Reclassified consolidated income statement of the Salini Impregilo Group
| (Values in thousands of euros) | Note (*) | First Half 2014 | First Half 2013 (§) | Change |
|---|---|---|---|---|
| Operating revenue | 2,073,373 | 1,303,337 | 770,036 | |
| Other revenue | 35,596 | 22,089 | 13,507 | |
| Total revenue | 31 | 2,108,969 | 1,325,426 | (783,543) |
| Operating costs | 32 | (1,916,282) | (1,220,470) | (695,812) |
| Gross operating profit (EBITDA) | 192,687 | 104,956 | 87,731 | |
| EBITDA % | 9.1% | 7.9% | ||
| Amortization and depreciation | 32 | (78,783) | (54,097) | (24,686) |
| Operating profit (EBIT) | 113,904 | 50,859 | 63,045 | |
| Return on Sales | 5.4% | 3.8% | ||
| Financing income (costs) and gains (losses) on investments | ||||
| Financing costs | 33 | (86,776) | (34,019) | (52,757) |
| Gains on investments | 34 | 4,987 | 203,947 | (198,960) |
| Net financing costs and net gains on investments | (81,789) | 169,928 | (251,717) | |
| Earnings before taxes (EBT) | 32,115 | 220,787 | (188,672) | |
| Income taxes | 35 | (12,204) | (23,651) | 11,447 |
| Profit (Loss) from continuing operations | 19,911 | 197,136 | (177,225) | |
| Profit from discontinued operations | 16 | 55,314 | (20,262) | 75,576 |
| Profit (Loss) before allocation to non-controlling interests | 75,225 | 176,874 | (101,649) | |
| Non-controlling interests | 4,065 | (355) | 4,420 | |
| Profit (loss) attributable to the owners of the parent | 79,290 | 176,519 | (97,229) |
(*) The note numbers refer to the notes to the consolidated financial statements where the items are analyzed in detail
(§) The income statement data for the first half of 2013 were 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 first half of 2014 compared to the reclassified consolidated income statement for the first half of 2013, reclassified as mentioned above in order to facilitate the comparison of the information on a homogeneous basis.
Reclassified consolidated income statement of the Salini Impregilo Group for the first half of 2014 on a homogeneous basis with the same period of the previous year
| (Values in thousands of euros) | First Half 2014 | First Half 2013 on a homogeneous basis | Change |
|---|---|---|---|
| Operating revenue | 2,073,373 | 1,834,432 | 238,941 |
| Other revenue | 35,596 | 34,398 | 1,198 |
| Total revenue | 2,108,969 | 1,868,830 | 240,139 |
| Purchasing costs | (235,820) | (252,682) | 16,862 |
| Service and subcontractor costs | (1,416,152) | (1,201,570) | (214,582) |
| Personnel costs | (218,043) | (198,669) | (19,374) |
| Other operating costs | (44,287) | (27,838) | (16,449) |
| Provisions and impairment losses | (1,980) | 4,096 | (6,076) |
| Operating costs | (1,916,282) | (1,676,663) | (239,619) |
| Gross operating profit (EBITDA) | 192,687 | 192,167 | 520 |
| EBITDA % | 9.1% | 10.3% | 0.2% |
| Amortization and depreciation | (78,783) | (75,679) | (3,104) |
| Operating profit (EBIT) | 113,904 | 116,488 | (2,584) |
| Return on Sales | 5.4% | 6.2% | -1.1% |
| Financing income (costs) and gains (losses) on investments | |||
| Financial income | 18,727 | 17,285 | 1,442 |
| Financial expenses | (69,638) | (63,635) | (6,003) |
| Net exchange rate gains | (35,865) | 3,735 | (39,600) |
| Financing costs | (86,776) | (42,615) | (44,161) |
| Gains on investments | 4,987 | 3,899 | 1,088 |
| Net financing costs and net gains on investments | (81,789) | (38,716) | (43,073) |
| Earnings before taxes (EBT) | 32,115 | 77,772 | (45,657) |
| Income taxes | (12,204) | (41,733) | 29,529 |
| Profit (Loss) from continuing operations | 19,911 | 36,039 | (16,128) |
| Profit from discontinued operations | 55,314 | 74,670 | (19,356) |
| Net profit (Loss) before allocation to non-controlling interests | 75,225 | 110,709 | (35,484) |
| Non-controlling interests | 4,065 | (176) | 4,241 |
| Profit (loss) attributable to the owners of the parent | 79,290 | 110,533 | (31,243) |
Revenue
The revenue booked in the first half of 2014 totaled €2,109.0 million (€1,868.8 million on a homogeneous basis) and included €1,876.2 million generated outside Italy.
Total consolidated revenue reports an increase of about 12.8% compared with the amount stated on a homogeneous 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 half of 2013, became fully operational (Ethiopia, Denmark and Poland), up against which the substantial completion of major road and highways projects in Italy and the sale to external parties– finalized 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 half 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 problematic 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 Half-year report and should be consulted for more detailed information - which also caused a reduction in the volume of production in the first half of his year, especially with reference to the first quarter compared to that observed in the same period of last year.
The 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 half of 2014, both in absolute terms and on a homogeneous basis compared with the same period of the previous year, was not affected by unusual occurrences extraneous to the production cycle. Taking account of this situation, as well as the fact that the first half of last year (on a homogeneous basis) benefited from the positive development of several disputes with customer local administrations according to improved prospects compared to prior assessments carried out, the operating profit achieved in the period reviewed in this Report reflects in a substantially consistent fashion the evolution of the production activities described in the comments to the item “Revenue”.
The main changes in the different types of operating expenses during the first half of 2014, as compared to the first half of 2013 were as follows:
- the increase in service costs, including subcontractors and other operating expenses, amounting to €232.5 million, is directly attributable to the change in production recognized for some projects structurally characterized by a greater recurrence of this type of charges;
- the total increase of €4.6 million in accruals to provisions and impairment losses reflects primarily adjustments made to receivables owed by customers in Venezuela to reflect a more conservative and reasonable time horizon for the collection of these receivables, taking also into account the current social and political situation in the country and for which a more detailed analysis is provided in the subsequent parts of this Half-year financial report;
- lastly, the increase in amortization and depreciation expense reflects, in addition to the reversal attributable to the period of the higher values assigned to some intangible assets of former Impregilo upon acquisition of control by former Salini, the circumstance that the projects in Denmark and Ethiopia specifically, which generated an increase in revenue compared with the first half of 2013, are characterized by a production structure that significantly employs plant and equipment and that, consistent with the performance of industrial activities, generated a corresponding increase in depreciation expense compared with the comparative period.
The overhead costs for the central corporate units and the other general expenses, for the period reviewed in this report, totaled approximately €75.1 million (roughly €77.0 on a homogeneous basis, without taking into consideration non-recurring expenses) and are currently allocated to the ‘Italy' segment.
Financing income (costs) and gains (losses) on investments
Net financing costs totaled €86.8 million (down by €44.2 million on a homogeneous basis) while net gains on investments amounted to €5.0 million (€3.9 million on a homogeneous basis).
The main cause of the change in the net financing costs, in respect of the corresponding value recognized on a homogeneous basis for the first quarter of 2013, is the non-recurring charge of about €55 million resulting from the adoption by the Group of the new official exchange rate called SICAD 2 to translate its net financial assets denominated in the Venezuelan currency (called Bolivar Fuerte or VEF), effective as of June 30, 2014. This situation, more details of which are provided in the notes to the Half-year consolidated 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.
The financial expenses for the period, net of income of the same nature, showed a slight increase compared to the same period last year, reclassified on a homogeneous basis. Please note that, within the adjustments made to the income statement for the first half 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 from discontinued operations
During the period reviewed in this chapter, the profit from discontinued operations totaled €55.3 million (profit of €74.7 million on a homogeneous basis). The reported profit is the net result of the following factors:
- a loss of €3.6 million reported by the remaining activities of the USW Campania Projects;
- a net profit of €85.1 million (loss of €0.4 million on a homogeneous basis) recognized as a result of the completion of the sale of the investment in the German company Fisia Babcock Environment GmbH 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 €26.2 million (loss of €7.8 million on a homogeneous 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 Half-year consolidated financial report entitled “Non-current assets held for sale and discontinued operations”.