Annual Report 2017 Enovos Luxembourg S.A.

50 51 Part I Our Mission 6 Part II Our Achievements 14 Part III Annual Accounts 22 Annual Report 2017 Enovos Luxembourg Note 11 – Provisions 11.1. Provisions for pensions and similar obligations Under a supplementary pension scheme, Enovos Luxembourg S.A. has contracted a defined benefit scheme for staff members who started their employment with the Company before 1 st January 2001. The Company is committed to pay a lump sum at the retirement of each employee. The amount reported in the balance sheet is estimated based on the following assumptions: • retirement age taken into account for financing: 60 years • yearly discount rate of 3.65% • estimated wage at time of retirement Actuarial profits and losses are immediately recognised in the profit and loss account based on a calculation done by an external actuary. In addition, for a defined contribution pension scheme for employees who joined after 1 st January 2001, the Company pays a contribution to an insurance company, that is recorded under expenses for the year. For 2017, expenses for the defined contribution pension scheme amount to EUR 547,267 (2016: EUR 496,678). 11.2. Other provisions The heading “Other provisions” mainly comprises provisions to cover risks related to energy trading for an amount of EUR 218,710 (2016: EUR 621,531), representing the negative impact against the market valuation of the Company’s proprietary trading positions when netting by commodity type and by maturity year. For all commodity types and maturities together, the net position is a loss of EUR 326,469 (2016: loss of EUR 392,259) (see also note 20 – Financial derivatives). Furthermore, this heading includes a provision of EUR 11,775,000 (2016: EUR 3,175,000) related to guarantees issued in the context of the Company’s participations in Enovos Solar Investments I S.r.l. Unipersonale and Aveleos S.A. and to cover some litigation risks in relation with Enovos Solar Investments II S.r.l. Unipersonale. In 2017, a provision of EUR 8,600,000 has been posted in the context of the ongoing litigation regarding the Company’s Italian PV parks. Finally, this heading also comprises provisions to cover untaken holidays for employees for an amount of EUR 1,407,544 (2016: EUR 1,279,705). Note 12 – Other creditors 12.1. Tax authorities Enovos Luxembourg S.A. is subject to all taxes applicable to Luxembourg companies and the tax provisions have been provided in accordance with the relevant laws. Since 2009, Enovos Luxembourg S.A. is part of a fiscal unity with Encevo S.A., Cegedel International S.A. and Enovos Ré S.A. In 2012, LEO S.A. became part of that fiscal unity, joined by Real Estate Enovos Esch S.A. and Enovos Real Estate Luxembourg S.A. in 2014. In the context of fiscal unity, taxes are recorded as follows: • Tax expenses are booked in the subsidiaries’ accounts as would be the case if there was no fiscal unity; • Tax savings relating to a loss-making subsidiary are recorded as a deduction of tax expenses in the head of the fiscal unity; • The head of the fiscal unity (i.e. Encevo S.A.) books the tax provisions on the basis of the consolidated results of the companies included in the fiscal unity. As the liabilities to tax authorities are generally becoming due after less than one year, it has been decided to reclassify the amounts owed to the parent company accordingly. In order to benefit from the fiscal unity system, the companies concerned have agreed to be part of the fiscal unity for a period of at least five financial years. This means that, if the conditions laid down in Article 164bis LIR (Income tax law) are not met at any time during this five-year period, the fiscal unity ceases to apply, retroactively, as from the first year in which it was granted. Debts to the tax authorities include other tax debts, such as net wealth tax, VAT debts, taxes on gas and electricity, taxes on salaries and pensions. 12.2. Other creditors This caption mainly includes the finance obligation towards SEO S.A. related to the investment at the Vianden pumping station for an amount of EUR 83,557,350 (2016: EUR 91,242,000) (see also note 5). Note 13 – Deferred income This heading includes mainly an invoice of a trading counterpart relating to the subsequent year.