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Directors’ report

Impregilo
Campania USW projects: summary of events up to 31 December 2013
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Todini Costruzioni Generali

As part of the Group’s strategies, aimed at achieving the increasingly efficient allocation of resources, also through a continuous focus on possible rearrangements of its organisational structure, the Board of Directors of Salini S.p.A. decided to assess the valuation of the 100% equity investment held in Todini Costruzioni Generali with a view to its disposal.

The goal of creating a global player in the field of complex infrastructures that can compete with major international competitors in terms of economies of scale, size and geographic complementarity has made the development of the contracts currently in the portfolio of Todini Costruzioni Generali S.p.A. irrelevant for the purpose of achieving the business plan objectives.

The guidelines for future business initiatives, increasingly focussed on the acquisition of major projects, provides for a rigorous selection of new business opportunities, according to profitability and cash generation parameters identified and in areas with high growth potential.

The markets in which the subsidiary currently operates are deemed to be of interest, and if opportunities meeting the dimensional requirements provided for by the Group’s current commercial policy were to arise, the possible methods of participation and/or acquisition will be assessed.

Given the uncertainties relating to the manner, terms and the timing of the aforementioned disposal, which is currently being developed through the involvement of a major financial institution, and the fact that no binding commitments have been made with any third parties yet, it is not possible to make a reasonably reliable estimate about its effects on the Group’s business plan.

SUW Campania Project

I. Situation at 31 December 2013

I.1 SUW Campania Projects: situation at 31 December 2013

I.1.1 Introduction

The Group became involved in the urban solid waste disposal projects in the Province of Naples and other provinces in Campania at the end of the 1990s through its subsidiaries FIBE and FIBE Campania. Given that, in 2009, FIBE Campania S.p.A. merged into FIBE S.p.A., further in this chapter - unless otherwise specified - reference is made only to the latter also for situations or events originated by the company closed as a result of this merger. 

The relevant issues, which from 1999 to 2000 characterized the activities of the company as part of the service contracts, have evolved and covered several years, giving rise to a significant set of disputes, some of which—as further illustrated below in this chapter—are of great importance and partly still ongoing at the reporting date of this Annual Report.

In order to facilitate a concise correlation of the various operational phases of the SUW Campania projects with the major disputes still pending and with the related assessments, these are presented chronologically broken down into the following main phases/periods: 

  • So-called “contractual” phase: the phase starts in 2000-2001 with the signing of the service contracts for the disposal of municipal solid waste in the provinces of the Campania Region by the two project companies FIBE and FIBE Campania, and ends on 15 December 2005 with the resolution by law of these contracts as a result of Decree Law no. 245/2005 (converted into Law 21 of 27 January 2006);
  • So-called “transitional” phase: this phase whose start coincides with the conclusion of the contractual phase, lasts until the entry into force of Decree Law 90 of 23 May 2008 and Decree Law 107 of 17 June 2008, both converted into Law 123 of 14 July 2008 which, among other things, sanctioned the exit of the Impregilo Group from the waste disposal activities, transferring the “ownership” of the RDF plants “located in their territories” to the relevant provincial authorities (see article 6- bis, para. 1)  and provided for “the use of the Armed Forces for the technical and operating management of the said plants” (see art. 6-bis, para. 3) and
  • so-called “post-transitional” phase, which spans from the end of the “transitional” phase to present and is hence called “current” phase in short.

I.1.2 Contractual phase

From the early stages of the Project, following the signing of the contracts, significant critical issues arose, the most important of which are: 

  • Failure by the Campania Regional Authorities to provide for the scheduled volumes of waste sorting, an essential factor  underpinning the  project and the  service  contracts entered into between the Company and the Government Commissioner and which is one of the causes of some of the most important disputes still pending and relating to the management of the former RDF plants (now “STIR”);
  • inadequate landfill areas made available by the government commissioner;
  • delayed start of the works to build the waste-to-energy plants in Acerra and Santa Maria La Fossa. The activities at the Acerra waste-to-energy plant, which should have commenced as per the contract in early 2001, started only in August 2004 following the extraordinary intervention of more  than 450 policemen who cleared the work areas occupied since January 2003 by demonstrators. The Santa Maria La Fossa waste-to- energy plant, which was supposed to complete the project framework covering Campania’s provinces with the exception of the province of Naples, only obtained the E.I.V. (environmental impact valuation) in 2007. Works were never started, although activities should have started there concurrently with those in Acerra.

Alongside the rapid worsening of the company’s operating and economic conditions resulting from the critical issues illustrated above, public authorities - both local and central - involved in the contractual relationship failed to pay the amounts due to FIBE for the treatment of their waste.

On 12 May 2004, the Naples public prosecutor seized the plants with their concurrent release on attachment bond as part of proceedings which included investigation of the directors of the Group companies involved in the project (FIBE, FIBE Campania and FISIA Italimpianti) and the top management of the commission, thereby starting a new criminal proceeding that will be illustrated more extensively in this section and which is still partly in progress.

At the end of the contractual phase, the company was thus significantly exposed financially for having implemented most of the investments it was contractually bound to with its own resources, including those for which the company had taken out loans from the banking system, and due to the non-payment by local authorities of a significant portion of the amounts due to FIBE.

The works to build the Acerra plant had been only partially started and meanwhile a number of civil and administrative law disputes had already been commenced.

These disputes, best described in the following paragraphs of this chapter, saw involved a variety of parties. In most cases, one side of the proceedings was the company (depending on the individual cases, FIBE could be called into question along with other subsidiaries of the Group, which had participated in contractual activities in various capacities, such as FISIA Italimpianti and Impregilo Edilizia e Servizi, later merged into Impregilo), which intervened at all levels to support the correctness of its actions and to enforce its rights vis-à-vis its debtors and the other side comprised the public authorities, which, in the course of the emergency situation and with the worsening of the company’s financial situation, instrumentally argued that FIBE was to be held liable for the breach of its contractual obligations.

Starting from the final stages of the contractual phase, in this already complex situation of disputes, an increasing number of companies and individuals were involved. For various reasons, and in some cases even indirectly, they found themselves engaged in the management activities, as was the case of the suppliers or sub-contractors of FIBE, which as a direct result of the failures to perform of the public authorities, were also under increasing financial pressure.

I.1.3 Transitional phase

Decree-Law 245/2005 (converted into Law 21 of 27 January 2006), inter alia, (i) terminated the service contract between FIBE, FIBE Campania and the Special Commissioner for the Waste Emergency in Campania by law on 15 December 2005, “without prejudice to any claims arising from terminated contracts”, (ii) provided that the company continue its activities in full compliance with the control and coordination of the Special Commissioner vis-à-vis the right to be reimbursed by the Commissioner for the costs and expenses incurred in connection therewith and (iii) continue with the construction of the landfills and plant in Acerra, pending that, due to the extreme urgency, the Commissioner find a new entity to be entrusted with the service through a public procedure. The law also imposed an obligation on the Government Commissioner to recover the sums due to the company by local authorities by way of fee for waste disposal until the date of termination of the service contracts.

The changed legal framework, already burdened by significant difficulties related both to the nature of the new legal relationships these were linked to and by the unrealistic expectations about the possibility of finding a new entity to which to award the service under the same conditions that had already led to the collapse of the management system in the contractual phase, led to the start of the so-called transitional phase and further complicated the task of FIBE without it being able to solve some of the most important critical aspects that characterised the previous phase. The most significant concerned:

  • the inadequate allocation of financial resources to the commissioner in order to carry out the ordered control and coordination both in relation to the operating expenses and to the significant capital expenditures to be made;
  • the unlawful continuation of the Fibe’s obligation to continue its activities because of the failure to find new service providers (all the tenders called were unsuccessful due to the lack of appropriate guarantees about the availability of sites where to dispose of the residues of the RDF process), although it had been the very law to determine the early termination of the service contracts; and the lack of specific and accurate forecasts in relation to the manner in which the company’s claims for damages arising from the early termination of its service contracts could be settled. 

While consistently operating in compliance with the rules in force at the time and keeping an open attitude to collaboration with the commissioner, FIBE nonetheless continued in the construction of the plant without being able to have appropriate funding from public authorities that would later become the owners thereof, thereby further worsening the impact on its financial statements.

The end of this phase, as described above, coincided with the entry into force of Decree Law 90 of 23 May 2008 and Decree Law 107 of 17 June 2008, both converted into Law 123 of 14 July 2008. These provisions, on the one hand, confirmed Fibe’s obligation to complete the Acerra incinerator and, on the other, definitively marked the exit of the Impregilo Group from the waste disposal activities, transferring ownership of the RDF plants to the provincial authorities of the Campania Region as well as the resources present in each plant including the staff (other than management) employed at the plants who were hired with temporary contracts.

Even though it was a major breakthrough, the company was in absolutely critical operating and financial conditions. The most significant of these include:

  • increased financial imbalance attributable to the forced continuation of  the construction of the Acerra plant for which no specific procedural  or  contractual process concerning its final destination was identified;
  • final exit of FIBE from the management of all the facilities and equipment used by the company until then to carry out the activities as mere executor on behalf of the commissioner of the waste disposal activities without any resolution relating to the repayment of the costs incurred for the construction of the said facilities;
  • suppression by law of the public administrative structures that had coordinated the activities in the transitional period without any concrete measure to repay the huge financial resources that in the course of the disposal activities FIBE had to pay in advance in the name and on behalf of the administration - with the financial support of the Group as in previous periods - and for which, once again, there were no specifically identified debtor or any specific procedures for the related payment by the public administration.

The already extensive impacts that the situation described above had on both FIBE and the entire Group was further burdened by the criminal proceedings, involving, on the one hand, a series of precautionary measures on assets (i.e.: seizures of equivalent amounts) requested by prosecutors, originally granted by the Court of Naples and subsequently cancelled in the last instance by the Court of Cassation, and, on the other, the start of new criminal proceedings against both the Company’s directors and public officers and the legal entities related to them for alleged responsibilities under Law 231.

I.1.4 Post-transitional or current phase

The start of this phase was mainly characterised by two new scenarios which involved (i) the completion of the Acerra waste-to-energy plant and the development of the events relating to it and (ii) the initiation of a new phase of litigation between the company and public authorities related to the management of plants, storage sites and facilities, which, due to the aforementioned Law 123/2008, had been taken over by public authorities.

As for the Acerra plant, in the month of December 2008 and in the framework of the procedure for the awarding of the service to manage the incinerator under construction, a new service provider was identified. It is a leading Italian company that owns other major waste disposal facilities and the related energy recovery. At the same time, FIBE, in accordance with the provisions of the aforementioned Law 123/2008, continued the technical activities aimed at the completion of the plant and the related testing. The final acceptance tests of the Acerra plant were carried out in the first two months of 2010 and the relevant certificate was issued on 16 July 2010 confirming the success of the procedure. In this context, we should mention the enactment of Decree Law 195/2009, converted with amendments into Law 26 of 26 February 2010, which, inter alia, contains some significant provisions that can be summarised as follows:

  1. the amount for the Acerra waste-to-energy plant was determined to be €355 million and title to the plant was to be transferred by Impregilo group to the Campania regional authorities (or to the Prime Minister Office - Civil Protection Department or to a private body). The transfer was to take place by 31 December 2011 in accordance with the Prime Minister’s new decree and after determining the related financial resources. Until then, the former service provider would be paid a monthly lease payment of €2.5 million for up to 15 years. The payments for the 12 months before transfer of title would be deducted from the consideration to be paid as well as the amounts advanced to the former service provider, pursuant to article 12 of Decree Law 90/2008, as advances for work in progress when the plant was being built;
  2. always in relation to the Acerra plant, (i) the deadline for the execution of the inspection was set on 28 February 2010, (ii) it was agreed that, until the transfer of property, it would not have been alienable, amenable to seizure or other provisions nor could registrations or other acts detrimental to the said plant be carried out, and (iii) the former service provider was imposed further significant charges in relation to a set of guarantees of a substantially different nature and significantly more burdensome than existing best practices in the plant engineering sector. The management of the plant, however, was awarded to the new service provider starting from 2010, despite the guarantees required and despite the property still belonged to FIBE.

As for the development of litigation relating to the management of the plants and storage sites, the first period of the post-transitional phase was marked, inter alia, by two key administrative disputes and more precisely:

  • one relating to the final determination of the role played by FIBE vis-à-vis public administration after the resolution of the service contracts and,
  • one relating to the determination of the entity which, after the entry into force of L.123/2008, would take charge and manage all plants, storage sites and equipment which, during the contractual phase had been built by FIBE for the conduct of its activities.

With regard to the determination of the role played by FIBE in the transitional phase, Lazio Regional Administrative Court ruling No. 7280 of July 2008, which became final due to the failure to appeal, reconstructed the role and responsibilities attributable to the former service providers after 15 December 2005 – “mere executors” of the commissioner’s orders – and to the commissioner – who bore the sole responsibility for the waste disposal service and coordination activities, required to identify the best solutions for waste disposal.

The ruling concurrently established that all obligations imposed on the former service providers by law ceased to exist on 31 December 2007, also expressing the fact that the commissioner’s various measures ordering FIBE to extend its operations up to the entry into force of Law 123/2008— measures which were all promptly challenged by the company— were found to be unlawful as contrary to the previous regulations governing the conditions and limitations of the specific emergency.

In relation to the dispute related to the ownership and management of the plants and storage sites, the litigation stage, which began in the period immediately following the entry into force of Law 123/2008, ended with the decision of the State Council which, by ruling No. 290/2010, finally confirmed the cancellation of the claims made by the government for the return of the sites to FIBE in December 2008, thus freeing it from any obligation in relation to the operation thereof, which, in the administration’s opinion, were deemed not suitable for its activities.

Near  the  end  of  2010,  therefore,  the  overall  situation  of  the  SUW  Campania  projects continued to be somewhat complex, mainly due to the following situations:

  • a statement of income and financial position, which at the Group consolidated level showed huge net receivables and claims for damages related mainly to the following activities:
    • construction of the Acerra plant, which, besides being one of the largest and most modern waste incineration plants with energy recovery in the world, was already fully functioning and productive without the company that built it being recognised any compensation;
    • repayment of costs not amortized yet of the former RDF plants which, according to the provisions of the service contracts terminated by law in late 2005, were to be paid by the public authorities, which at that date had not recognised them
    • net receivables arising from the financial imbalance that progressively accrued during both the contractual and transitional phases as a result, on the one hand, of the defaults of the debtor public authorities and, on the other, the impossibility of opposing such defaults in respect of third-party suppliers and subcontractors of FIBE which was forced to further expose itself in order to counter actions instrumentally taken by these entities also in bankruptcy proceedings.
  • the protracted criminal litigation in which, though proceedings on the merits were already in progress, the Group was still subject to relevant claims of a precautionary nature by prosecutors, with all the operational and reputational consequences that this entailed;
  • the continuation of both civil and administrative litigation, which, in spite of the important rulings described above, did not yet allow for the determination of a precise time-frame in which the legitimate claims made by the company in various capacities could be met.

As  of  year-end  2010,  however,  there  were  some  significant  changes  with  regard  to aforementioned issued. Specifically, these were:

  • the dispute concerning the legitimate compensation due to FIBE for the construction of the Acerra incinerator was largely completed at the end of 2011 and the final payment for said plant, amounting to about €355 million, was received during 2012;
  • the criminal proceedings initiated in 2004, which had been matched by the concurrent precautionary procedure that saw the Group subject to significant seizures of financial resources since financial year 2007, were finally closed in the early part of 2012 with the final exclusion of the applicability of the said measures, while in November 2013 the Court of Naples acquitted all the defendants involved. To date, the deadlines for an appeal by the public prosecutor are still pending;
  • the dispute for the legitimate claims of FIBE for the repayment of costs incurred for the construction of the former RDF plants and not amortized yet at the date of termination of the service contracts (15 December 2005) was also closed with the ruling of the Supreme Court in March 2013, which dismissed the appeal of the public authorities, which were deemed to be the losing party by the State Council in 2012. Although in this context enforcement proceedings started by FIBE are still pending to achieve full compliance by the unsuccessful public authorities, during 2013 a total of €240 million were collected, of which about €204 million related to costs not amortized at December 2005 and legal interest from said date equivalent to €35 million.

At year-end 2013, finally, the Group’s financial position related to the SUW Campania Projects, which are exhaustively discussed further below in the notes to the consolidated financial statements for the year 2013, is mainly concentrated in net receivables items within working capital, relating to FIBE claims under the contractual and transitional phases.

The rest of this chapter, in accordance with previous periodic financial disclosures of the Group, is a description of the main pending disputes in order to complete the complex operational framework that still characterises the Group’s activities in the SUW Campania Projects. In this context, despite having observed the significant and positive developments briefly described above, the overall picture is still quite complicated.

This situation, though constituting an important factor for the Group as a consistent support of the correctness of its actions at all levels of litigation still pending does not make it possible though to rule out the risks linked to this complex set of proceedings, even though these can be reasonably deemed overall as possible but not likely.

* * *

II. Pending disputes relating to the SUW Campania Projects

II.1 Administrative disputes

  1. In October 2006, FIBE and FIBE Campania took legal action before the Lazio Regional Administrative Court objecting to the commissioner’s failure to comply with its obligations under Decree Law 245/2005 (converted into Law 21/2006), namely: (i) recovery of outstanding amounts due by municipalities for waste disposal services at the date of termination of the contracts (15 December 2005) and (ii) identification of landfills for organic waste and stockpiles generated by the RDF plants and preparation and implementation of a plant maintenance plan.
    After accepting the precautionary motion filed by FIBE and FIBE Campania (in the ruling of 11 October 2006, confirmed by the State Council on 7 November 2006), in ruling No. 3790 filed on 27 April 2007, the Regional Administrative Court of Lazio stated that:
    1. FIBE and FIBE Campania effectively provided the waste disposal service under the 2000 and 2001 contracts up until 15 December 2005 and had the right to request completion of the procedure provided for under law for the collection of outstanding receivables;
    2. due to the termination by law of the service contracts, FIBE and FIBE Campania “as of 15 December 2005 merely provided the [waste disposal] service on behalf of the commissioner and had definitively lost title thereto”;
    3. the commissioner was to complete the procedure aimed at meeting the companies’ requests within 45 days;
    4. in the case of ongoing default of the public authorities, an extraordinary commissioner was appointed who was given an additional 45 days to act in their lieu.
    The commissioner appealed against this ruling with the Council of State, which rejected the appeal in ruling No. 6057 of 28 November 2007, fully confirming the ruling of the Lazio Regional Administrative Court.
    As a result of the newly introduced regulations, the companies were no longer interested in completing the procedure aimed at identifying the sites where to send the stabilised organic fraction (SOF) and stockpiles generated by the RDF plants and preparing and implementing a plant maintenance plan, given that these were to be transferred to the relevant municipalities. However, they continue to be interested in completion of the procedure for the recovery of their outstanding receivables for services provided until 31 December 2005.
    The extraordinary commissioner appointed by the Regional Administrative Court to recover the receivables due from public authorities of the Campania Region for the waste disposal services provided until 15 December 2005, filed a first report in August 2009 and another one in June 2013 based on a more in-depth investigation into the receivables by cross-checking the accounting records and documents submitted by the parties. While recognising the receivables due to FIBE for the services provided under the contract, the commissioner asked the Regional Administrative Court to evaluate the claims made by the public authorities and to take the relevant decisions. During the hearing to discuss these aspects on 4 December 2013, the Regional Administrative Court adjourned the case to 25 June 2014.
  2. The Lazio Regional Administrative Court confirmed the findings of its ruling No. 3790/2007 in ruling No. 7280 of 23 July 2008, reiterated by State Council ruling No. 6057/07, as confirmed and supplemented by the regulations implemented in the meantime and by the said Decree Laws 90/08 and 107/08, converted into Law no. 123/08 et seq.
    This ruling, which became final due to the failure of the public authorities involved to appeal, is very important for the companies because it provides an accurate reconstruction of the role and responsibilities attributable to the former service providers after 15 December 2005 – “mere executors” of the commissioner’s orders – and to the commissioner – who bore the sole responsibility for the waste disposal service and coordination activities, required to identify the best solutions for waste disposal. The ruling also established that all obligations imposed on the former service providers by law ceased to exist on 31 December 2007, as the challenged extension measures were in contrast with the previous regulations governing the conditions and limits of the specific emergency measures. Moreover, the regulations implemented in the meantime also affected the orders challenged, as such regulations were applicable to past contractual relationships involving the companies, to which “no further activities are requested except for those to allow the provincial authorities and Armed Forces to take over the management of the plants, staff and assets as well as transactions with third parties”. Given the above, the Regional Administrative Court concluded “It can logically be deducted that the appointed commissioner is required to meet the obligations...”.
  3. In December 2008, FIBE and FIBE Campania challenged a number of orders before the Lazio Regional Administrative Court whereby the parties appointed by the commissioner for technical and operating  activities (so-called  technical-operational chief as per Prime Minister’s Order No. 3705/2008 and the extraordinary commissioners for the provinces) obliged the companies to re-acquire possession of certain areas and stocking sites - which said parties had taken over in August 2008 - as these were not deemed functional to running the service, requesting the concurrent declaration of “the non-existence of any obligation to manage the offices, sites and plants used at any time as part of the integrated waste treatment system in Campania for the companies in light of the regulations existing in the sector which fully regulated the previous situations in full compliance with Lazio Regional Administrative Court ruling No. 3790/2007, confirmed by the Council of State with ruling No. 6057/2007 and Lazio Regional Administrative Court ruling No. 7280 of 23 July 2008 about the nature of the relationships between the public authorities, FIBE and FIBE Campania and third parties, and the obligations of public authorities to comply with the relevant provisions in the above court ruling No. 3790/2007, confirmed by the Council of State with ruling No. 6057/2007 and the Lazio Regional Administrative Court ruling no. 7280 of 23 July 2008 about the nature of the relationships between the public authorities, FIBE and FIBE Campania and third parties.”
    Following the hearing of 19 January 2009, the Regional Administrative Court suspended the enforceability of the challenged measures and by ruling No. 2357/09 on 13 March 2009 upheld the appeal made by FIBE and FIBE Campania, cancelling the challenged measures.
    The public authorities involved appealed against this ruling before the State Council on 8 July 2009. The companies appeared in court for the proceeding and lodged a counter- appeal against the same ruling, requesting that the objections deemed to have been covered by the first-instance hearing and specifically related to the lack of grounds concerning the alleged inoperability of the sites for the purposes of the waste management service, be examined and granted. They also requested that the objections related to the non-existence of any obligation for them to manage the offices, sites and plants used at any time for the integrated waste treatment system in Campania in line with the sector regulations and to the existence of the public authorities’ obligation to comply with rulings of the Lazio Regional Administrative Court No. 3790/07, confirmed by State Council ruling No. 6057/07 and Lazio Regional Administrative Court ruling No. 7280 of 23 July 2008 about the nature of the relationships between the public authorities, FIBE and FIBE Campania and third parties, be examined and granted as well.
    On 22 July 2009, the under-secretary of state notified FIBE and FIBE Campania through the extraordinary commissioners of new orders to take over the above sites. The companies appealed to the Regional Administrative Court also with respect to these orders.
    On 26 January 2010, the State Council issued ruling No. 290/2010 definitively confirming the cancelling of the orders issued in December 2008, freeing FIBE from any obligation to manage the sites which, according to the local public authorities, were not suitable for their activities.
    Specifically, this ruling analysed Prime Minister’s Order No. 3693/2008 deeming that the challenged orders were unlawful as they breached the relevant legislation due to the erroneous valuation of the concept of the operability of the assets for the waste management service.
    The State Council based its assessment of the operability of the sites on  Article 183.1.D) of Legislative Decree 152/2006, which expressly defines the concept of waste management as the collection, transportation, recycling and disposal of waste, including monitoring of these activities as well as of the landfill after it has been closed.
    This led to confirmation of the operability of the assets, the return of which had been ordered, for the waste management service as a whole; the challenged measures were accordingly declared unlawful.
    Despite this outcome, the party engaged under Law 26/2010 to manage the sites in the Province of Caserta and, subsequently, the parties engaged to manage the sites in the Provinces of Naples and Benevento commenced new proceedings to order FIBE S.p.A. to take over the custody and costs for the sites.
    The company lodged a motion for the repeal of this action with the relevant judicial authority which was rejected on 25 October 2010. Following the request for clarifications about the custody obligations, the Fifth Criminal Chamber of the Naples Court stated in its order of 24 November 2010 that the official receiver has “as its sole scope and responsibility that of ensuring the integrity of the seals, the property under seizure and to report any dangers to the judicial authority”. This conclusion corroborates the company’s argument, supported by its legal advisors, that the official receiver is exempt from any responsibility once it diligently and promptly informs the relevant authority of any events that could in any way compromise the integrity of the property under seizure and that the persons indicated as official receivers are behaving in this way.
    The civil proceedings before the Court of Naples initiated by S.A.P.NA. S.p.A., a local company set up by the Naples provincial authorities, are part of this situation. S.A.P.NA. S.p.A challenged its takeover of title to certain temporary and definitive areas and stocking sites in roughly 40 proceedings. These areas and sites were the same already found to be inoperable by the extraordinary commissioners in their measures of December 2008 challenged by FIBE S.p.A. and which led to Lazio Regional Administrative Court ruling No. 2357/09 and the State Council ruling No. 290/10. S.A.P.NA. also requested it be reimbursed and held harmless by FIBE S.p.A. and/or the government commissioner from the operating costs incurred in the meantime and yet to be incurred, including possible site reclamation.
    FIBE S.p.A. appeared before court in the various proceedings, which are still ongoing.
  4. FIBE and FIBE Campania appealed to the Lazio Regional Administrative Court again on 30 April 2009 (RG no. 3770/2009) disputing the public authorities’ slowness in completing the administrative procedures for the recording and recognition of the costs incurred by the former service providers for the services provided as required by law and the work ordered by the local public authorities and carried out by the companies during the transition period (16 December 2005 - 31 December 2007). They requested the Court to declare the unlawfulness of this silence and verify the local public authorities’ obligation to finalise the procedure in a suitable time-frame, with the concurrent appointment of an extraordinary commissioner who would take the measures required of the defaulting public authorities, should the latter fail to act within the set time-frame. At the conclusion of the hearing of 24 June 2009, the Court stated the appeal was inadmissible in ruling No. 7070/2009 and that with respect to the “checks into financial claims, even if based on obligations undertaken by law”, the companies should not have followed the special silence procedure, but should have lodged a specific action for declaration and satisfaction with the Court on an exclusive jurisdiction basis.
    In light of this, the companies filed a new appeal with the Lazio Regional Administrative Court (RG no. 7338/2009), which had exclusive jurisdiction pursuant to article 4 of Decree Law No. 90/2008, for the issue of the necessary declaration and satisfaction orders against the local public authorities, including on an admonitory basis. The admonitory motion was quashed as the Court did not accept the assumptions for issue of a court order. The merits hearing is yet to be held. Pending a date for the said hearing, a preliminary motion was notified and subsequently filed on 8 April 2010 for the appointment of a court-appointed expert who, after examining the documentation presented, should identify the amount of:
    1. the sum due by the local public authorities for the management activities reported by the companies from 16 December 2005;
    2. the amount already paid by the local public authorities for this service;
    3. the amount payable, already checked and acknowledged but not yet paid by the local public authorities as per the administrative measures already issued and added to the court records;
    4. the amount not yet checked or paid by the local public authorities for the services reported by the companies;
    5. the amount due by public local authorities for the services awarded to the companies and provided by them since 16 December 2005;
    6. the amount already paid by the local public authorities for the services as per item e);
    7. the amount payable, already checked and acknowledged but not yet paid by the local public authorities as per the administrative measures already issued and added to the court records;
    8. the amount payable not yet checked or paid by local public authorities for the requested services provided by FIBE S.p.A. and FIBE Campania S.p.A., based on the documentation added to the court records;
    9. the appointed expert should, based on the verification of the above documents, identify and specify the amount due by local public authorities for all the activities imposed on and carried out by FIBE S.p.A. and FIBE Campania S.p.A.in favour of such pubic authorities, starting from 16 December 2005, net of the amount already paid for such services and to any other issue that this court will consider.
  5. The companies lodged a specific motion for the timely setting of the related hearing, after which the Regional Administrative Court issued interim ruling No. 3669 ordering that the “checks” of the accounting documentation submitted for reporting purposes be carried out to ascertain if the claims made in court were grounded. It has reserved to hand down its decision at the end of procedure. Accordingly, the Court requested that La Sapienza Rome University carry out the check based on the questions posed in the ruling. A partial appraisal was filed on 29 January 2013 covering the period from 15 December 2005 to 31 December 2006 and an extension was requested for the filing of the final appraisal for all the periods considered. The extension was granted until 31 March 2014.
    With their appeal notified on 18 May 2009 (RG No. 4189/09), the companies challenged Prime Minister’s Order No. 3748/09 before the Lazio Regional Administrative Court whereby only waste produced and stored after the date of termination of the service contracts with the companies (15 December 2005) was to be transferred to the Acerra waste-to-energy plant. A date for the related hearing is yet to be set.
    While they are convinced that the obligation to dispose of the bales produced and stored in Campania (regardless of the solution chosen by the local public authorities for which waste was to be disposed of first) lies solely with the municipalities, the companies have prudently lodged an appeal against this order with the Lazio Regional Administrative Court in Rome.
  6. The Lazio Regional Administrative Court issued ruling No. 3886 on 5 May 2011 on FIBE’s appeal (RG No. 9942/2009) for the local public authorities’ non-payment of FIBE’s non-amortised costs at 15 December 2005 for the Campania RDF plants. It upheld  FIBE’s  appeal   and  ordered  the  local  public  authorities  to  pay  FIBE €204,742,665.00 plus legal and default interest from 15 December 2005 until settlement. This ruling correctly reconstructs the transactions between the parties as per the contractual terms and legislation of reference. It confirms that the local public authorities took over the RDF plants as a result of termination of the service contracts and are therefore obliged to pay the former service providers the non-amortised costs at the contract termination date (15 December 2005) as expressly stated by the local public authorities. The Regional Administrative Court based its quantification of the claim on FIBE’s accounting figures and the considerations set out by the local public authorities in the previous calls to tender for the service.
    The local public authorities lodged an appeal against the ruling, which was filed on 11 July 2011. The appeal (R.G. 6313/11) was heard on 13 December 2011 after which the State Council rejected it with its ruling No. 868/2012 filed on 20 February 2012 and ordered that the parties bear their own legal costs.
    The public prosecutor lodged an appeal with the Supreme Court against the State Council’s ruling, alleging that the administrative judge lacked jurisdiction. FIBE, in turn, filed a statement of defence and a counterclaim challenging the public local authorities’ arguments and appealing against the State Council’s ruling with its counterclaim in the part in which it holds that it had first to rule about jurisdiction (though favourable) rather than acknowledging the tardiness of the appeal and, therefore, invalidating it. The public prosecutor then presented its statement of defence to FIBE’s counterclaim. The Supreme Court rejected the public prosecutor’s motion in the hearing of 6 March 2013. FIBE thus commenced the enforcement action aimed at the compulsory recovery of the entire amount ordered. The public prosecutor appealed against enforcement with a suspension request, which was discussed at the hearing of 9 July 2013. The enforcement judge of the Rome Court ordered that  FIBE be paid €240,547,560.96 with its orders of 24 July 2013 to cover the receivables for principal and legal interest. The judge also suspended the enforcement procedure for the additional interest requested and set a deadline of 30 November 2013 for the merits ruling about the opposition.
    Both parties therefore initiated proceedings on the merits and at the hearing on 3 February 2014 the court declared the absence of the Presidency of the Council of Ministers, and set a deadline on February 21st for the production of a certificate attesting the non filing of the summons brought by the Presidency of the Council of Ministers with the date set (in the summons) on February 10th.
    Anyhow, the court stated that if this second appeal were filed, the two cases would be joined.
  7. The Campania Regional Administrative Court handed down order No. 292 of 23 February 2012 rejecting appeal RG No. 301/2012 lodged by S.A.P.NA. S.p.A. for the suspension of the ministerial measure which requested that the local company submit the results of the characterisation plan and implementation of urgent safety measures for the contaminated groundwater at the Settecainati landfill (Municipality of Giugliano) owned by FIBE S.p.A. The local company sued FIBE for its alleged liability for the contamination and its obligation to characterise and implement urgent safety measures. The court order included S.A.P.NA.’s obligation to pay the precautionary court costs. The date for the merits hearing has not yet been set. S.A.P.NA. challenged (appeal No. RG 3247/2012) Campania Regional Administrative Court order No. 292/2012 before the State Council, which confirmed first instance ruling No. 1968 of 23 May 2012. Each party bore its own legal costs.
  8. Lazio Regional Administrative Court ruling No. 5831 of 26 June 2012 stated the lack of its jurisdiction in favour of the Court of Public Waters with respect to the appeal RG no. 7434/2008 and subsequent additional grounds lodged by Fibe s.p.a. in which the latter requested the annulment of the commissioner’s and ministerial measures ordering the communication of the results of the surface and groundwater characterisation plan and urgent safety measures – failing which the substitute powers to address the damage would be activated -, as well as the recognition of the real cost and the inspection and repair of the environmental damage at the landfill in Cava Giuliani in the Municipality of Giugliano. The lack of jurisdiction of the Regional Administrative Court was stated in favour of the Court of Public Waters, as the measures were considered administrative measures covering public waters. The ruling was reinstated before the Court of Public Waters which adjourned the hearing to 9 October 2013. After an agreement with the government commissioner of 9 September 2013 covering the characterisation of the Cava Giuliana landfill, the hearing was adjourned to 25 June 2014.
  9. Lazio Regional Administrative Court ruling No. 6033/2012, published on 3 July 2012 and notified on 13 September 2012, joined and rejected appeals Nos. RG 10397/2007, 10398/2007 and 2770/2012 and related additional grounds lodged by FIBE for the cancellation of the commissioner’s and ministerial measures requiring the characterisation plan and urgent safety measures, under penalty that procedures to address the damage be initiated for the Pontericcio site, the RDF production plant and stocking site and the Cava Giuliani site and stocking site.
    The company appealed against this ruling with the State Council (RG no. 7313/2012) as it would appear to be tainted by the obvious misrepresentation of the facts as it is based on contamination at a site other than those referred to in the ruling. Reference is mistakenly made to contamination at the landfill in Cava Giuliani (as shown in the court-appointed expert’s report to the Naples public prosecutor, drawn up for criminal proceedings RGNR No. 15968/2008), appealed against with motion RG no. 7434/2008 (see letter I) above). On 21 November 2012, the State Council rejected FIBE’s precautionary motion for suspension of the execution of the ruling. A date for the merits hearing has not been set yet.
    Following rejection of the precautionary motion of ruling No. 6033/2012, FIBE decided to inform the Ministry for the Environment and the other relevant authorities of its willingness to voluntarily execute this ruling in its communication of 13 December 2012, requesting that a meeting be set to draw up an agreement to stipulate the relevant terms. It took this decision partly to prevent the possible commission of the crime of non-reclamation and the company’s liability pursuant to Legislative Decree No. 231/2001 and based on the government commissioner’s communication as per order No. 3849/2010 and following orders for the agreement in itinere of the contract for the characterisation of the areas in Pontericcio and Cava Giuliani with Sogesid S.p.A., covered by ruling No. 6033/2012 and appeal No. 36/2013 with the Court of Public Waters. However, it did not admit any liability as the merits hearing has yet to be held and it also reserved the right to recover the costs of executing the ruling. This agreement was signed by FIBE and the government commissioner on 9 September 2013, whereby FIBE accepted the government commissioner’s requests about the characterisation and environmental surveys, excluding any liability about possible issues that may arise during such surveys. FIBE confirms that it is proceeding in this sense solely to comply with Regional Administrative Court ruling No. 6033/2012 referred to above.

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II.2 Civil litigation

The government commissioner served a writ in May 2005 requesting compensation from FIBE, FIBE Campania and FISIA Italimpianti for alleged damages of approximately €43 million. During the hearing, the commissioner raised its claims to over €700 million, further to the additional claim for damage to its reputation, calculated to be €1 billion. 

The companies appeared before court to challenge the claims made by the government commissioner and lodged a counterclaim requesting compensation for damage and sundry charges determined before the court of first instance for more than €650 million, plus another claim for damage to their reputation of €1.5 billion. They also complained about the significant delay (compared to that provided for in the 2000 and 2001 contracts) in the issue of the authorisations required to build the waste-to-energy plants and the related delay in the construction thereof. These delays led to both the lengthening of the temporary stocking periods of the produced “eco-bales” and an increase in the stocked “ecobales” with the related need to find bigger stocking areas, thereby forcing FIBE and FIBE Campania to incur greater costs.

In the same proceeding, the banks that issued FIBE and FIBE Campania’s performance bonds in favour of the government commissioner also requested that the commissioner’s claim be rejected. In addition, they requested to be held harmless by Impregilo from the commissioner’s claims. Impregilo appeared before the court and challenged the banks’ requests.

The hearing was finalised with ruling No. 4253 of 11 April 2011 confirming the administrative court’s jurisdiction rather than that of the ordinary court. The public prosecutor appealed against this ruling and FIBE appeared accordingly before the court in the related case (RG No. 686/12). The specification hearing before the Appeal Court of Naples is set for 11 December 2014.

With the “resumption statement” of 1 August 2012, the Ministry for Justice and Cassa delle Ammende resumed proceedings for enforcement of the sureties totalling €13,000,000.00 before the Court of Milan. These sureties had been given by certain major banks to guarantee execution of the measures imposed by the Public prosecutor of Naples as part of the seizure of the RDF plants.

The group companies appeared before the Court of Milan (RG No. 57109/2012) challenging the grounds of the claims, alleging, inter alia, the invalidity of the policy as it was activated after its expiry date and the lack of grounds for its enforcement. In turn, they summoned the government commissioner.

At the first hearing of 17 January 2013, the proceeding was deferred to 5 December 2013 for the specification hearing, during which the final judgement was further delayed.

Finally, at civil law  level, the public authorities have recently commenced proceedings challenging FIBE’s operations with respect to the complex situation of receivables and payables arising from the contractual phase. Although these are separate from the other proceedings described above, they refer to the same claims filed by FIBE in the administrative courts for which the extraordinary commissioner is still taking action (see item II.1.A above). Accordingly and assisted by the group’s legal advisors, FIBE’s fully compliant conduct during the contractual phase can be reasonably confirmed and the risk of a negative outcome in these proceedings is a mere possibility.

The company’s legal advisors hold that the local public authorities’ claims can reasonably be challenged considering the counterclaims and, moreover,  the admissibility of legal compensation given the circumstances. 

Finally, FS Logistica (formerly Ecolog) has a pending payment order opposition proceeding vis-à-vis the Office of the President of the Council of Ministers for the payment of the fees for the 2001-2008 assignment made by the then government commissioner to transport waste abroad. FS Logistica motion for payment was addressed to the Office of the President of the Council of Ministers, which, in turn, filed action in warranty against FIBE. The latter, inter alia, firstly objected to the correspondence of the action in warranty with that already part of the case commenced by the Office of the President of the Council of Ministers/government commissioner before the Court of Naples and settled with ruling No. 4253/11, finding lack of jurisdiction (see above) and, with respect to the counterclaims made by the Office of the President of the Council of Ministers, noted both their inadmissibility due to their complete inconsistency with the claims originally made by FS Logistica and the fact that these claims had already been filed by the Office of the President of the Council of Ministers in many other pending disputes.

The judge, following the hearing on 11 July 2013, adjourned the proceedings to the hearing on 24 January 2014 where he admitted court-appointed experts only in relation to the claims of FS Logistica vis-à-vis Office of the President of the Council of Ministers and forming the subject of the injunction.

* * *

II.3 Criminal litigation

In September 2006, the public prosecutor at the Court of Naples served Impregilo S.p.A., Impregilo International Infrastructures N.V., FIBE S.p.A., FIBE Campania S.p.A., FISIA Italimpianti S.p.A. and Gestione Napoli S.p.A. in liquidation with a “Notice of the conclusion of the preliminary investigations about the administrative liability of legal entities” related to the alleged administrative crime pursuant to Article 24 of Legislative Decree 231/2001 as part of a criminal case against several former directors and employees of the above companies, investigated for the crimes as per Article 640.1/2.1 of the Criminal Code in relation to the tenders for management of the urban solid waste disposal cycle in Campania. Following the preliminary hearing of 29 February 2008, the Judge for the Preliminary Hearing at the Court of Naples accepted the request for indictment made by the public prosecutor.

The Court accepted the objections proposed by the companies’ defence and declared the unlawfulness of the civil parties’ claims against the bodies involved pursuant to Legislative Decree 231/2001. Therefore, all their claims made in the preliminary hearing were found to be inadmissible.

Moreover, the public prosecutors Messrs. Noviello and Sirleo presented an additional charge pursuant to Article 517 of the Italian Code of Criminal Procedure in the hearing of 15 June 2011, against individuals only, for the crime as per Article 110 of the Criminal Code, article 81, second paragraph of the Criminal Code and Article 53-bis of Legislative Decree 22/97, now Article 260 of Legislative Decree 152/06.

The public prosecutor requested the following precautionary measures relating to:

“assets”, pursuant to article 19 of Legislative Decree 231/2001 (seizure of: RDF production plants; Acerra waste-to-energy plant; approximately €43 million belonging to Impregilo group companies; receivables of about €109 million due to FIBE and FIBE Campania from municipalities in the Campania Region); and “interdiction”, pursuant to Article 9 of Legislative Decree 231/2001 (or: ban on negotiating with public bodies; exclusion from subsidies, loans and similar aid; ban on advertising goods and services).

In its ruling of 26 June 2007, the Judge for the Preliminary Investigation ordered the precautionary seizure of the profit from the alleged crime, estimated to amount to about €750 million; specifically, the Judge ordered the precautionary seizure of:

  1. €53,000,000.00, equal to the amount paid in advance by the commissioner to build the plants in provinces other than Naples;
  2. the total amount of €301,641,238.98 for the regularly collected waste tariffs;
  3. certain,  liquid  and  due  receivables  amounting  to  €141,701,456.56  due  from  the municipalities and not yet collected;
  4. the expenses incurred by the commissioner for the disposal of the SUW and related processing downstream of the RDF plants amounting to €99,092,457.23;
  5. €51,645,689.90 equivalent to the missing guarantee deposit, payment of which had been agreed to guarantee proper compliance with contractual obligations;
  6. amounts received as premiums for the collection service performed on behalf of the commissioner and municipalities to be determined upon enforcement;
  7. €103,404,000.00 being the value of the works carried out to build the Acerra waste-to- energy plant up to 31 December 2005.

The precautionary proceedings, commenced with the above orders, lasted nearly five years and have finally been settled with no consequences for the Group in May 2012 when the final ruling taken by the Supreme Court (Sixth Criminal Chamber) denied the existence of new evidence that would overturn the final judgement passed down by the same Supreme Court (Second Chamber) on 16 April 2009 about the public prosecutor’s precautionary requests related to the tariffs.

On 4 November 2013, the Court of Naples issued an order by which all the defendants were acquitted in the broadest terms, the seizure of the storage sites was repealed, and these were returned to the provincial authorities having territorial jurisdiction. On 1 February 2014, the articulated acquittal ruling (consisting of 265 pages) was filed and the deadline for any appeal by the Public Prosecutor is expected to expire on 21 March 2014.

* * *

During 2008, as part of a new inquiry by the Court of Naples into waste disposal and related activities in the region carried out after the termination by law of the contracts (15 December 2005), the Judge for the Preliminary Investigations issued personal preventive seizure measures upon the request of the public prosecutor against certain managers and employees of FIBE, FIBE Campania and FISIA Italimpianti and managers of the commissioner’s office.

As part of this inquiry, the former service providers and FISIA Italimpianti were once again charged with the administrative liability of legal entities under Legislative Decree 231/01. The related acts describe how this is both a continuation of the previous investigations and a separate proceeding based on new allegations.

The preliminary hearing was concluded on 29 January 2009 with all the defendants being arraigned for trial. In the pre-trial hearing, the civil actions brought against the legal entities were found to be inadmissible. Moreover, on 16 December 2009, the Court  of  Naples declined its jurisdiction and ordered that the documents be transferred to the Rome public prosecutor. The Court of Rome set the date for the preliminary hearing on 27 October 2010 when it was adjourned by the Judge for the Preliminary Hearing to 13 December 2010 due to the erroneous service of the writ about the hearing to legal counsel of FIBE S.p.A. At the next hearing of 10 January 2011, the Judge for the Preliminary Hearing at the Court of Rome cancelled certain charges filed against the chief executive officer in office when the events took place and adjourned the hearing to 23 March 2011, which was adjourned again to 21 September 2011, then to 14 December 2011 and finally to 28 March 2012. The Judge deferred the decision about the conflict in jurisdiction and the other individual positions and other charges to the Supreme Court, holding the Court of Naples competent to decide on these positions. The related hearing before the First Chamber of the Supreme Court was held on 6 July 2011. However, the First Chamber deferred the case, awaiting to know the opinion of the Joint Chambers of the Court of Cassation. However, following the decision of the Chief Justice of the Supreme Court, the “similar issue related though to another matter” was not heard by the Joint Chambers and, therefore, the Second Chamber of the Supreme Court handed down its judgement and ruled that the Judge for the Preliminary Hearing at the Court of Rome was competent to judge on all the charges for all the defendants on 2 March 2012. Therefore, the proceeding was to be recommenced with a preliminary hearing before the Judge in Rome on 16 May 2012, which was then adjourned to 26 September 2012 as the case was assigned to another Judge for the Preliminary Hearing replacing Mr. Mancinetti who had been transferred to another position.

On 26 September 2012, the new Judge, Mr. Saulino, took over the different parts of the proceeding and set the dates for the extraordinary hearings on 10 and 31 January 2013 and 14 March 2013.

Following these hearings, during which certain defendants made voluntary statements, the Judge for the Preliminary Hearing stated the inadmissibility of the sole party that had brought a civil action in the criminal proceeding. The public prosecutor requested that all the defendants and legal entities involved be arraigned for trial pursuant to Legislative Decree 231/2011.

The hearings of 14 and 21 March 2013 were held to hear the defence counsel’s statement and to hand down a ruling, respectively.

Following this hearing, the Judge for the Preliminary Hearing ordered that all the defendants and legal entities involved pursuant to Legislative Decree 231/2001 be arraigned for trial for all charges before the Court of Rome on 16 July 2013. 

During this hearing, the Court of Rome noted that many defendants had not received the summons and accordingly adjourned the hearing to 1 April 2014.

The Group companies involved in the new proceeding are fully convinced of the legitimacy of their actions, also because their activities are not only expressly covered by Law 21/2006 but were carried out merely on behalf of the commissioner (see the rulings of the Lazio Regional Administrative Court and State Council in paragraph II.A.).

In January 2011, FIBE joined proceeding No. 61604/10 RGNR as an injured party against MP Nicola Cosentino at the Court of Santa Maria Capua Vetere. The allegation to be examined during the trial, which legitimises FIBE’s position as an “injured party” is that Mr. Cosentino contributed significantly “to the planning and implementation of the project aimed - especially through the consortium company […], the consortium […] and other consortia in the Province of Caserta controlled by him - at setting up a competitive integrated cycle in Campania to compete with that lawfully managed by FIBE-FISIA Italimpianti, thus boycotting the latter two companies in order to take over the entire management of the related financial cycle and create an unlawful independent management at provincial level (i.e., local management of the waste disposal cycle, directly managing the landfills, where the waste is stored, taking action to build and manage a waste-to-energy plant and manipulating the activities of the government commissioner for the waste emergency)”.

On 27 January 2011, an order for immediate judgement was issued against the defendant and FIBE was specifically identified as an injured party. As already disclosed, this proceeding is at the trial stage.

On 23 December 2011, as the party involved pursuant to Legislative Decree 231/01, FIBE

S.p.A. was notified of the completion of the preliminary investigations related to another investigation by the Naples public prosecutor. The allegation relates to charges under Article 24 of Legislative Decree 231/01 relating to the committing of the crime covered and punished by Article 81, paragraph 2, and articles 110 and 640, para. 1 and 2, of the Criminal Code committed jointly and with the prior agreement of the defendants (individuals) and other parties to be identified with respect to management of the urban waste water purification service using purification systems.

Specifically, certain individuals working in the commissioner’s organisation and for FIBE

S.p.A. allegedly actively encouraged and induced other accomplices to implement stratagems and tricks to hide and conceal the extremely poor management of the above purification systems.

FIBE S.p.A. is accused as it has allegedly presented documents reporting among the other items related to the elimination of SUW the cost of transferring leachate, while not mentioning why the leachate had been transferred to plants that did not have the necessary legal authorisation, technical qualifications and residual purification capacity.

The public prosecutor will probably request that the Judge for the Preliminary Hearing at the Court of Naples hear the case. However, as it relates to events challenged in the period after the contracts were terminated, when the companies’ activities were not solely specifically covered by Law 21/2006 but also carried out on behalf of the commissioner, FIBE is fully convinced that it acted in accordance with the law.

***

III. Directors’ considerations about the situation at 31 december 2013

The Group’s overall situation with respect to the SUW Campania projects at 31 December 2013 continues to be extremely complex and uncertain (as can be seen from the wealth of the above information).

The rulings of the administrative courts on the claims about the costs of the RDF plants not yet depreciated at the termination date of the service contract (15 December 2005), which have become final following the Supreme Court’s ruling as illustrated above, are positive and important, as they support the Group’s argument that it has acted correctly and its related assessments made to date. In this context, the impairments which in previous years had been made to the total value of claims for damages relating RDF plants totalling €91.1 million were issued and the resulting positive economic effects, together with the interest component recognised by the enforcing Judge with the decision of July 24th, net of related tax effects, were recorded in the results of discontinued operations.

The conclusion of the first degree of the criminal proceedings at the Court of Naples with a full acquittal of both the natural and legal persons involved “because the fact does not subsist”, and the articulated reasons filed on 1 February 2014 in which the judges state: “The disastrous attempt to dispose of waste in Campania was not a result of unlawful conduct of the defendants, of technical competence, or of disorganization in the management of the plants” and again “what did not work were not the plants but the fact that the waste cycle, as had been organically and effectively conceived, was not fully in place being stunted both in the initial phase, i.e., waste sorting, and especially in the final one, since the incinerators at Acerra and Santa Maria La Fossa had not been built” reinforce the belief, supported by the opinions of the company’s legal advisors, which the various proceedings still pending in several courts of law (administrative, criminal and civil) will show the correctness of the activities carried out. Considering the recent decisions handed down by the administrative courts concerning the areas in the Municipality of Giugliano are still pending with respect to their merits, and for which the assessment of the risk of being the losing party, with the support of FIBE’s legal advisors in the relevant disputes, is deemed as merely possible, the exact timing of when the various  proceedings will be closed cannot yet  be established precisely.

Given the complexity and range of the different litigation proceedings disclosed in the previous sections, the Group cannot exclude that events may arise in the future that cannot currently be foreseen, which might require changes to these assessments.