THE RIGHT CHOICE TO TRAVEL AS LEADERS

Transcription

1 ANNUAL REPORT

2 ANNUAL REPORT

3 THE RIGHT CHOICE TO TRAVEL AS LEADERS THE GROUP S POSITIVE TREND CONTINUES IN SPITE OF THE CRISIS For the fifth year in a row, Gruppo FS Italiane confirms its growth in 2012, thanks to the commitment of its staff and management in the identification and fulfilment of the goals set in the Company Plan. The positive performance is especially meaningful, being obtained in a critical economic situation, and represented an indispensable premise for the Group s first bond issue (July 2013). The economic performance in 2012 reached 381 million Euro, with 96 million Euro growth with respect to the previous year, improving the already positive performance of 2011 by over 33%. The value of this growth is even higher because it was recorded in an economic situation characterized by stable operating revenues: the 8.3 billion Euro of 2011 are basically confirmed. For the first time, in 2012 EBITDA exceeds the threshold of 1.9 billion Euro (EBITDA Margin at 23.3%), with +7.6% vs. 1,782 million Euro when the previous year closed. EBIT reached 719 million Euro (+8.3%) with 55 million increase over Starting from the second quarter 2012, the macroeconomic balance of the Market sector recorded a change, with the entrance of new private operators in the most profitable HS segment. In spite of the above, revenues from Market of the profitable segment recorded +1.8% at the end of 2012, with 24 million Euro growth. The offer trend was characterized by the reinforcement of this segment and the progressive completion of the diversification process in the service levels, with +5.1% of the total offer. The pricing policy for all products of the national and international passenger sector (Frecce and Basic Services) underwent an important evolution process with a new pricing structure proposed to customers in the second semester of In particular, reference is made to three offers that provide a mix of flexibility and money value: Base, Economy and Super Economy. The Economy and Super Economy offers, which are organized according to different price levels, recorded sales of 9 million tickets, mainly in the second semester of the financial year. During the year ad hoc offers were proposed for special occasions related to particular events (such as, for example, CartaFreccia Day, or Festa della Donna 2x1 ). Moreover, the threshold of 2 million customers of the CartaFreccia programme was achieved, with exclusive pluses (such as the possibility to purchase tickets at convenient prices). The High Speed/High Capacity (HS/HC)System is still having an extremely positive impact on the Italian economic and social structure. With the Frecce trains the railway transportation obtained leading market shares compared to other transportation modes (road, air). The future introduction of the first Frecciarossa 1000 trains the super high speed trains that are being built at Ansaldo- Breda-Bombardier scheduled for 2014 will mark a sharp improvement of the Group s HS offer. With reference to the infrastructures, still with reference to the HS segment, the Torino Porta Susa, Reggio Emilia AV Mediopadana and the first phase of Bologna Centrale Alta Velocità stations were completed in As regards the Regional Transportation, 2012 recorded an increase in traffic revenues of 6.11% with respect to the previous financial year. Such a variation is mainly related with the indications of the Regions, which have involved an average increase of 6.9% in the regional rates, and a volume contraction of 0.8% linked to service rationalization. In the sector of Universal regional and local Services, together with a higher railway/road integration obtained with new partnerships and acquisitions with local operators, following the guidelines of the Industrial Plan, the development of metropolitan services was started through the enlargement of the fleet and the redefinition of the offer (both in quantitative and qualitative terms) in agreement with competent local Authorities. The aim is to speed up and rationalise the range of in/out bound trains to areas outside the large urban basins while also increasing the routes and stops of the trains within metropolitan areas. Moreover, the extensive modernization programme of the rolling stock for regional and local transportation will be completed during the implementation of the Industrial Plan. During 2012 the regulations on competition of public utility transportation service changed twice. At first the regulations established the obligation for the Regional government to call for a tender for regional transportation service upon the expiration of the agreements in force. Therefore, the Regional governments were not in a position to renew the agreements for an additional six-year term. Then, the regulations changed further to a judgement of the Constitutional Court that cancelled the obligation to call for a tender for public utility services, and restored the possibility to renew the Service Agreements in force. 2 3

4 As regards the new rolling stock, 70 locomotives started to operate (of which 8 for National/International transportation and 62 for Regional transportation), 77 cars for the Regional transportation and 7 ETR for National/International transportation. Moreover, 38 locomotives, and 764 between cars and rail wagons and 184 trains, all of them already in operation, were renovated. The expense for global investments made by Gruppo Ferrovie dello Stato Italiane in 2012 (3,891 million of Euro) inverts the trend of the last few years, showing a growth (+2.2%) with respect to the volume of accounting obtained in the previous year. The global investment picture of Gruppo FS Italiane is part of the ambitious action programme (for a total value of approximately 27 billion Euro) provide by the Company updated at the end of With the aim of finding resources on the financial market, in 2011 Gruppo FS Italiane has defined a MTN Programme (Medium Term Notes) to issue bonds to be listed on regulated markets. The Programme was started on 15 July 2013 with the issue of bonds for 750 million Euro. The issue was very favourably accepted by the markets, which expresses a much higher demand of about 3.6 billions. As regards Cargo Transportation and Logistics, although the continuing international economic crisis was particularly felt in business to business services, the Group intends to achieve the break even point (in terms of EBIT) already in 2013, developing the locomotive and logistics services through its Companies (Trenitalia Cargo, TX Logistik, FS Logistica, CEMAT). From the commercial viewpoint, the offer will still be focused on the strong lines, searching for synergies and partnerships to reinforce the service access points (ports and distribution centres). In the investment sector, although with public limited resources, in 2012 Gruppo FS Italiane managed to consolidate positive results higher than the year before, confirming the virtuous course of growth and expansion. The implementation of the Investment Plan continued, aiming at creating value for the Company and for the national production system, and contributing to stimulating a new development cycle, against the negative trend recorded at national level, in building investments (-6.9% vs. 2011)1 and machinery and transportation means investments (-11.3% vs. 2011) 1. The five-year investment programme aims at developing and maintaining the infrastructures of the Country, providing diversified qualified services with new trains that are more comfortable and technologically evolved, with modern stations integrated into the urban fabric. 1. Source: Prometeia forecast report - January

5 According to the financial requirements related with investments (for High Speed and for the acquisition of rolling stock by Trenitalia, including cycle maintenance) and also to the Group s capability to generate resources, the MTN Programme was defined for a maximum amount of 4.5 billions Euro, to be developed in several financial years with a requirement of about 1.5 billion Euro for Also in 2012 the Group managed its activities in compliance with social, environmental and economic sustainability principles. The Group s core business itself is permeated by large responsibility considerations, which are the result of a mature awareness of each railway worker. In particular, during 2012, as a continuation of the process started in 2010, the implementation of the Environmental Management Systems was completed for the Parent Company and the main operating Companies. The process included the drafting and publication of the Government model of the Environmental Management Systems of the Companies that belong to Gruppo FS Italiane, which identifies the key and support processes, as well as the methodological functional Guide Lines of each Environmental Management System. Other significant initiatives were carried out in the fields of energy, atmosphere emissions, raw materials use and waste management. On 20 July 2012 Agens, assisted by Federtrasporto, and by the labour unions Filt-Cgil, Fit-Cisl, Uiltrasporti, Ugl Trasporti, and Fast Ferrovie, entered the national wage agreement of the Mobility/Railway Activity contract area. On 30 October 2012 the Agreement was also entered by Or.S.A. Ferrovie. Still on 20 July 2012, while entering the national wage agreement, Gruppo FS and the labour unions also entered the Company Agreement of Gruppo FS Italiane, which was then entered by Or.S.A. Ferrovie on 30 October. The two previous contracts terminated on 31 December For the operating Companies of Gruppo FS Italiane applying the two agreements (the Parent company, RFI, Trenitalia, Italferr, Ferservizi, FS Sistemi Urbani and Italcertifer), the new regulations entered in force on 1 September Compared to the previous regulation, the new agreements provide higher flexibility in terms of industrial relations, working hours, rules on the use of employees, and work remuneration, favouring higher productivity, without neglecting growing attention towards its employees, as witnessed by the beginning of the integrative health care provided for by the new Agreement for the employees of FS Italiane, RFI, Trenitalia, Ferservizi, Italferr, FS Sistemi Urbani and Italcertifer. 6 7

6 As a confirmation of the Group s international vocation, the expansion of the services offered on foreign markets continues: management of passenger transportation, logistics, infrastructures, stations and railway engineering. These activities are carried out through subsidiaries on some important European markets: Netinera Deutschland GmbH, a group that operates in the regional passenger transportation sector, mainly in Germany, through a group of about 50 companies; TX Logistik AG, which operates in the cargo transportation business in Germany, Denmark, Switzerland and Sweden; Thello SAS (ex Trenitalia Veolia Transdev), founded in 2011, with provided in 2012 the full operation of the Venice - Paris connection, with encouraging results both in terms of load factor and customer satisfaction. In December 2012 the Rome - Paris connection was activated. The constant growth process will continue with the necessary balance, cautiously taking into consideration the global macro-economic scenario which is not showing yet the eagerly awaited signs of a general recovery and always considering the impact determined by the continuous changes in the reference regulation context. It is understood that Gruppo FS Italiane intends to adopt an inflexible attitude against all behaviours that do not comply with the legislation, the company rules and the coded ethical principles, because no challenge can be considered as won without the full respect of legality and safety. Through the constant commitment of all Companies, the Group continued to ensure high safety standards in all activities that may involve risks for customers, for the community and for employees, consolidating the prevention culture in health and safety issues through the participation of all actors. Moreover, Gruppo FS Italiane operates every day to protect its staff, passengers and goods thanks to the close collaboration with the Police, and more specifically the Railway Police, the body that is institutionally responsible for the prevention and repression of crimes in railway settings. Just like the previous years, the ordinary and extraordinary maintenance activity on the infrastructures and the rolling stock continued. Together with the last-generation technologies, this allowed the Group to become European leader on safety issues. Looking to 2013, given the goals that were achieved and determined radical changes in the Group s external perception FS Italiane being today one of the most sought-after companies by newly graduates growth in terms of dimensions and profitability, in addition to the current business portfolio, will continue on being obtained taking into consideration the Group s competitive scenario. The liberalization process offers interesting opportunities that may be caught in those markets that have been recently opened to competition in order to act as protagonists in the national and European scenario. 8 9

7 CONTENTS THE RIGHT CHOICE TO TRAVEL AS LEADERS 2 01 GRUPPO FERROVIE DELLO STATO ITALIANE FIVE YEARS OF UNSTOPPABLE DEVELOPMENT 14 THE DIFFICULT CONQUEST OF LIBERALIZATION 18 TRASPARENCY, CORRECTNESS AND THRUST TOWARDS COMPETITIVENESS 20 THE STRATEGY OF PERFORMANCE AND RESULTS THE GROUP S COMMITMENT A RECORD RECOGNISED ON INTERNATIONAL MARKETS 40 SERVICES, COMFORT, SAFETY: TO PUT CUSTOMERS IN THE CENTRE 44 CREATING INNOVATION, BUILDING THE TRANSPORT OF THE FUTURE 54 RESPONSIBILITY UNDER EACH AND ALL CHOICES 56 HUMAN RESOURCES, A MORE AND MORE VALUED ASSET ECONOMICS AND INVESTMENTS FROM SOLID ROODS, A SOLID GROWTH 26 THE CORRECT INVESTMENTS TO BECOME MORE COMPETITIVE GROUP S OTHER ACTIVITIES FOUR OPERATING SECTORS FOR ONE GROUP 64 Transport Sector BUSITALIA-SITA NORD 65 GRUPPO NETINERA DEUTSCHLAND 66 FS LOGISTICA 67 Infrastructure Sector ITALFERR SPA 68 Real Estate Sector GRANDI STAZIONI 69 CENTOSTAZIONI 71 FS SISTEMI URBANI 72 Other services FERCREDIT 73 FERSERVIZI

8 01 FERROVIE DELLO STATO ITALIANE GROUP

9 01 THE UNFAVOURABLE SITUATION AND THE BEGINNING OF COMPETITION DID NOT STOP THE GROWTH TREND OF FERROVIE DELLO STATO ITALIANE FIVE YEARS OF UNSTOPPABLE DEVELOPMENT THE GROUP CONSOLIDATES ITS TECHNOLOGICAL AND ECONOMICAL ROLE BOTH IN ITALY AND ABROAD INDUSTRIAL DEVELOPMENT AND COMPETITION In spite of the unfavourable economic situation and the operating start of competitors in the High Speed service segment, Gruppo FS Italiane improved its results for the fifth consecutive year, with 5% increase the Frecce passengers/km and recovered market shares in cargo transport services. The persisting economic crisis at national and international level reduced the global mobility demand of our Country, producing a generalized contraction with a perspective recovery of the transport services that is still rather weak. Moreover, NTV (a company with 20% share owned by the French incumbent SNCF) started to operate in 2012, the only European, if not world, case of a new entrant competitor in the service segment with the highest added value (High Speed). In the Frecce segment, the continuous improvement in the service quality (for instance, the introduction in 2012 of four service levels: Executive, Business, Premium and Standard), the rapid adjustment to the sales offer and pricing to the specific needs of various demand clusters and customer loyalty are some of the distinctive elements that determined the success of Gruppo FS Italiane. Trenitalia Frecce consolidated a customer satisfaction higher than 96% in the case of Frecciarossa. Moreover, the continuous innovation that has been characterising Gruppo Ferrovie dello Stato Italiane, and Trenitalia in particular, in the last few years determined the implementation of new important actions, which will further increase the quality of services and customer loyalty in the future. The fleet renovation with the new Frecciarossa 1000 in 2014, the new on board services (Wi-Fi, multimedia services, etc.) and the new web platform dedicated to the sale of Trenitalia products, are only a some examples of continuous upgrading. UNIVERSAL AND REGIONAL SERVICE In 2012 the regulations on universal service competition changed twice in the local and regional transport. The Legislative Decree no. 1 of 24 January 2012, the so-called Cresci Italia, established the obligation for the Regional Governments to call for tenders for regional transportation service upon expiration of the agreements in force, not giving the administrations the possibility to renew them for additional six years as established in the Service Agreements. Then the judgement of the Constitutional Court no. 199 of 20 July 2012 eliminated the obligation to call for tenders for public utility services, giving the possibility to renew the Service Agreements in force for a second sixyear term. Moreover, it must be noted that, although it is not mandatory, a call for tender is allowed and some Regional Governments confirmed their intention to work in this way. Although the funds for Service Agreements with public customers (Regional Governments and State) were reduced, according to the offer rationalization requirements shared with the Ministry of Infrastructures and Transports, in 2012 Trenitalia maintained the same service level as 2011 and continued on investing in new rolling stock and improving the service quality. Figures are confirmed by global customer satisfaction. CARGO TRANSPORTATION In spite of the weak demand, in 2012 Gruppo FS Italiane transported a global volume of 22,000 million tons/km that was converted in growth for the second consecutive year compared to 2011 (+1.8%). The positive aspects include the good performance of the national traffic segment of Trenitalia Cargo Division (approx. +8% vs. 2011) and of the foreign markets (approx. +8% vs. 2011). These results confirm the validity of the strategic-industrial choices, which aim at giving value to the national lines, developing foreign markets and reaching the necessary competitiveness on the liberalized market. Through the new industrial model, which is characterised by organizational innovation and rationalization of the service network, the Group presents itself as a fundamental engine for development in the Country. GRUPPO FS ITALIANE IN EUROPE The internationalization strategies pursued in the last few years brought Gruppo Ferrovie dello Stato Italiane at a top level in the international railway sector, both in economics terms, being the third European operator for revenues, and in technological terms, thanks 14 15

10 01 to the ongoing commitment in terms of investments and research to improve the performance of the entire system. Growth in terms of size and profitability was pursued looking at a competitive scenario no longer limited to the national situation, but opened at least to the European dimension. In fact, the foreign markets are an additional key for development and international growth is an essential condition to continue on being important player in the European and world scene. Consistently with these goals, Gruppo FS Italiane is working to affirm the equality principle of the opening rules and access conditions of the single national markets in Europe, in order to prevent giving an advantage to some Countries with respect to others. The aim is the creation of a real single European market of railway transport, being convinced that competition improves the quality of services in full benefit of end customers. As a confirmation of the importance of the internationalization strategies implemented by Gruppo FS Italiane, we must underline the strong increase of passenger services in foreign markets. In 2012 the new Thello Italia - France services, which were started in December 2011, produced almost 1 million of incremental trains-km. In Germany, only in 2012, the volume of trains-km produced by Netinera Deutschland increased by approximately 12%. In the cargo service, the tons/km made abroad increased by 7.9%, with 6.4% increase of trains/km production. In addition to cargo and passenger transportation, Gruppo FS Italiane operates abroad with railway engineering services, technical services to Ministries and Government Agencies, engineering and sales management of major railway stations. The technological leadership, the financial solidity and the good reputation allowed Gruppo FS Italiane to participate in tenders and projects in several areas of the world according to traditional financing schemes of Project Financing and PPP - Private, Public Partnership and enter important agreements with several international operators. RAILWAY/ROAD INTERMODALITY In order to guarantee a complete transport service to customers, until the final destination, Trenitalia is committed in the development of integrated mobility services, also interacting with several transportation modes and entering partnerships with other sector operators. Thanks to agreements entered with parking lots, in the stations of Turin, Milan, Bologna, Rome, Naples and Ancona, passengers can leaver their cars near the station and comfortably travel on Frecciarossa, Frecciargento and Frecciabianca trains. Upon arriving at the destination station passengers can rent a car at advantageous rates, thanks to the Noleggio Facile (Easy Rent) service, with different formulas according to the specific needs. The EcoRent services gives the possibility to rend electric cars at special rates (Roma Termini and Milano Centrale Station). The main stations (30) of Ancona, Bari, Bologna, Genoa, Florence, Milan, Naples, Pisa, Rimini, Rome, Salerno, Trieste, Turin, Venice and Verona are the connection point of the Freccia Transfer service, which has been created for customers who prefer renting vehicles with driver. Sustainable mobility is offered by the Car Sharing service, which allows passengers to subscribe to the national circuit at a special price, dedicated to Trenitalia CartaFreccia holders: hundreds of shared cars are available in Bologna, Brescia, Florence, Genoa, Milan, Padua, Palermo, Parma, Rome and Turin. With Car Sharing you can access limited traffic areas, travel on preferential lanes and park on blue parking areas for free. Moreover, in some cities, Trenitalia has also activated the Bike Sharing services at favourable customer rates. Agreements with Taxi operators, in some cities (Milan, Florence) guarantee advantages to passengers who prefer travelling by taxi. Moreover, agreements are being entered also with Local Public Transportation manager in the main Italian cities. MODAL INTEGRATION: THE ROLE OF METROPARK With fifteen-year experience in the design and construction of rest areas, Metropark, the subsidiary of FS Sistemi Urbani entrusted with the enhancement of the non-instrumental real estate assets, manages over 70 parking lots near the railway stations of the network, thus contributing to the offer of services aimed at improving accessibility to trains. In 2012 the network recorded 6.5 millions of passages, of which over 50% refers to loyalty offers dedicated to train passengers. Metropark is working on a development plan, through the progressive enlargement of its management perimeter, also with a view at diversifying the service portfolio. The company, which is interested by a change management project with integrated levers for strategic repositioning in the reference market, was awarded in 2012 the renewal of the UNI EN ISO 9001:2008 certification of the Quality Management System, opening up to sectors of urban parking manages and parking lot design, to integrate the management of its own parking lots

11 01 THE WILLINGNESS TO CREATE A SINGLE EUROPEAN RAILWAY SPACE HAS NOT CAUSED YET UNIFORM COMPETITION AMONGSTS DIFFERENT COUNTRIES THE DIFFICULT CONQUEST OF LIBERALIZATION ITALY HAS THE MOST OPEN MARKET IN EUROPE In 2012 the railway transport sector was in the centre of the European transportation policies on liberalization. The Directive 2012/34/UE (the so-called Recast) consolidated the legislation, combining the three Directives of the First Railway Package; on 30 January 2013 the European Commission presented six bills that form the Fourth Railway Package, introducing new rules, amongst others, on tolls, service access and regulation bodies. With the important goal in mind for the creation of a single European railway space, the European Union has not opened yet the national passenger transportation to competition. Therefore, there is still a considerable lack of uniformity among the different European countries in the access to the railway market. A comparison between the European national models shows that Italy has the most open market, thanks to the presence of multiple operators: it is a real competition, especially on rich segments, that is not found in any other Country. Liberalization of national passenger services as from the end of 2019 was introduced amongst the proposals of the Fourth Railway Package, together with many other news: the introduction of a single safety certification system for railway companies; the obligation to call for tenders for public service agreements as from the end of 2019; measures on the governance of the infrastructure manager; and new functions at ERA (European Safety Railway Agency) which will become a single window for the issue of safety certificate and authorisation for introduction of vehicles on the market. The proposals on liberalization, safety and in- teroperability are a crucial step to harmonize technical regulations, have common rules for operators and guarantee equal access to national markets. On the contrary, the proposal on governance which uses the proprietary separation model (unbundling) as reference, allowing the member States to maintain railway systems structured according to a Holding model (adopted, amongst others, in Germany, Italy and shortly in France) cannot be considered as satisfactory, useful or effective for the realization of a single railway market. The latest scientific production confirms the lack of empirical evidence in favour of proprietary separation. The cost-benefit analysis of the unbundling effects gives a negative result for the majority of the member States. The possible separation effects have been analysed in a recent study instructed by the CER (Community of European Railway and Infrastructure Companies) and carried out by an international consortium of independent research institutes and major universities. The study was delivered in November 2012 and affirmed that the imposition of the unbundling to all EU countries would generate a total cost increase of approximately 6,000 million Euro/year without an appreciable return in terms of higher competition. At the traffic levels foreseen by the European Commission in the White Book of Transports 2011 (+50% railway traffic) the higher costs would reach million/year. The Fourth Railway Package presented by the Commission will be now examined by the EU Parliament and Council. The intention is not to abandon, once again, the goal of a single railway market. At national level transport policies are still characterized by uncertain rules and resources. For instance, we are still awaiting the full operation of the Transport Authority, which was established more than one year ago. The railway public local transportation is still disciplined by a complicated regulation framework with multiple centres and in continuous evolution (as already illustrated on page 13). With specific reference to the financing modes of the railway sector, the Stability Law 2013 (no. 228 dated 24 December 2012) established a specific national Fund fed by the participation in the revenues from diesel and gasoline taxes. However, some of the necessary implementation actions must be enacted. The implementation decree that defines the amount of the extra charge to the High-Speed toll to be applied to all Railways Companies for the co-financing of the national Universal Service is still to be passed

12 01 GOVERNANCE IN FERROVIE DELLO STATO ITALIANE IS AN IMPORTANT TOOL TO FACE THE CHALLENGES OF THE NEW MARKETS TRASPARENCY, CORRECTNESS AND THRUST TOWARDS COMPETITIVENESS A SYSTEM THAT DIVERSIFIES BUSINESS AREAS FOR A STRONGER AND STRONGER ENTREPRENEURSHIP ORGANIZATION CHART OF FERROVIE DELLO STATO ITALIANE CHAIRMAN Central Audit Department CHIEF EXECUTIVE OFFICER Media Central Management Department External Communications Central Management Department Administration, Financial Reporting and Tax Department Company Protection Central Department The Governance system adopted by Gruppo Ferrovie dello Stato Italiane represents an important lever to increase competitiveness both at a national and European level. FS Italiane is inspired by principles of transparency and correctness, established in the Group s Ethical Code, which are indispensable to face the new competition challenges at national and European level. The Parent Company directs and coordinates the industrial policies and strategies of the Operating Companies on the basis of economic, environmental and social considerations. The Group is ready to face the new challenges as innovation leader, developing its entrepreneurial capacity in the transport service offer with business areas that are more and more focused to give a rapid efficient reply to the market and customer demand. The organisation of Gruppo FS Italiane reflects a clear corporate separation between network and transport services, implemented in 2000 in compliance with the European directives on market liberalisation. The audit work provided for by the Italian Civil Code is performed by PricewaterhouseCoopers SpA, which also carries out the auditing of the consolidated accounts, the sustainability report and the annual balance sheets of the Group Companies. Company Affairs Central Department Strategies and Planning Department Information Systems Central Department Legal Affairs Department Institutional and Competition Affairs Department Human Resources and Organisation Finance, Control and Assets CORPORATE BODIES OF FERROVIE DELLO STATO ITALIANE BOARD OF DIRECTORS President CEO Lamberto Cardia Mauro Moretti Directors Alberto Brandani Antimo Prosperi Stefano Zaninelli BOARD OF STATUTORY AUDITORS President Regular Auditors Alessandra Dal Verme Giuseppe Di Giovanni Giancarlo Filocamo Substitute Auditors Cinzia Simeone Paolo Castaldi Member of the Court of Auditors responsible for Control over Ferrovie dello Stato Italiane SpA Ernesto Basile Director responsible for drafting of company accounting documents Vittorio De Silvio 20 21

13 01 THE INDUSTRIAL PLAN REDEFINED GOALS AND IMPROVED STRATEGIES TO ACHIEVE THEM THE STRATEGY OF PERFORMANCE AND RESULT RELIABILITY, QUALITY, MODERNITY: THESE ARE SOME OF THE KEY WORDS OF THE NEW COMPANY PLAN The update of the Industrial Plan presented by the Board of Directors of Ferrovie dello Stato Italiane in September 2012, defined the goals and actions for the portfolio businesses in consideration of the new elements of 2012 that modified the reference situation. The new elements were both external (economic, tax and social security measures; international finance framework, etc.) and internal to the FS Italiane world (entering of the new Mobility/Railway activity area national collective labour agreement, modification of the Group s consolidation perimeter, etc.). The update of the Industrial Plan, with reviewed economic, financial and patrimonial goals for , confirmed the strategic lines of the Industrial Plan and highlighted performances and consolidated economic results, supporting the development intended by the Group. MARKET PASSENGER SERVICES (HS) With Freccia services, the railway transport has reached the market leadership with respect to other transportation modes (road, air). Trenitalia Frecce guarantee a higher and higher coverage of the national territory (islands excluded) with frequency, speed and quality appreciated by customers as shown by the high customer satisfaction levels. Reliability, commitment for quality, continuous upgrading and offers targeted to different customer needs are the key words for success. In particular, the service of the first Frecciarossa 1000, the super high-technology trains produced by AnsaldoBreda-Bombardier, will mark a further clear advancement in the High Speed offer of Gruppo FS Italiane. REGIONAL AND LOCAL TRANSPORTATION In terms of regional and local Universal services, and together with a higher railway/integration to be implemented with new partnerships and acquisitions, the Industrial Plan provides for the development of metropolitan services through the enlargement of the fleet and the redefinition of the offer (both in quantitative and qualitative terms), in accordance with local competent Authorities. The objective, which is to be shared with public regional customers, is to speed up and rationalise the railway connections with the large urban areas, while increasing the offer in metropolitan areas. Moreover, the Industrial Plan provides for the completion of the large modernization process of the rolling stock. CARGO TRANSPORTATION AND LOGISTICS Gruppo FS Italiane intends to develop the locomotive and logistic services through its own Companies (Trenitalia Cargo, TX Logistik, FS Logistica, and CEMAT), with the goal to achieve the break even point (in terms of EBIT) as soon as The strategy provides for the implementation of a new organizational and governance model, aimed at eliminating the residual diseconomies and recover efficiency and productivity by improving the internal processes through the deployment of new technologies. From the commercial viewpoint, the offer will still be focused on the strong lines, searching for synergies and partnerships to reinforce the service access points (ports and distribution centres). INTERNATIONALIZATION Growth in dimensional and profit terms will be obtained keeping in mind that the competitive arena for the Group is already of European level. The liberalization process offers interesting opportunities that may be caught in markets that have been recently opened to competition in order to increment the current business portfolio. The international growth is an essential condition to continue on being a key player in the European scenario. The international vocation of Gruppo FS Italiane is confirmed by the continuous expansion process of all the activities related with services on the foreign markets: management of passenger transportation, logistics, infrastructure and stations, and railway engineering

14 02 ECONOMICS AND INVESTMENTS

15 02 SECTOR BY SECTOR, AN ANALYSIS OF RESULTS FROM GRUPPO FERROVIE DELLO STATO ITALIANE FROM SOLID ROOTS, A SOLID GROWTH POSITIVE EFFECT ALSO DUE TO THE CONTINUOS REDUCTION OF OPERATING COSTS Although in an unfavourable economic situation, the 2012 consolidated economic result was 381 million Euro (of which 379 million Euro for the Group and 2 million Euro for third parties), with 96 million Euro growth with respect to the previous financial year. Therefore, Gruppo FS Italiane closed its balance sheet with a positive net result, with +33.7% compared to The trend reinforces the Group s growth and underlines the commitment of the management and staff in the anticipated achievement of the goals set in the Corporate Plan. In 2012 the Group recorded operating profits for 8,228 million Euro, with a slight decrease with respect to 2011 (8,264 million Euro, -0.4%), with a higher reduction of operating costs (6,310 million Euro), which decreased by 172 million Euro (-2.7%). This determined a positive effect at EBITDA level, with 1,918 million Euro, showing an increment of 136 million Euro, which corresponds to approximately 7.6%. Also the EBIT, which achieved 719 million Euro, recorded an increment that, although affected by the higher depreciations and allocations made in 2012, achieved 55 million Euro (8.3%). In spite of the start of the competitor s activity in the High Speed segment, the sales and performance revenues exceeded the threshold value of 7,500 million Euro (7,511 million Euro): 5,938 million Euro corresponded to revenues from transportation services; the remaining part was represented by infrastructure service revenues (1,340 million Euro) and other revenues (233 million Euro). Revenues from transportation services recorded a decrease of 247 million Euro (- 4.0%) arising from the reduction of market revenues (-147 million Euro) and of the revenues from public service agreement with the Regional Governments and the State (-101 million Euro). The reduction of market revenues was in turn generated by: lower revenues from passenger traffic on medium-long distances (-127 million Euro), partially attributable to the Market Services segment (-58 million Euro) that - within the market Services with negative margins - was affected by the rationalization of the Intercity services (-30 million Euro) and the revenue reduction following the closing of Artesia (-41 million Euro), partially set off by international revenues from the activity of Thello (+13 million Euro). The Market Services recorded a revenue increase (+24 million Euro) as consequence of the reinforced offer on the Turin - Milan - Rome - Naples - Salerno High Speed System. This is an extremely satisfactory figure, especially if we consider the beginning of competition on the High Speed segment. A further, even more significant reduction is due to the decrement recorded in the Contributed Universal Service (-75 million Euro) further to the gradual shift of the modal share towards alternative transportation systems, in line with what already happened in Europe; the increment of revenues from foreign regional traffic for 29 million Euro, contributed by the activities of Germany- controlled Netinera Deutschland GmbH; the reduction (-42 million Euro) in revenues from cargo traffic, arising from the combined effect of the increment of revenues recorded mainly by the Companies of TX Logistik (+22 million Euro) in international business and by Cemat in the national business (+16 million Euro), with a reduction of revenues for FS Logistica (-41 million Euro), Trenitalia (-22 million Euro) and Netinera Deutschland (-15 million Euro). The national regional passenger traffics remains practically unchanged. The revenues from public service agreements decreased by 10 million Euro because of minor revenues from Service Agreement with the State (-23 million Euro) and the Regional Government (-78 million Euro). The revenues from infrastructure services increased by 225 million Euro both for the increment of revenues from the State (+133 million Euro) for ordinary and extraordinary maintenance activity of the network, safety, security and railway navigation, both for the increase of revenues from tolls of 89 million Euro determined by the revenues with higher economic value (HS/HC). The increment of the other revenues from services (+45 million Euro) is linked to the increase of the consideration for maintenance services of the rolling stock and to the increase of the other performances related to transport, partially balanced by the reduction of the engineering services. The other revenues record a decrease of 7.6%, achieving 717 million Euro. The reduction of 59 million Euro compared to 2011 is mainly due to the lower values recorded in 2012 by Trenitalia and Grandi Stazioni for sales made in 2011: respectively the Trasporto regionale Lombardia branch sold to Trenord and the sale of the ex department building situated in via Marsala in Rome; and, on the other hand, a lower amount of works carried out by RFI for third parties, partially attenuated by the increase recorded in the lease charges for real estate properties, in particular from Rete Ferroviaria Italiana, and also Grandi Stazioni and Centostazioni. The operating costs, net of the adjustment 26 27

16 02 due to capitalizations, show a decrement of 172 million Euro due to the reduction of the labour cost for 233 million Euro, the reduction of the total staff (- 4,169 units on average) and the increment of the other net costs (+61 million Euro) mainly caused by the higher costs for services, partially balanced by higher capitalizations. The operating results achieved 719 million Euro, in spite of the higher depreciations (+68 million Euro), born almost entirely by Trenitalia for second level maintenance and for the investment process carried out by the Company, and higher allocation to provision (+30 million Euro) for the adjustment of the so-called bilateral fund, with lower depreciations (- 17 million Euro). The net result confirms the strong growth trend (+34%), while still suffering for the negative weight of the financial management for 290 million Euro, with a slight drop (43 million Euro) compared to the previous financial year. OPERATING REVENUES % 13% 75% OPERATING REVENUES % 16% 72% BREAKDOWN OF OPERATING REVENUES IN 2011 Other revenues Revenues from infrastructure services Revenues from transportation services Other revenues Revenues from infrastructure services Revenues from transportation services Economic, capital and financial highlights Operating revenues Operating costs (6.310) (6.482) Gross trading margin (EBITDA) Operating income (EBIT) Net result THE GROUP S OPERATING SECTORS Through its subsidiaries Gruppo FS Italiane is active in 4 operating sectors, which are identified according to the principles established by the IFRS 8 ( Operating sectors ). TRANSPORTATION OPERATING SECTOR REAL ESTATE OPERATING SECTOR INFRASTRUCTURE OPERATING SECTOR OTHER SERVICES OPERATING SECTOR The main operating activities are concentrated in the first three sectors, while the fourth sector includes all the remaining activities carried out within the Group. In particular, the Transportation Sector which is extremely important for the Group includes the operation of the Companies of Gruppo FS Italiane that carry out passenger and/or cargo transportation activities by railway, road or sea. Trenitalia (highest importance), Netinera Deutschland, and TX Logistik (both groups being mainly active in Germany), FS Logistica, BUSITALIASITA NORD, Ataf and other minor companies. The Infrastructure Sector includes the operation of Rete Ferroviaria Italiana (RFI) that, acting as national Provider, is responsible for the maintenance and use of the railway infrastructures. In a lower extent, the sector includes the results of Italferr, the Group s engineering company, and of the other FS Italiane companies that deal with infrastructure: Brenner Basistunnel (BBT- SE); Tunnel Ferroviario del Brennero (TFB) and Lyon Turin Ferroviaire (LTF), which are involved 28 29

17 02 in the construction of the new tunnels for Italy - Austria and Italy - France connections. The Real Estate Sector comprises the Group s Companies that deal with the management and development of the real estate properties not related with railway activities. In particular, Grandi Stazioni and Centostazioni (respectively in charge of managing the Italian large and medium-sized stations), FS Sistemi Urbani and the subsidiary Metropark (property development; parking areas) and the Mother Company FS Italiane, which is getting more and more active in the development and management of real estate property assigned to it, consistently with the strategic decisions of asset allocation defined in the Industrial Plan. Finally, the residual activities that are carried out within the Group, the importance of which determining the inclusion in an independent sector, are included in the Other Services Sector. Just to mention the main ones, these include Ferservizi s administrative management and building and facility management, Fercredit s financial activities and Italcertifer s certification activities of technological transportation systems and infrastructures. The following pages show the operating performance for 2012 compared with figures from 2011, of Trenitalia (page 29) and RFI (page 31), which operate in the two main activity sectors. TRENITALIA (TRANSPORTATION SECTOR) Values in /M Main indicators Difference % Operating revenues 5.498, ,05 (210,1) (3,7)% Gross trading margin (EBITDA) 1.350, ,10 (40,8) (2,9)% EBIT 418,30 496,25 (78,0) (15,7)% Result for the year 206,50 156,37 50,1 32,1% Investments 1.120,54 861,29 259,3 30,1% Net financial position 6.335, ,00 481,1 8,2% Net worth 1.912, ,61 94,3 5,2% Workforce (1.881) (5,1)% Main indexes ROE 11,7% 9,4% ROI 5,2% 6,3% ROS (EBIT MARGIN) 7,6% 8,7% EBITDA/OPERATING REVENUES (EBITDA MARGIN) 24,6% 24,4% DEBT/EQUITY 3,31 3,22 In line with the last few years, also in 2012 Trenitalia achieved a significant increment of the net result compared to the previous financial year (+50.1 million Euro, equal to +32%). The company expresses its full operation in three main service types: Services to Medium and Long Distance Passengers; Services to Regional Passenger Transport; Cargo services. Through the Passenger Transportation over Medium-Long Distances BU, Trenitalia provides passenger mobility services in the national and international scenario was characterised by a reduction of traffic revenues in the Market segment and in the Universal service. In the Market segment, while the reinforcement of the High Speed determined a revenue increase, a reduction of low performance services was respected for the rationalization of some Intercity trains. On the contrary, the Universal service segment was affected by the gradual shifting of the modal share to alternative means of transport, in line with what has already happened in Europe. The Regional Passenger Transportation is a benchmark for the passenger mobility service at local level. In 2012 the regional transport recorded a 6.14% increase in revenues from 30 31

18 02 traffic, equal to Euro 45 million, compared to the previous financial year. This change is mainly linked to the increase in regional fares, which increased by 7% on average, against a decline in volumes equal to 0.8% due to the rationalization of offered services (-1.9%) as requested by the customer Regional Governments. The Cargo Sector provides national and international services for the mobility of goods. In 2012 the Cargo Division recorded traffic revenues for 494 million Euro with 5.9% decrease compared to The reference sectors for the goods areas are: Conventional Business and Combined Business. In 2012 reference year shipments with complete trains Conventional Business recorded a volume (trains/km) reduction compared to 2011 due to the decline of international traffic, partially balanced by national long-distance traffic. Also the traffic figures of the National/International Combined Business show a decline in the international traffic (-16% trains/km and - 9.6% revenues), however the growth in the national traffic of the trains/km (+19.6%) manage to set off the loss in the international traffic, achieving a global increase in volumes (+3.5%) and revenues (+2.3%). RFI (INFRASTRUCTURE SECTOR) Values in /M Rete Ferroviaria Italiana (RFI) is the company responsible for the design, construction, installation, management and maintenance of the national railway infrastructure. The revenues mainly consist in tolls paid by the transportation Companies and in the contributions by the State to cover the ordinary and extraordinary maintenance costs of the network. In 2012 the Company recorded higher revenues from tolls arising from the increment of traffic volumes on the HS-HC network, with a reduction of revenues from property management and other incomes. Moreover, in 2012 RFI performance was affected by the reduction of staff costs. Main indicators Difference % Operating revenues 2.663, ,50 125,9 5,0% Gross trading margin (EBITDA) 376,76 239,84 136,9 57,1% EBIT 246,25 112,84 133,4 118,2% Result for the year 159,99 98,10 61,9 63,1% Investments 2.835, ,57 (203,3) (6,7)% Net financial position 2.310, ,47 255,7 12,4% Net worth , ,28 (325,2) (1,0)% Workforce (1.019) (3,6)% Main indexes ROE 0,5% 0,3% ROI 0,7% 0,3% ROS (EBIT MARGIN) 9,2% 4,4% EBITDA/OPERATING REVENUES (EBITDA MARGIN) 14,1% 9,5% DEBT/EQUITY 0,07 0,

19 02 TECHNICAL AND INFRASTRUCTURAL INVESTMENTS ARE A VALUABLE LEVER TO PROVIDE INCREASINGLY HIGH QUALITY AND SAFETY THE CORRECT INVESTMENTS TO BECOME MORE COMPETITIVE THE PROGRAMME AIMS AT ACHIEVING HIGHER SERVICE AND EFFICIENCY LEVELS THE GROUP INVESTMENTS Values in /M The five-year investment programme of Gruppo FS Italiane aims at developing and efficiently maintaining the infrastructures of the Country, providing diversified qualified services with new trains that are more comfortable and technologically evolved, with modern stations integrated into the metropolitan fabric. The technical investments made by FS Italiane in 2012, which accounted for 3,554 million Euro, show an increment (+4%) with respect to 2011 volume. In particular, 2,740 million Euro referred to infrastructure works (of which 2,242 million Euro for the convention network and 498 million Euro for the Turin - Milan - Rome - Naples - Salerno HS-HC network), 725 million Euro for works related with transportation and 89 million Euro for other investments. Total RFI Conventional Network SInfrastructural Development Safety and traffic technologies Maintenance in good working order Turin-Milan-Naples High Speed Line Trenitalia (1) National/International Passengers Regional Passengers Cargo 8 6 Others Other Investments Stations, road transportation, services (1) Cycle maintenance and advances for purchasing rolling stock are not included. RFI - RETE FERROVIARIA ITALIANA the new ones, consistently with the strategic lines agree at EU level to stimulate productivity and competitiveness. Rete Ferroviaria Italiana invested to maintain the efficiency of the national network and to develop technologies in order to increase safety levels and the management efficiency of railway circulation. Additional actions for infrastructural development were dedicated to reinforce and modernize the lines, the TEN-T Corridors, the metropolitan areas and the regional areas. For the HS/HC System, which completed the Turin - Salerno line in 2009, activities referred to the construction of the urban by-passing 34 35

20 02 infrastructures (the so-called By-Passes) and the new HS stations. In particular, the Bologna underground By- MAIN WORKS IMPLEMENTED IN 2012 TRENITALIA In 2012 investments for approximately 724 million Euro (net of advances for rolling stock purchases) were dedicated to adjust the fleet to the specific requirements in terms of comfort, efficiency and reliability, in addition to the fitting out of maintenance installations and the evolution of information systems to support transportation services. The main investment projects that were realized and are still in progress are: Frecciarossa restyling for the introduction of four service levels, according to the new sales model; purchase of new 1000 series electric trains in order to increase the HS offer; works to improve the network connection and implement information services on board. Frecciargento restyling of the ETR 485 fleet; Pass was activated in 2012; works continued for the Florence By-Pass and the HS Torino Porta Susa station was completed New infrastructures (New lines, Second lines, Bypasses) km High Speed Network km 28 - Conventional Network km Line modernization km Safety technologies (SCMT, SSC, SSCC/STS, GSM-R) km Station equipment /ACEI, ACS, ACC) no Suppression of railway crossings no Automation of railway crossings no. 7 3 implementation of information and internet services on board. Frecciabianca, Eurostar and Base rehabilitation of cars and locomotives travelling on conventional lines. Regional transportation development/upgrading of services within metropolitan areas; projects for the purchase of new electric and diesel units; additional 50 units to complete the order of new E464 locomotives, which add up to the 250 units that were already delivered; purchase of new Doppio Piano (Double Decker) cars. Cargo transportation continuation of adjustment works of the car fleet to the technical regulations of the fixing systems of rolling stock, according to interoperability requirements. Moreover, investments were allocated to: technological fitting-out: completion of the ACTIONS ON THE TRENITALIA ROLLING STOCK FLEET fleet used by the Regional Transportation Division; in progress for other Trenitalia rolling stock and locomotives, provision of a Technological System for integration of all necessary technologies (SCMT, SSC, GSM-R) on board; computerization: to improve the efficiency of production systems, rationalize and develop sales channels; maintenance and technological upgrade of maintenance installations for rolling stock and cargo terminals: reinforcement, reorganization and rationalization of the maintenance network; research and development. 70 locomotive (8 National/International transport, 62 Regional transport), 77 cars (Regional) and 7 ETR began operation for passenger services. Furthermore, the following means were brought back into operation after restructuring works: 38 locomotives, 764 among cars and wagons and 184 trains (ETR 500 and TAF). New rolling stock Refurbished rolling stock Locomotives no Cars/Wagons no Trains with blocked composition no THE OTHER COMPANIES The other Companies of the Group (Grandi Stazioni, Centostazioni, BUSITALIA-SITA NORD, Italferr, Ferservizi, FS Logistica, FS Sistemi Urbani and the Mother Company FS Italiane, in addition to Netinera Deutschland) realized a global investment volume, both in Italy and abroad, for approximately 89 million Euro: more than 50% refers to Grandi Stazioni and Centostazioni for the rehabilitation and development of the major stations, which were conceived as large-sized service poles and public spaces integrated with the urban fabric. The remaining value was mainly allocated to the rehabilitation and development of the real estate property, to local road transportation (in Italy) and railway transportation (in Germany), to logistic services and to the provision of information tools to support corporate processes