The accounting policies applied in preparing the 2018 consolidated figures are in line with those utilised for the 2017 consolidated financial statements. In accordance with IFRS 15, from FY 2018 commercial traffic development agreements are recognized as a reduction in revenues, rather than as operating costs. In order to facilitate like-for-like comparison with the previous year, the 2017 values have been restated.
The consolidation scope at December 31, 2018 differs from December 31, 2017 due to the inclusion of the associate Airport Handling SpA (30%), measured according to the equity method.
| (Euro thousands) | 2018 | 2017 | Change | C.ge % 2018/2017 |
|---|---|---|---|---|
| Operating revenues | 683,956 | 648,260 | 35,696 | 5,5% |
| Revenue for works on assets under concession | 29,189 | 28,281 | 908 | 3,2% |
| Total revenues | 713,145 | 676,541 | 36,604 | 5,4% |
| Operating costs | ||||
| Personnel costs | 189,416 | 210,743 | (21,327) | (10,1%) |
| Other operating costs | 215,150 | 196,786 | 18,364 | 9,3% |
| Total operating costs | 404,566 | 407,529 | (2,963) | (0,7%) |
| Costs for works on assets under concession | 26,728 | 26,006 | 722 | 2,8% |
| Total costs | 431,294 | 433,535 | (2,241) | (0,5%) |
| EBITDA (1) | 281,851 | 243,006 | 38,845 | 16,0% |
| Provisions & write-downs | 3,704 | 32,218 | (28,514) | (88,5%) |
| Restoration and replacement provision | 15,077 | 13,602 | 1,475 | 10,8% |
| Amortisation & Depreciation | 73,601 | 69,296 | 4,305 | 6,2% |
| Operating profit | 189,469 | 127,890 | 61,579 | 48,1% |
| Investment income | 14,568 | 8,135 | 6,433 | 79,1% |
| Net financial charges | 16,641 | 17,909 | (1,268) | (7,1%) |
| Profit before taxes | 187,396 | 118,116 | 69,280 | 58,7% |
| Income taxes | 51,318 | 35,667 | 15,651 | 43,9% |
| Continuing Operations profit | 136,078 | 82,449 | 53,629 | 65,0% |
| Discontinued Operations profit/(loss) (2) | 0 | 1,556 | (1,556) | (100,0%) |
| Minority interest profit/(loss) | 2 | (65) | 67 | (103,1%) |
| Group Net Profit | 136,076 | 84,070 | 52,006 | 61,9% |
(1) EBITDA is calculated as the difference between total revenues and total costs, excluding provisions and write-downs.
(2) The line “Discontinued operations profit/(loss)” from 2017 includes the net result of the company SEA Handling SpA in liquidation, as per IFRS 5. The liquidation process was concluded in 2017.
Operating revenues amounted to Euro 683,956 thousand in FY 2018, up Euro 35,696 thousand (+5.5%). This strong performance was mainly due to traffic development, which drove increases in both aviation revenues and non-aviation passenger service revenues of Euro 21,677 thousand and Euro 15,047 thousand, respectively, against a decline in the other General Aviation and Energy businesses of a total of Euro 1,028 thousand.
EBITDA was Euro 281,851 thousand, up 16% on 2017, which had been influenced by the inclusion among personnel costs of Euro 23,923 thousand relating to the leaving incentives provided for in the Framework Agreement signed on July 22, 2016 with the trade unions.
EBIT of Euro 189,469 thousand was up significantly on the previous year, which included the accrual of Euro 25,252 thousand on the Alitalia SAI receivable for unsettled invoices in the period before the company entered extraordinary administration (May 2, 2017), in addition to the aforementioned impact on personnel costs.
Net profit amounted Euro 136,076 thousand, an increase of Euro 52,006 thousand on the previous year.
The main income statement accounts are broken down as follow.
Revenues
Operating revenues for the period ended December 31, 2018 (net of work on assets under concession and traffic development incentives) amounted to Euro 683,956 thousand and include Aviation revenues of Euro 415,729 thousand (Euro 394,052 thousand in 2017), Non-Aviation revenues of Euro 242,399 thousand (Euro 227,352 thousand in 2017), General Aviation revenues of Euro 11,344 thousand (Euro 12,128 thousand in 2017) and Energy revenues of Euro 14,484 thousand (Euro 14,728 thousand in 2017).
Operating revenues increased by Euro 35,696 thousand on the previous year (+5.5%), supported in 2018 by non-recurring revenues of Euro 5,591 thousand due to the conclusion of the legal proceedings in which SEA was recognized as entitled to the fees for the premises occupied in previous years by the Italian Customs Authority. 2017 was supported by non-recurring revenues of Euro 2,929 thousand (Euro 2,429 thousand from the Anti-trust Authority review of the penalty imposed on SEA in 2015 following the acquisition of SEA Prime - previously ATA Ali Trasporti Aerei and Euro 500 thousand from the collection of a supplier penalty). Net of these items, revenues grew Euro 33,034 thousand (+5.1%). This performance is principally based on5:
- Aviation for Euro +23,289 thousand, mainly due to the boost in traffic volumes in the period.
- Non-Aviation for Euro +10,668 thousand, with organic growth across all the main business segments (Shops, Food & Beverage, Car Rental, Parking and Cargo), despite the decline in the Bank Services segment (-13.5%).
- Energy for Euro (165) thousand, mainly due to lower volumes of electricity sales to third parties.
- General Aviation for Euro (758) thousand, mainly due to lower revenues as a result of the discontinuation of the “into-plane” refuelling service in 2018 and the presence of non-recurring revenues in 2017.
Revenues for works on assets under concession rose from Euro 28,281 thousand in 2017 to Euro 29,189 thousand in 2018, marking an increase of 3.2%. These revenues refer to construction work on assets under concession increased by a mark-up representing the best estimate of the remuneration of the internal cost for the management of the works and design activities undertaken, which corresponds to a mark-up which a third-party general constructor would request to undertake such activities.
This account is strictly related to investment activities on assets under concession.
Operating costs
Operating costs for the year ended December 31, 2018, net of costs for works on assets under concession, amounted to Euro 404,566 thousand, falling Euro 2,963 thousand on the previous year (-0.7%). Costs in 2018 included non-recurring items for Euro 2,073 thousand, consisting solely of leaving incentives. Therefore, comparison with 2017 - which in turn included non-recurring components for Euro 23,966 thousand (of which leaving incentives of Euro 23,923 thousand Euro) - shows a net increase of Euro 18,930 thousand (+4.9%).
This cost increase is mainly due to:
- Group personnel costs, which increased Euro 523 thousand (+0.3%) compared to the same period of 2017, climbing from Euro 186,820 thousand in 2017 to Euro 187,343 thousand in 2018. The increase was primarily driven by a slight rise in the workforce to 2,782 full-time equivalents in 2018 compared with 2,766 in 2017.
- Other operating costs, which increased by Euro 18,407 thousand (+9.4%) compared to the same period of 2017, rising from Euro 196,743 thousand in 2017 to Euro 215,150 thousand in 2018. This growth was due to the increase in costs tied to volumes of Euro 5,307 thousand (for security, public fees, fees associated with the management of parking and commercial costs), the increase in the unit costs of energy – methane and CO2 – of Euro 3,830 thousand and higher operating costs (maintenance, tools and hardware/software fees) of Euro 9,270 thousand.
Costs for works on assets under concession
Costs for works on assets under concession increased from Euro 26,006 thousand in 2017 to Euro 26,728 thousand in 2018. These costs refer to the costs for the works undertaken on assets under concession. This movement is strictly related to investment activities.
As a result of the above dynamics, EBITDA stood at Euro 281,851 thousand compared to Euro 243,006 thousand for 2017, up 16% (+Euro 38,845 thousand). Excluding the non-recurring items outlined above and at like-for-like consolidation scope, EBITDA was up by 5.4% (+Euro 14,290 thousand).
Provisions & write-downs
In FY 2018 provisions and write-downs amounted to Euro 3,704 thousand and consisted of Euro 2,887 thousand in net provisions for future charges (Euro 1,494 thousand for the period ended December 31, 2017) and Euro 817 thousand in net provisions for doubtful debt (Euro 30,724 thousand for the period ended December 31, 2017).
Provisions for future charges include Euro 4,375 thousand in provisions relating to the current year for provisions for employment, revocatory risks and insurance deductibles, partially offset by the release of previous years’ provisions for risks and charges of Euro 1,488 thousand, as a result of the elimination of some ongoing disputes.
Credit risk provisions refer to net provisions for trade receivables (Euro 27,498 thousand in 2017).
In 2017 almost all of the provision for trade receivables was related to the credit exposure dating to the period (prior to placement in administration on May 2, 2017) to Alitalia SAI in Extraordinary Administration, for an amount of Euro 25,252 thousand. There was no guarantee of the collection of this loan either at the time of the provision or at the time of writing.
Further information is available in Note 9.7 of the Consolidated Financial Statements.
Restoration and replacement provision
During the reporting year, the net provision amounted to Euro 15,077 thousand (Euro 13,602 thousand in 2017) and includes the expected maintenance of the plant in the course of its useful life. In 2017 the net effect was due to a provision of Euro 15,093 thousand and the release of Euro 1,491 thousand.
Amortization & Depreciation
Amortization and depreciation increased by Euro 4,305 thousand compared to 2017 (+6.2%), from Euro 69,296 thousand to Euro 73,601 thousand. The movements reflect the amortization and depreciation process for tangible and intangible assets based on estimated useful life, which never exceeds the duration of the concession, together with the increase in fixed assets the depreciation of which began after the first half of 2017, such as the Sheraton hotel in Malpensa, the investments in terminal restyling and the investments in Cargo City.
Investment income and charges
In the reporting year net income from investments increased by Euro 6,433 thousand, rising from Euro 8,135 thousand in 2017 to Euro 14,568 thousand in 2018. Equity-accounted investments and other income and charges are included.
The share of the result of Equity-accounted associates was positive at Euro 14,177 thousand in 2018 (Euro 8,204 thousand in 2017). The increase, amounting to Euro 5,973 thousand, is primarily attributable to the improvement in the results achieved by some associates, in addition to the inclusion, with effect from July 2018, in the scope of companies measured at equity of Airport Handling SpA due to the 30% share owned by SEA SpA.
Other income increased by Euro 460 thousand. This increase was chiefly due to dividends, which amounted to Euro 387 thousand, as approved by the Shareholders’ Meeting of Airport Handling SpA on May 6, 2016, drawing on the profit from FY 2015, paid on the shares held by SEA, collected directly by SEA in July 2018 following the dissolution of the trust.
Financial income and charges
In 2018, net financial charges reduced Euro 1,268 thousand, from Euro 17,909 thousand in 2017 to Euro 16,641 thousand in 2018.
This outcome was primarily due to the lesser interest expense during the period on medium-/long-term loans, driven by the decrease in gross debt, lower charges on derivatives due to the continuing amortization of the relevant notional amount, greater guarantee fees on the EIB disbursement of late June 2017 and an increase in financial income of Euro 763 thousand following the recognition of interest income accrued on the IRES receivable collected in April 2018 concurrently with the corresponding nominal tax receivable.
Income taxes
Income taxes for FY 2018 amounted to Euro 51,318 thousand, up on 2017 (Euro 35,667 thousand), mainly due to the increase in profit before taxes.
A detailed analysis of the components that contributed to this net result and their comparison with 2017 is available in Note 9.12 of the Consolidated Financial Statements.
Discontinued Operations profit/(loss)
The profit on discontinued operations was nil following the liquidation on July 10, 2017 of SEA Handling SpA, against a net profit of Euro 1,556 thousand in the previous year, relating to the conclusion of the liquidation process which resulted in the settlement of credit and debit positions.
Group Net Result
As a result of the trends outlined above, the Group’s net profit amounted to Euro 136,076 thousand, up Euro 52,006 thousand over the previous year (Euro 84,070 thousand).
5 In this document, the 2017 figures for Aviation and Non-Aviation activities and the Energy and General Aviation businesses have been restated according to the allocation criteria used for FY 2018.