Consolidated interim report for the nine months ended 30 September 2010
ATLANTIA SpA Issued capital: 600,297,135.00, fully paid-up Tax code, VAT number and Rome Companies Register no. 03731380261 REA no. 1023691 Registered office in Rome, Via Antonio Nibby 20
Contents 1. Introduction... 3 Corporate bodies... 4 Group structure... 6 Consolidated financial highlights... 7 Shareholder structure... 8 Atlantia share price performance... 9 2. Report on operations... 11 Consolidated financial review... 13 Operating review for the Group s Italian motorway operators... 50.. Traffic... 50.. Toll charges... 51.. Network upgrade and modernisation... 53.. Network operations... 57 International operations... 59 Other events... 65 Other information... 66 Workforce... 68 Significant regulatory aspects... 71 Events after 30 September 2010... 76 Outlook... 77 3. Attestation... 79 1
1. Introduction
1. Introduction Corporate bodies Board of Directors. in office for 2010 2012 Internal Control and Corporate Governance Committee Chairman Chief Executive Officer Directors Secretary Chairman Members Fabio CERCHIAI Giovanni CASTELLUCCI Gilberto BENETTON Alessandro BERTANI Alberto BOMBASSEI (independent) Stefano CAO Roberto CERA Alberto CLÔ (independent) Antonio FASSONE Carlo MALINCONICO (independent) Giuliano MARI (independent) Gianni MION Giuseppe PIAGGIO Antonino TURICCHI (independent) Paolo ZANNONI Andrea GRILLO Giuseppe PIAGGIO Giuliano MARI (independent) Antonino TURICCHI (independent) 4
Corporate bodies Human Resources Committee Chairman Alberto BOMBASSEI (independent) Members Stefano CAO Alberto CLÔ (independent) Giuseppe PIAGGIO Paolo ZANNONI Supervisory Board Chairman Renato GRANATA Members Simone BONTEMPO Pietro FRATTA Board of Statutory Auditors. for three year period 2009 2011 Independent Auditors for the period 2006 2011 Chairman Auditors Alternate Auditors KPMG SpA Marco SPADACINI Tommaso DI TANNO Raffaello LUPI Angelo MIGLIETTA Alessandro TROTTER Giuseppe Maria CIPOLLA Giandomenico GENTA 5
1. Introduction Group structure TowerCo SpA 100% Pune Solapur Expressways Private Ltd 50% (3) Alitalia Compagnia Aerea Italiana SpA 8.85% (3) 100% Italian motorway operations Service companies International operations Tangenziale di Napoli SpA 100% Autostrada Torino Savona SpA 99.98% Società Autostrada Tirrenica pa 94% Strada dei Parchi SpA 60% Autostrade Meridionali SpA 58.98% Società Italiana p.a. Traforo del Monte Bianco 51% Raccordo Autostradale Valle d Aosta SpA 58% (1) EsseDiEsse Società di Servizi SpA 100% Pavimental SpA 71.67% Pavimental Polska Spzoo 100% Spea Ingegneria Europea SpA 100% AD Moving SpA 75% Port Mobility SpA 70% Newpass SpA 51% Giove Clear Srl 100% Tirreno Clear Srl 100% Autostrade Tech SpA 100% Telepass SpA 96.15% (2) Autostrade Service SpA 100% Infoblu SpA 75% IGLI SpA 33.3% (3) Impregilo SpA 29.96% (1) (3) Autostrade Participations SA 100% Autostrade International US Holdings Inc. 75% (4) Autostrade International of Virginia O&M Inc. 100% Electronic Transaction Consultants Co. 45% Stalexport Autostrady SA 56.24% Biuro Centrum Spzoo 74.38% Stalexport Autostrada Dolnoslaska SA 100% Stalexport Autoroute Sàrl 100% Stalexport Autostrada Malopolska SA 100% Stalexport Transroute Autostrada SA 55% Autostrade dell Atlantico Srl 100% Autostrade Holding do Sur SA 100% Sociedad Concesionaria de Los Lagos SA 100% Autostrade Portugal SA 100% Autostrade Brasil Limitada 100% Triangulo do Sol SA 50% (3) Autostrade Sud America Srl 45.76% (3) Autopista do Pacifico SA 100% (3) Costanera Norte SA 100% (3) Sociedad Concesionaria AMB SA 100% (3) Inversiones Autostrade Chile Limitada 100% (3) Nororiente SA 100% (3) Gestion Vial SA 100% (3) Litoral SA 50% (3) Operalia SA 50% (3) Autostrade Urbane de Chile SA 100% (3) Vespucio Sur SA 50% (3) Autostrade Indian Infrastructure Development Private Ltd. 100% (1) The percentage refers to ordinary shares representing the issued capital. (2) The remaining 3.85% is held by Autostrade Tech SpA. (3) Unconsolidated company. (4) The remaining 25% is held by Autostrade Participations SA. 6
Group structure Consolidated financial highlights Consolidated financial highlights (Em) 9M 2010 9M 2009 Total revenue (c) 2,838 2,600 Net toll revenue (c) 2,371 2,128 Other operating income 467 473 Gross operating profit (EBITDA) 1,788 1,673 EBITDA margin 63.0% 64.3% Operating profit (EBIT) 1,396 1,284 EBITD margin 49.2% 49.4% Profit/(Loss) from continuing operations 583 450 Profit margin from continuing operations 20.5% 17.3% Profit for the period (including non controlling interests) 576 436 Profit for the period attributable to owners of the parent 572 453 Operating cash flow (d) 1,141 996 Capital expenditure 994 908 (a) (b) (Em) 30.09.2010 31.12.2009 Equity 3,583 3,197 Net debt 9,176 9,755 (a) Compared with previously published amounts, figures in the consolidated statement of financial position and income statement at and for the nine months ended 30 September 2009 and at and for the year ended 31 December 2009 have been restated to take account of the impact of application of IFRIC 12, as described below. (b) In view of the fact that consolidation of Strada dei Parchi s contribution to the income statement for the first nine months of 2010 was conducted in accordance with IFRS 5, thus recognising the contribution to the interim result in Profit/(Loss) from discontinued operations/assets held for sale, Strada dei Parchi s contribution to the comparative consolidated income statement for the first nine months of 2009 has also been reclassified. Income statement amounts for the first nine months of 2009 are therefore also different from those published in the consolidated interim report for the nine months ended 30 September 2009 due to this reason, as well as due to the adoption of IFRIC 12. (c) Following the entry into effect of Law 102/2009, from August 2009 the toll surcharge that Italian motorways operators are required to pass on to ANAS is recognised in toll revenues, offset by a matching amount in operating costs. The total surcharge recognised in revenue for the first nine months of 2010 amounts to E166 million, compared with E36 million for the first nine months of 2009. (d) Operating cash flow is calculated as profit + amortisation/depreciation + provisions + financial expenses on the discounting to present value of provisions +/ impairments/ reversals of impairments of assets +/ share of profit/(loss) of investments accounted for using equity method +/ gains/(losses) on sale of assets +/ other non cash items +/ portion of deferred tax assets/liabilities recognised in the income statement. Partly due to the impact of application of IFRIC 12, as described below, the composition of the components of operating cash flow has been modified. As a result, the figures for the first nine months of 2009 have also been restated compared with previously published amounts. 7
1. Introduction Shareholder structure Abertis 6.68% 42.25% Rest of Europe 9% Germany 5% Rest of the world 8% United Kingdom 29% Fondazione CRT Assicurazioni Generali 6.68% 3.35% 39.03% (1) Free float France 12% Norway 8% USA 20% Italy 10% (3) (1) Excludes Atlantia SpA s treasury shares. (2) Source: CONSOB, Thomson Reuters figures at 30 September 2010. (3) Includes retail investors. Geographical distribution of institutional investors (2) 8
Shareholder structure Atlantia share price performance Atlantia share price performance Share information (*) Number of shares (30 September 2010) 600,297,135 Type of share Ordinary Final dividend per share for 2009, paid May 2010 (E) 0.391 Interim dividend per share for 2010, paid November 2010 (E) 0.355 Total dividend paid for 2010 (E) 0.746 Price at 30 September 2010 (E) 15.20 Low (25 May 2010) (E) 13.68 High (19 January 2010) (E) 18.10 Capitalisation at 30 September 2010 (Eb) 9.1 Average daily trading volume (m) 2.6 Atlantia share price performance 9M 2010 Price (E) (*) Volumes (000) 20 19 18 17 16 15 14 13 12 11 10 January February March April May June July August September 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Atlantia FTSE/MIB rebased Volumes (*) Share prices have been adjusted to take account of the bonus issue carried out on 7 June 2010. 9
2. Report on operations
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Consolidated financial review Consolidated financial review Introduction The Atlantia Group s interim report for the nine months ended 30 September 2010 has been prepared on the basis of the provisions of art. 154 ter, Financial reporting, of the Consolidated Finance Act introduced by Legislative Decree 195/2007, 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 2010. The financial review contained in this section includes and analyses the reclassified consolidated income statement, the statement of comprehensive income, the statement of changes in consolidated equity, the statement of changes in consolidated net debt and the statement of cash flows for the nine months ended. 30 September 2010, 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 at 30 September 2010, compared with the corresponding amounts at 31 December 2009. Compared with the accounting standards applied during preparation of the financial statements for the year ended 31 December 2009, the Group has adopted the new interpretation IFRIC 12 applicable to companies that provide services under concession. The Group has, therefore, calculated the impact of adoption of the new interpretation with effect from the beginning of the comparative financial year (1 January 2009) and in respect of all comparative amounts included in this interim report for the nine months ended 30 September 2010. Reference should be made to note 4 Impact of IFRIC 12 adoption on the Group s consolidated financial statements in the condensed interim financial statements for the six months ended 30 June 2010 for details. of the criteria used by the Group, impact of IFRIC 12 adoption on the consolidated financial statements for prior periods, and for comparisons of amounts in the consolidated financial statements at 1 January 2009 and 31 December 2009 and for the year ended 31 December 2009 before and after IFRIC 12 adoption. The impact of IFRIC 12 adoption on equity at 30 September 2009 and on profit/(loss) for the first nine months of 2009 are, instead, presented in the following section, Impact of IFRIC 12 adoption on the consolidated financial statements for the nine months ended 30 September 2009, together with comparisons of amounts in the reclassified income statement, statement of cash flows and statement of changes in net debt before and after IFRIC 12 adoption. The basis of consolidation at 30 September 2010 is the same as the ones used in preparing the consolidated financial statements for the year ended 31 December 2009 and for the nine months ended 30 September 2009. 13
2. Report on operations However, the contributions to the income statement and statement of cash flows for the comparative periods. of the companies acquired from the Itinere group at the end of June 2009 are limited to just the third quarter of 2009, as opposed to the full nine month period in 2010. Where material, the impact of this different period of contribution on changes in amounts in the financial statements is disclosed in the consolidated financial review. As allowed by IFRS 3, the purchase price allocation of goodwill provisionally accounted for at 30 June and. 30 September 2009 following the above acquisition was completed at 31 December 2009. The impact of final allocation was thus applied retroactively to amounts in the financial statements for the six months ended. 30 June 2009 (the date of first time consolidation of the acquired entity, the Autostrade dell Atlantico group) and to amounts at 30 September 2009, subsequently published as comparatives for amounts in the financial statements for the nine months ended 30 September 2010. Changes in amounts in the financial statements for the nine months ended 30 September 2009 deriving from completion of the purchase price allocation, and the matching amounts published in the interim report for the nine months ended 30 September 2009, are shown separately in the statements presented in the following section. Following manifestations of interest in the company and the subsequent start up of talks with a view to selling the Group s 60% interest in the subsidiary, Strada dei Parchi, this company s contribution to the consolidated income statement for the nine months ended 30 September 2010 is accounted for in Profit/ (Loss) from discontinued operations/assets held for sale, as required by IFRS 5 Non current Assets Held for Sale and Discontinued Operations, instead of being included in each component of the consolidated income statement for continuing operations. As a result, in accordance with IFRS 5, Strada dei Parchi s contribution to the comparative consolidated income statement for the first nine months of 2009 has also been reclassified with respect to the statement published in the interim report for the nine months ended. 30 September 2009. Also in accordance with IFRS 5, the assets and liabilities of Strada dei Parchi at 30 September 2010 have been accounted for in the statement of financial position in assets and liabilities included in disposal groups. The comparative presentation at 31 December 2009 remains unchanged. The investment in Triangulo do Sol, in which the Group holds a 50% interest, has not been consolidated on a line by line basis in the report for the nine months ended 30 September 2010 as, despite the fact that the Group agreed to acquire a further 10% of the company on 11 June 2010, not all the suspensive conditions included in the agreement have been met. 14
Consolidated financial review The Group did not enter into material transactions, either with third or related parties, of a non recurring, atypical or unusual nature during the first nine months of 2010. This interim report for the nine months ended 30 September 2010 has not been audited. Impact of IFRIC 12 adoption on the consolidated financial statements. for the nine months ended 30 September 2009 To facilitate the reconciliation of amounts published in the interim report for the nine months ended. 30 September 2009 and the comparative amounts presented in the financial statements for the nine months ended 30 September 2010, the impact of IFRIC 12 adoption on consolidated equity at 30 September 2009 and consolidated profit/(loss) for the nine months then ended is presented below. The analysis includes a separate presentation of the impact of completion of the purchase price allocation (PPA) of the companies acquired from the Itinere group, with respect to the amounts provisionally accounted for in the interim report for the nine months ended 30 September 2009. 15
2. Report on operations (Em) Equity at 30.09.2009 Amounts attributable to owners of the parent, before IFRIC 12 adoption 3,929.8 Amounts attributable to non controlling interests, before IFRIC 12 adoption 372.0 Published amounts before IFRIC 12 adoption 4,301.8 Adjustment of intangible assets 55.8 Re allocation of goodwill provisionally accounted for 41.5 Adjustment of carrying amounts of investments accounted for using the equity method 5.4 Other minor changes 4.3 Tax effect 17.6 Adjustments on completion of PPA 2.2 Amounts attributable to owners of the parent, before IFRIC 12 adoption 3,927.6 Amounts attributable to non controlling interests, before IFRIC 12 adoption 372.0 Amounts before IFRIC 12 adoption on completion of PPA 4,299.6 IFRIC 12 adjustments, before tax effect 1,567.3 Elimination of property, plant and equipment to be handed over 9,648.9 Adjustment of intangible assets Concession rights acquired from third parties 646.8 Recognition of intangible assets Concession rights accruing from construction services for which no additional economic benefits 8,724.7 are received Recognition of intangible assets Concession rights accruing from construction services for which additional economic benefits are received 2,017.5 Recognition of intangible assets Concession rights accruing from construction services provided by sub operators 75.2 Recognition of financial assets Takeover rights 189.3 Recognition of financial assets Guaranteed minimum revenues 61.7 Recognition of financial assets Government grants related to construction services 346.1 Adjustment of financial liabilities Government grants related to construction services 38.8 Recognition of provisions for construction services required by contract Construction services for which no additional economic benefits 4,398.2 are received Adjustment of provisions for repair and replacement obligations 275.0 Elimination of deferred income 64.1 Adjustment of carrying amounts of investments accounted for using the equity method 33.4 Other minor adjustments and reclassifications from other components of the financial position 7.2 Tax effect of IFRIC 12 adjustments 499.8 Amounts after IFRIC 12 adoption 3,232.1 Amounts attributable to owners of the parent, after IFRIC 12 adoption 2,866.0 Amounts attributable to non controlling interests, after IFRIC 12 adoption 366.1 Total difference after IFRIC 12 1,067.5 attributable to owners of the parent 1,061.6 attributable to non controlling interests 5.9 % difference after IFRIC 12 24.8% 16
Consolidated Profilo, storia financial e missione review (Em) Profit/(Loss) for 9M 2009 Profit attributable to owners of the parent, before IFRIC 12 adoption 581.9 Profit/(Loss) attributable to non controlling interests, before IFRIC 12 adoption 23.7 Published amounts before IFRIC 12 adoption 558.2 Adjustment of intangible assets 0.8 Adjustment of share of profit/(loss) of investee companies accounted for using the equity method 1.5 Tax effect 0.1 Adjustments on completion of PPA 2.2 Profit attributable to owners of the parent, before IFRIC 12 adoption 579.7 Profit/(Loss) attributable to non controlling interests, before IFRIC 12 adoption 23.7 Amounts before IFRIC 12 adoption on completion of PPA 556.0 IFRIC 12 adjustments, before tax effect 179.0 Elimination of deferred income 18.3 Adjustment of toll revenues for operators with guaranteed minimum revenues 1.2 Adjustments to other operating income/(costs) 4.2 Elimination of depreciation of property, plant and equipment to be handed over 251.9 Adjustment of amortisation of intangible assets Concession rights acquired from third parties 26.1 Recognition of amortisation of intangible assets Concession rights accruing from construction services for which no additional economic 224.2 benefits are received Recognition of amortisation of intangible assets Concession rights accruing from construction services for which additional economic 55.3 benefits are received Recognition of amortisation of intangible assets Concession rights accruing from construction services provided by sub operators 1.9 Adjustment of impairments of intangible assets Concession rights acquired from third parties 22.3 Adjustment of provisions for repair and replacement obligations 16.7 Adjustment of financial income Guaranteed minimum revenues and government grants 1.0 Adjustment of financial expenses from discounting to present value of provisions 138.0 Adjustment of capitalised financial expenses 40.0 Adjustment of share of profit/(loss) of investee companies accounted for using the equity method 1.7 Tax effect of IFRIC 12 adjustments 58.5 Amounts after IFRIC 12 adoption 435.5 Profit attributable to owners of the parent, after IFRIC 12 adoption 453.3 Profit/(Loss) attributable to non controlling interests, after IFRIC 12 adoption 17.8 Total difference after IFRIC 12 120.5 attributable to owners of the parent 126.4 attributable to non controlling interests 5.9 % difference after IFRIC 12 21.6% 17
2. Report on operations The reclassified consolidated income statement, statement of comprehensive income, statement of cash flows and statement of changes in net debt for the first nine months of 2009, comparing amounts before IFRIC 12 adoption and before completion of the above PPA with the matching amounts restated in accordance with the new interpretation and after completion of the PPA, are shown below. With reference to the above mentioned talks aimed at selling the Group s 60% interest in the subsidiary, Strada dei Parchi, in accordance with IFRS 5 this company s contribution to the comparative consolidated income statement for the first nine months of 2009 has also been reclassified with respect to the statement published in the consolidated interim report for the nine months ended 30 September 2009. Therefore, the column headed 9M 2009 before IFRIC 12 in the comparative consolidated income statement for the first nine months of 2009 also shows different amounts for the individual components of the consolidated income statement with respect to those previously published in the interim report for the nine months ended 30 September 2009, in which Strada dei Parchi s contribution to the income statement was classified in continuing operations. Despite this, profit attributable to owners of the parent and profit attributable to non controlling interests are the same as the previously published amounts. 18
Consolidated financial review Reclassified consolidated income statement for 9M 2009 (Em) 9M 2009 after IFRIC 12 and PPA fulfillment 9M 2009 before IFRIC 12 and PPA fulfillment Increase/(Decrease) Net toll revenues 2,129.3 2,112.2 17.1 Contract revenue 28.3 28.3 Other operating income 442.7 443.9 1.2 Total revenue 2,600.3 2,584.4 15.9 Cost of materials and external services 408.8 405.8 3.0 Concession fees 96.2 96.2 Staff costs 452.6 452.6 Capitalised staff costs 30.3 30.3 Total net operating costs 927.3 924.3 3.0 Gross operating profit (EBITDA) 1,673.0 1,660.1 12.9 Amortisation, depreciation, impairment losses and reversals of impairment losses 377.3 343.2 34.1 Provisions and other adjustments 12.2 28.5 16.3 Operating profit (EBIT) 1,283.5 1,288.4 4.9 Financial income/(expenses) 343.5 344.5 1.0 Financial expenses from discounting to present value 143.8 6.0 137.8 Capitalised financial expenses 1.7 41.7 40.0 Share of profit/(loss) of associates and joint ventures accounted for using the equity method 44.3 44.5 0.2 Profit/(Loss) before tax from continuing operations 753.6 935.1 181.5 Income tax (expense)/benefit 303.7 362.4 58.7 Profit/(Loss) from continuing operations 449.9 572.7 122.8 Profit/(Loss) from discontinued operations/assets held for sale 14.4 14.5 0.1 Profit for the period 435.5 558.2 122.7 (Profit)/Loss attributable to non controlling interest 17.8 23.7 5.9 Profit/(Loss) for the period attributable to owners of the parent 453.3 581.9 128.6 19
2. Report on operations Consolidated statement of comprehensive income for 9M 2009 (Em) 9M 2009 after IFRIC 12 9M 2009 before IFRIC 12 Increase/(Decrease) Profit for the period (A) 435.5 558.2 122.7 Fair value gains/(losses) on cash flow hedges 55.7 55.7 Gains/(Losses) from translation of financial statements of foreign operations 10.1 8.9 1.2 Gains/(Losses) from measurement of associates and joint ventures using the equity method 7.0 3.7 3.3 Other fair value gains/(losses) 0.4 0.4 Other components of comprehensive income for the period, after related tax effects (B) 58.4 60.5 2.1 Comprehensive income for the period (A + B) 377.1 497.7 120.6 of which attributable to owners of the parent 395.6 521.6 126.0 of which attributable to non controlling interests 18.5 23.9 5.4 20
Consolidated financial review The most significant effects of IFRIC 12 adoption on the consolidated income statement for the first nine months of 2009 regard: a) the increase in toll revenues, due to the derecognition of deferred income relating to tariff increases applied on the basis of investments not yet completed by Autostrade per l Italia (the so called X investments ), amounting to E18.3 million, partly offset by the reduction in Sociedad Concesionaria de Los Lagos s toll revenues, compensated for by the financial income recognised as a result of the guaranteed minimum (down E1.2 million); b) the elimination of depreciation of property, plant and equipment to be handed over, amounting to E251.9 million; c) the recognition of amortisation of concession rights, totalling E307.5 million, attributable to (i) the adjustment of amortisation of rights acquired from third parties (E26.1 million), and (ii) the recognition of amortisation of rights accruing from construction services for which no additional economic benefits are received (E224.2 million), rights accruing from construction services for which additional economic benefits are received (E55.3 million), and rights accruing from construction services provided by service area operators (E1.9 million); d) the reduction (E22.3 million) in the write down of the value of the concession right held by the. Polish operator, Stalexport Autostrada Malopolska, recognised at 30 September 2009 (amounting to E67.1 million) and calculated on the basis of the present value of expected future cash flows generated through to expiry of the related concession term (March 2027), in application of impairment testing; the reduction of the write down reflects the difference in the carrying amount of the concession right before the write down, as a result of the impact of IFRIC 12 adoption on the financial statements of Stalexport Autostrada Malopolska; e) the reduction in provisions for repair and replacement obligations, totalling E16.7 million; f) the portion of financial expenses from the discounting to present value of provisions, totalling. E138.0 million; g) the reduction in capitalised financial expenses (down E40.0 million), which may no longer be recognised in respect of construction services for which no additional economic benefits are received, essentially referring to Autostrade per l Italia. After deferred taxation on the above effects (resulting in the recognition of a E58.5 million increase in net deferred tax assets), IFRIC 12 adoption has resulted in a reduction in profit for the first nine months of 2009 of E120.5 million. 21
2. Report on operations Consolidated cash flow statement for 9M 2009 (Em) 9M 2009 after IFRIC 12 9M 2009 before IFRIC 12 Increase/(Decrease) CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES Profit for the period 435.5 558.2 122.7 Adjusted by: Amortisation and depreciation 365.3 308.9 56.4 Net change in non current provisions 15.7 29.3 13.6 Financial expenses from discounting to present value of non current liabilities 144.4 6.3 138.1 Share of (profit)/loss of associates and joint ventures accounted for using the equity method 44.3 44.5 0.2 Impairment losses/(reversal of impairment losses) and adjustments of non current assets 55.4 84.2 28.8 (Gain)/Loss on sale of non current assets 2.1 1.2 0.9 Net change in deferred tax (assets)/liabilities 9.1 51.1 60.2 Other non monetary costs/(income) 50.4 31.6 18.8 Change in working capital and other changes 58.4 55.9 2.5 Net cash generated from/(used in) operating activities (A) 1,057.4 1,105.6 48.2 CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES Motorways infrastructure works 856.1 856.1 Government grants related to motorways infrastructure works 104.9 104.9 Increase in financial takeover rights (related to motorways infrastructure works) 43.2 43.2 Purchases of property, plant and equipment 35.6 929.8 894.2 Purchases of intangible assets 16.0 16.0 Acquisition of investments, net of unpaid called up issued capital 120.7 120.7 Proceeds from sales of property, plant and equipment, intangible assets and unconsolidated investments 88.1 88.1 Dividends from associates and joint ventures accounted for using the equity method 220.5 224.1 3.6 Proceeds from sale of property, plant and equipment, intangible assets and unconsolidated investments 9.0 9.0 Change in other non current assets 2.1 0.7 1.4 Change in current and non current financial assets not held for trading purposes 61.4 75.9 14.5 Net cash generated from/(used in) investing activities (B) 999.9 1,053.1 53.2 CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES Dividends paid 221.1 221.1 Net change in the currency translation reserve and other reserves 7.4 6.7 0.7 Net change in issued capital and reserves attributable to non controlling interests 26.0 26.5 0.5 Bond Issues 1,492.7 1,500.0 7.3 Increase in medium/long term borrowings (excluding finance lease liabilities) 105.9 105.9 Increase in finance lease liabilities 0.6 0.6 Net change in other current and non current financial liabilities 132.4 135.9 3.5 Net cash generated from/(used in) financing activities (C) 1,051.3 1,056.3 5.0 Net effect of foreign exchange rate movements on net cash and cash equivalents (D) 0.8 0.8 Increase/(Decrease) in cash and cash equivalents (A + B + C + D) 1,108.0 1,108.0 Net cash and cash equivalents at beginning of period 39.6 39.6 Net cash and cash equivalents at end of period 1,147.6 1,147.6 22
Consolidated financial review Statement of changes in consolidated net debt for 9M 2009 (Em) 9M 2009 after IFRIC 12 9M 2009 before IFRIC 12 Increase/(Decrease) Profit/(Loss) for the period 435.5 558.2 122.7 AmortIsation and depreciation 365.3 308.9 56.4 Provisions 15.7 29.3 13.6 Financial expenses from discounting to present value of provisions 144.4 6.3 138.1 Share of (profit)/loss of associates and joint ventures accounted for using the equity method 44.3 44.5 0.2 Impairment losses/(reversal of impairment losses) and adjustments of non current assets 55.4 84.2 28.8 (Gain)/Loss on sale of non current assets 2.1 1.2 0.9 Net change in deferred tax (assets)/liabilities 9.1 51.1 60.2 Other non monetary costs/(income) 50.4 31.6 18.8 Change in working capital 87.9 89.6 1.7 Other changes in non financial assets and liabilities 146.3 145.5 0.8 Net cash from/(used in) operating activities (A) 1,057.4 1,105.6 48.2 Investments in motorway infrastructure 856.1 856.1 Government grants related to motorway infrastructure 104.9 104.9 Increase in financial assets deriving from takeover rights (related to investments in motorway infrastructure) 43.2 43.2 Purchases of property, plant and equipment 35.6 929.9 894.3 Purchases of intangible assets 16.0 16.0 Change in government grants related to property, plant and equipment and other intangible assets 120.7 120.7 Purchases of investments, net of unpaid called up issued capital 88.1 88.1 Purchases of new consolidated investments, including net cash acquired 167.3 372.2 204.9 Proceeds from sales of property, plant and equipment, intangible assets and unconsolidated investments 9.0 8.3 0.7 Changes in other non current assets 1.9 1.9 Net cash from/(used in) investing activities (B) 1,007.9 1,277.2 269.3 Dividends approved 209.9 209.9 Net change in currency translation reserve and other reserves and debt related translation differences 8.8 3.9 4.9 Changes in equity and reserves attributable to non controlling interests 26.6 26.6 Net equity cash inflows/(outflows) (C) 192.1 187.2 4.9 Increase/(Decrease) in cash and cash equivalents (A + B + C) 142.6 358.8 216.2 Change in the fair value of hedging derivatives recognised in comprehensive income (D) 76.8 76.8 Decrease/(Increase) in net debt for the period (A + B + C + D) 219.4 435.6 216.2 Net debt at beginning of period 9,330.6 9,754.8 424.2 Net debt at end of period 9,550.0 10,190.4 640.4 23
2. Report on operations Whilst not resulting in changes in total cash flows, IFRIC 12 adoption has involved a different presentation of cash flows from/(used in) operating activities and cash flows from/(used in) investing activities. This is essentially due to the reduced capitalisation of financial expenses in non current assets and the different presentation of prepayments made to suppliers for the construction of assets to be handed over, which are now classified in trade receivables and are, therefore, no longer relevant to the calculation of cash flows for investing activities. The statement of changes in consolidated net debt, which differs from the statement of cash flows in that it shows the impact of cash generated or used on consolidated net debt, reports a reduction of E216.2 million in net debt. This is essentially due to the recognition or adjustment of financial assets, such as the takeover right awarded to Autostrade Meridionali, the guaranteed minimum granted to Sociedad Concesionaria de Los Lagos and financial assets deriving from government grants for construction services. Consolidated results of operations Total revenue for the first nine months of 2010 amounts to E2,837.9 million, marking an increase of E237.6 million (9.1%) on the same period of 2009 (E2,600.3 million). In order to aid the reader s understanding of certain changes in the operating results, it should be noted that, following the entry into effect of Law Decree 78/2009, converted into Law 102/2009, from 5 August 2009 an increase in the concession fee payable to ANAS is included in operating costs (equal to 3 thousandths of a euro per km for classes A and B and to 9 thousandths of a euro per km for classes 3, 4 and 5), whilst a matching toll increase is recognised in toll revenues, without having any impact on the Group s results. In implementation of Law Decree 78/2010, converted into Law 122/2010, from 1 July 2010 a further toll increase has been introduced to match the rise in the concession fee payable by Italian motorway operators to ANAS (1 thousandth of a euro per kilometre for toll classes A and B and 3 thousandths of a euro per kilometre for classes 3, 4 and 5). The total amount for the above toll increases recognised in revenues for the first nine months of 2010. stands at E166.0 million, compared with the E36.2 million recognised in revenues for the period. 5 August 30 September 2009. 24
Consolidated financial review Revenues for the first nine months of 2010 also include non recurring income of E4.4 million generated by the handover, free of charge, of buildings located at a number of service areas. This compares with income of E33.2 million from the same source recognised in the first nine months of 2009. Based on a like for like period of contribution (only the third quarter in each period) to the Group s results from the companies acquired from the Itinere group at the end of June 2009, and after stripping out the toll increases matching the rises in the concession fee payable to ANAS, introduced by the above Law 102/2009 and Law 122/2010, and non recurring income for the two comparative periods, total like for like revenue is up E129.7 million (5.1%). 25
2. Report on operations Reclassified consolidated income statement (Em) Increase/(Decrease) % of revenue 9M 2010 9M 2009 Total % 9M 2010 9M 2009 Net toll revenues 2,370.5 2,129.3 241.2 11.3 83.5 81.9 Contract revenue 48.3 28.3 20.0 70.7 1.7 1.1 Other operating income 419.1 442.7 23.6 5.3 14.8 17.0 Total revenue 2,837.9 2,600.3 237.6 9.1 100.0 100.0 Cost of materials and external services 399.5 408.8 9.3 2.3 14.2 15.7 Concession fees 228.3 96.2 132.1 8.0 3.7 Staff costs 469.6 452.6 17.0 3.8 16.5 17.4 Capitalised staff costs 47.9 30.3 17.6 58.1 1.7 1.1 Total net operating costs 1,049.5 927.3 122.2 13.2 37.0 35.7 Gross operating profit (EBITDA) 1,788.4 1,673.0 115.4 6.9 63.0 64.3 Amortisation, depreciation, impairment losses and reversals of impairment losses 366.1 377.3 11.2 3.0 12.9 14.5 Provisions and other adjustments 26.2 12.2 14.0 114.8 0.9 0.4 Operating profit (EBIT) 1,396.1 1,283.5 112.6 8.8 49.2 49.4 Financial income/(expenses) 362.8 343.5 19.3 5.6 12.8 13.2 Financial expenses from discounting to present value 118.3 143.8 25.5 17.7 4.2 5.5 Capitalised financial expenses 9.7 1.7 8.0 0.3 0.1 Share of profit/(loss) of associates and joint ventures accounted for using the equity method 10.5 44.3 33.8 76.3 0.3 1.8 Profit/(loss) before tax from continuing operations 914.2 753.6 160.6 21.3 32.2 29.0 Income tax (expense)/benefit 331.2 303.7 27.5 9.1 11.7 11.7 Profit/(Loss) from continuing operations 583.0 449.9 133.1 29.6 20.5 17.3 Profit/(Loss) from discontinued operations/assets held for sale 6.7 14.4 7.7 53.5 0.2 0.6 Profit for the period 576.3 435.5 140.8 32.3 20.3 16.7 (Profit)/Loss attributable to non controlling interest 4.3 17.8 22.1 0.1 0.7 Profit/(Loss) for the period attributable to owners of the parent 572.0 453.3 118.7 26.2 20.2 17.4 9M 2010 9M 2009 Increase/ (Decrease) Basic earnings per share attributable to owners of the parent (E) 0.97 0.77 0.20 from: continuing operations 0.98 0.79 0.19 discontinued operations/assets held for sale 0.01 0.02 0.01 Diluted earnings per share attributable to owners of the parent (E) 0.97 0.77 0.20 from: continuing operations 0.98 0.79 0.19 discontinued operations/assets held for sale 0.01 0.02 0.01 Operating cash flow (Em) 1,141.1 996.3 144.8 from: continuing operations 1,125.2 982.1 143.1 discontinued operations/assets held for sale 15.9 14.2 1.7 Operating cash flow per share (E) 1.94 1.69 0.25 from: continuing operations 1.92 1.67 0.25 discontinued operations/assets held for sale 0.02 0.02 26
Consolidated financial review Net toll revenues of E2,370.5 million are up E241.2 million (11.3%) on the figure for the first nine months of 2009 (E2,129.3 million). This performance primarily reflects: a) the 0.4% increase in traffic using the network operated by Italian operators (excluding Strada dei Parchi) compared with the same period of 2009, in addition to an improved traffic mix thanks to a significant recovery in heavy traffic with 3 or more axles (up 3.8% on Autostrade per l Italia s network), further benefitting toll revenues by an estimated 0.5%; b) the application of annual toll charge increases by the Group s Italian operators from 1 January in 2010, rather than from 1 May, as in 2009; c) the above mentioned inclusion in toll revenues, from 5 August 2009, of the toll increase matching the. rise in the concession fee introduced by the above Law 102/2009, and the increase introduced from. 1 July 2010 in implementation of Law 122/2010; d) an increase in toll revenues reported by Autostrade Meridionali which, following the signature of the relevant Single Concession Agreement, as of its financial statements for the year ended 31 December 2009 no longer defers a portion of the X variable of tariffs, partially releasing provisions made in previous years (with a total impact of E7.0 million); e) an increase in toll revenues (up E7.1 million) reported by the Polish operator, Stalexport Autostrada Malopolska, primarily as a result of tariff increases applied from December 2009 (average increases of 18.6%) and the stronger Polish zloty (up 11.3%); f) the toll revenues of the Chilean operator, Sociedad Concesionaria de Los Lagos, amounting to. E9.5 million for the first nine months of 2010 (up E6.9 million on the same period of 2009, having been consolidated from 1 July 2009). Like for like toll revenues are up E105.1 million (5.0%). Had the annual toll charge increase been applied from 1 January in 2009, the improvement would have been 4.0%. Contract revenue of E48.3 million is up E20.0 million (70.7%) on the same period of 2009. (E28.3 million). The increase is substantially due to an increase in work carried out by Pavimental and. Spea for external customers. Other operating income of E419.1 million is down E23.6 million (5.3%) on the first nine months of 2009 (E442.7 million), reflecting: a) a reduction in non recurring income deriving from the handover, free of charge, of buildings located. at service areas by sub operators (E4.4 million in the first nine months of 2010, compared with. E33.2 million in the same period of 2009); 27
2. Report on operations b) an increase in income from service areas and payment systems (amounting to E15.9 million), essentially reflecting increases in service area royalties and in customers (the number of Telepass devices in circulation is up approximately 510 thousand, whilst subscribers of the Premium option are up 334 thousand); c) a reduction in other income (down E10.7 million). Total net operating costs of E1,049.5 million are up E122.2 million (13.2%) on the same period of 2009 (E927.3 million). Based on a like for like period of contribution to the Group s results from the companies acquired from the Itinere group, and after stripping out the rise in the concession fee, like for like net operating costs are down E11.4 million (1.3%). The Cost of materials and external services amount to E399.5 million, marking a reduction of E9.3 million on the first nine months of 2009 (E408.8 million). This reflects the greater contribution from activities linked to construction work carried out by the Group s own technical units, which exceeded the increase in the external costs incurred on contract work. Concession fees, totalling E228.3 million, are up E132.1 million on the same period of 2009. (E96.2 million), essentially due to the above increase in the concession fees payable by Italian operators. once the above changes in legislation came into effect. Staff costs, before deducting capitalised expenses, of E469.6 million are up E17.0 million (3.8%) on the first nine months of 2009 (E452.6 million). The trend in staff costs reflects an increase in the average unit cost (up 3.0%), primarily due to salary increases deriving from renewal of the contract applied by operators (up 1.7%) and the presence of an additional two Sundays (up 0.4%). The performance was also influenced by an increase of 68 in the average workforce (up 0.7%), resulting from the greater volume of construction work carried out by staff employed by Spea and Pavimental on behalf of the Group s operators. Capitalised staff costs are up from E30.3 million to E47.9 million (up E17.6 million), primarily due to an increase in infrastructure construction work carried out by Spea and Pavimental personnel. Gross operating profit (EBITDA) of E1,788.4 million is up E115.4 million (6.9%) on the same period of 2009 (E1,673.0 million). On a like for like basis, the increase in gross operating profit is E141.1 million (up 8.6%). Operating profit (EBIT) of E1,396.1 million is up E112.6 million (8.8%) on the same period of 2009 (E1,283.5 million). The increase is in line with the improvement in gross operating profit. This reflects the fact that increased charges, during the first nine months of 2010, for depreciation and amortisation (up E31.1 million), relating 28
Consolidated financial review primarily to concession rights, and greater provisions and impairments (up E14.0 million), including provisions for repair and replacement obligations and for bad debts, are offset by the write down of the concession right held by the Polish operator, Stalexport Autostrada Malopolska, recognised in the first nine months of 2009 (E44.8 million). Financial expenses, after deducting financial income, total E362.8 million and are up E19.3 million (5.6%) on the first nine months of 2009 (E343.5 million). This performance was influenced by both the different contribution of the Autostrade dell Atlantico group in the two comparative periods (resulting in an increase of E15.4 million, including E10.1 million relating to the first half of 2010), and non recurring financial income (E20.5 million) recognised during the first nine months of 2009 following the purchase by S.I.A.S. Società Iniziative Autostradali e Servizi SpA of 50% of Autostrade per il Cile. After adjusting for these two events, financial expenses are up E14.2 million, essentially reflecting an increase in interest payable and higher debt service costs. This is the result of the differential between returns on the investment of liquidity and the cost of borrowing incurred in order to provide the financial resources to be used to repay the bond issue maturing in 2011, and an increase in the Group s average exposure. Financial expenses from discounting to present value of provisions total E118.3 million, marking a decline of E25.5 million compared with the first nine months of 2009 (down 17.7%). This primarily reflects favourable interest rate trends and the stage of completion of construction services for which the Group does not receive additional economic benefits. Capitalised financial expenses, amounting to E9.7 million, are up E8.0 million on the first nine months of the previous year, reflecting the progressive increase in accumulated payments made for investments in the Group s network for which it will receive additional economic benefits. The Share of the profit/(loss) of associates and joint ventures accounted for using the equity method has resulted in a net loss of E10.5 million for the period, compared with a net loss of E44.3 million for the first nine months of 2009. This item includes the following: a) the write down of the investment in IGLI by E30.8 million (E54.6 million in the first nine months. of 2009), based on a comparison between the carrying amount of the Impregilo shares held by IGLI and their market value (the stock market price of the Impregilo shares held); b) recognition of the Group s share of the profits reported by the Autostrade Sud America group,. totalling E14.3 million (E8.1 million in the same period of 2009), by Triangulo do Sol, amounting to E4.1 million (E2.1 million in the same period of 2009) and the overall profit reported by other associates, amounting to E2.1 million (E0.1 million in the first nine months of 2009). 29
2. Report on operations Income tax expense of E331.2 million is up E27.5 million (9.1%) on the first nine months of 2009 (E303.7 million), substantially in line with the increase in Profit/(loss) before tax from continuing operations, excluding the share of the profit/(loss) of investments accounted for using the equity method, and taking account of the tax effect of the write down of the concession right held by Stalexport Autostrada Malopolska recognised in the first nine months of 2009. Profit from continuing operations amounts to E583.0 million, marking an increase of E133.1 million (29.6%) on the same period of 2009 (E449.9 million). Profit/(Loss) from discontinued operations/assets held for sale essentially regards the operating results. for the period of Strada dei Parchi which, as noted above, are recognised in this item, instead of being. included in each component of the consolidated income statement. As a result, Strada dei Parchi s contribution to the comparative consolidated income statement for the first nine months of 2009 has also been reclassified with respect to the statement published in the consolidated interim report for the nine months ended 30 September 2009. The improvement of E7.7 million reflects the cessation of depreciation and amortisation of Strada dei Parchi s non current assets, after the related taxation, from 30 June 2010, the date on which the investment was reclassified in accordance with IFRS 5. Profit for the period for the first nine months of 2010, amounting to E576.3 million, is up. E140.8 million (32.3%) on the same period of 2009 (E435.5 million). After adjusting for the impact on net profit of the write down of the concession right held by Stalexport Autostrada Malopolska (recognised in the first nine months of 2009) and write downs of the investment in IGLI (in both comparative periods), profit for the period is up 15.1%. Profit for the period attributable to owners. of the parent, amounting to E572.0 million, is up E118.7 million (26.2%) on the first nine months. of 2009 (E453.3 million), whilst the profit attributable to non controlling interests amounts to. E4.3 million (a loss of E17.8 million in the first nine months of 2009, essentially due to the write down of the concession right held by the Polish company). The consolidated statement of comprehensive income for the first nine months of 2010 reports. comprehensive income for the period of E607.1 million (E377.2 million in the same period of 2009). The net effect of other components of comprehensive income amounts to E30.8 million and reflects the. benefits deriving from translation of the financial statements of foreign operations into the functional currency (E13.9 million) and measurement of investments using the equity method (E31.3 million), which are higher than the amounts recognised in the income statement. These items were partially offset by a reduction in the fair value of cash flow hedges after the related tax effects (losses of E14.4 million). In the 30
Consolidated financial review first nine months of 2009 other components of comprehensive income amounted to a loss of. E58.3 million, primarily deriving from measurement of cash flow hedges after the related tax effects. (losses of E55.6 million). Consolidated statement of comprehensive income (Em) 9M 2010 9M 2009 Profit for the period (A) 576.3 435.5 Fair value gains/(losses) on cash flow hedges 14.4 55.7 Gains/(Losses) from translation of financial statements of foreign operations 13.9 10.1 Gains/(Losses) from measurement of associates and joint ventures using the equity method 31.3 7.0 Other fair value gains/(losses) 0.4 Other components of comprehensive income for the period, after related tax effects (B) 30.8 58.4 Comprehensive income for the period (A + B) 607.1 377.1 of which: attributable to owners of the parent 601.7 395.6 attributable to non controlling interests 5.4 18.5 Operating cash flow for the first nine months of 2010, as defined in the section Consolidated financial highlights, to which reference should be made, amounts to E1,141.1 million, up E144.8 million (14.5%) on the same period of 2009. This amount was primarily used to fund the Group s capital expenditure during the first nine months of 2010. 31