ACEGAS-APS : Results for 2011

· Operating results showed significant growth:

- Total revenues: €585.3 mn (€506.1 mn in 2010, up 15.7%)  

- EBITDA: €118.7 mn (€108.3 mn in 2010, up 9.6%)

- EBIT: €52.6 mn (€48.5 mn in 2010, up 8.5%)

· Net debt: €447.4 mn (€439.1 mn at 31.12.2010)

· Proposed distribution of a dividend of €0.18 per share, unchanged from the previous year

· The Board of Directors resolved to propose the extension of the share buyback and disposal program to the Shareholders in the General Meeting

· The Board of Directors resolved to propose an amendment to the Bylaws to the Shareholders in the General Meeting, to reflect the new rules on "Gender-balanced composition of corporate governance bodies"

Trieste, 20 March 2012- The Board of Directors of AcegasAps, chaired by Massimo Paniccia, met today to review and approve the preliminary financial statements for the year ended 31 December 2011.

In 2011, total revenues of the AcegasAps group rose by €79.2 million, or 15.7%, on the comparable amount of 2010. This increase was driven mainly by the electricity business, which saw its revenues rise by €33.8 million (up 31.1%), and the gas business, whose revenue increased by €14.1 million (up 11.4%). Also the service sector showed significant growth, with revenues up 10.1 million, or 10.9%, on the previous year.

The increase in revenues for the electricity business was due almost entirely to sales activities, which went up from €91.0 million to €118.0 million. In particular, this was due to the significant growth of EstEnergy, whose contribution to the increase in consolidated revenues for 2011 amounted to €26.8 million, due mainly to the development of new customers in the public sector. In terms of volumes, sales increase by 72%, from 544 GWh to 937 GWh.

On the other hand, sales of electricity in the standard offer market, by AcegasAps S.r.l., decreased by 5.8%, from €49.2 million in 2010 to €46.4 million in 2011. This decline was due largely to lower consumption, which dropped 13.3%, from 303.6 GWh to 263.2 GWh, and a progressive erosion of the customer base.

In the year under review, revenues from electricity generation rose from €7.3 million to €10.7 million, which was in keeping with the 54.4% increase in volumes produced, from 85.3 GWh to 131.7 GWh. It is worthy of note that in 2010 power generation was suspended as the Elettrogorizia plant was taken offline, for extraordinary maintenance.  

On the distribution front, prices continued to be low, even though they were higher than the average for 2010. Thus, even though distributed electricity was down 1.3% in terms of volumes, AcegasAps S.p.A. (795.9 GWh in 2011 compared with 806.0 GWh in 2010) saw its revenues from distribution services go up by 3.2%, from €21.3 million in 2010 to €22.0 million in 2010, due also to a €0.7 million generated thanks to a tariff increase for previous years applicable to certain customer segments.  

Total revenues in the gas business rose from €123.4 million in 2010 to €137.5 million in 2011, or 11.4%. Domestic revenues from distribution increased from €40.6 million to €45.2 million, or 11.3%. Such improvement was due also to the consolidation of revenues of Est Più (ex-Iris Gorizia) which accounted for €5.1 million of Group revenues.  

The unfavourable weather conditions for 2011, whose effect was offset only in part by a moderate recovery of industrial consumption, had an adverse effect on the gas volumes distributed by the Parent Company, whose sales in terms of volumes fell by 7%, from 519.9 million of cubic meters in 2010 to 483.5 million of cubic meters. In addition, for 2011 attention is called to the consolidation of the sales volumes of EstPiù and Isogas starting from June which, after they were adjusted for the equity interest held by AcegasAps S.p.A. in the company, contributed to Group volumes for 39 million cubic meters in distribution and 30 million cubic meters in sales. In 2011, gas volume sales followed in essence the trend of the distribution activity, as EstEnergy saw its turnover drop by 4.1%, from 454.8 million cubic meters to 436.3 million cubic meters.

Gas distribution and sales abroad generated €1.9 million in revenues, up €1.4 million on 2010.

Revenues from the service business rose by €10.1 million, from €92.5 million in 2010 to €102.7 million in 2011, reflecting a year-over-year increase of 10.9%. This was due mainly to the improved performance of the subsidiary Sinergie (up €9.4 million).   

The integrated water cycle and the environment businesses saw their revenues increase by €5.7 million and €5.4 million, respectively. Growth was more significant for the water business which, thanks to a tariff revision, generated revenues for €93.6 million, reflecting a growth rate of 6.5% over 2010.  

Regarding volumes, water sold amounted to 53.6 million cubic meters as against 53.3 million cubic meters in 2010, a 0.6% increase. In terms of territorial areas, consumption was progressively down in the Trieste area (24.2 million cubic meters in 2011 vs. 24.5 million cubic meters in 2010). This was more than offset by the volumes handled in Padua (from 28.8 million cubic meters to 29.4 million cubic meters), thanks to higher sales to sub-distributors. 

Revenues from the environment business went up 4.4%, from €123.5 million in 2010 to €129.0 million. Waste-to-energy ("WTE") operations had revenues for €63.6 million, up 18.4% on the €53.7 million for the previous year, thanks to the full contribution of the third line in the Padua plant, which commenced operations in May 2010, and the improved efficiency of the Trieste plant, which reduced the average number of stoppages from 92 days in 2010 to 41 in 2011. Volumes processed by the WTE plants rose overall by 19,3%, from 277.7 thousand tons in 2010 to 331.4 thousand tons in 2011. This was equivalent to processed volume increases of 17.7% and 21.4% for the Padua and Trieste plants, respectively.   

Electricity generation rose more than proportionately, from 148.6 GWh in 2010 to 217.6 GWh in 2011, up 46.5%. Growth was more significant in the Padua plant, as volumes of generated electricity were 55% higher than in 2010.

EBITDA rose from €108.3 million in 2010 to €118.7 million in 2011, reflecting a €10.4 million, or 9.6%, increase. This improvement was driven mainly by the gas business (up €6.2 million), the water cycle business (up €4.3 million) and the environment (up €1.5 million). With respect to the gas business, attention is called mainly to the contribution provided by the sales and distribution of EstPiù (up €3.9 million), which was accounted for by the Group on the basis of a 30% equity interest held by the parent as of June 2011, and by the sales of Estenergy (up 2.4 million). At the basis of the EBITDA improvement in the water business there are the positive results of Trieste's territorial area (up €4.8 million) while for the environment business emphasis is placed on the €2.9 million EBITDA increase generated by the WTE plant in Padua. 

The EBITDA increase was partly offset by depreciation and write-downs, which rose by €7.9 million mainly as a result of the higher depreciation expense associated with the significant investments made in the past few years in the water and environment sectors.

In 2011 EBIT amounted to €52.6 million compared with €48.5 million in 2010, reflecting a €4.1 million increase, up 8.5%.

Net financial expense went up by €5.4 million, from €7.9 million in 2010 to €13.3 million in 2011. The significant change was due mainly to the increase in the average cost of funds and the one-time charge of €1.4 million taken following the recognition of the interest expense determined by discounting to present value the sums owed to AcegasAps Service and Sinergie by the City of Padua, following renegotiation of the relevant terms and conditions.

Income taxes rose from €18.1 million to €19.3 million, up €1.2 million, while the tax rate went from 44.7% in 2010 to 51.7% in 2011. The tax rate was negatively affected by the non-deductibility of the impairment of Sarmato Energia, the increase of four percentage points applied to the companies subject to the so-called Robin Tax (up €0.9 million) and the higher regional business tax (IRAP) applied to concessionaires of networks (up €0.2 million).  

Net profit for the year amounted to €18.0 million compared with €22.1 million in 2010.

STATEMENT OF FINANCIAL POSITION

In 2011 the AcegasAps Group made investments totaling €110.5 million, compared with €96.7 million in 2010. Investments were made mostly (€34.4 million) in the gas sector, mainly in the Trieste area, with a massive program to replace gray cast iron pipes, and in the Bulgarian region of Zapad, where activities continue to build a gas distribution grid.   

Investments made in the water sector in 2011 concerned mainly grid maintenance, and were in line with the previous year's (€28.4 million compared with €27.2 million). On the other hand, investments in the environment sector were down to €24.7 million, from €28.4 million in 2010. In this area, in particular, the most significant investments concerned completion of the works on the Padua WTE plant for approximately €10 million and the revamping of a production line in the Trieste WTE plant for approximately €13 million.     

In the service sector investments totaled €16.0 million, compared with €15.4 million in 2010. The most significant investments were made by the subsidiary Sinergie, which invested approximately €10.0 million (€7.8 million in 2010) to revamp and upgrade customers' technological and thermal power plants.

Investments in the electricity sector, which saw the replacement of electronic meters, amounted to €7.0 million as against €7.9 million in 2010.

As a result of the investments incurred in 2011, property, plant and equipment rose by €83.9 million, from €724.6 million in 2010 to €808.5 million in 2011.

Working capitalfell by €50.0 million, from €57.7 million to €7.7 million. The significant decrease was due mainly to the increase in trade payables (up €68.1 million), due to a more effective management of credit terms with the Group's main suppliers, as well as to the steps taken to curb growth in trade receivables (up €16.3 million), including through factoring.

Invested capital was financed with equity for €368.8 million, which was up €6.8 million on the previous year, and net debt of €447.7 million, which was up €8.3 million.

OUTLOOK

The new year began in a climate of uncertainty and general slowdown of the economy. Financial markets are highly volatile and access to credit is challenging also for utilities. This context calls for AcegasAps to pay greater attention to the way it deploys its resources, thus to act more selectively in capital spending processes. In keeping with this view, the AcegasAps group set for 2012 a net investment objective of €42.0 million which, compared with 2011 (€104.5 million), represents a €62.5 million decrease in net capital expenditure, with a resulting expected positive effect on the Group's net debt. In this vein, the environment sector, which completed in 2011 the cycle of investments designed to strengthen its waste-to-energy activities, will operate to firm up its activities so as to enhance the value of its productive assets. This approach will be extended also to the water sector to unlock the value of the investments made in the past few years.

In terms of growth, 2012 will see the AcegasAps Group focus mainly on the development of the commercial activities of the gas distribution network set up in Bulgaria, to put the significant investments made to productive use. In addition, Sinergie will continue to manage its heating business, thanks to the significant order backlog and the large number of new contracts obtained. 

The new year will benefit also from the full contribution of the energy business of ex-Iris Gorizia  (Est Più e Isogas), which were purchased in a joint venture with ENI in 2011. As to the more general retail activities, it is possible that margins in the electricity and gas markets will be squeezed in 2012 due to the revision of the tariffs suggested by the Authority for the Electric and Gas Energy. 

The combined effects of the above events should translate into results for 2012 featuring unchanged margins compared with 2011.

Lastly, it should be noted that 2012 might witness a rationalization of the business portfolio, especially in the gas distribution area, and by possible related business combinations designed to take the opportunitiesmade available by the various segments and to face effectively the progressive liberalization of the industry.  

PARENT COMPANY'S RESULTS

In 2011 AcegasAps S.p.A. saw its revenues increase by €22.1 million, to €309.0 million.

EBITDA for the year amounted to €91.9 million (up €6.5 million compared with 2010) while EBIT stood at €34.9 million (up 2.6 million). Following net financial expense of €9.1 million and taxes for €12.8 million, net profit for the year amounted to €15.3 million, down €0.1 million from 2010.

In light of total investment outlays for the year, invested capital rose by €3.8 million, to €735.4 million. At year-end, equity amounted to €356.3 million (up €5.6 million) while net debt improved by €1.7 million, to €379.1 million.  

DIVIDEND PAYMENT

The Board of Directors resolved to recommend to the Shareholders, in the General Meeting to be held, in first call, on Thursday 26 April 2012 or, in second call, on Friday 27 April 2012, a dividend distribution of €0.18 per share, unchanged from the previous year. Based on the resolution of the Board of Directors of AcegasAps, dividends will be paid on 12 July 2012, while the share will go ex-dividend on 9 July 2012, with presentment of coupon no. 12. 

EXTENSION OF SHARE BUYBACK AND DISPOSAL PROGRAM 

The Board of Directors adopted a resolution to request the Shareholders in the General Meeting the authority to extend the share buyback program, following the expiration of the authority granted in the General Meeting of Shareholders of 28 April 2011. The new program calls for the purchase, under the same terms and conditions of the expired one, including the price, as disclosed with the press release of 28 April 2011, starting from the date of the Shareholders' resolution up to 18 months and in any case not later than the date of the General Meeting of Shareholders that will approve the financial statements for 2012, of up to 10% of the shares outstanding. The program calls also for  the disposal of such shares, in one or more transactions, without any time limits, in the manner deemed most appropriate for the Company's interests and in keeping with the applicable laws and market practices accepted by Consob.  

The program is due to the need to use shares to complete acquisitions and to foster the liquidity of the share and the stability of its price.

To this date, the Company holds 88,883 treasury shares, representing 0.16% of share capital. 

PROPOSED BYLAWS AMENDMENT

The Board of Directors resolved to submit to the Shareholders, in the Extraordinary General Meeting, to be held on the same day as the Ordinary General Meeting, the proposal to amend articles 16 and 25 of the Bylaws, pursuant to Law no. 120 of 12 July 2011, and article 144-undecies of the Regulation to implement Legislative Decree no. 58 of 24 February 1998, concerning the regulation on issuers, approved with Consob resolution no. 11971 of 14 May 1999 as amended by Consob Resolution no. 18098 of 8 February 2012 on "Gender-balanced composition of corporate governance bodies".