2012 Annual Report - Italcementi Group

2012 Annual Report
Presentation 4
General information 14
Annual Report Consolidated Annual Report Directors’ report 146
Sustainability disclosure Italcementi S.p.A. Annual Report Separate financial statements 241
Extraordinary session 351
2011). At the same date the subsidiary Italcementi Finance S.A. had 725 million euro of committed undrawn
bank lines of credit, although not contractually reserved exclusively for Italcementi S.p.A. requirements.
20.2.2. Covenants
In addition to the customary clauses, some of the company’s financing contracts include covenants requiring
compliance with financial ratios, fixed for the most part on the basis of Group consolidated results and verified
at June 30 and December 31. The same applies to available lines of credit at the subsidiary Italcementi
Finance S.A. and the intragroup lines granted by Italcementi Finance S.A. to Italcementi S.p.A.. The main
financial ratios included in the covenants are “leverage” (net debt/recurring EBITDA), and “coverage” (recurring
EBITDA/net financial costs, excluding capital gains/losses on the sale of equity investments). For bilateral lines
of credit and borrowings, failure to comply with covenants leads to termination and consequent early
repayment, although these clauses also include a stand-by period prior to actual execution. Lines of credit and
financing contracts do not contain rating triggers that would lead to early repayment. Some financing contracts
involve assumption of negative pledges to the counterparty, although these are limited to specific instances
that do not substantially compromise the company’s ability to finance or refinance its operations.
At December 31, 2012 lines of credit and loans subject to covenants stood at 360 million euro of total drawings
represented by gross debt (1,375 million euro at December 31, 2012 expressed at nominal value, excluding
the fair value effects of derivatives) and 795 million euro of total undrawn and immediately available lines of
credit (795 million euro at December 31, 2012)
At December 31, 2012, the company complied with all contractual commitments; covenant-related financial
ratios were well within the contractual limits agreed in the loans in question. The company expects to comply
with its covenants for the next 12 months and will provide information as appropriate should its financial
situation deteriorate.
20.2.3. Credit risk
In compliance with Italcementi S.p.A. procedures, customers electing extended terms of payment are vetted for
credit worthiness before and during the life of the contract. Credit checks take the form of customer-balance
monitoring by the administrative department, whose procedures also regulate provisions for overdue
receivables at regular intervals.
The concentration of trade credit risks is limited by virtue of Italcementi S.p.A.’s broadly based and
uncorrelated customer portfolio. For this reason, management believes that no further provisions for credit
risks will be necessary beyond the allowances normally provided for uncollectible and doubtful receivables.
20.2.4. Counterparty risk
Exchange- and interest-rate instruments are transacted only with counterparties with high ratings, selected on
the basis of a number of criteria: ratings attributed by specialist agencies, assets and equity as well as the
nature and maturity of transactions. The majority of counterparties are leading international banks.
No financial instruments are negotiated with counterparties in geographical regions exposed to political or
financial risks. All counterparties are in Western Europe or in the USA.
At December 31, 2012 Italcementi S.p.A.’s credit exposure (intragroup current accounts) to the Calcestruzzi
group, standing at 199.1 million euro did not present risk in excess of that already contemplated in testing the
Italcementi interest in the Calcestruzzi group for impairment.
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