Separate financial statements

Use of estimates – risks and uncertainties

Preparation of the Financial Statements and explanatory notes pursuant to IFRS requires ERG to make estimates and assumptions that affect the carrying values of the assets and liabilities recognised in the Financial Statements and disclosures relating to contingent assets and liabilities. Making these estimates involves using information available and subjective judgment.
By their very nature, estimates and assumptions used may vary from year to year, and therefore, it cannot be excluded that in subsequent years the current financial statement values may differ as a result of the change in the subjective assessments used.The main estimates for which the use of subjective assessments is more heavily required were used, inter alia, for:

  • provisions for bad debt, inventory obsolescence, and asset write-downs,
  • the definition of the useful life of fixed assets and their amortisation/depreciation;
  • provisions for environmental risks and for liabilities related to legal and fiscal disputes; specifically, the measurement processes involve both the determination of the likelihood of the occurrence of the conditions that may result in a financial outlay, and the quantification of such amount;
  • deferred tax assets, recognised on the basis of the Group's future taxability of expected profits generated in accordance with business plans as well as of the expected composition and renewal of tax consolidation regimes;
  • the impairment test for intangible and tangible fixed assets and for other equity investments, described in detail in the paragraph Impairment test on equity investments – in the estimation of the value in use – the utilisation of the investee companies' Business Plans, based on a set of assumptions and hypotheses relating to future events and actions by the investee companies' governing bodies, which may not necessarily occur. Similar estimation procedures are necessary when reference is made to the estimated fair value (net of disposal costs) component due to the uncertainty inherent in any negotiation.

Estimates and assumptions are revised periodically and the effects of each change are reflected in the Income Statement in the period when the change took place.

ERG S.p.A. - Genova

Paolo Merli

Head of Corporate Finance & Investor Relations

0039 010 2401376

ERG S.p.A. - Genova

Matteo Bagnara

Investor Relations

0039 010 2401423

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