Financial position, financial performance and cash flows of Iren S.p.A.

Income statement

(*) Change of more than 100%

Revenue

Total revenue for Iren S.p.A. was 247.3 million euro (upwards compared to the 231.9 million euro in 2020), primarily relating to corporate service activities provided to Group companies.

Operating expenses

Operating expenses amounted to 228.4 million euro, up compared to the 2020 figure (219.0 million euro) due in particular to costs for services, attributable to the management of staff activities in favour of Group companies and, specifically, the management of information systems. This increase in the cost base is reflected in the revenue trend described above.

Personnel expense rose as a result of charges for early retirement schemes and the adjustment of actuarial estimates for certain existing benefits.

Depreciation, amortisation, provisions and impairment losses

Depreciation, amortisation, provisions and impairment losses amounted to 36.3 million euro (31.4 million euro in 2020). Depreciation and amortisation, which constitute almost all of the item, increased due to the release in the operational phase of the recent and significant investments in the IT sector.

Financial income and expense

Net financial income came to 235.2 million euro.

Analysing the breakdown of the items, financial income, equal to 288.8 million euro, mainly includes dividends from subsidiaries for 235.3 million euro (- 1.1 million euro compared to 2020) and interest income on loans to subsidiaries and associates for 51.1 million euro, overall unchanged compared to 2020.

Financial expense was 53.6 million euro, and refers essentially to interest expense on bonds. The significant decrease with respect to the comparative figure, when it stood at 65.8 million, is largely attributable to the decrease in the average cost of financial debt; in 2020, there were also charges deriving from the closure of derivative positions outside hedge accounting for 6.4 million.

Profit before tax

As a consequence of the trends illustrated above, the profit before tax was 217.8 million euro, up compared to 205.9 million in 2020.

Income tax benefit

The parent recorded an income tax benefit (1.1 million euro), owing to a negative taxable income deriving from the non‐taxability of 95% of the dividends received.

Profit for the year

Including taxes for the year, there was a profit of 218.9 million euro.

Statement of Financial Position

(*) Change of more than 100%

⁽¹⁾ For a reconciliation of the reclassified statement of financial position with that of the financial statements, please refer to the specific annex to the Separate Financial Statements.

 

The main items of the statement of financial position subject to significant changes in the year are commented on below.

Non-current assets at 31 December 2021 amounted to 2,811.1 million euro, up compared to 31 December 2020, when they were 2,793.2 million euro. The increase (+17.9 million euro) was mainly due to the effect of the following:

• investments in property, plant and equipment and intangible assets (+49.9 million euro), mainly relating to motor vehicles, property redevelopment and IT implementations, and depreciation and amortisation (-36.3 million euro) in the year;
• the recognition of right-of-use assets in application of IFRS 16 - Leases for 4.3 million euro, mostly relating to lease contracts from Group companies for buildings used for management activities as well as vehicles.

The increase in Net Working Capital, which was positive at the end of 2021 (27.3 million euro), is attributable primarily to the Group's VAT positions with its subsidiaries and, to a lesser extent, to receivables due from them in connection with the corporate services provided.

"Provisions for Risks and Employee Benefits" amounted to 31.1 million euro and decreased by 1.4 million euro compared to 31 December 2020, largely as a result of disbursements in the year of the provision set aside for early retirement of personnel.

Equity amounted to 2,071.3 million euro, compared with 1,971.9 million euro at 31 December 2020 (+99.4 million euro). The change in the year refers to profit for the year (up 218.9 million euro), dividends paid (down 121.9 million euro), the hedging reserve (up 6.6 million euro), repurchases of treasury shares (down 4.1 million euro) and other minor changes (down 0.1 million euro).

Net financial debt at the end of the year was 743.7 million euro, a decrease of 8.6 million euro compared to 31 December 2020 (-1.1%). For more details please see the analysis of the statement of cash flows presented below.

 

STATEMENT OF CASH FLOWS OF IREN S.P.A.

Change in net financial debt

The statement below details the movements in the Group's net financial debt that occurred in the year.

(*) Change of more than 100%

The change in financial debt derives from the following determinants:

• operating cash flow of -55.3 million euro, influenced by the performance of net working capital;
• cash flows from investing activities (+186.0 million euro), which include dividends received from subsidiaries net of investments for the year;
• cash flows from own capital amounting to -125.9 million euro, which includes dividends paid (-121.8 million euro) and the repurchase of treasury shares (-4.1 million euro);
• the item "Other changes", amounting to +3.8 million euro, includes financial income and expense received and paid, the change in the fair value of derivative instruments hedging interest rate risk and the effect of the recognition of new lease agreements falling within the scope of IFRS 16.

We can note finally that the statement of cash flows prepared according to the format of a change in cash and cash equivalents is presented in the Separate Financial Statements at 31 December 2021.

The table below reconciles the equity and profit for the year of the Parent Iren S.p.A. at 31 December 2021 and 31 December 2020 with those of the consolidated financial statements.

“Elimination of intra‐group profits” refers to the elimination of capital gains from the sale of business units or companies within the Group. In particular, it is worth noting the transaction related to the Genoa integrated water cycle carried out by the former AMGA (positive effect of 7.4 million euro on the income statement and negative by 23.9 million euro on ’ Equity).