Reclassified income statement of Terna S.p.A.

The reclassified income statement of Terna S.p.A. for 2011 and 2010 is shown below.

In millions of euros 2011 2010 Change %
Revenue        
Grid transmission fees (1) 1,237.6 1,173.0 64.6 5.5%
Other energy items (1) 163.4 169.8 (6.4) (3.8%)
Other revenue from sales and services (1) 115.0 116.3 (1.3) (1.1%)
Other revenue and income 37.9 46.0 (8.1) (17.6%)
Total revenue 1,553.9 1,505.1 48.8 3.2%
Operating expenses:        
Personnel expenses 214.2 214.8 (0.6) (0.3%)
Services and leases and rentals 165.8 166.5 (0.7) (0.4%)
Materials 34.1 36.7 (2.6) (7.1%)
Other costs (2) 18.2 17.8 0.4 2.2%
Total operating expenses 432.3 435.8 (3.5) (0.8%)
EBITDA (gross operating profit) 1,121.6 1,069.3 52.3 4.9%
Amortisation and depreciation (3) 348.8 318.8 30.0 9.4%
EBIT (operating profit) 772.8 750.5 22.3 3.0%
Net financial income (expense) (4) (8.8) (87.7) 78.9 (90.0%)
Profit before taxes 764.0 662.8 101.2 15.3%
Income taxes 344.2 232.1 112.1 48.3%
Profit for the year from continuing operations 419.8 430.7 (10.9) (2.5%)
Profit for the year from discontinued operations and assets held for sale 33.8 1.4 32.4  
Profit for the year 453.6 432.1 21.5 5.0%
In the income statement: (1) this figure is included in “Revenue from sales and services”; (2) corresponds to “Other operating expenses” and “Amortisation, depreciation and impairment” for the impairment of trade receivables (€0.1 million); (3) corresponds to “Amortisation, depreciation and impairment” net of the impairment of trade receivables (€0.1 million); (4) corresponds to the balance of the items described under points 1 and 2 of “C. Financial income/expense”.

2011 revenue, amounting to €1,553.9 million, records an increase of €48.8 million (+3.2% on the €1,505.1 million of 2010), which mainly derives from the higher grid transmission fees, amounting to €64.6 million (+5.5%), as a result of the following:

  • review of the tariffs (€51.2 million, including the incentive on the remuneration of strategic works, pursuant to Resolution ARG/elt 87/10) and the related contingency items for the period (€2.1 million);
  • grid transmission fees related to the Defence Plan (€11.3 million).

This increase is largely offset by:

  • other energy items (a negative €6.4 million or -3.8%) mainly due to:
    • incentive mechanism associated with the reduction in volumes procured from the Market for Dispatching Services made available under AEEG Resolution 213/09 (€66 million, being a negative €11 million compared with €77 million incentives reported at 31 December 2010);
    • lesser investments made on the dispatching infrastructures, recognised in pursuance of IFRIC 12 (a negative €4.2 million);
    • increase of other tariff components connected with dispatching activities and quality of service for €8.8 million;
  • other revenue and income (a negative €8.1 million), mainly for the greater repaymentsfor damages to primary plants (a negative 3.5 million) and higher contingency assets (a negative 6.0 million) recognised during the previous financial year, net of greater penalties charged to suppliers recognised during the year (€1.5 million). 

Operating expenses amount to €432.3 million and show a reduction of €3.5 million (-0.8%) on the 2010 figure. This is mainly due to the costs for services and materials (a negative €3.3 million), largely relating to the greater investments in dispatching infrastructures[10] in 2010.

EBITDA (gross operating profit) stands at €1,121.6 million, representing 72.2% of revenue (up 1.2 percentage points from 2010); it rose by €52.3 million over €1,069.3 million of 2010 (+4.9%).

Amortisation and depreciation for the year amount to €348.8 million and are up by €30.0 million on 2010 (+9.4%), mainly due to the entry into operation of new plants.

EBIT (operating profit) came to €772.8 million, for an increase of €22.3 million (+3%) from financial year 2010.

Net financial expense for the year is €8.8 million and was considerably lower than €87.7 million reported for 2010. The €78.9 million decrease is mainly due to the combined effect of:

  • dividends for €100.0 million distributed by the subsidiary SunTergrid;
  • greater financial expense deriving from medium and long-term debt and the related hedges (a negative €60.1 million) due to the increased gross debt and the rise in market interest rates in 2011;
  • greater liquidity invested at higher interest rates (€21.2 million);
  • capitalised financial expense (€8.5 million) due to greater capital expenditure during the year; and
  • gain arising from the currency conversion of the provision for risks relating to the sale of the stake in the Brazilian subsidiaries (€6.8 million);

Income taxes for the year amount to €344.2 million, up on the previous financial year by €112.1 million (+48.3%), mainly as a result of the tax manoeuvre described above (the “Robin Hood Tax”), against profit before taxes up €101.2 million on 2010.

More specifically, income taxes increased by €129.2 million as a result of higher net deferred tax liabilities for approximately €47.9 million and greater current taxes for €81.3 million.

Income taxes also reflect the overall impact of the adjustment of IRAP (€6 million) with reference to the effects of the economic manoeuvre for the concession holders, lower income from previous years adjustments (€3.9 million) and the one-off positive effects relating to the release of Terna Rete Italia goodwill which is disclosed in the consolidated financial statements (a negative €23.5 million).

The year’s tax rate (45.1%), without considering the initial adjustments of provisions for net deferred tax liabilities, adjustments relating to previous financial years and net of the effects of the release of goodwill as described above, stands at 40.4%, up approximately 5 percentage points on the 2010 figure. This is the result of the greater IRES rate (the “Robin Hood Tax”, +9.3%) and the incidence of the additional IRAP tax on the profit before taxes (+0.4%), net of the tax effects on dividends distributed by the subsidiary SunTergrid (-4.7%)

Profit from continuing operations stands at €419.8 million, down €10.9 million (-2.5%) on the €430.7 million recorded for 2010.

Profit for the financial year, including the result of assets held for sale (€33.8 million for the release of the provision relating to contractual obligations connected with the sale of Terna Participações) is equal to €453.6 million, as compared with €432.1 million of the previous financial year.

 

(10) Pursuant to IFRIC 12.