Acea Group Investor Guidebook August 2020 ACEA Group Agenda ACEA - - PowerPoint PPT Presentation
Acea Group Investor Guidebook August 2020 ACEA Group Agenda ACEA GROUP The Acea Group today Historical results Business Plan 2019-2022 Potential upside (not included in Plan targets) Sustainability plan WATER Business Plan 2019-2022
August 2020
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ACEA Group
ACEA GROUP
The Acea Group today Historical results Business Plan 2019-2022 Potential upside (not included in Plan targets) Sustainability plan
WATER
Business Plan 2019-2022 Regulatory framework
ENERGY INFRASTRUCTURE
Business Plan 2019-2022 Regulatory framework
COMMERCIALE & TRADING
Business Plan 2019-2022 Regulatory framework
ENVIRONMENT
Business Plan 2019-2022 Regulatory framework
RESULTS
H1 2020 Q1 2020 2019 9M 2019
TITOLO PRESENTAZIONE / Luogo e data
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ACEA Group
Water Energy Infrastructure Environment Commercial & Trading
€1,042M EBITDA 2019
81% regulated
Source: CONSOB August 2020
With 9
millions
customers served in Lazio, Tuscany, Umbria and Campania
1° Italian player
in the water supply sector
Among the leading
Italian players in the electricity distribution market
2019 EBITDA Shareholder structure
Roma Capitale 51% Suez 23.3% Market 20.2% Caltagirone 5.5%
with 10
TWh
distributed electricity
Among the main
national players in the energy market With more than 6 TWh
Leading
player in the Italian waste treatment sector with more than 1.2
millions tons
waste treated/disposed
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ACEA Group
382.8 401.7 474.6 523.2 623.5 560.9 666.5 655.8 695.2° 675.4^ 717.7 732.0 896.3 840.0 933.2 1,042.3 112.3 127.9 147.4 186.3 (52.6) 92.1 86.0 77.4° 142.0^ 162.5 175.0 262.3 180.7 271.0 283.7
2004 2005 2006 2007 2008 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
214.3 219.6 279.4** 293.7 314.4 398.0 110.5* 48.8 47.6 (108.0) 49.0 102.6
1999 2000 2001 2003 2004
EBITDA NET PROFIT
2002
(€m)
EBITDA AND NET PROFIT
(OLD GAAP)
EBITDA AND NET PROFIT
(IAS/IFRS) 2009
* In 1999, Acea SpA benefitted from a tax holiday. Without this, net profit would have amounted to €65m. ** Including €45m from Enel Distribuzione Roma ° Restated ^ Adoption of IFRS 10 and 11 was obligatory from 1 January 2014. For comparative purposes, the figures for 2013 have been restated.
(€m)
164.0
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ACEA Group
(€m)
* Based on average price for the year ** Based on net profit after non-controlling interests
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 DPS (€) 0.378 0.470 0.540 0.62 0.657 0.450 0.28 0.30 0.42 0.45 0.50 0.62 0.63 0.71 0.78 Dividend Total (€m) 80.5 100.1 115.0 132.0 139.9 95.8 59.6 63.9 89.4 95.8 106.5 132.0 134.2 151.2 166.1
Capitale 41.1 51.1 58.7 67.3 71.3 48.9 30.4 32.6 45.6 48.9 54.3 67.3 68.4 77.1 84.7
Dividend yield* 5.6% 5.3% 4.7% 4.4% 5.6% 5.5% 4.1% 6.7% 4.3% 4.6% 4.2% 5.2% 4.7% 5.3% 4.7% Payout** 72% 78% 78% 80% 75% 75% 69% 83% 63% 59% 61% 50% 74% 56% 59% 80.5 100.1 115.0 132.0 139.0
59.8
59.6 63.9 89.4 95.8 106.5 132.0 134.2 151.2 166.1
36.0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Special dividend O rdinary dividend
95.8
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ACEA Group
(OLD GAAP) (€m)
1999 2000 2001 2002 2003 2004 Grids 60.0 53.5 68.9 70.5 76.4 97.2 Energy 9.5 5.2 5.5 3.8 6.8 5.9 Water 29.6 36.6 53.7 35.4 44.6 65.9 Acea Holding 19.9 9.7 19.8 13.2 5.2 6.9 Total Capex 119.0 105.0 147.9 122.9 133.0 175.9
CAPEX
(IAS/IFRS)
(€m)
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013** 2014 2015 2016 Grids 97.2 98.2 123.5 133.9 144.6 187.9 161.1 129.0 101.9 103.2 122.4 156.2 197.9 Energy 4.4 151.9 42.1 40.8 36.9 39.8 48.7 22.5 27.1 11.4 19.7 30.6 55.3 Water 64.6 83.9 119.0 186.8 199.5 177.4 202.8 230.4 224.4 130.0 148.9 204.4 230.4 Environment
6.4 17.5 89.4 48.5 20.6 37.5 12.1 13.3 25.9 34.0 Acea Holding 6.9 6.6 8.1 12.0 18.8 23.6 12.1 10.5 8.0* 11.9 14.2 11.8 13.1 Total Capex 173.1 340.6 293.4 379.9 417.3 518.1 473.2 413.0 398.9 268.6 318.5 428.9 530.7
NET DEBT/EBITDA (2004-2019)
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2.62x 2.33x 2.52x 2.53x 2.62x 3.80x 3.31x 3.55x 3.59x 3.33x 2.91x 2.75x 2.37x 2.88x 2.75x 2.94x
(€m)
2016° 2017 2018 2019 Water 227.1 271.4 329.7 380.1 Energy infrastructure 225.8 209.4 238.3 287.8 Commercial and Trading 27.4 19.4 24.6 42.5 Environment 34.0 15.4 20.1 51.9 Engineering and Services 1.8 0.8 1.6 1.8 Overseas 1.5 5.2 6.6 7.0 Acea Holding 13.2 10.7 10.0 21.7 Total Capex 530.7 532.3 631.0 792.8
° The new structure of the Acea Group was approved in June 2017. The figures for 2016 have, therefore, been reclassified on the basis of the new business segments. * The figure does not include investment in purchase of property housing Company’s headquarters ** Adoption of IFRS 10 and 11 was obligatory from 1 January 2014. For comparative purposes, the figures for 2013 have been restated.
TITOLO PRESENTAZIONE / Luogo e data
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ACEA Group
Industrial Growth Technology, Innovation and Quality Operational Efficiency Local focus & Sustainability
Business Plan 2018-2022
development
and service-based approach
development
collaboration
innovation applied to industrial processes
experience improvement
innovation strategy
improvement
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0.6 0.7 0.9 0.9 0.9 0.6 0.6 0.6 0.6 0.6 2018 2019 2020 2021 2022
€B €M CAPEX old plan €3.1B
pre-tax ROIC
2018 11.0% 2020 >10% 2022 >11%
€B
Gori ATO2, ATO5 and Areti ATO2, ATO5 e Areti (Old Plan)
Multiple NFP
933 1,042 1,083 1,270
864 972 1,002 1,108
2018 2019 2020 2022
271 284 283 362
230 282 332
Net Income
New BP Old BP 2.8 2.9 3.0 2.9
3.1 2.9 2.8
2018 2019 2020 2022
2.6 3.1 3.2 3.7
2.7 3.0 3.2
2.2
1.4 0.2 0.2 0.2
Areti Water Areti ATO2 ATO5 GORI ADF
2.0
* 2019 capex actual €0.793B
* 2019
€B 2019 €B
2019 EBITDA €1,042M 2020 EBITDA > 8% CAPEX broadly in line with 2019 and the Business Plan NET DEBT: €3.45B – €3.55B
2020 GUIDANCE
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ACEA Group
CAGR 7.7% CAGR 8.3%
investments (Peschiera / Marcio)
Performance improvement and cost efficiency + Generational turnover + Strengthening operations
Cross-business line actions €M
Water Energy Infrastr.
Environment
investments in Resilience
netw ork losses
plants
plants and M&A
reduction
Tutela phase-out
CAGR 8.0%
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Cumulative 2018-2022
€B
Regolato Regolato
Highlights
PV growth with M&A and greenfield developments Innovation, Resiliency and modernization related investments M&A Waste acceleration in a circular economy perspective Goriconsolidation and additional investments (Peschiera/Marcio)
€M (approx.)
*
*of which €0.5B innovation and industry 4.0 (smart meter, network districtization, automated secondary cabins, etc.)
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ACEA Group
secondary cabins enabled with remote-control Digital channels development Smart Recruiting with advanced analytics 100% network districtization in 2022 (over 15.000 km)
Note: (1) ATO2 e ATO5
1
(Power)
(Water) Thermal hydrolysis in a circular economy perspective
Investments
Tor di Valle Plant Big data analytics and data-driven asset management
1
Reached 40% of long-term goals for automated secondary cabins
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Dividend per share
€/share
0.78
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€B
Highlights Net Financial Position 2.8x Rating Working Capital Debt NFP 2.8x 3.0x 2.9x
NFP/EBITDA
BBB+ Stable outlook Baa2 Stable outlook
16 May 2019 - Placing of Euro 500 million bond under the EMTN Programm, 9 years, fixed rate 1.75%. July 2019 – EMTN programme ceiling increased to €4bn 29 January 2020 - Placing of Euro 500 million bond under the EMTN Programm, 9 years, fixed rate 0.50%.
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ACEA Group
Assumptions 2019 2020 2021 2022 Exchange
$/€
1.17 1.18 1.18 1.18 Brent
$/Bbl
76.71 71.67 68.61 67.41 PUN
€/MWh
65.97 60.62 55.10 56.09 EU-ETS
€/tons CO2
21.33 19.74 17.67 17.85 CIP6
€/MWh
237.20
TITOLO PRESENTAZIONE / Luogo e data
(not included in Business Plan targets)
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ACEA Group
Gas Distribution Growth in Renewables Smart Energy Efficiency M&A Waste Clients Acquisition Water Sector Consolidation
5-20
EBITDA (€M) Investments (€M)
30-90 5-10 40-60 8-12 ~10 35-110 60-150 50-70 200-350 60-90 ~70
New clients acquisition consistent with current market consolidation trends Additional growth in the PV market through alternative models (e.g., partnership with investors without society control) Consolidation of water
Tuscany, Umbria) Plant development acceleration also evaluating strategic partnership according the market consolidation ESCO acquisitions and cogeneration / trigeneration pilots and thermal coat installations Growth in the gas distribution market with selected acquisition and ATEM tenders
100-200 (€M)
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ACEA Group
Strategic Initiatives Full Potential EBITDA Target
€B
TITOLO PRESENTAZIONE / Luogo e data
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ACEA Group
United Nations Sustainable Development Goals (SDGs)
CO2 Reduction
(Reduced losses, Purchase of Green Energy, Biogas Recovery) Recovering materials and energy in a Circular Economy perspective
Green Energy
for internal use within the Group Power Grid Risk index reduction due to resiliency increase Safety inspections of maintenance contractors
Peschiera& Marcio
Development / M&A circular economy
PV development
+70% >200 kton 500 GWh
+50%
Standard Ethics has upgraded the
‘‘Positive’’. (July 2020). Acea is a member of the SE European Multi-Utilities Index.
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Acquisition of Pescara Gas (62k PDR) to enter in gas distribution business Supply securitization, by doubling Peschiera (100M€ already included in 2019-’22 Plan) 90% investments on T echnical Quality Rationalization of 35+ small purification facilities Focus on preservation of water, with development of a dedicated structure Gori full consolidation (1.4M clients served) 500k+ smart water meter and projects for water network districtization Procedure completed for renewal of concession for the Peschiera-Le Capore water main, due to expire in September 2031 (July 2019) Acquedotto del Fiora full consolidation (over 402K clients served; October 2019) Agreement signed for the acquisition of 51% stake in the company Alto Sangro Distribuzione Gas (34k PDR; March 2020)
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ACEA Group
€M €B
CAGR 10.1% CAGR 5.9%
CAGR 8.0%
Pescara Gas Including Gori on a y early basis (+45M€)
€B
Old Plan
ATO2, ATO5, Gori
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ACEA Group
TARIFF REGIME FOR THIRD REGULATORY PERIOD (2020-2023) REGULATORY CHANGES IN 2019
ARERA Resolution 580 of 27 December 2019
ARERA has approved the tariff regime for the third regulatory period (MTI-3), confirming its four-year duration and the biennial review. Apart from retention of the general approach used for MTI-2 relating to the structure of the revenue cap, the following should be noted:
all frameworks; for example, the maximum limit on framework V has been cut from 8% under MTI-2 to 6.2% under MTI-3);
(namely those not relating to strategic initiatives), for which the WACC is lower and decreasing over the 4 years covered by the tariff regime;
pertinent activity of the integrated water service and identify a match between the category of asset and quality targets;
underinvestment and failure to meet technical or contractually required quality targets;
graduated on the basis of the gap between per-capita opex incurred by the operator and the level of per-capita cost estimated using a specific econometric function adopted by the regulator (in cases of major improvements in operational efficiency, the curtailment may be eliminated);
revising opex and capex have also been revised;
definition of allowed energy costs and a specific incentive for innovative activities that meet efficiency and energy and/or environmental rationalisation targets (such as, for example, the recovery of energy and raw materials or the reuse of water for agricultural/industrial purposes);
additional cost for the disposal of wastewater sludge in view of the difficulties experienced by operators since 2018.
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ACEA Group
Since 2020, in addition to changes to certain parameters, a distinction has been introduced between the cost of debt allowed for ordinary work in progress, namely work in progress not linked to strategic works. The cost
debt relating to
work in progress also decrease on a linear basis in the 4 years in which they are recognised in the tariff.
(*) Whilst awaiting publication of the ARERA tool for calculating WACC for the ordinary work in progress set out in the table, the impact of the d/e ratio has been assumed to be 4 when calculating both the cost of debt and tax expense.
WACC FOR WATER SECTOR MTI-2 MTI-2 MTI-3
2016-2017 2018-2019 2020-2023
fixed assets entered into service + work in progress on strategic works Ordinary work in progress
Kd+T (WACC) 5.39% 5.31% 5.24% 3.92%(*) Kd (cost of debt) 3.65% 3.80% 3.73% 2.76% Km 2.1% 2.2% 2.2% 2.1% alpha 1.6% 1.6% 1.6% 0.6% T (tax expense) 1.74% 1.51% 1.50% 1.16% RAI 6.32% 6.28% 6.26% 4.83%
Parameters
CS (d) 50% 50% 50% 80% CnS (e) 50% 50% 50% 20% d/e 1 1 1 4 ɼf real (real risk- free rate) 0.5% 0.5% 0.5% 0.5% WRP (water utility risk premium) 1.5% 1.7% 1.7% 1.7% Kd real (including DRP-Debt risk premium) 2.84% 2.84% 2.77% 2.77% β levered 0.80 0.80 0.79 0.79 ERP (equity risk premium) 4.0% 4.0% 4.0% 4.0% tc (tax shield) 27.5% 24.0% 24.0% 24.0% T 34.2% 31.9% 31.9% 31.9% rpi (inflation rate) 1.5% 1.5% 1.7% 1.7%
Calculation of real pre-tax WACC
REGULATORY CHANGES
ACEA Group
27
TARIFF REGIME FOR THE THIRD REGULATORY PERIOD (2020-2023)
Delibera ARERA 580/2019
frameworks have been reduced
EXPIRY OF CONCESSIONS ATO2 Lazio Centrale (Acea ATO2) 2032 ATO5 Frosinone (Acea ATO5) 2033 ATO3 Regione Campania (Gori) 2032 ATO4 Alto Valdarno (Nuove Acque) 2027 ATO2 Basso Valdarno (Acque) 2031* ATO3 Medio Valdarno (Publiacqua) 2024** ATO6 Ombrone (Acquedotto del Fiora) 2031* Municipality of Lucca (Geal) 2025 ATO1 Perugia (Umbra Acque) 2027 ATI4 Umbria (Umbriadue Servizi Idrici) 2032
* Extension of the concession approved by the concession authority at the time of the biennial review 2018-2019 (also approved by ARERA). ** Extension of the concession approved by the concession authority at the time of the biennial review 2018-2019, yet to be approved by ARERA.
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ACEA Group
Resolution 547/2019 – REVISED CONTRACTUALLY REQUIRED QUALITY AND NEW INCENTIVE SYSTEM
In Resolution 547 of mid-December 2019, ARERA took action with regard to two important aspects: Regulation of contractually required quality and new incentive system
and data concerning performance is registered comes into effect from 1 July 2020;
services prior to entering into a supply contract;
regarding metering and billing;
construction of 2 macro-indicators, obtained on the basis of 42 of the 43 simple indicators provided for in the Regulations on contractually required quality for the integrated water service (28 specific standards, which are already subject to penalties if not met, and 14 general standards). The macro-indicators (MC1 “Start-up and termination of the contractual relationship” and MC2 “Management of the contractual relationship and accessibility to the service”) are computed as the average of the pertinent basic indicators (expressed in terms of percentage compliance with the standard), weighted by the number of services provided by the
used will be based on the results for the previous year. In quantifying the rewards and penalties, any recognised OpexQC will be taken into account. The proposed incentive mechanism is similar to the one for technical quality for later stages of assessment (basic and excellence) and starting point (maintenance or improvement). Two-year statute of limitations (Law 205 of 27 December 2017) The regulator has introduced measures resulting from new legislation included in the 2018 Budget Law. This has placed time limits
water supply sector, is applicable to bills falling due after 1 January 2020. Subsequent determinations will set out further criteria designed to better define cases in which responsibility for the delay in billing can be ascribed (if only on a presumptive basis) to the end user of the water service. The 2020 Budget Law has also recently dealt with the subject of a two-year statute of limitations.
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ACEA Group
ARERA Resolution 917/2017 supplemented the mechanism introduced at the end of 2015 designed to promote contractually required quality with new regulations governing the technical quality of the integrated water service. In the latter case, the regulator adopted a graduated approach from 1 January 2018 and selective application of the regulations through mechanisms providing ex ante and ex post flexibility. The new regulations set minimum technical quality standards and targets for the integrated water service through the introduction of specific standards designed to guarantee the services provided to each end user, and granting the right to compensation if the standards
service must be provided and that are linked to an incentive mechanism based on rewards and penalties. The Resolution also provides for specific requirements as a necessary condition of qualifying for the incentives associated with the overall standards. Application of the system of indicators forming the basis of technical quality – and the start of monitoring of the underlying data – was scheduled to begin from 1 January 2018. Obligations governing the recording and storage of data, according to the procedures provided for in the Resolution, came into effect from 1 January 2019, whilst initial quantification of the rewards/penalties will take place in 2020 based on the results reported for 2018 and 2019 which, as announced by the regulator, must be reported by 30 March 2020 (closure of the process of gathering data, with the related validation by concession authorities, has however been scheduled for 17 April 2020). The rewards are not subject to any cap on tariff increases. Provisions must be made in 2020 for any penalties imposed with regard to the first two years of application (2018-2019). The cost of the incentives will be covered from 2018 by an equalisation component at national level (UI2), which will primarily aim to promote quality and will be paid into the specific fund set up by the CSEA (the Fund for Energy and Environmental Services) to finance incentives relating to water services. In addition, from 2020, a further method of covering the cost will take the form of a specific amount to be deducted from allowed costs, determined on the basis of the level of operational efficiency and to be paid by operators into the same fund set up by the CSEA, covered by an equalisation component. The Concession Authority may submit a reasoned proposal to recognise an additional tariff component (OpexQT), within the limits established in the resolution, for the years 2018 and 2019 (and for the subsequent four-year period covered by MTI-3). The difference in each year between recognised OpexQT and the expenses effectively incurred in order to meet the technical quality standards can, in any event, be recovered (only if to end users’ advantage). Unlike the similar component relating to contractually required quality (OpexQC), recognition does not entail exclusion from the above incentive mechanism.
Resolution 917/2017 – TECHNICAL QUALITY
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ACEA Group
ARERA RESOLUTION 235/2020 «Adoption of urgent measures for the integrated water service, in response to the Covid-19 emergency»
the spread of Covid-19
billing) linked to the Covid-19 emergency
be applied for to CSEA – Cassa Servizi Energetici e Ambientali only for concessions where tariffs are approved by 30 September 2020)
2.77% in the subsequent years (previously 3.58%, 3.31%, 3.04% and 2.77%)
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ACEA Group
The RAB taken into account when determining the tariff for year n corresponds to the value of fixed assets in year n-2 (based on the historical cost of the entity’s assets revalued using deflators for the period) less accumulated depreciation revalued using deflators for the period.
WATER
Under the regulatory framework, the RAB does not include goodwill recognised in the companies’ statutory financial statements.
(€m)
2018 2020 Plan 2022 Plan
ATO2 1,327 1,589 1,928 ATO5 127 149 153 Gori 206 254 296 RAB ATO2+ATO5 1,660 1,992 2,377
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ACEA Group
* Extension of the concession approved by the concession authority at the time of the biennial review 2018-2019 (also approved by ARERA). ** Extension of the concession approved by the concession authority at the time of the biennial review 2018-2019, yet to be approved by ARERA.
UMBRIA
Umbra Acque (Acea 40%)
ATO1 Perugia
includes municipalities in the province of Perugia (concession expires 2027)
CAMPANIA
Sarnese Vesuviano (Acea 99%) controls 37% of Gori. Other investors in Gori are Ente d’Ambito Sarnese Vesuviano and ASM Azienda Speciale.
ATO3 Regione Campania
includes municipalities in the provinces of Naples and Salerno (concession expires 2032)
Acea owns 100% of TWS, which in turn holds 64% of Umbriadue Servizi Idrici, which provides the integrated water service in ATI4 Umbria
ATI 4 Umbria
includes 32 municipalities in the province of Terni (concession expires 2032)
Intesa Aretina (Acea 35%) controls 46% of Nuove Acque, with remaining 54% controlled by municipalities, the Provincial Authority and
TUSCANY
ATO4 Alto Valdarno
includes municipalities in the provinces of Arezzo and Siena (concession expires 2027)
Ombrone (Acea 99.5%) controls 40% of Acquedotto del Fiora. Other investors in Acquedotto del Fiora are Municipality of Grosseto, Municipality of Siena and
ATO6 Ombrone
includes municipalities in the provinces of Siena and Grosseto (concession expires 2031*)
Acque Blu Arno Basso (Acea 77%) controls 45% of
Acque are Publiservizi, Cerbaie and GEA.
ATO2 Basso Valdarno
includes municipalities in the provinces of Pisa, Lucca, Florence, Pistoia and Siena (concession expires 2031*)
Acque Blu Fiorentine (Acea 75%) controlls 40% of Publiacqua. Other shareholders of Publiacqua are Consiag and the Municipality of Florence.
ATO3 Medio Valdarno
includes municipalities in the provinces of Florence, Arezzo, Prato and Pistoia (concession expires 2024**)
Acea holds 48% of GEAL, which provides the integrated water service in the municipality of Lucca. The remaining interest is held by Lucca Holding (Municipality of Lucca).
Municipality of Lucca
Integrated water service Municipality of Lucca (concession expires 2025)
LAZIO
ATO 2 Central Lazio
(concession expires 2032)
ATO 5 Frosinone
(concession expires 2033)
Ato 2 (Acea 96%) provides the integrated water service in Rome and in another 111 municipalities in the surrounding province. Ato 5 (Acea 98%) provides the integrated water service in Frosinone and in another 86 municipalities in the surrounding province.
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150MW PV between grid parity and M&A on the secondary market 600k smart meters roll-out start 100+ M€ for Resiliency for electricity supply continuity vs Authority guidelines Remote control extension on 60% of the LV/MV secondary stations Renovation/expansion activities on the LV/MV network for over 2,500km Installation of over 600km of optical fiber at the service of the existing infrastructure Acquisition of photovoltaic plants with total capacity of approximately 45 MWp (H2 2019- H1 2020) Development of primary market projects, 40 MWp already authorised out of a pipeline of
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ACEA Group
€M €B
CAGR 6.3% CAGR 3.9%
CAGR 5.1%
€B
Old Plan
Distribution Metering
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ACEA Group
2018
2019 2020 Plan 2022 Plan
ENERGY INFRASTRUCTURE 360 392 407 440 Distribution (Areti) €m 317 345 352 363 Production (Acea Produzione+Ecogena) €m 49 45 52 73 Public Lighting €m
2 3 4
ACEA Group
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ARERA RESOLUTION:
566/2019/R/eel for the sub-period 2020-2023
REGULATORY PERIOD: EIGHT YEARS 2016-2023 divided into two sub-periods, each lasting four years:
REGULATORY PERIOD WACC: SIX YEARS 2016-2021
WACC FOR OTHER ACTIVITIES ELECTRICITY TRANSMISSION Electricity transmission WACC for 2019-2021 : 5.6% GAS NETWORKS Gas transport WACC for 2019: 5.7% Gas distrib WACC for 2019: 6.3% Gas metering WACC for 2019: 6.8% Gas storage WACC for 2019: 6.7%
Areti’s concession expires in 2030
WACC for 2020-2021: 5.7% WACC for 2020-2021: 6.3% WACC for 2020-2021: 6.7%
}
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ACEA Group
ARERA Resolution 568/2019 on the tariff review
REGULATORY CHANGES IN 2019
The main changes introduced by Resolution 568 regard: a) the recognition of opex in the sub-period 2020-2023, based on opex for 2018 and providing for the symmetrical allocation, between the operator and end users, of productivity improvements in the first sub-period (2016-2019); b) the sharing of net revenue generated by the use of electricity infrastructure for purposes other than those related to the electricity service; c) creation of a mechanism for recognising credit losses, in exceptional situations of late payment, relating to the portion linked to distribution tariffs, but postponing definition of the mechanism until a later resolution; d) the possibility of obtaining, on request and as a one-off, an increase in the ROIC provided for in the TITs for 2008- 2011 and 2012-2015 (for the first period in art. 11 and, for the later period, in art. 12, respectively); e) extension of the subsidies provided for changes in capacity requested by domestic customers, with definition in 2020 of the operational procedures for an equalisation mechanism relating to the subsidies provided in the period 2017-2019; In particular , the mechanism in point c) will enable Areti to also recover the portion of credit losses relating to distribution tariffs. By April 2020, ARERA is to define a mechanism that is expected to be the same as the one set
from users of the transport service.
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ACEA Group
ARERA Resolution 566/2019 on output-based regulation
REGULATORY CHANGES IN 2019
At the end of 2019, ARERA, following various consultation documents, issued Resolution 566/2019/R/eel on the
regulations regarding the tariffs for transmission, distribution and metering services, both coming into effect for the regulatory sub-period 2020-2023. Overall, ARERA has retained the same approach for both the first and second sub-periods. The main changes introduced by Resolution 566 regard:
continuity;
the actual cost of the work carried out.
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ACEA Group
In addition, the following are relevant to 2019:
REGULATORY CHANGES IN 2019
Following two consultations, the regulator issued Resolution 668/2018/R/eel, establishing initiatives regarding grid
Areti submitted its resilience plan for 2019-2021 to ARERA in order to be included, from 2019, in the related incentive scheme, which includes a series of rewards and penalties. In Resolution 534/19, ARERA introduced a system of rewards and/or penalties relating to implementation of Areti’s resilience plan for 2019-2021. The plan will covers approximately 230 interventions, concentrated primarily in 2020, with the aim of mitigating heatwave risk (most of the interventions) and flood risk (residual). Upgrade of plumbing risers In Resolution 467/2019/R/eel, the regulator began experimenting with regulation of the upgrade of aging plumbing risers in buildings, with effect from 1 January 2020 and for a three-year period. The regulation aims to: a) conduct a national census of aging plumbing risers; b) encourage condominiums to upgrade their plumbing risers; c) ensure greater access to withdrawals of electricity; d) gain experience for use in subsequently drawing up a stable regulatory framework.
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ACEA Group
2G smart meters In Resolution 306/2019, ARERA updated, for the three-year period 2020-2022, the directives regarding recognition of the costs relating to 2G (second-generation) smart metering systems used in the metering of LV electricity, and the provisions regarding their rollout. In September 2019, Areti submitted to the regulator a request for recognition of this type of investment, and presented its plan to the public in October 2019. The process of consulting on Areti’s 2G smart meters plan, provided for in Resolution 306, came to an end in November . In 2020, the regulator is due to publish a resolution approving the costs involved in Areti’s 2G smart metering systems. The plan envisages the replacement of 2.3 million meters by 2034, at an overall cost of €546 million, including capex
REGULATORY CHANGES IN 2019
42
ACEA Group
WACC ELECTRICITY DISTRIBUTION 2016-2018 2019-2021 654/2015 - All.D 639/2018 Wacc real
pre-tax
5.6%
5.9%
Kereal
16-17
4.9% 5.7% Factor Ke 84.8% 72.5% Kdreal
16-17
2.0% 2.4% Factor Kd 0.49 0.55 F 0.5% 0.5% Kereal
16-17
4.9% 5.7% RF nominal 0.79% 0.64% isr16-17 1.39% 1.62% RFRreal 0.5% 0.5% b asset 0.39 0.39 b levered 0.61 0.68 tc16-17 27.50% 24.00% T corrected for inflation 34.40% 31.0% d (g)
44% 50%
e (1-g)
56% 50%
d/e 0.80 1.00 TMR 6.0% 6.0% ERP 5.5% 5.5% CRPp 1.00% 1.39% Kdreal
16-17
2.00% 2.39% CRPp 1.00% 1.39% DRP 0.50% 0.50% F 0.50% 0.46% ia 1.50% 1.70% 33.8% 27.5% WACC GAS DISTRIBUTION 2016-2018 2019 2020-2021 654/2015 - All.D 639/2018 570/2019 Wacc real
pre-tax
6.1% 6.3%
6.3%
Kereal
16-17
5.0% 5.8% 5.8% Factor Ke 95.3% 80.6% 80.6% Kdreal
16-17
2.0% 2.4% 2.4% Factor Kd 0.41 0.49 0.49 F 0.5% 0.5% 0.5% Kereal
16-17
5.0% 5.8% 5.8% RF nominal 0.79% 0.64% 0.64% isr16-17 1.39% 1.62% 1.62% RFRreal 0.5% 0.5% 0.5% b asset 0.44 0.44 0.44 b levered 0.63 0.71 0.71 tc16-17 27.50% 24.00% 24.00% T correction for inflation 34.4% 31.0% 31.0% d (g)
37.5% 44% 44%
e (1-g)
62.5% 56% 56%
d/e 0.60 0.80 0.80 TMR 6.0% 6.0% 6.0% ERP 5.5% 5.5% 5.5% CRPp 1.00% 1.39% 1.40% Kdreal
16-17
2.00% 2.39% 2.40% CRPp 1.00% 1.39% 1.40% DRP 0.50% 0.50% 0.50% F 0.54% 0.49% 0.49% ia 1.50% 1.70% 1.70% 36.7% 29.5% 29.5%
43
ACEA Group
In response to the COVID emergency, in Resolution 60/2020 (revised) ARERA introduced a moratorium on efforts to recover unpaid bills payable by households and small businesses. As a result, Resolution 116/2020 (revised) allows users to make part payment of bills for electricity transmission and gas distribution falling due in April, May and June 2020 and permits distributors to make part payment of amounts covering general system costs to the CSEA and GSE. In Resolution 248/2020, ARERA has set out the procedure for paying previously unpaid amounts, and specifically:
September 2020 or pay in instalments (three monthly instalments, the first falling due in September);
costs until they have paid the full total billed for general system costs during the period;
which collection takes place, general system costs until they have paid the full total billed for general system costs during the period. ARERA RESOLUTION 248/2020 “Urgent measures linked to the Covid-19 pandemic: procedure for recovering amounts not paid to distributors by electricity transmission and natural gas distribution users and general system costs not already paid to the CSEA and GSE”
44
ACEA Group
The RAB (after impact
regulatory accounting), taken into account when determining the tariff for year n, corresponds to the value of fixed assets in year n (based
revalued using deflators for the period) less accumulated depreciation, calculated to year n, revalued using deflators for the period.
Under the regulatory framework, the RAB does not include goodwill recognised in the companies’ statutory financial statements.
ELECTRICITY DISTRIBUTION (€m) 2018 2020 Plan 2022 Plan RAB ARETI 2,085 2,281 2,432
46
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Operational excellence on key processes and reduction of 20% on CtS and 15% on CtC Strong commercial boost (3x vs. 2018) supported by a new offering model Strengthening of digital channels (10% on total acquisitions) Launch of new Value Added Services (e.g. smart meters, insurance, thermal systems) Entrance in the flexibility market (T erna auction for UVAM assigned to T
Increase of share of pull commercial channels (e.g. Shop, Branch and Digital) up to 50% Signed with ERG two Power Purchase Agreements (PPA) concerning the supply of renewable energy totalling 1.5 TWh during the period 2020-2022 (October 2019)
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ACEA Group
€M €M
CAGR 8.2% CAGR 31.4%
CAGR 19.3%
Millions
Old Plan
*Investments include Commissioning Capitalizations IFRS15 Power Mkt | Maggior Tutela Power Mkt | Free Gas
48
ACEA Group END OF ENHANCED PROTECTION MARKET Law 124/2017 called for the end of the enhanced protection market in the electricity and gas sectors from 1 July 2019. This deadline was extended until 1 July 2020 by the Law converting Law Decree 91/2018 – Law 108 of 21 September 2018. Law Decree 162/2019 (the so-called Milleproroghe legislation) has in turn further delayed the withdrawal of price protections until 1 January 2022. REGISTER OF SELLERS The annual competition and markets legislation, Law 124 of 2017, which came into force on 29 August 2017, requires the sellers of electricity to be enrolled on a Register of Electricity Sellers, to be created by the Ministry for Economic Development on the proposal of the regulator . In Resolution 762/2017/I/eel, the regulator set out an initial proposal to the Ministry, which, however , has yet to issue the related decree. Law Decree 162/2019 (the so-called Milleproroghe legislation) calls on the Ministry, in consultation with ARERA, to prepare a decree, to be implemented within 90 days, establishing the criteria, procedures and requirements (technical, financial and integrity) for enrolment and continued presence on the Register of Sellers. In serious cases of non- compliance or failure to meet the above requirements, or in situations deemed to be critical with respect to general principles governing the correct functioning of markets and consumer protections, the Ministry may exclude sellers from the Register .
END OF ENHANCED PROTECTION MARKET REGISTER OF SELLERS
49
ACEA Group TWO-YEAR STATUTE OF LIMITATIONS
Following the 2018 Budget Law (no. 205/2017), ARERA consulted on a number of occasions with stakeholders on
customers were not responsible for the delay in billing (the two-year statute of limitations). ARERA then adopted resolutions 97, 264 and 569 in 2018, containing regulations to be applied during the subsequent steps. To date, the regulator has established, among other things, that operators have an obligation to inform customers of their right to assert a statute of limitations with a notice in the bill containing the amount due and in the related past due notices. Several operators and associations have requested a review of the latest resolution, no. 569. In Resolution 683/2018/R/com, the regulator, whilst rejecting the above request, has in any event granted operators the right to adopt specific, differentiated approaches to the billing of amounts relating to consumption dating back more than two years. In the same resolution, the regulator has also introduced a requirement for distributors to return any amounts previously paid by sellers, where the distributor is responsible for the delay in billing, by offsetting the amount to be returned against future payments. Definition of the procedures to be followed by sellers when requesting Terna or Snam to review the matching amounts relating to the dispatching or balancing service, where the statute of limitations has been applied due to a failure on the part of the distributor, has been put off until another resolution. The 2020 Budget Law, no. 160 of 27 December 2019, has established that the provisions regarding the two-year statute of limitations are also applicable to customers where failure to record or the erroneous recording of consumption data is the proven responsibility of the customer.
General system costs
In Consultation Document 52/2018, ARERA proposed a mechanism, for the benefit of sellers, similar to the one for distributors introduced by Resolution 50/2018, under which any general system costs paid but not collected are to be
consumers’ associations, who are against mechanisms based on an approach that merely socialises costs. Following this, ARERA organised a series of working groups with operators and consumers’ associations to look at (i) the new «model for the system» that ARERA intends to adopt in order to establish how general system costs are to be collected, and the process for monitoring billing and the collection of payments; (ii) management of the recovery of general system costs billed from 2016 in the free market and not collected, presenting a mechanism designed to ensure that sellers are compensated and that also takes into account the recovery of overdue amounts that has already taken place through the prices applied in the free market.
TWO-YEAR STATUTE OF LIMITATIONS GENERAL SYSTEM COSTS
50
ACEA Group 2020 BUDGET LAW The 2020 Budget Law, no. 160 of 27 December 2019, has among other things established: 1) an obligation for operators to send customers reminders requesting payment of unpaid bills and notifying them that their power will be cut off with at least forty days notice and by registered mail; 2) that, in the event of the seller failing to comply with the law governing billing (violations of the requirements in relation to metering, back-billing or billing, charges for unjustified expenses or for the cost
form of a specific statement presented independently by the customer , including those presented on line”, the seller has no more than 15 days to refund any amounts paid by the customer and to pay a penalty equal to 10% of the contested, undue amount, and in any event no less than €100.
2020 BUDGET LAW
52
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Self-sufficiency in sludge treatment with innovative thermal hydrolysis technologies (80 kton) Doubling of treated waste (2.2 Mton target) with new plant development (e.g., organic fraction, liquid/sludge treatment, multi-material) Bioecologia integration with liquid waste treatment plant (~ 110 kton) M&A and development in a Circular Economy perspective focused on material recovery (200+ kton) Partnership with market operators for the recovery
economy perspective
Implementation of old BP strategic initiatives
Acquisition of 90%
treatment plant with an authorized capacity of 75,000 tons per year (July 2019)
Acquisition of 60%
Tons per year (July 2019)
Inaugurated at Monterotondo Marittimo (Grosseto) one
an authorized capacity of 70 kton per year (October 2019)
Acquisition of 60% of Ferrocart and Cavallari (which owns 100% of Multigreen), active in the storage, treatment and selection of waste with a total authorized capacity of more than 145,000 tons per year (April 2020)
Acquisition of 70% of Simam, a leading company in the engineering, construction and management of water and waste treatment facilities, and in environmental interventions and remediation, with high-tech global services (May 2020)
Environment / Engineering and Services areas
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ACEA Group
€M €B
CAGR -9.8% CAGR 19.6%
CAGR 3.9%
Mton
Old Pian
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ACEA Group
MD 6 July 2012 (GRIN system ex-GCs) Conversion of the right to GCs into an incentive is introduced by art. 19 of the Ministerial Decree (“MD”) of 6 July 2012. The incentive is added to revenue generated by the electricity fed into the grid, and is equal to: I = k·(180 – Re)·0.78 Factor k is defined by the regulation based on the type of source and intervention (for San Vittore and Terni k = 1.3). The term Re indicates the average sale price for electricity registered and communicated annually by ARERA. MD 6 July 2012 and MD 23 June 2016 (FER-E system) These decrees have established, among other things, the method for computing the incentive and the feed-in tariff (the second is valid only if the capacity of the plant is below a specific ceiling) in relation to the energy source, the type of intervention (namely: new plant, reconstruction, etc.) and the plant’s capacity.
Existing regulations regarding incentives for renewable sources other than photovoltaic (Min. for Econ. Dev. Decree of 23 June 2016, which has amended the previous ministerial decree of 6 July 2012) envisages the following forms of incentive: Feed-in tariff, being the total revenue generated from electricity fed into the grid and from the incentive (only for plants with capacity below a set amount, equal to 500 kW); Incentive, being additional revenue linked to electricity fed into the grid, as more fully described in the above decree. The feed-in tariff and the incentive have different purposes: Energy source (wind, biomass, geothermal, hydro, biogas, etc.) and type (e.g. biomass type A, B, C and D) Type of project (new plant, reconstruction, reactivated, repowering, total or partial upgrade) Plant capacity (nominal capacity in MW resulting from the sum of the electric capacity of the alternators,
55
ACEA Group
San Vittore del Lazio Lines 2 and 3 Lines 2 and 3 entered service in April 2011 and July 2011, respectively. These currently qualify for an incentive associated with capacity above 23.2 MW; it is supported by the Incentive (GRIN, ex-GC system) regulated by art. 19 of the MD of 6 July 2012 (conversion of GCs into Incentive), the value of which in the current year is based on the average sale price of electricity in the previous year. Estimated value: €96.37/MWh, based on the portion of the energy qualifying for the incentive (approximately 50% of the electricity fed into the grid). San Vittore del Lazio Line 1 Line 1 entered service on 1 October 2016. The incentive (FER-E system) is determined in accordance with the detailed rules provided by the MD of 6 July 2012. Estimated value: €43.05/MWh, solely with regard to the portion of the energy qualifying for the incentive (approx. 50% of the electricity fed into the grid, provided that it is type-C biomass). Terni A WTE plant that entered service in December 2012. This currently qualifies for the Incentive (GRIN ex-GC system) regulated by art. 19 of the MD of 6 July 2012 (conversion of GCs into Incentive), the value of which in the current year is based on the average sale price of electricity in the previous year. Estimated value: €96.37/MWh, based on the portion of the energy qualifying for the incentive (approximately 45% of the electricity fed into the grid). Orvieto (biogas from landfill) The plant has two sections: M1 and M2, which entered service in November 2007 and March 2013, respectively. Section M2 currently qualifies for the Incentive (GRIN ex-GC system), regulated by art. 19 of the MD of 6 July 2012 (conversion of GCs into Incentive), the value of which in the current year is based on the average sale price of electricity in the previous year, reduced by multiplying factor «k», amounting to 0.80 (for M2). Estimated value: k x €96.37/MWh, based on the electricity sold above the threshold of 6999.4 MWh/year, reduced by a multiplying factor of 0.9 (for M2). Orvieto (biogas from anaerobic digestion) The plant has two sections: M1 and M2, both of which entered service in November 2015. The incentive (FER-E system) is determined in accordance with the detailed rules provided by the MD of 6 July 2012 and consists of a feed-in tariff (all-inclusive P < 1 MW) of €174.44/MWh, based on the portion
Aprilia (biogas from anaerobic digestion) The plant that entered service in December 2019. The incentive (FER-E system) is determined in accordance with the detailed rules provided by the MD of 6 July 2012. Estimated value: €50.60/MWh, with regard to the portion of the energy qualifying for the incentive (approx. 95% of the electricity fed into the grid, provided that it is type-C biomass).
Estimated incentives and tariffs
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ACEA Group
158/99), with the introduction of certain elements such as sharing arrangements for revenue from the sale
between capex being carried out and its recognition in RAB.
quality of service provided and changes in the scope of operations.
previous two years and no longer on forecasts.
costs and subsequent adjustments for 2018 and 2019 (introduced
progressive basis and recognisable over no more than 4 years).
the charges covering the costs of disposal and treatment and of treatment and recovery are determined on the basis of approved and/or negotiated tariffs.
ARERA RESOLUTION 443/2019
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ACEA Group
Estimated incentives and tariffs (budget 2020)
Plant Ref. Tariff/Incentive Value Expiry Fixed/variable
Terni GRIN ex-GC, MD 6 July 2012 Incentive €96.37/MWh 2028 Variable (SP)* San Vittore d. Lines 2 e 3 (P < 23,2) GRIN ex-GC, MD 6 July 2012 Incentive €96.37/MWh 2026 Variable (SP)* San Vittore d. Linea1 FER-E, MD 6 July 2012 Incentive €43.05/MWh 2036 Variable (ZP)** Orvieto Discarica GRIN ex-GC, MD 6 July 2012 Incentive €77.10/MWh 2026 M2 Variable (SP)* Orvieto Landfill + Composting FER-E, MD 6 July 2012 Feed-in tariff €174.44/MWh 2035 Fixed Orvieto Landfill + Composting FER-E, MD 23 June 2016 Incentive €50.60/MWh 2039 Variable (ZP)**
Type of plant MD 6 July 2012 MD 23 June 2016
Biogas plant between 0.6 and 1 MW €178/MWh €160/MWh Biogas plant between 1 and 5 MW €125/MWh €112/MWh WTE plants > 5 MW €125/MWh €119/MWh
* Sale price (previous year) ** Zonal price (current year)
Basic tariffs applicable to Acea’s plants
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ACEA Group
Overall view of electricity production plants
Treatment plant FER e.e. Number of sets Installed capacity (MW) Gross production 2019 (GWh) Terni SSF (pulper) 1 13.6 80.93 Paliano
SSF (ex RDF) 3 43.8 276.27 Orvieto (1) biogas 4 3.125 19.79 Monterotondo M. (2) biogas 1 0.834
biogas 3 3.0
sets with total capacity of 0.998 MW. (2) Production plant to be built as part of expansion; one biogas-fueled set for Monterotondo (834 kW nominal) and 3 biogas-fueled sets for Aprilia (total nominal capacity of approx. 3,000 kW). (3) Plant not expected to produce electricity.
ACEA Group
TITOLO PRESENTAZIONE / Luogo e data
ACEA Group
ACEA Group
H1 2020 Results 61
KEY TRANSACTIONS COMPLETED SINCE THE BEGINNING OF THE YEAR
Successful placement of a €500m bond issue, with a term of 9 years and paying interest of 0.50% (January 2020). Signature of an agreement to acquire 51% of «Alto Sangro Distribuzione Gas» (537 km of network, 34,000 redelivery points in the province of l’Aquila). (March 2020) Acquisition of 60% of «Ferrocart» and «Cavallari» (which owns 100% of Multigreen) – 4 waste storage, treatment and sorting plants, handling 145 thousand tonnes per year (April 2020) Acquisition of 70% of Simam, a leader in the design, construction and operation of liquid waste treatment plants and in the delivery of environmental and remediation projects, offering integrated high-tech solutions (May 2020) Acquisition of photovoltaic plants continues, with total installed capacity amounting to up to 45 MWp. Development of primary market projects, 40 MWp already authorised (H1 2020) out of a pipeline of over 400 MWp Fitch’s confirmation of Acea’s rating of «BBB+» with a «Stable» outlook. (May 2020) Standard Ethics has upgraded the outlook for Acea from ‘‘Stable’’ to ‘‘Positive’’. The rating is ‘‘EE-’’ (July 2020). Acea is a member of the SE European Multi-Utilities index.
SIGNIFICANT IMPROVEMENT IN RESULTS DESPITE THE IMPACT OF THE HEALTH EMERGENCY GROWTH IN INVESTMENT IN REGULATED INFRASTRUCTURE CONTINUES
ACEA Group
H1 2020 Results 62
IMPACT OF ‘‘COVID-19 EMERGENCY’’
14% 86%
EBITDA from non-regulated businesses EBITDA from regulated businesses
HIGH RESILIENCE due to major presence in regulated businesses
H1 2020
UPDATED GUIDANCE FOR 2020:
RAISED Previous guidance +6%/+8%
CONFIRMED
CONFIRMED
SOLID FINANCIAL STRUCTURE LIQUIDITY WILL ENABLE US TO MEET OBLIGATIONS FALLING DUE AND SERVICE DEBT BEYOND 2024
THE GROUP CONTINUES TO SEE STRONG GROWTH DESPITE THE NEGATIVE IMPACT OF THE HEALTH EMERGENCY.
TO BE ALMOST ENTIRELY RECOVERED BY THE END OF 2020
ACEA Group
H1 2020 Results 63
Use of smart working arrangements continued Guaranteed continuity and efficiency of all the services provided. Ongoing «dialogue» with local communities and all the Group’s stakeholders. RECOVERY Plan already launched. Rollout of serological testing for «Covid-19» for 3,000 employees. Over 1,900 tests carried out.
Integrated water cycle, energy transition, circular economy, networks, smart cities, e-mobility…. Utilities will play a central role in the country’s «restart». The European Green Deal will help to relaunch investment that will be a key driver of the economic recovery. Acea confirms its strong commitment to:
the water sector in Italy
THE EUROPEAN REGULA TORY FRAMEWORK IS EVOLVING: GROWTH OPPORTUNITIES
Green Deal - National Energy and Climate Plan - Recovery Fund - ‘‘Simplifications’’ Decree
Plan to double the capacity
the Peschiera Acqueduct included in the ‘‘Simplifications’’ Decree as a ‘‘priority project’’ for Italy.
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H1 2020 Results
(€m) H1 2020 (a) H1 2019 (b) % change (a/b) Consolidated revenue 1,622.0 1,553.1 +4.4% EBITDA 568.7 502.6 +13.2% EBIT 277.4 260.2 +6.6% Group net profit 143.8 143.0 +0.6%
Capex
410.6 342.0 +20.1% (€m) 30 June 2020 (a) 31 Dec 2019 (b) 30 June 2019 (c) % change (a/b) % change (a/c) Net debt 3,527.5 3,062.8 2,842.5 +15.2% +24.1%
* The increase in the workforce is primarily due to changes in scope (AdF +402; Acea Perù +437; Environment +172; Simam +132)
H1 2020 H1 2019 Change 7,909 6,611 +1,298*
Average Group workforce
BUSINESSES (Water, Electricity Distribution)
ACTIVITIES MOST EXPOSED TO THE CRISIS
FIORA (AdF)
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ACEA Group
H1 2020 Results
EBITDA H1 2020 EBITDA (€m)
* Line-by-line consolidation of AdF ** Line-by-line consolidation of Consorcio Agua Azul, following the increase in the interest to 44% ^ Engineering, Corporate ^^ Contribution from consolidation using the equity method 1% 2% 5% 5% 36% 54%
Corporate Engineering Overseas Environment Commercial & Trading Energy Infrastructure Water
H1 2019 Water Energy Infrastructure Commercial & Trading Environment Overseas Other^ H1 2020
502.6 61.4* 12.8 (1.4) (7.3) 568.7 (5.3) 5.9**
(€m)
H1 2020 H1 2019 AdF 30.6 ^^2.6 Consorcio Agua Azul 5.0 ^^0.6 Pescara Distribuzione Gas 1.1 0.5 Demap 2.0
1.1
1.6
1.1
5.7
48.2 3.7
Contribution to EBITDA of consolidationof AdF, Consorcio Agua Azul and new acquisitions EBITDA (€m) 305.4 206.1 29.8 26.2 13.8 (12.6)
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H1 2020 Results
(€m) H1 2020 (a) H1 2019 (b) % change (a/b) EBITDA 305.4 244.0 +25.2%
Acea ATO2 200.8
176.8
+13.6% Acea ATO5 15.7
13.1
+19.8% Gori 39.5
34.2
+15.5% AdF 30.6 2.6 n/s Equity-accounted water companies 15.8
15.2
+3.9% Other consolidated water companies 1.9
1.6
+18.8% Pescara Distribuzione Gas 1.1 0.5 n/s
Capex 229.2 168.3 +36.2%
Including gas distribution
EBITDA main drivers
period 2020-2023 (Arera Resolution 580/2019):
(€16.8m), offset by recognition of new cost components (including those relating to sludge disposal)
October 2019): +€28.0m
(March 2019): +€0.6m EBITDA GROWTH KEY HIGHLIGHTS
Sangro Distribuzione Gas’’
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H1 2020 Results
KEY HIGHLIGHTS
Declining volumes and sharp fall in energy market prices, partly due to Covid-19 emergency Fhotovoltaic +€5.7m
regulatory effects) EBITDA GROWTH
secondary market, increasing total capacity to ~45 MWp
EBITDA main drivers
(€m) H1 2020 (a) H1 2019 (b) % change (a/b) EBITDA 206.1 193.3 +6.6%
181.3 168.2 +7.8%
24.1 25.4
0.7
n/s
Capex 141.3 133.4 +5.9%
4,755 4,256 H1 2019 H1 2020
Total elec tr ic ity distr ibuted ( G W h )
1,631 1,635 H1 2019 H1 2020
Numbe r of PO Ds
( ‘0 0 0 s )
340 321* H1 2019 H1 2020
Total elec tr ic ity pr oduc ed ( G W h )
* of which photovoltaic: 28 GWh
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H1 2020 Results
KEY HIGHLIGHTS
EBITDA main drivers
market: revised mechanism for compensating for delinquent accounts (ARERA Resolution 100/2020)
March-June period due to Covid-19 emergency (€m) H1 2020 (a) H1 2019 (b) % change (a/b) EBITDA 29.8 31.2
Capex 17.4 18.5
347 414 813 766
H1 2019 H1 2020
1,998 2,351 1,136 1,017
H1 2019 H1 2020
Total ener gy sold
( G W h )
3,134 1,160
Free market Enhanced protection market
number of mass market customers
179 198 H1 2019 H1 2020 83 90 H1 2019 H1 2020
EBITDA
3,368
N u mb er of elec tr ic ity c ustomer s ( ‘0 0 0 s )
1,180
Total gas sold (Mm 3) N umber of gas c ustomer s (‘000s)
regulation and reduced consumption of business customers
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H1 2020 Results
(€m) H1 2020 (a) H1 2019 (b) % change (a/b) EBITDA 26.2 33.5
2.0
Berg 1.1
Ferrocart/Cavallari/ Multigreen 1.6
Capex 9.5 10.6
EBITDA main drivers
(-€18.0m) KEY HIGHLIGHTS H1 2020
Multigreen (waste storage, treatment and sorting)
* Includes ash disposed of
170 173 H1 2019 H1 2020
E ner gy sold ( G W h )
631 778 H1 2019 H1 2020
T re atme nt and disposal* ( Kt onne s )
(April 2020): +€1.6m
EBITDA
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H1 2020 Results
EBIT (€m) NET PROFIT (€m) (€m)
H1 2020 H1 2019 % change
Depreciation 239.9 200.1 +19.9% Write-downs 43.8 36.0 +21.7% Provisions 7.5 6.3 +19.0% T
291.2 242.4 +20.1%
Consolidation of AdF (€13.0m) Increased capex, above all in Water segment Consolidation of AdF (€0.7m)
260.2 277.4
H1 2019 H1 2020
143.0*
H1 2019 H1 2020
143.8**
* Net profit H1 2019: Recognition of non-recurring item (€1.5m) relating to Agua Azul Bogotà Presence of CIP6 incentives (Environment segment), ended 1 August 2019 (€13m) ** Net profit H1 2020: Impact of consolidation of AdF and Consorcio Agua Azul fully offset by at the level of net profit by effect of profit attributable to non-controlling interests
Effect of Covid-19 emergency and consolidation of AdF (€0.9m)
TAX RATE 30.0% 30.5%
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H1 2020 Results
water and sewage pipes
maintenance of water centres
plants
(€15.5m)
grid
work on secondary substations and on the MV and LV network
plant
Orvieto landfill
acquisition
* Engineering, Corporate
Pedro: reduced investment
12% 88% Investment in non- regulated businesses Investment in regulated businesses
Capex (€m) 229.2 141.3 17.4 9.5 0.9 12.3
projects
342.0 60.9 7.9 (1.1) (1.1) (2.7) 4.7 410.6
H1 2019 Water Energy Infrastructure Commercial & Trading Environment Overseas Other* H1 2020
Capex: +20.1%
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ACEA Group
H1 2020 Results
The increase in net working capital in H1 2020 is primarily due:
payments in arrears at Acea Energia and the water companies (~€60m) deferred collection of regulatory items (~€60m)
H1 2020 H1 2019 EBITDA 569 503
Change in working capital
(210) (96)
Capex
(411) (342)
FREE CASH FLOW
(52) 65
Net finance income/(costs)
(43) (43)
Change in provisions
(56) (54)
Income tax paid
(45)
(166) (151)
Other
(16) (19)
M&A
(86) (15)
IFRS 16
TOTAL CASH FLOW
(464) (274)
EBITDA H12020 Change in working capital Capex Finance costs Change in provisions Total cash flow Other M&A Dividends
569
Income tax paid
(210) (411) (43) (56) (45) (166) (16) (86) (464)
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73
ACEA Group
H1 2020 Results
Ratings
BBB+ Stable Outlook
82% 18%
(€m) 30 June 2020 (a) 31 Dec 2019 (b) 30 June 2019 (c) Change (a-b) Change (a-c) Net debt 3,527.5 3,062.8 2,842.5 464.7 685.0
Medium/long-term 4,095.8 3,523.3 3,431.1 572.5 664.7 Short-term (568.3) (460.5) (588.6) (107.8) 20.3
NET DEBT/ EBITDA LTM 30 June 2020
3.2x
Baa2 Stable Outlook
3% 97%
Structure of debt
(maturity and interest rates at 30 June 2020)
> Fixed rate 82% > Average cost 1.82% > Average term 5.85 years
Floating rate Fixed rate Debt falling due after 2021 Debt falling due by 2021
29 January 2020 – Issue of bonds worth €500m under EMTN. Bonds have a 9-year term and pay a fixed rate of 0.50%
TITOLO PRESENTAZIONE / Luogo e data
ACEA Group
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75
Acea Group
Q1 2020 Results
«WATER EMERGENCY» (Q3 2017) effectively dealt with, ensuring continuity of service (~2,300 interventions, with large reduction in network leaks)
840 933 1,042
2017 2018 2019
EBITDA (€m)
EFFICIENCY AND COMUNITY ENGAGEMENT
532 631 793
2017 2018 2019
CAPEX (€m)
FOCUS ON INFRASTRUCTURE, INNOVATION AND SUSTAINABILITY
0.63 0.71 0.78
2017 2018 2019
DPS (€)
CREATION OF SHAREHOLDER VALUE
SHARE PRICE AT ALL-TIME HIGH since 27 April 2017 (the date the new Board of Directors took office):
Agreement with Open Fiber (January 2018) for the rollout of an ultrafast broadband communications network in the city of Rome. Bond issues totalling €2bn Evolving business mix: acquisitions in gas, environment and photovoltaic sectors, consolidation of Gori and Acquedotto del Fiora:
New BUSINESS PLAN 2019-2022 approved (April 2019) bringing forward targets announced to market in November 2017 by over twelve months.
Targets in existing Plan:
EBITDA (€m)
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76
Acea Group
Q1 2020 Results
Establishment of a Committee for managing Covid-19 preventive measures Reorganisation of work with expanded use of digital tools and the large-scale adoption of smart working arrangements (with over 85% of staff working from home) Guranteed continuity and efficiency of all the services provided. Ongoing «dialogue» with local communities and all the Group’s stakeholders. Introduction of special insurance cover for the Group’s employees and their families. Special attention paid to employees with underlying health issues. Donations to the health service (the Lazzaro Spallanzani and Agostino Gemelli hospitals). 6,369 hours donated by the Group’s employees to the Lazzaro Spallanzani hospital. Launch of a progessive, phased RECOVERY PLAN.
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77
Acea Group
Q1 2020 Results
KEY EVENTS DURING THE FIRST QUARTER OF 2020:
redelivery points in the province of l’Aquila). The transaction is in line with the gas market growth strategy and strengthens Acea’s presence in the sector in Abruzzo (March 2020).
THE ACEA GROUP CONTINUED TO DELIVER GROWTH IN THE FIRST QUARTER OF 2020, DRIVEN BY OUR MAJOR INVESTMENT PROGRAMME
KEY EVENTS AFTER 31 MARCH 2020:
Multigreen) – 4 waste storage, treatment and sorting plants, handling 145 thousand tonnes per year (April 2020).
tech solutions (May 2020)
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78
Acea Group
Q1 2020 Results
The impact of the «Covid-19 emergency» on the operating results for the first quarter of 2020 is negligible thanks to the Acea Group’s resilience, reflecting the fact that we primarily operate regulated businesses (contributing approximately 85% of consolidated EBITDA). In the last few days of the first quarter, we saw a slowdown in cash generated by sales, the impact of which will be offset over the coming months. The Group also has significant cash reserves: approximately €800m at 31 March 2020, in addition to approximately €600m in new loans and committed credit facilities in the process of being finalised. This liquidity will enable us to meet our obligations and service debt through to 2024 and beyond. THE PREVIOUSLY ANNOUNCED GUIDANCE FOR 2020 IS CONFIRMED: (assuming a full return to normal business activity from 1 July 2020)
In terms of the potential outlook for the impact of the «Covid-19 emergency» on the Acea Group’s financial performance, we do not expect – based on the current situation – that there will be a significant effect on the results for the current year.
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79
Acea Group
Q1 2020 Results
(€m) Q1 2020 (a) Q1 2019 (b) % change (a/b) Consolidated revenue 833.5 823.3 +1.2% EBITDA 276.4 247.9 +11.5% EBIT 136.8 132.8 +3.0% Group net profit 70.6 75.5
Capex
190.0 151.2 +25.7% (€m) 31 Mar 2020 (a) 31 Dec 2019 (b) 31 Mar 2019 (c) % change (a/b) % change (a/c) Net debt 3,184.4 3,062.8 2,675.7 +4.0% +19.0% (€m) Q1 2020 Q1 2019 Acquedotto del Fiora 15.1 1.4° Pescara Distribuzione Gas 0.5
1.2
0.6
2.3
Acquedotto del Fiora and new acquisitions
° Contribution from consolidation of equity-accounted investments * The increase in the workforce is primarily due to changes in scope (Acquedotto del Fiora +399; Pescara Distribuzione Gas +13; Acea Perù +499; Consorcio Agua Azul +32; Demap +15; Berg +18 )
Q1 2020 Q1 2019 Change 7,706 6,608 +1,098*
Average Group workforce
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80
Acea Group
Q1 2020 Results
EBITDA Q1 2020 EBITDA (€m)
15% 85%
EBITDA from non- regulated businesses EBITDA from regulated businesses ^ Line-by-line consolidation of Acquedotto del Fiora * Line-by-line consolidation of Consorzio Agua Azul, following the increase in the interest to 44% ** Engineering & Services, Corporate 1% 2% 4% 6% 37% 53%
Corporate Engineering & Services Overseas Environment Commercial & Trading Energy Infrastructure Water
Q1 2019 Water Energy Infrastructure Commercial & Trading Environment Overseas Other** Q1 2020
247.9 23.7^ 5.9 0.7 (4.4) 276.4 (0.8) 3.4*
EBITDA
(€m)
145.3 101.4 17.1 12.5 7.2 (7.1)
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81
Acea Group
Q1 2020 Results
(€m) Q1 2020 (a) Q1 2019 (b) % change (a/b) EBITDA 145.3 121.6 +19.5%
Acea ATO2 99.4 89.5 +11.1% Acea ATO5 5.4 6.6
Gori 17.0 17.9
Acquedotto del Fiora 15.1 1.4 n/s Equity-accounted water companies 6.9 5.5 +25.5% Other consolidated water companies 1.0 0.7 +42.9% Pescara Distribuzione Gas 0.5
Capex 104.0 73.1 +42.3%
Including gas distribution
EBITDA main drivers
regulatory period 2020-2023 (Arera Resolution 580/2019): effect of investment in growth recognition of new cost components no award of bonus for commercial quality
Fiora (from October 2019): +€13.7m
(March 2019): +€0.5m EBITDA GROWTH KEY HIGHLIGHTS
Fiora
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82
Acea Group
Q1 2020 Results
KEY HIGHLIGHTS
prices, partly due to the “Covid-19 emergency”)
EBITDA GROWTH
total capacity to ~29MWp
EBITDA main drivers
(€m) Q1 2020 (a) Q1 2019 (b) % change (a/b) EBITDA 101.4 95.5 +6.2%
91.0 81.8 +11.2%
11.0 14.9
(0.6) (1.2) n/s
Capex 66.2 63.7 +3.9%
2,454 2,308 Q1 2019 Q1 2020
Total elec tr ic ity distr ibuted ( G W h )
1,630 1,636 Q1 2019 Q1 2020
N umber of c ustomer s
( ‘0 0 0 s )
167 146 Q1 2019 Q1 2020
Total elec tr ic ity pr oduc ed ( G W h )
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83
Acea Group
Q1 2020 Results
KEY HIGHLIGHTS
EBITDA main drivers
market: revised mechanism for compensating for delinquent accounts (ARERA Resolution 100/2020)
March due to “Covid-19 emergency” (€m) Q1 2020 (a) Q1 2019 (b) % change (a/b) EBITDA 17.1 16.4 +4.3% Capex 9.0 6.1 +47.5%
342 414 831 775
Q1 2019 Q1 2020
1,047 1,263 599 532
Q1 2019 Q1 2020
Total ener gy sold
( G W h )
1,646 1,173 Free market Enhanced protection market
number of mass market customers
177 195 Q1 2019 Q1 2020 64 68 Q1 2019 Q1 2020
EBITDA
1,795
N umber of elec tr ic ity c ustomer s ( ‘0 0 0 s )
1,189
Total gas sold (Mm 3) N umber of gas c ustomer s (‘000s)
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84
Acea Group
Q1 2020 Results
(€m) Q1 2020 (a) Q1 2019 (b) % change (a/b) EBITDA 12.5 16.9
1.2
Berg 0.6 . n/s
Capex 3.9 3.1 +25.8%
EBITDA main drivers
(-€6.6m) KEY HIGHLIGHTS Q1 2020
treatment)
* Includes ash disposed of
85 87 Q1 2019 Q1 2020
E lec tr ic ity sold ( G W h )
304 384 Q1 2019 Q1 2020
T re atme nt and disposal* ( Kt onne s )
EBITDA EVENTS AFTER 31 MARCH 2020
«Ferrocart» and «Cavallari» (waste storage, treatment and sorting)
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85
Acea Group
Q1 2020 Results
EBIT (€m) NET PROFIT (€m) TAX RATE 29.6% 30.0% (€m)
Q1 2020 Q1 2019 % change
Depreciation 117.1 95.2 +23.0% Write-downs 19.9 18.6 +7.0% Provisions 2.6 1.4 +85.7% T
139.6 115.2 +21.2%
Consolidation of Acquedotto del Fiora (€6.3m) Increased capex Consolidation of Acquedotto del Fiora (€0.5m)
132.8 136.8
Q1 2019 Q1 2020
75.5*
Q1 2019 Q1 2020
70.6**
* Net profit Q1 2019: Recognition of non-recurring item (€1.5m) relating to Agua Azul Bogotà Presence of CIP6 incentives (Environment segment), ended 1 August 2019 (€5m) ** Net profit Q1 2020: Impact of consolidation of Acquedotto del Fiora fully offset by at the level of net profit by effect of profit attributable to non-controlling interests
Consolidation of Acquedotto del Fiora (€0.6m)
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86
Acea Group
Q1 2020 Results
water and sewage pipes
(€6.7m)
and on the M V and LV network
and Salisano hydroelectric plants and T or di V alle and M ontemartini thermoelectric plants
M arittimo plant
O rvieto landfill
acquisition
new ‘‘C ustomer Relationship M anagement’’
* Engineering & Services, Corporate
P edro: minor investment
13% 87% Investment in non- regulated businesses Investment in regulated businesses
Capex (€m) 104.0 66.2 9.0 3.9 0.8 6.1
projects
151.2 30.9 2.5 2.9 0.8 (0.7) 2.4 190.0
Q1 2019 Water Energy Infrastructure Commercial & Trading Environment Overseas Other* Q1 2020
Capex: +25.7%
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87
Acea Group
Q1 2020 Results
due to: Seasonal effects (also present in Q1 2019) Delay in collections by Acea Energiaand water companies due to «Covid-19 emergency» (~€40/50m)
Q1 2020 Q1 2019 EBITDA 276 248
Change in working capital
(146) (88)
Capex
(190) (151)
FREE CASH FLOW
(60) 9
Net finance income/(costs)
(22) (20)
Change in provisions
(23) (22)
Income tax paid
(4)
(7) (8)
M&A
(4) (12)
IFRS 16
(2) (55)
TOTAL CASH FLOW
(122) (108)
EBITDA Q1 2020 Change in working capital Capex Finance costs Change in provisions Total cash flow Other M&A IFRS 16
276
Income tax paid
(146) (190) (22) (23) (4) (7) (4) (2) (122)
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88
Acea Group
Q1 2020 Results
Ratings
BBB+ Stable Outlook
81% 19%
(€m) 31 Mar 2020 (a) 31 Dec 2019 (b) 31 Mar 2019 (c) Change (a-b) Change (a-c) Net debt 3,184.4 3,062.8 2,675.7 121.6 508.7
Medium/long-term 4,026.5 3,523.3 2,979.6 503.2 1,046.9 Short-term (842.1) (460.5) (303.9) (381.6) (538.2)
NET DEBT/ EBITDA LTM 31 MARCH 2020 NET DEBT/ EQUITY 31 MARCH 2020
3.0x 1.4x
Baa2 Stable Outlook
2% 98%
Structure of debt
(maturity and interest rates at 31 March 2020)
> Fixed rate 81% > Average cost 1.93% > Average term 6.16 years
Floating rate Fixed rate Debt falling due after 2020 Debt falling due by 2020
29 January 2020 – Issue of bonds worth €500m under EMTN. Bonds have a 9-year term and pay a fixed rate of 0.50%
Affirmed on 12 May 2020 despite the recent downgrading
TITOLO PRESENTAZIONE / Luogo e data
ACEA Group
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90
Acea Group
2019 Results
CONSTANT GROWTH SINCE THE NEW BOARD OF DIRECTORS TOOK OFFICE (27 APRIL 2017)
(€) (Source: Bloomberg)
2019: SHARE PRICE AT ALL-TIME HIGH, AS ACEA OUTPERFORMS THE MARKET (FTSE ITALIA ALL SHARE +27.2%)
2019 FROM 27 APRIL 2017 TO 31 DECEMBER 2019
(€) (Source: Bloomberg)
BEST EVER RESULTS, BEATING ALL OUR TARGETS 840 933 1,042
2017 2018 2019 EBITDA (€m)
EFFICIENCY AND COMMUNITY ENGAGEMENT
532 631 793
2017 2018 2019 CAPEX (€m)
FOCUS ON INFRASTRUCTURE, INNOVATION AND SUSTAINABILITY
2.9x 2.8x 2.9x
2017 2018 2019 DEBT/EBITDA (x) SOLID FINANCIAL STRUCTURE
+53.5% +38.6%
NET WORKING CAPITAL (€m) REDUCED WORKING CAPITAL DEMANDS 2017 2018 2019
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91
Acea Group
2019 Results
NEW BUSINESS PLAN 2019-2022 APPROVED ON 2 APRIL 2019, BRINGING FORWARD TARGETS ANNOUNCED TO THE MARKET IN NOVEMBER 2017 BY MORE THAN TWELVE MONTHS
BUSINESS PLAN CONFIRMS GROWTH IN FUNDAMENTALS ASSOCIATED WITH CONCRETE SUSTAINABILITY GOALS (environmental impact, circular economy, reduced water loss, customer care…..). ACEA WAS CREATED TO BE SUSTAINABLE.
Targets in existing Plan:
AN EVOLVING BUSINESS MIX: ACQUISITIONS IN THE GAS, ENVIRONMENT AND PHOTOVOLTAIC SECTORS AND CONSOLIDATION OF ACQUEDOTTO DEL FIORA
MARCH 2019
ACQUISITION OF 51% INTEREST IN PESCARA DISTRIBUZIONE GAS COMPLETED
JULY 2019
ACQUISITION OF 90% OF DEMAP, OWNER OF A PLASTIC TREATMENT PLANT AGREEMENTS REACHED FOR ACQUISITION OF PHOTOVOLTAIC PLANTS WITH TOTAL CAPACITY OF APPROXIMATELY 25 MWp
OCTOBER 2019
ACQUISITION OF 60% INTEREST IN BERG, A PROVIDER OF LIQUID WASTE TREATMENT SERVICES AMENDMENT OF ACQUEDOTTO DEL FIORA’S ARTICLES OF ASSOCIATION AND SHAREHOLDER AGREEMENTS TO ENABLE THE COMPANY’S CONSOLIDATION BY THE ACEA GROUP
ACEA’S CEO WINS TOP UTILITY 2020 AWARD FOR SUSTAINABILITY.
PLAN 2019-2022 Old PLAN 2018-2022
840 933 1,042
2017 2018 2019 EBITDA (€m) 916 972
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92
Acea Group
2019 Results
(€m) 2019 (a) 2018 (b) % change (a/b) Consolidated revenue 3,186.1 3,028.5 +5.2% EBITDA 1,042.3 933.2 +11.7% EBIT 518.1 478.6 +8.3% Group net profit 283.7 271.0 +4.7% Dividend per share (€) 0.78 0.71 +9.9%
Capex
792.8 630.8 +25.7% (€m) 31 Dec 2019 (a) 30 Sept 2019 (b) 31 Dec 2018 (c) % change (a/b) % change (a/c) Net debt 3,062.8 2,960.3 2,568.0 +3.5% +19.3% EBITDA +12%: well ahead of guidance Net debt: below lower end of guidance (€2.85-2.95bn). €2.83bn excluding impact of IFRS 16, M&A and consolidation of Acquedotto del Fiora
EBITDA +6%/+8% versus 2019 (€1,042m) in line with the CAGR in Business Plan 2019-2022 CAPEX broadly in line with 2019 and the Business Plan 2019-2022 NET DEBT €3.45-3.55bn
GUIDANCE 2020: FURTHER GROWTH EXPECTED
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93
Acea Group
2019 Results
EBITDA 2019 EBITDA (€m)
19% 81%
EBITDA from non- regulated businesses EBITDA from regulated businesses * Engineering & Services, Corporate ° Includes contribution from consolidation of equity-accounted investments, totalling €3m °° Contribution from consolidation of equity-accounted investments
2018 Water Energy Infrastructure Commercial & Trading Environment Overseas Other* 2019
EBITDA (€m) 505.0 392.0 69.1 52.0 16.9 7.3
933.2 72.0 31.3 (7.0) (13.6) 1,042.3 24.3 2019 2018 Gori 68.6 14.7° Acquedotto del Fiora 18.1 4.6°° Pescara Distribuzione Gas 1.7
3.6
1.8
0.5
consolidation of Gori, Acquedotto del Fiora and new acquisitions (€m)
1% 2% 5% 7% 37% 48%
Engineering & Services Overseas Environment Commercial & Trading Energy Infrastructure Water
2.1
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94
Acea Group
2019 Results
(€m) 2019 (a) 2018 (b) % change (a/b) EBITDA 505.0 433.0 +16.6%
Acea ATO2 356.1 357.4
Acea ATO5 24.4 20.8 +17.3% Gori 68.6 11.7 n/s Acquedotto del Fiora 18.1
Equity-accounted water companies 36.2 39.9
Other consolidated water companies (0.1) 3.2 n/s Pescara Distribuzione Gas 1.7
Capex 380.1 329.7 +15.3%
Including gas distribution business
EBITDA main drivers
(from October 2019): +€13.5m EBITDA GROWTH KEY HIGHLIGHTS
Acquedotto del Fiora
Gas
(from November 2018): +€53.9m
440 538 2018 2019
Volumes of w ater distr ibuted ( M m 3)
(March 2019): +€1.7m
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95
Acea Group
2019 Results
KEY HIGHLIGHTS
component of €5m
EBITDA GROWTH
and cuts to external costs)
with total capacity of 28MWp
EBITDA main drivers
(€m) 2019 (a) 2018 (b) % change (a/b) EBITDA 392.0 360.7 +8.7%
345.4 317.1 +8.9%
44.6 49.0
3.6
1.9 (5.4) n/s
Capex 287.8 238.3 +20.8%
9,792 9,849 2018 2019
Total elec tr ic ity distr ibuted ( G W h )
1,629 1,641 2018 2019
N umber of custome rs
( ‘0 0 0 s )
550 530 2018 2019
Total elec tr ic ity pr oduc ed ( G W h )
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96
Acea Group
2019 Results
KEY HIGHLIGHTS
increase in number of free market customers for electricity (+20.5%) and gas (+11.0%)
EBITDA main drivers
mechanism for compensating for delinquent accounts and to cut in enhanced protection market tariff (RCV component) (€m) 2019 (a) 2018 (b) % change (a/b) EBITDA 69.1 76.1
Capex 42.5 24.6 +72.8%
331 399 846 786
2018 2019
N umber of elec tr ic ity c ustomer s
( ‘0 0 0 s )
6,055
4,235 2,370 2,219
2018 2019
Total ener gy sold
( G W h )
3,685
6,454 1,177 1,185 Enhance…
free market customers
173 192 2018 2019
N umber of gas c ustomer s (‘ 0 0 0 s )
128 140 2018 2019
T otal gas sold ( M m 3)
EBITDA
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97
Acea Group
2019 Results
(€m) 2019 (a) 2018 (b) % change (a/b) EBITDA 52.0 65.6
Demap 1.8
Berg 0.5
Capex 51.9 20.0 +159.5%
EBITDA main drivers
(-€16.7m) KEY HIGHLIGHTS
treatment)
waste treatment)
composting plant opened
* Includes ash disposed of
355 327 2018 2019
E lec tr ic ity sold ( G W h )
1,120 1,219 2018 2019
T re atme nt and disposal* ( Kt onne s )
EBITDA
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98
Acea Group
2019 Results
EBIT (€m) 478.6 518.1
2018 2019
271.0 258.5
2018 2019
NET PROFIT (€m) TAX RATE 30.4% 28.6% DIVIDEND HISTORY
* Based on the average price for the year ** Based on consolidated net profit after non-controlling interests ^ The Board of Directors will propose the dividend for 2019 at the Annual General Meeting called for 28 and 29 April 2020, in first and second call, respectively
(€m)
2019 2018 % change
Depreciation 409.6 366.8 +11.7% Write-downs 66.8 75.1
Provisions 47.8 12.8 n/s T
524.2 454.7 +15.3% 283.7 234.1
Adjusted net profit
+10% adjusted increase
2017 2018 2019
DPS (€) 0.63 0.71 0.78^ Total dividend (€m) 134.2 151.2 166.1 Dividend yield* 4.7% 5.3% 4.7% Payout** 74% 56% 59%
Release in 2018 of provisions for risks by Gori (€44m) Consolidation of Gori and Acquedotto del Fiora Increased capex Impact of IFRS 16 Non-recurringcomponents (€m):
Non-recurring components (€m):
Antitrust fine -16.2
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99
Acea Group
2019 Results
630.8 50.4 49.5 17.9 31.9 0.4 11.9 792.8
2018 Water Energy Infrastructure Commercial & Trading Environment Overseas Other* 2019
Capex (€m) +25.7%
water and sewage pipes
(€44m)
(€11m)
grid
work on secondary substations and on the M V and LV network
hydroelectric plant and
M ontemartini thermoelectric plants
M onterotondo M arittimo plant (opened in O ctober 2019)
O rvieto landfill
acquisition
new ‘‘C ustomer Relationship M anagement’’
* Engineering & Services, Corporate
P edro: widening and maintenance
sewage pipes (Honduras)
19% 81% Investment in non- regulated businesses Investment in regulated businesses
Capex 380.1 287.8 42.5 51.9 7.0 23.5
projects
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100
Acea Group
2019 Results
Excellent performance of collections with regard to Acea Energia Working capital demands due to regulatory impact: €41m Excluding regulatory impact, working capital generated a cash inflow
2019 2018
EBITDA 1,042 933 Change in working capital
(16)
(35) Capex
(793)
(631) FREE CASH FLOW
233
267 Net finance income/(costs)
(90)
(83) Change in provisions
(107)
(108) Income tax paid
(134)
(81) Dividends
(151)
(134) Other
(12)
(35) M&A and consolidations
(171)
29 IFRS 16
(64)
(495)
(146) EBITDA 2019 Change in WC Capex Finance costs Change in provisions Total cash flow Other M&A IFRS 16
1,042
Dividends Income tax paid
(16) (793) (90) (107) (134) (151) (12) (171) (64) 495
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101
Acea Group
2019 Results
Ratings
BBB+ Stable Outlook
81% 19%
(€m) 31 Dec 2019 (a) 30 Sept 2019 (b) 31 Dec 2018 (c) Change (a-b) Change (a-c) Net debt 3,062.8 2,960.3 2,568.0 102.5 494.8
Medium/long-term 3,523.3 3,467.5 3,341.4 55.8 181.9 Short-term (460.5) (507.2) (773.4) 46.7 312.9
NET DEBT/ EBITDA 31 DECEMBER 2019 NET DEBT/ EBITDA 31 DECEMBER 2018
2.9x 2.8x
Baa2 Stable Outlook
12% 88%
Structure of debt
(maturity and interest rates at 31 Dec 2019)
> Fixed rate 81% > Average cost 2.15% > Average term 5.3 years
Floating rate Fixed rate Debt falling due after 2020 Debt falling due by 2020
2,568.0
2,826
90 83 64
2018 2019
IFRS 16 M&A Consolidation of AdF
3,062.8
16 May 2019 - Issue of bonds worth €500m under EMTN. Bonds have a 9 year term and pay a fixed rate of 1.75% July 2019 - Ceiling for EMTN programme raised to €4bn 29 January 2020 – Issue of bonds worth €500m under EMTN. Bonds have a 9-year term and pay a fixed rate of 0.50%
Net debt
Adjusted net debt below lower end of guidance
TITOLO PRESENTAZIONE / Luogo e data
ACEA Group
103
ACEA Group
THE POSITIVE RESULTS DELIVERED IN 9M 2019 CONFIRM THE GROWTH TREND THAT STARTED IN THE LAST TWO YEARS, SUPPORTED BY OUR MAJOR INVESTMENT PROGRAMME AND DRIVEN BY OUR COMMITMENT TO TECHNOLOGICAL INNOVATION AND SUSTAINABILITY
FOLLOWING RESULTS ACHIEVED, EXPECTATION-BEATING RESULTS, EBITDA GUIDANCE FOR 2019 RAISED
del Fiora consolidation)
RESULTS 9M 2019 GUIDANCE 2019
9M 2019 Results
104
ACEA Group
ACQUISITION OF 90% OF DEMAP, OWNER OF A PLASTIC TREATMENT PLANT, IN JULY
IN JULY, PROCEDURE COMPLETED FOR RENEWAL OF CONCESSION FOR THE PESCHIERA-LE CAPORE WATER MAIN, DUE TO EXPIRE IN SEPTEMBER 2031 IN JULY, GROUP AGREES TO ACQUIRE PHOTOVOLTAIC PLANTS WITH TOTAL CAPACITY OF APPROXIMATELY 25 MWp
ACQUISITION OF A 51% STAKE IN ‘‘PESCARA DISTRIBUZIONE GAS’’ COMPLETED IN MARCH
TRANSACTIONS COMPLETED HAVE LED TO DEVELOPMENT OF REGULATED BUSINESSES AND EXPANSION IN OTHER MARKET SEGMENTS ALREADYIDENTIFIED AS STRATEGIC
ISSUE OF BONDS WORTH €500M UNDER EMTN PROGRAMME SUCCESSFULLY COMPLETED IN MAY. BONDS HAVE A TERM TO MATURITY OF 9 YEARS AND PAY A FIXED RATE OF 1.75% BUSINESS PLAN 2019-2022 APPROVED ON 2 APRIL, TARGETING: IN MAY, FITCH RATINGS CONFIRMED ITS «BBB+» RATING OF ACEA WITH A STABLE OUTLOOK
KEY EVENTS 9M 2019
IN AUGUST, MOODY’S CONFIRMED ITS «Baa2» RATING OF ACEA WITH A STABLE OUTLOOK
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ONE OF LARGEST COMPOSTING PLANTS IN CENTRAL ITALY OPENED IN MONTEROTONDO MARITTIMO (GROSSETO)
GOOGLE CLOUD CHOSEN AS TECHNOLOGY PARTNER TO ACCELERATE IMPLEMENTATION OF DIGITAL INNOVATION TWO POWER PURCHASE AGREEMENTS (PPAS) ENTERED INTO WITH ERG FOR THE SUPPLY OF A TOTAL OF 1.5 TWh OF RENEWABLE ENERGY IN THE PERIOD 2020-2022.
ACQUEDOTTO DEL FIORA’S ARTICLES OF ASSOCIATION AND SHAREHOLDER AGREEMENTS AMENDED TO ENABLE THE COMPANY’S CONSOLIDATION BY THE ACEA GROUP
KEY EVENTS OCTOBER 2019
ACQUISITION OF 60% INTEREST IN BERG, A PROVIDER OF LIQUID WASTE TREATMENT SERVICES
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ACEA Group
(€m) 30 Sept 2019 (a) 31 Dec 2018 (b) 30 Sept 2018 (c) % change (a/b) % change (a/c) Net debt 2,960.3° 2,568.0 2,631.1 +15.3% +12.5% Invested capital 4,936.1 4,471.5 4,387.7 +10.4% +12.5% Capex 529.0 413.2 +28.0% (€m) 9M 2019 (a) 9M 2018 (b) % change (a/b) Consolidated revenue 2,346.2 2,173.9 +7.9% EBITDA 769.4* 685.2 +12.3% EBIT 402.5 381.0 +5.6% Group net profit** 218.9 214.8 +1.9%
Capex guidance confirmed for 2019: up by
Net debt guidance confirmed for 2019: €2.85-2.95bn (before impact
Acquedotto del Fiora consolidation)
* Effect of consolidation of Gori: €51.3m ** Recognition, in 9M 2018, of income from acquisition of investment in the TWS group (€8.9m) and, in 9M 2019, of a contingent asset (€16.2m) following cancellation of Antitrust fine °Impact of application of IFRS16 from 1 January 2019 (up +€59.7m), impact of M&A (€71m)
EBITDA GUIDANCE RAISED FOR 2019
Initial guidance: +5%/+6% Guidance provided in H1 2019: ≥ +7%
Updated guidance: ≥ +10% EBITDA 2018
€933m
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EBITDA 9M 2019 EBITDA (€m)
9M 2019 9M 2018 Change
6,615 5,545 1,070*
Average Group workforce
19% 81% EBITDA from non-regulated businesses EBITDA from regulated businesses 48% 38% 6% 5% 2% 1% Water Energy Infrastructure Commercial & Trading Environment Overseas Engineering & Services
* Increase in workforce primarily reflects changes in scope of consolidation (Gori +854; Consorcio Servicio Sur +188; Pescara Distribuzione Gas +13) ** Effect of consolidation of Gori: €49.7m (in 9M 2019 Gori’s EBITDA is €51.3m, in 9M 2018 Gori contributed €1.6m to EBITDA) *** Overseas, Engineering & Services, Corporate
9M 2018 Water Energy Infrastructure Commercial & Trading Environment Other*** 9M 2019
EBITDA (€m) 370.7 290.6 47.2 40.6 20.3
685.2 77.5** 14.3 (15.4) (7.5) 769.4 15.3
Gori 51.3
Pescara Distribuzione Gas 1.2 Photovoltaic 2.3 Demap 1.0
Contribution to EBITDA for 9M 2019 of consolidation of Gori and new acquisitions (€m)
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ACEA Group
EBITDA main drivers
(€m) 9M 2019 (a) 9M 2018 (b) % change (a/b)
EBITDA
370.7 293.2 +26.4%
Of which: ACEA ATO2
270.5 250.2 +8.1%
Acea ATO5
19.2 16.5 +16.4%
Gori
51.3
Companies consolidated using equity method
26.2 23.5 +11.5%
Other consolidated companies
3.5 3.0 +16.7%
Capex 253.5 224.6 +12.9% Companies consolidated using equity method: +€2.7m Quantitative data 9M 2019 9M 2018 T
distributed (Mm3) 394 313 9M 2019 (a) 9M 2018 (b) Change (a-b) Average workforce 2,684 1,801 +883* Line-by-line consolidation of Gori: +€49.7m
* The increase primarily reflects the consolidation of Gori (+854) and Pescara Distribuzione Gas (+13)
KEY HIGHLIGHTS OCTOBER 2019: Acquedotto del Fiora’s Articles of Association and Shareholder Agreements amended to enable the company’s line-by-line consolidation Contribution of Pescara Distribuzione Gas: +€1.2m
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ACEA Group
Quantitative data 9M 2019 9M 2018 T
7,490 7,449 Number of customers (‘000s) 1,631 1,628 T
401 409
EBITDA main drivers
(€m) 9M 2019 (a) 9M 2018 (b) % change (a/b) EBITDA 290.6 276.3 +5.2%
255.5 238.5 +7.1%
35.5 40.2
(0.4) (2.4) n/s
Capex 196.5 156.2 +25.8% Generation: -€4.7m due to lower price of energy sold (photovoltaic contribution +€2.3m) Public Lighting: +€2.0m 9M 2019 (a) 9M 2018 (b) Change (a-b) Average workforce 1,355 1,387
Distribution: +€17.0m KEY HIGHLIGHTS Over 400 km of MV/LV network renewed and expanded
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EBITDA main drivers
Quantitative data 9M 2019 9M 2018 T
4,817 4,563
Free market 3,125 2,782 Enhanced Protection market 1,692 1,781
1,155 1,175
Free market 357 330 Enhanced Protection market 798 845
T
98 88
183 172 (€m) 9M 2019 (a) 9M 2018 (b) % change (a/b) EBITDA 47.2 62.6
Capex 31.8 9.5 n/s 9M 2019 (a) 9M 2018 (b) Change (a-b) Average workforce 470 465 +5
KEY HIGHLIGHTS OCTOBER 2019: two PPAs entered into with ERG for supply of 1.5 TWh of renewable energy in the period 2020-2022 Reduced margins, essentially due to cut in late payment component in Central Italy in RCV tariff Increased sales of electricity and gas to free market customers
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Quantitative data 9M 2019 9M 2018 Treatment and disposal* (Ktonnes) 877 812 Electricity sold (GWh) 244 264
EBITDA main drivers
(€m) 9M 2019 (a) 9M 2018 (b) % change (a/b) EBITDA 40.6 48.1
Capex 29.4 13.1 +124.4%
* Includes ash disposed of ** Consolidation: Bioecologia (+9); Demap (+14)
Consolidation of Demap (+1.0 €m)
9M 2019 (a) 9M 2018 (b) Change (a-b) Average workforce 380 360 +20** KEY HIGHLIGHTS OCTOBER 2019: opening of Monterotondo Marittimo (Grosseto) plant, one of the biggest composting plants in Central Italy (authorised capacity 70k tonnes per year) CIP6 feed-in tariffs expired on August 1st , 2019 (-7.4 €m) Acquisition of 60% interest in Berg, a provider of liquid waste treatment services (authorised capacity 143k tonnes per year)
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ACEA Group
(€m) 9M 2019 9M 2018 EBITDA
Capex 11.3 5.2
(€m) 9M 2019 9M 2018 EBITDA 12.9 11.1 Capex 5.3 4.0 9M 2019 (a) 9M 2018 (b) Change (a-b) Average workforce 782 608 +174* 9M 2019 (a) 9M 2018 (b) Change (a-b) Average workforce 667 662 +5
(€m) 9M 2019 9M 2018 EBITDA 11.0 10.9 Capex 1.2 0.8 9M 2019 (a) 9M 2018 (b) Change (a-b) Average workforce 277 262 +15 Positive contribution from Aguas de San Pedro Margin in line with previous year
* Consolidation of Consorcio Servicio Sur (+188)
Recognition of contingent asset of €16.2m following Regional Administrative Court’s decision to cancel Antitrust fine OCTOBER 2019: Google Cloud chosen to be technology partner for digital innovation
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ACEA Group
9M 2018 9M 2019
(€m)
9M 2019 9M 2018 % change
Depreciation 306.7 251.8 +21.8% Write-downs 51.8 44.9 +15.4% Provisions 8.4 7.5 +12.0% T
366.9 304.2 +20.6% EBIT (€m) NET PROFIT (€m)
9M 2018 9M 2019
402.5 218.9 214.8 381.0
TAX RATE 30.4% 30.0%
Increase in depreciation linked to:
business and the IT platform
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ACEA Group
9M 2018 Water Energy Infrastructure Commercial & Trading Environment Other* 9M 2019
413
CAPEX (€m)
water and sewage pipes
maintenance of water centres
plants
(€33m)
secondary substations and on the M V and LV network
hydroelectric plant and of T or di V alle and M ontemartini thermoelectric plants
plant (opened in O ctober 2019)
composting plant
‘‘C ustomer Relationship M anagement’’
Capex 254 196 32 29 18
* Overseas, Engineering & Services, Corporate
29 40 22 16 9 529
17% 83% Investment in non- regulated businesses Investment in regulated businesses
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ACEA Group
EBITDA 9M 2019 Change in working capital* Capex Finance costs Change in provisions Total Cash Flow Other
* Before adjustments for credit losses ** Acquisition of Pescara Distribuzione Gas, Demap and photovoltaic plants
( (€m)
9M 2019 9M 2018
EBITDA 769
685
Change in working capital
(118) (177)
CAPEX
(529) (413)
FREE CASH FLOW
122 95
Net finance income/(costs)
(66) (66)
Change in provisions
(81) (59)
Income tax paid
(58) (19)
Dividends
(151) (134)
Other
(29) (26)
M&A**
(71)
(60)
(394) (209)
TOTAL CASH FLOW excluding impact of IFRS16 and M&A
(263) (209)
M&A** IFRS 16
769 (118)
Dividends
collection, above all at Acea Energia
transactions (€71m) and IFRS 16 (€60m)
(81) (71) (60) (151) (29) (66) (529) (394)
Income tax paid
(58)
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ACEA Group
80% 20%
NET DEBT/ EQUITY NET DEBT/ EBITDA LTM
1.5x 2.9x
Ratings
BBB+ Stable Outlook Baa2 Stable Outlook
13% 87%
Debt structure
(maturity and interest rates at 30 Sept 2019)
>Fixed rate 80% >Average cost 2.16% >Average term 5.6 years
Floating rate Fixed rate
(€m) 30 Sept 2019 (a) 31 Dec 2018 (b) 30 Sept 2018 (c) Change (a-b) Change (a-c) Net debt 2,960.3* 2,568.0 2,631.1 392.3 329.2 Medium/long-term 3,467.5 3,341.4 3,359.9 126.1 107.6 Short-term (507.2) (773.4) (728.8) 266.2 221.6
Debt falling due after 2020 Debt falling due by 2020
30 Sept 2019
* Impact of application of IFRS 16 from 1 January 2019 (+€59.7m), impact of M&A (€71m)
16 May 2019 - Issue of bonds worth €500m under EMTN programme successfully completed. Bonds have a term to maturity of 9 years and pay a fixed rate of 1.75% July 2019 - Ceiling for EMTN programme raised to €4bn
9M 2019 Results
ACEA Group
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THIS PRESENTATION CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS THAT REFLECT THE COMPANY’S MANAGEMENT’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND FINANCIAL AND OPERATIONAL PERFORMANCE OF THE COMPANY AND ITS SUBSIDIARIES. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON ACEA S.P.A.’S CURRENT EXPECTATIONS AND PROJECTIONS ABOUT FUTURE EVENTS. BECAUSE THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO RISKS AND UNCERTAINTIES, ACTUAL FUTURE RESULTS OR PERFORMANCE MAY MATERIALLY DIFFER FROM THOSE EXPRESSED THEREIN OR IMPLIED THEREBY DUE TO ANY NUMBER OF DIFFERENT FACTORS, MANY OF WHICH ARE BEYOND THE ABILITY OF ACEA S.P.A. TO CONTROL OR ESTIMATE PRECISELY, INCLUDING CHANGES IN THE REGULATORY FRAMEWORK, FUTURE MARKET DEVELOPMENTS, FLUCTUATIONS IN THE PRICE AND AVAILABILITY OF FUEL AND OTHER RISKS. YOU ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN, WHICH ARE MADE ONLY AS OF THE DATE OF THIS PRESENTATION. ACEA S.P.A. DOES NOT UNDERTAKE ANY OBLIGATION TO PUBLICLY RELEASE ANY UPDATES OR REVISIONS TO ANY FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE OF THIS PRESENTATION. THIS PRESENTATION DOES NOT CONSTITUTE A RECOMMENDATION REGARDING THE SECURITIES OF THE COMPANY. THIS PRESENTATION DOES NOT CONTAIN AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY SECURITIES ISSUED BY ACEA S.P.A. OR ANY OF ITS SUBSIDIARIES. *** PURSUANT TO ART. 154-BIS, PAR. 2, OF THE LEGISLATIVE DECREE N. 58 OF FEBRUARY 24, 1998, THE EXECUTIVE IN CHARGE OF PREPARING THE CORPORATE ACCOUNTING DOCUMENTS AT ACEA, FABIO PARIS – CFO OF THE COMPANY
BOOKS AND ACCOUNTING RECORDS.