23 Business combinations

On 25 June 2014, upon fulfilment of the conditions precedent for execution of the demerger plan approved by the Shareholders’ Meeting of A.E.S. Torino on 18 April 2014, the demerger deed for the company’s district heating business unit was drawn up, with an effective date of 1 July 2014.

As of that date, Italgas owns 100% of the share capital of A.E.S., a company operating exclusively in the natural gas distribution segment. Through A.E.S., Italgas directly manages the natural gas distribution service in the city of Turin, with a network of 1,336 km of pipelines, 465,784 active redelivery points and 326 million cubic metres transmitted at 30 September 2014.

Consequently, as of 1 July 2014, the equity investment held by Italgas in A.E.S., classified until 30 June 2014 as a joint venture and valued using the equity method, is fully consolidated in accordance with IFRS 10 – “Consolidated financial statements”. The acquisition of control over A.E.S. represents a “business combination”, reported in accordance with IFRS 3 – “Business combinations”. To this end, at the date of acquisition of control, the following steps were taken: (i) adjustment of the value of the equity investment previously held (equivalent to 49%) to the related fair value, attributing the difference with respect to the previous book value⁴⁶ to the income statement (€51 million); and (ii) recognition of the individual assets and liabilities acquired at the related fair value.

The accounting effects of the business combination, in accordance with the provisions of IFRS 3 – “Business combinations”, are summarised below:

The main values of the assets and liabilities of A.E.S. Torino S.p.A. at the acquisition date are summarised below: