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5,307 343 Total amortisation, depreciation and impairment losses 20,768 13,

14 Notes to the Income Statement

5,307 343 Total amortisation, depreciation and impairment losses 20,768 13,

“Amortisation and depreciation” rose by €2,394 thousand on 2011, mainly following the completion of the operating projects forming part of the broader reorganisation plan (FFDB). they are detailed in the schedules related to property, plant and equipment and intangible assets.

Impairment losses of €5,307 thousand relate to trade receivables, mainly as a consequence of the accrual to the allowance for impairment made by the parent.

14.7 Other operating expense

(€’000) 31.12.2012 31.12.2011

Accruals to the provisions for risks and charges 1,883 6,602

Losses to complete contracts 12,976 -

Membership fees 750 685

Losses on sales of property, plant and equipment and intangible assets 350 15

Realised exchange rate losses on operating items 5,921 6,169

Unrealised exchange rate losses on operating items 838 1,628

Interest and other operating expense 3,776 2,501

Indirect taxes 3,335 2,522

Other operating expense 2,569 4,734

Total other third party operating expense 32,398 24,856 Other related party operating expense 116 100 Total other operating expense 32,514 24,956

Other operating expense, mainly the portion related to third parties, rose €7,558 thousand from €24,956 thousand in 2011 to €32,514 thousand in 2012.

the most significant amount arises from actual losses to complete contracts, mainly attributable to the Indian subsidiary Ansaldo transportation Systems India Private Limited, mitigated by the decrease in the accruals to the provision for risks and charges.

As indicated in the section on “Accounting policies”, starting from 2012, expected losses to complete contracts are no longer recognised against revenue, rather under “Other operating expense”.

14.8 Internal work capitalised

(€’000) 31.12.2012 31.12.2011

Internal work capitalised (1,278) (868)

Internal work capitalised mainly relate to:

- the parent Ansaldo StS S.p.A., with respect to the Satellite and Rail telecom project to develop satellite technologies for new railway signalling systems. this project is co-financed with the European Space Agency and the Galileo Supervisory Authority;

- the French subsidiary Ansaldo StS France S.A.S., with respect to costs for the internal construction (personnel, materials and services) of intangible assets and property, plant and equipment.

14.9 Net financial expense

31.12.2012 31.12.2011

(€’000) Income Expense Net Income Expense Net

Interest and fees 1,903 5,882 (3,979) 2,528 2,769 (241)

Exchange rate gains and losses 11,942 14,047 (2,105) 17,415 18,399 (984)

Fair value gains and losses 3,015 1,239 1,776 6,164 3,019 3,145

Interest on Italian post-employment benefits - 657 (657) - 681 (681)

Interest on other defined benefit plans - 451 (451) - 435 (435)

Other financial income and expense 95 1,255 (1,160) 2 2,226 (2,224)

Total net financial expense 16,955 23,531 (6,576) 26,109 27,529 (1,420) Net related party financial income 152 62 90 648 - 648 Total 17,107 23,593 (6,486) 26,757 27,529 (772)

In 2012, third party net financial expense amounted to €6,576 thousand, up €5,156 thousand on the €1,420 thousand in 2011. the increase is due to lower financial income, mainly attributable to the following:

• the €3,738 thousand decrease in net interest income, which changed from -€241 thousand in 2011 to -€3,979 thousand in 2012,

mainly due to greater interest expense of the Indian subsidiary Ansaldo transportation Systems India Private Limited and the parent. the latter, in 2012, recognised smaller interest income (€734 thousand) on short-term securities (Eurobonds) of a nominal amount of €25,000, at the 4.5% fixed rate and maturing in August 2012 (2011: €1,076 thousand);

Notes to the Income Statement | Income taxes

• the €1,121 thousand increase in exchange rate differences on 2011;

• the smaller fair value of derivatives still in place at year end (€1,369 thousand).

In 2012, net income from related parties fell by €558 thousand, mainly as a consequence of smaller income from the ultimate parent Finmeccanica S.p.A..

As shown in the table, interest costs of defined benefit plans amount to €657 thousand in 2012, compared to €681 thousand in 2011.

14.10 Share of profits of equity-accounted investees

31.12.2012 31.12.2011

(€’000) Income Expense Net Income Expense Net

Share of profits of equity-accounted investees 3,592 62 3,530 8 4 4

Total 3,592 62 3,530 8 4 4

the share of profits of equity-accounted investees of €3,530 thousand comprises the profit of the investee International Metro Service S.r.l. (€3,592 thousand), the loss recognised following the liquidation of the Brazilian subsidiary in May 2012 (€58 thousand) and the loss of the associate Metro 5 S.p.A. (€4 thousand).

14.11 Income taxes

this caption comprises:

(€’000) 31.12.2012 31.12.2011

IRES 17,953 23,615

IRAP 6,099 7,010

Other foreign taxes 11,844 6,421

Prior year taxes (4,069) 44

Net deferred tax expense 6,594 5,206

Total 38,421 42,296

Income taxes decreased by an overall €3,875 thousand compared to the previous year. Specifically, the decrease is due to the following: - a decrease in IRES (€5,662 thousand) and IRAP (€911 thousand) of the year, mainly as a consequence of the smaller pre-tax profit of

the parent;

- an increase (€5,423 thousand) in income taxes of foreign companies given the greater pre-tax profit;

- a greater accrual for net deferred taxes which rose from €5,206 thousand to €6,594 thousand, up €1,388 thousand on the previous year. the increase is mainly due to the transfer of deferred tax assets on tax losses accrued in 2010 related, in particular, to Ansaldo StS USA Inc. (€1,709 thousand).

- prior year taxes of €4,069 thousand, mainly related to the parent Ansaldo StS S.p.A. following the recognition of the receivable covered by the application for refund pursuant to article 2.1-quater of Decree Law no. 201/2011, related to the lower IRES due for the 2007- 2011 period as a result of the IRAP deductibility on personnel expense (€3,555 thousand).

the difference between the theoretical and effective tax rates is analysed below:

31.12.2012 31.12.2011

(€’000) amount % amount %

Pre-tax profit 114,117 - 115,352 -

taxes calculated at ruling tax rates 31,382 27.50% 31,722 27.5%

Permanent differences (749) (206) -0.2% 4,669 1,284 1.1%

113,368 31,176 27.3% 120,021 33,006 28.6%

Different rates on foreign taxes and/or due to

losses of the year - 3,757 3.29% - 672 0.58%

IRAP and other taxes calculated on a basis

other than pre-tax profit - 7,556 6.62% - 8,574 7.43%

Previous year taxes - (4,069) -3.57% - 44 0.04%

At 31 December 2012, the effective tax rate is 33.67%, compared to 36.67% in the previous year.

As mentioned earlier, the 3% decrease is mainly attributable to the parent following the recognition of the receivable represented by the application for refund for lower IRES due for the 2007-2011 period as a result of the IRAP deductibility on personnel expense (€3,555 thousand or 3.12% of the pre-tax profit).

Income statement Statement of financial position

(€’000) Income Expense Assets Liabilities

Italian post-employment benefits and pension funds (239) 487 4,485 -

Remuneration - - 3,375 -

Property, plant and equipment and intangible assets (280) (272) 1,969 243

Provisions for risks and charges (4,432) - 9,017 -

Research grants - (127) 443 1,601

Allowances for WIP and inventory write-down (282) - 9,918 -

Cash flow hedges - defined benefit plans - - 73 955

tax losses (1,098) - 3,407 -

Stock grant plan - - 84 -

Other 2,894 3,069 5,356 5,303

Total (3,437) 3,157 38,127 8,102

the deferred tax assets generated by the “Provisions for risks and charges” mainly relate to the US subsidiaries (€4,282 thousand) and the parent (€4,542 thousand).

the deferred tax assets on tax losses relate to Ansaldo StS France S.A.S. (€2,920 thousand) and Ansaldo StS Australia PtY (€487 thousand).

the deferred tax assets related to the allowance for inventory write-down mainly relate to the subsidiary Ansaldo StS USA (€962 thousand) and the parent Ansaldo StS S.p.A. (€8,518 thousand).

“Other” mainly relates to the parent, Ansaldo StS S.p.A. (€2,949 thousand), the subsidiary Ansaldo StS Australia (€631 thousand), the French subsidiary (€1,128 thousand) and the subsidiary Ansaldo StS USA INC (€648 thousand).

Deferred tax liabilities mainly relate to the parent Ansaldo StS.

Deferred tax assets and liabilities include those recognised with a balancing entry directly in equity, on derivatives recognised as cash- flow hedges and actuarial gains/losses following the adoption of the equity method for defined benefit plans. this equity item changed as follows during the year:

(€’000) 31.12.2011 profit or lossTransfers to Fair value gains or losses changesOther 31.12.2012

Earning per share

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