Acea S.p.A. · MIL:ACE
Acea — 2019 Global Energy Conference
53 slides from Acea's conference presentation, Jun 5, 2019
Slide 1: Acea Group - 2019 Global Energy Conference
Acea Group - 2019 Global Energy Conference London - June 5, 2019
Slide 2: Agenda
ACEA Group Agenda ACEA TODAY: Challenges of today and tomorrow BUSINESS PLAN 2019-2022 STRATEGY AND TARGETS BUSINESS LINE HIGHLIGHTS STRATEGIC OPPORTUNITIES CLOSING REMARKS ANNEX MIL 190401 - Piano Industriale 201 ... 2
Slide 3: Acea Today: Leader in the multi-utility market
ACEA Group Acea Today Leader in the multi-utility market 2018 EBITDA Commercial & Water Trading 933M€ 1° Italian With 9 EBITDA 2018 Among with 6 TWh player millions the main of electricity sold in the water customers national players supply sector served in Lazio, in the energy Tuscany, Umbria marke
Slide 4: Pillars of the Business Plan 2018-22
ACEA Group Strategy and Targets Pillars of the Business Plan 2018-22 … Business Plan 2018-2022 Technology, Industrial Local focus & Operational Innovation and Growth Sustainability Efficiency Quality • Infrastructural • Sustainable • Research & • Capex discipline development development innovation a
Slide 5: Strong and sustainable growth
ACEA Group Strategy and Targets Strong and sustainable growth pre-tax ROIC 2018 2020 2022 11.0% >10% >11% 2019 GUIDANCE +5% €980M EBITDA 2018 EBITDA 2019 +6% €989M €933M CAPEX up by over 10% versus €631M of 2018 NET DEBT: €2.85B – €2.95B EBITDA growth with +8.0% CAGR NFP/EBITDA down to 2.9X €M Multi
Slide 6: Outperformed previous business plan EBITDA targets
ACEA Group Strategy and Targets Outperformed previous business plan EBITDA targets CAGR 8.0% CAGR 7.7% CAGR 8.3% €M Cross-business line actions Performance improvement and cost efficiency + Generational turnover + Strengthening operations Water Energy Infrastr. Comm. & Trading Environment • Tariff i
Slide 7: Additional €900M investments
ACEA Group Strategy and Targets Additional €900M investments Cumulative 2018-2022 Highlights €B €M (approx.) Gori consolidation and +250 additional investments (Peschiera/Marcio) PV growth with M&A and +200 greenfield developments Innovation, Resiliency +250 and modernization related investments Reg
Slide 8: Innovation and Industry 4.0
ACEA Group Strategy and Targets Innovation and Industry 4.0 Digital channels 60% of LV/MV development secondary cabins 600k Smart Meter enabled with (Power) remote-control 1 500k+ Smart Meter Reached 40% of (Water) long-term goals for automated secondary cabins 10MW UVAM Smart Tor di Valle Recruitin
Slide 9: Sustainability growth
ACEA Group Strategy and Targets Sustainability growth Additional €400M sustainability- CO2 Reduction >200 linked capex bring our Sustainability (Reduced losses, Purchase of kton effort to €1.7B overall Green Energy, Biogas Recovery) Recovering materials and energy in a Circular Economy perspective +
Slide 10: Growing dividends vs previous business plan
ACEA Group Strategy and Targets Growing dividends vs previous business plan Growing €800M of dividends 0.75 minimum dividends vs old throughout the plan, dividend per share business plan +€100M vs old from 2020 business plan Dividend per share €/share MIL 190401 - Piano Industriale 201 ... 10
Slide 11: Financial strategy
ACEA Group Strategy and Targets Financial strategy 16 May 2019 Successful placing of Euro 500 million bond under the EMTN Programm, 9 years, fixed rate 1.75%. Highlights Net Financial Position €B NFP/EBITDA Working Capital Improved working capital absorption (~€30M/year) Rating 3.0x 2.8x BBB+ Baa2 2
Slide 12: Water
Water Business Line Highlights
Slide 13: Development of a Smart Water Company
ACEA Group Water Business Line Key Actions Implementation of old BP strategic initiatives 500k+ smart water meter and projects Development for water network districtization of a Smart Focus on preservation of water, with development of a dedicated structure Water Rationalization of 35+ small purific
Slide 14: Water Business Line Key Financials
ACEA Group Water Business Line Key Financials CAGR 8.0% €M CAGR 10.1% CAGR 5.9% EBITDA Pescara Gas Including Gori on a yearly basis (+45M€) Old Plan ATO2, ATO5, Gori €B €B INVESTMENTS RAB MIL 190401 - Piano Industriale 201 ... 14
Slide 15: Business Line Highlights
Business Line Highlights
Slide 16: Energy Infrastructure: main actor of the energy transition
ACEA Group Energy Infrastructure Key Actions Main actor of the 600k smart meters roll-out start energy transition 100+ M€ for Resiliency for electricity supply continuity vs Authority guidelines with projects enabling the 150MW PV between grid parity and decarbonization M&A on the secondary market o
Slide 17: Energy Infrastructure Key Financials
ACEA Group Energy Infrastructure Key Financials CAGR 5.1% €M CAGR 6.3% CAGR 3.9% EBITDA Old Plan Distribution €B €B Metering INVESTMENTS RAB MIL 190401 - Piano Industriale 201 ... 17
Slide 18: Commercial and Trading
Commercial and Trading Business Line Highlights
Slide 19: Commercial and Trading Key Initiatives
ACEA Group Commercial and Trading Key Initiatives Growth of retail Strong commercial boost (3x vs. 2018) supported by a new offering model portfolio, Increase of share of pull commercial channels (e.g. Shop, Branch and Digital) up improvement of to 50% service quality Strengthening of digital channe
Slide 20: Commercial and Trading Key Financials
ACEA Group Commercial and Trading Key Financials CAGR 19.3% €M CAGR 8.2% CAGR 31.4% EBITDA Old Plan Power Mkt | Maggior Tutela CUSTOMER BASE €M Millions Power Mkt | Free INVESTMENTS Gas *Investments include Commissioning Capitalizations IFRS15 MIL 190401 - Piano Industriale 201 ... 20
Slide 21: Environment
Environment Business Line Highlights
Slide 22: Environment: Acceleration of plant development
ACEA Group Environment Key Actions Implementation of old BP strategic initiatives Doubling of treated waste (2.2 Mton Acceleration of target) with new plant development (e.g., organic fraction, liquid / sludge treatment, plant multi-material) development M&A and development in a Circular Economy per
Slide 23: Environment Key Financials
ACEA Group Environment Key Financials CAGR 3.9% €M CAGR -9.8% CAGR 19.6% EBITDA Old Pian €B Mton INVESTMENTS VOLUMES MIL 190401 - Piano Industriale 201 ... 23
Slide 24: Strategic Opportunities
Strategic Opportunities Potential Business Plan Upsides
Slide 25: Potential initiatives to be implemented
ACEA Group Strategic Opportunities Potential initiatives to be implemented EBITDA (€M) Investments (€M) Gas Growth in the gas distribution Distribution market with selected 5-20 35-110 acquisition and ATEM tenders ESCO acquisitions and Smart Energy cogeneration / trigeneration Efficiency pilots and
Slide 26: €0.2B potential upside 2022
ACEA Group Strategic Opportunities €0.2B potential upside 2022 Strategic Initiatives Full Potential EBITDA Target €B MIL 190401 - Piano Industriale 201 ... 26
Slide 27: Closing Remarks: Old plan targets reached two years in advance
ACEA Group Closing Remarks Old plan targets reached two years in advance Old plan targets reached two years in advance EBITDA CAGR of 8.8% vs 5,9% old BP (equal starting point) with new 2022 target set to €1.3B €4B investments (+ €0,9B vs old BP) with M&A growth RAB up to ~ €5B NFP/EBITDA ratio unde
Slide 28: Appendix
ACEA Group APPENDIX
Slide 29: 2019-2022 Business Plan Key Assumptions
2019-2022 Business Plan ACEA Group Key Assumptions 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 2018 Results 29
Slide 30: Q1 2019 Results
ACEA Group TITOLO Q1 2019 Results CAPITOLO TITOLO PRESENTAZIONE / Luogo e data
Slide 31: Q1 2019 financial highlights
Q1 2019 financial highlights Acea Group Q1 2019 Q1 2018 % change (€m) (a) (b) (a/b) Consolidated revenue 823.3 745.5 +10.4% EBITDA guidance 2019: +5/6% EBITDA 247.9* 229.2 +8.2% versus 2018 (€933m) EBIT 132.8 127.4 +4.2% +10.2% versus Group net profit 75.5** 77.4 -2.5% Q1 2018 after income relating
Slide 32: EBITDA
EBITDA Acea Group 2% 1% EBITDA from 21% Water 7% non-regulated Energy Infrastructure 6% businesses Commercial & Trading EBITDA Q1 2019 Environment 47% Overeas EBITDA from Engineering & Services 37% regulated 79% businesses Average Group EBITDA (€m) workforce Q1 2019 Q1 2018 Change 6,624 5,535 +1,089
Slide 33: EBITDA and quantitative data: Water
EBITDA and quantitative data Acea Group Q1 2019 financial highlights EBITDA GROWTH Water Acea ATO2: +€5.7m Acea ATO5: +€2.7m EBITDA main drivers Line-by-line consolidation of Gori: +€17.3m Companies consolidated using equity method: –€0.9m (€m) Q1 2019 Q1 2018 % change Quantitative data Q1 2019 Q1 2
Slide 34: EBITDA and quantitative data: Energy Infrastructure
EBITDA and quantitative data Acea Group Q1 2019 financial highlights EBITDA GROWTH Energy Distribution: +€1.1m Infrastructure Generation: +€0.9m EBITDA main drivers Public Lighting: -€1m (€m) Q1 2019 Q1 2018 % change Quantitative data Q1 2019 Q1 2018 (a) (b) (a/b) EBITDA 95.5 94.4 +1.2% Total electr
Slide 35: EBITDA and quantitative data: Commercial & Trading
EBITDA and quantitative data Acea Group Q1 2019 financial highlights Commercial & Trading EBITDA Reduced margins on Free market (mass market segment) EBITDA main drivers Reduced margins on Enhanced Protection market (cut in RCV) (€m) Q1 2019 Q1 2018 % change Quantitative data Q1 2019 Q1 2018 (a) (b)
Slide 36: EBITDA and quantitative data: Environment
EBITDA and quantitative data Acea Group Q1 2019 financial highlights EBITDA GROWTH Environment Acea Ambiente: +€2.6m EBITDA main drivers Aquaser (sludge recovery): +€0.5m Acque Industriali: -€0.3m (€m) Q1 2019 Q1 2018 % change Quantitative data Q1 2019 Q1 2018 (a) (b) (a/b) EBITDA 16.9 14.1 +19.9% T
Slide 37: EBITDA and quantitative data
EBITDA and quantitative data Acea Group Q1 2019 financial highlights Increased contribution from Positive contribution Engineering Ingegnerie Toscane and TWS Overseas from Aguas de San Pedro & Services Fall in contribution from Acea Elabori Q1 2019 Q1 2018 Q1 2019 Q1 2018 (€m) (€m) (a) (b) (a) (b) E
Slide 38: EBIT and Net profit
EBIT and Net profit Acea Group EBIT (€m) NET PROFIT (€m) 127.4 132.8 77.4 75.5 8.9* 68.5 Q1 2018 Q1 2019 Q1 2018 Q1 2019 TAX RATE 30.4% 29.6% (€m) Q1 2019 Q1 2018 % change Depreciation 95.2 77.5 +22.8% Write-downs 18.6 21.1 -11.8% Provisions 1.4 3.3 -57.6% Total 115.2 101.9 +13.1% * Income relating
Slide 39: Capex
Capex Acea Group Capex growth continues, above all in regulated businesses Capex (€m) Capex 73 64 6 3 5 • Repair and widening • Upgrade and • Capitalisation of • Work on Terni and San of water and sewage expansion of grid agents’ fees (IFRS 15) Vittore WTE plants pipes • Work on Tor di Valle • IT sy
Slide 40: Cash flow
Cash flow Acea Group ( (€m) Q1 2019 Q1 2018 ESTIMATED IMPACT OF IFRS16 IN 2019 (€m) EBITDA 248 229 Change in working capital Net debt 55 (88) (101) Fixed assets 55 CAPEX (151) (133) Lower operating costs 10 FREE CASH FLOW 9 (5) Higher depreciation 9 Net finance income/(costs) (20) (20) Finance costs
Slide 41: Net debt
Acea Group Net debt 31 Mar 2019 31 Dec 2018 31 Mar 2018 Change Change (€m) (a) (b) (c) (a-b) (a-c) Net debt 2,675.7* 2,568.0 2,482.1 107.7 193.6 Medium/long-term 2,979.6 3,341.4 3,540.2 (361.8) (560.6) Short-term (303.9) (773.4) (1,058.1) 469.5 754.2 31 March 2019 NET DEBT/ EQUITY NET DEBT/ EBITDA L
Slide 42: 2018 Results
ACEA Group TITOLO 2018 Results CAPITOLO TITOLO PRESENTAZIONE / Luogo e data
Slide 43: 2018 financial highlights
2018 financial highlights ACEA Group Group beats targets for 2018 (€m) 2018 2017 % change (a) (b) (a/b) Consolidated revenue 3,028.5 2,797.0 +8.3% EBITDA 933.2* 840.0 +11.1% Organic growth of 7.7% to €905m EBIT 478.6 359.9 +33.0% Plan target achieved 12 months Group net profit 271.0 180.7 +50.0% ear
Slide 44: EBITDA and quantitative data
EBITDA and quantitative data ACEA Group 2018 financial highlights Energy Water Infrastructure KEY HIGHLIGHTS KEY HIGHLIGHTS Tariff reviews completed in most companies Improved performance due to regulatory Increase in collections at ATO2 due to impact optimised collection strategy Over 500 k
Slide 45: EBITDA and quantitative data
EBITDA and quantitative data ACEA Group 2018 financial highlights Commercial and Trading Environment KEY HIGHLIGHTS KEY HIGHLIGHTS Re-start of Aprilia and Sabaudia plants Fall in customer base in Enhanced Protection Work in progress on Monterotondo plant market and growth in Free market custom
Slide 46: EBITDA and quantitative data
EBITDA and quantitative data ACEA Group 2018 financial highlights Overseas Positive contribution from Aguas Engineering Increase in engineering research de San Pedro and innovation activities for & Services Group companies 2018 2017 % change 2018 2017 %change (€m) (a) (b) (a/b) (€m) (a) (b) (a/b) EB
Slide 47: EBIT and Net profit
EBIT and Net profit ACEA Group EBIT (€m) Average Group workforce 2018 2017 478.6 6,471^ 5,494 359.9 2017 2018 NET PROFIT (€m) DIVIDEND HISTORY 271.0 2014 2015 2016 2017 2018 DPS (€) 0.45 0.50 0.62 0.63 0.71 180.7 Total dividend (€m) 95.8 106.5 132.0 134.2 151.2 Dividend yield* 4.6% 4.2% 5.2% 4.7% 5.
Slide 48: Capex
Capex ACEA Group Strong capex growth, above all in regulated businesses CAPEX (€m) 29 5 2 631 58* 5 532 2017 Water Energy Commercial & Environment Other** 2018 Infrastructure Trading Capex 330 238 25 20 18 • Repair and widening • Upgrade and • Capitalisation of agents’ • Work on Terni and San of wat
Slide 49: Net debt
ACEA Group Net debt Ahead of guidance 31 Dec 2018 30 Sep 2018 31 Dec 2017 Change Change (€m) (a) (b) (c) (a-b) (a-c) Net debt 2,568.0 2,631.1 2,421.5 (63.1) 146.5 Medium/Long-term 3,341.4 3,359.9 2,706.6 (18.5) 634.8 Short-term (773.4) (728.8) (285.1) (44.6) (488.3) NET DEBT/ EQUITY NET DEBT/ EQUITY
Slide 50: Regulatory framework
ACEA Group Regulatory framework - Water TITOLO - Electricity distribution CAPITOLO TITOLO PRESENTAZIONE / Luogo e data
Slide 51: Water: regulation
ACEA Group Water: regulation ARERA RESOLUTION 664/2015 ARERA RESOLUTION 918/2017 – Biennial revision of tariff arrangements for integrated water services (2018-2019) REGULATORY PERIOD: FOUR YEARS 2016-2019 The duration of the regulatory period has been set at four years, with biennial revision 2
Slide 52: Electricity Distribution
Electricity Distribution ACEA Group ARERA RESOLUTION 654/2015 tariff general framework ARERA RESOLUTION 583/2015 WACC ARERA RESOLUTION 646/2015 Quality of electricity distribution and metering service and output based regulation ARERA RESOLUTION 639/2018 WACC update REGULATORY PERIOD: EIGHTYEARS 201
Slide 53: Disclaimer
ACEA Group 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.