Earnings Release • Nov 13, 2020
Earnings Release
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Press Release
Rome, 13 November 2020 – Today's meeting of the Board of Directors of Atlantia SpA, chaired by Fabio Cerchiai, has approved the Atlantia Group's results announcement for the nine months ended 30 September 2020 ("9M 2020").
At the date of preparation of this results announcement for the nine months ended 30 September 2020, application of the going concern assumption has been confirmed, as required by the applicable laws and accounting standards. The reasons for this decision are described in the Interim Report for the six months ended 30 June 2020 and are also based on developments in talks with the Government, aimed at reaching a Settlement Agreement bringing to an end the dispute involving Autostrade per l'Italia over serious breaches of its concession arrangement.
Despite the fact the remaining risks and uncertainties, previously described in the Interim Report for the six months ended 30 June 2020, Atlantia's Board of Directors has prepared this results announcement for the nine months ended 30 September 2020 on a going concern basis, having concluded that:
This section presents and analyses the Atlantia Group's reclassified income statement and changes in net debt for the first nine months of 2020, compared with amounts for the same period of the previous year, and the reclassified statement of financial position as at 30 September 2020, compared with the corresponding amounts as at 31 December 2019.
The international financial reporting standards (IFRS) used in the preparation of the consolidated accounts for the nine months ended 30 September 2020 are substantially unchanged with respect to those used in the preparation of the Annual Report for 2019, to which reference should be made.
The reclassified consolidated income statement for the first nine months of 2019 includes certain differences with respect to the information published in the results announcement for the nine months ended 30 September 2019. These reflect completion of the Purchase Price Allocation process following the acquisition of the Abertis group completed at the end of October 2018. A fuller description is provided in the Annual Report for 2019, to which reference should be made.
In addition, the Atlantia Group's scope of consolidation as at 30 September 2020 has changed with respect to 31 December 2019. This essentially reflects completion, in the first half of 2020, of the acquisition by the subsidiary, Abertis Infraestructuras, of the Mexican company, Red de Carreteras de Occidente ("RCO"), as described in the Interim Report for the six months ended 30 June 2020.
There is no further evidence of impairment as at 30 September 2020 in addition to what was reported and accounted for in the Interim Report for the six months ended 30 June 2020.
With regard to efforts designed to settle the dispute over alleged serious breaches of Autostrade per l'Italia's concession arrangement, following the talks held in 2019 and which have continued in 2020, on 11 July 2020 Autostrade per l'Italia submitted a proposal that, among other things, has increased the funds the company has committed to make available, at its own expense and without any form of recovery, to €3,400m.
In response, on 15 July 2020, the Cabinet Office announced that the Government "has decided to begin the process of formalising the settlement provided for by law, without prejudice to the fact that the right to revoke the concession will only be waived once the settlement agreement has been finalised".
At the date of preparation of this announcement, the commitments worth €3.4bn thus consist of the following:
As at 30 September 2020, Autostrade per l'Italia has incurred total expenses of €471m, including:
Since the end of February 2020, the restrictions on movement, imposed by many governments in response to the global spread of the Covid-19 pandemic, have resulted in significant reductions in the volumes of traffic using the motorways and airports operated under concession by the Group. The following table shows the impact on the main countries in which the Group operates in the first nine months of 2019.
| TOLL MOTORWAYS | AIRPORTS | |||||||
|---|---|---|---|---|---|---|---|---|
| Italy | Spain | France | Brazil | Chile | Mexico | Italy | France | |
| km travelled |
km travelled |
km travelled |
km travelled |
km travelled |
km travelled |
passengers | passengers | |
| January | 2.8% | 2.8% | 7.7% | 1.7% | -7.6% | 6.7% | -0.2% | 5.3% |
| February | 1.7% | 8.5% | 4.9% | 8.9% | -3.1% | 5.8% | -8.9% | 5.2% |
| March | -60.5% | -42.4% | -41.3% | -18.5% | -29.9% | -9.3% | -81.2% | -62.0% |
| April | -80.4% | -78.9% | -79.6% | -38.2% | -53.0% | -39.4% | -98.3% | -99.4% |
| May | -55.1% | -65.6% | -56.0% | -23.5% | -54.5% | -32.3% | -97.5% | -98.5% |
| June | -23.4% | -40.4% | -22.9% | -16.4% | -53.8% | -18.7% | -93.4% | -92.1% |
| July | -13.2% | -16.6% | -5.0% | -16.9% | -50.7% | -18.5% | -82.9% | -68.0% |
| August | -5.1% | -21.6% | -5.1% | -6.4% | -39.6% | -14.5% | -77.9% | -54.6% |
| September | -7.3% | -15.7% | -8.4% | 2.3% | -27.1% | -6.5% | -81.7% | -69.9% |
| Progressive % change (from 1 January 2020 to 30 September 2020) |
-26.6% | -30.9% | -23.2% | -11.8% | -34.7% | -14.6% | -73.5% | -66.3% |
| October | -15.1% | -21.8% | -12.5% | 4.1% | -5.4%1 | -1.9% | -84.3% | -73.0% |
| Progressive % change (from 1 January 2020 to 31 October 2020) |
-25.5% | -30.0% | -22.2% | -10.1% | -32.1% | -13.3% | -74.6% | -67.0% |
In terms of operating segment, airport operators were the most affected compared with motorway operators, reflecting the global crisis that has hit the airline industry throughout the world.
1 The change in traffic registered in Chile in October is influenced by the impact of protests that took place last year from 18 October 2019.
With regard to motorway traffic, the most significant reductions were registered by the Chilean operators, reflecting the prevalently urban nature of the motorways operated, and by the European operators as opposed to those in Brazil and Mexico. This primarily reflects the different timing of the outbreak of Covid-19 and of the resulting restrictions on movement introduced by governments in the countries in which the Group operates.
The reduction in operating revenue, amounting to €2,161m on a like-for-like basis (down 26%) compared with the first nine months of 2019, is broadly linked to the reduction in traffic caused by the above restrictions on movement.
The Group has responded to the fall in traffic by promptly taking a series of steps to cut costs and review its investment plans, whilst guaranteeing works relating to the safety infrastructure.
The impact of the Covid-19 pandemic has also reduced operating cash flow on a like-for-like basis, after capital expenditure during the period, by €1,498m (58%) compared with the first nine months of 2019.
Information on the outlook regarding the impact of the Covid-19 pandemic on the Group is provided below in the "Outlook".
| €M | 9M 2020 | 9M 2019 (restated) |
INCREASE/ (DECREASE) |
% |
|---|---|---|---|---|
| Toll revenue | 5,132 | 7,049 | -1,917 | -27% |
| Aviation revenue | 202 | 637 | -435 | -68% |
| Other operating income | 889 | 1,134 | -245 | -22% |
| Total operating revenue | 6,223 | 8,820 | -2,597 | -29% |
| Cost of materials and external services | -1,802 | -1,715 | -87 | 5% |
| Concession fees | -332 | -469 | 137 | -29% |
| Staff costs | -926 | -1,098 | 172 | -16% |
| Operating change in provisions | -395 | 160 | -555 | n/s |
| Total operating costs | -3,455 | -3,122 | -333 | 11% |
| Gross operating profit (EBITDA) | 2,768 | 5,698 | -2,930 | -51% |
| Amortisation, depreciation, impairment losses and reversals of impairment losses |
-2,883 | -2,929 | 46 | -2% |
| Provisions for renewal work and other adjustments | -68 | -80 | 12 | -15% |
| Operating profit/(loss) (EBIT) | -183 | 2,689 | -2,872 | n/s |
| Financial expenses, net | -1,065 | -818 | -247 | 30% |
| Share of profit/(loss) of investees accounted for using the equity method |
-34 | 7 | -41 | n/s |
| Profit/(Loss) before tax from continuing operations | -1,282 | 1,878 | -3,160 | n/s |
| Income tax (expense)/benefit | 318 | -541 | 859 | n/s |
| Profit/(Loss) from continuing operations | -964 | 1,337 | -2,301 | n/s |
| Profit/(Loss) from discontinued operations | 1 | 1 | - | - |
| Profit/(Loss) for the period | -963 | 1,338 | -2,301 | n/s |
| Profit/(Loss attributable to non-controlling interests | -245 | 300 | -545 | n/s |
| Profit/(Loss) attributable to owners of the parent | -718 | 1,038 | -1,756 | n/s |
(*) The reconciliation with the reported amounts in the consolidated income statement is provided in the section, "Reconciliation of the reclassified and statutory financial statements".
"Operating revenue" for the first nine months of 2020 totals €6,223m, down €2,597m (29%) compared with the first nine months of 2019 (€8,820m). On a like-for-like basis, operating revenue is down €2,161m (26%), essentially due to the impact of the Covid-19 pandemic.
"Toll revenue" of €5,132m is down €1,917m compared with the first nine months of 2019 (€7,049m). After stripping out exchange rate movements, which had a negative impact of €227m due to the weakness of the South American currencies, toll revenue is down €1,690m. This primarily reflects the following:
"Aviation revenue" of €202m is down €435m compared with the first nine months of 2019 (€637m), primarily reflecting the impact of the Covid-19 pandemic on traffic volumes at Aeroporti di Roma (passenger traffic down 73.5%) and at the Aéroports de la Côte d'Azur group (passenger traffic down 66.3%), resulting in reductions in revenue of €372m and €63m, respectively.
"Other operating income", totalling €889m, is down €245m compared with the first nine months of 2019 (€1,134m). This essentially reflects a combination of the following:
"Operating costs" of €3,455m are up €333m compared with the first nine months of 2019 (€3,122m). This primarily reflects increased provisions made by Autostrade per l'Italia, partially offset by reduced concession fees and lower staff costs.
The "Cost of materials and external services and other costs" amounts to €1,802m, an increase of €87m compared with the first nine months of 2019 (€1,715m). After stripping out the impact of exchange rate movements (€64m) and the reduction in costs relating to reconstruction of the Polcevera road bridge in Genoa, totalling €54m (costs of €135m in the first nine months of 2020 and €189m in the first nine months of 2019), the increase of €205m is essentially due to:
"Concession fees", totalling €322m, are down €137m compared with the first nine months of 2019 (€469m), primarily due to the reductions in motorway and airport traffic.
"Staff costs" of €926m are down €172m (€1,098m in the first nine months of 2019), due primarily to the following:
The "Operating change in provisions" in the first nine months of 2020 generated expense of €395m (income of €160m in the first nine months of 2019), essentially due to the following:
"Gross operating profit" (EBITDA) of €2,768m is down €2,930m compared with the first nine months of 2019 (€5,698m, marking a fall of 51%). On a like-for-like basis, gross operating profit is down €2,448m (45%).
"Amortisation and depreciation, impairment losses and reversals of impairment losses", totalling €2,883m, is down €46m compared with the first nine months of 2019 (€2,929m). This primarily reflects reduced amortisation and depreciation following changes in the scope of consolidation and the expiry of certain concessions (€167m) and falls in the value of South American currencies against the euro (€99m), partially offset by impairment losses on the goodwill attributable to Aéroports de la Côte d'Azur (€94m) and on A4's intangible assets deriving from concession rights (€109m), previously recognized in the Interim Report for the six months ended 30 June 2020.
"Provisions for renewal work and other adjustments", amounting to €68m, are down €12m compared with the first nine months of 2019 (€80m). This primarily reflects updated estimates of the present value of renewal work to be carried out on the infrastructure operated under concession by Aeroporti di Roma and Aéroports de la Côte d'Azur.
The "Operating loss" (negative EBIT) of €183m marks a deterioration of €2,872m compared with the first nine months of 2019 (a profit of €2,689m).
"Net financial expenses" of €1,065m are up €247m compared with the same period of 2019 (€818m). This essentially reflects:
d) the overall positive impact, amounting to €145m, of movements in South American currencies against the euro and the application of IAS 29 - Financial Reporting in Hyperinflationary Economies (Argentina).
"Tax benefits" amount to €318m, marking a change of €859m compared with tax expense of €541m for the same period of 2019. The change is essentially linked to the pre-tax loss resulting from the above performance.
The first nine months of 2020 closed with a "Loss for the period" of €963m, compared with profit of €1,338m for the first nine months of 2019. This marks a deterioration of €2,301m, primarily due to the fall in traffic caused by the Covid-19 pandemic.
The "Loss for the period attributable to owners of the parent", amounting to €718m, compares with the profit of €1,038m recorded in the first nine months of 2019, marking a deterioration of €1,756m.
| €M | 30 September 2020 | 31 December 2019 | INCREASE/ (DECREASE) |
|---|---|---|---|
| Non-current non-financial assets (A) | 67,021 | 66,144 | 877 |
| Working capital (B) | -3,021 | -2,714 | -307 |
| Gross invested capital (C=A+B) | 64,000 | 63,430 | 570 |
| Non-current non-financial liabilities (D) | -12,211 | -11,805 | -406 |
| NET INVESTED CAPITAL (E=C+D) | 51,789 | 51,625 | 164 |
| Equity attributable to owners of the parent | 5,679 | 7,408 | -1,729 |
| Equity attributable to non-controlling interests | 7,627 | 7,495 | 132 |
| Equity (F) | 13,306 | 14,903 | -1,597 |
| Non-current net debt (G) | 44,990 | 39,042 | 5,948 |
| Current net debt/(net funds) (H) | -6,507 | -2,320 | -4,187 |
| Total net debt (I=G+H)(1) | 38,483 | 36,722 | 1,761 |
| NET DEBT AND EQUITY (L=F+I) | 51,789 | 51,625 | 164 |
(*) The reconciliation with the reported amounts in the consolidated statement of financial position is provided in the section, "Reconciliation of the reclassified and statutory financial statements".
As at 30 September 2020, "Non-current non-financial assets", totalling €67,021m, are up €877m compared with 31 December 2019, essentially due to:
a) an increase of €1,742m in intangible assets, primarily resulting from provisional recognition of the fair value of concession rights following consolidation of the RCO group, amounting to €5,722m, and investment in intangible assets totalling €520m. These changes are partially offset by amortization and depreciation for the period of €2,741m and the negative impact of translation differences, totalling €1,770m, primarily reflecting significant falls in the value of the Brazilian real and, to a lesser extent, the Chilean peso against the euro;
b) a reduction of €1,028m in the value of investments, primarily due to the movement in the fair value of the investment in Hochtief (€796m), linked to the sharp fall in the investee's share price as at 30 September 2020 compared with 31 December 2019 (€66.5 and €113.7 per share, respectively) and the sale, in 2020, of the investment in the French operator, Alis, the carrying amount of which at the transaction date was €117m.
"Working capital" reports a negative balance of €3,021m, marking an increase of €307m compared with the negative balance of €2,714m as at 31 December 2019. The change essentially reflects a reduction in current tax assets, after a reduction in current tax liabilities (€376m), due primarily to the collection of tax credits by Abertis Infraestructuras in 2020 (€622m) and an increase in current provisions at Autostrade per l'Italia, essentially due to the provisions of €200m linked to ongoing talks with the Government and the Ministry of Infrastructure and Transport and Autostrade per l'Italia's provisions for construction services required by contract (€244m). These changes were partially offset by a reduction in trading liabilities (€213m) linked to the decline in activity caused by the Covid-19 pandemic.
"Non-current non-financial liabilities", totalling €12,211m, are up €406m compared with 31 December 2019 (€11,805m). The change primarily reflects:
"Equity attributable to owners of the parent and non-controlling interests" totals €13,306m (€14,903m as at 31 December 2019).
"Equity attributable to owners of the parent", totalling €5,679m, is down €1,729m compared with 31 December 2019, primarily reflecting a combination of the following:
"Equity attributable to non-controlling interests" of €7,627m is up €132m compared with 31 December 2019 (€7.495m). This essentially reflects a combination of the following:
"Net debt" as at 30 September 2020 amounts to €38,483m, an increase of €1,761m compared with 31 December 2019 (€36,722m). This reflects events described in greater detail below in the section, "Consolidated cash flow". The main changes in financial liabilities regard the first-time consolidation of the RCO group, contributing a total of €1,988m as at 30 September 2020 and essentially consisting of bonds totalling €1,298m and medium/long-term borrowings of €638m.
"Net financial debt", an indicator usually used by analysts and rating agencies to assess the Group's financial structure, amounts to €40,844m as at 30 September 2020, marking an increase of €1,308m compared with 31 December 2019 (€39,536m). This primarily reflects the acquisition of RCO (€3,172m) and investment during the period (€970m), partially offset by the cash flow generated during the period (€1,892m) and the impact of exchange rate movements (€881m).
As at 30 September 2020, the Group's gross debt amounts to €51,429m, including €31,014m represented by bond issues and €20,415m by bank borrowings.
The residual weighted average term to maturity of the Group's debt is five years and two months as at 30 September 2020.
70.1% of the Group's debt is fixed rate. After taking into account the related hedges, fixed rate debt represents 78.0% of the total.
As at 30 September 2020, the weighted average cost of the Atlantia Group's medium/long-term borrowings, including differentials on hedging instruments, is 3.2% (reflecting the combined effect of the 2.5% cost of euro-denominated debt, the 4.2% paid on debt denominated in Chilean pesos and the 6.2% paid on debt denominated in Brazilian reals).
As at 30 September 2020, the Atlantia Group has cash reserves of €16,616m, consisting of:
On 5 November 2020, Atlantia repaid the Revolving Credit Facility of €2,000m (having a final term to maturity expiring in November 2021), having decided, after 30 September 2020, that it would not renew its use. The full amount of this facility is, therefore, once again available.
Also with regard to the financial position, in May 2020, Autostrade per l'Italia began the process of applying for a credit facility of €1,250m that would benefit from a guarantee provided by SACE under art. 1, paragraph 7 of law Decree 23 of 8 April 2020 (the so-called Liquidità Decree). At the date of preparation of this results announcement, the arrangement process is still ongoing.
| €M | 9M 2020 | 9M 2019 |
|---|---|---|
| (restated) | ||
| CASH FLOWS FROM/(USED IN) OPERATING ACTIVITIES | ||
| Operating cash flow | 1,892 | 3,974 |
| Change in operating capital | -222 | -396 |
| Other changes in non-financial assets and liabilities | 99 | 174 |
| Net cash generated from/(used in) operating activities (A) | 1,769 | 3,752 |
| NET CASH FROM/(USED IN) INVESTMENT IN NON-FINANCIAL ASSETS | ||
| Capital expenditure | -970 | -1,220 |
| Government grants related to assets held under concession | 3 | 5 |
| Increase in financial assets deriving from concession rights (related to capital expenditure) | 61 | 67 |
| Purchases of investments | - | -4 |
| Investment in consolidated companies, including net debt assumed | -3,182 | -16 |
| Proceeds from sale of property, plant and equipment, intangible assets and unconsolidated investments |
161 | 12 |
| Proceeds from sales of consolidated investments, including net debt transferred | 51 | - |
| Net change in other non-current assets | 29 | 49 |
| Net cash from/(used in) investment in non-financial assets (B) | -3,847 | -1,107 |
| NET EQUITY CASH INFLOWS/(OUTFLOWS) | ||
| Dividends declared by Atlantia | - | -736 |
| Dividends declared by Group companies and payable to non-controlling shareholders | -24 | -441 |
| Proceeds from exercise of rights under share-based payment plans | - | 1 |
| Distribution of reserves and returns of capital to non-controlling shareholders | -229 | -459 |
| Net equity cash inflows/(outflows) (C) | -253 | -1,635 |
| Increase/(Decrease) in cash and cash equivalents during period (A+B+C) | -2,331 | 1,010 |
| Change in fair value of hedging derivatives | 155 | -801 |
| Non-cash financial income/(expenses) | 88 | 186 |
| Effect of foreign exchange rate movements on net debt and other changes | 327 | -159 |
| Impact of first-time adoption of IFRS 16 as at 1 January 2019 | - | -137 |
| Other changes in net debt (D) | 570 | -911 |
| Decrease/(Increase) in net debt for period (A+B+C+D) | -1,761 | 99 |
| Net debt at beginning of period | 36,722 | 38,791 |
| Net debt at end of period | 38,483 | 38,692 |
(*) The reconciliation with the consolidated statement of cash flows is provided in the section, "Reconciliation of the reclassified and statutory financial statements".
The Atlantia Group's net debt increased by €1,761m in the first nine months of 2020 as a result of the following events.
"Net cash from operating activities" amounts to €1,769m, a reduction of €1,983m compared with the comparative period (€3,752m). This is broadly due to the reduction of €2,082m in operating cash flow, reflecting the negative impact of the Covid-19 pandemic on the traffic registered by the Group's motorway and airport operators.
"Net cash used for investment in non-financial assets" in the first nine months of 2020 amounts to €3,847m (€1,107m in the first nine months of 2019). The increase of €2,740m primarily reflects:
"Net equity cash outflows" amount to €253m in the first nine months of 2020 and reflect the payment of dividends and the distribution of equity reserves to non-controlling shareholders. The reduction of €1,382m compared with the same period of 2019 (€1,635m) essentially reflects dividends declared and payable to Atlantia's shareholders (€736m) and those declared by other Group companies and payable to non-controlling shareholders (€441m), as well as the distribution of equity reserves by Abertis HoldCo (€432m) in the first nine months of 2019.
Overall, cash flows from operating activities in the first nine months of 2020, less cash used for investment and net equity cash outflows, have resulted in an increase in net debt of €2,331m.
"Other changes in net debt" have reduced net debt by €570m, primarily due to the fall in value of the Brazilian real against the euro. In the first nine months of 2019, "Other changes in net debt" increased net debt by €911m, essentially due to an increase in fair value losses on hedging derivatives.
| Italian motorways | ||||
|---|---|---|---|---|
| €m | 9M 2020 | 9M 2019 | Change | % change |
| Operating revenue | 2,297 | 3,115 | -818 | -26% |
| EBITDA | 481 | 1,903 | -1,422 | -75% |
| Operating cash flow | 529 | 1,180 | -651 | -55% |
| Capital expenditure | 345 | 396 | -51 | -13% |
| Mil lions of km travelled |
||||
| Traffic | 28,895 | 39,357 | -10,462 | -26.6% |
Traffic during the first nine months of 2020 was significantly impacted by the effects of the spread of Covid-19 in Italy from the last week in February and the Government's subsequent imposition of restrictions on movement.
Traffic on the motorway network operated by Autostrade per l'Italia and its subsidiaries declined 26.6% in the first nine months of 2020 compared with the same period of the previous year. The reduction primarily regarded the number of kilometres travelled by vehicles with 2 axles, which is down 29.2%, whilst the figure for vehicles with 3 or more axles is down 9.4%.
The Group's Italian motorway operations generated operating revenue of €2,297m in the first nine months of 2020, a reduction of €818m compared with the same period of the previous year (€3,115m). On a like-for-like basis, operating revenue is down €784m (25%).
Toll revenue of €2,124m is down €693m compared with the same period of 2019 (€2,817m). The reduction broadly reflects the downturn in traffic due to the impact of Covid-19.
Other operating income is down €125m. This primarily reflects reduced income from motorway service areas on Autostrade per l'Italia's network (down €64m), following a reduction in sales and measures taken by to support oil and food service providers affected by the Covid-19 emergency. In addition, it should be noted that the figure for the first nine months of 2019 included insurance proceeds of approximately €38m, following agreement with the company's insurance company regarding quantification of the amount payable solely under existing third-party liability insurance policies for the Polcevera road bridge.
2 The results of the Abertis group's Italian motorway businesses, presented in the operating segment "Abertis group", are not included.
The cost of materials and external services reflects the additional costs incurred by Autostrade per l'Italia (up €257m, after the costs connected with work on reconstruction of the Polcevera road bridge), primarily linked to work on tunnels.
Concession fees are down €86m as a result of the reduction in traffic and in royalties from services areas in the first nine months of 2020.
Staff costs are down €40m, essentially reflecting a decline in the average workforce (down 215 on average), a reduction in the average cost (following activation of the ordinary wage guarantee fund or CIGO and other effects of the Covid-19 emergency) and a reduction in the fair value of management incentive plans, partially offset by an increase in costs following renewal of the national collective labour agreement.
The "Operating change in provisions" generated expense of €394m (income of €137m in the comparative period). The performance is essentially linked to:
EBITDA for the first nine months of 2020 amounts to €481m, a reduction of €1,422m compared with the same period of 2019 (€1,903m). On a like-for-like basis, EBITDA is down €1,209m (63%).
Operating cash flow in the first nine months of 2020 amounts to €529m, a reduction of €651m compared with the first nine months of 2019 (€1,180m). This primarily reflects the negative impact of the spread of Covid-19 and an increase in maintenance work carried out on Autostrade per l'Italia's network. On a like-for-like basis, operating cash flow is down €702m (51%).
Capital expenditure in the first nine months of 2020 amounts to €345m (€396m in the first nine months of 2019). Work on the following projects continued:
projects included in the Agreement of 1997, with particular regard to the widening of the A1 between Barberino and Florence North and between Florence South and Incisa to three lanes. The most important of the works completed is the boring of the Santa Lucia Tunnel. The tunnel forms part of the planned upgrade of the Barberino–Florence North section of the A1, which is a natural continuation of the Variante di Valico. Boring of the tunnel began on 26 April 2017 and was completed on 8 June 2020;
| 9M 2020 | 9M 2019 | Change | % change |
|---|---|---|---|
| 2,988 | 4,059 | -1,071 | -26% |
| 1,917 | 2,812 | -895 | -32% |
| 1,157 | 2,018 | -861 | -43% |
| 307 | 454 | -147 | -32% |
| 41,566 | 55,751 | -14,185 | -25.4% |
The Abertis group's traffic fell by 25.4% overall in the first nine months of 2020 compared with the same period of the previous year. On a like-for-like basis, the decrease is 23.9%3 .
| TRAFFIC (MILLIONS OF KM TRAVELLED) | ||||
|---|---|---|---|---|
| COUNTRY | 9M 2020 | 9M 2019 | % change | |
| Spain | 5,299 | 7,665 | -30.9% | |
| France | 9,818 | 12,792 | -23.2% | |
| Italy | 3,092 | 4,273 | -27.6% | |
| Brazil | 12,288 | 13,734 | -10.5% | |
| Chile | 3,804 | 5,949 | -36.0% | |
| Mexico | 3,013 | 3,528 | -14.6% | |
| Argentina | 2,032 | 3,782 | -46.3% | |
| Puerto Rico | 1,306 | 1,694 | -22.9% | |
| India | 706 | 928 | -23.9% | |
| Total | 41,357 | 54,346 | -23.9% |
Operating revenue for the first nine months of 2020 amounts to €2,988m, a reduction of €1,071m (26%) compared with the same period of the previous year, in part due to the fall in value of South American currencies.
On a like-for-like basis, revenue is down €731m (20%), primarily due to the decline in traffic caused by the Covid-19 pandemic.
3 The changes in traffic shown do not take into account the changes in scope occurring between 2019 and 2020. In Spain, Aumar's concession expired in December 2019, whilst in Brazil, Centrovias's concession expired in June 2020 and Autovias's concession was expanded in July 2019 with the addition of the Via Paulista concession). In contrast, for comparative purposes, the figures for 2019 in Mexico include the contribution of the Mexican group, RCO, consolidated from the first half of 2020.
| €M | OPERATING REVENUE | ||
|---|---|---|---|
| COUNTRY | 9M 2020 | 9M 2019 | % change |
| Spain | 684 | 1,178 | -42% |
| France | 1,111 | 1,359 | -18% |
| Italy | 247 | 322 | -23% |
| Brazil | 326 | 465 | -30% |
| Chile | 256 | 426 | -40% |
| Argentina | 65 | 94 | -31% |
| Puerto Rico | 89 | 121 | -26% |
| India | 18 | 24 | -25% |
| Mexico* | 131 | - | - |
| Other activities | 61 | 70 | -13% |
| Total | 2,988 | 4,059 | -26% |
* RCO contributes to the results for the first nine months for 5 months from May.
EBITDA for the first nine months of 2020 amounts to €1,917m, a reduction of €895m (32%) compared with the same period of the previous year. On a like-for-like basis and after stripping out exchange rate movements, EBITDA is down €651m (26%).
Abertis group companies implemented extraordinary measures to contain costs in response to the pandemic, including the use of income support schemes for workers adopted by governments in the various countries.
| €M | EBITDA | |||
|---|---|---|---|---|
| COUNTRY | 9M 2020 | 9M 2019 | % change | |
| Spain | 534 | 987 | -46% | |
| France | 728 | 929 | -22% | |
| Italy | 110 | 173 | -36% | |
| Brazil | 171 | 245 | -30% | |
| Chile | 192 | 341 | -44% | |
| Argentina | 11 | 19 | -42% | |
| Puerto Rico | 61 | 88 | -31% | |
| India | 11 | 17 | -35% | |
| Mexico* | 104 | - | - | |
| Other activities | -5 | 13 | n/s | |
| Total | 1,917 | 2,812 | -32% |
* RCO contributes to the results for the first nine months for 5 months from May.
The Abertis group's operating cash flow amounts to €1,157m for the first nine months of 2020, a decline of €861m compared with the same period of 2019. This primarily reflects the negative impact of the spread of Covid-19 and the expiry of Aumar's concession in Spain on 31 December 2019, partially offset by the contribution from the RCO group from the second quarter of 2020. On a like-for-like basis, operating cash flow is down €496m (30%).
The Abertis group's capital expenditure amounts to €307m in the first nine months of 2020. This primarily regards the investment programmes being carried out by the Brazilian operators and work on the Plan de Relance investment programme in France.
| €M | CAPITAL EXPENDITURE | |||
|---|---|---|---|---|
| COUNTRY | 9M 2020 | 9M 2019 | ||
| Spain | 7 | 12 | ||
| France | 73 | 145 | ||
| Italy | 12 | 22 | ||
| Brazil | 165 | 200 | ||
| Chile | 30 | 57 | ||
| Mexico | 15 | - | ||
| Other activities | 5 | 18 | ||
| Total | 307 | 454 |
| Overseas motorways | ||||
|---|---|---|---|---|
| €m | 9M 2020 | 9M 2019 | Change | % change |
| Operating revenue | 341 | 523 | -182 | -35% |
| EBITDA | 237 | 390 | -153 | -39% |
| Operating cash flow | 208 | 292 | -84 | -29% |
| Capital expenditure | 92 | 91 | 1 | 1% |
| Millions of km travelled | ||||
| Traffic | 5,346 | 6,978 | -1,633 | -23.4% |
In the first nine months of 2020, traffic on the networks managed by the Group's overseas operators fell 23.4% overall compared with the same period of 2019, reflecting the impact of the Covid-19 pandemic.
| TRAFFIC - KM TRAVELLED (IN MILLIONS) | ||||
|---|---|---|---|---|
| COUNTRY | 9M 2020 | 9M 2019 | % change | |
| Brazil | 2,758 | 3,321 | -16.9% | |
| Chile | 1,963 | 2,885 | -32.0% | |
| Poland | 625 | 772 | -19.1% | |
| TOTAL | 5,346 | 6,978 | -23.4% |
The overseas motorways segment generated operating revenue of €341m in the first nine months of 2020, a reduction of €182m (35%) compared with the same period of the previous year, in part due to the fall in value of South American currencies. On a like-for-like basis, operating revenue is down €111m (21%), primarily due to the decline in traffic caused by the Covid-19 pandemic.
Total EBITDA of €237m is down €153m (39%) compared with the first nine months of 2019. On a like-for-like basis, EBITDA is down €103m (27%), reflecting the above decline in revenue and the negative impact of changes in provisions following a revised estimate of the cost of road surface maintenance, partially offset by a reduction in concession fees.
4 The results of the Abertis group's overseas motorway businesses, presented in the operating segment "Abertis group", are not included.
| €M | EBITDA | ||
|---|---|---|---|
| COUNTRY | 9M 2020 | 9M 2019 | % change |
| Brazil | 98 | 148 | -34% |
| Chile | 108 | 214 | -50% |
| Poland and other | 31 | 28 | +11% |
| Total | 237 | 390 | -39% |
Capital expenditure in the first nine months of 2020 amounts to €92m, including approximately €66m in Chile primarily relating to payments to the Grantor by the operators, Americo Vespucio Oriente II and Conexión Vial Ruta 78 Hasta Ruta 68, as their contributions to the cost of expropriations in accordance with the related concession arrangements. Work has also been completed on the Santiago Centro Oriente upgrade programme.
Operating cash flow amounts to €208m for the first nine months of 2020, a reduction of €84m compared with the same period of 2019. This primarily reflects the negative impact of Covid-19 and declines in the value of the Brazilian real and the Chilean peso against the euro. On a likefor-like basis, operating cash flow is down €43m (15%).
| Italian airports | ||||
|---|---|---|---|---|
| €m | 9M 2020 | 9M 2019 | Change | % change |
| Operating revenue |
228 | 726 | -498 | -69% |
| EBITDA | 45 | 460 | -415 | -90% |
| Operating cash flow | 53 | 337 | -284 | -84% |
| Capital expenditure | 102 | 178 | -76 | -43% |
| Passengers in millions | ||||
| Traffic | 10.1 | 38.1 | -28 | -73.5% |
The global spread of Covid-19 led to a sharp decline in passenger traffic, which continued in the third quarter of the current year.
The Roman airport system handled 73.9% fewer passengers in the first nine months of 2020, compared with the same period of 2019.
In particular, Fiumicino airport registered a 74.4% decline in passenger traffic, whilst at Ciampino airport passenger numbers were down 67.0% compared with the first nine months of 2019.
Operating revenue for the first nine months of 2020 amounts to €228m, a reduction of €498m (69%) compared with the same period of the previous year. Aviation revenue of €145m is down by a total of €372m (72%), reflecting the decline in traffic. Other operating income of €82m is down €126m (61%) compared with the first nine months of the previous year, primarily due to reduced income from retail sub-concessions and car parks, reflecting the above fall in traffic and the resulting concentration of operations at Terminal 3, following the closure of the other two terminals at Fiumicino.
EBITDA of €45m is down €415m (90%) compared with the same period of the previous year. The reduction in revenue was partially offset by the impact of cuts to the cost of materials and external services, a reduction in staff costs, due partly to the use of government income support schemes (CIGS), and lower concession fees linked to the performance of traffic.
Operating cash flow amounts to €53m for the first nine months of 2020, a reduction of €284m compared with the same period of 2019.
Capital expenditure in the first nine months of 2020 reflected the slowdown in work caused by the lockdown in spring 2020 and amounts to €102m (€178m in the first nine months of 2019). The work carried out in the first quarter primarily regarded the continuation of work on increasing capacity, in line with the planned expansion of the terminals in the eastern part of Fiumicino airport, whilst work in the following six months consisted solely of interventions deemed essential in order to meet regulatory and safety requirements, and work on projects at an advanced stage and practically close to completion.
| Overseas airports | ||||
|---|---|---|---|---|
| €m | 9M 2020 | 9M 2019 | Change | & change |
| Operating revenue | 108 | 228 | -120 | -53% |
| EBITDA | 21 | 103 | -82 | -80% |
| Operating cash flow | -11 | 73 | -84 | n/s |
| Capital expenditure | 24 | 35 | -11 | -31% |
| Passengers in millions | ||||
| Traffic | 3.9 | 11.5 | -8 | -66.3% |
Nice airport handled 3.9m passengers in the first nine months of 2020, a reduction of 66.3% compared with the same period of the previous year and reflecting the spread of the Covid-19 pandemic.
The Group's overseas airports segment generated operating revenue of €108m in the first nine months of 2020, down €120m (53%) compared with the first nine months of 2019. Aviation revenue of €57m is down 53% compared with the first nine months of 2019. This reflects a combination of the impact on traffic of the spread of the Covid-19 pandemic and the negative impact of the French transport regulator's decision to reduce airport fees, which are 33% lower from 15 May 2019.
Other operating income of €51m is down €56m compared with the same period of the previous year, primarily due to reduced income from retail sub-concessions and car parks, reflecting the above fall in traffic in the first nine months of 2020.
EBITDA of €21m is down €82m compared with the first nine months of 2019 (down 80%). The reduction in revenue was partially offset by the impact of cuts in the cost of materials and external services and staff costs, due in part to the use of government income support schemes.
Negative operating cash flow for the first nine months of 2020 amounts to €11m, a deterioration of €84m compared with the same period of 2019. This essentially reflects the negative impact of Covid-19 and of the French transport regulator's decision to reduce airport fees from May 2019.
The Aéroports de la Côte d'Azur group's capital expenditure amounts to €24m in the first nine months of 2020 (€35m in the same period of 2019). Expenditure primarily regarded continued work on the safety of infrastructure.
In addition to the information already provided in the Annual Report for 2019 and the Interim Report for the six months ended 30 June 2020, this section provides details of updates or new developments relating to significant concession-related, regulatory and legal issues affecting Group companies and occurring through to the date of approval of this results announcement for the three months ended 30 September 2020.
The letters sent by Autostrade per l'Italia ("ASPI") on 11, 13, 14 and 15 July 2020 (the latter two also signed by the parent, Atlantia) contained a proposal aimed at resolving the dispute with the Government resulting from allegations made by the Ministry of Infrastructure and Transport (the "MIT" or the "Grantor") regarding serious breaches of the Concession Arrangement following the collapse of a section of the Polcevera road bridge.
Atlantia's letter of 14 July 2020, among other things, expressed a willingness to enter into an agreement to carry out a market transaction designed to result in Atlantia giving up control of ASPI and make it possible for a publicly owned entity, such as Cassa Depositi e Prestiti ("CDP"), to acquire an interest, whilst respecting the rights of ASPI's existing minority shareholders.
A series of meetings between ASPI, the MIT, the Ministry of the Economy and Finance (the "MEF") and the Cabinet Office were then held from 31 July 2020 with the aim of resolving the dispute and agreeing on the related documents, including the "Settlement Agreement" and the "Outline Addendum to the Single Concession Arrangement". Among other things, the two documents are intended to amend numerous provisions in the concession arrangement and the operator's obligations, to revise many elements of the Financial Plan, and to establish the procedures to be followed and the conditions to be met in order to settle the dispute and render the Addendum and the Financial Plan effective. On 4 August 2020, however, ASPI noted that there were differences between the nature of certain obligations and commitments to be assumed by the operator under the above documents and those previously agreed on.
Following further correspondence, on 23 September 2020, the Government sent a draft of the Settlement Agreement, stating that it was final and that it had applied a number of the changes proposed by ASPI and specifying, among other things, that, with regard to the changes it could not accept, "the second condition set out in art. 10 of the Agreement may not be removed". This condition subjects effectiveness of the Settlement Agreement to completion of the transaction that would result in CDP acquiring a stake in ASPI.
In response to this latter communication, on 29 September 2020, ASPI submitted the Agreement to the above Government departments to be finalised and ratified. The Agreement contained the changes deemed necessary to comply with the commitments given and just one request for removal of the above condition precedent. In the same letter, ASPI stated that, were the Government to be unwilling to conclude the agreement previously reached, the rights granted under the Concession Arrangement, and previously referred to in the latter dated 22 June 2020, would continue to apply.
On 29 September 2020, Atlantia also replied to the Government's letter dated 23 September. In addition to referring to certain aspects regarding the sale of ASPI, the letter noted that the Government's request to make effectiveness of the settlement agreement dependent on the Company's transfer of control of ASPI to CDP is to no extent pertinent to or in line with the objective of the agreement, nor with the content of the commitments in the letter sent by Atlantia to the Government on 14 July, which states that approval of the settlement agreement cannot be subject to the sale of ASPI.
On 2 October, ASPI followed up on previous correspondence regarding the allegations made as part of the dispute over serious breaches of its Concession Arrangement, sending the Grantor a copy of the Technical Report drawn up by its consultants in connection with the criminal case brought before the Court of Genoa. The Report identifies "the effective causes that led to the collapse of a section of the Polcevera road bridge, linked to events for which the Operator cannot be held responsible". The Technical Report points to "clear evidence of unseen defects during construction of the bridge that were in no way observable during maintenance activity, and a number of related external events". Declaring a willingness to quickly arrange a meeting to provider further clarification, ASPI thus requested that the dispute be brought swiftly to a conclusion.
On 2 October, ASPI also informed ANAS that, on the basis of the analyses and checks being carried out as part of the pre-trial investigation, the Polcevera road bridge suffered from a number of construction defects that were neither observable or predictable, reserving the right to take any action or file any claim against ANAS in relation to its then role as the contracting authority responsible for commissioning the bridge's construction, and without prejudice to any right of recourse.
On 8 October 2020, ASPI informed the MIT, the MEF and the Cabinet Office that it was willing to reach a negotiated settlement of the dispute. In this regard, "solely for the purpose of further facilitating conclusion of the Agreement", the Company expressed its willingness to sign the Settlement Agreement attached to the letter from the Government dated 23 September without any changes, with the sole exception of removal of the condition precedent contained in art. 10 for the reasons explained in previous correspondence.
On 5 November 2020, with reference to the letter of 8 October 2020 in which ASPI expressed its willingness to sign the Agreement, and noting that such Agreement, together with the revised Financial Plan and the Addendum, form three indivisible parts of any agreement settling the dispute, ASPI sent the Grantor the draft Addendum with the proposed changes previously discussed with the Grantor. The letter of 5 November also contained a request for a meeting so as to rapidly arrive at a final version of the Addendum.
In a letter dated 3 August 2020, the MIT set out its conclusions regarding the proposed Financial Plan submitted by ASPI on 23 July 2020, setting out the changes to be made.
Following further talks with the Grantor and the Government, on 14 September, ASPI again submitted the Financial Plan, containing a number of clarifications and summary tables requested by the Grantor .
On 14 October 2020, the Transport Regulator ("ART") published the opinion provided to the MIT in accordance with art. 43 of Law Decree 201 of 2011 regarding the update of the Financial Plan. The regulator's opinion expresses certain reservations regarding the Plan drawn up by ASPI which, though it substantially applies the Tariff System devised by ART, includes a number of clear differences in terms of application that could potentially be reflected in the level of the tolls charged to road users.
On 17 October 2020, ASPI sent the Grantor and the other Government departments referred to above its observations on the opinion published by ART on the proposed update of the Financial Plan. The company noted that, despite the ongoing legal dispute over introduction of the regulator's new tariff system, ASPI was willing to evaluate potential application of the new system under procedures agreed on with the Grantor, as part of the agreed settlement of the dispute over serious breaches and alongside finalisation of the Agreement and the Addendum to the Single Concession Arrangement. In view of this, ASPI invited the departments involved "to take all the necessary steps to rapidly approve the Financial Plan submitted on 14 September 2020 on the previously agreed basis, and to quickly sign the Agreement bringing an end to the dispute, in accordance with the terms set out in the previous letter of 8 October 2020, in relation to which the company is immediately willing to reach agreement on the Addendum".
In its letter dated 22 October 2020, the Grantor, in response to the proposed Financial Plan submitted by ASPI on 14 September 2020 and the regulator's opinion, requested ASPI to amend the proposed plan and to provide clarifications, details and documentation regarding a number of concerns raised by the Authority. In this regard, it should be noted that discussions between ASPI and the MIT aimed at finalizing the procedure for updating the Economic and Financial Plan are continuing.
In parallel with the talks between ASPI and the MIT, Atlantia has held a series of talks with CDP. The talks have brought to light material difficulties in proceeding with the negotiations, not only in terms of agreeing on the methods to use in order to determine ASPI's market value, but also in relation to new and significant requests from CDP for further commitments in addition to those set out in Atlantia's letter of 14 July 2020.
For this reason, whilst the Company continued to stand by its commitment to implement the proposals in the letter of 14 July 2020, the Board of Directors decided that it was necessary to seek alternative solutions for separating the Company and ASPI. It was necessary for such solutions to provide the market with certainty, in terms of both timing and transparency, whilst also meeting the indispensable need to protect the rights of all the investors and stakeholders involved. In particular, on 4 August 2020, the Board of Directors decided to examine the possibility of proceeding with a dual-track process based on the following options:
As previously reported, the MIT sent ASPI the proposed Settlement Agreement, attaching the Addendum to the Single Concession Arrangement in which effectiveness of the Settlement Agreement was made conditional on completion of the corporate restructuring in accordance with the outcome of the talks with CDP.
On 9 September 2020, believing that it was duty bound to report information on events and transactions capable of impacting on the correct functioning of the single market and, in particular, of the capital markets union, Atlantia wrote to the European Commission to report the inadmissibility of the provision unilaterally introduced into the text of the Settlement Agreement.
On 23 September, the Government then expressly requested ASPI to accept the text of the Settlement Agreement containing the condition subjecting the Agreement's effectiveness to completion of the transaction between Atlantia and CDP.
On 24 September, in view of the difficulties that had emerged during talks with CDP, and the resulting impossibility of reaching a positive conclusion to the negotiations, Atlantia's Board of
Directors decided to launch the dual-track process that would lead to the disposal of Atlantia's investment in Autostrade per l'Italia whatever the circumstances. This was in keeping with what was communicated to the Italian Government on 14 July 2020 and designed to provide market transparency, whilst also safeguarding the interests of all Atlantia's and ASPI's stakeholders. To this end, the Board approved the plan for the partial, proportional demerger of Atlantia in favour of the newly established beneficiary, Autostrade Concessioni e Costruzioni SpA, and, at the same time, launched a competitive auction, managed by independent financial advisors, with a view to the outright sale of the Company's 88% stake in ASPI.
On 29 September 2020, Atlantia wrote to the Government stating that , in line with the letter of 14 July 2020, the sale of ASPI could only be concluded under real market conditions, following the conclusion of a settlement agreement between ASPI and the MIT and agreement on a regulatory and tariff framework. Such conditions were indispensable for the bankability of the investment programme and to ensure ASPI's long-term attractiveness to investors. In addition, Atlantia repeated that the Government's request to make effectiveness of the Settlement Agreement dependent on the Company's transfer of control of ASPI to CDP is to no extent pertinent to the agreement itself and is entirely outside the authority granted to the Grantor under the Single Concession Arrangement.
On 8 October 2020, the Government and CDP sent another letter expressing their wish that Atlantia could see its way "to reconsidering the position expressed in the latter dated 9 September, with particular regard, among other things, to the issues surrounding the process of assessing statements and guarantees" and, in any event, expressing a hope that the talks could restart.
On 13 October 2020, Atlantia's Board of Directors, in a spirit of cooperation, agreed to examine potential proposals put forward by CDP – acting together with other Italian and international investors – for a possible agreement, as referred to in the letter of 14 July, for the outright purchase of the Company's interest in ASPI, provided that the transaction is concluded on the basis of a fair market value for the stake.
On 19 October 2020, CDP Equity SpA, The Blackstone Group International Partners and Macquarie Infrastructure and Real Assets submitted a preliminary offer to acquire the stake in ASPI. However, whilst welcoming the offer, Atlantia's Board of Directors deemed that the terms of the offer did not adequately reflect the fair market value of the stake.
On 27 October 2020, CDP Equity SpA, The Blackstone Group Partners and Macquarie Infrastructure and Reals Assets submitted a new joint offer.
Atlantia's Board of Directors then met again on 28 October 2020 to discuss this new offer. Whilst continuing to believe that the terms of the offer do not adequately reflect the fair market value of the stake, the Board decided to continue talks with CDP and its co-investors with a view to enabling them to produce a satisfactory, binding offer by no later than 30 November 2020, without, however, granting CDP and its co-investors an exclusive period.
Also on 28 October 2020, in response to the letter unexpectedly sent by the MIT to ASPI on 22 October 2020, regarding the opinion provided to the MIT by the Transport Regulator, the Board of Directors also decided to withdraw item 3 on the agenda for the Extraordinary General Meeting of shareholders ("EGM") originally scheduled for 30 October 2020. This item regarded the partial, proportional demerger in favour of Autostrade Concessioni e Costruzioni SpA. In this letter, the MIT, on the basis of the observations made by ART, requests that "in order to proceed with the approval process… it is necessary to amend the Financial Plan" submitted by ASPI on 14 September 2020. This has effectively cast doubt on key aspects of the Plan previously considered to have been agreed on following lengthy negotiations between ASPI and the relevant ministries. Finalisation of the Financial Plan constitutes a key prerequisite for the conclusion of a Settlement Agreement between MIT and ASPI, and thereby for the agreed resolution of the dispute regarding serious breaches of the Concession Arrangement.
At the same meeting, the Board of Directors decided to call a new General Meeting to deliberate on the same agenda item for no later than 15 January 2021, in the expectation that in the meantime it will be possible to resolve all the related uncertainties.
The collapse of a section of the Polcevera road bridge has resulted in criminal action before the Court of Genoa against 39 personnel, including executives and other people employed at Autostrade per l'Italia's Rome headquarters and the relevant area office in Genoa.
On 5 October 2020, the technical consultants appointed by ASPI and the people under investigation filed a document demonstrating that the collapse was caused by unnoticed construction defects and an external factor.
Subsequently, on 15 October, following a request from the court-appointed experts to carry out further technical examinations, the preliminary investigating magistrate further extended the deadline for completion of the expert investigation until 30 October 2020 and, as a result, the deadline for filing the expert technical report until 30 November 2020. The hearing at which the report is to be discussed is now scheduled to take place on 11 January 2021.
With regard to Autostrade Meridionali's appeal to the Campania Regional Administrative Court against the decision to award the SIS Consortium the new concession to operate the A3 Naples-Pompei-Salerno motorway, requesting its cancellation after suspension of the award, on 13 May
2020, the Court rejected Autostrade Meridionali's request for a provisional injunction halting the award and, at the same time, scheduled a hearing on the merits of the case to be held on 7 October 2020. Following this hearing, on 21 October 2020, the Campania Regional Administrative Court's ruling, turning down Autostrade Meridionali's appeal, was published. As a result, the appeal lodged by SIS was ruled inadmissible.
On 25 June 2020, the consultation with airport users took place (the Commission Consultative Économique) as part of the procedure for the annual endorsement of the tariffs to be applied by the airports of Nice and Cannes from November 2020.
The documentation was then submitted to the Transport Regulator (Autorité de régulation des transports) on 30 June 2020.
On 30 July 2020, the Transport Regulator did not endorse the proposed tariffs, merely approving the component relating to PRM (Persons with Reduced Mobility) services. French regulations provide for the option of submitting a second tariff proposal within a month, as a result of which, on 28 August 2020, ACA submitted a second proposal.
Subsequently, on 17 September 2020, the Transport Regulator endorsed the tariffs for Nice and Cannes for the period from 1 November 2020 to 31 October 2021, which envisage a 3.0% increase in the fees charged for regulated services at the airports of Nice and Cannes (landing/takeoff, passenger boarding, etc.).
This section provides the additional disclosures required by the CONSOB pursuant to art. 114 of Legislative Decree 58/1998 (the "CFA").
a) The net debt or net funds of the Company and the Group it controls, with short-term components shown separately from medium/long-term components
The following tables show the Company's and the Group's net debt or net funds as at 30 September 2020 and 31 December 2019, as required by CONSOB Ruling DEM/6064293 of 28 July 2006 and in compliance with the European Securities and Markets Authority – ESMA Recommendation of 20 March 2013, which does not permit the deduction of non-current financial assets from debt.
| Atlantia SpA's net debt | |||
|---|---|---|---|
| € M |
30 September 2020 31 December 2019 | INCREASE/ (DECREASE) |
|
| Cash | 3,057 | 551 | 2,506 |
| Cash equivalents | 705 | - | 705 |
| Intercompany current account receivables due from related parties | 3 | 46 | -43 |
| Cash and cash equivalents (A) | 3,765 | 597 | 3,168 |
| Current financial assets (B) | 362 | 1 9 |
343 |
| Intercompany current account payables due to related parties | 2 | 6 | -4 |
| Current portion of medium/long-term financial liabilities | 76 | 48 | 28 |
| Current derivative liabilities | - | 1 | -1 |
| Other current financial liabilities | - | 80 | -80 |
| Current financial liabilities (C) | 7 8 |
135 | -57 |
| Current net debt/(net funds) (D=A+B+C) | 4,049 | 481 | 3,568 |
| Medium/long-term borrowings | 7,244 | 3,986 | 3,258 |
| Bond issues | 1,737 | 1,736 | 1 |
| Non-current derivative liabilities | 361 | 246 | 115 |
| Non-current financial liabilities (E) | 9,342 | 5,968 | 3,374 |
| Net debt/(net funds) as defined by ESMA recommendation (F=D+E) |
5,293 | 5,487 | -194 |
| Non-current financial assets (G) | 757 | 686 | 7 1 |
| Net debt/(net funds) (H=F+G) | 4,536 | 4,801 | -265 |
As at 30 September 2020, Atlantia SpA has net debt of €4,536m, down €265m compared with 31 December 2019 (€4,801m).
Non-current financial liabilities of €9,342m as at 30 September 2020 are up €3,374m compared with 31 December 2019 (€5,968m), essentially due to use of the full amount available under revolving credit facilities (amounting to €3,250m) in January 2020.
Correspondingly, current net funds of €4,049m as at 30 September 2020 are up €3,568m compared with 31 December 2019 (€481m), due to the above use of revolving credit facilities, and collection of the proceeds from the assignment, completed in January 2020 for a sum of €278m, of receivables due on sterling-denominated bonds issued by Aeroporti di Roma and held by Atlantia. As at 31 December 2019, these receivables were accounted for in non-current financial assets at a value of €277m.
| Atlantia Group's net debt | |||
|---|---|---|---|
| € M |
30 September 2020 31 December 2019 | INCREASE/ (DECREASE) |
|
| Cash | 9,053 | 4,172 | 4,881 |
| Cash equivalents | 1,532 | 1,060 | 472 |
| Cash and cash equivalents (A) | 10,585 | 5,232 | 5,353 |
| Current financial assets (B) | 1,091 | 1,308 | -217 |
| Current account overdrafts repayable on demand | 37 | 30 | 7 |
| Current portion of medium/long-term financial liabilities | 4,352 | 3,620 | 732 |
| Other financial liabilities | 780 | 570 | 210 |
| Current financial liabilities (C) | 5,169 | 4,220 | 949 |
| Current net debt (D=A+B+C) | 6,507 | 2,320 | 4,187 |
| Bond issues | 29,622 | 26,628 | 2,994 |
| Medium/long-term borrowings | 17,960 | 15,204 | 2,756 |
| Other non-current borrowings | 2,176 | 1,994 | 182 |
| Non-current financial liabilities (E) | 49,758 | 43,826 | 5,932 |
| (Net funds) / Net debt as defined by ESMA recommendation (F=D+E) |
43,251 | 41,506 | 1,745 |
| Non-current financial assets (G) | 4,768 | 4,784 | -16 |
| Net debt (H=F+G) | 38,483 | 36,722 | 1,761 |
As at 30 September 2020, the Group has net debt of €38,483m, up €1,761m compared with 31 December 2019 (€36,722m).
Non-current financial liabilities of €49,758m are up €5,932m compared with 31 December 2019 (€43,826m). This is primarily due to the above use of revolving credit facilities by Atlantia SpA, totalling €3,250m and the non-current financial liabilities contributed following the acquisition and resulting consolidation of the Mexican group, RCO (totalling €1,903m) by the subsidiary, Abertis Infraestructuras. The impact of these events was partially offset by reclassification to the current portion of medium/long-term borrowings of a portion of Autostrade per l'Italia's borrowings from the EIB and CDP, solely for the purposes of paragraph 69 of IAS 1, as described in greater detail in the Interim Report for the six months ended 30 June 2020, and the repayment of medium/long-term borrowings (€2,542m) and bonds (€1,712m).
Current net funds of €6,507m are up €4,187m compared with 31 December 2019 (current net funds of €2,320m), primarily reflecting the above reclassification to short-term of a portion of Autostrade per l'Italia's borrowings from the EIB and CDP, Atlantia SpA's use of the revolving credit facilities and bond issues and new medium/long-term borrowings and, to a lesser extent, operating cash flow after capital expenditure during the period.
b) Past due payables of the Company and the Group it controls by category (financial, trade, tax, social security, due to employees) and the related actions taken by creditors (reminders, injunctions, suspensions of supply, etc.)
A summary of Atlantia SpA's payables as at 30 September 2020 is provided below by category, showing past due amounts.
| MILIONI DI EURO € M |
30/06/2020 30 September 2020 |
of which di cui scaduto past due |
|---|---|---|
| Financial liabilities Passività finanziarie |
9,420 | - 9.483 |
| Trading liabilities Passività commerciali |
7 | 1 8 |
| Tax liabilities Passività per imposte sul reddito |
23 | - 28 |
| Amounts payable to staff Debiti verso il personale |
13 | - 14 |
| Social security contributions payable Debiti previdenziali |
1 | - 4 |
| Other liabilities | 15 | 3 |
| Altre passività Total liabilities Totale Passività |
9,479 | 24 4 9.561 |
No action has been taken by Atlantia SpA's creditors as at 30 September 2020 involving material amounts or items deemed critical with regard to the Company's operations.
A summary of the Group's payables as at 30 September 2020 is provided below by category, showing past due amounts.
| € M |
30 September 2020 | of which past due |
|---|---|---|
| Financial liabilities | 54,927 | - |
| Trading liabilities | 2,030 | 164 |
| Tax liabilities | 191 | - |
| Amounts payable to staff | 192 | - |
| Social security contributions payable | 53 | - |
| Other liabilities | 1,057 | 12 |
| Total liabilities | 58,450 | 176 |
The Group's past due payables as at 30 September 2020 primarily regard trade payables for the most part reflecting non-payment within the usual contractual or commercial terms of payment, disputes over the services received, suppliers involved in insolvency proceedings awaiting settlement, the seizure of amounts due to suppliers and amounts to be offset against receivables due from the same party. None of the items is past due as a result of insufficient financial resources on the part of the Group.
No action has been taken by the creditors of Group companies as at 30 September 2020 involving material amounts or items deemed critical with regard to the operations of such companies.
c) Main changes in related party transactions involving the Company and Group it controls, compared with the latest annual or half-year report approved pursuant to art. 154-ter of the CFA
The following information is provided on the main changes during the first nine months of 2020 in Atlantia SpA's related party transactions:
In the Atlantia Group's case, on the other hand, there has been a reduction in trading assets due from Autogrill (€11m as at 30 September 2020) compared with 31 December 2019 (€35m), reflecting partial collection of receivables due as at 31 December 2019, in addition to the impact of the decline in turnover resulting from the restrictions on movement introduced in response to the spread of the Covid-19 pandemic.
d) Any breaches of covenants, negative pledge provisions or any other provisions attaching to the Group's borrowings, resulting in restrictions on the use of cash, with an up-to-date indication of the degree to which the provisions have been complied with
With respect to compliance with covenants, negative pledge provisions and other provisions involving restrictions on the use of cash by Group companies, following the downgrade of its ratings to below investment grade by two out of three rating agencies on 8 January 2020, a number of loan agreements entered into by Autostrade per l'Italia SpA with the EIB and CDP may trigger requests for early repayment. At the date of preparation of this document, neither the EIB nor CDP has made any request for early repayment.
Furthermore, with regard to two committed lines of credit amounting to €1.3bn obtained by Autostrade per l'Italia from Cassa Depositi e Prestiti, following a request to draw down €200m from the Revolving Credit Facility, Cassa Depositi e Prestiti has so far not proceeded to make any disbursement.
Finally, as a result of the negative impact of Covid-19 on the operating results and financial position of Group companies, a number of them have entered into negotiations with their lenders in order to obtain, on a precautionary and preventive basis, covenant holidays at the measurement date of 31 December 2020 and, where suitable, at subsequent measurement dates. At the date of preparation of this document, a most of such holidays have been approved and formalised.
Details of the impact of the spread of the Covid-19 pandemic on traffic figures are provided in the section, "Financial review for the Atlantia Group" in this announcement. The "Outlook" reports on the sensitivity analysis conducted in order to assess the potential impact on revenue and operating cash flow after capital expenditure in 2020, compared with 2019, as previously presented in the Group's periodic results announcements published in 2020.
On 17 October 2020, Atlantia agreed to sell a 49% stake in Telepass to the global private markets investment manager, Partners Group AG.
The purchase consideration for the investment was €1,056m. The sale is subject to the normal clearance and conditions for this type of transaction and is expected to complete in the first half of 2021. Atlantia will retain control of the company which will, therefore, continue to be consolidated by the Atlantia Group.
On 3 November 2020, the Board of Directors of Abertis Infraestructuras decided to adopt a new dividend policy, targeting an annual dividend payout of €600m in 2021 and 2022.
On 12 November 2020, Atlantia also collected from Abertis HoldCo the remaining 50% (equal to €216m) of the dividend for 2019 received from Abertis Infraestructuras.
On 9 November 2020, Abertis Infraestructuras, in partnership with Manulife Investment Management, agreed to acquire a 100% interest in the holder of the concession (until 2070) for the Elizabeth River Crossings tunnel in Virginia for a total consideration of approximately €1bn. Under the partnership agreement, Abertis will own between 51% and 68% of Elizabeth River Crossings. Abertis (and thus Atlantia) will control the company, consolidating it on a line-by-line basis in its accounts.
Events after the end of the reporting period connected with the investigation conducted by the Public Prosecutor's Office in Genoa regarding the installation of integrated safety and noise barriers on the A12
On 11 November 2020, precautionary measures were applied to four former managers of Autostrade per l'Italia, including the then Chief Executive Officer, the former Head of Operational Maintenance and Investment, the former Central Operations Director, the former Director of Genoa Area Office 1 and two engineers employed by the Company immediately suspended from their office.
The measures relate to the investigation being conducted by the Public Prosecutor's Office in Genoa regarding the installation and maintenance of "Integautos" model noise barriers on approximately 60 of the 3,000 km of network operated by Autostrade per l'Italia.
Autostrade per l'Italia became aware of the investigation following the inspections carried out on 10 December 2019. As far as the company is aware, the people under investigation, for their alleged responsibility at the time the offences were committed, are the Head of Operational Maintenance and Investment, the Central Operations Director, the Joint General Manager for New Works at Autostrade per l'Italia and the Chief Executive Officer of SPEA Engineering SpA, who are suspected of the offences in articles 110 ("aiding and abetting"), 81 ("continuing offence"), 356 ("public procurement fraud") and 432 ("violation of transport safety regulations") of the criminal code.
All of the barriers were inspected and appropriate steps taken to make them safe between the end of 2019 and January 2020, as part of a general assessment of motorway infrastructure initiated by Autostrade per l'Italia across the entire network. At the same time, at the beginning of 2020, the company agreed with the Grantor to replace the barriers.
As regards the two engineers to which the precautionary measures apply, and who are the only ones to be still employed by the company, Autostrade per l'Italia has activated the procedures provided for in the relevant contract, resulting in their immediate suspension. The company will consider further action where appropriate.
On 11 November 2020, following a number of unsolicited expressions of interest from potential international investors, Atlantia has begun to examine a number of potential strategic options for its Polish subsidiary, Stalexport Autostrady SA. This includes the start of a process leading to the partial or full sale of its 61.2% interest in the company. Any subsequent decision will be submitted for examination by the Board of Directors.
As previously mentioned, since the end of February 2020, the restrictions on movement, imposed by many governments in response to the global spread of the Covid-19 pandemic, have had an impact on the volumes of traffic using the motorways and airports operated under concession by the Group. The effects of the restrictions continue to be felt at the date of preparation of this document, partly due to the fact that many countries have recently seen a deterioration in the situation. The decline in traffic is having an impact on the ability of Group companies to generate sufficient cash to fund planned investment and to service their debt, and on their future ability to comply with certain covenants attached to their borrowings. The Group has responded rapidly to the impact of the decline in traffic, taking steps to implement cost-efficiencies and cost-savings and review its investment programmes, whilst at the same time guaranteeing works linked to the safety of infrastructure. We are also assessing all the various forms of aid being provided by governments and authorities in the various countries.
It is not currently possible to predict how the situation will develop or how long it will take to return to the Group's pre-existing levels of traffic and of activity.
The overall impact on traffic will depend on how the virus develops, on the extent and duration of the restrictions on movement introduced by the various governments, and on the impact the measures will have on the economy, specifically on consumer spending and demand for motorway and air travel.
In view of a resurgence of the Covid-19 pandemic, the new restrictions on movement imposed by many governments to contain the spread and the expected negative impact this will have on the performance traffic compared with earlier estimates, we are likely to see the results for 2020 come in below those indicated by the preliminary sensitivity analysis previously reported. We therefore estimate a potential reduction in the Group's revenue of around €3.5bn (in place of the earlier estimate of €3.0bn) compared with the figure for 2019 and a reduction in operating cash flow, after capital expenditure, of €2.2bn (in place of the earlier estimate of €2.0bn), again when compared with the figures for 2019. These estimates also take into account the impact of falls in the value of South American currencies (with an estimated impact on the Group's revenue of over €200m). The assumptions underlying such a sensitivity analysis are subject to change depending on events and on a number of risk factors and uncertainties. As a result, the impacts may differ, perhaps significantly, from the above figures. The above impacts should be considered as forecasts of a purely indicative nature and based on the above assumptions. They are subject to revision
based on future traffic projections as the situation evolves and, as such, do not constitute the outlook for the Group or future performance targets.
Group companies are closely monitoring developments and continue to assess the need for further efficiencies and changes to investment programmes. They are also looking at the possibility of taking advantage of government initiatives introduced in the various countries in which the Group operates, with the aim of mitigating the impact on earnings and financial strength.
The Group's performance is assessed on the basis of a number of alternative performance indicators ("APIs"), calculated on the same basis used in the Group's Annual Report for 2019, to which reference should be made. In application of the CONSOB Ruling of 3 December 2015, governing implementation in Italy of the guidelines for alternative performance indicators ("APIs") issued by the European Securities and Markets Authority (ESMA), the composition of each indicator and reconciliations with reported amounts are provided below:
A number of APIs, calculated as above, are also presented after applying certain adjustments in order to provide a consistent basis for comparison over time, or in application of a different financial statement presentation deemed to be more effective in describing the financial performance of specific activities of the Group. These adjustments to APIs are linked to "Like-for-like changes", as described in greater detail below.
| Operating segments | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Operating revenue, EBITDA, operating cash flow and capital expenditure for each operating segment is shown | ||||||||||||||||
| below. | ||||||||||||||||
| € M |
ITALIAN MOTORWAYS | ABERTIS GROUP | OVERSEAS MOTORWAYS | ITALIAN AIRPORTS | OVERSEAS AIRPORTS | ATLANTIA AND OTHER | CONSOLIDATION ADJUSTMENTS | TOTAL ATLANTIA GROUP | ||||||||
| 9 M |
9 M |
9 M |
9 M |
9 M |
ACTIVITIES 9 M |
9 M |
9 M |
|||||||||
| 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | ||
| 2020 | ||||||||||||||||
| REPORTED AMOUNTS | ||||||||||||||||
| External revenue Intersegment revenue |
2,255 42 |
3,064 51 |
2,988 - |
4,059 - |
340 1 |
522 1 |
227 1 |
725 1 |
108 - |
228 - |
305 320 |
222 316 |
- -364 |
- -369 |
6,223 - |
8,820 - |
| Total operating revenue | 2,297 | 3,115 | 2,988 | 4,059 | 341 | 523 | 228 | 726 | 108 | 228 | 625 | 538 | -364 | -369 | 6,223 | 8,820 |
| EBITDA | 481 | 1,903 | 1,917 | 2,812 | 237 | 390 | 4 5 |
460 | 2 1 |
103 | 6 9 |
3 2 |
- 2 |
- 2 |
2,768 | 5,698 |
| Operating cash flow | 529 | 1,180 | 1,157 | 2,018 | 208 | 292 | 5 3 |
337 | -11 | 7 3 |
-43 | 7 5 |
- 1 |
- 1 |
1,892 | 3,974 |
To provide a consistent basis for comparison of certain performance indicators for the two comparative periods, the following table shows a reconciliation of like-for-like consolidated amounts, for the two periods, for operating revenue, gross operating profit (EBITDA) and operating cash flow based on the consolidated results presented above.
The term "like-for-like basis", used in the description of consolidated operating revenue, EBITDA and operating cash flow, indicates that amounts for comparative periods have been determined by eliminating:
| Operating revenue | 9M 2020 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| € M |
Note | Italian motorways |
Abertis group | Overseas motorways |
Italian airports Overseas airports Atlantia and | other activities | Consolidation adjustments |
Total | |
| Reported amounts (A) | 2,297 | 2,988 | 341 | 228 | 108 | 625 | -364 | 6,223 | |
| Adjustments for non like-for-like items | |||||||||
| Change in scope of consolidation and other minor changes | (1) | 235 | 5 8 |
293 | |||||
| Exchange rate movements and impact of hyperinflation | (2) | -158 | -71 | - | -229 | ||||
| Impact connected with collapse of a section of the Polcevera road bridge |
(3) | -10 | -10 | ||||||
| Sub-total (B) | -10 | 7 7 |
-71 | - | - | 5 8 |
- | 5 4 |
|
| Like-for-like amounts (C) = (A)-(B) | 2,307 | 2,911 | 412 | 228 | 108 | 567 | -364 | 6,169 | |
| 9M 2019 | |||||||||
| Reported amounts (A) | 3,115 | 4,059 | 523 | 726 | 228 | 538 | -369 | 8,820 | |
| Adjustments for non like-for-like items | |||||||||
| Change in scope of consolidation and other minor changes | (1) | 403 | 4 9 |
452 | |||||
| Impact of hyperinflation | (2) | 1 4 |
1 4 |
||||||
| Impact connected with collapse of a section of the Polcevera road bridge |
(3) | 2 4 |
2 4 |
||||||
| Sub-total (B) | 2 4 |
417 | - | - | - | 4 9 |
- | 490 | |
| Like-for-like amounts (C) = (A)-(B) | 3,091 | 3,642 | 523 | 726 | 228 | 489 | -369 | 8,330 | |
| Like-for-like change | -784 | -731 | -111 | -498 | -120 | 7 8 |
5 | -2,161 | |
| % like-for-like change | -25% | -20% | -21% | -69% | -53% | 16% | -1% | -26% |
| FFO | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 9M 2020 | |||||||||
| € M |
Note | Italian motorways |
Abertis group | Overseas | motorways Italian airports | Overseas airports |
Atlantia and other activities |
Consolidation adjustments |
Total |
| Reported amounts (A) | 529 | 1,157 | 208 | 5 3 |
-11 | -43 | - 1 |
1,892 | |
| Adjustments for non like-for-like items | |||||||||
| Change in scope of consolidation and other minor changes | (1) | 6 8 |
2 0 |
8 8 |
|||||
| Exchange rate movements and impact of hyperinflation | (2) | -88 | -41 | -129 | |||||
| Impact connected with collapse of a section of the Polcevera road bridge | (3) | -130 | - 3 |
-133 | |||||
| Change in discount rate applied to provisions | (4) | - 3 |
- 3 |
||||||
| Sub-total (B) | -133 | -20 | -41 | - | - | 1 7 |
- | -177 | |
| Like-for-like amounts (C) = (A)-(B) | 662 | 1,177 | 249 | 5 3 |
-11 | -60 | - 1 |
2,069 | |
| 9M 2019 | |||||||||
| Reported amounts (A) | 1,180 | 2,018 | 292 | 337 | 7 3 |
7 5 |
- 1 |
3,974 | |
| Adjustments for non like-for-like items | |||||||||
| Change in scope of consolidation and other minor changes | (1) | 345 | 4 | 349 | |||||
| Exchange rate movements and impact of hyperinflation | (2) | - | |||||||
| Impact connected with collapse of a section of the Polcevera road bridge | (3) | -184 | - 8 |
-192 | |||||
| Sub-total (B) | -184 | 345 | - | - | - | - 4 |
- | 157 | |
| Like-for-like amounts (C) = (A)-(B) | 1,364 | 1,673 | 292 | 337 | 7 3 |
7 9 |
- 1 |
3,817 | |
| Like-for-like change | -702 | -496 | -43 | -284 | -84 | -139 | - | -1,748 | |
| % like-for-like change | -51% | -30% | -15% | -84% | n.s. | n.s. | n.s. | -46% |
Net financial debt is presented below as a synthetic indicator of the financial structure and is based on the nominal redemption value of bond issues, medium/long-term and short-term borrowings, including bank overdrafts repayable on demand, and after deducting cash.
The statement has been prepared to enable readers to assess the Group's financial structure, distinguishing between financial liabilities in the form of bank borrowings, and thus in the form of borrowing in the financial market in general, from other types of financial asset and liability.
| Reconciliation of net financial debt with net debt | |||
|---|---|---|---|
| € M |
30 September 2020 | 31 December 2019 | INCREASE/ (DECREASE) |
| Bond issues (nominal value) | 29,659 | 26,586 | 3,073 |
| Bank borrowings (nominal value) | 17,497 | 14,694 | 2,803 |
| Non-current debt, gross (A) | 47,156 | 41,280 | 5,876 |
| Bond issues (nominal value) | 1,355 | 1,875 | -520 |
| Bank borrowings (nominal value) | 2,444 | 1,192 | 1,252 |
| Short-term borrowings and bank overdrafts repayable on demand | 474 | 421 | 5 3 |
| Current debt, gross (B) | 4,273 | 3,488 | 785 |
| Cash (C) | -10,585 | -5,232 | -5,353 |
| Net financial debt (D=A+B+C) | 40,844 | 39,536 | 1,308 |
| Amortised cost and fair value of financial liabilities included in gross debt (E) | 7 9 |
208 | -129 |
| Other current and non-current financial liabilities (F) | 1,542 | 1,331 | 211 |
| Other borrowings (G) | 370 | 396 | -26 |
| Derivative liabilities (H) | 1,507 | 1,343 | 164 |
| Derivative assets (I) | -512 | -245 | -267 |
| Financial assets deriving from concession rights and other current and non-current financial assets (J)(1) |
-5,347 | -5,847 | 500 |
| Net debt (L=D+E+F+G+H+I+J+K) | 38,483 | 36,722 | 1,761 |
(1) Includes the financial statement items, "Non-current financial assets" and "Current financial assets" net of the items, "Non-current derivative assets" and "Current derivative assets". This item essentially includes financial assets deriving from concession rights (€3,320m as at 30 September 2020) attributable to the concessions held by the Group in Spain, Chile and Argentina and Autostrade Meridionali's takeover rights (€411m as at 30 September 2020). The other financial assets included in this item primarily regard term deposits and government grants to fund construction work.
Reconciliations of the Atlantia Group's income statement, statement of financial position and statement of cash flows, as prepared under IFRS, with the corresponding reclassified financial statements presented in the "Group financial review" are shown below.
| Reconciliation of the consolidated income statement with the reclassified consolidated income | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| statement | ||||||||||||
| € M |
9M 2020 | 9M 2019 (restated) | ||||||||||
| Reconciliation of items | Reported basis | Reclassified basis | Reported basis | Reclassified basis | ||||||||
| Ref. Sub-items Main entries | Ref. | Sub-items Main entries | Ref. Sub-items Main entries | Ref. | Sub-items Main entries | |||||||
| Toll revenue Aviation revenue |
5,132 202 |
5,132 202 |
7,049 637 |
7,049 637 |
||||||||
| Revenue from construction services | 501 | 661 | ||||||||||
| Revenue from construction services - government grants and cost of materials and external services | (a) | 451 | (a) | 606 | ||||||||
| Capitalised staff costs - construction services for which additional economic benefits are received |
(b) | 31 | (b) | 37 | ||||||||
| Revenue from construction services: capitalised financial expenses | (c) | 19 | (c) | 18 | ||||||||
| Other revenue Other operating income |
(d) | 889 | (d) | 889 | (d) | 1,134 | (d) | 1,134 | ||||
| Total revenue TOTAL OPERATING REVENUE |
6,724 | 6,223 | 9,481 | 8,820 | ||||||||
| Raw and consumable materials Service costs |
-241 -1,944 |
-241 -1,944 |
-405 -1,888 |
-405 -1,888 |
||||||||
| Gain/(Loss) on sale of elements of property, plant and equipment | 1 | 1 | 1 | 1 | ||||||||
| Other operating costs | -643 | -795 | ||||||||||
| Concession fees | (e) | -332 | (e) | -469 | ||||||||
| Lease expense Other |
-23 -290 |
-23 -290 |
-25 -301 |
-25 -301 |
||||||||
| Other capitalised operating costs Use of provisions for construction services required by contract |
2 | (j) | 2 214 |
- | (j) | - 259 |
||||||
| Revenue from construction services: government grants and capitalised cost of materials and external services | (a) | 451 | (a) | 606 | ||||||||
| Use of provisions for renewal of airport infrastructure | (h) | 28 | (h) | 38 | ||||||||
| COST OF MATERIALS AND EXTERNAL SERVICES | (e) | -1,802 | (e) | -1,715 | ||||||||
| CONCESSION FEES Staff costs |
(f) | -1,005 | -332 | (f) | -1,187 | -469 | ||||||
| STAFF COSTS | (b+f+k) | -926 | (b+f+k) | -1,098 | ||||||||
| OPERATING CHANGE IN PROVISIONS | (g+i) | -395 | (g+i) | 160 | ||||||||
| TOTAL OPERATING COSTS | -3,455 | -3,122 | ||||||||||
| GROSS OPERATING PROFIT/(LOSS) (EBITDA) | 2,768 | 5,698 | ||||||||||
| PROVISIONS FOR RENEWAL WORK AND OTHER ADJUSTMENTS | -68 | -80 | ||||||||||
| Operating change in provisions (Provisions)/ Uses of provisions for repair and replacement of motorway infrastructure |
(g) | -438 -177 |
(g) | 128 185 |
||||||||
| (Provisions)/ Uses of provisions for renewal of assets held under concession | -43 | -32 | ||||||||||
| Provisions for renewal of assets held under concession Use of provisions for renewal of assets held under concession |
(h) | -71 28 |
-71 | (h) | -70 38 |
-70 | ||||||
| Provisions for risks and charges | (i) | -218 | (i) | -25 | ||||||||
| (Impairment losses)/Reversals of impairment losses Use of provisions for construction services required by contract |
262 | (n) | 3 | 311 | (n) | -10 | ||||||
| Use of provisions for construction services required by contract Capitalised staff costs - construction services for which no additional economic benefits are |
(j) (k) |
214 | (j) (k) |
259 | ||||||||
| received | 48 | 52 | ||||||||||
| Amortisation and depreciation Depreciation of property, plant and equipment |
(l) | -2,680 -135 |
(l) | -2,929 -148 |
||||||||
| Amortisation of intangible assets deriving from concession rights | -2,450 | -2,688 | ||||||||||
| Amortisation of other intangible assets (Impairment losses)/Reversals of impairment losses |
-95 -200 |
-93 -10 |
||||||||||
| (Impairment losses)/Reversals of impairment losses on property, plant and equipment and intangible assets |
(m) | -203 | (m) | - | ||||||||
| (Impairment losses)/Reversals of impairment losses on other assets | (n) | 3 | (n) | -10 | ||||||||
| AMORTISATION, DEPRECIATION, IMPAIRMENT LOSSES AND REVERSALS OF IMPAIRMENT |
(l+m) | -2,883 | (l) | -2,929 | ||||||||
| LOSSES | ||||||||||||
| TOTAL COSTS OPERATING PROFIT/(LOSS) |
-6,888 -164 |
-6,774 2,707 |
||||||||||
| OPERATING PROFIT/(LOSS) (EBIT) | -183 | 2,689 | ||||||||||
| Financial income | 689 | 581 | ||||||||||
| Financial income accounted for as an increase in financial assets deriving from concession | (o) | 199 | (o) | 200 | ||||||||
| rights and government grants Dividends received from investees accounted for at fair value |
(p) | 70 | (p) | 70 | ||||||||
| Other financial income Financial expenses |
(q) | 420 -1,777 |
(q) | 311 -1,548 |
||||||||
| Financial expenses from discounting of provisions for construction services required by contract | (r) | -39 | (r) | -64 | ||||||||
| and other provisions Other financial expenses |
(s) | -1,738 | (s) | -1,484 | ||||||||
| Foreign exchange gains/(losses) | (t) | 4 | (t) | 131 | ||||||||
| FINANCIAL INCOME/(EXPENSES) | -1,084 | (c+o+p+q+r+s+t) | -836 | (c+o+p+q+r+s+t) | ||||||||
| Net financial expenses | -1,065 | -818 | ||||||||||
| Share of (profit)/loss of investees accounted for using the equity method | -34 | -34 | 7 | 7 | ||||||||
| PROFIT/(LOSS) BEFORE TAX FROM CONTINUING OPERATIONS | -1,282 | -1,282 | 1,878 | 1,878 | ||||||||
| Income tax benefit/(expense) | 318 | 318 | -541 | -541 | ||||||||
| Current tax expense Differences on tax expense for previous years |
-182 -11 |
-806 21 |
||||||||||
| Deferred tax income and expense | 511 | 244 | ||||||||||
| PROFIT/(LOSS) FROM CONTINUING OPERATIONS | -964 | -964 | 1,337 | 1,337 | ||||||||
| Profit/(Loss) from discontinued operations | 1 | 1 | 1 | 1 | ||||||||
| PROFIT/(LOSS) FOR THE PERIOD | -963 | -963 | 1,338 | 1,338 | ||||||||
| of which: Profit/(Loss) attributable to owners of the parent |
-718 | -718 | 1,038 | 1,038 | ||||||||
| Profit/(Loss) attributable to non-controlling interests | -245 | -245 | 300 | 300 |
| Reconciliation of the consolidated statement of financial position with the reclassified | ||||||
|---|---|---|---|---|---|---|
| consolidated statement of financial position | ||||||
| € M |
30 September 2020 | 31 December 2019 | ||||
| Reconciliation of items | Reported basis Ref. |
Main entries | Reclassified basis Main entries Ref. |
Reported basis Ref. |
Main entries | Reclassified basis Main entries Ref. |
| Non-current non-financial assets | ||||||
| Property, plant and equipment | (a) | 758 | 758 | (a) | 820 | 820 |
| Intangible assets Investments |
(b) (c) |
61,214 2,634 |
61,214 2,634 |
(b) (c) |
59,472 3,662 |
59,472 3,662 |
| Deferred tax assets | (d) | 2,379 | 2,379 | (d) | 2,113 | 2,113 |
| Other non-current assets | (e) | 36 | 36 (e) |
77 | 77 | |
| Total non-current non-financial assets (A) | 67,021 | 66,144 | ||||
| Working capital | ||||||
| Trading assets | (f) | 2,622 | 2,622 | (f) | 2,575 | 2,575 |
| Current tax assets Other current assets |
(g) (h) |
538 620 |
538 620 |
(g) (h) |
1,006 565 |
1,006 565 |
| Non-financial assets held for sale or related to discontinued | (w) | 4 | (w) 4 |
|||
| operations Current portion of provisions for construction services required by |
(i) | -803 | -803 | (i) | -571 | -571 |
| contract Current provisions |
(j) | -2,786 | -2,786 | (j) | -2,650 | -2,650 |
| Trading liabilities | (k) | -2,030 | -2,030 | (k) | -2,243 | -2,243 |
| Current tax liabilities Other current liabilities |
(l) (m) |
-191 -995 |
-191 -995 |
(l) (m) |
-283 -1,117 |
-283 -1,117 |
| Total working capital (B) | -3,021 | -2,714 | ||||
| Gross invested capital (C=A+B) | 64,000 | 63,430 | ||||
| Non-current non-financial liabilities Non-current portion of provisions for construction services required |
(n) | -2,201 | -2,201 | (n) | -2,473 | -2,473 |
| by contract Non-current provisions |
(o) | -2,930 | -2,930 | (o) | -2,694 | -2,694 |
| Deferred tax liabilities | (p) | -6,773 | -6,773 | (p) | -6,280 | -6,280 |
| Other non-current liabilities | (q) | -307 | -307 | (q) | -358 | -358 |
| Total non-current non-financial liabilities (D) | -12,211 | -11,805 | ||||
| Net invested capital (E=C+D) | 51,789 | 51,625 | ||||
| Total equity (F) | 13,306 | 13,306 | 14,903 | 14,903 | ||
| Net debt | ||||||
| Non-current net debt | ||||||
| Non-current financial liabilities | (r) | 49,758 | 49,758 | (r) | 43,826 | 43,826 |
| Non-current financial assets | (s) | -4,768 | -4,768 | (s) | -4,784 | -4,784 |
| Total non-current net debt (G) | 44,990 | 39,042 | ||||
| Current net debt | ||||||
| Current financial liabilities | (t) | 5,169 | 5,169 | (t) | 4,220 | 4,220 |
| Bank overdrafts repayable on demand Short-term borrowings |
37 438 |
37 438 |
30 391 |
30 391 |
||
| Current derivative liabilities | 61 | 61 | 42 | 42 | ||
| Current portion of medium/long-term borrowings | 4,352 | 4,352 | 3,620 | 3,620 | ||
| Other current financial liabilities | 281 | 281 | 137 | 137 | ||
| Cash and cash equivalents Cash in hand |
(u) -9,053 |
-10,585 | -10,585 -9,053 |
(u) | -5,232 -4,172 |
-5,232 -4,172 |
| Cash equivalents | -1,532 | -1,532 | -1,060 | -1,060 | ||
| Current financial assets | (v) | -1,091 | -1,091 | (v) | -1,308 | -1,308 |
| Current financial assets deriving from concession rights Current financial assets deriving from government grants |
-545 -27 |
-545 -27 |
-559 -63 |
-559 -63 |
||
| Current term deposits | -250 | -250 | -433 | -433 | ||
| Current portion of other medium/long-term financial assets | -131 | -131 | -136 | -136 | ||
| Other current financial assets | -138 | -138 | -117 | -117 | ||
| Total current net debt (H) | -6,507 | -2,320 | ||||
| Total net debt (I=G+H) | 38,483 | 36,722 | ||||
| Net debt and equity (L=F+I) | 51,789 | 51,625 | ||||
| Assets held for sale or related to discontinued operations | (w) | 4 | (w) | 4 | ||
| TOTAL NON-CURRENT ASSETS | (a+b+c+d+e-s) | 71,789 | (a+b+c+d+e-s) | 70,928 | ||
| 10,690 | ||||||
| TOTAL CURRENT ASSETS | (f+g+h-u-v+w) | 15,460 | (f+g+h-u-v+w) | |||
| TOTAL NON-CURRENT LIABILITIES | (-n-o-p-q+r) | 61,969 | (-n-o-p-q+r) | 55,631 | ||
| TOTAL CURRENT LIABILITIES | (-i-j-k-l-m+t) | 11,974 | (-i-j-k-l-m+t) | 11,084 |
| €M | 9M 2020 | 9M 2019 (restated) | |||||
|---|---|---|---|---|---|---|---|
| Reconciliation of items | Note | Consolidated statement of cash flows |
Changes in consolidated net debt | Consolidated statement of cash flows |
Changes in consolidated net debt | ||
| CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES | |||||||
| Profit/(Loss) for the period | -963 | -963 | 1,338 | 1,338 | |||
| Adjusted by: Amortisation and depreciation |
2,680 | 2,680 | 2,929 | 2,929 | |||
| Operating change in provisions(*) | 428 428 |
-170 | -170 | ||||
| Financial expenses from discounting of provisions for construction services required by contract and other provisions | 39 39 |
64 | 64 | ||||
| Impairment losses/(Reversal of impairment losses) on financial assets and investments accounted for at cost or fair value |
192 192 |
177 | 177 | ||||
| Dividends received and share of (profit)/loss of investees accounted for using the equity method Impairment losses/(Reversal of impairment losses) and adjustments of current and non-current assets |
35 35 200 200 |
34 10 |
34 10 |
||||
| (Gains)/Losses on sale of investments and other non-current assets | -26 -26 |
-1 | -1 | ||||
| Net change in deferred tax (assets)/liabilities through profit or loss | -511 | -511 | -244 | -244 | |||
| Other non-cash costs (income) | -182 | -182 | -163 | -163 | |||
| Operating cash flow | 1,892 | 3,974 | |||||
| Change in operating capital Other changes in non-financial assets and liabilities |
(a) (b) |
-222 99 |
-396 174 |
||||
| Change in trading assets and liabilities and other non-financial assets and liabilities | (a+b) | -123 | -222 | ||||
| Net cash generated from/(used in) operating activities (A) | 1,769 | 1,769 | 3,752 | 3,752 | |||
| NET CASH FROM/(USED IN) INVESTMENT IN NON-FINANCIAL ASSETS | |||||||
| Investment in assets held under concession | -790 | -790 | -1,011 | -1,011 | |||
| Purchases of property, plant and equipment | -100 | -100 | -150 | -150 | |||
| Purchases of other intangible assets Capital expenditure |
-80 -80 |
-970 | -59 | -59 | -1,220 | ||
| Government grants related to assets held under concession | 3 | 3 | 5 | 5 | |||
| Increase in financial assets deriving from concession rights (related to capital expenditure) | 61 | 61 | 67 | 67 | |||
| Purchase of investments | - | - | -4 | -4 | |||
| Cost of acquisition | (c) | -1,530 | -1,530 | -11 | -11 | ||
| Cash and cash equivalents acquired Net financial liabilities assumed, excluding cash and cash equivalents acquired |
(d) (e) |
283 | 283 -1,935 |
58 | 58 -63 |
||
| Acquisitions of additional interests and/or investments in consolidated companies, net of cash acquired | (c+d) | -1,247 | 47 | ||||
| Purchases of interests in consolidated companies, including net debt assumed | (c+d+e) | -3,182 | -16 | ||||
| Proceeds from sales of property, plant and equipment, intangible assets and unconsolidated investments | 161 | 161 | 12 | 12 | |||
| Sale price | (f) | 24 | 24 | - | - | ||
| Cash and cash equivalents transferred | (g) | - 5 |
-5 | - | - | ||
| Net financial liabilities transferred, excluding cash and cash equivalents transferred | (h) | 32 | - | ||||
| Proceeds from disposals of consolidated companies, net of cash and cash equivalents transferred | (f+g) | 19 | - | ||||
| Proceeds from disposals of consolidated companies, including net debt transferred | (f+g+h) | 51 | - | ||||
| Net change in other non-current assets | 29 | 29 | 49 | 49 | |||
| Net change in current and non-current financial assets | (i) | -35 | -720 | ||||
| Net cash from/(used in) investment in non-financial assets (B) | (j) | -3,847 | -1,107 | ||||
| Net cash generated from/(used in) investing activities (C) | (i+j-e-h) | -1,979 | -1,764 | ||||
| NET EQUITY CASH INFLOWS/(OUTFLOWS) | |||||||
| Dividends declared by Atlantia | (k) | - | -736 | ||||
| Dividends declared by the Group and payable to non-controlling shareholders | (l) | -24 | -441 | ||||
| Dividends paid by Atlantia Dividends paid by Group companies to non-controlling shareholders |
(m) (n) |
- -18 |
-735 -438 |
||||
| Proceeds from exercise of rights under share-based payment plans | - | - | 1 | 1 | |||
| Distribution of reserves and returns of capital to non-controlling shareholders | -229 | -229 | -459 | -459 | |||
| Net equity cash inflows/(outflows) (D) | -253 - |
-1,635 | |||||
| Net cash (used)/generated during the period (A+B+D) Issuance of bonds |
3,372 | -2,331 | 7,044 | 1,010 | |||
| Increase in medium/long term borrowings (excluding lease liabilities) | 6,209 | 3,482 | |||||
| Increase in lease liabilities | 24 | 53 | |||||
| Bond redemptions | -1,712 | -1,147 | |||||
| Repayments of medium/long term borrowings (excluding lease liabilities) | -2,543 | -10,180 | |||||
| Repayments of lease liabilities Net change in other current and non-current financial liabilities |
-25 573 |
-28 -172 |
|||||
| Net cash generated from/(used in) financing activities (E) | 5,651 | -2,579 | |||||
| Change in fair value of hedging derivatives | (o) | 155 | -801 | ||||
| Non-cash financial income/(expenses) | (p) | 88 | 186 | ||||
| Effect of foreign exchange rate movements on net debt and other changes Impact of first-time adoption of IFRS 16 as at 1 January 2019 |
(q) | 327 - |
-159 -137 |
||||
| Other changes in net debt (F) | 570 | -911 | |||||
| Net effect of foreign exchange rate movements on net cash and cash equivalents (G) | -95 | -18 | |||||
| Increase/(decrease) in net debt for period (A+B+D+F) | -1,761 | 99 | |||||
| Net debt at beginning of period | 36,722 | 38,791 | |||||
| Net debt at end of period | 38,483 | 38,692 | |||||
| Increase/(Decrease) in cash and cash equivalents during period (A+C+E+G) | 5,346 | -609 | |||||
| NET CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 5,202 | 5,073 | |||||
| NET CASH AND CASH EQUIVALENTS AT END OF PERIOD | 10,548 | 4,464 |
(*) This item does not include uses of provisions for the renewal of assets held under concession and includes uses of provisions for risks and charges.
Notes:
* * *
The manager responsible for financial reporting, Tiziano Ceccarani, declares, pursuant to section 2 of article 154 bis of the Consolidated Finance Act, that the accounting information contained in this release is consistent with the underlying accounting records.
In addition to the conventional financial indicators required by IFRS contained in this press release, certain alternative performance indicators have been included (e.g., EBITDA) in order to permit a better appraisal of the company's results and financial position. These indicators have been calculated in accordance with market practices.
The Group's net debt, as defined in the European Securities and Market Authority – ESMA (formerly CESR) Recommendation of 20 March 2013 (which does not entail the deduction of non-current financial assets from debt), amounts to €43,251m as at 30 September 2020 (€41,506m as at 31 December 2019).
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