Annual Report at December 31, 2017 Contents
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Annual Report At December 31, 2017 Contents 2 Letter to the Shareholders 4 Key figures and general information 5 The SEA Group 6 SEA Group structure and investments in other companies 8 Corporate Boards 9 2017 Key Financial Highlights & other indicators 11 2017 Directors’ Report 12 Significant events in 2017 14 Economic overview 17 Regulatory framework 20 Operating and financial overview 20 Traffic data 21 Income Statement 26 Reclassified balance sheet 28 Net financial position 28 Reconciliation between equity of the Parent and consolidated equity 29 SEA Group investments 31 Subsequent events 32 Outlook 33 Operating performance - Sector analysis 34 Commercial Aviation 41 General Aviation 42 Energy 45 Risk Management Framework 54 Main disputes outstanding at December 31, 2017 59 Other information 72 Corporate Governance System 77 Board of Directors’ proposals to the Shareholders’ meeting 77 Shareholders’ Meeting motions 78 SEA Group - Consolidated Financial Statements 79 Financial Statements 85 Explanatory Notes to the Consolidated Financial Statements 155 Auditors’ Report 161 SEA SpA - Separate Financial Statements 162 Financial Statements 168 Explanatory Notes to the Separate Financial Statements 238 Board of statutory auditors’ report to the shareholders’ meeting of SEA – Società Esercizi Aeroportuali S.p.A. 242 Auditors’ Report 248 Glossary Annual Report 2017 • 1 Letter to the Shareholders Dear Shareholders, represent the end of a long pe- 2017 passenger number growth riod of difficulty that began in of 14.1%, a gain of more than Our company enjoyed an excel- 2008 with the de-hubbing by Al- twice the Italian national average lent year in 2017, in terms of both italia and the dawn of a new era and outperforming the European traffic volumes - up by 9.0% for in which the Milan airport system average by 7.9 percentage points, passengers and by 7.1% for cargo, and its management company can finally approaching the previous compared to the Italian national legitimately aim to compete with high reached in 2007 and 27% averages of +6.4% and +9.2% re- Europe’s foremost airports, in above the low of 2009, having suc- spectively - and of operating re- keeping with the renewed ambi- ceeded in compensating for the sults, with an increase in EBITDA tions of the local community and structural loss of the portion of from Euro 239.8 million to Euro its metropolitan centre. its short- and medium-haul traffic 264.0 million (net of non-recurring (over 7 million passengers in 2007) revenues and costs), almost entire- Malpensa began a new chapter linked to Alitalia’s previous role as ly offsetting the impact of the im- in its history in 2017, ending its hub carrier. The process took a pairment of the Alitalia receivables traditional dualistic relationship decade to complete and was not and other non-recurring items. with Linate and returning to its an easy one. It was supported by originally intended role as a cru- efforts to promote Milan from The results for the year are also cial component of northern Italy’s 2015 and was also made possible significant as marking a funda- infrastructure serving both short by SEA’s commitment to revamp- mental shift, the effects of which and long-haul passenger and car- ing its infrastructure - beginning will persist for some time. They go routes. Malpensa reported for with the radical restyling of Ter- minal 1 - by boosting operating efficiency and by cultivating re- lationships with new carriers and routes. Today Malpensa is well po- sitioned to lay claim to being one of Europe’s foremost “point-to- point” intercontinental airports. Its competitive strengths include the number of airlines serving it, the lower level of concentration of these airlines than at most com- peting airports (the main airline carries approximately one-third of its passengers), its extensive cata- logue of routes and destinations and its significant potential for additional development before reaching the levels of saturation typical of many other large and mid-size European airports, which not infrequently prove highly con- straining for growth. Malpensa is Annual Report 2017 • 2 Europe’s fifth-largest cargo air- sustainable, high-quality devel- tinues, in constant pursuit of the port and in 2017 it accounted for opment. The quality of growth is best possible balance between 52% of the total volume of goods particularly focused on - as also opportunities for airport growth handled by Italian airports. shown by this Annual Report - a valuable means of connecting which for the first time includes, communities and providing em- As Malpensa grows, Linate is as required by law, a Non-Financial ployment - and strict compliance consolidating its traffic volumes Report dedicated to social, envi- with environmental restrictions. (while posting a 1.4% decline in ronmental and governance sus- The process of drafting and ap- passengers tied to the transfer tainability, alongside the Financial proving the Malpensa Master Plan of several Continental routes to Statements. is based on a transparent, partici- Malpensa). It remains essential to patory process that is destined to business traffic and continues to The aspects of sustainability con- yield positive results. rank among the best-connected sidered extend to all of the crucial city airports in Europe located in a dimensions of an airport’s exist- The positive trends witnessed in major metropolitan centre. ence, starting with the fundamen- 2017 continued in the first part of tal value of security. The company the new year. New domestic, Euro- Considerable investments contin- remains committed to refining its pean and intercontinental routes ued to be rolled out in 2017, for methods of measuring the actual have been announced and the a total spend of Euro 85.0 million, and perceived quality of our infra- plan to develop Air Italy is soon to evenly divided between the two structure and the related services, be launched, with the potential to airports. Investments are set to while continuing to improve them. propel Malpensa to regain its posi- proceed in the coming years in ac- In 2017 progress was made on al- tion as an intercontinental hub in cordance with the company’s stra- most all indicators, but there is the coming years - a phenomenon tegic plans: the restyling of Linate always room for further improve- which could entail a significant has already begun and is scheduled ment. rise in passenger numbers. for completion by 2020, Malpen- sa’s Terminal 2 will be renovated Collaborative, concerted and mo- In conclusion, the efforts made and a further cycle of renovations tivated shareholders are also es- by SEA - even in difficult years - to will be carried out at Terminal 1, in sential to sustainable growth. The protect and develop a harmonious addition to the initiatives essential company has set itself challenging airport system with the capacity to ensuring that flight and passen- organisational goals, based on for sustainable growth, capable ger accommodation infrastructure investing in individual responsi- of living up to the ambitious goals remains constantly up-to-date and bility in view of trust, proactive and potential of its community, the cargo business is able to con- collaboration and a result-orient- bore fruit in 2017 - in terms of tinue to grow. ed approach, which are expect- both operating results and traffic ed to yield measurable results in growth. Now the challenge is to Such growth is entirely compatible terms of the quality of the overall ensure excellence, to promote the with the company’s financial situa- performance and the sustaina- development of the Milan metro- tion. Our steadily rising operating bility of results over the medium politan area and to provide Lom- revenues permit the self-funding term. Within the framework of bardy with increasingly efficient, of investments, while also paring constant, transparent dialogue accessible and well-connected air- back debt and without compro- with trade unions, SEA remains ports, to help meet the challeng- mising dividend payouts. EBITDA committed to training (dedicating es posed by globalisation and to was in fact driven by the rise in rev- over 57,000 hours, equivalent to boost the region’s attractiveness enues generated by both aviation training for 33 people every day), and hospitality. SEA has prepared (+Euro 33.0 million) and non-avia- improving working conditions and itself for this challenge above tion (+Euro 9.2 million) business, safeguarding company welfare. all through the dedication of its combined with a containment of The many facets of this commit- workers, who deserve the compa- operating costs. Operating costs - ment include measures aimed at ny’s gratitude for the results that adjusting for components tied to meeting old and new needs and have been achieved thus far and the increase in volumes and public initiatives that seek to set a better that will certainly continue into fees - were in line with 2016. work-life balance. the future. SEA is committed to building on As part of this same process, dia- its current success in pursuit of logue with local communities con- Annual Report 2017 • 3 Key figures and general information KEY FIGURES AND GENERAL INFORMATION The SEA Group The SEA Group manages the Mal- ◼ Terminal 2 is easyJet’s main the restyling project, which is to pensa and Linate airports under a base of operations in Europe, involve thorough renovation of 40-year agreement signed by SEA serving a broad network of des- the entire airport. and the Italian Civil Aviation Au- tinations. Following the exten- ◼ Milan Linate Prime, an airport thority in 2001. The Milan airport sion of the rail network, which managed by SEA Prime SpA, system consists of the following already connected Milan with a subsidiary of SEA SpA. Ded- airports: Terminal 1, Terminal 2 can now icated to general aviation, its also be reached by train.