ACEA GROUP London, September 2006 EUROPEAN POWER AND UTILITY INVESTOR SUMMIT ACEA GROUP PRESENTATION

Transcription

1 ACEA GROUP London, September 2006 EUROPEAN POWER AND UTILITY INVESTOR SUMMIT ACEA GROUP PRESENTATION 1

2 Company overview Acea Group: strategy and target - Water - Electricity Networks - Electricity Sales and Generation Waste to Energy development EBITDA forecast update Closing remarks

3 Acea Group: focus on core business Water Regulated Activity Water Electricity Networks Regulated Activity Electricity Generation Electricity Sales Energy WTE** Not involved in liberalisation process Fully liberalised Liberalisation in progress: - Since July 2004 liberalisation of NO domestic clients* WTE - From July 2007 liberalisation of domestic clients *Until July 2007, tariffs for domestic customers are regulated **Figure not included in the Business Plan Activity acquired in May 2006 Acea is an asset manager with growing perspectives in regulated activities. Today, roughly 95% of EBITDA derives from regulated activities, operated under long-term concessions. In 2008, more than 80% of EBITDA will derive from regulated business. 3

4 Company overview Acea Group: strategy and target - Water - Electricity Networks - Electricity Sales and Generation Waste to Energy development EBITDA forecast update Closing remarks

5 Acea Group: key target in Business Plan Business Plan Strategy Target Water Electricity Distribution Consolidation of ATO2 results Further expansion in adjoining ATOs (Umbria, Toscana, Lazio) Consolidation of Acea s assets in Toscana ROIC improvement Operating efficiency Network modernisation 2008 pre-tax ROIC: 13.9% 2008 pre-tax ROIC: 6.7% Electricity Sales and Generation Balance generation and supply (16 TWh) Repowering of Tirreno Power Customer base development 2008 pre-tax ROIC: 12.9%* * Including consolidation of Tirreno Power from pre-tax ROIC: 13.7% Acea Group 2008 post-tax ROIC: 9.2% 2008 ROE: 11.6% WTE** ** Figure not included in the Business Plan Doubling of San Vittore Waste-To-Energy plant from 10 MW to 20 MW Construction of new Waste-To-Energy plant in Umbria ( 10 MW) Construction of new Waste-To-Energy plants in Lazio ( 40 MW) Unlevered IRR: at least 12% before synergies 5

6 Acea Group: main financial target Business Plan EBITDA Net profit before minority interest Pre-tax ROIC 2005 Annual Report (a) % 2008 BP (b) % % change (b/a) +38.2% +39.3% EBITDA growth (17) Post-tax ROIC 6.8% 9.2% 300 ROE 10.2% 11.6% 200 Net debt (936.1) Gearing 1 42% Capital employed 2,239.7 (997) 38% 2, % +15.8% previous BP (Italian GAAP) 2008 previous Acqua Italia and BP (IAS/IFRS) Acea Trasmissione ATO3 Sarnese Vesuviano and Sigesa Tirreno Power* * Consolidation starting from 2008 Efficiency and organic growth 2008 new BP 1 Net Debt/Capital employed EBITDA CAGR % EBITDA and Capital Employed by business segment EBITDA (1) CAGR EBIT CAGR Net profit CAGR (1) Excluding Tirreno Power +8.3% +15.5% +12.1% (%) % 11% 51% 54% 19% 38% 18% 44% Electricity Sales and Generation Electricity Networks DIVIDEND POLICY Pay out ratio % % % 35% 43% 38% Water Dividend per share Dividend yield %* %** -10 EBITDA Capital Employed EBITDA Capital Employed * Price at 31 Dec 2004: ** Price at 31 Dec 2005:

7 Acea Group: operating efficiency Business Plan EFFICIENCY AND TARGET: MORE THAN ON TRACK ON TARGET Key contributions Best practice Staff reductions Centralised procurement Public tenders Efficiency achieved in Efficiency achieved in 2004 Efficiency achieved in Efficiency target External costs Personnel costs MORE AGGRESSIVE EFFICIENCY TARGET PERSONNEL COSTS (27) EXTERNAL COSTS* 50 (28) Change in perimeter Salary dynamics Efficiency Change in Efficiency 2008 perimeter * Net energy transport costs, concession fees and fuel and energy costs 7

8 Acea Group: financial performance and capex plan Business Plan NET DEBT Rock solid financial structure Rating: - S&P: A Stable outlook - Fitch: A+ Stable outlook , % 42% % (%) Net Debt Gearing* * Net Debt/Capital employed TOTAL CAPEX Period: Annual Report BP Investments by business segment Acea Group Water Electricity Sales and Generation Electricity Netw orks Acea Holding After 2007 maintenance investments 250m p.a. (of which: energy sector 100m p.a. - water sector 150 m p.a.) 8

9 Company overview Acea Group: strategy and target - Water - Electricity Networks - Electricity Sales and Generation Waste to Energy development EBITDA forecast update Closing remarks

10 Water: strategy and target Business Plan EBITDA Pre-tax ROIC Net debt Gearing 1 Italian sector Capital employed 2005 Annual Report (a) % (179) 20% BP 229* +38.8% 13.9% (245) +36.9% 22% 1, % 1 Net Debt/Capital employed * After the B.P approval (March 2006) a tariff increase has been authorized for the Ato of Toscana ( + 11m EBTIDA 2008E) (b) % change (b/a) STRATEGY TARGET People (m) Further investment in new acquisitions will always be subject to following profit target: IRR = WACC + 3% before synergies Current Target 2008 Market share 14% 18% Consolidation of ATO2- Central Lazio results Further expansion in adjoining ATOs (Lazio Toscana Umbria) Consolidation of Acea s assets in Toscana Annual tariff increase: +5.0% Current situation Target 2006 Target 2008 Italy Population: 57m Volumes: 5.6bn m 3 ATO 2 Pisa ATO 6 Siena ATO 3 Firenze ATO 5 Frosinone ATO 2 Roma ATO3 Sarnese Vesuviano ATO1 Lucca ATO3 Firenze ATO 2 ATO2 Perugia Pisa ATO3 Rieti ATO 6 Siena ATO 2 Roma ATO5 Frosinone ATO3 Sarnese Vesuviano 10

11 Company overview Acea Group: strategy and target - Water - Electricity Networks - Electricity Sales and Generation Waste to Energy development EBITDA forecast update Closing remarks

12 Electricity networks*: strategy and target Business Plan EBITDA 2005 Annual Report (a) BP (b) % change (b/a) % Annual tariff change: -1.5% Pre-tax ROIC 6.9% 7.5% Annual customer growth: +0.5% Net debt Gearing 1 (610) 43% (592) -3.0% 43% Annual consumption growth: +2.5% Capital employed 1,413 1, % * Electricity networks includes public lighting activities managed by Acea SpA 1 Net Debt/Capital employed STRATEGY Efficiency increase and energy savings Modernisation of electricity distribution and public lighting networks Improvement in service quality Installation of digital meters for all end users TARGET Achieve pre-tax ROIC of 7.5%, including public lighting (pre-tax ROIC for Acea Distribuzione is equal to 6.7%) 12

13 Company overview Acea Group: strategy and target - Water - Electricity Networks - Electricity Sales and Generation Waste to Energy development EBITDA forecast update Closing remarks

14 Electricity Sales and Generation Business Plan Structure 40% 60% ACEAELECTRABEL S.p.A. 50% 50% 16.67% 100% ACEAELECTRABEL PRODUZIONE S.p.A % ACEAELECTRABEL TRADING S.p.A. ACEAELECTRABEL ELETTRICITA S.p.A. Generation Trading Supply 70%-30% 50%-50% 40%-60% Fully diluted All the plants up and running from 2007 in order to balance generation and supply when the market become fully liberalised (July 2007). The aim is to safeguard the customer base soon after July 2007, in order to minimize the churn rate. Generation (TWh) STRATEGY TARGET Through the partnership with Electrabel, Acea aims to develop its generation activity to vertically integrate sales and generation, balancing the current long position in sales Gradual and limited growth of generation has to enable us to overcome transition from an oligopoly to a liquid market, maintaining significant profitability and reducing risks linked to margin volatility Protecting and growing the customer base will allow exploitation of future liquidity of market, raising sales margins when generating margins are squeezed Acea Electrabel Tirreno Power Total Sales (TWh) Hypotheses: Growth Target Complete liberalisation of electricity customers by 2007 Sales growth totally covered by available generation Construction of 2 CCGT of 375 MW each (Rosignano, Leini) by 2007 in line with outlined scenarios; Rosignano plant will start Acea Electrabel operation in 2H06, Leini plan in 1H07 Voghera plant (375 MW) entered service in 1Q05 14

15 Electricity Sales and Generation: strategy and target Business Plan Today, generation margins are high, while sales margins are low. In the medium term ( ) the cost of production could match the long run marginal cost of the new entrant The electricity market becomes liquid so that the margin will be transferred from generation side to sell side In the near future shareholder value creation is downstream AceaElectrabel power plants: energy price scenario National generation market: energy price scenario Brent (USD/bbl) Brent (USD/bbl) Average wholesale price ( /MWh) Average wholesale price ( /MWh) Average cost of oil ( /MWh) Annual Report (a) 2008 BP (b) % change (b/a) Target: balance generation and supply (16 TWh) EBITDA % Annual sales growth: +46% Pre-tax ROIC 1.7% 12.9% Net debt (129) (223) +72.9% Gearing 1 44% 43% Capital employed % 1 Net Debt/Capital employed 15

16 Company overview Acea Group: strategy and target - Water - Electricity Networks - Electricity Sales and Generation Waste to Energy development EBITDA forecast update Closing remarks

17 Waste To Energy and Waste Management TAD ENERGIA AMBIENTE SAN VITTORE (LAZIO) Waste-to-energy plant using RDF Installed capacity: 10MW RDF: tonnes/day Energy produced: 79,300 MWh/year DOUBLING OF SAN VITTORE WASTE-TO- ENERGY PLANT FROM 10 MW TO 20 MW Current situation TERNI (UMBRIA) Waste-to-energy plant using RDF and biomass Installed capacity: 10MW RDF: tonnes/day Energy produced: 71,000 MWh/year Target CONSTRUCTION OF WASTE-TO-ENERGY PLANT IN UMBRIA ( 10 MW) CONSTRUCTION OF NEW WASTE-TO- ENERGY PLANTS IN LAZIO ( 40 MW) ORVIETO (UMBRIA) Waste disposal and treatment plant (Orvieto). Volumes treated: 115,000 tonnes/year WTE in Lazio WTE capacity and requirements MW RDF plants Acquisition of 100% of TAD Energia Ambiente (TEA, a subsidiary of Enertad) a Waste to Energy and Waste Management company Enterprise Value (EV) from continuing operations Costs for development of projects 146.1m + 3.4m EBITDA 2006 EBITDA/MW 06 TEA 1 CURRENT MW UNDER DEVELOPMENT* T/yr REQUIREMENT T/yr CURRENT ,307, ,000 TOTAL 149.5m T/yr UNDER DEVELOPMENT* 400,000 TEA debt EQUITY VALUE 135.6m 13.9m T/yr REQUIREMEN TO BE MET 607,513** * Expansion of San Vittore plant and Terni Plant ** For approximately 60 MW. 17

18 Company overview Acea Group: strategy and target - Water - Electricity Networks - Electricity Sales and Generation Waste to Energy development EBITDA forecast update Closing remarks

19 Update business plan Water tariff increase in Toscana EBITDA from TEA acquisition (stand alone basis) Synergies from TEA acquisition (by products disposal) 2008 update EBITDA 19

20 Company overview Acea Group: strategy and target - Water - Electricity Networks - Electricity Sales and Generation Waste to Energy development EBITDA forecast update Closing remarks

21 Closing remarks Defensive nature and low risk profile of a growing regulated utility Large and loyal customer base Balanced hedge between electricity generation and supply Focus on efficiency enhancement Defending high profitability in the water sector Significant profitability expansion in electricity distribution Stable cash flow with long term visibility (30 years concessions) Attractive dividend policy Potential to optimize financial structure

22 Disclaimer This document has been prepared by Acea solely for use at investor and analyst meetings. This document does not constitute an offer or invitation to purchase or subscribe shares and neither it nor any part of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. Certain information contained herein and other material discussed at the meetings may include forward-looking statements based on Acea s current beliefs and expectations. These statements are based on current plans, estimates, projections and projects and undue reliance should not therefore be placed on them. Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factors include, but are not limited to: changes in global economic conditions, changes in the price of certain commodities including electricity, gas and oil, the competitive market and regulatory factors. Moreover, forward-looking statements are to be held only at the date they are made. 22