Net debt

Net debt was a negative 2,325.8 million euros as at 31 December 2011, marking an increase of 122.1 million euros compared to 31 December 2010.

The breakdown is shown in the following table:

CONSOLIDATED NET DEBT      
(€ million) 31.12.2011  (a) 31.12.2010   (b) Increase/ (decrease (a) - (b)
Non-current financial assets/(liabilities) 1.9 10.2 (8.3)
Intercompany non-current financial assets/(liabilities) 18.0 5.0 13.0
Non-current borrowings and financial liabilities (2,298.9) (2,490.7) 191.8
Medium/long-term borrowings (2,279.0) (2,475.5) 196.5
Cash and cash equivalents and securities 321.1 297.8 23.3
Short-term bank borrowing (448.9) (208.8) (240.1)
Current financial assets/(liabilities) (26.8) (87.8) 61.0
Intercompany current financial assets/(liabilities) 107.7 270.6 (162.9)
Net short-term debt (46.9) 271.8 (318.7)
Total net debt (2,325.8) (2,203.7) (122.1)

The dissolution of the JV with GDF SUEZ Energia Italia significantly affected the result of the financial exposure of the ACEA Group.

The overall impact of the operation on consolidated net debt, stands at 208.5 million, including the cash-ins and cash-outs set out in the Framework Agreement: the amount also includes the effects of minimum temporary adjustments and does not include the non-financial items that were equalised (other debt like). 

More specifically, the deconsolidation of transferred companies decreased net debt by a total of 366.5 million euros; conversely, the consolidation of additional shareholdings acquired led to a 151.5 million euros increase in the Group's debt. This is in addition to the ACEA’s net outlay of 8.2 million euros and net receivables deriving from minimum temporary adjustments of 1.7 million euros.

Excluding the effect described above, growth of 330.6 million euros is recorded, of which 37.5 million euros refers to the change in the basis of consolidation caused by Acquedotto del Fiora.

The difference of 187.2 million euros mainly derives from covering the need due to dividends distributed (126.2 million euros), for investments in the PV area and in waste-to-energy, the payment of 11 million euros as an advance on the purchase of the site and implementation of the redundancy scheme, which involved outgoings of 14.5 million euros in 2011.

The individual components break down as follows.

Medium/long-term borrowings are composed of:

  • non-current financial assets / (liabilities) amounting to 1.9 million euros, which fell by 8.3 million euros with respect to 2010, mainly due to the deconsolidation of Tirreno Power’s VAT credit,
  • intercompany financial assets / (liabilities) of 18 million euros, and include financial receivables due from Roma Capitale relating to plant upgrades in terms of safety and legislation and new constructions as set out in the addendum to the Public Lighting contract, carried out in 2011. This receivable relates to the long-term portion deriving from application of the financial method as per IFRIC 12 regarding concession arrangements.
    As at 31 December 2010, the balance of 5 million euros included loans granted to Group companies and the balance was reduced to zero as a result of the different basis of consolidation.
  • Non-current borrowings and financial liabilities amounted to 2,298.9 million euros, including the fair value of hedging instruments for a positive 11.1 million euros.The table below shows the breakdown of the item net of the fair value of hedging instruments.
€ millions 31.12.2011 31.12.2010 Increase/ (Decrease)
Bonds 988.7 978.7 9.9
Medium/long–term loans 1,310.3 1,509.2 (198.9)
Medium/long–term loans from third parties 0.0 2.8 (2.8)
Total 2,298.9 2,490.7 (191.8)

The reduction of 191.8 million euros in non-current borrowings and financial liabilities is mainly linked to the change in the basis of consolidation.

The breakdown of non-current financial liabilities is shown below, including fair values per Industrial Area:

Industrial Area 31/12/2011 31/12/2010 Increase/ (Decrease)
ACEA 1,784.4 1,788.3 (3.9)
Networks 363.7 378.6 (14.9)
Energy 0.0 191.2 (191.2)
Water 144.5 124.8 19.7
Environment 6.3 7.8 (1.6)
TOTAL 2,298.9 2,490.7 (191.8)

Medium/long term component

Bonds

Bonds equal 988.7 million euros and include the instruments already existing at the end of the previous accounting year, in particular:

  • 303.2 million euros refer to the bond loan issued by ACEA in 2004, with interest of 6.5 million euros accrued in the period,
  • 517.3 million euros (including the accrual of accrued interest due) due to the bond loan issued by ACEA in March 2010 with a 10-year duration and maturity term on 16 March 2020,
  • 200 million euros relating to the Private Placement which, net of the fair value of the hedging instrument, a positive 34.7 million euros, amounts to 165.3 million euros. As at 31 December 2011, this fair value was allocated to a specific shareholders’ equity reserve. The exchange rate difference, a negative 15.5 million euros, of the hedged instrument calculated at 31 December 2011 was therefore allocated to an exchangeprovision. The exchange rate as at 31 December 2011 stood at 100.20, whilst it stood at 108.65 as at 31 December 2010; various fluctuations were recorded during the year: in March it was 117.61, 116.25 in June and 103.79 in September.
  • 2.8 million euros regarding the issue of the bond loan issued by Consorcio Agua Azul.

Medium/long-term loans and receivables 

The item at 31 December 2010 included medium–long term loans and the related hedges stipulated with the companies being transferred, such as Tirreno Power (for 144.1 million euros), Voghera Energia (for 43.5 million euros) and Longano Eolica (for 2.6 million euros). As a result of the proportionate consolidation of the Company Acquedotto del Fiora, the medium–long term loans of the ACEA Group grew by 6.7 million euros.

The following table shows medium/long–term borrowings by term to maturity and type of interest rate:

Bank Loans: TOTAL RESIDUAL
DEBT
DUE BY
 31.12.2012
FROM 31.12.2012
TO 31.12.2016
DUE AFTER 31.12.2016
fixed rate 411.9 40.1 89.6 282.3
floating rate 706.2 33.2 564.7 108.3
floating rate to fixed rate 266.5 1.1 66.2 199.2
Total 1,384.6 74.4 720.5 589.8

Medium/long–term loans from third parties

At 31 December 2011, medium/long–term loans from third parties are completely eliminated, as a consequence of the dissolution.

Short - term component

As at 31 December 2011, the short-term debt was negative, and contributed to the increase of 46.9 million euros in net debt. With respect to 31 December 2010, a decrease of 318.6 million euros was recorded, caused by:

  • an increase of 23.3 million euros in cash and cash equivalents,
  • growth in short-term bank debt of 240.1 million euros due to the increase registered by ACEA (190.4 million euros), which stipulated new lines of bank credit, debt contributed by the proportionate consolidation of Acquedotto del Fiora (34.7 million euros) and the growth of the Acea Energia Group (8 million euros),
  • the reduction of 61 million euros in the balance of current financial liabilities as a result of the change in the basis of consolidation, with particular reference to companies transferred (down 91.6 million euros), partially offset by the increase in payables deriving from the consolidation of greater equity investments acquired for total payables of 26.8 million euros;
  • reduced intercompany current financial assets (162.9 million euros) due to the changed basis of consolidation connected with the termination of the joint venture with GDF SUEZ Energia Italia. In fact, at the closing date, the shareholder loans granted by ACEA to Roselectra and Voghera (which amounted to 33.7 million euros at 31 December 2010) and AceaElectrabel Trading (for 1 million euros) were settled, as well as the inter-company current account balances with the Parent Company that, at the end of 2010, equalled 18.1 million euros. ACEA loans and receivables from Roma Capitale for the management of public lighting were recorded under said item (114.7 million euros).

The performance of debt in the individual Industrial Areas is summarised in the table below:

Industrial Area 31/12/2011 31/12/2010 Increase/ (Decrease)
ACEA 389.6 306.6 82.9
Networks 853.8 759.7 94.1
Energy 229.9 412.9 (183.0)
Water 633.8 523.7 110.2
Environment 218.7 200.8 18.0
TOTAL 2,325.9 2,203.7 122.2

Networks Industrial Area 

Net debt in the period came to 853.8 million euros, an increase of 94 million euros over the end of the previous year as a result of the following macro events: increase in receivables due from the municipality of Rome for the public lighting service, increase in ACEA Distribuzione receivables and higher requirement in relation to the purchase of Arse's photovoltaic panels.

Energy Industrial Area 

Net debt for the period amounts to 229.9 million euros and is down by 183 million euros compared to the end of the previous year, due to the dissolution of the joint venture with GDF SUEZ Energia Italia;; the financial exposure of the companies transferred as at 31 December 2010 amounted to 313.9 million euros

The total impact of the operation on the Area’s net debt at the closing date was 202 million euros, including the cash-in set forth in the Framework Agreement: this amount partially includes the effects of the adjustments, currently being defined, and does not include non-financial items subject to equalisation (other debt like).

Water Industrial Area (including therein the Engineering and Services Department) 

The Management of Water Services in Italy closed the year with a level of net debt equal to 626.5 million euros: the 108 million euros increase over the end of the previous year is mainly a result of the consolidation of Acquedotto del Fiora, which contributed 37.5 million euros in debt. The remaining part of the increase is due to 67.7 million euros from ACEA Ato2 (need generated by investments and distribution of dividends in 2010) and 17.3 million euros in investments made by Acque.

The net debt of overseas companies was zero, falling by 1.7 million euros compared to the end of the previous year, mainly due to Aguazul Bogotà.

So, overall, the area's debt came to 633.8 million euros and grew by 110.2 million euros over the end of the previous year. The increase is broken down as follows:

  • Management of water services in Lazio and Campania + 60.0 million euros
  • Management of water services in Tuscany and Umbria + 47.9 million euros
  • Management of Overseas Water Services - 1.7 million euros
  • Engineering and services + 3.9 million euros

Environment Industrial Area 

Net debt for the period amounts to 218.7 million euros and is up by 18 million euros compared to the end of the previous year, mainly due to the requirement resulting from the construction of the second and third lines of the San Vittore plant.

Interest expense accrued during the year on the medium/long-term line of 9.1 million euros, including 2 million euros capitalised on the I, II and III lines of the San Vittore plant.

Corporate 

Net debt in the period totalled 389.6 million euros, up by 82.9 million euros due to: i) dividends of 95.8 million euros distributed during the year relating to 2010 and 30.4 million euros for the 2011 advance, ii) payment of the advance for the site purchase for 11 million euros, iii) payment of the expenses relating to redundancy procedures of 2.9 million euros and (iv) payment of instalments due in respect of the tax settlement for a total of 13.4 million euros.