General economic indicators

Despite the presence of an unfavourable economic situation for the country and a specific context of uncertainty for the integrated water service, consequent to a segment regulatory system still being defined, the 2012 results of the Acea Group in any event highlight the positive performance of the business areas and the ability to guarantee profitability, in the wake of the planned industrial objectives. The main financial statements indicators10 in fact, reported growth: from consolidated revenues (Euro 3,612.7 million; +2.1% on 2011) to the gross operating margin (Euro 695.2 million; +6% on 2011) and the operating result (Euro 293.8 million; +32% on 2011). Group profit, amounting to Euro 77.4 million, disclosed a drop of 10% with respect to last year, due to the rise in income taxes: in fact the tax rate came to 51% (42.1% in 2011).

Table No. 7 - Acea Group income statement and equity highlights (2011-2012)

(in millions of Euro) 2011 2012
net revenues 3,538 3,612.70
payroll and related costs 280.6 282
external costs 2,599.90 2,635.30
operating costs 2,880.50 2,917.30
Gross operating margin (EBITDA) 655.8 695.2
Operating result (EBIT)  222.6 293.8
financial transactions -120.6 -120.6
transactions on equity investments 57.1 0.9
pre-tax result 159.1 174.1
income taxes 65.6 88.8
net result 93.5 85.3
income/loss pertaining to minority shareholders 7.6 7.9
Group net result 86 77.4
adjustment to fair value of discontinued activities    
Group net result net of adjustment to fair value of discontinued activities being disposed of 86 77.4
Shareholders’ equity 1,311.50 1,322.40
invested capital 3,637.30 3,827.90

Consolidated revenues in 2012 amounted to Euro 3,612.7 million, up 2.1% with respect to the Euro 3,538 million in 2011.

In the energy sector (services and sales of electricity and gas) revenues amounted to Euro 2,471 million, with growth of over 1.2% (Euro 2,440.5 million in 2011). The result indicated emerged due to contrasting episodes, such as: the lower revenues from the sale of gas, for Euro 8.1 million, consequent to the exit of AceaElectrabel Trading from the scope of the Acea Group; the positive margin, for Euro 26.9 million deriving, again consequent to the winding up of the joint venture  with AceaElectrabel, from the balance of the consolidation transactions on the generation and sales companies; the additional revenues, for around Euro 19 million, for the energy produced by the waste-to-energy plants of A.R.I.A.; the increase in revenues for around Euro 48 million from the energy distribution activities.

Revenues from white and11 green certificates12

10 The 2012 economic figures included the activities of the photovoltaic sector which was sold off at year end and the effects of the sentence of the Council of State, which confirmed the fine applied by the Antitrust authority in 2007 to Acea (Euro 8.3 million) and Suez Environment, due to the restrictive agreement on competition regarding participation in the bid for the acquisition of 40% of Publiacqua (water services management company in Florence).
11 The ministerial decrees dated 20 July 2004 introduced the so-called system of white certificates, (Titoli di Efficienza Energetica-TEE), into Italian legislation, envisaging that the distributors of electricity and natural gas must achieve specific quantitative objectives annually in primary energy savings, by means of the achievement of energy efficiency projects. The interministerial decree dated 28 December 2012, established the objectives up to 2016, transferring responsibility for the certification of savings achieved from the AEEG to the GSE.
12 Up until 2012, green certificatesrepresented the incentive instrument for electricity produced from renewable sources (excluding photovoltaic) as per the provision of Italian Legislative Decree No. 79/99 (Bersani decree). This model was out-dated by the Decree of the Ministry for Economic Development 6/6/2012 implementing Article  24 of Italian Legislative Decree No. 28/11. The incentive acknowledged to the production of energy from plants fuelled by the afore-mentioned renewable sources, with a nominal power greater than established threshold values and which came onto stream as from 1 January 2013, was awarded on the basis of discount auctions handled by the GSE. The auction procedures envisage a value of the incentive in any event acknowledged, determined taking into account the needs to recoup the investments made.

and CO213rights, came to Euro 37.4 million (Euro 19.7 million in 2011) up by around 90%. The sales of white certificates, for

energy saving projects, generated Euro 23.6 million. The hydroelectric plants of Salisano and Orte ensure Acea Produzione Euro 12.1 million for green certificates.

Public and cemetery lighting reported a drop in sales turnover, to around Euro 79.8 million (Euro 85.2 million in 2011). Waste management services (waste treatment, landfill management, compost production and WDF) reported revenues for Euro 32.1 million, up slightly with respect to the Euro 28.9 million in 2011.

Revenues for water management activities in Italy and abroad came to Euro 830.2 million14 (Euro 753.3 million in 2011). In detail, there was significant growth in the results achieved by the water companies in Lazio and Campania, whose revenues in total amounted to around Euro 617 million (around Euro 539 million in 2011).

The gross operating margin (EBITDA) came to Euro 695.2 million, up 6% (Euro 655.8 million in 2011). Excluding the corporate area and not considering the Antitrust Authority fine, the following contributed towards the formation of the overall value:

  • the Water business area, for 49%, with Euro 349 million (Euro 323.7 million in 2011). The margin was affected by the positive effects of the tariff adjustments acknowledged by the Mayors’ Conference of the related Area Authority to Acea Ato 2, for the years 2006 to 2011.
  • the Networks business area, for 36%, with Euro 260.7 million (Euro 269.6 million in 2011). The slight decrease in the margin was determined by the minor activities for the construction of photovoltaic plants on behalf of third parties and the changes on the calculations of revenues introduced by the AEEG as from 2012, being the first year of the new regulatory period (2012-2015)
  • the Energy business area, for 8%, with Euro 61 million (Euro 61.4 million in 2011). The margin was affected by both the effect of the winding up of the AceaElectrabel joint venture and the bringing onto stream of the hydroelectric plants at Orte and Salisano.
  • the Waste management business area for 7%, with Euro 49.3 million (Euro 31.7 million in 2011), thanks to the contribution of the two lines of the San Vittore del Lazio plant and the resumption of WDF production at the Paliano plant.

Chart No. 5 – Contribution of the business segments to the overall EBITDA (2011-2012)

Chart No. 5 – CONTRIBUTION OF THE BUSINESS SEGMENTS TO THE OVERALL EBITDA (2011-2012)

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13 The Emission Trading System (Directive No. 2003/87/EU) is an administrative instrument, in force within the EU sphere, for providing incentives for industrial production with reduced greenhouse gas emissions (CO2). The production plants falling within the sphere of this directive, assimilated in Italy by means of Italian Legislative Decree No.  216/2006, at the start of the year receive a permit to issue a maximum quantity of CO2 in relation to various factors, including the technology used: the more technologically advanced plants receive more extensive permits. The following year, after the checking of the effective emissions, the plant operator will have to acquire possible CO2 quotas on the market, in the event of exceeding the assigned limits, or may sell the CO2 quotas, which have possibly not been emitted with respect to the assigned amount. Thus a market mechanism is established, rewarding for the plants which emit under a sector benchmark and penalising for those which exceed the benchmark.
14 Revenues from foreign water management activities represent around 4.5% of total water revenues and around 1% of total Group revenues. See the section Activities abroad for a brief description of the foreign management activities. 

The operating result (EBIT) came to Euro 293.8 million, up 32% with respect to the previous year (Euro 222.6 million). The EBIT is determined by the value of the amortisation, depreciation, provisions and writedowns which came to Euro 401.4 million, down Euro 31.9 million with respect to 2011. This decrease was mainly due to the balance between the additional writedowns for Euro 25.5 million and the minor provisions for risks and charges totalling Euro 59 million; the estimate, for almost Euro 8 million in charges, deriving from the repayment of the portion of remuneration of the capital invested on the 2011 water tariff, which could come about further to the coming decisions which the AEEG will adopt, is in any event allocated under albeit reduced provisions.

The Group net result, after allocations to minority shareholders, presented a profit of Euro 77.4 million (Euro 86 million in 2011).

The net financial position presented a loss of around Euro 2,495.5 million (Euro 2,325.8 million in 2011), involving a change of Euro 169.7 million.

Table No. 8- Acea Group balance sheet figures and net financial position (2011-2012)

(in thousands of Euro) 31.12.2011 31.12.2012
non-current financial assets (liabilities) 1,097 2,060
non-current intercompany financial assets (liabilities) 18,033 30,899
payables and other non-current financial liabilities (2,298,916) (2,211,609)
Medium/long-term net financial position (2,278,976) (2,178,650)
liquid funds and securities 321,093 423,771
short-term amounts due to banks (448,889) (753,850)
current financial assets (liabilities) (26,787) (56,898)
current intercompany financial assets (liabilities) 107,727 70,149
Short-term net financial position (46,855) (316,828)
Total net financial position (2,325,831) (2,495,478)
Shareholders’ equity 1,311,457 1,332,409
invested capital 3,637,288 3,827,887

The results for the year positively influenced the profitability ratios both of own capital (ROE) and invested capital (ROIC).

Table No. 9 - THE MAIN PROFITABILITY INDICATORS (2009-2012)

  2010 2011 2012
Return on own capital
ROE = Result for the year after taxation/shareholders’ equity 9.9% 7.1% 6.4%
Return on capital invested
 Pre-tax ROIC = Operating result (EBIT)/invested capital 8.9% 6.1% 7.6%