TELECOM ITALIA GROUP
• Income results improved
despite write-downs of investment holdings
• Significant efficiency gains alongside major 1,328 million euro cash cost reduction
• Profitability up, debt down
• Disposals plan completed ahead of target
• Adopted a Group Code of Ethics and a Company Code of Behavior with regard to insider dealing
• Revenues: 22,440 million euros
(+0.8% compared with the first nine months of 2001;
+3% excluding exchange rate differences; +3.7% inclusive of changes to the area of consolidation)
• Gross operating result: 10,414 million euros
(+3.7% compared with the first nine months of 2001;
+5% excluding exchange rate differences and changes to the area of consolidation)
+4.6% gross operating result for the third quarter of 2002 compared with the third quarter of 2001
• Operating income: 5,706 million euros
(+11.1% compared with the first nine months of 2001;
+10.5% excluding exchange rate differences and changes to the area of consolidation)
+12.5% operating income for the third quarter of 2002 compared with the third quarter of 2001
• Parent company net income: 1,246 million euros
(+1,574 million euros compared with the first nine months of 2001)
• Free cash flow from operations: 6,588 million euros
(+2,995 million euros)
• Net financial borrowings down 4,278 million euros compared with year-end 2001 to 17,664 million euros, in line with target
• Debt composition further improved:
83% of total debt (64% at year-end 2001) due beyond one year
TELECOM ITALIA SpA
• Revenues: 12,561 million euros
(-1.5% compared with the first nine months of 2001, principally resulting from price cuts brought in by regulatory policy)
• Major growth in innovative and broadband services
• Gross operating result: 5,585 million euros
(+0.5% compared with the first nine months of 2001)
• Operating income: 3,101 million euros
(+3.2% compared with the first nine months of 2001)
• Net income: 94 million euros
(for the first nine months of 2001 a loss of 308 million euros)
• Net financial borrowings down to 15,849 million euros
• Company Shareholders´ Meeting called to decide upon the proposal to distribute a portion of the 2002 dividend in advance, through the withdrawal of a total amount of 1 billion euros from reserves
• Dividend policy unchanged
At today’s meeting the Telecom Italia Board of Directors, chaired by Marco Tronchetti Provera, examined and adopted the Group and Parent company third-quarter accounts at September 2002[1].
Group earnings and margins during the first nine months of 2002 recorded a substantial improvement compared with the first nine months of 2001.
Consolidated net income recorded a profit of 1,246 million euros, an increase of 1,574 million euros compared with the 328 million euro loss registered for the first nine months of 2001.
This increase may principally be ascribed to the following factors:
• improved operating income (+568 million euros, +11.1%)
• improved balance of long-term and equity investment income and charges (+299 million euros), plus an improved balance of extraordinary income and charges (+975 million euros), inclusive of capital gains from the disposal of equity interests (2,093 million euros), in addition to 1,799 million euros in equity investment write-downs and goodwill regarding Is TIM Turkey, Telekom Austria, Matrix, Corporacion Digitel and Netco Redes.
In the third quarter of 2002 the Group posted a consolidated net profit of 476 million euros, a 1,287 million euro improvement over the 811 million euro loss recorded for the third quarter of 2001.
Consolidated revenues for the first nine months of 2002 amounted to 22,440 million euros, an increase of 0.8% compared with the same period in 2001. Excluding the negative effect of exchange rate differences, the growth rate corresponded to 3%; changes to the area of consolidation[2] corresponded to 0.7%, which brings growth up to 3.7%.
In the third quarter of 2002 revenues amounted to 7,451 million euros, a fall of 0.9%; however, taking into account changes to the area of consolidation, growth rises to 1.3%.
The Group’s gross operating result corresponded to 10,414 million euros, a rise of 375 million euros (+3.7%) compared with the first three quarters of 2001, and amounting to 46.4% of revenues (45.1% for the first nine months of 2001). Excluding the effects of exchange rate differences and changes to the area of consolidation the figures posted a 5% rise.
In the third quarter of 2002 the gross operating result amounted to 3,606 million euros (3,448 million euros in the third quarter of 2001), or 48.4% of revenues (45.9% in the third quarter of 2001).
Operating income of 5,706 million euros was up by 568 million euros compared with the first three quarters of 2001 (+11.1%). Excluding the effects of exchange rate differences and changes to the area of consolidation, growth of 10.5% was registered, accounting for 25.4% of revenues (23.1% for the first nine months of 2001). The rise in the headline figure was influenced by higher gross operating margins and lower depreciation.
Third quarter 2002 operating income amounted to 2,044 million euros (1,817 million euros in the third quarter of 2001), or 27.4% of revenues (24.2% in the third quarter of 2001).
Free cash flow from operations for the first nine months of 2002 was equal to 6,588 million euros (+2,995 million euros). In the third quarter of 2002 it corresponded to 2,438 million euros (+1,487 million euros compared with the third quarter of 2001).
Consolidated net debt fell by 4,278 million euros compared with the end of last year (21,942 million euros), meeting plan targets, and corresponded to 17,664 million euros after dividend payout (3,247 million euros).
Compared with 30 June 2002 this represented a 3,436 million euro reduction.
The improved debt figure at 30 September reflected disposals undertaken during the first nine months of the year, after taking into account associated charges, worth an aggregate of 3,609 million euros. This included the disposals of Auna (1,998 million euros), Bouygues Decaux Telecom (750 million euros), Mobilkom Austria (756 million euros), Lottomatica (212 million euros), Sogei (176 million euros), Telemaco Immobiliare (219 million euros), 9Telecom (-529 million euros) and miscellaneous minor disposals (27 million euros).
The proportion of debt reaching maturity beyond one year registered a significant rise, up from 64% at 31 December 2001 to 83% at 30 September 2002, as a result of the Telecom Italia SpA 2,500 million euro bond issue on 1 February 2002. This issue was part of the Global Note Program.
BUSINESS UNITS/OPERATIONS
Domestic Wireline
Please see the remarks below
Mobile (TIM Group)
Please see the press release issued yesterday.
Internet and Media (Seat Pagine Gialle Group)
Please see the press release issued yesterday.
Information Technology Market
The IT Market BU began operations in a reorganized form on 22 October 2002, divided into functions with responsibility for planning, development, administration and commercialization of IT products/solutions for the following target markets:
Government: central and local government market
Finance: banking and the insurance company market
Innovation, New Markets and Management Coordination
The following events had a bearing on the IT Market company area of consolidation:
- Disposal in July 2002 of 100% of the equity in Sogei SpA to the Italian Ministry of the Economy and Finance – the Department for Fiscal Policies, transferred on 31 July 2002. In consequence, Sogei is consolidated solely in regard of economic data referring to the first half of 2002.
- Disposal in July 2002 by Consiel of an equity interest in associated company Jmac Consiel SpA to Jmac-JMA Consultants Inc.
- Stipulation of a sales agreement on 2 August 2002 by Finsiel for the disposal of 100% of the capital of Consiel SpA to World Investment Partners S.A., with transferral of shares taking place on 3 October 2002.
- Foundation of Agrisian – Agricultural Consulting and Services S.c.p.a. on 2 August 2002.
Revenues for the first nine months of 2002 suffered a drop of 46 million euros compared with the same period during the preceding year as a result of lower turnover generated principally by Finsiel, Consiel and Banksiel, a consequence of reduced volumes of business and price reductions for major clients; offsetting this was growth registered by Intersiel, TeleSistemiFerroviari and Webred, associated with invoices for current operations undergoing testing during the period, and revenues generated by Insiel, Centrosiel and Sogei regarding the acquisition of new orders and new clients.
The gross operating result (71 million euros) and operating income (47 million euros) fell as a result of the price cuts mentioned above, and of the renewal of tenders on lower contractual payment terms. This was only partially offset by acquisition cost reductions and efficiency gains.
Compared with the corresponding quarter in 2001, the third quarter of 2002 registered revenues that were 26 million euros lower, continuing the trends of the first nine months of the year.
Information Technology Group
During the third quarter of 2002 the IT Group operations area of consolidation changed following the addition of the Webegg Group, which was acquired at the end of June, and the exit of Teco Soft España, which was sold off on 31 July 2002. This company was fully consolidated for the first half of 2002.
Lower revenues were posted following revised pricing terms with the Domestic Wireline Business Unit.
South America
(Please see yesterday’s press release for information on TIM subsidiary operating units)
In May 2002 the International Operations unit was disbanded and Telecom Italia-associated companies and company units were transferred to Domestic Wireline and to the central International Investments central management unit; South American region companies are now overseen by Latin America Operations.
In the first nine months of 2002 the Entel Chile Group and the Entel Bolivia Group, the Telecom Italia Latin America company and the Telecom Italia South America unit recorded revenues of 1,036 million euros, an 11.5% reduction compared with the same period in 2001, wholly resulting from currency fluctuations. Stripping out these fluctuations, revenues would have registered growth of 1.5%, as a result of growth at Entel Chile (+8.3% in local currency). This was offset by the effects of liberalization of the Bolivian market, in addition to suspension of the Management Fee contract with Telecom Argentina from 1 April 2002.
The gross operating result, corresponding to 346 million euros, posted a 56.5 million euro fall (-14.1%) compared with the corresponding period in 2001, of which around 50 million euros may be attributed to the exchange rate fluctuations regarding Chile and Bolivia. Excluding exchange rates, the reduction in gross operating result would have been 2%, following the withdrawal of the management fee paid by Telecom Argentina and the loss of profitability in Bolivia; these elements were offset by improved results in Chile, where higher profitability was registered from wireless operations.
Operating income reflected the gross operating result performance.
* * *
Events occurring after 30 September 2002
• On 1 October 2002 Telecom Italia entered into an agreement with News Corporation to establish a sole single-platform Italian Pay-TV company, to be formed through the merger of Stream and Tele+ operations. Under the agreement Telecom Italia will have a 19.9% stake in the sole platform, and News Corporation shall control the remaining 80.1%. There are provisions for Telecom Italia and News Corporation to underwrite the contract for acquisition of Tele+, alongside an exclusive agreement with News Corporation to regulate relations between the two partners in the sole television platform. On closure of the deal, Telecom Italia shall pay a price corresponding to 31.84 million euros for its 19.9% stake in Tele+. Telecom Italia is to write off 147 million euros in trade receivables accrued by Group companies from Stream up to the end of 2002 (a figure wholly covered by provisions allocated in the 2001 accounts). At the same time News Corporation is to write off receivables and loans to Stream for an equal sum. The operation will result in overall gross charges of around 276 million euros for Telecom Italia, which are almost wholly covered by provisions made at 30 September 2002. Execution of this contract is conditional upon the receipt of approval from the relevant authorities.
• On 7 October 2002 TIM finalized the preliminary contract, signed on 7 August 2002, with the shareholders of Blu SpA for acquisition a 100% equity stake in Italy´s number four GSM carrier. The purchased company shall subsequently be amalgamated into TIM SpA. Authorization for this move has already been issued by the Italian Competition and Markets Regulatory Authority, after a favourable opinion was expressed by the Communications Regulatory Authority. The provisional price for these shares, as paid by TIM to Blu SpA shareholders, is 18 million euros; the final price, and in consequence settlement of the balance, shall be undertaken at a later date on the basis of the certified balance sheet situation at the date that the contract becomes effective.
• Progetto Tiglio. The Telecom Italia Group transferred assets worth around 1,360 million euros to Tiglio I and to Tiglio II (of which approximately 50 million euros worth belonging to Seat Pagine Gialle; the Group also transferred around 840 million euros in real estate assets to Emsa following the split of the Im.Ser company, as well as transferring around 470 million euros in additional real estate assets). During the 2002 financial year the operation will have a positive pre-tax impact on earnings (gross capital gains plus extraordinary dividends) of 221.6 million euros for Telecom Italia SpA, and of 4.6 million euros for Seat Pagine Gialle. The financial impact on the net consolidated financial position in 2002, prior to tax, corresponds to 326.9 million euros, of which 39.8 million euros regarding Seat.
• As part of Telecom Italia’s share buyback operation, authorized by the 7 November 2001 Telecom Italia Shareholders’ Meeting in ordinary session, in the period between 1 October and 7 November a total of 4,448,000 savings shares were purchased at an average price of 5.10 euros per share for an investment corresponding to 23 million euros, as were 301,000 ordinary shares at an average price of 7.32 euros per share for an investment of 2 million euros. The aggregate number of shares bought back by the company since 1 January 2002 amounted to 27,488,000 savings shares at an average price of 5.47 euros per share, for a total of 150 million euros, and 4,748,000 ordinary shares at an average price of 8.24 euros per share for a countervalue of 40 million euros. The aggregate investment since the start of the year amounts to 190 million euros.
• Telecom Italia has completed an agreement with Pagine Italia SpA to acquire the directories assets of Pagine Utili, the company unit principally responsible for the so-called pocket pages, which have around 60,000 advertisers. The deal calls for payment of Pagine Italia by way of 214 million Seat ordinary shares held by the Telecom Italia Group, corresponding to 1.9% of ordinary share capital. The company unit, which is expected to record 2002 revenues of 57 million euros and post a gross operating result of approximately 9 million euros, is being transferred debt-free and with working capital set at zero, with its staff of around 150 people. Completion of the deal is conditional upon receipt of approval from the Italian competition authorities. Following completion of the operation, decisions shall be taken on the terms and conditions for integrating this company unit into Seat Pagine Gialle.
• On 2 October 2002 Telecom Italia launched Alice Time, an innovative ADSL offering that enables residential customers to surf the Net for less than the cost of a local call, drastically reducing Internet access costs. Telecom Italia has also rounded off its Alice range of offerings with the launch of two new solutions for advanced Web users, Alice 640 and Alice Mega. Alice 640 provides the full benefits of an always on broadband connection at a fixed price; Alice Mega includes real time high quality multimedia content capabilities, making it ideal for video conferencing and video on demand connections.
On 18 October TIM launched its commercial offerings for GSM service in Brazil. One thousand points of sale are now open in over 80 cities. Launch of this service will make it possible to realize the first Pan-South American GSM network.
• Telekom Austria On 4 November 2002 Telecom Italia International N.V. completed the private placement of 65 million Telecom Austria AG shares (corresponding to 13% of company capital) on the very day that the offer opened. A further 10 million shares were placed on 5 November by way of a fully exercised greenshoe option (corresponding to a further 2% of the company). The placement price was fixed at 7.45 euros per share, which was the upper limit of the range announced to investors. Aggregate pre-tax earnings from the sale of these 75 million shares amounted to 559 million euros. After this move, the Telecom Italia Group’s holding in Telekom Austria has been reduced from 29.78% to 14.78%.
* * *
Operating income growth in 2002 is expected to match or exceed the figure for 2001, in confirmation of the announcement made to the market on 14 February 2002.
* * *
Telecom Italia SpA
Parent company Telecom Italia SpA registered net income of 94 million euros during the first nine months of 2002. During the same period in 2001 the company made a net loss of 380 million euros. Contributing to this improved result was better operational performance compared with the first nine months of 2001 (+95 million euros; +3.2%) and the balances of long-term investment and equity holdings income and charges (+99 million euros) and of extraordinary income and charges (+797 million euros), which were offset by higher taxes on income (+589 million euros).
In the third quarter of 2002 the company registered a 294 million euro loss. The figure for the third quarter of 2001 was a 962 million euro loss.
Parent company revenues corresponded to 12,561 million euros, down 194 million euros (-1.5%) compared with the first three quarters of 2001. The majority of this reduction, the result of regulatory policy, may be ascribed to traffic, which generated 6% lower revenues, despite a 4.3% increase in minutes carried, as a result of a 9.9% drop in average traffic yield (from 4.3 to 3.8 eurocents). This reduction was contained by strong growth in innovative services. Price cuts brought in by the price cap mechanism were partially offset by price redistribution operations, higher fees for interconnection with other operators, and a greater number of subscribers to the company´s range of discount packages.
In the third quarter of 2002 revenues corresponded to 4,131 million euros (4,202 million euros in the third quarter of 2001), down by 1.7%, once again predominantly owing to the effects of regulatory policy.
The gross operating result, corresponding to 5,585 million euros, registered a 30 million euro increase compared with the first three quarters of 2001 (+0.5%), and amounted to 44.5% of revenues (43.6% compared with the same period during the preceding financial year). The improved result was achieved through reduced consumption and containment of labour costs, which offset lower revenues.
In the third quarter of 2002 the gross operating result was 1,840 million euros, a fall of 0.6%. This figure amounted to 44.5% of revenues (44.1% in the third quarter of 2001).
Telecom Italia SpA operating income for the first nine months of 2002 was 3,101 million euros, up 95 million euros (+3.2%) and corresponding to 24.7% of revenues (23.6% for the first nine months of 2001).
In the third quarter of 2002 operating income was 1,013 million euros, after registering a rise of 2.5% compared with the third quarter of 2001. This was equal to 24.5% of revenues (23.5% in the third quarter of 2001).
Net income for the first nine months of the year, at 94 million euros, reflected extraordinary provisions for the equity stake in Telecom Italia International (1,052 million euros), associated principally with charges arising from the sale to LDCom of the equity stake in 9Telecom (440 million euros), the write-down of holdings in Telekom Austria (298 million euros) and in Netco Redes (88 million euros), and cancellation of the balance sheet value of the investment in Nortel Inversora (37 million euros).
Headcount at 30 September 2002 totalled 57,951, down 3,130 on the year-end 2001 figure. This was principally the result of redundancy inducements, disposals arising from mobility operations pursuant to law no. 223/1991, and the transfer of personnel following disposal of the Company’s "Vehicle Management" unit.
Net financial borrowings of 15,849 million euros were down by 1,064 million euros compared with year-end 2001 (16,913 million euros), and down by 967 million euros compared with 30 June 2002 (16,816 million euros). The improvement on the end of last year was generated by money supply from operations (5,264 million euros), which more than compensated for investment requirements (1,921 million euros) and for the 2001 dividend payout (2,306 million euros). Net financial borrowings are inclusive of accounts payable to JP Morgan Chase (497 million euros) in the wake of the reduction of the exercise price for the options on Seat Pagine Gialle shares from 4.2 euros to 3.4 euros per share. The borrowings figure also showed an improvement following the securitization of an amount corresponding to 845 million euros at 30 September 2002. The breakdown of gross financial borrowings underwent a change following the issue of the Telecom Italia Bond launched on 1 February 2002 under the Global Note Program: the proportion of medium and long-term debt has risen from 58% at year-end 2001 to 76% at 30 September 2002.
* * *
In line with a similar operation announced yesterday to the market by the TIM subsidiary, Telecom Italia has also decided to undertake a distribution of reserves up to a maximum 1 billion euros, which will enable an anticipated distribution of part of the 2002 dividend. Taken together, these operations shall, among other things, enable Telecom Italia to enter the dividends distributed by its subsidiary onto this year’s accounts, increasing its own share of profits and therefore creating conditions suited to ensuring continuity of its dividend distribution policy. This serves the interests of shareholders in general, investors, the Group and group companies, and responds to market expectations. The distributed dividend will allow the shareholders a full tax credit which may be used without limitation for up to 56.25%.
The Board of Directors of the company has given mandate to the Chairman to call a shareholders meeting of the company to deliberate upon such distribution
The ex-dividend date is foreseen for 16 December 2002, with payment on 19 December 2002.
* * *
The Group Code of Ethics and the Company Code of Behavior with regard to insider dealing is adopted.
The Board of Directors has also adopted a Group Code of Ethics and a Company Code of Behavior with regard to insider dealing.
The Code of Ethics underpins the entire corporate governance edifice. As such, it serves as a cornerstone for the whole system, providing a corpus of principles for an ethically-correct approach to business. This streamlined document contains a clear statement of the objectives and values underlying company operations, and refers to the principal stakeholders with whom the Group interacts on a daily basis: shareholders, the financial markets, customers, the community and personnel.
The Code of Behavior has been prepared in compliance with regulations introduced recently by the Italian Stock Exchange, which, as is commonly known, include the obligation for listed companies to make periodical disclosure regarding operations undertaken on listed securities belonging to the issuer and to its subsidiaries by parties who may have access to price sensitive information, with effect from 1 January 2003.
The document responds to the framework regulations published by the Italian Stock Exchange in the following ways:
- A flexible approach to identifying the pool of persons who are subject to disclosure obligations, in order to be able to take into account contingent situations requiring access to confidential information.
- Extension of the obligation to provide notification to include operations carried out on listed financial instruments issued by parent companies (in addition to subsidiary companies).
- A significant reduction in the quantitative threshold regarding the size of operations subject to market notification on a quarterly basis (from 50,000 to 30,000 euros) or immediately at the time of execution (from 250,000 to 80,000 euros).
- Extension of the obligation for transparency to include dealings regarding the exercise of stock options or pre-emption rights, in addition to all operations regarding financial instruments issued by Group companies, even when realized within the framework of management relations on an individual basis regarding investment portfolios for which the client has foregone the right to issue instructions.
- “Black-out periods”, that is to say predetermined periods during which persons who are subject to the provisions of the Code may not undertake dealings.
The Code of Behavior also provides for a system of strict sanctions which, for Directors and Auditors, includes the option of seeking removal from office from the Shareholders’ Meeting.
The Code is being brought into effect in advance of the compulsory date set out in the Stock Market Regulations (1 December 2002 as opposed to 1 January 2003). For notification purposes, dealings undertaken in the month of December 2002 shall be presented together with those undertaken during the first quarter of 2003.
On Friday 8 November at 3:30pm the Group and Parent company shall be illustrating the third-quarter 2002 results to the financial community during a conference call.
Members of the media may follow the conference call by dialing +39 0633485042 and then pressing * followed by 0. In case of difficulties, call +39 06334844 or +39 0636879212.
These presentations will be available on the company web site at www.telecomitalia.it/thirdquarter2002results 30 minutes prior to the conference call.
Cautionary Statement for Purposes of the “Safe Harbor” Provision of the United States Private Securities Litigation Reform Act of 1995. The Private Securities Litigation reform Act of 1995 provides a “safe harbor” for forward-looking statements. The Press Release included in this Form 6-K contains certain forward looking statements and forecasts reflecting management’s current views with respect to certain future events. Telecom Italia’s ability to achieve its projected results is dependant on many factors which are outside of management’s control. Actual results may differ materially from those projected or implied in the forward-looking statements. Such forward-looking information involves risks and uncertainties that could significantly affect expected results and are based on certain key assumptions.
The following important factors could cause the Group’s actual results to differ materially from those projected or implied in any forward-looking statements:
• the continuing impact of increased competition in a liberalized market, including competition from global and regional alliances formed by other telecommunications operators in Telecom Italia’s core domestic fixed-line and wireless markets;
• Telecom Italia’s ability to introduce new services to stimulate increased usage of its fixed and wireless networks to offset declines in its fixed-line business due to market share loss and pricing pressures generally;
• Telecom Italia’s ability to achieve cost-reduction targets in the time frame established or to continue the process of rationalizing its non-core assets;
• the impact of regulatory decisions and changes in the regulatory environment;
• the impact of the economic crisis in Argentina, the slowdown generally in Latin American economies and the slow recovery of economies generally on Telecom Italia’s international business focused on Latin America and on its foreign investments and capital expenditures;
• the continuing impact of rapid changes in technologies;
• the impact of political and economic developments in Italy and other countries in which the Group operates;
• the impact of fluctuations in currency exchange and interest rates;
• Telecom Italia’s ability to implement successfully its 2002-2004 Industrial Plan, including the rationalization of its corporate structure and the disposition of Telecom Italia’s interests in various companies;
• Telecom Italia’s ability to successfully achieve its debt reduction targets;
• Telecom Italia’s ability to successfully roll out its UMTS networks and services and to realize the benefits of its investment in UMTS licenses and related capital expenditures;
• Telecom Italia’s ability to realize the benefits of the merger of SEAT and Tin.it;
• SEAT’s ability to successfully implement its internet strategy;
• Telecom Italia’s ability to achieve the expected return on the significant investments and capital expenditures it has made in Latin America and in Europe;
• the amount and timing of any future impairment charges for Telecom Italia’s licences, goodwill or other assets; and
• the impact of litigation or decreased mobile communications usage arising from actual or perceived health risks or other problems relating to mobile handsets or transmission masts.
The foregoing factors should not be construed as exhaustive. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. Accordingly, there can be no assurance that the group will achieve its projected results.
[1] In order to facilitate data comparison on equivalent terms, the figures for the first nine months of 2002 and for the third quarter of the year have been compared with figures from the preceding accounting periods reclassified with the Nortel Inversora Group (Telecom Argentina) consolidated using the shareholders´ equity rather than the proportional method.
[2] During the third quarter of 2002 the following companies left the area of consolidation: 9Telecom Group, Sogei SpA, Consiel SpA and DataHouse SpA; new entrants to the area of consolidation were the Webegg Group, EpicLink SpA and Netesi SpA.