12-31-2011 CHANGES DURING THE PERIOD 12-31-2012 INCREASES (+)
REPAYMENTS (-)
PROVISIONS (-) VALUE RECOVERIES (+)
Due from clients 236,272 (1,564) 0 234,708
less
allowance for doubtful accounts (44,951) 2,488 (20,905) (63,368)
allowance for overdue interest (8,112) 103 0 (8,009)
183,209 1,027 (20,905) 163,331
Due from associated undertakings 482 1 0 483
Due from parent companies 320 8,324 0 8,644
Due from tax authorities 26,670 8,020 0 34,690
Deferred tax assets 40,624 4,989 0 45,613
Due from others:
sundry 59,224 (12,474) 0 46,750
advances to suppliers for services 143 7 0 150
59,367 (12,467) 0 46,900
310,672 9,894 (20,905) 299,661
“Due from clients”, net of allowances for doubtful accounts, amounts to 163,331 thousand Euros and includes trade receivables due from clients and amounts due from public bodies deriving from financed works and the supply of utilities and services. The reduction of 19.9 million euros is mainly attributable to higher provisions to the allowance for doubtful accounts deriving from the greater risks on the recoverability of receivables arising from the financial difficulties faced by several customers and the disputes regarding some fees deriving from the uncertain regulatory framework.
This item includes amounts due to the Group from Alitalia Group companies under special administration, totaling 20.3 million euros. For the amounts due from Alitalia SpA under special
issued by Alitalia/CAI to secure the amounts due to ADR from Alitalia SpA under special administration (as well as to the aircraft owned by lessors, obliged in a fair manner) in order to allow the aircraft owned by the lessors to reach Alitalia/CAI free from claims of seizure for protection purposes made by ADR. The amount collected was entered under Payables.
“Due from associated undertakings”, amounting to 483 thousand euros, includes amounts due from the insolvent Ligabue Gate Gourmet Roma SpA, classified among preferential liabilities. “Due from parent companies”, equal to 8,644 thousand euros comprises trade receivables for 426 thousand euros (320 thousand euros at 12/31/2011) and amounts due from tax consolidation for 8,218 thousand euros (zero at 12/31/2011), which include 7,721 thousand euros of the credit deriving from the higher IRES paid in the taxation periods 2007-2011 due to the non deduction of IRAP on staff costs. For further information, reference should be made to the item "Extraordinary income and expense"
“Due from tax authorities”, equal to 34,690 thousand euros, includes 26.1 million euros regarding the entry of the sums posted provisionally with regard to the current litigation with the Customs Office, fully paid. Indeed, these constitute advance payments as they have been provisionally recognized given that no definitive penalty has been imposed. For a more detailed overview of the accounting repercussions of this case, see the notes on “Allowances for risks and charges”.
The 8.0 million euro increase in tax credits includes the payment in the year of the installments above for 2.4 million euros, the increase in the VAT credit for 2.9 million and the IRAP credit for 2.5 million euros.
”Deferred tax assets”, amounting to 45,613 thousand euros, registered an increase of 4,989 thousand euros with respect to December 31, 2011. The composition of deferred tax assets and changes during the period are shown in the following table.
.
CHANGES IN THE BASIS OF CONSOLIDATION
TAXABLE TAX TAXABLE TAX TAXABLE TAX (D) TAXABLE TAX DEFERRED TAX ASSETS
Allowances for risks and charges 46,445 14,773 2,663 769 8,545 2,745 (33) 40,444 12,764
Allowance for obsolete and slow moving goods 292 81 982 270 82 23 (296) 116 32
Provision for doubtful accounts 42,447 11,675 19,248 5,293 1,232 339 0 60,463 16,629
Staff provisions 7,628 2,098 6,106 1,679 6,711 1,845 (59) 6,811 1,873
Accelerated amortization/depreciation 722 201 0 0 129 37 0 593 164
Consolidation adjustments 18,652 6,085 2,410 786 1,893 617 (44) 19,035 6,210
Other 20,770 5,711 9,793 2,693 1,309 360 (22) 29,174 8,022
Total deferred tax assets 136,956 40,624 41,202 11,490 19,901 5,966 (454) 156,636 45,694 DEFERRED TAX LIABILITIES
Dividends 0 0 (296) (81) 0 0 0 (296) (81)
Gain 0 0 (7) (2) (7) (2) 0 0 0
Total deferred tax liabilities 0 0 (303) (83) (7) (2) 0 (296) (81)
TOTAL 136,956 40,624 40,899 11,407 19,894 5,964 (454) 156,340 45,613
DEFERRED TAX ASSETS (LIABILITIES) IN THE I/S 4,989
BALANCE AT 12.31.2012 INCREASE DECREASE BALANCE AT 12.31.2012
(A) (B) (C) (A+B+C+D)
“Due from others: sundry”, dropped by 12,474 thousand euros during the year, and includes (43,150 thousand euros) the balance of the Debt Service Reserve Account (55,709 thousand euros as at December 31, 2011).
It should be borne in mind that, in accordance with ADR's loan agreements, the “Debt Service Reserve Account” is a term current account in the name of the Security Agent in which the
Company is obliged to keep a sum as security for debt servicing, to be adjusted every six months (periods March 20 – September 19 and September 20 – March 19).
Against the loans governed by agreements with Romulus Finance, a syndicate of banks, EIB and Intesa Sanpaolo (formerly BIIS), the Parent Company, ADR, has granted the lenders the liens stated below. These guarantees are valid until the above loans have been fully repaid:
a lien (in the form of a mortgage ranking pari passu with other claims) on all receivables deriving from the sale of plant, machinery and capital goods and rights constituting ADR and ADR Mobility, as well as other goods and rights subject to liens;
a lien on all receivables and contracts with clients and the insurance policies by ADR, ADR Tel, ADR Advertising, ADR Assistance, ADR Mobility and ADR Security.
Amounts due as of December 31, 2012 (299,661 thousand euros) comprise trade receivables (163,757 thousand euros), financial receivables (43,650 thousand euros) and sundry receivables (92,254 thousand euros). There are no promissory notes or similar bills. There are no receivables falling due beyond five years or receivables subject to exchange rate risk. The following table shows a geographical breakdown of the Group’s trade receivables:
ITALY OTHER
EU COUNTRIES
REST OF
EUROPE AFRICA AMERICA ASIA TOTAL
Due from clients
154,989 7,100 873 39 70 260 163,331
Due from parent companies
426 426
155,415 7,100 873 39 70 260 163,757
Cash on hand and in banks
12-31-2011 CHANGES DURING THE PERIOD
12-31-2012
Bank and post office deposits 173,561 219,499 393,060
Cash and notes in hand 864 (506) 358
174,425 218,993 393,418
The Group’s cash on hand and in banks increased by 218,993 thousand euros compared to the end of the year essentially due to the collection of the sale of the investment in ADR Retail. “Bank deposits” include, in particular, the following current accounts under ADR's loan agreements, subject to special use constraints:
“Recoveries Account”, in which any cash deriving from extraordinary transactions must be deposited and insurance claims. As of December 31, 2012, the balance in the account amounted to 0.7 million euros compared to 11.1 million euros of December 31, 2011 because, by virtue of a specific waiver granted by the lenders, the cash previously blocked on this account was released in favor of the contractual condition of price adjustment of the sale of ADR Handling;
account called “loan collateral” with a balance of 100.5 million euros on which, in relation to the retention regime in force in 2012, on the application dates of March and September, another 48.3 million euros were deposited destined for the repayment of Line A1 of the loan from Romulus Finance falling due;
two new accounts with a total balance of 218.7 million euros, with similar purposes to the mentioned Recoveries Account. On these, the collection was deposited deriving from the sale of ADR Retail (229.4 million euros), partly used for the payment of the transaction costs incurred on the sale. This amount, net of additional transaction costs, price adjustment and related taxes, is subject to a constraint on the allocation for the repayment of Line A1.
As security for the loans governed by agreements with Romulus Finance, a syndicate of banks, EIB and Intesa Sanpaolo (formerly BIIS), ADR has granted a lien on all ADR’s current accounts governed by a specific agreement ("Account Bank Agreement") and on the current accounts of ADR Mobility and ADR Security. This guarantee is valid until the above loans have been fully repaid.
As of December 31, 2012, 25.3 million euros (43.4 million euros as at December 31, 2011) was held in two ADR current accounts that is not subject to a lien (even in the event of a cash
sweep). This amount derives from free cash flow generated before 2008 and may, therefore, be
used for the payment of dividends under ordinary circumstances.