Press release BOARD APPROVES HALF YEAR FINANCIAL REPORT FOR 2008 The basis of consolidation from the first half of 2008 now includes the Polish Stalexport Autostrady Group and the U. S. company, Electronic Transaction Consultants (ETC), neither of which were consolidated in the corresponding period last year. The companies together contributed a total of 37.5 million to consolidated revenues and 14.8 million to gross operating profit Consolidated revenue of 1,673.0 million up 7.8% on the first six months of 2007. Net toll revenues on a like-for-like basis of consolidation increased 5.4%. Gross Operating Profit (EBITDA) of 1,043.4 million up 3.7% on the on the same period of 2007. On a like-for-like basis of consolidation, net of non-recurring items for the first half of 2007, the increase in gross operating profit is 5.3%. Profit attributable to equity holders of the parent is 366.6 million up 7.4% on the first six months of 2007. Adjusted for changes in the basis of consolidation and nonrecurring items for 2007, profit attributable to equity holders of the parent increased by 13.2%. Rome, 5 August 2008 Today s meeting of the Board of Directors of Atlantia SpA, chaired by Gian Maria Gros-Pietro, has approved the Group s consolidated half-year report for the six months ended 30 June 2008. As of the date of this announcement, the audit of the half-year financial report had not yet been completed. Investor Relations e-mail: investor.relations@atlantia.it Rapporti con i Media e-mail: media.relations@atlantia.it www.atlantia.it
Operating review of Italian motorway subsidiaries Investment Investments made by the Group s Italian motorway concession companies during the first half of 2008 amounted to 481.3 million. The decrease of 53.9 million between the two half-years (-10.1%) was a result of the completion in 2007 of the fourth lane on the Milan-Bergamo motorway and the Bologna Ring Road s third dynamic lane. Investments relating to Autostrade per l Italia s 1997 Agreement, compared to those of the same period last year, increased significantly by 67.5 million (+37.9%) primarily as a result of work on Lots 9-13 of the Variante di Valico and sites along sections B and C between Florence North Florence South. Of the works included in Autostrade per l Italia s Agreement of 1997, at 30 June 2008 more than 80% of the works have been authorised and are being carried out or the related contracts being awarded, whilst approximately 42% of the works have been completed. Following completion of the Environmental Impact Analysis on 19 November 2007 and the first meeting of the Services Conference on 3 April 2008, on 27 June 2008, Autostrade per l Italia completed and sent the Final Designs for approval for the addition of a third lane to the Barberino-Florence North section. The EIA for the Florence South Incisa section, that was started in 2005, has not yet been concluded despite the fact that, following Autostrade per l Italia s appeal to the Regional Administrative Court, the Ministry of the Environment announced that its opinion would soon be issued. With regard to the state of completion of the works envisaged under Autostrade per l Italia s IV Addendum, at 30 June 2008 approximately 55% of the works have been authorised, around 16% have been contracted out and more than 12% completed. On 18 February 2008, work on the access roads serving the Rho-Pero Exhibition Centre was completed. The final session of the Services Conference regarding the Lainate-Como section of the A9 (23.2 km) was held on 20 April 2007 with no agreement having been reached between central government and the regional authority. A decision to be taken by government ministers is awaited. With regard to the widening to three lanes of the A14 between Rimini North and Porto S. Elpidio, work on Lot 6A (37.0 km) is continuing, the final designs for lot 3 (21.0 km) is in the process of being approved, whereas approvals have been given for the final designs of lots 2 (28.3 km) and 4 (18.9 km) and the executive design for lot 6B (3.3 km). Procedures with respect to the award of the integrated contract for lot 5 (17.2 km) have been started. The Services Conference is underway for works not pertaining to the motorway for lot 1 (29.0 km). Given the fact, however, 2
that the Scacciano tunnel, which takes the longest to construct, is on the critical path for lot 1, and the road passing through the tunnel requires no additional approvals, Autostrade per l Italia decided to bring forward the work for this part of the lot (1.2 km out of the total length for lot 1 of 29.0 km) for which the final designs have been completed. With regard to the section of the A1 linking Fiano with Settebagni di Roma (15.9 km), on the other hand, Autostrade per l Italia has prepared and sent the executive design, that includes the Castelnuovo di Porto interchange, to ANAS. On 15 February 2008, Autostrade per l Italia submitted a new Preliminary Design (without the Environmental Impact Analysis) for the Genoa Bypass to ANAS. The new design covers the Gronda di Ponente section, the upgrading of the A7/A12 road system and the San Benigno interchange and is based on the configurations agreed with the relevant local authorities. However, no solution to the issue of how to dispose of the over 10 million cubic metres of materials resulting from excavation of the tunnels has been drawn up. Possible solutions are currently being examined by a committee of experts set up by the Ministry of Infrastructure. Work required by the Tunnel Safety Plan is continuing: based on the approved designs, the upgrading of 173 tunnels has been completed, whilst work on a further 43 is underway. With regard to investment in new works by Autostrade per l Italia s subsidiaries (Raccordo Autostradale Valle d Aosta, Strada dei Parchi and Autostrade Meridionali), at 30 June 2008 approximately 78% of the works are being carried out or the related contracts awarded, and over 64% have been completed. Traffic, safety and maintenance During the first six months of 2008, traffic on the motorway networks operated by Autostrade per l'italia and its subsidiaries increased 0.2% compared to the same period last year as a result of the combined effect of an increase in the volumes of light vehicles (0.4%) and a decline in the volume of heavy vehicles (0.53%). The figures for the first six months also benefited from the fact that the period was one day longer as 2008 is a leap year. The first half of 2008 witnessed a further improvement in safety levels, with the accident rate down from the 36.4 of the first six months of 2007 to 31.5 for the same period of 2008. The death rate also declined further to 0.42, compared with the 0.55 of the first half of 2007. The rollout of the new system for measuring the average speeds of vehicles using a particular stretch of motorway ( Tutor ) continues. One year on from its installation on a number of motorway sections, accidents are down 17.6%, with the number of deaths falling 50.0%. At 30 June 2008 Tutor has been installed along 1,398 km of motorway. By the end of 2008 the system will cover a further 517 km. 3
Toll collection In the first half of 2008, the number of transactions handled by automated toll-collection systems on the network operated in Italy rose 1.8% compared with the same period of 2007, reaching 73.0% of the total number of transactions (71.2% for the first half of 2007). Payments using Telepass accounted for 54.3% of total transactions, compared with 52.5% in the first half of 2007. At 30 June 2008, there were more than 6.1 million Telepass devices in use on the Italian motorway network. Service areas In the first half of 2008, the Group received royalties of 95.3 million on the revenues generated by the retail activities of the Italian network s sub-concessionaires, marking a 4% increase in royalties compared with the same period of 2007. The planned expansion and renovation of service areas, involving both Autostrade per l Italia and sub-concessionaires, continues. At 30 June 2008, approximately 73% of the works envisaged by the 800 million investment programme are in progress or have been completed. Work being carried out by Autostrade per l Italia and sub-concessionaires has been completed at 103 service areas, whilst expansion and renovation work is in progress at a further 78 service areas. The process of awarding 175 service concessions expiring between December 2008 and December 2009 and for four newly built service areas, included in the construction of the Variante di Valico and the roadways parallel to the urban section of the A24, is in progress. Autostrade per l'italia s Single Concession Agreement At the request of the European Commission Internal Market Directorate the Italian Parliament has passed Law 101 of 6 June 2008 Conversion into law, with amendments, o f Law Decree 59 o f 8 April 2008 having regard to urgent measure s relating to performance of EU obligations and compliance with the order by the Court of Justice o f the European Communities amending the provisions of art. 2 of Legislative Decree 262/2006, that included: the voiding of the clause contained in paragraph 82 of art. 2 of Legislative Decree 262/2006 permitting the unilateral amendment of the single concession when updating the financial plan; the approval of single concessions that have already been signed. The single concession agreement signed by ANAS and Autostrade per l Italia on 12 October 2007, consequently, became effective on 8 June 2008, the day following the publication of Law 101 in the Official Gazette. In compliance with the requirement of art. 38 of the single concession agreement regarding the withdrawal of litigation regarding obligations under the concession that was pending on the date of 4
signing the agreement, ANAS and Autostrade per l Italia are currently formalising documentation for an out of court settlement of the dispute. International activities Stalexport Autostrady During the first six months of 2008, the section of motorway operated by the concessionaire, Stalexport Autostrada Malopolska, registered a 2.6% increase in traffic compared with the same period of 2007. During the first half of 2008 the Stalexport Autostrady Group recorded revenues of 23.8 million and EBITDA of 16.0 million. The figures for the first six months of 2007 are not comparable as consolidation of the subsidiary s income statement was effective from 1 July 2007. Electronic Transaction Consultants (ETC) ETC is now consolidated as a result of the Group's 45% shareholding in the company in addition to the call option held for an additional 16%. During the first half of 2008, ETC recorded revenues of 13.7 million and negative EBITDA of -1.2 million. These results are a reflection of the postponement of certain business development initiatives and the reduced level of the profitability of the company s existing order book. The figures for the first six months of 2007 are not comparable as consolidation of the subsidiary s income statement was effective from 1 January 2008. Costanera Norte During the first half of 2008, Costanera Norte recorded an increase in traffic volume of 4.8% and revenues of 26.1 million, marking an increase of 2.0% (15.6% adjusted for variations in exchange rates) on the same period of 2007 (net of non-recurring income). Gross operating profit (EBITDA) was 19.9 million, representing a decline of 0.5% (an increase of 10.6% if adjusted for variations in exchange rates) compared with the first six months of 2007 ( 20.1 million). 5
Other activities On 15 January 2008, IGLI, a company 33% owned by Autostrade per l'italia, entered into an equity swap agreement regarding a further 2.989% of the shares of Impregilo, of which IGLI already owns 29.95%. The contract can be exercised, at IGLI's option, within 11 months either through cash settlement or physical delivery. The agreed price to be paid is 4.159 per Impregilo share. The shareholders agreement signed on 8 March 2007 by IGLI s shareholders (Autostrade per l'italia, Argo Finanziaria and Immobiliare Lombarda), that expired on 12 June 2008, has been renewed for one year as agreed by the parties on 12 March 2008. Other information: Treasury shares At 30 June 2008, Atlantia held 4,000,000 treasury shares or 0.70% of share capital, which were purchased at an average price of 21.83 per share thus totalling 87.3 million. The company subsequently increased the number of treasury shares held and on 4 August 2008 held 9,630,000 treasury shares equal to 1.68% of share capital. These shares were purchased at an average price of 19.42 per share corresponding to a total expenditure of 187.0 million. 6
Financial review Introduction Unlike the first half of 2007, the basis of consolidation for the first six months of 2008 now includes the full consolidation of the Polish group Stalexport Autostrady due to the acquisition of a controlling interest on 30 June 2007 and the U.S. company Electronic Transaction Consultants (ETC) acquired by the Group in late 2007. In order to improve information relating to the underlying trend of operating results in comparison with the same period last year thus making like-for-like comparisons possible, an income statement has been included, in addition to the reclassified consolidated income statement, that has been adjusted for the change in the basis of consolidation (Stalexport Autostrady Group and ETC) and for non-recurring items. Results Consolidated revenue for the first six months of 2008 of 1,673.0 million increased 121.4 million (+7.8%) on the same period of 2007. Stalexport Autostrady and ETC contributed 37.5 million to total revenues meaning that consolidated revenues on a like-for-like basis of consolidation increased by 83.9 million (+5.4%) on the first half of 2008. Net toll revenues of 1,389.9 million are up 69.4 million (+5.2%) on the same period of 2007 ( 1,320.5 million). The Stalexport Autostrady Group s contribution to net toll revenues for the first half of 2008 was 19.5 million. On a like-for-like basis of consolidation, net toll revenues increased by 49.9 million (+3.8%) primarily as a result of toll rate increases. The corresponding increases for Autostrade per l Italia, the Group s most important concessionaire, were 3.61% from 1 January 2008 and 0.67% from 15 March 2007. Increased traffic volumes on the Group s network only made a limited contribution to revenue growth (up 0.2% on the first six months of 2007). The above toll charge increase applied by Autostrade per l Italia for 2008, includes a portion equal to 0.99% recognised with regard to works envisaged in the IV Addendum (so-called X investments). The related increases, however, are not recognised as revenue until such time as the relevant works under construction enter service. Until that date, this revenue component is deferred and treated as long-term deferred income in that it relates to future financial years and will be recognised subsequent to the commissioning of the relevant works. For the first half of 2008, the overall value recognised for X investments, less the amount recognised in the income statement for works that have already entered service, totals 10.0 million. Contract revenue of 40.4 million is up 33.0 million on the first half of 2007 ( 7.4 million). ETC s contribution to contract revenue for the first half of 2008 was 7.4 million. On a like- 7
for-like basis of consolidation, contract revenue has, in any event, increased by 25.6 million, almost entirely reflecting the greater volume of work carried out by Pavimental for external customers. This work primarily related to the upgrading and restructuring of runways at Fiumicino and Cagliari Elmas airports. Other operating income of 242.7 million is up 19.0 million (+8.5%) on the first half of 2007 ( 223.7 million), due predominantly to the contributions of the Stalexport Autostrady Group and ETC (totalling 10.6 million). This item regards: income from service areas of 95.6 million, which is up 3.4 million (+3.7%) on the same period of 2007. Telepass ( 35.8 million) and Viacard ( 11.4 million) fees, which are up 3.5 million (+8.0%) on the first six months of 2007, reflecting increases in the average numbers of Telepass Family devices (up 401,000) and Telepass Business devices (up 149,000) in use and income deriving from the Telepass Premium service; other sales and service revenues of 99.9 million up 12.1 million (+13.8%) compared with the first three months of 2007, primarily due to the consolidation of the Stalexport Autostrady Group and ETC (in total 10.3 million). This item also includes concession fees, especially from the rental of multi-operator towers to mobile operators, revenues from global service provision and advertising, and reimbursements and damages received. The main variations in net operating costs of 629.5 million ( 545.5 million in the same period last year) were: an increase of 22.7 million due to the consolidation of Stalexport and ETC; the 23.0 million increase in the costs of the work performed by Pavimental for external customers in 2008; the reduction in capitalised expenditure in 2008 as a result of a lower amount of capitalised road surfacing due to the completion of the planned draining asphalt resurfacing ( 13.4 million) and the lower cost of capitalised labour ( 6.5 million). Finally, non-recurring income of 29.4 million (the so-called curtailment ) recognised in the first six months of 2007 following the restatement of the provision for staff termination benefits. Adjusting for these amounts, operating costs for the two half-years decreased by 11.1 million (-1.9%) from 2007 to 2008. In detail, the change in operating costs was caused by the combination of: a rise in the cost of materials and external services, after deducting capitalised expenses, of 30.2 million (up 10.2%), including 9.7 million attributable to the above change in the basis 8
of consolidation. The rise in these costs essentially reflects the increased volume of work carried out by Pavimental and the lower level of capitalisations; an increase in staff costs, after deducting capitalised expenditure of 57.8 million (+25.3%). The rise essentially reflects the above-mentioned curtailment and the increase in the average workforce resulting from consolidation of the Stalexport Group and ETC, which accounts for 12.9 million of staff costs. The increase in staff costs was also caused by the reduction in the amount of capitalised staff costs of 6.4 million (due to the commissioning of works for which staff costs had been originally capitalised) and costs relating to the renewal of the labour contract that expired at the end of 2007. Gross operating profit (EBITDA) of 1,043.4 million was up 37.3 million (+3.7%) on the first half of 2007 ( 1,006.1 million). The Stalexport Autostrady Group and ETC contributed a total of 14.8 million to gross operating profit for the first half of 2008. On a like-for-like basis of consolidation, net of non-recurring items for the first half of 2007, gross operating profit increased by 52.0 million (+5.3%), resulting in a margin of 62.9% for the first half of 2008, which is in line with the same period last year. Operating profit (EBIT) of 821.6 million was up 12.2 million (+1.5%) on the first half of 2007 ( 809.4 million). After excluding the above changes in the basis of consolidation, that had a favourable effect on operating results of 4.2 million, and the curtailment, the improvement becomes 37.5 million (+4.8%) and the EBIT margin 50.0% (50.3% for the first six months of 2007). In addition to the items explained above, operating results were also affected by increased depreciation of 24.1 million (+14.0%) primarily as a result of the entry into service of new motorway works during the past 12 months. Profit from continuing operations amounts to 372.8 million, marking an increase of 29.0 million (+8.4%) on the first half of 2007 ( 343.8 million). After excluding the above changes in the basis of consolidation, which had a positive impact of 2.9 million, profit from continuing operations is up 45.8 million (+14.1%). Net financial expenses of 244.3 million are 11.4 million (+4.9%) up on the same period last year, essentially due to an increase in average debt in the period. The use of the equity method to measure the Group s share of the profit/(loss) of associates and joint ventures resulted in a net loss of 18.5 million, compared to a profit of 1.2 million for the same period last year. The net loss was primarily due to losses incurred by Autostrade Sud America, as measured by the equity method, relating to estimated non-recurring expenses in connection with the purchase of a call option on 10% of the share capital of Costanera Norte s parent company, Autopista do Pacifico, held by Impregilo Iternational Infrastructuras N.V. 9
Income taxes for the period are 204.2 million down 46.2 million (-18.5%) on the first half of 2007 notwithstanding profit before tax practically unchanged with respect to the first six months of 2007. The reduction in the tax rate for the period essentially reflects reduced nominal rates for IRES and IRAP, as provided for in the 2008 Finance Act. Profit attributable to equity holders of the parent is 366.6 million (+7.4% compared to the first six months of 2007 or 341.4 million). Disregarding the change in the basis of consolidation, due to the first time consolidation of the Stalexport Autostrady Group and ETC, and the curtailment, profit attributable to equity holders of the parent is 365.4 million (up 13.2% on the first half of 2007 of 322.7 million). Equity attributable to equity holders of the parent amounts to 3,722.4 million, marking an increase of 90.6 million on the figure for 31 December 2007 ( 3,631.8 million). The Group s net debt at 30 June 2008 amounts to 9,375.0 million, representing a increase of 133.5 million with respect to 31 December 2007 ( 9,241.5 million), despite the positive impact of marking to market derivatives held by the Parent Company, which increased financial liabilities by 33.5 million. Adjusting for these amounts, net debt increases 167.0 million due to above-mentioned purchase of treasury shares by Atlantia. Outlook 2008 has so far been generally characterised by the slowdown and the limited ability to project the growth of traffic on the Italian motorway subsidiaries' networks as a result of adverse economic conditions. Due to the evolution of toll rates and related businesses, the outlook for the Group for full year 2008, is for results to improve compared to last year, notwithstanding the stagnant traffic volumes, as a result of non-recurring income. 2008 will also benefit from the full consolidation for the full year of the international companies Stalexport and ETC that were acquired in 2007 that will have a changed impact on the Group's margins as a result of the nature of ETC's business. * * * The manager responsible for financial reporting, Giancarlo Guenzi, declares, pursuant to section 2 of article 154 bis of the Consolidated Finance Act, that the accounting information contained in this press release is consistent with the underlying accounting documents, books and records. 10
In addition to the conventional IFRS financial indicator s contained in this press release, certain alternative performance indicators have been included (e.g., EBITDA) in order to permit a better appraisal of the company' s results and financial standing. These indicators have been calculated in accordance with market practice. The Group s net debt, determined in accordance with the CESR Recommendation of 10 February 2005 (which does not require the deduction of non-current financial assets from debt), amounts to 10,041.7 million at 30 June 2008, representing a decrease/increase of 52.1 million on the figure of 9,989.6 million at 31 December 2007. The Atlantia Group reclassified, consolidated balance sheet, cash flow statement and income statement for the six month s ended 30 June 2008 are shown below. 11
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