Reclassified consolidated income statement

in

The reclassified consolidated income statement of the Terna Group for 2012 and 2011 is shown below.

€ million 2012 2011 Change %
Revenue:
- Grid transmission fees (1) 1,532 1,381 151 10.9%
- Other energy items (1) 161 163 (2) (1.2%)
- Other operating revenue (2) 113 92 21 22.8%
Total revenue 1,806 1,636 170 10.4%
Operating expenses:
- Personnel expenses 197 211 (14) (6.6%)
- Services and leases and rentals 139 149 (10) (6.7%)
- Materials 30 21 9 42.9%
- Other costs (3) 50 25 25 100.0%
Total operating expenses 416 406 10 2.5%
EBITDA (gross operating profit) 1,390 1,230 160 13.0%
Amortisation and depreciation (4) 421 394 27 6.9%
EBIT (operating profit) 969 836 133 15.9%
- Net financial income (expense) (5) (93) (121) 28 (23.1%)
PROFIT BEFORE TAXES 876 715 161 22.5%
- Income taxes 412 388 24 6.2%
PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS 464 327 137 41.9%
Profit for the year from discontinued operations and assets held for sale - 113 (113) (100.0%)
PROFIT FOR THE YEAR 464 440 24 5.5%
- Attributable to owners of the Parent 464 440 24 5.5%
In the consolidated income statement: (1) the balance is included in the item “Revenue from sales and services”; (2) corresponds to “Revenue from sales and services” for the value of the “Other sales and services” (€40.2 million) and “Other revenue and income” (€73.1 million); (3) corresponds to “Other operating expenses” and “Amortisation, depreciation and impairment” for the impairment of trade receivables (€3.0 million) and of fixed assets (€0.1 million); (4) corresponds to “Amortisation, depreciation and impairment” net of the impairment of trade receivables (€3.0 million) of fixed assets (€0.1 million); (5) corresponds to the total of the items presented in points 1, 2 and 3 of letter C “Financial income/expense”.
 

In 2012, the Terna Group recorded revenue for €1,806 million, relating to the Parent Company for €1,592 million and to the subsidiary Terna Rete Italia S.r.l. for €197 million, up €170 million on the previous financial year (+10.4%), mainly attributable to the trend of the grid transmission fees (CTR), up €151 million and the results from unregulated activities carried out by the Group, amounting to €86 million in 2012 and recorded in "Other operating revenue" (of which approximately €12 million is for the review of the previous fees for fibre optic housing).

In particular the CTR indicated for:

  • the Parent Company an increase of €106 million, as a result of a combination of:
    • tariff review (+€108 million, including the incentive on the remuneration of strategic works, pursuant to Resolution ARG/elt 199/11);
    • grid transmission fees related to the Defence plan (-€2 million);
  • the subsidiary Terna Rete Italia S.r.l., +€45 million (compared to the €143 million recorded in 2011) for the share of NTG it owns. 

The trend of revenue deriving from "other energy items" is broadly in line with the previous period (-1.2%, corresponding to -€2 million, compared to the €163 million in 2011) mainly due to the combined effect of:

  • the fee review for the dispatching activity, for a total increase of €53 million;
  • adjustment of the fair value related to the measurement of Terna's performance in the Dispatching Services Market (DSM) with reference to the incentive mechanism envisaged by AEEG Resolution 213/09, of €23 million (-€44 million compared to the 67 million measured in 2011);
  • recognition of -€14 million for the bonuses and penalties mechanism on the subject of transmission service quality (ENSR-NDU);
  • increase of €3 million due to the effects of higher investments in the dispatching infrastructures7 as compared to the previous year.

In 2012, operating expenses amounted to €416 million and mainly referred to the Parent Company (€213 million) and the subsidiary Terna Rete Italia S.p.A. (€188 million), recording an increase of €10 million on last year (a positive 2.5%), mainly by virtue of the combined effect of the following phenomena:

  • personnel expenses: decrease of €14 million, mainly due to the greater average price per unit in 2011;
  • costs for services, leases and rentals: decrease of an overall €10 million, broadly due to lower expenses for dispatching infrastructures7 (down €3 million), as well as higher costs for research, advertising and consultancy sustained in the previous period;
  • costs for materials: the increase of €9 million is mainly due to the use of material from the warehouse for maintaining and running the company's and third-party plants, as well as the adjustment (a positive €3 million) of the net estimated realisable value of some materials;
  • other costs: this item registered an increase of €25 million, mostly referable to the Single Municipal Tax (IMU) for the period (approximately a positive €18 million, including the estimated impact of IMU on the stations pursuant to Memorandum 6/2012 from the Agency of the Territory (land registry)). It also records greater contingent liabilities (€3 million) relating to repayment of the balance of grants paid for 2002 to 2006 to the Ministry for Economic Development in relation to the former concession of telephony for private use. 

EBITDA (gross operating profit) for the year stands at around €1,390 million, up €160 million on the €1,230 million recorded for 2011 (+13%).

The increase in revenue and costs is reflected in the EBITDA margin which went from 75.2% in 2011 to 77% in financial year 2012. 

Amortisation and depreciation for the year are up by €27 million on 2011, for €22 million related to the Parent Company, essentially for the start-up of new plants, and for €4 million to the amortisation of the subsidiary Terna Rete Italia S.r.l.

As a result, EBIT (operating profit) stands at about €969 million, up by €133 million (+15.9%) compared with 2011. 

Net financial expense for the period, amounting to €93 million, relates mainly to the Parent Company (€90 million) and decreased by €28 million compared with the €121 million of 2011, mainly due to the reduction in interest rates which more than offset the charges relating to the higher level of net debt compared with 2011.

After the impact of net financial expense, the profit before taxes stands at €876 million, €161 million higher than the previous financial year (+22.5%).

Income taxes for the year were €412 million, up €24 million (+6.2%) compared with the previous year, owing essentially to the increase in the revenue for the financial year.

In fact, the tax rate of 47% is, without considering the one-off elements8 46.6% and broadly in line with the previous period (46% net of the one-off9 effect which was a feature of 2011).

As a result, the profit from continuing operations amounts to €464 million, up €137 million on the profit from continuing operations for 2011 and also up €24 million on the previous profit for the year, which includes €113 million of profit from discontinued operations and assets held for sale, relating to extraordinary transactions in the photovoltaic sector and the release of guarantee connected with the sale of the Brazilian subsidiaries.

 

(7) Pursuant to IFRIC 12.
(8) This is connected with tax risks mainly offset by the recognition of the IRES receivable pursuant to Legislative Decree 16/2012 of 2 March 2012.
(9) Related to the additional IRES (the “Robin Hood Tax”), the additional IRAP, the release of Terna Rete Italia goodwill, and the amendments regarding items of previous financial years.