Reclassified income statement of Terna S.p.A.

The reclassified income statement of Terna S.p.A. for 2012 and 2011 is shown below.

 

€ million 2012 2011 Change %
Revenue:
Grid transmission fees (1) 1,344 1,238 106 8.6%
Other energy items (1) 161 163 (2) (1.2%)
Other operating revenue (2) 155 153 2 1.3%
Total revenue 1,660 1,554 106 6.8%
Operating expenses:
- Personnel expenses 82 214 (132) (61.7%)
- Services and leases and rentals 315 166 149 89.8%
- Materials 19 34 (15) (44.1%)
- Other costs (3) 44 18 26 144.4%
Total operating expenses 460 432 28 6.5%
EBITDA (Gross Operating Profit) 1,200 1,122 78 7.0%
Amortisation and depreciation (4) 371 349 22 6.3%
EBIT (OPERATING PROFIT) 829 773 56 7.2%
- Net financial income (expense) (5) (19) (9) (10) 111.1%
PROFIT BEFORE TAXES 810 764 46 6.0%
- Income taxes 347 344 3 0.9%
PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS 463 420 43 10.2%
Profit for the year from discontinued operations and assets held for sale - 34 (34) (100.0%)
PROFIT FOR THE YEAR 463 454 9 2.0%
In the income statement: (1) the figure 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” (€66.5 million) and “Other revenue and income” (€88.2 million); (3) corresponds to “Other operating expenses” and in “Amortisation, depreciation and impairment” for the value of 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) and fixed assets (€0.1 million); (5) corresponds to the balance of the items presented in points 1 and 2 of letter C - “Financial income/expense”.
   

2012 revenue, amounting to €1,660 million, records an increase of €106 million (+6.8% on the €1,554 million of 2011), which mainly derives from the higher grid transmission fees (CTR), amounting to €106 million (+8.6%), as a result of the following phenomena:

  • 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 progress 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 in investments made in dispatching infrastructures7 compared to the previous period (+€3 million).

In the context of "Other operating revenue", the balance of which is consistent with the previous year (+€2 million, compared to the €153 million of 2011), revenue from non-regulated activities record a result of €61 million, around €12 million of which refers to the review of previous fibre optic housing fees. In reference to the contractual relationship between Terna and its subsidiaries following the reorganisation of the activities within the Group, income for Terna Rete Italia S.p.A. is particularly noteworthy, relating to the fee accrued for leasing the business unit (+€18 million) and the sale of the inventories of the same business unit (+€3 million), whilst the income for technical and administrative services for the subsidiary Terna Rete Italia S.r.l. have decreased. (-€53 million), partly offset by the provision of management fees (+€28 million) to Terna Rete Italia S.p.A. referring to the last nine months of 2012.

Operating costs amount to €460 million and show an increase of €28 million (+6.5%) on the figure for 2011, mainly due to the item other costs, which includes the recognition of the Single Municipal Tax (IMU) for the period (around €18 million, including the estimated impact of IMU on the stations pursuant to Memorandum 6/2012 from the Agency of the Territory (land registry)) and larger accruals of about €7 million for disputes and the impairment of a receivable from a dispatching operator.

The overall balance of the other items relating to the company's operating costs is broadly in line with the previous period (+€2 million, attributable in the main to higher costs for the dispatching infrastructures7) but distributed amongst them in a different way, as a result of the reorganisation process described above. In particular:

  • personnel expenses: reduction of -€132 million mainly attributable to the transfer of employees belonging to the business unit leased to Terna Rete Italia S.p.A.;
  • costs for services, leases and rentals: increase of €149 million mainly due to recording the costs for the period for the execution of specific contracts entered into with the subsidiary Terna Rete Italia S.p.A. (€213 million), referring in the main to technical maintenance and operation services for plants owned (€204 million), partially offset by the decrease in costs for contracts, technical and IT services for third parties, mainly provided by the subsidiary company Terna Rete Italia S.p.A. from Q2 of the financial year;
  • costs for materials: decrease of €15 million essentially attributable to ordinary plant maintenance activities directly carried out by the subsidiary Terna Rete Italia S.p.A. from Q2 of the financial year, net of the impact of the sale of the inventories of the latter (€3 million).

EBITDA (gross operating profit) stands at €1,200 million, representing 72.3% of revenue (compared to the 72.2% of 2011), with an increase of €78 million over the €1,122 million of 2011 (+7%).

Amortisation and depreciation for the year amount to €371 million and are up by €22 million on 2011 (+6.3%), mainly due to the entry into operation of new plants.

EBIT (operating profit) came to €829 million, with an increase of €56 million (+7.2%) on financial year 2011.

Net financial expense for the year is €19 million and is an increase on the €9 million of 2011. This difference (+€10 million) is mainly attributable to the combined effect of the smaller dividends distributed by the associate SunTegrid (€40 million) and the reduction in the interest rate which more than offset the charges for the higher net debt as compared to 2011.

After the impact of net financial expense, the profit before taxes stands at €810 million, €46 million higher than the previous financial year (+6%).

Income taxes for the year amount to €347 million, up €3 million (+0.9%) compared with the previous year, owing essentially to the increase in the profit for the financial year.

In fact, the tax rate of 42.8% (42.6% without considering the one-off elements10) is slightly higher than the adjusted 40.4%11 of the previous financial year, mainly due to the higher dividend registered in the previous period.

Profit for the year from continuing operations consequently stands at €463 million, up €43 million on the profit for the year from continuing operations for 2011 (+10.2%) and is also up €9 million with respect to the profit for the previous year (+2%), which includes €34 million profit for the year from discontinued operations and assets held for sale, with reference to the release of guarantees connected with the sale of the Brazilian subsidiaries.

 

(7) Recognised pursuant to IFRIC 12.
(10) In relation to the taxes for the previous years and the provisions for fiscal risks mainly offset by the recognition of the IRES credit pursuant to Legislative Decree 16 of 2 March 2012.
(11) Net of the one-off effects related to the additional IRES (the “Robin Hood Tax”), the additional IRAP, and the change in accounting for goodwill of Terna Rete Italia S.r.l..