Payables
24. Borrowings from banks and other financial institutions
The analysis of borrowings from banks and other financial institutions is as follows:
|
(in thousands of Euros) |
||||||
|
12/31/2007 |
12/31/2006 |
|||||
|
Total |
Non-current |
Current |
Total |
Non-current |
Current |
|
|
bonds |
650,000 |
150,000 |
500,000 |
1,150,000 |
650,000 |
500,000 |
|
borrowings from banks |
872,768 |
536,616 |
336,152 |
1,668,780 |
658,881 |
1,009,899 |
|
borrowing from other financial institutions |
69,433 |
67,936 |
1,497 |
31,756 |
31,115 |
641 |
|
finance lease payables |
35,652 |
32,271 |
3,381 |
39,223 |
35,949 |
3,274 |
|
financial accrued liabilities and deferred income |
17,693 |
420 |
17,273 |
40,669 |
- |
40,669 |
|
other financial payables |
14,411 |
955 |
13,456 |
9,260 |
1,481 |
7,779 |
|
1,659,957 |
788,198 |
871,759 |
2,939,688 |
1,377,426 |
1,562,262 |
|
These payables are secured by real guarantees (liens and mortgages) for Euros 179,380 thousand (Euros 73,262 thousand at December 31, 2006).
The carrying amount of current payables is regarded as approximating fair value.
The amount due within one year, totaling Euros 871,759 thousand, includes the current portion of long-term financial payables of Euros 531,200 thousand (Euros 623,300 thousand at December 31, 2006).
The fair value of non-current payables compared to the carrying amount is as follows:
|
12/31/2007 |
12/31/2006 |
||||
|
Carrying amount |
Fair value |
Carrying amount |
Fair value |
||
|
Non-current financial payables |
788,198 |
784,594 |
1,377,426 |
1,376,976 |
|
At December 31, 2007, the breakdown of payables by interest rate and currency of origin is as follows:
|
(in thousands of Euros) |
|||||
|
Fixed rate |
Floating rate |
Total |
|||
|
EUR |
659,443 |
103,520 |
762,963 |
||
|
USD |
19,908 |
– |
19,908 |
||
|
BRL (Brazilian Real) |
30,658 |
– |
30,658 |
||
|
CNY (Chinese Renminbi) |
57,931 |
– |
57,931 |
||
|
Other currencies |
299 |
– |
299 |
||
|
Current payables |
768,239 |
88% |
103,520 |
12% |
871,759 |
|
EUR |
367,746 |
371,412 |
739,158 |
||
|
USD |
23,579 |
– |
23,579 |
||
|
BRL (Brazilian Real) |
10,105 |
15,257 |
25,362 |
||
|
EGP (Egyptian Pound) |
99 |
– |
99 |
||
|
Non-current payables |
401,529 |
51% |
386,669 |
49% |
788,198 |
|
Total |
1,169,768 |
70% |
490,189 |
30% |
1,659,957 |
At December 31, 2006, the situation was as follows:
|
(in thousands of Euros) |
|||||
|
Fixed rate |
Floating rate |
Total |
|||
|
EUR |
699,562 |
787,883 |
1,487,445 |
||
|
USD |
36,709 |
– |
36,709 |
||
|
BRL (Brazilian Real) |
6,502 |
– |
6,502 |
||
|
CNY (Chinese Renminbi) |
29,207 |
– |
29,207 |
||
|
RON (Romanian Leu) |
– |
400 |
400 |
||
|
Other currencies |
– |
1,999 |
1,999 |
||
|
Current payables |
771,980 |
49% |
790,282 |
51% |
1,562,262 |
|
EUR |
873,944 |
438,865 |
1,312,809 |
||
|
USD |
35,145 |
– |
35,145 |
||
|
BRL (Brazilian Real) |
6,372 |
23,000 |
29,372 |
||
|
EGP (Egyptian Pound) |
100 |
– |
100 |
||
|
Non-current payables |
915,561 |
66% |
461,865 |
34% |
1,377,426 |
|
Total |
1,687,541 |
57% |
1,252,147 |
43% |
2,939,688 |
Fixed-rate payables above include payables denominated by contract at fixed rates and payables denominated by contract at floating rates hedged by derivatives.
The Group’s exposure to interest rate changes on financial payables in terms of either the type of rate or the date of resetting the rate can be summarized as follow:
|
(in thousands of Euros) |
||||||
|
12/31/2007 |
12/31/2006 |
|||||
|
TOTAL |
Fixed rate |
Floating rate |
TOTAL |
Fixed rate |
Floating rate |
|
|
up to 6 months |
756,989 |
266,800 |
490,189 |
2,011,013 |
758,866 |
1,252,147 |
|
between 6 and 12 months |
500,180 |
500,180 |
- |
12,373 |
12,373 |
- |
|
between 1 and 5 years |
394,598 |
394,598 |
- |
808,555 |
808,555 |
- |
|
beyond 5 years |
8,190 |
8,190 |
- |
107,748 |
107,748 |
- |
|
TOTAL |
1,659,957 |
1,169,768 |
490,189 |
2,939,689 |
1,687,542 |
1,252,147 |
With regard to financial covenants on the agreed and utilized credit lines, the following should be noted:
- on the Syndicated Line granted to Pirelli & C. Real Estate S.p.A. in which 20 banks participate for a total of Euros 750 million (Euros 450 million at December 31, 2006), Pirelli & C. Real Estate S.p.A. is obliged not to exceed a certain threshold in the ratio of the adjusted financial position (expressed gross of shareholder loans to the companies in which minority interests are held) to operating profit including earnings (losses) and financial income from investment holdings;
- on the line granted on June 29, 2007 by Mizuho Corporate Bank Ltd. Milan Branch for Euros 50 million, Pirelli & C. Real Estate S.p.A. is required to abide by the same covenants as those on the Syndicated Line above;
- on the line granted on December 21, 2007 by Bayerische Hypo-Und Vereinsbank AG, Milan Branch and Intesa Sanpaolo S.p.A., Pirelli & C. Real Estate Facility Management S.p.A. is required to abide by covenants which impose a certain ratio between (i) operating profit and net financial expenses (that is, net of financial income) - Interest Cover Ratio, (ii) debt (net of cash) and operating profit - Debit Cover Ratio e (iii) cash flows and debt servicing (financial expenses plus debt repayments) - Cash Flow Cover Ratio. Lastly, there is annual limit on the expenses capitalized.
At December 31, 2007, all the covenants were complied with.
Pirelli & C. Real Estate S.p.A. increased the revolving syndicated credit line obtained in 2005 from Euros 450 million to Euros 750 million. All the other conditions remained unchanged compared to those existing at December 31, 2006. The loan, due in August 2010, has a floating rate indexed to the Euribor plus 65 basis points.
The Syndicated Line also carries a negative pledge clause on the shares and on the receivables of the services companies.
Bonds – current portion (Euros 500,000 thousand) – refer to the bonds issued on October 21, 1998 at 4.875 percent by Pirelli & C. S.p.A. repayable in a one-off payment on October 21, 2008.
The non-current portion refers to bonds issued in 1999 by Pirelli & C. S.p.A. for Euros 150,000 thousand at 5.125 percent maturing in April 7, 2009.
The reduction from 2006 is due to the April 4, 2007 repayment of bonds of Euros 500,000 thousand issued in 2002 by the subsidiary Pirelli Finance (Luxembourg) S.A..
These bonds do not contain either financial covenants or clauses which could cause the early repayment of the bonds due to events other than insolvency.
With regard to negative pledge clauses, there is a commitment on these bonds requiring that real guarantees are not to be provided on the relevant debt (bonds and similar securities destined for listing) with the exception for real guarantees on existing debt.
The other financial payables are not covered by financial covenants or clauses which could cause the early repayment of the loans due to events other than insolvency.
There are no significant negative pledge clauses.
Financial accrued liabilities and deferred income mainly include the amount of interest accrued but not yet paid on bonds (Euros 10,474 thousand); the reduction in this item from the end of 2006 is due to the repayment of bonds issued by the subsidiary Pirelli Finance (Luxembourg) S.A. commented above.
As for financial lease payables, reference should be made to Note 8.1 “Finance leases”.
25. Trade payables
The analysis of trade payables is as follows:
|
(in thousands of Euros) |
||||||
|
12/31/2007 |
12/31/2006 |
|||||
|
Total |
Non-current |
Current |
Total |
Non-current |
Current |
|
|
associates and joint ventures |
24,458 |
- |
24,458 |
8,366 |
- |
8,366 |
|
third parties |
1,198,417 |
- |
1,198,417 |
991,137 |
- |
991,137 |
|
notes payable |
97,073 |
- |
97,073 |
102,953 |
- |
102,953 |
|
payables on construction contracts |
3,640 |
3,640 |
- |
- |
- |
|
|
1,323,588 |
- |
1,323,588 |
1,102,456 |
- |
1,102,456 |
|
The carrying amount of trade payables is regarded as approximating fair value.
Payables on construction contracts relating to the Real Estate Sector represent the advances received on progress billings for contracts, equal to Euros 26,818 thousand at December 31, 2007 (Euros 23,627 thousand at December 31, 2006), in excess of costs incurred and recognized profit, equal to Euros 23,178 thousand at December 31, 2007 (Euros 23,627 thousand at December 31, 2006).
26. Other payables
The analysis of other payables is as follows:
|
(in thousands of Euros) |
||||||
|
12/31/2007 |
12/31/2006 |
|||||
|
Total |
Non-current |
Current |
Total |
Non-current |
Current |
|
|
associates and joint ventures |
21,466 |
- |
21,466 |
3,263 |
- |
3,263 |
|
trade and other accrued liabilities and |
130,776 |
4,869 |
125,907 |
150,002 |
38,932 |
111,070 |
|
tax payables |
98,433 |
10,288 |
88,145 |
92,955 |
3,409 |
89,546 |
|
payables to employees |
131,031 |
77 |
130,954 |
123,059 |
73 |
122,986 |
|
payables to social security agencies |
48,308 |
2,934 |
45,374 |
48,148 |
2,064 |
46,084 |
|
payables for stock options |
494 |
- |
494 |
1,609 |
- |
1,609 |
|
dividends payable |
827,252 |
- |
827,252 |
2,196 |
- |
2,196 |
|
advances from customers |
4,979 |
- |
4,979 |
3,796 |
7 |
3,789 |
|
other payables |
155,234 |
5,132 |
150,102 |
244,754 |
88,395 |
156,359 |
|
1,417,973 |
23,300 |
1,394,673 |
669,782 |
132,880 |
536,902 |
|
The reduction in non-current accrued liabilities and deferred income is due, for Euros 33,300 thousand, to commissions paid to the financial institutions which took part last year in the private placement of the 38.9 percent interest of Pirelli Tyre S.p.A..
Dividends payable include Euros 826,254 thousand for the reimbursement of share capital approved by the shareholders’ meeting held on December 12, 2007 payable to the shareholders of Pirelli & C. S.p.A..
The reduction in other payables refers to the Real Estate Sector for Euros 81,539 thousand for the sale in the first half of 2007 of junior notes connected with a non-performing loan portfolio of ex-Banco di Sicilia to the Sagrantino B.V. joint venture, as described in the note “other receivables”.
The carrying amount of other current and non-current payables is regarded as approximating fair value.