Hera S.p.a. · MIL:HER
Hera — Investor Presentation (2013)
40 slides from Hera's investor presentation, 2013
Slide 1: Hera Group 2013-2017 business plan
HERAGROUP- 2013 — 2017 7 business plan
Slide 2: Index
Index Business plan up to 2017 Annex Business Plan update 4 Assumptions 20 Recent developments 5 Change in Governance 21 Strategy 6 Consolidated Group Ebit 22 Strategic targets vs. 2012 7 Financial Strategy 23 Ebitda growth drivers 8 Sustainable Development 24 Remarkable step forward 9 Network detai
Slide 3: Introducing business plan update with recent events
Introducing business plan update with recent events -22m€ impact mainly in waste Supportive achievements of last 6 months to be included in BP to 2017 4
Slide 4: Recent developments influencing business plan update to 2017
Recent developments influencing business plan update to 2017 Macro economic scenario Regulatory “review” Persistently negative scenario determines a • Review of Gas supply prices (“CCI”) rebound of Italian GDP slower than expected. • Gas Distribution new tariffs (4th regulatory Real estate industry
Slide 5: Continuing to keep on course, sticking to our strategy
Continuing to keep on course, sticking to our strategy Focus on efficiency gains 1 Strengthening regulated asset base 2 Activities reorganisation (divisionalization), streamlining Maintain control of networks on ref. Group structure. territory and investing in efficiency Rationalization and Cost Cut
Slide 6: Main strategic targets versus 2012
Main strategic targets versus 2012 1 Regulated business: 2 Efficiencies 58% Ebitda ~75% of Group capex Reorganization & Cost rationalization: +20m€ Ebitda 12 gas tenders in ref. territory • POD: +178K • Ebitda: +19m€ Synergies from M&A: +30m€ Ebitda 3 Energy customer base: 4 M&A • Acegas Aps: Integr
Slide 7: Ebitda growth leveraging upon all drivers
Ebitda growth leveraging upon “all” drivers +7.5% Cagr. 951 +54 +19 900 +57 +30 +129 700 662 500 300 2012 Acegas APS Merger Organic Gas tender M&A + E2017 2012 synergies reshufling Merger Synergies Energy trading & sales Reorganisation Gas tenders M&A 18% +10m€ Ebitda Confirming current gas Aimag (w
Slide 8: Remarkable step forward in business size
Remarkable step forward in business size 2012 E2017 Sector Key Industrial targets Volume of waste treated from 3rd parties (m 3.3 5.3 ton) Urban waste collected (m ton) 1.7 2.3 Network length (‘000 km) 73.1 86.7 Gas POD (m unit) 1.2 1.8 Heat sold (GWht) 530 643 Gas sold & traded (bcm) 3.5 3.4 Electr
Slide 9: Ebitda by strategic areas
Ebitda by strategic areas 310 vy Ay ae RCS _184 aS ooae ve Ebitda 2012 Regulated 52% Liberalised 48% Networks Waste Energy GRUPPO “> Ebitda £2017 = i | “a «=951m€E iy "2 ‘ . LZ £ OR y 135 Regulated 58% Liberalised 42%
Slide 10: Networks: Strengthening roots in reference territory
NETWORKS: Strengthening “roots” in reference territory Focus on enhancing returns Ebitda breakdown (m€) Focused capex: 1.34b€ Efficiencies +176m€ 486 Focus on proper investments to Focus on leakages/efficiency. +30 enhance RAB and asset efficiency Enhance “smart” grid management. +28 +19 450 +13 +86
Slide 11: Waste: Adapting and reacting in an evolving scenario
WASTE: Adapting and reacting in an evolving scenario Value extraction from all drivers Ebitda breakdown (m€) Asset mix toward Efficiencies recycle/recover 400 +127m€ Asset fine tuning and restructuring Reduce waste mgmt cost. +68 +19 311 focusing on plant that enhance Improve treatment cost efficien
Slide 12: Energy: Progress on down stream development
ENERGY: Progress on down stream development “Soft landing” on market change 400 Ebitda breakdown (m€) (16m€) Midstream position Tackle with margin squeeze Flexible procurement strategy Manage pricing. keeping short in upstream. Reduce cost to serve. 200 +11 +6 (41) Control working capital. 151 +7 13
Slide 13: Capex plan: 1.9b€ to sustain low risk growth
Capex plan: 1.9b€ to sustain low risk growth and efficiency gains 14
Slide 14: Financial performance
Financial performance EPS cagr. Returns (€) (%, b€) +5% Cagr ~0.11 ROI >9% 0.09 2012 E2017 8.2% EBIT (m€) 335 500 NIC* (b€) 4.1 5.3 2012* E2017 2012 E2017 *Normalised by one off tax benefits related to prior years *Net Invested Capital E2017 Cash flows Financial ratios (m€) +554 FFO/Debt* Debt/Ebitd
Slide 15: Geographical expansion in fragmented new reference territories
Geographical expansion in fragmented new reference territories Amga - Udine Swap Partecipation Financials 2012 (m€) Est Reti Elettriche Isontina Reti Gas Revenues 367 Ebitda 29 Financials 2012 (m€) Financials 2012 (m€) Ebit 12 Ebitda 1 Ebitda 5 Net Profit 4 Net Debt (4.5) Net Debt (20) Net Debt (84)
Slide 16: Swap with ENI on Gorizia shareholdings
Swap with ENI on Gorizia shareholdings From 01/01/14 to 31/03/14 Acegas Aps has a call option to step up to 100% in Isontina Reti Gas in the event that Italgas doesn’t exercise it’s call option to purchase ENI stake. 17
Slide 17: FSI first step into Hera shareholding
FSI first step into Hera shareholding Schedule of share capital increase Shares to issue Up to 80 million shares (share capital move from 1,342.8 to about 1,422.8 million shares). The increase is 5.6% (or 1/17) on share capital (post increase). Price issue Price set the day before the issue. Price r
Slide 18: Closing remarks
Closing remarks Confirming Strategy • Pursuing multi-utility strategy aiming at a positive growth through all drivers available Strengthening Assets • Capex plan ’13-’17 focused on strengthening regulated asset base and maintaining short upstream Creating value • Targeting +5% EPS growth and increas
Slide 19: Annex: Business plan 2013-2017
ANNEX: Business plan 2013-2017 Further Group details
Slide 20: Assumptions
Assumptions 2012 E2015 E2017 Brent (Dollar/Barrel) 112 105 105 Exchange ratio €/$ 1.29 1.33 1.32 PUN (€/MWh) 75.5 66.8 69.0 Inflation (%) 2% 2% 2% Italian GDP trend (%) (2.4%) +1.0% +1.0% Green certificate (€/MWh) 81 87 85 CEC (Cip6 avoid cost) (€/MWh) 87.6 80.3 81.0 White certificates (€/TEP) 87 81
Slide 21: Change in Governance
Change in Governance Hera Group Board of Directors Share capital develop. 2013 2014 1.343 20 Hera post Acegas m Bod Public offer shares members 1.423 21 15 Hera post m Bod Bod FSI shares members members Hera municipalities Acegas Aps municipalities Other shareholders New shares 21
Slide 22: Consolidated Group Ebit
Consolidated Group Ebit Ebit 2012 Ebit E2017 By strategic area 22 64 By Business 334 335m€ m€ 500m€ 71 175 22
Slide 23: Financial Strategy
Financial Strategy Refinancing needs to 2017 Pursuing balanced interest nature (m€) Rates Average debt cost Hera Group financial strategy E2013 E2017 • Maintain financial liabilities homogeneous Average rate 5.1% 5.6% with investment time horizons • Non speculative financing Variable rate 3.6% 4.6%
Slide 24: Sustainable development
Sustainable development Electricity production – renewable CO2 emission avoided (GWhe) (ton) Thermal energy production – renewable Low emission vehicles (GWht) 24
Slide 25: Annex: Networks
ANNEX: Business plan 2013-2017 NETWORKS (further details by strategic area)
Slide 26: Networks internal growth drivers (1)
Networks internal growth drivers (1) Visible and safe tariff enhancement Benefitting from new asset base Hera heating production sources (excl. leakages) Avg. revenue per m3 of water distributed (GWht) (€/m3) +1.1% Cagr +3.8% Cagr 23% 21% Efficient 16% 11% thermal energy 510 10% 386 11% production 1
Slide 27: Networks internal growth drivers (2)
Networks internal growth drivers (2) Economies of scale in networks management District Heating Gas (POD/Employee) (POD/Employee) +5.9% Cagr +1.7% Cagr Electricity Water (POD/Employee) (POD/Employee) +1.4% Cagr +1.7% Cagr 26
Slide 28: Networks targets
Networks targets Ebitda breakdown (m€) 486 23 310 266 13 158 43 27 153 112 2012 E2017 Gas distrib. Electricity distrib. Water D.H. 27
Slide 29: Annex: Waste
ANNEX: Business plan 2013-2017 WASTE (further details by strategic area)
Slide 30: Hera growth strategy and waste market expansion
Hera growth strategy and waste market expansion Market expansion Fully integrate value chain Focus on Expand Increase Hera Treatment capacity (k ton) value added geographical “full service” treatments scope contracts +2,541 Kton 1.104 568 7.397 481 Hera sales volumes 4.856 453 106 (kton) (172) +8.8%
Slide 31: Waste treatment capacity and energy generation enhancement
Waste treatment capacity and energy generation enhancement Green certificates Renewable Power generation (m€) (GWh) GC quantity 309 359 (GWh) GC price 81 85 (€/ MWh) 2012 Waste assets: 1.1b€ (20% of inv. capital) 2 83 4 10 4 8 11 35 11 La Ch Co In M 20 Ot Di W he od nd g 12 TE e m he es /p po rti f
Slide 32: Annex: Energy
ANNEX: Business plan 2013-2017 ENERGY (further details by strategic area)
Slide 33: Keeping a balanced and effective energy upstream strategy
Keeping a balanced and effective energy upstream strategy Ebitda breakdown (m€) • Gas Sales and Trading activities expected to benefit from M&A contribution more than offsetting negative projections on current sales & trading margins (due to progressive alignment of commodity cost component – “CCI”
Slide 34: Annex: Business plan by business
ANNEX: Business Plan 2013-2017 (by business)
Slide 35: Waste business
Waste business Economics Capex ’13-’17: 480m€ (m€) M€ 2012 E2017 Cagr. Ebitda 183,5 311,0 +11,1% Ebitda breakdown Highlights (m€) 2012 E2017 Tariffs (€/ton) 246 291 Volume treated Urban (kton) 1,771 2,241 Special (kton) 1,559 3,049 Hera prod. (kton) 1,527 2,106 31
Slide 36: Water business
Water business Economics Capex ’13-’17: 610m€ (m€) M€ 2012 E2017 Cagr. Ebitda 158,3 266,4 +11,0% Volume sold* Highlights 2012 E2017 2012 E2017 Leakage 27.0% 25.1% Volumes (mm3) 253 319 Tariff (€/m3) 1.8 1.9 * Civil acquduct+ industrial acqueduct 32
Slide 37: Gas business
Gas business Economics Capex ’13-’17: 631m€ (m€) M€ 2012 E2017 Cagr. Ebitda 240,7 258,1 +1,4% Ebitda breakdown (m€) Highlights 2012 E2017 Networks (kKm) 15.3 18.7 Tariffs (€c/m3) 7.4 7.2 33
Slide 38: Electricity business
Electricity business Economics Capex ’13-’17: 187m€ (m€) M€ 2012 E2017 Cagr. Ebitda 62,3 96,0 +9,0% Ebitda breakdown Highlights (m€) 2012 E2017 E. sold (TWh) 9.5 9.9 E. distr. (TWh) 2.2 3.2 E. contracts (K) 541 946 E. tariffs (€c/KWh) 2.4 2.6 34
Slide 39: Portfolio mix
Portfolio mix Business Portfolio breakdown Liberalized 42% Ebitda E2017 951m€ Regulated 58% 35
Slide 40: 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