Trenitalia S.P.A
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(Translation from the Italian original which remains the definitive version) Trenitalia S.p.A. Financial statements as at and for the year ended 31 December 2017 (with report of the auditors thereon) KPMG S.p.A. 19 March 2018 ANNUAL REPORT (Translation from the Italian original which remains the definitive version) TRENITALIA S.p.A. Trenitalia S.p.A. Company with sole shareholder, managed and coordinated by Ferrovie dello Stato Italiane S.p.A. Registered office: Piazza della Croce Rossa 1, 00161 Rome Fully paid-up share capital: €1,417,782,000.00 Rome R.E.A. no. 0883047 Tax code and VAT no. 05403151003 Telephone: 06 44101 Website: www.trenitalia.com 2017 annual report 1 TRENITALIA S.p.A. COMPANY MISSION Trenitalia provides passenger transport services domestically and internationally. Trenitalia’s mission revolves around certain essential conditions, which consist in the safety of its services, the quality and the health of its workers and protecting the environment. Trenitalia believes that putting its relationship with customers first is the way to gain a long-term competitive advantage and create value for shareholders. Trenitalia’s entire organisation is committed to meeting customers’ needs and market demands. It always guarantees high safety standards and implements development and modernisation plans in accordance with economic, social and environmental sustainability standards. To achieve its mission, the company has created an organisational structure divided into divisions, and it has assigned each of these the monitoring of the relevant business according to the particular characteristics of the market in which the division operates. 2017 annual report 2 TRENITALIA S.p.A. COMPANY OFFICERS AND INDEPENDENT AUDITORS Board of directors in office since 16 September 2017: Chairman Tiziano ONESTI CEO and General Manager Orazio IACONO Directors Daniela CAROSIO (*) Antonella D’ANDREA (**) Maria Rosaria MAUGERI Paolo COLOMBO (*) in office since 25 January 2018 (**) in office until 15 January 2018 Board of directors in office until 15 September 2017: Chairman Tiziano ONESTI CEO and General Manager Barbara MORGANTE Directors Marco GOSSO Maria Rosaria MAUGERI Paolo COLOMBO 2017 annual report 3 TRENITALIA S.p.A. Board of statutory auditors in office since 3 May 2017: Chairwoman Maria Laura PRISLEI Standing statutory auditors Fabio MASTRANGELO Davide FRANCO Alternate statutory auditors Guglielmo MARENGO Monica PETRELLA Board of statutory auditors in office until 2 May 2017: Chairwoman Maria Laura PRISLEI Standing statutory auditors Alessandro ALESSANDRINI Gianfranco ZANDA Alternate statutory auditors Margherita BONITATIBUS Gianpaolo Davide ROSSETTI Independent auditors: KPMG S.p.A. Manager in charge of financial reporting: Francesca SERRA 2017 annual report 4 TRENITALIA S.p.A. CONTENTS Chairman’s letter Management report Glossary ................................................................................................................................. 8 Main indicators ..................................................................................................................... 12 Main events of the year ......................................................................................................... 13 Macroeconomic enviroment ................................................................................................... 17 Market performance .............................................................................................................. 20 Relationships with customers ................................................................................................. 21 Economic performance and financial position .......................................................................... 26 Human resources .................................................................................................................. 41 Environmental and safety policy ............................................................................................. 46 Investments ......................................................................................................................... 54 Risk factors .......................................................................................................................... 60 Related party transactions ..................................................................................................... 62 The trenitalia group .............................................................................................................. 63 Treasury shares .................................................................................................................... 66 Other information ................................................................................................................. 67 Management foreseeable development ................................................................................... 71 Financial statements Statement of financial position ............................................................................................... 73 Income statement ............................................................................................................... 74 Statement of comprehensive income ...................................................................................... 75 Statement of changes in equity .............................................................................................. 76 Statement of cash flows ........................................................................................................ 77 Notes to the financial statements Introduction ......................................................................................................................... 78 Accounting policies ............................................................................................................... 78 Accounting standards applied ................................................................................................ 79 Financial risk management .................................................................................................... 96 Statement of financial position disclosure .............................................................................. 105 2017 annual report 5 TRENITALIA S.p.A. Income statement disclosure ............................................................................................... 125 Contingent assets and contingent liabilities ........................................................................... 131 Directors’ and statutory auditors’ fees ................................................................................... 134 Audit fees .......................................................................................................................... 135 Management and coordiation ............................................................................................... 135 Related parties ................................................................................................................... 136 Guarantees ........................................................................................................................ 141 Events after the reporting date ............................................................................................ 141 Allocation of profit for the year ............................................................................................ 142 2017 annual report 6 TRENITALIA S.p.A. Chairman’s letter Dear Shareholder, 2017 was marked by a moderate, but widespread global recovery. Against this background, Trenitalia’s performance improved with revenue up by 4.72% to above €5.3 billion. This led to a gross operating profit of €1.585 billion (+13.71%) and a profit for the year twice that of 2016. Excellent results were achieved in both the long haul segment (+6.1%) – where competition is always fiercer, especially in terms of prices – and the regional traffic segment (+8.7%), in which management renewed the main service contracts in place, while pursuing major investment programmes to improve the efficiency of rolling stock. Indeed, in 2017, the first electric “Jazz” and diesel “Swing” trains and the “Vivalto” double-decker carriages were delivered and the contracts to purchase new “Rock” and “Pop” trains also began. These trains are designed and built in Italy and their construction will benefit Italy’s entire economic system. Their roll-out is expected to begin in 2019. The aim of this innovation process – which has resulted in investments exceeding €7 billion over the past six years – is to ensure increasingly better comfort for our passengers – who are always our main focus – by improving service quality, punctuality, safety and, last but not least, the economic, social and environmental sustainability of Trenitalia’s fleet, in line with its mission. We believe that the quality of the services provided, the protection of the environment, the safeguarding of our workers’ health and safety and energy efficiency are strategic elements in the development of our business. This scenario includes the purchase of the Britain-based NXET (now Trenitalia c2c) to seize growth opportunities on an international scale and Trenitalia’s partial demerger, which entailed the transfer of its Cargo division to Mercitalia Rail S.r.l. as of January 2017. This transaction is part of FSI group’s 2017-2026 business plan to relaunch the Cargo business via a specific