SET DISTRIBUZIONE Financial Statements 2015 › wr-resource › ent3 › 1 › Set...8 set DistRiBUZiOne sPa fcinanial statements 2015 RePORt On OPeRatiOns9 Significant events and

SET DISTRIBUZIONEFinancial Statements 2015

f i n a n c i a l s t a t e m e n t s 2 0 1 5

On the cover:Electric Landscape, Archive Gruppo Dolomiti Energia

Board of Directors

chairman PeROni aGOstinO

Deputy chairman cescHi alessanDRO

Directors naDalini GiOVanna cReaZZi maRinO seRRaGliO fORti manUela cOnt DeBORa DalmOneGO lUiGi

chief executive Officer QUaGlinO stefanO

Board of Statutory auditors

chairman laneR alDO

statutory auditors BOnOmi William camanini cRistina

independent auditors Pricewaterhousecoopers spa

Set Distribuzione SpA

fully paid-up share capital 112,241,777 euroVia manzoni 24 - Rovereto (tn)trento Register of companies no. – taxpayer iD and Vat no. 01932800228

management and coordination by Dolomiti energia spa

SET DISTRIBUZIONEFinancial Statements2015


REPORT ON OPERATIONS siGnificant eVents anD BUsiness cOnDUcteD, sUmmaRY Of ecOnOmic, eQUitY anD financial POsitiOns 9

tHe UnBUnDlinG ReGUlatiOn 10

inDePenDent OPeRatOR’s actiVities 11

ORGanisatiOnal stRUctURe 12

HUman ResOURces 12

assessment BY tHe italian inlanD ReVenUe 13

ResUlts Of OPeRatiOns 13

seRVices QUalitY anD cOntinUitY 14

inVestiments 15

i sYstems 16

meteRinG anD RemOte manaGement seRVice 17

ReseaRcH anD DeVelOPment 18

KeY ecOnOmic anD financial ResUlt inDicatORs - financial anD eQUitY inDicatORs 19

analisi flUssi finanZiaRi 20

analYsis Of casH flOWs - RisK analYsis - cORPORate OBJectiVes anD POlicies On RisK manaGement 20

RelatiOns WitH tHe PaRent cOmPanY anD sHaReHOlDeRs 21

tHeasURY sHaRes 23

siGnificant eVents OccURReD afteR YeaR-enD 23

BUsiness OUtlOOK 23

BOaRD Of DiRectORs’ PROPOsals tO tHe ORDinaRY sHaReHOlDeRs’ meetinG 25

fINANcIAl STATEmENTSBalance sHeet 28

incOme statement 30

NOTES TO ThE fINANcIAl STATEmENTSPRePaRatiOn cRiteRia 32

intanGiBle assets anD PROPeRtY, Plant anD eQUiPment 37

cURRent assets 41

accOUnts ReceiVaBle Of tHe cURRent assets 42

casH anD casH eQUiValents 45

PRePaYments anD accRUeD incOme 45

sHaReHOlDeRs’ eQUitY anD liaBilities 46

incOme statement 56

REPORTBOaRD Of statUtORY aUDitORs’ RePORt 73

inDePenDent aUDitORs’ RePORt 76

INDEX


R E P O R T O N O P E R A T I O N S 98 S E T D I S T R I B U Z I O N E S P A f I N A N c I A l S T A T E M E N T S 2 0 1 5

Significant events and business conducted,summary of economic, equity and financial positionsDear Shareholders,

financial year 2015 is the tenth full year of operation of set Distribuzione which, as you know, began operating on 1

July 2005, following the finalisation of the purchase of the business unit relating to electricity distribution activities

and plants of enel existing in the province of trento.

set Distribuzione’s operations continued regularly also in 2015 and, as a result of the structural effects of the new

tariffs, along with the ongoing focus on aspects of operations, net of extraordinary components, profit was in line

with that of 2014. even net of the extraordinary components, this was your company’s best result ever. this con-

firms that the improvements in the revenue structure and the ongoing attention to costs have been definitively

consolidated and lead to the forecast of positive results also in the coming years.

Your company also fully confirms its place among companies of excellence in electricity distribution at national

level, as testified by the recognitions that we received again this year, as every year since 2005, from the italian

Regulatory authority for electricity, Gas and the Water system (aeeGsi) for the quality and continuity of service.

at european level, the phase of legislative changes is continuing, with the goal of redesigning tomorrow’s electricity

markets and further stimulating the development of a competitive market. these changes will be implemented

REPORTON OPERATIONS


shortly into national regulations, and will radically transform the role of the electricity distributor from what we

have traditionally been used to considering it to be. those changes will demand your company’s ability to face a

phase of structural change, by innovating operational models and integrating new skills in addition to those tradi-

tionally available.

lastly, we deem it important, at this time, to thank the structures of your company and the Parent company Do-

lomiti energia which, through their day-to-day commitment and professionalism, have made it possible to achieve

these excellent results.

The Unbundling regulationOn 23 June 2015, at the end of a long consultation process, started on 17 July 2014 with DcO 346/2014/R/com and

ended on 26 february 2015 with DcO 77/2015/R/, the authority for electricity, Gas and the Water system with

resolution no. 296/2015, approved the new integrated text of the provisions pertaining to functional separation

obligations for companies operating in the sectors of electricity and gas (tiUf), replacing the old tiU per previous

resolution no. 11/07. While the new consolidated text maintained the rules for functional separation in its original

meaning, mainly based on taxation to companies that are the addressees of the rule of specific structural and orga-

nisational restrictions, it introduced the possible adoption of a different, new approach to the problem of structural

restrictions and audits, by promoting the development of self-auditing forms, alternative to the institutional system

of audits.

for this purpose, with resolution no. 507/2015, the authority started an experimental phase, allowing interesting

companies to submit, on a voluntary basis, a draft strengthened self-auditing form, in order to obtain a reorganisa-

tion and rationalisation of the current set-up of the structural functional separation restrictions.

this alternative solution, if it is evaluated positively at the end of the experimental phase, would provide companies

with the advance of having the structural and organisational restrictions prescribed by the tiUf markedly reduced.

Within this experimental phase, which should be completed in the summer of 2016, the Dolomiti energia Group,

through the subsidiaries set Distribuzione s.p.a. and Dolomiti Reti s.p.a. submitted to the aeeGsi, in nearly mirror-

like form, two distinct draft self-auditing procedures, both accepted by the authority and being implemented.

note that the unbundling rules tend toward introducing competition in energy sectors, deeming that “this can be

ensured only through the separation of management of both the infrastructures and information deriving from

metering services”.

in particular, the content of the obligation of functional separation is specified in art. 7, paragraph 1 of said tiUf, by

virtue of which a vertically integrated enterprise is required to grant decision-making and organisational autonomy

to each of the activities listed therein (including energy distribution and sale), separating them administratively

from all the other activities.

to that end, as already known and set out in the relevant eU directives, the company assigns the administration of

each business segment to an independent Operator (Gi).

the Dolomiti energia Group, which your company is a part of, is bound by the obligations of functional separation

pursuant to the tiUf as a Vertically integrated enterprise which, through its subsidiaries, conducts distribution,

metering and sales of electricity and natural gas [art. 8, paragraph 1 of the tiUf]. therefore, it implemented a de-

tailed plan of organisational and corporate actions for the purpose of complying with the obligations set out in the

regulations.

the current corporate structure of the Dolomiti energia Group, adopted specifically due to the need that arose regar-

ding the unbundling regulations, envisages that grid activities and electricity and gas metering be carried out by spe-

cial purpose vehicles. in particular, set Distribuzione is assigned all the activities of management of the distribution

grid and metering of electricity and natural gas, while Dolomiti Reti comprises the management of the gas network.

availing of the possibility offered by the regulations, the independent Operator of set Distribuzione has the nature

of a single-member body, located in the Board of Directors, along with directors that are not functionally indepen-

dent and, for the purpose of guaranteeing the necessary independence and separation of his action in administering

the grid infrastructures, he was assigned the powers contemplated in art. 12 of the tiUf, i.e.:

• decision-makingandorganisationalautonomy;

• congruentassignmentofresourcestocarryouthisdutiesand,specifically,toimplementtheannualandlong-

termdevelopmentplansfortheassignedinfrastructures;

• autonomyintheprocurementofgoodsandservices;

• independencefromthepartiesthatadministerotherregulatedandnon-regulatedactivities,withspecificrefe-

rence to unregulated activities – such as sales – that use grid infrastructure.

at the same time, the independent Operator has a series of obligations (art. 14 of the tiU), including:

• ensuring that the activities that it administers are managed according to criteria of efficiency, cost-effectiveness,

neutralityandnon-discrimination;

• setting up and updating a fulfilment plan containing the measures for pursing the competition purposes pur-

suant to art. 3, paragraph 1 of the tiU and, in particular, for avoiding discriminatory conduct.

Independent operator’s activities for 2015 pursuant to AEEG Resolution 11/07 (TIU) and AEEGSI Resolution 296/2015/R/COM (TIUF)the main activities and duties of the independent Operator were updated with art. 14, annex a to aeeGsi Reso-

lution 296/2015/R/cOm (tiUf).

in that regard, the independent Operator ensured that the activities administered in 2015 were managed according to

criteriaofefficiency,cost-effectiveness,neutralityandnon-discrimination;theIndependentOperatorwasprovided

with suitable resources to carry out its operations and, in particular, for the obligations of the distribution and mete-

ring service as well as to implement the annual investment plan, which was achieved based on its targets and content.

in compliance with the internal self-regulations procedures and the indications provided in that regard by the au-


thority for electricity, Gas and the Water system, set’s independent Operator send the authority - through a speci-

fic internet site, and before the Board of Directors approved the 2016 Budget - the annual and long-term investment

plans for the period 2016-2018.

On 21 December 2015, the independent Operator sent the authority said plans, approved without any changes by

the Board of Directors on 18 December 2015.

lastly, with regard to the activities carried out by the independent Operator during the year, we note the updating

of the procedures of the Group and of set and the sending to the authority, on 22 June 2015, of the “annual Report

on measures adopted, calendar Year 2014” based on art. 14 of the tiUf.

Organisational structurethe main activities and duties of the independent Operator, originally defined in art. 11 of aeeG Resolution 11/07

(tiU) are now governed by art. 12 of aeeGsi Resolution no. 296/2015 (tiUf).

also in 2015 the ongoing process of rationalisation and development of set Distribuzione’s activities continued,

with the goal of strengthening your company’s role as a leading operator in electricity distribution in the entire

Province of trento, also following the approval of the Distribution Plan in 2013 by the autonomous Province of

trento.

in particular, during 2015 set Distribuzione completed and put into operation the activities linked to the

corporate transactions concluded at the end of 2014, meaning the takeover of management of the electricity

distribution service in the municipality of Palù del fersina.

this takeover, which took effect on 1 January 2015, occurred following the rental to set Distribuzione of the

azienda elettrica comunale business unit regarding electricity distribution, previously managed by stet s.p.a. of

Pergine Valsugana.

Human resourcesas at 31 December 2014, the company workforce was composed of: 1 executive, 7 managers, 178 office workers and

111 manual workers for a total of 297 resources.

in 2015, 7 increases were recorded: 3 manual workers and 4 office workers to replace personnel that retired.

there were 21 decreases: 14 office workers and 7 manual workers, all of whom retired.

therefore, as at 31 December 2015 the workforce was comprised as follows: 1 executive, 7 managers, 168 office wor-

kers and 107 manual workers for a total of 283 resources, a decrease of 14 on 31 December 2014.

the year 2015 was characterised by a decrease in accidents compared to the previous year (6 compared to 7 in

2014). Only two resulted in a prognosis exceeding 40 days and were not due to electrocution or commuting.

there were no injuries resulting from traffic accidents.

Assessment by the Italian Inland Revenuein 2008 the Guardia di finanza (finance Police) conducted a tax inspection in the company, after which an asses-

sment was conducted by the italian inland Revenue. this assessment charged the company with failing to apply

registration tax to the acquisition of a business unit for electricity distribution management in the trentino area

from enel Distribuzione s.p.a.

note that the transfer of the business unit was carried out through the following steps:

a) establishmentofanewCo(SETDistribuzionesrl)byENELDistribuzione;

b) contributionoftheabovebusinessunitbyENELtothenewCoestablished;

c) purchasebySETHoldingof100%oftheunitsofthenewCo;

d) transformationofthenewCofromalimitedliabilitycompany(Srl)toajoint-stockcompany(SpA);

e) reverse merger of set Holding into set Distribuzione spa.

in October 2008 set lodged an appeal against the assessment, with the first instance tax commission of trento,

which rejected it by sentence of 26 march 2009. subsequently, in february 2009 the payment order was received

in relation to the aforementioned assessment, showing taxes including sanctions, of 8,159 thousand euro. On 29

June 2009 the appointed legal advisor of the company filed an appeal with the second instance tax commission of

trento against the first instance decision.

Pending the sentence the company agreed with the trento tax authority on settlement of the amount of the

payment order (8,566 thousand euro) based on the assessment. for set, settlement of the payment order is still

offering a saving in terms of interest that the tax authority would calculate on the amounts due. the rate of interest

applied by the tax authority is 8.52% per year, significantly higher than current market interest rates. the payment

did not however preclude or affect the option of your company bringing action before the various tax tribunals at

alllevels;iftheTaxAuthorityshouldlosesuchactionitwouldberequiredtoreimbursetheentiresum,including

interest. By sentence of 21 June 2011 the second instance tax commission also rejected the appeal. convinced of

the correct nature of its operations, the company appealed against the decision before the court of cassation. for

more in-depth accounting details of that event, refer to the notes to the financial statements.

Results of operationsin 2015 operations generated positive income statement results, even though they were inevitably lower than in

the previous year, as they did not include the extraordinary asset items relating to the recovery of tariffs in arrears

present in the previous year. in particular, it is noted that:

• Theproductionvaluecameto98,105thousandeuro,comparedto113,845thousandeuroin2014,adecreaseof

13.83%;

• Thegrossoperatingmargincameto42,009thousandeuro,adecreaseofalmost30.14%comparedto60,129

thousandeurorecordedin2014;

• Consideringamortisation/depreciationof17,712thousandeuro(upbyaround311thousandeurocomparedto

2014), financial charges of 4,905 thousand euro (up by around 30 thousand euro compared to 2014) and extra-


ordinary income of 141 thousand euro, profit before tax of 19,373 thousand euro was achieved, with a negative

differenceof18,557thousandeurocomparedto2014(+48.9%);

• Netprofitfortheyearcameto12,080thousandeuro(comparedto21,742thousandeuroin2014),adecrease

on 2014 nearing 44.44%.

also regarding the financial aspects, 2015 recorded an additional improvement on the previous year: the short-term

net financial position (thus, net of the bond loan, which matures in 2029) was a positive 44 million euro, improving

by around 4.3 million euro on 2014, though the company financed a significant investment plan required by the in-

dependent Operator, using its own equity.

the total net financial position of your company, including 110 million euro of the bond loan, therefore amounted to

a negative 65,827 thousand euro, and guarantees extremely comforting financial stability indicators (ratio of nfP to

eBitDa, in particular).

Service quality and continuityset Distribuzione continues to maintain a high standard regarding the quality and continuity of the service of supply

of electricity to users. for several years the authority for electricity, Gas and the Water system has established an

adequate level of technical and commercial quality, through a set of indicators which electricity distribution com-

panies must guarantee to their active and passive users. if said parameters, which are accurately verified by the

authority based on the information that companies are required to provide, are not met, a penalty is envisaged for

non-performing companies or compensation to users.

for service continuity, in particular, the authority divided the territory of trentino, as well as the rest of italy, into

three areas (high, medium and low concentration) based on the number of inhabitants in the municipalities. the

Quality standards and related bonuses or penalties to Distributors are set at the level of each area.

With the 2008-2011 regulatory cycle, confirmed with the 2012-2015 regulatory cycle, the aeeGsi introduced addi-

tional indicators to measure service continuity. thus, in addition to the indicator of the average minutes of outages

per low voltage user (present since the start of regulation in 2000) it added, for each area, the indicator of maximum

number of long-lasting outages (> 3 minutes) and short outages (> 1 sec), also per low voltage customer.

moreover, the authority provided for compensation to individual medium voltage and low voltage users for long-

lasting, widespread outages.

the results reported to the authority in march 2015, regarding 2014, confirm that set Distribuzione is among the best

companies in the electricity distribution sector at national level, which enabled your company to obtain a bonus of

1.56 million euro as recognition for its excellent results achieved. in detail, in each of the areas of responsibility (high,

medium and low concentration of customers), the average duration of outages in 2014 was better than the targets

that the authority assigned set based on the best service quality standards requested at national level (high concen-

tration:standard-28minutes,result-8minutes;mediumconcentration:standard-45minutes,result19minutes;low

concentration: standard - 68 minutes, result - 28 minutes).

also with regard to the number of outages, the results were better than the standards in each of the areas (high

concentration:standard-1.2,result-0.43;mediumconcentration:standard-2.25,result-1.55;lowconcentration:

standard - 4.30, result - 2.62).

as regards 2015, the data concerning service continuity confirmed the positive trend of the previous years for all areas,

with all six reference indicators performing better than the standards set by the aeeGsi and improving on 2014. as

regards commercial quality, in 2015, set Distribuzione maintained the previous years’ positive results in compliance

with the standards set by the authority for the execution times for the various services (cost estimates and simple

works on the lV grid, activation and deactivation of metering units, replacements of defective metering units, etc.).

compensation was paid to 38 users out of a total of 33,600 services executed at the specific level of commercial

Quality, thus, compliant with timeframes in 99.9% of cases.

During 2015 set actively participated in the public consultation phase launched by the aeeGsi for the purpose of

developing rules to be applied in the new regulatory period 2016-2023.

lastly, with Resolution 646/2015, the aeeGsi resolved on the new integrated text on the Quality of electrical ser-

vices (tiQe), adding the following changes on the previous regulatory period:

• Durationoftheperiodextendedfrom4to8years

• Decreaseoftheincentivelinkedtotheindicatorofdurationofoutages,partlyoffsetbypostponingtheendof

the incentive from 2020 to 2023

• Reductioninthemaximumexecutiontimesforseveralcommercialqualityservices

• Incentivesforseveralinterventionsforinnovativemanagementofthegrid.

Investimentsin addition to the works on the mV and lV grids to fulfil the connection requests from passive users (which reco-

vered slightly on the previous years) during 2015 activities continued for the purpose of connecting photovoltaic

plants (around 500) and other plants with hydroelectric generation, for total power of 37 mVa, to the grid.

conversely, as regards works on set’s initiative relating to expanding the grids, improving service and adjusting

plants to legal regulations, the volume of activities was in line with the previous years, amounting to around 4.9

million euro.

these are highly profitable works, mainly on the mV grids and secondary stations (meaning those characterised

by high returns in terms of improving the quality of service), implemented based on a plan that identified these

works in great detail.

the main investments realised by your company in 2015 can be summarised as follows:

• completionofthe“Petersen”Project,withtheinstallationof2coilsinthePrimaryStationofRoveretoPista.All

46MVhalfbusbarsofthePrimaryStationsarenowcompensatedneutral;

• numerousworkstoreplacebareconductorswithoverheadcable,foratotalof54kmofMVlines,inwooded

areaslocatedin48differentmountaindistrictsintheProvince;


• expansionofseveralMVlinesandplantsinValdiFassaandAltaValsugana,workstoimproveserviceandin-

tegration with the set grids in the municipalities of cles and Palù del fersina, after management of plants was

takenoverfromthelocalpowercompany;

• completionoftherenovationoftheLVgridsandcentralisedswitchboards,aspartofchangingvoltage230-400

V, in the municipalities of fai della Paganella and Palù del fersina. at the end of 2015, all of set’s lV grids were

managed through a unified distribution system named tt at 230-400 V and electronic meters managed remo-

telyatallusers’premises;

• requalification of numerous obsolete secondary stations with open outfitting, with protected switchboards,

either motorised or equipped with switches, to improve service continuity and the selectivity of faults on the

medium voltage grid and to enable remote control by the trento integrated Remote control centre.

it is important to note that your company’s technical structures have drawn up a long-term plan of the need for

investment in the grid. through targeted works that have already been identified in detail, this plan covers a

time horizon up to 2020 and forms the reference foundation for the communications envisaged by the authority

in the integrated text on unbundling.

the plan was shared with the development business lines by your company’s directors and will continue, as in

recent years, to be concretely defined in the annual budgets of the next few years.

It systemsUnder the service agreement in force, the parent company Dolomiti energia develops and makes available to set

Distribuzione all the it infrastructure and systems required for company operations and to suitably fulfil the

obligations required by the authority for electricity, Gas and the Water system.

During 2015, the analysis, design and implementation of the future structure of the it system in the area of

unbundling continued. specifically, activities were completed to put into production the company processes

managed in full compliance, also in it terms, with the authority’s resolutions.

as regards applications, which have been covered by the service agreement with the Parent company for some

time, it is noted that the system of remote management of electronic meters (named “tmm”), developed by

Dolomiti energia is available in its now definitive version, both to set and to a further ten distributors in the

Province of trento, as well as siR (Grid it system).

note that the siR system was developed specifically to manage the grids of the Dolomiti energia Group and acts

as the centre of gravity for the main company flows, specifically between the commercial management area, the

remote manager tmm and the remote control of the grids, incorporating the distribution data structures and

work processes and unifying all the it management logics of technical data.

the functions make available through siR which are of interest to the company include the simulation of me-

dium and low voltage electrical grids and control of periodic summary data regarding service quality, in complian-

ce with the principles promoted by the aeeGsi resolutions, in addition to other applications to improve, monitor

and automate several company operating processes.

During 2015 numerous functionalities of the siR system were further improved and fine-tuned, also in line with

the provisions of the aeeGsi, and are now extensively used by all of the Group’s technical structures.

During 2015 a tender was held that assigned the development of m-siR (mobile siR), i.e. a project that will

provide technical-plant information through mobile devices for technicians and operational teams, guaranteeing

viewing and searching for data both online and offline. this project will be developed in the first half of 2016

and is included in the mobile project for company data and workforce management, named Wfm (Work force

management).

it development activities also involved the following:

• DevelopmentofintegrationwiththeIntegratedITSystem,accordingtotheprovisionsofResolution398/2014,

for managing the electricity transfer process.

• Adjustmentoftheequipmentforobtainingprofile-basedmeasurementsforpublicationoftheflowsonthe

integrated it system, as envisaged by Resolution 640/2014.

• FirstlotofworkstoadjustthesystemstothenewElectricityGridCode(Resolution268/2015),andinparti-

cular, the optimisation of equipment for taking non-hourly periodic measurements and controls on publication

of the same for the purpose of monitoring the timeframes for making them available to sellers. During 2016 the

works will be implemented for the complete adjustment of the systems to the Grid Distribution code (caDe),

as regards the periodic adjustment of the guarantees required from sellers by set, and the new methods for

invoicing sellers (pending the publication by the aeeGsi of communication standards for invoicing documents

and annexes).

• AdjustmentofthenewcommunicationflowsandrelatedstandardsdefinedbytheIntegratedTextonEnergy

and Gas Bonuses (tiBeG).

• UpgradingoftheIntegratedTextonActiveConnections(TICA)forelectricityproducers.

• Otherminorupgradesofthedistributionsystems.

On the infrastructure front, we note the realisation of the fibre optic connection with the offices in tuenno.

Metering and remote management servicein 2015, set Distribuzione worked on the optimisation of the remote control operation technique, obtaining excel-

lent quality results, among the best in italy.

the in-depth studies carried out at withdrawal points that could not be reached by the remote management system

nonetheless confirmed the increase in interference with the propagation of the waves conveyed on the low voltage

grid, caused by user devices owned by the end customers. important resources were dedicated to the search and eli-

mination of interference sources, with the goal of avoiding the rapid degradation of the performance levels reached,

considering that the new Grid code (caDe) prescribes, from the end of 2015 onwards, automatic indemnities which

the distributor must pay to sellers in the event of missing readings under a certain threshold.

also in the area of electricity, the procedures for reading and validating measurement data were fine-tuned for

points of delivery with hourly treatment. the new procedures for acquiring hourly measurements using PDas for


POD points not reached through remote connection made it possible to achieve the goal of 100% availability of

hourly data, despite the increasingly short timeframes imposed by regulations for making the data available to the

sales companies.

instead, as regards the metering service for the natural gas provided to Dolomiti Reti, we note the finalisation of

the remote reading of class G16 meters, using the centralised system that is now in its definitive version as regards

point-point technique, as well as the optimisation of the management and provision of the daily consumption data

for the over one thousand redelivery points that envisage such treatment.

the field tests for mass-market utilities (classes G4-G6) continued through demonstrative remote management

system based on point-multipoint technique via radio at 169 mHz.

Research and developmentin 2015, activities with high innovation content continued, on one hand with the reservation of strategic rela-

tionships and on the other with the implementation of real solutions in support of corporate processes, of the ope-

ration and advanced management of the grid of the near future, also in compliance with the indications of aeeGsi.

the activities of the sunshine Project - cofunded by the european Union - continued, including participation in

several public presentations of results, and involving the implementation of real time programming and diagnostic

systems for a number of public lighting systems in the municipality of Rovereto.

During the year, the experience of using certain electric vehicles issued to your company’s personnel was confirmed

to be positive and the necessary initiatives were started to assure, in 2016, the more generalised availability of cer-

tain public recharging stations for electric vehicle throughout the served territory.

During the year, the initial analysis phase of the Wfm project concluded. in the years to come, this project will im-

prove your company’s efficiency by making mobile it tools available, on which apps will be issued dedicated to the

various activities. in particular, at the end of 2015 the tender for the provision of the first app was assigned, which

will make available configuration layouts and technical data of all grids and networks managed.

Personnel continued in their commitment to guarantee participation in technical committees and strategic work

groups, both in italy and europe.

Key economic and financial result indicatorsecOnOmic inDicatORs

Indice Formula 2015 2014 differenza

ROe net Profit/equity 8.3% 16.7% -8.4%

ROi eBit/invested capital 6.0% 10.8% -4.8%

ROs eBit/turnover 24.6% 37.4% -12.8%

eBitDa Gross operating margin 42,009,149 60,129,012 (18,119,863)

eBit net operating margin 24,137,579 42,576,533 (18,438,954)

all economic indicators were lower than the previous year.

financial anD eQUitY inDicatORs

Index Formula 2015 2014 difference

Hedging of fixed net assetsequity+medium/long-term liabilities/fixednet assets

1.10 1.08 0.02

Debt ratio liabilities/equity 1.57 1.60 (0.02)

Degree of amortisation amortisation provision/gross fixed assets 0.55 0.55 0.01

secondary liquidity ratio short-term assets/short-term liabilities 1.45 1.38 0.07

the financial and equity indicators are in line with values from the previous year. also note that the liquidity

ratio improved further as a result of the profit for the year 2015.


Analysis of cash flowscasH flOW statement Of casH flOWs 2015

OPeninG casH anD casH eQUiValents 39,858,748

casH flOW 28,619,356

cHanGes in net WORKinG caPital 399,362

OPeRatinG casH flOW 29,018,718

ecOnOmic inVestment actiVitY (18,314,934)

sale Of assets 326,067

financial inVestment actiVitY -

net cHanGe in sHORt anD meDiUm-lOnG teRm lOans -

OtHeR 18,527

fRee casH flOW 11,048,378

cHanGe in eQUitY -

DiViDents (6,734,506)

net casH flOW 4,313,872

clOsinG casH anD casH eQUiValents 44,172,620

OPeninG net financial POsitiOn (70,141,252)

incRease/DecRease Of net financial POsitiOn 4,313,872

clOsinG net financial POsitiOn (65,827,380)

as regards the analysis of cash flows, centralised treasury balances were reclassified from the items regarding

accounts payable to/receivable from the parent company to those relating to bank amounts payable/receivable

in order to better illustrate the trend in the cash flows.

Risk analysis – Corporate objectives and policies on risk managementCredit riskthe company’s clients are mainly electricity wholesalers and, among these, the largest is the associated company trenta

s.p.a.

credit is monitored constantly during the year to ensure that the total always expresses its estimated realisable value.

Liquidity riskthe main liquidity risk that the company is exposed to is the potential difficulty of promptly obtaining funds to support

its normal business activities. to ensure the company has the necessary financial means for carrying out ordinary busi-

ness, it has stipulated a service agreement for finance management with the parent company Dolomiti energia, which

makes provision for treasury management under a “cash pooling” arrangement and surety management activities.

the company’s financial position is constantly monitored by the specifically-assigned office and does not exhibit any

problems. the financial position includes a bullet, fixed-rate bond loan of 110 million euro, maturing in 2029, issued on

acquiring the electricity distribution business unit from enel Distribuzione spa.

Market riskthe company exclusively operates on the national market and is thus not exposed to floating currency exchange rates.

the tariffs determining the consideration for electricity distribution are instead decided by the aeeG and are therefore

unlikely to change except in regulatory terms.

the risk of fluctuations in interest rates is limited, as financial exposure is represented by the fixed-rate bond loan

mentioned above, with duration until the concession ends. changes in interest rates could influence the index-linked

floating rate short-term deposit.

Relations with the parent company and shareholdersRelations with Dolomiti energia are governed by a service agreement which, during the year, made provision for equal

remuneration for the services performed by shareholders to set Distribuzione or by the company to its shareholders.

set Distribuzione’s decision not to set up its own operational structure to manage the various technical-administrative

activities resulted in significant management economies.

the activities carried out for set Distribuzione mainly regard administrative-management activities, and specifically

refer to general services (premises, logistics, cleaning, security, etc.), the outsourced set up and provision of it systems

(regarding the components of hardware, software and communications and network infrastructure), administration in

the strict sense, personnel administration and procurement of products and services.

a cash pooling agreement is also in place with cash pooling which is used to implement the cash pooling service. set Di-

stribuzione also participates in the national tax consolidation regime with its direct parent company Dolomiti energia.

the profit and loss items relating to those relationships are illustrated in detail in the notes to the financial statements.


RelatiOns WitH DOlOmiti eneRGia GROUP cOmPanies

the tables below summarise the economic and financial relations with the companies in the Dolomiti energia Group.(amount in euro)

Tradereceivables

Financial receivables

Trade payables

Loanspayables

Dolomiti energia spa 89,726 49,215,117 850,166 975,001

trenta spa 21,804,740 - 21,440,481 -

Dolomiti energia Rinnovabili srl 732 - 38,503 -

Dolomiti Reti spa 276,569 - 112,941 -

multiutility spa 21,464 - 37,701 -

Dolomiti ambienti srl - - 12,500 -

total 22,193,231 49,215,117 22,492,293 975,001

(amount in euro)

Revenue PurchasesFinancial

income

Financial

chargesGoods Services Other Goods Services Other

Dolomiti

energia spa- 420,283 - 349,804 3,509,040 192,000 87,524 -

trenta spa - 51,995,267 - - 157,870 127,315 - 349

Dolomiti energia

Rinnovabili srl- 1,380 - - 82,771 - - -

Dolomiti Reti spa - 1,140,249 - 400 505,852 - - -

Hydro Dolomiti

enel srl- - - - - 2,535 - -

multiutility spa - 23,772 - - - - - -

Dolomiti ambiente

srl- - - - 50,180 - - -

total - 53,580,951 - 350,204 4,305,713 321,850 87,524 349

Theasury sharesas at 31 December 2015, set Distribuzione spa did not hold treasury shares, nor did it carry out directly, indirectly

through subsidiaries or associates, through trust companies or third parties, purchases or sales of such shares in 2015.

as at 31 December 2015, the subsidiaries, associates and related parties did not hold shares of set Distribuzione, nor

did they carry out purchases or sales of such shares in 2015.

During the year, no shares with dividend entitlement, bonds convertible in shares or other securities or similar instru-

ments were issued.

Significant events occurred after year-endthere were no significant events after year-end.

Business outlooktariff regulations relating to the distribution service and the electricity metering service were governed by the

aeeGsi (hereinafter, the “authority”) for the regulatory period 2016-2019 through Resolution aRG/elt no. 654/15

of 23 December 2015.

therefore, the authority determined, separately for each service - transmission, distribution and metering - the tariff

levels for 2016-2019 based on the cost recognised, which includes:

a) operatingcostsrecognised;

b) amortisationanddepreciationoffixedassets;

c) remuneration of invested capital recognised.

the value of invested capital recognised was obtained by applying the criterion of historical cost revalued in con-

tinuity with the previous regulatory period, with the exception of net invested capital recognised relating to mV/

lV infrastructure prior to 2008, taken from revenues from tariffs for 2010, current and adjusted. the calculation of

assets for which the accumulated economic-technical amortisation/depreciation as at 31 December 2015 did not

fully cover the gross value of the assets net of subsequent revaluations were included. as a change on the previous

regulatory period, investments of year t-1 were also calculated, analogous to that envisaged in the gas distribution

sector (previously, investments made up to year t-2 were considered).

amortisation and depreciation recognised in the tariff was determined on a straight-line basis, starting with the va-

lues of the conventional durations of the assets defined by the authority based on the residual economic-technical

life of the assets. starting in 2016 the authority redefined the useful lives of mV and lV grids that entered into force

after 2007, bringing them from 30 to 35 years.


the real pre-tax rate of return on invested capital was determined as the weighted average of the rate of return

on risk capital and the cost of debt (Weighted average cost of capital, Wacc). compared to the previous regu-

latory period, the variable country Risk Premium was added to take account of the country risk associated with

investments in risk capital in countries with low ratings.

the authority set the real pre-tax Wacc for distribution and metering services at 5.6% compared to 6.4% in the

previous regulatory period. said reduction is the result of the trend in interest rates of public debt securities in the

recent past. it must be observed that the reduction would have been greater if the authority had not attenuated

the impact of the decrease in yields on said securities, by adopting certain shortcuts, including that referred to above

relating to the country Risk Premium.

With Resolution no. 268/R/eel of 2015, the aeeGsi also eliminated the possibility of withholding 0.5% of the

levies on system charges starting from 2016.

this change in tariffs should result in a reduction in revenues from tariffs, with the resulting reduction in the opera-

ting margin of around 3 million euro.

Board of Directors’ proposals to the ordinary Shareholders’ meetingWith the approval of these financial statements, the term of the Board of Directors expires. thus, we take this op-

portunity to thank the shareholders for the trust they have shown in us and for the active cooperation of the Board

of statutory auditors and all employees.

We wish the new board all the best in its work and invite you to approve the financial statements that we hereby

submit, confirming that:

thefinancialstatementsarebasedonaccountingrecordsheldinstrictcompliancewithactualbusinessoperations;

all costs and revenues were regularly counted.

therefore, we propose that you:

- approvetheBoardofDirectors’ReportonOperations;

- approvethefinancialstatementsfortheyearendedasat31December2015,assubmittedtoyou;

- allocate the profit for the year of 12,080,108 euro as follows:

• 604,005euro,i.e.5%,tothelegalreserve;

• 6,734,507euroasordinarydividendtoshareholders,correspondingto0.06europershare,andalsopropo-

singthatthedividendbepaidfrom1June2016;

• 4,741,596eurototheextraordinaryreserve.

Rovereto, 11 march 2016 SET Distribuzione SpA

the chairman

agostino Peroni

SET DISTRIBUZIONE SPAFinancial Statements2015

B A L A N C E S H E E T - f i N A N C i A L S T A T E M E N T S 2928 S E T D I S T R I B U Z I O N E S P A f I N A N c I A l S T A T E M E N T S 2 0 1 5

(amount in euro)

BALANCE SHEET - ASSETS 31/12/2015 31/12/2014

a) sUBscRiBeD caPital UnPaiD

B) fiXeD assets

i. immobilizzazioni immateriali

1) staRt-UP anD eXPansiOn cOsts 5,555

2) ReseaRcH, DeVelOPment anD aDVeRtisinG cOsts 5,961 3,086

5) GOODWill 28,513,850 30,414,773

7) OtHeR intanGiBle assets 384,044 384,664

total 28,903,855 30,808,078

ii. PROPeRtY, Plant anD eQUiPment

1) lanD anD BUilDinGs 22,278,418 22,468,246

2) Plants anD eQUiPment 224,782,271 220,396,907

3) inDUstRial anD cOmmeRcial fittinGs 19,252,449 20,876,624

4) OtHeR assets 766,236 895,638

5) WORK in PROGRess anD aDVance PaYments 5,000 266,191

total 267,084,374 264,903,606

iii. financial fiXeD assets

2) accOUnts ReceiVaBle WHicH aRe fiXeD assets

d) Others 38,774 57,301

total 38,774 57,301

total fixed assets 296,027,003 295,768,986

c) cURRent assets

i. inVentORies

1) RaW mateRials anD cOnsUmaBles 2,840,337 2,632,446

total 2,840,337 2,632,446

ii. accOUnts ReceiVaBle Of tHe cURRent assets

1) accOUnts ReceiVaBle - UseRs anD cUstOmeRs 9,253,110 10,143,338

4) accOUnts ReceiVaBle - PaRent cOmPanies 49,304,843 40,642,281

4)bis taX cReDits 1,139,044 703,475

4)ter PRePaiD taXes 7,438,085 8,256,748

5) accOUnts ReceiVaBle - OtHeRs, sHORt-teRm 38,148,587 35,740,803

total 105,283,669 95,486,646

iii. sHORt-teRm inVestments

total - -

iV. casH anD casH eQUiValents

1) BanK anD POstal cURRent accOUnts 20,522 4,508

3) casH On HanD 1,479 1,776

total 22,001 6,284

total current assets 108,146,007 98,125,376

D) accRUals anD DefeRRals

PRePaYments 69,221 81,355

total Prepayments and accrued income 69,221 81,355

tOtal assets 404,242,231 393,975,716

(amount in euro)

BALANCE SHEET - LIABILITIES 31/12/2015 31/12/2014

a) sHaReHOlDeRs’ eQUitY

i. sHaRe caPital 112,241,777 112,241,777

ii. sHaRe PRemiUm ReseRVe 2,517,012 2,517,012

iV. leGal ReseRVe 2,428,086 1,341,007

Vii. OtHeR ReseRVes

eXtRaORDinaRY ReseRVe 27,807,057 13,887,068

- rounding reserves (3)

iX. PROfit OR lOss fOR tHe YeaR 12,080,108 21,741,574

total shareholders’ equity 157,074,040 151,728,435

B) PROVisiOn fOR RisKs anD cHaRGes

2) PROVisiOn fOR incOme taXes (inclUDinG DefeRReD taXes) 3,055,738 3,625,259

total 3,055,738 3,625,259

c) emPlOYee teRminatiOn Benefits 3,862,017 4,465,571

D) accOUnts PaYaBle

1) BOnDs

- after 12 months 110,000,000 110,000,000

4) accOUnts PaYaBle - BanKs

- within 12 months 699 757

7) tRaDe PaYaBles

- within 12 months 41,735,103 35,570,525

11) accOUnts PaYaBle - PaRent cOmPanies

- OtHeR 1,825,168 4,557,355

12) taX PaYaBles

- within 12 months 479,590 533,974

13) sOcial secURitY PaYaBles

- within 12 months 789,723 795,579

14) OtHeR accOUnts PaYaBle

- within 12 months 2,372,657 1,823,625

- after 12 months 22,140,985 21,920,560

total 179,343,925 175,202,375

e) accRUeD liaBilities anD DefeRReD incOme

accRUeD liaBilities 2,155,214 2,155,002

DefeRReD incOme 58,751,297 56,799,074

total 60,906,511 58,954,076

tOtal sHaReHOlDeRs’ eQUitY anD liaBilities 404,242,231 393,975,716

B A L A N C E S H E E T - f i N A N C i A L S T A T E M E N T S 3130 S E T D I S T R I B U Z I O N E S P A f I N A N c I A l S T A T E M E N T S 2 0 1 5

(amount in euro)

INCOME STATEMENT 31/12/2015 31/12/2014

a) PRODUctiOn ValUe

1) ReVenUe fROm sales anD seRVices 80,329,364 78,697,835

4) incReases in fiXeD assets fOR in-HOUse PROJects 7,083,044 6,374,742

5) OtHeR ReVenUe anD incOme (nO sale/seRV.)

Other revenue 10,628,660 28,688,261

Plant-related grants and portion of operating grants 64,161 84,234

tOtal PRODUctiOn ValUe 98,105,229 113,845,072

B) PRODUctiOn cOsts

6) eXteRnal PURcHases Of RaW mateRials, cOnsUmaBles anD meRcHanDise (4,817,942) (3,974,764)

7) eXteRnal PURcHases Of seRVices (25,942,179) (24,218,384)

8) cOsts fOR Use Of tHiRD PaRtY assets (2,144,125) (2,126,792)

9) PeRsOnnel cOsts

a) Wages and salaries (12,221,879) (12,259,303)

b) social security costs (3,855,710) (3,925,217)

c) employee termination benefits (813,274) (830,320)

e) Other costs (545,784) (548,542)

10) amORtisatiOn, DePReciatiOn anD WRite-DOWns

a) amortisation of intangible assets (1,954,276) (1,950,219)

b) Depreciation of property, plant and equipment (15,758,047) (15,451,369)

d) Write-down of accounts receivable recognised to current assets (159,247) (150,891)

11) cHanGe in inVentORies Of RaW mateRials, cOnsUmaBles anD meRcHanDise 207,890 (427,277)

14) OtHeR OPeRatinG cOsts (5,963,077) (5,405,462)

tOtal PRODUctiOn cOsts (73,967,650) (71,268,540)

DiffeRence BetWeen PRODUctiOn ValUe anD cOsts 24,137,579 42,576,532

c) financial incOme anD cHaRGes

15) incOme fROm inVestments

Parent companies 87,524 129,040

Other 66,764 67,285

17) inteRest anD OtHeR financial cHaRGes

- PaRent cOmPanies

- OtHeR (5,059,594) (5,070,787)

tOtal financial incOme anD cHaRGes (4,905,306) (4,874,462)

(amount in euro)

31/12/2015 31/12/2014

D) ValUe aDJUstments Of inVestments

18) ReValUatiOns Of inVestments

19) WRite-DOWns Of inVestments

tOtal ValUe aDJUstments Of inVestments - -

e) eXtRaORDinaRY incOme anD cHaRGes

20) eXtRaORDinaRY incOme

- cOntinGent assets anD nOn-eXistent assets 143,114 150,816

- OtHeR eXtRaORDinaRY incOme 85,353

21) eXtRaORDinaRY cHaRGes

- taXes RelatinG tO PRiOR PeRiODs (2,301) (329)

- cOntinGent liaBilities anD nOn-eXistent liaBilities (7,549)

tOtal eXtRaORDinaRY items 140,813 228,291

PROfit BefORe taX 19,373,086 37,930,361

22) incOme taXes fOR tHe YeaR

- current taxes (7,043,836) (16,123,637)

- Deferred taxes 569,521 1,196,737

- Prepaid taxes (818,663) (1,261,887)

23) Profit (loss) for the year 12,080,108 21,741,574

these financial statements are truthful, actual and conform to the accounting records.

set Distribuzione spa

the chairman

agostino Peroni

Rovereto, 11 march 2016

N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 33

Preparation criteriathe financial statements were prepared on the basis of the provisions set forth in articles 2423 et seq. of the ita-

lian civil code, supplemented by the accounting standards issued by the italian accounting standard authority

(Oic), which also updated the standards originally prepared by the italian accounting profession.

these financial statements are expressed in euro.

furthermore:

a) thevaluationcriteriaarethosesetforthinArticle2426oftheItalianCivilCode;exceptionalcaseswhich

would make it necessary to not apply the valuation criteria set forth, since incompatible with the “true and

fair view” of the equity and financial situation as well as the economic result of the company, pursuant to

Article2423,4thparagraph,werenotidentified;

b) theitemsoftheBalanceSheetandtheIncomeStatementwerenotgrouped;

c) there are no asset and liability items that fall under more than one item in the statement.

the financial statements items are comparable with those from the previous year.

Principles applied in the valuation of Financial Statements itemsthe financial statement items were measured on the basis of general criteria of prudence and accrual under the

assumption that the company is a going concern, as well as taking into consideration the economic function of

the asset and liability item considered.

NOTES TO ThEfINANcIAlSTATEmENTS

the application of the principle of prudence entailed individually measuring the elements making up the indivi-

dual asset and liability entries or items, in order to avoid offsetting items that should be recognised and profits

that should not be recognised because not realised.

in compliance with the accrual principle, the effect of transactions and other events was stated for accounting

purposes and attributed to the year to which those transactions and events refer, and not to that in which the

relative cash movements actually take place (collections and payments).

the measurement criteria adopted in preparing the financial statements are described below.

INTANGIBLE ASSETS

intangible assets, characterised by a lack of tangibility, are represented by costs which do not terminate their

utility in the period they are incurred, but rather manifest economic benefits over several years. they are sta-

ted at the purchase cost effectively incurred inclusive of related charges, and/or at production cost if created

internally, which includes all the costs directly attributable and also the portion of the indirect costs reasonably

attributable to the asset.

they are stated net of the portions of amortisation, calculated systematically on a straight-line basis in relation

to their residual useful life.

in the event of impairment, regardless of the depreciation already accounted for, the asset is correspondingly

writtendown;iftheassumptionsonwhichthewrite-downisbasedarenolongervalidinsubsequentyears,the

original value is written back, only adjusted by depreciation.

start-up and expansion costs (amortised over a period of 5 years) and research, development and advertising

costs (amortised over 3 years) are recognised under the balance sheet assets with the consent of the Board

of statutory auditors. the goodwill generated by acquisitions of businesses and mergers are amortised over a

period corresponding to its useful life, determined in relation to the type of business to which it refers. Other

multi-year costs are amortised based on the duration of the contracts to which they refer.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment include assets held for long-term use whose economic utility extends beyond the

limits of one year, acquired from third parties or produced internally. the cost effectively incurred for the acqui-

sition of the asset also includes the related costs, incurred so that the fixed assets can be used. the production

costs include all the costs directly attributable to the asset (typically materials and direct labour) and the portion

of other general production costs reasonably attributable to the fixed asset. there were assets subject to reva-

luation pursuant to law no. 266 of 23 December 2005.

N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 3534 S E T D I S T R I B U Z I O N E S P A f I N A N c I A l S T A T E M E N T S 2 0 1 5

they are stated net of the portions of depreciation, calculated systematically on a straight-line basis in relation

to their residual useful life. the depreciation period begins from the year in which the asset is available and ready

for use, and for assets acquired during the year the rate is halved, to take into account the minor use. in particu-

lar, depreciation is mainly calculated according to the rates shown below:

- primary and secondary substations, satellite centres, transformers, lV/mV grids, connections 2,9%

- electronic metering units 6,7%

- furniture and office machines 5,6%

- electronic office machines 16,7%

- motor vehicles 12,5%

in the event of impairment, regardless of the depreciation already accounted for, the asset is correspondingly

writtendown;iftheassumptionsonwhichthewrite-downisbasedarenolongervalidinsubsequentyears,the

original value is written back, only adjusted by depreciation.

extraordinary maintenance charges increase the book value of the fixed assets to which they refer, since they in-

creasetheproductioncapacityortheusefullifeattributabletotheexistingasset;ordinarymaintenancecharges

are booked to the income statement.

no financial charges relating to loans possibly obtained for the construction and manufacture of assets, have

been capitalised.

ACCOUNTS RECEIVABLE

Receivables are stated at face value under financial fixed assets or under current assets depending on their nature

and intended use. they are stated net of the related allowance for doubtful receivables, established to estimate

the possible losses deriving from non-collectability which, as of the date these financial statements were drawn

up, are foreseeable and intrinsic, so as to reduce them to the estimated realisable value.

INVENTORIES

inventories represent assets destined for sale or which contribute to their realisation in the normal activities

of the company and mainly include raw, ancillary and consumable materials. the assets in inventories are re-

cognised at purchase cost, inclusive of related charges. the inventories are valued in the financial statements

atthelowerbetweencostandtherealisablevaluebasedonthemarketasoftheyear-enddate;thecostofthe

replaceable assets is determined using the weighted average cost method, since the quantities purchased are not

individually identifiable, but are included in a series of assets equally available.

ACCRUALS AND DEFERRALS

these represent the costs and income common to two or more accounting periods, the amount of which varies

over time. the amount of the accruals and deferrals is determined by means of the breakdown of the revenue or

the cost, for the purpose of allocating just the pertinent portion to the current period.

for multi-year accruals and deferrals, the conditions that led to the initial posting were verified, making suitable

changes where necessary.

ACCOUNTS PAYABLE

Payables include specific and certain liabilities, which represent obligations to pay a determinate amount usually

on an established date. they are recognised at their face value, adjusted by returns or invoicing adjustments.

PROVISIONS FOR RISKS AND CHARGES

Provisions for risks and charges include costs and liabilities of a specific nature whose existence is certain or

probable, but whose timing and extent are unknown as of the year end date. the provisions represent a realistic

estimate of the liability to be incurred on the basis of the information available. When evaluating these provi-

sions, the general principles of prudence and accruals are observed and steps are not taken to establish generic

provisions lacking economic justification.

EMPLOYEE TERMINATION BENEFITS

the employee termination benefits are provided on an accruals basis in compliance with the law and employment

contracts in force, considering all types of continuous wages and salaries. the amount recorded in the financial

statements reflects the effective liability accrued in favour of employees as at the year-end date, net of advances

paid out, and equals that which would be due to employees if their employment were to end on that date.


OPERATING REVENUES AND COSTS

the positive and negative components of income are established and recorded on an accruals basis with appro-

priate recognition of the accruals and deferrals and in accordance with the matching between costs and revenues.

sales revenues and purchase costs are recorded net of returns, discounts, allowances and premiums, as well as the

taxes directly associated with the sale or the purchase of products and services.

INCOME TAXES FOR THE YEAR

the current taxes for the year are established on the basis of a realistic forecast of the taxable income pertaining

to the year, in accordance with current tax legislation and are stated, net of the advances paid and the withhol-

dings made, in the item tax payables (in the event a net payable emerges) and in the item tax receivables (in the

event a net credit emerges).

Prepaid and deferred taxes are provided for on the timing differences between the value assigned to an asset

or liability on the basis of statutory criteria and the corresponding value for tax purposes. in observance of the

prudent principle, prepaid taxes are recognised if their future recovery is reasonably certain.

any estimation variations (including rate variations) are allocated to the taxes for the year.

MEMORANDUM ACCOUNTS

these include the guarantees provided by the company, both secured and unsecured, the commitments un-

dertaken vis-à-vis third parties and the value of third party assets lodged with the company. the guarantees

given are recorded at the value of said guarantee or, if this cannot be determined, at the best estimate of the

riskundertaken;thecommitmentsarerecognisedatfacevalue;thirdpartyassetslodgedwiththeCompanyare

recorded at face value for unlisted fixed income securities, at current market value for listed securities and assets

and residually at the value taken from existing documentation. these values are subject to systematic review

and possible adjustment as of the year-end date. specific information is provided in the notes for guarantees

received from third parties.

the content and significance of the main financial statements items are illustrated below.

Assets

INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT

the changes in historic costs during the year, including any revaluation, were as follows:(amount in euro)

intanGiBle assets anD PROPeRtY, Plant anD eQUiPment

Opening balance

Increases Decreases

"Reclassi-fications

asset startups"

Closing balance

i) intanGiBle assets

staRt-UP anD eXPansiOn cOsts 1,651,919 - - - 1,651,919

ReseaRcH, DeVelOP. anD aDVeRt. cOsts 2,009,916 4,559 - - 2,014,475

inDUstRial Pat. anD int. PROP. RiGHts 1,292,285 - - - 1,292,285

GOODWill 47,550,507 - - - 47,550,507

OtHeR intanGiBle assets 558,069 45,494 - - 603,563

i) intanGiBle assets 53,062,696 50,053 - - 53,112,749

ii) PROPeRtY, Plant anD eQUiPment

1) lanD anD BUilDinGs

lanD 3,418,805 31,747 (4,500) - 3,446,052

inDUstRial BUilDinGs 34,896,770 556,780 (17,712) - 35,435,838

Office BUilDinGs 707,566 16,842 - - 724,408

39,023,141 605,369 (22,212) - 39,606,298

2) Plants anD eQUiPment

electRicitY sUBstatiOns 109,262,850 2,757,736 (170,642) 28,505 111,878,449

elec. DistRiBUtiOn GRiDs 415,863,469 13,921,390 - 172,686 429,957,545

525,126,319 16,679,126 (170,642) 201,191 541,835,994

3) inDUstRial anD cOmm. fittinGs

fittinGs 3,355,424 81,251 - - 3,436,675

RemOte cOntROl 9,766,629 246,354 - 60,000 10,072,983

meteRs 29,206,537 479,610 (462,496) - 29,223,651

42,328,590 807,215 (462,496) 60,000 42,733,309

4) OtHeR assets

fURnitURe anD Office macHines 329,149 7,153 - - 336,302

electROnic Office macHines 1,097,169 (319,743) - 777,426

DeDUctiBle VeHicles 1,851,226 166,020 (7,085) - 2,010,161

3,277,544 173,173 (326,828) - 3,123,889

5) WORK in PROGRess anD aD. PaYments

WORK in PROGRess anD aD. PaYments 266,191 - - (261,191) 5,000

ii) PROPeRtY, Plant anD eQUiPment 610,021,785 18,264,883 (982,178) - 627,304,490

tOtal Bi) + Bii) 663,084,481 18,314,936 (982,178) - 680,417,239


start-up and expansion costs are connected with the incorporation of the company, with extraordinary corporate

transactions relating to the acquisition of the distribution grids from enel spa and the merger by absorption of

set Holding spa.

Research, development and advertising costs regard the provision by the parent company Dolomiti energia spa

of the equipment and licences to initiate management of the “electronic metering” project. that cost is appor-

tioned over the duration of the service agreement entered into with that company and, thus, for a period of 3

financial years.

industrial patent and intellectual property rights relate to the purchase cost of software licences (saP R3).

Goodwill derives mainly from the following transactions:

- the acquisition of the former enel business unit and the resulting merger with set Holding spa for an original

amountof47,498,618euro;

• theacquisitionofthepowercompanyofTerlagoforanoriginalamountof20,000euro;

• theacquisitionofthepowercompanyofVervòforanoriginalamountof2,000euro;

• theacquisitionofthepowercompanyofTresforanoriginalamountof2,000euro.

the value of goodwill pursuant to the first transaction indicated is equal to the higher price settled to purchase

the business unit as compared to its shareholders’ equity, not allocated to the asset acquired (already revalued

during 2005 in compliance with law no. 266 of 23 December 2005).

TheotheramountsderivefromthedifferenceintheconsiderationsettledbytheMunicipalitiesofTerlago,Vervò

and tres for the purchase of the respective municipal power companies and the value of the assets transferred.

Goodwill is amortised based on the duration of the concession, which is currently set to expire on 31 December

2030.

Other intangible assets refer to the commissions charged by the Royal Bank of scotland for the issue of the bond

loan, and are amortised over a period equal to the duration of the bond loan.

for property, plant and equipment, it is noted that, in compliance with a.e.e.G. Resolution no. 292/06, as at 31

December 2015, the percentage of analogue meters replaced with electronic meters was 99.93%.

Ordinary amortisation of intangible assets and depreciation of property, plant and equipment resulted in the

allocation of the following amounts, respectively, to the provisions set up in the accounts: 1,954,276 euro and

15,758,047 euro. the movements in the accumulated amortisation and depreciation for intangible fixed assets

and property, plant and equipment for the year 2015 are shown in the following table.

(amount in euro)


Opening balance

DecreasesAmortisation/ Depreciation

Closing balance


staRt-UP anD eXPansiOn cOsts (1,646,364) - (5,555) (1,651,919)

ReseaRcH, DeVelOP. anD aDVeRt, cOsts (2,006,830) - (1,684) (2,008,514)

inDUstRial Pat. anD int. PROP. RiGHts (1,292,285) - - (1,292,285)

GOODWill (17,135,734) - (1,900,923) (19,036,657)

OtHeR intanGiBle assets (173,405) - (46,114) (219,519)

i) intanGiBle assets (22,254,618) - (1,954,276) (24,208,894)



lanD (334,624) - - (334,624)

inDUstRial BUilDinGs (16,139,424) 8,542 (764,638) (16,895,520)

Office BUilDinGs (80,847) - (16,889) (97,736)

(16,554,895) 8,542 (781,527) (17,327,880)

2) Plant anD eQUiPment

electRicitY sUBstatiOns (58,590,217) 152,887 (2,714,486) (61,151,816)

elec. DistRiBUtiOn GRiDs (246,139,195) - (9,762,712) (255,901,907)

(304,729,412) 152,887 (12,477,198) (317,053,723)

3) inDUstRial anD cOmm. fittinGs

fittinGs (2,466,296) - (130,121) (2,596,417)

RemOte cOntROl (7,791,977) - (187,482) (7,979,459)

meteRs (11,193,693) 229,563 (1,940,854) (12,904,984)

(21,451,966) 229,563 (2,258,457) (23,480,860)

4) OtHeR assets

fURnitURe anD Office macHines (107,422) - (18,684) (126,106)

electROnic Office macHines (1,023,708) 261,831 (11,479) (773,356)

DeDUctiBle VeHicles (1,250,776) 3,287 (210,702) (1,458,191)

(2,381,906) 265,118 (240,865) (2,357,653)


WORK in PROGRess anD aD. PaYments - - - -

ii) PROPeRtY, Plant anD eQUiPment (345,118,179) 656,110 (15,758,047) (360,220,116)

tOtal Bi) +Bii) (367,372,797) 656,110 (17,712,323) (384,429,010)


the following table shows the change in the intangible fixed assets and property, plant and equipment at net

book value during the year.

(amount in euro)


Opening balance

IncreasesAmortisa-

tion/Depre-ciation

"Net value of assets

sold"

"Reclassi-fications

asset startups"

Closing balance


staRt-UP anD eXPansiOn cOsts 5.555 - (5.555) - - -

ReseaRcH, DeV. anD aDVeRtisinG cOsts 3.086 4.559 (1.684) - - 5.961

inDUstRial Pat. anD int. PROP. RiGHts - - - - - -

GOODWill 30.414.773 - (1.900.923) - - 28.513.850

OtHeR intanGiBle assets 384.664 45.494 (46.114) - - 384.044

i) intanGiBle assets 30.808.078 50.053 (1.954.276) - - 28.903.855



lanD 3.084.181 31.747 - (4.500) - 3.111.428

inDUstRial BUilDinGs 18.757.346 556.780 (764.638) (9.170) - 18.540.318

Office BUilDinGs 626.719 16.842 (16.889) - - 626.672

22.468.246 605.369 (781.527) (13.670) - 22.278.418

2) Plant anD eQUiPment

electRicitY sUBstatiOns 50.672.633 2.757.736 (2.714.486) (17.755) 28.505 50.726.633

elec. DistRiBUtiOn GRiDs 169.724.274 13.921.390 (9.762.712) - 172.686 174.055.638

220.396.907 16.679.126 (12.477.198) (17.755) 201.191 224.782.271

3) inDUstRial anD cOmmeRcial fittinGs

fittinGs 889.128 81.251 (130.121) - - 840.258

RemOte cOntROl 1.974.652 246.354 (187.482) - 60.000 2.093.524

meteRs 18.012.844 479.610 (1.940.854) (232.933) - 16.318.667

20.876.624 807.215 (2.258.457) (232.933) 60.000 19.252.449

4) OtHeR assets

fURnitURe anD Office macHines 221.727 7.153 (18.684) - - 210.196

electROnic Office macHines 73.461 - (11.479) (57.912) - 4.070

DeDUctiBle VeHicles 600.450 166.020 (210.702) (3.798) - 551.970

895.638 173.173 (240.865) (61.710) - 766.236


WORK in PROGRess anD aD. PaYments 266.191 - - - (261.191) 5.000

ii) PROPeRtY, Plant anD eQUiPment 264.903.606 18.264.883 (15.758.047) (326.068) - 267.084.374

tOtal Bi) + Bii) 295.711.684 18.314.936 (17.712.323) (326.068) - 295.988.229

Financial fixed assets

(amount in euro)

MISC. ACCOUNTS REC. - OTHER 31/12/2015 31/12/2014 Difference

from others 38,774 57,301 (18,527)

the decrease derives from the return of a guarantee deposit from Gme.

CURRENT ASSETS

Inventories

the movements during the year in the stock of materials in inventory are shown in the table below.

(amount in euro)

inVentORies Opening balance

PurchasesUsages for capitalised materials

Usages for year

Closing balance

RaW mateRials anD cOnsUmaBles 2,632,446 4,038,068 (3,374,638) (455,539) 2,840,337

tOtal inVentORies 2,632,446 4,038,068 (3,374,638) (455,539) 2,840,337

closing inventories include the stock of meters (604,668 euro), electrical cables (556,262 euro) and other ma-

terials used in the construction of electrical grids (1,679,407 euro). these are held in stock by third parties for a

total of 406,772 euro.


ACCOUNTS RECEIVABLE OF THE CURRENT ASSETS

Accounts receivable - Users, net of the provisions for write-downs(amount in euro)

acc. Rec. - UseRs anD cUstOmeRs 31/12/2015 31/12/2014 Difference

inVOices/Bills issUeD 8,131,450 8,739,924 (608,474)

electricity service 7,838,739 8,365,464 (526,725)

OtHeR seRVices 292,711 374,459 (81,749)

inVOices/Bills tO Be issUeD 1,522,716 1,691,142 (168,426)

electricity service 1,511,130 1,723,693 (212,563)

OtHeR seRVices 11,586 (32,551) 44,137

PROVisiOn fOR WRite-DOWns (401,056) (287,727) (113,329)

acc. Rec. - UseRs anD cUstOmeRs 9,253,110 10,143,338 (890,228)

accounts receivable - users and customers in 2015 were in line with those of the previous year.

changes in the provision for write-downs during the year were as follows:

(amount in euro)

PROVISION FOR WRITE-DOWNS 31/12/2015 31/12/2014 Difference

PROVisiOn fOR WRite-DOWns (287,727) (1,013,134) 725,407

Provision (159,247) (150,891) (8,356)

Usage 45,918 876,298 (830,380)

PROVisiOn fOR WRite-DOWns (401,056) (287,727) (113,329)

Accounts receivable - Parent companies(amount in euro)

ACC. REC. - PARENT COMPANIES 31/12/2015 31/12/2014 Difference

inVOices/Bills issUeD 89,726 28,724 61,002

OtHeR accOUnts ReceiVaBle 49,215,117 40,613,557 8,601,560

acc. Rec. - PaRent cOmPanies 49,304,843 40,642,281 8,662,562

Of WHicH

acc. rec. - parent companies for cash pooling 44,151,317 39,853,221 4,298,096

acc. rec. - parent comp. for taxes/interest 5,063,800 733,706 4,330,094

the receivable due from parent companies was primarily due to the positive balance of cash pooling (44,151,317

euro), and the remainder was mainly due to an iRes (corporate tax) credit for surplus advances on the balance due

(4,392,742 euro) and an iRes 2012 credit (641,578 euro) as a result of the application for refund for the failure to

deduct iRaP (productivity tax) on personnel costs (art. 4, paragraph 12 of law Decree no. 16 of 2 march 2012).

taX cO n sOli Dat i O n

Detailed below are the main characteristics of the contract governing relations between set and Dolomiti ener-

gia spa as part of the “national tax consolidation”:

- term of the transaction: from financial year 2013 to 2015

- transfer of taxable income: if the consolidated company records positive taxable income, it must pay the tax

to the consolidating company with a settlement date no later than the deadline for payments to the tax au-

thorities;

- transfer of tax losses: if a negative taxable income is recorded (tax loss), the consolidating company agrees

to recognise a final amount equal to the amount of the loss less 3% for discounting purposes.

Tax credits(amount in euro)

TAX CREDITS 31/12/2015 31/12/2014 Difference

OtHeR taX cReDits 8,919 6,313 2,606

iRes cReDit (corporate tax) 72,703 697,162 (624,459)

iRaP cReDit (productivity tax) 1,051,512 - 1,051,512

ViRtUal stamP DUtY 5,910 - 5,910

taX cReDits 1,139,044 703,475 435,569

after the additional iRes tax for the energy sector (known as the Robin Hood tax) was declared constitutionally

illegitimate, in 2015 the company used the credit resulting from this declaration for the year 2014 as “horizontal”

offsetting. at the end of 2015 a credit of 72,703 euro remained.

the iRaP credit (1,051,512 euro) derives from a higher advance paid with respect to the balance due.

Prepaid tax credits(amount in euro)

PREPAID TAXES 31/12/2015 31/12/2014 Difference

PRePaiD taXes 7,438,085 8,256,748 (818,663)

for details of prepaid tax credits please see the statements of temporary differences that led to the recognition

of deferred tax assets and liabilities.


Accounts receivable - Others(amount in euro)

ACCOUNTS RECEIVABLE - OTHERS 31/12/2015 31/12/2014 Difference

OtHeR cReDits 226,279 157,212 69,067

acc. Rec. - electRicitY cOmP. fUnD 14,719,745 14,906,839 (187,094)

ReneWaBle sOURce ceRtificates 743,674 893,770 (150,096)

aDVances/DePOsits 330,008 26,187 303,821

acc. Rec. - sOcial sec. institUtiOns 25,377 17,631 7,746

accOUnts ReceiVaBle - affiliates 22,103,504 19,739,164 2,364,340

acc. Rec. - OtHeRs, sHORt-teRm 38,148,587 35,740,803 2,407,785

the most important items are: amounts due from the ccse (electricity compensation fund), primarily deriving

from the 2015 transport adjustment (distribution and measurement) (9,053,784 euro), the 2011 measurement

adjustment (still pending the finalisation thereof, estimate at 1,000,000 euro), energy efficiency certificates

(3,741,899 euro) and amounts due from affiliates, primarily due to the electricity transport service.

Breakdown of receivables by maturity31/12/2015 (amount in euro)

BREAKDOWN OF RECEIVABLES BY MATURITY

Book value (2+3+4)

Mat. value - subsequent

year

Mat. value - subsequent 4

years

Beyond 5 years

1 2 3 4

acc, Rec, WHicH aRe fiXeD assets

from others 38,774 - - 38,774

acc, Rec, Of tHe cURRent assets

acc. Rec. - UseRs anD cUstOmeRs 9,253,110 9,253,110 - -

acc. Rec. - PaRent cOmPanies 49,304,843 49,304,843 - -

taX cReDits 1,139,044 1,139,044 - -

PRePaiD taXes 7,438,085 7,438,085 - -

acc. Rec. - OtHeRs, sHORt-teRm 38,148,587 38,148,587 - -

tOtal 105,322,443 105,283,669 - 38,774

the company has no accounts receivable positions outstanding with foreign entities.

Cash and cash equivalents(amount in euro)

CASH AND CASH EQUIVALENTS 31/12/2015 31/12/2014 Difference

BanK anD POstal cURRent accOUnts 20,522 4,508 16,014

casH On HanD 1,479 1,776 (297)

tOtal casH anD casH eQUiValents 22,001 6,284 15,717

PREPAYMENTS AND ACCRUED INCOME(amount in euro)

PREPAYM. AND ACCRUED INCOME 31/12/2015 31/12/2014 Difference

annUal PRePaYments 48,603 60,111 (11,508)

mUlti-YeaR PRePaYments 20,618 21,244 (626)

tOtal PRePaYm. anD accRUeD incOme 69,221 81,355 (12,134)

these refer to maintenance expense, lease payments, concession fees, licences and policies, whose accrual over-

laps several financial years.


Shareholders’ equity and liabilities

SHAREHOLDERS’ EQUITY

as at 31 December 2015 the shareholding structure was as follows:(amount in euro)

SHAREHOLDERS Number of shares %

DOlOmiti eneRGia s.P.a. 83,645,346 74.52%

aUtOnOmOUs PROVince Of tRentO 16,913,335 15.07%

cles mUniciPal aUtHORitY 3,506,412 3.12%

a.G.s. spa RiVa Del GaRDa 2,400,358 2.14%

stet spa 2,253,691 2.01%

aiR spa 1,430,000 1.27%

fai Della PaGanella mUnic. aUtHORitY 709,398 0.63%

mOnclassicO mUniciPal aUtHORitY 542,184 0.48%

VaRena mUniciPal aUtHORitY 227,723 0.20%

cOns. elettRicO stORO 155,833 0.14%

cOns. elettRicO inDUstRiale Di stenicO 146,667 0.13%

cOns. elettRicO Di POZZa Di fassa 100,832 0.09%

a.s.m. tiOne 82,499 0.07%

a.c.s.m. fieRa Di PRimieRO 72,499 0.06%

cOnsORZiO Dei cOmUni 55,000 0.05%

tOtal 112,241,777 100.00%

On 24 may 2005 enel Distribuzione spa established set Distribuzione srl, which conferred its business unit

(goods and personnel) in the province of trento, effective from 12:00 a.m. of 30 June 2005. set Holding spa

(subsidiary of Dolomiti energia spa, invested in by the autonomous Province, local entities of trentino and/

or their companies) acquired 100% of the share capital of set Distribuzione srl (transformed into a joint-

stock company (società per azioni) on 4 July 2005). effective 1 January 2011 Dolomiti energia conferred to

set Distribuzione its electricity distribution business unit, increasing its investment by 53,161,209 euro.

the shareholding structure in 2015 remained unchanged on 31 December 2014.

changes in shareholders’ equity accounts in the last two years were as follows:

(amount in euro)

BALANCE SHEET - LIABILITIESI) SHARE CAPITAL

II) SHARE PREMIUM RESERVE

IV) LEGAL RESERVE

VII) OTHER

RESERVES

IX) PROFIT OR LOSS FOR THE

YEARTOTAL

ValUe as at 31/12/2013 108,193,181 2,178,028 599,066 6,281,786 14,838,814 132,090,875

allOc. Of PROfit fOR tHe YeaR - - 741,941 7,605,282 (14,838,814) (6,491,591)

sHaRe caP. incRease/DecRease 4,048,596 338,984 - - - 4,387,580

OtHeR cHanGes - roundings - - - (3) - (3)

PROfit/lOss fOR tHe YeaR - - - 21,741,574 21,741,574

ValUe as at 31/12/2014 112,241,777 2,517,012 1,341,007 13,887,065 21,741,574 151,728,435

allOc. Of PROfit fOR tHe YeaR - 1,087,079 13,919,989 (21,741,574) (6,734,506)

sHaRe caP. incRease/DecRease

OtHeR cHanGes - roundings - 3 3

PROfit/lOss fOR tHe YeaR - 12,080,108 12,080,108

ValUe as at 31/12/2015 112,241,777 2,517,012 2,428,086 27,807,057 12,080,108 157,074,040

in 2013 and 2014 dividends were distributed for 6,491,591 euro and 6,734,506 euro, respectively.(amount in euro)

A) SHAREHOLDERS’ EQUITY 31/12/2015 31/12/2014 Difference

i) sHaRe caPital 112,241,777 112,241,777 -

ii) sHaRe PRemiUm ReseRVe 2,517,012 2,517,012 -

iV) leGal ReseRVe 2,428,086 1,341,007 1,087,079

Vii) OtHeR ReseRVes

- eXtRaORDinaRY ReseRVe 27,807,057 13,887,068 13,919,989

- rounding reserves - (3) 3

iX) PROfit OR lOss fOR tHe YeaR 12,080,108 21,741,574 (9,661,466)

tOtal sHaReH. eQUitY anD ReseRVes 157,074,040 151,728,435 5,345,605

the table below analyses shareholders’ equity in terms of availability and distribution options.


(amount in euro)

AVAILABILITY AND DISTRIBUTION OPTIONS FOR SHAREHOLDERS’ EQUITY

31/12/2015

Amount

Usage options

Available portion

Usage summary for past three years

to cover losses for other reasons

i) sHaRe caPital 112,241,777

eQUitY ReseRVes

ii) sHaRe PRemiUm ReseRVe 2,517,012 a,B 2,517,012 - -

PROfit ReseRVes

iV) leGal ReseRVe 2,428,086 B - -

eXtRaORDinaRY ReseRVe 27,807,057 a,B,c 27,807,057 - -

tOtal 144,993,932 30,324,069

nOn-DistRiBUtaBle PORtiOn 2,522,973

ResiDUal DistR. PORtiOn 27,801,096

* a: for share capital increase

* B: to cover losses

* c: for distribution to shareholders

the share premium reserve cannot be distributed until such time as the legal reserve reaches 20% of the share

capital (art. 2431 of the italian civil code).

in total, non-distributable reserves as at 31 December 2015 amounted to 2,522,973 euro, as 2,517,012 euro are

related to the share premium reserve and 5,961 euro to coverage of the amount of research, development and

advertising costs not yet amortised at the end of the year, pursuant to art. 2426, no. 5 of the italian civil code.

PROVISIONS FOR RISKS AND CHARGES

Deferred tax provision(amount in euro)

PROVISION FOR INCOME TAXES (INCLUDING DEFERRED TAXES)

31/12/2015 31/12/2014 Difference

DefeRReD taX PROVisiOn 3,055,738 3,625,259 (569,521)

tOtal PROVisiOn fOR incOme taXes 3,055,738 3,625,259 (569,521)

for details of deferred taxes please see the statements of temporary differences that led to the recognition of

deferred tax assets and liabilities, indicated at the end of the notes.

Assessment by the Italian Inland Revenue

as previously mentioned in the Directors’ Report, note that in 2008, the company was subject to a tax inspection

conducted by the Guardia di finanza which resulted in findings of a single charge relating to failure to apply regi-

stration tax to the acquisition of a business unit for electricity distribution management in the trentino area from

enel Distribuzione s.p.a.

in October 2008 set lodged an appeal with the first instance tax commission of trento against the finding, which

the commission rejected by sentence of 26 march 2009.

in february 2009 the payment order was received in relation to the aforementioned inspection. the order indicates

charges, including sanctions, of 8,158,586.28 euro. On 29 June 2009 the appointed legal advisor filed an appeal with

the second instance tax commission of trento against the first instance decision.

in relation to the sentence the company agreed with the trento tax authority on settlement of the amount of the

payment order (8,566,222 euro) based on the findings. settlement of the order resulted in a significant savings for

set in terms of interest due to the tax authorities.

By sentence of 21 June 2010 the second instance tax commission rejected the appeal. convinced of the correct

nature of its operations, the company appealed against the decision before the court of cassation and the supreme

court’s ruling is pending.

With regard to accounting recognition of this event, during 2010 the company recorded the entire amount mentio-

ned above as extraordinary charges and as a balancing entry for the provision for income taxes, which in turn offset

the credit of the same nature generated by virtue of the payments made.


EMPLOYEE TERMINATION BENEFITS

this provision relates to accounts payable by the company to employees in service as at year-end in accordance

with article 2120 of the italian civil code, employment contracts and corporate relations. the amount as at 31

December 2015 came to 3,862,017 euro.

the movements in employee termination benefits during the year were as follows:

(amount in euro)

EMPLOYEE TERMINATION BENEFITS 31/12/2015 31/12/2014 Difference

Opening balance 4,465,571 4,545,594 (80,023)

allocated during the year 813,274 830,320 (17,046)

Decreases (783,317) (159,079) (624,238)

Other changes (633,511) (751,264) 117,753

emPlOYee teRminatiOn Benefits 3,862,017 4,465,571 (603,554)

the significant decrease in the provisions was due to the fact that during the year, 22 employees retired.

ACCOUNTS PAYABLE

Bonds(amount in euro)

BONDS 31/12/2015 31/12/2014 Difference

110,000,000 110,000,000 -

the bond loan is issued by set Distribuzione spa, by virtue of the resolution of the Board of Directors of 21 July 2006,

pursuant to art. 2412, paragraph 1 of the italian civil code, for a nominal value of 110,000,000 euro, at a fixed rate of

4.60%, guaranteed by an irrevocable first demand surety issued by the trento autonomous Province.

the bond has a duration of 23 years as from 1 august 2006 and therefore until 1 august 2029, and shall be repaid at

par in a single solution on the maturity date (1 august 2029).

Accounts payable - Banks(amount in euro)

ACCOUNTS PAYABLE - BANKS 31/12/2015 31/12/2014 Difference

due to banks 699 757 (58)

accOUnts PaYaBle - BanKs 699 757 (58)

Trade payables(amount in euro)

TRADE PAYABLES 31/12/2015 31/12/2014 Difference

PaYaBles fOR inVOices ReceiVeD 17,580,762 15,113,205 2,467,557

electRicitY seRVice 16,583,435 14,727,060 1,856,375

OtHeR seRVices 997,327 386,145 611,182

PaYaBles fOR inVOices tO Be ReceiVeD 24,154,341 20,457,320 3,697,021

electRicitY seRVice 22,973,012 18,898,114 4,074,898

OtHeR seRVices 1,181,329 1,559,206 (377,877)

tRaDe PaYaBles 41,735,103 35,570,525 6,164,578

trade payables increased slightly in 2015 on the previous year, mainly due to the payable due to G.s.e. spa, to

which the company must pay a component of the tariff to cover promotional expenses for the production of

energy from renewable and similar sources.


Accounts payable - Parent companies(amount in euro)

ACCOUNTS PAY. - PARENT COMPANIES 31/12/2015 31/12/2014 Difference

PaYaBles fOR inVOices ReceiVeD 744,474 348,932 395,542

OtHeR seRVices 744,474 348,932 395,542

PaYaBles fOR inVOices tO Be ReceiVeD 1,080,694 4,208,423 (3,127,729)

electricity service 11,833 11,833

OtHeR seRVices 1,068,861 4,208,423 (3,139,562)

accOUnts PaY. - PaRent cOmPanies 1,825,168 4,557,355 (2,732,187)

Of WHicH

accounts pay. - parent comp. for cash pooling - - -

acc. pay. - parent comp. for taxes/interest 975,001 3,791,682 (2,816,681)

as at 31 December 2015 the company had no accounts payable due to Dolomiti energia for iRes (2,553,314 euro

as at 31 December 2014), resulting in a significant reduction in accounts payable - parent companies. the payable

at the end of 2015 was comprised of 972,939 euro for the December Vat, as a result of the company’s participa-

tion in Group Vat (1,236,232 euro at the end of 2014).

Payables for iRPef, substantially in line with 31 December 2014, mainly refer to the withholdings on employees’

income accrued as of December 2015, which the company shall pay in June 2016, as the withholding agent.

Tax payables(amount in euro)

TAX PAYABLES 31/12/2015 31/12/2014 Difference

iRaP - 32,525 (32,525)

iRPef 472,380 495,310 (22,929)

stamP DUtY 7,210 6,139 1,071

taX PaYaBles 479,590 533,974 (54,384)

Payables for iRPef, substantially in line with 31 December 2014, mainly refer to the withholdings on employees’

income accrued as of December 2015, which the company shall pay in January 2016, as the withholding agent.

Social security payables(amount in euro)

SOCIAL SECURITY PAYABLES 31/12/2015 31/12/2014 Difference

accOUnts PaYaBle - inPs 516,617 522,665 (6,048)

accOUnts PaYaBle - inPDaP 124,877 129,495 (4,618)

accOUnts PaYaBle - inail 795 310 485

sUPPlementaRY PensiOn fUnDs 147,434 143,109 4,325

sOcial secURitY PaYaBles 789,723 795,579 (5,856)

Other accounts payable(amount in euro)

OTHER ACCOUNTS PAYABLE 31/12/2015 31/12/2014 Difference

OtHeR accOUnts PaYaBle 871,731 375,695 496,036

accOUnts PaYaBle - emPlOYees 1,273,500 1,296,612 (23,112)

accOUnts PaYaBle - affiliates 227,426 151,318 76,108

- within 12 months 2,372,657 1,823,625 549,032

GUaRantee DeP. fROm tHiRD PaRties 726,285 505,860 220,425

GUaRantee DePOsits fROm affiliates 21,414,700 21,414,700 -

- after 12 months 22,140,985 21,920,560 220,425

OtHeR accOUnts PaYaBle 24,513,642 23,744,185 769,457

During the year, the value of guarantee deposits for the transport service remained substantially unchanged. the

amount relates to the payable due to the related parties trenta spa and multiutility spa.

accounts payable - employees relate to bonuses accrued to be paid and to amounts accrued and not yet paid

(unused holidays and leave, gross of the related charges for contributions).

Breakdown of accounts payable by maturity(amount in euro)

BREAKDOWN OF ACCOUNTS PAYABLE BY MATURITY

31/12/2015Book value (2+3+4)

Mat. value - subsequent year

Mat. value - subsequent

4 yearsBeyond 5 years

1 2 3 4

D) PaYaBles

BOnDs 110,000,000 - - 110,000,000

accOUnts PaYaBle - BanKs 699 699 - -

tRaDe PaYaBles 41,735,103 41,735,103 - -

acc. PaY. - PaRent cOmPanies 1,825,168 1,825,168 - -

taX PaYaBles 479,590 479,590 - -

sOcial secURitY PaYaBles 789,723 789,723 - -

OtHeR accOUnts PaYaBle 24,513,642 2,372,657 22,140,985 -

tOtal 179,343,925 47,202,940 22,140,985 110,000,000

the company has no accounts payable positions outstanding with foreign entities.


ACCRUED LIABILITIES AND DEFERRED INCOME(amount in euro)

ACCRUED LIAB. AND DEFERRED INCOME 31/12/2015 31/12/2014 Difference

accRUeD liaBilities 2,155,214 2,155,002 212

DefeRReD incOme 58,232,797 56,250,407 1,982,390

DefeRReD inc. - Plant-RelateD GRants 518,500 548,667 (30,167)

accRUeD liaB. anD DefeRReD incOme 60,906,511 58,954,076 1,952,435

accrued liabilities mainly derive from the coupon of the bond loan (2,106,218 euro) and the fees on the surety

issued by the trento autonomous Province (47,707 euro).

Deferred income derives from the method of charging connection revenues invoiced to users in relation to the

useful life of the investment. these are determined as follows:

(amount in euro)

Gross chargesCharged to

income statement

Discounted as at

31.12.2015

To be discounted as at 31.12.2015

former enel connections 5,184,673 160,836 1,732,306 3,452,367

2005 connections 2,884,777 80,192 960,163 1,924,614

2006 connections 5,744,222 164,121 1,641,206 4,103,016

2007 connections 4,952,250 141,493 1,273,436 3,678,814

2008 connections 4,770,256 136,293 1,090,344 3,679,912

2009 connections 5,899,275 168,551 1,179,855 4,719,420

2010 connections 5,407,674 154,505 927,030 4,480,644

2011 connections 20,591,712 618,042 7,868,680 12,723,032

- connect. D.e. spa contribution 12,759,501 394,264 6,749,792 6,009,709

2012 connections 7,774,991 222,143 888,570 6,886,421

2013 connections 4,609,357 131,696 395,088 4,214,269

2014 connections 4,522,270 129,208 258,415 4,263,855

2015 connections 4,227,211 120,777 120,777 4,106,434

tOtal 76,568,668 2,227,856 18,335,870 58,232,798

the remaining deferred income, amounting to 518,500 euro, is due to plant-related grants.

Other third party guaranteesthe guarantees obtained by the Parent company in favour of third parties are broken down below:

(amount in euro)

31/12/2015 31/12/2014 Difference

Guarantees received by third parties in favour of banks for loans

115,500,000 115,500,000 -

Guarantees issued by the parent company to third parties in the interest of the company

2,683,688 2,795,283 (111,595)

Bank/insurance guarantees issued in the interest of the company

2,633,688 2,731,404 (97,716)


Income StatementPRODUCTION VALUE

Revenue from sales and services(amount in euro)

REVENUE FROM SALES AND SERVICES 31/12/2015 31/12/2014 Difference

electRicitY ReVenUe 76,002,830 74,553,431 1,449,399

OtHeR ReVenUe 4,088,016 3,910,326 177,690

PUBlic liGHtinG ReVenUe 238,518 234,078 4,440

ReVenUe fROm sales anD seRVices 80,329,364 78,697,835 1,631,529

During the year, the company applied the new regulations pursuant to resolution 154/2015/R/eel of 3 april

2015 “determination of reference tariffs for the electricity distribution service”. item a1 includes the positive

equalisation of 14,005,000 euro for the protected market, and negative equalisation of 3,335,000 euro for the

unregulated market. the positive item of 707,000 euro relating to grid efficiency (difference between the losses

set out in agreements and the real losses) was also considered.

Revenues included connection contributions invoiced to users for 2,739,026 euro (2,448,647 euro in the previous

year).

Capitalised improvements(amount in euro)

INCREASES IN FIXED ASSETS FOR IN-HOUSE PROJECTS

31/12/2015 31/12/2014 Difference

caPitalisatiOns fROm inVentORies 3,374,638 3,007,457 367,181

caPitalisatiOns Of PeRsOnnel cOsts 3,708,406 3,367,285 341,121

incR. in fiXeD ass. fOR in-HOUse PR. 7,083,044 6,374,742 708,302

the company capitalises internal costs for materials and labour used in the construction of electricity distribution

grids.

Other revenue(amount in euro)

OTHER REVENUE AND INCOME 31/12/2015 31/12/2014 Difference

OtHeR ReVenUe 1,070,109 1,115,523 (45,414)

Real estate incOme 124,845 125,174 (329)

Gains fROm stanDaRD OPeRatiOns 61,228 91,078 (29,850)

ReVenUe fROm eXtRaORD. maint. 118,108 129,421 (11,313)

seRVices tO tHiRD PaRties 1,440,319 1,763,086 (322,767)

De GROUP ReVenUe 2,135,181 1,598,729 536,452

eneRGY efficiencY 3,741,899 3,246,908 494,991

stanDaRD cOntinGent assets 1,936,971 20,618,342 (18,681,371)

other revenue 10,628,660 28,688,261 (18,059,601)

cOntRiBUtiOns fOR Plant 64,161 84,234 (20,073)

grants 64,161 84,234 (20,073)

OtHeR ReV. anD inc. (nO sale/seRV.) 10,692,821 28,772,495 (18,079,674)

note that among standard contingent assets, the greatest amount is provided by the continuity bonus for 2014

(1,561,967 euro), paid in 2015. in the previous year, that item included 18,545,330 euro for the equalisation of

electricity distribution for the years 2012-2013.

note that revenues are not broken down by geographical area, as they were all achieved in italy.

PRODUCTION COSTS

Costs for purchases of raw materials(amount in euro)

EXT. PURCHASES OF RAW MATERIALS, CONSUMABLES AND MERCHANDISE

31/12/2015 31/12/2014 Difference

PURcHases Of inVentORies (4,038,068) (3,217,522) (820,546)

PURcHases Of fUels (404,276) (394,523) (9,753)

PURcHases Of VeHicle sPaRe PaRts (8,030) (10,067) 2,037

PURcHase Of mat. nOt in inVentORY (367,568) (352,652) (14,916)

eXt. PURcHases Of RaW mateRials, cOnsUmaBles anD meRcHanDise

(4,817,942) (3,974,764) (843,178)

Purchases for inventories refer to electrical cables (+70% compared to 2014), meters (-3% compared to the

previous year) and other consumables (+7% compared to 2014), used in the construction and maintenance of

distribution grids.


Service costs(amount in euro)

EXTERNAL PURCHASES OF SERVICES 31/12/2015 31/12/2014 Difference

eXteRnal maintenance seRVices (1,760,900) (2,042,667) 281,767

insUR., BanKinG anD fin. seRVices (917,002) (901,742) (15,260)

OtHeR seRVices (746,946) (809,113) 62,167

cOmmeRcial seRVices (21,522,931) (19,490,746) (2,032,185)

GeneRal seRVices (779,789) (758,650) (21,139)

financial statement ceRtificatiOn (34,998) (36,000) 1,002

BOaRD Of statUtORY aUDitORs (36,400) (41,008) 4,608

DiRectORs (143,213) (138,458) (4,755)

eXteRnal PURcHases Of seRVices (25,942,179) (24,218,384) (1,723,795)

external maintenance services include third parties services on the distribution grid for 1,111,540 euro (1,297,931

euro in 2014).

Other services include services for employees for 544,029 euro (586,894 euro in the previous year).

commercial services of 17,522,769 euro refer to electricity carrier services (15,902,191 euro in 2014) and of

3,987,559 euro to services provided by the parent company Dolomiti energia and other related companies

(3,574,822 euro in 2014).

fees were duly paid during the year to the Board of statutory auditors and the independent auditors in com-

pliance with shareholders’ meeting resolutions. the fees paid to the Board of Directors were decided by the

shareholders’ meeting and the Board of Directors pursuant to art. 2389 of the italian civil code.

Costs for use of third party assets(amount in euro)

COSTS FOR USE OF THIRD PARTY ASSETS 31/12/2015 31/12/2014 Difference

miscellaneOUs cOsts (171,800) (179,667) 7,867

Rental eXPense (1,165,128) (1,175,600) 10,472

Rental fees (568,373) (540,009) (28,364)

easement (19,790) (13,308) (6,482)

seRVice cOntRact cHaRGes (219,034) (218,208) (826)

cOsts fOR Use Of tHiRD PaRtY assets (2,144,125) (2,126,792) (17,333)

the 2015 amount is substantially in line with the previous year.

Personnel costs(amount in euro)

PERSONNEL COSTS 31/12/2015 31/12/2014 Difference

a) Wages and salaries (12,221,879) (12,259,303) 37,424

b) social security costs (3,855,710) (3,925,217) 69,507

c) employee termination benefits (813,274) (830,320) 17,046

e) Other costs (545,784) (548,542) 2,758

PeRsOnnel cOsts (17,436,647) (17,563,382) 126,735

the workforce as at 31 December 2015 numbered 283 staff (297 as at 31 December 2014), broken down by cate-

gory as follows:

INFORMATION ON EMPLOYEES 31/12/2015 31/12/2014 Difference

Personnel

executives 1 1 -

managers 7 7 -

employees 168 178 (10)

Workers 107 111 (4)

total personnel 283 297 (14)

the average number of workers was 282.07.

Amortisation, depreciation and write-downs(amount in euro)

AMORTIS., DEPREC. AND WRITE-DOWNS 31/12/2015 31/12/2014 Difference

a) amortisation of intangible assets (1,954,276) (1,950,219) -4,057

b) Deprec. of property, plant and equipment (15,758,047) (15,451,369) (306,678)

d) Write-down of acc. rec. rec. to current ass. (159,247) (150,891) (8,356)

amORtis., DePRec. anD WRite-DOWns (17,871,570) (17,552,479) (319,091)

amortisation and depreciation for 2015 were in line with that of the previous year.

Changes in inventories(amount in euro)

CHANGE IN INVENTORIES OF RAW MATERIALS, CONSUMABLES AND MERCHANDISE

31/12/2015 31/12/2014 Difference

CHANGE IN INVENTORIES OF RAW MATERIALS, CONSUMABLES AND MERCHANDISE

207,890 (427,277) 635,167


Other operating costs(amount in euro)

OTHER OPERATING COSTS 31/12/2015 31/12/2014 Difference

miscellaneOUs cOsts (1,459,143) (1,222,560) (236,583)

eneRGY efficiencY cHaRGes (3,701,077) (3,161,610) (539,467)

stanDaRD cOntinGent liaBilities (802,857) (1,021,292) 218,435

OtHeR OPeRatinG cOsts (5,963,077) (5,405,462) (557,615)

Other operating costs include sundry taxes and duties of 722,277 euro, charges for the specific tariff contribution of

293,540 euro and capital losses from disposals of 249,046 euro.

contingent liabilities include 181,417 euro for the 2014 equalisation, and 340,820 euro relating to the penalty from

art. 13 of aeeGsi resolution 570/2012.

FINANCIAL INCOME AND CHARGES

Other financial income(amount in euro)

OTHER FINANCIAL INCOME 31/12/2015 31/12/2014 Difference

d) financial inc. Diff. fROm aBOVe 154,288 196,325 (42,037)

OtHeR financial incOme 154,288 196,325 (42,037)

financial income included 87,524 euro in interest income accrued on cash pooling, down compared to 2014 (129,040

euro) following the decrease in interest rates for interest income. Default interest invoiced to users was in line with

the previous year.

Interest and other charges(amount in euro)

INT. AND OTHER FINANCIAL CHARGES 31/12/2015 31/12/2014 Difference

d) OtHeRs (5,059,594) (5,070,787) 11,193

int. anD OtHeR financial cHaRGes (5,059,594) (5,070,787) 11,193

interest expense/financial charges due to others mainly relate to the bullet bond loan of 110,000,000 euro maturing

in 2029, more or less unchanged on 2014.

Extraordinary income and charges(amount in euro)

31/12/2015 31/12/2014 Difference

EXTRAORDINARY INCOME AND CHARGES 140,813 228,291 (87,478)

b) cOnt. ass. anD nOn-eXistent ass. 143,114 150,816 (7,702)

d) OtHeR eXtRaORDinaRY incOme 85,353 (85,353)

eXtRaORDinaRY incOme 143,114 236,169 (93,055)

b) taXes RelatinG tO PRiOR PeRiODs (2,301) (329) (1,972)

c) cOnt. liaB. anD nOn-eXistent liaB. (7,549) 7,549

eXtRaORDinaRY cHaRGes (2,301) (7,878) 5,577

the decrease in extraordinary income is due to the iRes refund (85,353 euro) in 2014, following the application

for refund, due to the failure to deduct iRaP relating to the personnel costs incurred for the years 2006 and 2007.

INCOME TAXES FOR THE YEAR

Direct income taxes for financial year 2015 were recognised for a total of 7,292,978 euro.

these can be broken down as follows:(amount in euro)

INCOME TAXES FOR THE YEAR 31/12/2015 31/12/2014 Difference

a) current taxes (7,043,836) (16,123,637) 9,079,801

b) Deferred tax 569,521 1,196,737 (627,216)

c) Prepaid taxes (818,663) (1,261,887) 443,224

incOme taXes fOR tHe YeaR (7,292,978) (16,188,787) 8,895,809

current taxes are assessed on the basis of a realistic forecast of the taxable base for the year.

Deferred taxes are calculated on the timing differences between the economic result before taxation and the taxable

income. Deferred tax liabilities are recognised in the income statement under a specific sub-item of item 22) “income

taxes for the year”, with a matching balance under item B.2 “Provisions for risks and charges: taxation”. Prepaid taxes

are recognised in the income statement with a negative sign in the same item 22) “income tax for the year”, with a

matching balance under item c.ii. 4) ter “Prepaid taxes”:

By means of the publication of sentence no. 10 dated 11 february 2015, the constitutional court declared the con-

stitutional illegitimacy of the so-called Robin Hood tax and, in other words, the additional iRes envisaged for the

oil and energy sector by article 81, paragraphs 16-18 of italian Decree law no. 112/2008, as emerging further to the

amendments ultimately made by italian Decree law no. 69/2013. as a result, the additional iRes, equal to 6.50%

in 2014, was not applied in 2015, significantly reducing direct taxes for the year. the iRaP tax rate was also reduced,

from 3.10% in 2014 to 2.60% in 2015. the reduction in direct taxes was also the result of a reduction in the taxable

amount compared to 2014 by slightly less than 50%.


R e cOG n i t i O n Of De f e R R e D a nD PR e Pa i D taX es a nD t He R es U lt i n G e f f e ct s :

(amount in euro)

statement Of RecOnciliatiOn BetWeen Balance sHeet anD tHeORetical taX cHaRGe

Description Amount IRES % charge

Profit before tax 19,373,086

theoretical tax charge 5,327,599 27.50%

PeRmanent incReases

motor vehicle costs 119,509

Phone-related costs 27,575

non-deductible amortisation/depreciation 1,958,596

local property tax 150,513

contingent liabilities 475,796

Other 55,715

total Permanent increases 2,787,704

PeRmanent DecReases

supplementary social security 30,497

iRaP personnel/interest deduction 100,210

aid for economic Growth Deduction 1,508,389

contingent assets 106,024

Other 4,080

total Permanent decreases 1,749,200

temPORaRY DiffeRences - incReases

financial statement certification 34,998

Directors’ fees 5,200

Productivity and one-off bonus 986,245

amortisation 2,539,199

Grants - plant and connection 67

credit losses 3,425

total temporary differences - increases 3,569,134

temPORaRY DiffeRences - DecReases

financial statement certification 36,000

Productivity and one-off bonus 958,095

amortisation 288,701

Grants - plant and connection 213,947

total temporary differences - decreases 1,496,743

tax base 22,483,981 6,183,095 31.92%

(amount in euro)

statement Of RecOnciliatiOn BetWeen Balance sHeet anD tHeORetical taX cHaRGe

Description Amount IRAP % charge

net production value 41,733,473

theoretical tax charge 1,085,070 2.60%

PeRmanent incReases

established personnel costs 123,970

non-deductible amortisation/depreciation 1,963,141

Personnel costs 50,201

standard contingent liabilities 562,513

extraordinary contingent assets 37,090

local property tax 188,141

financial charges 115,500

Other increases 4,641

total Permanent increases 3,045,197

PeRmanent DecReases

standard contingent assets 2,923

Deduction of personnel costs 11,460,822

total Permanent decreases 11,463,745

temPORaRY DiffeRences - incReases

Grants - plant and connection 18,102

Other 0

total temporary differences - increases 18,102

temPORaRY DiffeRences - DecReases

amortisation and Depreciation 227,598

total temporary differences - decreases 227,598

tax base 33,105,429 860,741 2.06%


Statement pursuant to point 14) of art. 2427 of the Italian Civil Code: description of temporary differences resulting in recognition of tax assets and liabilities

no amounts were credited or charged to equity.

(valori in euro)

DESCRIPTION 2014 Prepaid taxes 2015 Reabsorptions Tax rate alignment 2015 IncreasesTaxes

for the year2015 Prepaid taxes

Taxable amount

Tax rateTax (a)

Taxable amount

Tax rateTax(b)

Taxable amount

Tax rateTax(c)

Taxable amount

Tax rateTax(d) e=b+c+d

Taxable amount

Tax rateTax

f=a+e

IRES

Provisions for risks 6,804,274 27.50% 1,871,174 27.50% (6,804,274) 3.50% (238,149) 24.00% (238,149) 6,804,274 24.00% 1,633,026

One-off incentive bonus 958,095 27.50% 263,476 (958,095) 27.50% (263,476) 3.50% 986,245 27.50% 271,217 7,741 986,245 27.50% 271,217

amortisation and Depreciation 11,372,251 27.50% 3,127,369 (75,128) 27.50% (20,660) (11,297,123) 3.50% (395,399) 1,777,201 24.00% 426,528 10,469 13,074,324 24.00% 3,137,838

amort./deprec. of revalued assets 8,421,167 27.50% 2,315,821 (860,773) 27.50% (236,713) (7,560,394) 3.50% (264,614) 24.00% (501,327) 7,560,394 24.00% 1,814,494

am./dep. of reabs. rev. ass. 2016 384,380 27.50% 105,705 27.50% 3.50% 27.50% - 384,380 27.50% 105,705

Grants - connections 96,602 27.50% 26,566 (20,749) 27.50% (5,706) (75,853) 3.50% (2,655) 27.50% (8,361) 75,853 24.00% 18,205

Reabsorbed grants - connect. 2016 19,737 27.50% 5,428 27.50% 3.50% 27.50% - 19,737 27.50% 5,428

Provision for write-downs 634 27.50% 174 (571) 27.50% (157) (63) 3.50% (2) 3,425 24.00% 822 663 3,488 24.00% 837

certification and BoD 36,000 27.50% 9,900 (36,000) 27.50% (9,900) 3.50% 40,198 27.50% 11,054 1,154 40,198 27.50% 11,053

tOtal PRePaiD taXes - iRes 7,725,613 (536,612) (900,819) 709,621 (727,810) 6,997,803

IRAP

Provisions for risks 6,319,738 3.10% 195,912 3.10% (6,319,738) 0.50% (31,599) 2.60% (31,599) 6,319,738 2.60% 164,313

One-off incentive bonus 958,095 3.10% 29,701 (958,095) 3.10% (29,701) 0.50% 986,245 2.60% 25,642 (4,059) 986,245 2.60% 25,642

amortisation and Depreciation 1,479,597 3.10% 45,867 (66) 3.10% (2) (1,479,531) 0.50% (7,398) 2.60% (7,400) 1,479,531 2.60% 38,468

amort./deprec. of revalued assets 8,066,987 3.10% 250,077 (227,532) 3.10% (7,053) (7,839,455) 0.50% (39,197) 2.60% (46,250) 7,839,455 2.60% 203,826

Grants - connections 308,975 3.10% 9,578 3.10% (308,975) 0.50% (1,545) 2.60% (1,545) 308,975 2.60% 8,033

tOtal PRePaiD taXes - iRaP 531,135 (36,756) (79,739) 25,642 (90,853) 440,282

tOtal PRePaiD taXes 8,256,748 (573,368) (980,558) 735,263 (818,663) 7,438,085


Statement pursuant to point 14) of art. 2427 of the Italian Civil Code: description of temporary differences resulting in recognition of tax assets and liabilities

no amounts were credited or charged to equity.

(valori in euro)

DESCRIPTION 2014 Deferred taxes 2015 Reabsorptions Tax rate alignment 2015 IncreasesTaxes

for the year2015 Deferred taxes

Taxable amount

Tax rateTax (a)

Taxable amount

Tax rateTax(b)

Taxable amount

Tax rateTax(c)

Taxable amount

Tax rateTax(d) e=b+c+d

Taxable amount

Tax rateTax

f=a+e

IRES

iRes am./ dep. surplus (sect. ec) 10,824,824 27.50% 2,976,827 (761,999) 27.50% (209,550) (10,062,825) 3.50% (352,197) 24.00% (561,747) 10,062,825 24.00% 2,415,078

Reabs. am./ dep. s. (sect. ec) 2016 784,733 27.50% 215,802 27.50% 3.50% 27.50% - 784,733 27.50% 215,802

Discounting of plant-rel. grants 2,061 27.50% 567 27.50% (2,061) 3.50% (72) 2,409 24.00% 578 506 4,470 24.00% 1,073

Discounting of connec.-rel. grants 1,508,499 27.50% 414,837 (1,079) 27.50% (297) (1,507,420) 3.50% (52,760) 191,801 24.00% 46,032 (7,025) 1,699,221 24.00% 407,813

Reabs. d. of conn.-rel. grants 2016 44,976 27.50% 12,367 27.50% 3.50% 27.50% - 44,976 27.50% 12,367

tOtal DefeRReD taXes - iRes 3,620,400 (209,847) (405,029) 46,610 (568,267) 3,052,133

IRAP

iRaP disc. of conn.-rel. grants 156,750 3.10% 4,859 (18,102) 3.10% (561) (138,648) 0.50% (693) 2.60% (1,254) 138,648 2.60% 3,605

tOtal DefeRReD taXes - iRaP 4,859 (561) (693) 0 (1,254) 3,605

tOtal DefeRReD taXes 3,625,259 (210,408) (405,722) 46,610 (569,521) 3,055,738


PROFIT FOR THE YEAR

the profit for 2015 was 12,080,108 euro after tax.

this document, comprising the Balance sheet, income statement and notes to the financial statements provide

a true and fair view of the equity and financial position and of the economic result for the period, and match

compulsory accounting records.

on behalf of the BOaRD Of DiRectORs

the chairman

agostino Peroni

Rovereto, 11 march 2016

summary table pursuant to art. 2497/bis. 4th paragraph

Dolomiti Energia Spa

- BALANCE SHEET -

SUMMARY

ASSETS LIABILITIES

items 31/12/2014 items 31/12/2014

a - sUBscRiBeD caPital UnPaiD a - sHaReHOlDeRs’ eQUitY 631,211,047

B - fiXeD assets B - PROV. fOR RisKs anD cHaRGes 5,127,323

i - intangible assets 15,206,176

ii - Property, plant and equipment 58,685,882

iii - financial fixed assets 703,175,908

777,067,966

c - cURRent assets c - emPlOYee teRm. Benefits 3,976,829

i - inventories 79,258

ii - accounts receivable 178,466,041 D - accOUnts PaYaBle 381,394,642

iii - financial assets 67,706,316

iV - cash and cash equivalents 58,071

246,309,685

D - accRUals anD DefeRRals 1,267,152 e - accRUals anD DefeRRals 2,934,962

tOtal assets 1,024,644,803 tOtal liaBilities 1,024,644,803

- RECLASSIFIED INCOME STATEMENT -

SUMMARY

Descrizione 31.12.2014

a - PRODUctiOn ValUe 89,192,971

B - PRODUctiOn cOsts (80,349,156)

- DiffeRence 8,843,815

c - financial incOme anD cHaRGes 61,785,249

D - ValUe aDJUstments Of inVestments

e - eXtRaORDinaRY incOme anD cHaRGes (2,248,882)

- PROfit BefORe taX 1,991,336

22 - incOme taXes fOR tHe YeaR 70,371,518

23 - PROfit (lOss) fOR tHe YeaR (2,454,360)

67,917,158

the key data of the parent company Dolomiti energia spa shown in the summary table required by article 2497-

bis of the italian civil code were extracted from the relevant financial statements for the year ended as at 31

December 2014. for an adequate and complete understanding of Dolomiti energia spa’s equity and financial

position as at 31 December 2014, as well as the economic result achieved by the company in the year ended as

at said date, please read the financial statements which, accompanied by the independent auditors’ report, are

available in accordance with the forms and methods set forth by law. it should be noted that the parent company

Dolomiti energia spa drafts the report to the consolidated financial statements of the Dolomiti energia Group.


ANNEXES

CASH FLOW STATEMENT (in thousands of Euro) 2015 2014

Profit (+) / loss (-) for the year 12,080 21,742

income taxes 7,293 16,189

interest income for the period (-) (154) (196)

interest expense for the period (+) 5,060 5,071

capital gains/losses (-/+) deriving from the sale of assets 188 (71)

profit (+) / loss (-) for the year before income taxes, interest, dividends and capital gains/losses from sale

24,467 42,735

allocations/absorptions - provisions for other risks and charges 813 830

Depreciation of fixed assets 17,712 17,402

Other adjustments for non-monetary elements (141) (228)

cash flow before changes in nwc 18,384 18,004

Decrease (+) / increase (-) in inventories (208) 427

Decrease (+) / increase (-) in trade receivables 895 4,270

increase (+) / decrease (-) in trade payables 5,986 682

Decrease (+) / increase (-) in prepayments and accrued income 12 (40)

increase (+) / decrease (-) in accrued liabilities and deferred income 1,953 2,377

Other changes in net working capital (1,533) 9,658

cash flow after changes in nwc 7,105 17,374

interest collected (+) 178 160

interest paid (-) (5,061) (5,077)

income taxes paid (-) (14,449) (20,952)

Usage of provisions (1,417) (910)

cash flow after other adjustments (20,749) (26,779)

cash flow from operations 29,207 51,334

Property, plant and equipment / investments (-) (18,265) (18,129)

Property, plant and equipment / Divestments (+) 138 113

intangible assets / investments (-) (50) (68)

financial fixed assets / investments (-) 19 (20)

cash flow from investing activities (18,158) (18,104)

liabilities / increase in short-term payables to banks - (4)

cash pooling (4,298) (26,733)

liabilities / Dividends paid (6,735) (6,492)

cash flows from financing activities (11,033) (33,229)

increase (+) decrease (-) in cash and cash equivalents 16 1

Opening cash and cash equivalents 6 5

closing cash and cash equivalents 22 6

the centralised treasury agreement in place with the parent company requires financial requirements to be ma-

naged centrally at the pooler company (Dolomiti energia), which operates through the transfer of the credit and

debit balances of set Distribuzione’s current accounts. therefore, due to the cash pooling, the company’s cash

and cash equivalents in the pooling accounts at the end of the day are always zero, since they are transferred

to the parent company, which, in turn, supports the company’s financial requirements, in the event its financial

resources are insufficient.

7372 S E T D I S T R I B U Z I O N E S P A f I N A N c I A l S T A T E M E N T S 2 0 1 5 R e l a Z i O n i

Board of Statutory Auditors’ Report TO THE SHAREHOlDERS’ MEETInG FOR APPROvAl OF THE FInAnCIAl STATEMEnTS

to the shareholders of s.e.t. Distribuzione s.p.a.

the Board of statutory auditors of your company exercises the function of legitimacy control and management

supervision pursuant to art. 2403 of the italian civil code. the independent audit has been assigned, by means

of the resolution of the shareholders’ meeting, to the independent auditors Pricewaterhouse coopers s.p.a.,

based on the provisions of art. 2409-bis of the italian civil code. in 2015, our activities were carried out in com-

pliance with the legal provisions and code of conduct of the Board of statutory auditors issued by the italian

accounting Profession, whose results are reported in the two parts highlighted hereunder pursuant to art. 2429,

paragraph 2 of the italian civil code,

cOntROl anD mOnitORinG actiVities

We monitored compliance with the law, with the articles of association and respect for the principles of sound

administration.

We attended shareholders’ meetings and the meetings of the Board of Directors, conducted in compliance with

the statutory and legislative provisions, in relation to which, based on the information obtained, we did not note

any breaches, nor transactions that were manifestly imprudent, hazardous, involved a potential conflict of inte-

rests or were as such to compromise the integrity of company assets.

During the meetings held, we acquired information from the directors on the performance of company opera-

tions, in respect of which we have no particular comments to make.

During the meetings held, we also obtained information from the chief executive Officer on the general performance

of operations and on the business outlook, as well as details of the more significant transactions in terms of size or

characteristics performed by the company and, based on the information acquired, we have no comments to make.

We acquired knowledge and monitored, for matters within our competence, the adequacy and functioning of

the company’s organisational structure, also through information obtained from department managers, in this

regard, we have no particular comments to make.

REPORT

7574 S E T D I S T R I B U Z I O N E S P A f I N A N c I A l S T A T E M E N T S 2 0 1 5 R e l a Z i O n i

We examined various management aspects in depth and monitored, for matters within our competence, the ade-

quacy and functioning of the administrative and accounting system, and its reliability in correctly representing

operating events, by obtaining information from department managers and from the appointed independent

auditor, also through an examination of corporate documents.

in this regard, we held the necessary meetings with the appointed independent auditor, and no significant data

or information emerged that would warrant mention in this report.

We also held several meetings with the supervisory Body, that provided us with the 2015 reports, including all

the activities carried out during the year, and no critical aspects emerged with respect to the correct implemen-

tation of the organisational model.

We did not receive any reports from shareholders in accordance with art. 2408 of the italian civil code, nor did

weissueanyopinionsorcarryoutanyinvestigations;consequently,noomissions,limitationsorirregularities

emerged which need to be reported.

During the course of our supervision, as described above, no other significant events emerged that would require

mention in this report.

PRePaRatiOn Of tHe financial statements anD tHe assOciateD cOntents

We examined the draft financial statements for the year ended as at 31 December 2015, which were made avai-

lable to us in accordance with the terms set out in art. 2429 of the italian civil code, in regards to which we

report the following,

as we are not responsible for the full audit of the financial statements, we monitored their overall presentation,

general compliance with the law in relation to their format and structure, and in this respect we have no parti-

cular comments to make.

the main financial statement items can be summarised as follows:

(amount in euro)

- BALANCE SHEET -

ASSETS LIABILITIES

fixed assets 296,027,003 shareholders’ equity 157,074,040

current assets 108,146,007 Prov. for risks and charges 3,055,738

accruals and deferrals 69,221 employee termination benefits 3,862,017

accounts payable 179,343,925

accruals and deferrals 60,906,511

total assets 404,242,231 total liabilities 404,242,231

- INCOME STATEMENT -

Production value 98,105,229

Production costs (73,967,650)

Difference 24,137,579

financial management (4,905,306)

extraordinary operations 140,813

Profit before tax 19,373,086

taxes (7,292,978)

net profit (loss) 12,080,108

We verified the observance of the legal provisions regarding the contents of the report on operations and, in this

regard, we have no particular observations to make.

as regards the preparation of the financial statements, we specify, based on our careful assessment, that the no-

tes to the financial statements provide all the information required by art. 2427, paragraph 1 of the italian civil

code on the actions that concerned the main financial statements items, and the other management information,

as well as those entered into with related parties.

it should be noted that no exceptional cases were verified during the year which made it necessary to make use

of the exemptions set forth in art. 2423, paragraph 4 and art. 2423-bis, paragraph 2 of the italian civil code.

We expressed our consent to the recognition in the financial statements of research, development and adverti-

sing costs and we agreed with the Directors on the criteria for the amortisation of such costs.

in closing this report, the Board of statutory auditors deems it important to note, as also highlighted in the

notes to the financial statements, that the significant difference between the profit (loss) for 2014 and that for

2015 (- 9,661,466 euro) is attributable to several factors which resulted in contingent assets in 2014 due to the

equalisation of electricity distribution for the years 2012-2013 for 18,545,330 euro.

it is also important to note that the positive results achieved are the fruit of constant, ongoing improvement in

the efficient running of the grid, which were also achieved due to the investments made and the management

ability of the company as a whole.

cOnclUsiOns

in relation to the above and taking into account the results reported in the audit report provided by Pricewa-

terhouse coopers s.p.a, the Board of statutory auditors proposes that the shareholders’ meeting approve the

financial statements for the year ended as at 31 December 2015, as drafted by the Board of Directors, and agrees

with the proposed allocation of the profit for the year formulated by the Directors.

Rovereto, 25 march 2016.

the Board of statutory auditors

aldo laner (chairman)

William Bonomi (statutory auditor)

camanini cristina (statutory auditor)

R E P O R T 7776 S E T D I S T R I B U Z I O N E S P A f I N A N c I A l S T A T E M E N T S 2 0 1 5

Indipendent Auditors’ Report

78 S E T D I S T R I B U Z I O N E S P A f I N A N c I A l S T A T E M E N T S 2 0 1 5

Graphic design: Plus, Trento

Set Distribuzione spa Rovereto, via Manzoni 24 www.set.tn.it

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