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Summary of results, assets and liabilities and financial position

The results of the A2A Group for the year ended December 31, 2011 are set out below together with comparative figures for the previous year:

Millions of euro 01 01 2011 01 01 2010 Changes
  12 31 2011 12 31 2010  
Revenues 6,198 6,041 157
of which:      
Revenues from the sales of goods and services 6,096 5,923 173
Other operating income 102 118 (16)
Operating expenses (4,698) (4,447) (251)
Labor costs (558) (554) (4)
Gross operating income 942 1,040 (98)
Depreciation and amortisation (415) (427) 12
Provisions and write-downs (226) (115) (111)
Net operating income 301 498 (197)
Net financial expense (123) (132) 9
Share of results of companies at equity (132) 28 (160)
Other non-operating income 6 - 6
Other non-operating expenses (10) (1) (9)
Income before tax 42 393 (351)
Income taxes (148) (158) 10
Income from current operations, net of tax (106) 235 (341)
Net result from non-current assets sold or held for sale (810) (39) (771)
Minorities 496 112 384
Group net profit for the year (420) 308 (728)

The Group earned revenues totaling 6,198 million euro in 2011, of which 265 million euro relates to the EPCG Group (6,041 million euro in the previous year, of which 298 million euro relates to the EPCG Group).

 

Revenues from sales and services amounted to 6,096 million euro while other operating income totaled 102 million euro.
The key quantitative data contributing to the formation of these revenues were as follows:

  12/31/2011 12/31/10
Electricity sold to wholesale and retail customers (GWh) 23,646 20,177
Electricity sold on the Power Exchange (GWh) 13,203 17,177
Electricity sold on foreign markets (GWh) 11,994 8,932
Electricity sold (GWh) - EPCG 4,720 4,682
Gas sold to wholesale and retail customers (Mmc) 4,005 4,194
Heat sold (GWht) 2,874 3,038
Electricity distributed (GWh) 11,489 11,375
Electricity distributed (GWh) - EPCG 2,564 2,516
Gas distributed (Mcm) 2,011 2,255
Water distributed (Mcm) 69 69
Water purified (Mcm) 40 41
Waste disposed of (Kton) 2,626 2,763

Sales mainly arose from the following quantities produced by the plants managed by the Group:

  12/31/2011 12/31/2010
Thermoelectric production (GWh) 8,210 9,039
Thermoelectric production (GWh) - EPCG 1,452 1,272
Hydroelectric production (GWh) 3,525 3,830
Hydroelectric production (GWh) - EPCG 1,204 2,749
Heat production (GWht) 2,478 2,569
Electricity produced by cogeneration (GWh) 602 574
Electricity sold from waste to energy and biogas plants (GWh) 1,209 1,179

Gross operating income for the year amounted to 942 million euro, a decrease of 98 million euro over the previous year.

 

The following table sets out changes in gross operating income by business area.

Milioni di euro 12/31/2011 12/31/2010
Energy Sector 336 441
- electricity 242 359
- gas 94 82
Heat and Services Sector 85 70
Environment Sector 287 262
Networks Sector 259 298
Other Services and Corporate Sector (25) (31)
Total 942 1,040

 

The Energy Sector  saw a decrease in margins compared to the previous year: the reduction in the results in the electricity division was partially offset by the rise in margins in the gas division.

Excluding the contribution made by the Montenegro subsidiary EPCG, the gross operating income of the electricity division  decreased by 69 million euro compared to the previous year. This fall was mainly due to a contraction of the margins in the sale of electricity and the reduced contribution of the valuation of the excess environmental certificates.

The contribution of EPCG’s electricity sector in the year fell by 48 million euro over 2010.

This decrease is mainly due to lower hydroelectric production in 2011 and the resulting increase in the quantity of imported electricity, in a market scenario characterized by increasing prices, as well as to the delay in the adjustment to end customer sales tariffs for the rise in provisioning costs.

In the gas division, the provisioning strategy, aimed at taking the opportunity arising from a market situation characterized by an excess supply of gas on the wholesale markets, more than offset the unfavorable effects of the energy scenario on the changes relating to the purchase and sales contract indexing formulae and the fall in volumes sold, due also to an especially mild season. The result of the division was 12 million euro higher than that of the previous year.

The gross operating income of the Heat and Services Sector amounted to 85 million euro compared to 70 million euro in the previous year. The rise of 15 million euro was mainly due to commercial development in the District Heating Section and the good performance of the Plant Management Section. These positive effects were only partially offset by those arising from the mild weather.

The gross operating income of the Environment Sector amounted to 287 million euro (262 million euro in the year ended December 31, 2010). This result is mainly due to the good economic performance of the waste to energy plants managed by the Group and the increased revenues from the sale of electricity produced by these plants.

The fall in margins in the Networks Sector for the activities carried out in Italy is due to the Electricity Distribution Section, which in 2010 benefited from settlements arising from the “company specific equalization mechanism”.

The decrease in margins in the Networks Section of the EPCG Group was on the other hand mainly due to the reduction in distribution tariffs approved by the local regulator in April 2011.

Depreciation, amortization and write-downs amounted in total to 641 million euro (542 million euro in the year ended December 31, 2010). The increase is mainly due to the writedown of the goodwill allocated to the EPCG Group for 94 million euro, whose effect on the Group’s consolidated income was 41 million euro after deducting minority interests, and to certain write-downs of the Aspem Group and the Ecodeco Group, partially offset by a decrease in depreciation and amortization for the year.

As a result of these changes net operating income amounted to 301 million euro, compared to 498 million euro for the year ended December 31, 2010.

Financial expense, net amounted to 123 million euro (132 million euro in the year ended December 31, 2010). This improvement is due to the positive change in the fair value of financial derivative contracts hedging interest rate risk and the significant fall in average debt (-300 million euro approximately), effects which were partially offset by the rise in the average cost of borrowing.

The share of results of companies accounted for at equity amounted to a loss of 132 million euro compared to a profit of 28 million euro for the year ended December 31, 2010. This item includes the negative effect of 123 million euro arising from the valuation of the investment held by A2A S.p.A. directly in Edipower S.p.A. (20%), made on the basis of an appraisal carried out as part of the operation for the acquisition of 70% of Edipower S.p.A. by the subsidiary Delmi S.p.A..

This item also includes the effects of the valuation of the investments in Acsm-Agam S.p.A., PremiumGas S.p.A, Dolomiti Energia S.p.A. and Ergosud S.p.A..

Other non-operating income and expenses totaled 4 million euro in the year ended December 31, 2011 (1 million euro in the year ended December 31, 2010) and relates to costs incurred by the EPCG Group.

Income taxes amounted to 148 million euro (158 million euro for the year ended December 31, 2010), a charge affected by a general increase in the rate of the “Robin Hood” tax from 6.5% to 10.5% for the period from 2011 to 2013 and the extension to the scope of the companies liable to pay the additional tax, with the previously excluded electricity and gas distribution activities included from 2011. In addition, the IRAP regional production tax rate increased from 3.90% to 4.20% for companies acting as concessionaires, other than those involved in the construction and management of motorways and tunnels.

Net income from non-current assets sold or held for sale, which totaled negative 810 million euro (negative 39 million euro for the year ended December 31, 2010), mainly includes the writedown by 847 million euro of the investment in Transalpina di Energia S.r.l., held by Delmi S.p.A..

Excluding the minorities’ share, this write-down had an effect of 433 million euro on the income statement of the A2A Group.

The valuation of this investment was made by considering as a whole the agreements signed on 15 February last by A2A S.p.A., Delmi S.p.A., EDF S.A. and Alpiq S.A.; these provide for the sale by Delmi S.p.A. of 50% of Transalpina di Energia S.r.l. at a price of 704 million euro and the purchase by Delmi S.p.A. from Edison S.p.A. and from Alpiq S.A. of 70% of Edipower S.p.A. at a price of 804 million euro.

The item also includes the positive contribution arising from the sale of the investments in Metroweb S.p.A. and CESI, recognized net of the costs incurred for the transaction.

This item amounted to negative 39 million euro in the year ended December 31, 2010 and consisted of the write-down of the investment Transalpina di Energia S.r.l., adjusted by the gain arising on the sale of the investment of 5.16% in Alpiq Holding AG. Excluding minority interest, this item was positive for 88 million euro.

After deducting the net income attributable to minority interests, the net income attributable to the Group for the year amounted to a loss of 420 million euro (profit of 308 million euro for the year ended December 31, 2010).

Excluding capital gains on the sale of assets and the write-down of investments and intangible and tangible assets, net income for the year amounted to a profit of 168 million euro.