Slide 1: Hera Group business plan to 2016
Hera Group business plan to 2016
Slide 2: Index
Index Introduction Annex Who and where we are page I Scenario page 13 Hera Group business portfolio page II Ebit breakdown page 14 10 years track record page III Share capital & Governance page 15 Recent news flow page IV Financial strategy page 16 Acegas APS merger: industrial rational page V Acega
Slide 3: Introduction to Hera
DF ntroduction to Hera
Slide 4: Hera Group reference territory
Hera Group Hera reference territory • In 2002: consolidation of 11 companies in E-R. • Up to 2011: expanded by merging other companies in E-R and in the Northern part of Marche region. Friuli Veneto region • In 2012: in progress to expand (Aimag in Modena region Province and Acegas Aps in Padua and
Slide 5: Well balanced portfolio
Well balanced portfolio Market positions 2011 Group Ebitda: 645m€ Constant Ebitda growth 2002-- 2011 250 +14% cagr 194 30% 200 15 0 Italian leader WASTE 10 0 58 50 80% regulated (W. treatment) 0 20% regulated (W. collection) ' 0 2 ' 0 3 ' 0 4 ' 0 5 ' 0 6 ' 0 7 ' 0 8 ' 0 9 ' 10 ' 11* 350 46% +10% cag
Slide 6: Fast and resilient growth despite difficult macro scenario
Fast and resilient growth despite difficult macro scenario Ever growing operating results Maintaining sustainable Debt/Ebitda (m€) (x) Ebitda Ebit Overcoming peak in capex* Progressing dividend per share (m€) (€c) *Gross capex III
Slide 7: Recent news flow
Recent news flow Jul. 2012 Aug. 2012 Sept. 2012 Oct. 2012 SPA for H1 2012 FSI Energonut Merger agreement Financial results Fondo Strategico Italiano share capital increase & BP to 2016 IV
Slide 8: Merger with Acegas Aps
Merger with Acegas Aps Just across the regional borders Friuli region • Nearby territories. Padua is located 40 Veneto region km from Emilia-Romagna Trieste Acegas APS Hera Padua 40 km distance • Acegas Aps regional territories Bologna have similar industrial development E-R region as Emilia-Romagna
Slide 9: Strengthening market positions
Strengthening market positions 2011 Key industrial data 2011 Financial Highlights (m€) 2011 Hera Acegas Combined Revenues 4,106 585 4,691 Ranking Sector Ebitda 645 119 764 combined Ebit 334 53 387 Waste 3,713k Net profit 105 18 123 Volumes 331k 3,382k treatm.from 3° 9% 91% 1st Net financial debt 1,9
Slide 10: Focusing on extracting synergies from merger
Focusing on extracting synergies from merger Synergies to 2016* (m€) LEVERS Procurement optimization (material and services) 9-10 Procurement • Volume concentration optimisation • Price benchmarking Network management 2 • Supplier base alignment and 40% Waste operations 4-5 e-procurement Commercial
Slide 11: Acegas APS next steps following EGM approval
Acegas APS next steps following EGM approval (15th Oct.) 2012 2013 1 Merger into HERA of 2 Public offer to minority AcegasAps Holding AcegasAps shareholders Swap ratio: 0.763x Swap ratio: 4.16x New issued Hera shares: 143.38m New issued Hera shares: 84.83m +228.21m new Hera shares Cash proceeds: 3.4
Slide 12: FSI agreement to become Hera shareholder
FSI agreement to became Hera shareholder • Fondo Strategico Italiano signed an agreement to enter into Hera Share capital • Strategic rational: support further cash M&A to strengthen development strategy being long term shareholder • Terms of the share capital increase: - Max 80 million new issued H
Slide 13: Herambiente signed SPA with Veolia for Energonut
Herambiente signed SPA with Veolia for 100% stake of Energonut Description WTE in Italy 1 • Energonut, located in Molise region, 0 13 1 3 owns a CIP6 WTE plant for RDF and a 2 8 solar plant 0 8 1 • Area characterized by plant 0 0 shortage/high waste production 4 1 2 1 1 • Client portfolio encompasse
Slide 14: Energonut key highlights
Energonut key highlights Financial Highlights (m€) 1 2 E2012 Enhance WTE normalised Expand market leadership Revenues 26 “Area short of plants” “National coverage” Ebitda 17 Ebit 12 3 4 Net Profit 6 Synergy potentials Positive CF & Net invested capital* 49 Dividend flows “Herambiente network & econo
Slide 15: Business plan 2012-2016
WF usiness plan 2012-2016
Slide 16: Tight to multi-utility expansion strategy
Tight to multi-utility expansion strategy Multi-business mix Expand downstream 1 2 Extracting synergies Enlarge customer base leveraging on larger scale and Cross selling operating efficiency and service Enhance service quality coverage “Tackling with tougher “Deploying economies of competition and
Slide 17: Remarkable step forward in business size
Remarkable step forward in business size 2011 2016 Sector Key Industrial targets Volume of waste treated from 3°parties (m ton) 3.4 4.8 Urban waste collected (m ton) 1.8 2.4 WASTE Number of plants 79 >90 Electricity generated from biomass (GWh) 400 600 Water volume (m m3) 254 327 NETWORK Gas POD (m
Slide 18: EBITDA growth leveraging upon all drivers
EBITDA growth leveraging upon “all” drivers Next 5Y Ebitda Target (m€) +9% cagr 990 +25 +54 +152 645 +114 2011 Hera syn. & Agegas APS Acegas APS Hera gas E2016 org. g. stand alone synergies tenders + Aimag Hera syn. & org. growth Acegas APS Gas tenders M&A: Aimag (m€) (m€) 27 Aiming at confirming On
Slide 19: Overview on Ebitda growth by strategic areas
Overview on Ebitda growth by strategic areas Ebitda growth drivers (m€) 4
Slide 20: Key challenges and opportunities
Key challenges and opportunities Challanges Opportunities • Changing business • Evolve asset base exploiting model in waste mgmt recovery/recycling WASTE • Volume development • Enhance market coverage (by territory, by technology) • Gas tenders • Consolidate “in current territory” NETWORK • New regu
Slide 21: WASTE: Maximize value extraction
WASTE: Maximize value extraction Strategy Ebitda breakdown (m€) Enhance Returns Develop Market & Asset “Focus on special waste mkt” +137m€ “Pricing optimization” “Asset portfolio mgmt” “Develop asset base consistently +10 331 +35 +7 with sorted collection increase” +85 194 Follow regulation Integrat
Slide 22: NETWORKS: Confirm concessions and extract value from assets
NETWORKS: Confirm concessions and extract value from assets Strategy Ebitda breakdown (m€) Gas & Electric. distr. Water services +173m€ +20 467 “Aiming at guaranting proper +76 +9 “Focus on upcoming tenders” “Electronic meter substitution” return on RAB” “Focus on leakages” +14 +54 294 Smart mgmt sy
Slide 23: ENERGY: Progress on down stream development
ENERGY: Progress on down stream development Strategy Ebitda breakdown (m€) Expand market Tackle with margin +32m€ “Cross selling to achieve 2.5 million squeezing +9 170 +30 +7 customers” “Manage pricing and customer “Complement new areas 138 (14) segments” with Acegas Aps” Upstream optimization Cost
Slide 24: M&A strategy focused on traditional core dimensions
M&A strategy focused on “traditional core dimensions” M&A scope and guidelines Rational Multi-utility Similar portfolio mix In surroundings territories • Increase economies of scale Reasonably sound financials • Consolidate territorial presence • Exploit value from Hera business Not diluitive model
Slide 25: Capital expenditures
Capital expenditures 2012-2016 capex plan by business Capex plan by legal entity (m€) (m€) 460 Total Capex: 1.94b€ 435 394 86 362 123 25 75 288 65 260 ’12-’16 1.94b€ 283 1,480 2012 2013 2014 2015 2016 Hera Acegas APS Aimag Gas tenders Capex by regulated/liberalised activities Development capex plan
Slide 26: Enhance financial performance
Enhance financial performance EPS Cagr Returns (€) (%, b€) ~0.12 ROI ROE >10% 8.0% 8.7% 6.7% 0.094 2011 E2016 2011 E2016 2011 E2016 NIC** 3.9 5.3 Equity 1.9 2.7 **NIC: Net Invested Capital E2016 Cash flows Financial ratios (m€) FFO/Debt Debt/Ebitda 3.1x 3.1x +599 (374) ~ 2.7x ~ 20% 15% +225 Operatin
Slide 27: Closing remarks
Closing remarks Leveraging upon well known levers to create value 990m€ Ebitda in 2016 M&A: synergy exploitation and business portfolio rationalization organic growth perspectives with Energonut Identify further opportunities matching Hera policies Focusing on EPS (>5%cagr) and Free Cash Flows (>200
Slide 28: ANNEX: Business plan 2012-2016
ANNEX: Business plan 2012-2016 Further Group details
Slide 29: Assumptions
Assumptions 2011 E2014 E2016 Brent (Dollar/Barrel) 111 106 105 Exchange ratio $/€ 1.39 1.35 1.35 PUN: Avg Northern Italy elect. price (€/MWh) 70 75 80 Inflation (%) 2% 2% 2% Italian GDP trend (%) +0.7% +1.4% +1.4% Green certificate (€/MWh) 83 78 73 CEC (Cip6 avoid cost) (€/MWh) 118 127 126 White cer
Slide 30: Change in Governance
Change in Governance Share capital develop. Hera Group Board of Directors 2013 2014 1,115 4 1% 14 18 Bod m Hera 2011 shares member 59% s 4 2 1,343 20 4 1% 14 Bod m member Hera post Acegas shares s 4 Public offer 48% 2 Hera post 38% 12 15 1,423 21 FSI Bod Bod m 14 member member 4 shares s s 3 46% 1 H
Slide 31: Consolidated Group Ebit
Consolidated Group Ebit Ebit 2011 Ebit 2016 1 4 85 172 By strategic area 156 334m€ 255 543m€ By legal entity 18 9 93 81 112 Waste Energy Networks Other Waste Energy Networks Other 543m€ 33 1 35 3 85 435 172 Hera Acegas APS By Business 334m€ 216 543m€ Aimag Gas tenders 147 69 116 Waste Water Gas Elec
Slide 32: Financial Strategy
Financial Strategy Refinancing needs to 2016 Pursuing balanced interest nature (m€) 1 6 00 589 1.50 0 1 6 00 450 1.50 0 1 4 00 1 4 00 1 2 00 1 2 00 230 1 000 284 1 000 500 8 00 104 8 00 6 00 303 Fixed 50% Rates 50% Varialble 6 00 4 00 180 4 00 220 2 00 +140 2 00 0 0 Convert. BEI Euro Loan Acegas Tot
Slide 33: Acegas APS Deal
Acegas APS Deal Deal valuation issues Activities in Bulgaria • Companies valuation based on business fundamentals, accounting perspective returns on recent investments/capex (i.e. 40m€ RAB in Bulgaria still not AcegasAPS - Rilagas •Population: 324k contributing to ’11 Ebitda). •Cities: 7+ •Network c
Slide 34: Acegas APS: Further business plan details
Acegas APS: Further business plan details Acegas APS Ebitda Ebitda growth ’12-’16 (m€) (m€) By strategic area By Business +8 +10 152 152 180.00 119 +4 +11 160.00 152 140.00 11.6 119 119 14.3 120.00 8.7 1.9 100.00 53.7 80.00 49.9 60.00 37.2 40.00 34.7 20.00 - 24.1 35.2 0 2011 E2016 2011 Energy Waste
Slide 35: AIMAG: Further details
AIMAG: Further details Ebitda Target 2016 2011 Industrial data & Financials (m€) By strategic area By Business 2011 40 50.00 40 Industrial data 2011 Revenues 243 45.00 40.00 2.5 0.6 Gas sold (mm3) 365 Ebitda 44 35.00 30.00 15.5 Gas distrib. (mm3) 290 25.00 Ebit 22 Water sold (mm3) 15 20.00 15.00 11.
Slide 36: Sustainable development
Sustainable development Electricity production – renewable CO2 emission avoided* (GWhe) (ton) ~600 ~575 ~400 374 374 220 WTE Digestor 5 12 50 Biogas 84 102 89 Idroelectric 1 1 1 Cagr. (3.1%) 90 86 86 Biomass 2011 E2013 E2016 Thermal energy production – renewable* Low emission vehicles* (GWht) Cagr.
Slide 37: ANNEX: Business plan 2012-2016 - WASTE
ANNEX: Business plan 2012-2016 WASTE (further details by strategic area)
Slide 38: Hera growth strategy and waste market expansion
Hera growth strategy and waste market expansion Market Expansion Fully integrate value chain Hera Treatment capacity* Focus on Expand Increase (k ton) value added geographical “full service” treatments scope contracts +1,294 Kton 627 125 178 6,333 5,107 147 35 114 Hera sales volumes* (kton) +4.8% Ca
Slide 39: Waste treatment capacity and energy generation enhancement
Waste treatment capacity and energy generation enhancement Green certificates* Waste To Energy Plants (m€) Renewable Power generation 21 (GWh) Ton Potenza EE EE a CV smaltite Installata prodotta WTE Ferrara 130 k 13,1 MW 109 Gwh 38 Gwh WTE Forlì 120 k 10,9 MW 94,6 Gwh 35 Gwh WTE Ravenna 45 k 6,3 MW
Slide 40: ANNEX: Business plan 2012-2016 - NETWORKS
ANNEX: Business plan 2012-2016 NETWORKS (further details by strategic area)
Slide 41: Networks internal growth drivers (1)
Networks internal growth drivers (1) Visible and safe tariff enhancement* Benefitting from new asset base* Avg. revenue per m3 of water distributed Hera heating production sources (excl. leakages) (€/m3) (GWht) +2.2% Cagr +5.3% Cagr 20% 20% Efficient 21% 519 thermal energy 384 20% production 17% 12%
Slide 42: Networks internal growth drivers (2)
Networks internal growth drivers* (2) Economies of scale in networks management Gas (€/POD) (0.2%)Cagr Average Cost per POD 44,1 (€/POD) 43,7 +1.2% Cagr 157 148 2011 E2016 Electricity Water (€/POD) (€/POD) +1.5% Cagr (0.4%) Cagr 281 260 140 137 2011 E2016 Increase below inflation rate 2011 E2016 201
Slide 43: Networks targets
Networks targets Ebitda breakdown RAB/NIC* (m€) (m€) 2,182 2500 2,035 2000 234 217 500 467 1500 908 848 450 26.8 1000 400 307 322 350 294 500 708 236 663 300 11.4 0 250 200 150 2011 E2016 36 150 Gas Electricity Water D.H. 100 26 166 50 107 Gas RAB (data do not include third parties RAB under 0 manag
Slide 44: ANNEX: Business plan 2012-2016 - ENERGY
ANNEX: Business plan 2012-2016 ENERGY (further details by strategic area)
Slide 45: ENERGY: challenging scenario
ENERGY: challenging scenario Gas demand & Import capacity Italy Italian (PSV) vs EU (EEX) Gas Spot price (bcm) (€/MWh) 113 Un utilized Import capacity 44% Gap Closing gap due to: Increase stocking capacity by +25% “Use or loose it” CCI will include increasing spot prices E2016 Elect. demand slow dow
Slide 46: Keeping a balanced and effective energy upstream strategy
Keeping a balanced and effective energy upstream strategy Ebitda breakdown (m€) 170 180 160 138 21 140 6 7 120 4 Heat mgmt 100 Cogeneration 85 94 80 Power generation 60 Sale&Trading Gas 40 Sale&Trading Electr. 20 43 47 0 2011 E2016 • Gas Sales and Trading activities expected to benefit from M&A cont
Slide 47: ANNEX: Business Plan 2012-2016 (by business)
ANNEX: Business Plan 2012-2016 (by business)
Slide 48: Waste business
Waste business Economics Capex ’12-’16: 482m€ (m€) M€ 2011 E2016 Cagr. Ebitda 194,2 331,0 +11,3% E2012 E2013 E2014 E2015 E2016 Capex Ebitda breakdown Highlights* (m€) 331 2011 E2016 194 Tariffs (€/ton) 229.1 283.4 Volume treated Urban (kton) 1,809 1,823 Special (kton) 1,573 2,461 C2011 E2012 E2013 E
Slide 49: Water business
Water business Economics Capex ’12-’16: 606m€ (m€) M€ 2011 E2016 Cagr. Ebitda 150,2 236,9 +9,5% E2012 E2013 E2014 E2015 E2016 Capex Volume sold Highlights* 2011 E2016 2011 E2016 Leakage 26.9% 24.5% Volumes (mm3) 254 327 RAB (b€) 0.85 0.91 Tariff (€/m3) 1.7 2.0 * Hera stand alone 29
Slide 50: Gas business
Gas business Economics Capex ’12-’16: 620m€* (m€) M€ 2011 E2016 Cagr. Ebitda 208,7 308,3 +8,1% E2012 E2013 E2014 E2015 E2016 Capex Ebitda breakdown (m€) Highlights* 308.3 21.3 208.7 26.8 2011 E2016 5.5 11.4 165.8 RAB (b€) 0.7 0.7 106.6 Networks (kKm) 13.7 15.6 85.2 94.4 Tariffs (€c/m3) 7.0 7.4 C2011
Slide 51: Electricity business
Electricity business Economics Capex ’12-’16: 210m€ (m€) M€ 2011 E2016 Cagr. Ebitda 73,2 90,5 +4,3% E2012 E2013 E2014 E2015 E2016 Capex Ebitda breakdown Highlights* (m€) 90.5 2011 E2016 73.2 6.5 0.8 4.0 1.2 E. sold (TWh) 10.0 9.1 36.2 26.0 E. distr. (TWh) 2.3 2.4 42.0 47.0 E. contracts (k) 482 814 C
Slide 52: Portfolio mix
Portfolio mix Business Portfolio breakdown * Hera stand alone 32
Slide 53: Disclaimer
Disclaimer This presentation contains forward-looking statements regarding future events (which impact the Hera Group’s future results) that are based on current expectations, estimates and opinions of management. These forward-looking statements are subject to risks, uncertainties and events that a