Operating (and financial) outlook

The Acea Group’s results for 2012 are in line with forecasts.

With respect to network management, 2012 presents some elements of uncertainty linked on one hand to the temporary nature of the company-based tariff, although mitigated following the publication of AEEG resolution 157/2012 of 26 April, which in fact approved the reference tariff of ACEA Distribuzione and, on the other hand, the difficulties in the operating environment in maintaining technical and management indicator levels. The main actions to be taken will continue to regard investments, processes and organisation, as in the recent past.

As set forth in the Group’s 2012 - 2016 Business Plan, on 28 December 2012, the PV business unit, previously owned by ARSE, was sold. The transaction regarded the disposal of Apollo S.r.l., operating in the PV sector, whose asset portfolio includes plants located in Puglia, Lazio and Campania, with total installed power of 32.544 MW. The sale price of the company sold was 102.5 million euros which, taking into account the amount of net working capital as shown in the Apollo S.r.l. forecast balance sheet as at 31 December 2012, gave rise to cash flows of 101,294 thousand euros, of which 7,027 thousand euros for equity and 94,267 thousand euros for the repayment of the loan granted by ACEA to Apollo S.r.l.

In the electricity generation sector, the repowering works at the Salisano and Orte hydroelectric power stations were completed, and works to extend the district heating network continued. That project will last for at least three years, and will make it possible to extend the service to the entire district of Mezzocammino in the southern area of Rome. Plant repowering will facilitate an increase in the current portion of electricity generated from renewable sources, and will also guarantee the production of green certificates. 

Regarding the retail electricity market, the Company’s efforts will be increasingly focused on customer management and developing the portfolio in response to changes in the market which, with the expansion of liberalisation to residential customers as well, require operators to provide a higher level of service to that type of customer.

The objective in the coming months will be to continue putting in place actions aimed at counteracting the effects of the crisis, from consolidation of the market share, to the careful management and containment of working capital, as well as management of the 2012/2013 sales portfolio with a view to ensuring customer loyalty, with the intent of consolidating current market shares. In the coming months, actions to normalise and stabilise administrative and commercial relations with customers will continue.

In the water services sector, the Group has basically completed the acquisition of the remaining services, affirming itself as the top national player. Resolving tariff-related problems, which still characterise some areas of the country, will be the top-priority objective in the next few months, in addition to implementation of the necessary steps to contain working capital. The 2012 water services results are obviously affected by the tariff updates introduced by AEEG with resolution no. 585 of 28 December 2012, governing the temporary tariff method (MTT) for determining tariffs in the years 2012 and 2013. The companies are engaged until the end of March 2013 in sharing the tariff proposals with their respective Area Authorities, which must be validated by AEEG by the end of the first half of the year.

In the coming months, they will also be working on understanding the definitive rules for the formation of revenues which will apply when the definitive tariff method comes into effect.

In the environment sector, the overall positioning of ARIA, the owner, either directly or through its subsidiary S.A.O., of important plant infrastructures intended for the generation of electric power from the recovery of waste, makes it possible to positively assess the short- and medium-term business outlook.

This is true even in consideration of the shortage of plant infrastructures for waste recycling and disposal in the Lazio Region in relation to effective needs, made particularly evident by the administration established by the central government introduced, based on the provisions of art. 1, paragraphs 358 and 359 of Law 228/2012, with the aforementioned decree of the Ministry of the Environment and Protection of the Sea of 3 January 2013, concerning the serious critical situation in urban waste management in the Province of Rome. As regards Kyklos and Solemme, the goal over the coming months is to continue to consolidate the activities carried out, ensuring plants become fully operational. In the case of Kyklos, the goal is to double treatment capacity.

 

As in previous years, the ACEA Group is continuing to streamline business processes and operating efficiency with the aim of counteracting the effects of the crisis, and at the end of 2012 it was positioned in line with Business Plan forecasts. 

The financial structure of the ACEA Group is solid for the upcoming years, as the entire debt is positioned on the long term, with an average life of about 10 years, covering 100% of fixed assets until at least 2013. 56% of the debt is at a fixed rate in order to guarantee protection against the mentioned increase in interest rates and any financial or loan fluctuations.

As of today, ACEA has committed and uncommitted credit lines totalling approximately 1.7 billion euros, of which 500 million euros will fall due after 2013. 

The long-term ratings assigned to ACEA by the main international rating agencies are as follows:

  • Standard & Poor’s: “BBB-”;
  • Fitch “A-”
  • Moody’s “Baa2”.