Summary of consolidated financial information and other information concerning operations

The  consolidated  financial  statements  at  31  December  2013  reported  total  revenues  of €3,425.7 million, an EBIT of €147.7 million and net profit attributable to the Group of €166.9 million.

Changes over the previous period are mainly due to the second, third and fourth quarter results of the Impregilo Company, which became a subsidiary starting from 1 April 2013 and to the effects of the measurement of the subsidiary Impregilo S.p.A. using the PPA method pursuant to IFRS 3.

Profit margins, though in the presence of significant non-recurring costs incurred for the completion of the public tender offer, recorded levels of excellence, with an EBITDA margin and ROS of 9.2% and 4.3% respectively.

Pre-tax profit was greatly affected by the net financial position, which, as well as reflecting the costs sustained in supporting investments and production activities and the results of foreign-exchange losses, shows the positive effect, equal to €204 million, of measuring the investment in Impregilo S.p.A. at fair value as provided for by IFRS 3.

In particular, paragraph 4 of IFRS 3 states that the acquisition should be accounted for by applying the purchase acquisition method, which requires that all assets and liabilities, including potential ones, of the acquiree be reported in the financial statements of the acquirer at fair value regardless of the value posted by the acquiree in its financial statements (for more details on the economic and financial effects of the so-called “PPA” process, see the paragraph on “Business combinations” in the notes to the financial statements).

The net result of discontinued operations equivalent to €(88.1) million consisted mainly of the consolidated result of Todini Costruzioni Generali S.p.A., which was measured for the first time in a disposal perspective.

With reference to the complex situation concerning the SUW projects in the Campania region, these too part of the non-current assets held for sale, the positive developments in litigation concerning the Group’s claims for damages in relation to the former CDR plants had a significant impact, as a result of which about €241 million were collected, equivalent to a net gain for the year of €21.1 million.

Also as part of the SUW Campania projects, the broad acquittal handed down by the Court of Naples at the end of 2013 for criminal proceedings started in 2004 was also of great relevance. As part of the above proceedings, the Impregilo Group was the subject of major precautionary measures which had already been quashed with a final ruling by the Court of Cassation. For more complete disclosure on the events related to the SUW Campania projects, see the section below of this Annual Report on Assets Held for Sale and Discontinued Operations.

As part of the contracts for works, in the latter part of financial year 2013, the contractual relationship with the client of the expansion works of the Panama Canal reported less favourable results.

In this context, the subsidiary Impregilo, participating as lead partner with the Spanish group Sacyr Vallehermoso in the international joint venture that was awarded the contract, met with major critical issues and significant cost increases—in previous financial years— basically due to causes attributable to the client , and in the second half of 2013 encountered difficulties to continue production activities.

This situation arising from the repeated refusal of the client to engage with a cooperative spirit in the procedures contractually provided for protecting the parties’ rights was settled only after year-end as a result of an agreement under which it was possible to resume construction activities.

The agreement provides, inter alia, that in view of the resumption of works and their completion by 31 December 2015, the client and contractors will co-fund the works to be finished and, specifically, the additional costs incurred compared to the original estimates, as well as defer the repayment of contractual advances by making the final allocation of the additional costs between the parties contingent on the outcome of the arbitration proceedings initiated simultaneously.

In light of these considerations, according to an evaluation approach consistent with these recent events, it was deemed necessary to update the forward-looking assessments concerning the contract reporting any additional net expenses over the entire life even if the amount is not particularly significant.  

Despite the considerable volume of production activities achieved during the year, the portfolio of work in hand reached €28.8 billion, which represents more than 8.5 years of future production, assuming revenues from ordinary operations equal to that recorded in the income statement for 2013.

New prestigious contracts have been acquired for contraction of the metro in Riyadh (Saudi Arabia), the “Red North Line” of the metro in Doha (Qatar) and the “Skytrain” project in Australia. More detailed information about these and other contracts acquired during the period is provided in the specific paragraph on the portfolio of work on hand.

Consolidated net financial position amounted to €(331.7) million after making significant investments for the control of Impregilo S.p.A. and covering the ordinary operations of the Group, and was in line with the forecasts of the business plan and much better than the figure of €(694.9) million recorded at the end of the first half.

Group personnel reached 31,172 employees, growing by 0.8% versus the figure at 31 December 2012, had the subsidiary Impregilo been part of the current scope of consolidation.