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Consolidatequarterlyreportas at 31 march 2016
Hera Group – Consolidated quarterly report as at 31 march 2016
Approved by Hera Spa’s Board of Directors in the meeting of 11 may 2016 1
TABLE OF CONTENTS
Introduction
Governance and Control Bodies 002
Mission 003
Directors’ Report
1.01 Overview of Group management and performance 004
1.01.01 Operating results 004
1.01.02 Analysis of the Group’s Financial Structure and investments 008
1.01.03 Analysis of Net Cash (Net Borrowings) 010
1.02 Analysis by strategic business area 012
1.02.01 Gas 013
1.02.02 Electricity 017
1.02.03 Integrated Water Cycle 020
1.02.04 Waste Management 024
1.02.05 Other Services 028
1.03 Share Performance and Investor Relations 031
1.04 Reference Scenario and Group Strategy 033
1.05 Personnel structure 036
Hera Group Consolidated Financial Statements
2.01 Financial Statements 037
2.01.01 Income Statements 037
2.01.02 Statement of financial position 038
2.01.03 Cash Flow Statement 040
2.01.04 Statement of changes in equity 041
2.02 Explanatory notes 042
2.03 Net Borrowings 044
2.04 Equity Investments 045
introduction
Hera Group – Consolidated quarterly report as at 31 march 2016
Approved by Hera Spa’s Board of Directors in the meeting of 11 may 2016 2
GOVERNANCE AND CONTROL BODIES
Board of Directors
Chairman Tomaso Tommasi di Vignano
CEO Stefano Venier
Vice President Giovanni Basile
Director Mara Bernardini
Director Forte Clò
Director Giorgia Gagliardi
Director Massimo Giusti
Director Riccardo Illy
Director Stefano Manara
Director Luca Mandrioli
Director Danilo Manfredi
Director Cesare Pillon
Director Tiziana Primori
Director Bruno Tani
Board of Statutory Auditors
Chairman Sergio Santi
Standing Auditor Antonio Gaiani
Standing Auditor Marianna Girolomini
Control and Risk Committee
Chairman Giovanni Basile
Member Massimo Giusti
Member Stefano Manara
Member Danilo Manfredi
Remuneration Committee
Chairman Giovanni Basile
Member Mara Bernardini
Member Luca Mandrioli
Member Cesare Pillon
Executive Committee
Chairman Tomaso Tommasi di Vignano
Vice President Giovanni Basile
Member Stefano Venier
Member Riccardo Illy
Ethics Committee
Chairman Massimo Giusti
Member Mario Viviani
Member Filippo Maria Bocchi
Independent auditing firm
Deloitte &Touche
Hera Group – Consolidated quarterly report as at 31 march 2016
Approved by Hera Spa’s Board of Directors in the meeting of 11 may 2016 3
MISSION
“Hera’s goal is to be the best multi-utility in Italy for its customers, workforce and
shareholders. It aims to achieve this through further development of an original corporate
model capable of innovation and of forging strong links with the areas in which it operates
by respecting the local environment".
“For Hera to be the best means to represent a reason for pride and trust for:
customers, who receive, thanks to Hera’s constant responsiveness to their needs, quality
services that satisfy their expectations. The women and men who work at Hera, whose
skills, engagement and passion are the foundation of the company’s success;
shareholders, confident that the economic value of the company will continue to be
generated in full respect of the principles of social responsibility; the reference areas,
because economic, social and environmental health represent the promise of a
sustainable future; and suppliers, key elements in the value chain and partners for
growth".
chapter 1
report on operations
Hera Group – Consolidated quarterly report as at 31 march 2016
Approved by Hera Spa’s Board of Directors in the meeting of 11 may 2016 4
1.01 OVERVIEW OF GROUP MANAGEMENT AND PERFORMANCE
1.01.01 OPERATING RESULTS
The Hera Group, at the end of the first quarter of 2016, showed growth in all economic
indicators: EBITDA rose by o.4%, operating profits by 0.4% and net profits by 4.7%.
These results, obtained thanks to the Group's consolidated multi-business strategy, have
been achieved in a competitive and increasingly challenging regulatory environment in
which the Group operates in a balanced and dynamic way.
The main corporate and business operations that have generated changes in the scope
over the first quarter of 2016 are:
As of 23 December 2015, Herambiente acquired a 100% shareholding in Waste
Recycling Spa, whose activities involve the treatment and recovery of special
waste in the province of Pisa, and which in turn holds shares in Rew Trasporti Srl
and Neweco Srl.
As of 1 December 2015, Herambiente acquired control of several branches of
Geo Nova Spa. In particular, the hazardous and non-hazardous waste storage
plant in San Vito al Tagliamento (near Pordenone) and the active landfills for non-
dangerous waste in Loria (near Treviso) and Sommacampagna (near Verona)
were taken over.
As of 29 December 2015, Hera Spa sold 90% of Hera Energie Rinnovabili, later
renamed Aloe Spa, to third parties, thus removing it from the scope of
consolidation.
As of 1 November 2015, Biogas 2015 became part of the Group's corporate
structure. This company's activities involve energy recovery and energy
production from waste recycling, and it is also responsible for constructing,
installing and managing the plants involved.
As of 30 December 2015 the stake held by AcegasApsAmga Spa in Trieste
Onoranze e Trasporti Funebri was sold.
This consolidated income statement reflects the application of accounting principle
IFRIC12 "Service concession arrangements". The effect of applying this principle, which
leaves the results unchanged, is that investments made in goods granted under
concession, including only network services, are acknowledged in the income statement.
(€/mln) Mar 2016 Mar 2015 Abs. Change % Change
Revenues 1,235.4 1,311.9 -76.5 -5.8%
EBITDA 278.4 22.5% 277.2 21.1% +1.2 +0.4%
Operating profit 170.8 13.8% 170.1 13.0% +0.7 +0.4%
Net profit 96.8 7.8% 92.5 7.0% +4.3 +4.7%
Constant and balanced growth
Approved by H
Constant angrowing increments
1.2 billion Euros in revenues
Hera Spa’s Boar
The
Reve
(equ
2015
decr
tradi
drop
resu
mate
regu
serv
9.5 m
583/
meth
on
serv
secto
whic
parti
of ap
powe
dispo
For f
Incom
Reve
Othe
Raw
Servi
Othe
Perso
Capit
EBITD
Amor
Oper
Finan
Pre-t
Taxes
Net p
AttribSharNon-
nd
rd of Directors in
table below
enues for the
al to approx
5. There are
reased by 2
ng of elec
pped by abou
lt of the dec
erials; Fina
lated gas,
ices there w
million Euros
/2015/R/com
hod for calcu
capital inve
ices in the g
or as well as
ch defines th
ally offset by
pproximately
er plants and
osed of.
further detail
me statement (€
enues
r operating reven
materials
ce costs
r operating costs
onnel costs
talised costs
DA
rt. & Prov.
rating profit
ncial operations
tax profit
s
profit of the year
utable to:reholders of the -controlling intere
n the meeting o
shows the ec
e first quarter
ximately 6%)
e several re
0 million Eu
ctricity and
ut 90 million
cline in the p
lly, in the
electricity
was a declin
s mainly due
, which m
ulating the ra
ested for in
as sector an
s decree 664
he rules for
y higher reve
y 12 million E
d, finally, by
s, see the an
€/mln)
nues
s
r
Parent Companests
Her
of 11 may 2016
conomic res
r amounted t
) from the 1,
easons for th
uros due to
gas have
Euros as a
price of raw
e area of
and water
ne of about
e to decree
odified the
ate of return
nfrastructure
nd electricity
4/2015/R/idr,
the second
enues due to
Euros, by gr
an increase
nalyses of th
Mar 2016
1,235.4
73.7
(608.5)
(281.7)
(12.1)
(132.9)
4.6
278.4
(107.6)
170.8
(25.7)
145.1
(48.4)
96.8
y 91.25.6
ra Group – Cons
ults for the fi
to 1,235.4 m
,311.9 million
his decline:
the mild cl
regulatory p
o higher volum
reater energ
in revenues
e single bus
% Inc. M
6.0%
-49.3%
-22.8%
-1.0%
-10.8%
0.4%
22.5%
-8.7%
13.8%
-2.1%
11.7%
-3.9%
7.8%
7.4%0.5%
solidated quarte
rst quarter o
million Euros,
n Euros see
in the gas
imate; reven
period. Thes
mes of elect
y production
s resulting fro
iness areas.
Mar 2015
1,311.9
71.4
(702.3) -5
(266.6) -2
(9.9)
(131.4) -1
4.1
277.2 2
(107.1)
170.1 1
(29.4)
140.7 1
(48.2)
92.5
86.65.9
erly report as at
of 2016 and 2
down 76.5 m
en in the sam
service, sa
nues from th
se negative e
tricity sold, in
n revenues f
om an increa
% Inc. Abs. cha
-
5.4%
53.5% -
20.3% +
-0.8%
10.0%
0.3%
21.1%
-8.2%
13.0%
-2.2%
10.7%
-3.7%
7.0%
6.6%0.4%
31 march 2016
5
2015:
million Euros
me period of
les volumes
he sale and
effects were
n the amount
from thermal
ase in waste
nge % Chan
76.5 -5.8
+2.3 +3.2
93.8 -13.4
15.1 +5.7
+2.2 +22.2
+1.5 +1.1
+0.5 +12.1
+1.2 +0.
+0.5 +0.5
+0.7 +0.
-3.7 -12.6
+4.4 +3.
+0.2 +0.4
+4.3 +4.
+4.6 +5.-0.3 -4.8
6
5
s
f
s
d
e
t
l
e
ge
8%
2%
4%
7%
2%
1%
1%
.4%
5%
.4%
6%
.1%
4%
.7%
.3%8%
Approved by H
EBITDA at 27million Euros(+0.4%)
Hera Spa’s Boar
Othe
due
amo
Cost
quar
the l
in the
Othe
serv
incre
costs
Pers
in th
incre
agre
the r
As o
to th
EBIT
millio
show
Euro
parti
that
reve
wate
Euro
4.9
the
grow
0.3 m
decr
Amo
going
same
the a
of 1.
com
chan
Third
78.4 s
rd of Directors in
er operating
to higher re
unt of which
ts of raw and
rter of 2015,
ower volume
e cost of raw
er operating
ices coming
ease is main
s of hosting a
sonnel costs
he first quar
ease is main
eement and t
reduction of t
of March 201
e same perio
TDA rose fro
on Euros a
wing an inc
os, equal to
cularly signi
the quarter w
nues in the
er sector am
os (3.9 in gas
in water, re
reduction o
wth of the gas
million Euros
reases in the
ortizations an
g from 107.1
e period of 2
amount of 2.
7 million Eur
panies. This
nge in duties
d Party Good
n the meeting o
revenues inc
evenues res
was due ma
d other mate
equal to a 1
es of gas sol
w materials.
revenues th
to 15.1 millio
nly due to ch
and transpor
rose by 1.5
rter of 2015
ly due to the
the entrance
the average
6, capitalize
od of 2015.
om the 277.2
as of Marc
crease of 1
0.4%. This
ificant if we
was affected
e gas, elect
mounting to 9
s, 0.7 in elec
espectively)
of the WA
s sector, amo
s, and the e
areas of wa
nd provisions
1 million Eur
2016. This in
0 million Eu
ros, and high
effect is offs
s on the form
ds in the gas
Her
of 11 may 2016
creased by 2
sulting from
ainly to increa
erials decrea
3.4% change
ld, less subs
hus increased
on Euros an
hanges in the
rting electrici
million Euros
to 132.9 m
e wage increa
of the Envir
presence of
ed costs sligh
2 million Euro
ch 2016,
.2 million
s result is
consider
d by lower
tricity and
9.5 million
ctricity and
following
ACC. The
ounting to
electricity AR
ater cycle and
s showed an
ros in the fir
ncrease is d
ros, higher a
her provision
set by a redu
mer Akron pl
s area.
ra Group – Cons
2.3 million E
the applicat
ased payme
ased by 93.8
e; as with re
stantial tradin
d by 17.3 m
d higher ope
e scope (5.0
ty and gas (
s (equal to 1
million Euros
ases establis
ronment unit
resources.
htly increase
os reported
REA amoun
d environme
n overall inc
rst quarter o
due to a cha
amortizations
ns for doubtfu
uction in the
ants followin
solidated quarte
uros, 1.7 mil
ion of IFRIC
nts for sorted
8 million Eur
venues, this
ng activities a
million Euros
erating expen
0 million Euro
10 million Eu
.1%), going f
in the sam
shed by the n
into the com
d, up 0.5 mi
for the first q
ting to 3.9 m
nt.
rease of 0.5
f 2015 to 10
nge in the s
s for new inv
ul accounts,
amortization
ng a corpora
erly report as at
llion Euros o
C 12 and th
d waste colle
ros compare
change is m
and the over
overall (high
nses coming
os) and incre
uros).
from 131.4 m
me period of
national colle
mpany, partia
llion Euros a
quarter of 20
million Euros
5 million Euro
07.6 million
scope of con
vestments in
in particular
n of WTE pla
ate merger a
31 march 2016
6
of which was
e remaining
ection.
d to the first
mainly due to
rall decrease
her costs for
to 2.2). The
eases in the
million Euros
f 2016. This
ective labour
ally offset by
as compared
015 to 278.4
s, offset the
os, or 0.5%,
Euros in the
nsolidation in
n the amount
r in the sales
ants and the
and on some
6
6
s
g
t
o
e
r
e
e
s
s
r
y
d
4
e
,
e
n
t
s
e
e
Neminm(+
Approved by H
Operating prat 170.8 milliEuros (+0.4%
et profits posminority nterests at 91
million Euros +5.3%)
Hera Spa’s Boar
Ope
reac
millio
170.
perio
The
Euro
2015
achie
In lig
140.
repo
The
rate
reas
year
deve
amo
Net
repo
of 20
Grou
Euro
first
othe
inter
com
Rom
rofits on
%)
st
.2
rd of Directors in
rating profit
hed 170.8
on Euros or 0
1 million Eur
od of 2015.
result of fina
os, an increa
5. This good
eved due to
ght of the ab
7 million Eu
orted in the sa
taxes for the
of 33.3%, a
on for this d
r resulting fro
elopment (2
rtizations (20
profits theref
orted in the fi
016.
up profits ca
os, up 4.6 m
quarter of 2
r things to a
rests mainly
plete acquis
magna Compo
n the meeting o
ts as of M
million Eur
0.4% as com
ros reported
ancial manag
ase of 3.7 m
performance
the repayme
bove, adjuste
uros reporte
ame period o
e first quarte
n improveme
ecrease is m
om the appl
015 Stability
016 stability
fore rose by
rst quarter o
ame to 91.2
illion Euros
2015, thanks
reduction of
y derived fr
sition of Ak
ost.
Her
of 11 may 2016
March 2016
ros, up 0.7
mpared to the
in the same
gement at th
million Euros
e is due both
ent of certain
ed pre-tax p
ed in the fir
of 2016.
er of 2016, a
ent as comp
mainly due to
lication of th
ty Law) as
Law).
4.7% or 4.3
of 2015 to the
2 million
from the
s among
f minority
from the
kron and
ra Group – Cons
6
7
e
e
he end of the
s or 12.6% a
h to lower av
loans as we
profits rose b
st quarter o
amounting to
pared to the
o the benefits
he "patent bo
well as th
3 million Euro
e 96.8 millio
solidated quarte
e first quarte
as compared
erage debt a
ell as the opti
by 4.4 million
of 2015 to t
o 48.4 million
same period
s that will be
ox" and tax
e concessio
os, rising from
n Euros repo
erly report as at
er of 2016 is
d to the sam
and to efficie
imization of c
n Euros, go
the 145.1 m
n Euros, com
d of 2015 (3
e enjoyed in t
credit for re
ons in term
m the 92.5 m
orted in the s
31 march 2016
7
25.7 million
me period of
ncy on rates
cash.
ing from the
million Euros
mprise a tax
34.3%). The
the 2016 tax
esearch and
ms of maxi-
million Euros
same period
6
7
n
f
s
e
s
x
e
x
d
-
s
d
Gin
Nc5
NrE
Approved by H
Group size ncreases
Net invested capital reache5.1 billion Eur
Net investmenise to 68.5 m
Euros
Hera Spa’s Boar
1.01
INES
The
finan
As o
inves
to 3
whol
work
decr
the c
redu
of tra
In th
from
Inves
Serv
Euro
repo
The with
Invesfinan
Net n
Net w
(Prov
Net i
Equit
Long
Net c
Net b
Tota
es ros
nts illion
rd of Directors in
1.02 ANAL
STMENTS
table below
ncing for the
of 31 March
sted capital d
1 Decembe
lly due to a
king capital w
rease due to
core busine
ction due to
ade receivab
e first quarte
4.5 million
stments Fun
vice. Includin
os. Net inves
orted in Marc
following tabthe total amo
sted capital andncing (€/mln)
non-current asse
working capital
visions)
nvested capital
ty
g-term borrowing
cash/short term
borrowings
l sources of fina
n the meeting o
LYSIS OF
w shows cha
period endin
h 2016, the
decreased a
r 2015. The
a positive tr
which, in add
o the season
ss, registere
o the good p
bles.
er of 2016, G
n Euros in
nd (FoNI), as
ng capital gr
stments grew
h 2015 to the
ble shows totount of capit
d sources of
ets
gs
borrowings
ancing
Her
of 11 may 2016
THE GR
anges in the
ng 31 March
amount of
as compared
e change is
rend in net
dition to the
nal nature of
ed a further
performance
Group investm
capital gran
s provided f
rants, the Gr
w by 6.3 m
e 68.5 million
tal investmental grants and
31 Mar 2016
5,509.0
105.0
(512.7)
5,101.3
(2,596.8)
(2,746.5)
242.0
(2,504.5)
(5,101.3)
ra Group – Cons
ROUP'S FI
e Group's n
2016.
ments amou
nts, of whic
or by the ta
roup's overa
million Euros,
n Euros repo
nts includingd separate m
% Inc. 31 D
108.0% 5
2.1%
-10.1% (
100.0% 5
50.9% (2
53.8% (2
-4.7%
49.1% (2
-100.0% (5
solidated quarte
INANCIAL
net invested
nted to 68.5
ch 2.6 millio
riff method f
all investmen
going from
orted in 2016
capital granmention of the
Dec 2015 % I
5,511.3 106
157.0 3.0
513.5) -10
5,154.8 100
2,503.1) 48
2,743.6) 53
91.9 -1.
2,651.7) 51
5,154.8) 100
erly report as at
STRUCTU
capital and
million Euro
on Euros fo
for the Integ
nts came to
m the 62.2 m
6.
nts, subdividee FoNI:
Inc. Abs. chan
6.9% (2.3)
0% (52.0
0.0% +0.8
0.0% (53.5
.6% (93.7
.2% (2.9)
.8% +150.
.4% +147.2
0.0% +53.5
31 march 2016
8
URE AND
d sources of
os, benefiting
or the New
grated Water
73.0 million
million Euros
ed by sector,
nge % Change
(0.0%)
) (33.1%)
(0.2%)
) (1.0%)
) +3.7%
+0.1%
1 +163.3%
2 (5.6%)
5 (1.0%)
6
8
f
g
w
r
n
s
P5E
2in
Ghinosf
Approved by H
Provisions at 512.7 million Euros
2.6 billion Eurn equity
Group headquartersnvestments i
offices, IT systems and leets
Strong commitmentinvestment iplants and infrastructurcontinues
Hera Spa’s Boar
Capi
Euro
quar
inter
infra
were
main
large
the p
inves
the a
At t
build
struc
Marc
As o
than
expe
Equi
Euro
whic
Tota(€/m
Gas
Elec
Wat
Was
Othe
Hea
Tota
Tota
Tota
Cap
Tota
ros
: n
t to n
res
rd of Directors in
ital expendit
os, rose 13
rter of 2
rventions
structures.
e performed
nly concerni
e-scale opera
purification a
stments in e
analyses by b
the Group's
dings, IT sys
ctures. Overa
ch 2015, prev
of March 20
ks to the p
enditures for
ty increased
os as of 31 M
ch equaled 96
al investmentmln)
s area
ctricity area
ter cycle area
ste managem
er services ar
adquarters
al operating in
al financial inv
al gross inves
pital contributio
of which FoNI
al net investm
n the meeting o
ture, amoun
3.9% as co
015 and
on plants
In addition
as required
ng the gas
ation replaci
and sewerag
each single
business are
s headquart
stems and th
all investme
valently in th
16, the fund
provisions fo
use.
d from 2.503
March 2016,
6.8 million E
ts
ment area
rea
nvestments
vestments
stments
ons
(New Investme
ments
Her
of 11 may 2016
nting to 73.
ompared to
mainly c
s, network
, updating
d by new re
s sector, ef
ng meters, a
ge area. Re
area are in
ea.
ters, investm
he vehicle fl
nts in struct
he IT systems
ds totalled 5
or the perio
31 billion Eu
thanks to the
uros.
M
ent Fund)
ra Group – Cons
.0 million
the first
concerned
ks and
activities
egulations
ffecting a
as well as
marks on
cluded in
ments conc
eet, as well
tures rose by
s and work c
12.7 million
od which we
uros as of 3
e contributio
Mar 2016
19.5
3.9
30.1
6.3
2.8
10.5
73.0
0.0
73.0
4.5
2.6
68.5
solidated quarte
cerned inter
as laborato
y 1.0 million
carried out in
Euros, in lin
ere substan
1 Decembe
n made by th
Mar 2015 A
12.7
4.0
30.2
5.3
2.5
9.5
64.1
0.0
64.1
1.9
1.8
62.2
erly report as at
rventions on
ories and rem
n Euros as c
n the corpora
ne with Dec
ntially equiva
r 2015 to 2
he results fo
Abs. Change
+6.8
-0.1
-0.1
+1.0
+0.3
+1.0
+8.9
+0.0
+8.9
+2.6
+0.8
+6.3
31 march 2016
9
n corporate
mote control
compared to
ate offices.
ember 2015
alent to the
.5968 billion
or the period,
% Change
+53.5%
-2.5%
-0.3%
+18.9%
+12.0%
+10.5%
+13.9%
+0.0%
+13.9%
+136.8%
+44.4%
+10.1%
6
9
e
l
o
5
e
n
,
Hera Group – Consolidated quarterly report as at 31 march 2016
Approved by Hera Spa’s Board of Directors in the meeting of 11 may 2016 10
1.01.03 ANALYSIS OF THE GROUP'S FINANCIAL STRUCTURE
Analysis of net financial debt:
Current debt is mainly made up of operations using bank accounts, in the amount of
approximately 40 million Euros, and of instalments of bank loans coming to maturity, in
the amount of approximately 89 million, a decrease as compared to 31 December 2015
as a result of repayment of the 195.4 million Euros bond that occurred in February 2016.
The amount related to non-current bank debt and bonds is prevalently made up of bonds
issued on the European market and listed on the Luxembourg Stock Exchange (77.3% of
the total), with repayment at maturity.
Debt overall shows an average term to maturity of approximately 8.4 years, with 73%
maturing after more than 5 years.
(€/mln) 31 Mar 2016 31 Dec 2015
a Cash and cash equivalents 385 541
b Other current financial receivables 35 35
Current f inancial debt (80) (129)
Current bank debt (89) (285)
Other current f inancial liabilities (7) (68)
Finance lease payments maturing w ithin 12 months (2) (2)
c Current financial debt (178) (484)
d=a+b+c Net current financial debt 242 92
Non-current bank debt and bonds issued (2,850) (2,845)
Other non-current f inancial liabilities (6) (6)
Finance lease payments maturing after 12 months (17) (18)
e Non-current financial debt (2,873) (2,869)
f=d+e Net financial position - CONSOB Communication No 15519 of 28/07/2006 (2,631) (2,777)
g Non-current financial receivables 127 125
h=f+g Net financial debt (2,504) (2,652)
A solid financial position
Hera Group – Consolidated quarterly report as at 31 march 2016
Approved by Hera Spa’s Board of Directors in the meeting of 11 may 2016 11
Net borrowings decreased from the
2,651.7 reported in 2015 to the
2,504.5 reported as of 31 March
2016. This decline, part of which is
physiological and linked to the
seasonal nature of the gas business,
is further enhanced by a good level
of trade receivables.
Net borrowings drop to 2.50 billion Euros
2,62,6
2,7
2,5
Dic 2014 Mar 2015 Dic 2015 Mar 2016
Net Borrowings (€/bln)
Hera Group – Consolidated quarterly report as at 31 march 2016
Approved by Hera Spa’s Board of Directors in the meeting of 11 may 2016 12
1.02 ANALYSIS BY STRATEGIC BUSINESS AREA
An analysis of the results achieved by management in the various business areas in
which the Group operates is provided below, including: the gas area, which covers
services in natural gas and LPG distribution and sales, remote heating and heat
management; the electricity area, which covers services in electricity production,
distribution and sales; the integrated water cycle area, which covers aqueduct,
purification and sewerage services; the waste management area, which covers services
in waste collection, treatment, recovery and disposal; the other services area, which
covers services in public lighting and telecommunications, as well as other minor
services.
The Group's income statements include corporate headquarter costs and reflect
intercompany transactions accounted for at market price.
The following analysis of each single business area take into account all increased
revenues and costs, with no impact on EBITDA, related to the application of IFRIC 12, as
shown in the Group's consolidated income statement. The business areas affected by
IFRIC 12 are: natural gas distribution services, electricity distribution services, all
integrated water cycle services and public lighting services.
46,2%
11,9%
17,9%
22,4%
1,5%
EBITDA March 2016
Gas Electricity Water Waste Manag. Other Services
Contribution coming from the various areas to Group EBITDA highlights a balanced mix, coherent with the Group's multi-business strategy.
Energy areas play a significant role, totalling roughly 58% of EBITDA
Approved by H
Gas: marginin line with thpast
Contributiontotal EBITDAline with the
The EBITDA the gas area increased by
1.3 million gacustomers
Hera Spa’s Boar
1.02
The
same
regu
mod
serv
and
and
The
The
incre
the
chan
com
initia
com
custo
parti
acqu
2015
(€/m
Area
Grou
Perc
ality he
n to A in
past
for
y 0.2%
as
rd of Directors in
2.01 GAS
first quarter
e period of
latory contex
ified the met
ices in the g
predictable r
EBITDA is 3
following tab
number of
eased 0.9%,
first quarter
nge is d
mercial and
atives set in
petition, as
omer base,
cular, tha
uisition of Ale
5.
mln)
a EBITDA
up EBITDA
centage weig
n the meeting o
r of 2016 sh
the last fin
xt in which, i
thod for calc
as sector wa
regulatory fra
3.9 million Eu
ble shows the
gas custom
as compare
r of 2015.
due to
customer lo
place to con
well as a w
in central Ita
anks to
ento Gas in
ht
Her
of 11 may 2016
hows the ga
ancial year.
in 2016, Res
ulating the ra
as first imple
amework. Th
uros for the fi
e changes oc
mers
ed to
This
both
oyalty
ntrast
wider
aly in
the
May
Mar
4
ra Group – Cons
as sector slig
These resu
solution 583/
ate of return
emented, in o
he negative i
rst quarter o
ccurred in te
2016 M
128.7
278.4
46.2%
solidated quarte
ghtly increas
ults should
/2015 / R / c
on invested
order to esta
impact of the
f the year.
rms of EBIT
Mar 2015 Abs
128.4
277.2
46.3%
erly report as at
sed as comp
be understo
com of 02.12
d capital for in
blish a more
e resolution
DA:
s. Change %
+0.3
+1.2
-0.1 p.p.
31 march 2016
13
pared to the
ood within a
2.2015 which
nfrastructure
e transparent
on revenues
% Change
+0.2%
+0.4%
6
3
e
a
h
e
t
s
a
Gov
Approved by H
Reduction involumes sold7.4%
Gas revenuesat 557.9 milliEuros
Gas: increase verall earning
Hera Spa’s Boar
Volu
101.
1,36
of 20
of 20
perfo
and
amo
of to
days
the p
to th
The
Reve
the
millio
2016
Euro
are:
volum
millio
of th
41 m
activ
Euro
trade
redu
n d: -
s ion
in gs
Inco(€/m
Rev
Ope
Pers
Cap
EBIT
rd of Directors in
mes of gas
1 million m3
2.3 million m
015 to 1,261
016. The ma
ormance we
a reduction
unting to 32
otal volumes)
s shows a d
previous yea
e historical a
following tab
enues went
first quarte
on Euros in
6, a decrea
os or -11.7%
a decrea
mes sold o
on Euros, a
he raw mate
million Euros;
vities of app
os due main
ed; and lowe
ction of the W
ome statememln)
venues
erating costs
sonnel costs
pitalised costs
TDA
n the meeting o
s sold decre
3 (7.4%), go
m3 in the firs
1.2 in the firs
ain factors be
ere the mild
n in trading
2.5 million m
). The trend
decrease of
ar and 13% c
average.
ble summaris
from 632.1
r of 2015
the same
ase of 74.
%. The main
ase in nat
of approxim
decrease in
erial of appr
a decrease
proximately
nly to lower
er regulated r
WACC.
nt Ma
5
(3
(
s
1
Her
of 11 may 2016
eased by
oing from
st quarter
rst quarter
ehind this
d climate
volumes,
m3 (-2.6%
in degree
5% over
compared
ses the econ
million in
to 557.9
period of
.2 million
n reasons
tural gas
mately 23
the price
roximately
in trading
6 million
r volumes
revenues in t
ar 2016
557.9
394.1)
(36.8)
1.7
128.7
ra Group – Cons
omic results
the amount o
% Inc. M
-70.6%
-6.6%
0.3%
23.1%
solidated quarte
for this area
of 3.9 million
Mar 2015
632.1
(467.5) -
(37.5)
1.4
128.4 2
erly report as at
a:
n Euros main
% Inc. Abs. c
74.0%
-5.9%
0.2%
20.3%
31 march 2016
14
ly due to the
change % C
-74.2 -
-73.4 -
-0.7
+0.3 +
+0.3
6
4
e
hange
-11.7%
-15.7%
-1.9%
+21.4%
+0.2%
Nin19
Approved by H
Gas EBITDA:128.7 million Euros
Net investmenn the Gas Are9.5 million Eu
Hera Spa’s Boar
The
prop
redu
went
first
Euro
over
Euro
quar
EBIT
quar
volum
by th
heat
the l
millio
In th
the g
reco
as c
prev
was
was
com
554/
631/
repla
class
plant
In th
com
the o
Inves
as w
Bolo
to he
vario
2015
:
nts ea: uros
rd of Directors in
reduction
portionately
ction in ope
t from 467.5
quarter of 20
os in 2016,
rall decreas
os as comp
rter of 2015.
TDA rose by
rter of 2015
mes of sales
he lower cost
ting and hea
ower revenu
on Euros.
he first quart
gas area ca
rding an inc
compared to
ious year.
an increase
mainly drive
pliance purs
/15 (forme
/13) for a
acing meters
s equipment
ts.
e first quarte
pared to the
overall econo
stments grew
well, 1.9 millio
ogna's Barca
eat managem
ous 2016 pro
5.
n the meeting o
in revenu
reflected
erating costs
million Euro
015 to 394.1
thus display
e of 73.4
pared to th
y 0.3 million
to 128.7 mil
s and trading
ts purchasin
at manageme
ues from regu
er of 2016,
ame to 19.5
rease of 6.8
o the same
In gas dist
of 2.7 millio
en by activitie
suant to Legi
erly Legisla
large-scale
s which also
t (G4-G6) a
er of 2016 th
previous yea
omic situation
w by 4.1 milli
on Euros of w
neighbourho
ment, mainly
ojects with t
Her
of 11 may 2016
ues is
in the
, which
os in the
million
ying an
million
he first
n Euros (0.2
llion Euros in
g, in which l
g costs for th
ent service;
ulated servic
investments
million Euro
8 million Eur
period of t
tribution, the
on Euros wh
es of regulato
islative Decr
ative Decr
operation
involves low
and increase
here was a s
ar, although
n.
ion Euros in
which was d
ood in distric
y in Sinergie
the delay of
ra Group – Cons
%), going fr
n the same
ower revenu
he raw mate
this positive
ces as a resu
in
os,
ros
the
ere
ich
ory
ree
ree
of
wer
ed extraordin
light increas
this sector c
the district h
due to the rev
ct heating an
e Spa due to
f some jobs
solidated quarte
rom 128.4 m
period of 20
ues for the v
rial and high
e trend esse
ult of the WA
nary mainten
e in demand
continues to
heating and h
vamping of t
d 2.2 million
o the combin
that occurre
erly report as at
million Euros
016, thanks t
volumes sold
her margins i
entially comp
ACC in the am
nance on ne
d for new con
suffer from t
heat manage
the cogenera
Euros of wh
ned effect o
ed in the firs
31 march 2016
15
s in the first
to the larger
d were offset
n the district
pensated for
mount of 3.9
etworks and
nnections as
the effects of
ement sector
ation plant in
hich was due
f moving up
st quarter of
6
5
t
r
t
t
r
9
d
s
f
r
n
e
p
f
Hera Group – Consolidated quarterly report as at 31 march 2016
Approved by Hera Spa’s Board of Directors in the meeting of 11 may 2016 16
Details of operating investments in the Gas Area are as follows:
Gas(€/mln)
Mar 2016 Mar 2015 Abs. change % Change
Networks and plants 13.3 10.6 +2.7 +25.5%
RH/Heat management 6.1 2.0 +4.1 +205.0%
Total Gas Gross 19.5 12.7 +6.8 +53.5%
Capital contributions 0.0 0.0 +0.0 +0.0%
Total Gas Net 19.5 12.7 +6.8 +53.5%
Investments grow
Approved by H
Electricity: rEBITDA
ContributionGroup EBITD+1.3%
Electricity arEBITDA grew13.3%
862.6 thouselectricity customers
Hera Spa’s Boar
1.02
In th
of p
regu
mod
serv
trans
on re
quar
The
The
custo
of 6.
due
whic
the t
year
reinf
activ
2016
(€/m
Area
Grou
Perc
rise in
n to DA:
rea w by
sand
rd of Directors in
2.02 ELECT
e first quarte
ercentage o
latory contex
ified the met
ices in the
sparent and
evenues and
rter of the yea
following tab
number
omers recor
.7% ( 54.4 th
to growth in
ch came to 1
trend of grow
rs, owing a
forcement
vities, imple
6 as well.
mln)
a EBITDA
up EBITDA
centage weig
n the meeting o
TRICITY
er of 2016, th
of the Group
xt in which, i
thod for calc
electricity se
predictable
d EBITDA fo
ar.
ble shows the
of elect
rded an incr
housand), m
the free ma
3.3%, confir
wth seen in re
above all t
of comme
emented d
ht
Her
of 11 may 2016
he Electricity
p's EBITDA.
in 2016, Res
ulating the ra
ector was fi
regulatory fr
or the WACC
e changes oc
tricity
rease
mainly
arket,
rming
ecent
to a
ercial
uring
Mar
1
ra Group – Cons
y sector grew
These resu
solution 583/
ate of return
irst impleme
ramework. T
C alone com
ccurred in te
2016 M
33.2
278.4
11.9%
solidated quarte
w both in abs
ults should
/2015 / R / c
on invested
ented, in ord
he negative
mes to 0.7 m
rms of EBIT
Mar 2015 A
29.3
277.2
10.6%
erly report as at
solute terms
be understo
com of 02.12
d capital for in
der to estab
impact of th
million Euros
DA:
Abs. change
+3.9
+1.2
+1.3 p.p.
31 march 2016
17
and in terms
ood within a
2.2015 which
nfrastructure
blish a more
he resolution
s for the first
% Chang
+13.3
+0.4
6
7
s
a
h
e
e
n
t
ge
3%
%
Elerev36Eu
EleEB
Approved by H
Volumes solrose by 6.2%
ectricity venues for
62.9 million uros
ctricity: rise ITDA
Hera Spa’s Boar
Volu
from
quar
the s
over
incre
main
com
incre
entit
The
the i
Reve
362.
main
in th
decr
com
decr
of 1
tradi
millio
reve
amo
the r
were
12 m
ener
the o
Ope
reve
Incom(€/mln
Reven
Opera
Perso
Capita
EBITD
ld %
in
rd of Directors in
mes of elec
2,377.9 G
rter of 2015 t
same period
rall increase
ease in sale
nly due to the
mercial ac
ease in vo
ies in Safegu
following ta
ncome state
enues decre
9 million Eu
n reasons of
he price of
reased by
pared to the
rease in sale
9 million E
ng revenue
on Euros,
nues of the
unt of 0.7 m
reduction of
e partly conta
million euros
rgy productio
optimization
rating costs
nues.
me statementn)
nues
ating costs
onnel costs
alised costs
DA
n the meeting o
ctricity sold
GWh in the
to 2,524.2 GW
of 2016, w
e of 6.2%.
es volumes
e strengthen
ctivity and
olumes sol
uarding.
able summa
ment for the
eased by 7.3
ros in the sa
this contract
f electricity
an average
previous ye
es revenues
Euros and a
es in the a
and low
distribution
million Euros
the WACC.
ained thanks
s related to
on revenues
activities car
fell by 34.2
t Mar
36
(31
(1
1
3
Her
of 11 may 2016
went
e first
Wh in
ith an
The
s was
ning of
the
ld to
arises
area:
3%, going fr
ame period
tion are: a dr
(Pun), wh
e of 24%
ear leading to
in the amou
a decrease
amount of
wer regulat
service in t
mainly due
. These effe
s to both high
increased
from power
rried out.
2 million Eu
r 2016 % In
62.9
19.4) -88.0
1.7) -3.2
1.4 0.4
3.2 9.1
ra Group – Cons
rom 391.4 m
of 2016, a d
rop
ich
as
o a
unt
in
27
ted
the
to
cts
her volumes
business ac
r plants due
ros, or 9.7%
nc. Mar 20
39
0% (353
2% (10
4%
1% 2
solidated quarte
million in the
decrease of
sold in the a
ctivity, which
to favorable
%, in propor
015 % Inc.
91.4
3.6) -90.3%
0.0) -2.6%
1.5 0.4%
29.3 7.5%
erly report as at
first quarte
28.5 million
amount of ap
h generates
e market con
rtion to the
Abs. change
-28.5
-34.2
+1.7
-0.1
+3.9
31 march 2016
18
r of 2015 to
Euros. The
pproximately
the largest
nditions, and
decrease in
% Change
-7.3%
-9.7%
+17.0%
-6.7%
+13.3%
6
8
o
e
y
t
d
n
Eleat 3Eur
Approved by H
ectricity EBITD33.2 million ros
Net investmein the ElectriArea: 3.9 milEuros
Hera Spa’s Boar
At th
2016
millio
Euro
of 20
same
highe
activ
the
decr
for
regu
Inves
Euro
millio
year
The
conc
and
surro
Goriz
Com
year
main
plant
this a
As re
millio
Deta
Elet(€/m
Netw
Indu
Tota
Cap
Tota
DA
ents icity llion
rd of Directors in
he end of t
6, the EBIT
on Euros (1
o 29.3 million
015 to 33.2
e period of 2
er margins i
vities, and h
production
rease is par
by lower r
lated distribu
stments in th
o 3.9 million
on Euros in t
r.
interventi
cerned non-r
distribution
ounding Mo
zia.
mpared to the
r, a lowe
ntenance wa
ts, in the am
area as well,
egards indus
on euros com
ails of operat
ricity mln)
works and pla
ustrial cogene
al Electricty G
pital contributio
al Electricity N
n the meeting o
the first qua
TDA rose
13.3%), goin
n in the first
million Euros
2016, thanks
n sales and
igher margin
of electricity
rtially compe
evenues fro
ution service
he electricity
n Euros, as
the first quar
ions imple
routine main
n networks
odena, Imo
e same perio
er amount
s carried ou
mount of 0.4
, connections
strial cogene
mpared to the
ing investme
ants
eration
Gross
ons
Net
Her
of 11 may 2016
arter of
by 3.9
ng from
quarter
s in the
s to the
trading
nality in
y. This
ensated
om the
e in the amou
y area amoun
compared
rter of the pr
emented
ntenance of
s in the
ola, Trieste
od of the pr
of non-r
ut on network
4 million Eu
s showed a s
eration for En
e same perio
ents in the El
ra Group – Cons
unt of 0.7 mil
nted to
to 4.0
revious
mainly
plants
areas
e and
revious
routine
ks and
ros. In
slight increas
nergy Service
od of the prev
ectricity Area
Mar 2016
3.6
0.3
3.9
0.0
3.9
solidated quarte
lion Euros.
se compared
e activities, i
vious year.
a are as follo
Mar 2015
4.0
0.0
4.0
0.0
4.0
erly report as at
d to the previ
interventions
ows:
Abs. change
-0.4
+0.3
-0.1
+0.0
-0.1
31 march 2016
19
ous year.
s rose by 0.3
e % Change
-10.0%
+100.0%
-2.5%
+0.0%
-2.5%
6
9
3
e
Tharby
Approved by H
Integrated WCycle: slight
he water cyclrea EBITDA fey 1.3%
Water Cycle customers amillion
ContributionGroup EBITD0.3%
Hera Spa’s Boar
1.02
In th
same
2016
reso
of re
for th
The
The
as c
2015
orga
Grou
of th
Emil
Hera
serve
rema
serve
Grou
in the
(€/mln
Area E
Group
Percen
Water t drop
le ell
are 1.4
n to DA: -
rd of Directors in
2.03 INTEG
e first quarte
e period of
6 is the first
lution numbe
educing the W
he WACC alo
following are
number of w
compared to
5, confirming
anic growth
up's referenc
e growth con
ia Romagna
a Spa, 15%
ed by Acega
ainder was
ed by the
up, thanks to
e number of
)
EBITDA
EBITDA
ntage weight
n the meeting o
GRATED W
er of 2016, th
2015, both
t year in wh
er 664/2015)
WACC. The
one amounts
e changes oc
water custom
o the first qu
g the trend
seen acro
ce areas. Of
ncerned area
a region man
% referred t
asApsAmga
reported in
Marche Mu
o the slight
connections
Her
of 11 may 2016
WATER CY
he integrated
as a contrib
hich the wa
) was applie
e negative im
s to 4.9 millio
ccurred in te
mers settled a
uarter of
towards
oss the
the 78%
as in the
naged by
to areas
and the
n areas
ultiservizi
increase
s.
Mar 2016
49.8
278.4
17.
ra Group – Cons
CLE
d water cycle
bution to Gro
ter tariff me
d for the pe
mpact of the
on Euros for
rms of EBITD
at 1.4 million,
6 Mar 20
50.5
277
9%
solidated quarte
area record
oup EBITDA
ethod defined
riod 2016-20
resolution on
the first quar
DA:
, increasing b
015 Abs.
5 (
.2 +
18.2%
erly report as at
ded a slight d
A and in abs
d by the AE
019, with the
n revenues a
rter of the ye
by 4.5 thous
change %
(0.7)
+1.2
-0.3 p.p.
31 march 2016
20
drop over the
solute terms.
EEGSI (with
e main effect
and EBITDA
ear.
and (+0.3%)
% Change
(1.3%)
+0.4%
6
0
e
.
h
t
A
)
RInCm
IntCyin
Approved by H
Revenues for ntegrated Wa
Cycle at 179.4million euros
tegrated Watycle: slight drEBITDA
69.8 millionmanaged inaqueduct
Hera Spa’s Boar
The
Volu
2015
activ
equa
inde
The
Reve
millio
as c
2015
in 20
first q
are l
the a
cons
WAC
cove
auth
Euro
conn
Ope
decr
Inco
Rev
Ope
Pers
Cap
EBIT
the ater 4
ter rop
m3 n the
rd of Directors in
main metrics
mes provide
5. Volumes d
vities in the
alisation purs
pendently of
following sum
enues decre
on euros in th
compared to
5, going from
015 to 179.4
quarter of 20
lower revenu
amount of 4
sequence of
CC, despite
er the cos
ority, and lo
os. These e
nections.
rating costs
rease in subc
ome stateme
venues
erating costs
sonnel costs
pitalised costs
TDA
n the meeting o
s for this sec
ed, through t
dispensed, in
geographica
suant to reg
f the volumes
mmarises the
eased by E
he first quart
o the same
m 182.6 mil
4 million Eu
016. The ma
ues from dist
4.9 million eu
f the reducti
higher rev
sts reported
ower revenu
effects are
decreased b
contracted w
nt (€/mln) M
s
Her
of 11 may 2016
ctor are show
the aqueduct
n line with A
al areas in
gulations tha
s distributed.
e income sta
Euro 1.8%
ter of 2016
period of
lion Euros
uros in the
in reasons
tribution in
uros, as a
ion of the
venues to
d by the
es from sub
partially com
by 2.8 million
works linked
Mar 2016
179.4
(94.3)
(35.7)
0.5
49.8
ra Group – Cons
wn below:
t, are substa
AEEGSI reso
which the G
t call for a r
.
atement for t
bcontracted
mpensated
n Euros (2.9
to the curren
% Inc. M
-
-52.6%
-19.9%
0.3%
27.8%
solidated quarte
antially in line
olution 664/2
Group opera
regulated rev
he area:
works in the
for by high
%), mainly d
nt state of p
Mar 2015 %
182.6
(97.1) -53
(35.4) -19
0.5 0
50.5 27
erly report as at
e with the fir
2015, are an
ates and are
venue to be
e amount o
her revenues
due to a 1.3
rogression o
Inc. Abs. ch
- (3.2
3.2% (2.8
9.4% +0.
.3% +0.
7.7% (0.7
31 march 2016
21
rst quarter of
n indicator of
e subject to
e recognised
f 1.3 million
s from new
million Euro
of contracted
ange % Cha
2) (1.8
8) (2.9
.3 +0.8
.0 +0.0
7) (1.3
6
1
f
f
o
d
n
w
o
d
ange
8%)
9%)
8%
0%
3%)
Approved by H
EBITDA rise49.8 million
Investments Water Cycle 25.6 million E
Hera Spa’s Boar
proje
millio
EBIT
millio
millio
2015
perio
distr
decr
of 4.
part
oper
Net
show
inves
30.1
with
Inter
conc
and
addit
conc
sewe
Inves
in th
sewe
Amo
syste
com
in se
inclu
purif
of th
Nord
Requ
com
elect
Capi
tariff
first q
es to Euros
in the Area:
Euros
rd of Directors in
ects, and low
on Euros.
TDA slightly
on Euros (1.3
on Euros in
5 to 49.8 mill
od of 201
ibution reve
rease of the W
9 million Eur
compensa
rating costs.
investments
wing a decre
stments in t
million Euro
the previous
rventions in
cerned exte
network an
tion to regul
cerned abov
erage.
stments tota
he aqueduct
erage and 6.
ong the more
em intercon
plex and sub
ewerage, pr
uding the cre
fication plant
he Idar purifi
dio and Aban
uests for ne
pared to the
tricity areas i
ital grants am
f component
quarter of 20
n the meeting o
wer costs for
y dropped
3%), going fr
the first qu
ion Euro in t
6, due to
nues caused
WACC in the
ros, which ar
ated for by
s in the inte
ease of 2.7 m
this area am
os, substant
s year.
the water cy
ensions, re
nd plant upg
atory upgrad
ve all purific
alled 15.1 mi
t, 8.1 million
9 million Eur
e significant w
nections an
bstantial upg
rogress was
eation of the
was built, an
er in Bologn
no Terme pur
ew water and
e previous y
in the area o
mounted to 4
for the new
015 by 2.7 m
Her
of 11 may 2016
the applicat
by 0.7
rom 50.5
uarter of
the same
o lower
d by the
e amount
re only in
y lower
egrated wate
million Euros
mounted to
tially in line
ycle mainly
eclamations
grading, in
ding, which
cation and
illion Euros
n Euros in
ros in purifica
works, the fo
nd networks
grading of wa
s made in w
Ausa tank; i
nd revampin
na, in additio
rifiers in the
d sewerage
year, confirm
of water servi
4.5 million Eu
w investments
million Euros.
ra Group – Cons
tion of the IF
er cycle are
over the pre
ation.
ollowing are o
and plant
ater network
work on the
n purification
g was carrie
on to continu
territory of A
connections
ming the impr
ice as well.
uros, of whic
s fund (FoNi
solidated quarte
RIC12 princ
a amounted
evious year.
of note: in the
upgrading,
s in the histo
e Rimini Sea
n, the balanc
d out on the
uing with upg
AcegasApsAm
s increased
rovement dis
ch 2.6 millio
) and increa
erly report as at
ciple in the am
d to 25.6 m
Including ca
e aqueduct s
including a
orical centre
awater Prot
cing tank of t
oxygen prod
grading the
mga.
by 0.3 millio
splayed by t
on Euros wer
ased as com
31 march 2016
22
mount of 1.8
illion Euros,
apital grants,
sector, water
particularly
of Bologna;
ection Plan,
the Riccione
duction plant
Servola, Cà
on Euros as
the gas and
re due to the
pared to the
6
2
8
,
,
r
y
;
,
e
t
à
s
d
e
e
Hera Group – Consolidated quarterly report as at 31 march 2016
Approved by Hera Spa’s Board of Directors in the meeting of 11 may 2016 23
Details of operating investments in the integrated water cycle area are as follows:
Water Cycle Area(€/mln)
Mar 2016 Mar 2015 Abs. change % Change
Aqueduct 15.1 14.3 +0.8 +5.6%
Purification 6.9 7.3 -0.4 -5.5%
Sewage 8.1 8.6 -0.5 -5.8%
Total Water Cycle Gross 30.1 30.2 -0.1 -0.3%
Capital contributions 4.5 1.8 +2.7 +150.0%
of which FoNI (New Investment Fund) 2.6 1.8 +0.8 +44.4%
Total Water Cycle Net 25.6 28.3 -2.7 -9.5%
Approved by H
Waste Managemendecreasing EBITDA
Urban Wast+0.2%
Hera Spa’s Boar
1.02
In th
Grou
2015
Belo
The the f
A tragrowRecywast
Urbasepa
(€/m
Are
Gro
Per
Quan
Urba
Mark
Was
Plan
Was
nt:
te:
rd of Directors in
2.04 WAS
e first quarte
up's profitabi
5.
ow are the va
table displayfirst quarter o
ade volume wth (24.0%) ycling and Gte managem
an waste is arate waste,
mln)
ea EBITDA
oup EBITDA
rcentage weig
ntitative data (t
an waste
ket waste
ste marketed
t by-products
ste treated by ty
n the meeting o
STE MANA
er of 2016, th
ility, with an
ariations in E
ys an analysof 2016:
analysis shoin the waste
Geonova acent sector.
in line with tgrowing by 4
ght
housand of ton
ype
Her
of 11 may 2016
AGEMENT
he waste ma
EBITDA dro
BITDA:
sis of the vo
ows a 12.1%e market. Th
cquisitions, w
the first quar4.6%, and m
nnes)
ra Group – Cons
anagement a
opping by 3.
olumes sold
% rise in mahis growth iswhich was a
rter of 2015 ixed waste, f
Mar 201
62.
278.
22.4%
Mar 2016
471.0
581.0
1,052.0
625.7
1,677.7
solidated quarte
rea accounte
.8% compare
and process
arketed wasts the effect a substantial
(0.2%), with falling by 4.3
6 Mar 2015
.4 64.9
.4 277.2
% 23.4%
Mar 2015
470.1
468.7
938.8
647.2
1,586.0
erly report as at
ed for 22.4%
ed to the firs
sed by the G
te, mainly reof the late
l boost to th
a different m3%.
Abs. change
-2.5
+1.2
-1.0 p.p
Abs.Change
+0.9
+112.3
+113.2
-21.5
+91.7
31 march 2016
24
% of the Hera
st quarter of
Group during
esulting from2015 Wastehe industrial
mix between
e % Change
5 -3.8%
2 +0.4%
p.
% Change
+0.2%
+24.0%
+12.1%
-3.3%
+5.8%
6
4
a
f
g
m e l
n
Lathe
+1.0was
Approved by H
andfill use one decline
0 % in sortedted
Hera Spa’s Boar
MaingrewrecoenvirincreareacollepercIt incin thsteadpercthe T
The urbacom
The 2015caseto th
It is and sharacqu
Quan
Urba
Mark
Was
Plan
Was
rd of Directors in
nly on accouw further fromvery percronmental eased flexibias managedection increentage point
creased by ae Marche Mdy growth wentage point
Triveneto.
Hera Group an and specposters/dige
waste treatm5 in the use oe throughout e acquisition
worth mentioorganization
re capital of tuisition, the
ntitative data (t
an waste
ket waste
ste marketed
t by-products
ste treated by ty
n the meeting o
unt of the nem 55.2% to 5centage ebenefits, aslity in plant d by Heraeased by t in the first
almost two peMultiservizi tewith an incrts is still conf
operates in ial waste, wsters and 8 s
ment sector of waste-to-e2015. The la
n of Waste R
oning that thnal - in the sthe Akron cocompany de
housand of ton
ype
Her
of 11 may 2016
ew projects 56.2%. The
entails gres well ascapacity. In
a Spa, soalmost
quarter of 2ercentage po
erritories, whrease by ovfirmed in 201
the full wastwith its mainselection pla
shows a slenergy plantsarger volume
Recycling.
he environmesecond quarompanies, 57ealt with se
nes)
ra Group – Cons
aimed to itshigh
eater an
n the orted
one 2016. oints
hile a ver 3 16 in
te cycle with facilities be
ants.
ight growth s, and a deces handled b
ent sector unrter of last ye7.5% of whiclecting sepa
Mar 2016
471.0
581.0
1,052.0
625.7
1,677.7
solidated quarte
s expansion,
83 treatmeneing: 10 was
as compareline in the usy the selectio
nderwent maear, i.e. the h is held by
arate collecti
Mar 2015
470.1
468.7
938.8
647.2
1,586.0
erly report as at
sorted was
nt and disposste-to-energy
ed to the firsse of landfillson plants are
ajor changesacquisition Herambienteion material
Abs. change
+0.9
+112.3
+113.2
-21.5
+91.7
31 march 2016
25
ste collection
sal plants fory plants, 11
st quarter ofs, as was thee mainly due
s - corporateof the entiree; before thes through a
% Change
+0.2%
+24.0%
+12.1%
-3.3%
+5.8%
6
5
n
r
f e e
e e e a
Approved by H
Waste Managemenslight marginality downturn
235.4 millionEuros in revenues froWaste Managemen
Waste ManagementEBITDA at 62.4 million
Hera Spa’s Boar
chainTriesimprestawherWas
IIn thincrethe fmillioThis volumhygiecoveincreall ofromamoCIP6decr
The resudeliv
The quarperioabso3.8%
Incom(€/mln
Reven
Opera
Perso
Capita
EBITD
nt:
n
om
nt
t
rd of Directors in
n of dedicatste were tranroving integrblished. Morreas Biogas
ste Recycling
he first quarteasing from first three mon euros in
increase ismes handleene revenuerage and ease for spof these offs electricity ng other fa
6/CEC unit reased recog
area operatlt of the spr
vering more c
EBITDA fellrter of 2015 od of 2016, olute terms in%.
me statement n)
nues
ating costs
onnel costs
alised costs
DA
n the meeting o
ted facilitiesnsferred overation, efficiereover, Rom 2015, the
g Group were
ter of 2016, 214.7 millio
months of 20the same 2
s a result ofed, of higues, of extof the ave
pecial/hazardset the lowe
production, actors - fro
price angnition of gree
ting costs roread of sortecollection and
l from 64.9 mto 62.4 milwhich deno
n the amoun
Mar 2
235
(129
(43.
0.6
62.
Her
of 11 may 2016
s. Eventuallyer to Herambency and fu
magna Compbusiness un
e acquired. H
revenues inon euros in 15 to 235.4
2016 period. f the larger
gher urban xtra service erage price dous waste; er revenues
ensuing -om a lower d from a en certificate
ose by 23.1 ed waste cold street clea
million Eurosllion Euros iotes a slighnt of 2.5 mill
2016 % I
5.4
9.7) -55.
.9) -18.
6 0.
.4 26.
ra Group – Cons
y, the wastebiente, and ll control of
post and Henit containingHere is a sum
ncreased by
es in some fa
million Eurollection, whic
aning service
s in the firstin the same
ht decline inion Euros or
Inc. Mar 20
21
1% (106
7% (43
3%
5% 6
solidated quarte
e disposal aHestambientf the WTE perambiente Rg a few Geo
mmary of the
9.6% (equa
acilities.
os in the firsch entails has.
t e
r
015 % Inc
4.7
6.6) -49.6%
3.7) -20.4%
0.5 0.2%
4.9 30.2%
erly report as at
activities for te, a compaplants groupRecovery weo Nova plansector resul
alling 20.7 m
st quarter ofandling more
c. Abs. change
+20.7
% +23.1
% +0.2
% +0.1
% -2.5
31 march 2016
26
Padua andany aimed atp wide, wasere merged,nts, and thets:
illion euros),
f 2016, as ae waste and
e % Change
7 +9.6%
1 +21.7%
2 +0.5%
1 +19.7%
5 -3.9%
6
6
d t s ,
e
,
a d
Approved by H
6.3 million Enet investmein Waste Management
Hera Spa’s Boar
Net iinvolamoEuroThe comincreinvesoffseVolta
The of foin lalandfnew devecomin the
Invesyearenha
As fsameplant
Ope
Was(€/m
Com
Lan
WTE
RS P
Eco
Tran
Tota
Cap
Tota
Euros ents
t
rd of Directors in
investments lve facility munt to 6.3 m
os as compacomposter/dpared to the
ease in stments in et by fewer ana plants du
separation armer Akron indfill investmfill, in additioengine and
elopment wopared to the e first quarte
stments in thr. A slight ancement of
for selection e period lasts (Bologna i
rational inves
ste Managemmln)
mposting/Dige
dfills
E
Plants
logical areas
nsshipment, s
al Waste Man
pital contributio
al Waste Man
n the meeting o
in the Wastemaintenance million Eurosared to the fidigester chaiprevious yethe Sant'Abiomethane interventionsuring 2015.
and biostabiin Tre Monti ments is maon to the Tred for the bioorks. In the
previous yeer of 2015.
he Special Wdrop in mthe cooling t
and transsst year, and in 2015, Sas
stments in th
ment
estors
and gathering
selection and
nagement Gro
ons
nagement Net
Her
of 11 may 2016
e Managemeand upgradi
s, up by 1.1irst quarter oin is more bar. The yearAgata com
activities, ws in the Rim
lization invehave also binly due to te Monti landogas collectiWTE chain,
ear, due to ad
Waste Plant aintenance towers and r
hipment facare offset b
ssuolo and C
he environme
g equipment
other plants
oss
t
ra Group – Cons
ent area ing, and 1 million of 2015. alanced
r saw an mposting which is mini and
stments een accountthe enactmedfill activitieson network,, investmentdditional wor
chain are saffected th
replacement
cilities, invesby minor ope
Cervia in 2016
ent area are
Mar 2016
0.3
3.5
0.6
0.3
1.2
0.6
6.3
0.0
6.3
solidated quarte
ed for. The 2nt of the 9th, providing f as well asts dropped brk on the Pad
ubstantially e Ravennaof the vibrati
tments are erations carr6).
detailed belo
Mar 2015
0.3
1.0
1.3
0.4
1.8
0.5
5.3
0.1
5.2
erly report as at
2.5 million Eh sector in tfor the cons
s for landslidby 0.7 milliodua and Trie
in line with ta plants (sling sieves).
broadly in lried out on
ow:
Abs. Change
+0.0
+2.5
-0.7
-0.1
-0.6
+0.1
+1.0
-0.1
+1.1
31 march 2016
27
uro increasehe Ravennatruction of a
de and roadon Euros aseste systems
the previousudge dryer,
ine with thethe different
e % Change
+0.0%
+250.0%
-53.8%
-25.0%
-33.3%
+20.0%
+18.9%
-100.0%
+21.2%
6
7
e a a d s s
s ,
e t
EOSsrm
Approved by H
Other Services: slight margiincrease
Contributiontotal marginality
EBITDA for Other Services: slightly on therise, up 0.1 million Euros
Lighting poinnumber 525.thousand
Hera Spa’s Boar
1.02
Othe
lighti
In th
com
quar
EBIT
Belo
The
5,00
Marc
Appr
Cesa
Pied
acqu
(€/m
Area
Grou
Perc
Qua
Pub
Ligh
Mun
in
n to
e
nts 4
rd of Directors in
2.05 OTHE
er Services
ing, telecomm
e first quarte
pared to the
rter of 2015 t
TDA variation
ow are the ma
quantitative
00 as well a
ch 2015, app
roximately 3
areo and Ca
mont, where
uisitions have
mln)
a EBITDA
up EBITDA
centage weig
antative data
blic lighting
hting points (th
nicipalities se
n the meeting o
ER SERVIC
refers to th
munications
er of 2016, th
e previous ye
o 4.2 million
ns are detaile
ain indicators
public lighti
s the loss of
proximately 1
30% of thes
ave and ap
eas the rest
e fully offset
ht
housands)
rved
Her
of 11 may 2016
CES
e minor ser
and cemete
he Other Ser
ear: the EBIT
Euros in the
ed below:
s for public li
ing data sho
f 6 municipal
19,000 light
se were in
proximately
t were in a
the decrease
Mar 2
27
1
Mar 20
525.4
151.0
ra Group – Cons
rvices delive
ry services.
rvices area d
TDA increas
e same perio
ighting:
ow an increa
ities. As to li
points were
Lazio, in th
17% in a n
reas handle
e in municipa
016 Mar
4.2
78.4 2
.5%
016 Ma
4 5
0 1
solidated quarte
ered by the
displayed a s
ed from 4.1
d of 2016.
ase in light
ght point ma
acquired in t
he municipal
number of t
ed by Acega
alities.
2015 Abs. C
4.1
277.2
1.5% +
r 2015 A
520.4
57.0
erly report as at
Group, suc
slight increas
million Euro
points in the
anagement, c
the first qua
lities of Fer
towns in Lo
asApsAmga.
Change %
+0.1
+1.2
+0.0 p.p.
Abs. change
+5.0
(6.0)
31 march 2016
28
ch as public
se (4.5%) as
os in the first
e amount of
compared to
rter of 2016.
rentino, San
mbardy and
The above
% Change
+4.5%
+0.4%
% Change
+1.0%
(3.8%)
6
8
c
s
t
f
o
.
n
d
e
e
2inin
Approved by H
Other Servicrevenues in
Revenues foOther Servicequalling 31million Euro
EBITDA groby 0.1 millioEuros
.8 million Eurn net nvestments
Hera Spa’s Boar
The
with
desp
the
Tries
Fune
Aceg
this
reco
incre
posit
telec
The
Euro
of
Aceg
millio
the f
most
perfo
busin
Rom
millio
grow
perim
The
as c
have
Inco(€/m
Reve
Ope
Pers
Cap
EBIT
ces: n line
or ces 1.2 os
ows on
ros
rd of Directors in
area revenu
the pre
pite the late
funeral s
ste Onoranz
ebri ow
gasApsAmga
change, Ot
rded a 0.4
ease, on ac
tive perform
communicatio
EBITDA r
os; net of the
the com
gasApsAmga
on Euro incre
first quarter o
tly connecte
ormance of
ness, espe
magna, whic
on Euro incre
wth trend of
meter.
Other Servic
compared to
e been invest
ome statemenmln)
enues
erating costs
sonnel costs
pitalised costs
TDA
n the meeting o
ues are in lin
evious yea
2015 sale o
service firm
ze e Traspor
wned b
a. Aside from
ther Service
million Eur
ccount of it
mances in p
ons ensuing
rose by 0.1
e aforesaid 2
pany own
a, it recorde
ease as com
of 2015. This
ed with the
the public
ecially in
ch recorded
ease in the f
f Hera Luce
ces investme
the same p
ted in netwo
nt Mar
3
(2
(4
0
4
Her
of 11 may 2016
ne
ar,
of
m
rti
by
m
es
ro
ts
public lighti
from an incr
1 million
2015 sale
ned by
ed a 0.2
mpared to
s trend is
positive
c lighting
Emilia-
d a 0.5
first quarter o
e has fully
ents amount
period of 201
rking and in
r 2016 %
31.2
22.5) -7
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31 march 2016
29
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Hera Group – Consolidated quarterly report as at 31 march 2016
Approved by Hera Spa’s Board of Directors in the meeting of 11 may 2016 31
1.03 STOCK EXCHANGE PERFORMANCE AND INVESTOR RELATIONS
Equity markets were characterized by instability in early 2016. Investors showed an
increased aversion to risk, due to growing concerns over the actual health of the Chinese
economy, over raw material price drops and over potential interest rate rises by the
Federal Reserve. Among the stock lists of the Western countries, Italy recorded the worst
performance, being more exposed to the banking sector. The latter has been penalised
by the bail-in regulatory enforcement, as well as by concerns about the high amount of
non-performing loans to total assets. Only in the second half of the quarter did stock
prices show a partial recovery, driven by the accommodating monetary policy measures
restated by central banks in the March meetings.
In this setting, the Hera share largely outperformed the Italian stock market and its peer
industry index, with a very divergent trend in the first weeks of the year, thanks to the
presentation of the new Strategic Business Plan, which was fully appreciated by the
financial community. As at 31/03/2016, the official share price reached € 2.626 increasing
by 7.5% since the beginning of the year.
The share price rise and the steady distribution of dividends since its listing has brought
the total shareholders' return to settle at + 186.3% at the end of the quarter. Hera Group's
market capitalization amounted to 3.9 billion Euros at the end of the same period; still the
highest in its peer group, it also excelled securities listed in the FTSE MIB index, the main
Italian stock exchange index.
The number of financial analysts covering the share remains unchanged: Banca Akros,
Banca IMI, Equita, Fidentiis, Goldman Sachs, ICBPI, Intermonte, Kepler Cheuvreux,
MainFirst and Mediobanca. At the end of the first quarter of 2016, approvals were still
predominant, with a marked majority of "Buy / Outperform" recommendations; the
consensus target price has been revised upwards - from € 2.77 to € 2.83 - since the
publication of the yearly results.
Hera; +7,5%
FTSE All Share; (14,8%)
Local Utilities; +0,3%
(30,0%)
(25,0%)
(20,0%)
(15,0%)
(10,0%)
(5,0%)
+0,0%
+5,0%
+10,0%
+15,0%
+186.3% total shareholders’ return from IPO
+7.5% Hera share upturn in the first quarter of 2016. Hera overperforms market and reference sector
2.83 € consensus target has been revised upwards since the publication of FY results
Hera Group – Consolidated quarterly report as at 31 march 2016
Approved by Hera Spa’s Board of Directors in the meeting of 11 may 2016 32
Shareholder composition as at 31/03/2016
As of March 31, the company structure shows its standard balance, with 51.9% of shares
held by 118 public shareholders in the reference territories, regulated by a Shareholders'
Agreement, signed on June 26, 2015 and effective for three years. Since 2006, Hera has
adopted a plan to repurchase its own shares; this was extended for a further 18 months
by the Shareholders' meeting on 28 April 2016, with a maximum total amount of 180
million Euros. This plan aims to fund the integration of smaller companies and to
standardise any atypical price fluctuations against the main Italian peer companies. At the
end of the first quarter, Hera held 16.6 million shares in its portfolio.
After the release of the new 2015-2019 Strategic Business Plan, the Hera top
management took part in a road show in the major European and North American
financial centers to present investors the growth targets set by the Group, as well as the
strategy needed to achieve such targets. This intense activity harvested much interest
from institutional investors and was rewarded by the share performance in the reporting
period. The Group's intense commitment to interacting with investors has helped
consolidate its reputation in the markets and is an intangible asset, to the benefit of the
share and of Hera stakeholders.
Flottante; 39,9%
Patto soci privati; 8,2%
Patto soci pubblici; 51,9%
51.9% Public shareholders' agreement share capital
Market contact as intangible asset
Hera Group – Consolidated quarterly report as at 31 march 2016
Approved by Hera Spa’s Board of Directors in the meeting of 11 may 2016 33
1.04 THE REFERENCE SCENARIO AND STRATEGIC APPROACH OF THE
GROUP
Italy's primary public utility service sector is fragmented still today into a large number of
local public enterprises. At present, with the expiry of grants for gas distribution, waste
gathering and street sweeping services and the introduction of new grants defined on a
larger geographical basis (province-wide), a period of competitive tenders is approaching
that will cause serious difficulties for many small enterprises and lead to a reduction in the
number of operators (of which there are currently over 200 in the gas distribution sector,
and over 450 in waste gathering and sweeping services). A very high number of small-
medium sized enterprises also currently operate in the free market waste treatment and
energy sales services sectors. They find themselves operating in rather difficult
conditions due to a progressive rise in competition coming from larger-sized companies.
In this context, the Hera Group is able to propose a model for development that can
respond to upcoming changes thanks to its ability to make the most of scale economies,
and bring together and develop the excellent proficiency that characterize local
enterprises. The "Hera model" was in fact conceived as a widely diversified ownership
framework, regulated by simple governance, which provided the basis for an industrial
and managerial approach to transforming a multitude of "local" enterprises into a single,
integrated system, aimed at reaching a higher degree of efficiency and service quality.
The results were pursued with a view to economic, social and environmental
sustainability, by sharing the economies and synergies derived from a close relationship
with the localities in question and an active collaboration between multiple protagonists,
as stated in the Group’s mission.
This business model has proven its efficiency in both internal and external growth,
constantly attracting other municipalised multi-utility enterprises from bordering
geographical areas. In less than 12 years, following the original model, 22 enterprises
from 4 regions in Central North-Eastern Italy have in fact been integrated, allowing the
Group to reach outstanding national market positions, quadrupling its EBITDA and, more
generally, improving all KPI in socio-environmental sustainability. The model currently
adopted by the Group can be seen as a point of reference for the transformation of the
sector, an issue which is currently on the Government's agenda and under examination
by the regulated services Authority.
The Group's growth strategy, pursued with continuity over the years, has maintained a
perfect balance between regulated and free market activities in its core businesses.
Growth in regulated activities has been achieved both through organic development and
by improving the efficiency of the municipalised enterprises acquired while integrating
them. An expanded customer base and plant system has been achieved by gaining new
market shares and acquiring "mono-business" companies operating in these sectors. This
balanced portfolio mix has ensured an effective expansion of the Group as well as a high
degree of risk diversification.
The reference scenario and the context as regards competition
The Hera Group model on the market
A reproducible model underlies competitiveness
A balanced development of the activity portfolio
Hera Group – Consolidated quarterly report as at 31 march 2016
Approved by Hera Spa’s Board of Directors in the meeting of 11 may 2016 34
Exposure to market risks and competition has been contained through a carefully
considered management of the Group's risk profile and return on activities. This is what
lay behind the choice to expand activities in waste treatment, which are inadequate
across the entire country and necessary for the sustainability of the services offered, and
to focus on commercial development. A further decision in line with this risk adverse
strategy concerns gas procurement with short-term contracts, instead of turning to long-
term supply contracts, which provide more guarantees but are also more exposed to the
risks of demand and price fluctuation.
In Italy, the sector's evolution towards a less fragmentary structure is now supported by a
legislative framework that encourages operators to consolidate. In addition to tenders
issued for some services whose grants have already expired, this will come about thanks
to the introduction of new laws and a reformulation of currently existing ones (i.e. decrees
intended to implement the "Madia" law) concerning local public services and public
administration, aimed at providing incentives for rationalising or transferring shares held
in primary public utility services of general economic interest. This new legislation
represents a break with the past, introducing a series of measures whose goal is to
encourage smaller municipalised enterprises to consolidate, an objective shared by the
recent revision of the tariff systems established by the Authority for Electricity, Gas and
the Water Cycle (hereinafter AEEGSI), providing incentives for enterprises that strive
towards a higher level of efficiency.
This complex context defines the reference scenario for the new business plan to 2019,
presented on 11 January 2016, which calls for continued growth in EBITDA, reaching
over 1 billion Euros by the end of the period in question. This goal will be sustained by the
Group's time-tested development model, which is propelled by two complementary
"motors": organic and external growth.
The first motor, i.e. organic growth, will pursue a form of management geared towards
searching for efficiencies, developing the plant base and the customer portfolio, and
extracting synergies from companies acquired in recent years. These levers will be able
to more than compensate for both the impact of tariff revisions in regulated services as
nationally defined by the AEEGSI, and the reduction in incentives for energy
management from renewable sources.
The second motor of growth, involving external lines, will make the most of tenders
awarded for gas distribution in localities served (based on the level of efficiency already
reached and a presence in the areas subject to tender), as well as the integration of four
multi-utilities in regions in which the Group currently operates. The use of this second
motor is expected to contribute to a rise in EBITDA, as was the case in the past. With its
new business plan, the Group intends to support the development of this sector in Italy,
counting on the knowhow is has accumulated in the past with M&As, and relying on its
own model of governance, open to the entry of new municipalised multi-utilities and their
public shareholders.
Building on the previous business plan, four strategic levers will be activated as regards
the company's organisation and each of its businesses: growth, efficiency, innovation and
excellence. This orientation, which has already proven its validity over the last two years,
is at the root of all main strategic projects envisaged for the next four years.
Organic growth
A "risk adverse" strategy
Future prospects in the sector
The new business plan to 2019
Hera Group – Consolidated quarterly report as at 31 march 2016
Approved by Hera Spa’s Board of Directors in the meeting of 11 may 2016 35
Growth will be fostered by investments expected to total more than 2.2 billion Euros,
accumulated over the duration of the plan. 78% of these investments will be directed
towards regulated assets and maintaining solid asset ratios thanks to the full coverage
guaranteed by cash flow generation coming from operational activities. At the same time,
the Group's current presence in free markets will also be reinforced, in particular by
developing the number of customers in energy sales activities and boosting activities in
waste treatment, by way of an increasingly eco-compatible management.
Objectives for growth in the environment sector are expected to remain in line with
market trends seen in the recent past, with a contribution coming from the acquisitions
finalised in late 2015 of Geo Nova and Waste Recycling, confirming the rationale of
regional expansion and the preference given to plants that are complementary to those
currently possessed by the Group.
In the energy sector, Hera can rely on a customer base with approximately 2.2 million
contracts, and aims at a greater presence in the retail sector, clearly marked by a more
stable and resilient consumption. The objective set for the duration of the Plan is to
increase electricity customers, prolonging the trend seen in recent years and continuing
to benefit from flexible energy commodity procurement sources. The expansion of this
market will be accompanied by continued improvement in service quality, development of
new commercial offers and cross selling opportunities for current customers. In this
business area, Hera will attempt to contain the effects of the increase in competition,
making the most of its present critical mass and market position.
The Group will continue to dedicate close attention to efficiency and synergy extraction,
with a view to not only creating value for its shareholders, but also protecting its own
competitiveness on the market. The Group's multi-utility model, which already guarantees
a `cost to serve' among the best in the sector, represents a competitive advantage in the
search for efficiency, because it allows new organisation and process solutions to
increase their benefits, with the possibility of specific applications in the various
businesses and an improvement in customer satisfaction.
Impetus towards growth will also come from innovation. As confirmation of the importance
that Hera gives to this strategic imperative, an Innovation Management branch was
created in 2014, specifically intended to act as a receptacle for ideas and new
technologies and to propel their implementation across the Group. The Business Plan
includes 51 innovative projects that will not only contribute to developing new lines of
revenue, but will also be responsible for about 10% of the efficiencies foreseen by the
Plan.
Hera intends to confirm its customary strategic framework, which is distinguished by its
excellence, surpassing the quality and efficiency standards the Authority has established
for regulated services, consolidating its leadership in environmental services and
maintaining a level of customer satisfaction among the highest in the sector, all within the
context of sustainable growth and continuous development of intangible assets.
These objectives are matched by a dividend policy of 9 cents per share. This policy can
be considered feasible thanks among other things to the expected cash flow that, in
addition to guaranteeing full coverage of the investment plan, confirms the Group's solid
financial structure.
Efficiency
Innovation
Excellence
Growth
Hera Group – Consolidated quarterly report as at 31 march 2016
Approved by Hera Spa’s Board of Directors in the meeting of 11 may 2016 36
1.05 PERSONNEL STRUCTURE
As of March 2016, Hera Group's permanent employees are 8,432 (consolidated
companies), with the following distribution by role: managers (151), middle managers
(530), clerks (4,482), workers (3,269). This structure has been determined by the
following dynamic: 68 new recruits and -62 exits.
Detailed below are the period dynamics, which essentially result from:
fixed-term contracts turned into open-ended contracts
recruitment of professional profiles that were not present in the Group
entry of 5 executives within the Waste Recycling delta perimeter
The reduced number of workers is offset by the entry of equivalent fixed-term profiles,
who were gradually introduced into open-ended contract consolidation schemes.
31 Mar 2016 31 Dec 2015 Change
Executive Managers 151 146 5
Middle Managers 530 526 4
Clerks 4,482 4,449 33
Workers 3,269 3,305 ‐36
Total 8,432 8,426 6
Resources as of 31st December 2015 8,426
Entries 68
Leaving ‐62
Net flows 6
Resources as of 31st March 2016 8,432
chapter 2
consolidatedFinancial statementsoF the hera Group
Hera Group – Consolidated quarterly report as at 31 march 2016
Approved by Hera Spa’s Board of Directors in the meeting of 11 may 2016 37
2.01 FINANCIAL STATEMENTS
2.01.01 Income Statement
(€/mln) 31 March 2016 31 March 2015 31 December 2015(3 months) (3 months) (12 months)
Revenues 1,235 1,312 4,487
Other operating revenues 74 71 331
Use of raw materials and consumables (609) (702) (2,257)
Service costs (282) (267) (1,132)
Personnel costs (133) (131) (511)
Amortisation, depreciation,provisions (107) (107) (442)
Other operating costs (12) (10) (62)
Capitalised costs 5 4 28
Operating profit 171 170 442
Portion of profits (loss) pertaining to joint ventures and ass 5 5 12
Financial income 29 30 81
Financial expense (60) (65) (227)
Total financial operations (26) (30) (134)
Pre-tax profit 145 140 308
Taxes for the period (48) (48) (114)
Net profit for the period 97 92 194
Attributable to:
Shareholders of the Parent Company 91 86 180
Non-controlling interests 6 6 14
Earnings per share
basic 0.062 0.056 0.123
diluted 0.062 0.056 0.123
Hera Group – Consolidated quarterly report as at 31 march 2016
Approved by Hera Spa’s Board of Directors in the meeting of 11 may 2016 38
2.01.02 Statement financial position
cont.
(€/mln) 31 March 2016 31 December 2015
ASSETS
Non-current assets
Property,plant and equipment 2,010 2,028
Intangible assets 2,902 2,896
Property investments 4 4
Goodw ill 378 378
Equity investments 162 157
Financial assets 127 125
Deferred tax assets 77 73
Financial instruments - derivatives 124 108
Total non-current financial assets 5,784 5,769
Current assets
Inventories 66 116
Trade receivables 1,683 1,533
Current f inancial assets 35 35
Current tax assets 29 29
Other current assets 254 226
Financial instruments - derivatives 31 7
Cash and cash equivalents 385 541
Total current assets 2,483 2,487
TOTAL ASSETS 8,267 8,256
Hera Group – Consolidated quarterly report as at 31 march 2016
Approved by Hera Spa’s Board of Directors in the meeting of 11 may 2016 39
(€/mln) 31-mar-16 31-dic-15
SHAREHOLDERS' EQUITY AND LIABILITIES
Share capital and reserves
Share capital 1,473 1,474
Reserves 882 704
Profit (loss) for the period 91 180
Group equity 2,446 2,358
Non-controlling interests 151 145
Total equity 2,597 2,503
Non-current liabilities
Non-current f inancial liabilities 2,948 2,944
Post-employment benefits 147 148
Provisions for risks and charges 366 365
Deferrred tax liabilities 23 24
Financial instruments - derivatives 49 34
Total non-current liabilities 3,533 3,515
Current liabilities
Current f inancial liabilities 178 484
Trade payables 1,080 1,121
Current tax liabilities 79 26
Other current liabilities 758 585
Financial instruments - derivatives 42 22
Total current liabilities 2,137 2,238
TOTAL LIABILITIES 5,670 5,753
TOTAL EQUITY AND LIABILITIES 8,267 8,256
Hera Group – Consolidated quarterly report as at 31 march 2016
Approved by Hera Spa’s Board of Directors in the meeting of 11 may 2016 40
2.01.03 Cash flow statement
(€/mln) 31-mar-16 31-mar-15
Pre-tax profit 145 140
Adjustment to reconciliate net profit w ith cash flow from operating activities:
Amortisation and impairment of tangible assets 39 40
Amortisation and impairment of intangible assets 45 43
Allocation to provisions 23 25
Effect from valuation w ith the equity method (5) (5)
Financial income / (expense) 31 35
(Capital gain) / loss and other non monetary elements(valuations commodities derivatives included)
(5) -
Change in provisions for risks and charges (8) (5)
Change in provisions for employee benefits (2) (2)
Total cash flow before change in working capital 263 271
(Increase) / Decrease inventory 50 60
(Increase) / Decrease trade receivables (169) (347)
(Increase) / Decrease trade payables (41) (17)
(Increase) / Decrease other current asset/liabilities 149 237
Change in working capital (11) (67)
Interest income and other f inancial income collected 5 5
Interest expense and other f inancial charges paid (52) (57)
Taxes paid - (1)
Cash generated from operating activity (a) 205 151
Investment in tangible assets (21) (16)
Investment in intangible assets (52) (48)
Selling price of tangible and intangible assets(including lease-back transactions)
1 1
(Increase) / Decrease other investment activities (1) 13
Cash generated / (absorbed) by investment activity (b) (73) (50)
Refund and other change in f inancial debt (283) (263)
Fees paid for f inancial leasing (1) (1)
Acquisition of share in consolidated companies - (27)
Dividends distributed to Hera shareholders (1) (3)
Change treasury shares (3) 7
Cash generated / (absorbed) by financing activity (b) (288) (287)
Effect of change in exchange rate on cash (d) - -
Increase / (Decrease) Cash (a+b+c+d) (156) (186)
Cash and cash equivalents at the begining of the period 541 834
Cash and cash equivalents at the end of the period 385 648
Hera Group – Consolidated quarterly report as at 31 march 2016
Approved by Hera Spa’s Board of Directors in the meeting of 11 may 2016 41
2.01.04 Statement of change in equity
(€/mln)Share capital
Reserves
Reserves for derivatives
instruments recognized at fair
value
Reserve actuarial income/(losses)
post-employment benefits
Profit (loss) for
the period
Equity Non-controlling
interestsTotal
Balance at 31 December 2014 1,470 707 (1) (30) 165 2,311 148 2,459
Profit for the period 86 86 6 92
Change treasury shares 3 4 7 7
changes in equity interests (21) (21) (6) (27)
Allocation of 2014 profit :
- allocation to other reserves 135 (135) - -
- allocation to retained earnings 30 (30) - -
Balance at 31 March 2015 1,473 855 (1) (30) 86 2,383 148 2,531
Balance at 31 December 2015 1,474 730 (1) (25) 180 2,358 145 2,503
Profit for the period 91 91 6 97
Change treasury shares (1) (2) (3) (3)
Allocation of 2015 profit :
- allocation to other reserves 172 (172) - -
- allocation to retained earnings 8 (8) - -
Balance at 31 March 2016 1,473 908 (1) (25) 91 2,446 151 2,597
Hera Group – Consolidated quarterly report as at 31 march 2016
Approved by Hera Spa’s Board of Directors in the meeting of 11 may 2016 42
2.02 EXPLANATORY NOTES
Accounting policies and significant accounting estimates
With reference to legislative decree 25/2016, an implementation of Directive 2013/50/EU (Transparency Directive), the
Hera Group, pending application of the Consob’s regulatory jurisdiction, has voluntarily decided to publish the
consolidated three-month report for the period ended 31 March 2016, interim financial statements, as in the past.
The Group further specifies that this decision may be retracted on the basis of changes in regulations, and therefore
must not be understood as binding in the future. When the framework in question reaches completion, the Group intends
to define a policy for managing financial information that will be adopted according to Consob recommendations.
This interim report was not prepared in accordance with IAS 34 - Interim Financial Reporting. The accounting standards
adopted for this report are however the same as those used to prepare the consolidated financial statements for the year
ended 31 December 2015, to which reference is made for further information, in addition to those applicable as of 1
January 2016.
The preparation of this interim report requires estimates and assumptions to be made concerning the value of revenues,
costs, assets and liabilities and disclosures relating to contingent assets and liabilities at the reporting date. If, in future,
such estimates and assumptions, which are based on the management's best judgment, should differ from actual events,
they will be adjusted accordingly in order to give a true representation of the results of operations.
It should also be noted that some measurement methods, particularly the more complex ones, such as detecting any
impairment of non‐current assets, are generally entirely applied only during the preparation of the annual financial
statements, unless there are indications of impairment which require an immediate impairment test.
Income taxes are recognised based on the best estimate of the weighted average rate for the entire financial year.
The disclosures contained in this interim report are comparable with those for prior periods.
Financial statements
The format used for the financial statements is the same as that used for the consolidated financial statements at 31
December 2015. Specifically, the income statement is presented in vertical format, with the individual items analysed by
nature. This presentation, also used by the company's major competitors, is considered consistent with international
practice and is the one that best represents the company's performance.
The statement of financial position shows the distinction between current and non-current assets and liabilities.
The overall income statement is not presented as part of this interim report, due to the non-relevance of its components.
The cash flows statement has been prepared using the indirect method, in accordance with IAS 7.
The financial statements contained in this interim report are expressed in millions of Euros, unless otherwise indicated.
Scope of consolidation
This interim report includes the financial statements of the Parent Company, Hera Spa, and its subsidiaries. Control
exists when the parent company has the power to influence the subsidiary’s variable returns or, when, through exercise
of its currently valid rights it has the ability to direct the subsidiary’s significant activities. Subsidiary companies which are
not significant in size and those in which voting rights are subject to severe long‐term restrictions are excluded from the
scope of line‐by‐line consolidation and are carried at cost.
Hera Group – Consolidated quarterly report as at 31 march 2016
Approved by Hera Spa’s Board of Directors in the meeting of 11 may 2016 43
Investments in joint ventures, which the Group controls jointly with other companies, are accounted for with the equity
method. Also companies on which a significant influence is exercised are accounted for with the equity method.
Investments held for negligible amounts are recognized at cost.
Companies held for sale are excluded from consolidation and measured at their fair value, with the exception of cases in
which fair value cannot be determined accurately, when they are recognized at cost. These investments are recorded as
separate items.
No changes in the scope of consolidation have come about in the first three months of 2016 with respect to the financial
statements for the year ended 31 December 2015.
The list of companies included in the scope of consolidation is available at the end of these explanatory notes.
Other information
These interim financial statements for the three months ended on 31 March 2016 were prepared by the Board of Directors and approved by it during the meeting held on 11 May 2016.
Hera Group – Consolidated quarterly report as at 31 march 2016
Approved by Hera Spa’s Board of Directors in the meeting of 11 may 2016 44
2.03 NET BORROWINGS
(€/mln) 31 Mar 16 31 Dec 15
a Cash and cash equivalents 385 541
b Other current financial receivables 35 35
Current bank debt (80) (129)
Current bank debt (89) (285)
Other current f inancial liabilities (7) (68)
Finance lease payments maturing w ithin 12 months (2) (2)
c Current financial debt (178) (484)
d=a+b+c Net current financial debt 242 92
Non-current bank debt and bonds issued (2,850) (2,845)
Other non-current f inancial liabilities (6) (6)
Finance lease payments maturing after 12 months (17) (18)
e Non-current financial debt (2,873) (2,869)
f=d+e Net borrowings - Consob communication n° 15519 of 28/07/2006 (2,631) (2,777)
g Non-current financial receivables 127 125
h=f+g Net financial debt (2,504) (2,652)
Hera Group – Consolidated quarterly report as at 31 march 2016
Approved by Hera Spa’s Board of Directors in the meeting of 11 may 2016 45
2.04 EQUITY INVESTMENTS
Subsidiaries
Name Registered office Share capital Total interest
direct indirect
Parent Company: Hera Spa Bologna 1,489,538,745
Acantho Spa Imola (BO) 23,573,079 77.36% 77.36%AcegasApsAmga Spa Trieste 284,677,324 100.00% 100.00%AcegasAps Service Srl Padova 180,000 100.00% 100.00%Amga Calore & Impianti Srl Udine 119,000 100.00% 100.00%Amga Energia & Servizi Srl Udine 600,000 100.00% 100.00%ASA Scpa Castelmaggiore (BO) 1,820,000 38.25% 38.25%Biogas 2015 Srl Bologna 1,000,000 75.00% 75.00%Black Sea Technology Company AD Varna (Bulgaria) 15.905.235 Lev 99.97% 99.97%Black Sea Gas Company o.o.d Varna (Bulgaria) 5.000 Lev 99.97% 99.97%Esil Scarl Bologna 10,000 100.00% 100.00%Feronia Srl Finale Emilia (MO) 2,430,000 52.50% 52.50%Frullo Energia Ambiente Srl Bologna 17,139,100 38.25% 38.25%Fucino Gas Srl Luco dei Marsi (AQ) 10,000 100.00% 100.00%HeraAmbiente Spa Bologna 271,648,000 75.00% 75.00%Herambiente Servizi Industriali Srl Bologna 1,748,472 75.00% 75.00%Hera Comm Srl Imola (BO) 53,536,987 100.00% 100.00%Hera Comm Marche Srl Urbino (PU) 1,977,332 72.01% 72.01%Hera Luce Srl San Mauro Pascoli (FC) 1,000,000 100.00% 100.00%Hera Servizi Energia Srl Forlì 1,110,430 57.89% 57.89%Hera Trading Srl Trieste 22,600,000 100.00% 100.00%HestAmbiente Srl Trieste 1,010,000 82.50% 82.50%Insigna Srl Padova 10,000 100.00% 100.00%Marche Multiservizi Spa Pesaro 13,484,242 49.59% 49.59%Medea Spa Sassari 4,500,000 100.00% 100.00%New eco Srl Santa Croce sull'Arno (PI) 100,000 75.00% 75.00%Rew Trasporti Srl Santa Croce sull'Arno (PI) 99,000 75.00% 75.00%Rila Gas EAD Sofia (Bulgaria) 32.891.000 Lev 100.00% 100.00%SiGas d.o.o Pozega (Serbia) 162.260.058 Rsd 95.78% 95.78%Sinergie Spa Padova 11,168,284 100.00% 100.00%Sviluppo Ambiente Toscana Srl Bologna 10,000 95.00% 3.75% 98.75%Tri-Generazione Srl Padova 100,000 70.00% 70.00%Uniflotte Srl Bologna 2,254,177 97.00% 97.00%Waste Recycling Spa Santa Croce sull'Arno (PI) 1,100,000 75.00% 75.00%
Jointly Controlled Companies
Name Registered office Share capital Total interest
direct indirectEnomondo Srl Faenza (RA) 14,000,000 37.50% 37.50%Estenergy Spa Trieste 1,718,096 51.00% 51.00%
Associated Companies
Name Registered office Share capital Total interest
direct indirectAimag Spa* Mirandola (MO) 78,027,681 25.00% 25.00%Ghirlandina Solare Srl Concordia Sulla Secchia (MO) 60,000 33.00% 33.00%Q.Thermo Srl Firenze 10,000 39.50% 39.50%Set Spa Milano 120,000 39.00% 39.00%So.Sel Spa Modena 240,240 26.00% 26.00%Sgr Servizi Spa Rimini 5,982,262 29.61% 29.61%Tamarete Energia Srl Ortona (CH) 3,600,000 40.00% 40.00%
* The Company's share capital is composed of € 67.577.681 of ordinary shares and € 10.450.000 of related shares
% held
% held
% held
2015Consolidated and SeparateFinancial Statements
Hera S.p.A.Registered Offi ce: Viale C. Berti Pichat 2/4 - 40127 Bolognaphone: +39 051.28.71.11 fax: +39 051.28.75.25
www.gruppohera.it
Share capital Euro 1.489.538.745 fully paid upTax code/VAT and Bologna Business Reg. no. 04245520376
HERA GROUP CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 2015