The table below shows the formation of the group’s profit for the year starting from profit from financial activities, previously described, compared with the same period of the previous year:

FORMATION OF PROFIT FOR THE YEAR(in thousands of Euro)

YEAR

ABSOLUTE

31.12.2010

 

31.12.2009

 

CHANGE

%

Net profit from financial activities

69,986

60,592

9,394

15.5%

Operating costs

(40,125)

(34,617)

(5,508)

15.9%

Pre-tax profit from continuing

 

operations

29,861

25,975

3,886

15.0%

Income tax expense

(11,235)

(8,759)

(2,476)

28.3%

Profit for the year

18,626

 

17,216

 

1,410

8.2%

The trend in operating costs was affected by the increase in business and enhancement of the organisation, in terms of the local presence and human resources who joined Banca IFIS.

Total operating costs reached 40,125 thousand Euro, up by 15.9% compared to 31 December 2009.

The cost/income ratio stood at 42.5%, down from 42.8% at 31 December 2009.

OPERATING COSTS

(in thousands of Euro)

YEAR

ABSOLUTE

31.12.2010

 

31.12.2009

 

CHANGE

%

Personnel expenses

25,176

21,544

3,632

16.9%

Other administrative expenses

13,902

12,108

1,794

14.8%

Net impairment losses on property, plant and equipment and investment property and intangible assets

2,483

2,371

112

4.7%

Other operating charges (income)

(1,436)

(1,406)

(30)

2.1%

Total operating costs

40,125

 

34,617

 

5,508

15.9%

The increase in personnel expenses, which totalled 25,176 thousand Euro (+16.9% compared to 21,544 thousand Euro at 31 December 2009), corresponds to forecasts and reflects the planned increase in the number of employees, which at 31 December 2010 stood at 339. The average number of employees increased by 11.4% compared to the previous year.

Other administrative expenses at 31 December 2010 reached 13,902 thousand Euro, compared to 12,108 thousand Euro in the prior year (+14.8 %). This increase is explained by the costs connected to the growth in business, in particular as regards the selection and training of human resources and the update of IT systems. This item includes some entries relating to the management of the Rendimax account, especially costs for the stamp duty on account statements, which rise in direct correlation to the number of operative customers and which, as a result of a commercial policy decision, are not charged back to customers.

Please note that part of the expenses included in this item (in particular legal expenses and indirect taxes) are charged back to customers and the relevant revenue is recognised under other operating income. Net of this component, other administrative expenses amounted to 12,355 thousand Euro at 31 December 2010, compared to 10,616 thousand Euro at 31 December 2009 (+16.4 %).

OTHER ADMINISTRATIVE EXPENSES

(in thousands of Euro)

YEAR

ABSOLUTE

31.12.2010

 

31.12.2009

 

CHANGE

%

Expenses for professional services

2,433

2,019

414

20.5%

Legal and consulting services

1,577

1,540

37

2.4%

Outsourcing services

548

289

259

89.6%

Auditing

308

190

118

62.1%

Direct and indirect taxes

2,361

1,851

510

27.6%

Expenses for purchasing non-professional

 

goods and services

9,108

8,238

870

10.6%

Property expenses

2,430

2,226

204

9.2%

Customer information

971

977

(6)

(0.6)%

Telephone and data transmission expenses

835

705

130

18.4%

Postage of documents

725

680

45

6.6%

Advertising and inserts

698

799

(101)

(12.6)%

Software assistance and hire

491

336

155

46.1%

Other sundry expenses

2,958

2,515

443

17.6%

Total administrative expenses

13,902

 

12,108

 

1,794

14.8%

Expense recoveries

(1,547)

 

(1,492)

 

(55)

3.7%

Total other administrative expenses, net

12,355

 

10,616

 

1,739

16.4%

Other sundry expenses refer to 194 thousand Euro of expenses for management of the special purpose vehicle set up for the revolving securitisation of trade receivables programme.

Net impairment losses on intangible assets at 31 December 2010 totalled 1,153 thousand Euro, up by 7.2% compared to 2009, and largely refer to IT support, while net impairment losses on property, plant and equipment and investment property totalled 1,330 thousand Euro compared to 1,295 thousand Euro at 31 December 2009 (+2.7%).

Other net operating income totalled 1,436 thousand Euro (+2.1% compared to 1,406 thousand Euro at 31 December 2009) and are mainly made up of revenue from recoveries of third party expenses. The relevant cost item is included in other administrative expenses, in particular under legal expenses and indirect taxes.

Pre-tax profit for the year stood at 29,861 thousand Euro, an increase of 15% compared to 2009.

Income tax expense amounted to 11,235 thousand Euro, against 8,759 thousand Euro at 31 December 2009 (+28.3%).

Profit for the year totalled 18,626 thousand Euro compared to 17,216 thousand Euro in 2009 (+8.2%). In the absence of non-controlling interests, these results refer entirely to the Group.