4. Costs of materials and overheads – 2,632,098 thousand euros

This item registered an increase of 367,305 thousand euros (+16.2%) compared to 31 December 2011, which closed with a total of 2,264,793 thousand euros.

€ thousand 31.12.2012 31.12.2011 Absolute increase/ (Decrease) Increase/ (decrease) %
Electricity, gas and fuel 2,084,204 1,707,255 376,949 22.1%
Materials 62,401 103,611 (41,210) -39.8%
Services 330,545 326,431 4,113 1.3%
Concession fees 74,018 60,953 13,065 21.4%
Lease expense 29,363 32,545 (3,182) -9.8%
Other operating costs 51,568 33,997 17,570 51.7%
Consolidated operating costs 2,632,098 2,264,793 367,305 16.2%

The increase is mainly due to the change in the basis of consolidation, with particular reference to the item Energy, gas and fuel costs.

It should be noted that the items Materials and Other operating costs were affected by fewer activities relating to the marketing and supply of photovoltaic panels by ARSE and by the fine applied by AGCM to ACEA, respectively.

 

Electricity, gas and fuel costs

This item includes:

  • costs relating to the procurement of electricity for the protected and free markets along with the related transport costs (totalling 2,027,249 thousand euros compared to 1,668,599 thousand euros as at 31 December 2011). The costs relating to the Single Buyer, excluding the effect of energy equalisation, amounted to 304,560 thousand euros (264,004 thousand euros at 31 December 2011 and 297,493 thousand euros on a like-for-like basis in respect of the previous year); the equalisation of electricity destined for the regulated market in the year led to an increase in costs of 2,134 thousand euros, compared to 4,057 thousand euros in 2011 (6,068 thousand euros on a like-for-like basis). This item also includes expenses relating to energy efficiency, UC6 and CTS (special tariff component) paid by the distributor totalling 4,512 thousand euros (5,668 thousand euros in 2011),
  • the cost of procuring gas for resale and the production of electrical energy, and the cost of other fuels consumed in the period by the central plants (40,135 thousand euros against 33,416 thousand euros at 31 December 2011). This item’s performance is affected by the price trends and the quantities produced in the period.

This item also includes the cost of purchasing green certificates, CO2 rights and white certificates (12,184 thousand euros, compared with 5,240 thousand euros at 31 December 2011).

 

Materials

The cost of materials is 62,401 thousand euros and represents the cost of materials used during the period less costs allocated to investments, as the table below displays.

€ thousand 31.12.2012 31.12.2011 Absolute increase/ (Decrease) Increase/ (decrease) %
Purchase of materials 90,126 134,965 (44,839) -33.2%
Changes in inventories 2,370 11,292 (8,923) -79.0%
Total 92,496 146,258 (53,762) -36.8%
Capitalised costs (30,095) (42,647) 12,552 -29.4%
TOTAL 62,401 103,611 (41,210) -39.8%

The trend in that item is essentially caused: i) by ARSE (-41,267 thousand euros) due to the use of owned PV panels, ii) by ACEA (-3,111 thousand euros) as a result of the lower requirements generated by the activities linked to the “Piano Luce” lighting project commissioned by Roma Capitale under the public lighting service agreement, partially offset by iii) Ato2 (+3,283 thousand euros) following greater purchases of automotive fuels and chemical products.

The materials purchases before capitalised costs decreased by 53,762 thousand euros, essentially as a result of the same considerations indicated above.

The capitalised costs decreased by 12,552 thousand euros, again largely attributable to the Networks segment (-10,211 thousand euros) due to the reduced ARSE investments.

Therefore, costs of materials incurred by the various business areas during the period are as follows.

in €/thousand 31.12.2012 31.12.2011 Absolute increase/ (Decrease) Increase/ (decrease) %
Networks 24,100 70,639 (46,539) -65.9%
Energy 936 552 385 69.8%
Water 30,133 23,804 6,330 26.6%
Environment 4,244 2,517 1,726 68.6%
Parent Company 2,988 6,100 (3,111) -51.0%
Materials costs 62,401 103,611 (41,210) -39.8%

 

Services and contract work

This item amounts to 330,544 thousand euros, marking an increase of 4,113 thousand euros on the 326,431 thousand euros at 31 December 2011.

This change is the result of the change in the basis of consolidation following the winding-up of the joint venture with GDF Suez Energia, which led to a change in the percentage consolidation of Acea Energia Holding and its subsidiaries (-3,882 thousand euros in total).

An analysis of the breakdown reveals the following:

  • contract work totalled 67,071 thousand euros, down 3,284 thousand euros compared to the previous year. That change is basically due to the 6,403 thousand euro decrease recorded by ACEA Distribuzione due to the reduction in costs for maintenance works in the public lighting division and for ACEA Distribuzione distribution services requested; that trend is partially offset by the increase in costs incurred by the companies operating in the Water area (+1,220 thousand euros) and by the Parent Company (+636 thousand euros). The change was also caused by increases in costs incurred by the Environment and Energy segments for a total of 842 thousand euros,
  • electricity, water and gas consumption for 51,468 thousand euros (+2,862 thousand euros). The change owes to contrasting elements: on the one hand, the 6,127 thousand euro increase recorded by the water companies operating in Tuscany and Umbria, mainly from Umbra Acque, partially offset by a lower contribution (1,336 thousand euros) to the consolidated result by that type of cost of the water companies operating in Lazio and by the parent company, also as a result of the change in the percentage of consolidation of Acea Energia,
  • intercompany services totalling 6,087 thousand euros (-11,467 thousand euros compared to 31 December 2011): this change is mainly due to the cancelling out of costs for facility management services provided by Marco Polo as a result of the business unit rental from 1 January 2012: the total cost of these services rendered to the Parent Company totalled 13,200 thousand euros at 31 December 2011. Intercompany services also include services provided by the consortium which has managed public lighting contract works in Naples since July 2010: costs accrued in the period under this item amounted to 5,368 thousand euros, up 397 thousand euros on 2011.
  • services for staff, totalling 19,133 thousand euros (+1,291 thousand euros compared to 31 December 2011), which were also affected by the reintegration of the Marco Polo business unit into ACEA,
  • telecommunications, printing, postage and bank charges totalling 18,229 thousand euros (+745 thousand euros); the change is essentially due to higher bank and postal charges (+1,509 thousand euros),
  • disposal and transport of sludge, waste, ash and refuse, and cleaning and porterage, totalling 50,328 thousand euros (+13,325 thousand euros). This change was mainly due to the operational start-up of the second and third lines of the San Vittore plant and to reuse of the Paliano plant for special waste treatment (+3,384 thousand euros); the remainder refers to: (i) additional costs incurred by ACEA Ato2 following the seizure of some water treatment plants (+10,900 thousand euros) and (ii) higher costs incurred by the parent company for cleaning and porterage, which were part of the services provided by Marco Polo last year (+2,800 thousand euros),
  • insurance for 15,879 thousand euros (+2,818 thousand euros), mainly attributable to ACEA Ato2,
  • technical and administrative services (including consultants’ fees and the cost of freelance workers), amounting to 45,450 thousand euros (-627 thousand euros). The change was caused by contrasting factors: on the one hand, the decrease in costs incurred (i) by the Parent Company for 2,082 thousand euros, since at 31 December 2011 costs had been incurred for participation in the bid for the public works contract for gas management in the Municipality of Rome and consultants’ fees for preparation of the Business Plan (ii) by the Water Area for 1,885 thousand euros; on the other hand, the increase in costs incurred (iii) by Acea8cento for 3,364 thousand euros for outsourced technical services (call overflow management), (iv) by Acea Energia for 2,848 thousand euros, of which 797 thousand euros as the effect of changes in the basis of consolidation,
  • internal use of electricity for 8,957 thousand euros (+2,156 thousand euros). This change was generated by ACEA Ato2;
  • advertising and sponsorship, amounting to 6,777 thousand euros (-1,471 thousand euros),
  • maintenance fees of 4,032 thousand euros (+229 thousand euros),
  • stock management costs incurred by ACEA Distribuzione, totalling 1,723 thousand euros (-410 thousand euros),
  • bill printing costs for 7,196 thousand euros (+901 thousand euros). The change derives primarily from the increase in the percentage consolidation of Acea Energia,
  • staff seconded by unconsolidated Group Companies and/or third party entities and companies totalling 581 thousand euros (-218 thousand euros),
  • remuneration of Group administrative and control bodies of 5,747 thousand euros (-295 thousand euros)

In addition to the above, additional service costs were incurred by companies from the (i) Energy area (3,172 thousand euros, up 1,520 thousand euros), (ii) that manage water services (9,732 thousand euros, down 4,370 thousand euros), (iii) Environment area (2,522 thousand euros, down 257 thousand euros), and (iv) ACEA (2,618 thousand euros, up 715 thousand euros).

The table showing the remuneration of directors, statutory auditors and key managers of the Parent Company is provided in an annex to these notes. 

As required by article 149 duodecies of the CONSOB Regulations for Issuers, the fees paid to the Independent Auditors, Reconta Ernst & Young, are shown in the table below.

Company and Reporting period
Amounts in euros
Audit Related Service Audit Services Non Audit Services Total
ACEA S.p.A. 201,000  146,186 70,000 417,186
ACEA GROUP 219,209 689,346 30,000  938,555
ACEA S.p.A. and Group total 420,209  835,532 100,000 1,355,741

 

Concession fees

These fees amount to 74,018 thousand euros (+13,065 thousand euros on 31 December 2011, when the figure was 60,953 thousand euros) and regard fees paid by companies that manage integrated water services under concession in certain areas of Lazio and Campania, Tuscany and Umbria.

The following table shows a breakdown by Company, compared with previous year.

€ thousand 31.12.2012 31.12.2011 Absolute increase/ (Decrease)
ACEA Ato2 36,128 33,014 3,114
Publiacqua 12,265 11,753 512
ACEA Ato5 6,881 5,489 1,392
Acque 4,672 4,469 204
Umbra Acque 1,322 1,602 (280)
Gori 9,555 1,310 8,245
Acquedotto del Fiora 2,086 2,113 (26)
Nuove Acque 733 733 (0)
Gesesa 302 345 (43)
Other minor entities 74 127 (52)
Concession fees 74,018 60,953 13,065

The increase of 8,245 thousand euros recorded by GORI is the result of decisions made by the Area Authority’s General Meeting on 27 October 2012. Please see the information provided in the section “Operating review”.

 

Lease expense

This item amounted to 29,363 thousand euros, down 3,182 thousand euros on the same period last year.

The following table illustrates the changes by industrial area:

in €/thousand 31.12.2012 31.12.2011 Absolute increase/ (Decrease) Increase/ (decrease) %
Networks 4,475 4,680 (205) -4.4%
Energy 7,018 6,367 652 10.2%
Water 9,172 7,450 1,722 23.1%
Environment 821 811 10 1.2%
Parent Company 7,876 13,237 (5,361) -40.5%
Lease expense 29,363 32,545 (3,182) -9.8%

This item includes lease payments for 13,951 thousand euros which recorded a decrease of 5,174 thousand euros mainly due to the cancelling out of the lease payment on the registered office following its purchase in January 2012.

It also includes other payments and rental costs for 16,008 thousand euros, up 1,812 thousand euros on 2011 due to the different method for chargeback of branch-off costs.

 

Other operating costs

Other operating costs at 31 December 2012 amounted to 51,568 thousand euros, marking an increase of 17,570 thousand compared to the previous year, which closed with 33,997 thousand euros.

The table below provides details of this item by type:

€ thousand 31.12.2012 31.12.2011 Absolute increase/ (Decrease) Increase/ (decrease) %
Taxes and duties 13,371 8,684 4,687 54.0%
Fines and penalties 8,870 614 8,256 1344.8%
Grants disbursed to confederations and non-profit organisations 2,838 2,977 (139) -4.7%
Compensation for damages and outlay for legal disputes 2,072 2,578 (506) -19.6%
Losses from asset disposals 397 766 (369) -48.2%
General expenses 24,020 18,378 5,642 30.7%
Total other operating costs 51,568 33,997 17,570 51.7%
  •  8,300 million euros from the fine due to the Antitrust Authority, applied to ACEA and Suez Environnement with measure no. 17623 of 22 November 2007, concerning irregularities committed during tenders for the awarding of water services in Tuscany, carried out in 2001 - 2004. In fact, on 24 September 2012 the Council of State handed down its ruling which cancels the Regional Administrative Court’s decision in favour of ACEA,
  •  2,341 thousand euros from higher IMU tax payments due,
  • the remainder consists of costs still outstanding from previous years and adjustments to revenue recognised previously, particularly regarding ACEA Ato2 (+1,908 thousand euros) and ACEA Energia (+4,046 thousand euros).