The Group has provided the following potential sureties as of 31 December 2008:
Legal proceedings
As of 31.12.2008, three claims are pending before the Veneto TAR, presented by Ascopiave S.p.a in regards to resolutions implemented by the licensing municipalities (the municipalities of Galliera Veneta, Tezze sul Brenta, and Tombolo) in reference to the duration of concessions, and four claims against calls for tenders published by the municipalities (those of Costabissara, Santorso, Marano Vicentino and Isola Vicentina), for the choice of the new public gas distribution operator service.
On the date 5 November 2008 the Veneto TAR with 2008 order no. 860 sustained the application for suspension formulated by Ascopiave S.p.A. regarding the determination of definitive judgement to another operator for the gas distribution service in the municipal area of Isola Vicentina.
On the date of 9 December 2008 the definitive judgement to Ascopiave S.p.A. regarding the bid for the gas distribution in the municipality of Casteggio for a period of 12 years has been published on the G.U.C.E..
Management of financial risk: objectives and criteria
The investments of the operative activities of the Group mainly consist of bank loans, financial leasing, lease contracts with the possibility of purchase and bank deposits at sight and short-term. The recourse to such forms of investment exposes the Group to the risk connected with the fluctuation of interest tax rate, that successively determine possible variation on financial costs.
The operative activity, on the contrary, put the Group on the position of possible receivable risks with the counterparts.
The Group, furthermore, is subject to liquidity risks because the available financial resources may not be sufficient to meet its financial obligations, in the terms and dead-lines forecasted.
(thousands of Euro) 31/12/2008
On surities on credit lines 154.616
On w orks esecutions 9.849
To UTF offices and regions for gas taxes 14.431
For partecipation to tender for methan supply 70
On contracts of trading ranting 17
On supply contracts 43
On gas purchase contracts 55.239
On gas supply contracts 1.195
The risk for the fluctuation of the change Euro/Dollar and of treated commodities prices (in the specific case natural gas and oil products) is managed through operation on derivatives, mainly options on exchanges and raw materials.
The Board of Directors re-examines and agrees the policies for risk management, described hereafter.
Interest rate risk
Group exposure to the risk of changes in market rates is mainly linked to the loans taken out with credit institutes, with variable interest rates.
Group policy, depending on the seasonability of the business cycle, aims to manage the need for cash by means of temporary loans at variable rates, that given their constant change, do not make it possible to suitably cover the interest rate risk.
The Group also manages fixed rate loans for insignificant amounts that depend on the conferral for the gas distribution networks of the local bodies, now shareholders of Asco Holding S.p.A..
The coverage of interest tax rate could be possible choosing the right balance between fixed interest tax rate loans and variable interest tax rate loans.
Sensitivity analysis to the interest rate risk
The following table shows the sensitivity of the Group’s pre-tax result, following reasonably possible variations in interest rates, keeping all other variables constant.
The sensitivity analysis, obtained simulating a variation on interest tax rates applied on the credit lines of the Group equal to 150 basis points in increase and decrease, maintaining unchanged all the other variables, leads to an estimation of an effect on the result before taxes respectively negative or positive for Euro 1.211 thousands.
Receivables risk
The operative activity put the Group in a position of possible receivable risk caused by the market for the missed respect of trading obligations with counterparts.
january february march april may june july august september october november december
Net Financial position of financial year
2008 (64.281) (107.610) (117.012) (82.251) (101.374) (91.620) (79.976) (74.503) (68.999) (48.939) (86.668) (45.249)
Lending/borrowing average rate 4,87% 4,75% 4,99% 5,12% 5,09% 5,19% 5,16% 5,39% 5,22% 5,76% 5,15% 4,44%
Average rate increased of 1,5 6% 6% 6% 7% 7% 7% 7% 7% 7% 7% 7% 6%
Average rate decreased of 1,5 3% 3% 3% 4% 4% 4% 4% 4% 4% 4% 4% 3%
Net Financial position recalculated with
increased of 1,5 (64.361) (107.745) (117.158) (82.354) (101.501) (91.734) (80.076) (74.596) (69.085) (49.000) (86.776) (45.306)
Net Financial position recalculated with
decreased of 1,5 (64.201) (107.476) (116.866) (82.148) (101.247) (91.505) (79.876) (74.410) (68.913) (48.878) (86.559) (45.193) tot
Negative effect to income before taxes 80 135 146 103 127 115 100 93 86 61 108 57 1.211
____________________________________________________________________________________________ The Group constantly monitors this type of risk through an appropriate credit management procedure, helped in that sense, also by the division of a significant component of accounts receivable. The Group policy is that of fully writing down the receivables that show an older expiry date than the year, and to apply write-down percentages determined by historical series on the remaining part of the credit. Consequently, representation of the customer types is not deemed significant, as they do not have significant credits that have not been written down.
Liquidity risk
The liquidity risk concern the risk of the Group not to dispose of available and sufficient financial resources in order to meet with own financial obligations, in the forecasted terms and dead-lines.
The Group constantly pursues a maintenance of the balance and flexibility of financing sources and uses.
The two main factors influencing Group liquidity are on the one hand the resources generated or absorbed by the operative or investment assets, on the other hand the expiry characteristics and debt renewal.
Division according to expiry, as of 31 December, of financial debts is reported at note 21.
The liquidity of the companies of the Group is managed in a centralised way. Liquidity requirements are monitored by the treasury function of the parent company with a view to guaranteeing an efficient recovery of financial resources, or a suitable investment of any available funds.
The directors believe that the funds and loans currently available, apart from those generated by operative or financing assets will allow the Group to meet requirements deriving from investment, management of circulating capital and reimbursement of debts at natural expiry.
Risk of prices of raw materials and of Euro/Dollar change
The Ascopiave Group manages the risk generated by the fluctuation of treated commodities prices, in this specific case natural gas price and oil products, through the recourse to operations on derivatives.
Because of the fact that raw material prices are indicated in Dollars, the Group is also subject to the consequent Euro/Dollar change risk.
The parent company apply the employment of the most used derivative instruments on the market in order to contain the exposition to risks within fixed limits.
At the moment the Group is not exposed to any change risk not connected to derivative operations.
Management of Capital
The primary objective of the management of Group capital is to guarantee that a solid credit rating is maintained, and suitable levels of capital indicator. The Group can adapt the dividends paid to shareholders, reimburse capital or issue
new shares.
The Group checks its capital by means of a debt/capital ratio, i.e. comparing the net debt to the total of the capital plus the net debt. Group policy aims at keeping this ratio between 20% and 35%.
The Group includes financial charges, accounts payable and other liabilities in the net liabilities, net of liquid funds and equivalent:
(thousands of Euro) 31/12/2008 31/12/2007
Medium/long-term debt 3.969 5.165
Loans from banks at net of equivalents on hand 33.139 83.863
Financial gross debt 37.108 89.027
Share capital 234.412 233.334
Reserves 108.569 115.970
Net result 18.452 21.764
Net assets 361.433 371.068
Total capital and gross debt 398.541 460.095
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