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Performance of the Parent Company

 € millions20162015
New orders15,848-
Order backlog26,551-
Revenues7,92554
EBITDA1,000(68)
EBITDA margin12.6%n.a.
EBITA510(79)
ROS6.4%n.a.
EBIT463(95)
EBIT margin5.8%n.a.
Net result before extraordinary transactions637444
Net result609444
Group net debt3,0192,494
FOCF58168
ROI7.4%(1.1%)
ROE13.4%11.2%
Workforce27,583279
 

The financial year 2016 closed with a net profit of €mil. 609 compared to €mil. 444 in 2015. As a consequence of the launch of the One Company, the P&L and balance sheet data are little comparable with those of 2015, since Leonardo has turned itself from a holding company managing a number of legally separate operating entities into a one-company able to combine, through the aforementioned divisional structure, its industrial nature with the management and control of its activities. This radical change significantly and obviously impacted on the financial statements: revenues went from €mil. 54 in 2015 to €bil. 7.9 in 2016, with impacts on all the income statement, balance sheet and cash flow items.

The business trends are commented on in a special section regarding the Group and the sectors in which Leonardo operates. By comparison with the previous year, it is worth recalling that the 2015 result benefitted from the gain arising, within the context of the disposal of the Transportation sector, from the sale of the shares in Ansaldo STS (equal to €mil. 702). As a result also of these transactions, Leonardo had adjusted the value of the shareholding in AnsaldoBreda as to reflect the losses posted by the latter upon the transfer of the business unit to Hitachi (as well as those reported in the financial year), by €mil. 353, with an overall net benefit of €mil. 349.

In 2016 Leonardo showed EBITA equal to €mil. 510, with ROS at 6.4%, and recorded net financial income of €mil. 274 mainly deriving from dividends received from subsidiaries and JVs (the latter contribute to the Group consolidated EBITA through their valuation at equity, while their contribution to the separate financial statements is reflected in the financial section thereof as dividends).

Below is provided the performance of earnings:

 € millions Notes20162015Change% Change
Revenues 7,925547,87114,575.9%
Purchase and personnel expense(*)(6,911)(118)  
Other net operating income/(expenses)(**)(14)(4)  
EBITDA 1,000(68)1,0681,570.6%
EBITDA margin 12.6%(125.9%)138.5 p.p. 
Amortisation, depreciation and impairment losses(***)(490)(11)  
EBITA 510(79)589745.6%
ROS 6.4%(146.3%)152.7 p.p. 
Restructuring costs (43)(16)  
Amortisation of intangible assets acquired as part of business combinations (4)-  
EBIT 463(95)589587.4%
EBIT margin 5.8%(175.9%)181.7 p.p. 
Net financial income/(expense)(****)274512  
Income taxes (100)27  
Net result before extraordinary transactions 63744419343.5%
Net result related to discontinued operations and extraordinary transactions(*****)(28)-  
Net result 60944416537.2%
   

Notes to the reconciliation between the reclassified income statement and the statutory income statement:
(*) Includes “Purchases and Personnel expense” (net of restructuring costs of non-recurring costs) and “Provisions (Reversals) for final losses on contracts”.
(**) Includes the net amount of “Other operating income” and “Other operating expenses”, net of restructuring costs, impairment of goodwill, non-recurring income (costs) and provisions (reversals) for final losses on contracts.
(***) Includes “Amortisation, depreciation and impairment losses”, net of the portion of amortisation referable to intangible assets acquired as part of business combinations and of impairments considered as “Non-recurring costs”.
(****) Includes “Financial income” and “Financial expense” (net of gains (losses) related to extraordinary transactions).
(*****) Includes “Profit (loss) from discontinued operations” and “Gains (losses) relating to extraordinary transactions (key acquisitions and disposals)”.

The following table compares the balance sheets at 31 December 2016 and at 31 December 2015.

€ millionsNotes31 December 201631 December 2015Change% Change
Non-current assets 10,5897,595  
Non-current liabilities (2,091)(262)  
Capital assets(*)8,4987,3331,16515.9%
Inventories 2,920-  
Trade receivables(**)4,95593  
Trade payables(***)(7,523)(100)  
Working capital  352(7)  
Provisions for short-term risks and charges (519)(226)  
Other net current assets/(liabilities)(****)(1,138)(426)  
Net working capital (1,305)(659)(646)(98.0%)
Net invested capital 7,1936,6745197.8%
Equity  5,3254,180  
Net debt 3,0192,49452521.1%
Net (assets)/liabilities held for sale(*****) 1,151 - 1,151n.a.
   

Notes on the reconciliation between the reclassified balance sheet and the statutory balance sheet:
(*) Includes all non-current assets and all non-current liabilities, net of “Non-current loans and borrowings”.
(**) Includes “Contract work in progress”.
(***) Includes “Progress payments and advances from customers”.
(****) Includes “Income tax receivables”, “Other current assets” (excluding “Hedging derivatives in respect of debt items”), net of “Income tax payables” and “Other current liabilities” (excluding “Hedging derivatives in respect of debt items”).
(*****) Includes the net amount of “Non-current assets held for sale” and “Liabilities associated with assets held for sale”.

A comparison with 2015 is poorly significant considering the impact of the concentration process finalised in 2016.

The net debt rose by €mil. 525 from 31 December 2015. However, this increase is exclusively due to the mergers and demergers and the elimination of the relevant credit and debit balances among companies. Beginning from 1 January 2016 Leonardo considerably reduced its indebtedness thanks to a significantly positive FOCF (€mil. 581), also as a result of the collection of the first advance payment relating to the EFA Kuwait contract, as reported several times. A breakdown of the Net Debt follows:

€ millions31 December 2016of which current31 December 2015of which current
Bonds3,2636033,32582
Bank debt2965832951
Cash and cash equivalents(1,747)(1,747)(1,365)(1,365)
Net bank debt and bonds 1,812 2,289 
Fair value of the residual portion in portfolio of Ansaldo Energia(138)(131)
Non-current financial receivables from SuperJet(65)   
Non-current financial receivables from Group's consolidated entities(15) (102) 
Current loans and receivables from related parties(326)(326)(2,558)(2,558)
Other current loans and receivables(27)(27)--
Current loans and receivables and securities(571)(2,791)
Hedging derivatives in respect of debt items35351313
Related-parties loans and borrowings1,6641,6642,9832,983
Other loans and borrowings7946--
Net debt3,019 2,494 
   

The cash flow for the year is summarised below:

€ millions20162015Change% Change
Funds From Operations (FFO) (*)1,226751,1511534.7%
Change in working capital(316)(1)  
Cash flows from ordinary investing activities (**)(329)(6)  
Free Operating Cash Flow (FOCF)58168513754.4%
Strategic transactions-761  
Change in other investing activities (***)19538  
Increase of share capital(35)(2)  
Net change in loans and borrowings(387)(259)  
Net increase/(decrease) in cash and cash equivalents354606  
Cash and cash equivalents at 1 January1,365745  
Effect from mergers/demergers56   
Exchange rate differences and other changes(28)14  
Cash and cash equivalents at 31 December1,7471,365  
   

Notes on the reconciliation between the reclassified cash flow and the statutory cash flow:
(*) Includes “Cash flows used in operating activities” (net of “Change in working capital” and debt payments pursuant to Law 808/1985) and dividends collected.
(**) Includes “Cash flow generated from (used in) investing activities, net of debt payments pursuant to Law 808/1985 and dividends collected.
(***) Includes “Sale of Transportation segment” and the share of “Other investing activities” classified as “Strategic transactions”.
(****) Includes “Other investing activities” (net of dividends collected and operations classified as “Strategic transactions”)