Financial Statements at 31 December 2016

Transcription

1

2

3 Financial Statements at 31 December 2016

4 2016 ANNUAL REPORT Spea Engineering S.p.A. ATLANTIA GROUP Share Capital 6,966,000 Euros Fully paid-up Tax Code, VAT and registration in the Register of Companies no Registered Office in Rome Via Bergamini, 50 Phone Fax Company subject to management and coordination by Atlantia S.p.A. pursuant to article 2497 of the Italian Civil Code. REPORT ON OPERATIONS 1

5 CONTENTS GENERAL INFORMATION 3 CORPORATE BODIES 4 HIGHLIGHTS 5 FINANCIAL STATEMENTS DIAGRAMS REPORT ON OPERATIONS 6 GENERAL 9 OPERATIONS PERFORMED DURING THE YEAR 9 REFERENCE STRATEGIC AND OPERATIONAL FRAMEWORK 9 OPERATIONS DURING THE YEAR 16 RESEARCH & DEVELOPMENT ACTIVITIES 18 HUMAN RESOURCES 21 OTHER INFORMATION 22 TRANSACTIONS WITH SUBSIDIARIES, ASSOCIATED COMPANIES, CONTROLLING COMPANIES AND WITH COMPANIES SUBJECT TO CONTROL BY THE LATTER 23 SIGNIFICANT EVENTS OCCURRED AFTER 31 DECEMBER BUSINESS OUTLOOK 25 TREASURY SHARES AND SHARES OR QUOTAS OF CONTROLLING COMPANIES 26 LIST OF REGISTERED OFFICES AND OPERATING OFFICES 27 S SUMMARY OF THE ECONOMIC, ASSET AND FINANCIAL MANAGEMENT 33 MOTIONS TO THE SHAREHOLDERS MEETING FINANCIAL STATEMENTS 34 BALANCE SHEET, INCOME STATEMENT AND CASH FLOW STATEMENT (ACCOUNTS) 39 NOTES TO THE FINANCIAL STATEMENTS 39 GENERAL 40 ACCOUNTING STANDARDS 45 EXEMPTION FROM THE OBLIGATION TO DRAW UP THE CONSOLIDATED FINANCIAL STATEMENTS 46 INTERCOMPANY TRANSACTIONS 50 BALANCE SHEET AND INCOME STATEMENT ITEMS 50 BALANCE SHEET: ASSETS 67 BALANCE SHEET: LIABILITIES 74 INCOME STATEMENT 85 OFF BALANCE SHEET COMMITMENTS, GUARANTEES AND CONTINGENT LIABILITIES FOREIGN BRANCHES EFFECTS OF THE CHANGE IN ACCOUNTING STANDARDS REPORT ON OPERATIONS 2

6 CORPORATE BODIES BOARD OF DIRECTORS In office for the three-year period Chairman COSTA Paolo Managing Director GALATA Antonino Directors DAMASCO Michelangelo GREGORI Giorgio TOMASI Roberto BOARD OF STATUTORY AUDITORS In office for the three-year period Chairman GALIMBERTI Sergio Regular Statutory Auditors De BARTOLOMEIS Giovanna MILANESE Aldo Alternate Statutory Auditors IBELLO Giuseppe GRECO Giovanni AUDITING COMPANY For the period DELOITTE & TOUCHE S.p.A. Via Tortona, 25 - Milan REPORT ON OPERATIONS 3

7 HIGHLIGHTS Amounts in thousands of Euros Revenues Ebitda Ebitda Margin 31,8% 33,9% 37,4% 35,1% 28,5% 24,6% 26,9% 23,4% Ebit Ebit Margin 29,2% 32,8% 35,7% 32,9% 25,1% 20,5% 23,2% 20,6% Net result Average personnel (no. of units) Labour costs / Revenues 37,5% 31,7% 35,5% 42,1% 49,4% 52,5% 43,8% 39,4% Net Invested Capital Net cash and cash equivalents Equity Cash Flow ROI 87,6% 129,5% 114,0% 63,8% 48,1% 29,1% 31,8% 31,5% ROE 95,9% 122,4% 116,7% 80,9% 36,5% 19,4% 23,1% 23,4% It is specified that the economic and equity ratios shown in the table are not ratios defined by the reference accounting standards, therefore they might be not consistent, thus comparable, with those adopted by other Companies. As regards the economic ratios reference is made to the analysis of the income results below in this Report on Operations, while for the equity and financial ratios see the analysis of the assets and liabilities structure. It is specified that the ratios mean the following:. Cash Flow = the sum of profit plus amortization and depreciation, amounts set aside to provisions for liabilities and charges, plus amounts set aside to other valuation reserves.. ROI = Ebit/Net invested capital. ROE = Year's profit/equity net of year's profit

8 NET PROFIT FOR THE YEAR CASH AND CASH EQUIVALENTS , , ,408 17, , ,471 9, ,402 5, TYPICAL PRODUCTION VALUE ADDED PER CAPITA PRODUCTION PER CAPITA VALUE ADDED , , ,715 90,067 89,080 74,888 72,308 59,666 75,862 77, Value added Production Value added Production thousands

9 General In 2016, whose balance sheet and income statement are submitted for your approval, together with the Notes to the financial statements, volumes increased against the volumes of the previous year, mainly as a result of major works being resumed in the design sector. Some of the activities that slowed down in 2015 (Genoa Junction, Amendment V 1 st priority, Florence-Incisa) and the activities previously suspended by the buyer (Amendment V 2 nd priority-a12 Livorno-Civitavecchia) resumed during Moreover, within design activities, the most significant activities included environmental and geotechnical monitoring performed throughout the national territory. The future progress of these activities will depend on the start of new sites, final design, specialist surveys and activities preliminary to the executive design of the Genoa Junction, the preliminary and final design of the Bologna By-pass and the preliminary design and preliminary environmental study of the Bologna By-pass. The Works Management Function is still focused on activities for the completion of the 3 rd lane of Motorway A14, completion activities on the Variante di Valico lots between Bologna and Florence, and works management to extend the 3 rd lane of Barberino North Florence, lots 1 and 2, installation of Laboratories preliminary to operating activities and extension to the 4 th dynamic lane along A4 Fiorenza-Sesto San Giovanni, Lots 0 and 1. As for New Activities, the Company s focus on the foreign market led to the acquisition of new contracts and the start of works in both Eastern Europe and Eastern Africa. These activities continued both at the Branches and in Italy. As for airport activities, the main design activities covered the EAST HUB air terminal, Runway 4, and the new East Area parking aprons; works management activities covered New Concourse C, works management and safety coordination for the rehabilitation of runways. Other activities performed for the Group continued during the year, consisting in works supervision and design and management of maintenance and rehabilitation of auxiliary and complementary works. The process to internalize activities is continuously optimized and improved. The higher volume recognized during 2016 results from the activities preliminary to the start of new works and consultancy on airport activities. Analyses of the characteristics and costs of the activities to perform, proper identification of strengths and weaknesses for each type of activity and a more accurate estimate of internal personnel requirements, including the necessary training, supply of equipment, vehicles and tools as necessary to perform the activities, will still be essential elements to compare internal costs with external services costs and to evaluate full or partial implementation of the internalization process. During 2016, the Company continued to strengthen its decision to go back to the non-captive market, in particular international market, after it had focussed exclusively on the captive market for years, especially on the investment plan of Autostrade per l Italia and its subsidiary companies. The merger with ADR Engineering which was performed last year enabled Spea to extend its business to the airport sector and to enter the international airport market. Therefore, areas were identified with good conditions to develop both engineering activities and all preliminary activities and feasibility studies preliminary to design. During 2016, the activities performed by Spea in terms of core production (including changes in provisions) increased by 15.2% compared to the previous year, and they amount to million (106.7 million in 2015). The overall production for the Group (intended as consolidation area) totalled million, i.e. 90.8% of the total amount (increasing from 99.9 million of 2015). Production is mainly the result of the design, works management and operating services activities performed for ASPI, for which works totalling 71.4 million were carried out (63.8 million in 2015, increasing by 11.9%), and REPORT ON OPERATIONS 6

10 design, works management and maintenance activities in the airport sector for Aeroporti di Roma, totalling 33.5 million (33.4 million in 2015). The activities related to the implementation of the investment and maintenance plan, technical-specialist services consisting in professional assistance, design and works management for airport works and infrastructures by the other Group concessionary companies to which the Company provided its services contributed for 6.6 million (2.8 million in 2015). The contribution of the activities performed for noncaptive Buyers in Italy and abroad resulted in production amounting to 11.4 million (6.8 million in 2015). Production costs amounted to million (84.6 million in 2015), increasing by 18.5% compared to This change mainly results from the more extended use of external professional services, while the Company is still implementing a cost reduction policy with a more prudent management of any expenses needed to run its offices. The effects on cost increase also affected, although to a lesser extent, labour costs, which increased by 2.3 million. The year 2016 closed with a profit of 17.7 million, increasing by 8% compared to the previous year (16.4 million ). In 2016 the financial position, which last year showed cash available equalling 9.2 million, closed with a positive balance of 12.2 million. This cash increase is better analyzed in paragraph Financial Management below. The jobs assigned by the main Companies of the Group, those which are being formalized and the promotional activities performed in Italy and abroad resulted in an order book totalling about 223 million at 31 December At 31 December 2016, personnel on payroll amounted to 678 units, with no significant changes compared to 31 December 2015 (680 units in 2015). In compliance with the obligations set forth in article 154 bis of Law 262/2005 ( Provisions for the protection of savings and regulations on financial markets ), under which Spea was included among the Group Companies whose specific processes and risks should be monitored, as they are sensitive processes and risks in the determination of material errors in the Group financial reporting, during 2016 the Company continued to analyze, formalize and update accounting and administrative procedures as required for the Company s documents and operations verification. The implementation of these processes will enable the Executive in charge from Atlantia S.p.A. to draft the report prescribed by the abovementioned Law, concerning the adequacy and actual implementation of administrative and accounting procedures. The certification is issued every six months. Within this framework, please note that like the other Group companies included in the consolidation area, Spea prepares a specific reporting package based on the international accounting standards (IFRS) adopted by Atlantia Group. As for the protection of health and safety at work, during 2016 the Company performed several activities, including the arrangement of training and refresher meetings for the personnel involved, and the update of the Risk Assessment Document (Documento di Valutazione dei Rischi DVR) to adjust it to the changes in legislation occurred over time. In November 2016, Spea Engineering S.p.A. confirmed the OHSAS 18001:2007 certification, which was extended to the Fiumicino site, thus including the airport activities previously performed by ADR Engineering. The Company continued health monitoring involving all the personnel exposed to construction site and office risks. All the Company Doctors that had been previously appointed were confirmed. In 2016 all workers whose fitness for work certification was about to expire underwent a medical examination, as prescribed by the Company s health protocol. The Company Doctors performed inspections at Spea s workplaces. An external provider was engaged to deliver Fire-Fighting, First Aid, Supervisors and Category 3 PPE training and induction. The same external provider was engaged to deliver the refresher course for safety coordinators, mainly covering the new provisions introduced by the new Code on Public Procurement. Moreover, in-house basic training courses were delivered to workers in accordance with the State-Region Agreement, and several employees received training and information on internal procedures. REPORT ON OPERATIONS 7

11 A course on design and site safety management was held in collaboration with the Rome Association of Engineers. The course is also recognized for the purpose of gaining CFP (Crediti Formativi Professionali Professional Credits). Internal audits were performed to verify the implementation of the SGSSL (Sistema di Gestione Salute e Sicurezza sul Lavoro Occupational Health and Safety Management System), both for compliance of Spea s offices workplace and activities and for CSEs activities. Within the framework of the tasks of supervision for operation of and compliance with the Organization, Management and Control Model, which are assigned under Legislative Decree 231/01, Spea Supervisory Board met seven times during The Supervisory Board acquired and analyzed information flows from the Company s functions in accordance with the Organization, Management and Control Model (the Model ) and Operating Procedure "Management/Monitoring of relationships with Public Administration and information flows to the Supervisory Board". In general, the analysis of incoming flows did not show criticalities or anomalies. During the year, the Supervisory Board reminded the persons responsible within the Company of the importance of timely reporting and asked for non-received flows to be sent. In order to perform its tasks, and in particular the monitoring under Decree 231, Spea Supervisory Board was supported by the Group Internal Audit Function. In 2016, the analysis performed by the Function mainly focussed on the Company s consultancy and payments. The process was found to be properly controlled, and the audits did not show profiles under Legislative Decree 231/2001. For 2017, the Supervisory Board agreed with Atlantia Internal Audit Function that the monitoring under Decree 231 will include a special section of the Model other than the section on offences against Public Administration (on which the monitoring has focussed so far), so that the analysis will cyclically cover all the special sections forming the Model. During the year, the Supervisory Board received updates on the analysis of local legislation in the countries where Spea has its Branches with respect to corporate liability and the issuing/revision of some Company procedures, in order to include the foreign Branches in the regulation of sensitive activities. Moreover, the Supervisory Board examined the findings of the Audits performed under Decree 231 on the Romanian and Armenian Branches. The Audits mainly resulted in recommendations/remarks on information flows to the Supervisory Board and the transposition of some procedures. During 2016, the Supervisory Board interviewed the Company Function Managers in order to monitor whether the Model and the Company procedures are effective and actually implemented. More specifically, the following subjects were covered: progress of the process after the merger between Spea and ADR Engineering, clarifications on some tasks assigned by the Company during the year, and personnel training on administrative liability of companies pursuant to Legislative Decree 231/2001. With reference to the activities performed in 2016, no reprehensible facts or breaches of the Model occurred, and no acts or conducts resulting in breaches of the provisions of Legislative Decree 231/2001 were reported. The periodic re-certification inspection performed on the Company in 2016 by Certification Entity DNV GL Business Assurance Italia S.r.l. confirmed the conformity of the Company s Quality Management System with European standard UNI EN ISO 9001:2008. The certificate was issued again in 2016 and will be effective for three years. REPORT ON OPERATIONS 8

12 Dear Shareholders: the results achieved during the year derive from the professional contribution of each resource. Therefore, we wish to thank all the Personnel at every level of responsibility for the efforts made and for the abilities and competences they have proven to have. For 2017 the Company is committed to continuing the innovation process started during the last periods and aimed at meeting our customers needs by identifying new projects, applying different methods, improving organization and processes and paying systematic attention to costs, times and quality of works design and execution. OPERATIONS PERFORMED DURING THE YEAR REFERENCE STRATEGIC AND OPERATIONAL FRAMEWORK During 2016 the Company continued its commitment to performing design and works management activities, keeping its role of technical-operational support for the Group, aiming at always providing appropriate responses in terms of ability, streamlining and safety required to extend the network assigned in concession, performing activities at airport facilities and continuing to search for new domestic and international markets. ORDER BOOK OPERATIONS DURING THE YEAR In 2016 the net value of the jobs acquired and of the updates of jobs in progress amounted to million, of which 70.6% (102.3 million ) include ASPI jobs and 20.8% (30.2 million ) refer to ADR (in 2015, the amount was 83.1 million, of which 45.6%, i.e million, were ASPI jobs and 32.2%, i.e million, were ADR jobs). As the year s production, excluding the change in provisions for liabilities and charges, amounts to million (at 31 December 2015 it was million ), the residual portion of the order book at 31 December 2016, including contracts which were formally executed or under definition, amounts to million, increasing by 12.9% compared to the previous year. Main jobs acquired or under formalization can be summarized as follows: ITALY Autostrade per l Italia Design Variante di Valico, rehabilitation of the Sasso Marconi La Quercia section Environmental monitoring of supplementary works in Fano Geotechnical monitoring of Lagaro-Badia Geotechnical and surveying monitoring of the Sparvo Tunnel Activities preliminary to the executive design of the Genoa Junction Specialist surveys and executive design of the Genoa Junction Design coordination activities for the Genoa Road Link On-site extension Bologna By-pass Supplementary works for the North Bologna-South Bologna By-pass Final design + environmental impact study along A12 Livorno-Civitavecchia, Lots 4 and 5 Works Management Works Management La Quercia-Aglio Base Tunnel Lots 9-11 Adjustment of the Apennines section La Quercia-Badia Nuova, Lots 6 and 7 Works Management North Florence-South Florence Extension to the 3 rd lane South Florence-Incisa Lot 1 North A4, extension to the 4 th dynamic lane Fiorenza -Sesto S. Giovanni Lot 1 REPORT ON OPERATIONS 9

13 A8, extension to the 5 th lane Milan-Lainate Barrier, Lot 2 A14, Works Management for supplementary works ASPI laboratories Operating Services Design and management of maintenance and restoration works relating to intervention plans and improvements of the motorway surface Safety plans for tunnels Stage II Replacement and extension of safety barriers Seismic analyses During the year no. 491 (350 in 2015) terotechnology jobs were assigned, of which no. 216 (149 in 2015) design jobs, no. 214 (171 in 2015) works management jobs and no. 61 (30 in 2015) testing jobs. Società Aeroporti di Roma Design Fiumicino hydraulic risk mitigation works Fiumicino EAST HUB Air Terminals Fiumicino design and rehabilitation of runway 4 Fiumicino 2 nd stage of the design of arrivals and departures North Fiumicino design sheets Phase A + Phase B Fiumicino preliminary design of West Business City Fiumicino and Ciampino works to adjust Terminal infrastructures and facilities Fiumicino and Ciampino supplementary works for 2016 Fiumicino T5, 2 nd stage of the design of arrivals and departures Fiumicino rehabilitation of Landside Arrivals at T3 Fiumicino new aprons in the EAST area, preliminary design and environmental impact study Fiumicino design of a new multi-level car park Fiumicino construction of building for EPUA III airport offices Fiumicino design of the adjustment of aprons , boarding area G Fiumicino boarding area F optimization of the non-schengen arrivals jet bridges Ciampino rehabilitation of the departures and arrivals terminal Ciampino rehabilitation works for the general aviation terminal Works Management Safety activities safety coordination Fiumicino Concourse C, front area for specialist services Fiumicino T3, restoration of East/West connections Fiumicino supply and installation of telescopic bridges at the apron facilities of Boarding Area F Fiumicino new aprons for the West Area and Boarding Area A Società Autostrade Meridionali (SAM) 1) Design Monitoring and surveys of the Olivieri Viaduct 2) Operating Services Renewal of the job to perform the supervision of the road structures Terotechnology for restoration design and Works Management Registration of hydraulic contacts REPORT ON OPERATIONS 10

14 Società Tangenziale di Napoli 1) Operating Services Renewal of the job to perform supervision of the road structures Società S.A.T. 1) Design Final design + environmental impact study A12 Livorno-Civitavecchia, Lots 4 and 5 2) Works Management Works Management for the completion of the aligned secondary road network 3) Operating Services Renewal of the job to perform the supervision of the road structures Supplementary works Consorzio TEM High surveillance for the TEM project. ABROAD Airport of Montenegro Montenegro Tivat Airport Preparation of Concept Designs JANVNO PREDUZECE "PUTEVI SRBIJE" Serbia Main Design of State Road IA 3 L = 21,805 km Serbia Design of rehabilitation and maintenance "IB 35" CITY OF KIGALI Rwanda Feasibility Study/Prel. Design BRT CITY OF KIGALI Albanian Road Authority Study Design for the widening of Tirane-Durres Motorway ROADS DEPARTMENT OF THE MINISTRY OF REGIONAL DEVELOPMENT Georgia Works Management Motorway E-60 RWANDA TRANSPORT DEVELOPMENT AGENCY Rwanda Consultancy Contr. Memento of Transport Project The order book at 31 December 2016 by activity sectors, compared to the previous year, is as follows: (Million euros) 31 December December 2015 Difference % Design Works Management Operating Services New Activities Airport Activities Total REPORT ON OPERATIONS 11

15 PRODUCTION AND MAIN JOBS PERFORMED In 2016 production increased by 16.3 million compared to 2015, including the effect of the release of provisions for jobs. The production by activity sectors in 2016, compared to the previous year, can be summarized as follows: (Million euros) 31 December December 2015 Difference % Design Works Management Operating Services New Activities Airport Activities Total The comparison shows a significant increase (80.8%) in production from Design activities compared to the previous year (16.7 million at 31 December 2015), mainly as a result of activities being resumed with respect to new infrastructure investments. The activities for the final design and environmental impact study continued for the road and motorway junction of the Genoa West Road Link Rehabilitation A10 extension of A7 and A12 for 6,167,000 (20.4%), Bologna By-pass, preliminary design, preliminary environmental study, on-site extension and supplementary works for 6,035,000 (20.0%), final-executive design and environmental impact study of the Variante di San Donato for 1,687,000 (5.6%), A13 extension to the 3 rd lane South Padua-Monselice and Ferrara-Bologna for 1,065,000 (3.5%), together with environmental, geotechnical and surveying monitoring throughout the motorway network for 7,904,000 (26.2%), final and executive design + environmental impact study of A12 Livorno-Civitavecchia, Lots 2-5, for 2,411,000 (8.0%). Works management activities amount to 28.0 million (at 31 December 2015 they amounted to 31.7 million ), decreasing by 11.7% compared to the previous year, mainly as a result of some jobs being completed or suspended. Production mainly relates to all the activities of the Variante di Valico, including the Base Tunnel, for 9,244,000 (33.0%), activities for the extension to the 3 rd lane of the lots of Motorway A14 for 6,036,000 (21.6%), extension to the 4 th dynamic lane along Fiorenza-Sesto San Giovanni and extension to the 5 th lane along A8, Milan Barrier, Lainate interconnection, for 1,439,000 (5.1%), extension and rehabilitation of SP46 Paderno-Rho, Lot 3, for 1,182,000 (4.2%) and installation of site laboratories for 2,492,000 (8.9%). Operating Services activities, amounting to 21.1 million, increased by 11.7% compared to the previous year, confirming the design and works management commitments for maintenance, restoration and adjustment works of the motorway network and of the service areas. Moreover, the Company continued the planned supervision of the road structures within the Group network. The production of New Activities (10.0 million ) increased significantly by 61.3% compared to the previous year, as a result of the start of previously acquired works for foreign jobs executed both by the Italian Company and by the Branches (Albania, Armenia, Georgia, Madagascar and Moldova). During the year, Airport Activities accounted for 33.7 million of production (33.2 million at 31 December 2015). These activities mainly refer to the executive design of the EAST HUB air terminals for 3,916,000 (11.6%), preliminary-final design and environmental impact study for Runway 4 for 1,477,000 (4.4%), works management for new Concourse C and connected works for 4,237,000 (12.6%), and supplementary works for the design and works management of civil, mechanical and electrical works for 2,191,000 (6.5%). REPORT ON OPERATIONS 12

16 The following major jobs were performed during the year: Design The jobs mentioned in the chapter Order Book started regularly and the following activities continued: Environmental, geotechnical and surveying monitoring of the Variante di Valico lots Final design + environmental impact study and activities preliminary to the executive design of the Genoa Junction Final and executive design + environmental impact study South Florence-Incisa Variante San Donato Final design + environmental impact study A12 Livorno-Civitavecchia, Lots 2-5 A1 Rehabilitation of the old route, Sasso Marconi-La Quercia section Bologna By-pass, preliminary design and Environmental pre-feasibility study Bologna By-pass on-site extension Supplementary Works for the By-pass Environmental monitoring of A4 Fiorenza-Sesto San Giovanni Environmental monitoring of Variante di Baranzate A8-A52 Acoustic treatment A10 Pra Palmaro, final design + executive design of acoustic tunnels Environmental monitoring of A14 lots Final design + environmental impact study A13, extension to the 3 rd lane Ferrara-Bologna TEM environmental monitoring Works Management and Technical Assistance The activities of the sector, also including expropriation jobs, mainly consisted in the following: Works for all the lots of the Variante di Valico, including the Base Tunnel (lots 5-5B ) Works to extend to the 3 rd lane A14 Rimini Pedaso Lots 1A-1B B Works Management, Rehabilitation and Extension of S.P. 46 Paderno-Rho Lot 3 Extension to the 4 th dynamic lane Fiorenza-Sesto San Giovanni Extension to the 5 th lane Milano-Lainate barrier Lot 1 Activities and installation of Laboratories along Motorways A1 and A14 Construction of full interconnection between A4 and A13 Works Management of the San Benigno Junction Lots 1 and 2 Expropriations on behalf of ASPI and for other Group Companies Autostrade Meridionali works management of the third lane at several locations Tangenziale di Napoli sundry works within the network TEM High Surveillance services ABROAD Activities are being performed at the Romanian Branch to update the feasibility study of the Sibiu-Pitesti Motorway of about 100 km and the activities for the warranty period of Lot E. Operating Services Supervision: works supervision activities continued with ASPI and with the Group Concessionary Companies Terotechnology and additional works: design and works management activities for the Group Companies concerning maintenance, restoration of additional works and the extension, adjustment and upgrading of motorway toll gates, variable message signs, coordination for the road surface and other operating structures and studies to assess seismic risks in tunnels and acoustic treatment, monitoring of hydraulic structures and anchor inspections in tunnels were performed Other network works for testing, tunnel lighting systems and minor works. REPORT ON OPERATIONS 13

17 New Activities The jobs mentioned in the chapter Order Book were started regularly. The main jobs refer to the following works: Montenegro: preparation of the Conceptual Design for the Tivat Airport Albania: Thumane-Vore road feasibility study and design Albania: studies and design for the extension to the 3 rd lane along the Tirane-Durres Motorway Madagascar: works management for the rehabilitation of the Mananieba Bridge Madagascar: rehabilitation of the Kamoro Bridge, phase B Uganda: Technical & Traffic Consultancy Kampala Jinja Expressway PPP Serbia: design of rehabilitation and maintenance IB 35 Serbia: design of rehabilitation and maintenance IA 3 Bosnia: Sect. Corridor VC motorway studies Bosnia: supervision for the construction of the BRCKO By-pass Sierra Leone: consultancy to design the road savings management strategy Rwanda: contract for consultancy, development and review of transport projects Armenia: Design, consultancy and services North-South Road Corridor Armenia: works management for construction and supervision of Tranche 3 N/S Corridor Armenia: works management Lanjik Gyumri Road Tranche 3 Moldova: works management for R1 Chisinau-Ungheni-Sculeni Moldova: works management for R33 Hincesti-Lapusna M1 Georgia: supervision for the construction of the new Samtredia-Grigoleti road and rehabilitation of the Grigoleti-Cholokhi section along E60 Comoro Islands: road network control and supervision Airport Activities The jobs mentioned in the chapter Order Book started regularly. The main jobs refer to the following works: Fiumicino executive design of the EAST HUB air terminals Fiumicino design of hydraulic risk mitigation structures for the West Area Fiumicino preliminary and final design and environmental impact study Runway 4 Terminal adjustment for Fire Prevention Certificate Environmental monitoring of South Fiumicino Fiumicino new Passenger Terminal signs Fiumicino new Alitalia L&F protection and refurbishment of building PG 123A Fiumicino design of parking aprons in Pianabella Area + environmental impact study Master plan for North Fiumicino preparation of design sheets + environmental impact study Ciampino rehabilitation of the General Aviation Terminal Fiumicino Works management for new Concourse C and connected works Fiumicino Works management for new Alitalia Cargo HBS/BHS luggage system Works management, safety systems and safety coordination during execution 2016 Works management for office rehabilitation for ADR premises Fiumicino T3 works to restore connections Fiumicino supply and installation of telescopic bridges and apron facilities for Boarding Area F Supplementary works for EMN civil/mechanical/electrical works 2016 REPORT ON OPERATIONS 14

18 During the year, production broken down by Buyer is as follows (in thousands of euros): Buyers Design Works Manag. New Activities Airport Activities S.V.E Total % 2016 % 2015 Autostrade per l Italia 25,943 25,470 19,948 71, Aeroporti di Roma 33,539 33, R.A.V Autostrade 337 1, , Meridionali Tangenziale di Napoli Stalexport S.A Autostrade Tech Spea do Brasil -8-8 AB Concessoes -1-1 Atlantia ADR Mobility Leonardo Energia S.A.T. 3, , Extra Group 409 1,010 9, , Total 30, ,034 33,676 21, , REPORT ON OPERATIONS 15

19 RESEARCH & DEVELOPMENT ACTIVITIES Market development activities During the year, the Company continued its commitments and efforts to extend the domestic and foreign markets, not only to acquire new business, but also to acquire new countries and opportunities. In Italy, the Unified Code on Public Procurement came into force during the year. This led to many initiatives being resumed, and it will have an impact on the Company s future operations. During the year, the Company participated in about 110 new initiatives on the Italian and foreign market with a very high success rate of approximately 30%. The Company submitted about 35 bids and acquired over 25% of the contracts for which it submitted the bid. Many development activities were performed, aimed partly at strengthening known countries and markets and partly at penetrating countries and markets with new sectors, such as airport engineering services. In particular, in Italy some airport extension and development initiatives were covered. Activities continued in order to strengthen and develop the Branches in Albania, Armenia, Bosnia, Georgia, Moldova, Madagascar and Romania. Initiatives in progress or acquired during the year include: Albania: activities continued to design the extension of the Tirana Durazzo motorway and of Thumane Vore; technical assistance is being acquired for a Road Safety Standards programme funded by the European Commission; Armenia: the contracts to develop the North-South corridor on behalf of ADB and EIB are continuing; Bosnia Herzegovina: works management being performed to build the Brcko By-pass and for the job assigned by the European Commission to perform studies and design of Corridor V C; Brazil: "Engineering design and work supervision of road rehabilitation and maintenance service funded by the WB acquired with the Bahia Department of Transport Infrastructures; Ethiopia: Consultancy Services For Development Of Road Asset Management System job funded by the African Development Bank (AFDB) acquired on behalf of the Ethiopian Roads Authority; Luxembourg, EIB (European Investment Bank): framework acquired to support the Bank with advisory services (IEBAS) for activities inside and outside the Europe of 28; Madagascar: design completed and works management being performed for the new Kamoro cable-stayed bridge and restoration of the Manajeba bridge; REPORT ON OPERATIONS 16

20 Georgia: works management activities continued to build Motorway E-60 Samtredia Grigoleti; project being acquired for ADB of Motorway E60 Khevi-Ubisa-Shorapani-Argveta Section and the World Bank s Assessment and Rehabilitation programme for secondary and local roads in the Guria region. Moldova: Works management activities continued to rehabilitate and improve roads R1 and R33; Montenegro: concept design developed and completed to develop the Tivat airport; Serbia: two EIB-funded Road rehabilitation and upgrading projects being acquired for state roads IA 3 and IB 35; Romania: feasibility study being revised and updated for the Sibiu Pitesti Motorway, for approximately 120 km; activities continued for the warranty period of Lot E; Rwanda: job being performed for a road and bridge development plan with a transport study; two projects acquired, one for the study, analysis and construction of the Kigali Bugesera expressway, connecting the international airport (BIA), the other for the feasibility study of a bus rapid transit (BRT) system for the city of Kigali. REPORT ON OPERATIONS 17

21 HUMAN RESOURCES ORGANIZATION A new organizational structure was implemented within the Company in May. The structure mainly results from the need to establish one reference structure for every Customer, which can properly control requested activities and guarantee quality and suitable times and costs. The structure is composed of three divisions: the Design and Works Management for New Motorway Structures Division, performing design and works management activities for major works commissioned by Autostrade per l Italia; the Design and Works Management for New Airport Structures Division, where the competences directly connected with Aeroporti di Roma were gathered, and performing airport design, works management and maintenance activities; and the Operation and New Activities Division, executing services related to the design, maintenance and surveillance of structures operated by Autostrade per l'italia S.p.A., and development of business activities performed for non-group customers. During the year, the usual review of the procedure system both for the regulatory adjustment and for the management, organization and control model (Legislative Decree 231/01) resulted in 21 documents, either newly-issued or for revisions of current standards, including procedures and technical instructions. Labour costs The year 2016 closed with an increase in labour costs, mainly resulting from the higher average number of employees reached during the year (12.60 units more than the previous year). The average per-capita cost, net of the reclassifications prescribed by the OIC standards restated in 2016, amounts to 73,800, slightly increasing by 1.4% compared to the previous year, confirming the strengthened cost reduction management policies. PERSONNEL TREND Two Middle Managers were promoted to Executives with effect as of 1 March During the year, 5 employment contracts were converted into open-ended contracts. They are all part of the new category of increasing-protection contracts under the Jobs Act. 23 units joined the Company, including 18 with fixed-term contract, and 25 units left the Company. During the year, 67 mobility initiatives were implemented, including 60 transfers, 4 units in internal mobility and 3 units posted to Group companies. PERSONNEL AVERAGE PERSONNEL DELTA DELTA Executives Middle Managers White-collar workers TOTAL Spea personnel include 489 men at 31 December 2016 (496 units at 31 December 2015) and 189 women (184 units at 31 December 2015). REPORT ON OPERATIONS 18

22 At 31 December 2016 personnel by Organizational Units broke down as follows: Difference Top Management and Staff Functions Design of New Motorway Structures Works Management Road Infrastructures Design and Works Management of Airport Infrastructures Operating Services Function Development Posted to Group Companies In addition to these resources the Company has 10 units operating at the Bucharest Branch under a Romanian employment contract. The following is a summary of the personnel education: Difference Engineers Architects Other University Degrees Total University Graduates Surveyors Other School Graduates Total School Graduates Total School and University Graduates The above table shows that 52.1% of the personnel are University Graduates, while 44.8% are School Graduates, totalling 96.9%. The average age of personnel is as follows: Executives Middle Managers White-collar workers General average Average seniority within the Company is as follows: Executives Middle Managers White-collar workers General average REPORT ON OPERATIONS 19

23 PERSONNEL TRAINING AND DEVELOPMENT ACTIVITIES Training activities consisted in 123 different courses, with a total of 911 training activities. 386 employees, including 13 executives, 79 middle managers and 96 seventh-level workers, took part in these training activities. Days/man totalled 994, and 56.9% of the personnel attended training activities during the year. The training focussed on the technical-specialist area (49.2%, with a 99.3% increase in training hours compared to 2015), safety (33.0%) and IT (12.6%). Administrative and sundry courses accounted for 5.2% of total training. INDUSTRIAL RELATIONS AND LITIGATIONS As for industrial relations, there was a constructive dialogue and understandings were reached. This led the Company to determine the productivity bonus, rewarding the personnel s contribution to the achievement of its productivity and profitability goals for the year Under the agreement reached, part of the bonus will be paid in the form of flexible benefit, with the allocation of the expense budget under the agreement. The benefit will be spent on tax-exempt services pursuant to articles 51 and 100 of the Consolidating Act on Income Taxes, which will be provided to workers and their families with educational, recreational, social assistance, healthcare or religious purposes. With reference to individual litigations, 6 disputes were pending at 31 December INFORMATION SYSTEMS TECHNOLOGICAL DEVELOPMENT ACTIVITIES In addition to management and development activities aimed at aligning the computer system with the new Company organization, and the support needed to ensure that internal mobility plans were implemented, technological development included wide-ranging innovations and improvements. Investments were made to improve/change labour organization, in order to simplify processes and make them more efficient, improve production capacity, reduce waste and minimize operating costs. Below are the most significant investments (studies and projects) implemented during the year: Bentley ProjectWise (PLM) implementation project to manage design jobs. ArchiCad, Tekla and Solibri software implementation project for BIM design. Project to improve business continuity and service levels for the Fiumicino and Bucharest offices. Project to upgrade central systems in terms of processing and storage capacity. Project to upgrade security systems through the implementation of additional proactive protection levels. Project to renovate workstations, with approximately 250 workstations being replaced. Project to improve operations in mobility through the extension of the use of VPN, Smartphones, Tablets, Ultrabooks and time clock apps. Completion of the integrated Information System implementation project aimed at systematizing the processes controlled by the Environmental Monitoring Office for Motorway and Airport jobs. Completion of the HR Information System implementation project to manage Prevention and Protection Service processes regarding PPE management, Prevention and Protection Service training and Health Surveillance. Information system implementation project aimed at managing the Santa Lucia mechanized excavation. REPORT ON OPERATIONS 20

24 OTHER INFORMATION INFORMATION PURSUANT TO ARTICLE 2428, PARAGRAPH 3, 6 BIS OF THE ITALIAN CIVIL CODE With reference to the abovementioned article, concerning the Company objectives and policies on its financial risk management and exposure, the following information is provided: Credit risk The Company operates in different business sectors, mainly with Group Companies. Though it is exposed to credit risk concentration, since they are customers with a strong equity and financial position, the Company thinks that its bad debt risk is limited. Liquidity and interest rate risk The Company does not have problems in finding the funds required to fulfil its commitments thanks to an efficient management of the cash flows derived from current operations and, in particular, it is not exposed to the interest rate risk related to normal collection and payment operations. The Company also has a running account with ASPI regulated under standard market conditions. Currency risk Although it is expanding to the foreign market, the Company performs operations mainly at national level, thus this risk is not material. The offer of services to the market is made mainly in Euros. Finally, it is highlighted that the Company does not have outstanding financial derivatives. REPORT ON OPERATIONS 21

25 TRANSACTIONS WITH SUBSIDIARIES, ASSOCIATED COMPANIES, CONTROLLING COMPANIES AND WITH COMPANIES SUBJECT TO CONTROL BY THE LATTER Spea Engineering S.p.A is subject to management and coordination by Atlantia S.p.A. TRANSACTIONS WITH THE COMPANY PERFORMING MANAGEMENT AND COORDINATION Income Statement 31/12/2016 Transaction description Production value 66,427 Resources posted to the Company, revenues from services and change in work in progress on order Production costs 25,000 Professional services Financial income - Balance Sheet 31/12/2016 Transaction description Work in progress on order 8,200 Trade receivables and accrued income and prepaid expense 2,533,067 Trade receivables and invoices to receive, tax receivables for National Consolidated Tax Return and IRES on IRAP, labour cost 2009/2011 Trade payables and accrued expense and prepaid income 92,682 Tax payables for National Consolidated Tax Return and invoices to receive Commitments receivable - Commitments payable - The account summarizing the essential data of the latest financial statements approved by the Company performing management and coordination is enclosed to the Notes. For Income Statement and Balance Sheet transactions with Companies subject to Atlantia control or Spea associated companies, specific reference is made to the Notes to the financial statements and to the detailed accounts. On this regard, note that the transactions are regulated by contracts under market conditions. REPORT ON OPERATIONS 22

26 SIGNIFICANT EVENTS OCCURRED AFTER 31 DECEMBER 2016 No events occurred after 31 December 2016 that might lead to material changes in the current Balance Sheet and Income Statement items compared to those approved by the Company s Bodies and therefore requiring adjustments or additional notes to the financial statements. REPORT ON OPERATIONS 23

27 BUSINESS OUTLOOK As in the previous years, the Company will be engaged as technical and operational support of Autostrade per l Italia S.p.A., Aeroporti di Roma S.p.A. and the other Atlantia Group Companies. It will mainly operate in the design and works management of transport infrastructure works, and it will also promote its competences on domestic and international markets. Also, it will be necessary to continue with actions aimed at optimizing the relation between the activities performed with internal resources and those requiring external resources, trying to reduce the latter to increase the value added and keep the acquired know-how within the Company. The level of the activities performed during 2016 is expected to be kept during In particular, the Company will be engaged in the following activities: 1. The Design Function will mainly continue its activities preliminary to the executive design of the Genoa Road and Motorway Junction, the final and executive design of the Bologna By-pass, the completion of jobs final design activities under article 15 with the possible start of executive design based on the approval of the respective CDS, environmental monitoring along different motorway sections, and geotechnical/surveying monitoring at Loc. Ripoli after the works. 2. The Works Management Function will mainly operate in the works management of the Barberino Mugello North Florence section, Lots 1 and 2, continue the works management of the North Florence-South Florence section, operate in the extension of the Fiorenza S. S. Giovanni section along A4, complete the works management of Lots 4 and 5 along A14 and operate in the installation of Laboratories preliminary to operating activities. 3. Expropriations on behalf of ASPI and for the other Group companies will continue. 4. The Operating Services Function will continue to be engaged in the works supervision and in the design and management of maintenance and rehabilitation of auxiliary and complementary works. Tests and activities on tunnel lighting systems will continue in the network. 5. The New Activities Function will execute the acquired jobs and will continue to search for new work opportunities in Italian and foreign markets, as started in the previous years. 6. The Airport Activities Function will perform design activities for infrastructure and facilities adjustments at the Fiumicino and Ciampino Airports. The initial stages of the studies for North Fiumicino will continue, and the design of the Business District will be started. As for works management, the activities for Concourse C will be completed, and the activities for the new west area aprons will continue. REPORT ON OPERATIONS 24

28 TREASURY SHARES AND SHARES OR QUOTAS OF CONTROLLING COMPANIES The Company does not own, directly or through trust Companies or through intermediary, treasury shares or shares or quotas of Controlling Companies. REPORT ON OPERATIONS 25