Untitled

Cmc in the world
Yesterday
Today
· Botswana
· Malaysia
· Algeria
· Burkina Faso
· Philippines
· Angola
· Colombia
· Somalia
· China
· Egypt
· Taiwan
· Italy
· Eritrea
· Tanzania
· Laos
· Ethiopia
· Zimbabwe
· Malawi
· France
· Mozambique
· Germany
· South Africa
· Iran
· Sudan
· Ivory Coast
· Swaziland
Offices worldwide
Italy
Registered office /
Patriota ao km.1, Luanda
People’s Republic
Romania
tel. +244 22 2401896
of China (P.R.C.)
· Cmc di Ravenna
fax +244 22 2370385
· Cmc Cina Branch
Sucursala Bucuresti
Room 802, Moer Building A
Aleea Modrogan 18
headquarters
48122 Ravenna
France
60, Chuncheng Road
ap. 8, Sector 1
via Trieste 76
· Cmc di Ravenna
Kunming City
Bucurest 011826
tel. +39 0544 428111
France Sarl
Yunnan Province
tel. +40 31 4252247
fax +39 0544 428554
15 Rue Taitbout, Paris
tel. +86 871 3110370
fax +40 31 4252250
cmc.cmc@cmcra.com
tel. +26 944393
fax +86 871 3110377
www.cmcra.com
fax +26 944396
cmccomp@public.km.yn.cn
Russia
· Cmc Company
· Cmc di Ravenna
Rome office
Laos
Cantiere Yin Tao
Moscow Branch
00187 Roma
· Cmc Laos Branch
Neiguanying Village
119019, Moscow, Bolshoy
via Toscana 10
House number 122
Dingxi, County
Afanasievsky pereulok 8/3
tel. +39 06 42020425
Unit 05, Saphanthongtai
Gansu Province
tel. +7 495 6979586
fax +39 06 42390728
Village, Sisattanak
tel. +86 932 8445121
fax +7 495 6979218
cmcroma@cmcroma.com
District, Vientiane
fax +86 932 8445122
tel. +856 21 353502
Milan office
Sudan
Republic of South Africa
· Cmc Sudan Branch
20122 Milano
Malawi
· Cmc Sud Africa Branch
Yassir Abdel Moneim
Torre Velasca 4° piano
· Cmc Malawi Branch
· Side Investments (Pty) Ltd
Building, Salih Basha
piazza Velasca 5
Unit House, Victoria
Atlas Road, Denel
Al-Mak Street, Khartoum
tel. +39 02 49680110
Avenue, Blantyre
North Entrance,
· Cmc Co. Ltd
fax +39 02 49790136
tel. +265 1 831776
2r Building, Denel
Plot No. 2, Block No. 8, West
cmcmilano@cmcra.com
fax +265 1 831729
Aviation, Kempton Park,
Blue Nile Front, Khartoum
Johannesburg
tel. +249 183 799631
Mozambique
tel. +27 11 9734029
fax +249 183 799630
· Cmc Maputo Branch
fax +27 86 5207926
Algeria
· Companhia Imobiliaria
· Dunrose
Swaziland
· Cmc Algeria Branch
Moçambicana Lda
Investments (Pty) Ltd
· Cmc Swaziland Branch
· Cmc Ravenna Eurl
· Cmc Africa Austral Lda
· Moreside
Sithobela Road,
Lotissement El Feth 9
· Madeiras Preciosas
Investments (Pty) Ltd
Siphofaneni
Sable Rouges, El Biar, Algeri
do Moçambique Lda
· Sidebar
tel. +268 344 1440
tel. +213 21 922677
· Profuro Internacional Lda
Manufacturing (Pty) Ltd
fax +268 344 1438
fax +213 21 923135
· Sulbrita Lda
10 Winter Street,
· Cmc Swaziland (Pty) Ltd
cmc_algerie@hotmail.com
Avenida da Namaacha
Industrial Area,
· Cmc Ravenna (Pty) Ltd
Km. 6, Matola
P. P. Box 586
Pass S.E.B., Head
Angola
tel. +258 1 780357
Barberton 1300, R.S.A.
Quarters 1, Mbabane
· Cmc Sucursal de Angola
fax +258 1 780335
tel. +27 11 2622777
tel. +268 551 0673
Estrada de Benfica, Lar do
info@cmcaa.co.mz
fax +27 11 2622779
fax +268 551 0668
Overseas
Contents
5
Capabilities of the Cmc Group
40
1.10 Other activities
5
Organization Chart
41
1.11 Risk management
7
Directors, officers and committees
42
1.12 Intercompany
9
Performance Review
transactions
43
1.13 Social policies
14 1.0 Report on Operations 2009
44
1.14 Subsequent events
14
1.1 Principal events during the year
45
1.15 Outlook for operations
16
1.2 Background
19
1.3 Results for 2009
21
1.4 Financial situation
23
1.5 Liquid funds
24
1.6 Members’ equity
and members’ loan
50 2.0 Consolidated
Financial Statements
50
2.1 Balance Sheet,
Profit and Loss Account
56
2.2 Notes to the Consolidated
25
1.7 Orderbook
25
1.8 Human resources
94
26
1.9 Principal projects in progress
104 2.4 Auditors’report
Financial Statements
2.3 Attachments
Capabilities of the Cmc Group
Cmc Group has a proud record of delivering
· Sewage systems.
world class infrastructural projects to the
· Treatment of toxic waste.
market, with the following specializations:
Building projects
· Civil and public buildings
Transport
(hospitals and clinics, schools,
· Roads, motorways.
sport structures, correctional facilities).
· Tunnels, bridges and viaducts.
· Executive and service buildings
· Railways and underground.
(hypermarkets, shopping malls,
· Airports.
post offices).
Water and irrigation works
· Hotels and resorts.
· Dams.
· Industrial plants
· Hydroelectric plant.
(power stations, silos).
· Tunnels.
· Maintenance and refurbishment.
· Aqueducts.
Water control and marine works
· Irrigation channels.
· Coastal protection, piers
Ecology and the environment
and jetties, dredging.
· Water treatment
Integrated territorial
and sanitation services.
development projects
Organization Chart
5
Directors, Officers and Committees
Board of Directors *
Auditors
Chairman
Pietro Mieti
Massimo Matteucci
Maurizio Rivalta
Deputy
Guido Leoni
Independent Auditors °
Chief Executive Officer
Deloitte & Touche Spa
Dario Foschini
Members
Audit Committee
Claudio Bandini
ex art. 6 Legislative
Marco Bulgarelli
Decree 231/2001
Lorenzo Cottignoli
Chairman
Maurizio Fucchi
Gian Luca Bandini
Fausto Gatti
Members
Valerio Giuliani
Tamara Magalotti
Massimo Gori
Riccardo Suprani
Tamara Magalotti
Stefano Marchetti
Executive Committee
Gianni Miccoli
Chairman
Massimo Matteucci
Board of Statutory
Chief Executive Officer
Auditors *
Dario Foschini
Chairman
Chief Operating Officer
Gian Luca Bandini
Roberto Macrì
* In office until approval of the financial statements at 31 December 2010.
° In office for the three-year period 2008-2010.
7
8
Performance Review
Photos pages 8, 10-12 > Cruise Terminal, Porto Corsini, Ravenna (Emilia Romagna) Construction of the new Cruise Terminal of Porto Corsini.
9
11
12
1.0
Report on Operations 2009
Members and Invited Guests,
Firstly, thank you all very much for attending this meeting called to examine and approve the 2009
separate and consolidated financial statements of Cooperativa Muratori & Cementisti, Cmc di
Ravenna. Special greetings are extended to the representatives of political, social and economic
institutions and organisations, whose presence here confirms the considerable attention given to
the activities of our Cooperative.
Cmc continues to play a leading role in our community; a role that we intend to strengthen, not
only as part of our development, but also in the interests of the entire area.
In view of the complexity of our contracts in Italy and Abroad, as well as the time required to prepare consolidated financial statements (art. 40 of Decree 127 dated 9 April 1991), this meeting is
being held within six months of the financial year end as allowed by the Articles of Association
and the Italian Civil Code (art. 2364).
The 2009 consolidated financial statements essentially confirm expectations, with the value of
production totalling € 715.7 million and income before taxes of € 20.6 million, while the parent
company (the Cooperative) reported € 528.9 million and € 20.3 million respectively.
The orderbook amounts to about € 2.9 billion, borrowing is optimal and the consistency of profitability allows us to view the future with reasonable optimism, especially considering current promotional activity the general progress made on live contracts.
1.1 Principal events
The principal events of 2009 are summarised as follows:
during the year
• At Group level, the consolidated volume of production was - as mentioned - about € 715.7 million, up by about € 13.9 million compared with 2008.
Net of reinvoicing, capitalisations and non-recurring items, the “operational” value of production
of Construction, our core business, was € 642.1 million. This was in line with 2008, although the
mix between Italy and abroad was different; in particular:
· foreign activity was up by € 68.8 million (+27.3%), not least due to growth in Southern Africa
and in Laos;
· activity in Italy was down by € 81.9 million (-20.3%), since the completion of major contracts was
not sufficiently offset by the start of new work, due to deferrals and delays not attributable to us.
• Consolidated operating income before depreciation and amortisation (Ebitda) has risen from €
61.5 million to € 72.8 million.
• Income before taxes of € 20.6 million (€ 13.5 million in 2008) benefited from the improved
construction results (€ 19.5 million compared with € 12.5 million in 2008), with a resulting rise in
net income to € 12.8 million (€ 9.2 million in 2008).
• Cash flow generation of € 57.4 million had a beneficial effect on borrowing, which has returned to earlier levels following the major drop seen at the end of 2008, when major contractual advances were collected at year end.
• With new orders totalling about € 555 million, the orderbook at 31 December 2009 amounts
to around € 2.9 billion (€ 3.0 billion at the end of 2008).
The principal orders obtained during 2009 comprised:
• modernisation of the Palermo-Lercara Friddi stretch of road from km 14.4 to km 48.0, worth €
177 million (Cmc share: 35%);
14
• construction of a dam and a tunnel at Tabellout-Setif (Algeria) for the annual transfer of 139,000
cu.m. of water. The value of this contract, to be performed as a Joint Venture with Razel, a French
firm, is € 160 million (Cmc share 49%);
• road and civil works in Mozambique worth € 150 million;
• construction of Milan’s external Eastern Ring Road (34 km) worth € 1.0 billion and entrusted by
the promoter for the planning, construction and management of the works, Tangenziali Esterne
di Milan-Tem Spa, to the Miteco Consortium (Cmc share 11%, € 110 million);
• construction of a shopping centre and offices in Riccione, worth a total of € 16 million (Cmc
share 80%, € 12.8 million);
• three contracts at the Us Navy base for a total of € 12.5 million. These involve the refurbishing
of some buildings in Vicenza and the construction of a control tower at Sigonella (Ct);
• As part of functional testing for the Bologna-Florence high capacity/high-speed railway, the
world record for speed in a tunnel, together with the Italian speed record, was broken on 4 February 2009 by the “Frecciarossa” operated by Trenitalia Spa.
• The Mestre motorway by-pass was inaugurated on 8 February 2009, in the presence of leading
representatives of the State and the Veneto Region. This opening was well ahead of schedule.
• The Members’ Meeting held on 28 February 2009 approved the three-year plan for 2009-2011.
• On 17 April, an agreement signed between Stretto di Messina Spa and Eurolink Scpa (the temporary association of firms that is the General Contractor for the design and construction of the
Bridge over the Strait of Messina, in which Cmc holds a 13% interest), settled the dispute that
arose when work was blocked in October 2006. The current agreement, which became effective
on 6 August, confirms the reciprocal commitment of the parties to complete the executive design
work for the bridge as rapidly as possible for presentation during the second half of 2010. Accordingly, the start of work is confirmed for 2011, with completion within six years.
• In May, an increase in the share capital of Cmc Immobiliare Spa by € 5.0 million (plus a premium
of € 5.0 million) was approved and reserved for Cooperare Spa, which now holds 23.8% of the
share capital. This transaction is intended to obtain the financial resources needed to develop
Ravenna’s “Darsena di Città” (or City Port);
• The Board of Directors met on 4 June 2009 and admitted 20 new Cooperative Members, thereby
raising the number, net of resignations, from 377 at the end of 2008 to 382 at the end of 2009.
• The number of permanent employees has increased slightly to 515, from 509 at the end of 2008.
• The Members’ Meeting of 6 June approved the new model of corporate governance and appointed two new directors: Dario Foschini and Claudio Bandini. Following resolutions adopted
by the Board of Directors on 12 and 30 June, the top management of the Cooperative was reorganised, with the role of Managing Director being taken by Dario Foschini, and that of General
Manager by Roberto Macrì.
• In July, Cmc bought a 30% stake in Granarolo Immobiliare Spa from Federazione delle Cooperative della Provincia di Ravenna for € 990 thousand, with a view to developing a real estate project in the Faenza area.
• On 6 August a new contract for signed for a syndicated loan of € 45 million, with Banca Popolare di Milano Scarl as lead manager.
• On 3 September the Provincial Council of Forlì provisionally decided in favour of the proposed
Emilia bis on the stretch between Forlì and Cesena. This involves the construction of a four-lane
15
1.0
Report on Operations 2009
highway with a budgeted cost of € 235 million using the project financing procedure formulated
by Autostrada Romagna 1, the consortium company in which Cmc has a 35% interest.
• On 29 October the deed of sale was signed by Cmc and Generali Prefabbricati Spa for a 20%
interest in Ged Srl, a subsidiary.
• Rather than prepare the usual separate social responsibility report, a summary is presented in
the documentation accompanying the annual report.
1.2 Background
The Group’s activity in the construction sector in Italy and abroad is naturally influenced by the
state of the economy and it is important to understand how the situation is likely to develop.
The position is especially complex at the start of 2010 - a year everyone had hoped would mark,
if not actually a turning point, at least a clear inversion in the direction of the devastating financial crisis that has heavily conditioned the world’s economies since the end of 2008. A crisis that
has dictated the agenda for the governments of all leading countries, influencing employment
prospects and the living conditions of their populations.
There are already some positive signals, especially at a global level, that our business must seek to
grasp and build upon, even though they are not always fully consistent. Nevertheless, we must
recognise that the difficulties encountered in finding a clear and unequivocal interpretation of
the situation also represent confirmation that the road towards a new, stable and virtuous economic cycle will be difficult and, in all probability, not short.
The crisis in Greece and the risk of contagion spreading to the weaker countries in the Euro area
remind us of past troubles, which we can only trust will be avoided by our governments and the
various European institutions. Clearly enough, all countries within the Euro area will have to implement strict controls over their public sector deficits, despite the adverse impact on growth.
Considering the alternatives however, failure of the single currency would have serious repercussions for the financial structure of every country and for the banking-corporate binomial. Growth
in the Usa appears more substantial, although conditioned both by the indebtedness of the public sector and households, and by a high unemployment rate that depresses consumption.
Accordingly, the greatest growth will come from the Asian countries, with China and India in
the forefront. This does not automatically mean an upset, in the short term, in the world hierarchy of influential economies; even so, it does indicate that the economic and financial baricentre is shifting and that the weight of the western democracies in the new world order will,
to some extent, be reduced.
Italy continues to count the cost of the heavy delays accumulated. Recent Istat data for 2009
shows that the country suffered the worst slump in forty years. Furthermore, contrary to the general growth expectations, Gdp contracted by 0.2% in the final quarter, while the Eu as a whole
expanded by 0.1%. Lastly, 600,000 jobs were lost over the year.
The eminently defensive policies adopted by Italy to tackle the crisis, combined with the lower exposure of Italian banks to toxic securities, have helped to keep the principal indicators of stability
16
under control; despite this, the costs of the public administration continue to rise, taxes do not
fall, industrial policy is not coordinated and, above all, there is no guidance about which productive and service skills and what know-how and knowledge underpin the country’s efforts to return to growth in the coming years.
At the risk of repetition, in order to release resources for productive investment it is essential
to find a way to rationalise and modernise the public sector and therefore overcome bureaucratic inefficiencies.
To do this, a concerted effort must be made of the type seen in the 1990s that enabled Italy to
join the European Monetary Union. Unfortunately, events on virtually a daily basis show that the
climate is entirely different. But recognition does not mean resignation and acceptance as unavoidable a status that, if maintained, would condemn Italy to steady decline.
Italy As regards the construction market, Italy needs massive investment in infrastructure more
than ever before. A recent comparison between Italy and the other main European countries
shows that there is a significant gap on all fronts. In the last fifteen years, Italy ranks among the
European nations with the lowest level of public and private investment in construction: 8% of
Gdp, compared with Germany, Holland and Belgium which have invested as much as 14%.
Without a doubt, the State plays an important role in this situation, partly because the government recently declared that it wanted to relaunch investment in infrastructure (almost € 18 billion in the transport sector), and partly because the State has a presence in many public sector or
semi-public sector companies whose balance sheets contain a significant part of this country’s infrastructure assets. For example, out of a road network that is 173,000 kilometres long, all of
153,000 are managed by local government entities at municipal, provincial or regional level.
Of the other 20,000 kilometres, only 6,500 involve private operators through long-term concession agreements. Italian and foreign funds specialising in infrastructure affirm that they are ready
to invest in Italy. Then there are the large Italian banks, which will be able to contribute several
tens of billions of Euro over the coming years in the form of loans and equity.
In the meantime, the demand for infrastructure continues to grow: not just the emergency needs
of Abruzzo and Sicily, but also those of a day-to-day nature.
Abroad We have a large number of projects in South America, Africa and the Middle East, relatively few in western countries (Europe, United States). A lot of them involve infrastructure (railways, roads, hydroelectric schemes), few of them housing and services. With these logos, which
have been stable for many years, Italian construction companies have continued their rapid tour
of world markets in 2009 as well. In 2008, our overseas sales came to € 6,400 million Euro,
15.2% more than the previous year, now accounting for 48.7% of total sales (more than 50%
for companies with sales of more than € 250 million). In the last four years, our turnover outside
Italy has more than doubled (+106.7%), whereas domestic turnover has gone up by only 1.4%.
Cmc has also reinforced its overseas presence, particularly in Southern Africa, Algeria, China and
Laos, so growth over the next few years will be in these areas.
Southern Africa The economies in this region offer good development opportunities. The economy
17
1.0
Report on Operations 2009
of Mozambique, led by such traditional sectors as agriculture, transport and communications, as
well as the export of natural gas, maintained growth of 6% during 2009, despite a generalised
slowdown in mining projects and in the energy sector. Our grassroots presence in Mozambique where we are the leading construction firm - has enabled us to enter the most important markets
in the region: South Africa and Angola.
Following the completion of preparations for the football World Cup, the South African economy
- founded on the mining of mineral resources - is now feeling the effects of the global crisis. The
growth rate has slackened but remains positive at around 4%, leaving room for major investment in the energy sector and in transportation.
Another country that is emerging is Angola, where the long and bloody war that ended in 2002
left a huge need for infrastructure as its sad inheritance. The country’s economy, which is driven
mainly by the exploitation of natural resources, especially oil (Africa’s leading crude oil producer)
and diamonds, should be able to sustain the investment needed to carry out important projects
for the reconstruction of the internal road network. Once the current difficulties caused by the
low cost of oil in 2009 have been overcome, the volume of investment is expected to pick up
again: repairs and new constructions planned for the coming years involve 12,000 km of roads,
as well as 32 airports and three railway lines.
Algeria The economic development that comes from exporting hydrocarbons and a political situation that is improving, although still influenced by the threat of Islamic terrorism, have generated a vast programme of infrastructure investments.
The substantial currency reserves accumulated in the years when the oil price was high will enable the country to continue its heavy investment in infrastructure.
Despite bureaucratic obstacles to this programme, the Algerian construction market remains one
of the most important markets for Italian operators and for Italian cooperatives in particular.
China China’s Gdp rose by 8.9% in the last quarter. This is the best performance for a year, raising growth towards Beijing’s target of 9% for the next 10 years from now to 2020. The recovery
is being driven above all by the government’s state aid plan. There is unanimous international
recognition that the incentive packet introduced by the Chinese government was one of the
most effective of all industrialised countries. A massive increase in consumer spending, which
rose by more than 15% in the period January-September. Robust growth in public-sector investment, mostly servicing the plan to urbanise rural areas and create new infrastructure. In other
words, China is managing to do what still seems an object of fantasy in America: raise domestic
spending, which on its own is more than enough to offset the decline in exports.
South East Asia Our activities in South-East Asia began in the mid-90s and have involved a certain
mobility between various countries such as the Philippines, Laos and Malaysia, where we have
built major hydroelectric schemes for private clients. Despite the periodic crises afflicting the area,
demand for electricity and the related projects for its production has never ceased.
Laos, in particular, has enormous hydroelectric potential. The energy produced by the plant we
are constructing will be sold to Thailand, under a long-term contract signed between our principal and the Thai public electricity authority. Laos and other countries in the area continue to offer
opportunities in the production of hydroelectric power, transport and aqueducts.
18
1.3 Results for 2009
Income statement Consolidating the entire Group, the resulting income statement is presented below:
The volume of production by the Group amounted to € 715.7 million in 2009, up € 13.9 million
on 2008, while Ebitda (+18.4%) improved markedly. This lifted income before taxes from € 13.5
million to € 20.6 million (+52.6%), which also reflects an improvement in the results of financial
management due to much reduced levels of borrowing throughout the first half of 2009, combined with interest rates at historical lows.
The increase in income before taxes is also reflected in a rise in net income to € 12.8 million, after
a tax charge of € 7.8 million (€ 4.3 million in 2008).
As you will remember, these results are consistent with the forecast contained in the Half-Year
Report published back in October.
The performance of Construction activities in Italy and abroad is summarised below:
Overall, the Group’s core business continues to generate good results, confirming he volumes
achieved in the prior year, with an increase in operating margin by € 3.0 million (+10.3%) following a rise in the contribution margin by € 5.7 million (+12.8%). The results from operations have
benefited accordingly, climbing by € 7.0 million (+56.0%) in the wake of lower financial expense
due to the drop in interest rates.
Trends in the construction sector differ among the various areas where the Group is active, which
are summarised below.
19
1.0
Report on Operations 2009
Volume in Italy was € 81.9 million lower than last year, mainly due to postponement of the start
of certain large contracts, namely:
• widening the Ss 640 Agrigento-Caltanissetta to four lanes - there have been delays in the application of expropriation procedures, with a consequent delay in making the work sites available;
• Maxiproject 1 on the road link between Marche and Umbria - Cipe (Interministerial Price Commission) delayed approval of the larger sub-projects, which delayed the start of work until the
second half of 2009.
The total contribution margin eased from € 26.7 million to € 25.9 million (-2.9%), in line with
budget expectations due to the excellent performance of three contracts that are being closed
out: maxiproject Salerno-Reggio Calabria, the Mestre By-pass and the Rho Pero station on the
Milan Underground.
The following detailed analysis of the changes in production abroad between 2008 and 2009 is
helpful for an understanding of the dynamics of our business:
As can be seen, Southern Africa is again the lynchpin of our foreign operations with a 38% increase in volumes. This is thanks to Mozambique’s commercial expansion towards neighbouring
countries, above all South Africa and Angola.
20
Overall, the volume generated abroad was € 68.8 million more than in the prior year (+27.3%),
due to full capacity working on the “Gilloly’s” road in Johannesburg and the start of work on
both the hydroelectric “Ingula Pumped Storage Scheme” in South Africa and the “Theun Hinboun Expansion Project” in Laos, without forgetting the Uige and Soyo road works in Angola.
The only contraction in revenues involves Algeria, where the main projects acquired in previous
years are coming to an end, having posted very satisfactory results. The work acquired there towards the end of 2009 is still at the start-up stage, as shown in the order backlog table.
The contribution margin has increased from € 17.7 million in 2008 to € 24.2 million in 2009, up
by € 6.5 million due to the increase in production and the greater profitability of contracts.
1.4 Financial situation
As shown below, the Group’s financial situation reflects net bank borrowing of 17% of turnover.
This is essentially equal to members’ equity and, therefore, is considered satisfactory both in absolute terms and in comparison with other leaders in the sector.
These parameters provide an appropriate starting point for tackling the challenges and the growth
expected over the next three years.
The Group’s overall financing requirement, including bank loans, the members’ loan and intercompany loans, is presented below:
The increase of about € 60 million since the end of 2008, essentially in line with budget, derives
from the normal absorption of resources at a time of considerable investment to start-up new
contracts, especially abroad, during the year.
Consolidated bank debt is analysed below:
21
1.0
Report on Operations 2009
This parameter has performed well, with the year-end statistic showing that the ratio of net borrowing to turnover is in line with the trend for recent years.
The comparison is imperfect of course, since the scope of consolidation has changed considerably over the years; nevertheless, the Group has clearly achieved a financial equilibrium in recent
years which enables us to look to the future with increased confidence and serenity.
From 2006, members’ equity includes the effect of establishing the “Preferred Pooled Shares Preps” programme.
As confirmed by the leading rating agencies, the characteristics of the capital allocated to Cmc, €
12 million repayable after seven years, make it the equivalent of equity.
Since this financial instrument is essentially equivalent to Cooperative Membership Shares, the
“Preferred Pooled Shares” have been classified as members’ capital.
22
1.5 Liquid funds
Liquid funds at 31 December 2009 are made up as follows:
The availability of significant liquidity despite the existence of gross borrowing reflect the nature
of the Group’s activities and the particular ways in which these are financed. More specifically,
Cmc mainly operates via consortiums which hold the liquidity deriving from advances paid by the
principals. The members obtain access to these funds on the basis and timing that reflects the
23
1.0
Report on Operations 2009
financing requirements of the contracts and the relevant clauses contained in the consortium
agreements. The ratio of borrowing to members’ equity, stable for almost a decade at around
1:1, is also a highly favourable confirmation of the financial equilibrium achieved by the Group.
1.6 Members’ equity
The recent changes in members’ equity and the members’ loan, which represent the main sources
and members’ loan
of self-financing, are summarised below (in millions of Euro):
The above data reflects increases of 84% and 12% respectively during the period examined, confirming our ability to self-finance activities via the capitalisation of results and financial support
from our members. The return on capital invested, being the ratio of net income to members’ equity, has changed as follows in recent years:
This trend has enabled us to remunerate as follows the various forms of self-financing (including
both the revaluation of the shares and the dividend):
* Excluding allocation.
24
As shown in the table, the return from financing the Cooperative has been attractive over the
years compared with that available from government securities (12-month Bot), especially for the
Financing Members that have provided funds.
1.7 Orderbook
The orderbook at the end of 2009 amounts to about € 2,930 million following the acquisition of
new business totalling € 555 million, of which € 319 million from Italy and € 236 million from
abroad. The analysis is as follows:
Italy The new work acquired during the year amounted to € 319 million, including change orders to contracts in progress of about € 100 million. This raised the backlog to € 2.0 billion, absorbing 92% of 2010 capacity and 76% of that in 2011.
Overseas New work obtained in 2009 amounted to € 236 million, of which € 150 million in
Mozambique and € 86 million in Algeria. The backlog of about € 1.0 billion guarantees 93% of
the production requirement in 2010 and 75% of that in 2011.
1.8 Human resources
The number of permanent employees increased by 6 during 2009, following the replacement of leavers
- mostly due to retirement - with highly educated young people. There was also a significant increase of
about 3,000 persons active on work abroad, now that work in South Africa has reached full capacity,
activities in Mozambique have expanded and the contract in Laos has commenced. This increase
comprises not only local personnel, but also persons from other countries and Italian expatriates.
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1.9 Principal
Italy
projects in progress
01. Venaus Pilot Tunnel (Piedmont) Design work and excavation of an pilot tunnel at Venaus
for the new Turin-Lyon railway line. The total value of this work is about € 84.3 million. Work is
still suspended and only the design work has been performed. At 31/12/2009 about 7% of the
work has been completed. Principal: Ltf - Lyon Turin Ferroviaire Sas. Contract work performed by
Venaus Scarl. Participation by Cmc di Ravenna: 44%.
02. Milan Underground, Rho Pero station (Lombardy) Construction of the Rho Pero railway station. The total value of this work is about € 72.7 million. At 31/12/2009 about 98% of the work has
been completed. Principal: Metropolitana Milanese Spa. Contract performed by Cmc di Ravenna.
03. Schools at the Vicenza base (Veneto) Construction of a primary and a middle school within
the Vicenza military base. The total value of this work is about € 46.3 million. Work started during
the first quarter of 2008. At 31/12/2009 about 68% of the work has been performed. Principal:
Us Government Em Department of the Navy-Vicenza. Contract performed by Cmc di Ravenna.
04. “Dal Molin” military base, Vicenza (Veneto) Design work and construction involving the
conversion of part of the Italian military airport “Dal Molin” near Vicenza. The total value of this
work is about € 248.3 million. The design phase has commenced, while the works started in
2009. At 31/12/2009 about 14% of the work has been completed. Principal: Us Government Em
Department of the Navy - Vicenza. Temporary association with Ccc di Bologna, but the works
performed entirely by Cmc. Participation by Cmc di Ravenna: 66%.
05. Mestre motorway by-pass (Veneto) Design and construction work for the Mestre by-pass
on the A4 motorway. The total value of this work is about € 870 million, considering the supplementary contract signed recently. At 31/12/2009 about 83% of the work has been performed.
Principal: Commissioner for Mestre’s social-economic-environmental viability emergency. Contract work performed by Passante di Mestre Scpa. Participation by Cmc di Ravenna: 12%.
06. Real Estate Project “Ex Cantina Alvisi” in Faenza (Emilia Romagna) Construction and
commercialisation of a private housing complex in Faenza. The estimated value of the initiative is
€ 30 million. Construction work began at the end of 2007. At 31/12/2009 about 47% of the
work has been completed. Participation by Cmc di Ravenna: 40%.
07. Cruise Terminal, Porto Corsini, Ravenna (Emilia Romagna) Work to construct the new
Cruise Terminal at Porto Corsini. The total value of this work, which started in the second quarter
of 2009, is about € 19.4 million. At 31/12/2009 about 65% of this work has been completed.
Principal: Ravenna Port Authority. Contract performed by Cmc di Ravenna.
08. Dredging to 11.50 metres, Ravenna (Emilia Romagna) Dredging to deepen the Candiano
Channel to 11.50 metres. The total value of this contract is about € 29.1 million. At 31/12/2009
about 74% of the work has been completed. Principal: Ravenna Port Authority. Participation by
Cmc di Ravenna: 65%.
26
Major projects under construction: Italy
03
09. Tagliata Channel by-pass (Emilia Romagna) Construction of a traffic regulator at the entrance to the Tagliata Channel in the Municipality of Cesenatico. The total value of this contract
has risen to € 9.9 million following the signature of a supplementary agreement. At 31/12/2009
all the work has been completed. Principal: Consorzio di Bonifica Savio e Rubicone. Contract performed by Cmc di Ravenna.
10. Riccione shopping centre (Emilia Romagna) Contract for the construction of an intermediate shopping centre and offices in via Berlinguer, Riccione. The value of the work is € 16.4 million. Work started during the third quarter of 2009. At 31/12/2009 about 20% of the work has
been completed. Principal: Coop Adriatica (Cons. Ravennate). Participation by Cmc: 80%.
11. Hsr, Milan-Bologna line (Lombardy/Emilia Romagna) Construction of the stretch of the
Milan-Bologna high-speed railway from km. 112.488 to km. 142.685. The total value of this
work is about € 700 million. At 31/12/2009 all the work has been completed. Principal: Tav Spa.
Contract work performed by Rodano Consortile Scarl. Participation by Cmc di Ravenna: 46.43%.
12. Hsr, Bologna-Florence line (Emilia Romagna/Tuscany) Construction of the stretch of the
Bologna-Florence high-speed railway from km. 4.884 to km. 82.366. The overall value of the
work has gone up to € 4,841 million as a result of agreeing additional contract variances. At
31/12/2009 about 98% of the work has been completed. Principal: Tav Spa. Contract work performed by the Cavet consortium. Participation by Cmc di Ravenna: 11.27%.
13. Quadrilatero roads project (Marche/Umbria) Design and construction of Maxiproject 1 Interior road system linking Marche and Umbria. The total value of this contract is about € 1 billion. Design work was completed in March 2009. The works for lot 1.1 were allocated during the
second quarter of 2007, worth about € 35 million. Work also started on lots 1.2 and 2.1 during
the second half of 2009. At 31/12/2009 about 6% of the work has been completed. Principal:
Quadrilatero Marche-Umbria Spa. Participation by Cmc di Ravenna: 28%.
14. University of Perugia, Faculty of Medicine (Umbria) Works for the new Faculty of Medicine
and Surgery in the S.Andrea delle Fratte area of Perugia. The total value of this contract is € 55.5
million. Work started at the beginning of 2007. At 31/12/2009 about 97% of the work has been
completed. Principal: Università degli Studi di Perugia. Participation by Cmc di Ravenna: 50%.
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15. Castelli Hospital, Rome (Lazio) Construction of a new Castelli Hospital to be built in the
Municipality of Ariccia (Rome). The total value of this contract is € 65.2 million. Works will commence during 2010. Principal: Ausl Rome. Participation by Cmc di Ravenna: 50.10%.
16. Rome-Pantano railway (Lazio) Modernisation and upgrading of the Rome-Pantano railway
line. The total value of this work is about € 167 million. At 31/12/2009 about 94% of the work
has been completed. Principal: Ministry of Transport - Metro Spa. Contract work performed by
Pantano Scarl. Participation by Cmc di Ravenna: 14.87%.
17. Wharf at Gaeta port (Lazio) Works for the wharf on the southern pier at Gaeta port. Following
signature of the supplementary agreement, the total value of the work is about € 25.7 million.
Works will commence at the beginning of 2010. Principal: Civitavecchia Port Authority. Contract
performed by Cmc di Ravenna.
18. Molfetta Commercial Port (Puglia) Completion of the sea walls and construction of the
Molfetta commercial port. The total value of this contract is € 57.6 million. The project phase has
commenced but the works are delayed since the areas concerned have not been made available.
A supplementary agreement has been signed, enabling part of the drainage work to be carried
out. At 31/12/2009 about 10% of the work has been completed. Principal: Molfetta Municipality
Participation by Cmc di Ravenna: 38.50%.
19. Maxiproject Salerno-Reggio Calabria motorway (Campania/Calabria) Modernisation
and upgrade to Type 1 under the Cnr/80 regulations from km 53.800 (Sicignano exit included) to
km 82.330 (Atena Lucana exit excluded) of the Salerno-Reggio Calabria motorway. The total value of this work is about € 522 million. At 31/12/2009, this work has been completed and trials
are now in progress. Principal: Anas Spa. Contract awarded to Cmc di Ravenna as general contractor pursuant to Law 443/2001.
20. Messina Bridge (Calabria/Sicily) Design and construction of the Straits of Messina crossing
and the related road and rail links on both the Calabria and Sicily sides. The total value of this revised contract is € 4,670 million, of which € 71 million relates to the design work. Signature of
the addendum marked the restart of design work and preliminary activities in Calabria worth
about € 25 million have commenced. Principal: Stretto di Messina Spa. Participation by Cmc di
Ravenna: 13%.
21. Maxiproject Ss road from Palermo to Lercara Friddi (Sicily) Modernisation of the Palermo-Lercara Friddi stretch of road. The contract, which was signed recently, provides for delivery
and approval of the project this year and in 2010, whereas the works are expected to commence
in 2011. The total value of this work is about € 176 million. Principal: Anas Spa. Participation by
Cmc di Ravenna: 70%.
22. Maas Catania (Sicily) Construction of the new meat, fruit and vegetable market for Catania. The total value of this work is about € 46.6 million. At 31/12/2009 about 93% of the work
has been completed. Principal: Maas Catania Scpa. Contract performed by Cmc di Ravenna.
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Report on Operations 2009
23. Gravina Shopping Centre (Sicily) Construction of a shopping centre for Ipercoop Sicilia and
a strip mall for Igd in the Gravina area of Catania. The value of this contract is over € 100 million.
The land was purchased in 2006 and construction work started in early 2007. At 31/12/2009 construction work has been completed. Principal: Ipercoop Sicilia and Igd Spa. Contract performed
by Cmc di Ravenna.
24. Sigonella Mega IV (Sicily) Civil and related works within the Sigonella military base - sectors Nas 1 and Nas 2. The total value of this work is about € 73.5 million. At 31/12/2009 about
95% of the work has been completed. Principal: Us Government Em Department of the Navy Catania. Contract performed by Cmc di Ravenna.
25. Maxiproject SS 640 road from Agrigento to Caltanissetta (Sicilia) Widening to 4 lanes
of the Porto Empedocle stretch of the SS 640 road from Agrigento to Caltanissetta. The total value of this work is about € 392 million. The design work has been completed and the works commenced in the first half of 2009. At 31/12/2009 about 8% of the work has been completed. Principal: Anas Spa. Participation by Cmc di Ravenna: 80%.
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Major projects under construction: abroad
Abroad
01. Koudiat dam Acerdoune (Algeria) Construction of a roller compacted concrete dam,
height 120 mt. and crest lenght of 430 mt. The total value of this work is about € 270 million.
At 31/12/2009 about 100% of the work has been completed. Principal: Agence Nationale Des
Barrages. Contract performed by Razel sa. Participation by Cmc di Ravenna France Sarl: 40%.
02. Alstom railway line (Algeria) Construction of a metal bridge for the Algiers railway line.
The total value of this work is about Euro 5.7 million. At 31/12/2009 about 70% of the work has
been completed. Duration of the works: 12 months. This work is financed by the Algerian government. Principal: Alstom Algérie Spa. Contract performed by Cmc di Ravenna.
03. Douaouda desalination plant (Algeria) Construction of connecting road for desalination plant. The total value of the work is about € 34 million. Start of work: December 2009.
Duration of the works: 10 months. At 31/12/2009 about 2% of the work has been completed.
Principal: Ade Algérienne des Eaux. This work is financed by the Algerian government. Contract performed by Cmc di Ravenna.
04. Dam and tunnel at Jijel (Algeria) Construction of a dam and a tunnel for the transfer of
work about 30 km south of Jijel. The total value of the work is about € 160 million. Duration of
the works: 30 months. Principal: Anbt Agence Nationale des Barrages et des Transferts. This work
is financed by Bad (Banque Algérienne de Developpement). The contract was obtained by a consortium comprising Cmc and Razel. Participation by Cmc di Ravenna: 45%.
05. El Kala port (Algeria) Completion of the El Kala fishing port. The total value of this work is about
€ 25 million. The work started in December 2006. Expected duration: 30 months. At 31/12/2009
about 93% of the work has been completed. This work is financed by the Algerian government.
Contract performed by Cmc di Ravenna.
06. Improvements to the Songo/Bembe and Negage N’Sosso roads (Angola) Improvements to about 360 km of roads. The value of the work is about € 35 million. At 31/12/2009
about 100% of the work has been completed. Principal: Gabineto Tecnico de Gestao dos Projectos do Programma de Investimentos Publicos (Angola). Duration of the works: 10 months.The
work is financed by the Angola government. Contract performed by Cmc di Ravenna.
07. Construction of 44 km of motorway between Luanda and Soyo (Angola) The value of
the work is about € 250 million. At 31/12/2009 about 15% of the work has been performed.
Principal: Inea Istituto Nacional Estrada de Angola. Duration of works: 36 months. The work is financed by the Angola government. Contract work performed by Cmc di Ravenna.
08. Improvements to the Vanduzi-Changara stretch of road (Mozambique) Improvements
to about 155 km of roads. The value of the work is about € 43 million. At 31/12/2009 about
79% of the work has been completed. Principal: Ane (National Road Administration). Duration
of the works: 24 months. This work is financed by the African Development Bank. Contract work
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Report on Operations 2009
performed by the Cmc Tamega J.V. Participation by Cmc di Ravenna: 99.99%.
09. Renovation of the Montepuez - Ruaca road (Mozambique) Renovation of the road between Montepuez and Ruaca. The total value of this work is about € 61 million. Works are due to
start during the first quarter of 2010. Duration of the works: 30 months. Principal: Ane - National
Road Administration. The work is financed by Adb (African Development Bank). Contract performed by Cmc di Ravenna.
10. Improvements to the network of drains in Beira (Mozambique) This value of this work
is about € 45 million. At 31/12/2009 about 60% of the work has been completed. Principal: Ministerio dos Negocios Estrangeiros - Gabinete do Ordenador Nacional. Duration of the works: 30
months. The work is financed by the Edf (European Development Fund). Contract work performed by the Cmc Conduril J.V. Participation by Cmc di Ravenna: 50%.
11. Construction of three bridges in the Manica-Sofala area (Mozambique) Construction
of three bridges in the Manica-Sofala area. Principal: Ane - National Road Administration. The
value of the work is about € 14 million. At 31/12/2009 about 90% of the work has been completed. Duration of the works: 24 months. The work is financed by the Mozambique government. Contract work performed by the Cmc-Conduril-Ceta Joint Venture. Participation by Cmc
di Ravenna: 50%.
12. Improvement of urban roads in Maputo (Mozambique) Improvements to Via Rapida (€
18 million) and Avenida Nelson Mandela (€ 3 million) totalling about € 21 million. At 31/12/2009
about 60% of the work has been completed. Duration of the works: 24 months. Principal: Ane National Road Administration. The work is financed by the Mozambique government. Contract
work performed by Cmc Africa Austral.
13. Construction of three bridges in the Nseleni area (South Africa) Construction of a bridge
over the River Nsezi, a viaduct in the Nseleni area and a bridge connecting to a pre-existing road.
The total value of this work is about € 23 million. Principal: Department of Transport Province of
KwaZulu-Natal. The work commenced in June 2007. At 31/12/2009 about 100% of the work
has been completed. Duration of the works: 26 months. The work is financed by the Province of
Kwazulu-Natal. Contract performed as a Joint Venture with Indiza Hkb (South Africa). Participation by Cmc di Ravenna: 85%.
14. Construction of the Ingula hydroelectric plant (South Africa) Civil works relating to the
hydroelectric plant for the “Ingula Pumped Storage Scheme”. The total value of this work is
about € 560 million. Principal: Eskom Holding Limited. The work started in September 2008. At
31/12/2009 about 25% of the work has been completed. Duration of the works: around 6 years.
The work is financed by Eskom Holding Limited. Participation by Cmc di Ravenna: 51%.
15. Road works at Gillouly’s Johannesburg (South Africa) Construction of a road junction
with related viaduct and improvements to and extension of existing roads in Johannesburg. The
value of the work is about € 100 million. Start of work: September 2008. At 31/12/2009 about
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40% of the work has been completed. Duration of the works: 30 months. Principal: South Africa
National Road Agency. The work is financed by the South African government. Contract work
performed by the Cmc/G4 J.V. Participation by Cmc di Ravenna: 80%.
16. Road works at Nelspruit (South Africa) Construction of a 3.97 km. road between Friedenheim and Croc Valley. The value of the work is about € 18 million. Start of work: September 2008.
At 31/12/2009 about 80% of the work has been performed. Duration of the works: 24 months.
Principal: Trans Africa Concessions Limited. The work is financed by the South African government.
Contract work performed by the Cmc-Inyatsi-Ulusha J.V. Participation by Cmc di Ravenna: 55%.
17. Yin Tao project (China) Excavation of an 18.3 km tunnel using Tbm (performed by Cmc)
and a 2.5 km D&B tunnel (performed by the Chinese partner - Bureau 4). The total value of the
work is 423 million rmb (€ 42.3 million). At 31/12/2009 about 15% of the work has been completed. Duration of the works: 65 months. Contract work performed in a Joint Venture with Bureau 4. Participation by Cmc di Ravenna: 65%.
18. Hydroelectric plant at Theun Hinboun (Laos) Construction of a hydroelectric plant in the
province of Bolikhamxai. The project involves expanding a hydroelectric plant comprising: a concrete dam situated about 20 km upstream of the existing plant; a new water intake; a concrete
lined headrace tunnel; a steel penstock 1,000 metres long and a new power station, with two 220
mw francis turbines, located near the existing power station. The value of the work is about €
190 million. At 31/12/2009 about 25% of the work has been completed. Duration of the works:
38 months. Principal: Thpc Ltd (Theun Hinboun Power Company). Bot financed by a syndicate of
international banks. Contract performed by Cmc di Ravenna.
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Report on Operations 2009
1.10 Other activities
The following amounts determined in accordance with art. 2426.4 of the Italian Civil Code are
those used for the preparation of the consolidated financial statements. They differ to those reported in the financial statements of the subsidiary in the accounting treatment of leasing contracts as finance leases.
Cmc Immobiliare Spa is used as a vehicle for the development of Ravenna’s “Darsena di Città”
and to manage the Group’s properties, after having acquired building land and the Ravenna headquarters from the Parent Company, as well as Ged’s factory in Cesena under a property lease.
To approach the property development project and the urban transformation of areas and buildings forming part of Ravenna’s Darsena with greater financial solidity, in May Cmc Immobiliare
Spa approved an increase in capital of € 5.0 million at par, from € 16.0 million to € 21.0 million,
plus a premium of € 5.0 million, to be subscribed and paid in by Cooperare Spa.
The Parent Company also actively invests in property, both directly and via direct subsidiaries, as
summarised below. In relation to work in progress with a total future value of € 58.4 million (our
share, € 23.3 million), the amount realised to date totals € 3.4 million.
With regard to work not yet started, with a total value of € 530 million (our share, € 482 million), investment to date by the Group amounts to € 10.2 million, relating in part to guarantees given to third parties.
* Guarantees given.
40
Sic Spa is a subsidiary that produces and sells cement and bituminous conglomerate, while also
extracting, selling and processing inert materials for the building sector.
During 2009, the company essentially confirmed the sales achieved in the prior year, enabling it
to report profits despite the deep recession in the reference market which, in some cases, has led
to credit collection difficulties.
Ged Srl is a subsidiary active in the production of metalwork and precompressed reinforced concrete beams for bridges. With pre-tax income of € 1.2 million, the company has continued the
positive trend that began in 2008, having finally left behind the period of crisis experienced in prior years. The company is able to look to the future with renewed confidence, aware of its newfound economic and financial equilibrium.
Pre-tax income in the prior year, € 5.5 million, was influenced by the capital gain of € 4.5 million
realised on the disposal of the industrial building used by the company to Cmc Immobiliare Spa
under a sale-and-leaseback arrangement.
In order to create an industrial alliance with a partner in the same sector, in 2009 the Quotaholders’ Meeting of Ged Srl approved the distribution of its 2008 earnings, having covered the losses
made in previous years, and allocated the property revaluation reserves to the sole quotaholder,
Cmc. These distributions, totalling € 6.9 million, made it possible to negotiate the sale of an interest at a value that was no longer affected by the capital gains on property contained in the
company’s equity. In particular, quotaholders’ equity was reduced from € 14.9 million previously
to € 8.0 million in 2009. As a consequence, in October, agreement was reached between Cmc
and Generale Prefabbricati Spa, Perugia, for the immediate sale of 20% of Ged’s capital, with an
option for a further 15% in two years and then another 15% in four years, with the declared objective of optimising the company’s production lines and developing a new product line.
1.11 Risk management
The complex and detailed process of risk management is of strategic importance to the Group, so
that our objectives can be met in terms of maximising and safeguarding value for our members.
The diversity of the Group’s operations, both in core sectors and those held for disposal, poses
varying challenges for management whose outcome, in many cases, is difficult to predict. Specific strategies have been devised for managing the various types of operations and for constantly
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Report on Operations 2009
monitoring the related risks that may arise, with a view to limiting as far as possible any fluctuations in the economic and cash flows deriving from changes in the situations found on a case-bycase basis.
In this regard, the analysis of performance by sector of activity discusses the current areas of risk,
providing information to facilitate comparison with the consolidated financial statements for the
prior year, together with details any new situations identified at the time of preparing these financial statements.
This list of specific risks is followed by further, more general considerations about the physiological risk associated with the complexity of the Group’s activities. In this regard, the following principal types of risk are identified and monitored:
• operational risk, associated with the performance of work and relations with the individual
principals;
• financial risk, comprising:
· market risk deriving from exposure to fluctuations in interest rates, in the exchange rates between the Euro and the other currencies in which the Group operates and, with regard to plant
engineering, the volatility of the prices for certain raw materials;
· credit risk deriving from exposure to possible losses due to the failure of principals to meet their
obligations;
· liquidity risk should the financial resources available to the Group be insufficient to meet outstanding obligations on the agreed basis and due dates.
The management of these risks is discussed elsewhere in this report and in the explanatory notes
to the financial statements.
1.12 Intercompany
Relations between Group companies, both as part of vertically-integrated production and with
transactions
regard to the provision of services, are settled on market terms. More specifically:
• sales and purchases on arms’-length terms;
• rentals on property market terms;
• interest at rates applied in banking practice.
These transactions primarily comprise:
• services supplied by central department:
· operational services giving technical and organisational support;
· financial services regarding the negotiation of loans and the granting of guarantees needed for
the performance of works;
· administrative, fiscal, corporate and insurance-related services.
• commercial relations regarding the purchase of machines, spare parts, raw materials and other
items needed for the performance of contracts;
• contractual relations deriving from work allocated to Ged and Sic, which specialise in the production of prefabricated items and the supply of construction materials.
Based on the information received from Group companies, there have not been any atypical or
unusual transactions.
The intercompany balances at 31 December 2009 are presented at the end of the explanatory
notes to the Parent Company’s financial statements.
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1.13 Social policies
The most significant change affecting the ownership of the Parent Company during 2009 was
the planned exit of “Cooperare Spa”, a financing member, which reduced this category to two
members. There was also a small reduction in the number of pensioner members (-12).
Admission of Cooperative members The net increase of 5 working members - 20 entrants
and 15 leavers - does not significantly change the cooperative element, but nevertheless confirms
the vitality of the admissions process and its ability to ensure continuity and the renewal of the
membership base. The average age has rise to 48 at the end of 2009 from 47.7 years in 2008.
Pursuant to art. 2528 of the Italian Civil Code, the requirements and procedures for admission as
a member of Cmc are governed by the articles contained in Chapter II of Section II of Volume III
of the articles of association, and in the “Internal regulations governing the admission of cooperative members and the bodies for democratic participation in the cooperative”. This detailed set
of internal regulations for the admissions process guarantees transparency and fair treatment.
Consistent with these regulations and having identified favourable conditions for the entry of
new members, on 19 December 2008 the Board set the minimum holding for admission as a Cooperative member at € 3,750.00 for 2009, together with an admission fee of € 50.00; at the
same time, pursuant to the Regulations, the Board appointed the Directors and the Commission
tasked with evaluating the applications. A resolution for the admission of new members was
adopted by the Board on 4 June 2009.
The subsequent operations were all carried out on the required basis and timescale: notification of members of their admission and establishment of the additional working relationship
pursuant to Law 142/2001. No applications for admission as a Cooperative member presented in 2009 were rejected.
Share capital Subscribed share capital has decreased from € 24.4 million at 31.12.2008 to € 23.0
million at 31/12/2009. The reduction was entirely due to the exit of “Cooperare Spa”, a financing
member that, as described in more detail elsewhere in this report, continues to support the programmes of the Cmc Group via its investment in the share capital of “Cmc Immobiliare Spa”.
The average quota held by each member has increased from € 31,388 at 31/12/2008 to €
32,173 at 31/12/2009, confirming the steady growth of each cooperative member’s investment
due, for the most part, to the allocation of profits in the current and prior years in the form of
bonus increases in share capital.
Together with the revaluation of the capital paid in pursuant to Law 59/92, this bonus allocation
is a key way to strengthen the Cooperative’s capital and, indeed, the Board proposes that a further bonus allocation should be made to members in relation to 2009; approval of this proposal
at the Members’ Meeting would increase share capital by € 1,246,400.
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Prevalent nature of the business as a mutual society Once again, the activities of the Parent
Company during 2009 were focused on achieving the cooperative objectives set out in the articles of association and on strengthening the key role of cooperative members within the ownership structure. In this regard, the greatest efforts during the year were made to modernise the
governance of the business. A special Board Commission produced a new “Internal regulation
governing the appointment, composition and functioning of corporate bodies” - approved at the
Members’ Meeting held in June 2009 - which has made profound innovations to Cmc’s system of
governance. The role of the Administrative Body has been strengthened and enhanced to include
not only strategic direction and control, but also more direct managerial and operational responsibilities. This has involved the appointment of a Managing Director and Board Committees to
make recommendations, provide advice, perform analyses and support the Chairman and the
Administrative Body.
Further steps taken, also approved at the Meeting held in June 2009, included changes to the articles of association and the appointment of two additional directors to the Board. Lastly, the
framework of internal regulations - previously introduced on adoption of the company law requirements set out in Decree 6/2003 - has been completed with approval (at the Meeting held in
February) of the “Internal regulation governing the business conducted at Members’ Meetings”.
This regulation supplements and completes the internal rules for the appointment of the Board
of Directors, consistent with the new regulation mentioned above.
As more fully documented in the explanatory notes, to which reference is made, activities in
2009 confirm the positioning of Cmc among those cooperatives that work predominantly for the
mutual benefit of their members. This is an important affirmation, but equally important is the
members’ decision to maintain and respect the fundamental cooperative principles, even if the
predominance required by art. 2512 of the Italian Civil Code should cease to exist for objective
reasons.
Social responsibility report The intensive entrepreneurial and cultural innovations seen in recent years have encouraged a review of Cmc’s commitment in the area of social responsibility.
Ahead of the development of a comprehensive project in this area, an inevitably brief social responsibility report has been included in the documentation accompanying the annual report.
Corporate communications With a view to keeping control over the tumultuous processes under way, the communications activities promoted by Cmc in recent years have been analysed in
depth. This analysis has identified new lines of communication that will accompany the instruments already in place: La Betoniera and the intranet.
The new actions cover Web 2.0, new It technologies with interactions and information generated
by users, and participative journalism to encourage contributions from the members and employees of Cmc, as well as from the parties financed by Cmc.
1.14 Subsequent events
New orders obtained in early 2010 amount to about € 625 million, of which € 334 million in Italy
and € 291 million from abroad. The most significant of these relate to:
• modernisation and improvement from km 44 to the junction with the A19 on the AgrigentoCaltanissetta road, worth € 542 million (Cmc share 44%);
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· executive design work and performance of works on the Ss 1 Nuova Aurelia on the access road
to the Savona Port hub, linking the A10 exits to Savona and Albissola and to the ports of Savona
and Vado, worth a total of € 108 million (Cmc share 51%);
· construction of a yacht marina at Marina di Pisa worth € 32 million (Cmc share 87%);
road widening En02 lot 3 from Berrouaghia to Boughzoul in Algeria, worth a total of € 92 million
(Cmc share 11%);
· design and construction of a water tunnel at Beni Haroun in Algeria worth a total of € 90 million (Cmc share 30%);
· renovation work on the Calueque dam in Angola worth a total of € 86 million;
· road and civil works in Mozambique worth about € 145 million.
• The Members’ Meeting held on 27 February approved the three-year plan for 2010-2012;
• as widely discussed in the local press, in March the Ravenna Municipality authorised the presentation of two urban projects for the development of City Port (Darsena) area. One project was
presented by Cmc, while the other was presented by Cap Candiano and Dp Immobiliare. The
project approval process should be completed this year and the work on the Cmc project should
start in early 2011;
• the inauguration ceremony for the new Faculty of Medicine and Surgery at the University of Perugia, held on 18 March, was attended by numerous local dignitaries and University luminaries.
1.15 Outlook
The three-year plan for 2010-2012 sets ambitious growth objectives. The main strengths of our
for operations
plan are summarised below, bearing in mind that current uncertainties call for careful periodic reviews and probable adaptation to situations that no-one appears able to foresee:
• our key strength is undoubtedly the orderbook worth almost 3 billion Euro, equal to four times
the revenues earned in 2009, which is well balanced between Italy and abroad. This portfolio
sees us well on our way to the revenue target of 1 billion Euro;
• major infrastructure projects will remain the focus of our activities in Italy and especially abroad;
however, we also want to enter into new market segments in Italy: construction and management concessions in the transport sector, and the development of new shopping centres, office
buildings, logistics hubs and industrial buildings. These sectors should offer greater profitability
than that obtainable from contracting work in Italy;
• Cmc is financially well balanced, considering that revenue growth and the start of new activities, such as project financing, will require a major financial commitment. The great confidence
of the banking system in the cooperative should enable us to obtain the necessary resources;
• Cmc does not shirk social and economic responsibility for our home territory: we are ready to
participate in the investment need to modernise the port and build both the container terminal
and the logistics hub. We will also work to progress such key projects as the Candiano underpass,
the new Romea road and the transformation of the city’s Darsena area.
Photos pages 46-47 > Sigonella Mega IV (Sicily) Civil works within the military base of Sigonella, Catania.
Photo page 48 > Maas Catania (Sicily) Construction of the new Agricultural and Food Market of Catania.
45
47
48
2.0
Consolidated Financial Statements 2009
2.1
Balance sheet and profit and loss account
50
51
52
53
54
55
2.0
Consolidated Financial Statements 2009
2.2 Notes to the
The Consolidated Financial Statements as of December 31, 2009 of the Cmc Group have been
Consolidated Financial
prepared pursuant to the regulations introduced by Legislative Decree No. 127/91 with the im-
Statements as
plementation of the VII Eu Directive and consist of the balance sheet, the profit and loss account
of December 31, 2009
(prepared in accordance with the schemes provided by art. 2424 and 2525 of the Italian Civil
(in thousands of Euro)
Code modified as requested by art. 32 of Legislative Decree No. 127/91 and 6/2003) and the
present explanatory notes. The requirements of the Italian Civil Law are integrated and interpreted, where necessary, in accordance with the accounting standards issued by the Italian Accountancy Board (Oic) and, where missing, by the International Accounting Board (Iasb), as far as they
are compatible with the Italian Laws.
The purpose of these notes is to analyse, explain and, in some cases, supplement the information
reported on the face of the financial statements. They contain the disclosures required by art. 38
of D.L. 127/1991 and D.L. 6/2003, as well as the information required by other articles contained
in the regulations or in earlier legislation. In addition, the attachments provide all the supplementary information considered necessary in order to present a true and fair view of the economic
and financial position of the Group, even if such information is not specifically required by law.
Consistent with the requirements of the Italian Civil Code and the approach adopted in the prior
year, new captions have been added to the financial statements if their content is not covered by
any of the captions specified in arts. 2424 and 2425. The preparation of these financial statements has taken account of any contingencies or losses relating to the year, even if they became
known after year end.
The consolidated balance sheet and income statement are presented in whole Euro, without decimals, as required by art. 16.8 of Legislative Decree no. 213/98 and art. 2423.5 of the Italian Civil
Code, while these explanatory notes are presented in thousands of Euro.
The activities carried out by the Group and the events arising subsequent to year end are described in the report on operations.
In addiction, it should be noted that:
• the consolidated financial statements were prepared using the separate financial statements as
of December 31, 2009 of the Parent Company and the companies included within the scope of
consolidation, as approved by their governing bodies. The financial statements at 31 December
2009 of the Group’s Italian companies were prepared in accordance with the requirements of
Legislative Decree no. 6/2003 and subsequent amendments. The application of this legislation
has had no effect on the economic and financial position presented in these consolidated financial statements.
• the financial statements used for consolidation purposes were appropriately adjusted, where
necessary, in order to align them to the accounting principles subsequently described, and reclassified into the format required by the Italian Civil Code.
• the financial statements of certain subsidiaries have been adjusted, in order to align the evaluations, made by local Directors to more appropriate criteria according to the Parent Company’s Directors point of view.
In particular, the differences of the evaluation criteria are related to the depreciation rates and to
the foreign currency conversion criteria that, for consolidation purposes, have been aligned to
those used by the Parent Company.
56
Consolidation Principles The main consolidation principles adopted for the preparation of the
consolidated financial statements are described below:
• the carrying amount of investments in companies consolidated on a line-by-line basis, recorded
in the financial statements of the Parent Company and the other consolidated companies, is eliminated against the related shareholders’ equity, while their total assets, liabilities, costs and revenues are combined without regard for the percentage interest held;
• the difference between the purchase cost and the shareholders’ equity is allocated, where possible, to the assets and liabilities of the consolidated companies, within the limits of their fair value. Any residual differences representing unallocated purchase costs are booked as “Consolidation difference” and amortised on a straight-line basis over the period of expected recoverability,
while those representing an equity surplus are classified among the “Consolidation reserve”
within the equity accounts. In the circumstances, no differences have been allocated to assets
and/or liabilities, or classified as Consolidation difference, since only positive differences - classified among the reserves arising on consolidation - have emerged since the first-time consolidation of the Group;
• significant unrealised profits and losses deriving from intercompany transactions are eliminated,
net of any tax effects, as are all intercompany receivables and payables;
• minority interests in members’ and shareholders’ equity are classified separately within the equity accounts, while their interests in the net results of subsidiaries are classified separately within
the consolidated income statement.
Associated companies and Joint Ventures operating in the construction industry jointly controlled with other partners are consolidated using the proportional method described in art. 37
of Legislative Decree no. 127/91. The main policies adopted for the application of this method
are described below:
• only the Group’s interest in the assets, liabilities, revenues and costs of the businesses concerned is consolidated, rather than the total amount. In addition, the carrying amount of the investments concerned is eliminated against the Group’s interest in the related shareholders’ equity. Accordingly, the “Minority interest” and “Net income attributable to minority shareholders”
captions of the balance sheet and income statement are not used;
• intercompany profits and losses are eliminated on a proportional basis, as are all other consolidation adjustments;
• on the elimination of receivables and payables arising between affiliates consolidated in different ways, the third-party interest identified upon proportional consolidation is classified among
the amounts due to and from third parties;
• any consolidation differences are treated in a manner similar to that described in relation to
line-by-line consolidation.
Investments in subsidiary and associated companies not operating in the construction segment are stated in accordance with the Equity method, pursuant to art. 36 of Legislative Decree no. 127/91.
Investments in other companies, and those in subsidiaries and associates that are being wound
up or which are dormant, are carried at cost.
57
2.0
Consolidated Financial Statements 2009
Translation in Euro of Financial Statements denominated in Foreign Currency The above
mentioned financial statements, being the subsidiaries essentially independent, are translated into Euro using the year-end exchange rates for the balance sheet items and the average rates for
the year for the income statement items.
As regards the Parent Company’s foreign branches, which have a high degree of operational autonomy and use multi-currency accounting systems, transactions and balances denominated in
foreign currencies are translated at year-end using the current rates at that time.
The net effect arising from the translation of the financial statements of foreign companies and
the balances relating to permanent establishments abroad is booked to equity as “reserve for
translation adjustments”.
The following exchange rates used:
Consolidation area The consolidation area as of December 31 2009 includes the following
companies:
58
59
2.0
Consolidated Financial Statements 2009
As an exception to the provisions of art. 37.1 of Legislative Decree no.127/91 and based on
the provisions of art. 29.4 of that Decree, the investments in the capital of Consorzio Cavet
(11.269%), Fda Srl (20%), Passante di Mestre Scpa (12%) and Eurolink Scpa (13%) have been
consolidated on a proportional basis since, under specific agreements, their shareholders exercise a joint control.
This approach more appropriately reports the Group’s costs and revenues, given the significant
volume of activity performed indirectly through these minority holdings.
The changes in the consolidation area with respect to the prior year are identified below:
Companies consolidated line-by-line
Companies that are newly formed or which have become operational:
• Terminal Crociere Scarl
Excluded following liquidation:
• Cmc di Ravenna Wbho J.V. Massingir
Partially consolidated
Companies that are newly formed or which have become operational:
• Bolgnetta Scpa
• Cooptre Scrl
Companies consolidated with the equity method
Companies that are newly formed or which have become operational:
• Granarolo Immobiliare Srl
60
The following subsidiaries and associates are carried at cost:
61
2.0
Consolidated Financial Statements 2009
The 95.90% interest in the capital of Csc - Coop. Servizi Cultura is also carried at cost since the
Group does not hold the majority of voting rights at members’ meetings, given that the company is a
cooperative. Had these investments been consolidated line-by-line or carried at equity, the effect on
the Consolidated Financial Statements as of December 31, 2009 would not have been significant.
Accounting policies The principal accounting policies adopted for the preparation of the consolidated financial statements are described below:
Intangible fixed assets are recorded at purchase cost including directly-related charges, at their
contributed value or at the cost directly incurred to create them; they are amortised over their expected useful lives.
Start-up and expansion costs, goodwill (recorded with consent from the Board of Statutory Auditors), advertising, patents and intellectual property rights, concessions, licences and trademarks
are amortised on a straight-line basis over five years.
Deferred charges relating to contracts, such as start-up costs, site preparation, studies and design
work, and contract warranties are capitalised in the year incurred and amortised on a stage-ofcompletion basis with reference to the individual projects concerned.
The costs of participation in bidding competitions whose outcome is unknown are capitalised as
assets in progress in the year incurred, on condition that they relate to contracts considered
winnable with reasonable certainty.
Research and development expenses are charged to the income statement as incurred.
Following the recognition of purchase or production cost, assets are written down if their value is
found to be permanently impaired; if the reasons for write-downs cease to apply in subsequent
years, the original values are reinstated net of the related amortisation charges.
Tangible fixed assets are recorded at purchase cost, including related charges, or at their construction cost, comprising the direct costs incurred plus a reasonable allocation of indirect costs. The
carrying amount of certain assets has also been adjusted in accordance with specific monetary
revaluation laws. Amounts are stated net of the related accumulated depreciation. In case of a
lasting impairment of value, regardless of the depreciation already provided, the asset is written
down accordingly, if, in subsequent periods, the reasons for the write-down are no longer applied, the original value is reinstated.
Maintenance and repair costs are charged in full to the income statement in the year incurred;
the cost of renovations and improvements that extend the economic life of an asset is allocated
to the fixed asset concerned and depreciated using the rate applicable to that asset.
Increases in fixed assets by internal construction comprise the cost of the materials and labour actually used, plus an allocation of general expenses.
Contract-related charges, such as transport, shipping, insurance and customs duties relating to
the transfer of machinery, are capitalised as “Ordinary deferred charges” and amortised with reference to the stage-of-completion of the contracts concerned.
Operating assets with a unit cost of less than Euro 500 are subject to considerable wear and tear
and are depreciated in full in the year of purchase.
Depreciation is calculated on a systematic basis using rates deemed representative of the residual
useful lives of the assets concerned.
62
The rates applied to the various categories of asset are indicated below:
When an asset enters into service, depreciation is charged in proportion to the number of days it
is used in the first year.
This approach is deemed representative of the average depreciation period for such assets.
Financial fixed assets Investments in associated companies not operating in the construction sector and investments in subsidiaries not deemed material for which it is not possible to obtain all
the information needed for line-by-line consolidation, are consolidated according to the equity
method except as specified in the “Scope of Consolidation” paragraph above. Accordingly, their
carrying amount represents the Group’s interest in the shareholders’ equity reported in their latest available financial statements, prepared pursuant to arts. 2423 and 2423 bis of the Italian
Civil Code, net of dividends received and after the appropriate consolidation adjustments.
Investments in subsidiaries and associates that are being wound up or which are dormant are carried at cost, together with the equity investments held in other companies. Carrying amount is determined with reference to purchase or subscription cost, or the contributed value. Cost is written
down in the case of impairment, when the investments have incurred losses that are unlikely to
be recovered from profits earned in the immediate future. The original value is reinstated in subsequent years if the reasons for the write-downs made cease to apply. The other financial fixed
assets comprising receivables are stated at their estimated realisable value.
Inventories are measured at the lower of weighted-average purchase or production cost (including related charges and direct cost allocations) or their corresponding market value.
Inventories deriving from direct property initiatives are measured with reference to the costs incurred, represented by the purchase cost of the land and related charges, plus construction costs.
Contract work in progress are accounted for the using the percentage of completion method.
The percentage of completion is calculated by comparing the costs effectively incurred with the
total forecasted costs. Such percentage is applied to the forecasted contract revenue.
63
2.0
Consolidated Financial Statements 2009
The progress reports approved by principals are recognised for the calculation of period revenues.
Closing inventories, measured on the basis described above, represent the production carried out
since the last approved progress report.
Work in progress that have to be completed within one year are booked following the “complete
contract” method; revenues are recognized only upon completion of the contract, whilst the
closing inventories are valued on the basis of the costs actually incurred.
Claims of additional remuneration not yet approved by the Employer, are recognised on a prudent basis. Accordingly, the repayment of extra costs incurred for the completion of works or the
extra revenues requested are only recognised as the deferral of costs or the recognition of revenues if the timing and extent of collection is reasonably certain. In this regard, reasonable certainty is usually deemed to exist if the claim is collected prior to the approval of the financial
statements and/or if the claim is subject to a dispute where the counterparty has, nevertheless,
recognised the right to additional payment and only the amount needs to be settled, or if the
opinions of authoritative third parties (lawyers, consultants etc.) suggest to the directors that outstanding disputes will have a favourable outcome.
Receivables are recorded at their nominal value and reduced to their estimated realisable value
through an allowance for doubtful accounts and an allowance for interest on delayed payments.
Receivables sold with recourse are derecognised and replaced by the amount of the advances received and the amount due from the factoring company, represented by the difference between
the nominal value of the receivable sold and the advance received. The recourse risk is reported in
the memorandum accounts.
Accruals and deferrals These items comprise costs and revenues relating to more than one year,
which are recognised in accordance with the matching principle.
Funds for risks and charges Reserves for risks and charges are provided to cover certain or probable losses or liabilities for which the exact value and effective date are not determinable at the
year-end. The reserves represent the best estimate possible based on the information currently
available. Risks, which may only possibly result in a liability, are disclosed in the Notes but not provided in the reserve for risks and charges.
Provisions are also recorded to cover contract risks arising in relation to work in progress for third
parties in Italy and abroad.
Severance indemnity Severance indemnities are recorded by the Group’s Italian companies to
cover the entire liability to employees accrued in accordance with current legislation and collective and in-house payroll agreements. Law no. 296 dated December 27, 2006 (2007 Finance
Law) introduced new rules for the severance indemnity accruing from 1 January 2007. Pursuant
to the reform of supplementary pensions:
• severance indemnity accumulated up to 31 December 2006 are retained by the business,
• the amounts accruing from 1 January 2007 are, depending on the explicit or tacit choices made
by each employee:
a. paid to a supplementary pension fund;
b. kept in the Company, and transferred to Treasury Fund managed by Inps.
64
The amounts accruing from 1 January 2007 are charged, as before, to the “Severance Indemnity” caption of the income statement. In the balance sheet, the “Severance Indemnity” caption
represents the residual balance of the provision outstanding at 31 December 2006, as appropriately revalued using official indices.
The “Payables to social security and welfare institutions” caption includes the accrued termination indemnities not yet paid over to the pension funds and other welfare institutions.
Payables are booked at nominal value.
Hedging contracts comprise Interest Rate Swaps (Irs). These contracts were arranged to hedge
the risk of changes in interest rates.
Despite their stated purpose, these contracts do not possess all the characteristics required by
current accounting standards for their recognition under hedge accounting rules.
Accordingly, these Irs are recognised in the financial statements with reference to their fair value
at year-end. Regarding the contracts of foreign currencies, they have been stipulated to hedge
from rates fluctuation related of some contracts denominated in foreign currency.
The effect of the hedging has been considered when calculating the contractual revenues for the
application of the cost to cost method.
Foreign currency transactions Receivables and payables originally denominated in foreign currencies are recorded using the exchange rates applying on the transaction dates. The exchange differences realised on the collection of receivables and the settlement of payables denominated in
foreign currencies are recognised in the income statement. Foreign currency receivables and
payables and liquid funds held in foreign currencies at year end are reported using the exchange
rates in force at that time. Profits and losses deriving from the translation using year-end rates of
current receivables and payables, including the current portion of long-term receivables and
payables, and of liquid funds held in foreign currencies, are respectively credited and debited to
the income statement as components of financial income (caption C.17 bis).
Any net profit deriving from the alignment of foreign currency balances using the year-end exchange rates is initially recognised as part of income for the year. On approval of the financial
statements and the related allocation of results, any such profits not absorbed by losses are credited to a non-distributable reserve until they have been realised, pursuant to para. 8-bis of art.
2426 of the Italian Civil Code.
Financial reporting in hyper-inflationary economies The financial statements of Cmc Africa Austral Lda, Cim Lda and Sulbrita Lda, all subsidiaries in Mozambique, have been adjusted in accordance with the following criteria:
• fixed assets were adjusted by translating them using the historical exchange rates at the time of
purchase and the related effect was reported separately within shareholders’ equity;
• monetary items were not adjusted and were therefore translated using the year-end exchange rates;
• income statement items were not adjusted and were therefore translated using the year-end
exchange rates.
Costs and revenues These are recognised on a prudent, accruals basis.
65
2.0
Consolidated Financial Statements 2009
Income taxes are recorded on the basis of estimated taxable income in accordance with prevailing laws, taking into account applicable exemptions and tax credits due.
In addition, deferred taxes are provided on the temporary differences between the book value of
assets and liabilities reflected in the balance sheet and the related value for tax purposes of each
company.
In particular, deferred tax assets are accounted for when it is reasonably certain that there will be
in the future taxable income, which will be offset by that tax asset.
Memorandum accounts These are stated at nominal value, taking account of the commitments
and contingencies identified at year end.
Finance leases Leasing contracts, mainly relating to plant and machinery and to a building located in Ravenna and a real estate situated in Cesena are recognised using finance lease methodology, where applicable having regard for the nature of the transactions concerned.
Expression of values For the sake of clarity and understandability, all the amounts reported in the
Notes and in the Attachments are stated in thousands of Euro.
Reconciliation with shareholders’ equity and net income of the ultimate parent company
As mentioned in the section “Accounting Policies” and in the notes to the financial statements fo
the Parent Company, the net income of the Parent Company has been affected by:
• Profit or loss from main subsidiary companies, in accordance to the valuation of the investments according to the equity method;
• Profit or loss from Joint Ventures in South Africa, which flow their results directly into profit and
loss account of the south african branch.
It derives that parent company net income of 20.3 million Euro is substantially aligned with the
consolidated net income of 20.6 million Euro, showing a more correct and complete representation of parent company activity in Italy and abroad.
The net profit of parent company includes a tax impact of Euro 16.4 million, while the net result
of consolidated financial statement, which takes into account the income taxes of every companies of Cmc’ group, is 12.8 million Euro.
66
Comments on major
• Receivable from shareholders for payments due This balance relates to amounts due from
items: Assets
shareholders for subscribed capital that has not yet been paid in.
• Fixed assets The legally-required information about intangible and tangible fixed assets is presented in schedules attached to these explanatory notes.
Intangible fixed assets “Start-up and expansion costs” mainly comprise the costs incurred on the
formation of Group companies.
“Industrial patents and intellectual property rights” comprise the cost of acquiring the rights to
use applications software.
“Assets in process of formation and advance payments” mainly comprise the deferred cost of
participation in bidding competitions whose successful outcome, as discussed in the section on
accounting policies, is deemed to be reasonably sure. This caption also includes the costs incurred
on contracts that have not yet started.
“Ordinary deferred charges” mainly comprise site set-up and contract start-up costs, amortised
on a stage-of-completion basis. These comprise:
The caption “Site installation/start-up” includes €4.5 million, which are the costs incurred to win the
contract for the construction of the Messina Bridge, as already mentioned in the Directors’ Report.
Tangible fixed assets The most significant change with respect to the prior year relates to the significant decrease in the “Construction in progress and advances” caption. This was due to additions made during the second half of the past year on the Tbm (Tunnel Boring Machine) for the
Yin Tao Project, for 7.2 million Euro, and for the construction of an underground hydroelectric
plant in South Africa for about 9.4 million Euro, both are classified in the caption “Plant and machinery”. The following assets held by the Group have been the subject of revaluations.
67
2.0
Consolidated Financial Statements 2009
At 31 December 2009 the accumulated depreciation in relation to these revaluations amounts to
about € 3.7 million.
Financial fixed assets Equity investments These comprise:
The investments in non-consolidated subsidiary and associated companies comprise:
68
The principal changes with respect to the prior derive from changes in the consolidation area, as
already discussed.
The changes with respect to the prior year reflect: * the effect of valuation with the equity method
and write-ff for impairment ** changes in consolidation area *** completion of liquidation work
**** acquisitions/disposals.
The most significant changes during the year 2009 are related to the revaluation of investments
in Alvisi Srl and Gruppo Immobiliare Srl together with the purchase of Granarolo Immobiliare Srl
evaluated on the basis of the equity method as Be Infrastrutture. The equity investments in other
companies are detailed below:
69
2.0
Consolidated Financial Statements 2009
The most significant change is related to the stock capital increase of Società Tem di Progetto Spa
70
made during the year 2009. Lastly, the shares held in Passante di Mestre Scpa have been pledged
to guarantee the loans grated to that company, as shown in the memorandum accounts.
Financial receivables Financial receivables comprise:
The amounts due to and from subsidiary and associated companies, not included in consolidation area, are detailed in an Attachment. The “Other” caption is analysed as follows:
• Current assets Inventories This caption is analysed as follows:
a. Raw materials and consumable The changes during the year mainly reflect increase of the
inventory in Laos, 3.6 million Euro, for the Hydroelectric plant at Theun Hinboun Project and in
Angola, 2.5 million Euro, for the construction of a motorway between Luanda and Soyo.
b. Work in progress The change with respect to the prior year was due to the sale of the shopping centre at Gravina (Catania) by Iniziative Immobiliari Siciliane in October 2009.
c. Contract work in progress The increase is mainly due to the beginning of works in Laos, for
those we haven’t got a signed certificate before the end of 2009, to the Agrigento-Caltanissetta
71
2.0
Consolidated Financial Statements 2009
Motorway (Sicily-Italy) and to the Ingula Hydroelectric plant (South Africa).
In the current and prior years, the Group has recorded claims for additional remuneration not yet
approved by the principals.
These are classified in the “Contract work in progress” and “Due from customers” captions, as
discussed in the “Accounting policies” section of these explanatory notes.
Contract work in progress inventories are analysed below:
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Certain foreign projects (Malawi and Angola) incurred in a slow-down due to the financial difficulties of the principal.
Company’s Directors believe that the amounts classified in the caption “Contract work in progress”
are fully collectible considering the advances already collected and the accruals posted in the caption “Provisions for risks and charges”.
For a more detailed analysis of the projects performed abroad reference should be made to the
Report on Operations.
Receivables This caption comprises:
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2.0
Consolidated Financial Statements 2009
The “Allowance for doubtful accounts” has not changed significantly during the year.
The amounts due from subsidiary and associated companies are analysed in the attachments to
these explanatory notes.
During the year, the Cooperative factored with recourse amounts due from third parties totalling
Euro 94.5 million, as reported in the memorandum accounts.
Of the total, Euro 70.2 million is due from public bodies and Euro 11.2 million is due from private
Italian and foreign firms.
The amount due from public bodies includes Euro 28.4 million for work on the “Milan-Bologna
Hsr - Reggio Emilia stretch”, Euro 22.3 million relates to work on the first maxi-project for the
Salerno-Reggio Calabria motorway, and Euro 14.0 million relates to the contract for the Catania
Fruit and Vegetable Market.
74
Amounts “Taxes” mainly include Italian and foreign Vat recoverable.
The amount owed by J.V .partners partially consolidated is related to J.V. consortiums for Euro
3.5 million, and foreign Joint Ventures for Euro 1.8 million.
“Other receivables” comprise the advances made to arbitration boards in relation to outstanding
disputes.
Deferred tax assets are analysed below:
The “Receivables” caption does not include balances due beyond five years.
75
2.0
Consolidated Financial Statements 2009
The effect on the income statement is summarised below:
Receivables are analysed by geographical area below, as required by art. 2427 of the Italian Civil Code:
The amount due from customers is stated net of the allowance for doubtful accounts.
Liquid funds Bank deposits represent temporary liquidity arising from collections made at the end
of December, funds held by consortiums which, under their shareholders’ agreements, only distribute any surpluses on completion of the contract, and hard currency deposits made in relation
to loans obtained in local currencies.
“Cash and cash equivalents” include the cash balances and equivalents held by the head office
and at the various construction sites.
This caption is analysed further in the report on operations. The significant increase, compared to
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the last year, is referred to the down payments received, in the last months of the year, received
from the Employers in Angola, Laos and South Africa.
Accrued income and prepayments This caption comprises:
“Accrued income and prepayments” do not include any amounts due beyond five years.
Comments on major
• Shareholders’ equity The statement of changes in members’ equity during the year is attached.
items: Liabilities and
Share capital comprises 488,167 shares, nominal value Euro 50 each, plus about Euro 19 thou-
Shareholders’ equity
sand in part shares deriving from the revaluation process.
Preferred Pooled Shares As explained in the report on operations, the Cooperative adopted a
“Preferred Pooled Shares (Preps)” in 2006. The characteristics of the capital assigned to Cmc, Euro 12 million repayable in seven years, make it the equivalent of equity.
Since the characteristics of this financial instrument are almost entirely equivalent to Cooperative
Membership Shares, the “Preferred Pooled Shares” have also been classified among the capital
accounts. The principal conditions governing this instrument are summarised below:
• Duration of seven years;
• Received as a single payment on completion of a European securitization transaction;
• Repayment in a lump sum on the seventh anniversary;
• Subordination in the event of liquidation or bankruptcy of Cmc with respect to all present and
future amounts due to all other lending banks;
• Profit participation up to a maximum of 1% of the amount financed;
• No early repayment allowed;
• Requirement for early redemption on violation of contractual commitments regarding disclosures made or to be made, delays in payments by more than 90 days, or changes in the ownership of the Cooperative;
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2.0
Consolidated Financial Statements 2009
• Cmc has also agree to obtain a rating (unpublished) for its official consolidated financial
statements. A series of additional obligations apply in the event of a downgrade to “sub-investment” grade.
Pursuant to art. 54 of the current Articles of association, the “Legal reserve” is not distributable
and cannot be divided among the members during the life of the Cooperative or upon winding up.
The “extraordinary reserve” comprises the profits of the Parent Company that have already been
taxed, as required for cooperatives under current regulations. The “currency conversion reserve”
reflects the differences in the equity of consolidated companies and permanent establishments
abroad generated by exchange-rate fluctuations at the balance sheet date with respect to the
historical rates. The “consolidation reserve” reflects the additional book value of the shareholders’ equity of consolidated companies with respect to their carrying amounts at the time of initial
consolidation. The changes in membership during 2009 are analysed below:
Provisions for risks and charges
The “Provision for contract risks” and the “Provision for foreign operations” have been recorded
to cover possible losses on contracts performed directly, with others or through companies, as
well as to take account of the value of certain equity investments, as discussed earlier.
Change from the last year are related to risks consequent the financial troubles of some foreign
employers. The Parent Company is party to a number of disputes arising in the ordinary course of
business. The “Other provisions for risks and charges” are considered adequate by the Directors
of the Parent Company, assisted by their legal and tax advisors, to cover any charges that may
arise from the settlement of the above litigations.
We underline that during the previous years, after a series of issues arisen by the Tuscany magistracy against Cavet Consortium for works done concerning High Capacity/High Speed BolognaFlorence railway, the Directors of such Consortium and a few managers were involved in various
78
penal procedures regarding the following topics:
• “water theft” through the interception of a groundwater during activities of digging of the galleries and the consequent use of the same water in construction activities;
• depauperation and damaging of superficial and underground water sources;
• illegal traffic of dangerous waste manifested by through the disposing of lands, rocks from digging and muds that the consortium didn’t deal as “refuses”.
On March 3rd 2009, the Florence Court ruled on the first degree judgement and acquitted the
defendants for all matters in hand relating to damages and depauperations of the groundwater, sent back any actions to the Italian Supreme Court (Constitutional Court) as regards to the
relative imputations to the “water theft”, while the defendants has been condemned for the
waste management. In such context the Court, that has sent back to a separated civil judgment
the quantification of the damages to be paid to the plaintiffs, has provided the deposit of an escrow in favour of the Ministry of the Environment, the Tuscany Region and the Province of Florence for an amount of Euro 50 million for every agency, besides smaller amounts in favour of the
others plaintiffs for total Euros 20 thousands approximately.
In addition the Court inflicted accessory interdictory penalties to the accused persons but such
sentence will be effective only after the last degree judgment in case it is not overruled.
We remind that Cavet Consortium has proceeded to contest the sentence of the Court, promoting an appeal from the sentence to the Court of Appeals in Florence, while concerning the “provisional” the judge ruled on November 26th 2009 in favour of the Consortium temporarily suspending the execution of the sentence. The Directors consider the “escrow” does not constitute
a quantification of the damages but a sort of patrimonial protection for the plaintiffs. Therefore,
at the balance sheet date, there is no indication of the damages that could be. The lawyers assisting the Consortium think that within the next appeal judgment they will be able to demonstrate
the correctness of Consortium’s acts and they are also confidente that the negative sentence in
the first degree, will be substantially reformed. For such reason no provision has been accrued in
the financial statements of Consortium against the risks arising from this litigation.
• Severance Indemnity The changes during the year are summarised below:
• Payables Shareholders’ loans account
The following disclosures are required by Section III, paragraph 2, of the Bank of Italy’s circular
dated 2 December 1996:
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2.0
Consolidated Financial Statements 2009
• the funds collected from members at 31 December 2009 total Euro 14.4 million and the interest charged to the income statement for the year was Euro 457 thousand;
• the members’ capital of the Parent Company (paid-in capital plus reserves) is more than 6 times
greater than the amount of the members’ loan.
Accordingly, the equity limits on the gathering of funds from members of cooperatives established by the Cicr (Ministerial Committee) are well respected.
Payables to banks
The change in this caption during the year is analysed in the statement of cash flows. The above
borrowing in hedged by contracts recorded on the basis described in the “Accounting policies”
section of these explanatory notes. The total payable includes long-term loans which are analysed
below by maturity of the related instalments:
During the year 2009, syndicate loans amounting to Euro 20,6 million were repaid, loans amounting to Euro 30.0 million were employed and new loans totalling Euro 45.0 million (of which Euro
22.5 had already been lended) were raised. In line with market practice, certain loan contracts require the Cooperative to comply with covenants whose parameters are calculated with reference
to the amounts reported in the consolidated financial statements.
The Cooperative is in full compliance with all covenants at the balance sheet date.
Other financers These payables are analysed as follows:
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The principal change derives from the recognition of the lease arranged with Ubi Leasing using finance lease methodology, thus identifying a residual payable of Euro 11.08 million.
These loans bear interest at market rates and do not include any amounts due beyond five years.
Advances from customers and Employers This caption includes the difference between the
amounts certified and paid by customers and the value of production actually performed.
Further information is provided in the “Inventories” section of the “Accounting policies”.
Payables to affiliated companies The amounts due to/from subsidiary and associated companies are analysed in the Attachment.
Taxes This caption comprises taxes payable of about Euro 3.7 million, together with Irpef withheld
from employees totalling about Euro 1.6 million which was paid over in January 2009. The Vat
payable relating to the secondary office in Mozambique is stated gross of the amount recoverable,
Euro 4.9 million, classified as “Taxes”, while the Italian Vat payable of Euro 2.2 million was paid
over in January 2009; the Vat payable of Cmc Africa Austral amounts to Euro 12.3 million and is
stated gross of the amount recoverable, Euro 5.3 million. The liability for foreign local taxes is Euro
3.8 million. The Parent Company, starting from July 2009 to December 2009, was audited by the
Internal Revenue Agency. An audit report was issued in connection with Vat and income taxes. The
main items disputed were related to the Vat accounting of certain litigations against Anas while in
connection with the income taxes, the accounting treatment of the interest on Preps was disputed.
The Parent Company has already asked the regional Revenue Agency for a settlement of the dispute and first steps have been made in order to reach an agreed solution between the parties. The
Company’s Directors, with the opinions of their fiscal consultants, do not believe that any liability,
not already accounted for in the financial statements, will result from the settlement of the dispute.
Other payables Other payables are summarised below:
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2.0
Consolidated Financial Statements 2009
The amounts payable from partners in Joint Ventures consolidated on a proportional basis derive
from the effects of partial consolidation and mainly relate to contracts performed abroad by vehicle companies.
“Guarantee payments from customers” comprise the amounts collected by Iniziative Immobiliari
Siciliane Srl and Sviluppo Trapani Srl, Euro 7.1 million and Euro 6.8 million respectively, in relation
to contracts signed with these subsidiaries.
The item “Other” caption includes debts of various nature and modest unitary value, and the liability to former partners in wound up J.V.
Advances from payments from Employers This caption comprises the contractual amounts
paid by Employers as advances against the work to be completed; these amounts are recovered
against the work performed as it progresses.
Advances from customers are analysed below:
This caption mainly comprises advances received for work still to be performed and does not include any amounts due beyond five years.
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The principal changes with respect to the prior year relate to the new advances received in 2008
in relation to work in Angola, Laos and South Africa.
Accrued liabilities and deferred income This caption comprises:
The “Accrued expenses and deferred income” caption does not include any amounts due beyond five years.
Comments on major items:
The commitments for guarantees received, being guarantees given to subsidiaries, associates and
Memorandum accounts
other Group companies, almost entirely relate to performance guarantees, advances and the release of amounts withheld in guarantee, and price revisions.
The main guarantees were given in the interests of contracts associated with the High Speed Railway project, as in the case of the Cavet (Bologna-Florence stretch) and the Cepav Uno Consortium (Milan-Bologna stretch).
In addition,there are share pledges, bound deposits, mortgages and guarantees issued by third
parties against advances payments granted from us, written off from companies in subjected of
bankruptcy proceedings and the face value of recourse factoring.
Memorandum accounts also include commitments on derivative instruments relating to “Interest
rate swap” and “Currency swap”.
At December 31, 2008, the notional value of the underlying relating to Interest Rate Swaps
arranged with primary banks is Euro 6.5 million. These contracts were arranged to hedge the interest-rate risk on loans.
Foreign exchange hedges have also been arranged with leading banks. The underlying notional
of Euro 30.5 million relates to Us dollars and South African rand.
These contracts hedge the risk of changes in exchange rates.
The effect of measuring these derivative contracts at fair value is reported in the explanatory
notes to the Parent Company’s financial statements.
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2.0
Consolidated Financial Statements 2009
Comments on major items:
Income statement The “Revenues from sales and services” are analysed below:
Profit and loss account
The caption “Sale of real estate” is related to the sale, of the shopping centre for Ipercoop Sicilia
and of a mall to Igd in the Gravina area of Catania (Sicily), completed during the month of October.
The value of production includes Euro 252.4 million relating to overseas project , as analysed below:
The additions to fixed assets by internal production are summarised below:
Other revenues and income are analysed below:
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The “Capitalization of deferred charges“ mainly relates to site set-up costs recognised as intangible fixed assets and amortised on a stage-of-completion basis with reference to the contracts concerned.
“Other income” mainly includes rental income for Euro 1.7 million, gains on the disposal of
fixes assets for Euro 2.1 million, recovered site damages for Euro 2.4 million and recovery from
charge to sub-contractors for about Euro 6.5 million for the use of site facilities and services.
The “Services costs” caption comprises:
The increase in the “Studies and design“ caption mainly relates to the Ss640 Agrigento/Caltanissetta motorway project, Porto Empedocle stretch in Sicily for Euro 3.4 million, and Maxiproject of
lot 1 for the Marche/Umbria road system for Euro 2.2 million.
Other operating expenses This item consists of the following:
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2.0
Consolidated Financial Statements 2009
Financial income and charges This caption comprises:
Devaluation of investments This caption reflects the permanent impairment recognised in relation to certain equity investments that are not consolidated line-by-line or on a proportional basis. In particular:
These losses, principally relating to prior years, were appropriately covered by related provisions
for risks and charges which have been released.
86
Extraordinary income and charges This items consists of the following:
The “Income taxes current, deferred and pre-paid” caption, € 7,777 thousand, comprises € 10,475
thousand in current taxes and € 2,698 thousand in deferred taxes.
Minority interests This caption comprises:
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2.0
Consolidated Financial Statements 2009
Directors’ and Statutory Auditors’ fees The Directors of Cmc not receive any remuneration in
relation to 2009, while the Board of Statutory Auditors of the Cooperative received fees totalling
Euro 60,5 thousand, which are reflected in the income statement.
Deloitte & Touche Spa, appointed by the Cooperative pursuant to articole 2409-bis 1St section of
the Civil Code, received during year 2009 a remuneration of € 118.2 thousand for the audit of
annual report of Cmc and for the Consolidated financial statement related to year 2008, while
for the audit of the Report on the Consolidated financial statements for the first half of 2009 Deloitte & Touche Spa received fees totaling € 13.1 thousand.
The average number of Group employees is summarised in the following table:
See the report on operations for all the information required by law that is not included in these Notes.
Photo pag. 89 > Movable Bridge, Ravenna (Emilia Romagna)
Construction of the new Movable Bridge over the Candiano channel.
Photos pages 90-93 > University of Perugia (Umbria) New faculty of Medicine and Surgery of Perugia University.
88
89
90
93
2.0
Consolidated Financial Statements 2009
2.3 Attachments
• Variations in the intangible fixed asset account
• Variations in the tangible fixed assets
• List of non-consolidated subsidiary and associated companies
• Receivables and payables due from/
to subsidiary and associated companies
• Cash flows of statement
• Reclassified consolidated balance sheet
• Change in shareholders’ equity
94
94
• Variations in the intangible fixed asset account
• Variations in the tangible fixed assets account
95
2.0
Consolidated Financial Statements 2009
• List of investments in subsidiary companies not consolidated
line-by-line or on a proportional basis
96
• List of investments in associated companies not consolidated
line-by-line or on a proportional basis
97
2.0
Consolidated Financial Statements 2009
• Receivables and payables due from/to no-consolidated subsidiary companies
98
• Receivables and payables due from/to no-consolidated associated companies
99
2.0
Consolidated Financial Statements 2009
• Cash flows stetements
100
• Reclassified consolidated balance sheet
101
2.0
Consolidated Financial Statements 2009
• Change in shareholders’ equity
Note: pursuant to the Cooperative’s Regulations, the net profit for 2009 include about Euro 1.2
million in “drawback Cooperative’s shareholders”, while the separate financial statements of the
Parent Company classify this amount among the “personnel costs”.
Photo page 103 > Road works at Johannesburg Gillooly’s (South Africa) Roads construction and rehabilitation.
102
103
104
Photos pages 106-109 > Ingula (South Africa) Hydroelectric plant of Ingula.
Photos pages 110-111 > Port of El Kala (Algeria) Completion of the El Kala fishing port.
105
107
108
111
Colophon
Cooperativa Muratori
Printed by
e Cementisti Cmc di Ravenna
Litographic printing
Consolidated financial statement
works Cils, onlus
as of December 31, 2009
Cmc preferred environment
This volume was printed
on ecological papers, composed
Photolithography
of a percentage of recycled fibre
Co-ordination Valda Miani
Il Digitale
and of pure cellulose Fsc
Graphic design and layout
Recycled paper
coming from Sustainable Forests
fabbricando.com
Covers and interiors
according to the principles
Fedrigoni, symbol
of sustainable development.
(Forest stewardship council),
Photography
freelife satin,
Cmc Archive
premium white,
These elements and the absence
Alberto Bevilacqua
300/130 gr/mq
of chlorine and acids in cellulose
Giorgio Biserni
whitening process do not cause
Joel Chiziane
Print Volume printed
Doppio Click
by four-colour process
Carla Moro · Aurelio Dessì
with opaque painting
Philip Schedler
Cover printed
by four-colour
Cover photo
process with silver
Giorgio Biserni
and plasticized opaque
Typography Frutiger font
Printing finished
(Adrian Frutiger, 1976)
In August 2010
damage to environment.