Net debt

The net debt at 31.12.10 increased by 74.2 million euros, from 2,129.6 million euros at the end of 2009 to 2,203.7 million euros at the end of 2010.

An analysis of the net debt is shown below:

(In €/thousand)
(A) - (B) Increase/ (decrease)
Non-current financial assets/(liabilities) 10.2 12.4 (2.2) (0.2)
Intercompany non-current financial assets/(liabilities) 5.0 4.8 0.3 5.3%
Non-current borrowings and financial liabilities (2,490.7) (1,853.7) (637.0) 34.4%
Net medium/long-term debt (2,475.5) (1,836.5) (639.0) 34.8%
Cash and cash equivalents and securities 297.8 102.3 195.4 191.0%
Short-term bank borrowing (208.8) (651.2) 442.4 (0.7)
Current financial assets/(liabilities) (87.8) 85.6 (173.5) (2.0)
Intercompany current financial assets/(liabilities) 270.6 170.1 100.5 59.1%
Net short-term debt 271.8 (293.1) 564.9 (1.9)
Total net debt (2,203.7) (2,129.6) (74.2) 3.5%

Following the adoption, as of 1 January 2010, of IFRIC 12 “Agreements for service concession arrangements”, the Group reclassified some comparative balances at 31 December 2009, with related effects on the item Financial Assets and therefore on the Net Debt.

In particular, as a result of the adoption of a mixed criterion as regards disclosure, pursuant to IFRIC12, of the concession for the Public Lighting service, the following amounts were disclosed at 31 December 2009:

  • 42.6 million euros, previously recorded in the item trade receivables, corresponding to the measurement of the unconditional right to receive cash for infrastructure management activities;
  • 69.5 million euros previously recorded under improvements on third-party assets under item tangible assets, corresponding to the measurement of the unconditional right to receive cash for the building and extraordinary maintenance of the infrastructure.

The change recorded over the previous year is a result of the requirements generated by investments (473.2 million euros), growth in current receivables (68.8 million euros) and inventories (19.6 million euros) only partially offset by the increase in current payables (144.7 million euros).

The requirement resulting from the implementation of voluntary mobility and redundancy schemes also contributed to the change (roughly 26 million euros).

medium/long-term component

The medium/long-term component stood at 2,475.5 million euros, up by 639 million euros due mainly to the placement of two debenture loans.

The breakdown is shown below:

  • non-current financial assets/(liabilities) amounted to 10.2 million euros: the decrease of 2.2 million euros over 2009 is due to the VAT rebates applied for by Tirreno Power, repayable after 2011, 
  • intercompany non-current financial assets/(liabilities) include loans disbursed by the Parent Company to consolidated Group companies with the equity or proportional method; the item amounts to 5 million euros and remains essentially unchanged (+ 0.3 million euros)
  • medium/long-term financial liabilities amounted to 2,490.7 million euros (1,853.7 million euros at 31 December 2009) consisting of:

€ millions
31.12.2010 31.12.2009 Increase/ (Decrease)
Bonds 978.7 308.6 670.1
Medium/long-term bank loans 1,509.2 1,543.1 (33.9)
Medium/long-term loans from third parties
2.8 1.9 0.9
TOTAL 2,490.7 1,853.7 637.0

The 637 million euro increase in non-current borrowings and financial liabilities is related to:

  • the following transactions carried out during the year:
    • 514.4 million euros resulting from ACEA’s placement of a 10-year debenture loan expiring on 16 March 2020,
    • 155.6 million euros due to the issue, in March, of a private debenture loan (Private Placement) for 20 billion Japanese Yen. The Private Placement, entirely subscribed by a single investor, was then subject to exchange rate risk and interest rate risk hedging, for a final amount of 161.8 million euros, at a fixed rate. As at 31 December 2010, the fair value of said hedge, after the exchange reserve, was a positive 6.7 million euros, and has been allocated to the appropriate shareholders’ equity reserve,
  • the increase of 7.2 million euros in long-term loans disbursed to Acque,
  • the reclassification of the portion of loans expiring in the year from long to short-term, totalling 64.9 million euros.

The table below gives details of the medium/long-term loans by expiry date and interest rate type, excluding debenture loans.

Bank loans
TOTAL REMAINING DEBT DUE BY 31.12.11 BETWEEN 31.12.11 AND 31.12.15 DUE AFTER 31.12.15
fixed rate 414.1 21.8 90.7 301.6
floating rate 762.2 34.2 264.5 463.6
floating rate to fixed rate 399.5 9.0 39.1 351.5
Total 1,575.9 64.9 394.4 1,116.6

As regards the conditions for medium/long-term loans and debenture loans, reference should be made to the Notes to the 2010 Consolidated Financial Statements.

Short-term component

The short-term component was positive, reducing net debt by 271.8 million euros, showing an improvement of 564.9 million euros over the previous year. 

The change was caused by the decrease in short-term debt net of cash and cash equivalents and uses of liquidity recorded under current financial assets; this was essentially the result of cash deriving from the two debenture loans. The table below shows the amounts in 2009 and 2010 and the associated increases/decreases relate mainly to the Parent Company.

€ millions
31.12.2010 31.12.2009 Increase/(Decrease)
Cash and cash equivalents and securities 297.8 102.3 195.5
Short-term bank borrowing (208.8) (651.2) 442.4
Current financial assets/(liabilities): uses of liquidity in fixed term deposit contracts 0.0 152.5 (152.5)
Total 89.0 (396.4) 485.4

Short-term bank borrowing for the Industrial Segment is shown below; said item also includes the portion of loans to be repaid in the year:

  • Networks: 18.4 million euros (up 0.9 million euros compared to December 2009),
  • Energy: 14.7 million euros (down 5.9 million euros compared to the same period in the previous year),
  • Water: 58.4 million euros (down 3.9 million euros compared to December 2009),
  • Environment and Energy: 8.4 million euros, (+ 0.3 million euros compared to 31 December 2009) due to the double effect of paying off the Ergo Ena debt of 1 million euros and the increase in the borrowings of Kyklos and Aquaser,
  • ACEA: 106.5 million euros (down 435.7 million euros compared with the previous year).

The balance of current financial assets and liabilities increased the Group’s debt by 87.8 million euros, which worsened by 20.9 million euros net of uses of liquidity through fixed term deposit contracts.

The worsening in the debt position is the result of the increase in amounts owed to concessionary counterparties for the return of collections due (totalling 13.7 million euros) and the factoring of receivables on the basis of the 2006 purchase/sale contract to Erg Renew (6.8 million euros).

Intercompany current financial assets and liabilities reduced borrowing by 270.6 million euros, recording an increase of 100.5 million euros compared with the previous year.

The change in the item when compared with 31 December 2009 is essentially due to the increase in financial receivables deriving from centralised treasury relations with particular reference to AceaElectrabel Elettricità and the increase in financial receivables due from the Municipality of Rome for the management of public lighting.

This item includes (i) ACEA S.p.A.’s credit and debit exposure deriving from cash pooling transactions with proportionally consolidated companies: as regards said relations, the Parent Company registered a credit balance as at 31 December 2010 of 58 million euros; (ii) shareholder loans disbursed by ACEA to AceaElectrabel Produzione (70.2 million euros) and Roselectra (32.4 million euros). It should be noted that during the year, AceaElectrabel Produzione and Roselectra made partial repayments to shareholders on the basis of available funds, and paid commitment fees and loan interest and capital totalling 31.3 million euros (ACEA portion 9.3 million euros).

As regards the methods of functioning and remuneration of centralised treasury relations, please refer to the 2010 Consolidated Financial Statements.