Acea S.p.a. · MIL:ACE
Acea — Investor Presentation (January 2024)
51 slides from Acea's investor presentation, January 2024
Slide 1: Investor Presentation January 2024
Investor Presentation January 2024
Slide 2: Strategic Guidelines
STRATEGIC GUIDELINES M9 2023 RESULTS ANNEX M9 2023 ANNEX 1
Slide 3: Strategic Guidelines
STRATEGIC GUIDELINES M9 2023 RESULTS ANNEX 9M 2023 ANNEX 2
Slide 4: ACEA Group: infrastructure operator with a strong presence in regulated sectors
ACEA Group: infrastructure operator with a strong presence in regulated sectors1 #1 #2 #4 by customer by customer by waste Water base Electricity base Environment managed Italy: Power grids: Waste management: • ~9m customers • ~1.7m PODs2 for 32,000 km • ~1.7m tonnes waste managed • ~59,000 km netwo
Slide 5: Highly challenging outlook for the sector in the coming years
Highly challenging outlook for the sector in the coming years Water1 Electricity2 Environment3 Importance of protecting water Energy transition Circular economy drive resources ~18% of GDP directly/indirectly linked to 60-65 GW growth in renewables by 2030, +10 pp of plastic waste recyclable the ava
Slide 6: ACEA vision: infrastructure growth to support the country, enabled by people
ACEA vision: infrastructure growth to support the country, enabled by people High level of service for the National in the integrated water community cycle (internationally scalable) Leader in (customers, citizens, towns, Local in power grids (Rome) regulated sectors provinces, regions) Regi
Slide 7: Water: strategic pillars
Water: strategic pillars Strengthening the Infrastructure development (e.g., Consolidating the Italian doubling the Peschiera aqueduct), presence in municipal market, positioning the geographical expansion, new water supply systems technologies (smart meters), incentives Group as a Water market in I
Slide 8: Electricity: Strategic pillars
Electricity: Strategic pillars Focus on electricity grids Boosting the grid’s resilience and Guaranteeing a resilient in Rome digitalisation, improving service quality, incentivising distributed flexibility and grid and protecting local dispatching and offering smart city quality of service in the s
Slide 9: Environment: Strategic pillars
Environment: Strategic pillars Consolidating / Consolidation in central Optimising our existing industrial Italy footprint, through geographical expanding our expansion in synergy with other leadership in central businesses Italy throughout the waste management chain Revamping and developing new lin
Slide 10: ACEA commitment to ESG
ACEA commitment to ESG E Confirmation of our SBTi targets for cutting CO2 emissions Strengthening the waste recycling chain Reducing water leakage S Commitment to gender equality Boosting youth employment Boosting personnel development and training opportunities G ESG criteria fully embedded in Risk
Slide 11: 9M 2023 Results
STRATEGIC GUIDELINES M9 2023 RESULTS ANNEX 9M 2023 ANNEX 10
Slide 12: A «challenging» market environment
A «challenging» market environment Renewed energy price inflation and ongoing developments in the regulatory framework Regulation Commodity prices and inflation Interest rates Water: Updated regulation of integrated water service tariffs for the 4th regulatory Commodity prices rose in the quarter: p
Slide 13: Highlights 9M 2023
Highlights 9M 2023 E B I T D A G RO W T H , I N C R E A S E D I N V E S T M E N T I N R E G U L AT E D B U S I N E S S E S * A N D C O N T I N U E D O P E R AT I O N A L D I S C I P L I N E REVENUE Group revenue of €3.4bn, including approximately €1.8bn from Water Italy, Energy Grids & Water Italy,
Slide 14: Overview of 9M 2023 results
Overview of 9M 2023 results O RG A N I C G ROW T H A N D R E L AU N C H O F I N V E S T M E N T S EBITDA (€m) CAPEX (€m) Non-recurring events and changes in scope Grant-funded REVENUES * 3,794 3,400 Organic EBITDA growth driven 1,002 1,006 715 784 primarily by the regulated businesses 38 14 50 and e
Slide 15: EBITDA 9M 2023
EBITDA 9M 2023 I M P RO V E M E N T D R I V E N B Y O RG A N I C G RO W T H O F R E G U L AT E D B U S I N E S S E S EBITDA (€m) 1,006 82 6 279 63 48 528 WATER ITALY GRIDS & SMART CITIES ENVIRONMENT PRODUCTION COMMERCIAL OTHER BUSINESSES^ EBITDA 9M 2023 AND HOLDCO 53% 28% 6% 5% 8% <1% (87*) +3% 1,00
Slide 16: Net profit 9M 2023
Net profit 9M 2023 O P E R AT I N G E F F I C I E N C I E S A N D O RG A N I C G RO W T H H AV E O F F S E T I N C R E A S E S I N D E P R E C I AT I O N A N D F I N A N C I A L COSTS NET PROFIT (€m) Non-recurring events and changes in scope Efficiency improvements and growth of regulated businesses
Slide 17: CAPEX 9M 2023
CAPEX 9M 2023 I N V E S T M E N T D R I V E C O N T I N U E S W I T H F O C U S O N R E G U L AT E D B U S I N E S S E S CAPEX (€m) 733* 31 34 20 197 28 423 WATER ITALY GRIDS & SMART ENVIRONMENT PRODUCTION COMMERCIAL OTHER BUSINESSES^ CAPEX 9M 2023 CITIES AND HOLDCO 57% 27% 4% 4% 5% 3% 88%** WATER I
Slide 18: Cash Flow 9M 2023
Cash Flow 9M 2023 I M P ROV E M E N T I N F R E E C A S H F LOW CASH FLOW (€m) 9M 2023 Operating FCF of €24m highlights ability to fund capex with 1,006 operating cash flow during the period, with an improvement of -139 €112m versus 2022. -60 758 -50 Cash flow before M&A and IFRS16 primarily reflect
Slide 19: Financial structure 9M 2023
Financial structure 9M 2023 L E V E R AG E G U I DA N C E C O N F I R M E D, AV E R AG E C O S T O F D E B T 2 % LEVERAGE CONS 9M CONS 9M CONS CONS N E T D E B T / E B I T D A LT M NET D EB T /EB I TDA (€m) DEC 2022 2023 vs 2023 vs 9M 9M 2023 9M 2022 DEC 2022 2022 30 SEPTEMBER 2023 31 DECEMBER 2022
Slide 20: Water Italy: organic EBITDA growth +6%
Water Italy^: organic EBITDA growth +6% VA L U E C R E AT I O N T H RO U G H I N V E S T M E N T REVENUE ORGANIC EBITDA GROWTH* MAIN DRIVERS (€m) (€m) Non-recurring events and changes in scope +6% 1,006 1,071 26 50 516 490 31 520 8 528 +40 980 1,020 (+4%) (26) 9M2022 9M2023 EBITDA BONUS FOR EBITDA 9
Slide 21: Grids & Smart Cities: EBITDA growth +6%
Grids & Smart Cities: EBITDA growth +6% F O C U S O N R E S I L I E N C E A N D D I G I TA L I S AT I O N O F T H E G R I D REVENUE EBITDA MAIN DRIVERS (€m) (€m) 452 469 +6% +17 264 15 279 (+4%) 9M2022 9M2023 EBITDA ORGANIC EBITDA 9M 2022 GROWTH 9M 2023 CAPEX TOTAL ELECTRICITY NUMBER OF PODs (€m) DI
Slide 22: Environment: increase in waste treated +9%
Environment: increase in waste treated +9% O N G O I N G I N T E G R AT I O N O F P L A N T S A C Q U I R E D I N C E N T R A L I TA LY REVENUE EBITDA MAIN DRIVERS (€m) Non-recurring events and changes in scope (€m) 254 248 -27% 11 11 21 21 -16 83 72 11 243 227 (-7%) 53 63 (11) (20) 9M2022 9M2023 EB
Slide 23: Production: increase in electricity production +14%
Production: increase in electricity production +14% O V E R 2 0 0 M W O F R E A D Y- T O - B U I L D P H O T O V O LTA I C P L A N T S REVENUE EBITDA MAIN DRIVERS (€m) (€m) Non-recurring events and changes in scope 139 -33% 0 105 -28 79 139 111 (-20%) 53 48 (26) (5) -6 -5 9M2022 9M2023 EBITDA ENERGY
Slide 24: Commercial: EBITDA growth +44%
Commercial: EBITDA growth +44% G ROW T H I N F R E E M A R K E T C U S TO M E R B A S E REVENUE EBITDA MAIN DRIVERS (€m) (€m) Non-recurring events and changes in scope 2,312 1 +44% 1,813 -498 2,311 82 (-22%) 58 57 25 (1) EBITDA NON-RECURRING EBITDA 9M 2022 ENERGY SCENARIO 9M 2023 9M2022 9M2023 9M 20
Slide 25: Annex 9M 2023
STRATEGIC GUIDELINES M9 2023 RESULTS ANNEX M9 2023 ANNEX 24
Slide 26: Sustainable growth pathway in early 2023
Sustainable growth pathway in early 2023 KEY DEVELOPMENTS Technical and Contractual DECO SIMAM EIB loan Quality bonus January 2023 April 2023 July 2023 Luglio 2023 October 2023 Settembre 2023 Completion of the acquisition of Completion of the acquisition of €435m EIB loan obtained. ACEA ATO2 ranked
Slide 27: Sustainable growth pathway in early 2023
Sustainable growth pathway in early 2023 KEY DEVELOPMENTS RSE Top Utility for Top Employers Italia 2023 Research and Innovation Standard Ethics January 2023 March 2023 Luglio July 2023 2023 Acea obtains «Top Employers Italia Winner of the award as «RSE Top Standard Ethics upgrades ACEA’s 2023» certi
Slide 28: Sustainability ratings
Sustainability ratings 62/100 «EE+» «B» «A» Positive outlook Management Level 81.58/100 «Leader ESG ESG risk Identity» Rating 20.1 27
Slide 29: Consolidated income statement and statement of financial position at 30 September 2023
Consolidated income statement and statement of financial position at 30 September 2023 Consolidated income statement (€000) Consolidated statement of financial position (€000) 28
Slide 30: Financial highlights for Engineering & Infrastructure Projects, Overseas Water and the Holdco
Financial highlights for Engineering & Infrastructure Projects, Overseas Water and the Holdco ENGINEERING & OVERSEAS WATER HOLDCO INFRASTRUCTURE PROJECTS (€m) 9M 2023 9M 2022 % change (€m) 9M 2023 9M 2022 % change (€m) 9M 2023 9M 2022 % change Revenue 82.7 84.4 -2.0% Revenue 73.5 70.0 +4.9% Revenue
Slide 31: Annex: Regulation, 2022 Results
STRATEGIC GUIDELINES M9 2023 RESULTS ANNEX M9 2023 ANNEX REGULATION 2022 RESULTS 30
Slide 32: Annex H1 2023: Regulation, 2022 Results
STRATEGIC GUIDELINES H1 2023 RESULTS ANNEX H1 2023 ANNEX REGULATION 2022 RESULTS 31
Slide 33: Water Italy - Regulation
Water Italy - Regulation TARIFF REGIME FOR THE FOURTH REGULATORY PERIOD (MTI-4) 2024 - 2029 ARERA RESOLUTION: 639/2023 CONFIRMED THIRD REGULATORY PERIOD GENERAL OVERVIEW AND REVENUE CALCULATION METHODOLOGY (i.e. Guaranteed Revenue Constraint (VRG)). ▪ Greater visibility: regulatory period of 6 years
Slide 34: Grids & Smart Cities – Regulation (1/2)
Grids & Smart Cities – Regulation (1/2) Areti’s concession expires in 2030 ARERA RESOLUTION 556/2023 – «Revision of rate of return on invested capital for infrastructure services in the electricity and gas sectors for the year 2024» • 2024 WACC electricity distribution: 6.0% ARERA RESOLUTION 497/202
Slide 35: Grids & Smart Cities – Regulation (2/2)
Grids & Smart Cities – Regulation (2/2) ARERA RESOLUTION 617/2023 – «Approval of output-based regulations and the commercial quality of electricity distribution and metering services, with effect from 1 January 2024» Incentives for the use of non-repayable funding • Bonus for the use of non-repayabl
Slide 36: Environment - Regulation
Environment - Regulation ARERA RESOLUTION 363/2021 (MTR-2) – «Approva of the tariff regime for waste (MTR-2) for the second regulatory period 2022-2025» ▪ The scope of application covers treatment plants used in the «recovery and disposal» of all urban waste, regardless of how it is subsequently cla
Slide 37: Annex H1 2023: 2022 Results
STRATEGIC GUIDELINES H1 2023 RESULTS ANNEX H1 2023 ANNEX REGULATION 2022 RESULTS 36
Slide 38: Performance and Delivery 2022
PERFORMANCE AND DELIVERY 2022 P O S I T I V E R E S U LT S D E S P I T E T H E U N C E RTA I N A N D V O L AT I L E S C E N A R I O NET PROFIT AFFECTED BY EXTERNAL FACTORS REVENUE EBITDA EBIT NET PROFIT €5,138m +29% €1,305m +4% €566m -3% €280m -11% Windfall tax LEVERAGE IMPACTED BY ENERGY SCENARIO A
Slide 39: EBITDA 2022
EBITDA 2022 (€m) E B I T D A + 4% MAIN DRIVERS 1,256 14 9 38 1,305 10 (19) (3) ✓ Impact of electricity distribution regulation (-€26m) ✓ Impact of energy scenario (+€37m) ✓ Technical quality bonus for water services (+€27m) ✓ Release of Terni plant from obligation to purchase CO2 2021 WATER ITALY GR
Slide 40: EBIT and Net Profit 2022
EBIT AND NET PROFIT 2022 EBIT (€m) NET PROFIT (€m) 581.1 565.9 313.3 318.2 38.5 Windfall tax 279.7 2021 2022 2021 2022 (€m) 2022 2021% CHANGE TAX RATE 2022 37.6% DEPRECIATION 594.6 546.6 +8.8% (tax rate 2021: 30.0%) INCREASE IN PROVISIONS CREDIT LOSS PROVISIONS 113.4 86.2 +31.6% FOR POTENTIAL DETERI
Slide 41: CAPEX 2022
CAPEX 2022 CAPEX (€m) 88% 12% 63 7 0 10 1,001 ** 931 * (6) (4) 2021 WATER ITALY GRIDS & SMART PRODUCTION COMMERCIAL ENVIRONMENT OTHER 2022 CITIES BUSINESSES^ CAPEX AND HOLDCO Capex regulated businesses ° (€m) 562^^ 269 30 50 46 44 Capex non-regulated businesses WATER ITALY GRIDS & SMART CITIES ENVIR
Slide 42: Cash Flow 2022
CASH FLOW 2022 CASH FLOW (€m) 2022 2021 FREE CASH FLOW EBITDA 1,305 1,256 CHANGE IN WORKING CAPITAL (87) (95) CAPEX* (1,001) (931) SALE OF PHOTOVOLTAIC ASSETS FREE CASH FLOW 217 230 FINANCE INCOME/(COSTS) (97)° (86) COLLECTION OF TECHNICAL QUALITY BONUS (WATER) CHANGE IN PROVISIONS (157) (127) INCOM
Slide 43: Financial Structure 2022
FINANCIAL STRUCTURE 2022 31 Dec 22 31 Dec 21 30 Sept 22 Change Change (€m) (A) (B) (C) (A-B) (A-C) NET DEBT 4,439.7 3,988.4 4,393.0 451.3 46.7 Medium/long- 4,722.3 4,792.0 4,706.2 (69.7) 16.1 term Short-term (282.6) (803.6) (313.2) 521.0 30.6 STRUCTURE OF DEBT DEBT FALLING DUE FLOATING RATE (MATURIT
Slide 44: Water Italy including gas distribution
WATER ITALY INCLUDING GAS DISTRIBUTION FINANCIAL HIGHLIGHTS 2022 (€m) 2022 2021 % change (A) (B) (A/B) EBITDA 669.0 655.3 +2.1% - ACEA ATO2 452.3 436.6 +3.6% SLUDGE DISPOSED - ACEA ATO5 30.2 33.7 -10.4% OF (ktonnes) - Gori 70.5 79.0 -10.8% - Adf 63.5 62.8 +1.1% 209 191 - SII Terni 14.4 13.8 +4.3% Eq
Slide 45: Grids & Smart Cities
GRIDS & SMART CITIES F I N A N C I A L A N D O P E R AT I O N A L H I G H L I G H T S 2 0 2 2 TOTAL NUMBER OF ELECTRICITY PODs (€m) 2022 2021 % change DISTRIBUTED (‘000s) GWh) (A) (B) (A/B) 9,172 9,355 EBITDA 352.2 371.6 -5.2% - areti 351.3 374.6 -6.2% - Public lighting 0.9 (3.0) n/s 1,653 1,647 CAP
Slide 46: Generation
GENERATION F I N A N C I A L A N D O P E R AT I O N A L H I G H L I G H T S 2 0 2 2 TOTAL ENERGY (€m) 2022 2021 % change PRODUCED (GWh)* (A) (B) (A/B) 710 650 EBITDA 89.8 79.5 +13.0% CAPEX 30.3 **23.4 +29.5% 2021 2022 EBITDA PRICE AND VOLUME EFFECTS DECONSOLIDATION OF ‘‘SOSTEGNI TER’’ LAW DECREE mai
Slide 47: Commercial
COMMERCIAL F I N A N C I A L A N D O P E R AT I O N A L H I G H L I G H T S 2 0 2 2 (€m) 2022 2021 % change (A) (B) (A/B) EBITDA 90.0 80.5 +11.8% CAPEX 49.6 49.4 +0.4% TOTAL ENERGY SOLD NUMBER OF TOTAL GAS SOLD NUMBER OF GAS (GWH) ELECTRICITY (M m 3 ) CUSTOMERS (‘000s) CUSTOMERS (‘000s) 8,256 7,742
Slide 48: Environment
ENVIRONMENT F I N A N C I A L A N D O P E R AT I O N A L H I G H L I G H T S 2 0 2 2 2022 2021 % change TREATMENT AND ELECTRICITY SOLD (€m) (A) (B) (A/B) DISPOSAL (KTONNES) (GWh) 1,715 EBITDA 101.6 63.7 +59.5% 1,515 328 322 CAPEX 46.2 36.1 +28.0% 2021 2022 2021 2022 EBITDA EBITDA FROM WTE CHANGE IN
Slide 49: Key ESG Highlights
KEY ESG HIGHLIGHTS E N V I R O N M E N TA L , S O C I A L , G O V E R N A N C E A N D E C O N O M I C P E R F O R M A N C E 8.6m Inhabitants served, Italy’s largest water 36 GWh of energy produced (+16%) from approx. 20,027 kNm3 company WATER ITALY ENVIRONMENT of biogas produced 30 Mm3 Water loss re
Slide 50: Key ESG Highlights
KEY ESG HIGHLIGHTS E N V I RO N M E N TA L , S O C I A L , G O V E R N A N C E A N D E C O N O M I C P E R F O R M A N C E COMMUNITY SUPPLIERS ➢ ACEA’S Covid-19 VACCINATION HUB ➢ 78% of QUALIFIED SUPPLIERS have delivered over 171k doses (closed from 1 January completed a self-assessment questionnair
Slide 51: Disclaimer
DISCLAIMER 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 CURR