the
Income Statement or shareholders’ equity, and purchases and sales made during 2015, are identified separately:
Impairment
and related
Fair value
Balance at
exchange
Fair value
on income Translation Balance at
(EUR thousand)
1.1.2015
Increases Decreases
effect
adjustment statement
effect
31.12.2015
Available-for-
sale equity
investments
held by funds
53,705
6,341
(9,975)
(1,068)
0
0
0
49,003
Investments
in associates
and JVs held
by Funds
(recognised
on income
statement)
24,805
0
0
(6,000)
0
784
0
19,589
Other entities
184
0
0
0
0
0
0
184
Available-
for-sale
investments
78,694
6,341
(9,975)
(7,068)
0
784
0
68,776
Other
available-for-
sale financial
assets -
non-current
portion
306
0
0
0
5
0
0
311
Valuation techniques and main unobservable input data
Available for sale investments held by Funds
At 31 December 2015, the DeA Capital Group held minority stakes in Giochi Preziosi, Manutencoop, Grandi Navi Veloci,
Euticals, Telit and Elemaster through the IDeA Opportunity Fund I.
100 DeA Capital - Annual Financial Statements to 31 December 2015
As regards the stake held in Telit, its fair value was based on the company price per share as quoted on the AIM market on the
London Stock Exchange as of December 31, 2015, and on the GBP/EUR exchange rate as of the same date.
As regards the other participations held through IDeA OF I, their fair value was based on different valuation techniques
(mainly Transaction Multiples, Market Multiples, Discounted Cash Flow) based on parameters which are not market based.
The fair value of such investments was selected within the valuation range determined for each them based on the
different valuation techniques, taking into account also their value as reported by the IDeA OF I report for the year ending
31 December 2015.
Investments in Associates and JVs valued at FV through P&L held by Funds
At 31 December 2015, the DeA Capital Group held minority stakes in Talgo, Corin and Iacobucci through the IDeA Opportunity
Fund I. Such stakes were valued at fair value through profit and loss based on the IAS 28.18.
As regards the stake held in Talgo, the fair value of the vehicle through which the participation is held by IDeA OF I was based
on the company price per share as quoted on the Madrid Stock Exchange as of December 31, 2015.
As regards the other participations held through IDeA OF I, their fair value was based on different valuation techniques
(mainly Transaction Multiples, Market Multiples, Discounted Cash Flow) based on parameters which are not market based.
The fair value of such investments was selected within the valuation range determined for each of them based on the
different valuation techniques, taking into account also their value as reported by the IDeA OF I report for the year ending
31 December 2015.
Kenan Investments/Migros
The shareholding in Kenan Investments (the indirect parent company of Migros) is recorded in the Consolidated Financial
Statements at 31 December 2015 in the amount of EUR 76.3 million.
The accelerated book building operation, completed on 8 April 2011, brought the company's total free float to 20.5%. This
increased the significance of stock market prices for the purposes of identifying the fair value of the company.
The valuation of the equity investment in Kenan Investments at 31 December 2015 is based on (i) the equity value of Migros,
(ii) an updated view of net debt at the various levels of the Company’s control structure (Kenan Investments, Moonlight
Capital, MH) and (iii) the TRY/EUR exchange rate (3.17 at 31 December 2015).
Venture capital funds, funds of funds, co-investment fund, theme funds and property funds
Valuations of shareholdings and funds in the portfolio reflect estimates made using the information available on the date this
document was prepared.
With regard to funds, at 31 December 2015, the DeA Capital Group held units in:
• six venture capital funds (with a total value of approximately EUR 9.7 million).
• IDeA I FoF (valued at EUR 77.2 million);
• ICF II (valued at EUR 41.7 million);
• ICF III (valued at EUR 4.8 million);
• IDeA EESS (valued at EUR 7.3 million);
• IDeA ToI (valued at EUR 1.1 million);
• six unlisted real estate funds (with a total value of approximately EUR 32.4 million).
The carrying value represents the NAV advised by the management company in its annual report for the year ending 31
December 2015, drafted in accordance with the Bank of Italy’s regulation of 19 January 2015 on collective asset management.
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
101
Statement of Financial Position
Non-current assets
1 - Intangible and tangible assets
1a - Goodwill
Changes in goodwill are shown in the table below:
Balance at
Balance at
(EUR thousand)
1.1.2015
Acquisitions Impairment
31.12.2015
Goodwill
166,363
0
(36,768)
129,595
The item, which totalled EUR 129,595 thousand at 31 December 2015 (EUR 166,363 thousand at 31 December 2014), mainly
relates to the acquisition of IDeA Capital Funds SGR for EUR 31,324 thousand and the acquisition of IFIM/FIMIT SGR (now
IDeA FIMIT SGR) for EUR 96,599 thousand.
The full goodwill method was used to record the minority interests of the companies acquired during 2011 (FIMIT SGR and
IFIM). This requires minority interests to be recorded at fair value.
Impairment tests on goodwill
Pursuant to IAS 36, goodwill is not subject to amortisation, and is tested for impairment at least annually.
In order to carry out impairment testing on the goodwill of its cash generating units (CGUs), the DeA Capital Group allocates
the goodwill to the relevant CGUs, identified in IDeA FIMIT SGR (real estate fund management) and IDeA Capital Funds SGR
(private equity fund management), which represents the minimum level of monitoring that the DeA Capital Group undertakes
for management control purposes consistent with DeA Capital’s strategic vision.
The redefinition of the IDeA Alternative Investments CGU following its merger into the Parent Company meant that a new
CGU had to be defined, namely IDeA Capital Funds SGR. The previous goodwill of the IDeA Alternative Investments CGU was
allocated in its entirety to the new CGU.
Impairment testing consists of comparing the recoverable amount of each CGU with the carrying amount of goodwill and other
assets attributed to each CGU.
In the case of CGUs that are not wholly controlled, goodwill is reported on a notional basis, which also includes the portion of
goodwill that relates to minorities, using the grossing up method.
The carrying value of the CGU is calculated using the same criterion as that used to determine the recoverable value of the CGU.
The main assumptions used in the impairment test calculations, together with the results, are set out below.
Impairment testing was carried out on the IDeA FIMIT SGR CGU, with a carrying amount of EUR 49.0 million, using the sum
of the parts model by determining the value in use, calculated as the sum of (i) the present value of dividend flows (DDM
method) expected from IDeA FIMIT SGR and (ii) the present value of the carried interest flows expected from the same
company (DCF method), both for the specific period covered by the forecasts (2016-2018) and for those in future (using a
projected terminal value based on normalised cash flows).
A number of assumptions were used in determining these flows, including estimates of future increases in revenues, based on
expected trends in managed assets, EBITDA and net income, or in the case of carried interest, on the basis of IRR projections
made by the company for the various funds under management.
The valuation was based on a cost of capital of between 10.2% and 11.9%, depending on (i) the period of the flows (2016-
2018 or later) and (ii) the nature of these flows (dividends from the asset management company or carried interest from the
managed funds), supplemented by a terminal value based on a growth assumption of 1.0%.
102 DeA Capital - Annual Financial Statements to 31 December 2015
With reference to the CGU in question, note that since the recoverable amount is less than the carrying amount, an
impairment of EUR 9,250 thousand (wholly attributable to the Group) was booked.
Sensitivity analysis performed on the most significant variables in terms of sensitivity to the recoverable value of IDeA
Capital Funds SGR, i.e. the "risk free" rate and the weighting of the probabilities of achieving the results linked to the new
funds focused on credit recovery (known as CCR) leads to potential variations in the carrying value of EUR -2.7/+1.7 million
(for changes in the risk free rate of +0.5% and -0.5% respectively) and of EUR -4.6 million/+4.7 million (for changes in the
weighting of the probability of results of the CCR funds of -25% and +25% respectively).
Similarly, impairment testing was carried out on the IDeA FIMIT SGR CGU, with a carrying amount of EUR 197.8 million, using
the sum of the parts model by determining the value in use, calculated as the sum of (i) the present value of dividend flows
(DDM method) expected from IDeA FIMIT SGR and (ii) the present value of the carried interest flows expected from the same
company (DCF method), both for the specific period covered by the forecasts (2016-2020) and for those in future (using a
projected terminal value based on normalised cash flows).
A number of assumptions were used in determining these flows, including estimates of future increases in revenues, based on
expected trends in managed assets, EBITDA and net income, or in the case of carried interest, on the basis of the company's
projections of future returns for the various funds under management.
The valuation was based on a cost of capital of 12.6% plus a terminal value based on growth ("g") assumptions of
+0.75%.
With reference to the CGU in question, note that since the recoverable amount is less than the carrying amount, impairment of
EUR 27,518 thousand (of which EUR 17,694 thousand related to the Group) was booked.
Sensitivity analysis performed on the most significant variables in terms of sensitivity to the recoverable value of IDeA FIMIT
SGR, i.e. the risk-free rate and the rate of growth (g) used, leads to a potential change in the company’s overall value of EUR
-4.3/+4.8 million (for changes of +0.5% and -0.5% in the discount rate) and EUR -2.9/+3.3 million (for changes of -0.5% and
+0.5% in the rate of growth (g)).
1b - Intangible assets
Changes in intangible assets are shown in the tables below:
Cum. amort. &
Net carrying
Historical
Cum. amort. &
Net carrying
Historical write-downs at
value at
cost at
write-downs at
value at
(EUR thousand)
cost at 1.1.2015
1.1.2015
1.1.2015
31.12.2015
31.12.2015
31.12.2015
Concessions, licences
and trademarks
5,439
(4,180)
1,259
5,926
(4,789)
1,137
Software expenses
400
(138)
262
402
(218)
184
Development expenses
229
(220)
9
229
(225)
4
Other intangible assets
122,850
(61,032)
61,818
122,850
(86,636)
36,214
Total
128,918
(65,570)
63,348
129,407
(91,868)
37,539
Changes in
Balance at
consolidation
Balance at
(EUR thousand)
1.1.2015
Acquisitions
Amort. Write-downs
Decreases
area
31.12.2015
Concessions, licences
and trademarks
1,259
486
(608)
0
0
0
1,137
Software expenses
262
3
(81)
0
0
0
184
Development
expenses
9
0
(5)
0
0
0
4
Other intangible
assets
61,818
0
(5,104)
(20,500)
0
0
36,214
Total
63,348
489
(5,798)
(20,500)
0
0
37,539
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
103
Increases in the items “concessions, licences and trademarks” and “software costs” relate to purchases of software usage
licences and the related development costs.
The cost of other intangible assets mainly relate to:
• Customer relationships arising from the allocation of the residual value of FIMIT SGR on the date of the (inverse) merger
into FARE SGR with the recognition of intangible assets identified as customer relationships and intangible assets related
to variable commissions that were valued at EUR 38,573 thousand and EUR 68,688 thousand respectively. This value is
based on the discounting of fixed management fees (for customer relationships) and variable fees calculated net of directly
applicable costs on the basis of the most recent business plans of the funds under management.
• Customer relationships, totalling EUR 14,156 thousand, arising from the allocation of the discounted value of commission
flows generated by the funds under management of IDeA Capital Funds SGR, net of management costs, based on the
business plans of the funds under management.
The revision of the business plans of the funds that make up the intangible assets from variable commissions, which caused
the decrease of the related cash flows estimates, required such assets to be subject to an impairment test.
The impairment test performed on these intangibles, with a carrying amount of EUR 48,4 million (vs. the original value of
EUR 68,7 million), was based on the determination of the value in use as present value (based on the discounted cash flow
methodology) of the variable commissions expected by the related Funds originally managed by FIMIT SGR for the time range
they are expected to be generated (2016-19).
Such commissions flows were determined based on a number of assumptions, among which the internal rate of return (“IRR”)
of the Funds, as provided by IDeA FIMIT SGR.
The resulting valuation, based on a +9,6% cost of capital, showed a recoverable amount of EUR 27,9 million for such
intangibles, causing an impairment of EUR 20,500 thousand (of which EUR 7.206 thousand pertaining the Group) in the
income statement.
A sensitivity analysis performed on the most relevant variables affecting the recoverable amount of such intangibles (i.e.
cost of capital and probability of the variable commissions) shows potential changes in valuation of EUR -0,5/+0,4 million
(for changes of +0,5% and -0,5% of the cost of capital, respectively) and of EUR -3,2/+3,1 million (for changes of -10% and
+10% of the probability of the variable commissions, respectively).
Except
for intangible assets involving rights connected with final variable
commissions, intangible assets with a finite useful life
are amortised on a straight-line basis over their useful life.
The amortisation method used for rights connected with final variable commissions reflects changes in future economic
benefits associated with the recognition of the related revenues.
1c - Tangible assets
Changes in tangible assets are shown in the tables below:
Cum.
Cum. amort.
Historical
amort. & write-
Net carrying
Historical
& write-
Net carrying
cost at
downs at
value at
cost at
downs at
value at
(EUR thousand)
1.1.2015
1.1.2015
1.1.2015
31.12.2015
31.12.2015
31.12.2015
Leasehold
improvements
3,714
(1,020)
2,694
3,723
(1,585)
2,138
Furniture and fixtures
1,729
(836)
893
1,774
(1,050)
724
Computer and office
equipment
1,158
(952)
206
1,240
(1,039)
201
Company vehicles
475
(389)
86
413
(382)
31
Plant
39
(20)
19
40
(25)
15
Other assets
389
(379)
10
394
(384)
10
Total
7,504
(3,596)
3,908
7,584
(4,465)
3,119
104 DeA Capital - Annual Financial Statements to 31 December 2015
Balance at
Balance at
(EUR thousand)
1.1.2015
Acquisitions Depreciation
Decreases
31.12.2015
Leasehold improvements
2,694
9
(565)
0
2,138
Furniture and fixtures
893
47
(216)
0
724
Computer and office equipment
206
107
(107)
(5)
201
Company vehicles
86
0
(55)
0
31
Plant
19
1
(5)
0
15
Other assets
10
6
(6)
0
10
Total
3,908
170
(954)
(5)
3,119
The item "Leasehold improvements", totalling EUR 2,138 thousand, mainly relates to improvements made to the building at
Via Brera 21 in Milan, which has been leased to the DeA Capital Group since 2013.
Depreciation of property, plant and equipment is calculated on a straight-line basis, according to the estimated useful life of
the asset.
The depreciation rates used in the financial year were 20% for specific plant assets, 12% for furniture and furnishings, 20%
for electronic office machines, 20% for company vehicles and 15% for leasehold improvements.
2 - Financial investments
Financial investments in companies and funds are the Group's typical activities. These investments fell from EUR 516,442
thousand at 31 December 2014 to EUR 352,362 thousand at end-2015.
2a - Investments in associates
This item totalled EUR 11,467 thousand at 31 December 2015 (EUR 19,066 thousand at end-2014).
In light of the launch, in the fourth quarter of 2015, of a process to sell the shareholding in Sigla Luxembourg S.A., the value
of the stake, of EUR 11,487 thousand (EUR 11,201 thousand at 31 December 2014) was reclassified under "held-for-sale
assets" at 31 December 2015.
The units in the AVA fund had a value of approximately EUR 11,467 thousand in the Consolidated Financial Statements to 31
December 2015 (compared with EUR 7,865 thousand at 31 December 2014). The increase was the combined effect of net
investments of EUR 4,413 thousand and the pro rata share of the net result for the period and other changes (EUR -811 thousand).
The table below provides details of the investments held in associates at
31 December 2015 by business:
Private Equity
Alternative Asset
(EUR million)
Investment
Management
Total
AVA fund
3.8
7.7
11.5
Total
3.8
7.7
11.5
2b - Investments held by funds
At 31 December 2015, the DeA Capital Group was a minority shareholder, through the IDeA OF I fund, in Giochi Preziosi,
Manutencoop, Grandi Navi Veloci, Euticals, Telit, Elemaster, Talgo, Corin and Iacobucci. The latter three companies were
measured at fair value with changes recognised in the income statement pursuant to IAS 28.18.
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
105
This item, which totalled EUR 90,675 thousand at 31 December 2015 (EUR 111,014 thousand at 31 December 2014), relates to
the assets set out below:
(EUR million)
31.12.2015
Investments in Portfolio
Giochi Preziosi
5.2
Manutencoop Facility Management
18.9
Lauro Cinquantasette (Euticals)
3.4
Telit Communications
13.0
Elemaster
3.5
Grandi Navi Veloci
8.5
Investments available for sale
52.5
Iacobucci HF Electronics
6.0
Pegaso Transportation Investments (Talgo)
18.5
2IL Orthopaedics LTD (Corin)
13.6
Investments in associates and JV valued at FV through P&L
38.1
Total investments in Portfolio
90.6
2c - Available-for-sale investments in other companies
At 31 December 2015, the DeA Capital Group was a minority shareholder of Kenan Investments (the indirect parent company
of Migros), Stepstone, Harvip Investimenti, two US companies operating in the biotech and printed electronics sectors, TLcom
Capital LLP (management company under English UK law) and TLcom II Founder Partner SLP (limited partnership under English
UK law).
At 31 December 2015, the item totalled EUR 76,464 thousand compared with EUR 209,320 thousand at 31 December 2014.
The table below provides details of equity investments in other companies at 31 December 2015 by area of activity.
Private Equity Alternative Asset
(EUR million)
Investment
Management
Total
Kenan Investments
76.3
0.0
76.3
Minority interests
0.2
0.0
0.2
Total
76.5
0.0
76.5
The shareholding in Kenan Investments (the indirect parent company of Migros) was recorded in the Consolidated Financial
Statements for the Year Ending 31 December 2015 at a value of EUR 76,280 thousand (compared with EUR 209,136 thousand
at 31 December 2014).
This valuation is based on the percentage DeA Capital owns in Kenan Investments/Moonlight Capital and a Migros share
price of:
• TRY 26.00 (plus interest of 7.5% p.a. from 30 April 2015) for the stake subject to put/call options on 9.75% of Migros, as
agreed with Anadolu and exercisable from 30 April 2017;
• TRY 17.45, being the market price on 31 December 2015, for the remaining stake (30.5% of Migros capital).
106 DeA Capital - Annual Financial Statements to 31 December 2015
The change in the value of the stake in Kenan Investments at 31 December 2015 compared with 31 December 2014 reflects the
following:
• net proceeds (EUR 107.7 million) received on 24 July 2015 following completion of the sale of a 40.25% stake in Migros;
•
a decrease of EUR 25.2 million in the fair value reserve due to the
fall in the share price (TRY 17.45 per share at 31 December
2015 compared with TRY 22.75 per share at 31 December 2014) and the depreciation of the Turkish lira against the euro (3.17
TRY/EUR at 31 December 2015 versus 2.83 TRY/EUR at 31 December 2014).
Note that the effect of the measurement of Migros at fair value on the NAV of the DeA Capital Group was partially offset
by the reversal (EUR 11.4 million) of the payable for carried interest to be paid based on the achievement of certain yield
parameters.
The value of minor equity investments relate to a minority shareholding in Harvip. The DeA Capital Group is also a shareholder
in
three companies - Elixir Pharmaceuticals Inc., Kovio Inc. and Stepstone
- which are not included in the investment portfolio as
they are either dormant or in liquidation, and have zero value.
Company
Registered office
Business sector
% holding
Elixir Pharmaceuticals Inc.
USA
Biotech
1.30
Distressed real estate and other
Harvip Investimenti S.p.A.
Italy
investments
19.18
Kovio Inc.
USA
Printed circuitry
0.42
Stepstone Acquisition Sàrl
Luxembourg
Special Opportunities
36.72
2d - Available-for-sale funds
This item relates to investments in units of three funds of funds (IDeA I FoF, ICF II and ICF III), two theme funds (IDeA EESS
and IDeA ToI), six venture capital funds and 11 real estate funds, totalling approximately EUR 173,730 thousand at end-2015,
compared with EUR 176,736 thousand at end-2014.
The table below shows changes to the funds during 2015.
Balance
Change in
Decreases
at
consolidation
Increases
(Capital
Fair value Translation Balance at
(EUR thousand)
1.1.2015
area
(Capital call) distribution) Impairment
adjustment
effect
31.12.2015
Venture capital
funds
9,580
0
0
(570)
(326)
388
601
9,673
IDeA I FoF
93,476
0
6,020
(31,299)
0
9,020
0
77,217
ICF II
35,254
0
2,494
(4,723)
0
8,685
0
41,710
ICF III Core
271
0
190
0
0
80
0
541
ICF III Credit &
Distressed
1,015
0
1,195
0
0
315
0
2,525
ICF III Emerging
Markets
454
0
1,350
0
0
(53)
0
1,751
IDeA EESS
4,330
0
3,984
(1,613)
(152)
763
0
7,312
Taste of Italy
3
0
1,412
0
0
(341)
0
1,074
IDeA FIMIT SGR
Funds
32,353
7,486
0
(5,750)
(1,767)
(395)
0
31,927
Total funds
176,736
7,486
16,645
(43,955)
(2,245)
18,462
601
173,730
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
107
During 2015, the Group received income distributions of EUR 1,425 thousand and capital reimbursements of EUR 38,206
thousand.
• Units in venture capital funds are valued at around EUR 9,673 thousand in the Consolidated Financial Statements for the
Year Ending 31 December 2015 (EUR 9,580 thousand at end-2014).
The overall change in the investments is mainly due to capital reimbursements from these funds of EUR -570 thousand, an
increase in fair value (and related exchange rate effects) of EUR 989 thousand, impairment (and related exchange rate effects)
of certain funds totalling approximately EUR -326 thousand.
The fair value measurement of investments in venture capital funds at 31 December 2015, carried out based on the
information and documents received from the funds, as well as other available information, meant that the amount had to
be written down by EUR 326 thousand; the significant reduction to below cost was considered clear evidence of impairment.
• Units in IDeA I FoF are valued at around EUR 77,217 thousand in the Consolidated Financial Statements for the Year Ending
31 December 2015 (EUR 93,476 thousand at end-2014).
The change in the carrying value compared with 31 December 2014 was due to contributions made for capital calls totalling
EUR 6,020 thousand, capital reimbursements of EUR 31,299 thousand and a net increase in fair value of around EUR 9,020
thousand.
• Units in ICF II are valued at around EUR 41,710 thousand in the Consolidated Financial Statements for the Year Ending 31
December 2015 (EUR 35,254 thousand at 31 December 2014).
The change in the carrying value compared with 31 December 2014 was due to contributions made for capital calls totalling
EUR 2,494 thousand, capital reimbursements of EUR 4,723 thousand and a net increase in fair value of around EUR 8,685
thousand.
• Units in IDeA EESS are valued at around EUR 7,312 thousand in the Consolidated Financial Statements for the Year Ending
31 December 2015 (EUR 4,330 thousand at 31 December 2014).
The change in the carrying value compared with 31 December 2014 was due mainly to contributions made for capital calls totalling
EUR 3,984 thousand, capital reimbursements of EUR 1,613 thousand and a net increase in fair value of around EUR 763 thousand.
• Units in ICF III are valued at around EUR 4,817 thousand in the Consolidated Financial Statements for the Year Ending 31
December 2015 (EUR 1,740 thousand at 31 December 2014).
The change in the carrying value compared with 31 December 2014 was due mainly to contributions made for capital calls
totalling EUR 2,735 thousand and a net increase in fair value of around EUR 342 thousand.
• Units in IDeA Taste of Italy are valued at approximately EUR 1,074 thousand in the Consolidated Financial Statements for the
Year Ending 31 December 2015, as a result of contributions made in the form of capital calls of EUR 1,412 thousand and the
decrease in fair value of approximately EUR 341 thousand.
The financial assets relating to units of funds managed by IDeA FIMIT SGR are considered long-term investments. This item
includes:
• mandatory investments (as stipulated by the Bank of Italy Regulation of 19 January 2015) in managed funds that are
not reserved for qualified investors. The latter are to be held in the portfolio until the funds' maturity date. However, they
were not classified as “held-to-maturity assets” since they are variable-rate financial instruments. It was therefore decided
to record them in this “residual” category in accordance with IAS 39, which specifies that they should be measured at fair
value with a balancing entry in an appropriate restricted reserve pursuant to Legislative Decree 38/2005
• Optional investments in managed funds that may or may not be reserved for qualified investors.
108 DeA Capital - Annual Financial Statements to 31 December 2015
Units in these funds are valued at around EUR 31,927 thousand in the Consolidated Financial Statements for the Year Ending
31 December 2015 (EUR 32,353 thousand at 31 December 2014).
The change in the carrying value versus end-2014 is due to capital reimbursements received of EUR 5,750 thousand,
impairment of around EUR 1,767 thousand and a net decrease in fair value of approximately EUR 395 thousand. The change in
the scope of consolidation is due to the removal of the "IDeA FIMIT Sviluppo" fund.
The table below provides a breakdown of the funds in the portfolio at 31 December 2015 by area of activity:
Private Equity
Alternative Asset
(EUR million)
Investment
Management
Total
Venture capital funds
9.7
0.0
9.7
IDeA I FoF
77.2
0.0
77.2
ICF II
41.7
0.0
41.7
ICF III
4.8
0.0
4.8
IDeA EESS
7.3
0.0
7.3
IDeA ToI
1.1
0.0
1.1
IDeA FIMIT SGR Funds
0.0
31.9
31.9
Total funds
141.8
31.9
173.7
3 - Other non-current assets
3a - Deferred tax assets
The balance on the item "deferred tax assets" totalled EUR 3,676 thousand (EUR 5,039 thousand at 31 December 2014) and
comprises the value of deferred tax assets minus deferred tax liabilities, where they may be offset.
Deferred tax assets relating to the Parent Company of EUR 15,960 thousand were fully offset against deferred tax
liabilities.
The changes to deferred tax assets and liabilities during the year, broken down by type, are analysed below:
Recognised
Change in
Compensation/
At in income Recognised in
consolidation
other
At
(EUR thousand)
1.1.2015
statement
equity
area
movements
31.12.2015
Deferred tax assets for:
-personnel costs
907
149
14
0
0
1,070
-other
4,132
27
(735)
0
(820)
2,604
Losses carried forward
available for offset against
future taxable profits
7,484
7,586
0
0
(15,988)
(918)
Total deferred tax assets
12,523
7,762
(721)
0
(16,808)
2,756
Deferred tax liabilities for:
- available-for-sale financial
assets
(9,458)
373
(7,365)
0
16,808
358
- TFR discounting IAS
51
(50)
0
0
0
1
- intangible assets
(17,773)
754
6,779
0
0
(10,240)
Total deferred tax
liabilities
(27,180)
1,077
(586)
0
16,808
(9,881)
Total deferred tax assets
5,039
3,676
Total deferred tax
liabilities
(19,696)
(10,801)
DEA CAPITAL - ANNUAL FINANCIAL STATEMENTS TO 31 DECEMBER 2015
109
The deferred tax liabilities of IDeA FIMIT SGR, amounting to EUR 9,227 thousand, mainly comprise the balancing entry for
deferred tax assets relating to variable commissions recorded under intangible assets. The balance is lower than at end-2014
due to the release of EUR 6,779 thousand on the income statement following the write-down of intangible assets from final
variable commissions of EUR 20,500 thousand.
As required by IFRS 3 (Business Combinations), the company recorded a deferred tax liability for the assets identified at the
date of acquisition.
No deferred tax assets were allocated against the significant tax losses of DeA Capital S.p.A. of around EUR 108,074 thousand,
which are fully usable, and about EUR 879 thousand, which are usable on a limited basis; the entire amount cannot be
transferred to the tax consolidation scheme. This was because there was insufficient information for the group to believe that
taxable income would be generated in future periods against which such tax losses could be recovered.
Deferred taxes were calculated using the liability method based on the temporary differences at the reporting date between
the tax amounts used as a reference for the assets and liabilities and the amounts reported in the financial statements.
3b - Other non-current assets
This item totalled EUR 31,795 thousand at 31 December 2015, compared with EUR 30,495 thousand at 31 December 2014,
and mainly relates to:
• the receivable from Beta Immobiliare fund concerning the final variable commission, in the amount of EUR 22,523 thousand.
The calculation was made according to the provisions of the operating regulations of the Beta Immobiliare fund, taking into
account the NAV shown in the management report at 31 December 2015. This receivable corresponds to the portion of the
overperformance commission accrued since the start of the fund’s operations, which the asset management fund will receive
when liquidated only if certain conditions are met.
• a receivable of EUR 7,549 thousand in favour of the IDeA OF I fund for the sale of 1% of Manutencoop.
4 - Current assets
4a - Trade receivables
Receivables amounted to EUR 17,818 thousand, compared with EUR 29,039 thousand at 31 December 2014, and mainly included
receivables from customers (EUR 17,740 thousand). These related mainly to the balances of IRE (EUR 11,846 million) and IDeA
FIMIT SGR (EUR 5,496 thousand). The latter amount mainly relates to receivables from managed funds for commission due but not
yet received.
Receivables from customers due to IRE include EUR 4,380 thousand relating to the re-invoicing of expenses incurred by the
company in its own name but on behalf of funds managed by IDeA FIMIT SGR. This activity was carried out by the company by
virtue of a mandate without appointed representation, as provided for in the framework agreement signed by IRE and IDeA FIMIT
SGR on 12 December 2012.
The
item "Transactions with Related Parties" includes EUR 69 thousand from
De Agostini S.p.A. for the agreement to sub-let rented
premises and the reimbursement of costs associated with said agreement.
The table below shows the maturities of outstanding trade receivables at 31 December 2015:
expired
Between 90
Between 180
More
Not
less than 90 days and 180
days and 360
than
(EUR thousand)
expired
days
days
days
360 days
Total
Trade reicevables
9,760
4,417
1,273
1,187
1,181
17,818
110 DeA Capital - Annual Financial Statements to 31 December 2015
4b - Available-for-sale financial assets
At 31 December 2015, this item totalled EUR 7,532 thousand, compared with EUR 5,080 thousand at 31 December 2014, and
relates to the portfolio of government securities and corporate bonds held by IDeA Capital Funds SGR.
4c - Financial receivables
At 31 December 2015, this item totalled EUR 3,467 thousand (compared with EUR 2,678 thousand at 31 December 2014) and
relates mainly to an agreement for a 12-month revolving loan, of up to EUR 5 million, in favour of Sigla S.r.l., a wholly-owned
subsidiary of associate company Sigla Luxembourg S.A.
4d - Tax receivables relating to the tax consolidation scheme entered into by the parent
companies
This item totalled EUR 2,667 thousand at 31 December 2015 (EUR 3,533 thousand at 31 December 2014) and relates to the
receivable from the Parent Company De Agostini S.p.A. for the joining of the tax consolidation scheme by DeA Capital S.p.A.
and DeA Capital Real Estate.
DeA Capital S.p.A., IDeA Capital Funds SGR, DeA Capital Real Estate, IRE and IRE Advisory have adopted the national tax
consolidation scheme of the De Agostini Group (the Group headed by De Agostini S.p.A., formerly B&D Holding di Marco
Drago e C. S.a.p.a.). This option was exercised jointly by each company and De Agostini S.p.A. by signing the “Regulation for
participation in the national tax consolidation scheme for companies in the De Agostini Group” and notifying the tax authorities
of this option pursuant to the procedures and terms and conditions set out by law. The option is irrevocable unless the
requirements for applying the scheme are not met.
The option is irrevocable for DeA Capital S.p.A. for the three-year period 2014-2016, for IDeA Capital Funds SGR, IRE and IRE
Advisory for the three-year period 2015-2017 and for DeA Capital Real Estate for the three-year period 2013-2015.
4e - Other tax receivables
At 31 December 2015, this item totalled EUR 4,567 thousand, compared with EUR 2,892 thousand at 31 December 2014. It
mainly includes:
• a receivable due to IDeA FIMIT SGR of EUR 1,620 thousand deriving from advance payments of IRES/IRAP during the year,
net of provisions for taxes;
• a receivable arising from an application for an IRES refund from the Parent Company due to non-deduction of IRAP relating
to personnel costs for 2010/2011, of EUR 94 thousand;
• a total payment of EUR 433 thousand arising from tax inspections in the tax periods 2009-2010 recorded for IDeA
Alternative Investments S.p.A. (a company that was merged by incorporation into DeA Capital S.p.A. with effect from 1
January 2012), against which the company filed an appeal;
• a receivable of EUR 739 thousand relating to December 2015 from Parent Company De Agostini S.p.A. (formerly B&D
Holding di Marco Drago e C. S.a.p.A.) for its part in settling Group VAT;
• advance payments made in relation to foreign direct and indirect taxes in Luxembourg for EUR 12 thousand.
4f - Other receivables
This item, which totalled EUR 2,876 thousand at 31 December 2015 compared with EUR 18,591 thousand at 31 December
2014 (of which EUR 15,193 thousand relates to the receivable of the IDeA FIMIT Sviluppo fund). As a result of the events
described in the Report on Operations, the scope of consolidation has changed compared with 31 December 2014: the IDeA
FIMIT Sviluppo fund has been removed following the arrival of new investors who, by contributing capital or land, have diluted
the DeA Capital Group's stake in said fund from 50% (held through the subsidiary IDeA FIMIT SGR) to 8.5%.
At 31 December 2015, this item mainly included receivables for guarantee deposits, advances to suppliers, prepaid expenses
and other receivables from managed funds totalling EUR 1,220 thousand.
These receivables fall due within the next year.
4g - Cash and cash equivalents
This item comprises bank deposits and cash including interest accrued to 31 December 2015. This item totalled EUR 123,468
thousand at end-2015 compared with EUR 55,583 thousand at end-2014.
Please see the consolidated cash flow statement for further information on changes to this item.
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
111
Cash deposited at banks accrues interest at floating rates, based on the prevailing overnight, 1-2-week and 1-3-month
interest rates.
4h - Held-for-sale assets
In light of the launch, in the fourth quarter of 2015, of a process to sell the shareholding in Sigla Luxembourg S.A., the value
of the stake (EUR 11,487 thousand) was reclassified under "held-for-sale assets" at 31 December 2015.
5 - Shareholders' equity
At 31 December 2015, Group shareholders’ equity was approximately EUR 546,988 thousand, compared with EUR 653,513
thousand at 31 December 2014.
The decrease of about EUR 106,525 thousand in Group shareholders' equity in 2015 was mainly due to the extraordinary
dividend paid (EUR 79,849 thousand) and to the reasons already discussed in the Statement of Performance - IAS 1 (EUR
-13,165 thousand) and the impact of the plan to purchase treasury shares (EUR -13,030 thousand).
The main changes in shareholders’ equity are described in more detail in the relevant table of changes included in the
Consolidated Financial Statements.
5a - Share capital
The share capital (fully subscribed and paid up) totalled EUR 306,612,100, represented by 306,612,100 shares (of which
42,688,945 treasury shares) with a nominal value of EUR 1 each.
Given that the nominal value of the above-mentioned treasury shares held at 31 December 2015 is deducted from total share
capital, share capital of EUR 263,923,155 was reported in the Financial Statements.
Changes in share capital are shown in the table below:
31.12.2015
31.12.2014
(EUR thousand)
No. of shares
amount
No. of shares
amount
Share capital
306,612,100
306,612
306,612,100
306,612
of which: Own shares
(42,688,945)
(42,689)
(34,985,736)
(34,986)
Share capital (excluding own
shares)
263,923,155
263,923
271,626,364
271,626
The table below shows a reconciliation of the shares outstanding:
Shares
Own shares in
Shares
issued
portfolio
in issue
Shares at 31 December 2014
306,612,100
(34,985,736)
271,626,364
Changes in 2015
Share capital increase
0
0
0
Own shares purchased
0
(7,703,209)
(7,703,209)
Own shares sold
0
0
0
Own shares disposed of
0
0
0
Used for stock options plan
0
0
0
Shares issued for stock options
0
0
0
Shares at 31 December 2015
306,612,100
(42,688,945)
263,923,155
112 DeA Capital - Annual Financial Statements to 31 December 2015
5b - Share premium reserve
The item in question fell from EUR 384,827 thousand at 31 December 2014 to EUR 299,647 thousand at 31 December 2015,
due to the posting to this reserve of the purchase of own shares (EUR 5,326 thousand) and the use of EUR 79,849 thousand to
distribute dividends during the year.
5c - Legal reserve
This reserve, which was unchanged compared with the end of 2014, totalled EUR 61,322 thousand at 31 December 2015.
5d - Fair value reserve
The fair value reserve at 31 December 2015 was positive at EUR 62,178 thousand (EUR 116,415 thousand at 31 December
2014) and comprises the items below:
Balance at
Change in
Tax
Balance at
(EUR thousand)
1.1.2015
Fair Value
Effect
31.12.2015
Direct Investments / Shareholdings
84,778
(68,534)
0
16,244
Venture capital funds and funds of funds
30,653
19,457
(5,468)
44,642
First time adoption IFRS and other reserves
984
521
(213)
1,291
Total
116,415
(48,556)
(5,682)
62,178
5e - Other reserves
Other reserves totalled EUR -11,720 thousand at 31 December 2015 (EUR -11,243 thousand at 31 December 2014) and are
made up of:
• a reserve for stock option costs totalling EUR +750 thousand;
• a reserve for the sale of option rights, unchanged from 31 December 2014, totalling EUR 413 thousand. This originated from
the sale of the remaining option rights to subscribe to a capital increase that had not been exercised by the shareholders,
that were sold by the Company;
• other reserves that are down by EUR 9,247 thousand relating to the associate of Santé, chiefly for the pro-rata
reclassification of the minority interests in Santé connected with the 2008-2009 extraordinary dividend distribution by
Générale de Santé, and changes in 2010-2012;
• other reserves by EUR -3,636 thousand.
5f - Retained earnings (losses) carried forward
This item totalled EUR -169,434 thousand at 31 December 2015, compared with EUR -111,833 thousand at 31 December
2014. The overall decrease of EUR 57,601 thousand was due to the allocation of profits for 2014.
5g - Profit (loss) for the year
The profit reported for the year of EUR 41,072 thousand is the consolidated loss attributable to the Group for 2015 (EUR
-57,601 thousand at 31 December 2014).
5h - Minority interests
This item, which totalled EUR 138,172 thousand at 31 December 2015 (EUR 173,109 thousand at 31 December 2014) relates
to the minority interest in shareholders' equity resulting from the line-by-line consolidation of IDeA FIMIT SGR and the IDeA
OF I fund.
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
113
The table below summarises details of the financial information of IDeA FIMIT SGR and IDeA OF I, before elimination of the
intercompany relationships with the Group’s other companies, as at 31 December 2015.
IDeA FIMIT SGR
IDeA OF I Fund
(EUR thousand)
2015
2014
2015
2014
Alternative Asset Management fees
47,725
54,116
0
0
Net profit/(loss) for the year
(7,605)
4,387
27,931
2,821
Profit/(loss) attributable to
minorities
(6,891)
83
14,806
1,495
Other profit/(loss), net of tax effect
431
1,231
(11,537)
(30)
Total comprehensive profit/
(loss) for the year
(7,174)
5,618
16,394
2,791
Total comprehensive profit/
(loss) for the year attributable to
minorities
(6,737)
522
23,497
2,975
(EUR thousand)
31.12.2015
31.12.2014
31.12.2015
31.12.2014
Current assets
31,367
24,333
3,428
1,134
Non-current assets
199,225
230,281
99,903
118,037
Current liabilities
(13,247)
(10,685)
(40)
(51)
Non-current liabilities
(12,084)
(24,258)
0
0
Net assets
205,261
219,671
103,291
119,120
Net assets attributable to
minorities
83,479
92,800
54,755
63,146
(EUR thousand)
2015
2014
2015
2014
CASH FLOW from operations
20,626
10,499
18,512
(1,082)
CASH FLOW from investment assets
(95)
(973)
0
0
CASH FLOW from financial assets
(6,583)
(9,972)
(15,230)
4,672
NET INCREASE IN CASH AND
CASH EQUIVALENTS
13,948
(446)
3,282
3,590
Dividends paid to minorities
during the year
(2,583)
(3,229)
0
0
6 - Non-current liabilities
6a - End-of-service payment fund
The end-of-service payment fund (TFR) is a defined benefit plan, and as such was measured using actuarial methodology.
This resulted in a liability calculated in demographic and financial terms on amounts owed to workers according to the number
of years worked. The total present value of the liability is proportioned to the period of employment already completed at the
calculation date, taking account of future salary increases and the employee's projected length of service.
Future TFR flows were discounted to the reporting date, using independent actuaries, based on the projected unit credit
method. The valuation assumptions use an annual average discount rate that takes the iBoxx Eurozone Corporates AA 10+
index as a benchmark, maintaining this parameter as constant compared with previous valuations.
114 DeA Capital - Annual Financial Statements to 31 December 2015
Changes in TFR in 2015 are shown in the table below:
Balance at
Balance at
(EUR thousand)
1.1.2015
Portion matured
Payments
Advances
31.12.2015
Movement in
provision
4,618
968
(873)
0
4,713
The amounts recognised in the item were calculated as follows:
(EUR thousand)
31.12.2015
31.12.2014
Nominal value of provision
4,148
3,871
Discounting effect
565
747
Total provision
4,713
4,618
7 - Current liabilities
Current payables amounted to EUR 31,294 thousand at 31 December 2015 (EUR 36,003 thousand at 31 December 2014) and
are all due within the following year. These payables are not secured on any company assets.
7a - Trade payables
Trade payables were EUR 15,598 thousand at 31 December 2015 versus EUR 18,180 thousand at 31 December 2014.
This item mainly relates to an amount of EUR 5,005 thousand for expenses incurred by IRE in its own name but on behalf
of the funds managed by IDeA FIMIT SGR and subsequently re-invoiced to them. This activity was carried out by virtue of a
mandate without representation signed by IRE and IDeA FIMIT SGR on 12 December 2012.
In respect of transactions with related parties, this item includes payables to:
- the affiliate, De Agostini Editore S.p.A., of approximately EUR 46 thousand;
- the affiliate, De Agostini Libri S.p.A., of approximately EUR 2 thousand;
- the affiliate, De Agostini Invest S.A., of approximately EUR 25 thousand.
Trade payables do not accrue interest and are settled, on average, within 30 to 60 days.
7b - Payables in respect of staff and social security organisations
This item totalled EUR 7,341 thousand at 31 December 2015 versus EUR 8,122 thousand at end-2014, and is largely due to:
- payables to social security organisations of EUR 1,152 thousand, paid after the close of the Financial Year 2015, with the
exception of payables for social security liabilities calculated on accrued bonuses;
- payables to employees and directors of EUR 5,774 thousand for holidays not taken and accrued bonuses;
- other payables to employees totalling EUR 415 thousand.
7c - Current tax payables
This item totalled EUR 3,384 thousand at 31 December 2015 (EUR 2,012 thousand at end-2014) and is largely due to the
payable of EUR 2,914 thousand to the Parent Company De Agostini S.p.A. from IDeA Capital Funds SGR, IRE and IRE Advisory
relating to their joining the tax consolidation scheme.
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
115
7d - Other tax payables
This item, which was EUR 1,571 thousand at 31 December 2015 (EUR 2,037 thousand at end-2014), mainly relates to the
payable to the tax authorities in respect of taxes deducted from the income of employees and self-employed staff totalling EUR
1,367 thousand, paid after the close of the 2015 financial year.
7e - Other payables
This item was EUR 2,749 thousand at 31 December 2015 (EUR 5,292 thousand at end-2014) and mainly relates to payables to
IDeA FIMIT SGR (EUR 2,046 thousand), payables to managed funds (EUR 1,338 thousand) and payables to distributors (EUR
451 thousand).
Contingent liabilities
IAS 37 defines a contingent liability as a possible obligation arising from past events and whose existence will be confirmed
only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity.
Companies must not recognise contingent liabilities, but should still disclose them.
On 17 December 2014, DeA Capital S.p.A. received an assessment notice for the 2009 tax year of IDeA Alternative
Investments S.p.A., a company which was merged into DeA Capital S.p.A. with effect from 1 January 2012. The assessment,
which alleged that revenues had been under-reported, was challenged in an appeal by DeA Capital before the Milan Provincial
Tax Court. An adverse outcome, which is possible but not likely, could result in taxes and penalties totalling EUR 0.7 million.
Subsequently, on 10 November 2015, DeA Capital S.p.A. received another assessment notice for IDeA Alternative Investments
S.p.A. relating to the 2010 tax period. The assessment alleged that revenues had been under-reported and that spin-off costs
had been improperly deducted. The assessment was challenged in an appeal by DeA Capital before the Milan Provincial Tax
Court.
In the event of an adverse outcome, which is possible but not likely,
DeA Capital could face liabilities consisting of taxes
and fines totalling EUR 1.5 million.
116 DeA Capital - Annual Financial Statements to 31 December 2015
INCOME STATEMENT
8 - Alternative asset management fees
Alternative asset management fees in 2015 were EUR 62,416 thousand compared with EUR 66,045 thousand in 2014.
These fees mainly relate to management fees paid to IDeA FIMIT SGR and IDeA Capital Funds SGR for the funds they manage.
9 - Income from investments valued at equity
This item includes income from the associate valued at equity for the period.
The item, which was EUR -539 thousand in 2015, compared with EUR -786 thousand in 2014, is attributable to the loss
relating to the holding in AVA.
10 - Other investment income and expenses
The net income realised on investments in shareholdings and funds was positive at around EUR 72,464 thousand in 2015,
compared with a loss of EUR 56,149 thousand in 2014.
Details are shown below:
(EUR thousand)
Year 2015
Year 2014
Gains from venture capital fund distributions
1,425
298
Gain from partial disposal of Kenan/Migros
46,315
0
Gains from real estate fund distributions
3,596
1,135
Gains from OF I Fund
32,496
8,749
Dividends from minor available-for-sale equity investments
50
108
Other gains
46
40
Gains from investments
83,928
10,330
Losses on disposals of equity investments in subsidiaries
0
0
Impairment venture capital funds
464
385
Impairment private equity funds
152
933
Impairment real estate funds
3,748
516
Impairment Santé
0
59,470
Impairment Iacobucci
6,000
0
Impairment Grandi Navi Veloci
1,068
0
Impairment Euticals
0
5,070
Other charges
32
105
Charges from investments
11,464
66,479
Total
72,464
(56,149)
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
117
Investment income
Income from available-for-sale venture capital funds was EUR 1,425 thousand and came from capital gains from distributions
of venture capital funds.
The capital gains from IDeA OF I management mainly include a capital gain of EUR 27,891 thousand made by IDeA OF I from
its sales of the Talgo equity investment.
The item also includes amounts of income distributed in 2015 (EUR 3,596 thousand) by the funds Omicron Plus (EUR 3,210
thousand) and Atlantic 1 (EUR 386 thousand).
Other net investment income from investments in shareholdings and funds mainly relate to the capital gain of EUR 46.3 million
from the sale of shareholdings in Migros and the resulting cash distribution by Kenan Investments.
Impairment
The fair value measurement of investments in funds and shareholdings at 31 December 2015 is based on information and
documents received from the funds and shareholdings, and other available information.
The fair value measurement of investments in funds at 31 December 2015, based on the documents received and the
information available, made it necessary to record:
• impairment of EUR 326 thousand directly on the investments;
• impairment of EUR 138 thousand as a reclassification to profit or loss of the negative fair value reserves;
• impairment of EUR 152 thousand relating to closed-end mutual investment funds.
For these funds, the significant reduction below cost was considered clear evidence of impairment, and necessitated these
write-downs.
The impairment charge of EUR 3,748 thousand on real estate funds relates to the reduction in the value of units in the Agris,
Omicron Plus, IDeA FIMIT Sviluppo, Gamma, Senior and Theta Comparto Focus funds.
11 - Service revenues
In 2015, these revenues totalled EUR 18,496 thousand, compared with EUR 18,667 thousand in 2014, and chiefly relate to
services connected with consulting, management and the sale of real estate held in the portfolios of real estate funds.
12 - Other revenues and income
Other revenues and income, totalling EUR 3,204 thousand in 2015 (compared with EUR 509 thousand at end-2014) relate
mainly to the reversal of the carried interest to be paid to the lead investor in Kenan, BC Partners, subject to the achievement
of specific profitability parameters, of EUR 3,008 thousand.
13 - Operating costs
Operating costs in 2015 were EUR 128,514 thousand, compared with EUR 87,957 thousand in the previous year.
13a - Personnel costs
Total personnel costs were EUR 32,519 thousand in 2015, compared with EUR 33,579 thousand in 2014.
118 DeA Capital - Annual Financial Statements to 31 December 2015
The item breaks down as follows:
(EUR thousand)
2015
2014
Salaries and wages
17,935
17,842
Social charges on wages
5,388
4,891
Board of directors' fees
5,032
4,806
Stock options
487
937
Employee severance indemnity
1,125
1,172
Other personnel costs
3,314
4,854
Long term incentive plans reversal
(762)
(923)
Total
32,519
33,579
The effect of the cost arising from the Stock Option Plans for 2015, of EUR 487 thousand (EUR 937 thousand in 2014),
was more than offset by the reversal of the cost allocated to the reserve for the 2013-2015 Stock Options Plan, of EUR
762 thousand.
The Allocation Plan 2004 is to be considered lapsed as the conditions for exercising option rights were not met.
At 31 December 2015, the DeA Capital Group had a total of 231 employees (224 at 31 December 2014).
The table below shows the changes and average number of Group employees during 2015.
Other
Position
1.1.2015
Recruits
Departures
changes
31.12.2015
Average
Senior Managers
38
7
(10)
0
35
36
Junior Managers
65
9
(11)
2
65
65
Staff
121
28
(16)
(2)
131
125
Total
224
44
(37)
0
231
226
Share-based payments
Employees of DeA Capital S.p.A. and the Parent Company, De Agostini S.p.A. are beneficiaries of stock option plans based on
the shares of DeA Capital S.p.A. Unexercised but valid call options on the company’s shares at 31 December 2015 totalled
3,135,200 (3,163,200 at 31 December 2014).
Stock option plans were valued using the numerical binomial tree procedure (the original Cox, Ross and Rubinstein method).
Numerical analysis using binomial trees generates simulations of various possible developments in the share price in future
periods.
On 17 April 2015, the DeA Capital S.p.A. Shareholders' Meeting approved the DeA Capital Performance Share Plan 2015-
2017, under which a maximum of 675,000 units may be allocated. On the same date, in implementation of the shareholders’
resolution, the Board of Directors of DeA Capital S.p.A. voted (i) to launch the DeA Capital Performance Share Plan 2015-2017
approved by the shareholders’ meeting, vesting the Chairman of the Board of Directors and the Chief Executive Officer with all
the necessary powers, to be exercised severally and with full power of delegation; and (ii) to allocate a total of 515,000 units
(representing the right to receive ordinary shares in the Company free of charge, under the terms and conditions of the plan)
to certain employees and/or directors performing particular roles at the Company, its subsidiaries and the Parent Company De
Agostini S.p.A.
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
119
On 27 August 2015, under the same Performance Share Plan 2015-2017, the Board of Directors allocated a further 150,000
units to employees with specific duties.
Shares allocated due to the vesting of units will be drawn from treasury shares already held by the company.
In addition, the Plan enables DeA Capital to oblige beneficiaries to return, in full or in part, shares received pursuant to the
Plan, should circumstances emerge that clearly show that incorrect data have been used to verify the achievement of the
targets for the vesting of the units (“claw-back”).
The shareholders’ meeting also approved the Company’s Remuneration Policy pursuant to art. 123-ter of the TUF.
In addition, pursuant to art. 114-bis of the TUF, on 17 April 2015, the Shareholders' Meeting approved a number of
amendments to the following current share-based incentive plans: (i) DeA Capital Performance Share Plan 2013-2015, (ii) DeA
Capital Stock Option Plan 2013-2015, (iii) DeA Capital Performance Share Plan 2014-2016, and (iv) DeA Capital Stock Option
Plan 2014-2016 (together, the Plans).
The approved amendments concern (i) the introduction of a second performance target, related to the total shareholder
return of the DeA Capital share, and as an alternative to the target for growth in the adjusted NAV already provided for by the
Plans, on which the conversion into shares of the units and the entitlement to exercise the options are dependent, and (ii) the
introduction of claw-back mechanisms that enable the Company to oblige beneficiaries to return shares received pursuant to
the Plans, should circumstances emerge that clearly show that incorrect data have been used to verify the achievement of the
required performance targets.
Subsequently, on 5 November 2015, in view of the distribution of the extraordinary dividend of EUR 0.30 approved by the
Shareholders' Meeting on 17 April 2015 and the resulting reduction in the DeA Capital share value, the Board of Directors of
DeA Capital, as the competent body pursuant to the Plans' regulations, approved a number of amendments to the following
incentive-based plans in order to keep the substance and financial content unchanged. Specifically:
• Performance share plans: the Board voted to compensate for the lower value of the Plans following the distribution of
the extraordinary dividend, in the event that the vesting conditions are met, by allocating new units, to be determined
on the vesting date. The new units, which will be valued at the price per share on the same date, will be allocated
pro rata to the portion of units that have vested, up to the maximum number of units provided for under the above-
mentioned Plans. The Board also resolved that where the lower value of the Plans cannot be compensated for by the
allocation of new units, a one-off bonus will be paid as compensation in cash, commensurate with the portion of units
that has vested;
• Stock Option Plans: the Board voted to adjust the strike price of the options commensurate with the extraordinary dividend,
i.e. EUR 0.30 per share, subject to the lower limit represented by the nominal value of the DeA Capital share. Specifically,
the Board voted to: reduce the strike price (i) from EUR 1.289 to EUR 1.000 for the Stock Option Plan 2013-2015 and (ii)
from EUR 1.32 to EUR 1.020 for the Stock Option Plan 2014-2016.
The terms and conditions of the above-mentioned Performance Share Plan 2015-2017 are in the Information Prospectus
prepared in accordance with art. 84-bis of Consob Resolution 11971 of 14 May 1999 (Issuer Regulations), available to the
public at the registered office of DeA Capital S.p.A. and on the Company’s website www.deacapital.it (in the section Corporate
Governance/Incentive Plans).
No loans and/or guarantees in favour of directors and/or auditors of the Parent Company and its subsidiaries were issued.
13b - Service costs
Service costs were EUR 22,397 thousand in 2015 versus EUR 30,734 thousand in 2014.
120 DeA Capital - Annual Financial Statements to 31 December 2015
A breakdown of these costs is shown in the table below:
(EUR thousand)
2015
2014
Admin. Consulting, Tax and Legal and other
9,146
11,202
Remuneration of internal committees
635
773
Maintenance
225
168
Travel expenses
1,036
1,226
Utilities and general expenses
1,431
1,623
Third-party rental, royalties and leasing
4,304
4,434
Bank charges
127
118
Books, stationery and conventions
418
534
Commission expense
1,269
4,351
Other expenses
3,806
6,305
Total
22,397
30,734
13c - Depreciation, amortisation and impairment losses
Please see the table on changes in intangible and tangible assets for details on this item.
13d - Other costs
This item totalled EUR 9,577 thousand (EUR 6,921 thousand in 2014) and mainly consisted of:
• an adjustment of the IDeA FIMIT SGR receivable from the Beta fund for final variable commission, and the write-down of
receivables for fixed commissions of the Agris, Atlantic 6 and Eta funds, of EUR 4,044 thousand;
• the cost incurred by IDeA FIMIT SGR and DeA Capital totalling EUR 2,731 thousand resulting from the inability to deduct VAT
released on purchase transactions on the basis of the pro-rata amount specified by art. 19 of Presidential Decree 633/1972;
•
an estimate of potential losses for activities in relation to the
listing of IDeA Real Estate (approx. EUR 4,529 thousand). Note
that,
owing to adverse conditions in the equity markets at the start of 2016,
the listing of IDeA Real Estate SIIQ has in fact been
suspended for the time being.
14 - Financial income and charges
14a - Financial income
Financial income in 2015 amounted to EUR 6,058 thousand (EUR 7,313 thousand in 2014); this mainly includes interest receivable
for the IDeA OF I fund on the sale of Talgo and Manutencoop (EUR 1,493 thousand), realised exchange rate differences relating to
the
IDeA OF I fund in the sale of the Telit stake (EUR 2,627 thousand), and
unrealised exchange rate differences for the IDeA OF I
fund relating to the valuation of the equity investment in 2IL Orthopaedics LTD (Corin) of EUR 784 thousand.
(EUR thousand)
2015
2014
Interest income
1,939
3,447
Income from financial instruments valued at fair value
through profit and loss
0
0
Derivative income
0
302
Income earn-out adjustement
0
2,206
Foreign exchange gains
3,571
1,358
Other income
548
0
Total
6,058
7,313
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
121
14b - Financial charges
Financial charges in 2015 amounted to EUR 1,076 thousand (EUR 4,408 thousand in 2014), mainly due to interest payable
on credit lines used from 30 April to 31 July 2015 with Mediobanca S.p.A. and Intesa SanPaolo S.p.A., totalling EUR 493
thousand, and fees of EUR 314 thousand.
(EUR thousand)
2015
2014
Interest expense
1,026
4,068
Exchange losses
7
267
Financial charge IAS 19
43
73
Other
0
0
Total
1,076
4,408
15 - Income tax for the period, deferred tax assets and deferred tax liabilities
This item, totalling EUR 6,452 thousand for 2015 (EUR 1,720 thousand in 2014), includes current income tax due for the
year of EUR -6,845 thousandand deferred tax assets of EUR +13,297 thousand, mainly related to the use by IDeA FIMIT SGR
of deferred tax liabilities of EUR 6.834 thousand (following the impairment of the intangible assets related to the variable
commissions of EUR 20.500 thousand) and to the set-off of tax liabilities resulting from the funds valuation of EUR 5.468
thousand (due to the tax losses available for the Parent Company).
The table below shows the taxes determined on the basis of the rates and the Group’s taxable income. The latter was
calculated in light of applicable legislation.
(EUR thousand)
2015
2014
Current taxes:
Income from tax consolidation scheme
2,278
1,747
- IRES
(7,122)
(6,743)
- IRAP
(1,998)
(2,757)
- Other tax
(3)
(3)
Total Current taxes
(6,845)
(7,756)
Deferred taxes for the period:
- Charges for deferred/prepaid taxes
(17)
(1,016)
- Income from deferred/prepaid taxes
6,579
9,792
- Use of deferred tax liabilities
7,556
722
- Use of deferred tax assets
(821)
(22)
Total deferred taxes
13,297
9,476
Total income tax
6,452
1,720
122 DeA Capital - Annual Financial Statements to 31 December 2015
The table below shows a reconciliation of the tax charges recorded in the Consolidated Financial Statements and the
theoretical tax charge for 2015 calculated using the corporate income tax (IRES) rate applicable in Italy.
2015
2014
(EUR thousand)
Amount
Rate
Amount
Rate
Profit before tax
32,509
(56,766)
Tax on theoretical income
8,940
27.5%
(15,611)
27.5%
Tax on inter-company dividends
301
0.9%
432
(0.8%)
Intangible assets amortization
5,638
17.3%
1,348
(2.4%)
Write-downs of equity investments
and loans
82
0.3%
1,160
(2.0%)
Effect of companies with different
taxation from that of Italy
0
0.0%
23,220
(40.9%)
Use of tax losses not previously
recognised
0
0.0%
0
0.0%
Net profit/(loss) from subsidiaries
not subject to taxation
(7,062)
(21.7%)
(767)
1.4%
Net profit/(loss) from associates
not subject to taxation
0
0.0%
216
(0.4%)
Non-deductible interest
182
0.6%
94
(0.2%)
Income from tax consolidation
scheme
(678)
(2.1%)
(836)
1.5%
Other net differences
(3,080)
(9.5%)
(3,525)
6.2%
Net effect of prepaid/deferred
taxes
(12,664)
(39.0%)
(9,375)
16.5%
IRAP and other taxes on foreign
income
1,890
5.8%
1,924
(3.4%)
Income tax reported in the
income statement
(6,452)
(19.8%)
(1,720)
3.0%
16 - Basic earnings (loss) per share
Basic earnings per share are calculated by dividing net profit for the period attributable to the Group's shareholders by the
weighted average number of shares outstanding during the period.
Diluted earnings per share are calculated by dividing net profit for the period attributable to the Group's shareholders by the
weighted average number of shares outstanding during the period including any diluting effects of existing stock option plans,
in the event the allocated options are “in the money”.
The table below shows the income and the share information used to calculate basic and diluted earnings per share:
(EUR thousand)
2015
2014
Consolidated net profit/(loss) - Group share (A)
41,072
(57,601)
Weighted average number of ordinary shares outstanding (B)
266,557,823
273,806,403
Basic earnings/(loss) per share (€ per share) (C=A/B)
0.154
(0.210)
Restatement for dilutive effect
-
-
Consolidated net profit/(loss) restated for dilutive effect (D)
41,072
(57,601)
Weighted average number of shares to be issued for the exercise of stock
options (E)
956,844
306,445
Total number of shares outstanding and to be issued (F)
267,514,667
274,112,848
Diluted earnings/(loss) per share (€ per share) (G=D/F)
0.154
(0.210)
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
123
Options have a dilutive effect only when the average market price of the share for the period exceeds the strike price of the
options or warrants (i.e. when they are “in the money”).
Primary and secondary reporting formats
The information on businesses reflects the Group's internal reporting structure. These businesses are:
- Private Equity Investment, which includes the reporting units involved in investment activities and breaks down into
equity investments (direct investments) and investments in funds (indirect investments);
- Alternative Asset Management, which includes reporting units involved in asset management activities and related
services, with a current focus on the management of private equity and real estate funds.
Summary Group Income Statement -
performance by business in 2015
Private Equity Alternative Asset
Holdings/
(EUR thousand)
Investment
Management
Eliminations
Consolidated
Alternative Asset Management fees
0
64,672
(2,256)
62,416
Income (loss) from equity investments
(180)
(359)
0
(539)
Other investment income/expense
72,552
(88)
0
72,464
Income from services
3,054
18,549
97
21,700
Other expenses
(2,455)
(120,285)
(5,774)
(128,514)
Financial income and expenses
5,065
616
(699)
4,982
PROFIT/(LOSS) BEFORE TAXES
78,036
(36,895)
(8,632)
32,509
Income tax
0
(409)
6,861
6,452
PROFIT/(LOSS) FOR THE PERIOD
FROM CONTINUING OPERATIONS
78,036
(37,304)
(1,771)
38,961
Profit (Loss) from discontinued
operations/held-for-sale assets
286
0
0
286
PROFIT/(LOSS) FOR THE PERIOD
78,322
(37,304)
(1,771)
39,247
- Group share
63,516
(20,673)
(1,771)
41,072
- Non controlling interests
14,806
(16,631)
0
(1,825)
124 DeA Capital - Annual Financial Statements to 31 December 2015
Summary Group income statement -
performance by business in 2014
Private Equity Alternative Asset
Holdings/
(EUR thousand)
Investment
Management
Eliminations
Consolidated
Alternative Asset Management fees
0
68,549
(2,504)
66,045
Income (loss) from equity investments
(262)
(524)
0
(786)
Other investment income/expense
(56,812)
663
0
(56,149)
Income from services
146
18,357
673
19,176
Other expenses
(5,930)
(71,152)
(10,875)
(87,957)
Financial income and expenses
3,006
155
(256)
2,905
PROFIT/(LOSS) BEFORE TAXES
(59,852)
16,048
(12,962)
(56,766)
Income tax
0
(6,584)
8,304
1,720
PROFIT/(LOSS) FOR THE PERIOD
FROM CONTINUING OPERATIONS
(59,852)
9,464
(4,658)
(55,046)
Profit (Loss) from discontinued
operations/held-for-sale assets
(887)
0
0
(887)
PROFIT/(LOSS) FOR THE PERIOD
(60,739)
9,464
(4,658)
(55,933)
- Group share
(62,235)
9,292
(4,658)
(57,601)
- Non controlling interests
1,496
172
0
1,668
Notes to the Cash Flow Statement
Changes to the Cash Flow Statement have been reported using the direct method.
Given the type of activity carried out by the Group, cash flow from investment in companies and funds (one of the Group’s
typical activities) is included in cash flow from operating activities.
In 2015, operating activities, as defined above, generated cash and cash equivalents of EUR 188,492 thousand (EUR 188,419
thousand in 2014). Please see the Consolidated Cash Flow Statement for information on changes to this item.
In 2015, financial activities absorbed EUR 120,580 thousand (EUR 157,756 thousand in 2014). Please see the Consolidated
Cash Flow Statement for information on changes to this item.
Cash and cash equivalents totalled EUR 123,468 thousand at end-2015, compared with EUR 55,583 thousand at the end
of the 2014.
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
125
Other information
Commitments
At 31 December 2015, residual commitments for payments to funds totalled EUR 92.6 million, compared with EUR 106.5
million at end-2014. Changes in commitments are shown in the table below:
(EUR million)
Residual Commitments to funds - 31.12.2014
106.5
Change in commitments of VC funds
0.0
New commitments
5.8
Capital Calls
(20.0)
Incorporated funds
0.0
Exchange differences
0.3
Residual Commitments to funds - 31.12.2015
92.6
Net Financial Position at 31.12.2015
133.8
NFP vs. Residual Commitments - 31.12.2015 (Overcommitment)
41.2
With regard to these overcommitments, the management believes that the funds and credit lines currently available, as well as
funds that will be generated by its operating and financing activities, will enable the DeA Capital Group to meet the financing
required for its investment activity, manage working capital and repay debts when they become due.
Treasury shares and Parent Company shares
On 17 April 2015, the Shareholders’ Meeting of DeA Capital S.p.A. authorised the Board of Directors to buy and sell, on one or
more occasions and on a revolving basis, a maximum number of ordinary shares in the Company representing a stake of up to
20% of the share capital.
The new plan replaces the previous plan approved by the shareholders’ meeting on 17 April 2014 (which was scheduled to expire
with the approval of the 2014 Annual Financial Statements), and will pursue the same objectives as the previous plan, including
purchasing treasury shares to be used for extraordinary transactions and share incentive schemes, offering shareholders a
means
of monetising their investment, stabilising the share price and
regulating trading within the limits of current legislation.
The authorisation specifies that purchases may be carried out up to the date of the shareholders’ meeting to approve the
Financial Statements for the Year Ending 31 December 2015 and, in any case, not beyond the maximum duration allowed by
law, in accordance with all the procedures allowed by current regulations, and that DeA Capital S.p.A. may also sell the shares
purchased for the purposes of trading, without time limits. The unit price for the purchase of the shares will be set on a case-
by-case basis by the Company's Board of Directors, but must not be more than 20% above or below the share’s reference
price
on the trading day prior to each individual purchase. In contrast, the
authorisation to sell treasury shares already held in
the Company’s portfolio, and any shares bought in the future, was granted for an unlimited period, to be implemented using
the methods considered most appropriate and at a price to be determined on a case-by-case basis by the Board of Directors,
which must not, however, be more than 20% below the share's reference price on the trading day prior to each individual sale
(with certain exceptions specified in the plan). Sale transactions may also be carried out for trading purposes.
On 17 April 2015, the Board of Directors held following the shareholders’ meeting voted to implement the above
mentioned plan to buy and sell treasury shares according to the operating practice as of the so called “Consob Practice”
(the operating practice n. 2 as of the Consob Resolution n. 16838 issued on March 19, 2009, as of the article 180,
subparagraph 1, letter c) of the TUF).
The treasury shares acquisition plan is aimed to the setup of a "securities warehouse" as permitted by the Consob Practice,
to be used according to the shareholders’ meeting decision as a means of payment for extraordinary corporate transactions
(exchange of participations included).
126 DeA Capital - Annual Financial Statements to 31 December 2015
According to article 5 of the Regolamento CE n. 2273/2003, the treasury shares purchase price can’t be higher than the higher
price between (i) the price of the latest independent transaction and (ii) current independent offer in the trading venues
where the purchase is made. All such price limits are subject to the further condition of the price per share being within a
-20%/+20% variance range compared to the public stock quote as of the latest stock market session preceding every treasury
share purchase.
On top of that the Board of Directors also resolved to set the maximum unit price above which purchases of treasury shares
may not be made at the NAV per share indicated in the most recent statement of financial position approved and disclosed to
the market.
DeA Capital has a contract with independent authorised intermediary Intermonte SIM S.p.A., granting this company a mandate
to buy and sell ordinary DeA Capital shares, pursuant to the Consob Practice. For further details please refer to the above
mentioned ordinary Shareholders’ meeting notice, to the Directors’ report and to the press release issued on 17 April 2015
available on the Company web site (www.deacapital.it ), respectively in the Investor Relations/Shareholders’ Meetings and the
Investor Relations/Press Releases sections.
In 2015, DeA Capital S.p.A. purchased around 7,703,209 million shares for a price of about EUR 13.0 million.
Taking into account purchases made in previous years for plans in place from time to time, and the use of treasury shares
to service purchases of controlling interests in FARE Holding and IDeA Alternative Investments, at 31 December 2015 the
Company owned 42,688,945 treasury shares (equal to about 13.9% of share capital).
As of the date of this document, based on purchases of 445,306 shares made after the end of 2015, the Company had a total
of 43,147,751 treasury shares corresponding to about 14.1% of the share capital.
During 2015, the Company did not hold, purchase or sell, on its own account or through a trust company, any shares in the
Parent Company De Agostini S.p.A.
Stock option and performance share plans
On 17 April 2015, the DeA Capital S.p.A. Shareholders' Meeting approved the DeA Capital Performance Share Plan 2015-
2017, under which a maximum of 675,000 units may be allocated. On the same date, in implementation of the shareholders’
resolution, the Board of Directors of DeA Capital S.p.A. voted (i) to launch the DeA Capital Performance Share Plan 2015-2017
approved by the shareholders’ meeting, vesting the Chairman of the Board of Directors and the Chief Executive Officer with all
the necessary powers, to be exercised severally and with full power of delegation; and (ii) to allocate a total of 515,000 units
(representing the right to receive ordinary shares in the Company free of charge, under the terms and conditions of the plan)
to certain employees and/or directors performing particular roles at the Company, its subsidiaries and the Parent Company De
Agostini S.p.A.
On 27 August 2015, under the same Performance Share Plan 2015-2017, the Board of Directors allocated a further 150,000
units to employees with specific duties.
Shares allocated due to the vesting of units will be drawn from own shares already held by the company.
In addition, the Plan enables DeA Capital to oblige beneficiaries to return, in full or in part, shares received pursuant to the
Plan, should circumstances emerge that clearly show that incorrect data have been used to verify the achievement of the
targets for the vesting of the units (“claw-back”).
The shareholders’ meeting also approved the Company’s Remuneration Policy pursuant to art. 123-ter of the TUF.
In addition, pursuant to art. 114-bis of the TUF, on 17 April 2015, the Shareholders' Meeting approved a number of
amendments to the following current share-based incentive plans: (i) DeA Capital Performance Share Plan 2013-2015, (ii) DeA
Capital Stock Option Plan 2013-2015, (iii) DeA Capital Performance Share Plan 2014-2016, and (iv) DeA Capital Stock Option
Plan 2014-2016 (together, the Plans).
The amendments approved concern (i) the introduction of a second performance target, related to the total shareholder return
of the DeA Capital share, and as an alternative to the target for growth in the Adjusted NAV, already provided for in the Plans,
on which the conversion into shares of the units and the entitlement to exercise the options are dependent,
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
127
and (ii) the introduction of claw-back mechanisms, according to the Corporate Governance Code recommendations, that
enable the Company to oblige beneficiaries to return shares received pursuant to the Plans, should circumstances emerge that
clearly show that incorrect data have been used to verify the achievement of the required performance targets.
Morover, on 5 November 2015, following the extraordinary dividend distribution of EUR 0.30 per share resolved by the
Shareholders’ meeting of 17 April 2015 resulting in a reduction of the DeA Capital share value, the Board of Directors of
DeA Capital, as enabled by the Plans regulations, approved some changes to the current incentive plans in order to maintain
unchanged their substantial and economic contents. More specifically:
• As regards the Performance Shares Plans, the Board voted to compensate for the lower value of the Plans following the
distribution of the extraordinary dividend, in the event that the vesting conditions are met, by allocating new units, to
be determined on the vesting date. The new units, which will be valued at the price per share on the same date, will be
allocated pro rata to the portion of units that have vested, up to the maximum number of units provided for under the
above-mentioned Plans. Where the lower value of the Plans cannot be compensated for by the allocation of new units, a one-
off bonus will be paid as compensation in cash, commensurate with the portion of units that has vested;
• As regards the Stock Option Plans, the Board voted to adjust the strike price of the options by an amount corresponding to
the extraordinary dividend, i.e. EUR 0.30 per share, subject to the lower limit represented by the nominal value of the DeA
Capital share. Specifically, the Board voted to: reduce the strike price (i) from EUR 1.289 to EUR 1.000 for the Stock Option
Plan 2013-2015 and (ii) from EUR 1.32 to EUR 1.020 for the Stock Option Plan 2014-2016.
The tables below summarise the assumptions made in calculating the fair value of the plans:
Stock options
Plan 2004
Plan 2005
Plan 2013
Plan 2014
No. of options allocated
160,000
180,000
1,550,000
1,550,000
Average market price at
allocation date
2.445
2.703
1.26
1.44
Value at allocation/
modification of regulation date
391,200
486,540
318,267
364,250
Average exercise price
2.03
2.46
1.00
1.02
Expected volatility
31,15%
29,40%
21,78%
22,06%
Option expiry date
31/08/15
30/04/16
31/12/18
31/12/19
Risk-free rate
4.25%
3.60%
0.71%
0.71%
The Allocation Plan 2004 is to be considered lapsed as the conditions for exercising option rights were not met.
Performance Share
Plan 2013
Plan 2014
Plan 2015
Plan 2015
N° units allocated
393,500
393,500
515,000
150,000
Unit value
1.60
1.44
1.46
1.34
Value at allocation/
modification date
249,217
228,230
302,477
66,750
Expected volatility
19.41%
22.06%
24.83%
25.54%
Option expiry date
31/12/15
31/12/16
30/06/19
30/06/19
Risk free rate
0.42%
0.42%
0.95%
0.82%
128 DeA Capital - Annual Financial Statements to 31 December 2015
Transactions with parent companies, subsidiaries and related parties
Transactions with related parties
Transactions with related parties, including those with other Group companies, were carried out in accordance with the
Procedure for Related Party Transactions adopted by the Company with effect from 1 January 2011, in accordance with the
provisions of the Regulation implemented pursuant to art. 2391-bis of the Italian Civil Code with Consob Resolution 17221
of 12 March 2010, as subsequently amended. During the year, the Company did not carry out any any atypical or unusual
transactions with related parties but only those that are part of the normal business activities of group companies. It also did
not carry out any "significant transactions" as defined in the above-mentioned procedure. Transactions with related parties
during the year were concluded under standard market conditions for the nature of the goods and/or services offered.
With regard to transactions with parent companies, note the following:
1) DeA Capital S.p.A. signed a service agreement with the controlling shareholder, De Agostini S.p.A., for the latter to provide
operating
services in the administration, finance, control, legal, corporate and
tax areas, investor relations, institutional and
press services.
This agreement, which is automatically renewed annually, is priced at market rates and is intended to allow the Company to
maintain a streamlined organisational structure in keeping with its development policy, while obtaining sufficient operational
support.
At the same time, on 1 January 2013, DeA Capital S.p.A. signed an “Agreement to sub-let property for use other than
residential use” with the controlling shareholder, De Agostini S.p.A. The agreement relates to parts of a building located at
Via Brera, 21, Milan, comprising space for office use, warehousing and car parking.
This agreement is renewable every six years after an initial term of seven years.
2) DeA Capital S.p.A., IDeA Capital Funds SGR, DeA Capital Real Estate, IRE and IRE Advisory have adopted the national tax
consolidation scheme of the De Agostini Group (the Group headed by De Agostini S.p.A., formerly B&D Holding di Marco
Drago e C. S.a.p.a.). This option was exercised jointly by each company and De Agostini S.p.A. by signing the “Regulation
for participation in the national tax consolidation scheme for companies in the De Agostini Group” and notifying the tax
authorities of this option pursuant to the procedures and terms and conditions set out by law. The option is irrevocable
unless the requirements for applying the scheme are not met.
The option is irrevocable for DeA Capital S.p.A. for the three-year period 2014-2016, for IDeA Capital Funds SGR, IRE and
IRE Advisory for the three-year period 2015-2017 and for DeA Capital Real Estate for the three-year period 2013-2015.
3) In order to enable more efficient use of liquidity and the activation of credit lines with potentially better terms and
conditions compared with those that may be obtained from banks, DeA Capital S.p.A. has signed a framework agreement
(Framework Agreement) with the Parent Company De Agostini S.p.A. for the provision of short-term intercompany loans/
deposits.
Deposit/financing operations falling within this Framework Agreement shall be activated only subject to verification that
the terms and conditions, as determined from time to time, are advantageous, and will be provided on a revolving basis,
and with maturities of not more than three months. The Framework Agreement shall have a duration of one year and is
automatically renewed annually.
The amounts involved in the deposit/financing operations will, however, always be below the thresholds defined for
“transactions of lesser importance” pursuant to Consob Regulation 17221/2010 (Transactions with Related Parties) and the
internal Procedure for Related Party Transactions adopted by DeA Capital S.p.A.
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
129
Lastly, the Company did not hold, purchase or dispose of shares of related-party companies in 2015.
The table below summarises the amounts of trade-related transactions with related parties.
31 december 2015
2015
Trade
Tax Other tax
Tax
Trade Income from Financial Personnel Service
(EUR thousand)
Loans receivables receivables receivables payables payables
services
income
costs
costs
Sigla S.r.l.
3,467
0
0
0
0
0
0
227
0
0
De Agostini
S.p.A.
0
69
2,667
1,187
2,914
34
335
0
335
602
Gruppo De
Agostini Editore
S.p.A.
0
8
0
0
0
134
52
0
47
350
Lottomatica
S.p.A.
0
1
0
0
0
0
26
0
0
0
DeA Factor
S.p.A.
0
0
0
0
0
1,687
0
0
0
0
De Agostini
Invest S.A.
0
0
0
0
0
25
0
0
0
22
Total related
parties
3,467
78
2,667
1,187
2,914
1,880
413
227
382
974
Total financial
statement line
item
3,467
17,818
2,667
2,892
3,384
15,598
18,496
6,058
32,519 22,397
As % of
financial
statement line
item
100.0%
0.4%
100.0%
41.0%
86.1%
12.1%
2.2%
3.7%
1.2%
4.3%
130 DeA Capital - Annual Financial Statements to 31 December 2015
Remuneration: directors of the board, auditors, general managers and managers with
strategic responsibilities
In 2015, remuneration payable to the directors and auditors of DeA Capital S.p.A. for the performance of their duties totalled
EUR 267 thousand and EUR 175 thousand respectively.
Remuneration paid to directors and auditors is shown in the table below:
Fees for
position at
company
Statutory
preparing
auditors' fees
Period
the financial
Non-
Bonuses
for positions
Other
position
Position
statements in
cash
and other
held at
remuneration
Director
Position
held
expires
EUR thousand
benefits
incentives
subsidiaries
EUR/000
Approval fin.
Lorenzo Pellicioli
Chairman
2015
statements 2015
30
0
0
0
0
Chief Executive
Approval fin.
Paolo Ceretti
Officer
2015
statements 2015
30
0
450
0
70
Senior managers
with strategic
to 11 april
Carlo Frau
responsibilities
2015
-
0
0
150
0
8
Approval fin.
Lino Benassi
Director
2015
statements 2015
26
0
0
0
64
to 12 march
Stefania Boroli
Director
2015
-
6
0
0
0
0
to 17 april Approval fin.
Busso Donatella
Director
2015
statements 2015
21
0
0
0
0
Approval fin.
Rosario Bifulco
Director
2015
statements 2015
30
0
0
0
25
Approval fin.
Francesca Golfetto
Director
2015
statements 2015
30
0
0
0
20
Approval fin.
Roberto Drago
Director
2015
statements 2015
30
0
0
0
0
Approval fin.
Marco Drago
Director
2015
statements 2015
30
0
0
0
0
Approval fin.
Severino Salvemini
Director
2015
statements 2015
30
0
0
0
35
Approval fin.
Marco Boroli
Director
2015
statements 2015
30
0
0
0
0
Chairman of
the Board of
Statutory
Approval fin.
Angelo Gaviani
Auditors
2015
statements 2015
75
0
0
9
0
Permanent
Approval fin.
Gian Piero Balducci
Auditor
2015
statements 2015
50
0
0
35
32
Permanent
Approval fin.
Annalisa Donesana
Auditor
2015
statements 2015
50
0
0
40
12
In contrast to the data contained in the Remuneration Report prepared pursuant to art. 123-ter of the TUF in accordance with
art. 84-quater of the Issuer Regulation, the emoluments and compensation indicated above do not include social security
contributions where applicable.
“Other remuneration” relates to remuneration received for other positions held in either DeA Capital S.p.A. or other Group
companies.
In 2015, annual salaries and bonuses, excluding benefits in kind, paid to managers with strategic responsibilities in the Parent
Company totalled about EUR 689 thousand.
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
131
Shareholdings held by directors, auditors, general managers and managers with strategic
responsibilities
Details
of shareholdings held in DeA Capital S.p.A. and its subsidiaries by
members of the boards of directors and auditors and by
managers with strategic responsibilities are provided in aggregate format in the table below.
No shareholdings were reported for general managers, since to date, this position does not exist.
All
those who held positions on the boards of directors or auditors, or as
managers with strategic responsibilities, for the whole or
part of the year in question, are included.
No. of shares
No. of shares No. of shares No. of shares
held at
Name and surname Investee company
held at 1.1.2015
purchased
sold
31.12.2015
Lorenzo Pellicioli
DeA Capital S.p.A.
2,566,323
0
0
2,566,323
Paolo Ceretti
DeA Capital S.p.A.
1,000,000
0
0
1,000,000
Rosario Bifulco
DeA Capital S.p.A.
1,536,081
0
0
1,536,081
Lino Benassi
DeA Capital S.p.A.
23,500
0
0
23,500
Senior managers
with strategic
responsibilities
DeA Capital S.p.A.
205,000
100,000
0
305,000
Total
5,330,904
100,000
0
5,430,904
Other than the shares indicated above, no DeA Capital shares are held by other directors or auditors who are currently in
office; furthermore, no shares are held in companies controlled by DeA Capital.
Directors Lorenzo Pellicioli, Marco Drago, Marco Boroli, Stefania Boroli (resigned on 12 March 2015) and Roberto Drago hold
treasury shares of B&D Holding di Marco Drago e C. S.a.p.A. and - in the case of directors Marco Drago, Roberto Drago,
Stefania Boroli and Marco Boroli - shares of De Agostini S.p.A., which control the Company both directly and indirectly, and are
party to a shareholders’ agreement covering these shares.
Stock options allocated to members of the boards of directors and auditors, general
managers and managers with strategic responsibilities
Details of stock options held by members of the boards of directors and auditors and by managers with strategic
responsibilities in DeA Capital S.p.A. and its subsidiaries are provided in aggregate format in the table below.
Options
lapsed
Options outstanding at
Options granted
during
Options outstanding at
1 January 2015
during 2015
2015
31 December 2015
Number
Average
Average
Average
Average
Number
Number
Average
Average
of
exercise
expiry Number of
exercise
expiry
of
of
exercise
expiry
Beneficiary Position
options
price
date
options
price
date options options
price
date
Paolo Ceretti CEO
950,000
1.00
5
0
0
0
0 950,000
1.00
5
Paolo Ceretti CEO
950,000
1.02
5
0
0
0
0 950,000
1.02
5
Key
Management
600,000
1.00
5
0
0
0
0 600,000
1.00
5
Key
Management
600,000
1.02
5
0
0
0
0 600,000
1.02
5
132 DeA Capital - Annual Financial Statements to 31 December 2015
Lastly, note that the Chief Executive Officer, Paolo Ceretti, and managers with strategic responsibilities were assigned 250,000
and 320,000 performance shares respectively in 2015, as shown in the table below.
Options
lapsed
Options outstanding at
Options granted
during
Options outstanding at
1 January 2015
during 2015
2015
31 December 2015
Number
Avrage
Avrage
Average
Avrage
Average
of
Exercise Average Number of
Exercise
expiry Number of Number
Exercise
expiry
Beneficiary Position
options
Price expiry date
options
Price
date
options of options
Price
date
Paolo Ceretti CEO
120,000
1.60
3
0
0
3
0
120,000
1.60
3
Paolo Ceretti CEO
120,000
1.44
3
0
0
3
0
120,000
1.44
3
Paolo Ceretti CEO
0
0
0
250,000
1.46
4
0
250,000
1.46
4
Key
Management
84,625
1.60
3
0
0
0
0
84,625
1.60
3
Key
Management
84,625
1.44
3
0
0
0
0
84,625
1.44
3
Key
Management
0
0
0
170,000
1.46
4
0
170,000
1.46
4
Key
Management
0
0
0
150,000
1.34
4
0
150,000
1.34
4
Main risks and uncertainties to which the Parent Company and consolidated Group
companies are exposed
As described in the Report on Operations, the DeA Capital Group operates through, and is structured as, two business areas,
Private Equity Investment and Alternative Asset Management.
The risks set out below take into account the features of the market and the operations of Parent Company DeA Capital S.p.A.
and the companies included in the Group’s Consolidated Financial Statements, the main findings of a risk assessment carried
out in 2015, as well as the periodic monitoring conducted partly through the regulatory policies adopted by the Group.
The Group has adopted a modern corporate governance system that provides effective management of the complexities of
its operations, and enables both individual companies and the Group to achieve their strategic objectives. Furthermore, the
assessments carried out by the organisational units and the directors confirm both the non-critical nature of these risks and
uncertainties, and the DeA Capital Group's financial solidity.
With reference to the specific risks relating to Migros, the main private equity investment, please see the Migros Annual Report
(available on the Migros website).
A. Contextual risks
A.1. Risks relating to general economic conditions
The operating performance and financial position of the DeA Capital Group are affected by the various factors that make up
the macro-economic environment in the countries in which the Group has invested, including GDP performance, investor and
consumer confidence, interest rates, inflation, the costs of raw materials and unemployment.
The ability to meet medium- to long-term objectives could be affected by general economic trends, which could slow the
development of sectors the Group has invested in, and at the same time, the business of the investee companies.
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
133
A.2. Socio-political events
In line with its own strategic growth guidelines, one of the DeA Capital Group’s activities is private equity investment in
companies and funds in different jurisdictions and countries around the world, which, in turn, invest in a number of countries
and geographical areas. The DeA Capital Group may have invested in foreign countries whose social, political and economic
conditions put the achievement of its investment objectives at risk.
A.3. Regulatory changes
Many Group companies conduct their operations in regulated sectors and markets. Any changes to or developments in the
legislative or regulatory framework that affect the costs and revenues structure of investee companies or the tax regime
applied could have negative effects on the Group’s financial results and necessitate changes to the Group’s strategy. To combat
this risk, the Group has established procedures to constantly monitor sector regulation and any changes thereto, in order to
take advantage of business opportunities and respond promptly to any changes in the prevailing legislation and regulations.
A.4. Performance of the financial markets
The Company’s ability to meet its strategic and management objectives could depend on the performance of financial
markets. A negative trend in financial markets could have an effect on the Private Equity Investment sector in general, making
investment and divestment transactions more complex, and on the Group’s capacity to increase the NAV of investments in
particular. The value of shareholdings held directly or indirectly through funds in which the Company has invested could be
affected by factors such as comparable transactions concluded on the market, sector multiples and market volatility. These
factors that cannot be directly controlled by the Group are constantly monitored in order to identify appropriate response
strategies that involve both the provision of guidance for the management of Group companies, and the investment and value
enhancement strategy for the assets held.
A.5. Exchange rates
Holding investments in currencies other than the euro exposes the Group to changes in exchange rates between currencies.
The investment in Kenan Investments is managed as a special case, since although it was made in euros, the underlying asset
is expressed in Turkish lira. Taking into account the time horizon of the investment, it is believed that the expected return on
the investment can absorb any devaluation of the underlying currency, if this is in line with the outlook for the currency.
A.6. Interest rates
Financing operations that are subject to variable interest rates could expose the Group to an increase in related financial
charges, in the event that the reference interest rates rise significantly.
B. Strategic risks
B.1. Concentration of the Private Equity investment portfolio
The Private Equity Investment strategy adopted by the Group includes:
- Direct investments;
- Indirect investments (via funds).
Within this strategy, the Group’s overall profitability could be adversely affected by an unfavourable trend in one or a few
investments,
if there were insufficient risk diversification, resulting from the
excessive concentration of investment in a small
number of assets, sectors, countries, currencies, or of indirect investments in funds with limited investment targets/types of
investment.
To combat these risk scenarios, the Group pursues an asset allocation strategy intended to create a balanced portfolio with a
moderate risk profile, investing in sectors and companies with an appealing current and future risk/return ratio. Furthermore,
the
combination of direct and indirect investments, which, by their nature,
provide a high level of diversification, helps reduce
the level of asset concentration.
134 DeA Capital - Annual Financial Statements to 31 December 2015
B.2. Concentration of Alternative Asset Management activities
In the Alternative Asset Management business, events could arise as a result of excessive concentration and hinder
achievement of the level of expected returns. These events could be due to:
• Private equity funds
- concentration of the management activities of asset management companies across a limited number of funds, if a decision
were made to cancel the asset management mandate for one or more funds;
- concentration of the financial resources of the funds managed in a limited number of sectors and/or geographical areas, in
the event of a currency, systemic or sector crisis;
- for closed-end funds, the concentration of the commitment across just a few subscribers.
• Real estate funds
- concentration of real estate present in the portfolio of managed funds in a few cities and/or in limited types of property
(management/commercial), in the event of a crisis in the property market concerned;
- concentration in respect of certain major tenants, if they were to withdraw from the rental contracts, which could lead to a
vacancy rate that has a negative impact on the funds' financial results and the valuation of the properties managed;
- concentration of the maturities of numerous real estate funds within a narrow timeframe, with related high availability of
property on the market, leading to a decrease in property values and an increase in selling times.
For each of the risk scenarios outlined above, the Group has defined and implemented appropriate strategies that include
strategic, operational and management aspects, as well as a system monitoring the level of asset diversification in the
Alternative Asset Management business.
B.3. Key resources (governance/organisation)
The success of the DeA Capital Group depends to a large extent on its executive directors and certain key management
figures, their ability to efficiently manage the business and the ordinary operations of the Group, as well as their knowledge
of the market and the professional relationships established. The departure of one or more of these key resources, without a
suitable replacement being found, as well as an inability to attract and retain new and qualified resources, could impact growth
targets and have a negative effect on the Group’s operating performance and financial results. To mitigate this risk, the Group
has put in place HR management policies that correspond closely to the needs of the business, and incentive policies that are
periodically reviewed, in light of, among other things, the general macroeconomic climate and the results achieved by the
Group.
C. Operating risks
C.1. Investment operations
Investment operations conducted by the Group are subject to the risks typical of private equity activities, such as the accurate
valuation of the target company and the nature of the transactions carried out. The Group has implemented a structured
process of due diligence on the target companies and the careful definition of shareholders’ agreements in order to conclude
agreements in line with the investment strategy and the risk profile defined by the Group.
C.2.Compliance with covenants
Some investment operations were concluded using financial leverage to invest in the target companies. For financing contracts
signed by investee companies, specific covenants generally backed by collateral are in place; failure to comply with these could
necessitate recapitalisation operations for investee companies and lead to an increase in financial charges relating to debt
refinancing. Failure to comply with covenants attached to loans could have negative effects on both the financial situation and
operations of investee companies, and on the value of the investment.
The Group constantly monitors the significant reference parameters for the financial obligations taken on by investee
companies, in order to identify any unexpected variance in good time.
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
135
C.3. Divestment operations
In
its Private Equity Investment business, the Group generally invests
over a medium-/long-term time horizon. Over the investment
management period, external situations could arise that might have a significant impact on the operating results of the investee
companies, and consequently on the value of the investment itself. Furthermore, in the case of co-investment, guiding the
management of an investee company could prove problematic or infeasible, and it may ultimately prove impossible to dispose of
the
stakes held owing to lock-up clauses. The divestment strategy could
therefore be negatively affected by various factors, some
of which cannot be foreseen at the time the investments are made. There is therefore no guarantee that expected earnings will be
realised given the risks arising from the investments made.
To
combat these risk situations, the Group has defined a process to
monitor the performance of its investee companies, facilitated
by
its representation on the management bodies of significant investee
companies, with a view to identifying any critical situations
in good time.
C.4. Funding risk
The income flows expected from the Alternative Asset Management business depend on the capacity of the Group’s asset
management companies to stabilise/grow their assets under management. In this environment, fundraising activity could be
harmed
both by external factors, such as the continuation of the global
economic crisis or the trend in interest rates, and internal
factors, such as bad timing in respect of fundraising activities by the asset management companies, or the departure of key
managers from the companies. The Group has established appropriate risk management strategies in relation to fundraising, with a
view to both involving new investors and retaining current investors.
Significant events after the reporting date for the 2015 Consolidated Financial
Statements
Private Equity funds - paid calls/capital distributions
After
the end of 2015, the DeA Capital Group increased its investments in the
ICF II, IDeA OF I, IDeA EESS, ICF III, IDeA I FOF and
IDeA ToI funds following total payments of EUR 2,909 thousand (EUR 764 thousand, EUR 1,374 thousand, EUR 76 thousand, EUR
69 thousand, EUR 555 thousand and EUR 71 thousand, respectively).
At the same time, DeA Capital received capital reimbursements from the IDeA I FoF and IDeA OF I funds of EUR 4,511 thousand
and EUR 4,070 thousand respectively, to be used in full to reduce the value of the units.
Second closing of ICF III private equity fund
On
19 January 2016, the second and final closing of the ICF III fund was
completed for EUR 9,900 thousand; this brought the final
commitment of the fund to EUR 66,950 thousand.
Further information
Publication of the 2015 Financial Statements
In accordance with the provisions of IAS 10, the Parent Company authorised the publication of these Financial Statements within
the terms set by the laws in force.
Atypical or unusual transactions
In 2015, there were no atypical or unusual transactions as defined by Consob Communication 6064293 of 28 July 2006.
Significant non-recurring events and transactions
In 2015, the DeA Group did not undertake any significant non-recurring transactions as defined by the above-mentioned Consob
Communication.
136 DeA Capital - Annual Financial Statements to 31 December 2015
STATEMENT OF RESPONSIBILITIES
FOR THE CONSOLIDATED FINANCIAL
STATEMENTS PURSUANT TO
ART. 154-BIS OF LEGISLATIVE
DECREE 58/98
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
137
Statement of responsibilities for the Consolidated Financial
Statements pursuant to art. 154-bis of Legislative Decree 58/98
The undersigned, Paolo Ceretti, as Chief Executive Officer, and Manolo Santilli, as the manager responsible for preparing the
accounting statements of DeA Capital S.p.A., hereby certify, pursuant to art. 154-bis, paragraphs 3 and 4 of Legislative Decree
58 of 24 February 1998, that based on the characteristics of the Company, the administrative and accounting procedures for
preparing the Consolidated Financial Statements during 2015 were suitable and were effectively applied.
The assessment as to the suitability of the administrative and accounting procedures for preparing the Consolidated Financial
Statements for the Year Ending 31 December 2015 was based on a process established by DeA Capital S.p.A. in keeping with
the Internal Control - Integrated Framework model issued by the Committee of Sponsoring Organisations of the Treadway
Commission, which is the generally accepted reference framework at international level.
Note in this regard, that as described in the Notes to the Financial Statements, a significant portion of the assets are
investments stated at fair value. Fair values were determined by directors based on their best estimates and judgement
using the knowledge and evidence available at the time the Financial Statements were prepared. However, due to objective
difficulties in making assessments and the absence of a liquid market, the values assigned to such assets could differ, and in
some cases significantly, from those that could be obtained when the assets are sold.
The undersigned further certify that the Consolidated Financial Statements at 31 December 2015:
- correspond to the companies' accounting records;
- have been prepared in compliance with the International Financial Reporting Standards adopted by the European Union, and
the measures issued to implement art. 9 of Legislative Decree 38/2005;
- to the best of their knowledge, provide a true and fair view of the operating performance and financial position of the issuer
and the group of companies included in the basis of consolidation.
The Report on Operations contains a reliable analysis of operating performance and results and of the position of the issuer
and all companies included in the basis of consolidation, together with a description of the main risks and uncertainties to
which they are exposed.
9 March 2016
Paolo Ceretti
Manolo Santilli
Chief Executive Officer
Manager Responsible
for preparing the Company’s Accounts
138 DeA Capital - Annual Financial Statements to 31 December 2015
Information pursuant to art. 149-duodecies of the Consob Issuer
Regulations
The table below was prepared in accordance with art. 149-duodecies of the Consob Issuer Regulation and reports the fees for
2015 for auditing and other services provided by the independent auditors and entities belonging to the independent auditors’
network. The fees reported below do not include VAT and out-of-pocket expenses.
Company providing
Compensation FY
(EUR thousand)
the service
Beneficiary
2015
Audit
PricewaterhouseCoopers S.p.A.
DeA Capital S.p.A.
55
PricewaterhouseCoopers S.p.A.
DeA Capital Real Estate
10
PricewaterhouseCoopers S.p.A.
Innovation Real Estate
13
PricewaterhouseCoopers S.p.A.
IRE Advisory
8
PricewaterhouseCoopers Advisory
Certification services (1)
S.p.A.
DeA Capital S.p.A.
15
PricewaterhouseCoopers Advisory
Other services
S.p.A.
IDeA FIMIT SGR
60
TLS Associazione professionale
IDeA FIMIT SGR
113
Total
274
1) Modello Unico / 770.
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
139
FINANCIAL STATEMENTS
FOR THE YEAR ENDING
31 DECEMBER 2015
• Statement of Financial Position
• Income Statement
• Statement of Comprehensive Income
• Cash Flow Statement
• Statement of Changes
in Shareholders’ Equity
• Notes to the Financial Statements
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
141
Balance Sheet - DeA Capital S.p.A.
(EUR)
Note
31.12.2015
31.12.2014
ASSETS
Non-current assets
Intangible and tangible assets
Intangible assets
1a
14,965
13,609
Tangible assets
1b
469,416
586,918
Total intangible and tangible assets
484,381
600,527
Investments
Subsidiaries and joint ventures
2a
221,680,803
256,900,010
Associates
2b
4,202,710
14,221,021
Available-for-sale investments
2c
76,464,384
209,320,028
Available-for-sale funds
2d
141,803,236
144,383,615
Total Investments
444,151,133
624,824,674
Other non-current assets
Deferred tax assets
0
Tax receivables from Parent companies
546,152
Total other non-current assets
0
546,152
Total non-current assets
444,635,514
625,971,353
Current assets
Trade receivables
557,069
Financial receivables
1,709,552
Tax receivables from Parent companies
2,782,826
VAT receivables from Parent companies
115,044
Other tax receivables
289,382
Other receivables
538,818
Cash and cash equivalents
37,961,858
Total current assets
95,112,068
43,954,549
Total current assets
95,112,068
43,954,549
Held-for-sale assets
5
11,486,685
0
TOTAL ASSETS
551,234,267
669,925,902
SHAREHOLDERS' EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY
Share capital
6a
263,923,155
271,626,364
Share premium reserve
6b
299,646,519
384,826,924
Legal reserve
6c
61,322,420
61,322,420
Fair Value reserve
6d
18,758,957
12,908,007
Other reserves
6e
316,409
504,126
Retained earnings (losses)
6f
(75,961,631)
(71,451,400)
Profit/(loss) for the year
6g
(18,899,586)
(4,519,219)
Shareholders' equity
549,106,243
655,217,222
LIABILITIES
Non-current liabilities
Deferred tax liabilities
3a
0
0
Provisions for employee termination benefits
7a
285,844
558,957
Other payables
7b
0
11,396,404
Total non-current liabilities
285,844
11,955,361
Current liabilities
Trade payables
8a
1,200,066
1,325,359
Payables to staff and social security organisations
8b
371,021
828,943
Current tax payables
8c
63,926
63,926
VAT payables vs Parent companies
8d
0
339,690
Other tax payables
8e
198,561
184,324
Other payables
8f
8,606
11,077
Total current liabilities
1,842,180
2,753,319
Held-for-sale liabilities
0
0
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES
551,234,267
669,925,902
Pursuant to Consob Resolution 15519 of 27 July 2006, the impact of dealings with related parties on the Statement of Financial
Position, Income Statement and Cash Flow Statement is explained in the Notes to the Financial Statements.
142 DeA Capital - Annual Financial Statements to 31 December 2015
Income Statement - DeA Capital S.p.A.
(EUR)
Note
Year 2015
Year 2014
Dividends from subsidiaries and joint ventures
9a
5,517,080
190,476,720
Gains from available-for-sale funds
9a
17,877,541
297,735
Subsidiaries and joint ventures impairment
9a
(53,379,363)
(192,148,356)
Impairment of associated companies
9a
0
(884,208)
Impairment of Investments in other companies-available-for-sale
9a
0
(65,190)
Impairment of funds available-for-sale
9a
(616,423)
(1,317,382)
Income from services
9b
1,767,185
1,868,506
Other income
9c
9,106,713
252,730
Personnel costs
10a
(2,452,009)
(4,978,154)
Service costs
10b
(4,475,056)
(4,818,879)
Depreciation, amortization and impairment
10c
(161,469)
(154,567)
Other expenses
10d
(67,009)
(444,042)
Financial income
11a
392,877
3,173,521
Financial expenses
11b
(823,027)
(3,443,143)
PROFIT/(LOSS) BEFORE TAX
(27,312,960)
(12,184,709)
Income tax
12a
855,513
908,140
Deferred tax
12b
7,557,861
6,757,350
PROFIT/(LOSS) FOR THE YEAR FROM CONTINUING
OPERATIONS
(18,899,586)
(4,519,219)
Profit (Loss) from discontinued operations/held-for-sale assets
0
0
PROFIT/(LOSS) FOR THE YEAR
(18,899,586)
(4,519,219)
Earnings per share, basic (€)
13
(0.07)
(0.02)
Earnings per share, diluted (€)
13
(0.07)
(0.02)
Pursuant to Consob Resolution 15519 of 27 July 2006, the impact of dealings with related parties on the Statement of Financial
Position, Income Statement and Cash Flow Statement is explained in the Notes to the Financial Statements.
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
143
Statement of Comprehensive Income
(Statement of Performance - IAS 1)
Comprehensive income or the Statement of Performance (IAS 1), in which performance for the year is reported, including results
posted directly to shareholders’ equity, reflects a net negative balance of approximately EUR 12,952 thousand compared with a
net positive balance of around EUR 28,765 thousand in 2014. This comprises:
• a net loss of EUR 18,900 thousand recorded on the income statement;
• results posted directly to shareholders’ equity totalling EUR +5,947 thousand, mainly due to the decrease in fair value of the
equity investment in Kenan Investments, which was only partly offset by the increase in the value of units in portfolio funds.
(in EUR)
31.12.2015
31.12.2014
Profit/(loss) for the year (A)
(18,899,586)
(4,519,219)
Components that may be subsequently restated under profit/(loss) for the year
5,851,000
33,364,802
Gains/(losses) from recalculation of available-for-sale financial assets
5,851,000
33,364,802
Components that will not be subsequently restated under profit/(loss) for the year
96,467
(80,598)
Actuarial gains/(losses) to be revalued in defined benefit plans
96,467
(80,598)
Total other profit/(loss), net of tax effect (B)
5,947,467
33,284,204
Total comprehensive profit/(loss) for the year (A)+(B)
(12,952,119)
28,764,985
144 DeA Capital - Annual Financial Statements to 31 December 2015
Cash flow statement - Parent Company - Direct method
Financial year
Financial year
(EUR thousand)
2015
2014
CASH FLOW from operating activities
Investments in funds and shareholdings
(19,967)
(18,108)
Proceeds from the sale of investments
107,670
1,220
Capital reimbursements from funds and shareholdings
55,199
29,601
Interest received
141
24
Intragroup interest received
0
1,111
Interest paid
(499)
(3,073)
Intragroup interest paid
0
(152)
Income from distribution from investments
1,423
298
Exchange gains (losses)
16
5
Taxes paid
(438)
(3)
Taxes refunded
3,111
3,689
Dividends received
5,517
131,557
Revenues for services
54
369
Intragroup revenues for services
2,104
2,777
Intragroup operating expenses
(942)
(1,409)
Operating expenses
(8,583)
(8,870)
Net cash flow from operations
144,806
139,036
CASH FLOW from investment activities
Acquisition of property, plant and equipment
(71)
(316)
Acquisition of intangible assets
(26)
(13)
Acquisition of property, plant and equipment ICO
(17)
0
Sale of property, plant and equipment ICO
354
45
Net cash flow from investments
240
(284)
CASH FLOW from financial activities
Purchase of own shares
(13,030)
(3,719)
Dividends paid
(79,849)
0
Bank loans
0
(147,000)
Short-term intragroup loans
(1,741)
45,398
Net cash flow from financial activities
(94,620)
(105,321)
NET INCREASE IN CASH AND CASH EQUIVALENTS
50,426
33,430
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
37,962
3,776
Initial cash and cash equivalents of companies merged in the period
0
756
Cash and cash equivalents of assets at beginning of period
37,962
4,532
EXCHANGE EFFECT OF CASH AND CASH EQUIVALENTS IN FOREIGN CURRENCY
0
0
CASH AND CASH EQUIVALENTS AT END OF PERIOD
88,388
37,962
Held-for-sale assets
0
0
CASH AND CASH EQUIVALENTS AT END OF PERIOD
88,388
37,962
Pursuant to Consob Resolution 15519 of 27 July 2006, the impact of dealings with related parties on the Statement of Financial
Position, Income Statement and Cash Flow Statement is explained in the Notes to the Financial Statements.
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
145
Statement of changes in shareholders’ equity
of the Parent Company DeA Capital S.p.A.
Share
Stock
premium
Legal Fair value
options
(EUR thousand)
Share capital
reserve
reserve
reserves
reserve
Total at 31.12.2013
273,975
386,198
61,322
(20,457)
912
Allocation of profit
0
0
0
0
0
Cost of stock options
0
0
0
0
121
Purchase of own shares
(2,349)
(1,371)
0
0
0
Total comprehensive profit/(loss) for 2014
0
0
0
33,365
0
Total at 31.12.2014
271,626
384,827
61,322
12,908
1,033
Allocation of profit
0
0
0
0
0
Cost of stock options
0
0
0
0
487
Stock Options Plan 2004 e 2013 reversal
0
0
0
0
(770)
Purchase of own shares
(7,703)
(5,326)
0
0
0
Dividend paid 2015
0
(79,854)
0
0
0
Total comprehensive profit/(loss) for 2015
0
0
0
5,851
0
Total at 31.12.2015
263,923
299,647
61,322
18,759
750
Pursuant
to Consob Resolution 15519 of 27 July 2006, the impact of dealings with
related parties on the Statement of Financial Position,
Income Statement and Cash Flow Statement is explained in the Notes to the Financial Statements.
146 DeA Capital - Annual Financial Statements to 31 December 2015
Reserve
Reserve
for the
Reserve for
for sale of
IDeA AI
actuarial
Profit/(loss)
option rights
merger gains / losses carried forward Profit/(loss)
Total
413
(831)
(31)
(8,585)
(62,866)
630,050
0
0
0
(62,866)
62,866
0
0
0
0
0
0
121
0
0
0
0
0
(3,720)
0
0
(80)
0
(4,519)
28,766
413
(831)
(111)
(71,451)
(4,519)
655,217
0
0
0
(4,519)
4,519
0
0
0
0
0
0
487
0
0
0
9
0
(761)
0
0
0
0
0
(13,029)
0
0
0
0
0
(79,854)
0
0
95
0
(18,900)
(12,954)
413
(831)
(16)
(75,961)
(18,900)
549,106
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
147
NOTES TO THE FINANCIAL
STATEMENTS
FINANCIAL STATEMENTS
FOR THE YEAR ENDING
31 DECEMBER 2015
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
149
Notes to the Financial Statements
Financial Statements for the Year Ending 31 December 2015
A. Structure and content of the Financial Statements
DeA Capital S.p.A. (hereinafter also the Company or the Parent Company or DeA Capital) is a company limited by shares with
its registered office in Via Brera 21, Milan.
Following the merger by incorporation of Luxembourg company DeA Capital Investments S.A. in 2014, a Luxembourg branch
was opened as a secondary office.
The financial statements were prepared in accordance with the general principles of IAS 1, specifically:
- the matching principle: the effect of events and transactions is recorded when they occur, and not when payment is made or
received;
- the going concern principle: the financial statements are prepared under the assumption that business operations will
continue for the foreseeable future. In this regard, the directors have evaluated this assumption with particular scrutiny in
light of the current economic and financial crisis. As indicated in the section “Uncertainties and the management of financial
risks” in the Report on Operations, the directors believe that the risks and uncertainties described therein are not critical in
nature, confirming the financial solidity of the Parent Company, DeA Capital S.p.A.;
- the materiality principle: when reporting operating events in accounting entries, preference is given to the principle of
economic substance over form;
- the accounting comparability principle: annual financial statements must show comparative information for the previous period.
The DeA Capital Financial Statements consist of the Statement of Financial Position, the Income Statement, the Statement
of Comprehensive Income (Statement of Performance - IAS 1), the Cash Flow Statement, the Statement of Changes in
Shareholders’ Equity and the Notes to the Financial Statements.
The Statement of Financial Position provides a breakdown of current and non-current assets and liabilities with separate
reporting for those resulting from discontinued or held-for-sale operations.
In the Income Statement, the Company has adopted the nature of expense method, whereby costs and revenues are classified
based on their nature.
The Cash Flow Statement is prepared using the “direct method”.
Unless
otherwise indicated, all tables and figures included in these Notes to
the Financial Statements are reported in EUR thousand.
As Parent Company, DeA Capital S.p.A. has also prepared the Consolidated Financial Statements for the DeA Capital Group at
31 December 2015.
In addition to the figures at 31 December 2015, the Financial Statement formats used also provide comparable figures for 31
December 2014.
The publication of the draft financial statements for the period ending 31 December 2015 was authorised by resolution of the
Board of Directors dated 09 March 2016.
Statement of compliance with accounting standards
The Financial Statements for the Year Ending 31 December 2015 (2015 financial statements) have been prepared in accordance
with the International Accounting Standards adopted by the European Union and approved by the date the financial statements
were
prepared (International Accounting Standards, or individually IAS/IFRS,
or collectively IFRS (International Financial Reporting
Standards)). IFRS also means all interpretations of the International Financial Reporting Interpretations Committee (IFRIC),
including those previously issued by the Standing Interpretations Committee (SIC), and approved by the European Union.
150 DeA Capital - Notes to the Financial Statements
The financial statements were prepared with a focus on clarity, and provide a true and fair view of the balance sheet, financial
situation, income statement and cash flows for the period.
Accounting standards, amendments and interpretations applied as of 1 January 2015
The IASB-approved international accounting standards and interpretations authorised for adoption in Europe that were applied
for the first time from 1 January 2015 are detailed below.
The Company did not apply any IFRS in advance.
IFRIC 21 - Levies
On 20 May 2013, the IASB published IFRIC Interpretation 21 - Levies, to describe the accounting of levies imposed by the tax
authorities, as well as current taxes. The interpretation deals with the issue of recognising costs that companies must sustain
for tax payments. IFRIC 21 is an interpretation of IAS 37 (Provisions, Contingent Liabilities and Contingent Assets).
IAS 19 (Employee benefits)
On 21 November 2013, the IASB published some minor amendments to IAS 19 (Employee benefits), entitled “Defined benefit
plans: employee contributions”. The amendments simplify the accounting requirements for contributions to defined benefit
plans from employees or, in certain cases, third parties.
Improvements to IFRS - 2010-2012 and 2011-2013 cycles
On 12 December 2013, the IASB issued a set of amendments to the IFRS (“Annual Improvements to IFRS - 2010-
2012 Cycle” and “Annual Improvements to IFRS - 2011-2013 Cycle”). The most important issues dealt with in these
amendments were:
- the changes to the definitions of vesting conditions and market conditions as well as to the definitions of performance
conditions and service conditions (previously included in the definition of vesting conditions) in IFRS 2 (Share-based
payment);
- information on estimates and assessments used in aggregating operating segments in IFRS 8 (Operating segments);
- the identification and disclosure of a transaction with a related party that arises when a management entity provides key
management personnel services to the company that prepares the accounts in IAS 24 (Related party transactions);
- the exclusion of all types of joint arrangements from the scope of application of IFRS 3 (Business combinations).
Future accounting standards, amendments and interpretations
Accounting standards, amendments and interpretations that are not yet applicable and have not
been adopted in advance by the Company, but were approved for adoption in the European Union
as of 28 February 2016
The International Accounting Standards, together with the interpretations and changes to existing IASB-approved accounting
standards and interpretations that were ratified for adoption in the European Union on 28 February 2016, are as follows:
Amendments to IAS 16 (Property, plant and equipment) and to IAS 38 (Intangible assets)
On 12 May 2014, the IASB issued an amendment to IAS 16 (Property, plant and equipment) and to IAS 38 (Intangible
assets). The IASB clarified that the use of revenue-based methods to calculate the depreciation of an asset is not appropriate.
This is because revenue generated by an activity that includes the use of an asset generally reflects factors other than the
consumption of the economic benefits embodied in the asset. The IASB also clarified that revenue is generally not presumed
to be an appropriate basis for measuring the consumption of the economic benefits embodied in an intangible asset. This
presumption, however, can be rebutted in certain limited circumstances.
These amendments are effective for annual periods starting from 1 January 2016.
Amendments to IFRS 11 (Joint arrangements)
On 6 May 2014, the IASB issued some amendments to IFRS 11 (Joint arrangements: accounting for acquisitions of interests in
joint operations) to clarify the accounting requirements for acquisitions in joint operations that constitute a business.
The amendments are applicable retrospectively for annual periods starting from 1 January 2016.
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
151
Amendments to IAS 27 Equity Method in Separate Financial Statements
On 12 August 2014, the IASB issued an amendment - “Equity Method in Separate Financial Statements” - to IAS 27.
The objective of the amendment to IAS 27 is to allow parent companies to use the equity method to account for investments
in associates and joint ventures in the separate financial statements.
The amendments will enter into force from 1 January 2016.
Improvements to IFRS - 2012-2014 cycle
On 25 September 2014, the IASB issued a set of amendments to IFRS (“Annual Improvements to IFRS - 2012-2014 Cycle”).
The most important issues dealt with in these amendments were:
- the amendment that introduces some specific guidance to IFRS 5 for cases in which an entity reclassifies an asset from the
held-for-sale category to the held-for-distribution category (or vice versa), or when the requirements for classifying an asset
as held-for-distribution no longer apply. The amendments specify that these reclassifications should not be considered as a
change to a sales plan or to a distribution plan and that the criteria for classification and valuation remain valid;
- as regards IFRS 7, the amendment covers the introduction of further guidance to clarify whether a servicing contract
constitutes a continuing involvement in a transferred asset for the purposes of transfer disclosure requirements
- the amendment introduced in IAS 19 clarifying that the high-quality corporate bonds used to determine the discount rate for
post-employment benefits should be issued in the same currency in which the benefits are paid;
- the amendments to IAS 34 to clarify the requirements in the event that the information required is presented in the interim
financial report but not in the interim financial statements.
The amendments will enter into force from 1 January 2016.
Amendments to IAS 1 Disclosure Initiative
On 18 December 2014, the IASB issued an amendment - “Disclosure Initiative” - to IAS 1.
The most important issues dealt with in these amendments were:
- clarification that the items on the statement of financial position, the income statement and the statement of comprehensive
income can be disaggregated or aggregated depending on their materiality;
-
clarification that the share of OCI of an associate company or joint
venture is presented as a single item, independently of its
subsequent recycling in the income statement.
The amendment will enter into force from 1 January 2016.
We do not anticipate that any adoption of the standards and interpretations noted above will have a material impact on the
valuation of the Company’s assets, liabilities, costs and revenues.
Accounting principles, amendments and interpretations that are not yet applicable, have not been
adopted in advance by the Company and are not yet approved for adoption in the European Union
as of 28 February 2016
The International Accounting Standards, interpretations and amendments to existing IASB-approved accounting standards and
interpretations that had not been ratified for adoption in the European Union as of 28 February 2016 are as follows:
IFRS 14 (Regulatory Deferral Accounts)
On 30 January 2014, the IASB published IFRS 14 (Regulatory Deferral Accounts), which allows only those adopting the IFRS
for the first time to continue to report amounts relating to rate regulation according to the previously adopted accounting
standards. In order to improve comparability with companies that already apply the IFRS and that do not report these
amounts, the standard requires the effect of rate regulation to be presented separately from other items.
The standard, which is awaiting ratification by the European Commission, will come into force on 1 January 2016.
IFRS 9 (Financial instruments)
On 24 July 2014, the IASB published IFRS 9 - Financial Instruments. The standard, which introduces changes to both the
recognition and the measurement of financial assets and liabilities, and hedge accounting, will fully replace IAS 39 (Financial
instruments: recognition and measurement).
152 DeA Capital - Notes to the Financial Statements
Specifically, the standard contains a model for valuing financial instruments based on three categories: amortised cost, fair
value and fair value with changes recognised in the Statement of Comprehensive Income. It also includes a new impairment
model that is different from the one stipulated in IAS 39, based mainly on the concept of “expected losses”.
The standard, which is awaiting ratification by the European Commission, will come into force on 1 January 2018, but can be
applied in advance.
IFRS 15 (Revenue from contracts with customers)
On 28 May 2014, the IASB issued IFRS 15 (Revenue from contracts with customers). The standard replaces IAS 18 (Revenue),
IAS 11 (Construction contracts), and the interpretations SIC 31, IFRIC 13 and IFRIC 15, and requires revenues reported when
the
control of assets or services is transferred to clients to reflect the
amount that is expected to be received in exchange for
these goods and services.
The new model for reporting revenues has five steps for recognising revenue from contracts with customers:
- identifying contracts with the customer;
- identifying performance obligations, i.e. contractual commitments to transfer goods or services to a customer;
- determining the transaction price;
- allocating transaction prices to performance obligations;
- reporting the revenues when the relevant performance obligation has been fulfilled.
The standard is applicable for annual periods starting after 1 January 2018, and must be fully or partially applied
retrospectively.
Amendments to IFRS 10, IFRS 12 and IAS 28 (Investment Entities - Applying the
Consolidation Exception)
On 18 December 2014, the IASB issued the amendment - “Investment Entities: Applying the Consolidation Exception
(amendments to IFRS 10, IFRS 12 and IAS 28)” with the objective of clarifying issues relating to the consolidation of an
investment entity. More specifically, the amendment to IFRS 10 specifies that a parent company (an intermediate parent,
i.e. not an investment entity) controlled, in turn, by an investment entity, is not obliged to prepare consolidated financial
statements, even if the investment entity measures subsidiaries at fair value, in accordance with IFRS 10. Prior to this
amendment, under IFRS 10, a parent company was not required to present consolidated financial statements provided that its
parent company drafted consolidated financial statements that comply with IFRS. Following this amendment, the exemption
from preparing consolidated financial statements has been extended to intermediate parents, controlled, in turn, by an
investment entity, even if the latter values its subsidiaries at fair value rather than consolidating them.
The standard, which is awaiting ratification by the European Commission, will come into force on 1 January 2016.
Amendments to IFRIC 10 and IAS 28 (Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture)
On 11 September 2014, the IASB published the document “Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture (Amendments to IFRS 10 and IAS 28)”.
The objective of the amendments is to clarify the accounting treatment, both in the event of a parent company losing control
of a subsidiary (governed by IFRS 10) and in the case of downstream transactions (governed by IAS 28), according to whether
or not the object of the transaction is a business, as defined by IFRS 3. If the object of the transaction is a business, then
the full gain must be recognised in both cases, while if the object of the transaction is not a business, then the gain must be
recognised only for the portion relating to minority interests.
On 10 August 2015, the IASB published the exposure draft, “Effective Date of Amendments to IFRS 10 and IAS 28”, in
which it proposed to defer the entry into force of the amendments until such time as any changes that might arise from the
research project into the equity method had been finalised. Any proposed new date for its entry into force will be the subject
of public consultation.
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
153
Amendments to IAS 12
On 19 January 2016, the IASB issued some amendments to IAS 12 (Income taxes).
The document aims to clarify how to account for deferred tax assets relating to debt instruments measured at fair value.
The amendments, which are awaiting ratification by the European Union, will enter into force on 1 January 2017.
Amendments to IAS
On 29 January 2016, the IASB issued some amendments to IAS 7 (Statement of cash flows: disclosure initiative).
The amendments, which are awaiting ratification by the European Union, will enter into force on 1 January 2017.
IFRS 16 - Leases
On 13 January 2016, the IASB issued IFRS 16 (Leases), which replaces the accounting rules contained in IAS 17.
Under the new accounting standard, all lease agreements must be shown as assets or liabilities whether they are financial
leases or operating leases.
IFRS 16 takes effect on 1 January 2019. Companies adopting IFRS 15 in advance may also apply this standard in advance.
The Company will adopt these new standards, amendments and interpretations on the basis of the stipulated date of
application, and will assess their potential impact when they have been ratified by the European Union. At present, we do not
anticipate that any adoption of the standards and interpretations noted above will have a material impact on the valuation of
the Company’s assets, liabilities, costs and revenues.
B. Key accounting principles and valuation criteria
The accounting principles and valuation criteria adopted for the 2015 Annual Financial Statements of DeA Capital are the
same as those used in drawing up the Consolidated Financial Statements, with the exception of specific principles and criteria
relating to the Consolidated Financial Statements and methods for valuing subsidiaries and joint ventures, as specified below.
Investments in subsidiaries and joint ventures are classified as available-for-sale assets and are measured at fair value with
appropriate reserves of shareholders’ equity as a balancing entry.
Current and non-current assets and liabilities
An asset is considered current if it meets at least one of the following conditions:
• it is expected to be converted during a company’s normal operating cycle. The “company’s operating cycle” means the period
from the acquisition of an asset to its conversion to cash and cash equivalents. When the company’s operating cycle cannot
be clearly identified, its duration is assumed to be twelve months;
• it is held mainly for trading purposes;
• its conversion is expected to occur within 12 months of the end of the financial year;
•
it consists of cash and cash equivalents which have no restrictions
that would limit its use in the twelve months after the end
of the financial year.
All other assets are carefully analysed to separate the “current” portion from the “non-current” portion.
Furthermore, deferred tax assets are recorded under non-current components.
A liability is considered current if it meets at least one of the following conditions:
• it is expected to be settled during the company’s normal operating cycle;
• it is held mainly for trading purposes;
• its settlement is expected to occur within 12 months of the end of the financial year;
• the company does not have an unconditional right to defer payment of the liability for at least 12 months after the end of the
financial year.
All other liabilities are carefully analysed to separate the “current” portion from the “non-current” portion.
Furthermore, deferred tax liabilities are recorded under non-current components.
154 DeA Capital - Notes to the Financial Statements
Intangible assets
Intangible assets are those assets with no identifiable physical form that are controlled by the Company and produce future
economic benefits. They are recorded under assets when it is likely that their use will generate future economic benefits and
when their cost can be reliably determined. The above assets are recorded at purchase cost, or at production cost if they are
generated internally.
The purchase cost is represented by the fair value of the price paid to acquire the asset and all other direct costs incurred in
preparing the asset for use.
The carrying value of intangible assets is maintained in the Financial Statements to the extent that there is evidence that this
value can be recovered through use, or if it is likely that these assets will generate future economic benefits.
The useful life of intangible assets is assessed as finite or indefinite.
Intangible assets with an indefinite useful life are tested to check that their value is still appropriate whenever there are
indications of possible impairment, as required by IAS 36 (Impairment of assets). Intangible assets with an indefinite useful
life are not amortised. The useful life of an intangible asset with an indefinite life is reviewed annually to check that the
underlying conditions for the classification continue to apply.
Intangible
assets with a finite useful life are amortised on a straight-line basis
over their expected useful life. The useful life
of these intangible assets is tested to check that their value is still appropriate whenever there are indications of possible
impairment.
Impairment
Impairment always occurs when the carrying value of an asset is greater than its recoverable value. On each reporting
date, a company determines whether there are any indications that an asset may be impaired. If such indications exist, the
recoverable value of the asset is estimated (impairment test) and any write-down is recorded. The recoverable value of an
asset is the higher of its fair value less costs to sell the asset and its value in use.
IAS 36 provides instructions on determining fair value less costs to sell an asset, as follows:
• if there is a binding sales agreement, the asset’s fair value is the negotiated price;
•
if there is no agreement, but the asset is marketed in an active
market, the fair value is the current bid price (thus, the exact
price on the value date and not the average price);
• if no prices can be found in active markets, fair value must be determined based on valuation methods that incorporate
the best information available including any recent transactions involving the same asset, after verifying that there were
no significant changes in the economic environment between the date of the transactions under consideration and the
valuation date.
IAS 36 defines value in use as the present value of future cash flows that an asset is projected to produce. The estimate of the
value in use must include the items listed below:
• an estimate of future cash flows that the company expects to derive from the asset;
• expectations of potential changes in value and the timing of such cash flows;
• the time value of money;
• other factors such as the volatility of the asset’s value and the lack of a liquid market for it.
For more information on determining value in use, please see Appendix A of IAS 36. However, the main elements for
accurately estimating the value in use are: an appropriate calculation of projected cash flows (for which the investee
company’s business plan is essential) and their timing, as well as the application of the right discount rate that accounts for
both the present value of money and the specific risk factors for the asset to be valued.
In all cases, when calculating the value it is important to:
• base cash flow projections on reasonable and sustainable assumptions that provide the best estimate of the economic
conditions that are likely to exist over the remaining useful life of the asset;
• base cash flow projections on the most recent budget/plan approved by the investee company, which, however, must exclude
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
155
any future inflows or outflows of cash that are expected to come from the future restructuring, improvement or optimisation
of operating performance. Projections based on these budgets/plans must cover a maximum period of five years unless a
longer period of time can be justified;
• estimate higher cash flow projections for the period covered by the most recent budgets/plans by extrapolating projections
based on the budgets/plans taken into consideration, and using a stable or declining growth rate for subsequent years
unless a rising rate can be justified. This growth rate must not exceed the average long-term growth rate for production in
the country or countries in which the investee company operates or for markets in which the asset used is placed, unless a
higher rate can be justified.
The assumptions used to determine cash flow projections must be reasonable, and based partly on an analysis of the
factors that generated differences between projections of past and current cash flows. In addition, the assumptions used to
determine current cash flow projections must be checked to ensure that they are consistent with actual past results, unless in
the meantime changes have occurred in the investee company’s business model or in the economic environment in which it
operates that justify changes in respect of the past.
Tangible assets
Tangible assets are acquired at purchase price or production cost adjusted for accumulated depreciation and any impairment.
Their cost includes ancillary costs and direct and indirect costs incurred at the time of purchase necessary to make the asset
usable. The purchase cost is represented by the fair value of the price paid to acquire the asset and all other direct costs
incurred
in preparing the asset for use. Tangible assets are depreciated on a
straight-line basis over their remaining useful life,
using the depreciation rates indicated in the notes on the item relating to similar groups of assets. If factors are discovered
that lead the company to believe that it may be difficult to recover the net carrying value, an impairment test is performed. If
the reasons for the impairment cease to exist, the carrying value of the asset is increased to its recoverable amount.
Financial assets
Based
on the classification of financial assets required by IAS 39, the
Company classified its financial assets at the time of the
transition to International Accounting Standards, and subsequently when individual financial assets were acquired.
The loans and receivables category includes non-derivative financial instruments that are not listed on an active market,
mainly relating to customer receivables, which have fixed or determinable expected payments. These are included in the
current portion except for those due after one year from the balance sheet date, which are classified under the non-current
portion. These assets are measured at fair value on initial recognition. Subsequently they are valued at amortised cost by
applying the effective interest rate method. Where there is objective evidence indicating impairment, the asset concerned is
written down to a carrying value equal to the discounted value of its future cash flows.
Minority interests and investments in funds, which constitute the main, predominant area of the Parent Company’s operations,
are classified under available-for-sale assets, which are recorded at fair value with a balancing item in shareholders’ equity.
IFRS 13.9 provides a “new” definition of fair value. It represents “the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at the measurement date”.
The concept of fair value is characterised by the following features:
1. it is fundamentally related to the free market and the values reflected therein;
2. it is calculated using the exit price as the relevant price;
3. it relates to the date on which the measurement is made;
4.
it relates to an “orderly” transaction, i.e. it is not a forced
transaction, such as a compulsory administrative liquidation or a
sale at below cost.
Assets and liabilities measured at fair value may be:
• stand-alone assets or liabilities (financial or non-financial instruments);
• a group of assets, a group of liabilities or a group of assets and liabilities.
In the case of assets not listed on active markets, such as the company’s direct investments in companies and its investments
in venture capital funds, the fair value reported in the Financial Statements has been determined by the directors based on
their best estimate and judgement, using the knowledge and evidence available when the Financial Statements are prepared.
156 DeA Capital - Notes to the Financial Statements
In these cases, it is provided that:
• if there are recent transactions related to the same financial instrument, these may be used to determine fair value after
verifying that there have been no significant changes in the economic environment between the date of the transactions
being considered and the valuation date;
•
if there are transactions involving similar financial instruments,
these may be used to determine fair value after verifying the
similarity (as a function of the type of business, size, geographic market, etc.) between the instrument for which transactions
have been found and the instrument to be valued;
• if no prices can be found in active markets, fair value must be determined using valuation models that account for all factors
that market participants would consider in setting a price.
However, due to objective difficulties in making assessments and the lack of a liquid market, the values assigned to such
assets could differ, and in some cases significantly, from those that could be obtained when the assets are sold.
Direct investments in companies that are neither subsidiaries nor associates and in venture capital funds are classified as
available-for-sale
financial assets, which are initially reported at fair value on the
date of the original posting. These assets are
measured at fair value when all interim and full-year financial statements are prepared.
Gains and losses from fair value measurement are posted to a special shareholders’ equity reserve called the “fair value
reserve” until the investment is sold or otherwise disposed of, or until impairment occurs, in which cases the gain or loss
previously recorded in the fair value reserve is posted to the income statement for the period.
At each reporting date, a test is performed as to the existence of objective evidence of impairment following one or more
events that have occurred after the initial recording of the asset, and that this event (or events) has an impact on the
estimated cash flow from the financial asset.
For
equity instruments, a significant or prolonged reduction in fair value
below their cost is considered to be objective evidence
of impairment.
Although International Accounting Standards introduced an important reference to quantitative parameters that must be
adhered to, they do not govern quantitative limits to determine when a loss is significant or prolonged.
DeA Capital S.p.A. has adopted an accounting policy that defines these parameters. In particular, “significant” means there
has been an objective reduction in value when fair value is more than 35% below its historical cost. In this case, impairment is
recorded in the income statement without further analysis.
The duration of the reduction in value is deemed to be prolonged when the reduction of fair value below historical cost
continues for a period of over 24 months. After exceeding 24 months, impairment is recorded in the income statement without
further analysis
Trade receivables
If there is objective evidence that a trade receivable has suffered impairment, it must be adjusted down and the loss
posted to the income statement; the write-down is allocated to the item “impairment provisions”, as a direct contra item
to the asset item.
The amount of the write-down must take into account recoverable cash flows, the related collection dates, future recovery
charges and expenses and the discount rate to be applied.
Cash and cash equivalents
Cash and cash equivalents include cash at hand, sight deposits and short-term, highly liquid financial investments that are
readily convertible into cash and subject to a negligible risk of price variation. They are reported at fair value.
Held-for-sale assets
A
non-current asset or disposal group is classified as held for sale if
the carrying value will mainly be recovered from its sale or
disposal
instead of its ongoing use. In order for this to occur, the asset or
disposal group must be available for immediate sale
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
157
in
its current condition, and the sale must be highly likely. Assets
meeting the criteria to be classified as held-for-sale assets
are valued at the lower of carrying value and sales value adjusted for any related costs.
Treasury shares
Treasury shares are not considered financial assets of the company that issued the shares. The purchase and sales value of
treasury shares is recorded as a change to shareholders’ equity. No gain or loss is reported in the income statement for the
sale, purchase, issue or cancellation of treasury shares.
Fair value reserve
The fair value reserve incorporates fair value changes to entries measured at fair value with a balancing entry in shareholders’
equity.
Warrants
Warrants issued by the Company, which do not meet the requirements either for being classified as share-based payments to
employees pursuant to IFRS 2 or as financial liabilities, are treated as Company equity instruments.
Financial liabilities
Financial liabilities comprise loans, trade payables and other payment obligations. These are valued at fair value on initial
recognition and subsequently at amortised cost, applying the effective interest rate method. Where there is a change in the
estimated
future cash flows and these can be reliably estimated, the value of the
payables is recalculated to reflect this change
on the basis of the present value of the new estimated future cash flows and the internal rate of return originally determined.
Provisions for risks and future liabilities
If necessary, the Company records provisions for risks and future liabilities when:
• it has a legal or implicit obligation to third parties resulting from a past event;
• it is likely that it will be necessary to use Company resources to fulfil the obligation;
• a reliable estimate can be made of the amount of the obligation
Provisions are recorded based on the projected value and discounted as necessary to present value if the time value is
considerable. Changes in estimates are recognised in the income statement of the period in which the change occurs.
Revenues and income
Service revenues are recognised at the time the services are rendered based on the progress of the activity on the
reporting date.
Income from equity investments for dividends or for their full or partial sale is reported when the right to receive payment
is determined, with a balancing item (receivable) at the time of the sale or decision to distribute dividends by the entity or
appropriate body.
Interest is reported using the effective interest rate method.
Employee benefits
Short-term employee benefits, whether in cash or in kind (meal vouchers) are reported in the income statement in the period
when work is performed.
Employee benefits related to participation in a defined benefit plan are determined by an independent actuary using the
projected unit credit method.
On 16 June 2011, the IASB published a revised version of IAS 19 “Employee Benefits”. Among other things, this document modified
the accounting rules of defined benefit plans (“Post-employment benefits: defined benefit plans”) and termination benefits.
Specifically:
158 DeA Capital - Notes to the Financial Statements
Specifically:
• For “Post-employment benefits: defined benefit plans”, the option to use the “corridor approach” to account for actuarial
gains and losses was eliminated. These must now be recognised in the Statement of Performance. The resulting
remeasurement effect cannot be recycled through P&L but should be accumulated as a separate account within equity. No
other option is available.
Actuarial gains and losses include profits and losses of a technical nature due to changes in the actuarial assumptions
adopted and/or the fact that experience may differ from the actuarial assumptions adopted (e.g. staff turnover, early
retirement, mortality, change in the discount rate);
• Past service costs and the effects generated by curtailments and/or plan settlement (caused, for example, by a significant
reduction in the number of employees covered by the plan, changes to the plan’s terms and conditions) are recorded
immediately in the income statement under personnel costs;
• The interest cost (resulting from the discounting to present value process) and the expected returns on assets servicing
the plan are replaced by a net interest figure reported in the income statement under financial charges and calculated
by applying a discount rate (based on the high-quality corporate bonds rate at the end of the year) to the balance of the
existing plan at the beginning of the year.
Employee benefits in respect of participation in a defined contribution plan only relate to those plans under mandatory
government administration. The payment of contributions fulfils the Company’s obligation to its employees. Thus, contributions
are costs in the period in which they are due.
Share-based payments
In the Company, benefits were provided in the form of stock options or share-based payments. This applies to all employees
eligible for stock option plans and performance shares.
The cost of these transactions is determined with reference to the fair value of the options on the date allocation is made and
is reported over the period from such date until the expiry date with a balancing entry in shareholders’ equity.
Estimating fair value requires determining the most appropriate valuation model for granting equity instruments, which
therefore depends on the terms and conditions under which these instruments are granted. This also requires the
identification of data to input into the valuation model including assumptions on the expected life of the options, volatility
and the share return.
The cost of stock options for the Company’s directors and employees is determined in the same way.
Income tax
Current income taxes are determined and reported on the basis of a reasonable forecast of tax liability by applying the tax
rates in force to taxable income, taking into account any exemptions and tax credits to which the company may be entitled.
Deferred
tax liabilities are allocated for all temporary differences between the
carrying value of the assets and liabilities and
the corresponding amount for tax purposes.
Deferred tax assets are recorded for all deductible temporary differences and for tax assets and liabilities carried forward to
the
extent that it is likely there will be sufficient future taxable profit
against which the deductible temporary differences and
the tax assets and liabilities carried forward can be used.
Deferred taxes are classified under non-current assets and liabilities and are determined using tax rates expected to be
applicable in the years when the temporary differences will be realized or will expire.
The
carrying values of deferred tax assets are analysed periodically and
reduced if it is not likely that sufficient taxable income
will be generated against which the benefits resulting from such deferred assets can be used.
Earnings per share
In accordance with IAS 33, basic earnings per share is determined as the ratio of net profit for the period attributable to
holders of parent company shares to the weighted average number of shares outstanding during the period. Treasury shares in
the portfolio are, of course, not included in this calculation.
Diluted earnings per share is calculated by adjusting the weighted average number of shares outstanding for all potential
ordinary shares resulting from the potential exercise of assigned stock options, which may therefore result in a diluting
effect.
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
159
C. Changes in accounting principles and the treatment of errors
Accounting principles are changed from one year to another only if the change is dictated by an accounting standard or if it
contributes to providing more reliable information or more complete reporting of the impact of transactions on the company’s
balance sheet, income statement and cash flow.
Changes in accounting principles are applied retrospectively with the impact reflected in shareholders’ equity in the first of
the periods presented. Comparative reporting is adapted accordingly. The prospective approach is used only when it is not
practical to restate comparative reporting. The application of a new or amended accounting standard is recorded as required
by the standard itself. If the standard does not specify transition methods, the change is reflected retrospectively, or if
impractical, prospectively.
If there are significant errors, the same treatment dictated for changes in accounting principles is used. If there are minor
errors, corrections are posted to the income statement in the period when the error is discovered.
The adoption of newly issued IAS principles and of any changes in the existing ones has not had any specific and/or cumulative
effect neither on the determination of the Net Equity/Net Result nor on the Profit per Share.
D. Use of estimates and assumptions in preparing the financial statements
The Company’s management must make assessments, estimates and assumptions that affect the application of accounting
standards and the amounts of assets, liabilities, costs and revenues recorded in the financial statements.
These estimates and assumptions are reviewed regularly. Any changes resulting from revisions to accounting estimates are
recorded in the period when the revision is made if such revision only affects that period. If the revision affects current and
future periods, the change is recorded in the period in which the revision is made and in related future periods.
Financial statement balances are reported and valued using the valuation criteria described above. At times, the application
of these criteria involves the use of estimates that may have a significant impact on amounts reported in the financial
statements. Estimates and related assumptions are based on past experience and factors deemed reasonable in the case
concerned; these are used to estimate the carrying value of assets and liabilities that cannot be easily obtained from other
sources. However, since these are estimates, the results obtained should not necessarily be considered definitive.
With the understanding that the use of reasonable estimates is an essential part of preparing financial statements, the items
where the use of estimates is most prevalent are stated below:
• valuation of financial assets not listed in active markets;
• valuation of financial assets listed in active markets but considered illiquid on the reference market;
• valuation of equity investments.
The process described above is made particularly complicated by the unusual levels of volatility in the current macroeconomic
and market environment, which affect financial indicators that have a bearing on the above valuations.
An estimate may be adjusted as a result of changes in the circumstances on which it was based, or as a result of new
information. Any change in the estimate is applied prospectively and has an impact on the income statement in the period in
which the change occurred and potentially on income statements in future periods.
As highlighted earlier, a significant proportion of the assets shown in the annual financial statements of DeA Capital S.p.A.
is represented by unlisted financial investments. These investments are valued at their fair value, calculated by directors
based on their best estimate and judgement using the knowledge and evidence available at the time the financial
statements are prepared. However, due to objective difficulties in making assessments and the lack of a liquid market,
the values assigned to such assets could differ, perhaps and in some cases significantly, from those that could be obtained
when the assets are sold.
160 DeA Capital - Notes to the Financial Statements
Information on the fair value hierarchy
IFRS 13 stipulates that financial instruments reported at fair value should be classified based on a hierarchy that reflects the
importance and quality of the inputs used in calculating fair value. Three levels have been determined:
• Level 1: includes quoted prices on active markets for assets or liabilities identical to those being valued;
• Level 2: includes observable inputs other than those included in level 1, for example:
- quoted prices on active markets for similar assets and liabilities;
- quoted prices on inactive markets for identical assets and liabilities;
- interest rate curves, implicit volatility, credit spreads;
• Level 3: unobservable data. These input data may be used if no observable input data are available.
IFRS 13 specifies that unobservable input data used to measure fair value must reflect the assumptions used by market
participants when fixing the price for the assets or liabilities being valued.
The table below shows assets valued at fair value by hierarchical level at 31 December 2015:
(EUR m)
Level 1
Level 2
Level 3
Total
Investments in Subsidiaries
0
48.5
173.2
221.7
Investments in Associates
0
4.2
0.0
4.2
Other investments - Available-for-sale
0
76.3
0.2
76.5
Available-for-sale funds
0
141.8
0.0
141.8
Total
0
270.8
173.4
444.1
For level 3, a reconciliation of the opening and closing balances is shown in the table below. Income and expenses posted to the
Income Statement or shareholders’ equity, and purchases and sales made during 2015, are identified separately:
Balance at
Fair value
Balance at
(EUR thousand)
1.1.2015
Increases Decreases Restatements Impairment
adjustment
31.12.2015
Subsidiaries
DeA Capital Real Estate S.p.A.
145,080
0
0
0
(16,741)
0
128,339
IDeA FIMIT SGR S.p.A.
5,939
0
0
0
(727)
(104)
5,108
IDeA Capital Funds SGR S.p.A.
49,910
0
0
0
(10,210)
0
39,700
Associates
Sigla Luxembourg S.A.
11,201
0
0
(11,487)
0
286
0
Other investments
Harvip Investimmenti S.p.A.
184
0
0
0
0
0
184
Total
212,314
0
0
(11,487)
(27,678)
182
173,331
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
161
Valuation techniques and main unobservable input data
Subsidiaries
Valuations of shareholdings and funds in the portfolio reflect estimates made using the information available on the date this
document was prepared.
Equity investments are valued using calculation methodologies based on specific assumptions concerning:
• the growth of future cash flows contingent upon future events that can be assigned probabilities based on historical
experience;
• the level of specific input parameters that are not listed on active markets; in all cases, the prices and spreads observed in
the market are preferred for estimating these.
IDeA FIMIT SGR S.p.A.
The economic value of the subsidiary IDeA FIMIT SGR was estimated with the help of a specific report by an independent
expert. The report was based on the sum of the parts model and calculated the value, defined as the sum of (i) the present
value of dividend flows (DDM method) expected from IDeA FIMIT SGR and (ii) the present value of the carried interest flows
expected from the same company (DCF method), both for the specific period covered by the forecasts (2016-2020) and for
future periods (using a projected terminal value based on normalised cash flows).
A number of assumptions were used in determining these flows, including estimates of future increases in revenues, based on
expected trends in managed assets, EBITDA and net income, or in the case of carried interest, on the basis of the company’s
projections of future returns for the various funds under management.
The valuation was based on a cost of capital of +12.6% plus a terminal value based on growth (“g”) assumptions of +0.75%.
Sensitivity
analysis performed on the most significant variables in terms of
sensitivity to the value of IDeA FIMIT SGR, i.e. the
risk-free rate and the rate of growth (g) used, leads to a potential change in the company’s overall value of EUR -4.3/+4.8
million (for changes of +0.5% and -0.5% in the discount rate) and EUR -2.9/+3.3 million (for changes of -0.5% and +0.5% in
the rate of growth “g”).
DeA Capital Real Estate S.p.A.
The economic value of the subsidiary DeA Capital Real Estate was estimated on the basis of a “sum of the parts” approach
whose key components are represented by the IDeA FIMIT SGR valuation as described in the previous section and the
Innovation Real Estate valuation.
IDeA Capital Funds SGR S.p.A.
The economic value of the subsidiary IDeA Capital Funds SGR was estimated with the help of a specific report by an
independent expert. The report was based on the sum of the parts model and calculated the value, defined as the sum of (i)
the current value of dividend flows (DDM method) expected from IDeA Capital Funds SGR and (ii) the current value of the
carried interest flows expected from the same company (DCF method), the specific period covered by the forecasts (2016-
2018) and for future periods (using a projected terminal value based on normalised cash flows).
A number of assumptions were used in determining these flows, including estimates of future increases in revenues, based on
expected trends in managed assets, EBITDA and net income, or in the case of carried interest, on the basis of IRR projections
made by the company for the various funds under management.
The valuation was based on a cost of capital of between +10.2% and +11.9%, depending on (i) the period of the flows (2016-
2018 or later) and (ii) the nature of these flows (dividends from the asset management company or carried interest from the
managed funds), supplemented by a terminal value based on a growth assumption of +1.0%.
162 DeA Capital - Notes to the Financial Statements
Sensitivity analysis performed on the most significant variables in terms of sensitivity to the recoverable value of IDeA
Capital Funds SGR, i.e. the “risk free” rate and the weighting of the probabilities of achieving the results linked to the new
funds focused on credit recovery (known as CCR) leads to potential variations in the carrying value of EUR -2.7/+1.7 million
(for changes in the risk free rate of +0.5% and -0.5% respectively) and of EUR -4.6 million/+4.7 million (for changes in the
weighting of the probability of results of the CCR funds of -25% and +25% respectively).
Kenan Investments/Migros
The shareholding in Kenan Investments (the indirect parent company of Migros) is recorded in the Consolidated Financial
Statements at 31 December 2015 in the amount of EUR 76.3 million.
The accelerated book building operation, completed on 8 April 2011, brought the company’s total free float to 20.5%. This
increased the significance of stock market prices for the purposes of identifying the fair value of the company.
The valuation of the equity investment in Kenan Investments at 31 December 2015 is based on (i) the equity value of Migros,
(ii) an updated view of net debt at the various levels of the Company’s control structure (Kenan Investments, Moonlight
Capital, MH) and (iii) the TRY/EUR exchange rate (3.17 at 31 December 2015).
Venture capital funds, funds of funds, co-investment fund, theme funds
Valuations of shareholdings and funds in the portfolio reflect estimates made using the information available on the date this
document was prepared.
With regard to funds, at 31 December 2015, the DeA Capital Group held units in:
• six venture capital funds (with a total value of approximately EUR 9.7 million).
• IDeA I FoF (valued at EUR 77.2 million);
• ICF II (valued at EUR 41.7 million);
• ICF III (valued at EUR 4.8 million);
• IDeA EESS (valued at EUR 7.3 million);
• IDeA ToI (valued at EUR 1.1 million);
• Atlantic Value Added (valued at EUR 4.2 million).
As
regards the venture capital funds, their fair value is based on their
net asset value calculated according to the international
valuation rules.
The carrying value represents the NAV advised by the management company in its annual report for the year ending 31
December 2015, drafted in accordance with the Bank of Italy’s regulation of 19 January 2015 on collective asset management.
DEA CAPITAL - ANNUAL FINANCIAL STATEMENTS TO 31 DECEMBER 2015
163
Notes to the balance sheet
NON-CURRENT ASSETS
1 - Intangible and tangible assets
1a - Intangible assets
Changes in intangible assets are shown in the tables below:
Cum.amort.
Net
Cum. amort.
Net
Historical
& write-
carrying
Historical ù
& write-
carrying
cost at
downs at
value at
cost at
downs at
value at
(EUR thousand)
1.1.2015
1.1.2015
1.1.2015
31.12.2015
31.12.2015
31.12.2015
Concessions, licences and trademarks
330
(316)
14
344
(329)
15
Total
330
(316)
14
344
(329)
15
Balance at
Disposals
Balance at
(EUR thousand)
1.1.2015
Acquisitions Disposals
(provision)
Amort.
31.12.2015
Concessions, licences and trademarks
14
14
0
0
(13)
15
Total
14
14
0
0
(13)
15
The increase in “Concessions, licences and trademarks” relates to the acquisition of new software licences, the cost of which
will be amortised over three years.
1b - Tangible assets
Changes in tangible assets are shown in the tables below:
Cum. depr.
Net
Cum. depr.
Net
Historical
& write-
carrying
Historical
& write-
carrying
cost at
downs at
value at
cost at
downs at
value at
(EUR thousand)
1.1.2015
1.1.2015
1.1.2015
31.12.2015
31.12.2015
31.12.2015
Plant
7
(6)
1
7
(6)
1
Furniture and fixtures
418
(309)
109
418
(348)
70
Computer and office equipment
59
(53)
6
63
(53)
10
Leasehold improvements
663
(212)
451
663
(312)
351
Non-depreciable tangible assets
20
0
20
37
0
37
Total
1,167
(580)
587
1,188
(719)
469
Balance at
Disposals
Disposals
Balance at
(EUR thousand)
1.1.2015
Acquisitions
(at cost)
(provision)
Depr.
31.12.2015
Plant
1
0
0
0
0
1
Furniture and fixtures
109
2
(2)
2
(41)
70
Computer and office equipment
6
13
(9)
8
(8)
10
Leasehold improvements
451
0
0
0
(100)
351
Non-depreciable tangible assets
20
17
0
0
0
37
Total
587
32
(11)
10
(149)
469
Depreciation is calculated on a straight-line basis, according to the estimated useful life of the asset.
The depreciation rates used in the financial statements are:
• specific equipment 20%;
• furniture and furnishings 12%;
• computer and office equipment 20%;
• leasehold improvements 15%.
164 DeA Capital - Notes to the Financial Statements
2 - Financial investments
2a - Investments in subsidiaries
Investments in subsidiaries are measured at fair value in accordance with IAS 27 and IFRS 13.
Details of the existing investments at 31 December 2015 are shown in the table below.
%
shareholding
Value at
% shareholding
Value at
(EUR thousand)
at 31.12.15
31.12.15
at 31.12.14
31.12.14
DeA Capital Real Estate S.p.A.
100.00%
128,339
100.00%
145,080
IDeA Opportunity Fund I
46.99%
48,534
46.99%
55,971
IDeA FIMIT SGR S.p.A.
3.00%
5,108
3.00%
5,939
IDeA Capital Funds SGR S.p.A.
100.00%
39,700
100.00%
49,910
Total
221,681
256,900
The changes in the item in question at 31 December 2015 compared with end-2014 are detailed below, separately by asset.
DeA Capital Real Estate S.p.A.
The fair value measurement of the equity investment at 31 December 2015, which was based on the documents received and
the information available, resulted in a decrease in fair value of EUR 16,741 thousand. This led to the creation of a negative
fair value reserve totalling EUR 42,442 thousand. The negative fair value reserve, which was maintained for 24 months, was
eliminated and an impairment of EUR 42,442 thousand was recorded for the investment.
In view of the calculation of the fair value of DeA Capital Real Estate S.p.A. using the sum of the parts model (including, in
particular, the value of the investments held in IDeA FIMIT SGR S.p.A., Innovation Real Estate S.p.A. and IDeA Real Estate
SIIQ S.p.A., and the value of the intangible assets connected with the variable fees of the funds managed by said asset
management company), the write-down is largely the result of adjusting the fair value of the subsidiary IDeA FIMIT SGR
S.p.A. to EUR 170.3 million (compared with a fair value of EUR 197.8 million reflected in the valuation of DeA Capital Real
Estate S.p.A. at 31 December 2014).
The valuation of IDeA FIMIT SGR S.p.A. described above, was carried out, in turn, using the sum of the parts model by
determining the value in use, calculated as the sum of (i) the present value of dividend flows (DDM method) expected from
IDeA FIMIT S.p.A. and (ii) the present value of the carried interest flows expected from the same company (DCF method),
both for the specific period covered by the forecasts (2016-2020) and for those in future (using a projected terminal value
based on normalised cash flows).
A number of assumptions were used in determining these flows, including estimates of future increases in revenues, based on
expected trends in managed assets, EBITDA and net income, or in the case of carried interest, on the basis of the company’s
projections of future returns for the various funds under management.
The valuation was based on a cost of capital of 12.6% plus a terminal value based on growth (“g”) assumptions of +0.75%.
IDeA Opportunity Fund I (IDeA OF I)
The units in IDeA OF I are valued at around EUR 48,534 thousand in the financial statements to 31 December 2015. The
change in the carrying value compared with 31 December 2014 was due to contributions made for capital calls totalling EUR
+1,852 thousand, capital reimbursements of EUR -16,992 thousand and a net increase in fair value of around EUR +7,703
thousand.
The fair value of the Fund is represented by the NAV reported in the IDeA OF I Annual Report as at 31 December 2015,
according to Banca d’Italia regulation as of 19 January 2015 relating to collective asset management.
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
165
IDeA FIMIT SGR S.p.A.
The fair value measurement of the equity investment at 31 December 2015, which was based on the documents received
and the information available, using the approach described above, necessitated a write-down of EUR 727 thousand for the
investee company.
IDeA Capital Funds SGR S.p.A.
The fair value measurement of the equity investment at 31 December 2015, which was based on the documents received and
the information available, made it necessary to record impairment of EUR 10,210 thousand for the investee company.
The calculation of the fair value of IDeA Capital Funds SGR S.p.A. was carried out, in turn, using the sum of the parts model
by determining the value in use, calculated as the sum of (i) the present value of dividend flows (DDM method) expected from
IDeA Capital Funds SGR S.p.A. and (ii) the present value of the carried interest flows expected from funds managed by the
same company (DCF method), both for the specific period covered by the forecasts (2016-2018) and for those in future (using
a projected terminal value based on normalised cash flows).
A number of assumptions were used in determining these flows, including estimates of future increases in revenues, based on
expected trends in managed assets, EBITDA and net income, or in the case of carried interest, on the basis of IRR projections
made by the company for the various funds under management.
The valuation was based on a cost of capital of between 10.2% and 11.9%, depending on (i) the period of the flows (2016-
2018 or later) and (ii) the nature of these flows (dividends from the asset management company or carried interest from the
managed funds), supplemented by a terminal value based on a growth assumption of 1.0%.
A
list of the equity investments with the information required under art.
2427 of the Italian Civil Code is shown in the table below:
Consolidated
Consolidated
net profit/
Share of
Carrying
Registered
Share shareholders’
(loss)
%
shareholders'
value
Company
office Currency
capital
equity for the year
holding equity (EUR)
(EUR)
DeA Capital Real
Estate S.p.A.
Milan, Italy
IDeA Opportunity
Fund I
Milan, Italy
Euro 126,638,440
103,291,382
27,931,709
46,99%
48,533,355
48,533,355
IDeA FIMIT SGR
S.p.A.
Rome, Italy
Euro
16,757,557
205,260,975
7,604,895
3,00%
6,157,829
5,108,253
IDeA Capital Funds
SGR S.p.A.
Milan, Italy
Euro
1,200,000
6,355,257
4,267,987
100,00%
6,355,257
39,700,000
Total
42,849,906
123,158,407
221,680,803
2b - Investments in associated companies and funds
At 31 December 2015, this item totalled EUR 4,203 thousand, as shown in the following table:
Balance
Impairment
at
Capital
Fair value
on income
Balance at
(EUR thousand)
1.1.2015
increases
adjustment statement Reclassification
31.12.2015
Sigla Luxembourg S.A.
11,201
0
286
0
(11,487)
0
Atlantic Value Added
3,020
1,470
(287)
0
0
4,203
Total
14,221
1,470
(1)
0
(11,487)
4,203
166 DeA Capital - Notes to the Financial Statements
The changes in the item under review at 31 December 2015 compared with end-2014 relate to:
• an increase of EUR 1,470 in the units of Atlantic Value Added due to the capital calls paid during the year;
• the fair value measurement of associated companies resulting in an increase of EUR +286 thousand for Sigla Luxembourg
S.A. and a decrease of EUR -287 thousand for Atlantic Value Added;
• the reclassification of the investment in Sigla Luxembourg S.A. under ” Held-for-sale assets” in light of the launch, in the
fourth quarter of 2015, of a process to sell the shareholding.
2c - Investments in other companies
This item, which totalled EUR 76,464 thousand at 31 December 2015, includes the investments in Kenan Investments S.A. and
Harvip Investimenti S.p.A., as shown in the following table.
Balance at
Fair value
Impairment on
Balance at
(EUR thousand)
1.1.2015
Distribution
adjustment income statement
31.12.2015
Kenan Investments S.A.
209,136
(91,218)
(41,638)
0
76,280
Harvip Investimenti S.p.A.
184
0
0
0
184
Total
209,320
(91,218)
(41,638)
0
76,464
Note that the Company is also a shareholder in other smaller companies with a carrying value of zero, as said companies are
in liquidation or dormant.
The changes in the item under review at 31 December 2015 compared with end-2014 relate to:
• a decrease of EUR 91,218 thousand in the equity investment in Kenan Investments S.A., due to the partial sale of the stake
for a price of EUR 107,687 thousand;
• the measurement at fair value of Kenan Investments S.A., the value of which fell by EUR 41,638 thousand (of which EUR
16,452 thousand related to the conversion - due to the partial sale of Migros - of the pre-existing reserves).
2d - Available - for-sale funds
This item relates to investments in six venture capital funds totalling EUR 9,673 thousand, compared with EUR 9,580 thousand
at the end of 2014, and five closed-end mutual investment funds in an amount of EUR 132,130 thousand compared with EUR
134,804 thousand at end-2014, as shown in the table below.
Impairment
Decreases
and related
Balance at
Increases
(capital
exchange
Fair value
Translation
Balance at
(EUR thousand)
1.1.2015
(capital call) distribution)
effect
adjustment
effect
31.12.2015
Total venture capital funds
9,580
0
(570)
(326)
388
601
9,673
Closed-end mutual investment
funds
134,804
16,645
(37,636)
(152)
18,469
0
132,130
Total funds
144,384
16,645
(38,206)
(478)
18,857
601
141,803
During 2015, the Company received income distributions of EUR 1,425 thousand and capital reimbursements of EUR 38,206
thousand.
Venture capital funds
The fair value measurement of investments in venture capital funds at 31 December 2015, carried out based on the
information and documents received from the funds, as well as other available information, meant that the amount had to
be written down along with the related exchange effect by EUR 326 thousand; the significant reduction to below cost was
considered clear evidence of impairment.
The other changes were for the increase in fair value (and related exchange effect) of EUR 989 thousand.
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
167
Closed-end mutual investment funds
The units in closed-end mutual investment funds relate to:
• units in IDeA I FoF, which are valued at around EUR 77,217 thousand in the Financial Statements for the Year Ending 31
December 2015. The change in the carrying value compared with 31 December 2014 was due to contributions made for
capital calls totalling EUR +6,020 thousand, capital reimbursements of EUR -31,299 thousand and a net increase in fair value
of around EUR +9,020 thousand.
• units in ICF II, which are valued at around EUR 41,710 thousand in the Consolidated Financial Statements for the Year
Ending 31 December 2015. The change in the carrying value compared with 31 December 2014 was due to contributions
made for capital calls totalling EUR 2,494 thousand, capital reimbursements of EUR -4,724 thousand and a net increase in
fair value of around EUR +8,686 thousand.
• units in IDeA EESS, which are valued at around EUR 7,312 thousand in the Consolidated Financial Statements for the Year
Ending 31 December 2015. The change in the carrying value compared with 31 December 2014 was due to the combined
effect of contributions made for capital calls totalling EUR 3,984 thousand, capital reimbursements of EUR -1,613 thousand,
impairment of around EUR -152 thousand, and a net increase in fair value of around EUR +763 thousand.
• units in ICF III, which are valued at around EUR 4,817 thousand in the Consolidated Financial Statements for the Year Ending
31 December 2015. The change in the carrying value compared with 31 December 2014 was due mainly to contributions
made for capital calls totalling EUR 2,735 thousand and a net increase in fair value of around EUR +342 thousand.
• units in IDeA ToI, which are valued at around EUR 1,074 thousand in the Consolidated Financial Statements for the
Year Ending 31 December 2015. The change in the carrying value compared with 31 December 2014 was due mainly
to contributions made for capital calls totalling EUR 1,412 thousand and a net decrease in fair value of around EUR 342
thousand.
3 - Other non-current assets
3a - Deferred tax assets
Deferred tax assets of EUR 15,960 thousand were fully offset against deferred tax liabilities.
The changes in deferred tax assets and deferred tax liabilities are shown in the table below:
Recognised
Balance at
in income Recognised in
Balance at
(EUR thousand)
1.1.2015
statement
equity
31.12.2015
Losses carried forward available for offset against
future taxable profits
8,402
7,558
0
15,960
Total deferred tax assets
8,402
7,558
0
15,960
Deferred tax liabilities for:
- available-for-sale financial assets
(8,402)
0
(7,558)
(15,960)
Total deferred tax liabilities
(8,402)
0
(7,558)
(15,960)
Total deferred tax assets, net of deferred tax
liabilities
0
7,558
(7,558)
0
No deferred tax assets were allocated against the significant tax losses of DeA Capital S.p.A. of around EUR 108,074 thousand,
which are fully usable, and about EUR 879 thousand, which are usable on a limited basis; the entire amount cannot be
transferred to the tax consolidation scheme. This was because there was insufficient information for the group to believe that
taxable income would be generated in future periods against which such tax losses could be recovered.
Deferred taxes were calculated using the liability method based on the temporary differences at the reporting date between
the tax amounts used as a reference for the assets and liabilities and the amounts reported in the financial statements.
168 DeA Capital - Notes to the Financial Statements
4 - Current assets
At 31 December 2015, current assets were approximately EUR 95,112 thousand compared with EUR 43,955 thousand at 31
December 2014.
4a - Trade receivables
This item totalled EUR 140 thousand (EUR 557 thousand at 31 December 2014) and relates to:
- EUR 69 thousand from De Agostini S.p.A. for the agreement to sub-let rented premises and the reimbursement of costs
associated with said agreement, and the pro rata reimbursement for improvements to leased assets incurred for the building
at Via Brera, 21;
- EUR 4 thousand from DeA Innovation Real Estate S.p.A. (IRE), EUR 41 thousand from IDeA FIMIT SGR S.p.A, EUR 24
thousand from IDeA Capital Funds SGR S.p.A., EUR 1 thousand from De Agostini Publishing Italia S.p.A., EUR 1 thousand from
Lottomatica S.p.A. for the pro rata reimbursement for improvements to leased assets incurred for the building at Via Brera, 21.
These receivables break down by region as follows:
- 49.31% from Italian parent companies;
- 49.20% from Italian subsidiaries;
- 1.49% from Italian affiliates.
4b - Financial receivables
This item totalled EUR 3,467 thousand at 31 December 2015 (EUR 1,710 thousand at 31 December 2014) and relates to:
• an amount of EUR 3,455 thousand disbursed under a revolving credit line of up to EUR 5 million in favour of Sigla S.r.l. (a
wholly-owned subsidiary of investee company Sigla Luxembourg S.A. which focuses on the sale of salary-backed loans). The
line is secured by a lien on 51% of the financed company’s shares and signed on 26 September 2014;
•
EUR 12 thousand for interest accrued but not yet paid on this revolving
credit line (variable rate of 1-month Euribor + spread).
4c - Tax receivables relating to the tax consolidation scheme due from parent companies
This item, totalling EUR 1,263 thousand at 31 December 2015 (EUR 2,783 thousand at 31 December 2014) relates to the
receivable
from the Parent Company De Agostini S.p.A. (previously B&D Holding
di Marco Drago e C. S.a.p.A.) for participation
in the tax consolidation scheme.
4d - VAT receivables from parent companies
This item, totalling EUR 739 thousand, relates to the receivable relating to December 2015 from the Parent Company De
Agostini S.p.A. (previously B&D Holding di Marco Drago e C. S.a.p.A.) for its part in settling Group VAT.
4e - Other tax receivables
This item, totalling EUR 617 thousand (EUR 289 thousand at 31 December 2014), relates to:
- tax deductions in the form of advance payments on interest of EUR 78 thousand;
- a receivable arising from an application for an IRES refund due to the non-deduction of IRAP relating to personnel costs for
2010-2011, for EUR 94 thousand;
- advance payments made in relation to foreign direct and indirect taxes in Luxembourg for EUR 12 thousand;
- a payment of EUR 433 thousand arising from tax inspections for the tax periods 2009-2010 recorded for IDeA Alternative
Investments S.p.A. (a company merged by incorporation into DeA Capital S.p.A. with effect from 1 January 2012), against
which the Company has filed an appeal.
4f - Other receivables
These receivables, totalling EUR 497 thousand (EUR 539 thousand at 31 December 2014), relate mainly to prepaid expenses,
receivables for guarantee deposits and advances to suppliers.
These receivables fall due within the next year.
4g - Cash and cash equivalents
Cash and cash equivalents consist of bank deposits and cash (EUR 6 thousand), including interest accrued at 31 December
2015. This item totalled EUR 88,388 thousand at end-2015 compared with EUR 37,962 thousand at end-2014.
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
169
This increase is primarily due to the combined effect of the following factors:
- receipt of dividends of EUR 1,800 thousand from DeA Capital Real Estate S.p.A., EUR 217 thousand from IDeA FIMIT SGR
S.p.A. and EUR 3,500 thousand from IDeA Capital Funds SGR S.p.A.
- payment of dividends to third parties of EUR 79,848 thousand;
- receipt of EUR +36,659 thousand for pay-outs from available-for-sale funds excluding capital calls paid
- receipt of EUR 2,929 thousand in remuneration for losses transferred to Parent Company De Agostini S.p.A. (formerly B&D
Holding di Marco Drago e C. S.a.p.A.) for participation in the tax consolidation scheme;
- payment of taxes of EUR 434 thousand;
- receipt of EUR 107,670 thousand from the partial sale of the shareholding in Kenan Investments S.A.;
- bank interest and commission of EUR 493 thousand in relation to the credit lines taken out with Mediobanca and Intesa
SanPaolo S.p.A.;
- service expenses net of reimbursements to parent companies and associates, of EUR 7,119 thousand;
- the purchase of treasury shares in the amount of EUR 13,030 thousand;
- an outlay of EUR 1,741 thousand for the credit line granted to Sigla S.r.l., a wholly-owned subsidiary of investee company
Sigla Luxembourg S.A.
Please see the Company’s Cash Flow Statement for further information on changes to this item.
5 - Held-for-sale assets
In
light of the launch, in the fourth quarter of 2015, of a process to
sell the holding in Sigla Luxembourg S.A., the value of the
stake, of EUR 11,487 thousand was reclassified under “held-for-sale assets” at 31 December 2015.
6 - Shareholders’ equity
At 31 December 2015, shareholders’ equity totalled approximately EUR 549,106 thousand, compared with EUR 655,217
thousand at 31 December 2014.
The increase of around EUR -106,111 thousand in shareholders’ equity in 2015 was mainly due to:
- an increase of EUR +5,850 thousand in the fair value reserve;
- the purchase of treasury shares in the amount of EUR 13,029 thousand;
- the distribution of a dividend of EUR -79,854 thousand;
- the loss of EUR 18,900 thousand for the period.
Please see the Statement of Changes in Shareholders’ Equity for more information on the main changes in this item.
6a - Share capital
The share capital (fully subscribed and paid up) totalled EUR 306,612,100, represented by 306,612,100 shares (of which
42,688,945 treasury shares) with a nominal value of EUR 1 each.
Given that the nominal value of the 42,688,945 treasury shares held at 31 December 2015 is deducted from total share
capital, share capital of EUR 263,923,155 was reported in the Financial Statements.
Changes in share capital are shown in the table below:
31.12.2015
31.12.2014
(EUR thousand)
No. of shares
amount No. of shares
amount
Share capital
306,612,100
306,612
306,612,100
306,612
of which: Own shares
(42,688,945)
(42,689)
(34,985,736)
(34,986)
Share capital (excluding own shares)
263,923,155
263,923
271,626,364
271,626
170 DeA Capital - Notes to the Financial Statements
The table below shows a reconciliation of the shares outstanding:
Shares
Own shares in
Shares
(EUR thousand)
issued
portfolio
in issue
Shares at 31 December 2014
306,612,100
(34,985,736)
271,626,364
Changes in 2015
Share capital increase
0
0
0
Own shares purchased
0
(7,703,209)
(7,703,209)
Own shares sold
0
0
0
Own shares disposed of
0
0
0
Used for stock options plan
0
0
0
Shares issued for stock options
0
0
0
Shares at 31 December 2015
306,612,100
(42,688,945)
263,923,155
6b - Share premium reserve (net of share issue costs reserve)
This item decreased by EUR 85,180 thousand (from EUR 384,827 thousand at 31 December 2014 to EUR 299,647 thousand at
31 December 2015) after using it for the distribution of dividends (EUR -79,854 thousand) and the purchase of treasury shares
(EUR -5,326 thousand).
6c - Legal reserve
This reserve totalled EUR 61,322 thousand, which was unchanged from the figure at 31 December 2014.
6d - Fair value reserve
The fair value reserve is positive at EUR 18,759 thousand (compared with EUR 12,908 thousand at 31 December 2014) and
comprises:
- the reserve for first-time adoption of IAS/IFRS, which has a negative balance of EUR 3,745 thousand (unchanged from 31
December 2014);
- a positive fair value reserve of EUR 22,504 thousand compared with a positive value of EUR 16,653 thousand at 31
December 2014.
The table below shows a summary of the changes in this item during the year:
Use of fair value
Balance at
reserve for
Fair value
Balance at
(EUR thousand)
1.1.2015
impairment
adjustment
Tax effect
31.12.2015
Direct investments/equity
investments
(5,015)
25,702
(39,165)
28
(18,450)
Venture capital
1,576
0
989
(282)
2,283
Closed-end mutual
investment funds
20,092
0
25,884
(7,305)
38,671
Reserve for IFRS first-time
adoption to other reserves
(3,745)
0
0
0
(3,745)
Total
12,908
25,702
(12,292)
(7,559)
18,759
With reference to the fair value reserve relating to the Direct Investments/Shareholdings the reserve as of the beginning of the
period, equivalent to EUR -5,015 thousand, was mainly related to the negative reserves connected to the shareholding in DeA
Capital Real Estate (EUR -25,701 thousand) and to the positive reserves connected to the shareholding in Kenan Investments
(EUR +20,611 thousand). In 2015 the former reserves have been impaired, the latter have been in part realized with a P&L
impact (following the partial disposal of Migros by Kenan Investments and the subsequent reimbursement of capital by Kenan
Investments itself) and in part decreased due to the fair value changes occurred to the Kenan Investments valuation.
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
171
6e - Other reserves
Other reserves, totalling EUR 317 thousand, comprise:
- a reserve for stock option costs totalling EUR +750 thousand;
- a reserve for the merger of the subsidiary IDeA Alternative Investments S.p.A. totalling EUR -831 thousand;
- a reserve for actuarial gains/losses on the end-of-service payment fund of EUR -15 thousand;
- a reserve for the sale of option rights, unchanged from 31 December 2014, totalling EUR +413 thousand. This originated
from the sale of the remaining option rights to subscribe to a capital increase that had not been exercised by the
shareholders, and were sold by the Company.
6f - Retained earnings (losses) carried forward
This item totalled EUR -75,961 thousand and includes profits/losses carried forward from previous periods.
6g - Profit/(loss) for the year
This item includes a loss of EUR 18,900 thousand for the year 2015, compared with a loss of EUR 4,519 thousand for 2014.
Art. 2427, para. 1, 7-bis of the Italian Civil Code: details of shareholders’ equity items
The table below shows a breakdown of shareholders’ equity at 31 December 2015, with details of the origin of the items, their
potential uses and whether or not they can be distributed, and their use in previous years:
Summary of use in the three
previous years
Description
Amount
to cover
for other
(in EUR)
Amount Potential use
available
losses
reasons
Share capital
263,923,155
=
=
Share capital reserve:
Share premium reserve
307,474,691
A,B,C
307,474,691
=
=
Profit reserves:
Legal reserve
61,322,420
B
=
=
=
Reserve for costs relating to share issue
(7,828,172)
=
=
=
=
Stock options reserve
750,121
=
=
=
=
Reserve for sale of option rights
412,798
=
=
=
=
Merger reserve
(831,486)
=
=
=
=
Fair value reserves
18,758,957
=
=
=
=
Reserve for actuarial gains / losses
(15,024)
=
=
=
=
Earnings (losses) carried forward
(75,961,631)
A,B,C
=
=
=
Profit (loss) for the year
(18,899,586)
=
=
=
=
TOTAL
549,106,243
307,474,691
Key: A = capital increase, B = to cover loss, C = distribution to shareholders
7 - Non-current liabilities
7a - End-of-service payment fund
The end-of-service payment fund is a defined benefit plan, and has therefore been valued using actuarial assessments. The
assumptions used in calculating the fund were: a discount rate of 2.03%; an annual rate of inflation of 1.75%; annual salary
growth of 2.75%; and an annual fund growth rate of 2.81%.
Changes in the end-of-service payment fund were as follows:
Balance at
Portion
Balance at
(EUR thousand)
1.1.2015
accrued
Payments
Advances
31.12.2015
Change in end-of-service payment fund
559
1
(274)
0
286
172 DeA Capital - Notes to the Financial Statements
The amounts concerned were calculated as follows:
(EUR thousand)
31.12.2015
31.12.2014
Nominal value of end-of-service payment fund
351
468
Discounting effect
(65)
91
Current value of end-of-service payment fund
286
559
7b - Other payables
This item was reduced to zero at 31 December 2015 (EUR 11,396 thousand at 31 December 2014) due to the reversal of
the carried interest to be paid to the lead investor in Kenan, BC Partners, subject to the achievement of certain profitability
parameters.
8 - Current liabilities
Total current liabilities amounted to EUR 1,842 thousand (EUR 2,753 thousand at 31 December 2014) and are all due within
the following year. These payables are not secured on any company assets.
These liabilities are made up of the items detailed below:
8a - Trade payables
This item totalled EUR 1,200 thousand, compared with EUR 1,325 thousand in the previous year, and stems from ordinary
operations.
Payables in respect of related parties include:
- payables to affiliate De Agostini Editore S.p.A. of approximately EUR 46 thousand;
- payables to affiliate De Agostini Invest S.A. of approximately EUR 25 thousand;
- payables to affiliate De Agostini Libri S.p.A. of approximately EUR 2 thousand;
- payables to the Parent Company IDeA FIMIT SGR S.p.A. of approximately EUR 9 thousand.
A breakdown of these payables by region is set out below:
- 91.39% due to suppliers in Italy;
- 6.12% due to suppliers in respect of affiliates in Italy;
- 0.76% due to suppliers in respect of subsidiaries in Italy;
- 0.67% due to suppliers in Germany;
- 0.48% due to suppliers in Luxembourg;
- 0.46% due to suppliers in the US;
- 0.12% due to suppliers in the UK.
Trade payables do not accrue interest and are settled, on average, within 30 to 60 days.
8b - Payables to staff and social security organisations
This item amounted to EUR 371 thousand (EUR 829 thousand at 31 December 2014) and breaks down as follows:
- EUR 143 thousand for payables to social security organisations, paid after the end of financial year 2015;
- EUR 228 thousand for payables to staff for holidays not taken, and accrued bonuses.
8c - Tax payables to subsidiaries
This item, which amounts to EUR 64 thousand (unchanged on 31 December 2014), relates to the payable to subsidiary
IDeA Capital Funds SGR S.p.A. regarding the application for an IRES refund due to the non-deduction of IRAP in respect of
personnel costs for 2010/2011.
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
173
8e - Other tax payables
This item amounted to EUR 199 thousand (EUR 184 thousand at 31 December 2014) and consists of payables to the tax
authorities in respect of taxes deducted from the income of employees and self-employed staff.
8f - Other payables
This item amounted to EUR 9 thousand (EUR 11 thousand at 31 December 2014) and mainly consists of a payable of EUR 5
thousand for dividends not yet paid.
Contingent liabilities
IAS 37 defines a contingent liability as a possible obligation arising from past events and whose existence will be confirmed
only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity.
Companies must not recognise contingent liabilities, but should still disclose them.
On 17 December 2014, DeA Capital S.p.A. received an assessment notice for the 2009 tax year of IDeA Alternative
Investments S.p.A., a company which was merged into DeA Capital S.p.A. with effect from 1 January 2012. The assessment,
which alleged that revenues had been under-reported, was challenged in an appeal by DeA Capital before the Milan Provincial
Tax Court. An adverse outcome, which is possible but not likely, could result in taxes and penalties totalling EUR 0.7 million.
Subsequently, on 10 November 2015, DeA Capital S.p.A. received another assessment notice for IDeA Alternative Investments
S.p.A. relating to the 2010 tax period. The assessment alleged that revenues had been under-reported and that merger costs
had been improperly deducted. The assessment was challenged in an appeal by DeA Capital before the Milan Provincial Tax
Court.
In the event of an adverse outcome, which is possible but not likely,
DeA Capital could face liabilities consisting of taxes
and fines totalling EUR 1.5 million.
174 DeA Capital - Notes to the Financial Statements
Notes to the Income Statement
9 - Revenues and income
9a - Investment income and expenses
Net expenses arising from investments totalled EUR 30,601 thousand in 2015 (compared with EUR 3,641 thousand in 2014).
Details of this item are shown below:
Financial year
Financial year
(EUR thousand)
2015
2014
Dividends from subsidiaries and other income
5,517
190,477
Income from available-for-sale funds - Kenan Investments S.A.
16,452
0
Capital gains on disposals
1,425
298
Investment income
23,394
190,775
Impairment IDeA Capital Fund SGR S.p.A
10,210
1,903
Impairment IDeA FIMIT SGR S.p.A
727
0
Impairment DeA Capital Investments S.A.
0
190,246
Impairment Sigla Luxembourg S.A.
0
884
Impairment DeA Real Estate S.p.A.
42,442
0
Impairment venture capital funds
464
385
Impairment closed-end mutual investment funds
152
933
Capital losses on Soprarno SGR S.p.A. disposal
0
65
Investment charges
53,995
194,416
Total
(30,601)
(3,641)
Dividends from associates and other income
The item comprises dividends paid out by:
- IDeA Capital Funds SGR S.p.A., in the amount of EUR 3,500 thousand;
- DeA Capital Real Estate S.p.A., in the amount of EUR 1,800 thousand;
- IDeA FIMIT SGR S.p.A., in the amount of EUR 217 thousand;
Available-for-sale investments in other companies
This item totalled EUR 17,878 thousand (EUR 298 thousand in 2014) and comprises gains from distributions of venture capital
funds totalling EUR 1,425 thousand and an amount of EUR 16,452 thousand stemming from the partial sale of Migros by
Kenan Investments S.A.
Impairment of available-for-sale equity interests and funds
The fair value measurement of investments in funds at 31 December 2015, based on the documents received and the
information available, made it necessary to record:
• impairment of EUR 326 thousand directly on the investments;
• impairment of EUR 138 thousand as a reclassification to profit or loss of the negative fair value reserves;
• impairment of EUR 152 thousand relating to closed-end mutual investment funds.
For these funds, the significant reduction below cost was considered clear evidence of impairment.
The valuations at fair value, at 31 December 2015, of the holdings in IDeA Capital Funds SGR S.p.A., IDeA FIMIT SGR S.p.A
and DeA Capital Real Estate S.p.A., carried out on the basis of the documents received and the information available, made
it necessary to record impairment of EUR 10,210 thousand, EUR 727 thousand and EUR 42,442 thousand for the holdings, as
shown in note 2a above.
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
175
9b - Service revenues
Income of EUR 1,767 thousand was reported in 2015 (EUR 1,869 thousand in 2014), attributable to the reimbursement of
costs or supply of services, in the following amounts:
- EUR 747 thousand to IDeA FIMIT SGR S.p.A.;
- EUR 455 thousand from IDeA Capital Funds SGR S.p.A.;
- EUR 335 thousand from De Agostini S.p.A.;
- EUR 93 thousand from IRE S.p.A.;
- EUR 35 thousand from DeA Capital Real Estate S.p.A.;
- EUR 32 thousand from De Agostini Editore S.p.A.;
- EUR 26 thousand from Lottomatica S.p.A.;
- EUR 20 thousand from De Agostini Publishing S.p.A.;
- EUR 20 thousand from IDeA Real Estate SIIQ S.p.A.;
- EUR 4 thousand from Innovation Real Estate Advisory S.r.l.
9c - Other revenues and income
Other revenues and income, totalling EUR 9,107 thousand (compared with EUR 253 thousand in 2014) relate mainly to the
reversal of the carried interest to be paid to the lead investor in Kenan, BC Partners, subject to the achievement of specific
profitability parameters.
10 - Operating costs
10a - Personnel costs
Personnel costs totalled EUR 2,452 thousand, compared with EUR 4,978 thousand in 2014.
The item breaks down as follows:
Financial year
Financial year
(EUR thousand)
2015
2014
Salaries and wages
1,453
1,526
Social security charges
407
338
Remuneration for the Board of Directors
646
149
Stock options figurative cost
487
937
Stock options reversal
(762)
(815)
End-of-service payment fund
137
106
Total personnel costs
84
2,737
Total
2,452
4,978
The effect of the cost arising from the Stock Option Plans for 2015, of EUR 487 thousand (EUR 937 thousand in 2014), was
more than offset by the reversal of the cost allocated to the reserve for the 2013-2015 Stock Options Plan, of EUR 762
thousand.
The Allocation Plan 2004 is to be considered lapsed as the conditions for exercising option rights were not met.
The Parent Company has 13 employees (unchanged from 31 December 2014).
The table below shows changes and the average number of Parent Company employees during the year.
Employees
1.1.2015
Recruits
Departures
31.12.2015
Average no.
Senior managers
3
2
(1)
4
3
Senior managers on fixed-term
contracts
1
0
(1)
0
1
Junior managers
4
0
0
4
4
Staff
5
0
0
5
5
Total
13
2
(2)
13
13
176 DeA Capital - Notes to the Financial Statements
Share-based payments
Employees of DeA Capital S.p.A. and the Parent Company, De Agostini S.p.A. are beneficiaries of stock option plans based on
the shares of DeA Capital S.p.A. Unexercised but valid call options on the company’s shares at 31 December 2015 totalled
3,135,200 (3,163,200 at 31 December 2014).
Stock option plans were valued using the numerical binomial tree procedure (the original Cox, Ross and Rubinstein method).
Numerical analysis using binomial trees generates simulations of various possible developments in the share price in future
periods.
On 17 April 2015, the DeA Capital S.p.A. Shareholders’ Meeting approved the DeA Capital Performance Share Plan 2015-
2017, under which a maximum of 675,000 units may be allocated. On the same date, in implementation of the shareholders’
resolution, the Board of Directors of DeA Capital S.p.A. voted (i) to launch the DeA Capital Performance Share Plan 2015-2017
approved by the shareholders’ meeting, vesting the Chairman of the Board of Directors and the Chief Executive Officer with all
the necessary powers, to be exercised severally and with full power of delegation; and (ii) to allocate a total of 515,000 units
(representing the right to receive ordinary shares in the Company free of charge, under the terms and conditions of the plan)
to certain employees and/or directors performing particular roles at the Company, its subsidiaries and the Parent Company De
Agostini S.p.A.
On 27 August 2015, under the same Performance Share Plan 2015-2017, the Board of Directors allocated a further 150,000
units to employees with specific duties.
Shares allocated due to the vesting of units will be drawn from own shares already held by the company.
In addition, the Plan enables DeA Capital to oblige beneficiaries to return, in full or in part, shares received pursuant to the
Plan, should circumstances emerge that clearly show that incorrect data have been used to verify the achievement of the
targets for the vesting of the units (“claw-back”).
The shareholders’ meeting also approved the Company’s Remuneration Policy pursuant to art. 123-ter of the TUF.
In addition, pursuant to art. 114-bis of the TUF, on 17 April 2015, the Shareholders’ Meeting approved a number of
amendments to the following current share-based incentive plans: (i) DeA Capital Performance Share Plan 2013-2015, (ii) DeA
Capital Stock Option Plan 2013-2015, (iii) DeA Capital Performance Share Plan 2014-2016, and (iv) DeA Capital Stock Option
Plan 2014-2016 (together, the Plans).
The amendments approved concern (i) the introduction of a second performance target, related to the total shareholder
return of the DeA Capital share, and as an alternative to the target for growth of the Adjusted NAV, already provided for in the
Plans, on which the conversion into shares of the units and the entitlement to exercise the options are dependent and (ii) the
introduction of claw-back mechanisms that enable the Company to oblige beneficiaries to return shares received pursuant to
the Plans, should circumstances emerge that clearly show that incorrect data have been used to verify the achievement of the
required performance targets.
Subsequently, on 5 November 2015, in view of the distribution of the extraordinary dividend of EUR 0.30 approved by the
Shareholders’ Meeting on 17 April 2015 and the resulting reduction in the DeA Capital share value, the Board of Directors of
DeA Capital, as the competent body pursuant to the Plans’ regulations, approved a number of amendments to the following
incentive-based plans in order to keep the substance and financial content unchanged. Specifically:
• Performance share plans: the Board of Directors voted to compensate for the lower value of the Plans following the
distribution of the extraordinary dividend, in the event that the vesting conditions are met, by allocating new units, to
be determined on the vesting date. The new units, which will be valued at the price per share on the same date, will be
allocated pro rata to the portion of units that have vested, up to the maximum number of units provided for under the
above-mentioned Plans. The Board also resolved that where the lower value of the Plans cannot be compensated for by the
allocation of new units, a one-off bonus will be paid as compensation in cash, commensurate with the portion of units that
has vested;
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
177
• Stock Option Plans: the Board of Directors voted to adjust the strike price of the options commensurate with the
extraordinary dividend, i.e. EUR 0.30 per share, subject to the lower limit represented by the nominal value of the DeA
Capital share. Specifically, the Board voted to: reduce the strike price (i) from EUR 1.289 to EUR 1.000 for the Stock Option
Plan 2013-2015 and (ii) from EUR 1.32 to EUR 1.020 for the Stock Option Plan 2014-2016.
The terms and conditions of the above-mentioned Performance Share Plan 2015-2017 are in the Information Prospectus
prepared in accordance with art. 84-bis of Consob Resolution 11971 of 14 May 1999 (Issuer Regulations), available to the
public at the registered office of DeA Capital S.p.A. and on the Company’s website www.deacapital.it (in the section Corporate
Governance/Incentive Plans).
10b - Service costs
The table below shows a breakdown of service costs, which came in at EUR 4,475 thousand in 2015 (EUR 4,819 thousand
in 2014):
Financial year
Financial year
(EUR thousand)
2015
2014
Management, tax, legal consultancy and other fees
1,406
1,626
Fees to corporate bodies
278
278
Ordinary maintenance
108
105
Travel expenses
25
98
Utilities and general expenses
2,522
2,577
Bank charges
32
24
Advertising, conferences, online subscriptions, office supplies
92
99
Other charges
12
12
Total
4,475
4,819
10c - Depreciation and amortisation
Please see the table on changes in intangible and tangible assets for details on this item.
10d - Other charges
This item totalled EUR 67 thousand (EUR 444 thousand in 2014) and mainly comprises registration tax and the non-deductible
portion of VAT as a result of applying the new percentage of 99% against which VAT on purchases made during the year may
be offset.
178 DeA Capital - Notes to the Financial Statements
11 - Financial income and charges
11a - Financial income
Financial income totalled EUR 393 thousand, compared with EUR 3,173 thousand in 2014. This item included interest
income of EUR 233 thousand and exchange rate gains of EUR 160 thousand.
A breakdown of interest income shows that EUR 6 thousand was earned on bank current accounts and EUR 227 thousand
on loans to Sigla S.r.l., a wholly-owned subsidiary of investee company Sigla Luxembourg S.A.
Financial year
Financial year
(EUR thousand)
2015
2014
Interest income
233
892
Financial liabilities adjustment
0
2,206
Exchange gains
160
75
Total
393
3,173
11b - Financial charges
Financial charges totalled EUR 823 thousand, compared with EUR 3,443 thousand in 2014. These mainly included interest
payable on loans and financial liabilities and losses on hedging derivatives and exchange rates.
Specifically, financial charges break down as follows:
- negative adjustment following the discounting to present value of the end-of-service provisions accrued in 2015, of EUR 7
thousand;
- interest payable from the readjustment to the IDeA ToI fund of EUR 2 thousand;
- interest payable on the Mediobanca and Intesa SanPaolo S.p.A. credit lines of EUR 493 thousand and fees of EUR 314
thousand;
- exchange rate losses of EUR 7 thousand.
Financial year
Financial year
(EUR thousand)
2015
2014
Interest expense
807
3,421
Interest's realignment on financial istruments - available for sale
2
0
Charges on financial liabilities
7
14
Exchange losses
7
8
Total
823
3,443
12 - Tax
12a - Income tax for the period
At 31 December 2015, no IRAP taxes were recorded because of the negative tax base. This item mainly includes current tax
income, amounting to EUR 859 thousand, which relates to DeA Capital S.p.A.’s participation in the national tax consolidation
scheme of the De Agostini S.p.A. Group (previously B&D Holding di Marco Drago e C. S.a.p.a.).
12b - Deferred tax assets and liabilities
This item came in at EUR 7,558 thousand and consists entirely of provisions for deferred tax assets during the year related
to the deferred tax assets due to the set-off (due to the available tax losses) of the tax liability resulting from the Funds
valuation.
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
179
The table below shows a reconciliation of the tax charges recorded in the financial statements and the theoretical tax charge
calculated using the IRES rate applicable in Italy:
2015
2014
(EUR thousand)
Amount
Rate
Amount
Rate
Profit before tax
(27,312)
(12,185)
Tax on theoretical income
(7,511)
27.50%
(3,351)
27.50%
Tax effect of permanent differences
- Write-downs on equity investments
14,680
-53.75%
53,156
-436.24%
- Dividends
(1,441)
5.28%
(52,045)
427.12%
- Non-deductible interest
161
-0.59%
635
-5.21%
- Other changes
(6,705)
24.55%
157
-1.29%
Income from tax consolidation scheme (interest)
859
-3.15%
(546)
4.48%
Adjustment to income from tax consolidation
scheme of previous years
(901)
3.30%
1,083
-8.89%
Deferred tax assets
(7,558)
27.67%
(6,757)
55.45%
Other net differences
0
0.00%
0
0.00%
Other taxes on foreign income
3
-0.01%
3
-0.02%
Income tax reported in the income
statement
(8,413)
(7,665)
13 - Basic earnings (loss) per share
Basic earnings per share are calculated by dividing net profit or loss for the period attributable to the parent company by the
weighted average number of ordinary shares outstanding during the period.
Diluted earnings per share are calculated by dividing net profit for the period attributable to shareholders by the weighted
average number of ordinary shares outstanding during the period, including any dilutive effects of stock options.
The table below shows the share information used to calculate basic and diluted earnings per share:
Financial year
Financial year
(in EUR)
2015
2014
Parent Company profit/(loss)(A)
(18,899,586)
(4,519,219)
Weighted average number of ordinary shares outstanding (B)
266,557,823
273,806,403
Basic earnings/loss per share (EUR per share) (C=A/B)
(0.0709)
(0.0165)
Adjustment for dilutive effect
-
-
Net profit/(loss) adjusted for diluted effect (D)
(18,899,586)
(4,519,219)
Weighted average number of shares to be issued for the
956,844
306,445
exercise of stock options (E)
267,514,667
274,112,848
Total number of shares outstanding and to be issued (F)
(0.0706)
(0.0165)
Diluted earnings/loss per share (EUR per share) (G=D/F)
Options have a dilutive effect only when the average market price of the share for the period exceeds the strike price of the
options or warrants (i.e. when they are “in the money”).
180 DeA Capital - Notes to the Financial Statements
Notes to the Cash Flow Statement
Changes to the Cash Flow Statement have been reported using the direct method.
Given the type of activity carried out by the Company, cash flow from investment in companies and funds (the Company’s
normal activity) is included in cash flow from operating activities.
In 2015, operating activities, as defined above, generated cash and cash equivalents of EUR 144,806 thousand (EUR 139,036
thousand in 2014). Please see the Cash Flow Statement for information on changes to this item.
In 2015, financing activities absorbed EUR 94,620 thousand (and EUR 105,321 thousand in 2014) mainly in relation to the
payment of dividends totalling EUR 79,849 thousand.
Cash and cash equivalents totalled EUR 88,388 thousand at end-2015, compared with EUR 37,962 thousand at the end of
the 2014.
Other information
Commitments
At 31 December 2015, residual commitments to make paid calls to funds totalled EUR 92.6 million, compared with EUR 106.5
million in 2014.
Changes in commitments are shown in the table below.
(EUR m)
Residual commitments to funds - 31.12.2014
106.5
New commitments
5.8
Capital Calls
(20.0)
Exchange differences
0.3
Residual commitments to funds - 31.12.2015
92.6
Treasury shares and Parent Company shares
On 17 April 2015, the shareholders’ meeting of DeA Capital S.p.A. authorised the Board of Directors to buy and sell, on one or
more occasions and on a revolving basis, a maximum number of ordinary shares in the Company representing a stake of up to
20% of the share capital.
The new plan replaces the previous plan approved by the shareholders’ meeting on 17 April 2014 (which was scheduled
to expire with the approval of the 2014 Annual Financial Statements), and will pursue the same objectives as the previous
plan, including purchasing treasury shares to be used for extraordinary transactions and share incentive schemes, offering
shareholders a means of monetising their investment, stabilising the share price and regulating trading within the limits of
current legislation.
The
authorisation specifies that purchases may be carried out up to the
date of the shareholders’ meeting to approve the Financial
Statements for the Year Ending 31 December 2015 and, in any case, not beyond the maximum duration allowed by law, in
accordance
with all the procedures allowed by current regulations, and that DeA
Capital S.p.A. may also sell the shares purchased
for
the purposes of trading, without time limits. The unit price for the
purchase of the shares will be set on a case-by-case basis
by the Company’s Board of Directors, but must not be more than 20% above or below the share’s reference price on the trading
day
prior to each individual purchase. In contrast, the authorisation to
sell treasury shares already held in the Company’s portfolio,
and any shares bought in the future, was granted for an unlimited period, to be implemented using the methods considered most
appropriate and at a price to be determined on a case-by-case basis by the Board of Directors, which must not, however, be more
than
20% below the share’s reference price on the trading day prior to each
individual sale (with certain exceptions specified in the
plan). Sale transactions may also be carried out for trading purposes.
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
181
On 17 April 2015, the Board of Directors held following the shareholders’ meeting voted to implement the above mentioned
plan to buy and sell treasury shares according to the operating practice as of the so called “Consob Practice” (the operating
practice n. 2 as of the Consob Resolution n. 16838 issued on March 19, 2009, as of the article 180, subparagraph 1, letter c)
of the TUF).
The treasury shares acquisition plan is aimed to the setup of a “securities warehouse” as permitted by the Consob Practice,
to be used according to the shareholders’ meeting decision as a means of payment for extraordinary corporate transactions
(exchange of participations included).
According to article 5 of the Regolamento CE n. 2273/2003, the treasury shares purchase price can’t be higher than the higher
price between (i) the price of the latest independent transaction and (ii) current independent offer in the trading venues
where the purchase is made. All such price limits are subject to the further condition of the price per share being within a
-20%/+20% variance range compared to the public stock quote as of the latest stock market session preceding every treasury
share purchase.
On top of that the Board of Directors also resolved to set the maximum unit price above which purchases of treasury shares
may not be made at the NAV per share indicated in the most recent statement of financial position approved and disclosed to
the market.
DeA Capital has a contract with independent authorised intermediary Intermonte SIM S.p.A., granting this company a mandate
to buy and sell ordinary DeA Capital shares, pursuant to the Consob Practice. For further details please refer to the above
mentioned ordinary Shareholders’ meeting notice, to the Directors’ report and to the press release issued on 17 April 2015
available on the Company web site (www.deacapital.it ), respectively in the Investor Relations/Shareholders’ Meetings and the
Investor Relations/Press Releases sections.
In 2015, as a part of the above plans, DeA Capital S.p.A. purchased 7,703,209 shares valued at approximately EUR
13,029,541 (at an average price of EUR 1.81 per share pre-dividend and EUR 1.4 per share post-dividend).
Taking into account purchases made in previous years for plans in place from time to time, and the use of treasury shares
to service acquisitions of controlling interests in FARE Holding and IDeA AI, at 31 December 2015 the Company owned
42,688,945 treasury shares (equal to about 13.9% of the share capital).
As of the date of this document, based on purchases of 458,806 shares made after the end of 2015, the Company had a total
of 43,147,751 treasury shares corresponding to about 14.07% of the share capital.
During 2015, the Company did not hold, purchase or sell, on its own account or through a trust company, any shares in the
Parent Company De Agostini S.p.A.
Stock option and performance share plans
Employees of DeA Capital S.p.A. and the Parent Company, De Agostini S.p.A. are beneficiaries of stock option plans based on
the shares of DeA Capital S.p.A. Unexercised but valid call options on the Company’s shares at 31 December 2015 totalled
3,135,200 (3,163,200 at 31 December 2014).
Stock option plans were valued using the numerical binomial tree procedure (the original Cox, Ross and Rubinstein
method). Numerical analysis using binomial trees generates simulations of various possible developments in the share
price in future periods.
On 17 April 2015, the DeA Capital S.p.A. Shareholders’ Meeting approved the DeA Capital Performance Share Plan 2015-
2017, under which a maximum of 675,000 units may be allocated. On the same date, in implementation of the shareholders’
resolution, the Board of Directors of DeA Capital S.p.A. voted (i) to launch the DeA Capital Performance Share Plan 2015-2017
approved by the shareholders’ meeting, vesting the Chairman of the Board of Directors and the Chief Executive Officer with all
the necessary powers, to be exercised severally and with full power of delegation; and (ii) to allocate a total of 515,000 units
(representing the right to receive ordinary shares in the Company free of charge, under the terms and conditions of the plan)
to certain employees and/or directors performing particular roles at the Company, its subsidiaries and the Parent Company De
Agostini S.p.A.
182 DeA Capital - Notes to the Financial Statements
On 27 August 2015, under the same Performance Share Plan 2015-2017, the Board of Directors allocated a further 150,000
units to employees with specific duties.
Shares allocated due to the vesting of units will be drawn from own shares already held by the company.
In addition, the Plan enables DeA Capital to oblige beneficiaries to return, in full or in part, shares received pursuant to the
Plan, should circumstances emerge that clearly show that incorrect data have been used to verify the achievement of the
targets for the vesting of the units (“claw-back”).
The shareholders’ meeting also approved the Company’s Remuneration Policy pursuant to art. 123-ter of the TUF.
In addition, pursuant to art. 114-bis of the TUF, on 17 April 2015, the Shareholders’ Meeting approved a number of
amendments to the following current share-based incentive plans: (i) DeA Capital Performance Share Plan 2013-2015, (ii) DeA
Capital Stock Option Plan 2013-2015, (iii) DeA Capital Performance Share Plan 2014-2016, and (iv) DeA Capital Stock Option
Plan 2014-2016 (together, the Plans).
The amendments approved concern (i) the introduction of a second performance target, related to the total shareholder
return of the DeA Capital share, and as an alternative to the target for growth of the Adjusted NAV, already provided for in
the Plans, on which the conversion into shares of the units and the entitlement to exercise the options are dependent and (ii)
the introduction of claw-back mechanisms according to the Corporate Governance Code recommendations that enable the
Company to oblige beneficiaries to return shares received pursuant to the Plans, should circumstances emerge that clearly
show that incorrect data have been used to verify the achievement of the required performance targets.
Morover, on 5 November 2015, following the extraordinary dividend distribution of EUR 0.30 per share resolved by the
Shareholders’ meeting of 17 April 2015 resulting in a reduction of the DeA Capital share value, the Board of Directors of
DeA Capital, as enabled by the Plans regulations, approved some changes to the current incentive plans in order to maintain
unchanged their substantial and economic contents. More specifically:
• As regards the Performance Shares Plans, the Board voted to compensate for the lower value of the Plans following
the distribution of the extraordinary dividend, in the event that the vesting conditions are met, by allocating new units,
to be determined on the vesting date. The new units, which will be valued at the price per share on the same date, will
be allocated pro rata to the portion of units that have vested, up to the maximum number of units provided for under the
above-mentioned Plans. Where the lower value of the Plans cannot be compensated for by the allocation of new units, a one-
off bonus will be paid as compensation in cash, commensurate with the portion of units that has vested;
• As regards the Stock Option Plans, the Board voted to adjust the strike price of the options by an amount corresponding
to the extraordinary dividend, i.e. EUR 0.30 per share, subject to the lower limit represented by the nominal value of the
DeA Capital share. Specifically, the Board voted to: reduce the strike price (i) from EUR 1.289 to EUR 1.000 for the Stock
Option Plan 2013-2015 and (ii) from EUR 1.32 to EUR 1.020 for the Stock Option Plan 2014-2016.
The tables below summarise the assumptions made in calculating the fair value of the plans:
Stock options
Plan 2004
Plan 2005
Plan 2013
Plan 2014
No. of options allocated
160,000
180,000
1,550,000
1,550,000
Average market price at allocation date
2.445
2.703
1.26
1.44
Value at allocation/modification date
391,200
486,540
318,267
364,250
Average exercise price
2.03
2.46
1.00
1.02
Expected volatility
31.15%
29.40%
21.78%
22.06%
Option expiry date
31/08/15
30/04/16
31/12/18
31/12/19
Risk-free rate
4.25%
3.60%
0.71%
0.71%
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
183
The Allocation Plan 2004 is to be considered lapsed as the conditions for exercising option rights were not met.
Performance Share
Plan 2013
Plan 2014
Plan 2015
Plan 2015
N° units allocated
393,500
393,500
515,000
150,000
Unit value
1.60
1.44
1.46
1.34
Value at allocation/modification date
249,217
228,230
302,477
66,750
Expected volatility
19.41%
22.06%
24.83%
25.54%
Option expiry date
31/12/15
31/12/16
30/06/19
30/06/19
Risk free yield
0.42%
0.42%
0.95%
0.82%
Transactions with parent companies, subsidiaries and related parties
Intercompany relationships with the Parent Company and its Group
Transactions with related parties, including intercompany transactions, were typical, usual transactions that are part of the
normal business activities of Group companies. Such transactions are concluded at standard market terms for the nature of
the goods and/or services offered.
With regard to transactions with parent companies, note the following:
1) DeA Capital S.p.A. signed a service agreement with the controlling shareholder, De Agostini S.p.A., for the latter to provide
operating
services in the administration, finance, control, legal, corporate and
tax areas, investor relations, institutional and
press services.
This agreement, which is automatically renewed annually, is priced at market rates, and is intended to allow the Company
to maintain a streamlined organisational structure in keeping with its development policy, while obtaining sufficient
operational support.
At the same time, on 1 January 2013, DeA Capital S.p.A. signed an “Agreement to sub-let property for intended use other
than residential use” with the controlling shareholder, De Agostini S.p.A. The agreement relates to parts of a building
located at Via Brera, 21, Milan, comprising space for office use, warehousing and car parking.
This agreement, which is renewable every six years after an initial term of seven years, is priced at market rates.
2) DeA Capital S.p.A., IDeA Capital Funds SGR S.p.A. and DeA Capital Real Estate S.p.A. have adopted the national tax
consolidation scheme of the De Agostini Group (the Group headed by De Agostini S.p.A., formerly B&D Holding di Marco
Drago e C. S.a.p.a.). This option was exercised jointly by each company and De Agostini S.p.A. by signing the “Regulation
for participation in the national tax consolidation scheme for companies in the De Agostini Group” and notifying the tax
authorities of this option pursuant to the procedures and terms and conditions set out by law. The option is irrevocable
unless the requirements for applying the scheme are not met.
The option for DeA Capital S.p.A. is irrevocable for the three-year period 2014-2016.
3)
In order to enable more efficient use of liquidity and the activation
of credit lines with potentially better terms and conditions
compared with those that may be obtained from banks, DeA Capital S.p.A. has signed a framework agreement (Framework
Agreement) with the Parent Company De Agostini S.p.A. for the provision of short-term intercompany loans/deposits.
Deposit/financing operations falling within this Framework Agreement shall be activated only subject to verification that
the terms and conditions, as determined from time to time, are advantageous, and will be provided on a revolving basis,
and with maturities of not more than three months. The Framework Agreement shall have a duration of one year and is
automatically renewed annually.
The amounts involved in the deposit/financing operations will, however, be below the thresholds defined for “transactions
of lesser importance” pursuant to Consob Regulation 17221/2010 (Transactions with Related Parties) and the internal
procedure on Transactions with Related Parties adopted by DeA Capital S.p.A.
184 DeA Capital - Notes to the Financial Statements
Lastly, the Company did not hold, purchase or dispose of shares of related-party companies in 2015.
The table below shows the balances arising from transactions with related parties.
31.12.2015
Financial year 2015
Revenues
Trade Financial
Tax
Tax
Trade
for
Financial
Tax
Personnel Service
(EUR thousand)
receivables receivables receivables
payables
payables
services
income
income
costs costs
Sigla S.r.l.
-
3,467.4
-
-
-
-
226.7
-
-
-
Idea Real Estate SIIQ
S.p.A.
-
-
-
-
-
20.0
-
-
-
-
IDeA Capital Funds
SGR S.p.A.
23.7
-
-
63.9
-
455.0
-
-
(40.0)
-
IDeA FIMIT SGR S.p.A.
41.1
-
-
-
9.2
747.0
-
-
(12.4)
-
DeA Capital Real
Estate S.p.A.
-
-
-
-
-
35.0
-
-
(5.0)
-
Innovation Real Estate
S.p.A.
-
-
-
-
-
91.5
-
-
(8.0)
13.8
I.R.E. Advisory S.r.l.
4.2
-
-
-
-
4.0
-
-
(1.3)
-
De Agostini Invest S.A.
-
-
-
-
25.0
-
-
-
-
22.2
De Agostini S.p.A.
69.1
-
2,002.5
-
-
335.3
-
858.8
162.6
586.8
De Agostini Libri S.p.A.
-
-
-
-
1.7
-
-
-
-
2.3
De Agostini Publishing
Italia S.p.A.
1.1
-
-
-
0.3
19.7
-
-
-
0.6
Lottomatica S.p.A.
1.0
-
-
-
26.2
-
-
-
De Agostini Editore
S.p.A.
-
-
-
-
46.4
32.0
-
-
-
158.0
Total related parties
140.2
3,467.4
2,002.5
63.9
82.6
1,765.7
226.7
858.8
95.9
783.7
Total financial
statement line item
140.2
3,467.4
2,619.2
263.5
1,200.1
1,767.2
392.9
858.8
2,452.0
4,475.1
as % of financial
statement line item
100.0%
100.0%
76.5%
24.3%
6.9%
99.9%
57.7%
100.0%
3.9%
17.5%
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
185
Remuneration: directors of the board, auditors, general managers and directors with
strategic responsibilities
In 2015, remuneration payable to the directors and auditors of DeA Capital S.p.A. for the performance of their duties totalled
EUR 267 thousand and EUR 175 thousand respectively.
Remuneration paid to directors and auditors is shown in the table below:
Fees for
position at
company
preparing
Statutory
the financial
auditors' fees
Period
statements
Bonuses
for positions
Other
position
Position
in EUR Non-cash
and other
held at
remuneration
Director
Position
held
expires
thousand
benefits
incentives
subsidiaries
EUR/000
Approval fin.
Lorenzo Pellicioli
Chairman
2015
statements 2015
30
0
0
0
0
Chief Executive
Approval fin.
Paolo Ceretti
Officer
2015
statements 2015
30
0
450
0
70
Senior managers
with strategic
to 11
Carlo Frau
responsibilities
april 2015
-
0
0
150
0
8
Approval fin.
Lino Benassi
Director
2015
statements 2015
26
0
0
0
64
to 12
Stefania Boroli
Director
march 2015
-
6
0
0
0
0
to 17
Approval fin.
Busso Donatella
Director
april 2015
statements 2015
21
0
0
0
0
Approval fin.
Rosario Bifulco
Director
2015
statements 2015
30
0
0
0
25
Approval fin.
Francesca Golfetto
Director
2015
statements 2015
30
0
0
0
20
Approval fin.
Roberto Drago
Director
2015
statements 2015
30
0
0
0
0
Approval fin.
Marco Drago
Director
2015
statements 2015
30
0
0
0
0
Approval fin.
Severino Salvemini
Director
2015
statements 2015
30
0
0
0
35
Approval fin.
Marco Boroli
Director
2015
statements 2015
30
0
0
0
0
Chairman of
the Board
of Statutory
Approval fin.
Angelo Gaviani
Auditors
2015
statements 2015
75
0
0
9
0
Permanent
Approval fin.
Gian Piero Balducci
Auditor
2015
statements 2015
50
0
0
35
32
Permanent
Approval fin.
Annalisa Donesana
Auditor
2015
statements 2015
50
0
0
40
12
In contrast to the data contained in the Remuneration Report prepared pursuant to art. 123-ter of the TUF in accordance with
art. 84-quater of the Issuer Regulation, the emoluments and compensation indicated above do not include social security
contributions where applicable.
“Other remuneration” relates to remuneration received for other positions held in either DeA Capital S.p.A. or other Group
companies.
In 2015, annual salaries and bonuses, excluding benefits in kind, paid to managers with strategic responsibilities in the Parent
Company totalled about EUR 689 thousand.
186 DeA Capital - Notes to the Financial Statements
Shareholdings held by directors, auditors, general managers and managers with strategic
responsibilities
Details of shareholdings held in DeA Capital S.p.A. and its subsidiaries by members of the boards of directors and auditors and
by managers with strategic responsibilities are provided in aggregate format in the table below.
No shareholdings were reported for general managers, since to date, this position does not exist.
All
those who held positions on the boards of directors or auditors, or as
managers with strategic responsibilities, for the whole
or part of the year in question, are included.
No. of shares
No. of shares
Investee
held at No. of shares No. of shares
held at
Name and surname
company
1.1.2015
purchased
sold
31.12.2015
Lorenzo Pellicioli
DeA Capital S.p.A.
2,566,323
0
0
2,566,323
Paolo Ceretti
DeA Capital S.p.A.
1,000,000
0
0
1,000,000
Rosario Bifulco
DeA Capital S.p.A.
1,536,081
0
0
1,536,081
Lino Benassi
DeA Capital S.p.A.
23,500
0
0
23,500
Senior managers
with strategic
responsibilities
DeA Capital S.p.A.
205,000
100,000
0
305,000
Total
5,330,904
100,000
0
5,430,904
No DeA Capital shares are held by other directors or auditors who are currently in office; furthermore, no shares are held in
companies controlled by DeA Capital.
Directors Lorenzo Pellicioli, Marco Drago, Marco Boroli, Stefania Boroli (resigned on 12 March 2015) and Roberto Drago hold
treasury shares of B&D Holding di Marco Drago e C. S.a.p.A. and - in the case of directors Marco Drago, Roberto Drago,
Stefania Boroli and Marco Boroli - shares of De Agostini S.p.A., which control the Company both directly and indirectly, and are
parties to a shareholders’ agreement covering these shares.
Stock options allocated to members of the boards of directors and auditors, general
managers and managers with strategic responsibilities
Details of stock options held by members of the boards of directors and auditors and by managers with strategic
responsibilities in DeA Capital S.p.A. and its subsidiaries are provided in aggregate format in the table below.
Options
lapsed
Options outstanding at
Options granted
during
Options outstanding at
1 January 2015
during 2015
2015
31 December 2015
Average
Average
Number
Average
Average
Number
Number
Average
Average
Number exercise
expiry
of
exercise
expiry
of
of
exercise
expiry
Beneficiary
Position of options
price
date options
price
date options options
price
date
Paolo Ceretti
CEO
950,000
1.00
5
0
0
0
0
950,000
1.00
5
Paolo Ceretti
CEO
950,000
1.02
5
0
0
0
0
950,000
1.02
5
Key Management
600,000
1.00
5
0
0
0
0
600,000
1.00
5
Key Management
600,000
1.02
5
0
0
0
0
600,000
1.02
5
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
187
Lastly, note that the Chief Executive Officer, Paolo Ceretti, and managers with strategic responsibilities were assigned 250,000
and 320,000 performance shares respectively in 2015, as shown in the table below.
Options
lapsed
Options outstanding at
Options granted
during
Options outstanding at
1 January 2015
during 2015
2015
31 December 2015
Average
Average
Average
Average
Number
Average
Average
Number exercise
expiry Number
exercise
expiry
of Number
exercise
expiry
Beneficiary
Position of options
price
date of options
price
date options of options
price
date
Paolo Ceretti
CEO
120,000
1.6
3
0
0
3
0
120,000
1.6
3
Paolo Ceretti
CEO
120,000
1.44
3
0
0
3
0
120,000
1.44
3
Paolo Ceretti
CEO
0
0
0
250,000
1.46
4
0
250,000
1.46
4
Key
Management
84,625
1.6
3
0
0
0
0
84,625
1.6
3
Key
Management
84,625
1.44
3
0
0
0
0
84,625
1.44
3
Key
Management
0
0
0
170,000
1.46
4
0
170,000
1.46
4
Key
Management
0
0
0
150,000
1.34
4
0
150,000
1.34
4
Management and coordination
The Parent Company is subject to the management and coordination of De Agostini S.p.A.
Key figures from the latest approved Financial Statements of De Agostini S.p.A. are shown below.
(in EUR)
INCOME STATEMENT
2014
2013
Revenues
5,021,658
4,670,254
Cost of production
(39,692,428)
(63,003,708)
Financial income and charges
120,208,697
78,497,618
Adjustments to value of financial assets
(14,198,409)
4,935,778
Extraordinary income and charges
(109,232)
(68,798)
Taxes for the year
12,106,133
10,728,946
Net profit
83,336,419
35,760,090
STATEMENT OF FINANCIAL POSITION
2014
2013
Unpaid subscribed capital
0
0
Non-current assets
3,214,873,613
3,229,406,987
Current assets
539,055,462
399,854,115
Accruals and deferrals
16,517,487
9,790,449
Shareholders’ equity
(2,739,282,218)
(2,691,130,778)
Provisions for risks and charges
(45,193,216)
(59,222,561)
End-of-service payment provision
(729,385)
(791,322)
Payables
(970,322,415)
(883,405,679)
Accruals and deferrals
(14,919,328)
(4,501,211)
188 DeA Capital - Notes to the Financial Statements
Risks
As described earlier in the Report on Operations, the Company operates through, and is structured as, two business areas,
Private Equity Investment and Alternative Asset Management.
The risks set out below stem from a consideration of the characteristics of the market and the Company’s operations, and the
main findings of a risk assessment, and from periodic monitoring, including that carried out through the regulatory policies
adopted by the Group. There could, however, be risks that are currently unidentified or not considered significant that could
have an impact on the Company’s operations.
The Company has adopted a modern corporate governance system that provides effective management of the complexities
of its operations and enables its strategic objectives to be achieved. Furthermore, the assessments conducted by the
organisational units and the directors confirm both the non-critical nature of these risks and uncertainties and the financial
solidity of the Company.
A. Contextual risks
A.1. Risks relating to general economic conditions
The operating performance and financial position of the company are affected by the various factors that make up the macro-
economic environment, including increases or decreases in GDP, investor and consumer confidence, interest rates, inflation,
the costs of raw materials and unemployment.
The ability to meet medium- to long-term objectives could be affected by general economic trends, which could slow the
development of sectors the Group has invested in, and at the same time, the business of the investee companies.
A.2. Socio-political events
In line with its strategic growth guidelines, one of the Company’s activities is private equity investment in companies and
funds
in different jurisdictions and countries around the world, which, in
turn, invest in a number of countries and geographical
areas. The Company may have invested directly and indirectly in foreign countries whose social, political and economic
conditions put the achievement of its investment objectives at risk.
A.3. Regulatory changes
Many of the Company’s investee companies conduct their operations in highly regulated sectors and markets. Any changes to
or developments in the legislative or regulatory framework that affect the costs and revenues structure of investee companies
or the tax regime applied, could have negative effects on the company’s financial results, and necessitate changes in the
Company’s strategy.
To combat this risk, the Company has established procedures to constantly monitor sector regulation and any changes
thereto, in order to seize business opportunities and respond to any changes in the prevailing legislation and regulations
in good time.
A.4. Performance of the financial markets
The Company’s ability to meet its strategic and management objectives could depend on the performance of public markets.
A negative trend on the public markets could have an effect on the private equity sector in general, making investment and
divestment transactions more complex, and on the Company’s ability to increase the NAV of investments in particular.
The value of shareholdings held directly or indirectly through funds in which the Company has invested could be affected by
factors such as comparable transactions concluded on the market, sector multiples and market volatility.
These factors that cannot be directly controlled by the company are constantly monitored in order to identify appropriate
response strategies that involve both the provision of guidance for the management of investee companies, and the
investment and value enhancement strategy for the assets held.
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
189
A.5. Exchange rates
Holding investments in currencies other than the euro exposes the Company to changes in exchange rates between currencies.
A.6. Interest rates
Ongoing financing operations that are subject to variable interest rates could expose the Company to an increase in related
financial charges, in the event that the reference interest rates rise significantly.
The
Company has established appropriate strategies to hedge against the
risk of fluctuations in interest rates. Given the partial
hedge of the underlying, the Company classifies these securities as speculative instruments, even though they are put in place
for hedging purposes.
B. Strategic risks
B.1. Concentration of the Private Equity investment portfolio
The Private Equity investment strategy adopted by the Company includes:
- Direct investments;
- Indirect investments (in funds).
Within this strategy, the Company’s overall profitability could be adversely affected by an unfavourable trend in one or a few
investments,
if there were insufficient risk diversification, resulting from the
excessive concentration of investment in a small
number of assets, sectors, countries, currencies or of indirect investments in funds with limited investment targets/types of
investment.
To combat these risk scenarios, the Company pursues an asset allocation strategy intended to create a balanced portfolio with
a
moderate risk profile, investing in attractive sectors and in companies
with an appealing current and future risk/return ratio.
Furthermore,
the combination of direct and indirect investments, which, by their
nature, provide a high level of diversification,
helps reduce the level of asset concentration.
B.2. Concentration of Alternative Asset Management activities
In the Alternative Asset Management business, events could arise as a result of excessive concentration that would hinder the
achievement of the level of expected returns. These events could be due to:
• Private equity funds
- concentration of the management activities of asset management companies across a limited number of funds, in the event
that one or more funds decides to cancel its asset management mandate;
- concentration of the financial resources of the funds managed in a limited number of sectors and/or geographical areas, in
the event of a currency, systemic or sector crisis;
- for closed-end funds, the concentration of commitment across just a few subscribers.
• Real estate funds
- concentration of real estate present in the portfolio of managed funds in a few cities and/or in limited types of property
(management/commercial), in the event of a crisis in the property market concerned;
- concentration in respect of certain major tenants, if they were to withdraw from the rental contracts, which could lead to
a vacancy rate that has a negative impact on the funds’ financial results and the valuation of the properties managed;
- concentration of the maturities of numerous real estate funds within a narrow timeframe, with related high availability of
property on the market, leading to a decrease in property values and an increase in selling times.
For each of the risk scenarios outlined above, the Company has defined and implemented appropriate strategies that include
strategic, operational and management aspects, as well as a system monitoring the level of diversification of Alternative Asset
Management assets.
B.3. Key resources (governance/organisation)
The success of the Company depends to a large extent on its executive directors and key management figures, their ability to
efficiently manage the business and the normal activities of individual Group companies, as well as knowledge of the market
and the professional relationships established.
190 DeA Capital - Notes to the Financial Statements
The departure of one or more of these key resources, without a suitable replacement being found, as well as an inability
to attract and retain new and qualified resources, could impact growth targets and have a negative effect on the Group’s
operating performance and financial results.
To mitigate this risk, the Group has put in place HR management policies that correspond closely to the needs of the business,
and incentive policies that are periodically reviewed, in light of, among other things, the general economic climate and the
results achieved by the Group.
C. Operating risks
C.1. Investment operations
Investment operations conducted by the Company are subject to the risks typical of private equity activities, such as an
accurate valuation of the target company and the nature of the transactions carried out, which require the acquisition of
strategic shareholdings, but not controlling interests, governed by appropriate shareholders’ agreements.
The Company implements a structured process of due diligence on target companies, which requires the involvement of
the different levels of group management involved and the careful definition of shareholders’ pacts in order to conclude
agreements in line with the investment strategy and the risk profile defined by the Company.
C.2. Compliance with covenants
Some investment operations were concluded using financial leverage to invest in the target companies. For financing contracts
signed by investee companies, specific covenants backed by real guarantees are in place; failure to comply with these could
necessitate recapitalisation operations for investee companies and lead to an increase in financial charges relating to debt
refinancing. Failure to comply with covenants attached to loans could have negative effects on both the financial situation and
operations of investee companies, and on the value of the investment.
The Company constantly monitors the significant reference parameters for the financial obligations taken on by investee
companies, in order to identify any unexpected variance in good time.
C.3. Divestment operations
The Company invests over a medium-to long-term horizon.
Over the investment management period, external situations could arise that might have a significant impact on the operating
results of the investee companies, and consequently on the value of the investment itself. Furthermore, in the case of co-
investment, guiding the management of an investee company could prove problematic or infeasible, and it may ultimately
prove impossible to dispose of the stakes held owing to lock-up clauses.
The divestment strategy could therefore be negatively affected by various factors, some of which cannot be foreseen at the
time the investments are made. There is therefore no guarantee that expected earnings will be realised given the risks arising
from the investments made.
To combat these risk situations, the Company has defined a process to monitor the performance of its investee companies,
facilitated by its representation on the management bodies of significant investee companies, with a view to identifying any
critical situations in good time.
C.4. Funding risk
The income flows expected from the Alternative Asset Management business depend on the capacity of the asset management
companies in which the Company invests to stabilise/grow their assets under management.
In this environment, fundraising activity could be harmed by both external factors, such as the continuation of the global
economic
crisis or the trend in interest rates, and internal factors, such as
bad timing in respect of fundraising activities by the
asset management companies, or the departure of key managers from the companies.
The Company has established appropriate risk management strategies in relation to fund raising, with a view to both involving
new investors and retaining current investors.
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
191
Significant events after the end of 2015
Private equity funds - paid calls/distributions
After the end of 2015, the Company increased its investments in the ICF II, IDeA OF I, IDeA EESS, ICF III, IDeA I FOF and
IDeA ToI funds following total payments of EUR 2,909 thousand (EUR 764 thousand, EUR 1,374 thousand, EUR 76 thousand,
EUR 69 thousand, EUR 555 thousand and EUR 71 thousand, respectively).
At the same time, the Company received capital reimbursements from the IDeA I FOF fund of EUR 4,511 thousand and from
the IDeA OF I fund of EUR 4,070 thousand, to be used in full to reduce the value of the units.
Second closing of ICF III private equity fund
On 19 January 2016, the second and final closing of the ICF III fund was completed for EUR 9,900 thousand; this brought the
final commitment of the fund to EUR 66,950 thousand.
Further information
In accordance with the provisions of IAS 10, the Company authorised the publication of these Financial Statements within the
terms set by the laws in force.
Atypical or unusual transactions
In 2015, there were no atypical or unusual transactions as defined by Consob Communication 6064293 of 28 July 2006.
Significant non-recurring events and transactions
In 2015, the Company did not undertake any significant non-recurring transactions as defined by the above-mentioned Consob
Communication.
192 DeA Capital - Notes to the Financial Statements
STATEMENT OF RESPONSIBILITIES FOR
THE ANNUAL FINANCIAL STATEMENTS
PURSUANT TO ARTICLE 154 - BIS OF
LEGISLATIVE DECREE 58/98
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
193
Statement of responsibilities for the Annual Financial Statements
pursuant to article 154-bis of Legislative Decree 58/98
The undersigned, Paolo Ceretti, as Chief Executive Officer, and Manolo Santilli, as the manager responsible for preparing the
accounting statements, hereby certify, pursuant to art. 154-bis, paragraphs 3 and 4 of Legislative Decree 58 of 24 February
1998, that based on the characteristics of the Company, the administrative and accounting procedures for preparing the
Annual Financial Statements during the year were suitable and effectively applied.
The assessment as to the suitability of the administrative and accounting procedures for preparing the Financial Statements
for the Year Ending 31 December 2015 was based on a process established by DeA Capital S.p.A. in keeping with the Internal
Control - Integrated Framework model issued by the Committee of Sponsoring Organisations of the Treadway Commission,
which is the generally accepted reference framework at the international level.
Note in this regard, that as described in the Notes to the Financial Statements, a significant portion of the assets are
investments stated at fair value. Fair values were determined by directors based on their best estimate and judgment
using the knowledge and evidence available at the time the Financial Statements were prepared. However, due to objective
difficulties in making assessments and the absence of a liquid market, the values assigned to such assets could differ, and in
some cases significantly, from those that could be obtained when the assets are sold.
The undersigned further certify that the annual financial statements to 31 December 2015:
- correspond to the Company’s accounting records;
- have been prepared in compliance with the International Financial Reporting Standards adopted by the European Union, and
the measures issued to implement art. 9 of Legislative Decree 38/2005;
-
to the best of their knowledge, provide a true and fair view of the
operating performance and financial position of the issuer.
The Report on Operations contains a reliable analysis of operating performance and results and of the position of the issuer
and all companies included in the basis of consolidation, together with a description of the main risks and uncertainties to
which they are exposed.
9 March 2016
Paolo Ceretti
Manolo Santilli
Chief Executive Officer
Manager Responsible
for preparing the Company’s Accounts
194 DeA Capital - Notes to the Financial Statements
Information pursuant to art. 149-duodecies of the Consob Issuer
Regulations
The table below was prepared in accordance with art. 149-duodecies of the Consob Issuer Regulations and reports the fees for
2015 for auditing and other services provided by the independent auditors and entities belonging to the independent auditors’
network. The fees reported below do not include VAT and out-of-pocket expenses.
Company providing the
Compensation paid for
(EUR thousand)
service
Beneficiary
FY 2015
Audit
PricewaterhouseCoopers S.p.A.
DeA Capital S.p.A.
55
PricewaterhouseCoopers
Other services
Advisory S.p.A.
DeA Capital S.p.A.
15
Total
70
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
195
SUMMARY OF SUBSIDIARIES’
FINANCIAL STATEMENTS TO
31 DECEMBER 2015
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
197
Innovation
DeA Capital
IDeA Capital
IDeA FIMIT
Innovation
Real Estate
Idea
(EUR thousand)
Real Estate
Funds SGR
SGR
Real Estate
Advisory
Real Estate
Non-current assets
61,463
999
199,225
2,286
14
7
Current assets
1,895
11,103
31,367
20,067
1,774
3,127
Available-for-sale financial
assets - non-current portion
-
-
-
-
-
-
Consolidated assets
63,359
12,102
230,593
22,352
1,788
3,134
Shareholders’ equity
62,112
6,355
205,261
10,594
1,253
(109)
Non-current liabilities
970
891
12,084
1,170
118
-
Current liabilities
276
4,855
13,247
10,588
417
3,243
Consolidated liabilities
63,359
12,102
230,593
22,352
1,788
3,134
Alternative asset
management fees
-
16,947
47,725
-
-
-
Service revenues
-
-
-
18,100
1,779
-
Other investment income/
charges
3,886
14
(472)
619
-
-
Other income
2
62
110
1
-
-
Personnel costs
(74)
(6,869)
(15,531)
(6,580)
(527)
(481)
External service costs
(221)
(3,514)
(9,760)
(6,548)
(399)
(169)
Depreciation and
amortisation
-
(186)
(24,538)
(129)
(2)
(2)
Other charges
(971)
(4)
(8,084)
(103)
-
-
Financial income
1
175
30
552
-
-
Financial charges
(116)
-
(119)
(20)
(2)
(1)
Taxes
538
(2,355)
3,033
(1,459)
(262)
-
Profit/(loss) for the
period from held-for-sale
operations
-
-
-
-
-
-
Net profit/(loss)
3,045
4,268
(7,605)
4,430
588
(653)
198 DeA Capital - Notes to the Financial Statements
INDEPENDENT AUDITORS’
REPORT
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
199
REPORT OF THE BOARD OF
STATUTORY AUDITORS
(ORIGINAL AVAILABLE IN
ITALIAN VERSION ONLY)
DeA CApitAl - AnnuAl FinAnCiAl StAtementS to 31 DeCember 2015
205
