Analyst presentation: 2012-2016 Business Plan

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Analyst presentation: 2012-2016 Business Plan

  1. 1. Hera Group business plan to 2016
  2. 2. 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 Acegas APS page 17 Fondo Strategico Italiano page IX AIMG page 19 Energonut page X Sustainability KPI page 20 WASTE details page 21 Business plan to 2016 NETWORK details page 23 Strategy page 1 ENERGY details page 26 Industrial targets page 2 Business plan by Business page 28 Ebitda drivers page 3 Ebitda breakdown page 4 Key challenges and opportunities page 5 Waste page 6 Network page 7 Energy page 8 M&A strategy page 9 Capex plan page 10 Financial structure page 11 Closing remarks page 12
  3. 3. Introduction to Hera
  4. 4. Hera GroupHera 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 Trieste Trieste province). Padua Ebitda Growth Drivers (m€) Bologna +14.4% Cagr 645 E-R region +151 600 +83 +219 400 192 200 2002 Marche region 0 2002-2011: M&A executed 2002 Syn. & New plants M&A 2011 2012: M&A in progress Org. G. Expanding at covering 4 of the wealthiest regions of Italy I
  5. 5. 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% cagr 294 300 250 2nd Water player in Italy 200 NETWORK 3rd Gas distributor in Italy 150 120 100 50 0 100% regulated 02 03 04 05 06 07 08 09 10 11* 160 138 140 +28% cagr 21% 120 100 4th gas supplier in Italy 80 ENERGY Top 8 Elec. supplier 60 40 15 20 0 100% liberalised 02 03 04 05 06 07 08 09 10 11* 750 100% +14% cagr 645 650 550 Top multi- utility player 450 GROUP 6,500 employees 350 250 192 150 48% liberalised 50 52% regulated -50 02 03 04 05 06 07 08 09 10 11* II
  6. 6. Fast and resilient growth despite difficult macro scenarioEver growing operating results Maintaining sustainable Debt/Ebitda(m€) (x) Ebitda EbitOvercoming peak in capex* Progressing dividend per share(m€) (€c) *Gross capex III
  7. 7. 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
  8. 8. Merger with Acegas ApsJust 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 Marche • Similar background and region shareholding printing.Perfect match of business mix (’11 Ebitda) • Same business portfolio • Balance between regulated and liberalised activities • Strong positioning in all services Waste, Energy and Water Enlarged platform to tackle with business opportunities V
  9. 9. Strengthening market positions2011 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 1,987 447 2,434 parties (Ton) NFP/Ebitda 3.1x 3.8x 3.2x Water clients 253k 1,184k 1,437k Market cap.ˆ 1,486 311 1,797 ^ As at 19th October 2012 in million Euro (#) 18% 82% 2nd 2011 Ebitda ranking Gas 1,374k (m€) clients 260k* 1,114k (#) 19% 81% 3rd Electric clients 142k 482k 624k (#) 23% 77% 7th Gas RAB ~200 ~850 (€m) 19% 81% ~1,050 * EstEnergy (51% AcegasAps, 49% Ascopiave) VI
  10. 10. Focusing on extracting synergies from mergerSynergies 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 and trading activities 4-5 Network • WFM on water network operations Shared services and G&A 4-5 management • Remote control concentration 6% • Alignment on maintenance policies Total increase of Ebitda ~25 • In-sourcing *on top of efficiency plan set by Acegas APS business plan Waste operations • Best practices on service 18% managementSynergies timing • O&M policies alignment (demand(m€) mgmt) • In-sourcing +5 +25 Commercial and • Volume concentration and +5 sourcing mgmt energy trading +8 18% • Costing alignment (mainly back office) • Commercial development +7 Shared services • Billing and G&A • Fleet mgmt0 18% • IT services 2013 2014 2015 2016 Total • G&A rationalisation Plus enhancement on capex spending VII
  11. 11. Acegas APS next steps following EGM approval (15th Oct.) 2012 2013 1 Merger into HERA of 2 Public offer to minority AcegasAps Holding AcegasAps shareholdersSwap ratio: 0.763x Swap ratio: 4.16xNew issued Hera shares: 143.38m New issued Hera shares: 84.83m +228.21m new Hera sharesCash proceeds: 3.4m€ Cash proceeds: 5.6m€ +9.0m€ cash proceeds 62.7% 34,466,941 37.2% 20,393,006 100.0% 54,859,947 (AcegasAps shares) (AcegasAps shares) (AcegasAps shares) HOLDING Other Share capital: 188m€ shareholders Own Shares : 118,883 NFP 06/30/’12: 6m€ VIII
  12. 12. 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 Hera shares (up to 5.6%-6.0% stake of post merger share capital) - Up to 100 million € investment from FSI (1.25€ p.s.) - Subject to a minimum stake of 2.6% in Hera - 1 new Board member appointed by FSI • FSI partnership enhances post Acegas APS financial structure • Condition president: Closing Acegas APS merger and clearance from Authorities Enhancing Hera financial structure and flexibility with a l/t shareholder IX
  13. 13. Herambiente signed SPA with Veolia for 100% stake of EnergonutDescription 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 encompasses mid-term 2 and established players 1 Balanced situation • CIP6 will expire mid 2016 Waste emergency 1 Waste mgmt crisis Opportunity to optimize Hera coverage of national market X
  14. 14. 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 & economies of scale” “Create value” *as of 31/12/2012Energonut technical data Deal details WTE plant Solar plant Power gen. capacity: 13.4MW inst Power gen. Enterprise value 49 m€ 0.5MW capacity Net electricity Closing expected produced/Y: 83.4 GWh 2012 Electricity 1GWh within: produced/Y Incentive: Cip6 Cash acquisition of RDF treated/Y: 93.5k ton Incentive escl. 100% PUN (€/MWh) 320 share capital Personnel: 27 people Equity IRR >15% Emas, Certified: ISO1400,18001 Leader in Italy with 10 WTE in 4 regions XI
  15. 15. Business plan 2012-2016
  16. 16. 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 economic scale, service enhancement” environment”” 3 4 Evolve and complement Merger & Acquisition asset base Execute deal in progress Increase recycling/waste treatment assets Pursue M&A selecting new Enhance generation from renewables opportunities Deploy an integrated perspective on smart network “Create value through “Leveraging on unique strengths” strategy execution” Creating value and sustainable dividend flows for shareholders 1
  17. 17. 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 unit) 1.2 1.7 Heat sold (GWht) 499 663 Gas sold & traded (bcm) 3.3 4.5 ENERGY Electricity sold (TWh) 10.0 10.6 Energy clients (m unit) 1.6 2.5 2
  18. 18. EBITDA growth leveraging upon “all” driversNext 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 Ongoing negotiation were 25 23 current concessions and interrupted due to 21 gas distribution (implying earthquake. 25.0 19 22.5 23.0 extensions of current territories 20.8 17 served by Hera with 120k POD More conservative projec- 15 Avg 06-11 Old BP 2011 Avg 12-16 and additional Ebitda of 14m€) tion vs old BP (40m€) EBIT CAGR expected to grow at +10% on average per annum 3
  19. 19. Overview on Ebitda growth by strategic areasEbitda growth drivers(m€) 4
  20. 20. 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 regulatory • Capitalise on capex performed and framework in water efficiency achieved • Volume development • Exploit peculiarity of reference territory ENERGY • Gas tariff reform • Steer “soft landing” through optimisation of costs and active customer portfolio mgmt. 5
  21. 21. WASTE: Maximize value extractionStrategy 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 Integration synergies “Contribute to new regulatory setting” “Tackle with authorization process” “Acegas aggregation” “Confirm current concessions on “Reduce cost base” 2011 Syn & Acegas AA Syn. Aimag E2016 waste collection” Org. G. APSHera waste management benchmarking Extract value from 100% urban waste* E2016 1 2 5 20 EU ranking 37% 50% 48% 67% Landfill 17% WTE 29% Other (composting, recovery, TMB) 49% 46% 33% 0% 1% 23% HOLLAND SWEDEN HERA ITALY * Hera stand alone Leveraging upon plant capacity in market shortage 6
  22. 22. 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 system Enhance Returns “Deploy intelligence to enhance “Asset value enhacem.” service quality and costing” “Enhance D.H. activities” 2011 Syn & Gas Acegas AA Syn. Aimag E2016 Org. G. tenders APS “Smart” network management Key targets on efficiency • Grid Automation • Remote control lightings • Integrated mgmt of power gen. • LED technology and 2011 E2016 sources automatic flow regulation • Water net leakages 27% 25% Energy Storage • Energy efficiency • Smart info Electr. Net/employee (km) 5.3 7 Smart city/ Smart area Gas & water net/employee (km) 33.4 47 • Wireless Water • Plant and gates Electr. POD/employee (unit) 138 195 • Monitoring automation Gas • Communication platforms • Roll out electr. meters Water & Gas POD/employee (‘000 km) 1.27 1.8 • Interconnections to by pass interruptionsTackling with Authority’s higher efficiency requirements safeguarding returns 7
  23. 23. ENERGY: Progress on down stream developmentStrategy 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 control “Synergies Acegas Aps” “Re-define trading scope to “Reduce cost to serve and tackle margin squeeze” 2011 Syn & Acegas AA Syn. Aimag E2016 enhance virtualization” Org. G. APSGas and Electricity volumes Key targets on efficiency Gas Electricity (bcm) (TWh) 2011 E2016 4.5 11 10.0 10.6 Avg. contracts per client 2.07 2.2 1.5 9 3.3 Multi-service invoice (m CA) 0.77 1,1 7 6.5 6.4 5 Automatic payments (mln contract) 1.9 2.3 3 55% 49% 3.5 35% 25% 1 2.7 On-line customers (‘000) 129 279 -1 2011 E2016 Cost to serve (€/POD) 20 19Customers 1.1 1.5 0.5 1.0 On-line billing (k CA) 53 187(m unit) Own pro ductio n M arket M &A Enhance marketing intelligence to tackle with changing scenario 8
  24. 24. 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 Pursuing controlling stake Energy & Waste National scope • Strengthen competitive positioning Sound financials • Leverage on leadership Primarily through cash • Exploit expertice 2013 focused on full integration of Acegas APS 9
  25. 25. Capital expenditures2012-2016 capex plan by business Capex plan by legal entity(m€) (m€) 460Total 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 tendersCapex by regulated/liberalised activities Development capex plan(m€) (m€) 123 123 586 ’12-’16 ’12-’16 934 1.94b€ 1.94b€ 881 1,229 Liberalised activities Regulated activities Gas tenders Development capex Maintenance capex Gas tenders 10
  26. 26. Enhance financial performanceEPS 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 CapitalE2016 Cash flows Financial ratios(m€) FFO/Debt Debt/Ebitda 3.1x 3.1x +599 (374) ~ 2.7x ~ 20% 15% +225 Operating Cash flows Capex & Inv.* Free Cash flows 2011 E2016 2011 E2016 * Excluding Hera gas tenders extraordinary expenditures Convertible bond assumed re-placed by debt 11
  27. 27. 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 (>200m€) Sound debt structure (2.7x Debt/Ebitda) DPS policy: guaranteeing a floor at 9c€ per year Maintaining a balance in cash flows Capitalizing a reliable & sound equity story 12
  28. 28. ANNEX: Business plan 2012-2016 Further Group details
  29. 29. 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 certificates (€/TEP) 94 80 81 CO2 certificates (€/ton) 17 12 16 WATER services revenues* (Cagr ’11-’16) +2.5% GAS distribution revenues* (Cagr ’11-’16) +1.8% ELECTRICITY distribution revenues* (Cagr ’11-’16) +1.1% WASTE Collection revenues* (Cagr ’11-’16) +4.3% *Data refers to Hera stand alone 13
  30. 30. 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 Hera municipalities Acegas Aps municipalities Other shareholders FSI 14
  31. 31. 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 Electricity Other 15
  32. 32. Financial Strategy Refinancing needs to 2016 Pursuing balanced interest nature (m€) 1 6 00 589 1.50 01 6 00 450 1.50 0 1 4 001 4 00 1 2 001 2 00 230 1 000 2841 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 Total 2012 2013 2014 2015 2016 Total bond bond amort. Focus on Acegas Debt structure Hera Group financial strategy Fixed 3% Mid term 32% • Maintain financial liabilities homogeneous Time with investment time horizons Interest rate horizon • Non speculative financing 68% • Optimize mix variable/fixed to stabilise Variable 97% Short related cash flows term 16
  33. 33. Acegas APS DealDeal 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 completed (km): 1,020 •RAB: 40m€ •Concession: 35 years • The deal doesn’t affect Hera sound financial structure. Multi-utility players in Veneto/Friuli • Almost neutral on ’11 EPS upfront, accretive on EPS by 8%-11% post synergies. • Implied 2012 Ebitda multiple ~6x (~5.5x net of Bulgarian assets) • Further upside driven by the new business opportunities (including potential M&A). 17
  34. 34. Acegas APS: Further business plan detailsAcegas 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 Netw ork Other E2016 Waste Water Gas Electricity OtherCapex plan Key Acegas APS growth drivers(m€) By strategic area By Business 11 48 10.6 • Waste: Full operation of WTE and market 29.2 48.0 enlargement ’12-’16 21 ’12-’16 • Other: Growth relates to Bulgaria and 260m€ 260m€ public lighting 98.8 73.2 180 • Tariffs of regulated businesses projected to Waste Energy Waste Water Gas grow moderately Electricity Other Networks Other 18
  35. 35. AIMAG: Further detailsEbitda 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 11.4 Net Profit 12 10.00 5.00 10.1 Net invested 231 - capital E2016 Net Debt 85 Waste Water Gas Electricity OtherCapex plan Key growth drivers and Deal issue(m€) By strategic area By Business • Aimag was prudently accounted for in Hera 15 15.2 15.1 BP projecting steady results through out the business plan period. ’12-’16 ’12-’16 • Financials structure as of 31/12/’11: 75m€ 75m€ • Net financial position : 90m€ 60 44.7 • Net Equity: 146m€ Waste Water Gas • Expected to issue 33m shares to merge Waste Networks Aimag. Hera owns 25% stake of Aimag (35m€ cash consideration) 19
  36. 36. Sustainable developmentElectricity 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 E2016Thermal energy production – renewable* Low emission vehicles*(GWht) Cagr. +2,5% 189.3 194.3 25.6% 135.1 74.3 74.3 24.4% Geothermal 5.5 6.7 74.7 Biogas 22.6% 109.5 113.2 60.4 WTE 2011C 2013PI 2016PI 2011C 2013PI 2016PI* Hera stand alone 20
  37. 37. ANNEX: Business plan 2012-2016 WASTE (further details by strategic area)
  38. 38. Hera growth strategy and waste market expansionMarket 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 1 25 178 6,333 5,107 147 35 14 1 Hera sales volumes* (kton) +4.8% Cagr 2011 WTE Landfill Compost Che/phy., Selction/RDF plants E2016 3rd +9.4% Cagr disidr. +0.2% Cagr Mix of treatments* (kton) 7000 6,333 6000 5,107 1398 Third p. plant 5000 Leverage upon domestic plant shortage 1216 424 Sort/RDF 333 RAEE/Disidr. 4000 Identified key target MKT 299 0 1188 Che./Phy. Competitive commercial offers (full service) 3000 892 618 Compost 505 2000 Landfil 1268 1303 WTE Stable urban waste volumes due to slow down in 1000 consumptions 923 1069 0 Increase sorted collection to 65% 2011 E2016* Hera stand alone 21
  39. 39. Waste treatment capacity and energy generation enhancementGreen 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 30,9 Gwh - 19 WTE Ravenna 45 k 4,2 MW 22,5 Gwh - F3 WTE Rimini 134 k 10,9 MW 122 Gwh 44 Gwh WTE Modena 154 k 18,6 MW 203 Gwh 74 Gwh 2011 E2016 WTE FEA 194 k 22,0 MW 145 Gwh - ENOMONDO ENOMONDO 110 k 12,7 MW 126 Gwh 41 Gwh GC quantity 256 264 ENERGONUT ENERGONUT 94 k 13,4 MW 94,6 Gwh - (GWh) GC price 83 73 WTE Trieste 159 k 14.9 MW 103 Gwh 10 Gwh (€/ MWh) WTE Padua 173 k 17.8 MW 115 Gwh 35 Gwh* Hera stand alone 22
  40. 40. ANNEX: Business plan 2012-2016 NETWORKS (further details by strategic area)
  41. 41. 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% Total gas revenues 13% 10% (m€) +1.8 % Cagr 35% 32% Hera heating production sources Total electricity revenues Increase volume sold to new customer (m€) +0.02% Cagr (new urbanization) Efficient sources for heat production Waste contribution to increase heat gen. Increase of margins/environmental perf. E2016 Ebitda of D.H. expected to increase by +15m€ (from 11 m€ of 2011)* Hera stand alone 23
  42. 42. 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 2011 E2016* Hera stand alone 24
  43. 43. Networks targetsEbitda 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 management of about 240m€) do not include the 2011 E2016 expected from Gas tenders Water data refer to RAB of Hera property only (excluding third parties RAB under management of about 124m€). Electricity network data refer to the net invested capital District Heating data refer to the net invested capital Gas Electricity Water D.H.* Hera stand alone 25
  44. 44. ANNEX: Business plan 2012-2016 ENERGY (further details by strategic area)
  45. 45. ENERGY: challenging scenarioGas 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 E2016Elect. demand slow down & over capacity Electricity PUN national average(bcm) (€/MWh) 339.9 339.5 332.3 332.5 332.5 336.0 337.8 341.6 320.3 330.5 83% 78% 77% 75% 23% 25% Reduction in gas prices effect more 17% 22% than Offset by increase in “A3” and potential capacity payment New Total demand Renewables capacity +3.8 +3.1 +4.1 +1.8 Conventional sources 26
  46. 46. Keeping a balanced and effective energy upstream strategyEbitda 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 contribution, more than offsetting negative projections on current sales & trading margins (due to progressive alignment of commodity cost component – “CCI” – to gas spot prices included in retail sales prices).• Electricity Sales and Trading activities affected by a projected reduction in volume sold to “salvaguardia” clients. 27
  47. 47. ANNEX: Business Plan 2012-2016 (by business)
  48. 48. Waste businessEconomics Capex ’12-’16: 482m€ (m€) M€ 2011 E2016 Cagr. Ebitda 194,2 331,0 +11,3% E2012 E2013 E2014 E2015 E2016 CapexEbitda 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 E2014 E2015 E2016 1,725 2,116 Hera prod. (kton) Collection Treatment & Disposal 28 * Hera stand alone
  49. 49. 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
  50. 50. Gas businessEconomics Capex ’12-’16: 620m€* (m€) M€ 2011 E2016 Cagr. Ebitda 208,7 308,3 +8,1% E2012 E2013 E2014 E2015 E2016 CapexEbitda 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 E2012 E2013 E2014 E2015 E2016 Sales Distribution D.H. Heat mgmt * Hera stand alone 30
  51. 51. Electricity businessEconomics Capex ’12-’16: 210m€ (m€) M€ 2011 E2016 Cagr. Ebitda 73,2 90,5 +4,3% E2012 E2013 E2014 E2015 E2016 CapexEbitda 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 C2011 E2012 E2013 E2014 E2015 E2016 E. tariffs (€c/KWh) 2.3 2.2 Sales Distribution Production Microcogen. * Hera stand alone 31
  52. 52. Portfolio mixBusiness Portfolio breakdown* Hera stand alone 32
  53. 53. DisclaimerThis presentation contains forward-looking statements regarding future events (which impact the HeraGroup’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 are unpredictableand depend on circumstances that might change in future.As a result, any expectation on Group results and estimates set out in this presentation may differsignificantly depending on changes in the unpredictable circumstances on which they are based.Therefore, any forward -looking statement made by or on behalf of the Hera Group refer on the datethey are made.The Hera Group shall not undertake to update forward-looking statements to reflect any changes in theGroup’s expectations or in the events, conditions or circumstances on which any such statements arebased.Nevertheless, the Hera Group has a “profit warning policy” , in accordance with Italian laws, that shallnotify the market (under “price-sensitive” communication rules) regarding any “sensible change” thatmight occur in Group expectations on future results. 33

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