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Transportation Solutions Business Unit

New orders acquired during the year totalled €643 million, compared to €1,256 million in the previous year, which included the Honolulu contract.

Generally, the global macroeconomic scenario is still affected by the financial crisis, leading to delays in several projects, and the relevant development programmes do not fully cover the cost of the main projects to expand the transport systems. Demand for technological solutions continues to grow in the driverless underground railway business segment.

Key events of the year are described below.

Perfomance of the Transportation Solutions Business Unit
(€ 000) 31.12.2012 31.12.2011 Change
New orders
642,712 1,256,058 (613,346)
Order backlog 3,388,258 3,442,345 (54,087)
Revenue 564,853 512,267 52,586
Operating profit (EBIT) 69,130 55,009 14,121
R.O.S. 12.2% 10.7% +1.5 p.p.
Operating working capital (129,106) (172,411) 43,305
Research and development 1,695 1,425 270
Headcount (no,) 631 600 31
(The amounts shown in the table include inter-segment transactions).

ITALY

New orders totalled €98 million and comprise: orders and variations related to Line 1 of the Naples underground as part of activities on the Dante-Garibaldi section for the development of the temporary operating control room (shuttle); the upgrade of the definitive operating control room and for the safety project for the entire line for a total of €23 million; the settlement agreement for Line C of the Rome underground (€36 million) and the extension of Line B1 Conca d’oro-Ionio (€3 million). A new contract was won in relation to the Italian high-speed railway for the Brescia- Treviglio section (€12 million) and orders for the Rome- Naples line (€11 million).

With respect to the contract won for Line 4 (S. Cristoforo- Linate) of the Milan underground, the financing agreements for the joint venture comprising Impregilo (lead contractor), Astaldi, AnsaldoSTS, AnsaldoBreda, Sirti and ATM Milano have not yet become effective but are expected to in the first half of 2013. However, based on the obligations taken on as part of the ancillary agreement and its appendices, the joint venture commenced the relevant activities.

REST OF EUROPE

In Denmark, new orders totalled €120 million in relation to variations and price revisions on existing contracts. Ansaldo STS Group was short-listed for the construction of the city of Aarhus’ first urban tram system; the tender is expected to be announced before the end of 2013.

NORTH AFRICA AND MIDDLE EAST

A €16 million order was acquired for the operation and maintenance of the APM Princess Noura University driverless underground in Riyadh, constructed and rolled out this year. Ansaldo STS was successfully short-listed for the Riyadh driverless underground.

The winner is expected to be announced in the first half of 2013.

The offer for the Lusail tramway has been submitted, featuring the TramWave® overhead line-free solution.

The winner is expected to be announced in early 2013.

ASIA PACIFIC

New orders acquired in Australia came to €408 million relating to specific contracts under the master agreement with the Rio Tinto mining company.

The largest amount relates to the “Autohaul” project totalling AUD317 million (approximately €253 million).

In India, certain underground projects are scheduled for the short- and medium-term and potential partnerships are being evaluated with local contractors.

Interest in the company’s innovative overhead line-free “Tramwave” solution is strong in China. A strategic agreement was reached in July with the China-based CNR Dalian and the Taiwan-based General Resources Company, licensing the TramWave® technology to the joint venture that will be formed by CNR Dalian and General Resources Company.

The innovative TramWave® solution offers overhead line-free electric power supply and was developed and patented by Ansaldo STS for use in urban transport systems, eliminating the visual impact of traditional overhead lines.

It is hoped that this agreement will lead to a profitable and long-term collaboration so that the many opportunities offered by the Chinese tram market can be exploited.

This agreement is also an ideal starting point for more far-reaching collaboration in the mass transit sector with the same partner companies.

Revenue generated by the Transportation Solutions Business Unit in 2012 amounted to €564,853 thousand, compared to €512,267 thousand in the previous year.

Volumes generated in Italy accounted for 43% and those generated abroad for 57%, with 57% of volumes in the underground sector. Production mainly related to the following projects: Line C of the Rome underground, high-speed railways, Copenhagen, the Milan underground, the Genoa underground, Alifana, Line 6 and Line 1 of the Naples underground, the Brescia underground, the Riyadh underground, the Honolulu underground and the Australian Rio Tinto project.

 

The key production activities are summarised below.

ITALY

HIGH SPEED RAILWAYS
Interconnections continued to be rolled out and works performed under warranty on those lines already in operation in the high-speed line.

With respect to the Rome-Naples section, arbitration between TAV and IRICAV UNO consortium was concluded in June, with the award in favour of IRICAV UNO. The customer has stated its intention to appeal against the award.

Negotiations are underway for a settlement to finalise the outstanding litigation.

The arbitration between RFI/TAV and the IRICAV DUE consortium was also concluded in March for the Verona-Padua section; under the award, RFI/TAV shall partially compensate IRICAV DUE and the 1992 Agreement is still valid and in effect.

RFI has already paid IRICAV DUE the amount set in the award but has not yet forwarded IRICAV DUE the definitive project for the section in order to commence the execution plan.

GENOA UNDERGROUND
The De Ferrari/Brignole functional section was opened to the public in December. A variation enabling the conclusion of works in May 2014 is under approval by the Genoa municipality.

ALIFANA REGIONAL LINE
Following the halt of all activities related to the Piscinola-Aversa section, the Group deemed it necessary to redetermine and agree a suspension of the physical activities so as not to incur extra costs.

With reference to the Piscinola-Capodichino section, as the customer failed to fulfil its commitments, a review of the claims was commenced and there is a court order imposing the customer to pay outstanding receivables.

NAPLES UNDERGROUND LINE 6
The progress of works for the year was in line with the schedule; it mainly comprised the continuation of civil works on the sites related to the sixth Rider (Mergellina-Municipio functional section) and progress on the testing of the signalling system’s trackside equipment.

Specifically, the civil works on the stations A. Mirelli and S. Pasquale are at an advanced stage (the excavation has reached the bottom and construction has commenced of the internal structures), while the Chiaia and Municipio stations are still subject to various issues compromising the normal progress of the executive stage.

The contract manager delivered the works for the technological systems in November, thus enabling the commencement of the procurement process which will take place in the first few months of 2013 with a view to having the main systems ready for testing by year end.

ROME UNDERGROUND LINE C
In 2012, CIPE (Interministerial economic planning committee) approved funding for the settlement agreement between the parties and the T3 section for which the contractual formalisation is yet to take place.

With reference to the progress of on-site activities, testing (including integrated system testing) is substantially complete on the Pantano-Torre Gaia section. Integrated system testing is underway for the Torre Gaia-Centocelle tunnel section, which is the first to be rolled out. Certain variations have become necessary for Metro C, reducing work shifts dedicated to testing and pre-operational activities. Consequently, Roma Metropolitane and Metro C are working on a new roll-out plan which foresees the above activities and which provides for the launch of the pre-operational stage by the general contractor in the first part of 2013 directly on the Pantano-Centocelle section, to avoid efficiency losses.

MILAN UNDERGROUND LINE 5
Assembly activities have been completed for the functional section from Bignami to Zara and the systems rolled out. The ATC proof tests and final integrated system testing have been completed. The functional section will be rolled out in February 2013.

No particular issues have arisen in relation to the activities to complete the Zara to Garibaldi section and its roll-out is slated for the end of 2013.

With reference to the line’s extension from Garibaldi (excluded) to the San Siro station, the executive design is substantially complete and orders for all main supplies have been issued. Testing of the signalling and telecommunications materials is nearing completion. Due to delays in delivery from the customer, there is presently a difference between the final date for the work compared to the contractuallyagreed programme. An agreement has been reached with the Milan municipality for a situation that, although on a smaller scale (skipping some stations), will allow the partial opening of the Garibaldi to San Siro line by the contractually-agreed date of April 2015 (in time for EXPO 2015) and the completion of all works and the opening of the complete line by October 2015.

NAPLES UNDERGROUND LINE 1
During the year, the technological works were completed in relation to the Toledo station opened in September.

Activities are also underway on the other sites that will lead to the completion of the Dante-Garibaldi section in its final configuration, except for the Municipio and Duomo stations, by the end of 2013.

BRESCIA UNDERGROUND
The procurement and assembly activities have been completed and the integrated system testing for the start-up (first year of commercial operation) configuration is substantially complete. Performance testing, which involves a greater number of vehicles, is yet to be completed. The system is at a pre-operational stage and ministerial approval for the start-up of commercial operations will be received in March 2013.

REST OF EUROPE

THESSALONIKI UNDERGROUND
Technical meetings continued with the customer, Attiko Metro, to formalise the technical acceptance of the compliance matrix of the CBTC signalling system, and concluded positively in December. With respect to the general final design, the customer has officially approved the Greek version of the Telecom system and partially approved that of the Security Management System (SMS); the English version for the third rail system has been partially approved and the approval procedure for depot equipment is almost complete.

A remedy of petition was formally brought before the Greek court at the end of November, representing the Parent’s claim for damage incurred during the design stage. Moreover, an official claim was lodged in October with the joint venture for the ATC signalling system proposed during the bidding stage and never accepted by the customer. Internal consultations and analyses also continued with a view to agreeing new timelines between the members of the joint venture.

COPENHAGEN
All detailed design documentation (“DD”) was issued in the fourth quarter of 2012. DD milestones for the CMC (civil works for the depot) and passenger vehicles subsystems have been reached.

The supplier of civil works for the depot has completed the activities related to the foundations of buildings E (internal washing) and F (external washing). Activities are underway for the construction of buildings A, B, C and D (electricity substation, offices and depot workshop), cable laying and piping.

The first factory-based testing of power supply and depot workshop equipment has been successfully completed.

NORTH AFRICA AND MIDDLE EAST

RIYADH AUTOMATED PEOPLE MOVER SYSTEM (APM)
The building design activities have been completed, as have the interfacing activities with the civil works. All monitoring activities have also been completed, as well as the key activities for roll-out.

The system has been running automatically since September 2012; at such time, following the signing of the contract, Ansaldo STS Group commenced operation and maintenance activities.

As well as activities necessary to consolidate system performances, the roll-out of the automated depot equipment (AMR: automatic meter reading, MMIS: manmachine interface systems and the washing plant), the roll-out of the automatic operation of some vehicles (five vehicles were not available for the implementation) and integrated system testing are yet to be completed.

Once these pending issues have been resolved and system performance established, system demonstration activities necessary for the system’s handover can commence by mid-2013.

AMERICA

HONOLULU RAIL TRANSIT PROJECT
Approval of the first of three planning stages (definitive design) is underway and activities related to the second stage (interim design) are commencing.

The customer officially approved the works schedule in November 2012.

Subcontract agreements between Ansaldo Honolulu JV and key electrical traction, telecommunications and security and fire prevention partners have been signed in recent months.

ASIA PACIFIC

TAIPEI UNDERGROUND CIRCULAR LINE
The customer divided the last civil works package, which had not yet been awarded, into two contracts; only the first of these has been awarded.

An extension of time was agreed with the customer at the end of 2012 and a new CBS (contract baseline schedule) will be drawn up in the first few months of 2013.

AUSTRALIA
Production of the reporting period related to projects under the master agreement with Rio Tinto (RAFA). The key production activities of the year related to RCE283, Hope Down 4, Driver Assist, OSS (Overspeed Sensor System) and ECP (Electronically Controlled Pneumatic brakes). Start-up activities are proceeding as scheduled for the AutoHaul and ECP Installation Phase projects.

 

Operating profit (eBIT) Operating profit (eBIT) of the Transportation Solutions Business Unit for 2012 came to €69,130 thousand (12.2% as a percentage of revenue), compared to €55,009 thousand (10.7% as a percentage of revenue) in the previous year.

This increase is due to the increased volume and the different mix of contracts in the two years.

Operating working capital at 31 December 2012 was negative by €129,106 thousand, compared to a negative €172,411 thousand at 31 December 2011. The increase is mainly due to the change in net work in progress.

Research and development expense taken to profit or loss totalled €1,695 thousand, compared to €1,425 thousand in the previous year.

The headcount at 31 December 2012 numbered 631, up 31 employees on the 600 employees at 31 December 2011. This rise is linked to the increase in volumes, particularly in Australia.

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> 2012 Sustainability Report for further information