|Net result before extraordinary transactions||637||444|
|Group net debt||3,019||2,494|
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||Notes||2016||2015||Change||% Change|
|Purchase and personnel expense||(*)||(6,911)||(118)|
|Other net operating income/(expenses)||(**)||(14)||(4)|
|EBITDA margin||12.6%||(125.9%)||138.5 p.p.|
|Amortisation, depreciation and impairment losses||(***)||(490)||(11)|
|Amortisation of intangible assets acquired as part of business combinations||(4)||-|
|EBIT margin||5.8%||(175.9%)||181.7 p.p.|
|Net financial income/(expense)||(****)||274||512|
|Net result before extraordinary transactions||637||444||193||43.5%|
|Net result related to discontinued operations and extraordinary transactions||(*****)||(28)||-|
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.
|€ millions||Notes||31 December 2016||31 December 2015||Change||% Change|
|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||7,193||6,674||519||7.8%|
|Net (assets)/liabilities held for sale||(*****)||1,151||-||1,151||n.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:
|€ millions||31 December 2016||of which current||31 December 2015||of which current|
|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 items||35||35||13||13|
|Related-parties loans and borrowings||1,664||1,664||2,983||2,983|
|Other loans and borrowings||79||46||-||-|
The cash flow for the year is summarised below:
|€ millions||2016||2015||Change||% Change|
|Funds From Operations (FFO) (*)||1,226||75||1,151||1534.7%|
|Change in working capital||(316)||(1)|
|Cash flows from ordinary investing activities (**)||(329)||(6)|
|Free Operating Cash Flow (FOCF)||581||68||513||754.4%|
|Change in other investing activities (***)||195||38|
|Increase of share capital||(35)||(2)|
|Net change in loans and borrowings||(387)||(259)|
|Net increase/(decrease) in cash and cash equivalents||354||606|
|Cash and cash equivalents at 1 January||1,365||745|
|Effect from mergers/demergers||56|
|Exchange rate differences and other changes||(28)||14|
|Cash and cash equivalents at 31 December||1,747||1,365|
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”)