Half-yearly financial Report at June 30, 2013 - A2A

Half-yearly financial report at June 30, 2013Notes to the income statement31) Depreciation, amortization, provisions and write-downs“Depreciation, amortization provisions and write-downs” totaled 280 million euro in the six monthsended June 30, 2013 (204 million euro in the six months ended June, 2012), of which 89 million eurorelates to the consolidation of Edipower S.p.A., representing an increase of 76 million euro.The following table provides details of the individual items:Depreciation, amortization, provisions and write-downs -Millions of euro 06 30 2013 06 30 2012Amortization of intangible assets 31 33Depreciation of tangible assets 210 160Total depreciation and amortization 241 193Provisions for risks and charges 13 2Bad debt provision (receivables recognized as current assets) 24 9Other write-downs of fixed assets 2Total depreciation, amortization, provisions and write-downs 280 20494“Depreciation and amortization” totaled 241 million euro (193 million euro in the correspondingperiod of the previous year), a rise of 48 million euro, mainly due to the increase in depreciationand amortization resulting from the consolidation of Edipower S.p.A..Regarding the transposition of the “Growth Decree” which lays down procedures forcalculating the surrender value of the water system works used to supply water underconcession to hydroelectric power plants (the “wet works”), the calculation criteria(revaluation coefficients and useful lives) needed to quantify the surrender value at the endof the relative concessions have not been set yet by the relevant authorities. In the absenceof a regulatory framework, the A2A Group has carried out a series of simulations using ISTATcoefficients, which were found to be the only possible data available, and its own estimatesof the economic and technical lives of the assets. The results of these simulations led to avery wide variability range, confirming that it is currently impossible to make a reliableestimate of the surrender values at the end of a concessions. Nevertheless, the net carryingamount of the wet works for which the concession is close to expiry was significantly lowerthan the range of results obtained. As a result, therefore, since June 30, 2012 depreciationand amortization is no longer charged only for those concessions nearing expiry, while thesame valuation methods continue to be applied to the remaining concessions.“Provisions for risks and charges” amounted to 13 million euro (2 million euro in the sixmonths ended June 30, 2012) and relate to the provisions made in the period for disputes incourse and pending litigation.The “Bad debt provision” amounted to 24 million euro (9 million euro in the six months endedJune 30, 2012), consisting of the accrual for the period. In the corresponding period of theprevious year this item included the release of previously accrued provisions of a significant