Ascopiave S.p.a. · MIL:ASC
Ascopiave — Italian Local Utilities Day 2007
40 slides from Ascopiave's conference presentation, Feb 28, 2007
Slide 1: Italian Local Utilities Day
ITALIAN LOCAL UTILITIES DAY London, February 28th 2007 Page 1
Slide 2: Contents
CONTENTS Business Overview Gas distribution and gas sales Strategy Financial highlights Dividends Page 2
Slide 3: Business Overview
Business Overview Ascopiave Group operates in the gas sector, and its principal business activities are the distribution and sale of gas to end customers in northern Italy. Ascopiave ranks eighth, in terms of customers served, among the operator active in the italian gas sale market. Ascopiave Group
Slide 4: Ascopiave Group structure
Ascopiave Group structure as of January 1st 2007 Asco Holding Market S.p.A.* ACTIVITIES 40 % 60 % Gas distribution, heat Ascopiave Group management Gas and electricity sales 89 % Gas and electricity sales, heat management GLOBAL ENERGY 51 % GLOBAL ENERGY GROUP Development of a gas GROUP storage site
Slide 5: History
History Capability to take opportunities from the market with a strong consolidation track record New acquisition Expansion and growth stategy: (Bimetano Servizi) 8 acquisition +64 new concessions +108,000 new clients 2009 Investments of € 140 mln Listing at Milan Stock Excange 2007 Expansion of gas
Slide 6: Market positioning
Market positioning 1 Società Eni* 6.386.170 33,5% 2 Enel Gas 2.147.563 11,3% 3 Hera Com 866.145 4,5% 7.000.000 4 AEM 820.494 4,3% 5 EON Vendita 585.814 3,1% 6 Italcogim Vendite 569.488 3,0% 6.000.000 7 Società AMGA** 408.564 2,1% 8 Ascotrade*** 332.655 1,7% More than 330,000 customers 9 Blumet 257.5
Slide 7: Market share
Market share Gas consumption in Italy (2005 data in Scm/M) Source: internal data processing on Friuli Ministry for Economic Development data Venezia Giulia Ascopiave Market Share: 19,2% in Veneto region of Italy 2,6% in Italy Lombardy Veneto Emilia Romagna Municipalities with only gas sales activity
Slide 8: Initial Public Offering
Initial Public Offering Ascopiave was listed on Milan Stock Exchange Star segment on 12 December 2006. The IPO was launched through a public offering for the underwriting of new shares (PUO). Performance of Ascopiave share price Main offering data of the Initial Public Offering since placement date*
Slide 9: Contents
CONTENTS Business Overview Gas distribution and gas sales Strategy Financial highlights Dividends Page 9
Slide 10: Gas distribution: concessions
Gas distribution: concessions 60% of concessions from shareholders municipalities Lenght of Number Populations* network (km)** Award from Asco Holding member municipalities 92 624,840 3,690 Concessions from other municipalities 63 358,130 2,671 Total 155 982,970 6,360 78% of users on concessions exp
Slide 11: Gas distribution: VRD breakdown
Gas distribution: VRD breakdown VRD (“Vincolo dei Ricavi della Distribuzione”, i.e. Distribution Revenue Constraint) Maximum cost of distribution activities, including VRD 06-07* €/M management operating costs, depreciation and CO 2006 13,334 remuneration of capital invested, that can be AMM 2006 7,
Slide 12: Gas sales
Gas sales 2006 Volumes of gas sold* (Scm/M) In network 773.5 Out of network 98.9 Total 872.4 Average annual consumption* (Scm) Ascopiave 2,795 National average ~ 1,900 Mean consumption higher than national average *2005 data, Source: AEEG; Bimetano Servizi included Page 12
Slide 13: Contents
CONTENTS Business Overview Gas distribution and gas sales Strategy Financial highlights Dividends Page 13
Slide 14: Strategic guidelines
Strategic guidelines Strategic guidelines: p taking advantage of opportunities arising from the liberalisation of the gas market, including opportunities in the national and international gas wholesale, transportation and storage market. p consolidating its presence as a utility provider in northern
Slide 15: Strategic guidelines: customer growth and integration
Strategic guidelines p Growth in size through a significant expansion of its customer base - Regional leadership (North Eastern Italy) through targeted acquisition and aggregation processes (distribution and sales) - accreditation, nation-wide role and reputation. p Integration within the gas chain
Slide 16: Market strategy
Market strategy Sources of competitive Commercial objectives: advantages: 1. Direct and competitive access 1. ‘Organic’ • Direct acquisition of the end to raw materials on national and growth (industrial and residential) market by international markets eroding market shares from other operators with
Slide 17: Competitive environment
Competitive environment Integrated operators Potentially integrated with operators own gas supply With own gas supply sources sources Focus on large abroad customers Local utility Wholesalers Mix of large and small customers Focus on small customers Gas Gas & Electricity Page 17
Slide 18: Evolutional trends
Evolutional trends ~ 20 operators + Consolidation of large 386 operators* groups – also abroad- and strong reduction Emergence of in the number of small macroaggregations Level of market operators concentration + Maintenance of - Eni; Enel; Edison independent gas sale 732 operators - Foreign compani
Slide 19: Swot analysis
Swot analysis Strengths Strengths Weakness Weakness Strong liquidity and high investment potentials (with ‘third Not present in upstream gas market party access’ exemption right) Dependence on incumbent gas imports Large end customer base Limited knowledge of the brand outside the region Deeply root
Slide 20: Import infrastructures and new projects
Import infrastructures and new projects PIPELINE 31 Gmc Netherlands/ Plan Capacity Operator +6.5 Gmc Norway Sonatrach, Edison, GALSI 8/10 18 Gmc PIPELINE Enel, Wintershall, Hera Gas Natural Slovenia IGI 8 Edison, Depa Trieste 1,5 Gmc Greenstream 2 Eni 8 Gmc ENI Panigaglia Endesa Trieste Rep. TAG 3,2
Slide 21: Up-stream integration
Up-stream integration p Signing an agreement with Sonatrach for 500 Gas Gas Import Import Scm/M of gas p Obtained ~ 120 Scm/M of gas transportation abroad p Ital Gas Storage acquisition completed in may 2006 p Ital Gas Storage is active in gas storage in Acquisition Acquisition of of storage storage
Slide 22: Agreement with Sonatrach
Agreement with Sonatrach Key characteristics GALSI p Purchase of 500 Smc/M of gas import trough GALSI pipeline from 2010 p Obtained ~ 60% of current volumes of gas sold p Duration of the agreement: 15 years since 2010 p One of 5 italian gas companies to participate to the agreement What does it impl
Slide 23: Downstream strategy
Downstream strategy p Participation in competitive bidding for the award of contracts to manage the gas distribution service Increase Increase number number of of the the clients p An integrated service offer with a dual fuel sales clients and and the the concession policy (a joint commercial propos
Slide 24: Development target
Development target GROWTH OBJECTIVES Doubling volumes of gas sold by 2011: From about 1 billion of gas cubic metre (current values) to over 2 billion Meeting of more than 70% of expected requirements in 2011 through autonomous supply contracts (not managed by the incumbent), including: • a share of
Slide 25: External growth: rationale
“External growth”: rationals Full acquisitions Partnership/Joint venture • Operational flexibility in managing volumes and risks; • Control over one’s reference geographical area; • Guaranteed market users; long-term guarantees in case of ‘long market’; • Refraining from using the price leverage for
Slide 26: Organic growth: objectives
“Organic growth”: objectives Most of the growth is expected to come from gas industrial customers directly connected with the gas transportation network, by means of autonomous commercial offerings • price leverage; • incumbents are the main competitor • need to put forward commercial actions; • low
Slide 27: Growth in the electric market
Growth in the electric market Value Creation Opportunities A tool for fostering current customer loyalty (“cross selling”) • Development over three years in the Treviso and Belluno provinces, to gain significant share of the microbusiness and soho market and of the Sme segment Leverage for acquiring
Slide 28: Business models
Business models 1. Full acquisitions (both gas distribution and sales business) 2. Full acquisitions (only gas sales business) 3. Sales partnerships on sales activity Model: Bimetano Ascopiave S.p.A. Servizi Srl Partner A Partner B … Partner N > 50% Ascotrade S.p.A. Page 28
Slide 29: Contents
CONTENTS Business Overview Gas distribution and gas sales Strategy Financial highlights Dividends Page 29
Slide 30: Financial highlights: 2006 income statement
Financial highlights: 2006* income statement (Thousands of Euro) 2006 2005 Chg Chg % Revenues 318.105 279.307 38.797 13,9% EBITDA 40.405 56.194 -15.789 -28,1% EBIT 29.150 45.137 -15.987 -35,4% EBT 27.286 41.704 -14.418 -34,6% Net income 16.239 24.522 -8.283 -33,8% *4thQ 06 financial report Page 30
Slide 31: Financial highlights: balance sheet
Financial highlights: balance sheet (Thousands of Euro) 2006 2005 Delta Delta % Capital 281.360 284.574 -3.214 -1,1% employed Shareholders 368.901 194.586 174.315 89,6% equity Net financial -87.541 89.988 -177.529 -197,3% position * *Negative values of the Net Financial Position indicate that the Gr
Slide 32: Financial highlights: cash flow
Financial highlights: cash flow (Thousands of Euro) 2006 2005 Cash Flow* 27.493 35.579 Change in net working capital 8.552 9.287 Investments -16.592 -15.826 Change in Shareholders Equity** 158.077 -33.755 Change in NFP 177.529 -4.715 *Net income + Amortization and Depreciation; **Increase of capital
Slide 33: Volumes of gas and electricity sold
Volumes of gas and electricity sold Volumes of gas sold Volumes of electricity sold (Milion of standard cubic meters) (GWh) ∆ = -50,6 ∆ = +63,6 Page 33
Slide 34: Revenues and EBITDA breakdown
Revenues and EBITDA breakdown Revenues breakdown (2006) EBITDA breakdown (2006/2005) (Thousands of Euro) (Thousands of Euro) Total = 318.105 ∆ = -15.789 Page 34
Slide 35: EBITDA bridge
EBITDA bridge EBITDA bridge (Thousands of Euro) ∆ = -15.789 Change in gross margin on gas sales and distribution Page 35
Slide 36: Impacts of AEEG resolutions (I)
Impacts of AEEG resolutions no. 248/04, no. 298/05, no. 63/06 and no. 134/06 (I) (Milion of Euro) Total 2005 I Q 2006 II Q 2006 III Q 2006 IV Q 2006 Full effect res. no. 248/04 and subsequent 21,6 7,3 8,8 1,6 0,3 3,6 Applied in tariff 5,5 1,6 0,3 3,6 Revenues adjustment 16,1 7,3 8,8 Incentive for re
Slide 37: Impacts of AEEG resolutions (II)
Impacts of AEEG resolutions no. 248/04, no. 298/05, no. 63/06 and no. 134/06 (II) p Possible illegitimacy of resolution no. 248/04: - write-off provision related to resolution no. 248/04 - 2ndQ 2006 revenues adjustment p Possible illegitimacy of subsequent resolution no. 134/06: - 3rdQ 2006 and 4thQ
Slide 38: Other issues
Other issues Gas sales tariffs Exit of non domestic clients from the regulated market (AEEG Resolution no. 134/06) Review of the QVD of the sales tariff (AEEG Resolution no. 297/06) Gas distribution tariffs Reduction of the price cap factor on distribution tariffs for the thermal years 2005-2006, 20
Slide 39: Contents
CONTENTS Business Overview Gas distribution and gas sales Strategy Financial highlights Dividends Page 39
Slide 40: Dividends
Dividends DIVIDEND DIVIDEND POLICY POLICY • In line with listed comparables • According to the international best practice DIVIDEND DIVIDEND PAYMENT PAYMENT • Two installments as from financial year 2007 Page 40