Annual Report Financial Report
2014
GRUPO ISOLUX CORSÁN, S.A. AND ITS SUBSIDIARIES Consolidated Annual Accounts at 31 December 2014 and 2014 Directors’ Report
Annual Report Financial Report
2014
CONSOLIDATED ANNUAL ACCOUNTS OF GRUPO ISOLUX CORSĂ N, S.A. AND SUBSIDIARIES AT 31 DECEMBER 2014 Index
4
CONSOLIDATED BALANCE SHEET
10
CONSOLIDATED BALANCE SHEET
11
CONSOLIDATED INCOME STATEMENT
12
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
13
CONSOLIDATED STATEMENT OF CHANGES
14
CONSOLIDATED STATEMENT OF CHANGES
15
CONSOLIDATED STATEMENT OF CASH FLOWS
16
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS
17
1.
General information
17
2.
Summary of significant accounting policies
20
2.1. Basis of preparation
20
2.2. Consolidation
27
2.3. Foreign currency transactions
30
2.4. Property, plant and equipment
31
2.5. Investment property
32
2.6. Intangible assets
32
2.7. Concessionary assets and other non-current assets assigned to projects
33
2.8. Interest costs
34
2.9. Impairment of non-financial asset
34
2.10. Financial assets
34
2.11. Derivative financial instruments and hedging activities
36
2.12. Inventories
37
2.13. Trade and other receivables
37
2.14. Cash and cash equivalents
37
2.15. Share capital
37
2.16. Deferred income
38
2.17. Trade and other payables
38
2.19. Bank Borrowings and other financial liabilities
38
2.20. Current and deferred income taxes
39
2.21. Employee benefits
39
2.22. Provisions
40
2.23. Revenue recognition
40
2.24. Interest Income
43
2.25 Dividend Income
43
2.26. Leases
44
2.27. Dividend distribution
44
2.28. Environment
44
2.29. Operating results
44
2.30. Non-current assets (disposable groups) and liabilities held for sale and discontinuing operations
44
2.31. Segment reporting
45
3.
Financial risk management
46
3.1. Financial risk factors
46
3.2. Capital risk management
51
Annual Report Financial Report
3.3. Fair value estimation
52
2014
4.
Critical accounting estimates and judgments
5.
Segment information
57
6.
Property, plant and equipment
63
7.
Goodwill and other intangible assets
66
4.1. Critical accounting estimates and judgments
8.
54
7.1. Goodwill
66
7.2. Other intangible assets
68
Concessionary assets and other non-current assets assigned to projects 8.1. Concessionary assets assignet to projects
9.
54
69 70
8.2. Other assets allocated to projects
71
8.3. Project finance
72
Investments in associates
73
9.1. Summarised financial information for Isolux Infrastructure Netherlands, B.V.
75
9.2. Summarised financial information for Isolux Corsรกn Aparcamientos, S.A.
80
10.
Financial Investments
81
11.
Derivative financial instruments
82
12.
Trade and other receivables
86
13.
Inventories
88
14.
Cash and cash equivalents and financial assets at fair value through profit or loss
89
14.1. Cash and cash equivalents
89
14.2 Financial assets at fair value through profit or loss
90
15.
Non-current assets and related liabilities held for sale and discontinuing operations
90
16.
Share capital, share premium and legal reserve
93
17.
Cumulative translation differences
95
18.
Parent company profit/(loss) distribution and non-controlling interest
96
19.
Earnings per share
97
20.
Trade and other payables
98
21.
Bank Borrowings and Senior Notes
100
21.1. Syndicated loans
101
21.2. Other borrowings
101
21.3. Credit lines
102
21.4. Other information
103
22.
Deferred income tax
103
23.
Provisions for other liabilities and charges
106
24.
23.1. Provisions for other liabilities and charges - Non-current
106
23.2. Provisions for other liabilities and charges - Current
107
Revenue / Sales and Materials consumed and other external costs
108 5
Index
25.
Other income and expense
108
26.
Employee benefit expenses
109
27.
Operating leases
110
28.
Net financial results
111
29.
Income tax
111
30.
Dividends per share
113
31.
Commitments, contingencies and guarantees provided
114
31.a) Commitments
114
31.b) Contingencies and guarantees provided
114
32.
Business combinations
115
33.
Related-party transactions
116
34.
Joint Operations
121
35.
Temporary joint ventures (UTEs) and consortia
122
36.
Environment
123
37.
Events after the reporting period
123
38.
Auditors’ fees
123
Appendix I
122
Appendix II
124
Appendix III
125
Appendix IV
131
Appendix V
132
DIRECTOR’S REPORT 1.
Entity’s position 1.1. Organizational structure 1.2. Operation
2.
3.
6
Evolution and Business results
138 138 138 139
2.1. Changes in accounting policies
139
2.2. Changes in consolidation scope
141
2.3. Main figures
143
2.4. Consolidated income statement
145
2.5. Segment results
146
2.6. Consolidated balance sheet
147
2.7. Consolidated cash flow statements
149
2.8. Key financial and non-financial indicators
149
2.9. Environmental and staff issues
150
Liquidity and capital resources
151
3.1. Liquid
151
3.2. Capital resources
153
3.3. Analysis of contractual operations and off- balance sheet
153
4.
Main regulatory risks
5.
Financial risk
4.1. Operational risks
154 154 157
Annual Report Financial Report
5.1. Market risk
157
2014
5.2. Credit risk
160
5.3. Liquidity risk
160
5.4. Capital risk management
161
6.
Expected Business Trends
162
7.
Information on Research and Development (R&D) Activities
163
8.
Acquisition and disposal of treasury shares
163
9.
Subsequent events
163
Preparation of the 2014 consolidated annual accounts
164
7
8
Annual Report Financial Report
2014
9
CONSOLIDATED ANNUAL ACCOUNTS OF GRUPO ISOLUX CORSĂ N, S.A. AND SUBSIDIARIES AT 31 DECEMBER 2014
CONSOLIDATED BALANCE SHEET (Thounsands of euros)
Note
31 December 2014
31 December 2013 (*)
1 January 2013 (*)
ASSETS Non-current assets 6
113,043
126,648
190,429
Goodwill
Property, plant and equipment
7.1
479,628
477,117
477,668
Intangible assets
7.2
23,458
26,727
21,106
-
-
14.650 201,310
Investment property Concessionary assets assigned to projects
8.1
25,622
10,467
Other non-current assets assigned to projects
8.2
126,470
135,048
228,41
Investments in associates and joint ventures
9
973,807
827,820
978,890
Financial investments
10
10,435
10,446
11,844
Trade and other receivables
12
111,905
94,463
77,460
Deferred income tax assets
22
288,523
256,204
226,033
Derivative financial instruments
11
777
-
12
2,153,668
1,964,940
2,427,543
Current assets Inventories
13
253,142
206,570
400,472
Trade and other receivables
12
1,847,216
1,657,482
1,647,541
Derivative financial instruments
11
2,131
2,726
2,621
Financial assets at fair value through profit or loss
14.2
14,675
7,794
1,484
Cash and cash equivalents
14.1
291,272
241,442
321,737
15
379,602
657,492
-
2,788,038
2,773,506
2,373,855
4,941,706
4,738,446
4,801,398
Non-current assets held for sale
Total assets
10
(*) See Note 2.1 Notes 1 to 38 and Appendices I to V are an integral part of these consolidated annual accounts.
CONSOLIDATED BALANCE SHEET (Thousands of euros)
Annual Report Financial Report
2014 Nota
31 December 2014
31 December 2013 (*)
1 January 2013 (*)
Share capital
16.a
18,017
18,017
18,017
Share premium
16.b
526,237
526,237
526,237
Legal reserve
16.c
17,637
15,280
12,921
EQUITY Equity attributable to owners of the parent company
Hedging reserve
11
(61,717)
(47,625)
(49,095)
Cumulative translation differences
17
(188,895)
(179,216)
(79,532)
60,474
92,866
58,994
371,753
425,559
487,542
(6,907)
(2,311)
26,899
364,846
423,248
514,441
Retained earnings Non-controlling interest
18
Total equity LIABILITIES Non-current liabilities Bank Borrowings and Senior Notes
21
1,271,424
918,478
862,177
Project finance
8.3
207,672
192,103
382,822
Derivative financial instruments
11
21,918
21,301
53,995
Deferred income tax liabilities Provisions for other liabilities and charges Other payables
22
43,171
24,179
28,018
23.1
43,206
46,051
22,050
20
62,354
54,829
56,470
1,649,745
1,256,941
1,405,532
Current liabilities Bank Borrowings and Senior Notes
21
276,090
406,854
584,808
Project finance
8.3
13,297
10,743
60,612
Trade and other payables
20
2,355,487
2,191,051
2,148,553
20,663
20,785
22,140
15,466
10,724
10,048
Current tax liabilities Derivative financial instruments Provisions for other liabilities and expenses
11 23.2
73,559
57,530
55,264
15
172,553
360,570
-
2,927,115
3,058,257
2,881,425
Total liabilities
4,576,860
4,315,198
4,286,957
Total equity and liabilities
4,941,706
4,738,446
4,801,398
Liabilities held for sale
(*) See Note 2.1 Notes 1 to 38 and Appendices I to V are an integral part of these consolidated annual accounts.
11
CONSOLIDATED INCOME STATEMENT (Thousands of euros)
Year ended 31 December Note Total operating income Revenue / Sales Other operating income
24 & 5
2014
2,603,488
2,128,103
2,572,792
5,255
15,794
514
(1,601)
25
Change in inventories Own work capitalized Total operating expenses
2013 (*)
2,134,187
315
16,503
(1,968,392)
(2,434,154)
Materials consumed and other external costs
24
(1,233,005)
(1,698,713)
Employee benefit expenses
26
(334,080)
(326,763)
Depreciation, amortization and impairment losses
6,7 &8
(41,216)
(47,615)
(44,587)
(33,735)
(315,504)
(327,328)
165,795
169,334
Change in trade provisions Other operating expenses
25
Operating results Financial expenses
28
(236,188)
(201,387)
Financial income
28
30,616
17,359
(205,572)
(184,028)
Net financial results Share of profits/ (losses) of investments accounted for the equity method
28 9
Profit before income tax Income tax
29
Results for the year from continuing operations Results for the year from discontinuing operations
15
Results for the year
26,357
10,009
(13,420)
(4,685)
(19,285)
8,139
(32,705)
3,454
(9,280)
(6,149)
(41,985)
(2,695)
Attributable to: Owners of the parent Non-controlling interest
(38,586)
6,640
(3,399)
(9,335)
(41,985)
(2,695)
18
Earnings per share from continuing and discontinued operations attributable to owners of the parent during the year (expressed in euro per share) Basic earnings per share: - From continuing operations
19
(0,33)
0,14
- From discontinued operations
19
(0,10)
(0,07)
19
(0,43)
0,07
From profit for the year
12
(*) See Note 2.1 Notes 1 to 38 and Appendices I to V are an integral part of these consolidated annual accounts.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED AT 31 DECEMBER 2014 AND 2013
Annual Report Financial Report
(Thousands of euros)
2014 Year ended 31 December Note
2014
Profit/(losses) for the year
2013 (*)
(41,985)
(2,695)
-
-
-
-
Other comprehensive income: Items that will not be reclassified to profit or loss:
Items that may be reclassified subsequently to profit or loss: Share of other comprehensive income of associates and joint ventures
9
(10,321)
(101,841)
Exchange differences
17
(19,634)
(1,246)
10,005
6,369
Cash flow hedges Tax effect relating to items that may be reclassified
22
(3,320)
(2,069)
Other comprehensive income for the year, net of tax
(23,270)
(98,787)
Total comprehensive income for the year
(65,255)
(101,482)
(62,357)
(91,574)
(2,898)
(9,908)
(65,255)
(101,482)
(53,111)
(85,487)
(9,246)
(6,087)
(62,357)
(91,574)
Total comprehensive income for the year attributable to: - Owners of the parent - Non-controlling interests Total comprehensive income for the year
Total comprehensive income attributable to owners of the parent company arising from: - Continuing operations - Discontinuing operations
(*) See Note 2.1 Notes 1 to 38 and Appendices I to V are an integral part of these consolidated annual accounts.
13
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY – YEAR 2014 (Thousands of euros)
Attributable to owners of the Parent Company Share Capital (Note 16)
Share Premium (Note 16)
Legal Reserve (Note16)
Hedging reserve (Note 11)
Cumulative translation difference (Note17)
Retained earnings
Noncontrolling interests (Note 18)
18,017
526,237
15,280
(47,625)
(179,216)
92,866
(2,311)
423,248
Profit/(loss) for the year
-
-
-
-
-
(38,586)
(3,399)
(41,985)
Share of other comprehensive income from investments in companies by equity method
-
-
-
(21,015)
10,694
-
-
(10,321)
Net cash flow hedges
-
-
-
6,923
-
-
(238)
6,685
Foreign currency translation differences
-
-
-
-
(20,373)
-
739
(19,634)
Total other comprehensive income
-
-
-
(14,092)
(9,679)
-
501
(23,270)
Total comprehensive income
-
-
-
(14,092)
(9,679)
(38,586)
(2,898)
(65,255)
Other movements and additions to consolidation scope
-
-
-
-
-
8,551
(1,698)
6,853
2013 Profit Distribution (Note 18)
-
-
2,357
-
-
(2,357)
-
-
18,017
526,237
17,637
(61,717)
(188,895)
60,474
(6,907)
364,846
Balance at 31 December 2013 (*)
Balance at 31 December 2014
14
(*) See Note 2.1 Notes 1 to 38 and Appendices I to V are an integral part of these consolidated annual accounts.
Total Equity
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY – YEAR 2013
Annual Report Financial Report
(Thousands of euros)
2014
Attributable to equity holders of the Parent Company Share Capital (Note 16)
Share Premium (Note 16)
Legal Reserve (Note 16)
18,017
526,237
12,921
(49,095)
(79,532)
58,994
26,899
514,441
Profit/(loss) for the year
-
-
-
-
-
6,640
(9,335)
(2,695)
Share of other comprehensive income from investments in companies equity method
-
-
-
(2,144)
(99,697)
-
-
(101,841)
Net cash flow hedges
-
-
-
3,614
-
-
686
4,300
Foreign currency translation differences
-
-
-
-
13
-
(1,259)
(1,246)
Total other comprehensive income
-
-
-
1,470
(99,684)
-
(573)
(98,787)
Total comprehensive income
-
-
-
1,470
(99,684)
6,640
(9,908)
(101,482)
Other movements and additions to consolidation scope
-
-
-
-
-
29,591
(19,302)
10,289
2012 Profit Distribution (Note 18)
-
-
2,359
-
-
(2,359)
-
-
18,017
526,237
15,280
(47,625)
(179,216)
92,866
(2,311)
423,248
Balance at 1 January 2013
Balance at 31 December 2013 (*)
Hedging reserve (Note 11)
Cumulative translation difference (Note 17)
(*) See Note 2.1 Notes 1 to 38 and Appendices I to V are an integral part of these consolidated annual accounts.
Retained earnings
Non-controlling interests (Note 18)
Total Equity
15
CONSOLIDATED STATEMENT OF CASH FLOWS (Thousands of euros) Year ended 31 December Notes
2014
2013 (*)
Cash flows from operating activities Results for the year before taxes
(25,473)
(13,425)
41,555
50,033
44,587
33,735
-
(2,196)
Adjustments for: - Depreciation, amortization and impairment losses
2.5, 6,7,8 & 15
- Change in trade provisions - Results on property, plant and equipment disposal - Share of results on investments accounted for the equity method - Net financial results
9 & 15
(25,276)
(8,817)
28 & 15
207,685
187,390
268,551
260,145
Subtotal Changes in working capital :
- Inventories - Trade and other receivables - Financial assets at fair value through profit or loss - Trade and other payables - Provisions for other liabilities and charges Cash generated from operations - Taxes paid Net cash generated from operating activities
(35,819)
10,621
(184,308)
(78,426)
(6,882)
(6,309)
117,942
19,571
-
(11,683)
134,011
180,494
(11,016)
(18,720)
122,995
161,774
Cash flows from investing activities - Net cash variation due to changes in perimeter
(6,003)
-
- (Acquisition)/Sale of tangible and intangible assets, net
32
(17,628)
(19,975)
- Acquisition of concessionary assets and non-current assets assigned to projects
(15,804)
(51,647)
- Net change in long-term payables - Acquisition of investments in equity-method companies - Income from equity method companies - Interest received and other financial income Net cash used in investing activities
(750)
(750)
(25,519)
(46,525)
13,648
67,942
3,879
6,175
(48,177)
(44,780)
Cash flows from Financing activities - Proceeds from borrowings - Reimbursement of borrowings - Proceeds from project finance - Reimbursement of project finance - Other debt instruments - Interest paid Net cash generated from/(used in) financing activities Net change in cash and cash equivalents
14.1 & 15
Cash and cash equivalents at beginning of the year Exchange differences included in net change for the year Cash and cash equivalents at the end of the year Cash Flows contributed by discontinuing operations
16
14.1 & 15 15
(*) See Note 2.1 Notes 1 to 38 and Appendices I to V are an integral part of these consolidated annual accounts.
185,606
183,867
(856,392)
(230,834)
37,008
53,599
(30,956)
(36,948)
840,322
-
(209,329)
(145,563)
(33,741)
(175,879)
41,077
(58,885)
251,752
321,737
1,147
(11,100)
293,976
251,752
29
(662)
CONSOLIDATED ANNUAL ACCOUNTS OF GRUPO ISOLUX CORSÁN, S.A. AND SUBSIDIARIES AT 31 DECEMBER 2014
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS (Thousands of euros)
1. General information As of yearend 2014 GRUPO ISOLUX CORSÁN, S.A. (hereinafter, the Company) forms a group (hereinafter, the Group) comprising the parent company Grupo Isolux Corsán, S.A. and its subsidiaries, joint ventures and associates. Additionally, the Group participates with other entities or members in joint ventures and temporary joint operations (hereinafter, Joint Ventures). Appendices I, II, III and IV to these notes contain additional information on the entities included in the consolidation scope. The Group companies hold interests of less than 20% in other entities over which they have no significant influence. The Group’s main activities and sales are carried on and made in Spain, Latin America, Asia, Africa and North America. On 17 December 2004, the Company was incorporated which following several name changes, is now named the company Grupo Isolux Corsán, S.A. The Company is the parent of a group that is continuing the activities of Grupo Isolux Wat. The latter group gained broad experience in the Spanish market and was engaged mainly in engineering. At the beginning of 2005 it merged with the Corsán Corviam Group, which was also reputable and engaged mainly in construction. Grupo Isolux Corsán is the result of the 2005 merger. Grupo Isolux Corsán, S.A.’s registered office is at Caballero Andante 8, 28021 Madrid. The Company is registered in the Madrid Mercantile Register, page M-00367466, volume 20,745, sheet 189. The latest updating of its bylaws is entered in page M-00367466, volume 27.069, sheet 14, inscription Nº169. For the purposes of preparing the consolidated annual accounts, a group is understood to exist when the parent company has one or more subsidiaries, which are those entities that the parent company controls directly or indirectly. The principles applied during the preparation of the Group’s consolidated annual accounts, together with the consolidation scope, are described in Note 2.2. Appendix I to these notes set outs the identification details of the subsidiaries included in the consolidation scope under the full consolidation method. Appendix II provides the identification details of the associates included in the consolidation under the equity method. Appendix III contains the identification details of the joint ventures included in the consolidation scope under the equity method.
Annual Report Financial Report
Appendix IV contains the identification details of the joint operations included in the consolidation scope unter the proportionate method.
2014
The parent company and certain subsidiaries are members of temporary joint ventures (UTEs) and consortia, whose assets, liabilities, income and expenses are recognized using the proportionate method. Appendix V contains a detail of the temporary joint ventures and consortia of which Group companies are members. The main consolidation scope changes during 2014 are described below: • Main incorporated companies: Corsan Corviam Colombia, S.A.S., Tenedora de Acciones de Líneas de Transmisión Peruanas, S.A.C., Líneas de Transmisión Peruanas, S.A.C., Icapark I, S.A. Icapark II, S.A., Isolux Corsan Aparcamientos Activos, S.L.U., Isolux Ingenieria G.K. and Isolux-TVIG HW, LLC. • Change of control of Isolux Corsan Aparcamientos, S.A. and its subsidiaries (see Note 32). The main consolidation scope changes during 2013 are described below: • Companies incorporated: Isolux Corsan Construction, ULC, Isolux Corsán Puerto Rico, LLC, Siascan (PTY) LTD, Tenedora de Acciones de Generadora Eléctrica Molloco, SAC, Generadora Eléctrica Molloco, SAC, Corsan Corviam Asia Projects, Infrainter Infraestructuras Internacionales, SA, Parque Eólico Loma Blanca I, S.A, Parque Eólico Loma Blanca III, S.A, Grupo Isolux Corsan Finance, B.V., Isolux Energy Investments, SLUV and Linhas de Itacaiunas Trasmissora de Energia LTDA. • Acquisition of 100% of Isolmex, S.A. de C.V. shares and acquisition to a related party of 50% of Aparcamientos IC Gomez Ulla, S.L. shares. • During 2013 the subsidiary T-Solar Global, S.A., manufacturing solar photovoltaic panels, was declared in to be involved in bankruptcy proceedings, with its subsequent liquidation and dissolution. The powers of administration and disposal of its assets were therefore suspended and a bankruptcy administrator was appointed by the courts. The Group considers that it has lost control of its subsidiary and has not consolidated it since March 2013. This has not had a significant impact on the Group’s assets and financial situation. The operations of the subsidiary, while it formed part of the consolidation, have been classified as discontinuing operations (see Note 15). 17
Notes to the consolidated annual accounts
18
Grupo Isolux Corsán, S.A. does business in Spain and abroad, mainly consisting of the following activities (carried on by the Company itself or its subsidiaries): • Engineering studies, industrial assembly and manufacture of the necessary components, integrated facilities and construction. • Manufacture, sale and representation of electrical, electronic, electromechanical, computer and industrial products, machinery and equipment. • Rendering of all types of consultancy, audit, inspection, metering, analysis, report, research and development services; project design, planning, supply, execution and assembly; project and site management and supervision; tests, trials, commissioning, control and evaluation; repair and maintenance services in integrated facilities; electrical and electronic facilities, air conditioning and aeration systems; sanitary fluid and gas systems; elevators and freight elevators; fire protection and detection systems; hydraulic systems, information systems, mechanical and industrial systems; communications, energy, environment; and energy lines, substations and power plants. • Integrated construction, repair, conservation and maintenance of all kinds of construction and all kinds of installation and fitting work. • Purchase, sale, lease and operation by any means of real property or real property rights. • Holding, management and administration of securities and equity interests in any entity.
The Group mainly operates through the following business lines: • EPC (Engineering, Procurement and Construction), related mainly to the construction and engineering projects under “turnkey contracts. • Concessions: • Through Isolux Infrastructure the Group holds infrastructure concessions of highways, electricity infrastructure concessions such as high-voltage transmission lines and substations, and solar-photovoltaic generation plants. •Infrastructure concessions of car parks. As mentioned in Notes 22 and 29 of these consolidated statements, Article 29 and Additional Provision 34 of Law 27/2014 published in the Official State Gazette of 28 November 2014, have introduced a change to the general tax rate, reducing it from 30% in 2014 to 28% for 2015 and 25% for 2016. These Notes quantify the impact of that reform on the Group’s financial position, particularly on the consolidated income statement (40 million euro). For the purposes of understanding such impacts and providing information to enable the comparison of the financial information between the years reported, Management considers it appropriate to include the following disclosures, showing the consolidated income statement for 2014 before and after these impacts:
Year ended 31 December, 2014 Previous Total operating income
Tax reform impact
Total
2,134,187
-
2,134,187
2,128,103
-
2,128,103
Change in inventories
5,255
-
5,255
Own work capitalized
514
-
514
Revenue / Sales
Work performed by the entity and capitalized Total operating expenses Materials consumed and other external costs Employee benefit expenses Depreciation, amortization and impairment losses
315
-
315
(1,968,392)
-
(1,968,392)
(1,233,005)
-
(1,233,005)
(334,080)
-
(334,080)
(41,216)
-
(41,216)
Change in trade provisions
(44,587)
-
(44,587)
Other operating expenses
(315,504)
-
(315,504)
Operating results
165,795
-
165,795
Financial expenses
(236,188)
-
(236,188)
30,616
-
30,616
(205,572)
-
(205,572)
26,357
-
26,357
(13,420)
-
(13,420)
20,763
(40,048)
(19,285)
Financial income Net financial results Share of profits/ (losses) of investments accounted for the equity method Profit before income tax Income tax Results for the year from continuing operations
7,343
(40,048)
(32,705)
Results for the year from discontinuing operations
(9,280)
-
(9,280)
Results for the year
(1,937)
(40,048)
(41,985)
Annual Report Financial Report
2014
These consolidated annual accounts, together with the annual accounts of the parent company, were prepared by the Board of Directors on 3 March 2015. The Directors will submit these consolidated annual accounts to the General Shareholders` Meeting for approval. The accounts are expected to be approved without changes.
19
Notes to the consolidated annual accounts
2. Summary of significant accounting policies The principal accounting policies applied in the preparation of these consolidated annual accounts are set out below. These policies have been consistently applied to all the financial years presented in these consolidated annual accounts. 2.1. Basis of preparation The Group’s consolidated annual accounts at 31 December 2014 have been prepared in accordance with International Financial Reporting Standards (IFRS) adopted for its use by the European Union, approved by the European Commission Regulations (IFRS-EU) and effective at 31 December 2014. The Group’s firs time application of IFRS-EU was on 1 January 2006. The policies described below have been consistently applied to all the financial years presented in these consolidated annual accounts. The amounts are expressed in thousands of euro in this document, unless otherwise stated. The consolidated annual accounts have been prepared on a historical cost basis, except for certain cases stipulated by IFRS-EU in which assets and liabilities are carried at fair value. The Company has made the following choices in cases in which IFRS-EU allow for alternative criteria: • Measurement of property, plant, equipment and intangible assets at historical cost, capitalizing financial expenses over the construction period. The preparation of consolidated annual accounts under IFRS-EU requires the use of certain critical accounting estimates. It also requires that management exercise judgment in the process of applying the Company’s accounting policies. In Note 4 discloses the areas that require a higher level of judgment or entail greater complexity, and the areas where assumptions and estimates are significant for the preparation of the consolidated annual accounts. Standards, amendments and interpretations that came into effect in 2014 a) Standards, interpretations and amendments effective from January 1, 2014 applied by the Group:
20
• IAS 27 (amendment) ‘Separated financial statements’. IAS 27 amendment is mandatory for periods beginning on or after January 1, 2014 under IFRS-EU
(January 1, 2013 under IFRS-IASB). After IFRS 10 has been published, IAS 27 covers only separate financial statements. • IAS 28 (amendment) ‘Associates and joint ventures’. IAS 28 has been amended to include the requirements for joint ventures to be accounted for under the equity method following the issuance of IFRS 11. IAS 28 amendment is mandatory for periods beginning on or after January 1, 2014 under IFRS-EU (January 1, 2013 under IFRS-IASB). • IFRS 10 ‘Consolidated Financial Statements’. IFRS 10 replaces current consolidation requirements of IAS 27 and introduces changes in the control concept, which is still considered as the main factor to define if and entity must or not be included in the consolidated financial statements. This Standard will be effective for periods beginning on or after January 1, 2014 under IFRS-EU (January 1, 2013 under IFRS-IASB). • IFRS 11 ‘Joint Arrangements’. This Standard will be effective for periods beginning on or after January 1, 2014 under IFRS-EU (January 1, 2013 under IFRSIASB). IFRS 11 replaces the current IAS 31 about joint ventures and provides an accounting treatment for joint ventures based on the rights and obligations each investor has rather than just the legal structure of the joint arrangement. Joint arrangements are reduced to two types: joint operations and joint ventures. Joint operations arise where a joint operator has rights to the assets and obligations relating to the arrangement and hence accounts for its interest in assets, liabilities, revenue and expenses on a proportional basis. Joint ventures arise where the joint operator has rights to the net assets of the arrangement and accounts for its interest under the equity method. Proportional consolidation of joint ventures is no longer allowed. • IFRS 12 ‘Disclosures of interests in other entities’. This Standard defines the disclosures related to interests hold in subsidiaries, associates, joint arrangements and non-consolidated entities. It will be effective for periods beginning on or after January 1, 2014 under IFRS-EU (January 1, 2013 under IFRS-IASB). • IAS 32 (Amendment) “Offsetting Financial Assets and Financial Liabilities” Amendment to IAS 32 “Financial instruments: Presentation” changes the Application Guidance of the standard to clarify some of the requirements for the offset of financial assets and financial liabilities on the balance sheet. The amendment does not entail changes to the offset model which already exits in IAS 32 , and which is still applicable when, and only when, an entity currently has the legally enforceable ri-
ght to offset the amounts recognised and has the intention to settle the net amount or realise the asset and settle the liability simultaneously. The amendment clarifies that the right to offset should be available at the present time -i.e. it does not depend on a future event. Additinonally, the right has to be legally enforceable in the ordinary course of business of the counterparties involved in the transaction, including in cases of default, insolvency and bankruptcy. The application of the amendment to IAS 32 is mandatory in all years starting on and after 1 January 2014 and is applicable retroactively. • IAS 36 (Amendment) “Recoverable amount disclosures for non-financial assets”. The IASB has published a limited scope amendment to IAS 36 “Impairment of assets” in relation to disclosures of the recoverable amounts of impaired assets when the recoverable amount is based on fair value less cost to sell or otherwise dispose of the assets. IFRS 13 “Fair value measurement” included the consequent amendments to the disclosure requirements of IAS 36. One of these amendments was worded more broadly than expected. The amendment corrects this situation and in addition, requires that complementary information be reported on fair value measurement when there is impairment or its reversal. Thais amendment applies to the years starting on and after 1 January 2014 and is applicable retrospectively. The application of the new standards and prior amendments by the Group has not had a significant effect on the consolidated annual accounts, except in the case of IFRS 10, 11 and 12, the details of which are discussed below. b) Standards, amendments and interpretations that are not yet in force but can be early adopted for periods beginning on or after January 1, 2014 and which have been adopted by the European Union: • IFRIC 21 “Levies”. This interpretation addresses the accounting treatment of taxes imposed by governments other than income taxes, fines and penalties imposed for violations of the law. The question is when the entity must recognise a liability for the obligation to pay a levy that is accounted for according to IAS 37. It also addresses the accounting treatment of a liability for the payment of a levy when the amount and due date are known. • Annual improvements to IFRS, 2011-2013. In December 2013, the IASB published the Annual Improvements to IFRS for the years 2011-2013. The changes introduced by these Annual Improvements generally apply to the fiscal years starting on or after
01 January 2015, although they may be implemented sooner. The changes are as follows: • IFRS 3, “Business combinations”. Exclusion of joint ventures from the scope.
Annual Report Financial Report
2014
• IFRS 13 “Fair value measurement”. Scope of the “portfolio exception” available in IFRS 13. • IAS 40 “Real estate investments”: Relationship between IAS 40 and IFRS 3 when a property is classed as an investment property or owner-occupied property. • Annual Improvements to IFRS for the years 20102012: In December 2013, the IASB published the Annual Improvements to IFRS for the 2010-2012 Cycle. The changes introduced by these Annual Improvements generally apply to the fiscal years starting on or after 1 February 2015, although they may be implemented sooner. The changes are as follows: • IFRS 2, “Share-based payments”: Definition of “condition for irrevocability of the concession”. • IFRS 3, “Business combinations”. Recognition of a contingent consideration in a business combination. • IFRS 8, “Operating segments” Information to be reported on the aggregation of operating segments and the reconciliation between the assets assigned to the segments reported on and the entity’s assets. • IFRS 13 “Fair value measurement”. References to the ability to measure current accounts receivable and payable at their nominal value when the effect of the discount is not significant. • IAS 16 “Property, plant and equipment” and IAS 38 “Intangible assets”: Proportional re-expression of the cumulative amortisation when using the revaluation model. • IAS 24 “Related party disclosures”: Entities that render services through key management personnel as related parties. • IAS 19 (Amendment) “Employee benefits’ regarding employee or third party contributions to defined benefit plans”: IAS 19 (revised in 2011).The amendment applies to contributions from employees or third parties to defined benefit plans and clarifies the treatment of such contributions. The amendment distinguishes between contributions which are linked to service only in the period in which they arise and those linked to service in more than one period. “Defined benefit schemes, employee contributions”; the IAS 19 (revi-
21
Notes to the consolidated annual accounts
sed in 2011) disgintuishes between employee contributions in relation to the service provided and those contributions not linked to the service provided. The current modification also distinguishes between contributions linked to service only in the financial year in which they appear and those linked to service in more than one financial year. The amendment allows the contributions linked to the service to be deducted from the accrued benefit during the year during in which the service is rendered, if the contributions do not vary during this period. Likewise, the contributions linked to service that do vary during the relevant time period must be extended for the duration of the service provided using the same assignation method as is applied to benefits. This amendment is applicable to financial years commencing 1 February 2015 and will be applied retrospectively. It may be adopted prior to that date. The Group is analysing the impact of these new standards on the consolidated annual accounts. c) Standards, amendments and interpretations of existing standards that have not been adopted by the European Union: • IFRS 14 “Regulatory deferral accounts”: This standard permits first-time adopters of IFRS to continue to recognise amounts related to rate regulation in accordance with their previous GAAP requirements when they adopt IFRS. However, to enhance comparability with entities that already apply IFRS and do not recognise such amounts, the standard requires the effect of rate regulation to be presented separately from other items. A company which has already presented its financial statements in accordance with IFRS cannot apply this standard. This standard comes into force from 1 January 2016, although it may be adopted prior to that date.
22
• IFRS 11 (Amendment) “Joint arrangements’regarding acquisition of aninterest in a joint opeartion”: This amendment provides new guidance on how to account for the acquisition of an interest in a joint venture operation that constitutes a business. The amendments require an investor to apply the principles of business combination accounting when it acquires an interest in a joint operation that constitutes a‘business’. The amendments are applicable to both the acquisition of the initial interest in a joint operation and the acquisition of additional interest in the same joint operation. However, a previously held interest is not re-measured when the acquisition of an additional interest in the same joint operation leads to the retaining of joint control. This Amendment will be applied prospectively for fiscal years starting on or after 1 January 2017, although it may be implemented early.
• IAS 16 (Amendment) and IAS 38 (Amendment) “Property, plant and equipment’ and IAS 38, ‘Intangible assets’ regarding depreciation and amortisation.”: This amendment clarifies that the use of revenue-based methods to calculate the depreciation of an asset is not appropriate 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. This has also clarified that revenue is generally presumed to be an inappropriate basis for measuring the consumption of the economic benefits embodied in an intangible asset. The presumption may only be rebutted in certain limited circumstances: these are where the intangible asset is expressed as a measure of revenue; or where it can be demonstrated that revenue and the consumption of the economic benefits of the intangible asset are highly correlated. This Amendment will be applied prospectively for fiscal years starting on or after 1 January 2017, although it may be implemented early.
• IFRS 15 “Revenue from contracts with clients”: In May of 2014, the IASB and the FASB issued a joint standard in relation to the recognition of revenue from contracts with clients. Under this standard, income is recognised when the client assumes the control over the product or service in question, i.e., when the client has the ability to determine how the product or service is used and to generate profits using it. This IFRS standard includes new guidelines for determining whether income should be recognised over time or at a particular moment in time. IFRS 15 requires detailed reporting of recognised income and the income that is expected to be recognised in the future in relation to existing contracts. It also requires quantitative and qualitative information on the significant judgments used by management to determine recognised income and the changes to those judgments. This Amendment will be applied prospectively for fiscal years starting on or after 1 January 2017, although it can be implemented early. • IAS 16 (Amendment) and IAS 41 (Amendment) “Agriculture: Fruit production plants”: Under this Amendment, fruit production plants are accounted for the same as other property, plant and equipment but differently than other biological assets. Consequently, the amendments include these types of plants within the scope of IAS 16 rather than IAS 41. The products grown at these plants still fall within the scope of IAS 41. These Amendments will apply prospectively to fiscal years starting on or after 1 January 2016 but may be implemented earlier. • IFRS 9 “Financial instruments”: Deals with the classification, valuation and recognition of financial assets
and liabilities. The complete version of IFRS 9 replaces most of the guidance in IAS 39. IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortised cost, fair value through OCI and fair value through P&L. The basis of classification depends on the entity’s business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are required to be measured at fair value throughprofit or loss with the irrevocable option at inception to present changes in fair value in OCI. There is now a new expected credit losses model that replaces the incurred loss impairment model used in IAS 39. For financial liabilities there were no changes to classification and measurement except for the recognition of changes in own credit risk in other comprehensive income, for liabilities designated at fair value, through profit or loss. IFRS 9 relaxes the requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests. It requires and economic relationship between the hedged item and hedging instrument and for the ‘hedged ratio’ to be the same as the one management actually use for risk management purposes. Contemporaneous documentation is still required but is different to that currently prepared under IAS 39. IFRS 9 will be effective for fiscal years starting on or after 1 January 2018, although it can be implemented earlier. IFRS will be applied retroactively, although it will not be necessary to re-express the comparative figures. If the entity chooses to implement IFRS 9 early, all of the requirements must be met early as well. Entities that apply the standard before 1 February 2015 have the option of implementing the standard in phases. • IAS 27 (Amendment) “Equity method in separate financial statements”: IAS 27 is modified to restore the option of using the equity method to account for investments in subsidiaries, joint ventures and associates in the separate financial statements of an entity. It also clarifies the definition of separate financial statements. An entity that chooses to change to the equity method will apply the amendment to the fiscal years beginning on or after 1 January 2016 according to IAS 8, “Accounting policies, changes to accounting estimates and errors”. Early implementation is allowed. • IFRS10 (Amendment) andIAS 28 (Amendment) “Sale or contribution of assets between an investor and its associate or joint ventures”: These amendments clarify the accounting treatment of sales and transfers
of assets between an investor and its associates or joint ventures, which depends on whether or not the non-monetary assets sold or contributed to an associate or joint venture constitute a “business”. These amendments address an inconsistency between IFRS 10 and IAS 28 in the sale or contribution of assets between an investor and its associate or joint venture.A full gain or loss is recognised when a transaction involves a business. A partial gain or loss is recognised when a transaction involves assets that do not constitute a business, even if those assets are in a subsidiary. The Amendments to IFRS 10 and IAS 28 are prospective and are effective from 1 January 2016.
Annual Report Financial Report
2014
• Improvement Project, Cycle 2012-2014: The amendments affect IFRS 5, IFRS 7, IAS 19 and IAS 34 and apply to the fiscal years beginning on or after 1 July 2016, subject to adoption by the EU. The main changes are as follows: • FRS 5: “Non-current assets held for sale and discontinued operations”: Changes to disposal methods. • IFRS 7, “Financial instruments: Disclosures”. Continued involvement in administration contracts. • IAS 19, “Employee Benefits”. Determination of the discount rate for post-employment obligations to employees. • IAS 34, “Interim financial reporting”: Information presented elsewhere in the interim financial information. • IAS 1 (Amendment) “Presentation of financial statements”. The amendments to IAS 1 encourage companies to use their professional judgement to determine which information should be disclosed on the financial statements. The amendments clarify that materiality applies to the financial statements as a whole and that the inclusion of information that is immaterial could diminish the usefulness of the financial information. In addition, the amendments clarify that entities should use their professional judgment when determining where and in what order the information is presented on the financial statements. The amendments to IAS 1 can be applied immediately and will be mandatory for fiscal years starting on or after 1 January 2016. • IFRS 10 (Amendment), IFRS 12 (Amendment) and IAS 28 (Amendment) “Investment entities: Applying the consolidation exception”: These amendments clarify three aspects regarding the application of the requirements for investment entities to recognise subsidiaries at fair value rather than consolidate them. The proposed amendments: Confirm that the exemption from presenting consolidated financial statements continues to apply to the
23
subsidiaries of an investment entity when they themselves are parent entities. Notes to the consolidated annual accounts
Clarifies when the dominant investment entity should consolidate a subsidiary that provides investmentrelated services rather than recognising the fair value of the subsidiary and Simplifies the application of the equity method of an entity that is not itself an investment entity but owns an interest in an associate that is an investor. This Amendment will apply to fiscal years beginning on or after 1 January 2016, although it can be implemented early. The Group is currently in the process of evaluating the impact on its operations derived from the application of these new standards.
Following the application by the Group of the new standards and amendments defined above, the main impact is related to the application of IFRS 11 to the consolidation method of a sifnificant part of the Concessions business (Isolux Infrastructure Netherlands B.V. and its sub-
24
sidiaries) which is accounted under the equity method instead of the proportionate method as was applied for the year 2013. Notwithstanding the Group ownership interest of 80.77%, Isolux Infrastructure Netherlands B.V. and its subsidiaries (hereinafter Isolux Infrastructures) is considered a joint venture considering that key business decisions on the relevant activities need to be taken jointly by the parties. This situation is the result of the experience of reserved matter in the shareholding agreement that require approvals through special majorities, in both Board of Directors and Shareholder’s meetings, including, amongst other, some matters that give participating rights to the partners such as budget and business plan approvals, acquisition and disposal of operational assets, changes of dividend policy, appointment and retribution of key management and withdrawing of financial facilities. The main impacts on the consolidated balance sheet items between 1 January and 31 December 2016 and on the consolidated income statement for the fiscal year ended 31 December 2013 are discussed below. In addition, and as mentioned in Note 15, in fiscal year 2014 car park business is no longer considered to be discontinuous, as a result of which the information included in the consolidated income statement for 2016 was re-expressed to include the effects of this change.
31 December 2013 Effect of restatement
As reported
1 January 2013 After Effect of restatement
After Effect of restatement
Effect of restatement
As reported
ASSETS Non-current assets Property, plant and equipment
126,648
-
126,648
190,429
-
190,429
Goodwill
511,099
(33,982)
477,117
511,646
(33,978)
477,668
26,727
-
26,727
21,106
-
21,106
-
-
-
14,650
-
14,650
Concessionary assets assigned to projects
2,736,017
(2,725,550)
10,467
2,913,799
(2,712,489)
201,310
Other non-current assets assigned to projects
1,370,731
(1,235,683)
135,048
1,352,015
(1,123,874)
228,141
-
827,820
827,820
3,576
975,314
978,890
Intangible assets Investment property
Investments in associates Financial investments
10,446
-
10,446
11,844
-
11,844
Trade and Other receivables
62,401
32,062
94,463
136,446
(58,986)
77,460
Deferred income tax assets
341,214
(85,010)
256,204
355,782
(129,749)
226,033
-
-
-
12
-
12
5,185,283
(3,220,343)
1,964,940
5,511,305
(3,083,762)
2,427,543
Derivative financial instruments Current assets Inventories Trade and other receivables
206,601
(31)
206,570
404,730
(4,258)
400,472
1,918,670
(261,188)
1,657,482
1,973,028
(325,487)
1,647,541
Derivative financial instruments
3,018
(292)
2,726
3,993
(1,372)
2,621
Financial assets at fair value through profit or loss
8,499
(705)
7,794
1,484
-
1,484
Cash and cash equivalents
420,652
(179,210)
241,442
561,847
(240,110)
321,737
Non-current assets held for sale
657,492
-
657,492
-
-
-
3,214,932
(441,426)
2,773,506
2,945,082
(571,227)
2,373,855
8,400,215
(3,661,769)
4,738,446
8,456,387
(3,654,989)
4,801,398
Total assets EQUITY Equity attributable to owners of the parent company Share capital Share premium Legal reserve Hedging reserve Cumulative translation differences Retained earnings
18,017
-
18,017
18,017
-
18,017
526,237
-
526,237
526,237
-
526,237
15,280
-
15,280
12,921
-
12,921
(47,625)
-
(47,625)
(49,095)
-
(49,095)
(179,216)
-
(179,216)
(79,532)
-
(79,532)
92,866
-
92,866
58,994
-
58,994
425,559
-
425,559
487,542
-
487,542
Non-controlling interest
129,690
(132,001)
(2,311)
161,910
(135,011)
26,899
Total equity
555,249
(132,001)
423,248
649,452
(135,011)
514,441
918,478
-
918,478
862,177
-
862,177
2,530,490
(2,338,387)
192,103
2,537,557
(2,154,735)
382,822
LIABILITIES Non-current liabilities Borrowings Project finance Derivative financial instruments
105,184
(83,883)
21,301
196,076
(142,081)
53,995
Deferred income tax liabilities
177,279
(153,100)
24,179
199,035
(171,017)
28,018
Provisions for other liabilities and charges Other payables
57,465
(11,414)
46,051
45,774
(23,724)
22,050
467,820
(412,991)
54,829
478,125
(421,655)
56,470
4,256,716
(2,999,775)
1,256,941
4,318,744
(2,913,212)
1,405,532 584,808
Current liabilities Borrowings
406,854
-
406,854
584,808
-
Project finance
299,990
(289,247)
10,743
367,492
(306,880)
60,612
2,415,165
(224,114)
2,191,051
2,329,180
(180,627)
2,148,553
Trade and other payables Current tax liabilities
21,033
(248)
20,785
22,117
23
22,140
Derivative financial instruments
27,086
(16,362)
10,724
28,487
(18,439)
10,048 55,264
Provisions for other liabilities and expenses Liabilities held for sale
57,552
(22)
57,530
156,107
(100,843)
360,570
-
360,570
-
-
-
3,588,250
(529,993)
3,058,257
3,488,191
(606,766)
2,881,425
4,315,198
7,806,935
(3,519,978)
4,286,957
8,456,387
(3,654,989)
4,801,398
Total liabilities
7,844,966
(3,529,768)
Total equity and liabilities
8,400,215
(3,661,769)
4,738,446
25
Year 2013 Notes to the consolidated annual accounts
Effect of Restatement
As reported Total operating income Revenue / Sales
After Effect of Restatement
3,202,840
(599,352)
2,603,488
3,025,131
(452,339)
2,572,792
Other operating income
30,900
(15,106)
15,794
Change in inventories
(1,601)
-
(1,601)
Own work capitalized Total operating expenses Materials consumed and other external costs
148,410
(131,907)
16,503
(2,789,830)
355,676
(2,434,154)
(1,798,838)
100,125
(1,698,713)
Employee benefit expenses
(382,784)
56,021
(326,763)
Depreciation, amortization and impairment losses
(120,652)
73,037
(47,615)
Change in trade provisions
(35,002)
1,267
(33,735)
Other operating expenses
(452,554)
125,226
(327,328)
Operating results
413.010
(243.676)
169.334
(367,995)
183,967
(184,028)
-
10,009
10,009
Profit before income tax
45,015
(49,700)
(4,685)
Income tax
(30,613)
38,752
8,139
Results for the year from continuing operations
14,402
(10,948)
3,454
Results for the year from discontinuing operations
(8,522)
2,373
(6,149)
5,880
(8,575)
(2,695)
Net financial results Share of profits/ (losses) of investments accounted for the equity method
Results for the year Attributable to:
26
Owners of the parent
6,640
-
6,640
Non-controlling interest
(760)
(8,575)
(9,335)
5,880
(8,575)
(2,695)
2.2. Consolidation Subsidiaries Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases. When through the acquisition of a subsidiary, the Group acquires a group of assets or net assets that are not a business, the group cost is allocated between the identifiable assets and liabilities within the group based on their fair values at the acquisition date. The Group applies the acquisition method to register business combinations. The consideration transferred for the acquisition of a subsidiary corresponds to the fair value of the assets transferred and the liabilities incurred with the previous owners and the equity interests issued by the Group. The above-mentioned consideration includes the fair value of any asset or liability arising from a contingent consideration agreement. Identifiable assets acquired and liabilities and contingent liabilities undertaken in a business combination are measured at fair value on the acquisition date. For each business combination, the Group may recognize any non-controlling interest in the acquired company at either its fair value or the percentage of such non-controlling interest in the acquired company’s identifiable net assets.
date of any previous share in the acquired equity over the fair value of the net identificable assets of the subsidiary acquired, is accounted for as goodwill. If the consideration transferred, the non-controlling interest recognized and the equity share previously hold is lower than the fair value of the net assets of the subsidiary acquired, the difference is directly recognized in the income statement.
Annual Report Financial Report
2014
Intercompany transactions, balances, income and expenses on transactions between Group companies are eliminated. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Appendix I to these notes set outs the identification details of the subsidiaries included in the consolidation scope under the full consolidation method. There are some subsidiaries held by 50% or less that are controlled due to agreements the Group has with shareholders (see Appendix I). The subgroups that areformed by Isolux Infrastructure Netherlands, B.V. and subsidiaries, Isolux CorsĂĄn Aparcamientos S.L and subsidiaries (this last one since the date specifiedin Note 32)where the group holds a 80.77% and 100% of the shares, respectively, are not considered subsidiaries as the control is not held by the Group. Agreements established between shareholders result in the investment being considered as a joint venture (See Appendix III). Disposal and change of control of subsidiaries
Acquisition-related costs are expensed as incurred. If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is re-measured to fair value at the acquisition date through profit or loss. Any contingent consideration to be transferred by the group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not remeasured, and its subsequent settlement is accounted for within equity. The excess of the aggregate of the consideration transferred, the amount of any non-controlling interest in the subsidiary acquired and the fair value at the acquisition
When the group ceases to have control, any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss. In transactions in which the Group loses control over a business but retains joint control (or moves from joint control to control), the Group measures the shareholding at fair value when control is lost (both the part retained and the part lost) and recognises the loss or gain in the income statement. 27
Notes to the consolidated annual accounts
Changes in the shareholding in subsidiaries without changes in control
where necessary to ensure consistency with the policies adopted by the Group.
Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to noncontrolling interests are also recorded in equity.
Dilution gains or losses in associates are recognized in the income statement.
Associates Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding between 20% and 50% of the voting rights. Investments in associates are accounted for by the equity method and are initially recognized at cost. The Group’s investment in associates includes goodwill (net of any accumulated impairment loss) identified on acquisition. If ownership in an associate is reduced, but significant influence is retained, only a proportionate share of those amounts previously recognized through the overall income statement are reclassified to the income statement, as appropriate. The Group’s share on its associates’ post-acquisition profits or losses is recognized in the income statement and its share of post-acquisition movements in other comprehensive income statement is recognized in the comprehensive income statement. The cumulative postacquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognize further losses, unless it has incurred obligations or made payments on behalf of the associate. At financial information reporting dates, the Group assesses if there is any objective evidence of impairment of the investment value in the associate. In such case, the Group calculates the amount of impairment as the difference between the associated recoverable amount and its carrying amount, and recognizes the amount adjacent to “share of profit/ (loss) of an associate” in the income statement.
28
Gains and losses on transactions between the Group and its associates are recognized in its financial statements to the extent they correspond to other investors’ share in associates not related to the investor. Unrealized losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed
Appendix II to these notes set outs the identification details of the associates included in the consolidation scope under the equity consolidation method (or equity method). Joint arrangements The Group applies IFRS 11 to all joint arrangements. Investments in joint arrangements under IFRS 11 are classified as joint operations or joint ventures depending on the contractual rights and obligations of each investor. The Group has evaluated the nature of its joint arrangements and has determined that part of them should be classed as joint ventures while others should be considered joint operations. Joint ventures are accounted for by the equity method, as are associates. Unrealised gains on transactions between the Group and its joint businesses are eliminated on the basis of the Group’s ownership percentage in them. Unrealised losses are also eliminated unless the transaction shows evidence of an impairment of the transferred asset. The accounting policies of the joint businesses have been modified as necessary to ensure that they are consistent with the policies adopted by the Group. Joint operations are consolidated using the proportionate method (or equity method). The Group combines its shareholdings in the assets, liabilities, revenues and expenses, as well as cash flows of the jointly controlled company on a line by line basis together with those items in its accounts that are similar in nature. The Group recognises its share in the profits or loss deriving from the sale of Group assets to jointly controlled entities in its consolidated annual accounts in the proportion corresponding to other participants. The Group does not recognise its share in the profit or loss of a jointly controlled entity deriving from the purchase by the Group of assets from the jointly controlled entity until the assets are sold to an independent third party. A loss is recognised immediately on a transaction if it reveals a reduction in the net realisable value of current assets, or any impairment loss. Appendix III hereto identifies the details of the joint businesses included in the scope of consolidation using the full consolidation method. Appendix IV hereto identifies the details of the joint operations included in the scope of consolidation using the proportionate consolidation method.
Temporary joint ventures (UTEs) A temporary joint venture (UTE), as defined by Spanish legislation and similar legislations, is a system in which entrepreneurs collaborate for a specified, fixed or undetermined period to carry out or to execute a construction work, service or supply.
Annual Report Financial Report
2014
The UTE’s balance sheet and income statement items are included in the shareholder’s balance sheet and income statement on a proportionate basis as these entities are considered joint operations. Transactions between the UTE and other Group subsidiaries are eliminated. Appendix V contains details of each UTE consolidated using the proportionate method.
29
2.3. Foreign currency transactions Notes to the consolidated annual accounts
Functional and presentation currency The items included in the annual accounts of each of the Group companies are measured using the currency of the principal economic environment in which the company operates (“functional currency”). The consolidated annual accounts are presented in euro, the Company’s functional and presentation currency, although figures are expressed in thousands of euro for presentation purposes. Transactions and balances Transactions in foreign currency are translated to the functional currency using the exchange rates effective at the transaction dates; at the year-end they are measured at the exchange rate in force at that moment. Foreign exchange gains and losses resulting from the settlement of transactions and translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currency are recognized in the income statement, except when deferred in equity (other comprehensive income) as qualifying cash flow hedges or qualifying net investment hedges. Changes in the fair value of monetary instruments denominated in foreign currency and classified as held for sale are separated into translation differences resulting from changes in the instrument’s amortized cost and other changes in the instrument’s carrying amount. The translation differences related to changes in the amortized cost are recognized in results for the year and other changes in the carrying amount are recognized in other comprehensive income. Translation differences on non-monetary financial assets and liabilities such as equity instruments at fair value through profit or loss are recognized in profit and loss as
30
part of the fair value gain or loss. Translation differences on non-monetary financial assets such as equity instruments classified as available-for-sale financial assets are included in other comprehensive income. Group companies Results and the financial position of all Group companies (none of which has the currency of a hyperinflationary economy) whose functional currency differs from the presentation currency are translated into the presentation currency as follows: • The assets and liabilities on each balance sheet presented are translated at the closing exchange rate at the balance sheet date; • The income and expenses in each income statement are translated at the average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates existing at the transaction dates, in which case income and expenses are translated at the rates on the transaction dates); and • All resulting exchange differences are recognized as a separate component of equity (other comprehensive income). On consolidation, any exchange differences resulting from the translation of a net investment in foreign companies and loans and other instruments in foreign currency designated as hedges of those investments are recognized in equity. When sold, such exchange differences are recognized in the income statement as part of the profit or loss on the sale. Adjustments to goodwill and fair value arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the yearend exchange rate, except goodwill arising prior to 1 January 2006. Exchange differences are recognised in other comprehensive income.
2.4. Property, plant and equipment Property, plant and equipment mainly comprise lands, buildings, plants, offices, technical installations, machinery and tooling. Property, plant and equipment are recognized at cost less depreciation and cumulative impairment losses, except for land, which is presented net of impairment losses. Historical cost includes expenses directly attributable to purchases of property, plant and equipment.
Annual Report Financial Report
2014
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset only when it is likely that the future economic benefits associated with the asset will flow to the Group and the cost of the asset can be measured reliably. The carrying amount of a replaced component is written off the accounts. All other repair and maintenance expenses are charged to the income statement in the year in which they are incurred. Land is not depreciated. Depreciation of other assets is calculated on a straight-line basis in order to allocate costs to their residual values over their estimated useful lives, using the following rates: Rate Buildings
1%- 3%
Plant
6 % - 14 %
Machinery Tooling Furnishings Data-processing equipment Vehicles
10 % - 17 % 12,5 % - 33 % 5 % - 16 % 12.5 % - 25 % 8 % - 14 %
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. . An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (Note 2.9). Gains and losses on the sale of property, plant and equipment are calculated by comparing the proceeds with the carrying amount and are included in the income statement on the line “Other operating income”. Own work capitalized is carried at production cost and reflected as income in the income statement. Assets received through debt collection procedures are measured at the lower of the price related to the receivable for the corresponding asset, and market price. 31
2.5. Investment property Notes to the consolidated annual accounts
Based on applicable legislation, investment property are valued at acquisition cost, applying the same criteria as those established for property, plant and equipment elements, regarding capitalization and depreciation, as stated in Note 2.4.
construction and subsequent operation of car parks, highways, electric transmission lines and other assets during the periods specified in the relevant contracts; assets related to those concessions are classified under the heading “concessionary assets assigned to projects” (Note 2.7). Computer software
In line with the presentation and disclosure requirements contained in IAS 40, and unless the Group applies the cost method to value its investment property, it also determines their fair value periodically, measured as their value in use. The value in use amount is determined based upon market assumptions made by the Group. Depreciation of real-estate investments is recognized annually through the income statement on a useful life basis. 2.6. Intangible assets Goodwill Goodwill arises from the acquisition of subsidiaries, associates and joint ventures and represents the excess of the consideration transferred over the Group’s interest in the net fair value of the identifiable net assets acquired, liabilities and contingent liabilities, and the fair value of the non-controlling interest in the acquired company. For the purposes of impairment testing, goodwill acquiring in a business combination is allocated to each cash generating unit, or group of cash generating units, which are expected to benefit from the combination synergies. Each unit or group of units to which the goodwill is allocated, represents the lowest level in the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level. Impairment losses on goodwill are reviewed at least once a year or more frequently if events or changes in circumstances indicate a potential impairment loss. Goodwill’s carrying amount compared with the recoverable amount, which is the higher of the value in use or the asset’s fair value, less sale costs. Any impairment loss is immediately registered as an expense and cannot be reversed. Administrative concessions Administrative concessions are recognized in the amount paid by the Company with respect to assignment or operating royalties. In certain cases, concessions relate to the administrative authorization granted by municipal authorities or other public bodies for the
32
Software licenses acquired from third parties are capitalized on the basis of the costs incurred to acquire and prepare the licenses for the use of a specific program. These costs are amortized over the useful life of the software for a maximum of 5 years. Costs associated with developing or maintaining computer software programs are recognized as an expense when incurred. Costs that are directly associated with the production of identifiable and unique software products controlled by the Group, and that will probably generate economic benefits exceeding costs beyond one year, are recognized as intangible assets. Computer program development costs recognized as assets are amortized over the program’s estimated useful lives (no more than 5 years) on a straight-line basis. Research and development expenses Research expenditure is recognized as an expense as incurred. Costs incurred in development projects (related to the design and testing of new or improved products) are recognized as intangible assets when the following requirements are met: •Completion of production of the intangible asset so that it becomes available for use or sale is technically possible; • Management intends to complete the intangible asset in question, for use or sale; • There is capacity to use or sell the intangible asset; • The manner in which the intangible asset will generate probable future economic benefits is demonstrable; • Adequate technical, financial or other resources are available to complete development in order to use or sell the intangible asset; and • The outlay attributable to the intangible asset during development can be reliably measured. Other development expenditure is recognized as an expense when incurred. Development expenses previously recognized as an expense are not recorded as an asset in a subsequent period. No development costs are capitalized at 31 December 2014 and 2013.
2.7. Concessionary assets and other non-current assets assigned to projects When concessions refer to administrative authorization granted by several public bodies for the construction and later operation, during the period stated in the corresponding agreements, of car park, highways, electric transmission lines and other assets, they are treated as established in IFRIC 12 from an accounting perspective. This applies only when, according to the contractual terms, the Group has authorization to operate the infrastructure but does not control because: • The concession assets are owned by the granting authority in the majority of cases. • The granting authority controls or regulates the concession holder’s services and the conditions under which they must be rendered.. • Operated by the concession holder in accordance with the criteria set out in the concession documents during the stipulated concession term. • At the end of that period, the assets revert to the granting authority and the concession holder no longer holds any rights in this respect. In the cases in which concessions are under the IFRIC 12 scope, related assets may be classified as: •Financial assets: When the granting authority establishes an unconditional right to receive cash or other financial assets, regardless of public service demand made by users. • Intangible assets: Only in such cases in which contractual arrangements do not set an unconditional right to receive cash or other financial assets from the granting authority, regardless of public service demand made by users. These concessions are mainly funded under the heading of “Project Finance”. Although additional guarantees may exist during the construction and operational phases, these funding structures are usually applied to projects that in themselves provide enough support to financial entities related to the debts incurred. Each of these projects is performed through specific companies by which the project’s assets are funded on the one hand by promoters limited to a certain amount, and on the other hand through long-term debt from third parties. Debt servicing of these loans is mainly supported by future cash flows generated by the project and by real guarantees on the project’s assets. Revenue is recognized at the fair value of the service rendered.
Construction services: The Group recognizes construction services revenue as stated in Note 2.23. The amounts received or outstanding related to construction services are recognized at their fair value.
Annual Report Financial Report
2014
Assets are valued based upon the costs directly attributable to the construction, such as studies and projects, expropriations, service replacement, work execution, work management and administration, plants and buildings, until they are in operation, as well as the corresponding part of other indirect attributable costs. This type of costs can be capitalized to the extent that they correspond to the construction period. Likewise, those financial expenses accrued during the construction period are also capitalized (under the intangible asset model). The Group recognizes contractual obligations to the extent related services are incurred. Nonetheless, when the granting authority has complied with its contractual obligations to a greater extent than those commitments corresponding to the Group’s concessionary entity, a liability and an increase in the intangible assets will be recognized for the amount that equalises the obligation rendered by the group to the obligation committed by the granting authority. This situation mainly occurs when the Group’s concessionary entity has the right to charge users from the beginning of the concession period and the infrastructure previously existed and will be improved and/or extended later. Under the intangible asset model, dismantling, retirement or replacement accruals as well as work relating to improvements or increases in capacity the associated income of which is included in the concession contract, are recognized from the beginning of the concession period as part of the fair value of the asset. Financial discounts of such accruals and the corresponding amortization are recorded in the income statement for the period. In addition, provisions related to major repairs are registered in the income statement n a systematic and accrual basis. Under the financial asset model, the construction service counterpart is a receivable which also includes a financial remuneration It is calculated based upon the project’s expected rate of return in line with its estimated flows, which includes inflation forecasts and tariff reviews in those cases in which they are included in the contract. Once the construction has finished, the Group re-estimate the fair value of the service rendered if circumstances have changed or uncertainties that existed during construction have disappeared. Once the operational phase begins, the receivable is valued at amortized 33
Notes to the consolidated annual accounts
cost and any difference between actual and expected flows will be recognized in the income statement. Unless the circumstances affecting concession asset flows significantly change (economical re-balances approved by the granting authority, contract enhancement, etc.), the rate of return will not be modified.Economic rebalancing is only considered for calculating the value of a financial asset when the grantor has a vested right to receive cash or other financial assets.
assets, which are those that necessarily require a substantial period of time before they are ready for their intended use or for sale, are added to the cost of the assets until the assets are substantially ready for intended use or sale.
Financial remuneration in concession financial assets is classified by the Group as operating revenue, since it is part of the Group’s general activity, which is exercised on a regular basis and generates income periodically.
Other borrowing costs are recognised in the income statement in the year in which they are incurred.
Financial income from temporary investments of specific borrowings pending their application in qualifying assets is deducted from borrowings costs able to be capitalised.
2.9. Impairment of non-financial asset When claims against the grantor due to construction overcosts arise, the Group only recognises the related revenue when negotiations have reached an advanced stage such that is highly probable that the grantor will accept the claim and the amount of the claim that the grantor will probably accept can be reliably measured. Maintenance and operational services: Safeguarding and maintenance costs not representing an increase in an assets useful life or productive capacity are registered as an expense in the period in which they occur. At the end of the concession period, the whole investment, net from any amount to be reimbursed by the granting authority, will be covered through recognition of depreciation. The concessionary entity receives income based on services rendered, either directly through the users or through the granting authority. Once the operational phase begins, collections and operational costs are recognized as operating income and expenses, respectively, in the year. Under the intangible asset model, assets are depreciated on a straight-line basis over the concession period, except for highways and car parks, which are depreciated based upon the demand (traffic volume and expected occupation) during the concession life. At each balance sheet date the project performance is reviewed to assess if assets will be recovered through operating income generated over the concession period; otherwise, there would be impairment. 2.8. Interest costs Interest costs incurred in the construction of any qualifying assets are capitalized over the period needed to complete and prepare the asset for the intended use; they have been assessed in accordance with IAS 23. Other interest costs are expensed.
34
General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying
Assets with an indefinite useful life and goodwill are not amortized/depreciated and are tested annually for impairment. Assets subject to amortization/depreciation are tested for impairment provided that an event or change in circumstances indicates that their carrying amount might not be recoverable. An impairment loss is recognized in the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher between an asset’s fair value less sale costs and value in use. For the purposes of assessing impairment, assets are grouped together at the lowest level for which there are separately identifiable cash flows (cashgenerating units). Non-financial assets other than goodwill, for which impairment losses have been recognized, are tested at each balance sheet date in the event that the loss has reversed. 2.10. Financial assets The Group classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables, held to maturity and held for sale. The classification depends on the purpose for which the financial assets were acquired. Management establishes the classification of financial assets when they are initially recognized and reviews the classification at each reporting date. In accordance with IFRS 7 amendment, the Group classifies market-valued financial instruments based on the lowest of used data that were significant with respect to the instrument whole fair value. In compliance with this standard, financial instruments must be classified as follows: 1. Quoted prices in active markets for identical instruments. 2. Directly (prices) or indirectly (based on prices), observable data for the instrument. 3. Data not based on market observations.
Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired mainly for short-term sale. Derivatives are also categorized as held for trading unless they are designated as hedges. The assets in this category are included in current assets, where the intention is to settle them within 12 months, otherwise they are classified as non-current. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date, which are classified as non-current assets. Loans and receivables are included in trade and other receivables in the balance sheet (Note 2.13), as well as in concessionary assets assigned to projects in the case of receivables related to the financial assets model (Note 2.7). They are also included under the consolidated balance sheet heading “Cash and cash equivalents” (Note 2.14). Held-to-maturity financial assets Held-to-maturity financial assets are non-derivative financial assets with fixed or determinable payments and fixed maturities that Group management has the positive intention and ability to hold to maturity. If the Group sells a non-insignificant amount of its held-to-maturity financial assets, the entire category will be reclassified as held for sale. Such available-for-sale financial assets are included in non-current assets, except those that mature within 12 months as from the balance sheet date, which are classified as current assets.
nancial assets at fair value through profit or loss are initially carried at fair value and transaction costs are taken to the income statement. Investments are written off when the rights to receive cash flows from them have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are carried at amortized cost using the effective interest rate method.
Annual Report Financial Report
2014
Gains and losses resulting from changes in the fair value of financial assets at fair value through profit or loss are included in the income statement in the year in which they arise. Dividend income from financial assets at fair value through profit or loss is recognized in the income statement when the Group’s right to receive payment is established. Changes in the fair value of monetary instruments denominated in foreign currency and classified as held for sale are analyzed by separating the differences in the instrument’s amortized cost and other changes in the instrument’s carrying amount. Translation differences on monetary instruments are recognized in the income statement, while translation differences on non-monetary instruments are recognized in equity (other comprehensive income). Changes in the fair value of monetary and non-monetary instruments classified as held for sale are recognized in equity (other comprehensive income). When available-for-sale instruments are sold or impaired, the cumulative fair value adjustments recognized in equity are taken to the consolidated income statement. Interest on available-for-sale instruments calculated using the effective interest rate method is recognized in the income statement item “Net financial results”. Dividends from available-for-sale equity instruments are recognized in the income statement in “Net financial results” when the Group’s right to receive payment is established.
Financial assets held for sale
Recognition of financial assets
The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value using measurement techniques which include recent uncontrolled transactions between willing and knowledgeable parties relating to other instruments that are substantially identical and the analysis of discounted cash flows and option pricing models, maximizing market input and relying as little as possible on the entity’s specific inputs.
Acquisitions and disposals of investments are recognized at the trading date, i.e. the date the Group undertakes to acquire or sell the asset. Investments are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Fi-
At the balance sheet date, the Group assesses whether there is objective evidence of impairment losses with respect to a financial asset or group of financial assets. For equity instruments classified as held for sale, in order to determine whether there is impairment losses it will be
Financial assets held for sale are non-derivatives assets that are either designated in this category or not classified in any of the other categories. They are included in noncurrent assets unless management intends to dispose of the investment within 12 months of the balance sheet date.
35
Notes to the consolidated annual accounts
necessary to examine whether there is a significant or protracted below cost decline in the fair value of the securities. If there is any evidence of this type for availablefor-sale financial assets, the cumulative loss determined as the difference between the acquisition cost and current fair value, less any impairment loss in that financial asset previously recognized in the income statement, is removed from equity and recognized in the income statement. Impairment losses recognized in the income statement on equity instruments are not reversed through the income statement. Impairment testing of receivables is described in Note 2.13. A financial assetis derecognized when all risks and benefits associated with the asset’s ownership are substantially transferred. In the case of receivables, this transference takes place when credit and default risks are transferred. Financial assets and liabilities are offset and presented by its net value in the balance sheet when there is a legally enforceable right to offset the recorded amounts, and the Group has the intention to settle or to realize the asset and settle the liability simultaneously. 2.11. Derivative financial instruments and hedging activities Derivatives are initially recognized at fair value at the contract date and are subsequently re-measured at fair value. The method to recognize the resulting gain or loss depends on whether the derivative is designated as a hedging instrument and, if so, on the nature of the item being hedged. The Group applies hedging accounting when the hedge is highly efficient, to hedge the fair value of hedged items. The Group may designate certain derivatives as: • Fair value hedges of recognized assets and liabilities (fair value hedge); • Hedges of a specific risk associated with a recognized liability or a highly probable forecast transaction (cash flow hedge); or • Hedge of a net investment in a foreign operation (net investment hedge).
36
The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items as well as its risk management objective and strategy for undertaking hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether or not the derivatives used in hedge transactions are highly effective in offsetting changes in the fair value or cash flows of the hedged items.
The fair value of some derivative financial instruments used for hedging purposes is shown in Note 11. Movements on the hedging reserve are shown in the consolidated statement of changes in equity and consolidated statement of comprehensive income. The total fair value of hedging derivatives is classified as a non-current asset or liability if the period to maturity of the hedged item is more than 12 months and as a current asset or liability if the period to maturity of the hedged item is less than 12 months. Derivatives not classified as hedges for accounting purposes are classified as current assets or liabilities. Regarding the amendment in IFRS 7, the Group proceeds to classify financial instruments market valuations as stated in Note 2.10. Fair value hedge Changes in the fair value of derivatives that are designated and qualified as fair value hedges are recognized in the income statement together with any change in the fair value of the hedged asset or liability that may be attributable to the risk hedged. If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of the hedged item for which effective interest rate method has been used, is recorded as profit or loss up to its maturity. Cash flow hedge The effective portion of changes in the fair value of derivatives that are designated and qualified as cash flow hedges is recognized in equity. The gain or loss relating to the ineffective portion is immediately taken to the income statement. Amounts accumulated in equity are reclassified to in the income statement in the periods when the hedged item affects results (for instance, when the forecast sale that is hedged takes place). The gain or loss relating to the effective portion of interest rate swaps hedging variable-rate borrowings is recognized in the income statement item “Net financial results”. The gain or loss relating to the effective portion of forward foreign currency contracts hedging sales is recognized in the income statement item “Revenue/Sales” and the ones hedging purchases is recognized in “Materials consumed and other external costs”. When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognized when the forecast transaction is ultimately recognized in the income state-
ment. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement item “Net financial results”. Net investment hedge Hedges of net investments in foreign operations are accounted for in a similar way to cash flow hedges. Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognized in equity. The gain or loss relating to the ineffective portion is immediately recognized in the income statement. Gains and losses accumulated in equity are included in the income statement when the foreign operation is disposed of. Derivative financial instruments at fair value through profit or loss Certain derivatives do not qualify for hedge accounting and are recognized at fair value through profit or loss. Changes in the fair value of any derivative instruments that do not qualify for hedge accounting are immediately recognized in the income statement item “Net financial results”. 2.12. Inventories Raw materials and finished products are carried at the lower between the acquisition or production cost, using the weighted average cost method, or the net realizable value (the lowest). Finished products and work-in-progress items costs include design costs, raw materials, direct work force, other direct costs and general manufacturing costs (based on a normal capacity of production facilities). Changes in prices of such inventories referred to variable indexes are recorded against inventories value.
2.13. Trade and other receivables Trade receivables are amounts due from customers related to goods sold or services rendered in the ordinary course of business. If the receivables are expected to be collected in a year or less (or in the operation cycle if longer), they are classified as current assets. Otherwise, they are recorded as non-current assets.
Annual Report Financial Report
2014
Trade receivables are initially recognized at fair value and are subsequently measured at amortized cost using the effective interest rate method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due in accordance with the original terms of the receivables. The existence of significant financial difficulties on the part of the debtor, the probability that the debtor will become bankrupt or undertake a financial restructuring, and late payment or default are considered to be indicators of the impairment of a receivable. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The asset’s carrying amount is written down as the provision is applied and the loss is recognized in the income statement. When a receivable is uncollectable, the provision for receivables is adjusted accordingly. Subsequent recoveries of receivables written off are recognized in the income statement for the year in which the recovery takes place. 2.14. Cash and cash equivalents Cash and cash equivalents include cash in hand, demand deposits in banks and other short-term highly liquid investments with original maturities of three months or less. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet. 2.15. Share capital
Buildings under construction and other structures are measured based on direct execution costs, also including financing costs incurred during the development phase and structural costs attributable to the projects. These items are classified as short- or long-term cycle depending on whether the period to completion is less or more than twelve months. Obsolete, defective or slow-moving products are written down to their net realizable value. Net realizable value is the selling price estimated during ordinary business course, less applicable sale variable costs.
Share capital consists entirely of ordinary shares classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Where any Group company purchases the Company’s equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes), is deducted from equity attributable to the Company’s equity holders until the shares are redeemed, reissued or sold. When these shares are sold 37
Notes to the consolidated annual accounts
or subsequently reissued, any amount received, net of any incremental cost on the transaction which is directly attributable and the corresponding income tax effects, and is included in equity attributable to the Company’s equity holders. 2.16. Deferred income a) Official grants According to IFRS-EU, official grants are booked when there is a reasonable assurance of compliance with all the conditions related to their enjoyment and that they will be received. Grants and aids given to the Group are subject to several conditions. Expectations on compliance with requirements to get the above-mentioned grants are continually assessed, considering that they will be fulfilled without the Group having to restore them. Thus, grants are recognized at 31 December 2014 and 2013 (Note 20). The Group has several grants to fund its investments. Due to the varied characteristics of each grant received, judgement is used to determine their amount in those cases in which the aids refer to non-interest-bearing loans. In these situations, implicit interests are computed by using the effective market rate to calculate a loan’s fair value. The difference between the nominal amount and the fair value of loans is considered as deferred income and is registered in the income statement in line with what is being financed. If the non-interest-bearing loan is allocated to an asset acquisition, the deferred income is registered as profit / (loss) for the year, during the useful life of that asset. Otherwise, if the non-interest-bearing loan is related to an operating cost, the deferred income is recognized in the income statement at the time that the expense is incurred. b) Non-interest-bearing loans granted by official entities Non-interest-bearing loans received by the Group are registered at present value (calculated applying the effective market interest rate). The difference at the initial date between the nominal value of the loan and its present value is booked as follows: when the funding is allocated to an asset acquisition, the above-mentioned difference is considered as deferred income and is registered on the income statement during the period in which such financial assets are amortized.
38
c) Deductions Tax revenue corresponding to deductions or allowances in the income tax amount pending of application, from investments in non-current assets, is registered in the consolidated income statement in the same period in which the non-current asset that gave rise to them is depreciated, because they are specific aids subject to
certain conditions and aimed at encouraging investment in renewable energies. 2.17. Trade and other payables Trade payables are initially recognized at fair value and are subsequently measured at amortized cost using the effective interest rate method. Payables are classified as current liabilities if payments mature is less than a year. Otherwise, they are classified as non-current liabilities. 2.18. Compound financial instruments The liability component of a compound financial instrument is recognised initially at the fair value of a similar liability that does not have an equity conversion option. The equity component is recognised initially as the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts. Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. Estimated cash flows are re-estimated at each closing date and changes in the amortised costs using the original effective interest rate are recognised against profit and loss. The equity component of a compound financial instrument is not re-measured subsequent to initial recognition except on conversion or expiry. Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period. 2.19. Bank Borrowings and other financial liabilities Borrowings are initially carried at fair value net of transaction costs. They are subsequently measured at amortized cost. Any differences between the funds obtained (net of necessary costs) and their repayment value are recognized in the income statement over the life of the debt applying the effective interest rate method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement for at least 12 months as from the balance sheet date. Interest and other costs incurred to obtain bank loans are
taken to the income statement for the year on an accrual basis. Commissions paid on the arrangement of credit lines are recognised as debt transaction costs provided that it is probable that part or all the line will be used. In this case, the commissions are deferred until the line is utilised. Insofar as it is not probable that all or part of the credit line will be used, the commission is capitalised as an advance payment for liquidity services and is amortised over the period during which the facility is available. Other financial liabilities mandatorily convertible into equity instruments on a specific date or in a specific time period are initially recognised at fair value, net of transaction costs, and are subsequently measured at amortised cost, using the original effective interest rate and adjusting the carrying amount through profit or loss due to changes in estimated future debt repayment flows. 2.20. Current and deferred income taxes Tax expense for the year comprises current and deferred tax. Tax is recognized in the income statement except to the extent it relates to items recognized directly in equity. In this case, tax is also recognized in equity. The current tax charge is calculated based on the tax laws approved or about to be approved at the balance sheet date in the countries where the Group’s companies operate and generate results subject to tax. Management assesses regularly the positions taken in relation to tax returns with respect to situations where tax law is subject to interpretation, and establishes, where appropriate, the necessary provisions on the basis of the amounts that it is expected to pay to the tax authorities. Deferred income tax is calculated, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated annual accounts. However, if the deferred taxes arise from the initial recognition of a liability or an asset on a transaction other than a business combination that at the time of the transaction has no effect on the tax gain or loss, they are not accounted for. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled. Deferred income tax assets are recognized to the extent that it is probable that future taxable profit will be available against which the temporary differences can be offset. Deferred income tax is provided on temporary differen-
ces arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary differences is controlled by the Group and it is likely that the temporary difference will not reverse in a foreseeable future.
Annual Report Financial Report
2014
Deferred tax assets and liabilities are offset if, and only if, there is a legally recognized right to offset current tax assets against current tax liabilities and when the deferred tax assets and deferred tax liabilities derive from income tax levied by the same taxing authority on the same taxable entity or person or different taxable entities or persons which intend to settle current tax assets and liabilities on a net basis. 2.21. Employee benefits Pension and retirement obligations For the purposes of their accounting treatment, defined contribution plans under which the company’s obligation consists solely of contributing an annual amount must be differentiated from defined benefit plans under which employees are entitled to a specific benefit on the accrual of their pensions. Defined contribution plans A defined contribution plan is a pension plan under which the Group pays fixed contributions to a fund and has no legal or constructive obligation to make additional contributions if the fund has insufficient assets to pay all the employees the benefits related to the services rendered in the current year and in prior years. Contributions accrued in respect of defined contribution plans are expensed annually. Defined benefit plans A defined benefit plan is a pension plan that is not a defined contribution plan. A defined benefit plan usually defines the amount of the benefit that will be received by an employee at the time of retirement, normally on the basis of one or more factors such as age, years of service and remuneration. The liability recognized in the balance sheet with respect to defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of the plan assets and any unrecognized past service costs. The defined benefit obligation is calculated annually by independent actuaries in accordance with the projected unit credit method. The present value of the obligation is determined by discounting the estimated future cash flows at interest rates on government Senior Notes denominated in the currency in which the benefits will be paid and maturities similar to those of the relevant obligations.
39
At 31 December 2014 and 2013 the Group does not have this type of defined contribution or defined benefit plans. Notes to the consolidated annual accounts
Termination benefits Termination benefits are payable as a result of the Group’s decision to terminate employment before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognizes these benefits when it has demonstrably undertaken to terminate current employees’ employment in accordance with a formal detailed plan that cannot be withdrawn, or to provide severance indemnities as a result of an offer made to encourage voluntary redundancy. Benefits that will not be paid within 12 months of the balance sheet date are discounted to their present value. Profit-sharing and bonus plans The Group recognizes a liability and an expense for bonuses and profit-sharing based on a formula that takes into consideration the profit attributable to the Company’s equity holders after certain adjustments. The Group recognizes a provision when contractually obliged or when there is a past practice that has created a constructive obligation. 2.22. Provisions The Group recognizes a provision when: it has a present legal or constructive obligation as a result of past events; it is likely that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognized for future operating losses.
llations recognized under the heading of assets assigned to projects. This estimation has been capitalized as higher asset value and depreciated over its useful life, which in most cases is similar to lease contracts subscribed for the lands in which the installations have been installed. In addition, the Group has capitalized the present value of the estimated dismantling and retirement costs of the plants at the end of their useful life. Concessionary assets dismantling, retirement and major maintenance provisions are detailed in Note 2.7. 2.23. Revenue recognition Sales include the fair value of payments received or receivable for the sale of goods and services in the lordinary course of the Group’s activities. Sales are presented net of value added tax, returns, rebates and discounts, and after eliminating sales within the Group. The Group recognizes revenue when the amount may be reliably estimated, it is likely that the future economic benefits will flow to the entity and the specific conditions are fulfilled for each of the Group’s activities, as described below. A reliable calculation of the amount of revenue is not deemed possible until all sale-related contingencies have been resolved. The Group’s estimates are based on historical results, taking into consideration customer type, transaction type and specific terms of each arrangement. The methods used to recognize revenue in each of the Group’s business activities are described below: Construction business
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are carried at the present value of forecast payments that are expected to be required to settle the obligation, using a rate before taxes that reflects the current market assessment of the time value of money and the specific risks of the obligation. The increase in the provision due to passage of time is recognized as interest expense. Provisions for project completion and loss-making construction contracts are explained in Note 2.23.
40
Dismantling accruals Based on technical studies performed, the Group has estimated the present dismantling cost of technical insta-
When the results of a construction contract may be reliably estimated, ordinary revenue and associated costs of the contract are recognized as such in the income statement, based on the percentage of completion of the activity performed under the contract at the balance sheet date. When a project is expected to generate a loss, the necessary provisions are recorded to cover the entire loss during preparation of the updated budget. Percentage of completion is generally determined by examining work executed. This method may be used since all contracts generally include: • A definition of each project unit that must be executed to complete the whole project; • A measurement of each of these project units; and • The price at which each unit is certified.
In order to put this method into practice, at the end of each month a measurement of completed units is obtained for each project. The resulting total is the amount of construction work executed at the contractual price, which is recognized as project revenue from inception. The difference with respect to the corresponding figure a month earlier is production for the month, which is the amount recognized as revenue.
to the provision recorded and the remaining balance is recognized in the item “Provisions for other liabilities and charges” in current liabilities in the consolidated balance sheet.
The cost of executing a project is recognised on an accrual basis, recognising the expenses actually incurred to perform the units of work as expenses (including unaccrued expenses and those for which no supplier invoices have been received from the supplier, in which case a liability will be recognised for the invoices to be received).
When claims against the grantor due to construction overcosts arise, the Group only recognises the related revenue when negotiations have reached an advanced stage such that is highly probable that the grantor will accept the claim and the amount of the claim that the grantor will probably accept can be reliably measured.
The application of this revenue recognition method is combined with the preparation of a budget made for each construction contract by project unit. This budget is used as a key management tool in order to maintain detailed monitoring, project unit by project unit, of fluctuations between actual and budgeted figures.
Late-payment interest arising from delays in the collection of certificates from public administrations is recognized when it is likely that the interest will actually be collected and the amount may be reliably measured.
In such exceptional cases, when it is not possible to estimate the margin for the entire contract, the total costs incurred are recognized, and sales that are reasonably assured with respect to the completed work are recognized as contract revenue, subject to the limit of the total contract costs. During the execution of construction work, unforeseen events not envisaged in the primary contract may occur that increase the volume of work to be executed. These changes to the initial contract require the customer’s technical approval and subsequent financial approval. This approval permits, from that moment, the issue and collection of certificates for this additional work. Revenue from the additional work is not recognized until the customer’s approval is reasonably assured; costs incurred in this work are, however, recognized when incurred, irrespective of the degree of approval obtained from the customer. In the event that the amount of work actually executed in a project exceeds the amount certified at the year end, the difference between the two amounts is reflected in the consolidated balance sheet item “Trade and other receivables”. When the amount of work actually executed in a project is lower than the amount of the certificates issued, the difference is recognized in the consolidated balance sheet item “Trade and other payables”. Estimated project close-out costs are provisioned and deferred over the execution period. These costs are recognized proportionally on the basis of estimated costs as a proportion of executed work. Costs incurred from project completion to definitive settlement are charged
In the case of construction contracts at the year end that are expected to make a loss, the estimated loss is recognised when it is unlikely to be offset by additional revenue.
Annual Report Financial Report
2014
Costs relating to the tendering of bids for construction contracts are taken to the income statement when incurred, when the success of the bid is not probable or is not known at the date the costs are incurred. Bid tendering costs are included in the cost of the contract when the success of the bid is probable or is known, or when it is certain that the costs will be reimbursed or included in contract revenue. Engineering business Engineering project revenue is recognized on a percentage-of-completion basis, based on direct costs incurred in relation to total estimated costs. The methods described for the construction business, as regards the recognition of revenue for additional work, recognition of estimated future losses by recording provisions, accounting treatment of any timing differences between revenue recognition for accounting purposes and the certificates issued to customers, recognition of late-payment interest, treatment of costs related to bids submitted and treatment of claims submitted to customers are also applied to the engineering business. Concessions and services business The Group has concessions to operate electricity infrastructure, car parks, toll roads, and others (Note 2.7). The services business consists mainly of environmental services, such as wastewater treatment, and maintenance services for industrial infrastructure and related areas. Under concession and management contracts for services, revenue and expenditure is recognized on an accrual basis, irrespective of when the related monetary or
41
financial flows take place. The accounting treatment of the main activities is described below. Notes to the consolidated annual accounts
Car park business may be divided into: Multiple element contracts Concessions for public services are contracts between a private operator and the Government or a different public body, in which the latter party grants to the private operator the right to provide public services such as the supply of water or electricity, or the operation of roads, airports or prisons. Control over the asset is retained by the public sector, but the private operator assumes responsibility for building the asset and for operating and maintaining the infrastructure. Depending on the contract terms, concessions are treated as intangible assets (when the predominant element is that the concession holder has the right to receive fees directly from users or the level of future flows are not assured by the granting authority) or as financial assets (when the granting authority guarantees a level of future cash flows). The Group offers certain agreements under which it builds an infrastructure in exchange for a concession to operate it for a specified period. When such contracts contain multiple elements, the amount of revenue recognized is defined as the fair value for each phase of the contract. Revenue from infrastructure construction and engineering is recognized as described in the preceding paragraphs. Revenue from an intangible asset operation is recognized on an accrual basis as operating revenue. When a financial asset has been recognized, revenue is treated as a principal repayment with an interest income component. The characteristics of the Group’s main activities are described below: Toll roads/electricity transmission lines In most cases, the principle of risk and business venture on the part of the concession holder coexists with the principle of assurance of the concession’s economic and financial equilibrium on the part of the Government. Revenue is recognized at fair value during the construction phase. When the granting authority directly provides or guarantees a level of revenue for the concession holder, the asset is included in receivables. When the concession holder has the right to receive fees from users, or revenues are not guaranteed, an intangible asset is recognized. In such cases, the Group recognizes revenue on an accrual basis and the intangible asset is depreciated over the concession term using a straight-line method, except for some toll roads infrastructures concessions in which the depreciation is recognized based in the traffic forecast for the concession.
42
Car parks
• Car parks for local residents: This business involves the construction of car parks whose spaces are sold directly to the end customer. The sale and related costs are not recognized until the parking space has been handed over, which usually coincides with the execution of the public deed of sale. Additionally, in order to recognize the sale and costs, construction of the car park must have been completed and the license for the use of the car park must have been delivered. Commitments formalized in car park sale contracts pending handover are recorded as advanced receivables in the amounts obtained on account of the parking space. Capitalized costs are included in inventories and measured as described in the relevant section. • On-street car parks: This is a public service rendered to local authorities, which mainly concerns the management of public parking and the collection of the fees charged by municipalities for these services. The revenues are usually the hourly parking fees paid or the price paid for the public service by the council, and is recognized when the relevant amounts fall due for payment. In the case of concessions, the amount paid to obtain the concession is recognized in the income statement over the concession period. Capitalized costs are included as intangible assets or financial assets, depending on the characteristics of the contract. Depreciation is charged on a straight-line basis during the concession term and begins when the asset is available for use. • Off-street car parks: In this case, revenues arise from the use of parking spaces owned by the company or held under an administrative concession. Off-street car park revenues are recorded when the hourly parking rate is paid and, in the case of season ticket holders, on an accrual basis. Revenues from mixed car parks (off-street and for local residents) are recognized as described in the preceding paragraph, in the case of the off-street spaces. As regards spaces for local residents, the amounts received for spaces handed over are recorded in liabilities and taken to the income statement on a straight-line basis over the relevant concession periods, provided the distributable costs may not be reasonably segregated. During the accounting period in which the revenues are recognized, the necessary provisions are posted to cover costs to be incurred following handover. These provisions are calculated using the best estimates of costs to be incurred and may only be reduced as a result of a
Electric energy sales
ket prices, the standard operating costs necessary to carry out the activity and the standard value of the initial investment are taken into consideration. The standard values will be set in a Ministerial Order published by the Ministry of Industry, Energy and Tourism for each of the various solar-photovoltaic plants which may be segmented by technology, capacity, age, etc.
Electricity sales carried out by solar-photovoltaic plants in accordance with the sector regulations, as described below, are usually registered based upon the actual production. In the case of solar-photovoltaic plants in Spain, a complement due to investment costs (based on a standard per technology) and a complement related to operation compensation are additionally accounted for. Sales for the period include the estimate about provided energy which is pending to be invoiced at the year end.
The compensation for the investment and, if appropriate, compensation for operation will allow the cost of plants to be covered such that they may compete on equal level with other technologies and may obtain a reasonable profit, which will be set based on the average yield of 10-year Spanish Government Senior Notes plus a spread. Both the spread that is set and certain compensation parameters that will be established in the Ministerial Order may be changed every six years.
Up until 2013 solar-photovoltaic plants in Spain operated and received compensation based on Royal Decree 661/2007 (25 May), which regulates the production of energy under the special system, or based on Royal Decree 1578/2008 (26 September) on compensation for the generation of electricity using solar-photovoltaic technologies after the deadline for maintaining compensation in accordance with Royal Decree 661/2007 (25 May). In both cases the compensation was based on the right to receive a regulated rate for up to 30 years. During the period in which the aforementioned Royal Decrees were in force certain legislative changes were made that did not modify the essence of the compensation system, but did introduce limits and variables that changed the income to be received.
The new regulation took effect on 13 July 2013, although certain developments were published in 2014. One of these was Royal Decree 413/2014 of 6 June which regulates the production of electricity using renewable energy sources, co-generation and waste. Another was Order IET/1045/2014 of 16 June which approved the remuneration parameters for standard facilities applicable to certain electricity production plants using renewable energy, co-generation and waste and established the parameters to be considered for calculating the specific remuneration to which each facility is entitled as well as the different standards by plant type.
payment made in relation to the costs provisioned or a reduction in the risk. Once the risk has disappeared or the payments have been made, the surplus provision is reversed. Capitalized costs are recognized as intangible assets.
Upon the publication of Royal Decree-Law 9/2003 (12 July 2013), which adopts urgent measures to guarantee the financial stability of the electrical system, solar-photovoltaic plants and other renewable source electricity generation technologies, may also receive during the regulatory useful life specific compensation consisting of an amount per unit of installed capacity that covers, when appropriate, the investment costs for each typical solar-photovoltaic plant that cannot be recovered through the sale of energy on the market, in addition to the compensation for the sale of energy at market values, and the former is called compensation for the investment. There is also an amount that covers, if appropriate, the difference between operating costs and market share revenue which is called compensation for operations.
Annual Report Financial Report
2014
Based on the regulatory changes, the parent company has conducted impairment tests on the Cash Generating Units (CGU) of the photovoltaic solar power plant, as mentioned in Note 8.2. 2.24. Interest Income Interest income is recognised using the effective interest method. When a loan and receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loan and receivables is recognised using the original effective interest rate. 2.25 Dividend Income
To calculate the compensation for the investment and compensation for operations for a typical plan the standard revenues from the sale of energy produced at mar-
Dividend income is recognised when the right to receive payment is established.
43
2.26. Leases Notes to the consolidated annual accounts
When a Group company is the lessee - Finance lease The Group leases certain property, plant and equipment. Property, plant and equipment leases where the Group has substantially all the risks and rewards of ownership are classed as finance leases. Finance leases are capitalized at the lease’s inception at the lower between the fair value of the leased property and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the outstanding debt. The corresponding rental obligations, net of finance charges, are included in other long-term payables. The interest element of the finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance lease is depreciated over the shorter of the useful life of the asset or the lease term.
Assets leased to third parties under operating lease contracts are included in tangible fixed assets on the balance sheet. Income from leases is recognized on a straightline basis during the lease term. 2.27. Dividend distribution Dividend distribution to the Parent Company’s equity holders is recognized as a liability in the Group’s consolidated annual accounts in the year in which the dividends are approved by the parent Company’s equity holders. 2.28. Environment The consolidated Group has no environmental liabilities, costs, assets, provisions or contingencies that could be significant in relation to its equity, financial situation and results. No specific breakdowns are therefore included in these notes to the consolidated annual accounts relating to environmental issues. 2.29. Operating results
When a Group company is the lessee - Operating lease Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease. When a Group company is the lessor When assets are leased under finance lease, the present value of lease payments is recognized as a financial account receivable. The difference between the gross receivable and the present value of that amount is recognized as a financial return on capital. Lease revenues are recognized during the lease period in accordance with the net investment method, which reflects a constant periodic rate of return.
44
The income statement caption Operating results includes the results of the Group companies’ ordinary activities, excluding financial results (see Note 28) and shares on results of companies consolidated under the Equity method. 2.30. Non-current assets (disposable groups) and liabilities held for sale and discontinuing operations Non-current assets and associated liabilities (or disposable groups of assets) are classified as assets held for sale and liabilities associated with non-current assets held for sale when their value will be recovered mainly through their sale, provided that the sale is considered to be highly probable and the asset is available for immediate sale in its current state. These assets are measured at the lower of the carrying value and fair value less selling costs.
Discontinuing operations represent components of the Group that will be sold or otherwise disposed of, or are classified as held for sale. These components consist of operations and cash flows that may be clearly distinguished from the rest of the Group from both an operating and financial information point of view and they represent lines of business or geographic areas that may be considered to be separate from the rest.
Annual Report Financial Report
2014
2.31. Segment reporting Operative segments are consistently disclosed with internal information, which is presented to the highest decision-making unit. This unit is responsible for operative segments resources allocation and for these segments’ performance assessment. Management Committee has been designed as the highest decision-making unit.
45
Notes to the consolidated annual accounts
3. Financial risk management 3.1. Financial risk factors Group’s activities are exposed to a variety of financial risks: market risk (including foreign exchange risk, fair value interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on financial markets uncertainty and seeks to minimize potential adverse effects on the Group’s financial performance. The Group uses derivative financial instruments to hedge certain risks. Risk management is performed by the Group’s Central Treasury Department in accordance with policies approved by the Board of Directors. This department identifies, evaluates and hedges financial risks in close association with the Group’s operating units. The Board provides written policies for overall risk management and for specific areas such as foreign exchange risk, interest rate risk, liquidity risk, use of derivatives and non-derivatives, and investment of cash surpluses. a) Market risk a.1) Foreign exchange risk The Group has international operations and is therefore exposed to foreign exchange risk during currency transactions, relating particularly to the US Dollar (USD), Brazilian Real, Mexican Peso and Indian Rupee, as well as to other currencies. Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations. Management has implemented a policy that requires the Group companies to manage foreign exchange risk with respect to their functional currency. The Group companies are obliged to hedge all foreign exchange risk through the Central Treasury Department. Foreign exchange risks arising from future commercial transactions and recognized assets and liabilities are hedged by means of forward contracts traded through the Group’s Treasury Department. Foreign exchange risk arises when future commercial transactions or recognized assets and liabilities are denominated in a currency other than the company’s functional currency.Additionally, Management policy also establishes different “natural hedges” mechanisms, by which the price of sale can be negotiated in different currencies.
46
The Group’s Treasury Department has a policy of hedging net forecast flows deriving from forecast transactions in currencies other than the functional
currency of the Group company that effects the transaction. At 31 December 2014 and 2013 there were foreign current call-put transactions related to companies located in Spain, USA, Asia and Latin America (See Note 11). The Group’s transactions are generally completed in each country’s functional currency, although transactions are often effected in a different currency (mainly in Spain, India, and Latin America), particularly in US Dollars and Euro. At 31 December 2014, had the functional currency of each country with transactions in US Dollars depreciated/appreciated by 10% against the US Dollar, without any change in the remaining variables, the consolidated result after tax for 2014 would have been 17,850 thousand euro lower/ higher (2013: 16,980 thousand euro lower/higher), mainly due to the effects of the increase/decrease in USD liability/asset positions. Equity would have changed by the same amounts (effects calculated excluding the impact of fair value changes in the derivative financial instruments contracted). The Group has a number of investments in foreign operations whose net assets are exposed to foreign exchange risk. These investments are located basically in Netherlands, Latin America (Brazil and Mexico), USA and India. In general, the Group ensures that operations in each country are financed by borrowings in the functional currency of that country so that foreign exchange risk only affects the capital investment. Where the investment is partially or fully financed by borrowings, the Group ensures that the loans are obtained in the correspondent functional currency. When no financing is used, the Group does not contract hedges, except in certain cases in which short-term forecast flows relating dividends from the subsidiary are hedged. Set out below is a breakdown of the main foreign currency exposures affecting capital investments (measured considering net assets from foreing consolidated subsidiaries, and investment in joint ventures included in Note 9):
Brazilian Real (*)
2014
2013
504,124
461,787
Mexican Peso (*)
255,927
217,775
Indian Rupee
339,983
283,483
US Dollar (*)
457,571
565,731
Other currencies (*)
184,310
149,038
1,741,915
1,677,814
Total
(*) Excluding the value of goodwill at each date, as mentioned in Note 7.1.
• Project finance As explained in Note 8, the Group participates in a number of investment projects under “Project finance” arrangements in which, among other aspects, repayments are secured only by cash flows from the respective projects; there may be, in some cases and during the construction phase, additional guarantees. In such cases, financing mainly comprises long-term, variable-rate instruments. The interest rates applicable depend on the country in which the project is located and on the currency in which the financing is issued. Financing issued at variable rates exposes the Group to cash flow interest rate risk. The Group uses interest rate swaps to convert long-term financing totally or partially to fixed interest rates. Additionally, under certain project finance contracts the company that obtains the financing undertakes vis-à-vis the granting banks to contract the above-mentioned derivative financial instruments.
a.2) Price risk The Group is not exposed to equity instrument price risk since it has no significant investments. The Group is partially exposed to market price risk in respect of raw materials, relating basically to metals and oil, which affect the price of supplies of equipment and materials manufactured in the projects executed by the Group. Generally, these effects are efficiently passed on in selling prices by all similar contractors operating in the same sector. The Group reduces and mitigates price risk by means of policies implemented by management, consisting basically of a reduction or increase in the rate of placements and the selection of currencies and countries of origin, as well as by ensuring the production or acquisition of certain raw materials at a closed price. a.3) Cash flow and fair value interest rate risk Interest rate risk must be analyzed in relation to the two types of financing obtained by the Group:
Annual Report Financial Report
2014
Exposure to variable interest rate risk at each year end is analyzed below:
2014 Euribor Rate Project Finance Cash and cash equivalents interest-bearing Net position
Other rates (*)
Total
162,312
81,773
244,085
(201)
(4,365)
(4,566)
162,111
77,408
239,519
69%
0%
47%
Portion hedged with derivative financial instruments 2013 Euribor Rate Project Finance Cash and cash equivalents interest-bearing Net position Portion hedged with derivative financial instruments
Other rates (*)
181,018
Total
82,970
263,988
(337)
(697)
(1,034)
180,681
82,273
262,954
62%
0%
43%
(*) Includes project finance related to non-current assets held for sale (Note 15)
47
The Group analyses its exposure to interest rate risk in a dynamic manner. A simulation is performed in which the Group calculates the effect on results of a specific change in the interest rate. In each simulation, the same interest rate fluctuation is used for all currencies and reference rates. Scenarios are only simulated for liabilities representing the most relevant interest-bearing positions. Based on the simulations performed, the impact on results after tax of an increase/decrease of 100 basis points in the interest rate would have been a reduction/increase of 672 thousand euro (2013: 801 thousand euro), mainly due to a rise/reduction in interest expense on variable-rate loans; equity would have changed by the same amounts (effects calculated without conside-
Notes to the consolidated annual accounts
ring the impact of fair value changes in the derivative financial instruments contracted). • Bank Borrowings The Group’s interest-rate risk arises mainly from longterm borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Fixed-interest borrowingsand Senior Notes expose the Group to fair value interest rate risk. A large part of the Group’s borrowings are obtained at variable rates, the main reference rate being the Euribor. The Group policies consist in the use of interest rate swaps to convert long-term financing to fixed interest rates. Exposure to variable interest rate risk at each year end is analyzed below:
2014 Euribor Rate Bank Borrowings
447,445
226,843
674,288
(88,645)
(183,726)
(272,371)
Net position
358,800
43,117
401,917
101%
0%
67%
2013 Euribor Rate
Other rates
Total
Bank Borrowings
1,050,632
241,371
1,292,003
Interest-bearing cash and cash equivalents
(117,040)
(97,361)
(214,401)
933,592
144,010
1,077,602
53%
0%
43%
Net position Portion hedged with derivative financial instruments
48
Total
Interest-bearing cash and cash equivalents Portion hedged with derivative financial instruments
Other rates
The Group analyses exposure to interest rate risk in a dynamic manner. A number of scenarios are simulated taking into consideration refinancing, renewal of current positions, alternative financing, existence of variable-rate investments (in this sense, very short-term interest-bearing placements are treated as being exposed to variable interest rates) and existing hedges. Through these scenarios, the Group calculates the effect on results of a specific change in the interest rate. In each simulation, the same interest rate fluctuation is used for all currencies. Scenarios are only simulated for liabilities that represent the most relevant interest-bearing positions. Based on the simulations conducted, the impact on after-tax results of an increase/decrease of 100 basis points interest rate would decrease/increase in1,640 thousand euro (2013: 2,759 thousand euro), mainly due to higher/lower interest expense on variable rate loans;equity would have changed in the same amount (effects calculated not considering the impact of changes in fair value of financial derivatives contracts). b) Credit risk The Group manages credit risk in relation to the following groups of financial assets: • Derivative financial instruments (see Note 11) and balances included under Cash and cash equivalents and financial assets at fair value through profit or loss (see Note 14). • Balances related to trade and other receivables (see Note 12). Derivative financial instruments and bank transactions included in cash and cash equivalents and financial assets at fair value through profit or loss are contracted with reputable financial institutions that obtain high credit ratings. A high proportion of trade and other receivables (56.27% and 68.67% at 31 December 2014 and 2013, respectively) relate to transactions with national and international public institutions and the Group therefore considers that credit risk is under tight control. A significant part of the
receivables from private companies relate to companies with high credit ratings and there is no default history with respect to the Group. A follow-up is performed on a periodically basis of the overall position in trade and other receivables and also an individual analysis of the most significant exposures.
Annual Report Financial Report
2014
c) Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Due to the dynamic nature of the underlying businesses, Group Treasury aims to maintain flexibility in funding by keeping committed credit lines available. Regarding to the Group’s project financing arrangements (“Project finance”), as explained in Note 8, repayments are secured only by cash flows from the respective projects. In such cases, the Group hedges liquidity risk by ensuring that financing is long term and structured on the basis of the forecast cash flows for each project. Accordingly, 93.98% of financing assigned to projects recognized at 31 December 2014 (2013: 94.70%) falls due after more than 1 year and 17.23% of the financing recognized at 31 December 2014 (2013: 2.30%) falls due after more than 4 years. As regards the Group’s liquidity position, management monitors the Group’s forecast liquidity based on expected cash flows. The following table contains a breakdown of the Group’s financial liabilities that will be settled in the net amount, grouped together by maturity date based on the period from the balance sheet date to the maturity date stipulated in each contract. The amounts shown in the table relate to undiscounted cash flows stipulated in the contract. Balances payable in less than 12 months reflect the relevant carrying amounts as the effect of discounting is not significant.
49
Less than 1 year Notes to the consolidated annual accounts
Between 1 and 2 years
Between 2 and 5 years
More than 5 years
At 31 December 2014 Bank Borrowingsand Senior Notes Derivative financial instruments*
276,090
90,958
309,618
870,848
15,466
7,888
7,098
10
1,873,182
14,654
-
-
101,482
88,268
205,506
31,351
2,266,220
201,768
522,222
902,209
Bank Borrowingsand Senior Notes
406,854
302,788
541,707
73,983
Derivative financial instruments*
10,724
10,586
6,093
-
1,575,846
12,499
8,658
-
Trade and other payables** Accrued unmatured interest Total At 31 December 2013
Trade and other payables** Accrued unmatured interest Total
56,095
38,354
44,979
5,918
2,049,519
364,227
601,437
79,901
*Excluding derivative financial instruments linked to project finance. **Does not include deferred income, interim invoicing or advances received on contracts. It also does not include any other accounts payable that do not involve liquidity risks.
Liquidity risk is managed on an overall, centralized basis by the Group Treasury Department. This includes both managing cash from the Group’s recurring transactions (analysis and follow-up of debt maturities, collections, renewal and contracting loans, management of available credit lines, and temporary investment of cash surpluses) and managing the funds necessary to undertake planned investments. At 31 December 2014 even though the Group shows negative working capital amounting 139 million euro, Group management considers liquidity risk to be adequately. The Group forecasted cash flows for the year 2015 are: •Operating cash flows forecasted for 2015are positive in the amount of €194 million euro. This forecast could even improve due, among other reasons, to the success of certain construction claims that the Group has submitted and to the contracting and execution of additional projects in the pipeline at year-end 2014. • Positive investment forecasted cash flows for 2015 total €13 million euro. This forecast could improve substantially as a result of various investment financing alternatives being negotiated by the Group. • Negative financing forecasted cash flows amount to 181 million euro, since all available credit lines are expected to be renewed (as in previous years), as well as other short-term bank borrowings. that are renewable annually. It is worth mentioning that financing cash flow forecast could improve considerably due to the obtainment of other long-term financingwhich is under negotiation. 50
Bearing in mind these cash flows forecasts and cash available at year-end 2014, the Group’s situation is sound and will allow short-term commitments to be fulfilled, also considering that there are undrawn credit lines and available factoring and other financing facilities for efficient working capital management and adequate liquidity risk management. 3.2. Capital risk management The Group’s capital management objectives consist of protecting its capacity to do business as a going concern in order to obtain a return for shareholders and profits for other holders of equity instruments, as well as to maintain an optimal capital structure and reduce cost of capital.
shareholders, reimburse capital to shareholders, issue new shares or sell shares to reduce debt. The Group monitors capital based on the leverage ratio, in line with industry practices. This ratio is calculated as net debt divided by total capital (excluding the position assigned to projects). Net debt is calculated as total borrowings and Senior Notes (including current position in trade and other payables, as reflected in the consolidated accounts) less cash and cash equivalents and financial assets at fair value through profit or loss. Capital is calculated as equity, as reflected in the consolidated accounts, plus net debt.
Annual Report Financial Report
2014
Leverage ratios at 31 December 2014 and 2013 are shown below:
In order to maintain or adjust the capital structure, the Group could adjust the amount of dividends payable to
2014 Bank Borrowings and Senior Notes (see Note 21) and Trade and other payables – Current (see Note 20)
2013
3,903,001
3,516,383
(14,675)
(7,794)
Less: cash and cash equivalents (see Note 14.1)
(291,272)
(241,442)
Net debt
3,597,054
3,267,147
615,458
650,089
4,212,512
3,917,236
85.4%
83.4%
Less: financial assets at fair value through profit or loss (see Note 14.2)
Equity (including non-controlling interest , excluding hedge reserves and cumulative translation differences) Total capital Leverage ratio (Net debt / Total capital)
51
3.3. Fair value estimation Notes to the consolidated annual accounts
Financial instruments included at Level 1: The fair value of financial instruments traded in active markets (such as publicly traded derivatives and held-for-trading and available-for-sale investments) is based on quoted market prices at the balance sheet date. The market price used for financial assets is the current bid price. Financial instruments included at Level 2:
The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance sheet date. Market prices or brokers’ prices are used for long-term payables. Other techniques, such as the estimated discounted cash flow method, are used to determine fair value for the remaining financial instruments. The fair value of interest-rate swaps is calculated as the present value of the estimated future cash flows. The fair value
of forward foreign exchange contracts is determined using forward exchange market rates at the balance sheet date. The methods are classified in accordance with IFRS 7 (see Note 2.10). If one or more of the significant inputs are not based on observable market data, the financial instrument is included in Level 3. The following table presents an analysis of the financial instruments that are measured at fair value, classified by measurement method. The various levels have been defined as follows: • Listed prices (not adjusted) on active markets for identical assets and liabilities (Level 1). • Directly (prices) or indirectly (deriving from prices) (Level 2) observable information relating to the asset or liability, other than the listed prices included in Level 1. • Information regarding the asset or liability that is not based on observable market data (non-observable data) (Level 3). The following table presents the Group’s assets and liabilities that are measured at fair value at 31 December 2014:
Level 1
Level 2
Level 3
Total
Derivative financial instruments - assets
-
2,908
-
2,908
Derivative financial instruments - liabilities
-
(37,384)
(34,194)
(71,578)
Total
-
(34,476)
(34,194)
(68,670)
During the year there were no reclassifications among indicated Tiers. The following table presents the Group’s assets and liabilities that are measured at fair value at 31 December 2013: Level 1 Derivative financial instruments - assets
52
Level 2 -
2,726
Level 3
Total -
2,726
Derivative financial instruments - liabilities
-
(32,025)
(17,969)
(49,994)
Total
-
(29,299)
(17,969)
(47,268)
The valuation techniques used to define fair values are as follows:
value. Changes in fair value generated during the year are recognised in the income statement.
a) Swaps: The exchange by two market participants of a series of cash flows, according to the terms of each contract, during a period of time. The value of this type of instrument is calculated by discounting the cash flows in the currency as for the contract. Likewise, day computation models are implemented in accordance to the base.
e) Options on a basket of underlined securities: The prices of the options are obtained from estimates of scenarios based on the probability of their occurrence. In this context, the most common methodology is the Montecarlo method, which is based on the premise that the value of an option is the average of the values obtained under different random scenarios adjusted to reflect the statistical distribution of the underlying securities. The number of scenarios must be high and never less than 50,000 simulations. To perform the valuation of these assets, the Montecarlo simulation method is employed for the valuation of the underlying securities and the Payoff in each scenario is applied to deduce the corresponding price.
b) Interest Rate Swaps (IRS): Variable interest rates are calculated based upon the curve of the corresponding currency and deriving the implicit rates on each of the reference dates as for the contract. c) Futures on the exchange rate between currencies or variable income assets: fair value is calculated based on the differential between the price contracted at the beginning of the operation and expected value of the asset on maturity, being an accepted practice in the market. d) The fair value of the option on the Corpfin Capital contract and other entities (Note 11) included in Level 3 is calculated using models based on estimated future cash flows discounts using observable market
Annual Report Financial Report
2014
f) It is assumed that the carrying value less the provision for impairment of accounts receivable and payable approximates their fair value. g) The fair value of financial liabilities for financial reporting purposes is estimated by discounting future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments.
53
Notes to the consolidated annual accounts
4. Critical accounting estimates and judgments The preparation of consolidated annual accounts under IFRS-EU requires that management makes estimations and assumptions that could affect the accounting policies adopted and the amounts of assets, liabilities, revenue, expenses and related breakdowns. The estimates and assumptions made are continuously evaluated and are based on past experience or other facts that are deemed to be reasonable under the circumstances, at the balance sheet date, the result of which is the basis from which to judge the carrying amount of the assets and liabilities that cannot be immediately determined in any other manner. Actual results could differ from estimated ones. Certain accounting estimates are considered to be significant if the amount of the estimates and assumptions is material and if the impact of the estimates and assumptions on the financial position or operating results is material. Group management’s main estimates are explained below. 4.1. Critical accounting estimates and judgments The Group makes estimates and judgments concerning the future. The resulting accounting estimates will, by definition, rarely matches the related actual results. The estimates and judgments that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. Business combinations or net-asset group acquisitions IFRS-EU requires, at the acquisition date of a subsidiary, an analysis of whether the acquired element can be considered as a business or as a net-asset group not complying with the business definition, as stated in IFRS 3 “Business combinations” (Note 2.2). When the Group acquires shares in an entity not considered as a business but as a net-asset group, the cost is allocated to identifiable individual assets and liabilities, based on their fair value at the acquisition date. Net-asset group cost may include any element related to share-based payments. In these cases, the difference between the fair value of the acquired assets and the amount payable in cash is directly registered in equity.
54
When the Group acquires shares in an entity considered as a business, the business combination cost is allocated to identifiable assets, liabilities and contingent
liabilities in the acquired company, at the acquisition date. These assets and liabilities are initially valued at fair value. If a part of the combination cost depends on future events, the amount of such adjustment is included in the combination cost, to the extent it is probable and can be reliably measured. The excess of business combination cost over the acquirer’s shareholding in the acquired net assets at fair value is registered as goodwill. During 2014 and 2013, the Group completed acquisitions and changes of control over groups of net assets and businesses (Note 32). Based on management judgement, the acquisition cost of these businesses has been booked in line with the terms included in the salepurchase agreements. Estimated impairment of goodwill and other non financial assets The Group, on an annually basis, tests for impairment goodwill, and if any impairment indicators are identified tests other non-financial assets, in accordance with the accounting policy in Note 2.9. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of estimates and sensitivity analyses are performed on the most relevant variables included in the estimates, paying particular attention to situations in which potential impairment indicators may be identified (see Note 7.1 and 8.2). Income tax The Group is subject to income taxes in numerous jurisdictions. A significant level of judgment is required to determine the worldwide provision for income tax. There are many transactions and calculations with respect to which the ultimate calculation of the tax is uncertain in the ordinary course of business. The Group recognizes liabilities for anticipated tax matters based on estimates as to whether additional taxes will be necessary. When the final tax result differs from the amounts which were initially recognized, such differences will have an effect on income tax and the provisions for deferred taxes in the year in which they are deemed to arise. In such sense, there are no significant aspects subject to estimates that could have a material impact on the Group’s position. Recovery of deferred tax assets The recoverability of deferred tax assets (Note 22) is assessed at the moment these arise, and subsequently each balance sheet date, based upon forecast results included in the Group’s business plan. In particular, the Group considers the synergies arising from tax conso-
lidation, as well as future tax benefits based upon the above-mentioned business plan. Fair value of derivatives or other financial instruments The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Group exercises judgment to select a variety of methods and to make assumptions based mainly on market conditions at the balance sheet date. The Group has used discount cash flow analyses for a number of available-for-sale financial assets not traded in active markets. Revenue recognition The Group recognizes revenue from construction and engineering activities on a percentage-of-completion basis. Percentage of completion is calculated as costs incurred under the contract as a percentage of estimated total contract costs. This revenue recognition method is only used when the result of the contract may be reliably estimated and the contract is likely to generate profits. If the result of the contract cannot be reliably estimated, revenue is recognized as costs are recovered. When a contract’s costs are likely to exceed the contract’s revenue, the loss is immediately expensed. When applying the percentage-of-completion method, the Group makes significant estimates in relation to total costs necessary to perform the contract. These estimates are reviewed and evaluated periodically to verify whether a loss has been generated and whether the percentage-of-completion method may continue to be applied, or to re-estimate the forecast project profit. During the project, the Group also estimates likely contingencies relating to the increase in the total estimated cost and adjusts revenue recognized accordingly. The Group’s historical data indicates that its estimates are adequate and reasonable in relation to the above-mentioned aspects. Concession contracts Based upon available information and all relevant terms included in the concession contracts, the Group performs a detailed analysis to determine if such arrangements are within the scope of IFRIC 12. The main aspects to be considered in this analysis are as follows: a) If the granting authority controls or regulates the use of the infrastructure by the concessionaire, to whom it must render the associated services and at what price. b) If the granting authority has any residual share of the infrastructure at the end of the concession period.
Based on these terms and on the available information for each contract, the Group determines the accounting model to be applied: Intangible asset model: the Group applies this model when the concessionaire has the right to receive toll collections (or any other type of payment) from users, as a consideration for infrastructure funding and construction, or when the granting authority remunerates the concessionaire based on the degree of infrastructure utilization. In both cases, the amounts to be paid to the concessionaire are not guaranteed. Financial asset model: the Group applies this model when the concessionaire has an unconditional contractual right to receive payments from the granting authority, regardless of the degree of infrastructure utilization.
Annual Report Financial Report
2014
Mixed model: when the concessionaire is partially paid both by users (depending on the infrastructure use) and by the granting authority (based on an unconditional contractual right to receive payments). Once the accounting model has been defined, there are key estimations / assumptions used by Management, such as: • Traffic forecasts to calculate intangible assets amortisation (road concessions). • Maintenance accrual: estimates of future CAPEX value, based on each business plan used by Management. • The construction margin expected by Management, used to measure intangible / financial assets at fair value. • When determining the financial asset value in accordance with electric transmission line contracts and their legal interpretations, the concessionaire Management estimates granting the authority to compensate them for the infrastructure residual value at the end of the concession period. Useful lives of property, plant and equipment and intangible assets Group management determines estimated useful lives and related depreciation charges for its property, plant and equipment and its intangible assets. This estimate is based on the period during which the non-current assets will generate economic benefits based on updated business plans. At each closing date, the Group reviews the useful lives of non-current assets. If the estimates differ from previous estimates, the effect of the change is recognized prospectively as from the year in which the change takes place. 55
Notes to the consolidated annual accounts
For those intangible assets related to motorway administrative concessions that are depreciated in a systematic way based on the traffic and revenues expected in accordance with updated business plans, Group’s management annually updates traffic estimates made for such concessions. Likewise, in case circumstances imply worse conditions based on business plans, impairment tests will be carried out.
due to disagreement with the work executed or the failure to fulfil contractual clauses linked to the return on the assets handed over to customers. The Group also makes estimates to assess the recoverability of available-for-sale financial assets, based mainly on the financial health and near-term business prospects of the investee company. Provisions
Warranty claims
Provisions are recognized when it is probable that a present obligation arising from past events will result in an The Group generally offers 24 or 36-month warranties on outflow of funds and the amount of the obligation may be its projects and services (up to 60 months, in special ca- reliably estimated. Significant estimates are required in orses). Management estimates the related provision for future der to comply with IFRS-UE. Group management makes warranty claims based on historical warranty claim infor- estimates of the likelihood of the contingencies and the mation, as well as recent trends that might suggest that amount of the liability to be settled in the future, evaluating past cost information may differ from future claims. As in all relevant information and facts. the case of revenue recognition, the Group’s historical data Joint agreements and control indicates that its estimates are adequate in this respect. Receivables and financial assets
When applying IFRS 10 and IFRS 11 on investments, the Group makes accounting estimates and judgments The Group makes estimates relating to the collecta- when determining the existence of joint agreements or bility of balances owned by customers in projects in control and when differentiating between joint business which disputes have arisen or litigation is in progress and joint operations.
56
5. Segment information As described in Note 1 of the consolidated financial statements and based on the information reviewed by the Management Committee, the Group develops its activity mainly through 2 operating segments, as described below: • EPC • Concessions Other Corporate and Consolidated Adjustments” includes corporate overheads and non-core business such as the operation of a biodiesel plant and Real Estate business. Following the internal restructuring process started in the previous year, in 2014 the Group has taken the decision to show its business activities grouped within the EPC Segment, that on previous year were disclosed under the EPC segment as “Infrastructure and Industrial Activities” and “Enegery”, due to these activities have similar economic characteristics. The “EPC” segment obtains its revenues mainly from the rendering of construction services, whereas the “Concessions” segment, mainly related to concessions of highways, concessions of transmission lines, solar photovoltaic energy plants (all of them included in subgroup Isolux Infraestructures) and concession of car parks (included in subgroup Isolux Corsán Aparcamientos), ears its revenues by renderind the related service according to the relevant concession agreement. Revenues generated between segments mainly arise from construction services rendered by “EPC” to the rest of the Group’s segments. These transactions are carried out under market conditions and are analysed by the Management Committee. Note 28 include relevant information on about the volume of these transactions. The effects of business combination (including transactions that imply changes of control) are considered by the Group as part of corporate segment.
In addition, the Management Committee performs detailed analysis concerning the main geographical areas in which the Group operats; these are principally Spain, Latin America (mainly Mexico, Brazil and Argentina), Asia (mainly India), and others (mainly activities carried out in the USA and African countries, such as Angola or Algeria).
Annual Report Financial Report
2014
As described in Note 2.1, the Group has applied new standards since 2014 (and has modified prior period information for comparison purposes), the most noteworthy of which is IFRS 11 due to its significant impact over consolidated information. This impact has basically come from the application of the consolidation by the equity method instead of the proportionate consolidation method in relation to the subgroups headed by Isolux Infraestructure Netherlands, B.V. and Isolux corsán Aparcamientos, S.A. (see Note 33), which represents a significant part of the concession business. In order to measure its business performance, the Group Management uses financial information which still considers the application of the proportionate consolidation method,; on the basis it gives more detailed and precise information for a better understanding of the concession segment development. The tables below include the column “Adjustments due to change in consolidation method” with the purpose of reconcile segment information with the data included in the consolidated income statement. The performance of operating segments is assessed by the Management Committee based on the evaluation of each segment’s operating result. Financial income and expenses are analysed at the level of each individual segment to assess their net impact on the line item “Net financial result”. A detailed analysis is carried out by the Treasury Department, which manages the Group cash position. Income tax is analysed at a Group level by the Management Committee, and for this reason, income taxes are not allocated to each individual segment. The information by segments related to the income statement submitted to the Management Committee for the segments to be reported for the fiscal year ended 31 December 2014 is as follows:
57
Notes to the consolidated annual accounts
2014
Revenue from external customers Segment´s ordinary revenue Own work capitalized Other operating income and Change in inventories
Concessions
Other, Corporate and Consolidation Adjustments
2,096,689
656,597
26,985
2,780,271
(652,168)
2,128,103
2,096,689
656,597
26,985
2,780,271
(652,168)
2,128,103
315
-
-
315
-
315
16,025
-
425
16,450
(10,681)
5,769
EPC
Consolidation method adjustments (IFRS 11)
Sub-total
Total
Total operating income
2,113,029
656,597
27,410
2,797,036
(662,849)
2,134,187
Other operating expenses
(1,834,054)
(285,013)
(57,735)
(2,176,802)
294,213
(1,882,589)
Gross operating results (EBITDA) (*)
278,975
371,584
(30,325)
620,234
(368,636)
251,598
Depreciation, amortization and impairment losses
(18,504)
(86,703)
(27,317)
(132,524)
91,308
(41,216)
Variation in trade provisions
(20,563)
99
(24,123)
(44,587)
-
(44,587)
Operating result
239,908
284,980
(81,765)
443,123
(277,328)
165,795
Net financial results
(13,430)
(263,893)
(170,957)
(448,280)
242,708
(205,572)
-
-
-
-
26,357
26,357
226,478
21,087
(252,722)
(5,157)
(8,263)
(13,420)
-
-
(31,122)
(31,122)
11,837
(19,285)
226,478
21,087
(283,844)
(36,279)
3,574
(32,705)
-
-
(9,280)
(9,280)
-
(9,280)
226,478
21,087
(293,124)
(45,559)
3,574
(41,985)
-Owners of the parent
-
-
(38,586)
-
(38,586)
-Non-controlling interest
-
-
(6,973)
3,574
(3,399)
Share of profit / (losses) of investments accounted for the equity method Profit before income tax Income tax Results for the year from continuing operations Results for the year from discontinuing operations Results for the year Attibutable to:
(*) EBITDA is the profit for the year from continuing operations before income taxes, participation in the earnings of companies carried by the equity method, net financial result, variation in trade provisions, amortisation and impairment charges.
The information by segments related to the income statement submitted to the Management Committee for the segments to be reported for the fiscal year ended 31 December 2013 is as follows:
58
Annual Report Financial Report
2014
2013 Revenue from external customers Segment´s ordinary revenue Own work capitalized Other operating income and Change in inventories
Concessions
Other, Corporate and Consolidation Adjustments
2,425,275
617,141
1,215
3,043,631
(470,839)
2,572,792
2,425,275
617,141
1,215
3,043,631
(470,839)
2,572,792
148,410
-
-
148,410
(131,907)
16,503
EPC
Consolidation method adjustments (IFRS 11)
Sub-total
Total
16,800
20,421
(1,882)
35,339
(21,146)
14,193
Total operating income
2,590,485
637,562
(667)
3,227,380
(623,892)
2,603,488
Other operating expenses
(2,285,833)
(305,133)
(60,346)
(2,651,312)
298,508
(2,352,804)
304,652
332,429
(61,013)
576,068
(325,384)
250,684
(17,938)
(87,624)
(20,972)
(126,534)
78,919
(47,615)
Gross operating results (EBITDA) (*) Depreciation, amortization and impairment losses Variation in trade provisions
(3,603)
(15,078)
(16,321)
(35,002)
1,267
(33,735)
Operating result
283,111
229,727
(98,306)
414,532
(245,198)
169,334
Net financial results
(30,726)
(255,643)
(89,193)
(375,562)
191,534
(184,028)
-
-
-
-
10,009
10,009
252,385
(25,916)
(187,499)
38,970
(43,655)
(4,685)
-
-
(26,941)
(26,941)
35,080
8,139
252,385
(25,916)
(214,440)
12,029
(8,575)
3,454
Share of profit / (losses) of investments accounted for the equity method Profit before income tax Income tax Results for the year from continuing operations Results for the year from discontinuing operations
-
-
(6,149)
(6,149)
-
(6,149)
252,385
(25,916)
(220,589)
5,880
(8,575)
(2,695)
- Owners of the parent
-
-
6,640
-
6,640
- Non-controlling interest
-
-
(760)
(8,575)
(9,335)
Results for the year Attibutable to:
(*) EBITDA is the profit for the year from continuing operations before income taxes, participation in the earnings of companies carried by the equity method, net financial result, variation in trade provisions, amortisation and impairment charges.
Ordinary revenues from external customers are measured consistently with those applied in the income statement. In fiscal years 2014 and 2013, no consolidation adjustments are included in the “Other, Corporate and Consolidation Adjustments”. Therefore, the financial informa-
tion included in this column refers only to transactions included in the “Others” and “Corporate” segments. The information by segments related to the balance sheet submitted to the Management Committee for the segments to be reported for the fiscal year ended 31 December 2014 is as follows:
59
2014
Other, Corporate and Consolidation adjustm
Concessions
EPC
Consolidation method adjustments (IFRS 11)
Sub-total
Total
ASSETS Property, plant and equipment
81,394
245
31,404
113,043
-
113,043
479,628
32,883
-
512,511
(32,883)
479,628
13,988
106
9,364
23,458
-
23,458
Other fixed assets assigned to projects
-
3,548,499
-
3,548,499
(3,522,877)
25,622
Concessionary assets assigned to projects
-
1.337.191
126.470
1.463.661
(1.337.191)
126.470
Investments in companies by equity method
-
-
-
-
973,807
973,807
Goodwill Intangible assets
1,107
-
9,328
10,435
-
10,435
Trade and other receivables
Financial investments
37,694
15,955
15,768
69,417
42,488
111,905
Deferred income tax assets
86,128
112,934
201,872
400,934
(112,411)
288,523
20
-
757
777
-
777
699,959
5,047,813
394,963
6,142,735
(3,989,067)
2,153,668
134,505
25,416
100,709
260,630
(7,488)
253,142
2,651,258
311,739
(774,288)
2,188,709
(341,493)
1,847,216
1,648
-
483
2,131
-
2,131
11,443
24,819
3,232
39,494
(24,819)
14,675
236,341
314,114
41,348
591,803
(300,531)
291,272
Derivative financial instruments Non-current assets Inventories Trade and other receivables Derivative financial instruments Financial assets at fair value through profit or loss Cash and cash equivalents
-
-
379,602
379,602
-
379,602
Current assets
Non-current assets held for sale
3,035,195
676,088
(248,914)
3,462,369
(674,331)
2,788,038
TOTAL ASSETS
3,735,154
5,723,901
146,049
9,605,104
(4,663,398)
4,941,706
63,710
6,963
1,200,751
1,271,424
-
1,271,424
-
2,941,273
143,234
3,084,507
(2,876,835)
207,672
3,635
135,246
16,892
155,773
(133,855)
21,918
Deferred income tax liabilities
20,875
202,957
15,759
239,591
(196,420)
43,171
Provisions for other liabilities and charges
65,838
30,386
(36,987)
59,237
(16,031)
43,206
2,933
526,810
48,904
578,647
(516,293)
62,354
156,991
3,843,635
1,388,553
5,389,179
(3,739,434)
1,649,745
94,108
990
180,992
276,090
-
276,090
LIABILITIES Bank Borrowings and Senior Notes Project finance Derivative financial instruments
Other payables Non-current liabilities Bank Borrowings and Senior Notes Project finance
-
366,585
12,656
379,241
(365,944)
13,297
2,505,403
556,201
(294,192)
2,767,412
(411,925)
2,355,487
Current tax liabilities
17,525
(85)
3,138
20,578
85
20,663
Derivative financial instruments
12,069
16,178
3,397
31,644
(16,178)
15,466
Provisions for other liabilities and expenses
73,208
3,018
351
76,577
(3,018)
73,559
Trade and other payables
Liabilities held for sale
60
-
-
172,553
172,553
-
172,553
Current liabilities
2,702,313
942,887
78,895
3,724,095
(796,980)
2,927,115
TOTAL LIABILITIES
2,859,304
4,786,522
1,467,448
9,113,274
(4,536,414)
4,576,860
5,853
145,689
(31,465)
120,077
(126,984)
(6,907)
Non-controlling interests
The information by segments related to the balance sheet submitted to the Management Committee for the segments to be reported for the fiscal year ended 31 December 2013 is as follows:
2013
Other, Corporate and Consolidation adjustm
Concessions
EPC
Annual Report Financial Report
Consolidation method adjustments (IFRS 11)
Sub-total
Total
2014
ASSETS Property, plant and equipment Goodwill Intangible assets
94,131
-
32,517
126,648
-
126,648
477,117
33,982
-
511,099
(33,982)
477,117
15,801
592
10,334
26,727
-
26,727
Concessionary assets assigned to projects
27
2,734,941
1,049
2,736,017
(2,725,550)
10,467
Other fixed assets assigned to projects
-
1,235,683
135,048
1,370,731
(1,235,683)
135,048
Investments in companies by equity method
-
-
-
-
827,820
827,820
Financial investments Trade and other receivables Deferred income tax assets Non-current assets Inventories Trade and other receivables
1,118
-
9,328
10,446
-
10,446
32,563
64,810
(34,972)
62,401
32,062
94,463
82,408
85,741
173,065
341,214
(85,010)
256,204
703,165
4,155,749
326,369
5,185,283
(3,220,343)
1,964,940
93,427
13,319
99,855
206,601
(31)
206,570
2,583,328
331,594
(996,252)
1,918,670
(261,188)
1,657,482
Derivative financial instruments
2,726
292
-
3,018
(292)
2,726
Financial assets at fair value through profit or loss
5,897
705
1,897
8,499
(705)
7,794
Cash and cash equivalents Non-current assets held for sale Current assets
TOTAL ASSETS
214,433
196,475
9,744
420,652
(179,210)
241,442
-
257,766
399,726
657,492
-
657,492
2,899,811
800,151
(485,030)
3,214,932
(441,426)
2,773,506
3,602,976
4,955,900
(158,661)
8,400,215
(3,661,769)
4,738,446
70,949
8,020
839,509
918,478
-
918,478
LIABILITIES Bank Borrowings and Senior Notes Project finance Derivative financial instruments Deferred income tax liabilities
-
2,367,085
163,405
2,530,490
(2,338,387)
192,103
6
85,030
20,148
105,184
(83,883)
21,301
6,941
163,747
6,591
177,279
(153,100)
24,179
Provisions for other liabilities and charges
54,250
11,520
(8,305)
57,465
(11,414)
46,051
Other payables
61,288
506,063
(99,531)
467,820
(412,991)
54,829
193,434
3,141,465
921,817
4,256,716
(2,999,775)
1,256,941
126,410
990
279,454
406,854
-
406,854
Non-current liabilities Banks Borrowings and Senior Notes Project finance
-
289,333
10,657
299,990
(289,247)
10,743
2,325,923
370,214
(280,972)
2,415,165
(224,114)
2,191,051
Current tax liabilities
16,697
248
4,088
21,033
(248)
20,785
Derivative financial instruments
10,442
16,362
282
27,086
(16,362)
10,724
Provisions for other liabilities and expenses
57,011
22
519
57,552
(22)
57,530
Trade and other payables
-
160,367
200,203
360,570
-
360,570
Current liabilities
Liabilities held for sale
2,536,483
837,536
214,231
3,588,250
(529,993)
3,058,257
TOTAL LIABILITIES
2,729,917
3,979,001
1,136,048
7,844,966
(3,529,768)
4,315,198
4,001
150,908
(25,219)
129,690
(132,001)
(2,311)
Non-controlling interests
61
Notes to the consolidated annual accounts
The consolidation adjustments included in the column “Others, Corporate and Consolidation Adjustments” at 31 December 2014 and 2013 totalled €1,612 million euro and €1,030 million euro, respectively, and mostly affected the headings “titled “Clients and other accounts receivable” and “Suppliers and other accounts payable”, both current and non-current. The additions to non-current assets in 2014 in the amount of 14,251 thousand euro refers to the EPC segment (2013:18,257 thousand euro) to the Concessions segment, in the amount of 16,224 thousand euro (2013: €18,935 thousand euro) and to the Others segment in the amount of 3,377 thousand euro (2013: €37,900 thousand euro). Total assets and liabilities amounts presented to Management Committee are measured consistently with those applied in the consolidated annual accounts. These assets and liabilities are assigned based on segment activities and physical asset location. The parent company is registered in Spain, but as mentioned above, the Group also operates abroad. Information by geographical segment considering the geographical origin of each customer at 31 December 2014 and 2013 is presented below:
2014
Revenue/ sales
2013
Revenue/ sales
Spain
536,315
Spain
710,695
Latin America
1,496,663
Latin America
1,489,161
Asia
Other
404,634
342,659
2,780,271
(652,168)
Asia
Other
Sub-total
Consolidation method adjustments (IFRS11)
423,157
420,618
3,043,631
(470,839)
During 2014 and 2013 there is no ordinary revenue from transactions carried out with a single customer representing more than 10% of the Group.
62
Sub-total
Consolidation method adjustments (IFRS 11)
Total
2,128,103
Total
2,572,792
6. Property, plant and equipment
Annual Report Financial Report
2014
Set out below is a breakdown of property, plant and equipment showing its movement below:i
2014
Land and buildings
Plant, machinery and tooling
Furnishings
Vehicles
Data processing equipment
PPE in progress
Other PPE
Total
541
4,588
Cost 1 January
72,926
Additions
3,063
8,123
381
1,291
572
36
624
14,090
Disposals
(84)
(15,410)
(110)
(2,434)
(432)
(56)
(1,468)
(19,994)
(1,001)
325
-
-
1,917
206
-
1,447
531
1,513
105
48
675
17
41
2,930
75,435
128,971
9,791
12,074
13,649
744
3,785
244,449
(6,308)
(85,006)
(5,526)
(9,266)
(8,813)
-
(4,409)
(119,328)
(675)
(13,001)
(565)
(1,486)
(1,174)
-
(809)
(17,710)
Trasnsfers Translation differences effects 31 December
134,420
9,415
13,169
10,917
245,976
Amortisation and Deterioration Accumulated Depreciation 1 January Depreciation Disposals
25
5,884
83
2,390
383
-
1,359
10,124
Transfers
590
(471)
(10)
(47)
(1,528)
-
9
(1,457)
Translation differences effects
(99)
(661)
(41)
11
(564)
-
(53)
(1,407)
Impairment 31 December
Net book value
(1,628)
-
-
-
-
-
(8,095)
(93,255)
(6,059)
(8,398)
(11,696)
-
(3,903)
(131,406)
(1,628)
67,340
35,716
3,732
3,676
1,953
744
(118)
113,043
63
Notes to the consolidated annual accounts
2013
Land and buildings
Plant, machinery and tooling
Furnishings
Vehicles
Data processing equipment
PPE in progress
Other PPE
Total
Cost
1 January
132,398
215,470
9,531
14,299
11,562
4,078
4,290
391,628
Additions
768
6,793
405
2,022
175
68
387
10,618
Disposals
(2,362)
(8,015)
(516)
(3,152)
(813)
(25)
(89)
(14,972)
(46,862)
-
(5)
-
(7)
-
-
(46,874)
-
3,580
-
-
-
(3,580)
-
-
Changes in the consolidation scope (Note 15)
(11,016)
(83,408)
-
-
-
-
-
(94,424)
31 December
72,926
134,420
9,415
13,169
10,917
541
4,588
245,976
1 January
(8,740)
(164,314)
(4,945)
(10,797)
(8,510)
-
(3,893)
(201,199)
Depreciation
(1,793)
(11,584)
(839)
(1,555)
(1,130)
-
(1,360)
(18,261)
Disposals
1,284
7,484
258
3,086
822
-
844
13,778
Transfers to non-current assets held for sale (Note 15)
1,712
-
-
-
5
-
-
1,717
-
-
-
-
-
-
-
-
1,229
83,408
-
-
-
-
-
84,637
31 December
(6,308)
(85,006)
(5,526)
(9,266)
(8,813)
-
(4,409)
(119,328)
Net book value
66,618
49,414
3,889
3,903
2,104
541
179
126,648
Transfers to non-current assets held for sale (Note 15) Transfers
Accumulated Depreciation
Transfers Changes in the consolidation scope (Note 15)
64
In 2013 disposals are mainly due to the exit of the T-Solar factory from the scope of consolidation due to the loss of control by the Group (see Notes 1 and 15) and the classification of certain assets as held-for-sale.
Annual Report Financial Report
2014
Property, plant and equipment include at 31 December 2014 vehicles, machinery and other assets totalling 435 thousand euro (2013: 623 thousand euro) being acquired under finance leases, as analyzed below: 2014
2013
Capitalized finance lease cost
1,123
1,275
Accumulated depreciation
(688)
(652)
435
623
Net carrying amount
Bank borrowings are secured by land and buildings valued at €24,516 thousand euro (2013: €24,752 thousand euro). The balance of secured debt amounts to €3,655 thousand euro (2013: €4,523 thousand euro). At 31 December 2014, the Group has property, plant and equipment located abroad for a total cost of €63,498 thousand euro (2013: €47,407 thousand euro) and accumulated depreciation of €36,131 thousand euro (2013: €27,704 thousand euro). The income statement includes rental costs of €101,950 thousand euro (2013: €106,839 thousand euro), relating to rented property, plant and equipment. At 31 December 2014, fully-amortized assets with a carrying amount of €46,358 thousand euro are still in use (2013: €43,635 thousand euro). The consolidated Group has taken out a number of insurance policies to cover risks relating to property, plant and equipment. The coverage provided by these policies is considered to be sufficient.
65
Notes to the consolidated annual accounts
7. Goodwill and other intangible assets 7.1. Goodwill Set out below is an analysis of goodwill, the only intangible asset with an indefinite useful life, showing its movement below:
Beginning of the year
2014
2013
477,117
477,668
Additions Translation differences effects
-
-
2,511
(551)
-
-
479,628
477,117
Impairment charges End of the year
During 2014 and 2013 no impairment charges have been identified. Goodwill and intangible assets with indefinite useful lives have been assigned to the Group’s cash-generating units (CGUs) based on the country concerned and the business segment. Set out below is a summary by CGU (or CGU group) of goodwill assignment:
UGE Construction
2014
2013
154,578
154,578
Engineering – México
24,510
24,510
Engineering – Brazil
54,735
54,735
Engineering – Argentina and other
14,639
12,128
Engineering – Spain and other
231,166
231,166
Total
479,628
477,117
The amount recoverable from CGUs is determined based on value-in-use calculations using cash flow projections before taxes in accordance with the financial budgets approved by Management covering years.in which the cash flows are estimated for the entire life of the projects. Cash flows relating to periods after these five years are projectedusing the estimated residual growth rates indicated below. The growth rate does not exceed the average growth rate over the long term for the business in which the CGU operates. Cash flows are discounted using a rate based on the weighted average cost of capital for each of the CGU’s. 66
The most relevant key assumptions employed to calculate value-in-use are set out below: Operating result
Residual growth rate
CGU
2014
2013
2013
2014
2013
Construction
98,927
68,721
1%
1%
11.50%
10.86%
Engineering – México
13,364
12,267
2%
2%
10.50%
10.49%
Engineering – Brazil
6,194
11,715
2%
2%
14.50%
10.87%
Engineering – Argentina and other
9,201
3,276
2%
2%
13.80%
17.63%
96,398
140,207
1.7%
1.7%
17.40%
10.69%
Engineering – Spain and other
2014
Discount rate
Annual Report Financial Report
2014
(*) Results included in operating result column refer to the forecast for the following.
These assumptions have been used to analyze each CGU in the business segment. Group management considers that changes to assumptions that could cause a CGUs carrying amount to exceed its recoverable amount are not reasonably possible. Management calculated the budgeted gross margin based on past performance and market expectations. Weighted average growth rates are in line with the forecasts contained in industry reports. Discount rates applied are before taxes and reflect specific risks related to the relevant business segments. Additionally, for each goodwill balance, the Group performs sensitivity analyses, particularly in relation to discount rates (increased by amounts ranging between 17% and 21%), operating results (decreased according to expectations and covering potential risks), and residual growth rate (using lower anticipated inflation rates) in order to determine whether possible changes in key assumptions generate impacts on the recoverability of the carrying value of goodwill. The values that emerged as a result of these sensitivity analyses are higher than the book value of the goodwill.
67
7.2. Other intangible assets Notes to the consolidated annual accounts
A breakdown of 2014 and 2013 change is as follows:
2014
Administrative Concessions
Computer software and other
Total
Cost 1 January
16,869
40,734
57,603
Additions
16
3,522
3,538
Disposals
-
(473)
(473)
Transfers
(80)
-
(80)
-
20
20
16,805
43,803
60,608
(2,416)
(28,460)
(30,876)
(437)
(5,887)
(6,324)
Disposals
-
369
369
Transfers
(413)
119
(294)
-
(25)
(25)
31 December
(3,266)
(33,884)
(37,150)
Net book value
13,539
9,919
23,458
Translation differences effects 31 December Accumulated depreciation and impairment 1 January Amortization
Translation differences effects
2013
Administrative Concessions
Computer software and other
Total
Cost 1 January
10,471
Additions
7,139
5,588
12,727
Disposals
(741)
(1,337)
(2,078)
-
(19)
(19)
16,869
40,734
57,603
(2,629)
(23,238)
(25,867)
(417)
(6,458)
(6,875)
630
1,220
1,850
-
16
16
31 December
(2,416)
(28,460)
(30,876)
Net book value
14,453
12,274
26,727
Transfers to non-current assets held for sale (Note 15) 31 December
36,502
46,973
Accumulated depreciation and impairment 1 January Amortization Disposals Transfers to non-current assets held for sale (Note 15)
68
Administrative concessions captions include costs related to the construction and/or operation of various assets (water treatment and waste management plants, and other concessions) for which the Group has obtained the concession to operate the assets for a certain period. At the end of the concession period, the asset will entirely revert to the granting authority. The Group will depreciate capitalized asset over the concession term. The item Computer software reflects the ownership and right of use of computer software acquired from third parties. The balance of computer software does not include amounts related to software developed in-house. At 31 December 2014, fully-amortized computer software with a carrying amount of €20,733 thousand euro is still in use (2013: €15,724 thousand euro). Bank borrowings are secured by Other intangible assets valued at €11,317 thousand euro (2013: €11,514 thousand euro). The balance of secured debt amounts to €798 thousand euro (2013: €700 thousand euro).
8. Concessionary assets and other non-current assets assigned to projects
Annual Report Financial Report
2014
The consolidation scope includes investment in companies equity incorporated to engage single project. The project companies are usually financed by means of project finance. The basis of the agreement between the company and the bank is the assignment of cash flows generated by the project to service the debt and interest (including an exclusion or quantified allowance for all other assets), in such a way that investment payback for the bank will generally take place solely through the project cash flows. Additional guarantees could be settled in some cases during construction phase. Any other borrowings are subordinated to the Project finance until it is fully repaid.These are financing arrangements which are applied to specific business projects.
69
8.1. Concessionary assets assignet to projects Notes to the consolidated annual accounts
In view of the projects’ characteristics a large part of the concessionary assets assigned to projects are related to intangible and financial concessionaire assets (see accounting treatment in Notes 2.6, 2.7 and 2.23).
2014
2013
Cost 1 January
14,360
234,803
Additions
16,198
27,895
-
11,966
(243,690)
-
Additions to the consolidation scope Business combination effects (Note 32) Translation differences effects Transfer to non-current assets held for sale (Note 15)
593
-
243,557
(244,422)
Disposals
(1,306)
(7,541)
Transfers
497
(8,341)
30,209
14,360
(3,893)
(33,493)
-
(391)
(3,668)
(13,939)
31 December Accumulated depreciation and impairment 1 January Additions to the consolidation scope Amortization Business combination effects (Note 32)
38,835
-
(35,853)
37,028
Disposals
-
6,902
Transfers
(8)
-
31 December
(4,587)
(3,893)
Net book value
25,622
10,467
Transfers to non-current assets held for sale (Note 15)
As mentioned in Note 15, in 2013 the Group classified its investments in car parks as assets held for sale. In 2014, this classification was reversed prior to the deconsolidation as a result of the business combination described in Note 32. At 31 December 2014, assets assigned to projects located abroad amount to€15,538 thousand euro(2013: There were no concession assets assigned to projects in foreign countries). 70
During 2014, €159 thousand euro have been capitalized (2013: €188 thousand euro). According to Note 2.7 of the accounting policies the Group classifies its concession assets into two groups: intangible nature and financial nature. At 31December, 2014 all the concession assets are intangible. Control of most concession assets reverts to the grantor at the end of the concession period although there is usually an option to renew concessions at the time they expire.
8.2. Other assets allocated to projects There are other non-current assets assigned to projects (non-concession assets not included within the scope IFRS 12), whose detail is presented below:
Annual Report Financial Report
2014
2014
2013
Cost 1 January
236,386
328,230
Additions
26
23,752
Business Combination effects (Note 32) Translation differences effects
(27,267) -
(13,823)
Transfer to non-current assets held for sale (Note 15)
29,057
(106,120)
Disposals
(1,871)
(30)
Transfers
(277)
4,377
236,054
236,386
(101,338)
(100,089)
(8,626)
(10,831)
-
-
4,672
-
31 December Accumulated depreciation and impairment 1 January Amortization Disposals Business Combination effects (Note 32) Translation differences effects Disposals Transfer to non-current assets held for sale (Note 15) Transfers 31 December Net book value
At 31 December 2014 this heading included €126 million euro in net value (2013: €134 million euro) relating to two biodiesel production plants (located in Ferrol and Castellón) that are managed through the subsidiary Infinita Renovables,S.A. These plants started operations in 2009.On 24 January 2014 the Official State Gazette published the final list of the assignments of biodiesel production amounts for the calculation of mandatory biofuel targets and Infinita Renovables, S.A. was given 900,000 tonnes per year for the coming two years, which is the maximum capacity of the Company’s plants. On 2013 the Company signed an industrial lease agreement that
641
16
(5,105)
5,602
172
3,964
(109,584)
(101,338)
126,470
135,048
71
Notes to the consolidated annual accounts
entered into force during the first semester of 2014 and under which the Company will lease the operation of the two plants for five years, renewable for a further five, in exchange for a fixed annual price, plus a variable price based on the tonnes sold by the third party, plus a share in the profits that party obtains. The recoverable value of these assets is calculated based on a business plan that reflects management’s best estimates taking into consideration a series of assumptions. The most important is the entry into force and term of the industrial lease agreement and the production volume traded, together with the gross margin obtained by exploitations of plants. Within the balance of the heading, during 2014 and 2013 there were no elements assigned to projects in the abroad. During the year 2014 and 2013, financial expenses have not been capitalized. At 31 December 2014 this heading registers no work-in progress (2013: €282 thousand euro). 8.3. Project finance The repayment schedule for project finance is set out below, based on project cash flow forecasts and as stipulated in the relevant contracts: 2014 Non-current Current Maturities per year
13,297
2016
2017
2018
45,875 123,159
572
2019
2020
34,560
588
Subsequent
Subtotal
2,918
207,672
Total 220,969 2013
Non-current Current Maturities per year
10,743
2015 13,670
2016 42,494
2017 131,280
At 31 December 2014 debts totalling €58,657 thousand euro (2013: €21,827 thousand euro) are denominated in foreign currencies (mainly United States Dollars).
72
The Group has been granted a loan with a nominal amount of 202million euro (senior loan), of which 155 million euro approximately are outstanding as of 31 December 2014 (2013: €174 million euro), to finance the construction and operation obligations relating to the biodiesel production plants. This loan was granted by Banco San-
2018 572
2019 4,087
Subsequent
Subtotal -
192,103
Total 202,846
tander and has corporate guarantees. On 27 December 2013 the loan agreement was novated, establishing an interest rate of Euribor plus a spread ranging between 3.75% and 4.25% based on a series of parameters and extending its maturity to 2017. On 29 December a waiver was obtained with respect to the compliance of the ratios associated with the loan in 2014.
Annual Report Financial Report
2014
Project finance can be guaranteed through the project company’s shares granted by its partners, through the transfer of collection rights or through limitations on the disposal of the project assets. However, mainly during the construction and implementation phases, additional guarantees may exist. Every funding is referenced to different market rates (principally Euribor) and these are revised over periods not exceeding 6 months. As a result, fair value of both current and non-current funding amounts approximate to their carrying amounts.
9. Investments in associates Set out below is an analysis of investments in associates showing its movement below:
Opening balance 1 January Business combination effects (Note 32) Translation differences effects Cash flow hedging reserves
31/12/2014
31/12/2013
827,820
978,890
119,768
-
10,694
(99,697)
(21,015)
(2,144)
Other changes with impacts on reserves and other movements
17,991
12,280
Dividend payments and similar
(7,808)
(67,942)
-
(2,384)
26,357
8,817
Transfers to non-current assets held for sale (Note 15) Profit/(loss) of entities accounted for the equity method Closing balance 31 December
973,807
827,820
73
Notes to the consolidated annual accounts
The investments are mainly related to the joint businesses of Isolux Infrastructure Netherlands, B.V. and subsidiaries and Isolux Corsán Aparcamientos, S.A. and subsidiaries (the latter only in 2014, see Note 32). The Group’s interests in its joint ventures consolidated through the Equity method, all of which are unlisted, are analyzed below:
2014 Name
Isolux Infrastructure Netherlands, B.V. and subsidiaries Isolux Corsán Aparcamientos, S.A. and subsidiaries
Country of incorporation
Activity
Consolidation method
Share
Holland
(1)
Equity Method
80.77%
Spain
(2)
Equity Method
100.00%
2013 Name Isolux Infrastructure Netherlands, B.V. and subsidiaries
Country of incorporation Holland
Activity (1)
Consolidation method Equity Method
Share 80.77%
(1) Isolux Infrastructure Netherlands, B.V. and subsidiaries operate primarily in the following lines of business:• Concesiones de infraestructuras de autopistas. • Highway infrastructure concessions. • High voltage transmission line concessions • Operation of photovoltaic solar power plants In 2014, the Group received dividend payments and similar in the amount of €13,648 thousand euro from Isolux Infrastructure Netherlands, B.V.(2013: 68,027 thousand euro). (2) Isolux Corsán Aparcamientos, S.A. and subsidiaries operate the car park concession business (see Note 32).
Note 5 on financial reporting by segment include relevant financial information regarding these investments, for each of the periods presented. There are no contingencies relating to associates and joint ventures except for those mentioned in Note 31.
74
9.1. Summarised financial information for Isolux Infrastructure Netherlands, B.V. Annual Report Financial Report
The main assets in which Isolux Infrastructure Netherlands, B.V. participates in are:
Business
Name
2014
Share
Country
Concession period / Duration
Initia- Integration Situation tion Method
H
NH1: Panipat - Jalandhar
61%(1)
India
15
2008
FC
C/O
H
NH2 Varanasi – Aurangabad
50%(2)
India
30
2010
EM
C/O
50%(2)
India
19
2009
EM
C
50%(2)
India
18
2009
EM
C
H H
NH6 Gujarat-Maharastra Border – Surat – Hazira Port NH8 Kishangarh – Ajmer – Beawar
H
Viabahia BR 116 - BR 324
86%
Brazil
25
2009
FC
C/O
H
Saltillo – Monterrey
100%
Mexico
45
2006
FC
O
H
Perote – Banderilla
50%
Mexico
45
2008
EM
O
H
Madrid – Ocaña A4
51%
Spain
19
2007
FC
O
51%
US
35 years since COD
2014
FC
C
H
Indiana I-69
TL
CPTE – Cachoeira Paulista
100%
Brazil
30
2002
FC
O
TL
LXTE – Xingu
100%
Brazil
30
2008
FC
O
TL
LMTE – Macapá
100%
Brazil
30
2008
FC
O
TL
IENNE – Interligação
50%
Brazil
30
2007
EM
O
TL
JTE – Jaurú
33%
Brazil
30
2007
EM
O
TL
LTTE- Taubaté
100%
Brazil
30
2011
FC
C
TL
LITE – Itacaiunas (Pará-Tocatins)
100%
Brazil
30
2013
FC
C
TL
WETT
50%
US
Unlimited
2008
EM
O
TL
Uttar Pradesh
100%
India
35 years since COD
2011
FC
C
PS
Grupo T-Solar Global
88%
Several
Unlimited
2008
FC
C/O
(1) Includes 10% stake in NH1 from Corsán Corviam Construcción. (2) Interest affected by operation with Morgan Stanley described afterwards. FC: Full consolidation method EM: Equitymethod H: Highway TL: Transmission Lines PS: Photovoltaic Solar C: Under construction O: In operation
75
Notes to the consolidated annual accounts
The information presented below refers to the figures at 100% and then converted to euros, and also includes the reconciliation with the information considered for consolidation purposes by the Group. Therefore, it takes into account the effects of including the Group’s participation and the adjustments arising from the consolidation process. 31 December 2014
31 December 2013
3,932,833
3,368,442
ASSETS Non-current assets Concessionary assets and other non-current assets assigned to projects Investments in associates and joint ventures
299,505
283,233
Other non-current assets
192,920
188,003
4,425,258
3,839,678
Concessionary assets and other non-current assets assigned to projects
112,112
84,810
Cash and cash equivalents
306,161
192,743
Current assets
Other current assets Total assets
212,005
313,606
630,278
591,159
5,055,536
4,430,836
2,712,703
2,236,964
763,952
633,103
3,476,655
2,870,067
340,359
342,074
LIABILITIES Non-current liabilities Project financing Accounts payable and other current liabilities Current liabilities Project financing Trade and other current liabilities Total liabilities Non-controlling interests Total net assets Effects of applying Group share and consolidation adjustments Total net assets at 80.77%
76
448,504
421,242
788,863
763,317
4,265,518
3,633,384
133,431
149,003
656,587
648,449
201,454
179,371
858,041
827,820
As described in note 2.7, the Group classifies its concession assets as intangible or financial assets. At 31 December 2014, the net carrying value of these assets (considering the part of the investments in joint business consolidated by equity) totalled €1,903 million euro (31 December 2013: €1,585 million euro) and €1,747 million euro (31 December 2013: €1,446 million euro), respectively. In line with accounting practices and in compliance with IFRIC 12 in relation to such contracts, accounts receivable are recorded using the financial asset model. Non-current accounts receivable are recognised at amortised cost. There were no significant changes in 2014 in relation to concession assets, except for the following: • A highway concession award in the United States (I69 Indiana Highway - Section 5) for the improvement and expansion of 2+2 to 3+3, a 34 km stretch of section 5 of the SR-37 between Bloomington and Martinsville in the state of Indiana. Operations are expected to begin in 2016 and end in 2051. • In relation to the legal proceeding involving the concessionaire of the India highway, India Soma Isolux NH-One Tollway Private Limited, on 17 April 2014 the Supreme Court of that country ruled in favour of the concessionaire. Based on that ruling the construction period runs until March 31, 2015, and permission was obtained to move the toll plazas. Other assets assigned to projects mainly include photovoltaic solar power plants (through T-Solar Global Group), and power transmission lines in the United States (through the WETT concessionaire), with a net book value (considering the share of the investments in joint businesses consolidated by the equity method) of €1,552 million euro (31 December 2013: €1,479 million euro). Based on the regulatory changes described in Note 2.23, and considering the Ministerial Order defining the remuneration parameters passed in 2014, the Group updated the impairment tests performed the year before on the CGUs related to solar plants located in Spain. The results of the tests did not reveal the need to record any impairment, considering the recoverable amount of the assets related to this business. Consolidated accounts payable and other non-current liabilities include (either consolidated or carried by the Company using the equity method): • Convertible debts into ordinary shares of Isolux Infrastructure, Netherlands, B.V. Netherlands, B.V. as a result of the agreement with Public Sector Pension Investment Board (hereinafter PSP). On June 29, 2012, the Company and certain of its subsidiaries entered into the Investment Agreement with PSP to enter into the company Isolux Infrastrucutre Netherlands,
B.V., the latter received two convertible loans from its shareholders. PSP has provided a convertible loan available to Isolux Infrastrucutre in the amount of 313 million US dollar. This amount was fully withdrawn at 31 December 2014. Group Isolux Corsán Concesiones, S.A. has provided a convertrible loan available to Isolux Infrastructure, Netherlands, B.V.in the amount of 63 million US dollar. Both loans bear interest at 12.5%, payable half-year. The loans will be converted in 2017 upon the release of2016 year-end financial statement in a variable stake in “average net operating income”, as defined in the agreement, of Isolux Infrastructure, Netherlands, B.V. and on whether new projects have been developed) that as a whole implies that this instrument does not qualify as an embedded derivative. PSP’s shareholding in Isolux Infrastructure, Netherlands, B.V.may increase to approximately 29%. However, depending mainly on the performance of Isolux Infrastructure, Netherlands, B.V. PSP’s shareholding in Isolux Infrastructure, Netherlands, B.V. following the conversion of the Loan Contribution could be higher than 29%. The carrying amount is recognized fully as a liability on the accompanying balance sheet. in an amount of 345 million euro (2013: 284 million euro).
Annual Report Financial Report
2014
• Preferred shares issued by the company that acts as a holding for several highway concessions in India, that were underwritten by Morgan Stanley Infrastructure Partner (hereinafter MSIP). On 18 March 2011, the Group signed an agreement with MSIP for an infrastructure investment fund to enable the latter to act as a strategic partner in the development of the motorway concession business in India. At 31 December 2014, MSIP had made several investments in ICC Sandpiper, which in turn made investments in the concession holders. These preferred shares are classified as a liability, considering that the conversion ratio is variable and they can be converted into shares after an initial five-year period (or sooner if certain events occur such as a breach of certain obligations included in the Agreement between the parties and other events such as a public offering of the SPV’s shares or a change of control). These investments, classified as liabilities on the balance sheet and totalling €76 million euro (2013: €59 million, euro), give MSIP 24% of the voting rights ICC Sandpiper and approximately 83% of the economic rights, a position that will be adjusted in the future. Once the investment is complete and the shares have been converted, each partner will hold 50% of the economic and political rights. The liabilities section of the balance sheet includes approximately 60 million euro in project financing for the projects of the concessionaire, Highway A-4. At 31 December 2014 the debt service coverage ratio had not
77
Notes to the consolidated annual accounts
been met as a result of certain amounts withheld by the customer, the Ministry of Development, which the company expects to recover in the near future. As of the date of this report, the Company is in the advanced stages of negotiating a release from the obligation to comply with the debt service ratio. Management does not believe that this breach will have a significant negative effect on Isolux Infrastructure Netherlands, B.V. The balance shown under the heading of investments in associates and joint ventures includes the following projects:
2014 Denomination NH2
Concessional assets and other assets assigned to projects
Project financing
Revenue / Sales
Cash and cash equivalents and assets at fair value with changes in the income statement
137,830
(62,897)
34,890
42,509
NH6
210,367
(173,426)
18,162
3,888
NH8
145,663
(108,433)
2,541
315
Perote-Banderilla
416,178
(366,477)
17,565
4,981
IENNE
3,255
(51,234)
17,943
368
JTE
1,566
(38,717)
(2,300)
2,604
492,995
(293,345)
74,968
1,290
WETT
2013 Denomination NH2
162,402
Project financing
Revenue / Sales
(57,561)
39,934
29,857
NH6
194,449
(167,653)
32,230
4,334
NH8
153,335
(111,244)
3,505
123
Perote-Banderilla
535,054
(434,288)
16,030
11,635
IENNE
4,481
(67,458)
16,892
1
JTE
1,840
(51,853)
14,371
2,666
537,695
(332,734)
11,995
3,799
WETT
78
Concessional assets and other assets assigned to projects
Cash and cash equivalents and assets at fair value with changes in the income statement
The results of these projects are shown under companies carried by the equity method on the income statement detailed below. 31 December 2014 Total operating income Revenue / Sales Other operating income Total operating expenses Materials consumed and other external costs
31 December 2013
881,695
855,978
870,135
850,807
11,560
5,171
(580,928)
(642,599)
(415,612)
(360,668)
Employee benefit expenses
(26,513)
(70,170)
Depreciation, amortization and impairment losses
(89,889)
(146,166)
Other operating expenses
(48,914)
(65,595)
300,766
213,379
(266,465)
(246,961)
8,553
(1,332)
Profit before income tax
42,854
(34,914)
Income tax
(25,894)
(3,293)
Results for the year
16,960
(38,207)
– Owners of the parent
21,139
(18,564)
– Non-controlling interest
(4,179)
(19,643)
7,672
28,573
28,811
10,009
Operating results Net financial results Share of profits/ (losses) of investments accounted for the equity method
Annual Report Financial Report
2014
Attributable to:
Effects of applying Group share and consolidation adjustments Results for the year at 80.77%
In relation to this joint business, there are no specific restrictions on the payment of dividends, other than the statutory ones. As mentioned in Note 31.b), in the ordinary course of business, and as is common among engineering and construction companies, when Group companies act as sponsors during the construction phase of certain concession projects, the Group provides guarantees to certain companies that are part of the Isolux Infrastructure joint business in the amount of 171 million euro (2013: â‚Ź229 million euro). Additionally, at 31 December 2014 there are no commitments by the Group in relation to this investment; the investment commitments assumed by the Group under the agreement with PSP mentioned above are fully covered at 31 December 2014.
79
9.2. Summarised financial information for Isolux Corsán Aparcamientos, S.A. Notes to the consolidated annual accounts
The information below refers to the figures at 100%, which is the Group’s interest in the share capital of Isolux Corsán Aparcamientos, S.A. 31 December 2014 ASSETS Non-current assets Concessional assets and other assets assigned to projects
296,244
Other non-current assets
132,345 428,589
Current assets Concessional assets and other assets assigned to projects
-
Cash and cash equivalents
13,558
Other current assets
14,701 28,259
Total assets
456,848
LIABILITIES Non-current liabilities Projects financing Trade and other non-current liabilities
50,292 203,666 253,958
Current liabilities Projects financing
70,818
Trade and other current liabilities
14,677 85,495
Total liabilities Non-controlling interests Total net assets
1,629 115,766
Accounts payable and other non-current liabilities include debt with a carrying value of approximately €48 million euro related to the transaction described in Note 32. This loan bears an annual interest rate of 8.75%, 4.25% of which must be capitalised as part of the debt while the remaining 4.50% may be paid in cash or capitalized as part of the debt, at the borrower’s discretion
ginal maturity of this liability is non-current, nevertheless, the contractual obligation to fund the Debt Service Reserve Account according to the provisions of the credit agreement had not been met as of 31 December 2014. However, the Company has taken the necessary steps to address the situation. Management believes that this breachwill not have a significant impact on the Isolux Corsán Aparcamientos subgroup.
This debt matures on June 30, 2020. However, it may be repaid in advance under certain conditions.
As mentioned in Note 31.b), the Group has provided guarantees totalling €70 millioneuro for certain project finance debts of certain companies that are part of the Isolux Corsán Aparcamientos joint venture. In addition, at 31 December 2014 there are no other commitments on the part of the Group in relation to this investment.
Within project financing approximately 65 million euro have been classified as current liabilities corresponding to Hixam Gestión de Aparcamientos I, S.L. project financing. The ori80
339,453
31 December 2014 Total operating income
7,835
Revenue / Sales
6,772
Annual Report Financial Report
Other operating income
1,063
2014
Total operating expenses
(8,082)
Materials consumed and other external costs
(54)
Employee benefit expenses
(1,259)
Depreciation, amortization and impairment losses
(2,527)
Other operating expenses
(4,242)
Operating results
(247)
Net financial results
(2,795)
Profit before income tax
(3,042)
Income tax
455
Results for the year
(2,587)
Attributable to: – Owners of the parent
(2,454)
– Non-controlling interest
(133)
10. Financial Investments Set out below is an analysis of financial investments assets showing its movement below:
Opening balance
2014
2013
10,446
11,844
Additions
-
-
Disposals
(11)
(1,398)
Closing balance
10,435
10,446
Less non-current portion
(10,435)
(10,446)
-
-
Current portion
For measurement purposes, financial investments are classified as available-for-sale financial assets (See Note 2.10). For non-controlling interest investments in unlisted companies in which the Group does not have significant influence because these are residual investments in companies with no significant size within the Group, and given the impossibility of applying measurement methods to
the investments, they are presented at acquisition cost, net of impairment disclosed in the financial information of the respective companies. This caption does not include investments in debt instruments. Financial investments are all denominated in euro. Maximum exposure to credit risk at the reporting date is the carrying amount of the assets classified as financial investments.
81
Notes to the consolidated annual accounts
11. Derivative financial instruments Derivative financial instruments are analyzed below at 31 December 2014 and 2013:
2014 Assets
2013
Liabilities
Assets
Liabilities
Interest rate swaps-cash flow Hedges
-
(19,314)
-
(21,577)
Interest rate swaps-held for Trading
-
(2,151)
-
-
2,908
(15,881)
2,711
(10,448)
Currency forward contracts-cash flow Hedges Currency forward contracts- held for Trading
-
(38)
15
-
2,908
(37,384)
2,726
(32,025)
Interest rate swaps –cash flow Hedges
-
(15,916)
-
(21,295)
Interest rate swaps –held for Trading
-
(2,151)
-
-
777
(3,851)
-
(6)
-
-
-
-
Total Less non-current portion:
Currency forward contracts – cash flow hedges Currency forward contracts – held for Trading Current portion
Derivatives held for trading are classified as current assets or liabilities. The total fair value of a hedging derivative is classified as a non-current asset or liability if the period to maturity of the hedged item is more than 12 months and as a current asset or liability if the period to maturity of the hedged item is less than 12 months. The ineffective net portion of cash flow and fair value hedges recognized as revenue in the income statement totals €2,205 thousand euro (2013: €36 thousand euro) (see Note 28). The maximum credit risk exposure at the reporting date is the fair value of the derivative financial instruments carried in the balance sheet. Financial instrument balances under this caption are classified in Group 2 for the purpose of information sources used to determine its fair value in compliance with IFRS 7 (See Note 2.10).
82
777
(21,918)
-
(21,301)
2,131
(15,466)
2,726
(10,724)
Foreign currency forward contracts The notional valueof currency forward sale contracts, relating mainly to the sale of US dollars and purchase of euro (net of US dollars purchased against euro) outstanding at 31 December 2014 was $35,353 thousand US dollars (2013: $124,555 thousand US dollars). It is expected that high likely future transactions hedged, denominated in foreign currency, take place on different dates, mainly within the next 12 months. Profit and loss recognized in the hedging reserve in equity with respect to foreign currency forwards at 31 December 2013 are recognized in the period or periods during which the hedged transaction affects the income statement. This normally takes place within 12 months of the balance sheet date unless the gain or loss had been included in the initial purchase value of fixed assets, in which case such recognition occurs during asset’s life (between five and ten years).
Main currency forward contracts characteristics at 31 December 2014 are shown below: Annual Report Financial Report
Project name or associate
2014 Transaction
Currency (**)
Final maturity
Notional value (*)
Forward Isolux Ingeniería
Sale
MXN
15/01/2015
Forward Isolux Ingeniería
Sale
QAR
14/01/2015
(74,083)
Forward Isolux Ingeniería
Purchase
USD
31/12/2015
170
Forward Isolux Ingeniería
Sale
KWD
02/03/2015
(12,259)
Forward Isolux Ingeniería
Purchase
USD
01/03/2016
29,600
Forward Isolux Ingeniería
Sale
USD
30/01/2015
(58,059)
Forward Isolux Uzbekistán
Purchase
USD
13/01/2015
24,000
Forward Isolux Uzbekistán
Sale
USD
13/01/2015
(20,358)
Forward Isolux México
Purchase
MXN
31/07/2017
698,828
Forward Isolux Grupo Isolux Corsán
Purchase
USD
18/02/2020
60,000
(6,862)
(*) Effective at 31 December 2014 (**) USD: US Dollar; QAR: Qatari Riyal; MXN: Mexican Peso
Main currency forward contracts characteristics at 31 December 2013 are shown below:
Project name or associate
Transaction
Currency (**)
Final maturity
Notional value (*)
Forward Isolux Ingeniería
Sale
MXN
28/01/2014
(9,837)
Forward Isolux Ingeniería
Sale
QAR
22/01/2014
(74,083)
Forward Isolux Ingeniería
Sale
USD
15/01/2014
(6,495)
Forward Isolux Ingeniería
Purchase
USD
31/12/2015
390
Forward Isolux Ingeniería
Sale
USD
29/01/2014
(238)
Forward Isolux Ingeniería
Purchase
USD
29/01/2014
38,848
Forward Isolux Ingeniería
Sale
USD
15/01/2014
(1,300)
Forward Isolux Ingeniería
Purchase
USD
09/01/2014
29,645
Forward Isolux Ingeniería
Purchase
USD
14/01/2014
6,737
Forward Isolux Ingeniería
Sale
USD
30/09/2014
(33,062)
Forward Isolux Ingeniería
Purchase
USD
06/05/2014
34,741
Forward Isolux Ingeniería
Sale
USD
31/12/2014
(140,533)
Forward Isolux Ingeniería
Purchase
USD
31/12/2014
196,361
Forward Isolux Ingeniería/Tecna
Purchase
USD
16/01/2014
1,481
Forward Elaborados Metalicos Emesa
Sale
USD
03/04/2014
(2,020)
(*) Effective at 31 December 2013 (**) USD: US Dollar; QAR: Qatari Riyal; MXN: Mexican Peso
83
Notes to the consolidated annual accounts
Although all the contracts in force at 31 December 2014 and 2013 were obtained for hedging purposes, due to the Group’s contracting and designation criteria applicable at the contract dates, some of the contracts did not qualify for hedge accounting under IFRS-EU. Profits and losses recorded in the hedging reserve within the Equity (net of tax effect and non-controlling interests) resulting from cash flow hedge at 31 December 2014 amount to (€(10,211 thousand euro (2013: 5,349 thousand euro) and will be transferred to the income statement on an ongoing basis until the contract is settled. Interest rate swaps The notional value of interest rate swaps (including the effect of inversions in joint ventures and assets held for sale) outstanding at 31 December 2014 amounted to €1,112,044 thousand euro (2013: €1,252,008 thousand euro).
Name GRUPO ISOLUX
At 31 December 2014 profit and loss from interest rate swaps recordedin equity through a hedging reserve (net of the tax effect and non-controlling interests andincluding the effect of investments and assets held for sale) amounts to 51,506 thousand euro (2013: 42,276 thousand euro). They will be transferred to the income statement until bank loans are paid off. Settlement of these derivatives generated a loss of €14,815 thousand euro (2013: loss €14,202 thousand euro). Set out below is an analysis of the main interest rate swaps in force at 31 December 2014 (including contracts related to joint ventures and non-current assets held for sale):
Currency
Fixed interest rate (paid)
Variable interest rate ( charged)
85,441
Eur
2.03%
Euribor
Contract date
Final maturity
Notional value (thousand
10/09/2010
29/06/2015
GRUPO ISOLUX
04/07/2013
29/12/2017
319,436
Eur
1.72%
Euribor
GRUPO ISOLUX
16/05/2011
16/05/2015
45,000
Eur
3.05%
Euribor
HIXAM I
05/02/2007
29/12/2022
55,133
Eur
4.36%
Euribor
HIXAM II
13/01/2010
23/12/2025
25,996
Eur
4.35%
Euribor
Sociedad Concesionaria ZONA 8A
19/05/2008
20/05/2024
5,697
Eur
4.82%
Euribor
INFINITA RENOVABLES
30/12/2013
30/12/2017
117,390
Eur
2.53%
Euribor
Infra Netherlands PEROTE XALAPA
13/02/2008
14/02/2022
1,410,810
Mxn
8.20%
TIIE (*)
Infra Netherlands CONCESIONARIA A4
01/08/2008
16/06/2025
45,264
Eur
5.55%
Euribor
NG Banco syndicated loan
22/12/2008
31/12/2026
28,678
Eur
3.96%
Euribor
BBVA syndicated loan (**)
15/07/2008
31/12/2027
336,607
Eur
5.09%
Euribor
La Caixa loan (**)
18/06/2009
18/06/2021
8,003
Eur
4.09%
Euribor
Santander loan (**)
04/01/2009
04/12/2023
4,681
Eur
4.00%
Euribor
Banesto syndicated loan (**)
31/12/2010
20/12/2023
22,041
Eur
3.69%
Euribor
Bankia loan (**)
18/03/2010
23/04/2026
1,497
Eur
3.65%
Euribor
Raggio di Puglia loan (**)
25/01/2012
29/06/2029
11,179
Eur
2.73%
Euribor
(*) Mexican long-term reference interest rate (**) Corresponding to Grupo T- Solar Global
84
At 31 December 2014, fixed interest rates ranged between 1.72% and 5.55% (2013: 1.72% and 5.09%) for those operations in which interest rate is variable linked to Euribor. In the case of the derivative linked to the TIIE rate (variable rate used for two projects in Mexico), the contracted fixed interest rate 8.20% (2013: 8.20%).During 2014 operations linked to Libor were cancelled.
Set out below is an analysis of the main interest rate swaps in force at 31 December 2013 (including contracts related to joint ventures and non-current assets held for sale):
Annual Report Financial Report
2014
Name
Contract date
Final maturity
Notional value (thousand
Currency
Fixed interest rate (paid)
Variable interest rate (charged)
GRUPO ISOLUX
04/07/2013
29/12/2017
343,777
Eur
1.72%
Euribor
GRUPO ISOLUX
10/09/2010
29/06/2015
136,698
Eur
2.03%
Euribor
GRUPO ISOLUX
28/06/2011
29/06/2014
35,700
Eur
2.20%
Euribor
GRUPO ISOLUX
16/05/2011
16/05/2015
45,000
Eur
3.05%
Euribor
HIXAM I
05/02/2007
29/12/2022
58,311
Eur
4.36%
Euribor
HIXAM II
13/01/2010
23/12/2025
27,558
Eur
3.60%
Euribor
Sociedad Concesionaria ZONA 8A
19/05/2008
20/05/2024
6,185
Eur
4.82%
Euribor
INFINITA RENOVABLES
05/01/2010
30/12/2016
106,134
Eur
3.79%
Euribor
Infra Netherlands PEROTE XALAPA
13/02/2008
14/02/2022
1,512,706
Mxn
8.20%
TIIE (*)
Infra Netherlands CONCESIONARIA A4
01/08/2008
16/06/2025
46,293
Eur
4.45%
Euribor
Infra Netherlands WIND ENERGY TEXAS
02/08/2011
31/03/2016
92,961
Usd
1.91%
Libor
Infra Netherlands WETT HOLDINGS
31/08/2011
31/03/2016
15,493
Usd
1.96%
Libor
BBVA syndicated loan (**)
15/07/2008
31/12/2027
362,284
Eur
5.09%
Euribor
La Caixa loan (**)
18/06/2009
18/06/2021
8,666
Eur
4.09%
Euribor
Santander loan (**)
04/01/2009
04/12/2023
5,111
Eur
4.00%
Euribor
Banesto syndicated loan (**)
31/12/2010
20/12/2023
25,215
Eur
3.69%
Euribor
Bankia loan (**)
18/03/2010
23/04/2026
1,629
Eur
3.65%
Euribor
Raggio di Puglia loan (**)
25/01/2012
29/06/2029
11,935
Eur
2.73%
Euribor
NCG Banco syndicated loan (**)
22/12/2008
31/12/2026
31,512
Eur
3.96%
Euribor
(*) Mexican long-term reference interest rate (**) Corresponding to Grupo T- Solar Global
Shares call and put During October 2011, an agreement was signed between the Group and Corpfin Capital Advisors, S.A. and other funds, whereby Grupo T-Solar Global, S.A. (GTSG) shares received by these Companies (equivalent to 11.66% of the capital of GTSG) are subject to a put option and call option by which the Group would have the obligation (under the put option) or on the contrary would have the right (under the call option) to acquire such shares under certain condi-
tions (which defer between both options). The options are exercisable between April 30 and May 31, 2016 for the put option, even though there are situations related to liquidity events that could lead to an early exercise, and between 1 January 2014 and 28 February 2016 in the case of the call option, at an agreed price of €75,6 million euros (which can vary according to the date of exercise and other conditions). These options have been valued at fair value,and the related liabilities are included within the caption “Other payables” in non-current liabilities.
85
Notes to the consolidated annual accounts
12. Trade and other receivables Set out below is an analysis of trade and other receivables:
31/12/2014
31/12/2013
Non-current Loans to companies consolidated under the equity method
87,661
60,555
Trade receivables for sales and services
20,284
29,750
3,960
4,158
111,905
94,463
Other receivables Current Trade receivables for sales and services
539,497
385,553
Trade receivables-Work completed pending certification
859,299
919,939
Less: Provision for impairment of receivables
(10,372)
(36,125)
Trade receivables – Net
1,388,424
1,269,367
Trade receivables and other receivables from companies consolidated under the Equity Method
93,535
92,120
Sundry debtors
13,864
31,558
Public entities
141,701
159,764
In advance-payments to suppliers
147,239
58,820
Other receivables
There is no significant effect on the fair values of trade and other receivables due to its recognition at amortized cost, since nominal values are deemed to approximate fair values. At 31 December 2014, the heading of “Customers for sales and services rendered” includes customer withholdings in the amount of €82,742 thousand euro (2013: 61,126 thousand euro). At 31 December 2014 €183,443 thousand euro have been deducted (2013: €119,707 thousand euro), corresponding to German method contracts loans and other invoiced ceded to third parties prior to maturity. These assets have been written off the balance as it has been considered they meet the conditions established by IAS 39 on derecognition of financial assets. At 31 December 2014 “Trade receivables for sales and services” caption includes bills discounted at banks for a total of €28,169 thousand euro (2013: €47,238 thousand euro). The Group has recognized a loss of €2,013 thousand euro due to the impairment of trade receivables during the fiscal 86
62,453
45,853
1,847,216
1,657,482
year ended 31 December 2014 (2013: €4,679 thousand euro). At 31 December 2014 the Group has recognized a provsion of€10,372 thousand euro (2013: €36,125 thousand euro) due to the impairment of trade receiveables. The majority of the provision refers to past due amounts, being the rest of the overdue estimated not to be impaired. Periodically the Group analyses the posible existence of impairment of trade receivable. In this sense, in order to mitigate credit risk, the Group has established measures both previoulsy the engagement of new contracts and during the execution of work, to flag the existence of any risk associated to the collectability of the amouns receivable. Such measures, amongst others, comprise solvency study, credit ratings, considering as well the geopolitical risks, Project type and class of client (public or private). The matured debt at 31 December 2014 represents 10.4% of the trade receivables - net (2013: 12.5%), 61.9% of which was less than 180 days old (2013: 56.0%). At 31 December 2014, 73.3% of matured debt referred to public sector clients (2013: 62.6%).
At 31 December 2014, unimpaired matured debt outstanding amount due by 180 days totalled €55,588 thousand euro (2013: €71,390 thousand euro) of which 49% (2013: 67%) refers to outstanding amount due by public sector entities.
Annual Report Financial Report
2014
Change in the provision for impairment of trade receivables is as follows: 2014 Opening balance Appropriations Applications
2013
36,125
55,042
2,013
4,679
(27,766)
(23,595)
Transfers
-
(1)
Closing balance
10,372
36,125
The remaining accounts included in receivables contain no assets that are impaired. The maximum exposure to credit risk at the reporting date is the fair value of each category of receivables referred to above. It is not Group policy to contract insurance for receivables hedging. The balance of trade receivables for sales and services includes the following amounts denominated in currencies other than the euro:
31/12/2014
31/12/2013
US Dollar
75,185
76,619
Qatar Riyal
16,235
13,203
Brazilian Real
19,987
17,941
Argentinean Peso
63,758
51,334
Mexican Peso
4,377
11,150
Algerian Dinar
27,516
50,258
Indian Rupee
39,376
22,471
Chilean Peso
3,416
3,728
53,639
12,804
303,489
259,508
Other currencies
Costs incurred and recognized gains (less recognized losses) on all contracts in force at the balance sheet date amounted to €7,802 million euro (2013:€6,139 million euro) and €578 million euro (2013: €371 million euro), respectively. 87
13. Inventories Notes to the consolidated annual accounts
A breakdown of inventories is set out in the following table:
Real Estate developments in progress
31/12/2014
31/12/2013
100,085
90,976
Raw materials and finished products
69,137
52,261
Capitalized project costs
83,920
63,333
253,142
206,570
Set out below is a breakdown of property developments in progress by cycle: 31/12/2014 Real Estate developments in progress, short cycle
-
-
Real Estate developments in progress, long cycle
100,085
90,976
100,085
90,976
In 2013 the Group has classified the real estate business in Spain as discontinuing operations and related assets and liabilities held for sale (Note 15). At 31 December 2014 and 2013 there are no commitments to sell real estate developments in progress (other than those held for sale). In this respect, during 2014 and 2013 the Group has not received advance payments related to real estate developments. During 2014, capitalized interest amounted to €384 thousand euro (2013: €751 thousand euro), relating to interest accrued during the construction of developments and arising on direct financing received to build the properties. Assets were received through payment in kind during 2014 in the amount of 1,440 thousand euro (2013:€512 thousand euro). In 2014, no impairment was recognised for the real estate development projects underway(2013: €1,800 thousand euro). Market value of the properties is based on independent expert reports.
88
31/12/2013
14. Cash and cash equivalents and financial assets at fair value through profit or loss
Annual Report Financial Report
2014
14.1. Cash and cash equivalents Set out below is a breakdown of cash and cash equivalents:
31/12/2014 Cash and banks Short-term bank deposits and other
31/12/2013
263,622
221,838
27,650
19,604
291,272
241,442
This caption includes cash (cash in hand and demand deposits in banks) and cash equivalents (i.e., short-term highly liquid investments easily convertible into specific cash amounts within a maximum of three months, or with no restriction and no availability penalty if higher, and whose value is not subject to significant change risks).
Of the total figure for cash and cash equivalents, temporary joint ventures contributed €49,176 thousand euro (2013: €74,240 thousand euro). Cash and cash equivalents include balances in currencies other than euro totalling €197,760 thousand euro (2013: €141,405 thousand euro). The main currencies held as cash are as follows: 2014 US Dollar
2013
61,171
62,340
Argentine Peso
44,222
13,054
Argelian Dinar
22,660
29
Boliviano
2,702
19,813
Bangladesh Taka
8,425
2,202
Indian Rupee
7,584
4,562
Brazilian Real
5,559
13,799
Mexican Peso
3,875
2,220
Omani Rial
8,844
-
CFA Franc
7,886
449
Other
24,832
22,937
Total
197,760
141,405
For the purposes of the cash flow statement, the treasury balance includes the balance in the caption cash and cash equivalents.
89
14.2 Financial assets at fair value through profit or loss Notes to the consolidated annual accounts
Set out below is a breakdown of financial assets at fair value through profit or loss: 31/12/2014 Short -term bank deposits and others
31/12/2013
14,675
7,794
14,675
7,794
In 2014 this heading mainly records current deposits in credit institutions.
15. Non-current assets and related liabilities held for sale and discontinuing operations Non-current assets and related liabilities held for sale In 2013 the Group formally approved the start of the process to sell its property operations and parking garage concessions located in Spain, as well as certain operating assets located in Latin America and therefore decided to classify the assets and liabilities relating to these operations as held-for-sale in the consolidated balance sheet at 31 December 2013. As a consequence of the operation described in Note 32, in 2014 the car park concession business was excluded from this classification. The real estate and other operating assets located in Latin America, which are classified as held for sale, have been classified as such for more than twelve months but they have not been sold due to circumstances that, at the time of classification, were either improbable or beyond the Group’s control. However, the Group remains firmly committed to the plan to sell these assets. They are being actively marketed and formal offers have been received. The Group therefore believes that there is a very good chance that they will be sold in the near future. In some cases, sales agreements have been signed and are pending authorisation from the supervisory bodies or finalisation of the sales process. This heading in the balance sheet at 31 December 2014and 2013 breaks down as follows:
90
31/12/2014
31/12/2013 (1)
Non-current assets Property, plant and equipment (Note 6)
44,939
45,157
1
3
Investment property
14,413
14,531
Concessionary assets assigned to projects and other fixed assets assigned to projects (Notes 8.1 y 8.2)
81,410
307,912
5,605
2,384
Intangible assets (Note 7.2)
Investments in associatesaccounted for the equity method (Note 9) Long-term credits and deferred tax assets
12,675
28,585
159,043
398,572
168,255
186,099
49,600
62,511
Annual Report Financial Report
2014
Current assets Inventories Trade and other receivables Cash and cash equivalents Total assets
2,704
10,310
220,559
258,920
379,602
657,492
38,104
53,806
100,385
212,295
-
14,922
Non-current liabilities Borrowings Project finance Derivative financial instruments Provisions for other liabilities and charges (Note 23)
2,459
6,599
Other payables and deferred tax liabilities
9,095
11,636
150,043
299,258
6,318
11,680
12,168
30,298
4,004
19,334
Current liabilities Borrowings Project finance Trade and other payables Provisions for other liabilities and expenses Total liabilities
20
-
22,510
61,312
172,553
360,570
(1) Includes amounts related to assets and liabilities of the car park concessions located in Spain.
In order to compare the carrying value of the assets against their fair value, the Group has estimated fair value using appraisals prepared from independent experts in the case of the real estate activity in Spain, all of them included in the Official Register of Bank of Spain. The appraisals have been issued accordig to different valuation methods, such as residual dynamic method, cost method and comparative method, and have been updated during the year 2014.
91
Notes to the consolidated annual accounts
Equity in the consolidated balance sheet at 31 December 2014 includes €7.1 million euro (2013: €6.2 million euro) in accumulated differences on exchange that are related to non-current assets and liabilities held-for-sale. In hedging reserves there are no amounts related to noncurrent assets and liabilities held for sale (2013: €10.4 milion euro). Bank borrowings are secured by land and buildings valued at €17,880 thousand euro (2013: €17,962 thousand euro). The secured debt amounts to €3,579 thousand euro (2013: €4,328 thousand euro). Inventories and investment properties include real estate developments totalling €109 million euro securing financing received at 31 December 2014 (2013: €127 million euro).The balance of the secured debt amounted to €38 million euro (2013: €59 million euro). Discontinuing operations In 2013 the Group classified the real estate activities and the car park concessions located in Spain as discontinuing operations as they relate to Group components
that have been classified as held-for-sale (as mentioned previously) and they represent significant lines of business that may be taken into consideration separately from the rest.During 2014, as a result of the transaction described in Note 32, the car park concession business was excluded from this classification (Note 2.1.). In addition, in 2013 the results of the company T-Solar Global SAU are included up to the time of the deconsolidation (see Note 1). IIn order to comply with the provisions of IFRS 5 the Group presented the information for these activities in a separate lineof the income statement as well as the comparative figures for 2013. In 2014, the car park concessions business (see Note 32) is no longer considered discontinued. As a result, the information included in the consolidated income statement for the year 2013 and the breakdown below have been restated to order to collect the effects of this change.been restated to order to reflect the effects of this change. Set out below is a breakdown of the results for the year from discontinuing operations for 2014 and 2013: 2014
2013
Total operating income
(4,653)
430
Total operating expenses
(4,206)
(4,616)
(339)
(2,418)
Other operating expenses
Depreciation, amortization and impairment losses
(3,867)
(2,198)
Operating profit/(loss)
(8,859)
(4,186)
Net financial results
(2,113)
(3,362)
(1,081)
(1,192)
(12,053)
(8,740)
Share of profits/ (losses) of investments accounted for the equity method (Note 9) Profit before tax Income tax (Note 28) Results for the year
2,773
2,591
(9,280)
(6,149)
Attributable to: Non-controlling interest
92
(34)
(62)
Owners of the parent
(9,246)
(6,087)
Results for the year
(9,280)
(6,149)
Cash flows generated by discontinuing operations unit in 2014 and 2013 are analysed below:
2014
2013
Cash flows from operating activities
(3,031)
795
Cash flows from investing activities
1,803
(1,875)
Cash flows from financing activities
1,257
Net change in cash and cash equivalents
29
Annual Report Financial Report
2014
418 (662)
16. Share capital, share premium and legal reserve a) Share capital The parent company’s share capital consists of 90,085,006ordinary shares (2013: 90,085,006 shares) with a par value of €0.20 euro each (2013: €0.20 euro). The shares are fully paid up in a total amount of €18,017 thousand euro (2013: €18,017 thousand euro). There are no restrictions on the transfer of the shares. The following companies hold interests in the parent company’s share capital: 2014 No. of shares
2013
% Interest
No. of shares
% Interest
Construction Investment Sarl
46,864,562
52.023%
46,864,562
52.023%
Inversiones Corporativas S.A.
10,573,339
11.737%
10,573,339
11.737%
Hiscan Patrimonio, S.A.U.
21,442,448
23.802%
21,442,448
23.802%
Cartera Perseidas, S.L.
9,021,752
10.015%
9,021,752
10.015%
Charanne B.V.
2,182,905
2.423%
2,182,905
2.423%
90,085,006
100.000%
90,085,006
100.000%
Total
On 15 January 2015, the Group’s shareholders, at the General Shareholders Meeting approved a capital increase in the amount of €342,323 thousand euro to be charged to the Share Premium by increasing the par value of the existing shares €4euroeach. It was also agreed to split the Company’s shares, reclassifying them as Class A shares (par value of €0.01 euro each) with one voting right per share and Class B shares (par value of €1 euro each) with 100 voting rights per share. As a result, the share capital was reduced by €267,552 thousand euro. The share capital reduction was intended for creating a restricted reserve fund for the Class A shares that will only be available under the same conditions as required
93
for the share capital reduction. Following these changes, the share capital is €92,788 thousand euro. Notes to the consolidated annual accounts
Finally, in the same meetings the shareholders agreed to modify the representation system of the Class A and Class B shares by transforming the physical certificates into account entries. b) Share premium account At December 31 2014 this reserve is unrestricted and amounts to €526,237 thousand euro (2013: €526,237 thousand euro). c) Legal reserve and other unavailable reserves Appropriations to the legal reserve are made in compliance with Article 274 of the Spanish Capital Companies Act, which stipulates that 10% of the profits for each year must be transferred to this reserve until it represents at least 20% of share capital. At 31 December 2014 and 2013 this reserve amounts to €3,493 thousand euro and was fully incorporated in 2011. As a result of the capital increasesmade after, in coming periods a part of the profit must be taken to this reserve. The legal reserve is not available for distribution. If it is used to offset losses in the event of no other reserves being available, it must be restablished with future profits. In addition, this reserve includes the reserve resulting from the application of the parent company of Article 273.4 of the Spanish Capital Companies Act “In any event, a restricted reserve equivalent to the goodwill appearing on the asset side of the balance sheet must be allocated and a portion of profits representing at least 5% of that goodwill must be allocated to this reserve.If there were no profits or profits were insufficient, freely available reserves should be used”. This reserve amounts to €14,144 thousand euro at 31 December 2014 (2013: €11,787 thousand euro).
94
17. Cumulative translation differences
Annual Report Financial Report
2014
A breakdown by company/subgroup of cumulative translation differences is set out below: Subsidiary or subgroup Isolux de México S.A. de CV
2014
2013
(2,255)
(2,097)
(34,903)
1,719
(358)
511
Isolux Corsán Energías Renovables, S.A.
(6,380)
(5,419)
Isolux Proyectos e Instalaciones, Ltda.
Grupo Isolux Corsán - Branches Carreteras Centrales Argentina, S.A.
(3,998)
(6,202)
Isolux Corsán do Brasil, S.A.
8,208
8,422
Isolux Corsán India
3,413
(5,389)
(2,235)
(5,987)
8,708
3,127
Tecna Estudios y Proyectos de Ingeniería, S.A. and subsidiaries Azul de Cortes, S.A. de C.V. Isolux Corsán Argentina, S.A.
(4,472)
(2,837)
Corsán Corvián Construcción, S.A. - Branches
(8,946)
(9,394)
(30,921)
(22,663)
1,533
1,536
(117,907)
(134,396)
Isolux Ingeniería, S.A.- Branches Isolux Mozambique LDA. Isolux Infrastructure Netherlands, B.V. and subsidiaries Other
1,618
(147)
Total
(188,895)
(179,216)
95
Notes to the consolidated annual accounts
18. Parent company profit/ (loss) distribution and non-controlling interest The proposal for the distribution of the parent company’s 2014 results that will be submitted to the Annual General Meeting and as well as the approved 2013 result distribution (on 30 June 2014) are set out below:
2014
2013
Available for distribution Results for the year
(140,373)
(66,766)
Distribution Voluntary reserves Prior-year losses Reserve for unavailable goodwill (Spanish Capital Companies Act, article 273.4)
-
(408)
(142,730)
(68,715)
2,357
2,357
Dividends
(140,373)
(66,766)
Change in non-controlling interests during 2014 is set out below:
Opening balance Grupo Tecna Grupo Isolux Corsan Concesiones, S.A. Interisolux Torrejón Viv. Joven, S.L. Julitex, S.L. Interisolux Alcorcón Viv. Joven, S.L. Agua Limpa Paulista, S.A. Infinita Renovables, S.A. Aparcamiento Gomez Ulla, S.L. Aparc. Nuevo Hospital de Burgos Luxeol, S.L. Total
96
Share of profit/losses
Change in shareholding and others
Dividends
Closing balance
4,001
702
-
1,147
5,850
17,184
1,521
-
-
18,705
12
-
-
-
12
(396)
(61)
-
33
(424)
498
17
-
(13)
502
1,989
(381)
-
31
1,639
(27,324)
(5,192)
-
(679)
(33,195)
1,580
(26)
-
(1,554)
-
143
19
-
(162)
-
2
2
-
-
4
(2,311)
(3,399)
-
(1,197)
(6,907)
Change in non-controlling interests during 2013 is set out below:
Opening balance Grupo Tecna Grupo Isolux Corsan Concesiones, S.A.
Interisolux Alcorcón Viv. Joven, S.L. Agua Limpa Paulista, S.A. Infinita Renovables, S.A.
Dividends
Annual Report Financial Report
2014
Closing balance
6,810
1,452
-
(4,261)
4,001
37,000
(1,521)
-
(18,295)
17,184
Interisolux Torrejón Viv. Joven, S.L. Julitex, S.L.
Share of profit/losses
Change in shareholding and others
12
-
-
-
12
(294)
(112)
-
10
(396)
449
49
-
-
498
2,617
(215)
-
(413)
1,989
(19,696)
(9,178)
-
1,550
(27,324)
Aparcamiento Gomez Ulla, S.L.
-
87
-
1,493
1,580
Aparc. Nuevo Hospital de Burgos
-
101
-
42
143
Luxeol, S.L. Total
1
2
-
(1)
2
26,899
(9,335)
-
(19,875)
(2,311)
19. Earnings per share Basic earnings per share are calculated by dividing the profit atributable to the parent company’s equity holders by the wighted average number of outstanding ordinary shares for the year. Diluted earnings per share are calculated by adjusting the wighted average number of outstanding ordinary shares to reflect the conversion of all potentially dilutive ordinary shares. The Company has no potentially dilutive ordinary shares, therefore the diluted earnings per share are the same as basic earnings per share.
2014 Result for the period from continuing operations attributable to owners of the parent Result for the period from discontinued operations attributable to owners of the parent Total Weighted average number of outstanding ordinary shares
2013
(29,340)
12,727
(9,246)
(6,087)
(38,586)
6,640
90,085,006
90,085,006
97
Notes to the consolidated annual accounts
20. Trade and other payables Set out below is a breakdown of trade and other payables at 31 December 2014 and 2013: 31/12/2014
31/12/2013
Non-current Deferred income-Official grants
8,625
10,453
Accounts payable in associates and Joint Ventures
1,573
-
52,156
44,376
Other payables Total
62,354
54,829
1,412,575
1,083,727
Current Trade payables Bills payable
411,402
320,061
Advances received on contracted work
342,565
556,385
Accounts payable in associates and Joint Ventures
16,015
36,841
Social security and other taxes
75,840
96,571
Other payables
97,090
97,466
2,355,487
2,191,051
Total
Nominal values are deemed to approximate fair values. Information on deferred payments to suppliers. Third additional provision of the “Duty of information disclosure” Spanish Law 15/2010, of 5 July In line the resolution of December 29, 2010, of the Spanish Accounting and Auditing Institute (ICAC), on the duty of information to be disclosed in the report on the annual accounts in connection with the deferred of payments to suppliers in business operations, companies must publish explicit information on payment terms to their suppliers in the notes on their annual accounts of companies based in Spain that prepare stand-alone and consolidated annual accounts. In accordance with the regime provided for in Law 15/2010, the deferral period allowed and applicable to Group spanish companies is 60 days in the case of supplier and subcontractors of work contracts or other trade operations. These terms are applicable to contracts signed after July 7, 2010.
98
The duty of disclosure refers only to the accounts payable to suppliers and trade payables included under “Current liabilities” in the Consolidated Statement of Fi-
nancial Position for accounts payable to providers of goods and services. Thus, creditors or suppliers that do not meet this condition, such as suppliers of fixed assets or creditors through leasing, are outside the scope of this law. The Group generally applies the payment management system the confirming through financial entities under the terms of contracts with their suppliers and/or subcontractors. The Group recognizes and pays suppliers financial expenses implicit in these agreements reached with the Group. Bearing the above in mind, at 31 December, 2014 and 2013, the outstanding balances of payment to suppliers to which this law applies does not exceed in significant amounts the stipulated legal period for cumulative deferrals. In addition, during fiscal year 2014, payments to suppliers of group companies to which this law applies exceeding the prescribed limits has been approximately €241 million euro (2013: €145 million euro) which is 55.1% (2013: 49.7%) of the total payments, exceeding in 80 days (2013: 38 days) of the legal deadline. gal deadline by 80 days.
Payments made and pending payments at year ended 2014 Thousand euro
Annual Report Financial Report
%
Payments within the maximum legal limit
196,429
44.9%
Rest
241,280
55.1%
Total year payments
437,709
Balance pending payment at close of year exceeding the legal limit Average weighted delay in payments (days)
2014
61,275 80
Pursuant to the above-mentioned, Group policy about payment to suppliers responds to agreements reached to those suppliers and takes into account market conditions, considering works volume and supplies resulting from contracts entered by the Group with different Public Administrations as well as the usual collection period in the business sectors in which the Group operates.
99
Notes to the consolidated annual accounts
21. Bank Borrowings and Senior Notes At 31 December 2014 and 2013, bank borrowings and senior notes are as indicated below:
31/12/2014
31/12/2013
Non-current Senior Notes
829,458
-
Syndicated loans
221,483
698,422
18,663
11,018
201,492
208,799
328
239
1,271,424
918,478
Senior Notes
11,760
-
Credit lines Other borrowings Finance lease liabilities Current Advanced credit debts
28,910
47,238
Syndicated loans
88,742
120,364
Credit lines
57,931
147,972
90
107
88,657
91,173
Finance lease liabilities Other loans Total borrowings
276,090
406,854
1,547,514
1,325,332
During 2014 the Group issued (through its subsidiary Group Isolux Corsán Finance B.V.) €850 million euro of senior unsecured notes with a fixed rate of 6.625%. These notes mature on April 15, 2021. The Original Notes were issued on March 15, 2014 for € an amount of 600 million euro, and the Additional Notes on June 26, 2014 for € an amount of 250 million euro, all together “the Notes”. The Notes are jointly and severally guaranteed by Group Isolux Corsán, S.A. and certain group subsidiaries. At 31 December 2014 the listed price of these senior notes was 87.21%. Except for the senior notes, all borrowings bear interest at Euribor rates and contracted rates are reviewed after periods which do not generally exceed six months. The fair values of current and non-current borrowings, therefore, approximate their carrying amounts.
100
At 31 December 2014 and 2013, non-current borrowings mature as indicated below: 2014 Between 1 and 5 years
Annual Report Financial Report
2013
More than 5 years
Between 1 and 5 years
Total
More than 5 years
2014
Total
Concept Senior Notes Syndicated loans Credit lines Other borrowings Finance lease liabilities Total
-
829,458
829,458
-
-
-
221,483
-
221,483
698,422
-
698,422
18,663
-
18,663
11,018
-
11,018
160,169
41,323
201,492
134,863
73,936
208,799
261
67
328
192
47
239
400,576
870,848
1,271,424
844,495
73,983
918,478
Finance lease liabilities amounts have been discounted to their present value. Future financial charges on finance leases amount 48 thousand euro (2013: €347 thousand euro). 21.1) Syndicated loans On June 2010 the Group signed an agreement for anoncurrent syndicated loan “Forward Start Facility” type that cancelled previous agreements. The withdrawn amounts accrued interests at Euribor plus a variable spread between 2.25% and 3%, based on the value of certain ratios. In connection with the syndicated loan, in July 2013 the Group reached an agreement with some of the banks part of the syndicate (approximately 66% of the total debt), to sign a new “Forward Start Facility” replacing the previous agreement.ICO and others joined the agreement in amount of 574 million euro.The main terms agreed with respect to this new loan include repayment clauses and interest clauses based on the Euribor plus spreads ranging between 3.25% and 4.25% depending on the value of certain ratios.At 31 December 2014, the outstanding balance of the new FSF is €163 million euro (574 million euro at 31 December 2013) with a single maturity date in December 2017. As for the banks that did not sign the agreement in July 2013, as of 31 December 2014 the debt has been repaid in full 148 million euro balance at 31 December 2013). This loan is subject to a compliance ratio agreement, in line with this type of transaction. At December 31, 2014 Company management understands that the Group is in compliance with all ratios relating to this agreement. On 17 June 2010, the Group reached an agreement for a 85,000 thousand euro credit line with Natixis, ICO and KBC. At 31 December 2014 the outstanding nominal value amounts to €85,000 thousand euro (2013: €85.000
thousand euro). The loan accrues interest of Euribor plus a 3% annual spread and cancelation is through a single installment on June 2015. This loan is subject to a compliance ratio agreement, in line with this type of transaction. At December 31, 2014 Company management understands that the Group is in compliance with ratio relating to this agreement. In June 2011, the Group entered into an agreement to obtain a loan in the amount of €59,500 thousand euro with a syndicate of banks whose agent is EBN Banco de Negocios, S.A. to finance Group’s projects. In February 2014 the Group signed a novation agreement whereby the initial maturity date of June 2014 was renewed, with bi-annual instalments and a final maturity date of June 2017. The loan bears an interest rate of Euribor plus a variable margin between 3.25% and 4% per annum (previously Euribor plus 3.5% per annum) depending on the value of certain ratios. As of the closing date, the outstanding balance amounts to€19,040 thousand euro (29,750,000 thousand euro at 31 December 2013). This loan is subject to a compliance ratio agreement, in line with this this type of transaction. At December 31, 2014 Company management understands that the Group is in compliance with ratio relationg to this agreement. 21.2) Other borrowings The following debts are included under this caption: The agreement with Bank of America, National Association, Spanish branch that at 31 December 2013 had an outstanding amount of €40,000 thousand euro, has been totally cancelled duringthe year 2014. The credit accrued interest at Euribor plus a 4% annual spread, in periods of 1, 3 or 6 months. 101
Notes to the consolidated annual accounts
On 15 February 2012, the Group entered into a new agreement with Corporación Andina de Fomento to obtain a loan with a nominal value of $50,000 thousand US dollar,to finance Group activities; at the year end, the outstanding balance amounts to$46,875 thousand US dollar (2013: $50,000 thousand US dollar). The loan bears interest at the six-monthly Libor rate plus 5.5% per annum, in six-month periods. The final maturity of this loan is February 13, 2022 with 16 semi-annual installments starting on August 2014. This loan is subject to a compliance ratio agreement, in line with this type of transaction. At 31 December 2014 Company management understands that the Group is in compliance with ratio relationg to this agreement. On 14 March 2013, the Group concluded a new agreement with Inter-American Development Bank, to grant a loan with a nominal value of $100,000 thousand US dollarwhose main purpose is the financing of the Group’s activities and at the year-end it presents an outstanding balance of $100,000 thousand US dollar (2013: $100,000 US dollar). This loan bears interest at 6-month Libor plus a spread of 4.38% per year, every six months. This loan matures on 15 February 2020, with 10 halfyearly installments starting on 15 February 2015. This loan is subject to a compliance ratio agreement, which is normal for this type of transaction. At 31 De-
102
cember 2014 Company management understands that full compliance has been obtained with all ratio relating to this agreement. On 25 April 2013, the Group concluded a new agreement with Corporación Andina de Fomento, to grant a loan with a nominal value of $50,000 thousand US dollar whose main purpose is the financing of the Group’s activities and at the year-end it presents an outstanding balance of $50,000 thousand US dollar (2013: $50,000 US dollar). This loan bears interest at 6-month Libor plus a spread of 5.5% per year, every six months. This loan finally matures on 25 April 2023, with 16 half-yearly installments starting on 25 October 2015. This loan is subject to a compliance ratio agreement, which is normal for this type of transaction. At 31 December 2014the Company management understands that full compliance has been obtained with all ratio relating to this agreement. 21.3) Credit lines The Company has contracted multiple credit lines that are generally recognised as short-term balances since maturities are usually annual, although the agreements include automatic renewal clauses. Amounts due after one year are classified as non-current balances. These credit lines are linked to EURIBOR rate with spreads between 2% and 5%.
21.4) Other information The carrying amount of the Group’s borrowings is denominated in the following currencies:
Annual Report Financial Report
2014 2014
2013
Non-current Euro Other currencies
1,108,888
765,356
162,536
153,122
1,271,424
918,478
201,857
318,604
74,233
88,249
Current Euro Other currencies
276,090 Total borrowings
1,547,514
406,854 1,325,332
At 31 December 2014, the Group has available shortterm facilities through credit lines, factoring and other financing facilities amounting â‚Ź211,012 thousand euro (2013: â‚Ź115,374 thousand euro). Nominal values are deemed to approximate fair values.
22. Deferred income tax The gross movement of deferred income tax is shown below:
2014 Deferred tax assets 1 January
2013 Deferred tax liabilities
Deferred tax assets
Deferred tax liabilities
256,204
24,179
226,033
28,018
Charge to income statement (Note 29)
79,523
22,896
52,913
(261)
Tax charged to equity
(1,600)
141
(5,185)
9
Transfer to non-current assets held for sale (Note 15)
-
-
(17,010)
(3,587)
Other
-
-
(547)
-
(44,010)
(3,962)
-
-
(1,594)
(83)
-
-
288,523
43,171
256,204
24,179
Effect of tax rate change in Spain inincome statement Effect of tax rate change in Spain in equity 31 December
103
Deferred tax assets at each year end are as follow: Notes to the consolidated annual accounts
2014 Tax losses Tax credits pending application Temporary differences
2013
106,507
93,799
18,911
14,758
163,105 288,523
147,647 256,204
Change during 2014 and 2013 in deferred tax assets and liabilities is as follows:
Deferred tax assets Reversals
Appropriations
Other movements
Total
At 1 January 2013 Charged to income statement Charged to equity
226,033 (12,394)
65,307
-
52,913
(6,090)
905
-
(5,185)
Transfers to non-current assets held for sale (Note 15)
-
-
(17,010)
(17,010)
Business combinations (Note 32)
-
-
(547)
At 31 December 2013 Charged to income statement Charged to equity
(547) 256,204
(11,851)
91,374
-
79,523
(1,636)
36
-
(1,600)
Effect of tax rate change in Spain in income statement
-
-
(44,010)
(44,010)
Effect of tax rate change in Spain in equity
-
-
(1,594)
At 31 December 2014
(1,594) 288,523
Deferred tax liabilities Reversals
Appropriations
Other movements
Total
At 1 January 2013 Charged to income statement
28,018 (14,978)
14,717
-
(261)
(21)
30
-
9
-
-
(3,587)
(3,587)
(10,154)
33,050
-
Charged to equity
-
141
-
141
Effect of tax rate change in Spain in outcome
-
-
(3,962)
(3,962)
Effect of tax rate change in Spain in equity
-
-
(83)
(83)
Charged to equity Transfers to non-current assets held for sale (Note 15) At 31 December 2013 Charged to income statement
At 31 December 2014
104
24,179 22,896
43,171
Deferred tax assets / (liabilities) charged to equity during the year are as follows:
2014
2013
(1,125)
(5,196)
(1,125)
(5,196)
Annual Report Financial Report
2014
Fair value reserves in equity: Reserve for hedging transactions
Deferred tax assets and liabilities arising from temporary differences are analysed below:
2014
2013
Deferred tax assets Arising from provisions
49,653
59,844
Arising from non-current assets
3,682
2,209
Arising from financial derivatives measurement
8,229
9,297
Arising from deductible financial expense (Royal Decree-Law 12/2012)
72,404
50,852
Arising from other items
29,137
25,445
163,105
147,647
(504)
(743)
Arising from non-current assets
(15,659)
(17,355)
Arising from trade and other receivables
(27,008)
(6,081)
(43,171)
(24,179)
Total Deferred tax liabilities Arising from measurement of derivative financial instruments
Total
At 31 December 2014 the Group has recognized tax credits with respect to tax losses from some subsidiaries in the amounts detailed below:
Generation Year
Espa単a
Argentina
Other countries
Brasil
Total
2009
2,569
-
-
-
2,569
2010
10,406
-
-
1,605
12,011
2011
9,861
590
-
-
10,451
2012
33,103
2,224
-
-
35,327
2013
25,801
1,725
7,858
513
35,897
2014
-
4,382
4,193
1,677
10,252
81,740
8,921
12,051
3,795
106,507
105
Notes to the consolidated annual accounts
Tax credits for losses carried forward in Argentina expire in 5 years time since the date of creation. In Spain due to the law amendment detailed below, the application of the tax credits becomes unlimited. In Brasil the compensation period is unlimited. Deferred tax assets for tax credits in respect of tax losses available for offset and tax-loss carryforwards are recognized insofar as the existence of the relevant tax benefit through future taxable profits is likely. Most tax loss carryforwards relate to companies that are part of the consolidated tax group in Spain. Management has performed an analysis to determine the amount of credits to be activated, considering that it is likely that tax revenues will be generated in the future to offset these tax loss carryforwards (along with other net tax assets related to the tax group). Among other things, management’s analysis took the following aspects into account: generation of future tax revenues according to the business plans of the member companies of the tax group, the existence of past tax losses that are not expected to be repeated
in the future (e.g., related to the impairment of certain assets), the reorganisation measures implemented to adapt the structure to the current business volume in Spain, and the implementation of tax optimisation measures to offset the inefficiencies that have arisen in recent years as a result of the rapid international expansion of the Group’s operations and the changes in Spanish tax laws. A new Corporate Tax Law was enacted on 28 November, introducing a gradual reduction in the general tax rates from 30% in 2014 to 25% in 2016, the elimination of the time limit on offsetting tax losses and limits on the deductibility of losses associated with the assets. The impact of this policy change on the tax expense shown on the income statement amounted to a loss of €40,048 thousand euro (Note 29), while the effect on equity items amounted to €1,511 thousand euro. Also on the same date, laws 26/2014 and 28/2014 were passed on Personal Income Tax and Value Added Tax, respectively. These laws did not have a significant impact on the Group’s financial statements as of the closing date.
23. Provisions for other liabilities and charges 23.1. Provisions for other liabilities and charges – Non-current Provisions for project completion Balance at 1 January 2013
Provisions for major repairs
Decommissioning provisions
Total
9,033
7,377
3,891
1,749
22,050
-
20,424
(2,418)
-
18,006
Appropriations
7,635
7,681
61
470
15,847
Transfers to non-current assets held for sale (Note 15)
(232)
(4,833)
(1,534)
-
(6,599)
Changes in the consolidation scope
Applications Balance at 31 December 2013 Reversals /Applications Appropriations Balance at 31 December 2014
106
Provisions for litigation and other
(2,688)
(565)
-
-
(3,253)
13,748
30,084
-
2,219
46,051
(2,303)
(17,721)
-
-
(20,024)
842
16,238
-
99
17,179
12,287
28,601
-
2,318
43,206
Provisions for project completion and guaranteess The balance in this account relates to projects that are completed or substantially completed and consists of the Group’s estimate of probable costs to be incurred prior to final acceptance by the customer. Additional customer claims not subject to objective quantification at consolidated annual accounts preparation date could arise, although Management understands no significant loss over provisioned amounts will arise. Provisions for litigation and other This balance relates to provisions set up to cover other liabilities and charges related or not related to litigation, including tax or other contingencies for which the Group considered a provision should be posted. In the opinion of the directors and legal counsel, the lawsuits in question are not likely to generate significant losses above the amounts provisioned. Decommissioning provisions Based upon technical studies, the Group has estimated the current cost of decommissioning central solar insta-
llations as well as biodiesel plants that have assets assigned to projects, booking these estimates as a higher asset value and amortizing it over its useful life, which in most cases is similar to the useful life of the lease agreements of the land where the solar plants and the biodiesel plants are located. Provisions for major repairs
Annual Report Financial Report
2014
Corresponds to expected provisions for the replacement and major repairs to be performed in some infrastructure concessions during its concession period. The Group calculates the appropriations to be made according to the estimated investments schedules of the Business Financial Plan, which is the best estimate. 23.2. Provisions for other liabilities and charges – Current The balances included in this item, totalling €73,559 thousand euro (2013: €57,530 thousand euro), related to the Construction Division and the Engineering Division and mainly consist of provisions for project completion costs and other items. “Change in trade provisions” in the income statement registers net allocations made to provisions for other liabilities and current expenses.
107
Notes to the consolidated annual accounts
24. Revenue / Sales and Materials consumed and other external costs Sales information by activity and market is included in segment information note (see Note 5). The account “Materials consumed and other external costs” during 2014 and 2013 is analyzed below:
2014
2013
Raw materials and other supplies
620,248
717,209
Change in inventories – no real estate
(14,875)
8,547
Other external costs
627,632
972,957
1,233,005
1,698,713
Total
25. Other income and expense Other operating income and expense are analyzed below: 2014
2013
Other operating income Operating grants
2,049
904
Other operating revenue
3,206
14,890
Total
5,255
15,794
Operating leases
101,950
106,839
Other external services
186,214
155,775
Net impairment of accounts receivables
(12,909)
(10,340)
Taxes
40,249
75,054
Total
315,504
327,328
Other operating expense
“Net impairment of accounts receivable” includes €12,909 thousand euro related to impairment of trade receivables (2013: €10,340 thousand euro) and other amounts (Note 12).
108
26. Employee benefit expenses
Annual Report Financial Report
2014 Wages and salaries
2013
266,689
257,730
67,391
69,033
334,080
326,763
Social Security contributions and other social charges
2014
“Wages and salaries” include termination indemnities amounting 10,916 thousand euro (2013:€16,949 thousand euro). The Group’s average workforce is analyzed below:
Category
2014
2013
Graduates
2,008
2,109
Administrative staff
1,030
760
Workers
2,936
3,372
5,974
6,241
Additionally, the average number of persons employed by the proportionately-consolidated companies has been 356 (2013: 609). At 31 December 2014, personnel distribution by gender is as follows:
Category Board Directors Senior managers
Men
Women 14
Total -
14
6
-
6
Managers
364
22
386
Graduates
1,761
413
2,174
Administrative staff Workers
538
216
754
2,133
137
2,270
4,816
788
5,604
109
At 31 December 2013, personnel distribution by gender is as follows: Notes to the consolidated annual accounts
Category
Men
Board Directors
Women 14
Senior managers
Total -
14
4
-
4
Managers
344
25
369
Graduates
1,500
435
1,935
Administrative staff
370
274
644
3,228
166
3,394
5,460
900
6,360
Workers
Additionally, the proportionately-consolidated companies had 374 employees at the year end (2013: 853 employees). The average number of disabled persons (disability equal or higher than 33%) employed during 2014 and 2013 by Group companies, are classified in the following categories:
Category
2014
Graduates and administrative staff
2013 15
Workers
8
18
23
39
27. Operating leases Future minimum lease instalments under non-cancellable operating leases are analyzed below:
2014 Less than 1 year
30,298
12,334
18,060
19,130
147
931
48,505
32,395
Total
110
2013
Between 1 and 5 years More than 5 years
21
The expense recognized in the income statement during 2014 in relation to operating leases totals â‚Ź101,950 thousand euro (2013: â‚Ź106,839 thousand euro). The Group leases the building in which its headquarters are located from a third party. The lease agreement has a 12-year term as from lease inception (15 March 2007), although the Group may exercise a purchase option as from year five, in which case the parties must previously agree on the terms of the transaction. Since at lease inception and at the preparation date of these consolidated annual accounts, the purchase option is not likely to be exercised the operation has been classified as an operating lease. All payments due throughout the original 12year term are included in the above table.
28. Net financial results Net financial results at 31 December 2014 and 2013 are detailed below:
Annual Report Financial Report
2014 2014
Interest expense and other financial expense Financial expenses Interest income and other financial income Net gains/(losses) on foreign currency transactions Financial income Net financial result – Expense
2013
236,188
201,387
236,188
201,387
28,566
10,545
2,050
6,814
30,616
17,359
205,572
184,028
During 2014 the chapter interest expense and other financial expense included €9.9 millioneurorelated to the payment in advance of certain bank borrowing (Note 21) and €2.5 million euro of corresponding ineffectiveness of related derivatives.
29. Income tax Group Isolux Corsán, S.A. is the parent Company of Tax Group 102/01, therefore it is authorized to file consolidated statement in Spain for all the companies included within the Tax Group. The expense for income tax include:
2014 Current income tax
2013
35,864
45,035
Deferred tax (Note 22)
(16,579)
(53,174)
Total Income Tax Expense
19,285
(8,139)
111
Notes to the consolidated annual accounts
The Group’s income tax differs from the theoretical amount that would have been obtained if the tax rate applicable to the consolidated companies’ profits had been used as follows: Continuing operations 2014 Profit before income tax
2013
(13,420)
(4,685)
Tax calculated at the rate applicable to the parent company’s profits
(4,026)
(1,406)
Effect no equity method consolidation
(7,907)
(3,003)
Effect on tax payable of non-tax deductible expenses Effect of different tax rates abroad and other differences in foreign operations Effect of tax rate change in Spain (Note 22)
5,400
9,262
(4,171)
(2,840)
40,048
-
Other
(10,059)
(10,152)
Tax expense
19,285
(8,139)
2014
2013
(12,053)
(8,740)
(3,616)
(2,622)
Discontinuing operations: Results before taxes Tax calculated at the rate applicable to the parent company’s profits Effect on tax payable of non-tax deductible expenses and other Tax expense
The effective tax rate, for continuing and discontinuing operations, in 2014 has been (64.8%) (2013: (79.9%)). This rate differs from the rate applicable to the parent company (30% in 2014 and 2013) mainly due to the net effect of non-deductible expenses as well as different tax rates abroad that may be higher or lower than the rate applicable in Spainwith the effect of not including the share of profits / (losses) of investments accounted for the equity method and the effect of changes in tax rates in Spain in 2014.
843
31
(2,773)
(2,591)
On 31 August 2012, an economic-administrative claim was filed against those assessments at the Central Tax and Treasury Court, who on 31 January 2015 notified the dismissal of the claim. The Group is preparing an appeal to be filed before the Supreme Court.
In the opinion of the Parent company’s management and tax advisors, there are sound grounds for defending the Group’s position and these proceedings are not expected to have a significant impact on the Group’s financial On 1 July 2010, inspection activities on Income Tax for the situation.Consequently, the Group has not recognized period 2005-2008 were initiated in Grupo Isolux Corsán, any provision in relation to the previous situation. S.A., as the parent company of the tax group.Likewise, several group companies were subject to a general ins- The Group has provided mortgages on certain properpection of Value Added Tax (2006-2008), Personal Income ties to secure the appeals against the aforementioned Tax (2006-2008), Annual Statement of Operations (2005- contested tax assessments as well as for other claims 2008) and Intra-Community Business Operations State- made by the tax authorities. The net carrying value of the ment (2005-2008).As a result of the above-mentioned properties subject to mortgages totals €66 million euro. inspections, in 2012 corporate income tax assessments were raised for the periods inspected. Some of the as- In addition to the periods mentioned, the main Group sessment were contested by Grupo Isolux Corsán, mainly companies are open to inspection for the following taxes in connection with export deductions, transactions abroad, and periods: non-deductible expenses and other deductions applied to property restatements amounting to approximately €33.7 million euro, all relating to subsidiaries of the Tax Group. 112
Tax
Fiscal years
Corporate Income Tax
2009 to 2013
Value Added Tax
2009 to 2014
Annual Report Financial Report
Personal Income Tax
2010 to 2014
2014
Other taxes
Last 4 years
As a result, among other things, of the different interpretations to which Spanish tax legislation lends itself, additional liabilities may be raised in the event of a tax inspection. The directors of the parent company consider, however, that any additional liability that might be raised would not significantly affect these consolidated annual accounts.
30. Dividends per share No dividends have been distributed in 2013, nor proposed in 2014.
113
Notes to the consolidated annual accounts
31. Commitments, contingencies and guarantees provided 31.a) Commitments Non-current assets purchase commitments No significant commitments have been made to purchase non-current assets at the balance sheet date, other than those required in the ordinary course of business. Operating lease commitments The Group leases a number of premises, offices and other property, plant and equipment under non-cancellable operating leases. These leases contain variable terms, phase-related clauses and renewal rights. The lease expenditure charged to the income statement during the year and information on future minimum instalments is set out in Note 27. 31.b) Contingencies and guarantees provided The Group has contingent liabilities in respect of bank guarantees and other guarantees provided in the ordinary course of business. In accordance with its general terms of engagement, the Group is required to provide technical guarantees in connection with the execution of projects. These guarantees may be provided in cash or in the form of bank guarantees and must remain in effect for a specified period.
114
In the ordinary course of business, as is common practice in companies engaged in engineering and construction activities, the Group furnished guarantees to third parties totalling €1,929 million euro (2013: €1,690 million euro) for the proper performance of contracts. In addition, in the ordinary coruse of business and as is common practice wit the sector, wherte the Group companies act as sponosrs during the construction phase of certain concession projects, the Group has provided guarantees to certain project companies that form part of the subgroup Isolux Infraestrucutre, for a total amount of€171 millioneuro (2013: €229 million euro). In addition, the Group have provided certain guarantees to Isolux Corsan Aparcamientos, S.A. for a total amount of €70 mililon euro. With respect to such guarantees, no additional significant liabilities are expected, other than those provided for, as stated in Note 23. Under the agreements reached with PSP in the business combination performed on 2012, the Group Group has executed a series of guarantees in relation to certain losses sustained or incurred by Isolux Infrastructure Netherlands, B.V. and subsidiaries as a consequence, among other things of the fulfilment of concession project construction budgets, legal proceedings, environmental aspects, tax contingencies or certain breaches of the EPCs agreed prior to the shareholders’ agreement signed in 2012. Additional liabilities could arise in the future as a result of significant departures relating to these commitments.
32. Business combinations
funds to each one of the party will be variable depending on the selling price obtained.
During 2014 the following business combinations took place:
The agreements signed between the parties mean that although the new investors do not have an ownership interest in the companies, key business decisions have to be taken jointly by the parties. Therefore Isolux Corsán Aparcamientos, S.A. and its subsidiaries is considered to be a joint venture. This operation has been recognised as a change of control with the application, therefore, of the accounting policies described in Note 2.2 Key business decision include amongst other, budget and business plan approvals, acquisition and disposal of investment, dividend distribution, and of financial facilities withdrawing. In order to allocate the acquisition cost, the estimated fair value of the assets, has been calculated on the basis of the future cash flow discount method. As a result of this change of control, there are no significant impacts on the consolidated income statement.In the consolidated cash flow statement, according to requirement of IAS 7, the effect of scoping out of the consolidation perimeter is shown under the heading “Net cash variation due to change in perimeter” within cash flow from investing activities,even though it is a non-cash transaction.
a) Isolux Corsán Aparcamientos, S.A. and subsidiaries During July 2014 the Group signed an agreement with several investments funds acting in a coordinated manner through Oak Hill Advisors, under which the investment funds undertook to invest in the form of senior loans for up to a total of €100 million euro. These loans will be used to make new investments in the Group’s car park business which is included in the subgroup of which Isolux Corsán Aparcamientos, S.A. is the parent. At 31 December 2014 loans received amounted to €50 million euro. The remaining €50 million euro loans will be withdrawed only once the initial €50 million euro investment is completed. The purpose of this agreement is to group existing assets together with new assets and subsequently after some time during which business is expected to improve, the intention is to sell the car park business on a whole. The selling is expected to take place between October 1, 2019 and June 3, 2020. The agreement between the parties provides how the funds will be distributed on the basis of the spelling price obtained. Distribution of the
Annual Report Financial Report
2014
The following table summarises payments and provisional fair values of the assets acquired and liabilities assumed at the acquisition date:
Thousands of euros Cash and cash equivalents Non-current assets assigned to projects Other non current assets Other current assets
6,003 259,257 12,406 12,097
Non current borrowings Other non current liabilities
(117,362) (37,993)
Other current liabilities
(5,431)
Taxes payable
(7,650)
Total activos identificables adquiridos y pasivos asumidos Non-Controlling interests Total net assets
121,327 (1,559) 119,768
The balance sheet at 31December 2014 and the income statement for the period between the change of control and 31 December 2014 are disclosed in Note 9 for the Isolux Corsán Aparcamientos, S.A. subgroup.
115
Notes to the consolidated annual accounts
33. Related-party transactions Transactions with related parties during 2014 and 2013 form part of the Group’s ordinary course of business. These transactions are described below: a) Transactions with the Company’s main shareholders a.1) Transactions with CAIXABANK The Group only carries out banking activities with Caixabank. Set out below are the amounts and nature of banking operations contracted at 31 December 2014 and 2013:
2014 Granted Credit lines
2013
Disposed
Disposed
-
-
-
-
Long-term loans - Syndicated
55,058
55,058
102,059
102,059
Project finance
75,997
65,516
65,103
65,103
Mortgage loans Bank guarantees furnished
327
327
566
566
171,264
171,264
89,311
89,311
3,600
3,600
5,400
5,400
Other loans
In addition, the Group has numerous bank accounts in the ordinary course of business with Caixabank.The Group manages a portion of its cash position by contracting financial assets through Caixabank. Income statement for the period includes costs and income related to the transactions described above, which have been performed under market conditions. The Group has also contracted interest rate swaps with Caixabank to hedge the future changes in of the Euribor, for a notional amount of €114,661 thousand euro (2013: €81,185 thousand euro), related to the syndicated loan and specific project finance. a.2) Operations carried out with other shareholders The Group carried out the following transactions with the shareholder Charanne. B.V in 2013:
116
Granted
- On 7 February 2008 the Group granted a loan to the company Vista B.V. for a total amount of €4,700 thou-
sand euro, and accrued interests at Euribor plus 1%. In 2009 it was transferred to the company Charanne B.V. - In July 2013, the company Charanne B.V. assumed the debtor position held by certain members of the Board of Directors in the amount of 5,400 thousand euro (Note33.b.3) and simultaneously fully repaid the debt described in the preceding paragraph by providing shares in the subsidiary Grupo Isolux Corsán Concesiones, S.A. The indicated transactions have been carried out under market conditions. b) Transactions with the Company’s Board of directors and management b.1) Information required by articles 229 to 231 of Spanish Company Act Parent company´s directors have nothing to report pursuant to Articles 229 to 231 of Spanish Companies Act,in relation to the obligation to be loyal, to avoid conflicts of interest and to refrain from competing with the Company,except for the following offices and functions held and performed, and shareholdings owned with respect to all Group companies at 31 December 2014: • Mr. Luis Delso Heras is a Board director of GHESA, INGENIERÍA y TENOLOGÍA, S.A., Cable Submarino de Canarias, S.A., T-Solar Global, S.A.U (Chairman), Grupo T-Solar Global, S.A. (Chairman), Grupo Isolux Corsán Concesiones, S.A. (Chairman), and Isolux Infrastructure Netherlands B.V. His son, Mr. Alvaro Delso Ramírez del Molino, Director of Finance of Grupo Isolux Corsán, S.A.; member of the Board of Directors of Corsán-Corviam Construcción, S.A.; and Isolux Ingeniería, S.A. His daughter, Mrs Carmela Delso Ramírez del Molino, is a member of the Board of Directors of T-Solar Global Operating Assets, S.L. •Mr. José Gomis Cañete is a Board member of Grupo Isolux Corsán Concesiones, S.A. (Vice-Chairman), Grupo T-Solar Global, S.A., and Isolux Infrastructure Netherlands, B. V. His son, Mr. Alvaro Gomis Fernández, is a member of the Board of Directors of T-Solar Global Operating Assets, S.L. • Mr. Antonio Portela Álvarez is a Board director of Desarrollo de Concesiones y Servicios, Sercón, S.A.(Chairman), Isolux Corsan Aparcamientos, S.L (Chair-
man), Grupo T-Solar Global, S.A., Corsán-Corviam Construcción, S.A. (Chairman), Isolux Ingeniería, S.A. (Chairman), Grupo Isolux Corsán Concesiones, S.A., and Isolux Infrastructure Netherlands, B. V. Additionally, Mr Antonio Portela Alvarez holds shares in Infinita Renovables, S.A. (indirect interest of less than 10% through other companies).
Annual Report Financial Report
2014
• D. Francisco Francisco Moure Bourio is a Board director (Secretary) of PGP de Energía, S.A. • Inversiones Corporativas, S.A. is a Board Member of El Reino de Don Quijote de la Mancha, S.A.; de Casa 2030, S.A. (Joint Administrator); Urbanizadora Montearagón, S.L (Joint Administrator); CCM Iniciativas Industriales, S.L. (Joint Administrator); de Industrializaciones Estratégicas, S.A.; Comtal Estruc S.L.; Las Cabezadas de Aranjuez, S.L. (Chairman); Obenque, S.A.; Grupo Naurener, S.A.; Biocombustibles de Cuencia, S.A. Moreover, it has a shareholding in the following companies: CCM Iniciativas Industriales, S.L. and subsidiaries (100.00%); CCM Inmobiliaria Centrum 2004, S.L. and subsidiaries (99.99%); CCM Inmobiliaria del Sur 2004, S.L. and subsidiaries (100.00%); Comtal Estruct, S.L. (31.51%); Chamartín La Grela (5,20%); Gestiones Hervemu, S.L. (50%); Kipoa de Inversiones, S.L. (30%); Villa Romana Golf, S.L. (25.68%); Biocombustibles de Cuenca, S.A. (20%); Desarrollos Urbanísticos Veneciola, S.A. (20%); Grupo Naturener, S.A. (20%); Jardines de la Rivera del Tajo, S.L. (10%); Toletum Visigodo (13.54%); DHO Grupo Constructor Corporativo, S.L. (16.01%); El Reino de Don Quijote de la Mancha, S.A. (12.80%); Promociones MiralSur, S.L. (100.00%); Planes e Inversiones CLM, S.A. y filiales (99.99%); Bami Newco, S.A. (5.39%); Midamarta, S.L. (99.99%); Divergea Construcciones, S.L. (4.95%); Obenque, S.A. (14.33%); Explotaciones Forestales y Cinegéticas Alta-Baja (100.00%); Hormigones y Aridos Aricam, S.L. (25%); and Desarrollo Industrial Aricam, S.L. (4.74%). Mr. Lorenzo Martínez Márquez, in his capacity as representative de Inversiones Corporativas, S.A., is a Board Member of Madrid Sur CESA, S.A. (in his capacity as representative of Instituto de Economía y Empresa, S.L.); and Inversora de Autopistas del Sur, S.L. (in his capacity as representative of Instituto de Economía y Empresa, S.L.). • Mr. Ángel Serrano Martínez-Estéllez is a Board Director member of Grupo T-Solar Global, S.A; Alten Energías Renovables S.L. (Non-executive chairman) and Alten 2010 Energía Renovables, S.A. (Non-executive chairman).
117
Notes to the consolidated annual accounts
• Mr. Javier Gómez-Navarro Navarrete is a Board Director member of Técnicas Reunidas, S.A. • Mr. José María de Torres Zabala, as representative of Cartera Perseidas, S.L., is a Board Director member of Autovía de los Pinares, S.A. • HISCAN PATRIMONIO, S.A.U., is a Board Member of Autovía del Camino, S.A.; Concessia, Cartera y Gestión de Infraestructuras, S.L.; Metropolitano Tenerife, S.A.; and it has a shareholding in Autovía del Camino, S.A. (10.91%). Companies that form part of the group of HISCAN PATRIMONIO, S.A.U., in accordance with Article 42 of the Code of Commerce, hold shares in companies with the same, similar or complementary activity to that which constitutes the Company purpose. These companies are: • Abertis Infraestructuras, S.A. (15.36%), through Criteria CaixaHolding, S.A.U.; • Abertis Infraestructuras, S.A.(3.88%), through Inversiones Autopistas, S.L.; • ALA Ingeniería y Obras, S.A. (in liquidation) (5.01%), through Madrigal Participaciones, S.A. • Autovía del Camino, S.A. (10.91%), through Hiscan Patrimonio, S.A.U. • Concessia, Cartera y Gestión de Infraestructuras, S.A. (12.74%), through Caixabank, S.A. • Terminal Polivalente Portuaria de Sagunto, S.A. (25%), through Inversiones Valencia Capital, S.A.U. In addition, the companies forming the group of HISCAN PATRIMONIO, S.A.U., in accordance with Article 42 of the Code of Commerce, that holds shares or are in charge in companies with a similar or complementary activity to that which constitutes the Company purpose, are:
118
• Abertis Infraestructuras, S.A. (Board Director), through Pablis 21, S.L.; • Abertis Infraestructuras, S.A. (Vicepresident III), through G3T, S.L.; • Autovía del Camino, S.A. (Board Director), through Hiscan Patrimonio, S.A.U.; • Concessia, Cartera y Gestión de Infraestructuras, S.A. (Board Director), through Hiscan Patrimonio, S.A.U.; • Concessia, Cartera y Gestión de Infraestructuras, S.A. (Board Director), through Inversiones Corporativas Digitales, S.L.; • Metropolitano de Tenerife, S.A. (Board Director), through Hiscan Patrimonio, S.A.U.; • Terminal Polivalente Portuaria de Sagunto, S.A. (Board Director), through Inversiones Valencia Capital, S.A.
In addition, the companies forming the group of SERCAPGU, S.L., in accordance with Article 42 of the Code of Commerce, that holds shares or are in charge in companies with a similar or complementary activity to that which constitutes the Company purpose. These companies are: • Abertis Infraestructuras, S.A. (15.36%), through Criteria CaixaHolding, S.A.U.; • Abertis Infraestructuras, S.A. (3.88%), through Inversiones Autopistas, S.L.; • ALA Ingeniería y Obras, S.L. (in liquidation) (5.01%), through Madrigal Participaciones, S.A. • Concessia, Cartera y Gestión de Infraestructuras, S.A. (12.74%), through CaixaBank, S.A.; • Autovía del Camino, S.A. (10.91%), through Hiscan Patrimonio, S.A.U.; • Terminal Polivalente Portuaria de Sagunto, S.A. (25%), through Inversiones Valencia Capital, S.A. That the companies that form part of the group of SERCAPGU, S.L., in accordance with Article 42 of the Code of Commerce, hold shares in companies with the same, similar or complementary activity to that which constitutes the Company purpose, are: • Abertis Infraestructuras, S.A. (Board Director), a through de Pablis 21, S.L.; • Abertis Infraestructuras, S.A. (Vicepresident III), through G3T, S.L.; • Autovía del Camino, S.A. (Board Director), through Hiscan Patrimonio, S.A.U.; • Concessia, Cartera y Gestión de Infraestructuras, S.A. (Board Director), thorugh Hiscan Patrimonio, S.A.U.; • Concessia, Cartera y Gestión de Infraestructuras, S.A. (Board Director), through Inversiones Corporativas Digitales, S.L.; • Metropolitano de Tenerife, S.A.U. (Board Director), through Hiscan Patrimonio, S.A.U.; • Terminal Polivalente Portuaria de Sagunto, S.A. (Consejero), through Inversiones Valencia Capital, S.A. Mr. Salvador Alemany Mas (as representative of SERCAPGU, S.L. until 7 February 2014) is Board Member of: • Abertis Infraestructuras, S.A. (Chairman), holding shares in this company representing 0.0506%; and • Saba Infraestructuras, S.A. (Chairman), holding shares in this company representing 0.0344%. • INVERSIONES CORPORATIVAS DIGITALES, S.L.U. is a Board Member of Concessia, Cartera y Gestión de Infraestructuras, S.A. That the companies that form part of the group of IN-
VERSIONES DIGITALES CORPORATIVAS, S.L.U, in accordance with Article 42 of the Code of Commerce, hold shares in companies with the identical, analogous or complementary activity to that which constitutes the Company purpose, are: • Abertis Infraestructuras, S.A. (15.36%), through Criteria CaixaHolding, S.A.U.; • Abertis Infraestructuras, S.A. (3.88%), through Inversiones Autopistas, S.L.; • ALA Ingeniería y Obras, S.L. (in liquidation) (5.01%), through Madrigal Participaciones, S.A.; • Autovía del Camino, S.A. (10.91%), through Hiscan Patrimonio, S.A.U.; • Concessia, Cartera y Gestión de Infraestructuras, S.A. (12.74%), through CaixaBank, S.A.; • Terminal Polivalente Portuaria de Sagunto, S.A. (25%), through Inversiones Valencia Capital, S.A.U. Companies forming the group of INVERSIONES CORPORATIVAS DIGITALES, S.L.U, in accordance with Article 42 of the Code of Commerce, that holds shares or are in charge in companies with a similar or complementary activity to that which constitutes the Company purpose. These companies are: • Abertis Infraestructuras, S.A. (Board Director), through Pablis 21, S.L.; • Abertis Infraestructuras, S.A. (Board Director), through G3T, S.L. (Vicepresidente III); • Autovía del Camino, S.A. (Board Director), through Hiscan Patrimonio, S.A.U.; • Concessia, Cartera y Gestión de Infraestructuras, S.A. (Board Director), through Hiscan Patrimonio, S.A.U.; • Metropolitano de Tenerife, S.A.U. (Board Director), through Hiscan Patrimonio, S.A.U.; • Terminal Polivalente Portuaria de Sagunto, S.A. (Board Director), through Inversiones Valencia Capital, S.A.
The inclusion of the above information in the notes to the consolidated annual accounts of Grupo Isolux Corsán, S.A. is the result of a detailed analysis of the information received from all the members of the Board of Directors of Grupo Isolux Corsán, S.A., based on a teleological interpretation of Articles 229 to 231 of Spanish Companies Act.
Annual Report Financial Report
2014
b.2) Board of directors and Senior management of Grupo Isolux Corsán, S.A. benefits: 2014 Wages and salaries (including indemnities) Per diems for attendance at Board meetings
2013
5,667
5,223
660
504
6,327
5,727
b.3) Loans granted to Board of Directors At 1January 2013 certain loans were granted by the Group to members of the Board of Directors totalling €5,400 thousand euro. The loans originated from 2000 and 2002 and there was not established maturity date. In 2013 these loans were transferred to the company Charanne V.B. (Note 33.a.2). b.4) Loans extended to the group by members of the Board of Directors On 7 October 2011 certain directors of Grupo Isolux Corsán and other directors sold their GTSG shares (2.59% of total) to Grupo Isolux Corsán with deferred payment. At 31 December 2014, the outstanding balance was €5.4 millioneuro (2013: €6.2 million euro).
119
Notes to the consolidated annual accounts
c) Transactions with companies consolidated under the equity method Transactions and balances with associates and joint ventures at 31 December 2014 and 2013 are analyzed below: 2014 Debtor balances Isolux Infrastructure subgroup Isolux Corsán Aparcamientos subgroup Pinares del Sur, S.L.
Creditor balances
Costs / Purchases
Revenue / Sales
180,990
17,588
777
290,670
-
-
858
6,188
206
-
-
-
2013 Debtor balances Isolux Infrastructure subgroup
Creditor balances
152,675
Transactions mentioned above were made under market conditions. In the normal course of business activities, and as usual between the companies engaged in engineering and construction activities, the Group has provided guarantees to joint ventures for a total amount of €123 million euro (2013: €443 million euro) included within the amount disclosed in Note 31 b).
120
36,841
Costs / Purchases 5,134
Revenue / Sales 543,863
34. Joint Operations Annual Report Financial Report
The Group has interests in the joint operations disclosed in Appendix IV. The amounts set out below represented the Group’s share, based on its interest in the joint ventures, on assets, liabilities, revenue and results of joint operations consolidated through the proportional method (see Note 2.2). These amounts are included in the consolidated balance sheet and consolidated income statement:
2014
2014
2013
Assets: Non-current assets Current assets
17,878
34,107
54,685
47,448
72,563
81,555
Non-current liabilities
23,548
23,394
Current liabilities
43,838
46,828
Liabilities:
Net assets Income Expenses Profit after tax
67,386
70,223
5,177
11,331
45,632
47,892
(49,921)
(65,340)
(4,289)
(17,448)
There are no contingent liabilities relating to the Group’s interests in las joint operations or contingent liabilities recognized by the joint operations themselves.
121
Notes to the consolidated annual accounts
35. Temporary joint ventures (UTEs) and consortia The Group has interests in the UTEs disclosed in Appendix V. The amounts set out below represent the Group’s share, based on its interests in the UTEs, of assets, liabilities, revenue and results. These amounts are included in the consolidated balance sheet and consolidated income statement:
2014
2013
Assets: Non-current assets Current assets
1,467
3,834
794,368
740,559
795,835
744,393
148
66
Liabilities: Non-current liabilities Current liabilities
730,104
651,250
730,252
651,316
Net assets
65,583
93,077
Revenue
613,570
843,693
Expenses
(547,987)
(750,616)
65,583
93,077
Profit after taxes
In addition, at 31 December 2014 and 2013 the Group holds shares in several consortia. The following amounts have been recorded in the consolidated balance sheet and consolidated income statement: 2014
2013
Assets: Non-current assets Current assets
7,988
5,046
340,577
138,727
348,565
143,773
2,603
306
Liabilities: Non-current liabilities Current liabilities
374,358
136,760
376,961
137,066
(28,396)
6,707
Revenue
199,682
159,322
Expenses
(228,078)
(152,615)
Profit after tax
(28,396)
6,707
Net assets
122
There are no contingent liabilities relating to the Group’s interests in UTEs / Consortia, or contingent liabilities recognized by the UTEs / Consortia themselves.
Annual Report Financial Report
2014
36. Environment The Group has taken the necessary measures to protect and improve the environment and to minimize environmental impact, if applicable, in compliance with current environmental legislation. Consequently, no provision for environmental liabilities and charges has been deemed necessary and there are no contingencies relating to environmental protection and improvement.
37. Events after the reporting period After the reporting period, no significant subsequent event exist that could impact these annual accounts. There are no significant subsequent events that impact these consolidated annual accounts.
38. Auditors’ fees The fees accrued by PricewaterhouseCoopers Auditors, S.L. for audit services rendered during 2014amount to €1,091 thousand euro (2013: €949 thousand euro). Fees accrued by PricewaterhouseCoopers Auditores, S.L. for other services rendered during 2014 amount to €864 thousand euro (2013: €419 thousand euro). Fees accrued by other companies operating under the PricewaterhouseCoopers brand for audits and other services rendered in Spain during 2014 amount to €356 thousand euro (2013: €1.015 thousand euro). Fees accrued by other companies operating under the PricewaterhouseCoopers brand for audits and other services rendered abroad during 2014 amount to €790 thousand euro and €143 thousand euro respectively (2013: €615 thousand euro and €80 thousand euro respectively). The fees accrued by other auditors for audit services rendered during 2014 amount to€150 thousand euro and €301 thousand euro respectively (2013: €127 thousand euro and €41 thousand euro respectively). 123
Appendix I
Subsidiaries included in the Consolidation Scope Consolidated annual accounts Company name
124
Address
% of interest
Shareholder
Csolidation Method
Activity
Auditor
Isolux Ingeniería, S.A.
Madrid
100.00%
Grupo Isolux Corsán, S.A.
FC
Engineering
Watsegur, S.A.
Madrid
100.00%
Isolux Ingeniería, S.A.
FC
Engineering
PwC PwC
Elaborados Metálicos Emesa S.L.
A Coruña
100.00%
Isolux Ingeniería, S.A.
FC
Engineering
PwC
GIC Fábricas, S.A.
Madrid
100.00%
Isolux Ingeniería, S.A.
FC
Engineering
PwC
Eólica Isolcor, S.L.
Madrid
100.00%
Isolux Ingeniería, S.A.
FC
Engineering
Unaudited Unaudited
Luxeol S.L.
Madrid
70.00%
Isolux Ingeniería, S.A.
FC
Concessions
Sociedad Concesionaria Zona 8-A, S.A
Zaragoza
100.00%
Isolux Ingeniería, S.A.
FC
Concessions
PwC
Desarrollos de Ingenieria Iguarán S.A.
Avilés
100.00%
Isolux Ingeniería, S.A.
FC
Engineering
Unaudited
Isolux Eólica, S.A
Madrid
100.00%
Isolux Ingeniería, S.A.
FC
Engineering
Unaudited
Isolux Corsán, LLC
Houston
100.00%
Isolux Ingeniería, S.A.
FC
Engineering
PwC
Isolux Corsan Construction, LLC
Canadá
100.00%
Isolux Corsán, LLC
FC
Construction
Unaudited
Isowat Mozambique, Lda.
Maputo
100.00%
Isolux Ingeniería, S.A.
FC
Engineering
Unaudited
Isolux Maroc, S.A.
Casablanca
100.00%
Isolux Ingeniería, S.A.
FC
Engineering
PwC
Agua Limpa Paulista, S.A
Sao Paulo
40.00%
Isolux Ingeniería, S.A.
FC
Engineering
PwC
Isolux Corsán Polonia Sp Zoo
Varsovia
100.00%
Isolux Ingeniería, S.A.
FC
Engineering
Unaudited
Isolux Corsan Puerto Rico, LLC
Puerto Rico
100.00%
Isolux Ingeniería, S.A.
FC
Engineering
Unaudited
Engala Africa (PTY) LTD (1)
Sudáfrica
50.00%
Isolux Ingeniería, S.A.
FC
Engineering
Unaudited
Energia Huasteca, S.A. de C.V.
México DF
98.00%
Isolux Ingeniería, S.A.
FC
Engineering
Unaudited
Construcciones e Instalaciones del Noreste S.A.de C.V
México DF
100.00%
Isolux Ingeniería, S.A.
FC
Construction
PwC Unaudited
Isolmex, SA de CV
México DF
100.00%
Isolux Ingeniería, S.A.
FC
Engineering
Tecna Estudios y Proyectos de Ingeniería, S.A.
Buenos Aires
74.99%
Isolux Ingeniería, S.A.
FC
Engineering
PwC
Tecna Proyectos y Operaciones, S.A.
Madrid
75.00%
Tecna Estudios y Proyectos S.A.
FC
Engineering
PwC
Latintecna, S.A.
Lima
74.97%
Tecna Proy. y Operaciones, S.A.
FC
Engineering
Other
Tecna Bolivia, S.A.
Sta.Cruz de la Sierra
67.49%
Tecna Proy. y Operaciones, S.A.
FC
Engineering
PwC
Tecninct Proyectos e Ingeniería S.A. de C.V.
México DF
74.99%
Tecna Proy. y Operaciones, S.A.
FC
Engineering
PwC
Tecna Brasil Ltda.
Rio de Janeiro
71.25%
Tecna Proy. y Operaciones, S.A.
FC
Engineering
E&Y
Medianito del Ecuador, S.A.
Quito
74.99%
Tecna Proy. y Operaciones, S.A.
FC
Engineering
Other
Ven Tecna, S.A.
Caracas
74.96%
Tecna Proy. y Operaciones, S.A.
FC
Engineering
Unaudited
Tecna del Ecuador, S.A.
Quito
74.99%
Tecna Proy. y Operaciones, S.A.
FC
Engineering
Other
Tecna Arabia
Al Khobar
74.99%
Tecna Proy. y Operaciones, S.A.
FC
Engineering
Other
TPYC Angola, S.A.
Luanda
74.99%
Tecna Proy. y Operaciones, S.A.
FC
Engineering
Deloitte
Tecna Ingeniería y Construcciones, S.A.S.
Bogotá
74.99%
Tecna Proy. y Operaciones , S.A.
FC
Engineering
Unaudited
Isolux Wat Ingeniería, S.L.
Madrid
100.00%
Isolux Ingeniería, S.A.
FC
Engineering
Unaudited
Powertec Española, S.A.
Madrid
100.00%
Isolux Wat Ingeniería, S.L.
FC
Engineering
Unaudited
Powertec Proyectos e Obras Ltda.
Rio de Janeiro
100.00%
Powertec Española, S.A.
FC
Engineering
Unaudited
Isolux Corsán Servicios S.A.
Madrid
100.00%
Isolux Wat Ingeniería, S.L.
FC
Services
PwC
Ambulux, S.L.
Madrid
100.00%
Isolux Corsán Servicios, S.A.
FC
Services
Unaudited
Global Vambru, S.L.
Madrid
100.00%
Isolux Corsán Servicios S.A.
FC
Services
Unaudited
Aguas de Gata, S.L.
Madrid
100.00%
Global Vambru, S.L.U.
FC
Services
Unaudited
Grupo Isolux Corsán Concesiones, S.A.
Madrid
97.76%
Grupo Isolux Corsán, S.A.
FC
Concessions
PwC
Desarrollo de Concesiones y Servicios Sercon, S.A.
Madrid
100.00%
Grupo Isolux Corsán, S.A.
FC
Services
Unaudited
Instalaciones y Montajes La Grela, S.A.
A Coruña
100.00%
Grupo Isolux Corsán, S.A.
FC
Engineering
Unaudited
Corsan-Corviam Construcción, S.A.
Madrid
100.00%
Grupo Isolux Corsán, S.A.
FC
Construction
PwC
Construções Pina do Vale, S.A.
Lisboa
100.00%
Corsán Corviam Construcción S.A.
FC
Construction
Other
Extremeña de Infraestructura, S.A.
Madrid
100.00%
Corsán Corviam Construcción S.A.
FC
Construction
Unaudited
Inversiones Blumen, S.L.U.
Madrid
100.00%
Corsán Corviam Construcción S.A.
FC
Construction
Unaudited
Perú
100.00%
Corsán Corviam Construcción S.A.
FC
Construction
Unaudited
Tenedora de Acciones de Generadora Electrica Molloco, SAC Generadora Electrica Molloco, SAC
Perú
75.00%
Inversiones Blumen, S.L.U.
FC
Construction
Unaudited
Corsanmex, S.A. de C.V
México DF
100.00%
Corsán-Corviam Construcción, S.A.
FC
Construction
Unaudited
Isolux Corsán Cyprus Limited
Nicosia
100.00%
Corsán Corviam Construcción S.A.
FC
Construction
Unaudited
Isolux Corsán Panamá, S.A.
Ciudad de Panamá
100.00%
Corsán Corviam Construcción S.A.
FC
Construction
Unaudited
Isolux de México, S.A. de C.V.
México DF
100.00%
Corsán Corviam Construcción S.A.
FC
Construction
PwC
Isolbaja, S.A. de C.V. (*)
México DF
98.00%
Isolux de México, S.A. de C.V.
FC
Construction
Unaudited
Constructora Presa El Purgatorio SPU, S.A. de C.V.
México DF
98.00%
Isolux de México, S.A. de C.V.
FC
Construction
Unaudited
Isolux Corsán Argentina S.A.R.L.
Buenos Aires
100.00%
Corsán Corviam Construcción S.A.
FC
Construction
PwC
Isolux Corsán Argelie EURL
Argelia
100.00%
Corsán Corviam Construcción S.A.
FC
Construction
PwC
Isolux Corsán do Brasil S.A.
Rio de Janeiro
100.00%
Corsán Corviam Construcción S.A.
FC
Construction
Unaudited
Isolux Projectos, Investimentos e Participaçes LTDA
Sao Paulo
100.00%
Corsán Corviam Construcción S.A.
FC
Construction
Unaudited
FC
Construction
Unaudited
Isolux Proyectos e Instalaciones LTDA.
Isolux Projectos, Investimentos e
Rio de Janeiro
100.00%
Haryana
100.00%
Corsán Corviam Construcción S.A.
FC
Construction
PwC
Corsan Corviam Asia Projects
Uzbekistán
100.00%
Corsán Corviam Construcción S.A.
FC
Construction
Unaudited
Infrainter Infraestructuras Internacionales, SA
Ecuador
100.00%
Corsán Corviam Construcción S.A.
FC
Construction
Unaudited
Isolux Corsán Inmobiliaria, S.A.
Madrid
100.00%
Grupo Isolux Corsán, S.A.
FC
Real-estate
PwC
Valdelrío, S.L.
Madrid
100.00%
Isolux Corsán Inmobiliaria, S.A.
FC
Real-estate
Unaudited
Electrónica Control de Motores, S.A.
Madrid
100.00%
Isolux Corsán Inmobiliaria, S.A.
FC
Real-estate
Unaudited
Julitex, S.L.
Las Palmas
80.00%
Isolux Corsán Inmobiliaria, S.A.
FC
Real-estate
Unaudited
Isolux Corsán India Engineering & Constuction Private LTD.
Participações TDA
El Sitio de la Herrería, S.L.
Madrid
100.00%
Isolux Corsán Inmobiliaria, S.A.
FC
Real-estate
Unaudited
Interisolux Torrejón Vivienda Joven, S.L.
Madrid
90.00%
Isolux Corsán Inmobiliaria, S.A.
FC
Real-estate
Unaudited
Interisolux Alcorcón Vivienda Joven, S.L.
Madrid
80.00%
Isolux Corsán Inmobiliaria, S.A.
FC
Real-estate
Unaudited
Olmosa, S.L.
Madrid
100.00%
Isolux Corsán Inmobiliaria, S.A.
FC
Real-estate
Unaudited
Cost Wright, S.L.
Madrid
100.00%
Isolux Corsán Inmobiliaria, S.A.
FC
Real-estate
Unaudited
Las Cabezadas de Aranjuez, S.L.
Madrid
100.00%
Isolux Corsán Inmobiliaria, S.A.
FC
Real-estate
Unaudited
Unidad Mater. Avanz. Ibérica, S.A.
Orense
100.00%
Grupo Isolux Corsán, S.A.
FC
Engineering
Unaudited
Energía
2014
PwC
Infinita Renovables, S.A.
Vigo
80.70%
Grupo Isolux Corsán, S.A.
FC
Azul de Cortes, B.V.
Amsterdam
100.00%
Grupo Isolux Corsán, S.A.
FC
Real-estate
Unaudited
Azul de Cortes, S. de R.L, de C.V.
México DF
100.00%
Azul de Cortes BV
FC
Real-estate
PwC
Bendía, S.A.
Madrid
100.00%
Grupo Isolux Corsán, S.A.
FC
Engineering
Unaudited
EDIFISA, S.A.
Madrid
96.00%
Grupo Isolux Corsán, S.A.
FC
Real-estate
Unaudited
Renovable
Annual Report Financial Report
Corvisa, productos asfálticos y aplicaciones, S.L.
Madrid
100.00%
Grupo Isolux Corsán, S.A.
FC
Construction
PwC
Powertec Catalunya, S.A.U.
Madrid
100.00%
Grupo Isolux Corsán, S.A.
FC
Engineering
Unaudited
Powertec Sistemas Energéticos, S.A.U.
Madrid
100.00%
Grupo Isolux Corsán, S.A.
FC
Engineering
Unaudited
Acta – Actividades Eléctricas Asociadas, S.A.
Lisboa
100.00%
Grupo Isolux Corsán, S.A.
FC
Engineering
Other
Isolux Corsan Gulf LLC
Oman
70.00%
Grupo Isolux Corsán, S.A.
FC
Engineering
Unaudited
Isolux Corsán Energías Renovables, S.A.
Buenos Aires
100.00%
Grupo Isolux Corsán, S.A.
FC
Concessions
KPMG
Isolux Corsán Arabia Saudí, LLC
Riyadh
50.00%
Grupo Isolux Corsán, S.A.
FC
Construction
Unaudited
125
Parque Eólico Loma Blanca II, S.A.
Consolidated annual accounts
Buenos Aires
100.00%
Grupo Isolux Corsán, S.A.
FC
Engineering
PwC
Parque Eólico Loma Blanca I, S.A.
Argentina
100.00%
Grupo Isolux Corsán, S.A.
FC
Engineering
PwC
Parque Eólico Loma Blanca III, S.A.
Argentina
100.00%
Grupo Isolux Corsán, S.A.
FC
Engineering
PwC
Grupo Isolux Corsan Finance, B.V.
Amsterdam
100.00%
Grupo Isolux Corsán, S.A.
FC
Other
PwC
Corsan Corviam Colombia, SAS (*)
Colombia
100.00%
Corsan-Corviam Construcción, S.A.
FC
Construction
Unaudited
Peru
100.00%
Isolux Ingeniería S.A.
FC
Engineering
Unaudited
Lineas De Transmision Peruanas, SAC (*)
Peru
99.90%
FC
Engineering
Unaudited
Isolux Ingenieria, GK (*)
Japon
100.00%
Isolux Ingeniería S.A.
FC
Engineering
Unaudited
Isolux Ingenieria, Ltd (*)
Ruanda
100.00%
Isolux Ingeniería S.A.
FC
Engineering
Unaudited
Ferrocarriles Interurbanos, SA de CV (*)
México
20.88%
Isolux Ingeniería S.A.
FC
Construction
Unaudited
Tenedora De Acciones De Lineas De Transmision Peruanas, SAC (*)
Tenedora De Acciones De Lineas De Transmision Peruanas, SAC
(*) Companies acquired or incorporated during the year and/or additional investment in companies already included in the consolidation scope in the previous year. The incorporation of these companies in the scope did not generate additional sales this year. (1) Company name changed during the year (before Siascan (PTY) LTD) IFC: Full consolidation method.
Appendix II Associates included in the consolidation scope Company name
% of interest
Shareholder
Consolidation Method
Activity
Auditor
Gestión de Partícipes de Bioreciclaje, S.L.
Cádiz
33.33%
Global Vambru, S.L
EC
Concessions
Other
Autopista Madrid Toledo Concesionaria, S.A.
Madrid
25.50%
Grupo Isolux Corsán, S.A.
EC
Concessions
Other
Proyectos Inmobiliarios Residenciales, S.L.
Madrid
25.60%
Isolux Corsán Inmobiliaria, S.A.
EC
Real-estate
Unaudited
Albali Señalización, S.A.
Madrid
7.50%
Isolux Ingeniería, S.A.
EC
Engineering
Other
EC: Equity consolidation method.
126
Address
Appendix III Joint ventures included in the consolidation scope Company name
Address
% of interest
Shareholder
Consolidation Method
Activity
Auditor
Isolux Corsán Aparcamientos, S.A.
Madrid
100.00%
Grupo Isolux Corsán Concesiones, S.A.
EC
Concessions
PwC
Aparcamientos IC Talavera II, S.L.
Madrid
100.00%
Isolux Corsán Aparcamientos S.A.
EC
Concessions
Unaudited
Aparcamientos IC Segovia II, S.L.
Madrid
100.00%
Isolux Corsán Aparcamientos S.A.
EC
Concessions
Unaudited
Aparcamientos IC Ruiz de Alda S.A.
Madrid
100.00%
Isolux Corsán Aparcamientos S.A.
EC
Concessions
PwC Unaudited
Explotaciones Las Madrigueras, S.L.
Tenerife
100.00%
Isolux Corsán Aparcamientos S.A.
EC
Concessions
Aparcamientos IC Zaragoza Torrero, S.L.
Madrid
100.00%
Isolux Corsán Aparcamientos S.A.
EC
Concessions
Unaudited
Isolux Corsán Aparcamientos Madrid, S.A.
Madrid
100.00%
Isolux Corsán Aparcamientos S.A.
EC
Concessions
Unaudited
I.C. Plaza de Benalmádena Canarias
Las Palmas
100.00%
Isolux Corsán Aparcamientos S.A.
EC
Concessions
Unaudited
Aparcamiento Nuevo Hospital de Burgos, S.L.
Madrid
70.00%
Isolux Corsán Aparcamientos, S.A.
EC
Concessions
Unaudited PwC
Hixam Gestión de Aparcamientos, S.L.U.
Madrid
100.00%
Isolux Corsán Aparcamientos S.A.
EC
Concessions
Aparcamientos IC Gomez Ulla, S.L. (*)
Madrid
50.00%
Isolux Corsán Aparcamientos, S.A.
EC
Concessions
Unaudited
Ceutí de Aparcamientos y Serv., S.A.
Ceuta
100.00%
Hixam Gestión de Aparcamientos, S.L.U.
EC
Concessions
Unaudited
Aparcamientos IC Zaragoza, S.L.
Madrid
100.00%
Hixam Gestión de Aparcamientos, S.L.U.
EC
Concessions
Unaudited
Aparcamientos IC Talavera, S.L.
Madrid
100.00%
Hixam Gestión de Aparcamientos, S.L.U.
EC
Concessions
Unaudited
Aparcamientos Islas Canarias, S.L.
Las Palmas
100.00%
Hixam Gestión de Aparcamientos, S.L.U.
EC
Concessions
Unaudited
Gestión de Concesiones, S.A.
La Línea
100.00%
Hixam Gestión de Aparcamientos, S.L.U.
EC
Concessions
Unaudited
Aparcamientos IC Toledanos, S.L.
Madrid
100.00%
Hixam Gestión de Aparcamientos, S.L.U.
EC
Concessions
Unaudited
Aparcamientos Segovia, S.L.
Segovia
100.00%
Hixam Gestión de Aparcamientos, S.L.U.
EC
Concessions
Unaudited
Hixam Gestión de Aparcamientos II, S.L.
Madrid
100.00%
Isolux Corsán Aparcamientos S.A.
EC
Concessions
PwC
Aparcamientos IC Toledanos II, S.L.
Madrid
100.00%
Hixam Gestión de Aparcamientos II, S.L.U.
EC
Concessions
Unaudited
Aparcamientos IC Ponzano, S.L.
Madrid
100.00%
Hixam Gestión de Aparcamientos II, S.L.U.
EC
Concessions
Unaudited
Aparcamientos IC Hospital de Murcia, S.L.
Madrid
100.00%
Hixam Gestión de Aparcamientos II, S.L.U.
EC
Concessions
Unaudited
Aparcamientos IC Chiclana, S.L.
Madrid
100.00%
Hixam Gestión de Aparcamientos II, S.L.U.
EC
Concessions
Unaudited
Aparcamientos IC Córdoba, S.L.
Madrid
100.00%
Hixam Gestión de Aparcamientos II, S.L.U.
EC
Concessions
Unaudited
Aparcamientos IC Valladolid, S.L. (3)
Madrid
100.00%
Isolux Corsán Aparcamientos S.A.
EC
Concessions
Unaudited
Parking Pio XII, S.L.
Palencia
50.00%
Isolux Corsán Aparcamientos S.A.
EC
Concessions
Unaudited
Aparcamientos IC Sarrión
Madrid
51.00%
Isolux Corsán Aparcamientos S.A.
EC
Concessions
Other
Emiso Cádiz S.A.
Cádiz
50.00%
Isolux Corsán Aparcamientos S.A.
EC
Concessions
Unaudited
Aparcamientos Los Bandos Salamanca, S.L
Madrid
70.00%
Isolux Corsán Aparcamientos S.A.
EC
Concessions
Unaudited
IC Aparcamientos activos, S.L. (*)
Madrid
100.00%
ICAPARK II, S.A.
EC
Concessions
Unaudited
Inversiones Pallas, S.L. (*)
Madrid
100.00%
Isolux Corsan Aparcamientos Activos, S.L.U.
EC
Concessions
Unaudited
Compañía Concesionaria Baracaldo Parking Juzgados, S.A.(*)
Madrid
100.00%
Isolux Corsan Aparcamientos Activos, S.L.U.
EC
Concessions
Unaudited
Icapark I, S.A. (*)
Madrid
100.00%
Isolux Corsan Aparcamientos, S.A.
EC
Concessions
Unaudited
Icapark II, S.A. (*)
Madrid
100.00%
ICAPARK I, S.A.
EC
Concessions
Unaudited
Inversiones Estromboli, S.L.U. (*)
Madrid
100.00%
Isolux Corsan Aparcamientos Activos, S.L.U.
EC
Concessions
Unaudited
Inversiones Filicudi, S.L.U (*)
Madrid
100.00%
Isolux Corsan Aparcamientos Activos, S.L.U.
EC
Concessions
Unaudited
Inversiones Koronis, S.L.U (*)
Madrid
100.00%
Isolux Corsan Aparcamientos Activos, S.L.U.
EC
Concessions
Unaudited
Inversiones Hildas, S.L.(*)
Madrid
100.00%
Isolux Corsan Aparcamientos Activos, S.L.U.
EC
Concessions
Unaudited
Concesionaria Autopista Perote Xalapa S.A. de C.V.
México DF
40.39%
Isolux Corsán Concesiones, S.A.U.
EC
Concessions
PwC
Iccenlux Corp.
Delaware
80.77%
Isolux Corsán Concesiones, S.A.U.
EC
Concessions
E&Y
Wett Holdings LLC
Delaware
40.39%
Iccenlux Corp.
EC
Concessions
E&Y
Wett - Wind Energy Transmission Texas, LLC.
Austin
40.39%
Wett Holdings
EC
Concessions
E&Y
Annual Report Financial Report
2014
127
ICC Sandpiper, B.V. (*)
Consolidated annual accounts
128
Amsterdam
65.21%
Isolux Corsan Concessions Infraestructures Holland BV
EC
Concessions
Unaudited
Isolux Corsan Concessions Cyprus Limited (*)
Nicosia
65.21%
ICC Sanpiper, B.V.
EC
Concessions
Unaudited
Indus Concessions India Private Limited (*)
Haryana
64.55%
Isolux Corsán Concessions Cyprus Limited
EC
Concessions
Unaudited
Soma Isolux Surat Hazira Tollway Private Limited (*)
Haryana
40.39%
Indus Concessions India Private Limited
EC
Concessions
PwC
Soma Isolux Varanasi Aurangabad Tollway Private Limited (*)
Haryana
40.39%
Indus Concessions India Private Limited
EC
Concessions
PwC
Soma Isolux Kishangarh-Beawar Tollway Private Limited (*)
Haryana
40.39%
Indus Concessions India Private Limited
EC
Concessions
PwC
ICCON Transmission Inc.
Vancouver
80.77%
Isolux Corsán Concesiones, S.A.U.
EC
Concessions
Unaudited
Interligação Eletrica Norte e Nordeste, S.A.
Sao Paulo
40.39%
Isolux Energia e Participações Ltda.
EC
Concessions
E&Y
Jauru Transmisora de Energía, S.A.
Rio Janeiro
26.92%
Isolux Energia e Participações Ltda.
EC
Concessions
Deloitte
Plena Operação e Manutenção de Transmissora de Energía Ltda
Rio Janeiro
80.77%
Isolux Energia e Participações Ltda.
EC
Concessions
Unaudited
Isolux Energy Investments, S.L.U.
España
80.77%
Isolux Corsan Concesiones, SA
EC
Concessions
Unaudited
Isolux Infrastructure Netherlands, B.V.
Amsterdam
80.77%
Grupo Isolux Corsán Concesiones, S.L.
EC
Concessions
PwC
Isolux Corsán Concesiones de Infraestructuras, S.L.U.
Madrid
80.77%
Isolux Infrastructure Netherlands, B.V.
EC
Concessions
PwC
Sociedad Concesionaria Autovía A-4 Madrid S.A.
Madrid
41.39%
Isolux Corsán Concesiones de Infraestructuras, S.L.U.
EC
Concessions
PwC
Isolux Corsán Brasileña de Infraestructuras, S.L.U.
Madrid
80.77%
Isolux Corsán Concesiones de Infraestructuras, S.L.U.
EC
Concessions
Unaudited
Isolux Corsán Participaçöes de Infraestrutura Ltda
Sao Paulo
80.77%
Isolux Corsán Brasileña de Infraestructuras, S.L.
EC
Concessions
Unaudited
Isolux Corsán Participaçöes na Viabahía Ltda
Sao Paulo
80.77%
Isolux Corsán Participaçöes de Infraestrutura Ltda
EC
Concessions
Unaudited
Viabahia Concessionaria de Rodovias, S.A. (*)
Sao Paulo
69.33%
Isolux Corsán Participaçöes na Viabahía Ltda
EC
Concessions
PwC
Isolux Corsán Mexicana de Infraestructuras, S.L.U.
Madrid
80.77%
Isolux Corsán Concesiones de Infraestructuras, S.L.U.
EC
Concessions
Unaudited
Vias Administración y Logística, S.A. de C.V.
México DF
80.77%
Isolux Corsán Mexicana de Infraestructuras, S.L.U.
EC
Concessions
PwC
Conc. Aut. Monterrey-Saltillo, S.A. de C.V.
México DF
80.77%
Isolux Corsán Mexicana de Infraestructuras, S.L.U.
EC
Concessions
PwC
Isolux Corsan NH1 Cyprus Limited
Nicosia
80.77%
Isolux Corsán Concesiones de Infraestructuras, S.L.U.
EC
Concessions
Other
Soma-Isolux NH One Tollway Private Limited (*)
Haryana
41.19%
Isolux Corsan NH1 Cyprus Limited
EC
Concessions
PwC
Isolux Corsán Concesiones, S.A.U.
Madrid
80.77%
Isolux Infrastructure Netherlands; B.V.
EC
Concessions
PwC
Isolux Energia e Participações S.A.
Río de Janeiro
80.77%
Isolux Corsán Concesiones, S.A.U.
EC
Concessions
Deloitte
Cachoeira Paulista T. Energia S.A.
Río de Janeiro
80.77%
Isolux Energia e Participações S.A.
EC
Concessions
Deloitte
Linhas de Xingu Transmissora de Energía Ltda.
Río de Janeiro
80.77%
Isolux Energia e Participações S.A.
EC
Concessions
PwC
Linhas de Taubaté Transmissora de Energía Ltda.
Río de Janeiro
80.77%
Isolux Energia e Participações S.A.
EC
Concessions
PwC
Linhas de Macapa Transmissora de Energía Ltda.
Río de Janeiro
80.77%
Isolux Energia e Participações S.A.
EC
Concessions
PwC
Linhas de Itacaiunas Trasmissora de Energia LTDA (*)
Brasil
80.77%
Isolux Energia e Participações S.A.
EC
Concessions
Unaudited
Operadora Autopista Perote-Xalapa, S.A. de C.V. (*)
México DF
40.39%
Isolux Corsán Concesiones, S.A.U.
EC
Concessions
Unaudited
Isolux Corsán Concesiones de México, S.A. de C.V.
México DF
80.77%
Isolux Corsán Concesiones, S.A.U.
EC
Concessions
Unaudited
Isolux Corsán Energy Cyprus Limited
Nicosia
80.77%
Isolux Corsán Concesiones, S.A.U.
EC
Concessions
Unaudited
Isolux Corsán Power Concessions India Private Limited
Haryana
80.77%
Isolux Corsan Energy Cyprus Limited
EC
Concessions
Unaudited
Mainpuri Power Transmission Private Limited (*)
Haryana
80.77%
Isolux Corsan Power Concessions India Private Limited
EC
Concessions
Unaudited
South East U.P. Power Transmission Company Limited (*)
Uttar Pradesh
80.77%
Mainpuri Power Transmission Private Limited
EC
Concessions
Unaudited
Isolux Corsan Concessions Infraestructures Holland , B.V.
La Haya
80.77%
Isolux Corsán Concesiones, S.A.U.
EC
Concessions
Unaudited
ICCI USA Holding, LLC (*)
EE.UU.
80.88%
Isolux Corsán Concesiones de Infraestructuras, S.L.U.
EC
Concessions
Unaudited
ICCI Indiana Holding, LLC (*)
EE.UU.
80.77%
ICCI Indiana Holding , LLC
EC
Concessions
Somerset
I-69 Investment Partners, LLC (*)
EE.UU.
41.60%
ICCI Indiana Holding , LLC
EC
Concessions
BDO
I-69 Development Partners, LLC (*)
EE.UU.
41.60%
I-69 Investment Partners, LLC
EC
Concessions
BDO
Grupo T-Solar Global, S.A.
Madrid
88.34%
Isolux Infrastructure Netherlands, B.V.
EC
Concessions
PwC PwC
Gts Majes, S.A.C.
Lima
35.58%
Grupo T-Solar Global, S.A.
EC
Concessions
ARRL (Mauritius) Limited
Bombay
34.88%
Grupo T-Solar Global, S.A.
EC
Concessions
Mazars
Astonfield Solar Rajasthan (Private) Limited
Bombay
69.76%
ARRL (Mauritius) Limited
EC
Concessions
Other
T Solar Cyprus Limited
Madrid
69.76%
Global Elefantina S.L.U.
EC
Concessions
Unaudited
T-Solar Global Operating Assets, S.L.
Madrid
18.15%
Grupo T-Solar Global, S.A.
EC
Concessions
PwC
Tuin Zonne Origen, S.L.U.
Madrid
35.58%
T-Solar Global Operating Assets, S.L.
EC
Concessions
PwC
Global Surya, S.L.U.
Madrid
35.58%
T-Solar Global Operating Assets, S.L.
EC
Concessions
PwC
TZ Almodóvar del Río, S.L.U.
Madrid
35.58%
T-Solar Global Operating Assets, S.L.
EC
Concessions
PwC
Ortosolar Promotor de Energías Renovables, S.L.U.
Madrid
35.58%
T-Solar Global Operating Assets, S.L.
EC
Concessions
PwC
Global Elefantina, S.L.U.
Madrid
35.58%
Grupo T-Solar Global, S.A.
EC
Concessions
Unaudited
Tuin Zonne Solar, S.L.U.
Madrid
35.58%
T-Solar Global Operating Assets, S.L.
EC
Concessions
PwC
T-Solar Autónoma S.L.U.
Madrid
35.58%
T-Solar Global Operating Assets, S.L.
EC
Concessions
PwC
TZ Morón 2, S.L.U.
Madrid
35.58%
Grupo T-Solar Global, S.A.
EC
Concessions
Unaudited
Ortosol Energía 1, S.L.U.
Madrid
35.58%
T-Solar Global Operating Assets, S.L.
EC
Concessions
PwC
Ortosol Energía 2, S.L.U.
Madrid
35.58%
T-Solar Global Operating Assets, S.L.
EC
Concessions
PwC
Ortosol Energía 3, S.L.U.
Madrid
35.58%
T-Solar Global Operating Assets, S.L.
EC
Concessions
PwC
Ortosol Energía 4, S.L.U.
Madrid
35.58%
T-Solar Global Operating Assets, S.L.
EC
Concessions
PwC
Ortosol Energía 5, S.L.U.
Madrid
35.58%
T-Solar Global Operating Assets, S.L.
EC
Concessions
PwC
Ortosol Energía 6, S.L.U.
Madrid
35.58%
T-Solar Global Operating Assets, S.L.
EC
Concessions
PwC
Pentasolar, S.L.U.
Madrid
35.58%
Tuin Zonne Origen, S.L.U.
EC
Concessions
PwC
Pentasolar Talayuela 1, S.L.U.
Madrid
35.58%
Pentasolar, S.L.U.
EC
Concessions
PwC
Pentasolar Talayuela 2, S.L.U.
Madrid
35.58%
Pentasolar, S.L.U.
EC
Concessions
PwC
Pentasolar Madrigal 1, S.L.U.
Madrid
35.58%
Pentasolar, S.L.U.
EC
Concessions
PwC
Pentasolar Madrigal 2, S.L.U.
Madrid
35.58%
Pentasolar, S.L.U.
EC
Concessions
PwC
TZ Morita, S.L.U.
Madrid
35.58%
Tuin Zonne Origen, S.L.U.
EC
Concessions
PwC
TZ Morita 1, S.L.U.
Madrid
35.58%
TZ Morita, S.L.U.
EC
Concessions
PwC
TZ Morita 2, S.L.U.
Madrid
35.58%
TZ Morita, S.L.U.
EC
Concessions
PwC
TZ Morita 3, S.L.U.
Madrid
35.58%
TZ Morita, S.L.U.
EC
Concessions
PwC
TZ Morita 4, S.L.U.
Madrid
35.58%
TZ Morita, S.L.U.
EC
Concessions
PwC
TZ Morita 5, S.L.U.
Madrid
35.58%
TZ Morita, S.L.U.
EC
Concessions
PwC
TZ Morita 6, S.L.U.
Madrid
35.58%
TZ Morita, S.L.U.
EC
Concessions
PwC
TZ Morita 7, S.L.U.
Madrid
35.58%
TZ Morita, S.L.U.
EC
Concessions
PwC
TZ Castillo de Alcolea, S.L.U.
Madrid
35.58%
Tuin Zonne Origen, S.L.U.
EC
Concessions
PwC
Annual Report Financial Report
2014
129
Consolidated annual accounts
130
TZ Castillo de Alcolea 1, S.L.U.
Madrid
35.58%
TZ Castillo de Alcolea, S.L.U.
EC
Concessions
PwC
TZ Castillo de Alcolea 2, S.L.U.
Madrid
35.58%
TZ Castillo de Alcolea, S.L.U.
EC
Concessions
PwC
TZ Castillo de Alcolea 3, S.L.U.
Madrid
35.58%
TZ Castillo de Alcolea, S.L.U.
EC
Concessions
PwC
TZ Castillo de Alcolea 4, S.L.U.
Madrid
35.58%
TZ Castillo de Alcolea, S.L.U.
EC
Concessions
PwC
TZ Castillo de Alcolea 5, S.L.U.
Madrid
35.58%
TZ Castillo de Alcolea, S.L.U.
EC
Concessions
PwC
TZ Castillo de Alcolea 6, S.L.U.
Madrid
35.58%
TZ Castillo de Alcolea, S.L.U.
EC
Concessions
PwC
TZ Castillo de Alcolea 7, S.L.U.
Madrid
35.58%
TZ Castillo de Alcolea, S.L.U.
EC
Concessions
PwC
TZ Archidona I , S.L.U.
Madrid
35.58%
Tuin Zonne Origen, S.L.U.
EC
Concessions
PwC
Tuin Zonne Archidona 1, S.L.U.
Madrid
35.58%
TZ Archidona I, S.L.U.
EC
Concessions
PwC
Tuin Zonne Archidona 2, S.L.U.
Madrid
35.58%
TZ Archidona I, S.L.U.
EC
Concessions
PwC
Tuin Zonne Archidona 3, S.L.U.
Madrid
35.58%
TZ Archidona I, S.L.U.
EC
Concessions
PwC
Tuin Zonne Archidona 4, S.L.U.
Madrid
35.58%
TZ Archidona I, S.L.U.
EC
Concessions
PwC
Tuin Zonne Archidona 5, S.L.U.
Madrid
35.58%
TZ Archidona I, S.L.U.
EC
Concessions
PwC
Tuin Zonne Archidona 6, S.L.U.
Madrid
35.58%
TZ Archidona I, S.L.U.
EC
Concessions
PwC
TZ La Poza, S.L.U.
Madrid
35.58%
Tuin Zonne Origen, S.L.U.
EC
Concessions
PwC
TZ La Poza 1, S.L.U.
Madrid
35.58%
TZ La Poza, S.L.U.
EC
Concessions
PwC
TZ La Poza 2, S.L.U.
Madrid
35.58%
TZ La Poza, S.L.U.
EC
Concessions
PwC
TZ La Poza 3, S.L.U.
Madrid
35.58%
TZ La Poza, S.L.U.
EC
Concessions
PwC
TZ La Poza 4, S.L.U.
Madrid
35.58%
TZ La Poza, S.L.U.
EC
Concessions
PwC
TZ La Poza 5, S.L.U.
Madrid
35.58%
TZ La Poza, S.L.U.
EC
Concessions
PwC
TZ La Poza 6, S.L.U.
Madrid
35.58%
TZ La Poza, S.L.U.
EC
Concessions
PwC
TZ La Poza 7, S.L.U.
Madrid
35.58%
TZ La Poza, S.L.U.
EC
Concessions
PwC
TZ Buenavista, S.L.U.
Madrid
35.58%
Tuin Zonne Origen, S.L.U.
EC
Concessions
PwC
TZ Buenavista 1, S.L.U.
Madrid
35.58%
TZ Buenavista, S.L.U.
EC
Concessions
PwC
TZ Buenavista 2, S.L.U.
Madrid
35.58%
TZ Buenavista, S.L.U.
EC
Concessions
PwC
TZ Buenavista 3, S.L.U.
Madrid
35.58%
TZ Buenavista, S.L.U.
EC
Concessions
PwC
TZ Buenavista 4, S.L.U.
Madrid
35.58%
TZ Buenavista, S.L.U.
EC
Concessions
PwC
TZ Buenavista 5, S.L.U.
Madrid
35.58%
TZ Buenavista, S.L.U.
EC
Concessions
PwC
TZ Buenavista 6, S.L.U.
Madrid
35.58%
TZ Buenavista, S.L.U.
EC
Concessions
PwC
TZ Buenavista 7, S.L.U.
Madrid
35.58%
Grupo T-Solar Global, S.A.
EC
Concessions
Unaudited
TZ Alcolea Lancha, S.L.U.
Madrid
35.58%
Tuin Zonne Origen, S.L.U.
EC
Concessions
PwC
TZ Alcolea Lancha 1, S.L.U.
Madrid
35.58%
TZ Alcolea Lancha, S.L.U.
EC
Concessions
PwC
TZ Alcolea Lancha 2, S.L.U.
Madrid
35.58%
TZ Alcolea Lancha, S.L.U.
EC
Concessions
PwC
TZ Alcolea Lancha 3, S.L.U.
Madrid
35.58%
TZ Alcolea Lancha, S.L.U.
EC
Concessions
PwC
TZ Alcolea Lancha 4, S.L.U.
Madrid
35.58%
TZ Alcolea Lancha, S.L.U.
EC
Concessions
PwC
TZ Alcolea Lancha 5, S.L.U.
Madrid
35.58%
TZ Alcolea Lancha, S.L.U.
EC
Concessions
PwC
TZ Alcolea Lancha 6, S.L.U.
Madrid
35.58%
TZ Alcolea Lancha, S.L.U.
EC
Concessions
PwC
TZ Alcolea Lancha 7, S.L.U.
Madrid
35.58%
TZ Alcolea Lancha, S.L.U.
EC
Concessions
PwC
Tuin Zonne Veguilla, S.L.
Madrid
29.55%
Tuin Zonne Origen, S.L.U.
EC
Concessions
PwC
TZ Veguilla 1, S.L.U.
Madrid
35.58%
Tuin Zonne Veguilla, S.L.
EC
Concessions
PwC
TZ Veguilla 2, S.L.U.
Madrid
35.58%
Tuin Zonne Veguilla, S.L.
EC
Concessions
PwC
TZ Veguilla 3, S.L.U.
Madrid
35.58%
Tuin Zonne Veguilla, S.L.
EC
Concessions
PwC
TZ Veguilla 4, S.L.U.
Madrid
35.58%
Tuin Zonne Veguilla, S.L.
EC
Concessions
PwC
TZ Veguilla 5, S.L.U.
Madrid
35.58%
Tuin Zonne Veguilla, S.L.
EC
Concessions
PwC
TZ Veguilla 6, S.L.U.
Madrid
35.58%
Tuin Zonne Veguilla, S.L.
EC
Concessions
PwC
TZ Veguilla 7, S.L.U.
Madrid
35.58%
Tuin Zonne Veguilla, S.L.
EC
Concessions
PwC
Tuin Zonne Los Mochuelos, S.L.U.
Madrid
35.58%
Tuin Zonne Origen, S.L.U.
EC
Concessions
PwC
TZ Los Mochuelos 1, S.L.U.
Madrid
35.58%
Tuin Zonne Los Mochuelos, S.L.U.
EC
Concessions
PwC
TZ Los Mochuelos 2, S.L.U.
Madrid
35.58%
Tuin Zonne Los Mochuelos, S.L.U.
EC
Concessions
PwC
TZ Los Mochuelos 3, S.L.U.
Madrid
35.58%
Tuin Zonne Los Mochuelos, S.L.U.
EC
Concessions
PwC
TZ Los Mochuelos 4, S.L.U.
Madrid
35.58%
Tuin Zonne Los Mochuelos, S.L.U.
EC
Concessions
PwC
TZ Los Mochuelos 5, S.L.U.
Madrid
35.58%
Tuin Zonne Los Mochuelos, S.L.U.
EC
Concessions
PwC
TZ Los Mochuelos 6, S.L.U.
Madrid
35.58%
Tuin Zonne Los Mochuelos, S.L.U.
EC
Concessions
PwC
Pensolar Pozohondo, S.L.U.
Madrid
35.58%
Tuin Zonne Origen, S.L.U.
EC
Concessions
PwC
Pensolar Pozohondo 1, S.L.U.
Madrid
35.58%
Pensolar Pozohondo, S.L.U.
EC
Concessions
PwC
Pensolar Pozohondo 2, S.L.U.
Madrid
35.58%
Pensolar Pozohondo, S.L.U.
EC
Concessions
PwC
Pensolar Pozohondo 3, S.L.U.
Madrid
35.58%
Pensolar Pozohondo, S.L.U.
EC
Concessions
PwC
Pensolar Pozohondo 4, S.L.U.
Madrid
35.58%
Pensolar Pozohondo, S.L.U.
EC
Concessions
PwC
Pensolar Pozohondo 5, S.L.U.
Madrid
35.58%
Pensolar Pozohondo, S.L.U.
EC
Concessions
PwC
Pensolar Pozohondo 6, S.L.U.
Madrid
35.58%
Pensolar Pozohondo, S.L.U.
EC
Concessions
PwC
Pensolar Pozocañada, S.L.U.
Madrid
35.58%
Tuin Zonne Origen, S.L.U.
EC
Concessions
PwC
Pensolar Pozocañada 1, S.L.U.
Madrid
35.58%
Pensolar Pozocañada, S.L.U.
EC
Concessions
PwC
Pensolar Pozocañada 2, S.L.U.
Madrid
35.58%
Pensolar Pozocañada, S.L.U.
EC
Concessions
PwC
Pensolar Pozocañada 3, S.L.U.
Madrid
35.58%
Pensolar Pozocañada, S.L.U.
EC
Concessions
PwC
Pensolar Pozocañada 4, S.L.U.
Madrid
35.58%
Pensolar Pozocañada, S.L.U.
EC
Concessions
PwC
Pensolar Pozocañada 5, S.L.U.
Madrid
35.58%
Pensolar Pozocañada, S.L.U.
EC
Concessions
PwC
Pensolar Pozocañada 6, S.L.U.
Madrid
35.58%
Pensolar Pozocañada, S.L.U.
EC
Concessions
PwC
Granadasolar E. Renovables, S.L.U.
Madrid
35.58%
Tuin Zonne Origen, S.L.U.
EC
Concessions
PwC
Granadasolar Sigüenza 1, S.L.U.
Madrid
35.58%
Granadasolar E. Renovables, S.L.U.
EC
Concessions
PwC
Granadasolar Sigüenza 2, S.L.U.
Madrid
35.58%
Granadasolar E. Renovables, S.L.U.
EC
Concessions
PwC
Aspa Energías Renovables, S.L.U.
Madrid
35.58%
Tuin Zonne Origen, S.L.U.
EC
Concessions
PwC
TZ La Seca 1, S.L.U.
Madrid
35.58%
Aspa Energías Renovables, S.L.U.
EC
Concessions
PwC
TZ La Seca 2, S.L.U.
Madrid
35.58%
Aspa Energías Renovables, S.L.U.
EC
Concessions
PwC
Tuin Zonne Medina, S.L.U.
Madrid
35.58%
Tuin Zonne Origen, S.L.U.
EC
Concessions
PwC
Tuin Zonne Medina 1, S.L.U.
Madrid
35.58%
Tuin Zonne Medina, S.L.U
EC
Concessions
PwC
Tuin Zonne Medina 2, S.L.U.
Madrid
35.58%
Tuin Zonne Medina, S.L.U
EC
Concessions
PwC
Tuin Zonne Medina 3, S.L.U.
Madrid
35.58%
Tuin Zonne Medina, S.L.U
EC
Concessions
PwC
TZ El Carpio, S.L.U.
Madrid
35.58%
Tuin Zonne Origen, S.L.U.
EC
Concessions
PwC
Elduayen Fotovoltaica, S.L.U.
Madrid
35.58%
Tuin Zonne Origen, S.L.U.
EC
Concessions
PwC
P.S. Huerto Son Falconer, S.L.U.
Madrid
35.58%
Tuin Zonne Origen, S.L.U.
EC
Concessions
PwC
Borealis Solar, S.L.U.
Madrid
35.58%
Tuin Zonne Origen, S.L.U.
EC
Concessions
PwC
European Sun Park Arnedo, S.L.U.
Madrid
35.58%
Tuin Zonne Origen, S.L.U.
EC
Concessions
PwC
Windmill Fotovoltaica, S.L.U.
Madrid
35.58%
Tuin Zonne Origen, S.L.U.
EC
Concessions
PwC
Windmill Energie Alicante 1.2, S.L.U.
Madrid
35.58%
T-Solar Global Operating Assets, S.L.
EC
Concessions
PwC
Windmill Energie Alicante 1.3, S.L.U.
Madrid
35.58%
T-Solar Global Operating Assets, S.L.
EC
Concessions
PwC
Windmill Energie Alicante 1.4, S.L.U.
Madrid
35.58%
T-Solar Global Operating Assets, S.L.
EC
Concessions
PwC
Yeguas Altas, S.L.U.
Madrid
35.58%
T-Solar Global Operating Assets, S.L.
EC
Concessions
PwC
Huerto Albercones, S.L.U.
Madrid
35.58%
T-Solar Global Operating Assets, S.L.
EC
Concessions
PwC
Huerto Las Pesetas, S.L.U.
Madrid
35.58%
T-Solar Global Operating Assets, S.L.
EC
Concessions
PwC
Huerto Cortillas, S.L.U.
Madrid
35.58%
T-Solar Global Operating Assets, S.L.
EC
Concessions
PwC
Huerto Paniza, S.L.U.
Madrid
35.58%
T-Solar Global Operating Assets, S.L.
EC
Concessions
PwC
Huerto Montera, S.L.U.
Madrid
35.58%
T-Solar Global Operating Assets, S.L.
EC
Concessions
PwC
Annual Report Financial Report
2014
131
Consolidated annual accounts
Parque Solar Saelices, S.L
Madrid
1.78%
T-Solar Global Operating Assets, S.L.
EC
Concessions
PwC
Gts Repartición, S.A.C
Lima
Raggio di Puglia 2 S.R.L.
Roma
35.58%
Grupo T-Solar Global, S.A.
EC
Concessions
PwC
69.76%
T-Solar Global Operating Assets, S.L.
EC
Concessions
PwC
Astonfield Solar Gujarat (Private) Limited Grupo T-Solar Global USA, INC
Bombay
69.76%
ARRL (Mauritius) Limited
EC
Concessions
Other
Delaware
69.76%
Grupo T-Solar Global, S.A.
EC
Concessions
Unaudited
Grupo T-Solar Global USA, LLC
Delaware
69.76%
Grupo T-Solar Global USA, INC
EC
Concessions
Unaudited
Solar Power Ventures, LLC (USA)
Delaware
41.86%
Grupo T-Solar Global USA, LLC
EC
Concessions
Unaudited
Sol Orchard Imperial 1, LLC
Dover
69.76%
Grupo T-Solar Global USA, INC
EC
Concessions
Unaudited
GTS Puerto Rico LLC
Delaware
69.76%
Grupo T-Solar Global USA, INC
EC
Concessions
Unaudited
Solaner Puerto Rico One, LLC
Hato Rey
34.88%
GTS Puerto Rico LLC
EC
Concessions
Unaudited
GTS Puerto Rico Two LLC (USA)
Hato Rey
69.76%
Grupo T-Solar Global USA, INC
EC
Concessions
Unaudited
Solaner Puerto Rico Two LLC (Puerto Rico)
Hato Rey
34.88%
GTS Puerto Rico Two LLC (USA)
EC
Concessions
Unaudited
Grupo T-Solar Australia Pty Ltd(*)
Perth
69.76%
Grupo T-Solar Global, S.A.
EC
Concessions
Unaudited
GTS El Centro Equity Holdings(*)
California
69.76%
GTS El Centro Managing Member, LLC
EC
Concessions
Unaudited
GTS El Centro Managing Member, LLC(*)
California
69.76%
Grupo T-Solar Global USA, inc
EC
Concessions
Unaudited
Gts El centro Project Holdings, LLC(*)
California
69.76%
GTS El Centro Equity Holdings
EC
Concessions
Unaudited
GTS Japan Co, Ltd. (*)
Tokio
69.76%
Grupo T-Solar Global, S.A.
EC
Concessions
Unaudited
Piosol (Pty) Ltd. (*)
Sudáfrica
69.76%
Grupo T-Solar Global, S.A.
EC
Concessions
Unaudited
Shizen Kankyo Systems Kabushiki Kaisha (*)
Tokio
69.76%
GTS Japan Co, Ltd.
EC
Concessions
Unaudited
Solar Farm Cunderin Pty Ltd.(*)
Perth
48.83%
Grupo T-Solar Australia Pty Ltd
EC
Concessions
Unaudited
Solar Farm Jurien Bay Pty Ltd. (*)
Perth
48.83%
Grupo T-Solar Australia Pty Ltd
EC
Concessions
Unaudited
Solar Farm Kellerberrin Pty Ltd. (*)
Perth
48.83%
Grupo T-Solar Australia Pty Ltd
EC
Concessions
Unaudited
Solar Farm Moora Pty Ltd. (*)
Perth
48.83%
Grupo T-Solar Australia Pty Ltd
EC
Concessions
Unaudited
Solar Farm Southerb Cross Pty Ltd.(*)
Perth
48.83%
Grupo T-Solar Australia Pty Ltd
EC
Concessions
Unaudited
Pinares del Sur, S.L.
Cádiz
50.00%
Isolux Corsán Inmobiliaria, S.A.
EC
Real-estate
PwC
Alqlunia 5, S.A.
Toledo
50.00%
Isolux Corsán Inmobiliaria, S.A.
EC
Real-estate
Other
Landscape Corsán, S.L.
Madrid
50.00%
Isolux Corsán Inmobiliaria, S.A.
EC
Real-estate
Unaudited
(*) Companies acquired or incorporated during the year and/or additional investment in companies already included in the consolidation scope in the previous year. The incorporation of theses companies in the scope of consolidation did not generate additional sales this year. EC:Equity consolidation method.
132
Appendix IV Joint Operations included in the Scope of Consolidation Company name
Address
% of interest
Shareholder
Consolidation Method
Activity
Auditor
Lineas de Comahue Cuyo, S.A.
Buenos Aires
33.34%
Grupo Isolux Corsán, S.A.
PC
Engineering
PwC
Indra Isolux de México S.A de C.V.
México DF
50.00%
Isolux de México, S.A. de C.V.
PC
Construction
Unaudited
Constructora Autopista Perote Xalapa S.A. de C.V.
México DF
50.00%
Isolux de México, S.A. de C.V.
PC
Construction
PwC
Eclesur, S.A.
Buenos Aires
50.00%
Grupo Isolux Corsán, S.A.
PC
Concessions
Unaudited
Líneas Mesopotámicas S.A.
Buenos Aires
33.33%
Grupo Isolux Corsán, S.A.
PC
Engineering
PwC
Líneas del Norte S.A.
Buenos Aires
33.33%
Grupo Isolux Corsán, S.A.
PC
Engineering
PwC
Ciudad de la Justicia de Córdoba S.A.
Sevilla
50.00%
Corsán Corviam Construcción S.A.
PC
Construction
Unaudited
Empresa Concesionaria Líneas Eléctricas del Sur, S.A.
Buenos Aires
50.00%
Grupo Isolux Corsán, S.A.
PC
Engineering
Unaudited
Partícipes de Biorreciclaje, S.L.
Madrid
33.33%
Global Vambru, S.L
PC
Concessions
Otros
Bioreciclajes de Cádiz S.A.
Cádiz
32.66%
Partícipes de Biorreciclaje, S.L.
PC
Concessions
Otros Unaudited
Isonor Transmission S.A.C.
Lima
50.00%
Grupo Isolux Corsán, S.A.
PC
Concessions
Caravelli Cotaruse Transmisora de Energía S.A.C.
Lima
25.00%
Isonor Transmisión S.A.C.
PC
Concessions
Unaudited
Carreteras Centrales de Argentina, S.A.
Buenos Aires
50.00%
Corsan Corviam Construccion, S.A.
PC
Construction
Unaudited
Societat Superficiaria Preventius Zona Franca, S.A.
Barcelona
50.00%
Corsan Corviam construcción, S.A.
PC
Construction
Unaudited
Isolux TVIG HW, LLC (*)
USA
50.00%
Isolux Corsan LLC
PC
Engineering
Unaudited
Annual Report Financial Report
2014
(*) Companies acquired or incorporated during the year and/or additional investment in companies already included in the consolidation scope in the previous year. The incorporation of theses companies in the scope of consolidation did not generate additional sales this year. PC: Proportional consolidation method.
133
Appendix V
Consolidated annual accounts
Temporary Joint Ventures (UTEs) and Consortia participated by companies included in the Consolidation Scope Joint ventures’ name
134
% of interest
Joint ventures’ name
% of interest
ABASTMENTO MELILLA
50.00%
BEATRIZ DE BOBADILLA
50.00%
DEPURADORA AYNA
100.00%
FACULT.MEDICINA CTCS
50.00%
PLANTA DE MIRAMUNDO
33.34%
MADRES MADRID ING.
20.00%
EDAR VILLAHERMOSA(ag
70.00%
RAMBLA ALBOX
70.00%
51 VIV. ARGANDA REY
50.00%
MTTO.COMUNICACION.L9
20.00%
UTE JUCAR VINALOPO
33.33%
UTE ELECT. PARAPLEJICOS
1.00%
CORREDOR DEL MORRAZO
50.00%
UTE TUNEL BIELSA-INS
18.00%
RONDA LOS OMEYAS UTE
33.34%
PRESA GUADALMELLATO
60.00%
FFCC EL PORTAL UTE
70.00%
UTE TUNEL BIELSA-22%
22.00%
CONVENTO SAN FRANCIS
50.00%
UTE ISDEFE (50%)
50.00%
RESIDENCIA TABARA
50.00%
UTE TUNEL BIELSA-C&S
10.00%
RSU BARBATE
100.00%
UTE GERONA I
50.00%
UTE ZAMORA VERDE
33.00%
LAV PINOS PUENTE-GR
80.00%
ASISTENCIAL BURGOS
50.00%
PCI L2 METRO BCN
50.00%
UTE EDAR LA LINEA
50.00%
L5 METRO BCN-INSTAL.
40.00%
UTE A357 DES CARTAMA
60.00%
C.PENITENCIAR.CEUTA
10.00%
A-312 VTE LINARES
50.00%
PENITENCIARIO CEUTA
20.00%
UTE-AT MADRID TOLEDO
36.00%
UTE AVICO - 25% TTE.
33.34%
A-316 DESDOB MARTOS
50.00%
HOSP.GR.DE LAFERRERE
40.00%
UTE LAS TERRAZAS.SUP
100.00%
BALSA DE VICARIO
70.00%
FFCC OSUNA AGUADULCE
50.00%
UTE ZONA VERDE
60.00%
UTE LAXE CORSAN 80%
100.00%
UTE MONUM.HISTORICO
60.00%
EMERG.QUIEBRAJANO
50.00%
UTE ALICANTE I
40.00%
UTE ALMAGRO CS-CV
100.00%
DCS RIO TURBIO C&S
50.00%
ABAST.OCCID.ASTURIAS
100.00%
UTE AVE PORTO-MIAMAN
75.00%
ABASTECIMIENTO OVIED
100.00%
SANEA.CASTRILLON UTE
55.00%
UTE ACCESO CORUÑA
50.00%
UTE TORIO-BERNESGA
50.00%
M-501 PANTANOS
50.00%
C.HIDROGENO PUERTOLL
100.00%
UTE COIN CASAPALMA
50.00%
TOLOSA-HERNIALDE UTE
90.00%
HOSPITAL DE BURGOS
10.00%
RMS AEROP.SANTIAGO
50.00%
UTE ABASTEC.LERIDA
70.00%
UTE CEUTA APARCAM.
50.00%
UTE AITREN.SUPLIDOS
20.00%
UTE CHUAC
50.00%
UTE HOSPITAL MILITAR
100.00%
MTTO. VIA ADIF 2011
50.00%
LINEA AVE CAMPOMANES
50.00%
CONSERV.CIUDAD REAL
50.00%
UTE CATENARIA MALAGA
50.00%
ACONDIC.LOS RODEOS
70.00%
UTE L5 HORTA
40.00%
CARCEL DE MENDOZA
50.00%
AUTOV.CONCENTAI.MURO
50.00%
COMISARIA TARRAGONA
90.00%
INTERC.ARCO TRIUNFO
100.00%
MERCADO DE TARRAGONA
99.90%
SANEAMIENTO Y ABAST. CHICLANA
50.00%
UTE PALENCIA
50.00%
UTE ACCESOS C.REAL
70.00%
MEJORAS TENERIFE SUR
100.00%
UTE U 11 SAN LAZARO
70.00%
UTE HOSPITAL DEL SUR
40.00%
HOSP.PARAPLEJ.TOLEDO
80.00%
UTE PUERTO MIÑO
85.00%
UTE PRESA SANTOLEA
50.00%
PSFV EN INGLATERRA
100.00%
UTE DEPURAD.F.NUÑEZ
100.00%
EDIF.MUTUA MADRILEÑA
100.00%
UTE AVE TRINIDAD
33.34%
TELECONTROL EDARES
60.00%
UTE PZA SUR DELICIAS
50.00%
UTE COMPOST.ARAZURI
50.00%
UTE MACEIRAS REDONDE
50.00%
UTE VICOTEL
50.00%
UTE EDIFIC.MEDICINA
50.00%
ELORRIO - ATXONDO
65.00%
SANEAM.PUERTO CARMEN
70.00%
UTE HOSPITAL PARANA
50.00%
ABASTECIMIEN.OROPESA
100.00%
AMPLIAC. Y MODERNIZ. EDAR DE LAGARES VIGO
50.00%
CTRA.VALLEHERM-ARURE
70.00%
UE TENIENTE RUIZ
50.00%
AUTOV IV CENTENARIO
70.00%
UTE PLISAN
50.00%
LINEA DE TRANSMISIÓN CAPANDA
33.33%
UTE VARIANTE ALMANSA
50.00%
VIA PRAT LLOBREGAT
25.00%
UTE PARAMO BAJO
55.00%
UTE ARITZETA
50.00%
UTE SALAVE
25.00%
ACOND.A-495 UTE
60.00%
UTE CORNO VIA DERECHA
70.00%
BALAZOTE UTE
100.00%
UTE EDAR MALPARTIDA
99.99%
REDES BCN UTE
50.00%
CONST. PLATAFORMA FERROV. ZIZURKIL-ANDOAIN
18.50%
UTE PRESA HORNACHUEL
50.00%
UTE SECOM PURA CONSTRUCCT.
36.78%
UTE CABREIROS
70.00%
UTE NEA SUR
50.00%
LOMA LA LATA - OFF
75.00%
CONSERV. CTRAS. ZONA OESTE MALABA
70.00%
REGADIO DURATON UTE
100.00%
UTE INSTALACIONES ELECTRICAS MOGAN
50.00%
UTE DEP.SESEÑA BOROX
99.00%
UTE CHOELE CHOEL
50.00%
ATEWICC-4.
33.33%
GASODUCTO HOSP. MATERNO
50.00%
AVE PINAR ANTEQ.UTE
45.00%
UTE CONTROL MOGAL
33.33%
CTRA.LEÓN CEMBRANOS
65.00%
UTE VERTEDERO SEGOVIA
50.00%
DRATYP IX UTE
50.00%
UTE URZAIZ-SOUTOMAIOR
50.00%
T.RENFE 07CENTRO UTE
50.00%
CATENARIA DURANGO
50.00%
UTE PTO.RICO-MOGAN
30.00%
OAMI ALICANTE
33.33%
EST. L3 ROQUETES UTE
100.00%
OBRAS EDAR NERJA,UTE-CONSTRUC.
100.00%
NUEV.APOY T.BARC UTE
100.00%
UTE OLMEDO ZAMORA
40.00%
RIO TURBIO SUC.GRUPO
91.00%
UTE SALAVE MANTENEDORA
25.00%
UTE EDAR TOMELLOSO
90.00%
UTE RED ENTRE RIOS
40.00%
UTE RIO TURBIO OFF
91.00%
CIE.CICLO ENARSA OFF
50.00%
CERCANIAS PINTO UTE
40.00%
UTE EDAR SALAMANCA
65.00%
UTE IDAM MONCOFA
45.00%
UTE ISOCAS
50.00%
UTE SANT V ICENÇS DELS HORTS SANTS
33.34%
UTE EDAR LA MINA
55.00%
UTE CIS TENERIFE
25.00%
UTE AYTO.MORALEJA
60.00%
UTE LAVACOLLA AER.SA
55.00%
UTE CORNO IZQUIERDA MADRID
70.00%
QATAR FASE VIII SUBESTAC GTC144B_2006
100.00%
CONSERVA. CTRAS. EXTREMADURA
50.00%
UTE PLANTA ALGAR
99.00%
UTE MESAVE
40.00%
UTE REMODELAC.L3 TMB
40.00%
ET PUERTO MADRYN
50.00%
AUT A4 TRAMO MADR R4
50.00%
UTE AGUAS DE LA VERA
100.00%
Annual Report Financial Report
2014
135
Consolidated annual accounts
136
AUTOVÍA ARANDA
70.00%
UTE ISOLUX ARIAS
60.00%
UTE SANTA ANA
70.00%
UTE AMPLIACIÓN EDAR LEON
75.00%
UTE GARABOLOS
80.00%
UTE VIVIENDA CA N´ARUS
65.00%
UTE CORIA-MORALEJA
60.00%
UTE ELECTRIFICACIÓN PAJARES
50.00%
UTE AP7 MAÇANET
55.00%
UTE FÁBRICA DE TABACOS
70.00%
UTE AVELE INFRA.TRAN
28.00%
UTE SUBESTACIÓN PAJARES
50.00%
UTE AVELE 2 INFRA.TR
28.00%
UTE EMBALSE ALMUDEVAR
30.00%
UTE REFORMA HOSP. VIRGEN
20.00%
UTE CONEXIÓN S20 LOS CASTROS
50.00%
UTE INECAT
39.25%
UTE CORREDOR TRES HILOS
22.00%
UTE VIA SAGRERA
50.00%
UTE BURGOS
50.00%
SEDE ADMIN.HOSPITAL
100.00%
UTE BOMBEO BOLUETA
60.00%
LOS BANDOS-SALAMANCA
99.39%
UTE COMPLEJO JUDICIAL CORDOBA
65.00%
UTE ENLACE MEIRAS
50.00%
UTE ISAC ENTRE RIOS
66.70%
UTE ENARSA ON
50.00%
UTE LOMA LA LATA ON
75.00%
ACCESOS SOTO RIBERA
60.00%
UTE DAROCA
100.00%
UTE CAJA DUERO
100.00%
UTE EDAR PALOMARES
100.00%
REH.CUARTEL TTE.RUIZ
42.50%
UTE MERIDA
50.00%
3M APARCAM. CEUTA
42.50%
UTE EXPLOTACION TOMELLOSO
100.00%
LT 220KV LUCALA-UIGE
33.33%
UTE EDAR VALDEPEÑAS
100.00%
MTTO. ALCALA-MECO
100.00%
CONSTR.SUBEST.LINEAS
50.00%
UTE DCS LOMA LA LATA
50.00%
RED ACCESO RURAL EN
50.00%
UTE ELECTR.PARAPLEJ.
99.00%
UTE HOTEL CAMP DE MAR
50.00%
SISTEMAS A4T1
50.00%
UTE BENIDORM:SUPLIDO
49.00%
UTE LEVATEL
50.00%
SUPLIDOS UTE HOSPITA
40.00%
MUSEO DE AMERICA
100.00%
UTE GIRONA
33.00%
UTE ENARSA OFF
50.00%
UTE FLUMEN MODE
50.00%
UTE EDAR LA CHINA
50.00%
UTE MIERA
50.00%
CSIC EN LA CARTUJA
100.00%
UTE GUADALOPE
50.00%
UTE ARQUITECTURA L-5
43.50%
VODAFONE CDC ALCOBEN
50.00%
AMP.HOSP.GUADALAJARA
50.00%
VDF CDC LEGANES
50.00%
HOSPITALIZACION
100.00%
UTE EMPALME MANACOR
30.00%
UTE PLTA.COMPRESORA
50.00%
LINEA 9 METRO BARCEL
20.00%
PUENTE PISUERGA UTE
50.00%
INTERCAMBIADOR SAGRE
25.00%
EUBA-IURRETA UTE
50.00%
AER.CIUDAD REAL UTE
65.00%
RONDA POCOMACO-CORUÑ
80.00%
UTE COMAVE, SUPLIDOS
28.33%
UTE LOECHES
50.00%
SAVE 3, SUPLIDOS E I
26.20%
C.PENITENCIAR.CEUTA
70.00%
UTE BALIZAMIENTO 15L
33.33%
AZUCARERA PRAVIA UTE
60.00%
SSEE. LINEA 1 SUPLID
50.00%
MTTO.EDIF.ADM.XUNTA
70.00%
SS/EE LINEA 3 METRO
50.00%
UTE AVE PINAR II
64.29%
JARDINES DE GERENA S
50.00%
EL MANCHON SUPLIDOS
50.00%
ARRIBES ABADENGO VIT
50.00%
UTE ATEWICC 3 SUPLID
33.34%
RESIDUOS SAN ROQUE
100.00%
MTTO.INT.DISTRITO SA
20.00%
Name of the entity
Percentage of share
Isolux Soma and Unitech JV
49.50%
ICI –Soma Maharashtra CJV
50.00%
C&C ICI Mep Services J.V.
50.00%
Isolux - Man J.V. Uttar Pradesh
99.99%
I.C.I. - C&C J.V. Uttar Pradesh
60.00%
I.C.I. - C&C J.V. Varanasi
60.00%
I.C.I. – C&C J.V. Mainpuri (*)
100.00%
I.C.I. C&C Transmission JV
60.00%
I.C.I. C&C Execution JV
60.00%
Constructor Minuano
50.00%
Consorcio Constructor Viabahia
70.00%
Consorcio Constructor Puente Chilina
30.00%
Consorcio Isolux-Tradeco-Tampa Tank (*)
45.00%
I.Ingenieria Sterlin & Wilson Consortium
70.00%
Consorcio de los Cuatro Rios Cuenca
57.50%
CCC Proj&sadbhav Rngin JV
60.00%
Consorcio Medes-Isolux
50.00%
Consorcio Paranaiba
50.00%
Consorcio Grupo Isolux Corsán Engevix (*)
80.00%
Consorcio Araguaia – Isolux Corsán (*)
99.00%
Consorcio Grupo Isolux Corsán – Linha 15 Metro (*)
100.00%
Consorcio Grupo Isolux Corsán – Linha 17 Metro (*)
100.00%
Consorcio Grupo Isolux Corsán (*)
100.00%
KAS Corsan Corviam, J.V. (*)
60.00%
Annual Report Financial Report
2014
(*) Entities acquired or created during the year and/or additional stakes acquired in companies already included in the scope of consolidation the previous year. The inclusion of these companies in the scope of consolidation did not generate additional sales this year.
137
DIRECTOR’S REPORT 2014 1. Entity’s position
1.2. Operation The Group is organized in the following business areas:
1.1. Organizational structure At 31 December 2014, Grupo Isolux Corsán, S.A. (hereinafter, the Company) forms a group (hereinafter, the Group) comprising the parent company Grupo Isolux Corsán, S.A. and its subsidiaries, joint ventures and associates. In addition, the Group participates with other entities or members temporary joint ventures. Group companies also hold interests of less than 20% in other entities over which they have no significant influence. The Group develops its main activities in Spain, Latin America, Asia, Africa and North America.
A. EPC
Isolux, S.A., was founded in 1933 with a focus on energy transmission and generation. In 1991, Isolux, S.A. merged with Wat, S.A., a company established in 1954 with a focus on engineering projects. The resulting company, Isolux Wat, S.A., was specialized in a range of support and design services for projects and was awarded its first highway concession, which was located in Spain. In 2000, Isolux Wat, S.A. was awarded its first electric power transmission line, which was located in Brazil. In 2005, Isolux Wat, S.A. expanded its presence both domestically and internationally through the acquisition of Corsán Corviam, S.A., a leading Spanish construction company which was the result of the merger in 2000 of Corsán Empresa Constructora, S.A. (incorporated in 1928) and Corviam, S.A. (incorporated in 1962). The resulting entity, Grupo Isolux Corsán, S.A., was the then largest non-listed engineering and construction group in Spain in terms of revenue. Since our establishment, we have operated in the infrastructure and industrial activities, energy and construction, and concessions businesses. The Group mainly operates through the following business lines: • EPC (Engineering, Procurement and Construction), related mainly to the construction and engineering projects under “turnkey contracts”, in the following businesses. Energy, Infrastructure and Transmission & Distribution. • Concessions: the Group holds infrastructure concessions including motorways, high-voltage transmission lines, solar-photovoltaic energy plants and car parks. 138
The EPC business is present in over 38 countries across the world and develops the following activities: • T&D (Transmission and distribution): The Group provides the installation and maintenance of T&D infrastructures (including high-voltage transmission lines and substations), a wide range of services, including electrical, mechanical and special installations, railway electrification and signage, deployment and maintenance of electrical and telecommunications networks, electromechanical installations for airports and shipping, security and control systems, and industrial services and maintenance. • Energy: construction of thermal power generation plants (coal, liquid fuel and gas primarily), renewable energies (solar photovoltaic and wind), oil&gas (focus mainly on upstream and midstream EPC projects, both onshore and offshore). • Infrastructures: construction of roads, highways, railways, non-residential building and any type of civil works (waste water treatment infrastructures, etc.) B. Concessions Our concessions division is organized in two separate sub-groups: • Isolux Infrastructure Netherlands, B.V.: this company through a number of project companies maintains and operates three types of assets: (i) transmission lines, (ii) toll roads and (iii) solar photovoltaic generation assets. • Isolux Aparcamientos: this company operates over 26 thousand car park spaces in Spain. C. Other assets and Corporate In addition to the corporate and headquarters costs, we include here other assets that are considered as non-core activities for the Group (i.e. Biodiesel plants, real estate and other assets which are held for sale, etc.).
Grupo Isolux Corsán is a leading EPC international contractor, with a strong market position. According to ENR, we are the 10th largest international contractor in the power sector, 7th in the Latin America/Caribbean area and 41st EPC contractor globally. WE have maintained similar rankings in the previous years. Our strategy is based on the following: Expand our EPC activities and selectively enter new markets. We intend to consolidate the current footprint of our EPC business, as well as to selectively enter new markets, and to develop our business in growth areas such as energy. We intend to leverage our presence in countries where we already operate and use our knowledge of local markets and potential synergies to expand our operations in those countries and to expand to neighboring countries. We see opportunities in markets with high GDP growth rates and strong demand for infrastructure, subject to the presence of a stable legal framework and clients with strong credit standing. We prioritize U.S. dollar and euro denominated contracts and advance payment practices. We also see opportunities in markets where there is a need to expand current infrastructure or for the revitalization of obsolete facilities. In particular, we see the energy sector as a key area of growth and intend to leverage our in-house capabilities and experience in energy generation and renewable energies. Maximize the value of our concessions portfolio in select markets. We are seeking to maximize the value of our concessions portfolio by strategically developing and consolidating our existing portfolio and identifying selective growth opportunities. We intend to consolidate our existing concessions portfolio both operationally and, in certain cases, by refinancing debt at project companies. We will also selectively tender for new contracts and look for strategic partnerships with companies that are already operating in relevant countries and that can add value to our infrastructure projects. Increase operational efficiency and financial flexibility. We are committed to maintaining a sound capital structure and a strong liquidity position. We intend to increase our financial flexibility through the sale of concession or other assets on an opportunistic basis, when we deem market conditions to be appropriate. We also intend to access the global capital markets, as appropriate and subject to market conditions.
2. Evolution and Business results The accounting policies adopted in the preparation of the consolidated financial statements are consistent with
those applied in the preparation of the consolidated annual accounts for the financial year ended 31 December 2013, except for the application the new standards described below. 2.1. Changes in accounting policies Duringthe year 2014, the Group applied the following new standards that are effective as from 1 January 2014:
Annual Report Financial Report
2014
• IAS 27 (amendment) ‘Separated financial statements’. IAS 27 amendment is mandatory for periods beginning on or after January 1, 2014 under IFRS-EU (January 1, 2013 under IFRS-IASB). After IFRS 10 has been published, IAS 27 covers only separate financial statements. • IAS 28 (amendment) ‘Associates and joint ventures’. IAS 28 has been amended to include the requirements for joint ventures to be accounted for under the equity method following the issuance of IFRS 11. IAS 28 amendment is mandatory for periods beginning on or after January 1, 2014 under IFRS-EU (January 1, 2013 under IFRS-IASB). •IFRS10 ‘Consolidated Financial Statements’. IFRS 10 replaces current consolidation requirements of IAS 27 and introduces changes in the control concept, which is still considered as the main factor to define if and entity must or not be included in the consolidated financial statements. This Standard is effective for periods beginning on or after January 1, 2014 under IFRS-EU (January 1, 2013 under IFRS-IASB). •IFRS 11 ‘Joint Arrangements’. This Standard is effective for periods beginning on or after January 1, 2014 under IFRS-EU (January 1, 2013 under IFRS-IASB). IFRS 11 replaces the current IAS 31 about joint ventures and provides an accounting treatment for joint ventures based on the rights and obligations each investor has, rather than just the legal structure of the joint arrangement. Joint arrangements are reduced to two types: joint operations and joint ventures. Joint operations arise where a joint operator has rights to the assets and obligations relating to the arrangement and hence accounts for its interest in assets, liabilities, revenue and expenses on a proportional basis. Joint ventures arise where the joint operator has rights to the net assets of the arrangement and accounts for its interest under the equity method. Proportional consolidation of joint ventures is no longer allowed. •IFRS 12 ‘Disclosures of interests in other entities’. This Standard defines the disclosures related to interests hold in subsidiaries, associates, joint arrangements and non-consolidated entities. It is effective for periods beginning on or after January 1, 2014 under IFRS-EU (January 1, 2013 under IFRS-IASB).
139
Management Report 2014
• IAS 32 (Amendment) “Offsetting Financial Assets and Financial Liabilities” Amendment to IAS 32 “Financial instruments: Presentation” changes the Application Guidance of the standard to clarify some of the requirements for the offset of financial assets and financial liabilities on the balance sheet. The amendment does not entail changes to the offset model which already exits in IAS 32, and which is still applicable when and only when, an entity currently has the legally enforceable right to offset the amounts recognised and has the intention to settle the net amount or realise the asset and settle the liability simultaneously. The amendment clarifies that the right to offset should be available at the present time -i.e. it does not depend on a future event. Additionally, the right has to be legally enforceable in the ordinary course of business of the counterparties involved in the transaction, even in cases of default, insolvency and bankruptcy. The application of the amendment of IAS 32 is mandatory for all years starting on or after 1 January 2014 and is applicable retroactively. •IAS 36 (Amendment) “Recoverable amount disclosures for non-financial assets” , the IASB has published a narrow scope amendment of IAS 36 “Impairment of assets”, in relation to the information to be disclosed concerning the recoverable amount of impaired assets when the recoverable amount is based on fair value less costs of disposal. Through IFRS 13 “Fair value measurement” the resulting changes were made to the disclosure requirements of IAS 36. One of these amendments was more extensive than expected. The amendment corrects this situation and in addition, requires that complementary information be presented on fair value measurements when
140
there is impairment or a reversal of the same. This amendment applies to the years starting on or after 1 January 2014 and is applied retrospectively. The application by the Group of the new legislation and previous modifications has not had a significant effect on the consolidated, with the exception of IFRS 10, 11 and 12. Following the application by the Group of the new standards and amendments defined above, the main impact is related to the application of IFRS 11 to the consolidation method of a sifnificant part of the Concessions business (Isolux Infrasttructure Netherlands B.V. and its subsidiaries) which is accounted under the equity method instead of the proportionate method as was applied for the year 2013. Notwithstanding the Group ownership interest of 80.77%, Isolux Infrastructure Netherlands B.V. and its subsidiaries (hereinafter Isolux Infrastructures) is considered a joint venture considering that key business decisions on the relevant activities need to be taken jointly by the parties. This situation is the result of the experience of reserved matter in the shareholding agreement that require approvals through special majorities, in both Board of Directors and Shareholder’s meetings, including amongst other, some matters that give participating rights to the partners such as budget and business plan approvals, acquisition and disposal of operational assets, changes of dividend policy, appointment and retribution of key management and withdrawing of financial facilities. The main impacts on the consolidated balance sheet items between 1 January and 31 December 2013 and on the consolidated income statement for the fiscal year ended 31 December 2013 are discussed below. In addition, in fiscal year 2014 certain activities were no longer considered to be discontinuous, as a result of which
the information included in the consolidated income statement for 2013 was re-expressed to include the effects of this change.
Annual Report Financial Report
The impact on equity by applying the new accounting policy is as follows: (€ Thousand)
2014
31 December 2013 As reported
Effect of Restatement
1 January 2013
After After Effect of effect of As reported effect of Restatement Restatement Restatement
EQUITY Capital and reserves attributalble to shareholders of the company Share capital Share premium Legal reserve
18,017
-
18,017
18,017
-
18,017
526,237
-
526,237
526,237
-
526,237
15,280
-
15,280
12,921
-
12,921
(47,625)
-
(47,625)
(49,095)
-
(49,095)
(179,216)
-
(179,216)
(79,532)
-
(79,532)
92,866
-
92,866
58,994
-
58,994
425,559
-
425,559
487,542
-
487,542
Non-controlling interest
129,690
(132,001)
(2,311)
161,910
(135,011)
26,899
Total equity
555,249
(132,001)
423,248
649,452
(135,011)
514,441
Hedging reserve Cumulative translation differences Retained earnings
Despite the application of IFRS 11 described above, for presentation purposes of segment reporting, the Group continued applying the proportionate consolidation method, based on a reflection of a better understanding of concessions segment. Therefore, financial información by segment and by geographical area presented is not affected by the application of IFRS 11.
2.2. Changes in consolidation scope The main changes in the scope of consolidation in 2014 correspond to the change of control of Isolux Corsán Aparcamientos, S.A. and subsidiaries.
ning €50 million will be granted once the first €50 million investment tranche has been completed. The purpose of the agreement is to group existing assets together with new assets to be acquired which will already be functioning at normal levels of operation, and which will be expected to add value to the new jointportfolio. It is foreseen that the sale will take place between 1 October of 2019 and 30 June 2020. The agreement contemplates the sale of the whole car park business , foreseeing also how the distribution of funds will be carried out according to the sale price obtained among the different parties.
The agreements entered into between the parties mean that although the new investors do not have an ownership interest in these companies, key business decisions The most significant change in the consolidation scope have to be taken jointly by the parties. Therefore Isolux during the year 2014 refers to the change of control in Corsán Aparcamientos, S.A. (and its subsidiaries) is conIsolux Corsan Aparcamientos, S.A. and its subsidiaries. In sidered jointly controlled through a joint venture-likewise the month of July 2014 the Group signed an agreement structure. This operation has been accounted for as a with several investment funds acting in a coordinated man- “change of control with the application therefore of the coner through Oak Hill Advisors, under which the investment rresponding accounting policies. In order to allocate the funds undertook to invest in the form of senior loans for up acquisition cost, the estimated fair value of the assets, to a total of 100 million euro. These loans will be used to calculated on the basis of the future cash flow discount invest in the Group’s car park business headed by Isolux method, has been taken into account. As a result of this Corsán Aparcamientos, S.A. at 31 December 2014 loans change of control, there are no significant impacts on the of a nominal value of €50 million were received. The remai- consolidated income statement. 141
Management Report 2014
The following table summarizes the consideration and provisional fair values of the assets acquired and liabilities assumed at the acquisition date:
€ Thousand Cash Non-current assets assigned to prrojects Other non-current assets Other current assets Non-current borrowings Other non-current liabilities
259,257 12,406 12,097 (117,362) (37,993)
Other current liabilities
(5,431)
Credit balance with Public Treasury
(7,650)
Total identifiable assets acquired and liabilities assumed Non-controlling interests Total net assets
At 31 December 2013, the Car park business, through Isolux Corsán Aparcamentos, S.A. was recorded as held for sale and due to the significance of such business and the fulfillment of the conditions required by IFRS 5 NonCurrent Assets Held for Sale and Discontinued Operations, the Car Parks business was classified as discontinued operations. Principally, the following subsidiaries companies have been incorporated during 2014: • Corsan Corviam Colombia, S.A.S., • Tenedora de Acciones de Lineas de Transmision Peruanas, S.A.C. • Líneas de Transmisión Peruanas, S.A.C. Discontinued Operations and assets and liabilities held for sale At the end of 2013, following the decision to divest certain operations of the Group, activities set forth below have been classified as non-current assets held for sale in accordance with IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations: •Real estate business in Spain, which comprises Isolux Corsán Inmobiliaria, S.A. and its subsidiaries, as well as certain real estate assets that are owned by Grupo Isolux Corsán, S.A., Corsán Corviam Construcción, S.A. and Isolux Ingeniería, S.A. (the “Real Estate bu142
6,003
121,327 (1,559) 119,768
siness”); • Água Limpa Paulista, S.A. (“Água Limpa”) • Isolux Corsán Energías Renovables, S.A. (“ICERSA”). •Isolux Aparcamiento (the “Car Park business”) As a result of this decision, all the assets related to the abovementioned activities have been classified under the heading “Non-current assets held for sale” in our consolidated balance sheet as of 31 December, 2013 and have measured them at the lower of (a) their book value and (b) their fair value less cost to sell. The book value of the liabilities related to such assets has been classified under the heading “Long-term liabilities related to assets held for sale.” During 2014, as a result of loss of control of the business of car park concessions were excluded from this classification. The real estate and other operating assets located in Latin America, which are classified as held for sale, have been classified as such for more than twelve months but they have not been sold due to circumstances that, at the time of classification, were either improbable or beyond the Group’s control. However, the Group remains firmly committed to the plan to sell these assets. They are being actively marketed and formal offers have been received. The Group therefore believes that there is a very good chance that they will be sold in the near future. In some cases, sales agreements have been signed and are pending authorisation from the supervisory bodies or
finalisation of the sales process. Additionally, the real estate business activity qualifies as discontinued activity as required by IFRS 5. Therefore, the results of operations of real estate activity in the consolidated income statement have been classified under “Net of tax results for the year from discontinuing opeartions” during the years 2014 and 2013. The results of operations for the year 2014 and 2013 in Agua Limpia and ICERSA have not been classified as discontinued operations becauses this assets does not meet the requirements for such classification.
Annual Report Financial Report
2014
2.3. Main figures Financial Data • Revenue of €2,128 million euro, decrease of 17.3% compared to previous period. • EBITDA(*) of €252 million euro, increase of 0.4% compared to previous period.
(€ million)
Year 2014
Year 2013
Var %
Consolidated Income Statement 2,128
2,573
(17.3%)
EBITDA
Revenue
252
251
0.4%
Operating result
166
169
(1.8%)
Net result
(42)
(3)
-
(€ million)
31.12.14
31.12.13
Var %
Consolidated Balance Sheet Total Assets Shareholder's equity
4,942
4,738
4.3%
365
423
(13.7%)
(*)EBITDA are the results for the year from continuing operations before Net financial results, Share of profit / (loss) of investments accounted for the equity method, Change in trade provisions, Income tax, and Depreciation, amortization and impairment losses.
143
Key indicatos by segment are as follows: Management Report 2014
€ Million Key indicators by segment
Sales Year 2014
EPC Concessions Other, Corporate and Consolidation Adjustments Subtotal
EBITDA
Year 2013
Var %
Year 2013
Var %
Year 2014
Year 2013
2,097
2,425
(13.5)%
279
305
(8.5)%
13.3%
12.6%
657
617
6.3%
371
332
11.7%
56.6%
53.8%
27
1
n.a.
(30)
(61)
(50.8)%
n.a.
n.a.
2,780
3,044
(8.7)%
620
576
7.6%
22.3%
18.9%
Consolidation method adjustments
(652)
(471)
38.4%
(369)
(325)
13.5%
n.a.
n.a.
Total consolidated
2,128
2,573
(17.3)%
252
251
0.4%
11.8%
9.8%
Operational data: EPC In the year 2014, 80.07% of our EPC revenue came from international markets outside Spain. The backlog of our EPC business amounted to €7,107 million euroa s of December 2014. Concessions The following table details some operational data of our concessions portfolio: Projects already in operations
Year 2014
Transmission lines – (Km)
3,637
Toll roads – (Km)
1,477
Solar PV – (MW)
254
Car parks – (Spaces)
144
Year 2014
EBITDA margin
26,103
2.4. Consolidated income statement (â‚Ź million) Operating income Operating expenses
Year 2014
Year 2013
Var %
2,134
2,603
(18.0)%
(1,927)
(2,386)
(19.2)%
Depreciation and impairment charges
(41)
(48)
(14.6)%
Operating result
166
169
(1.8)%
(206)
(184)
12.4%
26
10
-
Financial result Share of profit/(losses) of investments accounted for under the equity method Net result before tax
(14)
(5)
-
Corporate income tax
(19)
8
-
Result of continuing operations
(33)
3
-
(9)
(6)
-
Result of discontinuing operations, net Net result for the period
(42)
(3)
Annual Report Financial Report
2014
-
Operating result Operating result as a percentage of operating income increased from 6.5% in the year 2013 to 7.8% in 2014, mainly due to improved margins in our EPC business related to the projects that are currently under construction, compared to projects under construction in the prior year that had lower margin. Net results before taxes The decline in results before taxes in 2014 as compared to the year 2013 is mainly due to worse financial results, that include the accounting impact of deferred financial expenses written off (12.4 million euro), in connection with the early repayment of our syndicates facilities, following the bond issuance in 2014, and also higher interest expense related to that issuance. This impact was partially offset by improved results obtained by Isolux Infrastructure (shown as share of profits of investments accounted for under the equity method).The tax on the gain reflects the negative impact of â‚Ź40 million euro corresponding to the tax rate change in Spain.
145
2.5. Segment results Management Report 2014
Million € Key indicators by segment EPC
Year 2014
Year 2013
2,097
Concessions Transmission
Revenue
lines
Toll roads
EBITDA
2,425
(13.5)%
Year 2013
279
Year 2014
Var %
305
(8.5)%
Year 2013
13.3%
12.6%
657
617
6.5%
371
332
11.8%
56.5%
53.8%
263
250
5.2%
203
154
31.8%
72.2%
61.6%
156
152
2.6%
93
95
(2.1)%
59.6%
62.5%
Solar photovoltaic
90
98
(8.2)%
73
77
(5.2)%
81.1%
78.6%
Car parks
15
13
15.4%
5
7
(28.6)%
33.3%
53.8%
133
105
26.7%
(2)
(1)
-
(1.5)%
(1.0)%
27
1
n.a.
(30)
(61)
n.a.
n.a.
n.a.
2,780
3,044
(8.7)%
620
576
7.6%
22.3%
18.9%
(652)
(471)
38.4%
(369)
(325)
13.5%
n.a.
n.a.
2,128
2,573
(17.3)%
252
251
0.4%
11.8%
9.8%
Other (includes Construction revenue) Other, corporate and consolidation adjustments Subtotal Adjustment due to change in consolidation method Total consolidated
EPC EPC revenues decreased by 13.5% during the year 2014, compared to the year 2013, mainly due to the impact of exchange rates (Brazilian real, Indian rupee and Argentinean peso). It also reflects the impact of the completion of the construction of the WETT project (transmission line in the US) in September 2013, which has been partially replaced by the impact of the construction of the Uttar Pradesh transmission line in India. Assuming constant exchange rates, revenues from EPC would have decreased by 5.5%. The evolution of EBITDA in absolute effects shows a slight decrease although an improvement EBITDA margin, passing from 12.6% to 13.3%, can be seen due to the better margin of the construction/development. Concessions Concessions revenue increased by 6.5% in the year 2014, compared to prior year`s, mainly driven by the start of operations of transmission assets during 2013. Revenue from our solar photovoltaic generation business
146
Year 2014
Var %
EBITDA Margin
reflects the impacts of the latest changes in regulation in Spain, implemented at the end of 2013. The evolution of EBITDA in absolute terms does not present significant variations during the year except forthe business line of transmission lines whose increase is motivated by the entry into operation of WETT in the fourth quarter of 2014. Other, corporate and consolidation adjustments EBITDA primarily includes Group’s corporate overhead costs, which have decreased significantly following the restructuring process implemented during the last 12-18 months. This segment also includes revenue and EBITDA generated by: • Biodiesel business Infinita. In the first quarter of 2014 the lease agreement with Indonesian oil producer Musim Mas came into effect. EBITDA during 2014 reflects the start of operations of the production plants under this agreement. • Wind farm Loma Blanca, in Argentina, which started operations early this year. This asset is held for sale.
2.6. Consolidated balance sheet
(Million â‚Ź)
31.12.14
31.12.13
Var (%)
Annual Report Financial Report
2014
Tangible assets
113
127
(11.0)%
Intangible assets and Goodwill
503
504
(0.2)%
Long term assets assigned to projects
152
146
4.1%
Investments in associates and joint ventures
974
828
17.6%
Deferred tax assets
289
256
12. 9%
123
104
18.3%
2,154
1,965
9.6%
Other long term assets Total non-current assets Inventories Trade and other accounts receivable Derivative financial instruments Financial assets at fair value through profit and loss Cash and cash equivalents Non-current assets held for sale
253
207
22.2%
1,847
1,657
11.5%
2
3
(33.3)%
15
8
87.5%
291
241
20.8%
380
657
(42.2)%
Total current assets
2,788
2,773
0.5%
Total assets
4,942
4,738
4.3%
Investment in associates and joint ventures as of 31 December, 2014 includes both Isolux Infrastructure Netherlands, B.V, the holding company for the majority of our concessions, as well as our car parks business. Increase during the year is due to the inclusion of the Car parks business within this caption (it was previously included as assets held for sale refer to previous pages for explanation about this change.) Trade and other receivables as of 31 December, 2014 increased by 11.5% compared to year end 2013 mainly due to an increase in the average collection period specially in projects in Latin America. Non-current assets held for sale decreased by 42.2%, mainly due to the reclassification of our car park business to investment accounted for under the equity method, following the signature of an agreement with a financial investor to jointly develop the business that at the year end 2013 was presented under this heading and at 31 December 2014 is classified in investments in companies under the equity method.
147
(Million €) Management Report 2014
31.12.14
Share capital and reserves Non-controlling interests
31.12.13
Var (%)
425
(12.5)%
(7)
(2)
-
Shareholders' equity
365
423
(13.7)%
Bank borrowings
442
918
(51.9)%
Senior notes
829
-
-
Project finance
208
192
8.3%
Long term provisions for risks
43
46
(6.5)%
Deferred tax liabilities
43
24
79.2%
Other long term liabilities Total non-current liabilities Bank borrowings
85
77
10.4%
1,650
1,257
31.3%
264
407
(35.1)%
Senior notes
12
-
n.a.
Project finance
13
11
18.2%
2,355
2,191
7.5%
74
58
27.6%
Trade and other accounts payable Short term provisions Other short term liabilities
36
30
20.0%
173
361
(52.1)%
Total current liabilities
2,927
3,058
(4.3)%
Total liabilities and equity
4,942
4,738
4.3%
Liabilities held for sale
Bank borrowings: At 31 December 2014, debt with credit institutions has been reduced as a result of early repayment of our syndicated loans and other long-term loans, following the issuance of the senior notes in March 2014 (and the additional issue in June 2014). Senior notes: re due on April 2021, and accrue 6.625% interest. Nominal amount of the issuance was €850 million euros (issued through Grupo Isolux Corsán Finance B.V.). The Original Notes were issued on March 15, 2014 for an amount of €600 million euro, and the Additional Notes on June 26, 2014 for an amount of 250 million euro, all together “the Notes”. The notes are jointly and severally guaranteed by Grupo Isolux Corsán, S.A and certain subsidiaries. Project finance: Primarily corresponds to our biodiesel business (Infinita Renovables, S.A.). This debt has corporate guarantees. Trade and other accounts payable: As of 31 December, 2014 was higher by 7.5% compared to 31 December, 2013, primarily due to extended payment days following longer collection days from customers.
148
372
2.7. Consolidated cash flow statements (€ Million)
Year 2014
Year 2013
Profit/(loss) for the period before taxes
(25)
(13)
Adjustments for non-cash items
269
260
(110)
(66)
Taxes paid
Changes in working capital
(11)
(19)
Net cash generated from/(used in) operating activities
123
162
(6)
0
Acquisition of concessionary assets and non-current assets assigned to projects
Changes in consolidation perimeter, net
(34)
(72)
Other capital expenditure, net
(12)
21
4
6
Interest received and other finance income
(48)
(45)
Income/(reimbursement) of corporate debt, net
Net cash generated from/(used in) investing activities
(671)
(47)
Income/(reimbursement) of project finance, net
6
17
Interest paid
(209)
(146)
Proceeds from issuance of Senior Notes
840
0
Net cash generated from/(used in) financing activities
(34)
(176)
Our net cash generated in operating activities was €123 million euro in the year ended 31 December 2014. We had net results for the period of € negative by 25 million euro, which, after adjusting for non-cash items, changes in working capital and taxes paid, amounted to 148 million euro. Our net cash used in investing activities was negative by €48 million euro in the year ended 31 December 2014, consisting primarily of investments made in our associates (primarily in Isolux Infrastructure, corresponding to the pending contributions in accordance with the PSP agreement and investment in ), as well as certain other limited capital expenditures made during the period. These investments
Annual Report Financial Report
2014
are partially offset by interest income received. The net change in cash for changes in the scope, corresponds to the non-cash effect due to the effect of the exit of the consolidation scope of the car park concession business after the change of control. Our net cash generated in financing activities was negative 34 million euro in the year ended 31 December 2014, consisting primarily of 850 million euro of gross proceeds from the issuance of the 2014 Senior Notes, partially offset by 675 million euro of repayments under certain corporate debt instrument. 2.8. Key financial and non-financial indicators The main operational and financial indicators for the years ended December 31, 2014 and 2013 include:
(€ Million) Corporate net debt
Year 2014 1,256
Year 2013 1,084
Var (%) 15.9%
Portfolio
7,107
6,626
7.3%
Portfolio for concessions
16%
16%
-
New contracts
3,344
3,177
5.3%
EPC Income
2,097
2,425
(13.5)%
1,59x
1,31x
21.7%
“Book to bill” ratio
149
2.9. Environmental and staff issues Management Report 2014
a) Environment Our operations generally require us to obtain authorizations, permits and environmental licenses in the different countries where we operate. Isolux Corsán has the Corporate Environmental Management System which applies in all business areas and in all countries in which it operates. The aim is to prevent contamination with the utmost respect and care for the environment. In its Environmental Policy Group is committed to: • Develop and implement activities in environmental management systems in accordance with the principles established in the international standard ISO 14001. • Establish and monitor compliance with environmental objectives and targets consistent with tis policy. • Ensure that these objectives and targets help to increase good behavior and effectiveness of environmental management system. • Implement practices aimed at preventing and reducing pollution, minimizing the most significant environmental impacts. • Comply with applicable environmental legislation and other requirements subscribed by the company. • Periodically review this policy to maintain its alignment with the vision and strategic objectives of the Management. According to this methodology, Isolux Corsán identifies the environmental aspects associated with their activity and objectively evaluates them by applying a standard for all business areas and all countries scale. A degree of affection is obtained for every environmental intervention to determine the need for controls and measures to eliminate or minimize their impact on the environment. We are not aware of any material environmental issues that may affect the Group’s utilization of our tangible fixed assets. b) Personnnel The composition of the average workforce employed in the Group was as follows:
Category
2013
2,008
2,109
Administrative
1,030
760
Operator 150
2014
Qualified
2,936
3,372
5,974
6,241
Additionally, the average number of employees during the year by the companies included in the consolidation by the proportional method has been 356 people (2013: 609 people).
Annual Report Financial Report
2014
The gender distribution at the end of the fiscal year ended 31 December, 2014 and 2013 of the Group staff was as follows: 2014 Category Counselors Senior Managers
Men
2013
Women 14
Total -
Men 14
Women 14
Total -
14
6
-
6
4
-
4
Managers
364
22
386
344
25
369
Qualified
1,761
413
2,174
1,500
435
1,935
Administrative Operator
538
216
754
370
274
644
2,133
137
2,270
3,228
166
3,394
4,816
788
5,604
5,460
900
6,360
3. Liquidity and capital resources 3.1. Liquid Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of its business operations, including working capital needs, capital expenditures, debt service obligations, other commitments, contractual obligations and acquisitions. Our primary sources of liquidity across our businesses are provided by our cash flows from operating activities and our financing activities. In the case of our EPC business, our primary sources of liquidity are provided by cash flows from our EPC business and from our non project debt including Bank borrowings and the Senior Notes. The primary liquidity requirements of our EPC business are debt service obligations on our existing and future non project debt and costs and expenses related to operation of the business. In the case of our Concessions business, the primary source of liquidity for each company in the Concessions division is the cash flow generated by the relevant project and the project of such project company. The primary liquidity requirements of each project company are capital expenditures and debt service obligations on existing and future project debt.We finance the construction of our concession type projects by means of project debt at the project company level and equity contributions from 151
us, our partner PSP and, in certain cases, other co investors. Management Report 2014
Additionally, durint the year 2014 the Group issued senior notes with a nominal value of €850 million euro, which pay a fixed rate and mature on April 15, 2021. As of September 30, 2014 we had €706 million euro of bank borrowings, €841 million euro of senior notes and €221million euro of project debt in our balance sheet. Group’s maturities greater than one year of borrowings are: (€ Million)
Between 1 and 5 years
Senior notes Syndicated loans Credit facilities Other borrowings Finance lease liabilities
Total
-
829
829
221
-
221
19
-
19
160
42
202
0
0
0
Total borrowings and senior notes
400
871
1,271
Project debt
205
3
208
Current maturities of borrowings correspond to:
(€ Million) Borrowings and senior notes Project finance
276 13
Total current borrowings
289
The position of short-term liquidity assets correspond to:
(€ Million) Cash and cash equivalents Financial assets at fair value through profit or loss Total position
152
More than 5 years
291 15 306
Ths position of the short-term liquidity at the end of 2014 has significantly improved over the previous year thanks to the refinancing of most debt maturing within one year. The short term liquidity position at the end of 2014has improved significantly over the previous years thanks to the refinancing of a mayor portion of the current debt made with the bond issue during the year.
Annual Report Financial Report
2014
Additionaly, at year end, Isolux Infrastructure and Isolux Aparcamientos, our main business segment concessions,consolidated by the equity method had the following balances: (€ Million)
Project debt
Cash and cash equivalents
Financial assets at fair value through profit or loss
Isolux Infrastructure
3,122
287
25
Isolux Aparcamiento
121
14
-
3,243
301
25
Total
3.2. Capital resources Our strategy includes strengthening the capital structure of the group, for which it was raised during the year 2014, to conduct a public offering of shares. The purpose was to reduce the Group’s level of debt. This process has been postponed until the right market conditions are met and so far, alternatives to reduce the leverage of the Group are been studied. These options include corporate operations of either asset sales or new partners. 3.3. Analysis of contractual operations and offbalance sheet The following table details the Group’s commitments with third parties at 31 December , 2014:
(€ Million)
Less than 1 year
Between 1 and 2 years
Between 2 and 5 years
More than 5 years
At December 31, 2014 Borrowings and senior notes Derivative financial instruments* Trade and other payables ** Unearned interest payable Total
276
91
310
871
16
8
7
-
1,873
15
-
-
101
88
205
31
2,266
202
522
902
*Does not include associated derivative financing projects **Distributable income, billing account and advances received for work contracts and any other accounts payable non-refundable and that does not generate liquidity risk are not included. 153
The detail of borrowings and senior notes, current and non-current, at 31 December 2014 is the following: Management Report 2014 (â‚Ź Million)
Current
Non-current
At December 31, 2014 Senior notes Loans
12
829
177
424
Factoring
29
-
Credit facilities
58
19
276
1,272
Total
The following table shows the breakdown of debt commitments Project Group at 31 December, 2014:
(â‚Ź Million)
Less than 1 year
Project Finance
Between 1 and 2 years
13
169
Between 2 and 5 years 36
More than 5 years 2
There are no other off-balance sheet obligations in addition to those described in the notes of the consolidated financial statements that are recurrent in our business (guarantees provided, litigation, arbitration proceedings or other regulatory measures).
4. Main regulatory risks
do not provide sufficiently greater income or are delayed, our business, results of operations and financial condition may be materially adversely affected.
4.1. Operational risks a) Regulatory risks We are subject to changes in regulations.
154
We must comply with specific regulations relating to our EPC and Concessions divisions as well as general regulations in the various jurisdictions where we operate (such as those related to accounting, employment, data protection and taxation). As in all highly regulated sectors, any deregulation or regulatory changes in the EPC or concession sectors could adversely affect our business, financial condition and results of operations. In the case of significant regulatory changes (including tax amendments) affecting the concessionaires in which we hold a stake, there may, in certain circumstances be a right to adjust the terms of a concession or to negotiate changes with the competent administration in order to reestablish the economic and financial balance between the parties. We cannot guarantee that an adjustment, however, will be possible in all cases, that any such adjustment would be satisfactory for the concessionaires or that it would be carried out in a reasonable time period. If these adjustments are not possible,
Our operations in solar photovoltaic generation and continued growth depend on regional, national and international policies supporting renewable energies, including the availability of state incentives and approved premiums for renewable power. The development and profitability of renewable energies are dependent, in significant part, on national and international political support. In particular, the European Union and its Member States, including Spain and Italy, have been pursuing policies of active support for renewable energies for several years. In countries where no feed-in tariff regime exists or is being contemplated, we are required to sell electricity under power purchase agreements with governments or utilities. The prices under such agreements are freely negotiated and are often linked to current market prices for electricity, which may be substantially lower than the feed-in tariffs established under regulatory frameworks in Spain or elsewhere. In addition, while certain regulatory frameworks establish feedin tariffs for periods of up to 30 years, power purchase agreements typically have substantially shorter durations
and we can give no assurance that we will be able to the aim of guaranteeing the sector’s financial stability. The enter into new power purchase agreements or renew our first step of such reform was implemented by means of existing power purchase agreements when they expire. the Royal Decree Law 9/2013, of July 13, 2013 (the Any changes in tariff regimes or our inability to enter into “RDL 9/2013”). In late 2013, Law 24/2013, of December power purchase agreements on favorable terms or at all, 26, on the electricity sector was approved (containing, could significantly reduce a relevant project’s economic among others, the principles set out in RDL 9/2013 in viability and may have a material adverse effect on our respect of the remuneration of renewable energy generators). As with previous regulations (i.e., RDL 14/2010, the business, results of operations and financial condition. Moratorium, the Energy Tax Law or the Additional MeasuRegulatory changes may have an adverse effect on res), the purpose of the Energy Reform is to resolve the unsustainability of the electricity tariff deficit. our electricity operations. Regulatory changes related to our electricity operations may have an adverse effect on our electric power generation and transmission operations and ultimately our results of operations and financial condition. In particular, on January 27, 2012, the Spanish Council of Ministers approved a new regulation (the “Moratorium”), temporarily suspending further renewable energy generation capacity. The Moratorium, so long as it remains in effect, therefore removes incentives for growing our electricity operations and introduces uncertainty with regard to the development of new facilities, as the suspension period is open-ended and may extend indefinitely. On 28 December, 2012, a law aimed at reducing the deficit within Spain’s heavily-subsidized electricity production industry and ensuring the sustainability of Spain’s energy supply through the imposition of certain tax measures was published in the Spanish Official Gazette (the “Energy Tax Law”). The Energy Tax Law, which became effective as of January 1, 2013, provides for, among other things, a direct tax on energy generators equal to 7% of the total annual revenue of each energy generation facility. Moreover, Royal Decree Law 2/2013 of February 1 introduced some measures that affect the remuneration to be received by energy generators under the special regime (the “Additional Measures”):
Annual Report Financial Report
2014
On June 11, 2014 a new regulation on renewable energy electricity generation activity was passed by means of Royal Decree 413/2014, which regulates electricity generation activity using renewable energy sources, cogeneration, and waste (the “RD 413/2014”). Additionally, on June 16, 2014, the Ministerial Order IET/1045/2014 (the “MO IET/1045/2014”) was passed, approving the remuneration parameters based on standardized costs and revenues for certain electricity production facilities using renewable energy sources, cogeneration and waste. The new regulations establish a new remuneration system for facilities producing electricity from renewable energy sources, cogeneration and waste, which replaces the former remuneration regime and has had an adverse impact on our electricity operations in Spain. Compliance with new regulations relating to electricity generation activity may have a material adverse effect on our business, results of operations and financial condition. b) Operational risks: We depend on a limited number of suppliers for materials and components and various outside contractors to construct, operate and maintain our projects.
• Special regime facilities which elect selling its electricity output to the pool will receive an equivalent premium equal to zero; and • The amendment of the methodologies for reviewing the remuneration linked to the general Consumer Price Index (as the remuneration received by special regime generators). From January 1, 2013 that index was replaced by the Consumer Price Index at constant tax rates, excluding unprocessed foods and energy products.
If we are not able to obtain the necessary materials and components for our EPC or concession-type projects that meet our quality, quantity and cost standards on time, our capacity to construct or develop a project could be interrupted and our production costs could be increased. We may not be able to identify new suppliers or approve their products for use in our projects in a timely manner and on commercially reasonable terms. Materials and components from new suppliers may also be less suitable for our technology and result in lower efficiency that may materially adversely affect our business, results of operations and financial condition.
Regulatory changes such as the Moratorium, the Energy Tax Law and the Additional Measures may have a material adverse effect on our business, results of operations and financial condition. Furthermore, the Spanish government has initiated a reform of the electricity sector (the “Energy Reform”) with
We frequently subcontract certain works in our EPC and concession-type projects to third parties. We therefore depend on the capacities of these third parties to complete the construction of certain parts of the works of our projects according to the quality standards, price and deadline to which we have agreed. Most of our construc-
155
Management Report 2014
tion and operating agreements with third-party contractors contain fixed deadlines and prices. If these contracts are breached, the guarantees that may have been given may be insufficient to cover the losses we suffer and our business, results of operations and financial condition may be materially adversely affected. We are exposed to fluctuations in the price and problems with the supply of raw materials. The primary raw materials we use in our projects are steel, stainless steel, stone and sand aggregate, cement, reinforcing bars, iron and copper. Our raw materials suppliers vary in each market in which we operate due to the market-specific requirements of our projects. Although we include raw material cost estimates in our tender estimates, raw material costs are subject to price fluctuations. In addition, the supply of essential raw materials may be delayed or interrupted due to factors beyond our control, including the implementation of import restrictions, which could result in project delays and increased costs if alternative suppliers are unable to provide replacement raw materials at competitive prices, or at all. Moreover, we may be unable to pass on any or all of the increased raw material costs to our customers. Such price fluctuations or supply interruptions could have a material adverse effect on our business, financial condition and results of operations. Our operations require us to obtain licenses, authorizations and permits for both our EPC and our concession-type projects, which may entail a long and complex process. Any failure to obtain or renew such approvals, licenses and permits or comply with the terms of such approvals, licenses and permits may have a material adverse effect on our business, results of operations and financial condition. We are required to obtain various environmental, development and labor-related approvals in connection with our operations in the countries in which we operate. Although we have obtained the majority, but not all, of the licenses, authorizations and permits required for carrying out the construction works in both our EPC and our concessiontype projects that are in the development phase, we cannot ensure that this will be the case in the future. We may be unable to obtain all licenses, authorizations and permits required for the projects we are planning. Procedures for obtaining authorizations vary from country to
156
country and requests may be rejected by the relevant authorities for many reasons, or they may be approved, but with significant delays. The process of obtaining permits can be further delayed or hindered by changes in national, or other, legislation or regulation or by opposition from communities in the areas affected by a project. Moreover, certain operating or construction permits that have been issued to us could be contested. We may be subject to claims made against us by customers, suppliers, subcontractors or other third parties, and other litigation and legal proceedings. Our EPC and concession-type projects involve complex design and engineering, procurement of supplies to be manufactured specifically for the project, and management of the project’s construction management. We may encounter difficulties in engineering, equipment delivery, scheduling changes and other factors, some of which are beyond our control and may affect our ability to complete the project in accordance with the original delivery schedule or to meet the contractual performance obligations. In addition, we rely on third-party partners, equipment manufacturers and subcontractors to assist us with the completion of our contracts. As such, claims involving customers, partners, suppliers, subcontractors and third parties may be brought against us, and by us, in connection with our project contracts. Claims brought against us could include back charges for alleged defective or incomplete work, breaches of warranty and/or late completion of the project and claims for canceled projects and involve actual damages, as well as contractually agreed upon liquidated sums. Claims brought by us against customers could include claims for additional costs incurred in excess of current contract provisions arising out of project delays and changes in the previously agreed scope of work. Claims between us and our suppliers, subcontractors and vendors include claims like any of those described above. These project claims, if not resolved through negotiation, are often subject to lengthy and expensive litigation or arbitration proceedings. Charges associated with claims may materially adversely affect our business, results of operations and financial condition. As of 31 December, 2014, our recorded provisions for “litigation and other” were €28.6 million euro. c) Concentration of customers During the years 2014 and 2013 there is no client that contributes more than 10% of revenue.
5. Financial risk Group’s activities are exposed to a variety of financial risks: market risk (including foreign exchange risk, fair value interest rate risk and price risk), credit risk and liquidity risk. 5.1. Market risk a.1) Exchange rate risk The Group has international operations and is therefore exposed to foreign exchange risk during currency transactions, relating particularly to the US Dollar (USD), Brazilian Real, Mexican Peso and Indian Rupee, as well as to other currencies. Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations. The Group hedges net forecast flows deriving from forecast transactions in currencies other than the functional currency of the Group companies that affect the transaction. Management has established a policy requiring Group entities to manage their risk of exchange rate of foreign currency against the functional currency. The companies are required to cover the entire exchange rate risk to which they are exposed with the Central Department of Treasury. To manage exchange rate risk that arises from future comercial transactions and recognized assets and liabilities, the Group companies use forward contracts, transacted through Group Treasury Department. The Group management policy of the Group Treasury Department is to cover the expected net flows originated in transactions in other than the functional currency of the Group’s company that makes the transaction.At 31 December 2014 and 2013 there were only sales-purchases of foreign currency by transactions realized by companies located in Spain, USA, Asia and Latin America.
The Group’s operations are generally performed in the functional currency of each country, although transactions performed in other currency are common (in Spain, India and Latin America principally), especially in USD and Euro. If at December 31, 2014 the functional currency of each country with operations in USD had depreciated/appreciated 10% against the USD keeping the other variables constant, consolidated profit after tax would have been €17,850 thousand euro lower/higher (2013: €19,680 thousand euro lower/higher), mainly as a result of the effects of revaluation/devaluation of the active or passive positions in USD; equity would have varied in the same magnitudes (calculated excluding the effect of the impact of changes in fair value of derivative financial instruments).
Annual Report Financial Report
2014
The Group has various investments in foreign operations, whose net assets are exposed to risk of foreign currency translation. Such operations are concentrated mainly in Latin America (Brazil and Mexico), USA and India. Overall, the Group policy is that the operations in each country are financed by debt taken in the functional currency of each country, so that risk affects only to the part corresponding to the investment capital. If investment is financed partly or wholly with borrowings to credit institutions, the Group’s policy is to take loans denominated in the functional currency.In the absence of funding, the Group’s policy is not to make coverage, except in certain cases where expected cash flows in short term by delivering dividends. of the subisidiary are covered. The main exposures in foreign currenty as a result of capital investments measured from the net assets of foreign companies included in the consolidated balance at 31 December 2014 are set below: (€ Million)
2014
Brazilian real (*)
504
Mexican peso (*)
256
Indian rupee
340
US Dollar (*)
458
Other currency (*)
184
Total
1,742
(*) Value of goodwill existing at each date not included.
157
a.2) Price risk Management Report 2014
• Project finance
The Group is not exposed to equity instrument price risk since it has no significant investments. The Group is partially exposed to market price risk in respect of raw materials, relating basically to metals and oil, which affect the price of supplies of equipment and materials manufactured in the projects executed by the Group. Generally, these effects are efficiently passed on in selling prices by all similar contractors operating in the same sector. The Group reduces and mitigates price risk by means of policies implemented by management, consisting basically of a reduction or increase in the rate of placements and the selection of currencies and countries of origin, as well as by ensuring the production or acquisition of certain raw materials at a closed price. a.3) Cash flow and fair value interest rate risk
The Group participates in a number of investment projects under “Project finance” arrangements in which, among other aspects, repayments are secured only by cash flows from the respective projects; there may be, in some cases and during the construction phase, additional guarantees. In such cases, financing mainly comprises long-term, variable-rate instruments. The interest rates applicable depend on the country in which the project is located and on the currency in which the financing is issued. Financing issued at variable rates exposes the Group to cash flow interest rate risk. The Group uses interest rate swaps to convert long-term financing totally or partially to fixed interest rates. Additionally, under certain project finance contracts the company that obtains the financing undertakes vis-àvis the granting banks to contract the above-mentioned derivative financial instruments.
Interest rate risk must be analysed in relation to the two types of financing obtained by the Group:
The risk exposure to variable interest rate at year-end 2014 is as follows:
(€ Million) Funding Cash and cash equivalents interet-bearing Net position Portion covered with derivatives
(*) Includes project finance related to assets held for sale.
158
Referenced Euribor
Other references (*)
Total
162
82
244
-
(4)
(4)
162
78
240
122%
0%
83%
The Group analyzes its exposure to interest rate risk dynamically. A simulation through which the Group estimates the effect on the outcome of a given interest rate change is made. For each simulation, the same variation in the interest rate for all currencies and references is used. The scenarios are performed only for liabilities that represent the most relevant interest-bearing positions.Based on the simulations performed, the impact on a profit after tax increase / decrease of 100 basis points in the interest rate would mean a decrease / increase of €672 thousand euro (2013: €801 thousand euro), mainly due to higher / lower interest expense on variable rate loans; equity would have varied in the same magnitudes (calculated excluding the effect of impact of changes in fair value of derivative financial instruments).
• Banks Borrowings The Group’s interest-rate risk arises mainly from longterm borrowings. Borrowings and Senior Notes issued at variable rates expose the Group to cash flow interest rate risk. Fixed-interest borrowings expose the Group to fair value interest rate risk. A large part of the Group’s borrowings are obtained at variable rates, the main reference rate being the Euribor. The Group policies consist in the use of interest rate swaps to convert long-term financing to fix interest rates.s to convert long-term financing to fixed interest rates.
Annual Report Financial Report
2014
The variable rate risk exposure at each period is as follows: 2014
(€ Million) Debts to credit institutions
Referenced Euribor 448
Other references 227
Total 675
Cash and cash equivalents interest-bearing
(89)
(184)
(273)
Net position
359
43
402
Portion covered with derivatives
101%
0%
67%
The Group analyses exposure to interest rate risk in a dynamic manner. A number of scenarios are simulated taking into consideration refinancing, renewal of current positions, alternative financing, existence of variable-rate investments (in this sense, very short-term interest-bearing placements are treated as being exposed to variable interest rates) and existing hedges. Based on these scenarios, the Group calculates the effect on the outcome of a given interest rate change. For each simulation, the same variation in the interest rate for all currencies is used. The scenarios are performed only for liabilities that represent the most relevant interestbearing positions. Based on the simulations performed, the impact on profit after tax of an increase / decrease of 100 basis points in the interest rate would mean a decrease / increase of €1,640 thousand euro (2013: €2,759 thousand euro), mainly due to higher / lower interest expense on variable rate loans; equity would have varied in the same magnitudes (calculated excluding the effect of impact of changes in fair value of derivative financial instruments).
159
5.2. Credit risk Management Report 2014
The Group manages credit risk in relation to the following groups of financial assets: • Derivative financial instruments and balances included under Cash and cash equivalents and financial assets at fair value through profit or loss. • Balances related to trade and other receivables. The financial derivative instruments used and the operations with banks included under Cash, cash equivalents and financial assets at fair value through profit or loss are contracted with renowned, prestigious banking entities with high credit ratings. In relation to the assessment of credit risk in respect of derivative financial instruments and bank transactions included in cash and cash equivalents and financial assets at fair value through profit or loss, Group management applies the following procedures: • Credit Default Swap (CDS). When CDSs quoted in the market exist, credit risk is quantified on the basis of the market quotation. The CDS is the additional premium that an investor is prepared to pay to cover a credit position. The quantification of the risk is therefore equal to this premium. • Credit Spread on issues of bonds. When quoted bonds on various financial markets exist, the quantification of the credit risk can be obtained as the differential between the internal rate of return (yield) on the bonds and the risk free rate. • Comparable. If it is not possible to obtain the quantification of the risk by applying the above two methodologies, the use of comparable is generally accepted, that is, companies or bonds issued by companies in the same sector are used as a reference. In connection with the balances of trade and other receivables, a high proportion of them (56.27% y 68.67% at 31 December 2014 and 2013, respectively) are related to operations with national and international public entities, which the Group believes that the credit risk is very limited. In relation to private sector clients, a significant portion of the balances are related to companies with high credit ratings and with which there is no history of default. position of customers and receivables is periodically monitored as well as an individual analysis of the most significant exposures. 5.3. Liquidity risk
160
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of comited credit facilities and the ability to close out market positions. Given the dynamic nature of the underlying business, the Group’s Treasury Department aims to maintain flexibility in
funding by the availability of committed credit lines. It is noteworthy that, in relation to various investment projects (“Project finance”) in which the Company participates, they are characterized by the fact that the repayment of the financing arranged is mainly guaranteed by the cash flow of the respective projects. In theses cases, the Group’s policy to cover the liquidity risks state that these loans are takenout long-term and structured on the basis of expected cash flows for each of the projects. In implementing this policy, the 93.98% of the funding allocated to projects taken at 31 December 2014 (2013: 94.70%) has a maturity greater than one year, and 17.23% of the funding taken at 31 December 2014 (2013: 2.30%) is longer than 4 years. maturity. Regarding the rest of the Group’s liquidity position, the Management monitors the forecast liquidity reserve of the Group based on expected cash flows. The liquidity risk management is carried out jointly and centrally by Group’s Treasury. This management includes both treasury management of Group’s recurrent operative (analysis and monitoring debt maturities and credit collection, renewal and contracting credit facilities, management of available credit lines, temporary placement of surplus cash) as the management of the necessary funds to undertake planned investments. While the Group has negative working capital at 31 December 2014 amounting to €139 million euro, the Group’s management believes that the liquidity risk is properly bounded. In this regard, the Group has the following forecast cash flows for the year 2015: • Forecast operating cash flow for 2015 is positive in 194 million euro. This forecast could even be improved among other reasons, by the success of certain claims on works that the Group is undertaking, as well as the procurement and execution of additional portfolio to which Group maintains at year end 2014. • Forecasts of positive investment flows for 2015 amounted 13 million euro. This forecast could be substantially improved through various financing alternatives of the committed investments that the Group is negotiating. • Forecast negative cash flow of fundings is (181) million, as all the credit facilities arranged (as in previous years) and other short-term annually renewable debts with credit institutions are expected to be renovated. Note that the forecasted cash flows from financing could be substantially improved by obtaining other long-term loans that the Group is negotiating. Given these cash flow projections and the available cash at year end 2014, the Group has a strong position that allows it to meet its obligations in the short term, considering the existence of undrawn credit lines available and the existence of available factoring lines and other financial instruments that enable efficient working
capital management and proper management of liquidity risk. 5.4. Capital risk management The Group’s objectives regarding managing capital are to safeguard the ability to continue as a going concern to seek a return for shareholders and benefits to other holders of equity instruments and to maintain an optimar capital structure to reduce the cost thereof. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends payable to shareholders, repay capital to shareholders, issue new shares or sell assets to reduce debt.
The Group monitors capital in accordance with the leverage ratio, in line with the industry practice. This index is calculated as net debt divided by total capital (excluding the projects’ position assigned). Net debt is calculated as total debt with credit institutions, the current positon of suppliers and other payables, as shownin the consolidated accounts, less cash and cash equivalents and financial assets at fair value through profit or loss.The capital is calculated as equity, as shown in the consolidated accounts, plus net debt. The leverage ratios at 31 December 2014 and 2013 were as follows:
(€ Million) Borrowings and senior notes and Trade and other payables -current Less: Financial assets at fair value through profit or loss Less: Cash and cash equivalents Net debt Equity (including Non-controlling interests, excluding hedging reserves and accumulated translation differences) Capital total Leverage ratio (Net debt / Total capital)
2014
Annual Report Financial Report
2014
2013
3,903
3,516
(15)
(8)
(291)
(241)
3,597
3,267
615
650
4,212
3,917
85.4%
83.4%
161
Management Report 2014
6. Expected Business Trends EPC (€ Million) EPC Portfolio Portfolio for concessions New contracts EPC Income “Book to bill” ratio
YE 2014
YE 2013
Var (%)
7.107
6.626
7,3%
16%
16%
-
3,344
3,177
5.3%
2,097
2,425
(13.5%)
1.59x
1.31x
21.7%
At 31December 2014 our portfolio of EPC, which gives visibility to revenues in the coming years, was €7,1 bn euro. New contracting during the year amounted to €3,3bn euro, an increase of 5.3% over the previous year, of which about 90% are international projects. Portfolio of workfor our concession division represents only 16% of the total. Our EPC division has reduced reliance on concession division significantly since at 31 December 2010 the concessions portfolio represented 26% of the total. Concessions
Key metrics
In operation
Under construction
Transmission lines (Km)
3,637
2,322
5,959
Toll roads (Km)
1,477
167
1,644
Solar PV (MW)
254
72
326
26,103
1,100
27,203
Car parks (Spaces)
A significant number of our concession projects are already operational. We expect the remaining part of the current portfolio to be fully operational by the end of 2016.
162
Total operational in 2016 (expected)
7. Information on Research and Development (R&D) Activities
Annual Report Financial Report
2014
The Group is particularly committed to dedicating the necessary resources to be up-to-date with the latest technological developments in our sector. Research, initial design, testing of new products and services, etc., as well as specific innovation initiatives involving these products, regardless of whether or not they are attributed to projects, are carried out in general by the employees of the Group’s different departments within the framework of varying national government aid program.
8. Acquisition and disposal of treasury shares There has been no acquisition or disposal of treasury shares during the period.
9. Subsequent events There have been no significant events after the reporting date that could have a significant impact on the consolidated financial statements., other than the ones disclosed in the notes of the financial statements.
163
Preparation of the 2014 consolidated annual accounts The Board of Directors of the trading Company “Grupo Isolux Corsán, S.A. at its meeting on March 3, 2015, and in compliance with the requirements of Article 253 of the Law of Capital Companies and of Article 37 of the Commercial Code, procedes to formulate the Consolidated Financial Statements (Consolidated Balance Sheet, Consolidated Income Statement, Global Consolidated
Income Statement, Consolidated Statement of Changes in Equity, Consolidated Statement of Cash Flows and Notes to the Consolidated Financial Statements) and the Director’s Report, referring to the year ended at 31 December 2014, and on the terms set out in the accompanying documents and preceding this writing.
Signatories: D. Luis Delso Heras
D. José Gomis Cañete
Chairman
VP (Representing Construction Investments, Sarl.)
D. Javier Gómez-Navarro Navarrete
D. Serafín González Morcillo
Member
Member
D. Francisco Moure Bourio
D. Ángel Serrano Martínez – Estéllez
Member
Member
D. Jordi Casas Bedós
D. Jorge Mercader Miró
Member (Representing Sercapgu, S.L.).
Member (Representing Hiscan Patrimonio S.A.U.)
D. José María de Torres Zabala
D. Lorenzo José Martínez Márquez
Member (Representing Cartera Perseidas, S.L.)
Member (Representing Inversiones Corporativas, S.A.)
D. Antonio Hernández Mancha
D. José Luis Ros Maorad
Member
Member
D. Antonio Portela Álvarez
D. Francesc Bellavista Auladell
CEO
Member (Representing Inversiones Corporativas Digitales, S.L.U.
D. Juan Francisco Falcón Ravelo Non-voting secretary
164
Annual Report Financial Report
2014
Issued by: Grupo Isolux Cors谩n S.A. Direcci贸n General de Medios Departamento de Comunicaci贸n C/ Caballero Andante, 8 28021 Madrid www.isoluxcorsan.com
Creation and design: Torres y Carrera Printing: Legal deposit number: Printed on paper from sustainably managed forests.