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Profit and Loss Account analysis

The results as at 31 December 2009, despite the effects of the economic crisis mentioned in preceding paragraphs, show growth for all operational indicators compared to 2008 and including the negative effects of the tax moratorium in the non-typical operations, as provided in the following table in which the Groupís main results are summarized:

Income Statement (millions of Ä)31-Dec-2008% Inc.31-Dec-2009% Inc.Abs. Change% Change†
Revenues3.716,34.204,2+487,9+13,1%
Changes in inventories of finished products2,60,1%(1,9)0,0%-4,5-172,8%
Other operating revenues73,12,0%82,82,0%+9,7+13,3%
Raw and other materials(2.421,4)-65,2%(2.774,9)-66,0%+353,5+14,6%
Service Costs(716,0)-19,3%(633,4)-15,1%-82,6-11,5%
Other operating† costs(43,7)-1,2%(37,4)-0,9%-6,3-14,4%
Personnel costs(331,1)-8,9%(352,0)-8,4%+20,9+6,3%
Capitalised costs248,56,7%80,01,9%-168,5-67,8%
EBITDA528,314,2%567,313,5%+39,0+7,4%
Amortization, Depreciation, Allowances(247,6)-6,7%(276,0)-6,6%+28,4+11,5%
EBIT280,77,6%291,36,9%+10,6+3,8%
Financial charges(91,9)-2,5%(113,4)-2,7%+21,5+23,4%
Other non-operating costs-0,0%(15,3)-0,4%+15,3+0,0%
Pre-tax profit188,95,1%162,63,9%-26,3-13,9%
Tax(78,6)-2,1%(77,6)-1,8%-1,0-1,3%
Net profit for the year110,33,0%85,02,0%-25,3-22,9%

Revenues as at 31 December 2009 amounted to Euro 4,204.2 million, up 13.1% over 2008, EBITDA increased from Euro 528.3 million in 2008 to Euro 567.3 million in 2009, up + 7.4%, and EBIT from Euro 280.7 million to Euro 291.3 million, up 3.8%. Following the impact of the aforementioned tax moratorium, pre-tax profit was down 13.9%, from Euro 188.9 million in 2008 to Euro 162.6 million in 2009. Net profit/loss for the year changed from Euro 110.3 million as at 31 December 2008 to Euro 85.0 million in 2009.

The increase in Revenues, amounting to Euro 487.9 million, is almost entirely attributable to the Electricity Area, which accounts for about Euro 470 million, mainly linked to higher trading volumes and the rising raw material costs.

The increased Costs of raw materials and consumable materials, amounting to Euro 353.5 million (+14.6%), is linked to the increase in electricity unit costs mentioned and the higher volumes traded for about Euro 400 million, partially offset by lower capitalized costs for about Euro 24 million, of which approximately Euro 15 million can be attributed to the different accounting treatment, and the remaining part to the reduction in the purchasing cost of the gas raw material.

Other operating costs (Services costs were down by Euro 82.6 million and Other operating costs by Euro 6.3 million), saw a total decrease of Euro 88.9 million (-11.7%); the reduction is attributable by approximately Euro 136 million to lower costs on internally capitalised activities, of which Euro 117 million are due to the different accounting treatment and the remaining part due to a reduction in the activity level, particularly in the Integrated water cycle; net of the accounting treatment variance, Other operating costs would have been up by approximately Euro 47 million (+6.2%), mainly linked to the consolidation of companies operating in the telecommunications sector.

The increase in Personnel costs, which rose from Euro 331.1 million in 2008 to Euro 352.0 million in 2009 (+6.3%), should be attributed for approximately 50% to the effects of changes in the perimeter and for the remainder to the evolution of the contractual dynamics.

The reduction of Capitalised costs, which decreased from Euro 248.5 million to Euro 80.0 million, is connected for Euro 132 million to the different accounting treatment resulting from the spin-off of the territorial operating companies, and the remaining part to lower internal investment, particularly in the Integrated Water Cycle, details of which are provided in the specific section.

The consolidated EBITDA of the Group as at 31 December 2009 increased from Euro 528.3 million in 2008 to Euro 567.3 million in 2009 (+7.4%), due to the effect of the operational factors outlined above and of the extraordinary capital gains obtained in the conferment of the gas and district heating networks.

Amortisation and Depreciation and allowances increased by 11.5%, from Euro 247.6 million as at 31 December 2008 to Euro 276.0 million on 31 December 2009. This increase is due for about one third to the consolidation of telecommunications activities, and the remainder to the new investments that started operations during the year, in addition to the increase of the bad debt provision.

The 2009 financial statements show an EBIT of Euro 291.3 million, an increase of 3.8% compared to 2008, which was particularly positive given the adverse macroeconomic environment generated by the recession that characterized the last twelve months.

With regard to financial management, 2009 results were impacted by the recovery of so-called "state aid" for a total of Euro 27.6 million, of which Euro 15.3 million correspond to Other operating costs and Euro 12.3 million to interest expenses within Financial operations.

Financial operations for 2009 recorded a negative result of Euro 113.4 million compared to Euro 91.9 million in 2008. If we consider that in 2009 they registered, compared to the previous year, greater profits from associated companies by Euro 2.6 million and exceptional items related to the tax moratorium and the repayment of loans to the Cassa Depositi e Prestiti for Euro 9.2 million, the net increase in Financial Charges amounted to Euro 14.8 million, of which only Euro 7.1 million are related to the increased debt burden while the rest is due to the application of IAS principles.

In light of the above, the Pre-Tax Profit rose from Euro 188.9 million at 31 December 2008 to Euro 162.6 million in 2009, a decrease of 13.9%; net of the tax moratorium effect, pre-tax profit would have improved by Euro 1.3 million, which considering the overall economic scenario, reveals the continued attention of the Group on cost containment and management efficiency.

Income Taxes slightly decreased from Euro 78.6 million in 2008 to Euro 77.6 million in 2009.†† We already mentioned that the tax burden for the year 2009 saw additional taxes for approximately Euro 5.3 million, because of the non-deductible nature of some of the charges related to the tax moratorium.

The Net Result as at 31 December 2009 therefore stands at Euro 85.0 million, down 22.9% compared to Euro 110.3 million in 2008

 
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