Press release

 

Trieste, 11 November 2009:  Today the Board of Directors of AcegasAps, under the chairmanship of Massimo Paniccia, reviewed and approved the Group’s results in the first nine months of 2009 (9M09).

In 9M09 the AcegasAps Group’s net revenues increased by € 10.1 million (mn) (+3.0%), rising from € 337.2 mn in the same period in 2008 (9M08) to € 347.4 mn in 9M09. Underpinning this growth we point out the significant growth of revenues in the Gas Division, with a total increase of € 10 mn, involving both sales and distribution activities. As regards the latter, growth – totalling € +5.5 mn – was mainly due to the new tariff structure introduced by the Italian Electricity & Gas Authority’s resolution ARG/gas 159/08.

 

EBITDA grew from € 66.2 mn to € 67.4 mn, thus increasing by 1.7% YoY. Going into greater detail, EBITDA for the Waste Management Division ended 9M09 with an increase of € 0.4 mn (from € 25.6 mn to € 26.0 mn). The increase was primarily attributable to the Padua WTE (waste-to-energy) plant, which in 9M09 reduced the number of maintenance stoppage days and increased its electricity output by 15% vs. 9M08.

 

The Power Division suffered a decrease of € 1.1 mn in EBITDA, which was down from € 9.9 mn in 9M08 to € 8.8 mn in 9M09. The main cause of this reduction was due to a decrease in generation operations (€ -0.6 mn) and, in particular, to the significant reduction of volume generated by the Elettrogorizia power station (50 GWh in 9M09 vs. 60 GWh in 9M08). This in turn was due to shrinkage of electricity demand at sufficiently remunerative prices. Sales activity was down (€ -0.4 mn) mainly because of decreasing volume (588 GWh in 9M09 vs. 630 GWh in 9M08).

 

EBITDA of the Gas Division grew from € 15.6 mn to € 21.9 mn, with an increase of € 6.3 mn. The increase was due both to the distribution segment (€ +5.2 mn) and to free-market activities (€ +1.8 mn). More specifically, the increase of distribution revenues related to application of the new tariff structure (resolution ARG/Gas 159/08). If the tariff system previously in force had been applied, revenues would have been aligned with those of 9M08. As regards volume, the quantities distributed decreased overall from 314 Mcm (million cubic metres) to 293 Mcm (-6.9%), while quantities sold decreased from 284 Mcm to 266 Mcm (-6.2%) mainly because of lower consumption in the industrial sector.

 

EBITDA of the Services Division increased by € 0.4 mn, rising from € 9.4 mn to € 9.8 mn. The Sinergie subsidiary progressed slightly (€ +0.1 mn) while the other services remained flat or grew slightly.

 

Lastly, EBITDA of the Integrated Water Management Division was down, declining from   € 24.2 mn to € 22.7 mn, with a decrease of € 1.4 mn caused by the combined effect of a volume downturn (40.5 Mcm distributed in 9M09 vs. 41.5 Mcm in 9M08) and higher operating and overhead costs.

 

Net provisions in 9M09 amounted to € 0.8 mn. Among the main effects justifying this change, it has to stated that, in the period in question, € 3 mn of the provision relating to any controversies concerning the Ponte San Nicolò landfill site was released while € 0.5 mn of this provision was used to pay what was owed to the parties in the suit who had accepted the transaction settlements proposed. In addition, provisions of € 2.7 mn were made mainly relating to disputes concerning the ordinary and extraordinary subsidised temporary lay-off system. Depreciation & amortisation and write-downs increased by € 0.6 mn, rising from € 36.3 mn to € 36.9 mn, because of higher depreciation stemming from investments made.

 

EBIT in 9M09 amounted to € 31.3 mn vs. € 29.4 mn in 9M08. There was thus an increase of € 1.9 mn (+6.5%). There was also improvement in the Group’s operating efficiency, which in 9M09 operated with an EBIT margin on sales of 9.0% vs. 8.7% in 9M08.

 

Financial costs decreased from € 15.2 mn in 9M08 to € 12.8 mn in 9M09 (of which € 4.1 mn attributable to the tax moratorium. The major reduction was mainly due to the Group’s financial structure, 92% of which is variable-rate, and to the tangible decrease of base interest rates

 

Income taxes increased, rising from € 5.6 mn in 9M08 to € 15.6 mn in 9M09 (€ +10.1 mn), of which € 5.9 mn ascribable to the effect of clawback of the so-called “tax moratorium”. It should also be pointed out that the period of comparison, i.e. 9M08, benefited from discharge of € 2.3 mn of deferred taxes.

 

Net profit attributable to equity holders of the parent company amounted to € 3.2 mn vs. € 10.7 mn in 9M08. Without the non-recurring impact of the so-called “tax moratorium”, net profit would have totalled € 12.0mn, corresponding to growth of € 1.9 mn (+18.7%) vs. 9M08.

 

As regards investments, in 9M09 the parent company undertook capital expenditure of         € 77.8 mn vs. € 54.5 mn in 9M08. The most significant investment consisted of the third line of the Padua WTE plant, which has reached a cumulative total of € 66.3 mn out of the projected total of € 99.8 mn. The trend of the net financial position reflects the increase in financial requirements caused by the major entity of investments undertaken by the Group. As at 30 September 2009 the net financial position showed net debt of € -408.6 mn, with an increase of € 93.2 mn vs. 31 December 2008.

 

In October AcegasAps received the notifications of tax assessments issued by the Italian Inland Revenue department concerning tax years 1997-1999 following the coming into force of Italian Decree Law 135/2009 concerning “government aid”, declared incompatible with the common market in the EC Commission’s decision of June 2002. AcegasAps has paid the assessments relating to the years 1997, 1998 and 1999 which, between principal and interest, amounted to a total of € 10 mn

 

On 4 November 2009, having successfully completed the checks required concerning the need to obtain any approvals pursuant to Bulgarian law, AcegasAps SpA completed purchase of the remaining 48% of RilaGas AD, a company based in Sofia (Bulgaria), already 52% owned by AcegasAps and founded in 2006 to perform works for the creation of a natural gas network in the Zapad region in Bulgaria. The deal was completed for a total amount of € 5.3 mn. It is expected that RilaGas, which benefits from a 35-year concession, when fully on-stream will generate EBITDA of approximately € 12 mn set against total investments of approximately € 120 mn.

 

In November two committed lines of credit were agreed with leading banks for a total amount of € 40 mn.

 

The first months of 2009 featured a second quarter affected by the very recessionary climate and a third quarter showing significant recovery. From a business standpoint the results achieved were in line with our expectations and – as regards the whole of 2009 – operating margins are expected to be in line with those of 2008. Net profit, however, will be tangibly lower due to the effect of the one-off impact produced by the so-called “tax moratorium” which has an impact on the Group’s income statement of € 8.9 mn.

 

More generally, among significant factors that may affect the Group’s possible evolution, we must point out the changing legislative framework – particularly as regards Italian Decree Law 135/2009, currently under discussion in Parliament. This envisages maintenance of so-called in-house providing, on condition that the public-administration stake is gradually reduced to a level not exceeding 30%. Other factors are the adverse macroeconomic conditions, which, notwithstanding some signs of recovery, will inevitably have consequences also on heavily regulated activities.

 

On the investment front, AcegasAps is undertaking a challenging investment plan, which, during 2009, has weighed down the Group’s net financial position. In this situation, management has taken some measures that, together with (a) cash flows generated by the start of full operation of investments made in the last two years (in particular the third line of the Padua WTE plant and the foreign assets) and (b) the benefits of some measures taken to rationalise and curb overhead costs, are designed to optimise the Group’s financial structure and exposure.

 

We also inform the public that, during its meeting today, the Board of Directors of AcegasAps co-opted, according to the approach established in the company by-laws, Paolo Polidori to replace Santi Terranova, who resigned from office in October due to the onset of personal commitments.