Reclassified consolidated income statement of the Salini Impregilo Group
| (Amounts in thousands of euros) | Jan - Sep 2014 | Jan - Sep 2013 (§) | Change |
|---|---|---|---|
| Operating revenue | 3,032,935 | 2,307,600 | 725,335 |
| Other revenue | 55,407 | 34,328 | 21,079 |
| Total revenue | 3,088,342 | 2,341,928 | 746,414 |
| Operating costs | (2,788,553) | (2,167,910) | (620,643) |
| Gross operating profit (EBITDA) | 299,789 | 174,018 | 125,771 |
| EBITDA % | 9.7% | 7.4% | |
| Amortization and depreciation | (118,158) | (89,864) | (28,294) |
| Operating profit (EBIT) | 181,631 | 84,154 | 97,477 |
| Return on Sales | 5.9% | 3.6% | |
| Financing income (costs) and gains (losses) on investments | |||
| Financing costs | (111,693) | (60,205) | (51,488) |
| Gains (losses) on investments | 4,492 | 205,270 | (200,778) |
| Net financing costs and net gains on investments | (107,201) | 145,065 | (252,266) |
| Earnings before taxes (EBT) | 74,430 | 229,219 | (154,789) |
| Income taxes | (27,539) | (26,104) | (1,435) |
| Profit (loss) from continuing operations | 46,891 | 203,115 | (156,224) |
| Profit (loss) from discontinued operations | 55,226 | (40,934) | 96,160 |
| Net profit (loss) before allocation to non-controlling interests | 102,117 | 162,181 | (60,064) |
| Non-controlling interests | 3,626 | 3,207 | 419 |
| Profit (loss) attributable to the owners of the parent | 105,743 | 165,388 | (59,645) |
(§) The income statement figures for the period January-September 2013 have been reclassified following the adoption of the new standards IFRS 10 and IFRS 11 and IFRS 3 and in accordance with the provisions of IFRS 5 with reference to Todini Costruzioni Generali and Fisia Babcock Environment.
The following table shows the reclassified consolidated income statement for the period January-September 2014 compared to the reclassified consolidated income statement for the period January-September 2013, reclassified as mentioned above in order to facilitate the comparison of the information on a like-for-like basis.
Reclassified consolidated income statement of the Salini Impregilo Group for the period January-September 2014 on a comparable basis with the same period of the previous year
| (Amounts in thousands of euros) | Jan - Sep 2014 |
Jan - Sep 2013 | Change |
|---|---|---|---|
| Operating revenue | 3,032,935 | 2,840,616 | 192,319 |
| Other revenue | 55,407 | 46,637 | 8,770 |
| Total revenue | 3,088,342 | 2,887,253 | 201,089 |
| Purchasing costs | (372,226) | (390,769) | 18,543 |
| Service and subcontractor costs | (1,992,749) | (1,890,559) | (102,190) |
| Personnel costs | (340,682) | (300,078) | (40,604) |
| Other operating costs | (79,153) | (42,825) | (36,328) |
| Provisions and impairment losses | (3,743) | (7,092) | 3,349 |
| Operating costs | (2,788,553) | (2,631,323) | (157,230) |
| Gross operating profit (EBITDA) | 299,789 | 255,930 | 43,859 |
| EBITDA % | 9.7% | 8.9% | |
| Amortization and depreciation | (118,158) | (104,088) | (14,070) |
| Operating profit (EBIT) | 181,631 | 151,842 | 29,789 |
| Return on Sales | 5.9% | 5.3% | |
| Financing income (costs) and gains (losses) on investments | |||
| Financial income | 27,214 | 24,407 | 2,807 |
| Financial expense | (98,805) | (92,622) | (6,183) |
| Net exchange rate gains | (40,102) | (577) | (39,525) |
| Financing costs | (111,693) | (68,792) | (42,901) |
| Gains (losses) on investments | 4,492 | 5,403 | (911) |
| Net financing costs and net gains on investments | (107,201) | (63,389) | (43,812) |
| Earnings before taxes (EBT) | 74,430 | 88,453 | (14,023) |
| Income taxes | (27,539) | (44,806) | 17,267 |
| Profit (loss) from continuing operations | 46,891 | 43,647 | 3,244 |
| Profit (loss) from discontinued operations | 55,226 | 53,998 | 1,228 |
| Net profit (loss) before allocation to non-controlling interests | 102,117 | 97,645 | 4,472 |
| Non-controlling interests | 3,626 | 3,385 | 241 |
| Profit (loss) attributable to the owners of the parent | 105,743 | 101,030 | 4,713 |
Revenue
The revenue booked in the first nine months of 2014 totaled € 3,088.3 million (€ 2,887.3 million on a like-for-like basis) and included € 2,695.8 million generated outside Italy.
Total consolidated revenue reports an increase of about 7% compared with the amount stated on a like-for-like basis compared to the same period of the previous year. This increase is essentially the net result of the production progress on some large-scale projects abroad which, compared to the first nine months of 2013, became fully operational (Ethiopia, Denmark, Saudi Arabia and Qatar), up against which the substantial completion of major road and highways projects in Italy and the sale to third parties – completed in the second half of the previous period – of activities related to the construction of Milan’s External East Bypass.
Please also note that, as far as the Group’s foreign industrial activities are concerned, during the first nine months of 2014 it was necessary to take into consideration both (i) the temporary slowdown in production of several large projects in Venezuela and (ii) the continuing problem issues encountered in the Panama Canal expansion project, with specific reference to the temporary deterioration of relations with the client – further information of which is provided in the subsequent parts of this Interim financial report and should be consulted for more detailed information – which also caused a reduction in the volume of production, especially with reference to the first quarter compared to that observed in the same period of last year.
Item “Other revenue” includes mainly positive components of income originated in the projects in progress and arising from ancillary industrial activities not directly attributable to the contract with the client.
Operating profit
The performance of the operating activities in the first nine months of 2014, both in absolute terms and on a comparable basis with the same period of the previous year, was not affected by unusual occurrences extraneous to the production cycle.
Given this situation, the operating profitability achieved in the period subject of this Report reflects in a substantially consistent fashion the evolution of the production activities described in the comments to “Revenue”.
The profitability for the period, amounting to 5.9% (5.3% on a like-for-like basis) was adversely affected by the reversal of the effects of the Purchase Price Allocation, amounting to € 14.5 million of amortisation, without which it would have been 6.3%.
The main changes in the different types of operating expenses during the first nine months of 2014, as compared to the first nine months of 2013 were as follows:
- the increase in service costs, including subcontractors and other operating expenses, amounting to € 138.5 million, is in line with the change in production;
- the decrease in the item provisions and impairment losses, totals around € 3.3 million and includes the release of write-down provisions made in previous years on receivables due from customers in the Venezuela area, amounting to € 4.7 million, partially offset by the provision of € 3.4 million made on the Metro 6 in Chile relating to fines for delays in delivery of the works. The item also includes the provision amounting to € 1.9 million related to the Uganda branch for the write-down of receivables from the insurance company regarding the claim for damages for which a civil lawsuit is under way;
- lastly, the increase in amortization and depreciation expense mainly reflects the reversal attributable to the quarter of the higher values assigned to some intangible assets of the former Impregilo upon acquisition of control by the former Salini.
The overhead costs for the central corporate units and the other general expenses, for the period reviewed in this report, totaled approximately € 103.1 million (roughly € 110.1 on a like-for-like basis, without taking into consideration nonrecurring expenses) and are currently allocated to the “Italy” segment.
Financing income (costs) and gains (losses) on investments
Net financing costs totaled € 111.7 million (down by € 68.8 million on a like-for-like basis) where for investments there was a gain of € 4.5 million (€ 5.4 million on a like-for-like basis).
The main cause of the change in the net financing costs, in respect of the corresponding value recognized on a like-for-like basis for the first nine months of 2013, is the non-recurring charge of about € 54 million resulting from the adoption by the Group of the new official exchange rate called SICAD 2 to translate its net assets denominated in the Venezuelan currency (called Bolivar Fuerte or VEF), effective as of June 30, 2014.
This situation, details of which are provided in the notes to the condensed consolidated interim financial statements and should be consulted for more information, was necessary in light of the continuing financial/currency crisis being experienced in the country within the framework of a more reliable estimate of the value that these net financial assets will be realized, also in consideration of the regulatory characteristics of the local currency market which expresses significant limitations on movement of Venezuelan currency.
Financial expense for the period, net of income of the same nature, showed a slight increase compared to the same period last year, reclassified on a like-for-like basis. Please note that, within the adjustments made to the income statement for the first nine months of 2013, shown here on a comparative basis, no adjustments were made in relation to the indebtedness of the Group in this period in relation to the public tender offer for all ordinary shares of the former Impregilo S.p.A. and therefore, on an aggregated and consolidated basis, there are no significant differences between the two periods being compared as regards average indebtedness.
Profit (loss) from discontinued operations
During the period reviewed in this chapter, the profit from discontinued operations totaled € 55.2 million (profit of € 54.0 million on a like-for-like basis). The reported profit is the net result of the following factors:
- a loss of € 0.8 million (profit of € 84.1 million on a like-for-like basis) reported by the remaining activities of the USW Campania Projects;
- a net profit of € 85.1 million (loss of € 0.6 million on a like-for-like basis) recognized as a result of the completion of the sale of the investment in the German company Fisia Babcock Environment G.m.b.H. to third parties. The Group held this investment through its subsidiary Impregilo International Infrastructures N.V. Upon completion of the sales transaction a net gain of € 89.2 million was recognized, partially offset by the net loss, and amounting to roughly € 4.1 million, which the company itself had contributed to the Group for the period prior to the sale;
- a loss of € 29.1 million (loss of € 28.5 million on a like-for-like basis) reported in the period by Todini Costruzioni Generali and by its subsidiaries.
Complete information about the main developments affecting the various assets held for sale and discontinued operations is provided in the relevant chapter included in this Interim financial report entitled “Non-current assets held for sale and discontinued operations”.