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Summary Financial Statements

SUMMARY CONSOLIDATED INCOME STATEMENT
(million euros) 2011
2010(1)
Sales revenues  6,096 5,923
Other operating income 102 118
Total revenues 6,198 6,041
Operating costs -4,698 -4,447
Labour costs -558 -554
Gross profit from operations (EBITDA) 942 1,040
 * Energy  336 441
      - Electricity (Italy) 252 321
      - Electricity (EPCG) -10 38
      - Gas 94 82
 * Cogeneration and District Heating 85 70
 * Environment 287 262
 * Networks 259 298
      - Electricity distribution (Italy) 136 153
      - Electricity distribution (EPCG) 6 22
      - Gas distribution 104 107
      - Water and other activities 13 17
 * Corporate and other services -25 -31
Depreciation, Amortisation and Writedowns -641 -542
Net operating income (EBIT) 301 498
Net financial charges -123 -132
Affiliates -132 28
Other non-operating income (costs) -4 -1
Income before taxes 42 393
Income taxes -148 -158
Profit (Loss) from continuing operations net of taxes -106 235
Net result from non-current assets held for sale -810 -39
Net profit -916 196
Minorities 496 112
GROUP NET PROFIT FOR THE YEAR -420 308
(1) The comparative figures for period January-December 2010 for Affiliates have been reclassified to reflect the implementation of IFRS 5.

The annual report of the A2A Group at December 31, 2011 has been prepared in accordance with the International Financial Reporting Standards (IAS/I FRS) issued by the International Accounting Standard Board (IASB) and approved by the European Union.

Revenues of the A2A Group amounted to 6,198 million euros, up by around 3% compared to the year 2010.

The gross operating margin of the year equalled 942 million euros, a reduction of 98 million euros (-9.4%) compared to the previous year. This decrease can essentially be attributed to the performance of the subsidiary EPCG, which was specifically affected by a massive reduction in the production of hydroelectricity (-56%) due to an exceptionally dry season.
The industrial profitability is confirmed by the positive performance of the Environment business (specifically in the waste-to-energy sector) and the Cogeneration and District Heating business (a significant increase in the customers served in the city of Milan).

The amortization and depreciation, write-downs and provisions amount to a total of 641 million euros (542 million euros at 31 December 2010). The increase can mainly be attributed to the write-down of goodwill attributed to the EPCG Group for 94 million euros, which had an impact on the consolidated income statement of the A2A Group, after deducting the Minorities, of 41 million euros, and also write-downs relative to the Aspem Group and the Ecodeco Group, partially offset by the reduction of the amortizations and depreciations for the year.
Due to the events mentioned above the net operating income equalled 301 million euros, compared to 498 million euros at 31 December 2010.

The net financial charges amounted to 123 million euros (132 million euros at 31 December 2010). The improvement can be attributed to the positive trend of the fair values of financial derivatives to cover rate risk and the considerable reduction in the average debt (approximately -300 million euros), effects that were partially compensated by the increase in the average cost of money.

Affiliates are negative by 132 million euros, whereas in 2010 the result was positive for 28 million euros. The item includes the effects (negative for 123 million euros) of the writedown of the shareholding that A2A S.p.A. holds directly in Edipower S.p.A. (20%) carried out on the basis of a survey conducted in the context of the acquisition of 70% of the shareholding in Edipower S.p.A. by the subsidiary company Delmi S.p.A.. The item in question also includes the effects of the results of the assessments of the shareholdings held in Acsm-Agam S.p.A., PremiumGas S.p.A, Dolomiti Energia S.p.A. and Ergosud S.p.A..  

Other non-operating expenses and income amount to a total of 4 million euros at 31 December 2011 (1 million euros at 31 December 2010).
Income taxes
in the year in question equalled 148 million euros (158 million euros at 31 December 2010) and are affected both by the general increase in the rate of the socalled “Robin Hood tax”, raised from 6.5% to 10.5% for the three-year period 2011- 2013, and the expanded perimeter of the companies subject to the same additional tax, with activities concerning the distribution of gas and electricity, which were previously excluded, also becoming taxable from 2011. The rate of Regional Tax on Production (IRAP) also increased during the year, rising to 4.20% compared to 3.90% in the previous year for companies holding concessions other than those for construction and motorway and tunnel management.

The net result from non-current assets held for sale, negative for 810 million euros (negative for 39 million euros at 31 December 2010), mainly includes the write-down of the shareholding in Transalpina di Energia S.r.l., held by Delmi S.p.A., for 847 million euros. The impact of the write-down on the A2A Group’s income statement, net of the Minorities share, equalled 433 million euros.
This shareholding was assessed taking into overall consideration the agreements signed between A2A, Delmi, EDF and Alpiq on last 15 February which provide for the disposal by Delmi of 50% of Transalpina di Energia at the price of 704 million euros and the acquisition by Delmi from Edison and Alpiq of 70% of Edipower at the price of 804 million euros. The item in question includes the positive contribution relative to the transfers of the shareholdings in Metroweb S.p.A. and CESI calculated net of the costs incurred for the transaction.At 31 December 2010 this item was negative for 39 million euros and included the writedown of the shareholding held in Transalpina di Energia S.r.l. adjusted by the capital gains generated by the transfer of 5.16% of the company Alpiq Holding AG. Net of the Minorities share, the item was positive for 88 million euros.

The Group net profit for the year, after the Minorities were deducted, was negative for 420 million euros (positive for 308 million euros at 31 December 2010).

NON RECURRING AND EXTRAORDINARY ITEMS
(million euros) 2011 2010
ADJUSTED NET PROFIT 168 243
write-down of fixed assets -59 -9
EPCG goodwill -94  
   of which minorities 53  
net effect EPCG goodwill -41  
other write-downs -24 -9
lower taxes 6  
write-down of associates -568 -138
Edipower -123  
net effect of TdE -433 -132
other -13 -6
Total non-recurring and extraordinary items -627 -147
capital gains 39 212
Metroweb 39  
Alpiq   212
TOTAL -588 65
NET PROFIT -420 308

The net profit for the year, after deducting capital gains for the disposals of assets (39 million euros) and the net write-downs (627 million euros) primarily relative to the agreements connected to the shareholding reorganization of Edison, amounted to 168 million euros (243 million euros in 2010).

2011 REVENUES 
(million euros) 
Sales and distribution of electricity 3,344
Sales and distribution of gas 1,560
Sales of heat 207
Sales and distribution of water  45
Sales of certificates and emission allowances 99
Connection contributions 33
Services to costumers 802
Revenues from long-term contracts 8
Other operating income  100
TOTAL REVENUES  6,198
2011 LABOUR COSTS
(million euros) 
Wages and salaries 366
Social security charges 137
Severance indemnities 22
Other costs 33
TOTAL LABOUR COSTS 558

The labour costs, net of capitalized charges, equalled 558 million euros (554 million euros at 31 December 2010).

CAPITAL EMPLOYED AND SOURCES OF FINANCING  
(million euros) 31.12.2011 31.12.2010
Net fixed capital 5,846 7,911
Tangible assets 4,685 4,872
Intangible assets 1,503 1,552
Shareholdings and other non-current financial assets (1) 535 2,423
Other non-current assets/liabilities (1) -133 -137
Deferred tax liabilities -10 -63
Provisions for risks, charges and liabilities for landfills -462 -460
Employee benefits -272 -276
 - of which with contra-entry in equity -112 -118
Working capital 850 763
Inventories 267 239
Trade receivables and other current assets (1) 2,368 2,416
Trade payables and other current liabilities (1) -1,790 -1,854
Current tax assets/tax liabilities 5 -38
 - of which with contra-entry in equity -8 3
Assets/liabilities available for sale (1) 918 64
 - of which with contra-entry in equity - -
TOTAL CAPITAL EMPLOYED 7,614 8,738
SOURCES OF FUNDS    
Equity 3,593 4,845
Total financial position beyond one year 3,729 3,635
Total financial position within one year 292 258
Total net financial position 4,021 3,893
 - of which with contra-entry in equity -32 -41
TOTAL SOURCES 7,614 8,738
(1) Net of balances included in net financial position.

The consolidated net employed capital, at 31 December 2011, comes to 7,614 million euros and is covered by the Net Equity for 3,593 million euros (of which 826 million euros referred to Minorities) and the net financial debt for 4,021 million euros.

The net working capital, equal to 850 million euros, is up by 87 million euros compared to 31 December 2010 and is mainly affected by the increase in tax credits for around 120 million euros that are expected to be reabsorbed in the current year.

The net fixed assets, including the “Assets/ Liabilities held for sale”, equals 6,764 million euros (-1,211 million euros). The decrease can mainly be attributed to the assessment of the shareholding held in the company Transalpina di Energia S.r.l., and the write-downs of some assets relative to the EPCG Group, the Aspem Group and the Ecodeco Group.

The net financial position equalled 4,021 million euros at 31 December 2011. The increase of 128 million euros can be attributed to the positive generation of cash flow for 401 million euros, revenue of 79 million euros from disposals, investment costs and dividends respectively equal to 310 and 298 million euros.

Outlook for the year 2012

The finalization of agreements on the shareholding reorganization relative to Edison will make it possible to significantly expand, in the second half of the year, the perimeter of the activities managed by the A2A Group in the electricity generation sector with the consequent increase of the Gross Operating Margin. The Group net profit, which was affected in the year in question by the extraordinary transactions described above, will return to show the positive values associated with ordinary operations.

SUMMARY CONSOLIDATED BALANCE SHEET
   
(million euros)
31.12.2011 31.12.2010
ASSETS    
NON-CURRENT ASSETS    
Tangible assets 4,685 4,872
Intangible assets 1,503 1,552
Shareholdings carried according to equity method 521 2,411
Other non-current financial assets 48 40
Other non-current assets 132 113
Total non-current assets 6,889 8,988
CURRENT ASSETS  
Inventories 267 239
Trade receivables 1,958 2,141
Other current assets 410 275
Current financial assets 233 56
Current taxes assets 30 18
Cash and cash equivalents 147 132
Total current assets 3,045 2,861
Non-current assets held for sale 921 82
TOTAL ASSETS 10,855 11,931
EQUITY AND LIABILITIES  
EQUITY    
Share capital 1,629 1,629
Treasury shares -61 -61
Reserves 1,619 1,625
Net profit for the year -420 308
Equity pertaining to the Group 2,767 3,501
Minority interests 826 1,344
Total equity 3,593 4,845
LIABILITIES    
NON-CURRENT LIABILITIES    
Non-current financial liabilities 3,851 3,736
Deferred tax liabilities 10 63
Employee benefits 272 276
Provisions for risks, charges and liabilities for landfills 462 460
Other non-current liabilities 177 177
Total non-current liabilities 4,772 4,712
CURRENT LIABILITIES    
Trade payables  1,348 1,450
Other current liabilities 442 404
Current financial liabilities 675 448
Tax liabilities 25 56
Total current liabilities 2,490 2,358
Total liabilities 7,262 7,070
Liabilities associated to non-current assets held for sale - 16
TOTAL EQUITY AND LIABILITIES 10,855 11,931
CHANGES IN CONSOLIDATED NET FINANCIAL POSITION  
(million euros)
31.12.2011 31.12.2010
Net financial position at the beginning of the year  -3,893 -4,644
Contribution related to EPCG net financial position  - 56
Net income for the year (including minorities)(1) -951 -26
Depreciation and amortization  415 427
Write-downs and disposals of fixed assets  125 23
Result from affiliates  979 231
Shareholdings write-downs 4 5
Net taxes paid -240 -69
Changes in assets and liabilities(2)  78 252
Cash flow from operating activities  410 843
Cash flow from investment activities  -225 60
Free cash flow  185 903
Dividends paid by the parent company  -298 -217
Dividends paid by the subsidiaries  -6 -28
Cash flow from distribution of dividends  -304 -245
Changes in financial assets/liabilities with contra-entry in equity  -9 37
CLOSING NET FINANCIAL POSITION  -4,021 -3,893
(1) Net of capital gains from shareholding disposals (2) Net of balances with contra-entry in equity

2011 dividends

In consideration of the priority goal to reduce the debt ratio, the Management Board proposed to the shareholder’s Meeting to distribute an ordinary dividend per share equal to 0.013 euro, to be paid on June 21 2012 (June 18 2012 - ex dividend date).
On May 29 2012, the Shareholders’ Meeting approved the proposal.

Scope of consolidation

The annual report of the A2A Group at 31 December 2011 includes the figures of the parent company A2A S.p.A. and those of its subsidiaries in which A2A S.p.A., directly or indirectly, holds a majority of the voting rights that can be exercised at ordinary shareholders’ meetings.
Also consolidated , according to the equity method, are joint ventures and those companies over which the parent company exercises a considerable influence (associates). In particular, among the strategic shareholdings, EPCG is consolidated line by line.

Changes in the scope of consolidation

Your attention is drawn to the completion of the sale of BAS S.I.I S.p.A on December 23,2011; at year-end was reclassified to “Non-current assets held for sale”.

RELEVANT SHAREHOLDINGS
  Ownership
(%)
Book value
(mln €)(1)
Delmi 51.0 476.9
EPCG 43.7 376.0
Edipower 20.0 290.0 (2)
Dolomiti Energia 7.9 62.4
ACSM-AGAM 21.9 31.6
(1) Book values on A2A Consolidated and Separate Financial Statements at 31 December, 2011 (2) on the basis of the new independent valuation (100% fair value equal to 1,450 million euros), conducted in the context of the acquisition of 70% Edipower by the subsidiary company Delmi S.p.A.

 

Bonds issued by A2A

The bonds of A2A Group denominated in euro are listed below

Euro Bond 2016

  • The seven-year bond has a nominal value of 1 billion euros and pays an annual fixed-rate coupon of 4.5%.

  • The bond ratings are the same as A2A ratings at the issue date.

  • On 27 October 2009 A2A issued a bond that was placed on the international Eurobond market and listed on the Luxembourg Bond Market.

 

ISSUE QUANTITY
(EUR)
ANNUAL
COUPON
ISSUE
DATE (1)
MATURITY
DATE (2) 
% ISSUE
PRICE
RATING
1,000,000,000 4.5% 02.11.2009 02.11.2016 99.255 - S&P: BBB+, Credit
Watch Negative
- Moody's: A3, Stable

Euro Bond 2014

 

  • On 28 May 2004 was issued a bond that was listed on the Luxembourg Bond Market.

  • The issue has a nominal value of 500 million euros and is made up of bearer bonds with a nominal value of 100,000 euros. It has a ten-year maturity and pays an annual fixed-rate coupon of 4.875%.

  • The bond rating is the same as at the issue date.


ISSUE QUANTITY (EUR)
ANNUAL COUPON ISSUE DATE (1) MATURITY DATE (2) % ISSUE PRICE RATING
500,000,000 4.875% 28.05.2004 28.05.2014 99.304 S&P: A+ 

 

Euro Bond 2013

 

  • On 17 October 2003 was issued a bond that was placed on the international Eurobond market and listed on the Luxembourg Bond Market.

  • The ten-year bond has a nominal value of 500 million euros and pays an annual fixed-rate coupon of 4.875%.

  • The bond rating is the same as at the issue date.


ISSUE QUANTITY (EUR) ANNUAL COUPON ISSUE DATE (1) MATURITY DATE (2)  % ISSUE PRICE RATING
500,000,000 4.875% 30/10/2003 30/10/2013 99.767 S&P: BBB 

Please for more details refer to Bonds Information Prospectus that can be downloaded to A2A Investor Relations website, Bonds section.

(1) Date from which interest is paid.
(2) Last date on which interest accrues.

DEBT STRUCTURE AND MATURITY AT 31 DECEMBER 2011
Debt items  (million euros) Accounting balance 31.12.2011  Portions maturing  within 12 months  Portions maturing beyond 12 months  Portion maturing in
31.12.2013 31.12.2014 31.12.2015 31.12.2016 Beyond
Bonds 2,186  -    2,186 505 513  -    1,069 99
Due to other providers of finance 266 43 223 22  -    19 18 164
Finance lease payables 23 10 13 5 4 1 1 2
Financial payables to related parties 2 2  -     -     -     -     -     -   
Bank loans 2,049 620 1,429 606 183 97 72 471
TOTAL 4,526 675 3,851 1,138 700 117 1,160 736