Economic performance

The table below shows the main impact of the change in the consolidation scope at 31 December 2023 (gross of intercompany adjustments). For more details, see the paragraph “Main changes in the consolidation scope”.

As at 31 December 2023, revenue from sales and services amounted to € 4,430.3 million, a decrease of € 526.9 million (-10.6%) compared to the previous year. This decrease is attributable to lower revenues from sales and services of electricity (-€ 667.5 million) and gas (-€ 27.4 million) due to the increase in unit prices seen in 2022, as well as lower quantities and lower revenues from managing the electricity incentive payment (GRIN) due to different scheduling for GRIN incentives by the GSE (-€ 5.0 million). This change was offset by:

• greater revenue from waste disposal and landfill operations (+€ 50.3 million), almost entirely attributable to the change in the scope of consolidation (+€ 62.7 million), partially offset by lower revenue from energy sales due to both price trends and lower volumes (-€ 9.0 million) and lower revenue from contributions from the Compost supply chain (-€ 4.0 million);
• greater revenue from the Integrated Water Service (€ 36.0 million), partially due to greater investments and partially to the effects of the increase in tariff revenue, also influenced by the biennial tariff update for 2022-2023 as well as the estimate for adjustments for pass-through items (electricity, wholesale water, etc.);
• greater revenue from customer services (+€ 18.8 million), in part deriving from the change in contract work in progress for energy efficiency projects (+€ 32.6 million), in part offset by the negative change in inventories linked to multi-year contracts (-€ 11.5 million) and lower revenue realised in relation to the public lighting contract with the Municipality of Rome (-€ 6.2 million);
• greater revenues from sustainable development (+€ 62.0 million) deriving from sales, installation and customer services in the context of energy efficiency projects, smart services and smart comp.

Other revenue shows an increase of € 38.1 million (21.0%) compared to the previous year. The change mainly derived from: i) greater contingent assets (+€ 20.5 million), for the most part recognised following the allocation of energy items relative to previous years; ii) greater reimbursements for damages and penalties (+€ 8.9 million), in part attributable to Acea Energia (+€ 7.6 million) due to the increase in indemnities for the Cmor component and to areti (+€ 2.3 million), associated with settlements finalised with suppliers; iii) greater revenue from Gori due to the recognition of contributions for Regional Works for the years 2018-2021 (+€ 5.4 million); iv) greater revenues from the IFRIC 12 margin (+€ 3.1 million) following greater investments; v) lower energy account contributions (-€ 3.7 million), mainly following the deconsolidation of the photovoltaic companies.External costs decreased overall by € 617.6 million (-17.4%) compared to 31 December 2022. The change is due to the reduction in costs associated with electricity and gas procured on the free market and the gradual protection market (-€ 721.3 million) in line with that seen in revenues and lower recognition of contingent liabilities (-€ 11.3 million), for the most part associated with the recognition of the items relative to 2020 in the previous year, recognised in a lower amount, at the time of the biennial update of the tariff structure 2020-2023, particularly with reference to the “RCARC” component, partially compensated by greater contingencies in relation to the allocation of energy items relative to previous years. This reduction was offset by the increase:

• in costs for services and contract work (+€ 95.4 million), in large part linked to energy efficiency and smart services projects (+€ 73.5 million), in line with that recognised in revenues, in costs for disposal and transport of sludge, slag, ash and waste (+€ 7.1 million) and greater costs for Cmor indemnities (+€ 7.9 million). A generalised reduction in other spending items offset this increase, including lower technical and administrative services (-€ 7.5 million), advertising and sponsorship costs (-€ 5.0 million) and lower maintenance fees (-€ 4.5 million). The change in the scope of consolidation impacted the item for a total of +€ 33.9 million;
• costs to purchase materials (+€ 5.0 million), influenced for the most part by the change in the scope (+€ 2.9 million);
• costs for compensation for damages (+€ 3.0 million for areti deriving from indemnities to clients and losses on lapsed credits.

The cost of labour rose by € 29.4 million (+9.6%) with respect to the previous year, partially influenced by the change in scope (+€ 20.2 million), as well as the increase in salaries and wages deriving from the incremental effect on payment components and the changes in national collective labour contracts.

The average number of employees was 10,348 and increased by 137 compared to the previous year, owing mainly to the change in scope (78 employees)

The net income/(expense) from commodity risk management shows a net balance. The previous years it included net income on hedging derivatives closed in the period, in line with IFRS 9.

Income from equity investments of a non-financial nature represents the consolidated result according to the equity method included among the components forming the consolidated EBITDA of the strategic companies.

Income from equity investments for these companies fell by € 13.6 million, mainly due to greater amortisation/depreciation.

EBITDA rose from € 1,305.0 million at 31 December 2022 to € 1,390.9 million at 31 December 2023, recording an increase of € 85.9 million or 6.6%. EBITDA net of the change in scope (€ 18.6 million) and non-recurring items for 2022 (€ 20.0 million), for the most part involving sales of CO2 rights after resolution no. 66/22 (€ 11.1 million) and the write down on plants subject to revamping (€ 9.1 million) resulted in growth of 6.9% (€ 87.0 million). The change is therefore due to the following counterbalancing effects:

• lower margins for WTEs due in part to the energy situation (-€ 4.6 million) and in part due to lower amounts of energy sold (-€ 0.4 million);
• lower margins from composting activity (-€ 5.2 million), TBM and landfill (-€ 4.0 million) and recycling (-€ 4.0 million) consequent to lower tariffs and lower quantities;
• lower margins from hydroelectric and thermoelectric production (-€ 22.0 million), mainly impacted by the price effect (-€ 46.0 million) and partially offset by greater quantities (+€ 24.0 million);
• higher margins from the increase in water tariff revenue, relative to non-pass-through items (+€ 37.0 million), in part influenced by the biennial tariff update for 2022-2023;
• the recognition by Gori of contributions for Regional Works for the years 2018-2021 (+€ 5.3 million);
• lower margins from energy balancing (+€ 16.1 million) and management of the public lighting service in the Municipality of Rome (+€ 3.0 million) following extraordinary maintenance and safety activities and extraordinary items relative to previous years;
• an increase in the margin on sales of electricity and gas on the free market (respectively +€ 27.5 million and +€ 29.6 million), offset by the reduction in the energy margin on the protected market (-€ 13.9 million) and the margin from energy management activities (-€ 24.5 million);
• an increase in margins for added value services (+€ 8.1 million), in relation work done in the energy efficiency area.
  EBIT amounted to € 612,3 million and increased by € 46.5 million compared to the previous year. Below are details of the items influencing EBIT.

The increase in amortisation and impairment (+ € 57.2 million) is mainly linked to natural growth in amortisation for regulated business, for the most part in the “Water” segment, as a consequence of greater investments, of assets in progress beginning to be utilised and, in part, growth in amortisation relative to commissioning costs to acquire new Acea Energia customers (+€ 6.2 million). The change in the scope of consolidation accounted for € 13.6 million of the increase, due to effects following the acquisition of the “Polo Cirsu” business unit (+€ 6.1 million) and the consolidation at the end of 2022 of ASM Terni (+€ 5.2 million) and Tecnoservizi (+€ 2.4 million).

Net write-downs (write-backs) of trade receivables declined with respect to the previous year, both in terms of absolute value (-€ 26.9 million) and in terms of impact on Group consolidated revenues (1.9% vs. 2.2%). Beyond the excellent amounts collected by the main companies, this result can be attributed to the following reasons: with reference to the Commercial B.U. (-€ 12.0 million), the reduction in volumes invoiced as a consequence of commercial policies to break up risk and trends in commodities prices; for the “Water” segment (-€ 13.8 million), the combination of i) business growth ii) the favourable resolution of certain credit settlements of significant amount by Acea Ato2, iii) the presence of a non-recurring extraordinary component for Gori in 2022 (settlement with EIC [Campania Water Authority]) for previous items equal to around +€ 5.6 million. Finally, as in previous periods, the “stress scenario” introduced in 2022 for the main Group companies was substantially maintained, intended to anticipate potential issues with customer standing not identifiable from current performance but based on satellite models utilising macroeconomic e-business information.

Provisions and releases for risks and charges were up with respect to the previous year (+€ 9.1 million). The change is due to greater provisioning by Acea Ato2, mainly linked to a payment injunction from the Lazio Region with reference to a request to recognise greater concession fees relative to the period prior to 2011 (+€ 5.6 million), areti for various provisioning including former Enel shift workers, the Arera Cmor proceedings, the Arera complaint for residence change charges (+€ 5.0 million), Acea Innovation (+€ 2.7 million) in relation to ecobonus disputes, Cavallari (+€ 2.2 million), mainly for provisioning for the notice of findings deriving from the audit carried out by the Labour Inspectorate with reference to social security contributions and Acea Energia for the release of the provision allocated for the AGCM penalty following the ruling with which the Lazio Regional Administrative Court annulled the provision due to the compliance of Acea Energia’s actions with the regulation in question, as reconstructed by ARERA in its internal procedural opinion (€ 2.6 million). This change was offset by lower provisioning, net of amounts released, for the Group’s mobility programmes (-€ 10.2 million).

Financial management shows net expense of € 136.5 million, up compared to 31 December 2022 by € 50.8 million due to the combined effects of higher interest rates and the increase in the average debt during the period. In particular, the increase in financial expense suffered from: i) greater interest recorded by the parent company on bond loans, mainly due to the parent company’s new € 700 million issue (+€ 24.0 million) and greater interest on medium/long-term borrowings (+€ 16.5 million) due to the increase in short-term interest rates (+€ 8.0 million); ii) greater expenses recognised by Acea Energia in relation to interest on deferments for € 7.9 million. With reference to financial income, note i) the increase in interest income on short-term receivables (+€ 13.2 million), of which € 10.8 million relative to interest income on the parent company’s short-term deposits; ii) greater interest income from customers for € 8.1 million mainly attributable to the increase in market rates; iii) lower discounting income in relation to the discounting income recognised by Gori in 2022 (-€ 11.1 million).

The average overall all-in cost of the Acea Group’s debt stood at 2.08% compared to 1.44% the previous year.

Income and expense from equity investments show net income of € 0.6 million, down by € 18.4 million compared to the previous year. This reduction is largely due to the recognition in 2022 of net capital gains (€ 16.4 million) following the sale of a group of photovoltaic plants as part of the agreement signed with the British investment fund Equitix. The effects, following deconsolidation of the decommissioned assets at 31 December 2021, also included the provisional appraisal of the assets and liabilities relative to the second closing, classified with respect to IFRS 5.

The estimated tax burden is € 147.8 million, compared to € 186.8 million of the previous year. The reduction is due to the combined effects of lower before tax profit and a lower tax rate, impacted in 2022 by the extraordinary solidarity contribution pursuant to article 37 of Decree Law 21/2022 (“extra-profit contribution”). The tax rate at 31 December 2023 was 31.1% (37.5% at 31 December 2022).

The net profit attributable to the Group was € 293.9 million, and showed an increase of € 14.2 million compared to the previous year. The change net of one-off effects (€ 38.0 million) and the change in the scope (€ 2.4 million) shows an increase of around € 50 million (+22%).