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AR annual report December, 31st 2005 Introduction to Hera Group 2 - PDF document

Aug 17, 2022 •388 likes •751 views

AR annual report December, 31st 2005 Introduction to Hera Group 2 Hera achieved Leadership through a unique consolidation process Hera is a leading and fast mover in an Hera positioning in the utility sector evolving market Incumbent High

  1. AR annual report December, 31st 2005

  2. Introduction to Hera Group 2

  3. Hera achieved Leadership through a unique consolidation process Hera is a leading and fast mover in an Hera positioning in the utility sector evolving market Incumbent High Sales in Italy Enel ENI Multi-utility > Italian utility sector is mainly composed of Local Energy players small local multi-utility public-owned players Players Edison Thuga which has only recently begun to react to Hera Hera Vivendi Aem Mi higher competition through the search of GDF Acea Asm ... larger dimensions. Aem To Hera Hera Hera Amga Acegas Foreign Players Low Acsm Multi Service Mono business > In the last 3 years, Hera has quickly moved Business Portfolio promoting the consolidation process by Hera reference territory merging 14 local multi-utilities reaching a 70% coverage of the rich Emilia Romagna region. > This process has brought Hera to a leading position in all core businesses reaching a strong and defendable position. 3

  4. Milestones Hera is created from the consolidation of 11 public utility companies in the Emilia Romagna region, a Nov. 2002 first time ever in Italy Giu. 2003 Public offering and listing on the Italian Stock Exchange (44.5% of share capital free float) Ott. 2003 Acquisition of 42% of Agea Ferrara S.p.A ., the public utility company of the province of Ferrara Acquisition of further 2.9% of Aspes Multiservizi (rounding the stake up to 26.9%) and Sett. 2004 acquisition of 15% of the share capital of Calenia Energia (Sparanise CCGT, 800MW) Acquisition of 100% of Centro Ecologico di Ravenna; agreement between Hera and Gas Rimini Ott. 2004 Group for the acquisition by Hera of a holding of 20% in the company SGR servizi Agea S.p.A. merged into Hera S.p.A , and the water business of Acosea S.p.A was simultaneously Dic. 2004 spun-off in favour of Hera; acquisition of 39% of the share capital of SET (Teverola CCGT, 400MW) Dic. 2005 Meta S.p.A. merged into Hera S.p.A Gen. 2006 Agreement on merger of Geat Gas Riccione (20.500 clients, 41 Ml cm sold) Preliminary agreement signed between Hera and Enel for the acquisition of the electricity Mar. 2006 distribution grid in 18 Municipalities located in the Modena Province 4

  5. Hera model is a reference benchmarking Hera strong competitive advantage Shareholding 1,016.8 Ml shares M. Bologna; 15,0% > Hera expansion has been carried out through mergers with public shareholders committed Free float; 40,9% M. Modena; 11,2% to maintain 51% of share capital CON.AMI; 5,3% > Hera has become the only multi-utility with no “absolute controlling shareholder” (Bologna M. Ravenna; 4,8% Municipality holds 15%): M. Rimini; 2,4% M. Cesena; 2,3% > Benefits in governance issues Other M. Ferrara; 2,2% Municipalities; M. Forlì; 2,2% > Appeal for further aggregations 13,8% Territorial presidium through L.O.C.s > Hera has spin off the operating activities of the merged companies into 7 similar L.O.C.s, 100% owned by the Holding. HERA HERA > The L.O.C.s (Local Operating Companies) Hera Bologna Hera Rimini Hera FO-CE Hera Ravenna are benchmarked in order to define and share the internal best practices. Hera Imola Hera Ferrara Hera Modena Hera Modena 5

  6. Strong asset base and balanced contribution to results WATER WASTE 2005 2005 Distributed (Ml m 3 ) 228 Urban waste (Ml tons) 1.6 Population served (Ml unit) 2.3 Special waste (Ml tons) 2.2 Customers (K unit) 914 Population served (Ml unit) 2.4 Pipeline (km) 23,474 34% OTHER 2005 24% Group Ebitda breakdown Group Ebitda breakdown Light towers (K unit) 293 by business 5% by business Heat distribution (Gwht) 470 6% 31% GAS ELECTRICITY 2005 2005 Volume sold (Ml m 3 ) 2,786 Volume sold (Gwh) 3,755 Volume distributed (Ml m 3 ) 2,399 Volume distributed (Gwh) 1,507 Customers (K unit) 940 Customers (K unit) 178 Network (km) 11,511 Network (km) 5,586 6

  7. Business portfolio highlights low risk profile Hera multi-service business portfolio Weight of regulated activities on Ebitda highlight low risk profile: > Balanced between regulated (with long term concessions and diversified authorities) and Free Mkt competitive market businesses. 45% Regulated 55% > Low inter-dependence among businesses characterize Group risk profile. Risk relations among businesses REGULATED Waste Water Gas dist. Ele. dist. WASTE WASTE WASTE Authority 6 different Ato Aeeg Climate impact Low Rain / Hot / Low Sinergy potential Low relation among WATER OTHER on result relation no rain Cold relation WATER and OTHER WATER OTHER business drivers low risk relation Tariff vs UE <30% <30% >30% >30% Concession 2012 2022 2010 2030 ELECTRICITY GAS GAS ELECTRICITY ELECTRICITY GAS 7

  8. Revenues and Ebitda targets REVENUES growth Strategy: sustainable value for shareholders Ml € 2.625 2.148 > Sector consolidation & Upstream integration 1.099 > Synergies and rationalization > Sustainable development 2002 2005* E2008* 2008 EBITDA Growth by Driver EBITDA growth Ml € Ml € 83 597 57 12 59 386 292 597 242 192 386 192 2002 2003 2004* 2005* Ch. Syn. Org. New E2008 2002 2005* E2008* Perim. Gr. Plants * IAS adjusted – Meta accounted since January 1st, 2005 8

  9. Key highlights on 2005 Results (Meta accounted since January 1st, 2005) 9

  10. 2005 major achievements > Meta PTO executed on 20% of Meta share capital (98 Ml €) > 176,8 Ml new shares issued for the Meta merger Meta merger > Integration activities on track > Significant expansion in volumes managed : > Gas sales: up to 2.8 bl cm, including wholesale > WTE: 614 tons of urban waste treated (+36%) providing 261 GWh Organic > Waste: 3.8 Ml tons disposed (+41%) Growth > First year of new waste and water tariffs . > +3.0% revenue increase in water > +2.5% revenue increase in waste > 2005 financials presents another year of significant growth 2005 financials > New target set in the 2006-2008 business plan presented in November 2005 & Business Plan > Key 2006 initiatives already achieved in 1st quarter (i.e. Enel’s distribution network) 2005 confirmed capabilities to deliver promised results 10

  11. Meta integration progressing on track May : Preliminary agreement June : Merger was approved by BoD Meta Sept .: Approval of shareholders Merger Oct : PTO executed on 20% of Meta Dec : Merger fulfilment January 2006 > Hera Modena LOC established Meta > Organisational structure deployed Meta Hera 2005 > IT system integration scheduled in ‘06 Gas sold (Ml cm) 347 2,439 2,786 Integration Electricity sold (Gwh) 1,426 2,329 3,755 > Specific business integration structured into focused initiatives Water sold (Ml cm) 27 201 228 Waste treat. (‘000 ton) 507 3,268 3,775 7.5x EV/Ebitda 2005 7.5x EV/Ebitda 2005 (excluding synergy estimated in 20 Ml € additional Ebitda in 2008) (excluding synergy estimated in 20 Ml € additional Ebitda in 2008) 1 1

  12. Hera figures on path since 2002 Revenues + 41% Year Ml € 2002* 2003* 2004 2005*** Incr.% > Meta merger contribution (by 380 Ml€) > Increase of volumes, energy prices and Revenues 1099 1,241 1.529 2,148 41% “W-W” tariffs Oper. Costs** (907) (999) (1,237) (1,762) 42% Ebitda 192 242 292 386 32% Ebitda + 32% EBIT 78 113 177 216 22% > +65 Ml€ Meta contribution Net profit 33 50 81 101 25% * Figures stated following Italian accounting principles Ebit + 22% ** Net of capitalisations *** Proforma figures; Meta accounted since January 1st, 2005 > 2005 figure reflecting 2004/2005 investments and Meta invested capital % 2002* 2003* 2004 2005*** D/E 29 50 53 65 ROI 8.8% ROI 6.9 8.4 10.9 8.8 > 9.4% excluding Meta integration (due to higher capital employed) € 2002* 2003* 2004 2005*** EPS 0.042 0.062 0.096 0.100 Proposed Dividend 0.07€ 0.070 § DPS 0.035 0.053 0.060 > Pay out ratio about 70% § Proposed 2005 dividend 1 2

  13. Hera Group is today among the largest Italian multi-utility Shareholdings > Hera has today about 1 Ml customers served and a portfolio focused on balanced portfolio. > The Group can rely upon considerable M. Bologna; 15,0% Synergies and Organic Growth potential to strengthen its market position. Free float; 40,9% M. Modena; 11,2% > The Group aims to leverage upon the leading CON.AMI; 5,3% position in the sector consolidation process to M. Ravenna; 4,8% further create value. M. Rimini; 2,4% M. Cesena; 2,3% Other M. Ferrara; 2,2% Municipalities; M. Forlì; 2,2% 13,8% Market Position in Italy 3Y Share capital development 2003 2004 2005 Ml € Rank Shares 786,5 793,2 839,9 Waste 1 st New issued shares 6,7 46,7 176,8 Water 2 nd Total 793,2 839,9 1.016,8 Gas 3 rd Electricity 6 th Geat Agea Meta 1 3

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