Interim report of the Atlantia Group for the nine months ended 30 September 2013

Transcription

1 Interim report of the Atlantia Group for the nine months ended 30 September 2013

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3 Contents 1. Introduction... 5 Consolidated financial highlights... 6 Shareholders... 7 Atlantia share price performance... 8 Group structure... 9 Corporate bodies Report on operations Consolidated financial review Operating review for the main Group companies Italy International operations Workforce Significant regulatory aspects and litigation Merger of Atlantia and Gemina Other information Events after 30 September Outlook and risks or uncertainties Annexes Declaration by the manager responsible for financial reporting pursuant to section 2 of article 154-bis of Legislative Decree 58/ Consolidated financial statements

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5 Introduction 1

6 1. Introduction Consolidated financial highlights (Em) 9M 2013 (1) 9M 2012 Total revenue 3,167 3,039 Net toll revenue 2,694 2,563 Other operating income Gross operating profit (EBITDA) 1,995 1,895 EBITDA margin 63.0% 62.4% Adjusted gross operating profit (EBITDA) (3) 2,056 1,938 Operating profit (EBIT) 1,463 1,366 EBIT margin 46.2% 44.9% Profit/(Loss) from continuing operations (4) Profit margin from continuing operations 19.5% 22.9% Profit for the period (including non-controlling interests) (4) Adjusted profit for the period (including non-controlling interests) (3) (4) Profit for the period attributable to owners of the parent (4) Operating cash flow (5) 1,288 1,149 Adjusted operating cash flow (3) 1,284 1,158 Capital expenditure 879 1,136 (1) (2) (Em) (1) Equity 5,731 5,527 Net debt 9,605 10,109 Adjusted net debt (3) 11,345 11,651 (1) The figures for the comparative periods reflect the accounting effects of certain changes in the basis of consolidation, as described more fully in the section Consolidated financial review. (2) Certain amounts in the income statement for the first nine months of 2012 and amounts in the statement of financial position as at 31 December 2012 have been restated with respect to the published Interim Report for the nine months ended 30 September 2012 and the Annual Report for 2012, reflecting completion of the process of identifying the fair value of the assets and liabilities of the Chilean and Brazilian companies acquired in (3) Adjusted amounts have been presented with the aim of enabling analysts and the rating agencies to assess the Group s results of operations and financial position using the basis of presentation normally adopted by them. Information on the nature of the adjustments and on differences between the reported and adjusted amounts is provided in the specific section Consolidated financial review. (4) The balance of these items for the first nine months of 2012 reflects the gain (amounting to E170.8 million) resulting from fair value measurement of the existing % interest in Autostrade Sud America, following this company s consolidation with effect from 1 April (5) Operating cash flow is calculated as profit + amortisation/depreciation +/- provisions/releases of provisions + financial expenses from discounting of provisions +/- impairments/reversals of impairments of assets +/- share of profit/(loss) of investments accounted for using equity method +/- (losses)/gains on sale of assets +/- other non-cash items +/- portion of net deferred tax assets/liabilities recognised in profit or loss. (1) (2) 6

7 Shareholders Shareholders Edizione Government of Singapore Investment Corporation Goldman Sachs Infrastructure Partners Mediobanca 66.40% 17.68% 9.98% 5.94% 100% Principal other investors (1) 47.96% Rest of Europe 12.7% Australia 8.3% Rest of the world 5.3% United Kingdom 23.7% Fondazione CRT Blackrock 6.32% 5.02% 36.70% (2) Free float France 5.2% Switzerland 6.0% Lazard 2.06% USA 18.1% Italy (3) 20.7% Geographical breakdown of free float (4) (1) Source: Consob (as at 6 November 2013). (2) Excludes the treasury shares held by Atlantia SpA. (3) Includes retail investors. (4) Source: Thomson Reuters (as at 30 September 2013). 7

8 1. Introduction Atlantia share price performance Number of shares 661,827,592 Par value (E) 1.00 Type of shares Ordinary Final dividend per share for 2012 (May 2013) (E) Interim dividend per share for 2013 (January 2014) (E) Price at 30 September Low (26 June 2013) High (25 September 2013) Capitalisation at 30 September 2013 (Em) 9,947 Average daily trading volume (m) 1.9 Share price performance - 9M 2013 Price (E) January February March April May June July August September Volumes ( 000) 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Atlantia share FTSE/MIB rebased Volumes 8

9 Group structure Group structure (*) TowerCo SpA 100% Pune-Solapur Expressways Private Ltd 50% (1) Alitalia - Compagnia Aerea Italiana SpA 8.85% (1) 100% Italian motorway operations International operations Other activities Tangenziale di Napoli SpA 100% Autostrade Meridionali SpA 58.98% Società Italiana pa Traforo del Monte Bianco 51% Raccordo Autostradale Valle d Aosta SpA 58% (2) Società Infrastrutture Toscane SpA 46.60% (1) Società Autostrada Tirrenica pa 24.98% (1) Tangenziali Esterne di Milano SpA 15.38% (1) Ecomouv Sas 70% Ecomouv D&B Sas 75% Tech Solutions Integrators Sas 100% Autostrade Indian Infrastructure Development Private Ltd 100% Autostrade dell Atlantico Srl 100% (3) Electronic Transaction Consultants Co % Autostrade Portugal SA 100% (1) (4) Lusoponte-Concessionaria para a travessia do Tejo SA 17.21% Autostrade Concessões e Participações Brasil Ltda 41.14% (5) Infra Bertin Participações SA 50% Triangulo do Sol Participações SA 100% Atlantia Bertin Concessões SA 100% Rodovia das Colinas SA 100% Concessionaria da Rodovia MG 050 SA 100% Triangulo do Sol Auto-Estradas SA 100% Concessionaria Rodovias do Tietê SA 50% (1) Autostrade Holding do Sur SA 100% Sociedad Concesionaria de Los Lagos SA 100% Grupo Costanera SpA 50.01% Sociedad Concesionaria Costanera Norte SA 100% Sociedad Concesionaria AMB SA 100% Sociedad Concesionaria Autopista Nororiente SA 100% Sociedad Gestion Vial SA 100% Sociedad Concesionaria Litoral Central SA 100% Sociedad Operacion y Logistica de Infraestructuras SA 100% Sociedad Concesionaria Autopista Nueva Vespucio Sur SA 100% Sociedad Concesionaria Autopista Vespucio Sur SA 100% Stalexport Autostrady SA 61.20% Biuro Centrum Spzoo 40.63% (1) Stalexport Autostrada Dolnoslaska SA 100% Stalexport Autoroute Sàrl 100% Stalexport Autostrada Malopolska SA 100% Via4 SA 55% EsseDiEsse Società di Servizi SpA 100% Pavimental SpA 99.40% Pavimental Polska Spzoo 100% Spea Ingegneria europea SpA 100% Spea do Brasil Projetos e Infra estrutura Ltda 99.99% (6) AD Moving SpA 100% Newpass SpA 51% Giove Clear Srl 100% Autostrade Tech SpA 100% Telepass SpA 96.15% (7) Telepass France Sas 100% Infoblu SpA 75% (*) As at 30 September (1) Unconsolidated companies. (2) The percentage refers to ordinary shares representing the issued capital. (3) In the second quarter of 2013 Autostrade Sud America Srl was merged with and into Autostrade dell Atlantico Srl. (4) Company held for sale. (5) The remaining shares are held by Autostrade Portugal SA (25.0%) and Autostrade Holding do Sur SA (33.86%). (6) The remaining 0.01% is held by Autostrade Concessões e Participações Brasil Ltda. (7) The remaining 3.85% is held by Autostrade Tech SpA. 9

10 1. Introduction Corporate bodies Board of Directors in office for Chairman Chief Executive Officer Directors Secretary Fabio Cerchiai Giovanni Castellucci Carla Angela (independent) Gilberto Benetton Carlo Bertazzo Bernardo Bertoldi (independent) Alberto Clô (independent) Gianni Coda (independent) Massimo Lapucci Lucy P. Marcus (independent) Giuliano Mari (independent) Valentina Martinelli Monica Mondardini (independent) Clemente Rebecchini Paolo Zannoni Andrea Grillo Internal Control, Risk and Corporate Governance Committee Committee of Independent Directors with responsibility for Related Party Transactions Chairman Members Chairman Members Giuliano Mari (independent) Carla Angela (independent) Lucy P. Marcus (independent) Giuliano Mari (independent) Bernardo Bertoldi (independent) Monica Mondardini (independent) 10

11 Corporate bodies Human Resources and Remuneration Committee Chairman Members Alberto Clô (independent) Carlo Bertazzo Gianni Coda (independent) Massimo Lapucci Monica Mondardini (independent) Supervisory Board Coordinator Giovanni Ferrara Members Simone Bontempo Pietro Fratta Ethics Officer Coordinator Giuseppe Langer Members Giulio Barrel Enzo Spoletini Board of Statutory Auditors for three-year period Chairman Auditors Alternate Auditors Corrado Gatti Tommaso Di Tanno Raffaello Lupi Milena Teresa Motta Alessandro Trotter Giuseppe Maria Cipolla Fabrizio Riccardo Di Giusto Independent Auditors for the period Deloitte & Touche SpA 11

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13 Report on operations 2

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15 Consolidated financial review Consolidated financial review Introduction The Atlantia Group s interim report for the nine months ended 30 September 2013 has been prepared on the basis of the provisions of article 154-ter of Legislative Decree 58/1998, the Consolidated Finance Act, in implementation of EU Directive 2004/109/EC (the so-called Transparency Directive) regarding periodic reporting, and in compliance with the international financial reporting standards (IFRS) issued by the International Accounting Standards Board (IASB), endorsed by the European Commission and in force at 30 September The accounts referred to in this section do not, however, represent interim financial statements prepared under IFRS and, in particular, under IAS 34. The financial review contained in this section includes and analyses the reclassified consolidated income statement, the consolidated statement of comprehensive income, the statement of changes in consolidated equity, the statement of changes in consolidated net debt and the consolidated statement of cash flows for the first nine months of 2013, in which amounts are compared with those for the same period of the previous year. The review also includes the reclassified statement of financial position as at 30 September 2013, compared with the corresponding amounts as at 31 December There have not been any material changes in the accounting standards applied during preparation of this document with respect to those adopted for the consolidated financial statements as at and for the year ended 31 December 2012, given that no new accounting standards, new interpretations or revisions of standards already in force, having a material impact on the Atlantia Group s consolidated financial statements, came into effect during the first nine months of However, it should be noted that, in accordance with the amendment to IAS 1 published by the IASB on 16 June 2011, and endorsed by the EU in June 2012, from 2013 components of the statement of comprehensive income are to be classified by nature, grouping them into two categories: (i) items that, under certain conditions, may be reclassified subsequently to profit or loss, as required by IFRS, and (ii) items that will not be reclassified subsequently to profit or loss. The basis of consolidation at 30 September 2013 is unchanged with respect to the consolidated financial statements for the year ended 31 December However, the income statement and statement of cash flows for the first nine months of 2013 benefit from the contribution of Autostrade Sud America (merged with and into Autostrade dell Atlantico in June 2013) and the other Chilean and Brazilian companies, consolidated from 1 April 2012 and 30 June 2012, respectively. Details of these companies are provided in the Annual Report for The term like-for-like basis, used in the following review, indicates that amounts for comparative periods have been determined by eliminating: a) from the consolidated amounts for the first nine months of 2013: 1) the contributions for the first quarter of Autostrade Sud America and its Chilean subsidiaries; 2) the contribution for the first half of the Brazilian companies of which control was acquired during 2012; 15

16 2. Report on operations b) from the consolidated amounts for the first nine months of 2012: 1) the gains and losses resulting from the corporate transactions completed in 2012 for the purposes of the acquisition of control of Autostrade Sud America (and its Chilean subsidiaries) and the subsequent sale of the minority interest in the sub-holding company, Grupo Costanera. These gains and losses include, among other things, the gain (totalling E170.8 million) resulting from fair value measurement of the investment in Autostrade Sud America prior to its consolidation; 2) measurement using the equity method, in the first quarter of 2012, of Autostrade Sud America and its subsidiaries; 3) the contribution of Autostrada Torino-Savona, reclassified in accordance with IFRS 5 following completion of its sale in the fourth quarter of Following completion, in 2013, of the process of identifying the fair value at the acquisition date of the assets and liabilities of Autostrade Sud America and the Chilean and Brazilian companies consolidated from 2012, the following amounts have been restated with respect to the previously published amounts: a) amounts in the statement of financial position as at 31 December 2012 (as reported in more detail in note 6 to the condensed interim financial statements for the six months ended 30 June 2013, to which reference should be made); b) amounts in the income statement for the first nine months of The Group did not enter into transactions, either with third or related parties, of a non-recurring, atypical or unusual nature during the first nine months of This interim report has not been audited. Consolidated results of operations Revenue for the first nine months of 2013 amounts to E3,167.0 million, marking an increase of E128.3 million (4.2%) on the same period of 2012 (E3,038.7 million). On a like-for-like basis, total revenue is down E2.8 million (0.1%). Toll revenue of E2,693.9 million is up E130.8 million (5.1%) compared with the same period of 2012 (E2,563.1 million), essentially reflecting the contribution for the first quarter of 2013 of the new Chilean companies (E34.9 million), consolidated from 1 April 2012, and the contribution for the first half of 2013 of the new Brazilian companies (E88.6 million), consolidated from 30 June On a like-for-like basis, toll revenue is up E7.3 million (0.3%), primarily reflecting a combination of the following: a) application of annual toll increases for 2013 by the Group s Italian operators (in Autostrade per l Italia s case 3.47% from 1 January and 0.07% (1) from 12 April), boosting toll revenue by an estimated E67.0 million; b) an increase in toll revenue at overseas operators (up E8.4 million), reflecting toll rises and increases in traffic, partially offset by unfavourable exchange rate movements; c) a 1.9% decline in traffic on the Group s Italian network, accounting for an estimated E43.9 million reduction in toll revenue (including the impact of the different traffic mix); (1) A toll increase granted to the company (by Decree 145 of 9 April 2013, issued by the Minister of Infrastructure and Transport, in agreement with the Minister of the Economy and Finance) regarding the K investments component of tolls accruing in 2012 and provisionally suspended when determining the tolls to come into effect from 1 January The increased revenue that should have been received in the period from 1 January to 11 April 2013 is to be recovered via the toll increase for

17 Consolidated financial review Reclassified consolidated income statement (Em) INCREASE/(DECREASE) % OF REVENUE 9M M 2012 ABSOLUTE % 9M M 2012 Toll revenue 2, , Contract revenue Other operating income Total revenue 3, , Cost of materials and external services (1) Concession fees Staff costs Capitalised staff costs Total net operating costs -1, , Gross operating profit (EBITDA) (2) 1, , Amortisation, depreciation, impairment losses and reversals of impairment losses Provisions and other adjustments Operating profit (EBIT) (3) 1, , Financial income from discounting n.s to present value of concession rights and government grants Financial expenses from discounting to the present value of provisions for construction services required by contract and other provisions Other financial income/(expenses) Capitalised financial expenses Share of profit/(loss) of associates n.s and joint ventures accounted for using the equity method Profit/(Loss) before tax from , continuing operations Income tax (expense)/benefit Profit/(Loss) from continuing operations Profit/(Loss) from discontinued operations Profit for the period (Profit)/Loss attributable n.s to non-controlling interests (Profit)/Loss attributable to owners of the parent (1) After deducting the margin recognised on construction services provided by the Group s own technical units. (2) EBITDA is calculated by deducting all operating costs, with the exception of amortisation, depreciation, impairment losses on assets and reversals of impairment losses, provisions and other adjustments, from operating revenue. (3) EBIT is calculated by deducting amortisation, depreciation, impairment losses on assets and reversals of impairment losses, provisions and other adjustments from EBITDA. In addition, it does not include the capitalised component of financial expenses relating to construction services. Basic earnings per share attributable to the owners of the parent (E) 9M M 2012 INCREASE/ (DECREASE) of which: - continuing operations discontinued operations Diluted earnings per share attributable to the owners of the parent (E) of which: - continuing operations discontinued operations Operating cash flow (Em) 1, , of which: - continuing operations 1, , discontinued operations Operating cash flow per share (E) of which: - continuing operations discontinued operations

18 2. Report on operations d) a reduction (E6.4 million or 2.4%) in the contribution of toll increases matching the increased concession fees payable by Italian operators (2) to ANAS, linked to the decline in traffic; e) reduced toll revenue from Autostrade Meridionali (down E9.8 million) due to the release in 2012 of the accumulated X variable toll component, no longer recognised from 2013 following expiry of the concession term and the extension of responsibility for operation of the motorway; f) income deriving from cancellation, in the first nine months of 2012, of unused prepaid Viacard cards issued over 10 years previously by Autostrade per l Italia (a reduction of E5.1 million). Contract revenue of E39.0 million is up E9.7 million on the first nine months of 2012 (E29.3 million), primarily reflecting an increase in work carried out by Pavimental for external customers. Other operating income of E434.1 million is down E12.2 million (2.7%) on the same period of 2012 (E446.3 million). After stripping out the contributions from the companies consolidated for the first time in 2012 (totalling E7.6 million), and the contribution to the first nine months of 2012 of Port Mobility (E5.2 million), a company sold in the fourth quarter of 2012, other operating income is down E14.6 million, primarily due to a reduction in payouts from insurance companies and a decrease in royalties from Autostrade per l Italia s service areas, partly as a result of the revision, in 2012, of the fixed component agreed to by the company in response to the decline in traffic. Net operating costs of E1,172.2 million are up E28.2 million (2.5%) on the same period of 2012 (E1,144.0 million). On a like-for-like basis, net operating costs are down E7.7 million (0.7%). The Cost of materials and external services amounts to E408.5 million, marking an increase of E22.8 million on the first nine months of 2012 (E385.7 million). On a like-for-like basis, the cost of materials and external services is more or less in line with the comparative period, having risen E0.2 million (0.1%) due to the offsetting effect of the following : a) a E37.5 million decrease in maintenance costs, primarily due to a reduction in the cost of winter operations, an increase in insourcing, an increase in work carried out by Autostrade Meridionali in 2012 in view of the planned handover of infrastructure operated under concession, and reduced road surfacing work conducted by Los Lagos and the Brazilian operators; b) an increase of E37.7 million in other costs, primarily due to the reduced margins generated by the Group s own technical units, mainly in view of the reduced volume of major works carried out and the greater costs incurred by Autostrade per l Italia as a result of settlements with service area sub-operators. The increase also reflects the costs incurred in the form of consultants fees linked to the current merger with Gemina SpA and the greater volume of work carried out by Pavimental for external customers, partially offset by improvements in operating efficiency and a reduction in costs attributable to Port Mobility, which was sold at the end of Concession fees, totalling E324.9 million, are down E5.0 million (1.5%) compared with the first nine months of 2012 (E329.9 million), essentially reflecting the reduction in additional concession fees collected via the tolls charged by Italian operators (down E6.4 million), due to the above-mentioned decline in traffic, partially offset by the costs incurred by the overseas operators consolidated in Staff costs (before deducting capitalised expenses) of E500.4 million are up E3.2 million (0.6%) on the same period of 2012 (E497.2 million). (2) From 1 January 2011 the additional concession fees payable to ANAS, pursuant to Laws 102/2009 and 122/2010, calculated on the basis of the number of kilometres travelled, amount to 6 thousandths of a euro per kilometre for toll classes A and B and 18 thousandths of a euro per kilometre for classes 3, 4 and 5. 18

19 Consolidated financial review After stripping out the contribution from the Chilean and Brazilian companies consolidated for the first time in 2012 and adjusting for the deconsolidation of Port Mobility, staff costs are down E6.9 million (1.4%), reflecting: a) a decrease of 286 (2.7%) in the average workforce; b) an increase in the average unit cost (up 2.1%), primarily due to contract renewals at Italian motorway operators for the periods and ; c) a 0.8% reduction in other staff costs, primarily due to reduced use of agency staff (124 fewer on average). Capitalised staff costs total E61.6 million for the first nine months of 2013, compared with the E68.8 million of the same period of Gross operating profit (EBITDA) of E1,994.8 million is up E100.1 million (5.3%) on the first nine months of 2012 (E1,894.7 million). On a like-for-like basis, gross operating profit is up E4.9 million (0.3%). Operating profit (EBIT) of E1,462.7 million is up E96.8 million (7.1%) on the first nine months of 2012 (E1,365.9 million). On a like-for-like basis, operating profit is up E35.1 million (2.6%), reflecting, in addition to the above, a combination of the following: a) a reduction of E52.1 million in Provisions and other impairments, primarily reflecting changes in provisions for the repair and replacement of assets to be handed over at the end of concession terms, due mainly to the positive impact, compared with the comparative period, of changes in discount rates; b) a E21.9 million increase in Depreciation, amortisation, impairment losses and reversals of impairment losses, essentially due to increased amortisation of concession rights. Financial income from the discounting to present value of concession rights and government grants amounts to E65.2 million, marking an increase of E37.3 million on the same period of On a like-forlike basis, the figure is up E25.8 million, reflecting the impact of the passage of time on financial assets deriving from concession rights and government grants discounted to present value. Financial expenses from the discounting to present value of provisions for construction services required by contract and other provisions amount to E71.9 million and are down E37.8 million on the first nine months of This is primarily due to the performance of provisions for construction services required by contract, which essentially reflected a decline in the interest rates used to discount provisions at 31 December 2012, compared with the rates used at 31 December Net other financial expenses of E532.2 million are up E237.9 million on the same period of 2012 (E294.3 million). The increase primarily reflects the overall positive impact of the following transactions in the first nine months of 2012 (resulting in income of E210.7 million): a) recognition of a net gain of E183.0 million resulting from the transactions completed in 2012 for the purposes of the acquisition of control of Autostrade Sud America (and its Chilean subsidiaries) and the subsequent sale of the minority interest in the sub-holding company, Grupo Costanera. These gains and losses include, among other things, the gain (totalling E170.8 million) resulting from fair value measurement of the investment in Autostrade Sud America prior to its consolidation; b) recognition of a gain of E61.0 million on the sale of the investment in IGLI; c) expenses of E33.3 million incurred in relation to the partial buyback of Atlantia s bonds maturing in After stripping out these items, net financial expenses are up E27.2 million (5.4%), primarily reflecting the following: a) an increase of E43.2 million in debt servicing costs, essentially due to the increase in financial debt. The increase includes approximately E28.3 million relating to the differential between the cost of funding incurred in order to raise the cash needed by the Group and the return on the investment of liquidity. In 19

20 2. Report on operations view of the redemption of Atlantia s bonds with a par value of E2,094.2 million maturing in June 2014, the Group obtained financing to fund full repayment of the debt, resulting in the above increase in net financial expenses as a result of the greater average liquidity made available, despite a reduction in the differential between the cost and the return on liquidity compared with the figure for the same period of 2012 in relation to the average liquidity available; b) the difference in the contributions to net financial income in the two comparative periods of the Brazilian companies consolidated from 30 June 2012, totalling E18.4 million. Capitalised financial expenses, amounting to E40.1 million, are in line with the same period of 2012 (E39.4 million). Income tax expense for the first nine months of 2013 totals E343.4 million, up E7.8 million (2.3%) on the same period of 2012 (E335.6 million). This is in line with the improved profit before tax from continuing operations, after taking account of the limited impact for tax purposes of net gains on investments in the first nine months of 2012 and of certain tax benefits relating to previous years accounted for in the first nine months of Profit from continuing operations amounts to E618.6 million, down E75.9 million (10.9%) on the first nine months of 2012 (E694.5 million). On a like-for-like basis, profit from continuing operations is up E77.8 million (15.4%). The Profit/(Loss) from discontinued operations, totalling E0.9 million, includes the dividends received from the Portuguese company, Lusoponte, whilst the amount for the first nine months of 2012 (E12.8 million) included the Group s share of the profit of Autostrada Torino-Savona, an investee company sold and deconsolidated in Profit for the period, amounting to E619.5 million, is down E87.8 million (12.4%) on the first nine months of 2012 (E707.3 million). Profit for the period attributable to owners of the parent (E557.9 million) is down E144.5 million (20.6%) on the figure for the first nine months of 2012 (E702.4 million), whilst profit attributable to noncontrolling interests amounts to E61.6 million (E4.9 million for the first nine months of 2012), reflecting the contribution of the new Chilean and Brazilian companies. After stripping out the accounting effects of the changes in the basis of consolidation, profit attributable to owners of the parent is E541.4 million, up E41.9 million (8.4%), whilst profit attributable to non-controlling interests is up E36.8 million (7.5%). Operating cash flow for the period, as defined in the section Consolidated financial highlights, to which reference should be made, amounts to E1,288.0 million, up E138.6 million (12.1%) on the first nine months of On a like-for-like basis, operating cash flow is up E62.2 million (5.4%), essentially reflecting the fact that the figure for the first nine months of 2012 included the above cost of buying back the bonds issued by Atlantia maturing in 2014, totalling E33.3 million. Operating cash flow was primarily absorbed by the Group s investing activities. For the first nine months of 2013 the other comprehensive loss for the period, after the related taxation, amounts to E184.2 million (a loss of E1.7 million in the same period of 2012), essentially reflecting the following main components: a) a loss on the translation of transactions in foreign currencies other than the euro, totalling E237.9 million, substantially reflecting falls in the value of the Chilean peso and the Brazilian real against the euro and an increase in the average value of foreign currency assets held by the Group following the acquisitions in Chile and Brazil. The increase in the foreign currency translation reserve in the first nine months of 2012, totalling E87.1 million, primarily reflected increases in the value of the Chilean peso and Polish zloty against the euro; 20

21 Consolidated financial review b) a gain on the fair value measurement of cash flow hedges, totalling E56.6 million (a loss of E55.6 million in the first nine months of 2012), essentially reflecting a rise in interest rates in the first nine months of 2013 (compared with the reduction in interest rates in the first nine months of 2012). Consolidated statement of comprehensive income (Em) 9M M 2012 Profit for the period (A) Fair value gains/(losses) on cash flow hedges Fair value gains/(losses) on net investment hedges Gains/(losses) from translation of transactions in functional currencies other than the euro concluded by consolidated companies Gains/(Losses) from translation of transactions in functional currencies other than the euro concluded by associates and joint ventures accounted for using the equity method Other fair value gains/(losses) Other comprehensive income/(loss) for the period reclassifiable to profit or loss, after related taxation (B) Gains/(losses) from actuarial valuations of provisions for employee benefits Other comprehensive income/(loss) for the period not reclassifiable to profit or loss, after related taxation (C) Total other comprehensive income/(loss) for the period, after related taxation (D = B + C) Comprehensive income for the period (A + D) of which: - attributable to owners of the parent attributable to non-controlling interests

22 2. Report on operations Reclassified consolidated income statement for the third quarter of 2013 (Em) INCREASE/(DECREASE) % OF REVENUE Q Q ABSOLUTE % Q Q Toll revenue 1, , Contract revenue n.s Other operating income Total revenue 1, , Cost of materials and external services (1) Concession fees Staff costs Capitalised staff costs Total net operating costs Gross operating profit (EBITDA) (2) Amortisation, depreciation, impairment losses and reversals of impairment losses Provisions and other adjustments n.s Operating profit (EBIT) (3) Financial income from discounting to present value of concession rights and government grants Financial expenses from discounting to present value of provisions for construction services required by contract and other provisions Other financial income/(expenses) Capitalised financial expenses Share of profit/(loss) of associates and n.s. - - joint ventures accounted for using the equity method Profit/(Loss) before tax from continuing operations Income tax (expense)/benefit Profit/(Loss) from continuing operations Profit/(Loss) from discontinued operations Profit for the period (Profit)/Loss attributable n.s to non-controlling interests (Profit)/Loss attributable to owners of the parent (1) After deducting the margin recognised on construction services provided by the Group s own technical units. (2) EBITDA is calculated by deducting all operating costs, with the exception of amortisation, depreciation, impairment losses on assets and reversals of impairment losses, provisions and other adjustments, from operating revenue. (3) EBIT is calculated by deducting amortisation, depreciation, impairment losses on assets and reversals of impairment losses, provisions and other adjustments from EBITDA. In addition, it does not include the capitalised component of financial expenses relating to construction services. Basic earnings per share attributable to the owners of the parent (E) Q Q INCREASE/ (DECREASE) of which: - continuing operations discontinued operations Diluted earnings per share attributable to the owners of the parent (E) of which: - continuing operations discontinued operations Operating cash flow (Em) of which: - continuing operations discontinued operations Operating cash flow per share (E) of which: - continuing operations discontinued operations

23 Consolidated financial review The reclassified consolidated income statement for the third quarter of 2013 reports revenue of E1,177.3 million, marking an improvement of E21.2 million (1.8%) on the same period of Toll revenue of E1,012.2 million is up E12.0 million (1.2%) overall on the third quarter of 2012 (E1,000.2 million), essentially reflecting: a) application of toll increases by the Group s Italian operators (in Autostrade per l Italia s case 3.54% higher than in the comparative period), boosting toll revenue by an estimated E26.0 million; b) an estimated 0.8% decline in traffic on the Group s Italian network, accounting for an estimated E7.8 million reduction in toll revenue; c) the reduced contribution of toll increases matching the increased concession fees payable by Italian operators, resulting in a decrease of E1.5 million (1.5%) compared with the third quarter of 2012, with the reduction linked to the fall in traffic; d) reduced toll revenue from Autostrade Meridionali (down E3.3 million) due to the release, in the first nine months of 2012, of the accumulated X variable toll component, no longer recognised from 2013 following expiry of the concession term and the extension of responsibility for operation of the motorway. Other operating income is up E9.2 million overall compared with the third quarter of 2012, essentially reflecting an increase in work carried out by Pavimental for external customers. Net operating costs of E399.5 million are up E18.5 million (4.9%) on the third quarter of 2012, primarily due to the reduced margins generated by the Group s own technical units, the greater costs incurred by Autostrade per l Italia as a result of settlements with service area sub-operators and the increase in costs associated with the work carried out by Pavimental for external customers. Gross operating profit (EBITDA) for the third quarter of 2013 amounts to E777.8 million, marking an increase of E2.7 million (0.3%) on the same period of 2012 (E775.1 million). Operating profit (EBIT) of E609.3 million for the third quarter of 2013 is up E41.0 million (7.2%) on the same period of 2012 (E568.3 million). In addition to the above, this reflects a reduction of E48.7 million in provisions and other impairments, primarily reflecting changes in provisions for the repair and replacement of assets to be handed over at the end of concession terms, due mainly to the positive impact, compared with the comparative period, of changes in discount rates. Profit from continuing operations of E297.9 million is up E110.6 million (59.0%) on the third quarter of 2012 (E187.3 million), reflecting, in addition to the above, the following: a) a reduction in net financial expenses of E38.0 million, with E24.4 million of this attributable to the different contribution of the Brazilian companies consolidated from 30 June 2012; b) a E12.7 million reduction in financial expenses from the discounting to present value of provisions for construction services required by contract and other provisions, essentially reflected a decline in the interest rates used to discount provisions at 31 December 2012, compared with the rates used at 31 December In the third quarter of 2012 the Profit/(Loss) from discontinued operations reflected the profit of E5.7 million contributed by Autostrada Torino-Savona, which was deconsolidated from the fourth quarter of Profit for the third quarter of 2013 is thus E297.9 million (E193.0 million for the third quarter of 2012), of which E270.9 million is attributable to owners of the parent (E191.6 million for the third quarter of 2012). Finally, operating cash flow amounts to E509.1 million, up E35.2 million on the same period of 2012 (E473.9 million), primarily due to the reduction in net financial expenses incurred by the Brazilian companies across the two comparative periods. 23

24 2. Report on operations Reclassified consolidated statement of comprehensive income for the third quarter of 2013 (Em) Q Q Profit for the period (A) Fair value gains/(losses) on cash flow hedges Fair value gains/(losses) on net investment hedges Gains/(losses) from translation of transactions in functional currencies other than the euro concluded by consolidated companies Gains/(Losses) from translation of transactions in functional currencies other than the euro concluded by associates and joint ventures accounted for using the equity method Other fair value gains/(losses) Other comprehensive income/(loss) for the period reclassifiable to profit or loss, after related taxation (B) Gains/(losses) from actuarial valuations of provisions for employee benefits - - Other comprehensive income/(loss) for the period not reclassifiable to profit or loss, after related taxation (C) Total other comprehensive income/(loss) for the period, after related taxation (D = B + C) Comprehensive income for the period (A + D) of which: - attributable to owners of the parent attributable to non-controlling interests For the third quarter of 2013 the other comprehensive loss for the period, after the related taxation, amounts to E71.3 million (income of E39.7 million in the comparative period), essentially reflecting the following main components: a) a loss on the translation of transactions in foreign currencies other than the euro, totalling E84.0 million, substantially reflecting falls in the value of the Chilean peso and the Brazilian real against the euro and an increase in the average value of foreign currency assets held by the Group. The increase in the foreign currency translation reserve in the third quarter of 2012, totalling E78.9 million, primarily reflected increases in the value of the Chilean peso and Polish zloty against the euro; b) a gain on the fair value measurement of cash flow hedges, totalling E13.4 million (a loss of E14.0 million in the third quarter of 2012), primarily reflecting movements in interest rates in the two comparative periods. Consolidated financial position As at 30 September 2013 Non-current non-financial assets of E22,440.0 million are down E931.5 million on the figure for 31 December 2012 (E23,371.5 million), essentially reflecting a reduction in intangible assets and deferred tax assets. Intangible assets total E20,276.3 million (E21,104.7 million as at 31 December 2012). In addition to the goodwill (E4,382.7 million) recognised as at 31 December 2003, following acquisition of the majority shareholding in the former Autostrade - Concessioni e Costruzioni Autostrade SpA, these assets include the Group s concession rights, amounting to E15,854.3 million (E16,680.6 million as at 31 December 2012). The reduction of E828.4 million in intangible assets is essentially due to: a) amortisation for the period (down E487.2 million); b) a reduction resulting from currency translation differences, essentially reflecting the performances of the Chilean peso and the Brazilian real (down E356.8 million); c) a reduction in the present value on completion of investment in construction services for which no additional benefits are received (down E265.6 million); d) increased investment in construction services for which additional economic benefits are received (up E303.7 million). 24

25 Consolidated financial review Investments, totalling E123.8 million (E119.4 million as at 31 December 2012), are up E4.4 million. The change primarily reflects the positive impact of accounting for the investment in Rodovias do Tietê following the merger of Atlantia Bertin Participações (previously 50%-owned) with and into the subholding, Infra Bertin Participações (up E14.5 million), and certain smaller increases in the carrying amounts of other investments accounted for at cost or fair value (up E2.1 million), partially offset by the impairment loss of E13.7 million in respect of the carrying amount of the investment in Alitalia - Compagnia Aerea Italiana. Deferred tax assets of E1,826.5 million are down E85.0 million, primarily due to the release of E79.3 million in deferred tax assets on the reversal of intercompany gains in connection with the contribution, in 2003, of a portfolio of motorways to Autostrade per l Italia, equal to the amount for the period deductible from the goodwill recognised by Autostrade per l Italia as a result of the contribution. Working capital reports a negative balance of E1,206.2 million, compared with a negative balance of E1,145.5 million as at 31 December 2012, marking a reduction of E60.7 million. This essentially reflects a combination of the following: a) an increase of E194.9 million in net current tax liabilities, reflecting income tax payable for the period less the related prepayments; b) an increase of E98.5 million in current provisions, essentially linked to the volume of work on the repair and replacement of assets held under concession expected to be necessary in the next twelve months; c) a reduction of E209.8 million in trading liabilities, reflecting reduced investment in motorway infrastructure, primarily by Autostrade per l Italia, and approaching completion of the development phase of the Eco-Taxe project; d) a reduction in other current liabilities of E25.4 million, essentially following payment of fees due in relation to tolls and sub-concessions. Non-current non-financial liabilities, totalling E5,897.8 million, are down E692.1 million on the figure for 31 December 2012 (E6,589.9 million), essentially due to: a) a reduction in provisions for construction services required by contract, totalling E511.1 million, resulting from reclassification of the current portion (down E305.3 million) and adjustment of the present value on completion of investment in construction services (down E261.2 million), linked to the rise in current and future interest rates, partly offset by the cost of discounting to present value (E44.9 million); b) a reduction in other provisions, totalling E91.9 million, primarily due to reclassification of the current portion; c) a reduction in deferred tax liabilities of E80.1 million, primarily due to the decrease in deferred tax liabilities recognised on gains deriving from business combinations, realised in the past, following the unfavourable performance of exchange rates. As a result, Net invested capital, totalling E15,336.0 million, is down E300.1 million on the figure for 31 December 2012 (E15,636.1 million). Equity attributable to owners of the parent and non-controlling interests totals E5,731.0 million (E5,526.7 million as at 31 December 2012). Equity attributable to owners of the parent, totalling E4,063.6 million, is up E244.9 million on the figure for 31 December 2012 (E3,818.7 million), essentially reflecting profit for the period (up E557.9 million), partly offset by payment of the final dividend for 2012 (down E253.6 million) and the above other comprehensive loss for the period, totalling E67.4 million. Equity attributable to non-controlling interests of E1,667.4 million is down E40.6 million on 31 December 2012 (E1,708.0 million), essentially due to the reduction in the foreign currency translation reserve after the above falls in value of the Chilean peso and the Brazilian real against the euro (down E118.6 million), partially offset by the profit for the period attributable to non-controlling interests (up E61.6 million). 25

26 2. Report on operations Reclassified consolidated statement of financial position (Em) INCREASE/(DECREASE) NON-CURRENT NON-FINANCIAL ASSETS Property, plant and equipment Intangible assets 20, , Investments Deferred tax assets 1, , Other non-current assets Total non-current non-financial assets (A) 22, , WORKING CAPITAL (1) Trading assets 1, , Current tax assets Other current assets Non-financial assets held for sale or related to discontinued operations (2) Current portion of provisions for construction services required by contract Current provisions Trading liabilities -1, , Current tax liabilities Other current liabilities Total working capital (B) -1, , Invested capital less current liabilities (C = A + B) 21, , NON-CURRENT NON-FINANCIAL LIABILITIES Non-current portion of provisions for construction services required by contract -3, , Non-current provisions -1, , Deferred tax liabilities , Other non-current liabilities Total non-current non-financial liabilities (D) -5, , NET INVESTED CAPITAL (E = C + D) 15, , (1) Calculated as the difference between current non-financial assets and liabilities. (2) The presentation of assets and liabilities related to discontinued operations is based on their nature (financial or non-financial). 26

27 Consolidated financial review (Em) INCREASE/(DECREASE) EQUITY Equity attributable to owners of the parent 4, , Equity attributable to non-controlling interests 1, , Total equity (F) 5, , NET DEBT Non-current net debt Non-current financial liabilities 12, , ,454.0 Bond issues 8, , ,503.7 Medium/long-term borrowings 3, , Non-current derivative liabilities Other financial liabilities Other non-current financial assets -2, , Non-current financial assets deriving from concession rights -1, , Non-current financial assets deriving from government grants Non-current term deposits convertible Non-current derivative assets Other non-current financial assets Non-current net debt (G) 10, , ,779.4 Current net debt Current financial liabilities 2, , ,441.0 Bank overdrafts Short-term borrowings Current derivative liabilities Intercompany current account payables due to unconsolidated Group companies Current portion of medium/long-term borrowings 2, , ,479.9 Other current financial liabilities Cash and cash equivalents -3, , Cash in hand and at bank and post offices -1, Cash equivalents -1, , Other current financial assets Current financial assets deriving from concessions Current financial assets deriving from government grants Current term deposits convertible Current derivative assets Current portion of medium/long-term financial assets Other current financial assets Financial assets held for sale or related to discontinued operations (2) Current net debt (H) -1, , ,275.0 Net debt (I = G + H) 9, , NET DEBT AND EQUITY (L = F + I) 15, , (2) The presentation of assets and liabilities related to discontinued operations is based on their nature (financial or non-financial). 27

28 2. Report on operations The Group s net debt as at 30 September 2013 totals E9,605.0 million (E10,109.4 million as at 31 December 2012). Non-current net debt, amounting to E10,725.0 million, is down E1,779.4 million on 31 December 2012 (E12,504.4 million) and consists of: a) non-current financial liabilities of E12,984.4 million, essentially relating to: 1) bond issues restricted to institutional investors as part of Atlantia s E10 billion Medium Term Note Programme (accounted for in the financial statements at E6,622.2 million and maturing between 2014 and 2038). The balance is down E2,044.5 million on 31 December 2012 (E8,666.7 million) essentially following reclassification of bonds with a par value of E2,094.2 million maturing on 9 June 2014; 2) bonds issued by Atlantia to retail investors (E972.6 million and maturing in 2018); 3) bonds issued in the first half of 2013, with amortisation maturities between 2020 and 2023, by Triangulo do Sol and Rodovias das Colinas at a floating nominal CDI rate (accounted for in the financial statements at E286.8 million, with residual weighted average terms to maturity of approximately 5 years) and a real IPCA rate (accounted for in the financial statements at E231.6 million, with residual weighted average terms to maturity of approximately 6 years), and the bullet bonds issued by Rodovias MG 050, maturing in April 2015 and totalling E67.4 million (accounted for in the financial statements at E67.1 million, with a residual weighted average term to maturity of approximately 2 years); 4) medium/long-term loans granted to Autostrade per l Italia by the European Investment Bank (EIB) (E1,529.5 million) and Cassa Depositi e Prestiti and SACE (E671.6 million), and the Term Loan Facility (E279.3 million) and loans to be repaid directly by ANAS in accordance with the provisions of Laws 662/1996, 135/1997 and 345/1997 (E212.3 million); 5) Chilean project bonds issued by Costanera Norte (accounted for in the financial statements at E318.8 million and maturing in 2016 and 2024) and Vespucio Sur (accounted for in the financial statements at E161.8 million and maturing in 2025); 6) Chilean project loans issued by Litoral Central (maturing in 2025), Nororiente (maturing in 2031), Los Lagos (maturing in 2021) and Vespucio Sur (maturing in 2028), totalling E532.2 million, in addition to Grupo Costanera s bank borrowings of E151.1 million; 7) project financing obtained by Ecomouv (E408.3 million), which has increased by E214.3 million in line with progressive drawdown of the available funds as the Eco-Taxe project has progressed; 8) fair value losses on hedging derivatives (E341.2 million), essentially relating to cash flow hedges and including the impact of movements in exchange rates recognised in respect of the change in hedged foreign currency financial liabilities. The E1,454.0 million decrease in non-current financial liabilities compared with 31 December 2012 is essentially due to reclassification of the current portion of the bonds maturing on 9 June 2014 (a par value of E2,094.2 million), partially offset by the above bonds issues by Triangulo do Sol and Rodovia das Colinas (totaling E518.4 million); b) non-current financial assets of E2,259.4 million are up E325.4 million compared with 31 December 2012, essentially due to: 1) an increase in financial assets deriving from concession rights (E180.8 million), primarily resulting from investment in the Eco-Taxe project; 2) an increase in other non-current financial assets (E96.6 million), primarily reflecting an increase in the medium/long-term receivable due to Atlantia Bertin Concessões as a result of convertible bonds issued by Infra Bertin Empreendimentos (E325.0 million as at 30 September 2013), which controls the project company, SPMAR, the holder of the concession for the construction and operation of the orbital motorway serving the south east of Sao Paulo. 28

29 Consolidated financial review Current net funds of E1,120.0 million are down E1,275.0 million compared with 31 December 2012 (E2,395.0 million), essentially due to: a) reclassification of bonds (E2,094.2 million) maturing in June 2014, partially offset by the redemption of bonds (E544.3 million), essentially by Rodovias das Colinas and Triangulo do Sol following the above refinancing transactions; b) a reduction in cash (E347.1 million); c) a reduction in accrued interest and differentials payable on hedging derivatives following payments made during the first nine months (E94.1 million); d) a decrease in the current portion of term deposits (E208.6 million), essentially following use of the deposit to increase the loan that Atlantia Bertin Concessões is disbursing to Infra Bertin Empreendimentos (to be completed by 2014) and the release of Autostrade Holding do Sur s term deposits. The Group s ordinary operating and financing activities expose it to market risks, primarily regarding interest rate and currency risks linked to the financial assets acquired and the financial liabilities assumed, in addition to liquidity and credit risks. The Group s financial risk management strategy is consistent with the objectives set by Atlantia s Board of Directors. The strategy aims to both manage and control such risks, wherever possible mitigating interest rate and currency risks and minimising borrowing costs, taking account of the interests of stakeholders, as defined in the Group s Financial Policy. The components of the Group s derivatives portfolio as at 30 September 2013 are classified, in application of IAS 39, on the basis of the specific risk being hedged. Based on the positive outcome of tests of effectiveness of cash flow hedges as at 30 September 2013, changes in fair value have been recognised in full in comprehensive income. During the first nine months of 2013 the Group entered into new derivatives classified as fair value hedges, designed to convert the bonds originally issued by Triangulo do Sol and Rodovias das Colinas to a floating nominal CDI rate from the original real IPCA rate. Changes in the fair value of these instruments are recognised in profit or loss and are offset by matching changes in the fair value of the underlying liabilities. Changes in fair value during the first nine months of 2013 have been recognised in full in comprehensive income. The residual weighted average term to maturity of the Group s interest bearing debt is approximately 6 years at 30 September % of the Group s debt is fixed rate. 18% of the Group s medium/long-term debt is denominated in currencies other than the euro. Taking account of foreign exchange hedges and the proportion of debt denominated in the local currency of the country in which the relevant Group company operates (around 12%), the Group is not exposed to currency risk on translation into euros. The average cost of the Group s medium/long-term borrowings in the first nine months of 2013 was approximately 5.1% (4.7% for the companies operating in Italy, 6.4% for the Chilean companies and 10.2% for the Brazilian companies). As at 30 September 2013 project debt attributable to specific overseas companies amounts to E2,228.6 million. At the same date the Group has cash reserves of E6,811 million, consisting of: a) E3,158 million in cash and/or investments maturing within 120 days; b) E476 million in term deposits allocated primarily to part finance the execution of specific construction services and to service the debt of the Chilean companies; c) E3,177 million in undrawn committed lines of credit. The Group has lines of credit with a weighted average residual term to maturity of approximately 8.5 years and a weighted average residual drawdown period of approximately 2.2 years, including the new lines agreed with the EIB during the third quarter of 2012, totaling E450.0 million. 29

30 2. Report on operations Statement of changes in consolidated equity (Em) EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT ISSUED CAPITAL CASH FLOW HEDGE RESERVE NET INVESTMENT HEDGE RESERVE Balance as at 31 December Comprehensive income for the period Owner transactions and other changes Bonus issue Final dividend approved Retained earnings for previous year Changes in the basis of consolidation, capital contributions, other minor changes and reclassifications Balance as at 30 September Balance as at 31 December Comprehensive income for the period Owner transactions and other changes Final dividend approved Retained earnings for previous year Exercise of options awarded under share-based incentive plans Changes in the basis of consolidation, capital contributions, other minor changes and reclassifications Balance as at 30 September The Group s net debt, as defined according to the European Securities and Markets Authority - ESMA (formerly CESR) recommendation of 10 February 2005 (which does not permit the deduction of non-current financial assets from debt), amounts to E11,864.4 million as at 30 September 2013, compared with E12,043.4 million as at 31 December Consolidated cash flow Operating activities generated cash flows of E1,250.8 million in the first nine months of 2013, up E515.4 million on the first nine months of 2012 (E735.4 million). The increase primarily reflects: a) an increase in operating cash flow (up E138.6 million on the first nine months of 2012), above all due to the contribution from the Chilean and Brazilian operators, control of which was acquired in 2012; b) the greater amount of cash absorbed by operating capital in the first nine months of 2012, reflecting an increase in the portion of tolls receivable from banks, which were collected in early October after being billed on the last day of September, which was not a working day; c) the increased flow from non-financial assets and liabilities, essentially due to the increase in net current tax liabilities. Cash used for investment in non-financial assets amounts to E617.3 million, essentially relating to investment in assets held under concession, after the related government grants and the increase in financial assets deriving from concession rights (amounting to E572.2 million). 30

31 Consolidated financial review RESERVE FOR TRANSLATION DIFFERENCES ON TRANSACTIONS IN FUNCTIONAL CURRENCIES OTHER THAN THE EURO RESERVE FOR ASSOCIATES AND JOINT VENTURES ACCOUNTED FOR USING THE EQUITY METHOD EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT OTHER RESERVES AND RETAINED EARNINGS TREASURY SHARES PROFIT/(LOSS) FOR PERIOD TOTAL EQUITY ATTRIBUTABLE TO NON-CONTROLLING INTERESTS EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT AND TO NON-CONTROLLING INTERESTS , , , , , , , , , , , , , , , , ,731.0 In the first nine months of 2012 the outflow of E1,778.5 million was due to the amount invested in the acquisition of control of the Chilean and Brazilian companies, including net debt assumed (totalling E1,428.1 million), the proceeds from the sale to the Canada Pension Plan Investment Board (CPPIB) of the 30% interest in Grupo Costanera held by Autostrade Sud America (E491.5 million ), in addition to investment in assets held under concession (a net balance of E859.1 million). The cash outflow resulting from changes in equity during the first nine months of 2013 amounts to E221.7 million, essentially reflecting dividends approved by Atlantia (E253.6 million) and by other Group companies for payment to their non-controlling shareholders (E8.5 million). In the first nine months of 2012, on the other hand, the cash inflow resulting from changes in equity amounted to E62.3 million, essentially reflecting the capital contribution to Grupo Costanera by the above Canadian pension fund (E349.2 million), partially offset by dividends approved by Atlantia and by other Group companies. In the first nine months of 2013 net debt was reduced by E92.6 million, resulting from the change in the fair value of financial instruments recognised in comprehensive income (E76.8 million), essentially following an upward shift in the euro yield curve used at 30 September 2013, compared with the one used at 31 December 2012, and by financial income and expenses accounted for as increases in financial assets and liabilities (E15.8 million). In the first nine months of 2012 net debt increased by E129.0 million, entirely as a result of changes in the fair value of financial instruments recognised in comprehensive income, primarily due to a downward shift in the euro yield curve at 30 September 2012, compared with the one used at 31 December The overall impact of the above cash flows was to reduce net debt by E504.4 million, compared with an increase of E1,109.8 million in the first nine months of

32 2. Report on operations Statement of changes in consolidated net debt (1) (Em) 9M M 2012 Q Q Profit for the period Adjusted by: Amortisation and depreciation Provisions Financial expenses from discounting to present value of provisions for construction services required by contract and other provisions Impairment losses/(reversal of impairment losses) on non-current financial assets and investments accounted for at cost or fair value Share of (profit)/loss of associates and joint ventures accounted for using the equity method Impairment losses/(reversal of impairment losses) and adjustments of other non-current assets (Gain)/Loss on sale of non-current assets Net change in deferred tax (assets)/liabilities Other non-cash costs (income) Change in working capital Other changes in non-financial assets and liabilities Net cash from operating activities (A) 1, Investment in assets held under concession , Government grants related to assets held under concession Increase in financial assets deriving from concession rights (related to capital expenditure) Purchases of property, plant and equipment Purchases of intangible assets Purchase of investments, net of unpaid called-up issued capital Investiments in consolidated companies, including net debt assumed - -1, Proceeds from sales of property, plant and equipment, intangible assets and unconsolidated investments Proceeds from sale of consolidated investments, after net debt transferred Change in other non-current assets Net cash from/(used in) investment in non-financial assets (B) , Dividends declared by Group companies Contributions from non-controlling shareholders Proceeds from transfer of treasury shares due to exercise of rights under share-based incentive plans Effect of changes in exchange rates on net debt and other changes Net equity cash outflows (C) Increase/(Decrease) in cash and cash equivalents (A + B + C) Change in fair value and extinguishment of financial instruments recognised in comprehensive income (D) Non-cash financial income/(expenses) DECREASE/(INCREASE) IN NET DEBT FOR PERIOD (A + B + C + D) , Net debt at beginning of period -10, , , ,019.2 Net debt at end of period -9, , , ,080.0 (1) This statement of changes in consolidated net debt differs from the consolidated statement of cash flows insofar as it: (a) presents the impact of cash flows generated or used during the period on consolidated net debt, as defined above, rather than on net cash and cash equivalents; (b) shows the change in operating capital, consisting of trade-related items directly linked to the ordinary activities of the business concerned; (c) does not include changes in current and non-current financial assets and shows investments in consolidated companies and proceeds from the sale of previously consolidated companies after deducting the net debt on the books of these companies, rather than less any net cash on the books of the companies consolidated or sold; (d) does not include changes in current and non-current financial liabilities and shows dividends approved during the reporting period, rather than dividends effectively paid in the reporting period; (e) shows changes in the fair value of financial instruments recognised in the statement of comprehensive income. 32

33 Consolidated financial review Consolidated statement of cash flows (Em) 9M M 2012 Q Q CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES Profit for the period Adjusted by: Amortisation and depreciation Provisions Financial expenses from discounting to present value of provisions for construction services required by contract and other provisions Impairment losses/(reversal of impairment losses) on non-current financial assets and investments accounted for at cost or fair value Share of (profit)/loss of associates and joint ventures accounted for using the equity method Impairment losses/(reversal of impairment losses) and adjustments of non-current assets (Gain)/Loss on sale of non-current assets Net change in deferred tax (assets)/liabilities Other non-cash costs (income) Change in working capital and other changes Net cash generated from/(used in) operating activities (A) 1, CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES Investment in assets held under concession , Government grants related to assets held under concession Increase in financial assets deriving from concession rights (related to capital expenditure) Purchases of property, plant and equipment Purchases of intangible assets Purchase of investments, net of unpaid called-up issued capital Purchase of new consolidated investments, net of cash acquired Proceeds from sales of property, plant and equipment, intangible assets and unconsolidated investments Proceeds from sales of consolidated investments, after cash and cash equivalents transferred Net change in other non-current assets Net change in current and non-current financial assets not held for trading purposes Net cash generated from/(used in) investing activities (B) , CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES Dividends paid Contributions from non-controlling shareholders Proceeds from transfer of treasury shares due to exercise of rights under share-based incentive plans New non-controlling shareholder loans Issuance of bonds , Increase in medium/long-term borrowings (excluding finance lease liabilities) , Bond redemptions Repayments of medium/long-term borrowings (excluding finance lease liabilities) Payment of finance lease liabilities Net change in other current and non-current financial liabilities Net cash generated from/(used in) financing activities (C) , Net effect of foreign exchange rate movements on net cash and cash equivalents (D) Increase/(Decrease) in cash and cash equivalents (A + B + C + D) , ,479.9 Net cash and cash equivalents at beginning of period 2, , Net cash and cash equivalents at end of period 3, , , ,

34 2. Report on operations Additional information on the statement of cash flows (Em) 9M M 2012 Q Q Income taxes paid (refunded) Interest income and other financial income collected Interest expense and other financial expenses paid ,106.1 Dividends received Foreign exchange gains collected Foreign exchange losses incurred Reconciliation of net cash and cash equivalents (Em) 9M M 2012 Q Q Net cash and cash equivalents at beginning of period 2, , Cash and cash equivalents 2, , Bank overdrafts repayable on demand Intercompany current account payables due to unconsolidated Group companies Cash and cash equivalents related to discontinued operations Net cash and cash equivalents at end of period 3, , , ,838.0 Cash and cash equivalents 3, , , ,906.7 Bank overdrafts repayable on demand Intercompany current account payables due to unconsolidated Group companies Cash and cash equivalents related to discontinued operations Cash flows related to discontinued operations (Em) 9M M 2012 Q Q Net cash generated from/(used in) operating activities Net cash generated from/(used in) investing activities Net cash generated from/(used in) financing activities

35 Consolidated financial review Adjusted results of operations and financial position and reconciliation with reported amounts The following section shows adjusted gross operating profit (EBITDA), profit for the period, operating cash flow and net debt. These amounts have been adjusted by stripping out the impact of financial items recognised by the Group s motorway operators in application of IFRIC 12 when, under its concession arrangement, an operator has an unconditional right to receive contractually guaranteed cash payments for construction services rendered, regardless of the extent to which the public uses the service. This right is accounted for, regardless of its specific nature, in financial assets deriving from concession rights in the statement of financial position. The adjusted amounts, which are not IFRS compliant, are presented with the aim of enabling analysts and the rating agencies to assess the Group s results of operations and financial position using the basis of presentation normally adopted by them. In particular, the adjustments applied to the reported amounts regard: a) an increase in toll revenue to take account of the reduction in financial assets deriving from guaranteed minimum revenue; b) an increase in other operating income, corresponding to the portion of government grants collected in relation to motorway maintenance and accounted for as a reduction in financial assets; c) an increase in other operating income, corresponding to the portion of government grants in relation to investment in motorway infrastructure, which are accounted for as a reduction in financial assets and which were collected in full in previous years; d) the reversal of financial income deriving from the discounting to present value of financial assets deriving from guaranteed minimum revenue and government grants for motorway maintenance; e) the elimination of financial assets recognised in application of IFRIC 12 (takeover rights, guaranteed minimum revenue, other financial assets deriving from concession rights and government grants for motorway maintenance). 35

36 2. Report on operations Reconciliation of adjusted and reported amounts (Em) 9M M 2012 EBITDA PROFIT (1) OPERATING CASH FLOW EBITDA PROFIT (1) OPERATING CASH FLOW Reported amounts 1, , , ,149.4 Increase in revenue for guaranteed minimum revenue: - Los Lagos Costanera Norte (2) Litoral Central (2) Nororiente (2) Adjustment (before tax) Grants for motorway maintenance: - Los Lagos Adjustment (before tax) Grants for investment in motorway infrastructure: - Litoral Central (2) Adjustment (before tax) Reversal of financial income deriving from the discounting to present value of financial assets deriving from concession rights: - Los Lagos Costanera Norte (2) Litoral Central (2) Nororiente (2) Ecomouv Adjustment (before tax) Reversal of financial income deriving from the discounting to present value of financial assets deriving from grants for motorway maintenance: - Los Lagos Adjustment (before tax) Deferred taxes Total adjustment Adjusted amounts (3) 2, , , ,

37 Consolidated financial review (Em) NET DEBT AS AT NET DEBT AS AT Reported amounts 9, ,109.4 Reversal of financial assets deriving from takeover rights: - Autostrade Meridionali Adjustment Reversal of financial assets deriving from guarantee minimum revenue: - Los Lagos Costanera Norte (2) Litoral Central (2) Nororiente (2) Adjustment Reversal of other financial assets deriving from concession rights: - Ecomouv Costanera Norte (2) Adjustment Reversal of financial assets deriving from grants for motorway maintenance: - Los Lagos Adjustment Total adjustment 1, ,541.5 Adjusted amounts 11, ,650.9 (1) Adjusted profit does not take into account amortisation and depreciation, after the related taxation, intangible assets deriving from concession rights which in theory would have been recognised by the Group s operators had they not adopted, in calculating reported profit, the financial model envisaged by IFRIC 12. (2) The Chilean companies, Costanera Norte, Litoral Central and Nororiente, were consolidated from 1 April (3) Compared with the amount reported in the Interim Report for the nine months ended 30 September 2012, the adjusted amounts for profit and operating cash flow for the first nine months of 2012 reflect the impact of the item, Reversal of financial income deriving from the discounting to present value of financial assets deriving from grants for motorway maintenance, shown in this statement in order to improve presentation of Los Lagos s cash flows. 37

38 2. Report on operations Operating review for the main Group companies ITALY Operating review for the Group s Italian motorway operators Autostrade per l Italia Revenue in the first nine months of 2013, totalling E2,425 million, is down E3.9 million (0.2%) on the same period of 2012, primarily reflecting a combination of the following: a) an increase in toll revenue (up E9.6 million), due to toll increases for 2013 (an increase of 3.47% from 1 January and 0.07% (1) from 12 April), offset by a contraction in traffic (down 2.0%) and the absence of income resulting from the cancellation, in 2012, of unused prepaid Viacards issued more than 10 years previously; b) a reduction in other operating income (down E12.4 million), primarily due to a reduction in payouts from insurance companies and a decrease in royalties from Autostrade per l Italia s service areas, partly as a result of Autostrade per l Italia s revision, in 2012, of the fixed component of the fees in response to the decline in traffic. The cost of materials and external services is down E31.6 million, reflecting a E26.6 million decrease in maintenance costs, primarily due to a reduction in the cost of winter operations, an increase in insourcing, and a reduction in other costs (down E5.0 million), mainly due to a decrease in direct costs incurred in relation to the Design & Build phase of the Eco-Taxe project in France and improvements in operating efficiency, partially offset by increased costs deriving from the closure of agreements relating to subconcessions at service areas. Staff costs, after deducting capitalised expenses, are substantially in line with the same period of the previous year. Before capitalised expenses, staff costs are up E1.0 million (0.4%) due to an increase in the average total cost (up 2.8%). This reflects the knock-on effect of salary increases agreed in the previous year and the increased costs incurred now the National Bilateral Entity (2) is fully operational, partially offset by a reduction of 135 in the average workforce (down 2.4%). The above knock-on effects will have faded by end of the year. EBITDA for the first nine months of 2013 amounts to E1,508.5 million, up E34.1 million (2.3%) on the first nine months of 2012 (E1,474.4 million). (1) A toll increase granted to the company (by Decree 145 of 9 April 2013, issued by the Ministry of Infrastructure and Transport, in agreement with the Ministry of the Economy and Finance) regarding the K component of tolls accruing in 2012 and provisionally suspended when determining the tolls to come into effect from 1 January The increase revenue that should have been received in the period from 1 January to 11 April 2013 is to be recovered via the toll increase for (2) This Entity was set up by Autostrade per l Italia and the labour unions as a result of the contract negotiations in It has the primary role of organising specific training programmes and professional retraining, health and safety and income support initiatives. 38

39 Operating review for the main Group companies Other Italian operators Toll revenue attributable to other Italian operators is down E10.7 million (6.5%) on the first nine months of 2012, reflecting a combination of the following principal factors: a) the decline in traffic (reducing revenue by E3.1 million) reported by the other Italian operators, with the exception of Autostrade Meridionali, which registered an increase in traffic of 2.7%, partly due to the closure of the Statale 18 between Vietri sul Mare and Salerno; b) the application of toll increases applied from 1 January 2013 (boosting toll revenue by an estimated total of E2.2 million); c) Autostrade Meridionali s release, in 2012, of the accumulated X variable toll component (a reduction of E9.8 million), no longer recognised from 2013 following expiry of the concession term and the extension of responsibility for operation of the motorway. External maintenance costs attributable to other operators are down E8.0 million, essentially due to a reduction in non-routine maintenance carried out by Autostrade Meridionali, reflecting the plan to relinquish the concession, scheduled for EBITDA for the other Italian operators is down E2.5 million (3.4%) on the first nine months of 2012, reflecting the combined effect of the above changes. Traffic The number of kilometres travelled on the network operated by Autostrade per l Italia and the Group s other Italian motorway operators during the first nine months of 2013 totals 35,413.1 million: 31,141.1 million by vehicles with 2 axles (cars and vans, representing 87.9% of the total) and 4,272.0 million by vehicles with 3 or more axles (12.1% of the total). Traffic on the Group s Italian network is down 1.9% in terms of kilometres travelled, compared with the first nine months of Reductions were reported by both categories of vehicle, with vehicles with 2 axles down 1.7% and those with 3 or more axles down 3.2%. The economic downturn continued to weigh heavily on the figures for the first nine months of 2013, though the figures for the third quarter represent an improvement with respect to the first half of the year. In addition, compared with the same period of the previous year, the figures for the first nine months of 2013 reflect the negative impact of February being one day shorter (2012 was a leap year), which accounts for approximately 0.4 percentage points of the drop registered in the first nine months. These factors were partially offset by the fact that traffic during the first nine months of 2013 was not affected by the unfavourable events witnessed during the same period of 2012 (a lorry drivers strike and exceptional snowfall). After adjusting for this calendar-related factor, traffic during the first nine months of 2013 is down 1.5%, with vehicles with 2 axles down 1.3% and those with 3 or more axles down 2.9%. Traffic was down at most of the Group s Italian companies, with the exception of Naples-Salerno section, which recorded growth of 2.7% following closure of the Statale 18, an alternative to the A3, between Vietri sul Mare and Salerno after a landslide. Traffic using the Mont Blanc Tunnel was substantially unchanged following a significant increase in vehicles with 2 axles and a notable decline in those with 3 or more axles. The decline in traffic on Autostrade per l Italia s network was slightly above average in the first nine months of 2013, with a reduction of 2.0% in overall traffic (vehicles with 2 axles down 1.8% and those with 3 or more axles down 3.2%). 39

40 2. Report on operations The third quarter of the year saw traffic pickup compared with the previous six months, resulting in an overall decline of 0.8% on the Group s network: vehicles with 2 axles down 0.8%, those with 3 or more axles down 1.4%. The Naples-Salerno, partly due to closure of the Statale 18 between Vietri sul Mare and Salerno, and the Mont Blanc Tunnel saw growth in traffic of approximately 2% in the quarter. Traffic on the network operated under concession in Italy in the first nine months of 2013 MOTORWAY OPERATOR VEHICLES X KM (MILLIONS) ATVD (1) 9M 2013 VEHICLES WITH 2 AXLES VEHICLES WITH 3 + AXLES TOTAL VEHICLES % INCREASE/ (DECREASE) ON 9M 2012 Autostrade per l Italia 29, , , ,044 Autostrade Meridionali 1, , ,389 Tangenziale di Napoli ,885 Società Italiana per il Traforo del Monte Bianco ,275 Raccordo Autostradale Valle d Aosta ,189 Total italian operators 31, , , ,756 (1) ATVD = total km travelled/length of section/no. of days in period. Toll increases The following annual toll increases were introduced by Autostrade per l Italia and the Group s Italian motorway operators from 1 January The increases were calculated in accordance with the terms and conditions of the respective concession arrangements in force: ITALIAN MOTORWAY OPERATORS TOLL INCREASE Autostrade per l Italia (1) 3.54% Raccordo Autostradale Valle d Aosta (2) 14.44% Tangenziale di Napoli (2) 3.59% Autostrade Meridionali (3) 0.0% Società Italiana per il Traforo del Monte Bianco (4) 5.01% (1) The toll increases applied by Autostrade per l Italia consist of a 1.23% increase designed to provide a return on additional capital expenditure via the X tariff component and a 2.24% increase equivalent to 70% of the consumer price inflation rate (as measured by ISTAT) in the period from 1 July 2011 to 30 June Between 1 January 2013 and 11 April 2013 the toll increase applied was 3.47% following postponement of the increase based on the K component. Subsequently, on 9 April 2013 the Minister of Infrastructure and Transport, in agreement with the Minister of the Economy and Finance, issued a decree authorising the toll increase of 0.07% based on the K component providing a return on new investment required by the Single Concession Arrangement of 2007 and relating to noise abatement initiatives. The toll increase that should have been applied in the period from 1 January to 11 April 2013 will be recovered via the toll increase for (2) The operators, Raccordo Autostradale Valle d Aosta and Tangenziale di Napoli, apply a tariff formula that takes into account the target inflation rate, a rebalancing component and a return on investment, in addition to quality. (3) Autostrade Meridionali was not authorised to apply any toll increase following expiry of its concession on 31 December (4) Traforo del Monte Bianco, which operates under a different concession regime based on bilateral agreements between Italy and France, applied a total increase of 5.01% from 1 January 2013, in accordance with the resolutions approved by the Intergovernmental Committee for the Mont Blanc Tunnel on 20 October and 25 November This increase is based on the combination of two elements: 2.61% representing the average inflation rate in France and Italy for the period from 1 September 2011 to 31 August 2012; 2.40% in accordance with the joint declaration issued by the Italian and French governments on 3 December 2012, with use of the proceeds still be decided on by the two governments. 40

41 Operating review for the main Group companies Capital expenditure During the first nine months of 2013 the Group s Italian motorway operators invested a total of E636.8 million, marking a reduction of E278.0 million (after stripping out companies sold or held for sale) on the first nine months of 2012 (down 30.4 %). Capital expenditure (*) (Em) 9M M 2012 INCREASE/(DECREASE) Autostrade per l'italia - projects in Agreement of % Autostrade per l'italia - projects in IV Addendum of % Investment in major works by other operators % Other capital expenditure and capitalised costs (staff, maintenance and other) % Total investment in infrastructure operated under concession % Investment in other intangible assets % Investment in property, plant and equipment % Total capital expenditure in Italy % (*) After stripping out Autostrada Torino-Savona, a company sold in The volume of investment relating to works envisaged in Autostrade per l Italia s Agreement of 1997 is down E16.0 million on the first nine months of 2012, primarily due to the fact that work has been at a standstill in Tuscany following the investigation launched by the Public Prosecutor s Office in Florence regarding the reuse of soil and rocks resulting from excavation work (see the specific section on the claim for damages lodged by the Ministry of the Environment), and to the approaching completion of the principal works for the Variante di Valico. The volume of investment in works envisaged in Autostrade per l Italia s IV Addendum is down E224.7 million on the first nine months of 2012, reflecting the completion of a number of works on motorways opened to traffic in 2012 (the A9 Lainate-Como and the Rimini North-Cattolica, Fano-Senigallia and Ancona South- Porto Sant Elpidio sections of the A14) and the financial difficulties affecting certain contractors engaged to carry out a number of works in progress, resulting in delays. The above reduction in work has only partly been offset by an increase in work on the sections of the A14 between Cattolica and Fano (fully opened to traffic in August 2013) and between Ancona North and Ancona South. Contract reserves quantified by contractors As at 30 September 2013 contract reserves amounting to approximately E2,280 million (E1,600 million as at 31 December 2012) have been quantified by contractors in relation to capital expenditure by Group companies. Based on past experience, only a small percentage of the reserves will actually have to be paid to contractors and, in this case, will be accounted for as an increase in the cost of concession rights. 41

42 2. Report on operations Operating review for other activities in Italy Pavimental The company operates as a motorway maintenance provider and carries out major infrastructure works for the Group and external customers. Compared with the first nine months of 2012, revenue of E254.1 million for the first nine months of 2013 is down E177.5 million (41.1%). This is due to the lower volume of work carried out as a result of the completion of a number of construction projects commissioned by Autostrade per l Italia (on the A14 and A9) and by other customers (Società Autostrada Tirrenica and Autostrade Centropadane). EBITDA of E6.2 million is down on the figure of E33.1 million for the same period of the previous year. The reduction reflects the above-mentioned decrease in the volume of work carried out, partially offset by a reduction in staff costs (down E5.7 million or 15.34%) due to cuts in the number of personnel employed on major works and infrastructure construction and the impact of a series of cost savings involving maintenance and headquarters staff. Spea Ingegneria europea The company supplies engineering services involved in the design, project management and controls connected to the upgrade and extraordinary maintenance of the Group s network. Revenue of E63.6 million for the first nine months of 2013 is down E24.3 million (27.6%) on the same period of the previous year, primarily due to the lower volume of infrastructure design work carried out, above all in relation to the Genoa Interchange and the final designs for the works included in Autostrade per l Italia s investment programme of The reduction in revenue also reflects a decrease in the volume of project management carried out, relating to the A14 Rimini-Pedaso, A9 Lainate-Como and Base Tunnel. 90.4% of the company s revenue was earned on services provided to the Group. EBITDA is E15.1 million for the first nine months of 2013, down E15.1 million on the same period of the previous year, primarily reflecting the above reduction in revenue, partially offset by reduced use of external consultants (down E4.9 million) and a decrease in staff costs (down E3.2 million). Telepass The company is responsible for operating motorway tolling systems in Italy, providing an alternative to cash payments (the Viacard direct debit card and Telepass devices), as well as payment systems for car parks (especially at airports) and restricted traffic zones. In addition, from 2013 the company s new product, Telepass SAT, offers the drivers of heavy vehicles an electronic tolling service for the payment of tolls on the motorway networks of France, Spain and Belgium. As at 30 September 2013 the number of Telepass devices in circulation exceeds 8.2 million (up more than 200,000 compared with 30 September 2012) with the number of subscribers of the Premium option totalling 1.7 million (up approximately 125,000 compared with 30 September 2012). 42

43 Operating review for the main Group companies Revenue of E103.4 million in the first nine months of 2013 was primarily generated by Telepass fees of E69.2 million (up E1.2 million on the first nine months of 2012), Viacard subscription fees of E15.8 million (down E0.7 million on the same period of 2012) and payments for Telepass Premium services of E9.8 million (up E0.9 million on the same period of 2012). The company s EBITDA for the first nine months of 2013, amounting to E63.3 million, compares with EBITDA of E63.7 million for the same period of Autostrade Tech Autostrade Tech is a provider of Information Technology Systems, operating in Italy and overseas. It supplies systems used for tolling, traffic management and information, urban access controls, car parks and speed checks. Revenue of E49.3 million in the first nine months of 2013 is down E8 million (14%) on the same period of 2012, above all due to the fact that work on the contract for the Eco-Taxe Poids Lourds project awarded to the subsidiary, Ecomouv, is nearing completion. EBITDA of E6.0 million for the first nine months of 2013 is down on the same period of 2012 (E13.3 million). TowerCo TowerCo is responsible for the construction and management of fully equipped sites located around the motorway network managed under concession by Group companies in Italy and on land owned by other parties (municipal authorities and other motorway operators, etc.). These sites host antennae and equipment used by commercial operators (mobile communications companies and TV and radio broadcasters) and public services (police, Isoradio and traffic monitoring systems). As at 30 September 2013 there are 303 sites in operation (of which 91 providing GSM/UMTS mobile coverage in motorway tunnels), 3 sites at which work is in progress and a further 14 at the design stage or awaiting receipt of the necessary permits. The company reports revenue of E16.1 million for the first nine months of 2013 (E14.5 million in the same period of 2012), with EBITDA of E9.7 million (E8.5 million for the same period of 2012). 43

44 2. Report on operations INTERNATIONAL OPERATIONS Chile The Atlantia Group is one of the leading motorway operators in Chile through: the operator, Los Lagos, a wholly owned subsidiary of the Group, which holds the concession for a 135 km section between Rio Bueno and Puerto Montt; the holding company, Grupo Costanera, which is 50.01% owned by the Atlantia Group and 49.99% owned by CPPIB (Canada Pension Plan Investment Board), and which directly and indirectly holds 100% interests in the following operators in Chile: Costanera Norte, which holds the concession for 42.5 km of road network in the city of Santiago; Autopista Nororiente, the holder of the concession for the 21.5 km north-eastern bypass in the city of Santiago; Autopista Vespucio Sur, the holder of the concession for the 23.5 km southern section of the orbital toll motorway serving the city of Santiago; AMB, the holder of the concession for the 10 km section of motorway linking Santiago to the city s international airport; Litoral Central, the holder of the concession for the 80.6 km toll motorway serving the cities of Algarrobo, Casablanca and Cartagena in Chile. Grupo Costanera and its subsidiaries have been consolidated since 1 April The results for the period reflect the decline in the value of the Chilean peso versus the euro, which resulted in a reduction in the exchange rate from Chilean pesos per euro for Los Lagos (the average rate for the period of consolidation from January to September 2012) and from Chilean pesos per euro for Gruppo Costanera (the average rate for the period of consolidation from April to September 2012) to an average rate of Chilean pesos per euro in the first nine months of Key performance indicators (Em) REVENUE EBITDA ADJUSTED REVENUE (1) ADJUSTED EBITDA (1) 9M M 2012 % INCREASE/ (DECREASE) 9M M 2012 % INCREASE/ (DECREASE) 9M M 2012 % INCREASE/ (DECREASE) 9M M 2012 % INCREASE/ (DECREASE) Los Lagos % % % % Grupo Costanera (2) Costanera Norte n.s n.s n.s n.s. Nororiente n.s n.s n.s n.s. Vespucio Sur n.s n.s n.s n.s. Litoral Central n.s n.s n.s n.s. AMB n.s n.s n.s n.s. (1) Information on the nature of the adjustments made and differences between reported and adjusted amounts is provided in the specific section Consolidated financial review. (2) Amounts for 2012 refer solely to the period of consolidation (from 1 April 2012). Traffic TRAFFIC (MILLIONS OF KM TRAVELLED) 9M M 2012 % INCREASE/ (DECREASE) TRAFFIC (THOUSANDS OF JOURNEYS) 9M M 2012 % INCREASE/ (DECREASE) Los Lagos % 10,834 9, % Grupo Costanera Costanera Norte % 154, , % Nororiente % 3,953 3, % Vespucio Sur % 188, , % Litoral Central % 2,842 2, % AMB % 6,755 6, % Total 1, , % 367, , % 44

45 Operating review for the main Group companies During the first nine months of 2013 the Chilean operator, Los Lagos, registered a 6.8% increase in traffic in terms of kilometres travelled compared with the same period of In the same period traffic on the network managed by the operators present in the metropolitan area of Santiago registered increases of 4.3% for Costanera Norte, located in the more urban districts of the capital, and 9.5% for Vespucio Sur, up to 20.0% for Nororiente. On the network managed by Litoral Central, located along the coast to the west of the capital, traffic grew 8.8%. From 1 January 2013 the tolls applied by Los Lagos have risen 3.2%, reflecting the inflation-linked increase of 2.1%, an increase relating to safety improvements (up 2.7%) and the rounding off of tariffs to the nearest 100 pesos (down 1.6%). From 1 January 2013 the operators controlled by Grupo Costanera have applied the annual toll increases calculated under the terms of the related concession arrangements: 5.7% for Costanera Norte, Vespucio Sur and Nororiente (equal to inflation in 2012 plus 3.5%), 3.7% for AMB (equal to inflation plus 1.5%) and 2.1% for Litoral Central (equal to inflation). On 26 June 2013 Costanera Norte and the grantor signed the final agreement for the implementation of an investment programme named Programma SCO (Santiago Centro Oriente). Ratification of the agreement by Supreme Decree to be signed by the President of the Republic of Chile is currently in progress. The programme covers seven projects designed to eliminate the principal bottlenecks on the section operated under concession. The total value of the work to be carried out is 230 million pesos (approximately E360 million). The agreement envisages that the operator will receive specific payment from the grantor in return for the above construction services, including a final payment at the expiry of the concession term designed to guarantee a minimum return, and a share of the increase in revenue deriving from the installation of new tollgates. Further information is provided in the section, Significant regulatory aspects and litigation. Brazil Atlantia Bertin Concessões SA and its subsidiaries The Atlantia Group is one of the leading motorway operators in Brazil through the joint venture, Atlantia Bertin Concessões SA, set up with the Bertin group, and which manages a total of 1,538 km of network. Through Autostrade Concessões e Participações Brasil (a wholly owned subsidiary of the Atlantia Group), the Atlantia Group holds 50% + 1 share of Infra Bertin Participações SA, a Brazilian holding company set up with the Bertin group, and which in turn controls Atlantia Bertin Concessões SA and the following operators: Triangulo do Sol, which holds the concession for 442 km of motorway in the north west of the state of Sao Paulo; Rodovias das Colinas, the holder of the concession for a total of 307 km of motorway network in the state of Sao Paulo, connecting the cities of Campinas, Sorocava and Rio Claro; Nascentes das Gerais, the holder of the concession for a total of 372 km of motorway in the state of Minas Gerais, serving Betim, São Sebastião do Paraíso and Belo Horizonte. Following the merger of Atlantia Bertin Participações SA with and into Atlantia Bertin Concessões SA with effect from 1 July 2013, Atlantia Bertin Concessões SA owns 50% of Tietê (3), the holder of the concession (expiring in 2039) for 417 km of road in the state of Sao Paulo, in the area between Bauru and Campinas. (3) The remaining 50% is held by Ascendi-Mota Engil. 45

46 2. Report on operations Atlantia Bertin Concessões and its subsidiaries, Rodovias das Colinas and Nascentes das Gerais, have been consolidated since 1 July 2012, whilst Triangulo do Sol has been consolidated since 1 July Atlantia Bertin Concessões SA also has an option to acquire a 100% interest in Infra Bertin Empreendimentos SA, which owns a 95% interest in SPMAR, the company that holds the concession to operate a part of the Rodoanel, the 105 km orbital toll motorway serving Sao Paulo, of which approximately 60 km is in operation, with the remainder under construction. Toll increases in the State of Sao Paulo are applied from 1 July of each year based on the inflation rate for the previous 12 months. In response to growing civil unrest throughout Brazil, sparked by protests over the increasing cost of public transport in urban areas, at the end of June 2013 the Governor of the State di Sao Paulo decided to delay introduction of the motorway toll increases, due to come into effect from 1 July 2013, and the Public Transport Services Regulator for the State of Sao Paulo (ARTESP) devised a package of measures designed to compensate operators for the lack of the increase in tolls. Information on the delay in increasing tolls in the State of Sao Paulo in line with inflation and the related forms of compensation for operators is provided in the section, Significant regulatory aspects and litigation. Traffic registered by the operators, Triangulo do Sol and Rodovias das Colinas, rose by 6.1% and 5.9%, respectively, in the first nine months of 2013 in terms of kilometres travelled. The operator, Nascentes das Gerais, located in the south west of the state of Minas Gerais, recorded growth of 2.6%. The results for the period reflect the decline in the value of the Brazilian real versus the euro, which resulted in a reduction in the exchange rate from 2.46 Brazilian reals per euro for Triangulo do Sol (the average rate for the period of consolidation from January to September 2012) and 2.54 Brazilian reals per euro for Rodovias das Colinas and Nascentes das Gerais (the average rate for the period of consolidation from July to September 2012) to an average rate of 2.79 Brazilian reals per euro for the first nine months of Key performance indicators (Em) TRAFFIC (MILLIONS OF KM TRAVELLED) REVENUE (1) EBITDA (1) 9M M 2012 % INCREASE/ DECREASE) 9M M 2012 % INCREASE/ DECREASE) 9M M 2012 % INCREASE/ DECREASE) Triangulo do Sol 1, , % % % Rodovias das Colinas 1, , % n.s n.s. Nascentes das Gerais % n.s n.s. Total 3, , % (1) Amounts for 2012 refer solely to the period of consolidation (from 1 July 2012). Poland Stalexport Autostrady group The Polish operator, Stalexport Autostrada Malopolska, recorded a 9.1% increase in kilometres travelled in the first nine months of 2013, compared with the same period of 2012, with light vehicles up 9.6% and heavy vehicles 6.5%. The increases are primarily due to the poor weather conditions seen in the first quarter of 2012 and extraordinary maintenance on one of the alternative roads carried out from May Stalexport Autostrada Malopolska generated total revenue of E37.5 million in the first nine months of 2013 (including toll revenue of E35.9 million), marking an increase of 11.3% (11.1% on a constant exchange rate basis) compared with the same period of EBITDA of E29.5 million is up 15.6% (15.4% on a constant exchange rate basis) compared with the same period of 2012 (E25.5 million). 46

47 Operating review for the main Group companies France Ecomouv On 20 October 2011 Autostrade per l Italia, via the project company, Ecomouv Sas (in which it holds a 70% interest) signed a partnership agreement with the French Ministry of Ecology, Sustainable Development and Transport (MEDDTL) for the construction and operation of a compulsory satellite-based tolling system for heavy vehicles weighing over 3.5 tonnes on approximately 15,000 km of the country s road network (the socalled Eco-Taxe Poids Lourds project). The contract envisages total investment of approximately E650 million and total revenue of E2.8 billion over the 13 years and 3 months of the concession term. There will be an initial 21-month design and construction phase starting from signature of the contract, followed by operation and maintenance of the tax collection system for 11 and a half years. As part of the design and construction phase, in the first nine months of 2013 Ecomouv completed work, relating primarily to development of the tolling system, the central system and the control system, amounting to E525.6 million. More information on the overall timing of the project is provided in the section Significant regulatory aspects and litigation. United States of America Electronic Transaction Consultants Electronic Transaction Consultants (ETC) is the leading US provider of systems integration, hardware and software maintenance, customer services and consultancy in the field of free-flow electronic tolling systems. Via its subsidiary, Autostrade dell Atlantico, Autostrade per l Italia holds a 61.41% interest in the company. ETC generated revenue of E40.2 million in the first nine months of 2013, marking an increase of 10.0% (13.1% on a constant exchange rate basis) compared with the same period of 2012 (E36.5 million). EBITDA of E4.6 million is an improvement on the negative result of the same period of 2012 (negative EBITDA of E0.7 million). India Pune-Solapur Expressways Private Limited On 17 February 2009 Atlantia, in consortium (50-50) with TRIL Roads Private Limited, a Tata group company, was awarded a 21-year concession for the 110 km Pune-Solapur section of motorway in the Indian state of Maharashtra. On 4 February 2013 the first 85 km of the Pune-Solapur section of motorway to be completed entered service. Work on widening the remaining 25 km of motorway from two to four lanes is nearing completion. On 5 May 2013 A&T Road Construction Management and Operation Private Limited, a company 50% owned by the Atlantia Group and 50% owned by the Tata group, was established. The company will be the vehicle responsible for operation and maintenance on behalf of the operator, Pune Solapur. The operator applied the toll increase of 5.9% provided for in the concession arrangement from 5 August This is calculated on the basis of 3% + 40% x WPI (the wholesale price index). Approximately 22,000 journeys a day (the total for the two barriers) have been registered since the road entered service until 30 September 2013, with 44% being light vehicles and 56% heavy vehicles. 47

48 2. Report on operations Workforce As at 30 September 2013 the Group employs 11,532 staff on permanent contracts and 425 temporary staff, resulting in a total workforce of 11,957, with 8,979 employed in Italy and 2,978 by overseas companies. This is down 35 (0.3%) on the 11,992 of 31 December The change in permanent staff (up 121) primarily reflects events at the following Group companies: Ecomouv (up 160), reflecting the recruitment of staff for the Metz contact centre; Giove Clear (up 29) due to the progressive increase in operating personnel; Telepass (down 40) due to the transfer of contact centre staff to Autostrade per l Italia; Pavimental (down 12) due to a freeze on new recruitment and early retirement incentives; Spea (down 10) as a result of redundancy incentives; Autostrade Tech (up 10) following the conversion of a number of temporary contracts and the transfer of staff from Autostrade per l Italia; the Brazilian companies (up 43) following the recruitment of staff for the Shared Services Centre at ABC Concessões and to replace retiring toll collection staff at Colinas and Nascentes das Gerais; the Chilean companies (down 55) due to a reduction in staff following the centralisation of operations; Italian operators (down 7); after the transfer of staff to Autostrade per l Italia from Telepass, the reduction totals 47 and reflects a cut in toll collectors, above all at Autostrade per l Italia. The change in temporary staff (down 156) primarily reflects changes at the following Group companies: Spea (down 63), the Chilean companies (down 12) and Pavimental (down 6) due to the non-renewal of contracts expiring; Ecomouv (up 21) following the start-up of operation of the Eco-Taxe system; Pavimental Polska (up 12) following the recruitment of construction workers to work on contracts acquired in the second half of 2013; Italian operators (down 97) following reductions in toll collectors at Autostrade per l Italia, Tangenziale di Napoli and Autostrade Meridionali; Autostrade Tech (down 7) following conversions to permanent contracts. The average workforce (including agency staff) is up from 11,051 in the first nine months of 2012 to 11,446 for the first nine months of 2013, marking an overall increase of 395 (up 3.6%). The increase primarily reflects: the different impact on the basis of consolidation of the new Chilean operators (up 193 on average) and the new Brazilian operators (up 652 on average); recruitment of personnel to staff Ecomouv s contact centre (up 80 on average); the expansion of Giove Clear s operations (up 37 on average); a reduction in temporary staff, a freeze on recruitment and use of ordinary and extraordinary income support and solidarity contracts by Pavimental (down 165 on average); 48

49 Workforce a reduction in staff at Italian operators (down 139 on average) following a reduction in toll collectors (down 113 on average), above all at Autostrade per l Italia, due to a freeze on recruitment of new toll collectors; a reduction in temporary contracts and reduced use of agency staff at Spea (down 93 on average); reduced use of agency staff at Electronic Transaction Consultants (down 87 on average); the sale of Port Mobility (down 40 on average); staff cuts and the non-renewal of agency contracts at EsseDiEsse (down 31 on average); deconsolidation of Biuro Centrum from the Stalexport Autostrady group (down 20 on average). Staff costs (before deducting capitalised expenses) of E500.4 million are up E3.2 million (0.6%) on the same period of 2012 (E497.2 million). After stripping out the contribution from the new Chilean and Brazilian companies, consolidated for the first time in 2012, and the deconsolidation of Port Mobility, staff costs are down E6.9 million (1.4%), reflecting: a) the decrease of 286 (2.7%) in the average workforce; b) an increase in the average unit cost (up 2.1%), primarily due to contract renewals at Italian motorway operators for the periods and ; c) a 0.8% reduction in other staff costs, primarily due to reduced use of agency staff (124 fewer on average). Capitalised staff costs total E61.6 million for the first nine months of 2013, compared with the E68.8 million of the same period of

50 2. Report on operations Permanent staff POSITION INCREASE/(DECREASE) TOTAL % Senior managers % Middle managers % Administrative staff 4,904 4, % Manual workers 2,240 2, % Toll collectors 3,404 3, % Total 11,532 11, % Temporary staff POSITION INCREASE/(DECREASE) TOTAL % Senior managers 1-1 n.a. Middle managers % Administrative staff % Manual workers % Toll collectors % Total % Average workforce (1) POSITION 9M M 2012 (2) INCREASE/(DECREASE) TOTAL % Senior managers % Middle managers % Administrative staff 4,887 4, % Manual workers 2,451 2, % Toll collectors 3,122 3, % Total 11,446 11, % (1) Includes agency staff. (2) The figure includes the workforce of Port Mobility, deconsolidated in

51 Significant regulatory aspects and litigation Significant regulatory aspects and litigation Toll increases with effect from 1 January 2013 Decree 501 of 31 December 2012 issued by the Minister of Infrastructure and Transport, in agreement with the Minister of the Economy and Finance, gave Autostrade per l Italia the go-ahead to increase its tolls by 3.47% from 1 January The same decree also suspended the increase based on the K component the Company had requested an increase of 0.07% and deferred application until the five-yearly update of the financial plan, with effect from 1 January Autostrade per l Italia has challenged the above decree before Lazio Regional Administrative Court, contesting the part in which it delays application of the K component until the update of the financial plan. The Minister of Infrastructure and Transport, in agreement with the Minister of the Economy and Finance, subsequently issued Decree 145 of 9 April 2013, authorising, with immediate effect, the toll increase of 0.07% suspended by the earlier decree of 31 December This new decree also authorised recovery, to be taken account of in the five-yearly update of the financial plan, of the uncollected tolls for the period between 1 January 2013 and the date of application of the above increase (12 April 2013). It was, finally, established that the above recovery will begin from the toll increases for Five-yearly update of financial plan In accordance with the terms of its Single Concession Arrangement, Autostrade per l Italia submitted the documentation comprising the five-yearly update of its financial plan to the Grantor on 28 September Whilst awaiting completion of the related approval process, the CIPE (the Interministerial Economic Planning Committee) passed Resolution 27/2013 of 21 March 2013, establishing that the five-yearly update of the financial plan must, for all operators, take place within 30 June of the year following the five-year period. As a result, Autostrade per l Italia submitted the documentation comprising the proposed five-yearly update of its financial plan to the Grantor on 28 June Following the outcome of a series of meetings with the Grantor, on 2 October 2013 Autostrade per l Italia submitted an updated version of the above documentation. The process of formally updating the financial plan is still in progress. Award of the concession for the A3 Naples-Pompeii-Salerno motorway The single concession arrangement signed by Autostrade Meridionali and ANAS on 28 July 2009, and approved with Law 191/2009, expires on 31 December

52 2. Report on operations The Grantor published the call for tenders in the Official Gazette of 10 August 2012 in order to award the concession for maintenance and operation of the Naples-Pompeii-Salerno motorway. The tender process envisages that the winning bidder must pay Autostrade Meridionali the value of the takeover right, which the call for tenders has set at up to E410 million. Autostrade Meridionali submitted its request for prequalification. The tender process is still in progress at the date of approval of this Report. In compliance with the concession arrangement, in December 2012 the Grantor asked Autostrade Meridionali to continue operating the motorway after 1 January 2013, in accordance with the terms and conditions set out in the concession arrangement, and to implement safety measures on the motorway. According to the terms of the concession arrangement, the transfer of the concession to the incoming operator will take place at the same time as payment for the takeover right is made to Autostrade Meridionali. Disputes with oil and food service providers Two food service providers have alleged that Autostrade per l Italia has breached the terms of contracts relating to a number of service areas, requesting the payment of damages. In brief, the dispute regards six claims brought before the Civil Court of Rome regarding the same number of service areas. The actions regard alleged breaches of contract by Autostrade per l Italia and delays in carrying out foreseen investment by the providers, which the providers themselves claim is not their responsibility. The plaintiffs are requesting the payment of damages and a reduction in the royalties payable. One oil service provider has requested the termination of existing agreements, alleging that the terms are excessively onerous and requesting the payment of damages for breach of contract by Autostrade per l Italia in relation to a number of service areas. With regard to the above provider, Autostrade per l Italia has responded to the failure to pay the fees due by enforcing the related bank guarantees and has notified orders for payment of the amounts due. The provider has challenged the orders for payment served on them. Claim for damages from the Ministry of the Environment On 26 March 2013 the Ministry of the Environment filed a civil claim in connection with a criminal case pending before the Pontassieve division of the Court of Florence. The case, which dates back to 2007 and relates to events in 2005, involves two of Autostrade per l Italia s managers and another 18 people from contractors, and regards alleged violations of environmental laws during construction of the Variante di Valico. The Ministry is claiming equivalent damages of approximately E800 million for joint liability of the accused. The Ministry s claim was notified to Autostrade per l Italia on 10 April. The Public Prosecutor s investigation centres around categorisation of the materials produced during excavation of the tunnels as waste consisting of earth removed as work on boring the tunnel proceeds, mixed with other waste materials from construction and demolition containing hazardous substances. The Public Prosecutor s Office claims that, as a result, the conduct of Autostrade per l Italia s managers and the contractors carrying out the work was illegal, given that these materials were then used in constructing motorway embankments and in the landscaping work included in the designs and approved by the relevant authorities. Based in part on opinions obtained from Autostrade per l Italia s advisors, the company notes the following: in supervising execution of the above works and, in particular, in handling the resulting excavation material, Autostrade per l Italia has always acted in consultation with the government bodies and local authorities with responsibility for the related controls, as required by the Unified Standards, dated 8 August 2008, for the treatment of soil and rocks from excavation work, containing specific procedures for the handling of these materials; 52

53 Significant regulatory aspects and litigation the method used for the works in question was confirmed by Ministerial Decree 161/2012, which clarifies the conditions to be met before soil and rocks from excavation work can be reused as byproducts, confirming what was agreed with the Ministry of the Environment in the above Unified Standards on 8 August The above decree also establishes limits on the amount of pollutants contained for the purposes of reuse in motorway infrastructure, limits with which the materials in question complied, as certified by a technical expert provided by the Engineering Department of the University of Roma 3; it should also be noted that the abnormally large claim for equivalent damages, presented during the criminal trial (in place of any prior attempts at environmental recovery), appears not to be compliant with Italian legislation or with EU Directive 2004/35/EC. In respect of which, the European Commission indeed initiated infringement proceedings against Italy in 2007 (no. 2007/4679), which has recently resulted in the inclusion of a number of amendments of the Environmental Code in legislation enacted on 6 August 2013 (the so-called European Law 2013 ). The amendments include (in article 25 of the above European Law) elimination of the provision requiring payment of the equivalent damages referred to in article 311 of the Environmental Code, without prejudice to the payment of compensation for specific environmental damage through specific reparation; however, in the remote likelihood that the court should find the two managers liable, the company believes that any recovery work would be limited. Autostrade per l Italia, therefore, in part based on the uniform opinions issued by its legal advisors, deems the claim to be without grounds and as a result, in view of the remoteness of the risk, has not deemed it necessary to make any provision in its financial statements. At the hearing held on 25 June 2013, Autostrade per l Italia appeared before the court as the civil defendant. The hearing was adjourned until 27 September 2013, partly in order to rule on the objections raised by the defence, and subsequently given the closure of the Pontassieve division pursuant to Legislative Decree 155/2012 and the decision to switch all trials to the Court of Florence. The adjournment was initially until 4 October 2013 and later until 9 December Judgement at first instance is expected to be pronounced by the end of Accident on the Acqualonga viaduct on the A16 Naples-Canosa motorway on 28 July 2013 On 28 July 2013 there was an accident on the A16 Naples-Canosa motorway at km The accident, which occurred on the Naples-bound carriageway on the Acqualonga viaduct, involved a coach and a number of cars. 40 people were killed as a result of the accident. As a result of this event, the Public Prosecutor s Office in Avellino, which is conducting a preliminary investigation, notified Autostrade per l Italia of a sequestration order in respect of the concrete slabs to which the New Jersey type crash barriers were fitted along the right-hand edge of the section between km and km of the westbound carriageway of the A16 motorway, as well as the roadside crash barriers on this stretch of motorway, which finished up below the viaduct. The investigation involves three managers (the current Director of the section of motorway and his two predecessors) and two employees of Autostrade per l Italia, who are being investigated for multiple manslaughter and negligence. The Public Prosecutor s Office in Avellino later ordered sequestration of the westbound carriageway of the entire Acqualonga viaduct, only partially covered by the previous order, and widened the scope of the investigation being conducted by its technical experts to include checks on safety levels along the eastbound carriageway of the Acqualonga viaduct and on all the viaducts on the section of motorway from Baiano to Avellino West. This was done to see whether or not there is evidence of deterioration and thus of danger to the public. The relevant checks were carried out on 5 September The Prosecutor s Office has taken no further action. The expert assessment is still in progress. 53

54 2. Report on operations Ecomouv On 19 July 2013 the Minister of Transport authorised the start-up of registration of taxpayers who intend to pay the tax by the companies specifically appointed by decree to act on behalf of the government (the Société Habilitée de Télépéage, or SHT, which include the subsidiary, Telepass). Nationwide, voluntary trials of the system began on 29 July 2013, involving around 4,200 vehicles. This confirmed the correct operation of the unit s core functions (collection and payment of the tax), as publicly acknowledged by the customer. On 5 September 2013 the Ministry of Transport, however, announced that there would be a delay in application of the tax, previously scheduled for 1 October 2013, in order to correct a number of peripheral aspects of the device (but, in substance, as widely reported in the press, due to the low number of contracts registered in the period from 19 July to 31 August, numbering around 20,000 and thus insufficient to permit the start-up of operation). Application is now scheduled for 1 January Final testing of adjustments made by Ecomouv in the meantime began on 16 September and the legislative framework governing application of the tax has been completed (with publication of the decree bringing the tax into effect on 5 October 2013). From 15 October 2013 the State has authorised the start-up of registration for users who have not subscribed and the opening of the distribution network. More than 130,000 heavy vehicles have been registered to date. In the meantime, final testing of the improvements made to the system is in the process of being completed. However, on 29 October 2013 the French Prime Minister announced the suspension of introduction of the ecotax in order to reduce the burden on road users, as demanded by road hauliers associations, farmers and politicians in the Brittany region. Subsequent announcements by the Prime Minister and the Minister of Transport confirmed that it is a suspension and not abolition of the ecotax and no formal communication has been sent to Ecomouv, which, in agreement with the Ministry of Transport, is proceeding to prepare for rollout of the system, which is still scheduled for November The tax remains politically and socially unpopular in France and its application is uncertain and subject to change. This situation may necessitate application of the safeguards provided for in the relevant contract. Chile On 26 June 2013 Costanera Norte and the grantor signed the final agreement for the implementation of an investment programme named Programma SCO (Santiago Centro Oriente). The process of ratifying the agreement by Supreme Decree to be issued by the country s President is underway. The programme covers seven projects designed to eliminate the principal bottlenecks on the section operated under concession. The total value of the work to be carried out is around 230 million pesos (approximately E360 million) and work is expected to be completed in mid The agreement envisages that the operator will receive specific payment from the grantor in return for the above construction services, including a final payment at the expiry of the concession term designed to guarantee a minimum return, and a share of the increase in revenue deriving from the installation of new tollgates. Work on the first three projects, with a value of approximately E40 million and previously approved as priority works, began in February Work is due to start on the last four projects at the beginning of Brazil Following the recent civil unrest in the country, at the end of June 2013 the Governor of the State of Sao Paulo decided to delay introduction of the motorway toll increases due to be applied from 1 July 2013 in order to bring tolls into line with the inflation rate for the last 12 months. 54

55 Significant regulatory aspects and litigation The resolution published by the Public Transport Services Regulator for the State of Sao Paulo (ARTESP), dated 27 June 2013, and subsequent implementation guidelines issued by ARTESP and the Secreteriat for Logistics and Transport in the State of Sao Paulo (SLT) contained a package of measures designed to compensate operators for the lack of an increase in tolls. The measures include cancellation of 50% of the variable fee payable to ARTESP (reduced from 3% to 1.5% of revenue) for the months of July, August and September 2013 and the right to bill for the suspended axles of heavy vehicles from 28 July Should the above compensation not be sufficient to maintain the financial conditions of the arrangements, the concession arrangements provide for compensation via an extension of the concession term for a period to be calculated on the basis of the discount rate originally provided for in the arrangements. On 13 July 2013 ARTESP used the Official Gazette to announce its decision to proceed with an investigation of all ten operators in the State of Sao Paulo that agreed Addenda and Amendments with ARTESP, which were signed and approved in The agreed changes were designed to extend the concession terms to compensate, among other things, for the expenses incurred as a result of taxes introduced after the concessions were granted. The Addenda and Amendments of 2006 were negotiated and signed by ARTESP on the basis of favourable opinions issued by the Regulator s own technical, legal and finance departments. The Addenda and Amendments were then examined by specific oversight bodies from the Ministry of Transport and the Court of Auditors of the State of Sao Paulo, which confirmed their full validity. ARTESP is contesting the fact that the compensation was calculated on the basis of forecasts in the related financial plans as, moreover, provided for in the concession arrangements, and not on the basis of actual data. The operators concerned, which include Triangulo do Sol and Colinas, and industry insiders, including banks, believe that the risk of a unilateral revision of the Addenda and Amendments is remote. This view is backed up by a number of unequivocal legal opinions provided by leading experts in administrative law and regulation. Electronic Transaction Consultants (ETC) Following the withholding of payment by the Miami-Dade Expressway Authority ( MDX ) for the on site and office system management and maintenance services provided by ETC, and after a failed attempt at mediation as required by the service contract, on 28 November 2012 ETC petitioned the Miami-Dade County Court in Florida to order MDX to settle unpaid claims amounting to over US$30 million and damages for breach of contract. In December 2012 MDX, in turn, notified ETC of its decision to terminate the service contract and sue for compensation for alleged, yet unquantified, damages for breach of contract by ETC. Pre-trial hearings are currently underway. The court is expected to rule by the end of the first half of Poland The Polish Antitrust Authority has launched an Explanatory Proceeding to investigate the investee company, Stalexport Autostrada Malopolska SA. The proceeding aims to investigate the company s abuse of its dominant position with regard to the tolls charged to road users when carrying out construction and extraordinary maintenance work, given that Stalexport Autostrada Malopolska SA is held to operate as a monopoly. Should the Authority rule that there has been an abuse of its dominant position, the proceeding could result in a fine. At the end of a similar investigation in 2008 the local Antitrust office fined the Polish company approximately E300 thousand, given that it had not put in place a procedure for reducing tolls during the work. 55

56 2. Report on operations The fine was confirmed at various instances, including by the Supreme Court. No construction or extraordinary maintenance work of note is currently being conducted on the section of motorway operated by Stalexport Autostrada Malopolska SA. Whilst reserving the right to challenge any ruling the Authority s investigation may result in, the company is taking steps to define the timing and amount of eventual reductions in tolls whilst such work takes place. At the present time, the outcomes of the above litigation proceedings are not expected to result in significant charges to be incurred by Group companies, in addition to the amounts already provided at 30 September 2013 and reported in the consolidated financial statements. 56

57 Merger of Atlantia and Gemina Merger of Atlantia and Gemina On 30 April 2013 the Annual General Meeting (AGM) of the Company s shareholders, meeting in extraordinary session, voted to approve the plan for the merger of Gemina with and into Atlantia, as approved by the Boards of Directors of the respective companies on 8 March 2013, and to thus proceed with the merger of Gemina SpA with and into Atlantia SpA in accordance with the terms and conditions set out in the plan. As a result, the AGM approved an increase in the issued capital of the acquirer, Atlantia, via the issue of up to 164,025,376 new ordinary shares with a total par value of up to E164,025, The new shares will have a par value of E1.00 each and will be issued in application of the exchange ratio (1 ordinary share in Atlantia for every 9 ordinary/savings shares in Gemina) and the procedures for allocating the shares provided for in the merger plan. The AGM thus voted to adopt, from the date on which the merger is effective in respect of third parties, the necessary amendments to the articles of association. On 29 April Atlantia informed Gemina that, in connection with case 9149/2007 brought by the Public Prosecutor s Office in Florence, the Ministry of the Environment has filed a civil claim for damages of E810 million. In addition, prior to the extraordinary general meetings of the shareholders of the two companies involved in the merger, on 30 April Atlantia provided Gemina with a copy of the legal opinion issued by the Marchiolo law firm, which expresses the firm conviction that the risk of a negative outcome is extremely remote, if not entirely non-existent. On the same date Gemina, in responding to the letter from Atlantia, announced that it had informed those attending its extraordinary general meeting. The company also stated that its Board of Directors, meeting after the general meeting, had authorised the Chairman and CEO to conduct all the checks held to be necessary or opportune, including via the subsequent appointment of experts to enable the company to assess any eventual impact on the agreed share exchange ratio. Information on this matter was also provided during the AGM of Atlantia s shareholders. Following the above analysis, conducted in part by a panel of experts specifically appointed by Gemina, on 20 June 2013 Gemina s Board of Directors concluded that the potential risk of a negative outcome for Autostrade per l Italia was not sufficient to require a revision of the exchange ratio set out in the Merger Plan and approved by the respective general meetings of April At the same meeting Gemina s Board of Directors asked the Chairman and the Chief Executive Officer to engage in discussions with Atlantia to determine whether some form of legal protection to safeguard the interests of Gemina and all of its shareholders can be put in place to mitigate, whilst leaving the share exchange ratio unchanged, the potential risk of a decrease in the economic value of Atlantia s capital should an adverse ruling be handed down against Autostrade per l Italia as a result of the above proceedings or of a subsequent civil claim for damages. As a result of the above discussions, involving the companies legal and financial advisors and conducted in compliance with the companies respective procedures for related party transactions, on 28 June 2013 the Boards of Directors of Atlantia and Gemina, with the consent obtained from the relevant corporate bodies in accordance with such procedures, approved the inclusion of an additional provision in the Plan for the Merger of Atlantia and Gemina envisaging, at the same time as the issue of the shares to service the Merger exchange ratio, the grant free of charge of Contingent Value Rights to the holders of Gemina s ordinary and savings 57

58 2. Report on operations shares, who will receive Atlantia ordinary shares on the effectiveness of the Merger in the ratio of 1 Contingent Value Right for each Atlantia Ordinary Share received under the terms of the Merger. On 8 August 2013 the Extraordinary General Meetings of Atlantia s and Gemina s shareholders voted to approve the new provision for inclusion in the Atlantia-Gemina Merger Plan, providing for the issuance of up to 164,025,376 contingent value rights (the Contingent Value Rights ), to be granted free of charge to the holders of Gemina s ordinary and savings shares, who will receive Atlantia ordinary shares on the effectiveness of the Merger in the ratio of 1 Contingent Value Right for each Atlantia Ordinary Share allotted to the above Gemina shareholders under the terms of the Merger, at the same time as the issue of the shares to service the Merger exchange ratio. The General Meeting also approved the related Terms and Conditions of the Atlantia SpA 2013 Contingent Value Rights, as amended. The new provision for inclusion in the Merger Plan was also approved by the Special General Meeting of Gemina s savings shareholders held on 7 August The General Meeting of Atlantia s shareholders also approved the concomitant issue of new shares by the Acquirer, Atlantia SpA, with a total par value of up to E18,455,815, via the issue of up to 18,455,815 new Atlantia ordinary shares with a par value of E1.00 each, to be irrevocably allotted to service the Contingent Value Rights. This further capital increase is in addition to the increase previously approved by the Extraordinary General Meeting of shareholders held on 30 April 2013 to service the exchange ratio. The terms of the Merger relating to the issue of the Contingent Value Rights and the consequent additional provision in the Merger Plan are governed by an Addendum to the Merger Agreement between Gemina and Atlantia dated 8 March 2013, signed by Atlantia and Gemina on 28 June At the date of the approval of this Consolidated Interim Report, all but one of the conditions precedent provided for in the Merger Plan have been fulfilled. Completion of the Merger is, therefore, subject to fulfilment of the remaining condition set out in the Merger Plan (the absence, within the date set for execution of the Merger Deed, of any acts or rulings by judicial and administrative authorities having an impact on the entire validity and/or effectiveness of the Merger, or even a partial impact, provided that, in the latter case, the impact is significant and, in any event, such as to alter the risk profile or valuations on which determination of the Exchange ratio has been based: regarding (i) the ADR Agreement and/or its content, (ii) the Approval Decree, (iii) the planning agreement signed by ENAC and ADR, or (iv) resolution 38 of 19 October 2012 passed by the Board of Directors of ENAC). The Merger is expected to be completed at the latest by 31 December 2013 and, in any event, not before the second half of November, given that the deadline for creditors to express their opposition, pursuant to article 2503 of the Italian Civil Code, expires on 14 November

59 Other information Other information Exemption from disclosure requirements On 17 January 2013 a meeting of Atlantia SpA s Board of Directors elected to apply the exemption provided for by article 70, paragraph 8 and article 71, paragraph 1-bis of the CONSOB Regulations for Issuers (Resolution 11971/99, as amended). The Company will therefore exercise the exemption from disclosure requirements provided for by Annex 3B of the above Regulations in respect of significant mergers, spin-offs, capital increases involving contributions in kind, acquisitions and disposals. 59

60 2. Report on operations Events after 30 September 2013 Bond issue On 22 October 2013 Atlantia issued bonds with a value of E750 million, a term to maturity of 7 years and 4 months and guaranteed by Autostrade per l Italia. The bond issue forms part of the Company s E10 billion Medium-term Note Programme launched on 7 May 2004 and subsequently updated, which has so far resulted in the issue of bonds worth E9 billion. The effective yield to maturity is 3.00%, corresponding to a yield that is 128 basis points above the reference mid-swap rate. Alitalia On 15 October 2013 the extraordinary general meeting of Alitalia s shareholders, at the proposal of the company s board of directors, unanimously approved a capital increase of up to E300 million, with new shares to be offered to shareholders in proportion to their percentage interest. The capital increase is conditional up to a total of E240 million and unconditional above this amount, and any unsubscribed shares may be offered to third parties, until 31 December 2013, the deadline for subscription of the new shares. As part of the capital increase, the banks, Intesa Sanpaolo and UniCredit, have undertaken to subscribe up to a maximum of E100 million in unsubscribed shares. To date a number of shareholders, including Atlantia, have paid in a total of E65 million and a further E65 million has been paid in by the above banks in accordance with the above undertaking. Treasury shares Atlantia currently holds 12,845,556 treasury shares, representing 1.9% of its issued capital. There were no purchases or sales during the first nine months of 2013, except for the allocation of 440,060 treasury shares to beneficiaries exercising options granted under certain of Atlantia s share option plans. 60

61 Outlook and risks or uncertainties Outlook and risks or uncertainties As a result of the continuing weakness of the macroeconomic environment in Italy, we do not expect to see an appreciable improvement in the Group s operating result for the current year in Italy, compared with the previous year, whilst we expect to see a growing contribution from the Group s overseas operations (linked to the full-year contribution of the companies consolidated for the first time in 2012 and to positive traffic trends). In view of the expected effective date of the merger with Gemina, the contribution to the income statement generated by line-by-line consolidation of the acquired companies will have a marginal impact on the Group s post-merger operating results for

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63 Annexes 3