Interim report of the Atlantia Group for the nine months ended 30 September 2012
Contents 1. Introduction... 5 Consolidated financial highlights... 6 Shareholder structure... 7 Atlantia share price performance... 8 Group structure... 9 Corporate bodies... 10 2. Report on operations... 13 Consolidated financial review and adjusted amounts... 15 Operating review for the Group s main subsidiaries... 45 Workforce... 61 Events after 30 September 2012... 64 Outlook... 65 3. Annexes... 67 Declaration of the manager responsible for financial reporting pursuant to section 2 of article 154 bis of Legislative Decree 58/1998... 69 Consolidated financial statements... 70 3
Introduction 1
1. Introduction Consolidated financial highlights (Em) 9M 2012 (a) 9M 2011 Total revenue 3,039 2,962 Net toll revenue 2,563 2,495 Other operating income 476 467 Gross operating profit (EBITDA) 1,895 1,846 EBITDA margin 62.4% 62.3% Adjusted gross operating profit (EBITDA) (c) 1,938 1,858 Operating profit (EBIT) 1,366 1,462 EBIT margin 44.9% 49.4% Profit/(Loss) from continuing operations 675 679 Profit margin from continuing operations 22.2% 22.9% Profit for the period (including non controlling interests) 687 779 Adjusted profit for the period (including non controlling interests) (c) 700 785 Profit for the period attributable to owners of the parent 680 766 Operating cash flow (d) 1,149 1,366 Adjusted operating cash flow (c) 1,164 1,374 Capital expenditure 1,136 1,128 (a) (b) (Em) 30.09.2012 (a) 31.12.2011 Equity 5,722 4,031 Net debt 10,031 8,970 Adjusted net debt (c) 11,357 9,430 (a) (b) (a) The figures for the first nine months of 2012 and 2011 reflect the accounting effects of certain changes in the basis of consolidation, as described more fully in the section Consolidated financial review and adjusted amounts. (b) Certain amounts for 2011 have been restated with respect to the published financial statements, reflecting completion of the process of identifying the fair value of the assets and liabilities of Triangulo do Sol at the acquisition date (1 July 2011) and consolidation of the contribution of Autostrada Torino Savona to the income statement in accordance with IFRS 5 (thus accounting for the contribution to the result for the first nine months of 2012 in Profit/(Loss) from discontinued operations ). (c) 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 and adjusted amounts". (d) 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 the income statement. 6
Shareholder structure Shareholder structure Edizione Srl 66.40% (1) Government of Singapore Investment Corporation Goldman Sachs Infrastructure Partners 17.68% (1) 9.98% (1) 100% Mediobanca SpA 5.94% (1) 46.41% Rest of Europe 14.9% Rest of the world 10.6% UK 21.7% Fondazione CRT 6.06% 45.53% (2) Free float France 7.8% USA 15.7% Italy (4) 29.3% Geographical distribution of free float (3) (1) Percentage ownership on a fully diluted basis, taking into account that Sintonia s issued capital is fully paid up. (2) Excludes the treasury shares held by Atlantia SpA. (3) Shareholder structure as at 30 September 2012 based on data from the CONSOB and Thomson Reuters. (4) Includes retail shareholders. 7
1. Introduction Atlantia share price performance Share information Number of shares (*) 661,827,592 Par value (E) 1.00 Type of shares Ordinary Final dividend per share for 2011, paid May 2012 (E) 0.391 Interim dividend per share for 2012, paid November 2012 (E) 0.355 Price at 28 September 2012 12.08 Low (26 June 2012) 9.135 High (12 September 2012) 12.67 Capitalisation at 28 September 2012 (Em) 7,995 Average daily trading volume (m) 2.5 Atlantia share price performance 9M 2012 Price (E) (*) 13.6 12.8 12.0 11.2 10.4 9.6 Volumes ( 000) 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 8.8 January February March April May June July August September 2,000 0 Atlantia Rebased FTSE/MIB Volumes (*) Following bonus issue of 7 June 2012. 8
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 Service companies Tangenziale di Napoli SpA 100% Autostrada Torino Savona SpA 99.98% (2) Autostrade Meridionali SpA 58.98% Società Italiana pa Traforo del Monte Bianco 51% Raccordo Autostradale Valle d Aosta SpA 58% (3) 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% Electronic Transaction Consultants Co. 61.41% Autostrade Portugal SA 100% Autostrade Concessões e Participações Brasil Ltda 30.31% (4) Infra Bertin Participações SA 50% Triangulo do Sol Participações SA 100% Atlantia Bertin Concessões SA 100% Rodovias das Colinas SA 100% Concessionaria da Rodovia MG 050 SA 100% Triangulo do Sol Auto Estradas SA 100% Autostrade Holding do Sur SA 100% Sociedad Concesionaria de Los Lagos SA 100% Inversiones Autostrade Holding do Sur Ltda 100% Autostrade Sud America Srl 100% Grupo Costanera SA 50.01% Sociedad Concesionaria Costanera Norte SA 100% Sociedad Concesionaria AMB SA 100% Inversiones Autostrade de Chile Ltda 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% AD Moving SpA 100% Port Mobility SpA 70% Newpass SpA 51% Giove Clear Srl 100% Autostrade Tech SpA 100% Telepass SpA 96.15% (5) Telepass France Sas 100% Infoblu SpA 75% (*) As at 30 September 2012. (1) Unconsolidated company. (2) SIAS exercised the call option on the Group s interest on 28 September 2012. Transaction closing is expected shortly. (3) The percentage refers to ordinary shares representing the issued capital. (4) The remaining shares are held by Autostrade dell Atlantico Srl (47.91%) and Autostrade Holding do Sur SA (21.78%). (5) The remaining 3.85% is held by Autostrade Tech SpA. 9
1. Introduction Corporate bodies Board of Directors in office for the period 2010 2012 Internal Control and Corporate Governance Committee Committee of Independent Directors with responsibility for Related Party Transactions Chairman Chief Executive Officer Directors Secretary Chairman Members Chairman Members Fabio CERCHIAI Giovanni CASTELLUCCI Gilberto BENETTON Alessandro BERTANI Alberto BOMBASSEI (independent) Stefano CAO Roberto CERA Alberto CLÔ (independent) Antonio FASSONE Giuliano MARI (independent) Gianni MION Monica MONDARDINI (independent) Giuseppe PIAGGIO Antonino TURICCHI (independent) Paolo ZANNONI Andrea GRILLO Giuseppe PIAGGIO Giuliano MARI (independent) Antonino TURICCHI (independent) Giuliano MARI (independent) Alberto CLÔ (independent) Monica MONDARDINI (independent) 10
Corporate bodies Human Resources and Remuneration Committee Board of Statutory Auditors for three year period 2012 2014 Independent Auditors for the period 2012 2020 Chairman Members Chairman Auditors Alternate Auditors Deloitte & Touche SpA Alberto CLÔ (independent) Stefano CAO Monica MONDARDINI (independent) Giuseppe PIAGGIO Paolo ZANNONI Corrado GATTI Tommaso DI TANNO Raffaello LUPI Milena Teresa MOTTA Alessandro TROTTER Giuseppe Maria CIPOLLA Fabrizio Riccardo DI GIUSTO 11
Report on operations 2
Consolidated financial review and adjusted amounts Consolidated financial review and adjusted amounts Introduction The Atlantia Group s interim report for the nine months ended 30 September 2012 has been prepared on the basis of the provisions of article 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 2012. 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 equity, the statement of changes in net debt and the statement of cash flows for the first nine months of 2012, 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 2012, compared with the corresponding amounts as at 31 December 2011. The reclassified consolidated income statement, the consolidated statement of changes in net debt and the consolidated statement of cash flows also include amounts for the third quarter of 2012, compared with those for the third quarter of 2011. The accounting standards applied during preparation of this document are consistent with those adopted for the consolidated financial statements as at and for the year ended 31 December 2011. Amounts in the income statements, statements of financial position and statements of cash flows for the comparative periods reflect the impact of the following changes in the basis of consolidation: a) consolidation, from 1 April 2012, of Autostrade Sud America (in which the Group previously held a 45.765% stake), Grupo Costanera and its Chilean subsidiaries; b) consolidation, from 30 June 2012, of the holding company, Atlantia Bertin Concessões, and a number of Brazilian toll motorway operators; c) consolidation, from 1 July 2012, of the Brazilian operator, Triangulo do Sol; d) deconsolidation of Strada dei Parchi from the second quarter of 2011; e) deconsolidation of Autostrada Tirrenica from 31 December 2011. In this regard, the term like for like basis, used in the following analysis of the results of operations, indicates that amounts for the comparative periods have been determined by eliminating: a) from the figure for the first nine months of 2012: the contribution of the newly consolidated Chilean and Brazilian companies, the fair value gain on the existing investment in Autostrade Sud America, the 15
2. Report on operations first half contribution from Triangulo do Sol, and the result of measurement of Autostrade Sud America (consolidated from 1 April 2012) using the equity method in the first quarter; b) from the figure for the first nine months of 2011: the gain on the sale of Strada dei Parchi, the results of this company and Autostrada Tirrenica, the results of measurement of Triangulo do Sol and Autostrade Sud America (consolidated during 2012) using the equity method, and the gain resulting from the acquisition of control of Triangulo do Sol. In particular, with regard to point a), the acquisition of full control of Autostrade Sud America, a Group holding company, was the subject of the agreement with SIAS and Mediobanca dated 25 February 2012. Transaction closing was on 28 June 2012 but, under new agreements between the former shareholders in force in the second quarter of 2012, the Group consolidated these companies from 1 April 2012. In addition, following implementation of the agreement with the Canada Pension Plan Investment Board (CPPIB), a leading Canadian pension fund, as at 30 September 2012 CPPIB owns 49.99% of Grupo Costanera (following the direct purchase of a 30% interest in the company from Autostrade Sud America and the subscription of new issues), whilst the Group continues to own 50.01%. With regard to point b), the holding company, Atlantia Bertin Concessões, and a number of Brazilian toll motorway operators were contributed in accordance with agreements with the Bertin group. As at 30 September 2012 the Atlantia Group owns 50% plus one share of the above holding company, exercises control under the related partnership and governance agreements and, therefore, consolidates the company and its wholly owned motorway operators on a line by line basis. Based on the fact that the transaction closed at the end of June 2012, the new Brazilian companies income statements have been consolidated on a line by line basis from the third quarter of 2012. As required by IFRS 3, the transactions resulting in the acquisition of the Chilean and Brazilian companies consolidated for the first time during the period have been accounted for using the acquisition method. With regard to point c), it should be noted that the income statement, statement of changes in net debt and statement of cash flows for the first nine months of 2012 benefit from the contribution of the Brazilian motorway operator, Triangulo do Sol, whilst the statements for the comparative period only include this company s contribution for the three months after the date of consolidation, from 1 July 2011. As more fully described in note 6.3 in the condensed consolidated interim financial statements as at and for the six months ended 30 June 2012, regarding the completion of identification of the fair value of the company s assets and liabilities at the acquisition date, compared with the previously published financial statements: a) assets and liabilities as at 31 December 2011 have been restated; 16
Consolidated financial review and adjusted amounts b) in addition to the impact on the income statement of the restatement of assets and liabilities as at 1 July 2012, the income statement for the first nine months of 2011 reflects recognition of a financial gain from remeasurement of the fair value of the existing 50% interest in the acquiree, totalling E75.8 million (compared with the original estimate of E36.5 million provisionally accounted for in the consolidated financial statements for 2011), and of a gain resulting from the acquisition of the 20% interest, assessed in accordance with IFRS 3, totalling E15.9 million, calculated by applying the average exchange rate for the period. With regard to points d) and e), in addition to the results of Strada dei Parchi and Autostrada Tirrenica until the dates of their respective deconsolidation, Profit/(Loss) from discontinued operations for the comparative period of 2011 includes the after tax gain on the sale of Strada dei Parchi. Finally, following the decision, in February 2012, to grant SIAS a call option, exercised on 28 September 2012, on the Group s 99.98% interest in Autostrada Torino Savona SpA, the latter company s contribution to the consolidated income statement for the nine months ended 30 September 2012 is accounted for in Profit/(Loss) from discontinued operations, as required by IFRS 5 Non current Assets Held for Sale and Discontinued Operations, rather than included in each component of the consolidated income statement for continuing operations. As a result, in accordance with IFRS 5, the company s contribution to the comparative consolidated income statement for the first nine months of 2011 has been reclassified with respect to the statement published in the interim report for the nine months ended 30 September 2011, whilst its consolidated assets and liabilities at 30 September 2012 have been accounted for in financial and non financial assets and liabilities related to discontinued operations, depending on their nature. The sale of the investment is expected to be completed shortly. 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 2012. This interim report has not been audited. Consolidated results of operations Revenue for the first nine months of 2012 amounts to E3,038.7 million, marking an increase of E76.6 million (2.6%) on the first nine months of 2011 (E2,962.1 million). On a like for like basis, total revenue is down E115.8 million (3.9%). 17
2. Report on operations Toll revenue of E2,563.1 million is up E68.4 million (2.7%) overall compared with the first nine months of 2011 (E2,494.7 million), essentially due to the different period of consolidation of Triangulo do Sol (E64.2 million) and the first time consolidation of the Group s Chilean operators (E65.5 million) and Brazilian operators (E47.3 million). On a like for like basis, toll revenue is down E108.6 million (4.4%), primarily reflecting a combination of: a) the decline in traffic on the Italian network, essentially due to the ongoing economic downturn, resulting in an estimated reduction of 6.6% (reducing revenue by E139.7 million), partially offset by the positive effect of the extra day in February 2012, a leap year, which accounted for an increase of around 0.3% in traffic during the first nine months of 2012 (resulting in additional toll revenue of approximately E6.7 million), but worsened by exceptionally bad weather, with a series of very heavy snowfalls during the first two months of 2012, and the lorry drivers strike at the end of January 2012, which overall resulted in a 1.2% (E25.9 million) reduction in toll revenue; b) the reduced contribution of toll increases matching the increased concession fees payable by Italian operators (1), resulting in a decrease of E22.7 million (7.9%) compared with the first nine months of 2011, with the reduction linked to the fall in traffic; c) application of annual toll increases by the Group s Italian operators from 1 January 2012 (a rise of 3.51% in Autostrade per l Italia s case), boosting toll revenue by an estimated E62.1 million. Contract revenue of E29.3 million is down E15.9 million on the first nine months of 2011 (E45.2 million), reflecting a reduction in work carried out by Pavimental for external customers. Other operating income of E446.3 million is up E24.1 million (5.7%) on the first nine months of 2011 (E422.2 million), with E15.3 million of the increase resulting from the above changes in the basis of consolidation. The increase also reflects: a) an increase in commercial revenue from payment systems (up E5.1 million), reflecting an increase in Telepass customers (around 242,000 new devices in circulation and approximately 162,000 new subscribers to the Premium options); b) a decrease of E13.1 million in royalties from service areas; c) a rise in other income (up E16.8 million), essentially attributable to Autostrade per l Italia, consisting of increased income from the in house production of electricity, non recurring income and contingent assets and insurance payouts, offset by reduced income from service area operators. Autostrade Tech also reports increased income from the supply of tolling systems. (1) 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
Consolidated financial review and adjusted amounts Reclassified consolidated income statement (Em) Increase/(Decrease) % of revenue 9M 2012 9M 2011 Absolute % 9M 2012 9M 2011 Toll revenue 2,563.1 2,494.7 68.4 2.7 84.3 84.2 Contract revenue 29.3 45.2 15.9 35.2 1.0 1.5 Other operating income 446.3 422.2 24.1 5.7 14.7 14.3 Total revenue 3,038.7 2,962.1 76.6 2.6 100.0 100.0 Cost of materials and external services (1) 385.7 363.1 22.6 6.2 12.6 12.3 Concession fees 329.9 350.4 20.5 5.9 10.9 11.8 Staff costs 497.2 464.7 32.5 7.0 16.4 15.7 Capitalised staff costs 68.8 62.0 6.8 11.0 2.3 2.1 Total net operating costs 1,144.0 1,116.2 27.8 2.5 37.6 37.7 Gross operating profit (EBITDA) 1,894.7 1,845.9 48.8 2.6 62.4 62.3 Amortisation, depreciation, impairment 476.8 385.1 91.7 23.8 15.8 12.9 losses and reversals of impairment losses Provisions and other adjustments 52.2 1.2 53.4 n.s. 1.7 Operating profit (EBIT) 1,365.7 1,462.0 96.3 6.6 44.9 49.4 Financial income/(expenses) 294.0 313.4 19.4 6.2 9.6 10.6 Financial expenses from discounting 109.7 133.7 24.0 18.0 3.6 4.5 of provisions for construction services required by contract Capitalised financial expenses 39.4 13.1 26.3 n.s. 1.3 0.4 Share of profit/(loss) of associates 0.9 0.5 1.4 n.s. and joint ventures accounted for using the equity method Profit/(Loss) before tax from continuing 1,002.3 1,027.5 25.2 2.5 33.0 34.7 operations Income tax (expense)/benefit 327.8 348.9 21.1 6.0 10.8 11.8 Profit/(Loss) from continuing operations 674.5 678.6 4.1 0.6 22.2 22.9 Profit/(Loss) from discontinued operations 12.8 100.0 87.2 87.2 0.4 3.4 Profit for the period 687.3 778.6 91.3 11.7 22.6 26.3 (Profit)/Loss attributable to non controlling 7.5 13.0 5.5 42.3 0.2 0.5 interests (Profit)/Loss attributable to owners of the parent 679.8 765.6 85.8 11.2 22.4 25.8 (1) After deducting the margin recognised on construction services provided by the Group's own technical units. 9M 2012 9M 2011 Increase/ (Decrease) Basic earnings per share attributable 1.05 1.18 0.13 to owners of the parent (E) of which: continuing operations 1.03 1.03 discontinued operations 0.02 0.15 0.13 Diluted earnings per share attributable 1.05 1.18 0.13 to owners of the parent (E) of which: continuing operations 1.03 1.03 discontinued operations 0.02 0.15 0.13 Operating cash flow (Em) 1,149.4 1,365.5 216.1 of which: continuing operations 1,134.5 1,331.3 196.8 discontinued operations 14.9 34.2 19.3 Operating cash flow per share (E) 1.77 2.11 0.34 of which: continuing operations 1.75 2.06 0.31 discontinued operations 0.02 0.05 0.03 19
2. Report on operations Net operating costs of E1,144.0 million are up E27.8 million (2.5%) on the first nine months of 2011 (E1,116.2 million). On a like for like basis, net operating costs are down E37.3 million (3.3%). The Cost of materials and external services amounts to E385.7 million, marking an increase of E22.6 million on the same period of 2011 (E363.1 million). On a like for like basis the cost of materials and external services is down E24.7 million (6.8%), reflecting a combination of the following main factors: a) an increase in the cost of winter operations following the exceptional snowfall seen on the Italian network during the first two months of 2012 (up E21.6 million); b) a reduction in other maintenance costs (down E9.2 million) at Autostrade per l Italia and, limited to the third quarter of 2012, at Triangulo do Sol; c) a reduction in other costs (down E37.1 million) due to improved operating efficiency and a reduction in work carried out by Pavimental for external customers. Concession fees, totalling E329.9 million, are down E20.5 million compared with the first nine months of 2011 (E350.4 million), essentially reflecting the reduction in additional concession fees collected via the tolls charged by Italian operators (down E22.7 million), due to the above mentioned decline in traffic. Staff costs, before deducting capitalised expenses, of E497.2 million are up E23.9 million (5.1%) on the first nine months of 2011, after stripping out the release, in the first half of 2011, of surplus provisions following closure of the three year management incentive plan for the period 2008 2010. The increase reflects: a) first time consolidation of the Chilean and Brazilian companies, launch of the Eco Taxe project, the different period of consolidation of Triangulo do Sol and the expansion of Giove Clear s operations (up 5.2%); b) a like for like decrease of 65 in the average workforce (down 0.7%); c) a like for like increase in the average unit cost (up 0.6%), primarily due to contract renewals at the Group s motorway operators and industrial companies, partly offset by a reduction in the use of temporary staff. 20
Consolidated financial review and adjusted amounts Capitalised staff costs are up E6.8 million (E68.8 million in the first nine months of 2012 and E62.0 million in the first nine months of 2011). Gross operating profit (EBITDA) of E1,894.7 million is up E48.8 million (2.6%) on the first nine months of 2011 (E1,845.9 million). On a like for like basis, gross operating profit is down E78.5 million (4.3%). Operating profit (EBIT) of E1,365.7 million is down E96.3 million (6.6%) on the first nine months of 2011 (E1,462.0 million). On a like for like basis, operating profit is down E163.4 million (11.2%) due, in addition to the fall in gross operating profit, to a E36.0 million increase in Depreciation, amortisation, impairment losses and reversals of impairment losses (including E29.9 million in depreciation and amortisation), and to a E48.9 million rise in Provisions and other impairments (recognised primarily as a result of changes in provisions for the repair and replacement of assets to be handed over at the end of concession terms). Net financial expenses of E294.0 million are down E19.4 million (6.2%) on the same period of the previous year (E313.4 million). The figures for the two comparative periods reflect the accounting effects of changes in the Group s basis of consolidation, including: a) recognition of a fair value gain of E171.1 million on the existing 45.765% interest in Autostrade Sud America, following the acquisition of control from 1 April 2012; b) the contributions to financial expenses of the newly consolidated Chilean and Brazilian companies (amounting to E36.1 million); c) Triangulo do Sol s contribution to financial expenses following its consolidation from 1 July 2011 (amounting to E15.8 million); d) the gain (E91.4 million) recognised in the first nine months of 2011 following the acquisition of control of Triangulo do Sol. 21
2. Report on operations After stripping out these items, financial expenses are up E8.4 million (2.1%), primarily due to a combination of the following: a) financial expenses (up E33.3 million) relating to the premium paid on the partial buyback, in the first nine months of 2012, of bonds issued by Atlantia and maturing in 2014; b) increased interest expense and debt servicing costs linked to funding for the acquisition, in June 2011, of 50% of the motorway operators, Vespucio Sur and Litoral Central (up E16 million), and funding for the Eco Taxe project (up E12.6 million); c) the recognition of financial items linked to the management of investments, with a positive overall impact of E67.0 million, including the gain (E61.0 million) realised on the sale of the investment in IGLI and the reduced impairment loss (E19.0 million in the first nine months of 2012, compared with E25.0 million in the same period of 2011) on the carrying amount of the investment in Alitalia Compagnia Aerea Italiana; d) increased net interest expense essentially due to an increase in average net debt and a reduction in the average amount of cash invested. In this regard, the average exposure linked to non recurring transactions relating to the Group s expansion in 2012 is estimated at E188.1 million, at a cost of E16.9 million. Financial expenses from discounting of provisions for construction services required by contract and other provisions amount to E109.7 million, marking a reduction of E24.0 million compared with the same period of 2011. This primarily reflects a reduction in the interest rates used to discount the provisions at 31 December 2011, compared with 31 December 2010. Capitalised financial expenses, amounting to E39.4 million, are up E26.3 million on the same period of 2011 as a result of both progress on the Eco Taxe project and the progressive increase in accumulated payments made in relation to investment in construction services for which additional economic benefits are received. The Share of the profit/(loss) of associates and joint ventures accounted for using the equity method has resulted in a profit of E0.9 million, compared with a loss of E0.5 million for the first nine months of 2011. Income tax expense for the first nine months of 2012 amounts to E327.8 million and is down E21.1 million (6.0%) on the first nine months of 2011 (E348.9 million). This reflects lower taxable income (taking account of the non taxable nature of the fair value gains referred to above. Profit from continuing operations thus amounts to E674.5 million, marking an decrease of E4.1 million (0.6%) compared with the first nine months of 2011 (E678.6 million). The Profit/(Loss) from discontinued operations reflects the profit of E12.8 million for the first nine months reported by Autostrada Torino Savona. The figure for the first nine months of 2011 (E100.0 million) included the after tax gain of E96.7 million on the sale of Strada dei Parchi in the second quarter of 2011, in addition to the results for the period of this company, Autostrada Tirrenica, deconsolidated at the end of 2011, 22
Consolidated financial review and adjusted amounts and Autostrada Torino Savona, partially offset by the impairment loss on the investment in the Portuguese company, Lusoponte. Profit for the period, amounting to E687.3 million, is thus down E91.3 million (11.7%) on the first nine months of 2011 (E778.6 million). Profit for the period attributable to owners of the parent (E679.8 million) is down E85.8 million (11.2%) on the figure for the first nine months of 2011 (E765.6 million), whilst "Profit attributable to non controlling interests" amounts to E7.5 million (E13.0 million for the first nine months of 2011). After stripping out the accounting effects of the change in the basis of consolidation, profit attributable to owners of the parent is E514.9 million, down E34.6 million (6.3%). Operating cash flow for the first nine months of 2012, as defined in the section Consolidated financial highlights, to which reference should be made, amounts to E1,149.4 million, down E216.1 million (15.8%) on the first nine months of 2011. On a like for like basis, operating cash flow is down E281.5 million (20.6%) due to a reduced cash inflow from operating activities. This essentially reflects the above reduction in traffic on the Group s Italian network and changes in current tax expense, which in the first nine months of 2011 benefitted from confirmation of the deductibility of the various components of the financial statements recognised by Autostrade per l Italia in application of IFRIC 12. Operating cash flow is almost entirely absorbed by the Group s investing activities. 23
2. Report on operations Consolidated statement of comprehensive income (Em) 9M 2012 9 M 2011 Profit for the period (A) 687.3 778.6 Fair value gains/(losses) on cash flow hedges 55.6 5.9 Fair value gains/(losses) on net investment hedges 37.6 Gains/(Losses) from translation of transactions in functional currencies other than the euro 84.3 69.2 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 4.2 20.5 Other fair value gains/(losses) 0.3 0.5 Other components of comprehensive income for the period, after related taxation 4.4 96.1 of which: discontinued operations 1.0 Reclassifications of components of comprehensive income to profit/(loss) Fair value gains on cash flow hedges reclassified to profit/(loss) for the period 0.6 Total other comprehensive income for the period, after related taxation and reclassifications to profit/(loss) for the period (B) 4.4 95.5 Comprehensive income for the period (A + B) 682.9 683.1 of which: attributable to owners of the parent 644.2 689.7 attributable to non controlling interests 38.7 6.6 The consolidated statement of comprehensive income reports comprehensive income for the period of E682.9 million (E683.1 million for the first nine months of 2011). 24
Consolidated financial review and adjusted amounts The loss, after the related taxation, of E4.4 million (a loss of E95.5 million for the first nine months of 2011) resulting from other components of comprehensive income essentially reflects: a) a loss on the fair value measurement of cash flow hedges, totalling E55.6 million (a loss of E5.9 million for the first nine months of 2011), essentially reflecting differing interest rate trends in the two comparative periods; b) a loss on the fair value measurement of net investment hedges, totalling E37.6 million, reflecting the settlement of differentials linked to a number of derivative contracts entered into to hedge the exposure to currency risk of the assets of certain companies operating in Chile; c) a gain on the translation of the financial statements of foreign operations into the Group s functional currency, totalling E84.3 million (a loss of E69.2 million for the first nine months of 2011), primarily reflecting an increase in the value of the Chilean peso versus the euro in the first nine months of 2012, compared with falls in the value of the Chilean peso and the Brazilian real versus the euro during the first nine months of 2011; d) a gain of E4.2 million resulting from the measurement of associates using the equity method, essentially due to the above increase in value of the Chilean peso versus the euro, which had a positive impact on the carrying amount of the investment in Autostrade Sud America in the first quarter of 2012, before its consolidation from 1 April 2012 (a loss of E20.5 million in the first nine months of 2011 due to a weakening of the Chilean peso at that time). 25
2. Report on operations Reclassified consolidated income statement for the third quarter of 2012 (Em) Increase/(Decrease) % of revenue Q3 2012 Q3 2011 Total % Q3 2012 Q3 2011 Toll revenue 1,000.2 955.9 44.3 4.6 86.5 85.5 Contract revenue 4.2 16.4 12.2 74.4 0.4 1.5 Other operating income 151.7 145.7 6.0 4.1 13.1 13.0 Total revenue 1,156.1 1,118.0 38.1 3.4 100.0 100.0 Cost of materials and external services (1) 120.7 128.5 7.8 6.1 10.5 11.5 Concession fees 124.2 131.5 7.3 5.6 10.7 11.8 Staff costs 158.6 153.5 5.1 3.3 13.7 13.7 Capitalised staff costs 22.5 19.2 3.3 17.2 1.9 1.7 Total net operating costs 381.0 394.3 13.3 3.4 33.0 35.3 Gross operating profit (EBITDA) 775.1 723.7 51.4 7.1 67.0 64.7 Amortisation, depreciation, impairment losses and reversals of impairment losses 170.6 141.8 28.8 20.3 14.8 12.7 Provisions and other adjustments 39.0 0.4 39.4 n.s. 3.3 0.1 Operating profit (EBIT) 565.5 582.3 16.8 2.9 48.9 52.1 Financial income/(expenses) 195.0 31.3 163.7 n.s. 16.8 2.8 Financial expenses from discounting of provisions for construction services required by contract 36.8 44.6 7.8 17.5 3.2 4.0 Capitalised financial expenses 16.6 0.7 15.9 n.s. 1.4 0.1 Share of profit/(loss) of associates and joint ventures accounted for using the equity method Profit/(Loss) before tax from continuing operations 0.5 14.4 13.9 96.5 1.3 349.8 492.7 142.9 29.0 30.3 44.1 Income tax (expense)/benefit 157.6 146.1 11.5 7.9 13.7 13.1 Profit/(Loss) from continuing operations 192.2 346.6 154.4 44.5 16.6 31.0 Profit/(Loss) from discontinued operations 5.7 8.1 13.8 n.s. 0.5 0.7 Profit for the period 197.9 338.5 140.6 41.5 17.1 30.3 (Profit)/Loss attributable 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. 4.0 9.7 5.7 58.8 0.3 0.9 193.9 328.8 134.9 41.0 16.8 29.4 Basic earnings per share attributable to owners of the parent (E) of which: Q3 2012 Q3 2011 Increase/ (Decrease) 0.30 0.51 0.21 continuing operations 0.29 0.52 0.23 discontinued operations 0.01 0.01 0.02 Diluted earnings per share attributable to owners of the parent (E) of which: 0.30 0.51 0.21 continuing operations 0.29 0.52 0.23 discontinued operations 0.01 0.01 0.02 Operating cash flow (Em) 473.9 546.1 72.2 of which: continuing operations 467.3 532.5 65.2 discontinued operations 6.6 13.6 7.0 Operating cash flow per share (E) 0.73 0.85 0.12 of which: continuing operations 0.72 0.83 0.11 discontinued operations 0.01 0.02 0.01 26
Consolidated financial review and adjusted amounts The reclassified consolidated income statement for the third quarter of 2012 reports revenue of E1,156.1 million, marking an improvement of E38.1 million (3.4%) on the same period of 2011, essentially attributable to first time consolidation of the new Chilean and Brazilian companies. After stripping out the contribution from the new Chilean and Brazilian companies, revenue is down E49.8 million (4.5%). Toll revenue of E1,000.2 million is up E44.3 million (4.6%) overall on the third quarter of 2011 (E955.9 million), essentially reflecting changes in the basis of consolidation, which account for E80.7 million. On a like for like basis, toll revenue is down E36.4 million (3.8%), primarily due to: a) the decline in traffic on the Italian network, essentially due to the ongoing economic downturn, resulting in a reduction of 6.7% (reducing toll revenue by E54.6 million); b) the reduced contribution of toll increases matching the increased concession fees payable by Italian operators, resulting in a decrease of E8.3 million (7.7%) compared with the third quarter of 2011, with the reduction linked to the fall in traffic; c) application of annual toll increases by the Group s Italian operators from 1 January 2012 (a rise of 3.51% in Autostrade per l Italia s case), boosting toll revenue by an estimated E22.6 million. "Other operating income" is down E6.2 million overall compared with the third quarter of 2011, essentially reflecting a reduction in work carried out by Pavimental for external customers and a decrease in royalties from service areas, partially offset by the contribution from the companies consolidated for the first time in 2012 (totalling E7.2 million). "Net operating costs" of E381.0 million are down E13.3 million (3.4%) on the third quarter of 2011. On a like for like basis, net operating costs are down E45.6 million (11.6%), primarily reflecting improved operating efficiency, a reduction in maintenance costs and a reduction in work carried out by Pavimental for external customers. Gross operating profit (EBITDA) for the third quarter of 2012 amounts to E775.1 million, marking an increase of E51.4 million (7.1%) on the same period of 2011 (E723.7 million). On a like for like basis, gross operating profit is down E4.2 million (0.6%). Profit from continuing operations of E192.2 million is down E154.4 million (44.5%) on the third quarter of 2011 (E346.6 million). 27
2. Report on operations After stripping out the accounting effects of the change in the basis of consolidation, the reduction is E35.6 million, reflecting a combination of the following: a) a E37.2 million increase in provisions and other impairments, recognised primarily as a result of changes in provisions for the repair and replacement of assets to be handed over at the end of concession terms; b) an increase in financial expenses of E18.8 million, essentially due to an increase in average net debt and a reduction in the average amount of cash invested; c) recognition, in the third quarter of 2011, of an impairment loss on the investment in IGLI (E18.2 million). The profit from discontinued operations reflects the profit of E5.7 million contributed by Autostrada Torino Savona, partly taking into account the interruption of depreciation from the first quarter of 2012. The loss for the third quarter of 2011 (totalling E8.1 million) reflected the impairment loss on the investment in the Portuguese company, Lusoponte (amounting to E20.0 million, after the related taxation), partially offset by the profits contributed by Autostrada Torino Savona and Autostrada Tirrenica (totalling E11.9 million). Profit for the third quarter of 2012 is thus E197.9 million (E338.5 million for the third quarter of 2011), of which E193.9 million is attributable to owners of the parent (E328.8 million attributable to owners of the parent for the third quarter of 2011). After stripping out the accounting effects of the change in the basis of consolidation, profit attributable to owners of the parent is E220.7 million, compared with E227.9 million for the third quarter of 2011. Operating cash flow amounts to E473.9 million (E546.1 million in the third quarter of 2011). On a like for like basis, operating cash flow is down E85.0 million quarter on quarter, essentially due to changes in current tax expense, which in the third quarter of 2011 benefitted from confirmation of the deductibility of the various components of the financial statements recognised by Autostrade per l Italia in application of IFRIC 12. Consolidated financial position As at 30 September 2012 Non current non financial assets of E23,098.5 million are up E3,311.3 million on the figure for 31 December 2011 (E19,787.2 million). Property, plant and equipment, amounting to E233.3 million, has not undergone significant changes during the period. 28
Consolidated financial review and adjusted amounts Intangible assets total E20,845.6 million (E17,344.6 million as at 31 December 2011). In addition to the goodwill (E4,382.9 million) recognised 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 E16,413.9 million (E12,916.2 million as at 31 December 2011). The increase in intangible assets, amounting to E3,501.0 million, is essentially due to the following: a) recognition of the concession rights of the newly consolidated Chilean and Brazilian companies (up E3,314.3 million), primarily consisting of the fair value of concession rights resulting from preliminary allocation of the purchase price; b) investment in construction services for which additional economic benefits are received (up E558.2 million); c) adjustment of the present value on completion of investment in construction services for which no additional benefits are received (up E220.3 million); d) amortisation for the period (down E427.8 million); e) reclassification of the intangible assets of Autostrada Torino Savona to Non financial assets held for sale or related to discontinued operations (down E257.9 million). 29
2. Report on operations Reclassified consolidated statement of financial position (Em) 30.09.2012 31.12.2011 Increase/(Decrease) Non current non financial assets Property, plant and equipment 233.3 230.1 3.2 Intangible assets 20,845.6 17,344.6 3,501.0 Investments 123.5 318.7 195.2 Deferred tax assets less deferred tax liabilities eligible for offset 1,894.0 1,891.4 2.6 Other non current assets 2.1 2.4 0.3 Total non current non financial assets (A) 23,098.5 19,787.2 3,311.3 Working capital Trading assets 1,427.4 1,018.2 409.2 Current tax assets 169.1 28.6 140.5 Other current assets 110.8 89.3 21.5 Non financial assets held for sale and related to discontinued operations Current portion of provisions for construction services required by contract 297.2 308.3 11.1 629.7 551.6 78.1 Current provisions 183.3 171.6 11.7 Trading liabilities 1,381.1 1,490.5 109.4 Current tax liabilities 354.5 117.0 237.5 Other current liabilities 413.2 493.7 80.5 Non financial liabilities related to discontinued operations 61.8 0.3 61.5 Total working capital (B) 1,019.1 1,380.3 361.2 Invested capital less current liabilities (C = A + B) 22,079.4 18,406.9 3,672.5 NON CURRENT NON FINANCIAL LIABILITIES Non current portion of provisions for construction services required by contract 4,049.4 4,135.0 85.6 Non current provisions 1,106.5 1,030.8 75.7 Deferred tax liabilities not eligible for offset 1,060.2 174.1 886.1 Other non current liabilities 110.0 66.2 43.8 Total non current non financial liabilities (D) 6,326.1 5,406.1 920.0 NET INVESTED CAPITAL (E = C + D) 15,753.3 13,000.8 2,752.5 30
Consolidated financial review and adjusted amounts (Em) 30.09.2012 31.12.2011 Increase/(Decrease) Equity Equity attributable to owners of the parent 4,054.2 3,566.0 488.2 Equity attributable to non controlling interests 1,668.0 464.6 1,203.4 Total equity (F) 5,722.2 4,030.6 1,691.6 Net debt Non current net debt Non current financial liabilities 13,968.5 10,347.2 3,621.3 Bond issues 9,823.2 7,507.1 2,316.1 Medium/long term borrowings 3,846.7 2,590.0 1,256.7 Non current derivative liabilities 284.3 250.1 34.2 Other financial liabilities 14.3 14.3 Other non current financial assets 2,316.6 1,200.3 1,116.3 Non current financial assets deriving from concession rights 1,298.5 452.3 846.2 Non current financial assets deriving from government grants 236.1 238.7 2.6 Term deposits convertible after 12 months 318.1 290.3 27.8 Non current derivative assets 10.0 27.7 17.7 Other non current financial assets 453.9 191.3 262.6 Non current net debt (G) 11,651.9 9,146.9 2,505.0 Current net debt Current financial liabilities 819.1 666.8 152.3 Bank overdrafts 36.8 10.2 26.6 Short term borrowings 110.0 161.2 51.2 Intercompany current account payables due to 33.2 41.4 8.2 unconsolidated Group companies Current portion of medium/long term borrowings 548.2 449.6 98.6 Other financial liabilities 44.8 4.4 40.4 Financial liabilities related to discontinued operations 46.1 46.1 Cash and cash equivalents 1,908.0 619.9 1,288.1 Cash in hand and at bank and post offices 623.7 338.1 285.6 Cash equivalents 1,283.0 281.7 1,001.3 Cash and cash equivalents related to discontinued operations 1.3 0.1 1.2 Other current financial assets 531.9 223.6 308.3 Current financial assets deriving from concessions 27.0 7.3 19.7 Current financial assets deriving from government grants 33.6 51.0 17.4 Term deposits convertible within 12 months 282.5 76.6 205.9 Current portion of medium/long term financial assets 15.5 32.8 17.3 Other current financial assets 91.7 54.2 37.5 Financial assets held for sale or related to discontinued 81.6 1.7 79.9 operations Current net debt (H) 1,620.8 176.7 1,444.1 Net debt (I = G + H) 10,031.1 8,970.2 1,060.9 NET DEBT AND EQUITY (L = F + I) 15,753.3 13,000.8 2,752.5 31
2. Report on operations As at 30 September 2012 Investments, totalling E123.5 million (E318.7 million as at 31 December 2011), are down E195.2 million, primarily reflecting the following: a) the line by line consolidation of Autostrade Sud America. As at 31 December 2011 the Group held a 45.765% interest with a carrying amount of E170.6 million; b) the sale of the entire investment in IGLI, equal to 33.3% as at 31 December 2011 and at that date measured using the equity method, resulting in a carrying amount of E26.6 million; the sale of this investment resulted in a gain of E61.0 million in the consolidated financial statements; c) an impairment loss of E19.0 million in respect of the carrying amount of the investment in Alitalia Compagnia Aerea Italiana; d) the acquisition of 50% less one share of the Brazilian holding company, Atlantia Bertin Participações, accounted for at a value of E26.2 million. Deferred tax assets less deferred tax liabilities eligible for offset, amount to E1,894.0 million, substantially in line with the E1,891.4 million of 31 December 2011. As at 30 September 2012 consolidated working capital reports a negative balance of E1,019.1 million, compared with the negative balance of E1,380.3 million of 31 December 2011. This marks an improvement of E361.2 million. The improvement substantially reflects: a) an increase of E402.7 million in trade receivables, primarily regarding tolls billed on the last non working day of September and collected from banks in early October (E178.6 million) and the contribution of the newly consolidated companies as at 30 September 2012 (E210.2 million); b) a reduction of E109.4 million in trading liabilities due to reduced capital expenditure at Autostrade per l Italia; c) a reduction of E80.5 million in other current liabilities, primarily following payment of the fees due to the grantor of the Group s concessions and the Ministry of the Economy and Finance by Italian operators; d) an increase of E97.0 million in net current tax assets, substantially due to the prepayment and settlement of income tax for 2011 and provisions for current tax expense for the period; e) an increase of E78.1 million in the current portion of provisions for construction services required by contract, reflecting the expected volume of construction services for which no additional economic benefits are received. 32
Consolidated financial review and adjusted amounts It should also be noted that, in accordance with IFRS 5, the balance of assets and liabilities held for sale as at 30 June 2012 includes amounts attributable to Autostrada Torino Savona, whilst the balance of assets held for sale as at 31 December 2011 included E290.2 million representing the carrying amount of the investment in Nueva Inversiones, which was consolidated for the first time from 1 April 2012 as part of the consolidation of the Autostrade Sud America group and subsequently, during the third quarter of 2012, merged with and into Grupo Costanera. Non current non financial liabilities, totalling E6,326.1 million, are up E920.0 million compared with 31 December 2011 (E5,406.1 million). This essentially reflects deferred tax liabilities not eligible for offsetting of E900.5 million recognised, in accordance with the acquisition method, in relation to the Chilean and Brazilian operations. As a result, Net invested capital, totalling E15,753.3 million as at 30 September 2012, is up E2,752.5 million on the figure for 31 December 2011 (E13,000.8 million). Equity attributable to owners of the parent and non controlling interests totals E5,722.2 million (E4,030.6 million as at 31 December 2011). Equity attributable to owners of the parent, totalling E4,054.2 million, is up E488.2 million, essentially reflecting a combination of: a) profit for the period (up E679.8 million); b) payment of the final dividend for 2011 (E241.5 million); c) the negative balance of other components of comprehensive income, totalling E35.6 million, and primarily including the fair value loss on the measurement of cash flow hedges and net investment hedges (an after tax loss of E88.5 million), partially offset by the gain on the translation of the financial statements of subsidiaries that use a different functional currency other than the euro (E49.3 million). Equity attributable to non controlling interests of E1,668.0 million is up E1,203.4 million on the figure for 31 December 2011 (E464.6 million), essentially due to the non controlling interests in the newly consolidated Chilean and Brazilian companies. 33
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 2010 600.3 53.4 Total comprehensive income for the period 4.5 Owner transactions and other changes Bonus issue 30.0 Final dividend approved Retained earnings for the previous year Change in basis of consolidation, capital contributions, reclassifications and other changes Balance as at 30 September 2011 630.3 48.9 Balance as at 31 December 2011 630.3 41.0 Total comprehensive income for the period 50.9 37.6 Owner transactions and other changes Bonus issue 31.5 Final dividend approved Retained earnings for the previous year Change in basis of consolidation, capital contributions, reclassifications and other changes 0.1 Balance as at 30 September 2012 661.8 10.0 37.6 The Group s net debt as at 30 September 2012 is E10,031.1 million, up E1,060.9 million on 31 December 2011 (E8,970.2 million), primarily reflecting debt contributed by the newly consolidated companies. Non current net debt, amounting to E11,651.9 million (E9,146.9 million at 31 December 2011), is up E2,505.0 million, primarily due to the following: a) new bond issues by Atlantia with face values of E1,000 million (paying coupon interest of 4.5% and maturing in 2019), E750.0 million (paying coupon interest of 4.375% and maturing in 2020) and E35.0 million (paying coupon interest of 4.8% and maturing in 2032), and subscription of a Zero Coupon Note with a par value of E48.6 million (maturing in 2032), partly offset by the partial buyback (E655.8 million) of bonds ahead of their maturity in 2014; 34
Consolidated financial review and adjusted amounts 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 Treasury shares Profit/(Loss) and retained for period earnings Total Equity attributable to non controlling interests Total equity attributable to owners of the parent and non controlling interests 15.7 53.9 2,201.6 215.6 474.1 3,183.4 403.5 3,586.9 50.6 20.5 0.3 765.6 689.7 6.6 683.1 30.0 230.0 230.0 10.8 240.8 244.1 244.1 21.8 21.1 6.7 7.4 122.4 129.8 13.1 12.3 2,422.1 215.6 765.6 3,650.5 508.5 4,159.0 8.4 20.7 2,419.7 215.6 661.6 3,566.0 464.6 4,030.6 49.3 3.4 0.2 679.8 644.2 38.7 682.9 31.5 241.5 241.5 20.4 261.9 420.1 420.1 21.9 23.6 87.3 85.5 1,185.1 1,270.6 79.6 0.5 2,895.8 215.6 679.8 4,054.2 1,668.0 5,722.2 b) use of the remaining E500.0 million tranche of the fixed rate loan, maturing in 2036 and paying interest at 4.596%, agreed by Autostrade per l Italia and the European Investment Bank (EIB) in 2008, and signature of a new loan agreement with a par value of E250.0 million by Autostrade per l Italia and the EIB (maturing in 2034 and paying a fixed rate of 3.771%), partially offset by the reclassification of borrowings maturing in the next 12 months to current liabilities (E239.2 million); c) the issue of floating rate bonds by the Brazilian companies, Rodovias das Colinas (E328.9 million) and Triangulo do Sol (E239.7 million), maturing on 23 October 2013, as part of the above acquisition in Brazil; d) the assumption of debt attributable to the new Chilean companies, essentially consisting of: Project Bonds issued by Costanera Norte, maturing through 2016 and 2024, and Vespucio Sur, maturing 35
2. Report on operations through 2028, and totalling E551.3 million; Project Loans issued by Litoral Central, maturing through 2025, Nororiente, maturing through 2031, and Vespucio Sur, maturing through 2028, and totalling E370.5 million; and bank borrowings assumed by the sub holding company, Grupo Costanera (E178.7 million); e) an increase in medium/long term debt (up E123.2 million) at Ecomouv, reflecting the progressive drawdown of the company s project financing; f) an increase of E262.6 million in other non current financial assets, primarily due to the medium/long term receivable represented by convertible bonds issued by Infra Bertin Empreendimentos, which controls the project company, SPMAR, in order to fund construction and operation of the orbital motorway to the south east of São Paulo; g) an increase in financial assets deriving from concession rights (up E846.2 million), essentially reflecting the present value of concession rights deriving from guaranteed minimum revenue contributed by the new Chilean companies (up E647.2 million), and concession rights deriving from investment in Ecomouv (up E173.4 million), which is engaged in the production of a satellite based tolling system for heavy vehicles in France. As at 30 September 2012 current net funds amount to E1,620.8 million (E176.7 million as at 31 December 2011). The change of E1,444.1 million essentially reflects: a) an increase in cash (up E1,288.1 million), primarily due to the liquidity acquired as a result of Atlantia s recent bond issues and of the loans granted by the EIB to Autostrade per l Italia, and to operating cash flow, partially offset by funding requirements relating to capital expenditure; b) an increase in the short term portion of term deposits (up E205.9 million), due primarily to the project accounts linked to financing for the Chilean operators and the establishment of a deposit to be used for the loan that Atlantia Bertin Concessões is to disburse to Infra Bertin Empreendimentos by the end of 2013. 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, whilst taking account of the interests of stakeholders, as defined in the Group s Financial Policy. 36
Consolidated financial review and adjusted amounts The components of the Group s derivatives portfolio as at 30 September 2012 are classified, in application of IAS 39, as cash flow hedges or net investment hedges, depending on the specific risk being hedged. Based on the positive outcome of tests of effectiveness of cash flow hedges as at 30 September 2012, changes in fair value have been recognised in full in comprehensive income, with no recognition of any ineffective portion in profit or loss. In March 2012 the Group entered into new derivative contracts known as Non Deliverable Forwards and classified as net investment hedges in accordance with IAS 39. These transactions relate to the forward sale of Chilean pesos with the aim of hedging the foreign currency translation risk linked to certain assets and investments in Chile. Changes in fair value during the first nine months of 2012 have been recognised in full in the comprehensive income. The residual weighted average term to maturity of the Group s interest bearing debt is approximately 7 years as at 30 September 2012. 91% of the Group s debt is fixed rate. 20% 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 13%), 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 2012 was approximately 5.2% (4.9% without taking account of the debt of the Chilean and Brazilian companies). As at 30 September project debt allocated to individual companies amounts to E1,933.2 million. At the same date the Group has cash reserves of E5,262 million, consisting of: a) E1,908 million in cash and/or investments maturing within 90 days; b) E601 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) E2,753 million in undrawn committed lines of credit with a weighted average residual term to maturity of approximately 8 years and a weighted average residual drawdown period of approximately 2 years. The Group s net debt, as defined according to the CESR Recommendation of 10 February 2005 (which does not permit the deduction of non current financial assets from debt), amounts to E12,347.7 million as at 30 September 2012, compared with net debt of E10,170.5 million as at 31 December 2011. 37
2. Report on operations Consolidated cash flow Net debt increased by E1,060.9 million during the first nine months of 2012, compared with a reduction of E813.8 million in the first nine months of 2011. Operating activities generated cash flows of E611.4 million in the first nine months of 2012, down E970.2 million on the figure for the first nine months of 2011 (E1,581.6 million). This primarily reflects differing contributions from working capital in the two comparative periods, consisting of a cash outflow of E421.2 million in the first nine months of 2012 compared with a cash inflow of E75.3 million in the first nine months of 2011. The change essentially reflects the increase, in the first nine months of 2012, in tolls billed on the last non working day of September and collected from banks in early October and the increase, in the first nine months of 2011, in trading liabilities, relating to both suppliers and the operators of interconnecting motorways. The reduction in operating cash flow also reflects reduced cash flows from ordinary activities and a reduced contribution from other non financial assets and liabilities in the first nine months of 2012, compared with the same period of 2011. Cash used for investment in non financial assets amounts to E1,727.7 million, compared with E449.6 million in the first nine months of 2011. Cash flow for the first nine months of 2012 essentially reflects: a) the overall impact of transactions relating to consolidated companies (an outflow of E885.0 million), reflecting investments in consolidated companies, consisting almost entirely of the acquisition of the new Chilean and Brazilian companies, including net debt assumed (E1,376.5 million) and 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); b) investment in motorway infrastructure operated under concession, after the related government grants and the increases in takeover rights and in other financial assets resulting from capital expenditure (totalling E859.1 million); c) cash generated by the sale of the investment in IGLI (E87.6 million). 38
Consolidated financial review and adjusted amounts The corresponding cash flow for the first nine months of 2011 essentially reflected investment in motorway infrastructure, after the related government grants, and the purchase of investments by the Chilean company, Inversiones Autostrade Holding do Sur, which acquired a 50% interest in Nueva Inversiones, partially offset by the gain realised on deconsolidating Strada dei Parchi, including net debt transferred. The cash inflow resulting from changes in equity during the first nine months of 2012 amounts to E184.4 million (an outflow of E312.5 million in the first nine months of 2011), essentially reflecting the capital contribution to Grupo Costanera by the above Canadian pension fund (E349.2 million), partially offset by dividends approved by Atlantia during the period, in addition to dividends approved by other Group companies and payable to non controlling shareholders. The overall impact of the above cash flows was to increase net debt by E931.9 million during the first nine months of 2012, compared with a reduction of E819.5 million in the same period of 2011. Finally, in the first nine months of 2012 net debt was increased E129.0 million by changes in the fair value of financial instruments recognised in comprehensive income, compared with an increase of E5.7 million in the first nine months of 2011. 39
2. Report on operations Statement of changes in consolidated net debt (Em) 9M 2012 9M 2011 Q3 2012 Q3 2011 Profit for the period 687.3 778.6 197.9 338.5 Amortisation and depreciation 470.7 392.5 170.6 144.1 Provisions 52.4 1.1 39.6 4.2 Financial expenses from discounting of provisions for construction services required by contract and other provisions Impairments/(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 110.7 134.5 37.4 44.9 146.0 66.4 91.4 0.9 0.5 0.5 14.4 108.0 107.7 84.7 102.1 (Gain)/Loss on sale of non current assets 60.5 94.1 0.5 Net change in deferred tax (assets)/liabilities 45.4 193.4 32.9 55.3 Other non cash costs (income) 7.1 5.8 1.6 1.0 Change in working capital 421.2 75.3 174.1 152.8 Other changes in non financial assets and liabilities 11.4 64.3 193.1 106.2 Net cash from operating activities (A) 611.4 1,581.6 412.1 564.5 Investment in motorway infrastructure 1,089.0 1,069.2 399.8 392.3 Government grants related to motorway infrastructure 33.5 52.1 11.8 15.3 Increase in financial assets deriving from takeover rights (related to investment in motorway infrastructure) 196.4 25.8 72.3 20.3 Purchases of property, plant and equipment 31.3 37.5 9.7 15.6 Purchases of intangible assets 15.9 21.5 5.0 6.6 Purchase of investments, net of unpaid called up issued capital 26.4 309.9 0.5 2.2 Dividends received from investee companies accounted for using the equity method Purchase of new consolidated investments, including net debt assumed Proceeds from sales of property, plant and equipment, intangible assets and unconsolidated investments Proceeds from sale of consolidated investments, after net debt transferred 2.6 1,376.5 106.7 10.3 106.7 89.8 1.3 491.5 1,021.2 491.5 Change in other non current assets 0.2 7.8 1.2 9.2 Net cash from/(used in) investment in non financial assets (B) 1,727.7 449.6 170.7 497.0 Dividends declared by Group companies 262.0 240.8 6.8 8.4 Net change in currency translation reserve and other reserves, debt related translation differences and other changes 59.5 52.8 28.9 42.0 Contributions from non controlling shareholders 349.2 0.1 349.2 0.1 Net change in reserves attributable to non controlling interests 37.7 19.0 40.4 18.3 Net equity cash inflows/(outflows) (C) 184.4 312.5 411.7 68.6 Increase/(Decrease) in cash and cash equivalents (A + B + C) 931.9 819.5 994.5 1.1 Change in the fair value of hedging derivatives recognised in comprehensive income (D) 129.0 5.7 56.2 46.8 Decrease/(Increase) in net debt for period (A + B + C + D) 1,060.9 813.8 938.3 47.9 Net debt at beginning of period 8,970.2 9,657.3 10,969.4 8,795.6 Net debt at end of period 10,031.1 8,843.5 10,031.1 8,843.5 40
Consolidated financial review and adjusted amounts Consolidated statement of cash flows (Em) 9M 2012 9M 2011 Q3 2012 Q3 2011 CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES Profit for the period 687.3 778.6 197.9 338.5 Adjusted by: Amortisation and depreciation 470.7 392.5 170.6 144.1 Provisions 52.4 1.1 39.6 4.2 Financial expenses from discounting of provisions for construction 110.7 134.5 37.4 44.9 services required by contract Impairments/(Reversal of impairment losses) on non current 146.0 66.4 91.4 financial assets and investments accounted for at cost or fair value Share of (profit)/loss of associates and joint ventures accounted 0.9 0.5 0.5 14.4 for using the equity method Impairment losses/(reversal of impairment losses) 108.0 107.7 84.7 102.1 and adjustments of non current assets (Gain)/Loss on sale of non current assets 60.5 94.1 0.5 Net change in deferred tax (assets)/liabilities 45.4 193.4 32.9 55.3 Other non cash costs (income) 7.1 5.8 1.6 1.0 Change in working capital and other changes 432.6 139.6 19.0 46.6 Net cash generated from/(used in) operating activities (A) 611.4 1,581.6 412.1 564.5 CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES Investment in motorway infrastructure 1,089.0 1,069.2 399.8 392.3 Government grants related to motorway infrastructure 33.5 52.1 11.8 15.3 Increase in financial assets deriving from concession rights 196.4 25.8 72.3 20.3 (related to investment in motorway infrastructure) Purchases of property, plant and equipment 31.3 37.5 9.7 15.6 Purchases of intangible assets 15.9 21.5 5.0 6.6 Purchase of investments, net of unpaid called up issued capital 26.4 309.9 0.5 2.2 Purchase of new consolidated investments, after net cash acquired 556.0 49.3 0.9 49.3 Dividends received from investee companies accounted for using 2.6 the equity method Proceeds from sales of property, plant and equipment, intangible 89.8 1.3 assets and unconsolidated investments Proceeds from sales of consolidated investments net of cash 491.5 58.3 491.5 and cash equivalents transferred Net change in other non current assets 1.0 7.8 0.5 9.2 Net change in current and non current financial assets not held 603.6 69.2 140.9 4.2 for trading purposes Net cash generated from/(used in) investing activities (B) 1,510.0 1,285.9 21.1 443.8 CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES Dividends paid 261.9 240.8 7.2 8.8 Net change in the currency translation reserve and other reserves 57.0 45.0 20.6 35.1 Contributions from non controlling shareholders 349.2 0.1 349.2 0.1 Net change in reserves attributable to non controlling interests 37.7 19.0 40.4 18.3 New shareholder loans 0.6 3.0 0.1 0.9 Bond issues 2,069.0 739.0 Increase in medium/long term borrowings (excluding finance lease 997.8 443.8 293.0 0.1 liabilities) Bond redemptions 671.6 2,000.0 20.0 Repayments of medium/long term borrowings (excluding finance 279.1 153.2 30.2 44.5 lease liabilities) Payment of finance lease liabilities 0.3 0.9 0.1 Net change in other current and non current financial liabilities 135.6 45.1 343.9 54.9 Net cash generated from/(used in) financing activities (C) 2,162.8 1,966.9 1,040.7 50.7 Net effect of foreign exchange rate movements on net cash 5.5 7.7 6.0 6.9 and cash equivalents (D) Increase/(Decrease) in cash and cash equivalents (A + B + C + D) 1,269.7 1,678.9 1,479.9 63.1 Net cash and cash equivalents at beginning of period 568.3 2,519.9 358.1 777.9 Net cash and cash equivalents at end of period 1,838.0 841.0 1,838.0 841.0 41
2. Report on operations Additional information on the statement of cash flows (Em) 9M 2012 9M 2011 Q3 2012 Q3 2011 Income tax payments/(rebates) 170.6 54.9 11.7 9.4 Interest income and other financial income collected 169.8 70.5 45.8 5.3 Interest expense and other financial expenses paid 637.3 779.5 166.5 239.7 Dividends received 0.1 0.1 Foreign exchange gains collected 2.4 0.3 1.9 Foreign exchange losses incurred 18.2 1.6 17.6 1.0 Reconciliation of net cash and cash equivalents (Em) 9M 2012 9M 2011 Q3 2012 Q3 2011 Net cash and cash equivalents at beginning of period 568.3 2,519.9 358.1 777.9 Cash and cash equivalents 619.8 2,533.2 403.6 777.9 Bank overdrafts repayable on demand 10.2 19.9 13.9 0.1 Intercompany current account payables due to unconsolidated Group companies 41.4 0.9 33.2 0.5 Cash and cash equivalents related to discontinued operations 0.1 15.5 1.6 0.6 Bank overdrafts related to discontinued operations 8.0 Net cash and cash equivalents at end of period 1,838.0 841.0 1,838.0 841.0 Cash and cash equivalents 1,906.7 913.3 1,906.7 913.3 Bank overdrafts repayable on demand 36.8 72.4 36.8 72.4 Intercompany current account payables due to unconsolidated Group companies 33.2 0.2 33.2 0.2 Cash and cash equivalents related to discontinued operations 1.3 0.3 1.3 0.3 Cash flows related to discontinued operations (Em) 9M 2012 9M 2011 Q3 2012 Q3 2011 Net cash generated from/(used in) operating activities 8.5 56.3 1.5 12.1 Net cash generated from/(used in) investing activities 4.0 64.2 14.1 49.9 Net cash generated from/(used in) financing activities 9.5 100.6 1.0 114.3 42
Consolidated financial review and adjusted amounts 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 debt, 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 and have not been audited by the independent auditors, 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, presented in the reclassified income statement as an adjustment to 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) the reversal of financial income deriving from the discounting to present value of financial assets deriving from guaranteed minimum revenue; d) the elimination of financial assets recognised in application of IFRIC 12 (takeover rights, guaranteed minimum revenue, other financial assets deriving from concession rights). 43
2. Report on operations Reconciliation of reported and adjusted amounts (Em) 9M 2012 9M 2011 EBITDA Profit/(Loss) Operating cash flow EBITDA Profit/(Loss) Operating cash flow Reported amounts 1,894.7 687.3 1,149.4 1,845.9 778.6 1,365.5 Increase in revenue for guaranteed minimum revenue: Los Lagos 6.0 6.0 6.0 6.3 6.3 6.3 Costanera Norte (1) 18.0 18.0 18.0 Litoral Central (1) 2.3 2.3 2.3 Nororiente (1) 6.7 6.7 6.7 Adjustment (before tax) 33.0 33.0 33.0 6.3 6.3 6.3 Grants for motorway maintenance: Los Lagos 9.9 9.9 9.9 6.0 6.0 6.0 Adjustment (before tax) 9.9 9.9 9.9 6.0 6.0 6.0 Reversal of financial income deriving from the discounting to present value of financial assets deriving from guaranteed minimum revenue: Los Lagos 4.4 4.4 4.1 4.1 Costanera Norte (1) 13.0 13.0 Litoral Central (1) 3.9 3.9 Nororiente (1) 6.6 6.6 Adjustment (before tax) 27.9 27.9 4.1 4.1 Deferred taxes 2.6 1.4 Adjusted amounts 1,937.6 699.7 1,164.4 1,858.2 785.4 1,373.7 (Em) Net debt as at 30.09.2012 Net debt as at 31.12.2011 Reported amounts 10,031.1 8,970.2 Reversal of financial assets deriving from takeover rights: Autostrade Meridionali 363.1 346.2 Reversal of financial assets deriving from guaranted minimum revenue: Los Lagos 79.3 72.6 Costanera Norte (1) 365.2 Litoral Central (1) 114.8 Nororiente (1) 185.6 Reversal of other financial assets deriving from concession rights: Ecomouv 217.4 40.9 Adjusted amounts 11,356.5 9,429.9 (1) The Chilean companies, Costanera Norte, Litoral Central and Nororiente, were consolidated from 1 April 2012. 44
Operating review for the Group s main subsidiaries Operating review for the Group s main subsidiaries Italy Traffic The number of kilometres travelled on the network operated by Autostrade per l Italia and the Group s other Italian motorway operators (1) during the first nine months of 2012 totals 36,094.0 million: 31,680.3 million by vehicles with 2 axles (cars and vans, representing 87.8% of the total) and 4,413.7 million by vehicles with 3 or more axles (12.2% of the total). The number of kilometres travelled on the Group s Italian network is down 7.5% compared with the first nine months of 2011. There was a more accentuated decline in heavy vehicles, with those with 3 or more axles falling 8.2%, compared with a reduction of 7.4% in vehicles with 2 axles. The performance for the first nine months of 2012 reflects the continuing economic downturn, in addition to the impact of a number of unfavourable events in early 2012: the 5 day lorry drivers strike at the end of January, and exceptionally bad weather, with heavy snowfall across the country, above all in late January and mid February. On the other hand, the period benefitted from the extra day in February (2012 is a leap year), which added around an extra 0.3% of traffic in the first nine months. After adjusting for non recurring events (the strike, bad weather and the leap year effect), traffic during the first nine months of 2012 is down an estimated 6.6%. Traffic was down at all the Group s Italian companies and for both categories of vehicle. The decline was slightly more accentuated on Autostrade per l Italia s network, with total traffic down 7.7%: vehicles with 2 axles down 7.6% and those with 3 or more axles down 8.3%. Traffic using the motorways serving the Naples area declined by 4.7% in the case of Tangenziale di Napoli and 4.8% in the case of Autostrade Meridionali. The latter recorded a bigger reduction in heavy vehicles, with those with 3 or more axles down 10.6%. Raccordo Autostradale Valle d Aosta and Traforo del Monte Bianco registered reductions of 6.6% and 5.7%, respectively, above all due to a downturn in the 2 axle category (down 7.1% and 6.7%, respectively). All operators report a decline in traffic for the third quarter of the year, with the number of vehicles falling 6.7% across the Group s network as a whole. Vehicles with 3 or more axles registered the biggest fall, decreasing 8.3% compared with the same quarter of 2011, whilst the 2 axle component was down 6.6%. (1) Excluding Autostrada Torino Savona, a company held for sale. 45
2. Report on operations Traffic on the network operated under concession in Italy: figures for the first nine months of 2012 Motorway Vehicles x km (millions) % increase/(decrease) on 2011 ATVD (a) 2012 Vehicles with 2 axles Vehicles with 3+ axles Total vehicles Vehicles with 2 axles Vehicles with 3+ axles Total vehicles Autostrade per l Italia 29,920.3 4,316.1 34,236.4 7.6 8.3 7.7 43,772 Autostrade Meridionali 1,040.0 21.9 1,061.9 4.7 10.6 4.8 75,106 Tangenziale di Napoli 643.7 58.3 702.0 4.7 4.7 4.7 126,830 Società Italiana per il Traforo del Monte Bianco Raccordo Autostradale Valle d Aosta Total for Group s Italian operators 5.8 2.5 8.3 6.7 3.1 5.7 5,242 70.5 14.9 85.4 7.1 3.9 6.6 9,637 31,680.3 4,413.7 36,094.0 7.4 8.2 7.5 44,435 Autostrada Torino Savona (b) 650.0 52.8 702.8 8.2 12.0 8.5 19,594 (a) ATVD Average theoretical vehicles per day, equal to number of kilometres travelled/(journey length x number of days in the period). (b) Company held for sale. Tolls The following annual toll increases were introduced by Autostrade per l Italia and the Group s Italian motorway operators from 1 January 2012. The increases were calculated in accordance with the terms and conditions of the respective concession arrangements in force: Toll increases from 1 January 2012 Italian motorway operator % Toll increase Autostrade per l Italia (1) 3.51 Raccordo Autostradale Valle d Aosta (2) 14.17 Tangenziale di Napoli (2) 3.49 Autostrade Meridionali (2) 0.31 Società Italiana Traforo del Monte Bianco (3) 5.97 Autostrada Torino Savona (4) 1.47 (1) The toll increases applied by Autostrade per l Italia consist of a 2.04% increase, relating to the X component (1.99% to cover additional capital expenditure inserted into the IV Addendum of 2002) and the K component (0.05% to provide a return on new investment provided for in the Single Concession Arrangement of 2007), calculated on the basis of the stage of completion of work, and a 1.47% increase equivalent to 70% of the consumer price inflation rate in the period from 1 July 2010 to 30 June 2011. (2) The operators, Raccordo Autostradale Valle d Aosta, Tangenziale di Napoli and Autostrade Meridionali, 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) Traforo del Monte Bianco, which operates under a different concession regime based on bilateral agreements between Italy and France, applied a total increase of 5.97% from 1 January 2012, in accordance with the resolutions approved by the Intergovernmental Committee for the Mont Blanc Tunnel on 20 October and 25 November 2011. This increase is based on the combination of two elements: 2.47% representing the average inflation rate in France and Italy for the period from 1 September 2010 to 31 August 2011; 3.50% in accordance with the agreement between the Italian and French governments dated 24 February 2009, with use of the proceeds still be decided on by the two governments. (4) The increase applied by Autostrada Torino Savona (a company held for sale) is equal to 70% of the inflation rate in the period from 1 July 2010 to 30 June 2011. 46
Operating review for the Group s main subsidiaries Capital expenditure During the first nine months of 2012 the Group s Italian companies invested a total of E914.8 million, a reduction of E127.1 million (excluding companies sold or held for sale) on the same period of 2011 (down 12.2%). Capital expenditure in Italy (Em) 9M 2012 9M 2011 Increase/(Decrease) % Autostrade per l'italia projects in Agreement of 1997 233.6 278.9 16.2 Autostrade per l'italia projects in IV Addendum of 2002 453.0 521.4 13.1 Investment in major works by other subsidiaries 23.9 27.2 12.1 Other capital expenditure and capitalised costs 168.3 169.6 0.8 (staff, maintenance and other) Total investment in infrastructure operated under 878.8 997.1 11.9 concession Investment on other intangible assets 11.7 10.1 15.8 Investment in property, plant and equipment 24.3 34.7 30.0 Total investment in continuing operations 914.8 1,041.9 12.2 Capital expenditure by Autostrada Torino Savona 7.0 20.2 65.3 (a company held for sale) Total capital expenditure in Italy 921.8 1,062.1 13.2 The volume of investment in works envisaged in the Autostrade per l Italia s Agreement of 1997 and the IV Addendum of 2002 is down on the same period of 2011. In terms of the Agreement of 1997, the start up of work on the Barberino Florence North section (up E28.8 million) only partially offset the reduction linked to the approaching completion of work on the Variante di Valico and on the Florence North Florence South section (down E63.2 million). In terms of the IV Addendum of 2002, despite the acceleration of work on Lots 1B and 4 of the Rimini North Porto Sant Elpidio section (up E78.4 million), the total reflects reduced work carried out on the lots nearing completion and opened to traffic. This relates primarily to work on the A9 Lainate Como (down E12.1 million), on Lots 6B and 3 on the Rimini North Porto Sant Elpidio section (down E66.2) and on the Fiano Settebagni section (down E47.9 million). Investment in major works by the Group s other motorway operators is down E3.3 million compared with the same period of 2011, essentially reflecting a reduction in the volume of work carried out by Autostrade Meridionali on the widening of the A3 motorway. 47
2. Report on operations As at 30 September 2012 Italian operators have recognised contract reserves quantified by contractors amounting to E1,330 million, including E730 million regarding works envisaged in Autostrade per l Italia s Agreement of 1997, the additional cost of which cannot be clawed back via tolls. Other activities Pavimental The company operates as a motorway maintenance provider and carries out major infrastructure works for the Group. Compared with the first nine months of 2011, revenue of E431.6 million is down E57.6 million (11.8%). This is primarily due to the lower volume of infrastructure construction work carried out for Autostrade per l Italia and a reduction in work commissioned by other customers (Autostrada Tirrenica and Autostrade Centropadane). EBITDA of E39.3 million compares with E16.7 million for the same period of the previous year. 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 motorway network. Revenue of E87.9 million for the first nine months of 2012 is down 22.2% (E25.1 million) on the same period of the previous year, primarily due to the lower volume of infrastructure design work carried out (down E24 million), above all in relation to the final designs for the Genoa Interchange on behalf of Autostrade per l Italia and for the A12 Livorno Civitavecchia for Autostrada Tirrenica. 92.3% of the company s revenue during the year has been earned on services provided to the Group. EBITDA is E30.2 million for the first nine months of 2012, down E13.1 million on the same period of the previous year, primarily reflecting the above reduction in revenue, offset by reduced use of external consultants (down E9.3 million) and a decrease in staff costs (down E2.6 million). 48
Operating review for the Group s main subsidiaries Telepass The company is responsible for operating motorway tolling systems providing an alternative to cash payments: the Viacard direct debit card and Telepass devices. As at 30 September 2012 the number of Telepass devices in circulation exceeds 8 million (up approximately 242,000 on 30 September 2011), with the number of subscribers of the Premium option totalling 1.6 million (up approximately 162,000 on 30 September 2011). Revenue of E101.9 million in the first nine months of 2012 was primarily generated by Viacard subscription fees of E16.5 million (in line with the same period of 2011), Telepass fees of E68.0 million (up E3.4 million on the first nine months of 2011) and payments for Telepass Premium services of E8.9 million (up E1.1 million on the same period of 2011). In order to provide a like for like basis for comparison, it should be noted that Telepass fees reported for the first nine months of 2011 reflect discounts, totalling E0.9 million, applied to Telepass Family customers to take account of the increased amount of VAT payable for motorway use prior to the date on which the increase in VAT from 20% to 21% came into force on 17 September 2011, in compliance with Law 148 of 14 September 2011. The company s EBITDA for the first nine months of 2012, amounting to E63.7 million (an EBITDA margin of 62.5%), compares with EBITDA of E53.5 million for the same period of 2011. 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 E57.3 million in the first nine months of 2012 is up E23.6 million (70.25%) on the same period of 2011, above all due to the sub contract with Autostrade per l Italia linked to the contract for the Eco Taxe Poids Lourds project awarded to the subsidiary, Ecomouv. EBITDA of E19.3 million for the first nine months of 2012 (an EBITDA margin of 34%) is up on the same period of 2011 (E6.4 million). TowerCo TowerCo is responsible for the construction and management of fully equipped sites located around the 49
2. Report on operations motorway network managed under concession and on land owned by other parties (ANAS, municipal authorities and other motorway operators). 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). The company reports revenue of E14.4 million for the first nine months of 2012 (E14.1 million in the same period of 2011), with EBITDA of E8.5 million (E8.3 million for the first nine months of 2011). Significant regulatory aspects and litigation This section describes the main regulatory developments during the reporting period and provides an update on significant litigation outstanding. Snow events in February 2012 On 19 June 2012 ANAS IVCA (the Motorway Concession Inspectorate) sent Autostrade per l Italia a notice of violation regarding its handling of the snow events on the A1 on 3 February 2012. This was followed, on 10 July 2012, by a second notice of violation for snow events on the A16 on 6 and 7 February 2012. The related investigations are ongoing. The Ministry of Transport and Infrastructure s Department for Motorway Concessions Law Decree 98/2011, converted into Law 111/2011, set up the Highways Agency within the Ministry of Transport and Infrastructure. The Agency will take over the role of grantor for existing highway concessions from ANAS, exercising every aspect of the role previously assigned to the latter organisation. Given that adoption pursuant to the provisions of Law Decree 216/2011, as amended on conversion into Law 14/2012 and by Law Decree 95/2012, converted into Law 135/2012 of the Agency s bylaws and organisational and operational regulations had not taken place by 30 September 2012, the Agency was abolished by law and its activities and responsibilities transferred, from 1 October 2012, to the Ministry of Transport and Infrastructure, which thus took over the role of grantor from ANAS. Ministerial Decree 341 of 1 October 2012 set up the Department for Motorway Concessions within the Ministry of Transport and Infrastructure s Department for Infrastructure, General Affairs and Personnel, to which the staff and resources of the Motorway Concession Inspectorate previously forming part of ANAS were transferred. 50
Operating review for the Group s main subsidiaries The Office of Transport Regulation At the same time, Law Decree 201/2011 converted, with amendments, into Law 214/2011, has set up the Office of Transport Regulation to oversee conditions of access and prices for rail, airport and port infrastructure and the related urban transport links to stations, airports and ports. This legislation was subsequently amended by article 36 of Law Decree 1/2012 converted, with amendments, into Law 27/2012, which extended the scope of the new regulator s responsibilities to include the motorway sector. Other motorway regulations Law Decree 1/2012, as amended by Law Decree 83/2012 (converted, with amendments, into Law 134 of 7 August 2012) contains a range of provisions impacting, among other things, on motorway concessions, including (i) article 51, which, from 1 January 2014, has raised the minimum percentage of works to be contracted out to third party contractors by the providers of construction services under concession to 60%; (ii) article 17, which has introduced a new regime for the holders of fuel service licences, who may now offer other goods and services for sale at their service stations. With regard to motorway service areas, the terms and conditions of sub concession arrangements in force at 31 January 2012 are unaffected, as are the restrictions linked to competitive tenders for motorway areas under concession, conducted in accordance with the format required by the Office of Transport Regulation. 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 2012. ANAS 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. On 8 October 2012 Autostrade Meridionali submitted its application to tender, attaching the required documentation. In any event, at the end of the current concession term, the outgoing operator continues to be responsible for ordinary operation of the motorway until the transfer of the concession, which will take place at the same time as payment for the takeover right. 51
2. Report on operations Update on significant litigation outstanding With regard to tolls, court order 4330 of March 2012 dismissed the actions filed with Lazio Regional Administrative Court by Codacons and other consumers associations challenging the toll increases introduced in 2003. On 21 March 2011 Autostrade per l Italia together with Genoa Provincial Authority, the Municipality of Genoa, the Ministry of Infrastructure and Transport, Genoa Port Authority and ANAS were notified of legal action brought before Liguria Regional Administrative Court by several hundred members of the public requesting an injunction annulling the Memorandum of Understanding signed on 8 February 2010, relating to construction of the Genoa Interchange (the so called Gronda di Ponente). The plaintiffs have subsequently presented further challenges during 2012 regarding regional authority resolutions and decisions, as well as the related ministerial documents and/or documents linked to the Memorandum of Understanding arising subsequent to the filing of the legal action. A date for the related hearing has yet to be set. Finally, Autostrade per l Italia is the defendant in a number of legal actions regarding expropriations, tenders and claims for damages deriving from motorway use. 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 2012 and reported in the consolidated financial statements. 52
Operating review for the Group s main subsidiaries International operations Chile The Atlantia Group is one of the leading motorway operators in Chile through the operator, Los Lagos, which holds the concession for a 135 km section between Rio Bueno and Puerto Montt, and Grupo Costanera, the Chilean holding company, which controls five operators responsible for a total of 177 km of motorway, including 98 km in the capital Santiago. Key performance indicators for the Chilean operators (Em) Revenue EBITDA Adjusted revenue (a) Adjusted EBITDA (a) 9M 2012 9M 2011 Increase/ (Decrease) % 9M 2012 9M 2011 Increase/ (Decrease) % 9M 2012 9M 2011 Increase/ (Decrease) % 9M 2012 9M 2011 Increase/ (Decrease) % Los Lagos 14.5 11.4 27.4 6.8 6.3 7.5 30.4 26.2 16.0 22.6 21.1 7.3 Grupo Costanera (b) Costanera Norte 34.8 n.a. n.s. 24.5 n.a. n.s. 52.8 n.a. n.s. 42.6 n.a. n.s. Nororiente 1.8 n.a. n.s. 0.1 n.a. n.s. 8.6 n.a. n.s. 6.6 n.a. n.s. Vespucio Sur 33.5 n.a. n.s. 26.7 n.a. n.s. 33.5 n.a. n.s. 26.7 n.a. n.s. Litoral Central 1.1 n.a. n.s. 0.2 n.a. n.s. 3.4 n.a. n.s. 2.1 n.a. n.s. AMB 0.6 n.a. n.s. 0.0 n.a. n.s. 0.6 n.a. n.s. 0.0 n.a. n.s. (a) Information on the nature of the adjustments made and differences between reported and adjusted amounts is provided in the specific section Consolidated financial review and adjusted amounts. (b) The figures only refer to the period of consolidation from 1 April to 30 September 2012. Traffic on the network operated under concession by Los Lagos and Grupo Costanera in the first nine months of 2012 Traffic (millions of km travelled) 9M 2012 9M 2011 Increase/ (Decrease) % Traffic (thousands of journeys) 9M 2012 9M 2011 Increase/ (Decrease) % Los Lagos 384.8 344.4 11.7 9,909.9 8,982.0 10.3 Grupo Costanera Costanera Norte 672.5 646.5 4.0 149,140.9 144,285.0 3.4 Vespucio Sur 526.4 485.0 8.5 172,051.9 158,507.0 8.5 Litoral Central 65.1 56.9 14.4 2,594.9 2,264.0 14.6 Nororiente 39.4 34.8 13.3 3,328.3 2,944.2 13.0 AMB 14.5 13.0 11.4 6,318.0 5,670.1 11.4 Total 1,702.7 1,580.5 7.7 343,343.9 322,652.3 6.4 53
2. Report on operations Sociedad Concesionaria de Los Lagos During the first nine months of 2012 the Chilean operator, Los Lagos, registered a 11.7% increase in traffic in terms of kilometres travelled compared with the same period of 2011, marking growth of 13.2% in light vehicles and of 7.2% in heavy vehicles. From 1 January 2012 the tolls applied by the Chilean operator, Los Lagos, rose 1.9%, reflecting the effect of: the inflation linked increase of 3.9% (calculated between 1 December 2010 and 30 November 2011); the rounding off of tariffs to the nearest 100 pesos (down 2.0%); the failure to qualify for the increase relating to the safety factor (as in the previous year). In the first nine months of 2012 Los Lagos recorded total revenue of E14.5 million (E30.4 million including the portion attributable to the guaranteed minimum and grants for motorway maintenance (1) ), up 27.4% (19.6% on a constant exchange rate basis) on the same period of 2011 (E11.4 million). EBITDA of E6.8 million (E22.6 million including the above adjustments) is up 7.6% (1.0% on a constant exchange rate basis) compared with the same period of 2011 (E6.3 million). Grupo Costanera Grupo Costanera, the Chilean holding company controlled via Autostrade Sud America, wholly owns the following investments in Chilean motorway operators, consolidated in the Group s accounts as they are wholly owned direct and indirect subsidiaries from 1 April 2012: Costanera Norte SA, which holds the concession (expiring 2033) for 43 km of road network in the city of Santiago in Chile; Autopista Nororiente SA, the holder of the concession (expiring 2044) for the 21.5 km north eastern bypass in the city of Santiago; AMB SA, the holder of the concession (expiring 2048) for the 10 km section of motorway linking Santiago to the city s international airport; Autopista Vespucio Sur SA, the holder of the concession (expiring 2032) for the 23.5 km southern section of the orbital toll motorway serving the city of Santiago; (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 and adjusted amounts. 54
Operating review for the Group s main subsidiaries Litoral Central SA, the holder of the concession (expiring 2031) for the 79 km toll motorway serving the cities of Algarrobo, Casablanca and Cartagena in Chile. The sale of 49.99% of Grupo Costanera to Canada Pension Plan Investment Board (CPPIB), a leading Canadian pension fund, was completed on 3 August 2012 for a price of 560 billion Chilean pesos (equal to approximately E860 million at the euro/chilean peso exchange rate on 1 April 2012), in accordance with the agreements signed on 19 April 2012. The transaction took the form of a direct purchase of a 30% interest in the company from Autostrade Sud America and the subscription of new issues. Costanera Norte During the first nine months of 2012 traffic using the motorway operated under concession by Costanera Norte rose 4.0% in terms of kilometres travelled compared with the same period of 2011. From 10 January 2012 the tolls applied on the section of motorway operated under concession were increased by a total of 7.95%, calculated under the concession arrangement on the basis of consumer price inflation in 2011 plus 3.5%. From 1 April to 30 September 2012 (the period of consolidation) the company generated revenue of E34.8 million (E52.8 million including the portion attributable to the guaranteed minimum), primarily consisting of toll revenue of E31.0 million. EBITDA amounts to E24.5 million. On 24 April 2012 Costanera Norte signed a preliminary agreement for the implementation of an investment programme named Programma SCO (Santiago Centro Oriente). Work is scheduled to start at the beginning of 2013 and to be completed by July 2017. The total value of the work to be carried out is approximately E319 million. The investment programme aims to upgrade and widen the section operated under concession. Autopista Nororiente Traffic on the section of motorway operated by the Chilean operator, Nororiente, was up 13.3% in terms of kilometres travelled in the first nine months of 2012, compared with the same period of 2011. From 1 April to 30 September 2012 (the period of consolidation) the company generated revenue of E1.8 million (E8.6 million including the portion attributable to the guaranteed minimum), primarily consisting of toll revenue of E1.7 million. Negative EBITDA for the period is E0.1 million. 55
2. Report on operations AMB Traffic on the section of motorway operated by the Chilean operator, AMB, was up 11.4% in terms of kilometres travelled in the first nine months of 2012, compared with the same period of 2011. From 1 April to 30 September 2012 (the period of consolidation) the company generated revenue of E0.6 million and EBITDA equal to zero. Vespucio Sur The section of motorway operated by the Chilean operator, Vespucio Sur, registered an increase in traffic of 8.5% in terms of kilometres travelled in the first nine months of 2012, compared with the same period of 2011. From January 2012 the company applied the annual toll increase of 7.95% (under the concession arrangement based on consumer price inflation in 2011, plus 3.5%). From 1 April to 30 September 2012 (the period of consolidation) the company generated revenue of E33.5 million, primarily consisting of toll revenue of E31.3 million. EBITDA amounts to E26.7 million. Litoral Central The section of motorway operated by the Chilean operator, Litoral Central, registered an increase in traffic of 14.4% in terms of kilometres travelled in the first nine months of 2012, compared with the same period of 2011. From 1 April to 30 September 2012 (the period of consolidation) the company generated revenue of E1.1 million (E3.4 million including the portion attributable to the guaranteed minimum). Negative EBITDA is E0.2 million. Brazil Atlantia Bertin Concessões SA The Atlantia Group is one of the leading motorway operators in Brazil through the joint venture established with the Bertin group on 30 June 2012, to which the two partners have contributed their respective investments in Brazilian motorway operators, which manage a total of 1,538 km of network under concession. 56
Operating review for the Group s main subsidiaries The transaction resulted in the creation of Atlantia Bertin Concessões SA, a Brazilian holding company of which Autostrade do Brasil (a wholly owned subsidiary of the Atlantia Group) owns 50% plus 1 share and the Bertin group owns 50% minus 1 share. Atlantia Bertin Concessões SA owns the following investments consolidated in the Atlantia Group s accounts: Triangulo do Sol, which holds the concession for 442 km of motorway in the state of São Paulo, expiring in 2021; Colinas, the holder of the concession (expiring in 2028) for a total of 307 km of motorway network in the state of São Paulo, connecting the cities of Campinas, Sorocava and Rio Claro; Nascentes das Gerais, the holder of the concession (expiring in 2032) for a total of 372 km of motorway in the state of Minas Gerais, serving Betim, São Sebastião do Paraíso and Belo Horizonte. Atlantia Bertin Concessões SA also has an option to acquire the 95% of SPMAR owned by the Bertin group. SPMAR holds the concession to operate a part of the Rodoanel, the 105 km orbital toll motorway serving São Paulo, of which approximately 60 km is in operation, with the remainder under construction. Atlantia Bertin Participações SA The above transaction also resulted in the creation of Atlantia Bertin Participações, a second Brazilian holding company established by the Atlantia Group (50% minus 1 share) and the Bertin group (50% plus 1 share). This company owns 50% of Tietê (1),the holder of the concession for 417 km of motorway in the state of São Paulo, in the area between Bauru and Campinas, expiring in 2039. The agreements entered into with the Bertin group envisage the contribution of the interest in Tietê to Atlantia Bertin Concessões SA following receipt of the necessary clearance. Key performance indicators for the Brazilian operators (Em) Revenue EBITDA Adjusted revenue (a) Adjusted EBITDA (a) 9M 2012 9M 2011 Increase/ (Decrease) % 9M 2012 9M 2011 Increase/ (Decrease) % 9M 2012 9M 2011 Increase/ (Decrease) % 9M 2012 9M 2011 Increase/ (Decrease) % Triangulo do Sol 103.9 95.6 8.7 75.1 70.6 6.3 103.9 95.6 8.7 75.1 70.6 6.3 Rodovias das Colinas (b) 40.5 n.a. n.s. 29.2 n.a. n.s. 40.5 n.a. n.s. 29.2 n.a. n.s. Nascentes das Gerais (b) 8.6 n.a. n.s. 4.5 n.a. n.s. 8.6 n.a. n.s. 4.5 n.a. n.s. (a) Information on the nature of the adjustments made and differences between reported and adjusted amounts is provided in the specific section Consolidated financial review and adjusted amounts. (b) The figures only refer to the period of consolidation from 1 July to 30 September 2012. (1) The remaining 50% is held by Ascendi Mota Engil. 57
2. Report on operations Traffic on the network operated under concession in Brazil in the first nine months of 2012 Traffic (millions of km travelled) Traffic (thousands of journeys) 9M 2012 9M 2011 Increase/ (Decrease) % 9M 2012 9M 2011 Increase/ (Decrease) % Triangulo do Sol 1,023.7 963.4 6.3 14,930.3 14,055.0 6.2 Rodovias das Colinas 1,418.1 1,357.2 4.5 26,375.3 25,218.1 4.6 Nascentes das Gerais 559.7 545.0 2.7 9,028.1 8,790.4 2.7 Tietê 933.7 918.7 1.6 19,285.9 18,977.0 1.6 Total 3,935.3 3,784.4 4.0 69,619.6 67,040.4 3.8 Triangulo do Sol Traffic on the network operated by the subsidiary, Triangulo do Sol, rose 6.3% in terms of kilometres travelled in the first nine months of 2012 (the period of consolidation), compared with the same period of 2011. Triangulo do Sol generated revenue of E103.9 million in the first nine months of 2012, primarily consisting of toll revenue of E100.6 million. EBITDA amounts to E75.1 million. Colinas In terms of kilometres travelled, traffic on the motorways operated by the operator, Rodovias das Colinas, rose 4.5% in the first nine months of 2012. In the third quarter of 2012 (the period of consolidation) Colinas generated revenue of E40.5 million, primarily consisting of toll revenue of E39.5 million. EBITDA amounts to E29.2 million. Nascentes das Gerais In terms of kilometres travelled, traffic on the motorways operated by the operator, Nascentes das Gerais, rose 2.7% in the first nine months of 2012. In the third quarter of 2012 (the period of consolidation) Nascentes das Gerais generated total revenue of E8.6 million, primarily consisting of toll revenue of E7.8 million. EBITDA amounts to E4.5 million. 58
Operating review for the Group s main subsidiaries Poland Stalexport Autostrada Malopolska The Polish operator, Stalexport Autostrada Malopolska, recorded a 7.4% decline in kilometres travelled in the first nine months of 2012, compared with the same period of 2011, with light vehicles down 2.0% and heavy vehicles falling 28.0%. The latter figure reflects the transfer, from 1 July 2011, from a shadow tolling system to direct tolling for vehicles weighing more than 12 tonnes and toll increases applied to vehicles under 12 tonnes. In addition, from 1 March 2012 tolls for light vehicles were raised by 12.5%. The overall effect of the toll increases in the first nine months of 2012, compared with the same period of the previous year, was a rise of 23.2% (based on like for like traffic volumes and traffic mix). The toll increases introduced by the Polish operator are within the limits set out in the concession arrangement. Stalexport Autostrada Malopolska generated total revenue of E33.7 million in the first nine months of 2012 (including toll revenue of E31.8 million), marking a reduction of 1.7% (up 2.9% on a constant exchange rate basis) compared with the same period of 2011 (E34.2 million). The reduction reflects the negative effect of exchange rate fluctuations. Gross operating profit (EBITDA) of E25.5 million is up 0.6% (up 5.3% on a constant exchange rate basis) compared with the first nine months of 2011 (E25.4 million). France Ecomouv On 20 October Autostrade per l Italia, via the wholly owned project company, Ecomouv Sas (in which Autostrade per l Italia holds a 70% interest) signed a partnership agreement with the French Ministry of Ecology, Sustainable Development and Transport (MEDDTL) for the implementation and operation of a satellite based tolling system for heavy vehicles weighing over 3.5 tonnes on approximately 15,000 km of the country s road network (the so called Eco Taxe Poids Lourds project). The signature follows award of the contract at the end of a tender process organised by the MEDDTL. 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 59
2. Report on operations construction phase, followed by operation and maintenance of the tax collection system for 11 and a half years. Ecomouv s capital expenditure during the first nine months of 2012, relating primarily to the development of the tolling system, the central system and the control system, amounted to E174.7 million. 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. ETC generated revenue of E36.5 million in the first nine months of 2012, marking an increase of 5.6% (down 3.9% on a constant exchange rate basis) compared with the same period of 2011 (E34.6 million). Negative EBITDA of E0.7 million (EBITDA of E5.2 million in 2011, which benefitted from the greater capitalisation of software development costs and income in the form of royalties from the sale of licences). 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. Work on construction and on widening the motorway from two to four lanes is underway, having been divided into two lots for which contracts were awarded separately to the local companies, Oriental and IJM. Under the Concession Arrangement, construction work is to last 30 months from 14 November 2009. In reality, the necessary expropriations of land, which are the responsibility of the Grantor, are behind schedule with respect to the deadline envisaged by the concession arrangement. The Operator is putting pressure on the Grantor to speed up the process. 60
Workforce Workforce As at 30 September 2012 the Group (excluding Autostrada Tirrenica (1) and Autostrada Torino Savona (2) from the basis of consolidation for the two comparative periods) employs 11,562 staff on permanent contracts and 616 temporary staff, resulting in a total workforce of 12,178. This is up 1,627 (15.4%) on the 10,551 of 31 December 2011. The change in permanent staff (up 1,628) primarily reflects events at the following Group companies: first time consolidation of the Chilean and Brazilian companies (up 918 and 704, respectively); the expansion of Giove Clear s operations to cover 84% of the service areas on Autostrade per l Italia s motorway network (up 59); progress on the Eco Taxe project in France (up 14 at Ecomouv and Tech Solutions Integrators); Electronic Transaction Consultants (up 26), reflecting the launch and implementation of the tolling project commissioned by the state of Washington; Pavimental (down 39), following the completion of construction work on the section of the A1 between Fiano and Rome s orbital motorway, on Lot 1 of the extension of the Autostrada Tirrenica motorway and on 3 lots on the A14; Stalexport Autostrady group (down 19), primarily reflecting cuts in clerical staff and manual workers due to reduced investment; Italian operators (down 43), following a reduction in toll collectors (down 83), partly offset at Autostrade per l Italia (up 23) by the recruitment of staff to fill specific roles in certain departments, above all regarding the management of overseas operations. The average workforce (excluding Autostrada Tirrenica and Autostrada Torino Savona and including temporary staff) is up from 9,973 in the first nine months of 2011 to 11,051 in the same period of 2012, making an increase of 1,078 on average (up 10.8%). The increase (up 1,078 on average) primarily reflects: the first time consolidation (up 991 on average) of the new Chilean operators (up 636 on average), Triangulo do Sol from 1 July 2011 (up 238 on average), the new Brazilian operators (up 79 on average) and launch of the Eco Taxe project (up 38 on average); the expansion of Giove Clear s operations (up 152 on average); Autostrade Tech (up 19 on average), following the recruitment of temporary staff to work on the systems to be supplied for the Eco Taxe project; (1) The Group sold a 69.1% interest in the fourth quarter of 2011. (2) This company s contributions to the first nine months of 2012 and the same period of 2011 have been accounted for in Profit/(Loss) from discontinued operations. 61
2. Report on operations the Stalexport Autostrady group (down 21 on average), reflecting the cuts in clerical staff and manual workers; Italian operators (down 68 on average), following a reduction in toll collectors (down 100), partly offset at Autostrade per l Italia by the recruitment of staff to fill specific roles in certain departments, above all regarding the management of overseas operations. Staff costs, before deducting capitalised expenses, amount to E497.2 million, marking an increase of E23.9 million (5.1%) on the first nine months of 2011, after stripping out the release, in the first half of 2011, of surplus provisions following closure of the three year management incentive plan for the period 2008 2010. This increase is due to: a) first time consolidation of the Chilean and Brazilian operators, launch of the Eco Taxe project, the different period of consolidation of Triangulo do Sol and the expansion of Giove Clear s operations (up 5.2%); b) a like for like reduction in the average workforce of 65 (down 0.7%); c) a like for like increase in the average unit cost (up 0.6%), primarily due to contract renewals at the Group s motorway operators and industrial companies, partly offset by a reduction in the use of temporary staff. 62
Workforce Permanent staff (a) Position 30.09.2012 31.12.2011 Increase/(Decrease) Absolute % Senior managers 210 187 23 12 Middle managers 856 679 177 26 Administrative staff 4,713 4,158 555 13 Manual workers 2,265 1,878 387 21 Toll collectors 3,518 3,032 486 16 Total 11,562 9,934 1,628 16 Temporary staff (a) Position 30.09.2012 31.12.2011 Increase/(Decrease) Absolute % Senior managers 0 0 0 n.a. Middle managers 4 1 3 300 Administrative staff 181 220 39 18 Manual workers 303 187 116 62 Toll collectors 128 209 81 39 Total 616 617 1 16 Average workforce (a) (b) Position 9M 2012 9M 2011 Increase/(Decrease) Absolute % Senior managers 198 180 18 10 Middle managers 788 647 141 22 Administrative staff 4,727 4,337 390 9 Manual workers 2,250 1,850 400 22 Toll collectors 3,088 2,959 129 4 Total 11,051 9,973 1,078 11 (a) (b) The period end and average figures do not include the workforces of Autostrada Tirrenica and Autostrada Torino Savona. The figure for the average workforce includes temporary staff. 63
2. Report on operations Events after 30 September 2012 Interim dividend for 2012 On 19 October Atlantia SpA s Board of Directors approved payment of an interim dividend for 2012 of E0.355 per share. The interim dividend will be paid, after deducting any withholding taxes required by law, from 22 November 2012, whilst the ex dividend date for coupon no. 21 is 19 November 2012. Issue of retail bonds On the same date the Board of Directors also approved the issue, by 31 December 2013, of one or more new non convertible bonds amounting to total of up to E1.5 billion. The bonds are to be sold to retail investors in Italy via a public offering. The above bonds, with terms to maturity of no more than 8 years, are to be listed on one or more regulated markets, may be fixed or floating rate and will be guaranteed by Autostrade per l Italia SpA, which undertakes to guarantee fulfilment of all Atlantia s financial obligations deriving from the notes to be issued as part of the above bond issue, up to a total maximum amount equal to the sum of 120% of the total par value of each of the bond issues and 120% of interest accrued and yet to be paid on the bonds issued. Autostrade per l Italia will in turn benefit from the financial resources raised by the bond issue in the form of intercompany loans. The issues aim to maintain a balanced financial structure in terms of the ratio of short to medium/long term debt, to finance Autostrade per l Italia s investment programmes and diversify the Group s sources of funding. 64
Outlook Outlook Against a less than favourable macroeconomic backdrop, which led to a 7.5% decline in traffic using the Group s Italian network in the first nine months of 2012, compared with the same period of 2011, we expect the Group s consolidated operating performance for the current year to be substantially stable, thanks to the greater contribution from overseas operations. 65
Annexes 3