Acea S.p.A. · MIL:ACE
Acea — 6th Italian Local Utilities Conference 2020 (Equita)
65 slides from Acea's conference presentation, Jan 14, 2020
Slide 1: Acea Group Business Plan 2019-2022
Acea Group Business Plan 2019-2022 ‘‘6th Italian Local Utilities Conference’’ Equita Milan – January 14, 2020
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 EBITDA 2018 EBITDA 2019 ≥ +10% €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 Multiple New BP Ol
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 R
Slide 8: 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 9: 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 ... 9
Slide 10: 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%. July 2019 – EMTN programme ceiling increased to €4bn Highlights Net Financial Position €B NFP/EBITDA Working Capital Improved working capit
Slide 11: Water
Water Business Line Highlights
Slide 12: Development of a Smart Water Company
ACEA Group Water Business Line Implementation of old BP Key Actions strategic initiatives 500k+ smart water meter and projects for water network districtization Development Focus on preservation of water, with development of a dedicated structure of a Smart Rationalization of 35+ small purification
Slide 13: 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 ... 13
Slide 14: Business Line Highlights
Business Line Highlights
Slide 15: Main actor of the energy transition
ACEA Group Energy Infrastructure Key Actions 600k smart meters roll-out start 100+ M€ for Resiliency for electricity supply continuity vs Authority guidelines Main actor of the 150MW PV between grid parity and M&A on energy transition the secondary market with projects Remote control extension on 60
Slide 16: 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 ... 16
Slide 17: Commercial and Trading
Commercial and Trading Business Line Highlights
Slide 18: Growth of retail portfolio, improvement of service quality
ACEA Group Commercial and Trading Key Initiatives Strong commercial boost (3x vs. 2018) supported by a new offering model Growth of retail Increase of share of pull commercial channels (e.g. Shop, Branch and Digital) up to 50% portfolio, Strengthening of digital channels (10% on total acquisitions)
Slide 19: 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 ... 19
Slide 20: Environment
Environment Business Line Highlights
Slide 21: Acceleration of plant development
ACEA Group Environment Implementation of old BP strategic initiatives Key Actions Doubling of treated waste (2.2 Mton target) with new plant development (e.g., organic fraction, liquid/sludge treatment, multi-material) M&A and development in a Circular Economy Acceleration of perspective focused on
Slide 22: 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 ... 22
Slide 23: Strategic Opportunities
Strategic Opportunities Potential Business Plan Upsides
Slide 24: 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 25: €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 ... 25
Slide 26: 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 27: Appendix
ACEA Group APPENDIX
Slide 28: 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 28
Slide 29: 9M 2019 Results
ACEA Group TITOLO 9M 2019 Results CAPITOLO TITOLO PRESENTAZIONE / Luogo e data
Slide 30: Executive Summary: Results and Guidance
Executive Summary ACEA Group THE POSITIVE RESULTS DELIVERED IN 9M 2019 CONFIRM THE GROWTH TREND THAT STARTED IN THE LAST TWO YEARS, SUPPORTED BY OUR MAJOR INVESTMENT PROGRAMME AND DRIVEN BY OUR COMMITMENT TO TECHNOLOGICAL INNOVATION AND SUSTAINABILITY RESULTS 9M 2019 • EBITDA €769m +12% versus 9M 20
Slide 31: Key Events 9M 2019
Executive Summary ACEA Group TRANSACTIONS COMPLETED HAVE LED TO DEVELOPMENT OF REGULATED BUSINESSES AND EXPANSION IN OTHER MARKET SEGMENTS ALREADY IDENTIFIED AS STRATEGIC ACQUISITION OF A 51% STAKE IN ‘‘PESCARA DISTRIBUZIONE GAS’’ COMPLETED IN MARCH BUSINESS PLAN 2019-2022 APPROVED ON 2 APRIL, TARGE
Slide 32: Key Events October 2019
Executive Summary ACEA Group ACQUISITION OF 60% INTEREST IN BERG, A PROVIDER OF LIQUID WASTE TREATMENT SERVICES • Total Enterprise Value: €10m • Total EBITDA: €1.6m • Authorised capacity: 143k tonnes per year ACQUEDOTTO DEL FIORA’S ARTICLES OF ASSOCIATION AND SHAREHOLDER AGREEMENTS AMENDED TO ENABLE
Slide 33: 9M 2019 financial highlights
9M 2019 financial highlights ACEA Group 9M 2019 9M 2018 % change EBITDA GUIDANCE RAISED FOR 2019 (€m) (a) (b) (a/b) Initial guidance: +5%/+6% Consolidated revenue 2,346.2 2,173.9 +7.9% Guidance provided in H1 2019: ≥ +7% EBITDA 2018 EBITDA 769.4* 685.2 +12.3% €933m Updated guidance: ≥ +10% EBIT 402.
Slide 34: EBITDA
EBITDA ACEA Group 1% 5% 2% Water EBITDA from Energy Infrastructure 6% non-regulated 19% Commercial & Trading businesses Environment EBITDA 9M 2019 48% Overseas Engineering & Services 38% EBITDA from regulated 81% businesses EBITDA (€m) Average Group workforce 77.5** 14.3 15.3 769.4 9M 2019 9M 2018 C
Slide 35: EBITDA and quantitative data: Water
EBITDA and quantitative data ACEA Group 9M 2019 financial highlights KEY HIGHLIGHTS Line-by-line consolidation of Gori: +€49.7m Water Contribution of Pescara Distribuzione Gas: +€1.2m EBITDA main drivers Companies consolidated using equity method: +€2.7m OCTOBER 2019: Acquedotto del Fiora’s Articles
Slide 36: EBITDA and quantitative data: Energy Infrastructure
EBITDA and quantitative data ACEA Group 9M 2019 financial highlights KEY HIGHLIGHTS Distribution: +€17.0m Generation: -€4.7m due to lower price of energy sold Energy (photovoltaic contribution +€2.3m) Infrastructure Public Lighting: +€2.0m Over 400 km of MV/LV network renewed and expanded EBITDA mai
Slide 37: EBITDA and quantitative data: Commercial & Trading
EBITDA and quantitative data ACEA Group 9M 2019 financial highlights KEY HIGHLIGHTS Increased sales of electricity and gas to free market customers Commercial & Trading Reduced margins, essentially due to cut in late payment component in Central Italy in RCV tariff EBITDA main drivers OCTOBER 2019:
Slide 38: EBITDA and quantitative data: Environment
EBITDA and quantitative data ACEA Group 9M 2019 financial highlights KEY HIGHLIGHTS Environment CIP6 feed-in tariffs expired on August 1st , 2019 (-7.4 €m) EBITDA main drivers Consolidation of Demap (+1.0 €m) Acquisition of 60% interest in Berg, a provider of liquid waste treatment services (authori
Slide 39: EBITDA and quantitative data
EBITDA and quantitative data ACEA Group 9M 2019 financial highlights Positive contribution Engineering Margin in line with Overseas from Aguas de San & Services previous year Pedro (€m) 9M 2019 9M 2018 (€m) 9M 2019 9M 2018 EBITDA 12.9 11.1 EBITDA 11.0 10.9 Capex 5.3 4.0 Capex 1.2 0.8 9M 2019 9M 2018
Slide 40: EBIT and net profit
EBIT and net profit ACEA Group EBIT (€m) NET PROFIT (€m) 381.0 402.5 214.8 218.9 9M 2018 9M 2019 9M 2018 9M 2019 TAX RATE 30.4% 30.0% (€m) 9M 2019 9M 2018 % change Increase in depreciation linked to: Depreciation 306.7 251.8 +21.8% increased capex across all areas of business and the IT platform
Slide 41: Capex
Capex ACEA Group Strong capex growth, above all in regulated businesses Investment in non- 17% CAPEX (€m) regulated businesses Investment in regulated businesses 83% 16 9 529 40 22 29 413 9M 2018 Water Energy Commercial & Environment Other* 9M 2019 Infrastructure Trading Capex 254 196 32 29 18 • Rep
Slide 42: Cash flow
Cash flow ACEA Group ( (€m) 9M 2019 9M 2018 EBITDA 769 685 Change in working capital (118) (177) CAPEX (529) (413) Excellent performance of credit FREE CASH FLOW 122 95 collection, above all at Acea Energia Net finance income/(costs) (66) (66) Change in provisions (81) (59) Major impact on net d
Slide 43: Net debt
ACEA Group Net debt 30 Sept 2019 31 Dec 2018 30 Sept 2018 Change Change (€m) (a) (b) (c) (a-b) (a-c) Net debt 2,960.3* 2,568.0 2,631.1 392.3 329.2 Medium/long-term 3,467.5 3,341.4 3,359.9 126.1 107.6 Short-term (507.2) (773.4) (728.8) 266.2 221.6 30 Sept 2019 16 May 2019 - Issue of bonds worth €500m
Slide 44: H1 2019 Results
ACEA Group TITOLO H1 2019 Results CAPITOLO TITOLO PRESENTAZIONE / Luogo e data
Slide 45: H1 2019 financial highlights
H1 2019 financial highlights ACEA Group H1 2019 H1 2018 % change EBITDA GUIDANCE RAISED FOR 2019 (€m) (a) (b) (a/b) Consolidated revenue 1,553.1 1,454.3 +6.8% Initial guidance : +5%/+6% EBITDA 2018 EBITDA 502.6* 449.9 +11.7% €933m Updated guidance: ≥+7% EBIT 260.2 250.7 +3.8% +6.9% versus H1 2018 Gr
Slide 46: EBITDA
EBITDA ACEA Group 2% 1% EBITDA from Water 7% non-regulated 20% Energy infrastructure 6% businesses Commercial & Trading EBITDA H1 2019 Environment 47% Overseas Engineering & Services 37% EBITDA from regulated 80% businesses Average Group EBITDA (€m) workforce 51.7** 14.6 1.7 502.6 449.9 (12.7) (2.6)
Slide 47: Capex
Capex ACEA Group Strong capex growth, above all in regulated businesses Capex from non- Capex (€m) regulated businesses 13% Capex from 87% regulated businesses 28 13 2 5 342 282 12* H1 2018 Water Energy Commercial & Environment Other** H1 2019 Infrastructure Trading Capex 168 133 19 11 11 • Repair a
Slide 48: Cash flow
Cash flow ACEA Group ( (€m) H1 2019 H1 2018 EBITDA 503 450 Cash outflow due to working capital Change in working capital (96) (81) movements reflecting seasonal factors CAPEX (342) (282) Cash outflow due to working capital FREE CASH FLOW 65 87 movements reflecting regulatory Net finance income/(
Slide 49: Net debt
ACEA Group Net debt 30 June 2019 31 Dec 2018 30 June 2018 Change Change (€m) (a) (b) (c) (a-b) (a-c) Net debt 2,842.5* 2,568.0 2,570.3 274.5 272.2 Medium/long-term 3,431.1 3,341.4 3,359.7 89.7 71.4 Short-term (588.6) (773.4) (789.4) 184.8 200.8 30 June 2019 16 May 2019 - Issue of bonds worth €500m u
Slide 50: Q1 2019 Results
ACEA Group TITOLO Q1 2019 Results CAPITOLO TITOLO PRESENTAZIONE / Luogo e data
Slide 51: 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 52: 2018 Results
ACEA Group TITOLO 2018 Results CAPITOLO TITOLO PRESENTAZIONE / Luogo e data
Slide 53: 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 54: EBITDA and quantitative data: Water and Energy Infrastructure
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 55: EBITDA and quantitative data: Commercial and Trading, Environment
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 56: EBITDA and quantitative data: Overseas, Engineering, Holding
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 57: 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 58: 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 59: Cash flow
Cash flow ACEA Group Significant improvement in working capital in Q4 2018 2018 2017 EBITDA 933 840 Excellent credit collection performance Change in working capital (37) (126) Measures designed to optimise working capital CAPEX (631) (532) FREE CASH FLOW 265 182 Q4 2018 registered following improve
Slide 60: 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 61: Regulatory framework
ACEA Group Regulatory framework - Water TITOLO - Electricity distribution CAPITOLO - Environment TITOLO PRESENTAZIONE / Luogo e data
Slide 62: Water: regulation
ACEA Group Water: regulation ARERA RESOLUTION 664/2015 CONCESSIONS’ EXPIRY ARERA RESOLUTION 918/2017 – Biennial revision of tariff arrangements ATO2 Lazio Centrale 2032 for integrated water services (2018-2019) ATO5 Frosinone 2033 ATO3 Regione Campania (Gori) 2032 REGULATORY PERIOD: FOUR YEARS 2016-
Slide 63: Electricity Distribution: regulation
Electricity Distribution: regulation 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: EI
Slide 64: Environment: regulation
ACEA Group Environment: regulation ARERA RESOLUTION 443/2019 Regulatory period 2018-2021, structured in line with the previous tariff regulation (Presidential Decree 158/99), with the introduction of certain elements such as sharing arrangements for revenue from the sale of material and energy der
Slide 65: 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.
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