43. RELATED PARTY TRANSACTIONS

Related party transactions, including intercompany transactions, are neither unusual nor exceptional, but are part of the ordinary course of business of Group companies. Such transactions, when not carried out at standard conditions or dictated by specific laws, are in any case settled on an arm’s length basis.

The statement below shows a summary of the balance sheet and income statement items that include transactions with related parties and their percentage impact:

BALANCE SHEET (in millions of euro)
  TOTAL REPORTED
AT 12/31/2011
OF wHICH RElATED PARTIES % SHARE TOTAL REPORTED
AT 12/31/2010
OF wHICH RElATED PARTIES % SHARE
Non-current assets       
Other receivables 347.9 161.0 46.3% 315.5 140.4 44.5%
Current assets            
Trade receivables 745.2 7.9 1.1% 676.7 8.1 1.2%
Other receivables 281.7 28.5 10.1% 175.0 9.3 5.3%
Current liabilities       
Borrowings from banks and other financial institutions 369.5 0.3 0.1% 247.5 0.1 0.0%
Trade payables 1,382.8 6.4 0.5% 1,066.4 5.4 0.5%
Other payables 626.8 42.5 6.8% 403.4 1.2 0.3%
INCOME STATEMENT (in millions of euro)       
Revenue from sales and services 5,654.8 10.9 0.2% 4,848.4 5.6 0.1%
Other income 140.4 3.2 2.3% 154.3 1.8 1.2%
Personnel expense (1,123.5) (13.3) 1.2% (1,063.6) (5.3) 0.5%
Other costs (1,574.0) (32.9) 2.1% (1,443.1) (23.0) 1.6%
Financial income 56.7 7.6 13.5% 33.8 1.1 3.4%
Financial expenses (146.1) (0.4) 0.3% - - -

 

The effects of related party transactions on the consolidated income statement and balance sheet of the PIRELLI Group at December 31, 2011 are shown below.

Relations with associates
(in millions of euro)
Revenue from sales and services 10.6 The amount mainly concerns services provided by: PIRELLI Tyre S.p.A. to Sino Italian Wire Technology Co. Ltd (euro 9.9 million); PIRELLI & C. Ambiente S.p.A. to Idea Granda Società Consortile r.l. (euro 0.6 million).
Other costs 5.5 The amount mainly concerns: costs for purchase of products of PIRELLI Tyre Co. Ltd (euro 4.2 million) and PIRELLI Tyre S.p.A. (euro 1.1 million) from Sino Italian Wire Technology Co. Ltd; costs of Pirelli & C. S.p.A. from CORIMAV (euro 0.1 million).
Financial income 0.3 The amount relates to income from Sino Italian Wire Technology Co. Ltd.
Current trade receivables 5.3 The amount mainly concerns receivables for provision of services by: PIRELLI Tyre S.p.A. to Sino Italian Wire Technology Co. Ltd (euro 4.7 million); PIRELLI & C. Ambiente S.p.A. to Idea Granda Società Consortile r.l. (euro 0.6 million).
Current other receivables 3.7 The amount consists of receivables of: Solar Utility S.p.A. from G.P. Energia S.r.l. (euro 2.0 million); PIRELLI Tyre Co. Ltd (euro 1.5 million) and PIRELLI Tyre S.p.A. (euro 0.2 million) from Sino Italian Wire Technology Co. Ltd.
Current financial receivables 24.8 The amount consists mainly of receivables of: PIRELLI International Ltd from Sino Italian Wire Technology Co. Ltd (euro 19.3 million); Solar Utility S.p.A. from GWM Renewable Energy II S.p.A. (euro 5.1 million); PIRELLI & C. Ambiente S.p.A. from Green&Co2 S.r.l. (euro 0.3 million).
Current trade payables 2.6 The amount consists of payables for provision of services by: Sino Italian Wire Technology Co. Ltd to Pirelli Tyre Co. Ltd (euro 2.3 million) and to Pirelli Tyre S.p.A. (euro 0.2 million); Corimav to Pirelli & C. S.p.A. (euro 0.1 million).
Current other payables 2.1 The amount concerns payables of Solar Utility S.p.A. (euro 2.1 million) to G.P. Energia S.r.l.

 

Transactions with parties related to Pirelli through directors
(in millions of euro)
Revenue from sales and services 0.3 The amount refers to services provided mainly to the Camfin Group (euro 0.1 million) by PIRELLI & C. S.p.A. and to the Prelios Group (euro 0.1 million) by Poliambulatorio Bicocca S.r.l..
Other income 3.2 The amount mainly refers to services provided by PIRELLI Sistemi Informativi S.p.A. to the Prelios Group (euro 2.4 million) and to the Camfin Group (euro 0.2 million) and to rental income and associated operating expenses of PIRELLI & C. S.p.A. from Prelios S.p.A. (euro 0.2 million) and from the Camfin Group (euro 0.1 million).
Other costs 13.1 The amount mainly refers to advertising costs owed to F.C. Internazionale Milano S.p.A. (euro 12.4 million), to costs for other services of Pirelli & C. S.p.A. (euro 0.2 million) and to costs for leases of Poliambulatorio Bicocca S.r.l. (euro 0.3 million) to the Prelios Group.
Financial income 7.3 The amount refers to accrued interest (euro 6.5 million) and fees (euro 0.8 million) on the outstanding loan to Prelios S.p.A. of PIRELLI & C. S.p.A..
Current trade receivables 2.6 The amount refers to receivables connected with the services shown above to the Camfin Group (euro 0.4 million) and to the Prelios Group (euro 2.0 million) including: Pirelli Sistemi Informativi (euro 1.2 million); Pirelli & C. Ambiente Site Remendation S.p.A. (euro 0.4 million); Poliambulatorio Bicocca S.r.l. (euro 0.1 million); Pirelli Tyre S.p.A. (euro 0.1 million).
Non-current other receivables 161.0 The amount mainly concerns the loan to Prelios S.p.A. as part of the spin-off (euro 160 million).
Current trade payables 3.7 The amount mainly refers to payables to F.C. Internazionale Milano S.p.A. (euro 3.3 million), to the Prelios Group (euro 0.3 million)
Investments in subsidiaries (cash outflow) 7.0 The amounts relates to the transfer of 49% of Environment Products and Services BU from Camfin Group to PIRELLI & C. S.p.A..
Investments in other financial assets (cash outflow) 0.6 This refers to the capital increase of F.C. Internazionale Milano S.p.A..

 

Related party transactions
(in millions of euro)
 Commission payments (cash outflows)    1.1   The amount refers to up-front fees for placement of the bond loan paid by PIRELLI & C. S.p.A. to Banca IMI S.p.A. and Mediobanca S.p.A.. 
 Financial expenses    0.4   The amount refers to fees owed by PIRELLI International Ltd to Intesa Sanpaolo S.p.A. and to Mediobanca S.p.A..  
 Other costs   0.9   The amount mainly refers to insurance costs of PIRELLI Deschland Gmbh (euro 0.7 million) and costs for other services of PIRELLI UK Tyres Ltd (euro 0.2 million) owed to the Allianz Group.  
 Current trade payables    0.1   The amount refers to payables to Allianz Group (euro 0,1 million). 
 Current borrowings from banks and other financial institutions    0.3   The amount refers to payables by Pirelli International Ltd to Intesa Sanpaolo S.p.A. and to Mediobanca S.p.A. for interest accrued on loans. 

 

Benefits for key managers of the Company

The fees payable to key managers totalled euro 26,693 thousand at December 31, 2011 (euro 13,885 thousand at December 31, 2010). The portion relating to employee benefits was recognised in the income statement item “personnel expense” for euro 13,274 thousand, of which euro 492 thousand relating to employees’ leaving indemnity (euro 5,333 thousand in 2010, of which euro 589 thousand relating to employees’ leaving indemnity) The portion relating to nonemployees (euro 13,420 thousand) was recognised in the income statement item “other costs” (euro 8,552 thousand in 2010).

The item “other current payables” includes euro 40,398 thousand for bonuses to be paid to key managers in 2012, accrued in 2011 and in previous years.