total yield
of the stock
compared to
its 2003 price
euro cent
per share
million euro
of added value distributed
to local stakeholders

Economic value for the stakeholders

The production and allocation of value added

Value added, in this Sustainability Report, is understood as the difference between revenues and production costs not constituting corporate stakeholder remuneration and the purchase costs for goods and services useful for the production process. It is therefore the difference between the revenues and costs incurred for the purchase of the production factors from other businesses and thus represents the value that the production factors within the company, own capital and labour have added to the inputs acquired from outside. Value added is distinct from the value added strictly applying to accounting practices. Here, the methodology applied is that proposed in 2001 by the Gruppo di studio per il Bilancio Sociale (GBS). With respect to the GBS methodology, rentals for use of assets owned by shareholder municipalities and sponsorship costs are considered, as they are deemed significant for stakeholders. In addition, in contrast to the proposal of the GBS, the portion of value allocated to financial institutions was calculated considering the balance of financial income and charges, as deemed a better quantification of the relationships with this type of stakeholder, as opposed to the sole figure of financial charges. With this framework, the gross overall value added distributed is almost equal to the gross value added produced by normal operations.

There are two important reasons for using the indicator of value added. Firstly, it enables quantification of the wealth generated by the company, and accounts for how this wealth was generated and how it is allocated to stakeholders; it is therefore useful for comprehending the economic impacts the company produces. Secondly, through this report it connects the Sustainability Report with the Financial Statements. In this sense, production and allocation of value added provides an instrument by means of which we can reconsider the corporate Financial Statements from the vantage point of stakeholders.

Further to the Arera 268/2015/R/eel Resolution in relation to which the Authority adopted the Network code for transporting electricity, revenues and likewise costs were recorded in the income statement for a total of Euro 657.9 million for the assignment of the general system charges from the equity accounts to the income statements of the sales companies. For the purposes of greater comparability between the 2016 and 2017 figures, the 2016 financial statement balances have been adjusted for comparison with 2017. This adjustment did not have any effect on the results and as of 31 December 2016 led to greater revenues for Euro 697.9 million and an equivalent increase in costs. This adjustment affects the prospect of production of the added value but does not change the total gross global added value.

Again for the purpose of greater comparability between accounting periods, 2016 was adjusted for the reclassification under the item Other operating revenues of the former green certificate feed in premium contributions stated under the revenues: this reclassification amounts to Euro 26.8 million. These contributions have therefore been included in the statement of distribution of the added value decreasing the portion which can be distributed to the public administration authorities.

Production of value added
in millions of Euro 2015 2016 adjusted 2017
Revenues 4,487.0 5,131.3 5,612.1
Other operating and non-operating revenues 330.8 430.2 524.8
Grants received from public institutions -13.6 -35.1 -38.8
Use of raw materials and consumable (net of changes to raw materials inventories and stocks) -2,256.6 -2,176.8 -2,606.8
Service costs restated -1,032.3 -1,799.6 -1,861.4
Bad debt provisions -72.0 -85.1 -103.4
Accruals to provisions for contingencies and other provisions -33.0 -28.5 -50.6
Other operating costs restated -38.0 -50.7 -52.9
Capitalised costs 28.5 27.8 43.0
Gross value added 1,400.8 1,413.5 1,466.0
Portion of profit (loss) pertaining to associated companies and joint ventures 12.0 13.8 14.7
Gross overall value added 1,412.8 1,427.3 1,480.7

Service costs and Other operating costs are shown net of costs considered as stakeholder remuneration.

Gross overall value added generated for stakeholders in 2017 came to Euro 1,480.7 million, an increase of Euro 53.4 million on the previous year (+3.7%).

Distribution of value added to stakeholders
in millions of Euro 2015 2016 adjusted 2017
Workforce 510.8 36.2% 524.1 36.7% 551.6 37.3%
Shareholders 147.9 10.5% 147.1 10.3% 156.9 10.6%
Company 383.5 27.1% 419.3 29.4% 479.6 32.4%
Financial institutions/Banks 146.0 10.3% 131.2 9.2% 116.2 7.8%
Public Administration 222.0 15.7% 202.8 14.2% 173.9 11.7%
Local community 2.6 0.2% 2.8 0.2% 2.5 0.2%
Gross overall value added 1,412.8 100.0% 1,427.3 100% 1,480.7 100%

The portion of value added intended for the Group’s workforce increased Euro 27.5 million (+5.2%) compared to 2016.  This increase is mainly linked to the remuneration increases envisaged by the National collective labour agreement and the inclusion of resources of the companies deriving from the companies acquired in particular in the environmental sphere, Aliplast Group and business segment of Teseco Srl.

The portion allocated to the shareholders of Hera Spa and the minority shareholders of the subsidiaries rose by Euro 9.8 million (+6.7%) and equates to 10.6% of the total. Of this portion, Euro 141.5 million was allocated as dividends distributed to Hera Spa shareholders (up almost 6% with respect to 2016), and Euro 15.4 million was allocated as the portion of earnings pertaining to the minority shareholders of the subsidiaries of Hera Spa (up Euro 2.3 million compared to 2016, or +17.6%).

A portion totalling 32.4% of the value added generated in 2017 was re-invested in the company. This portion increased with respect to 2016 (+14.4%) and includes the net profit for the year not allocated to shareholders (Euro 109.9 million, up Euro 36.6 million compared to 2016) and amortisation/depreciation of investments made (Euro 369.7 million, up Euro 23.7 million compared to 2016).

The portion of value added allocated to financial institutions in 2017 came to Euro 116.2 million (7.8% of the total, -11.4% compared to 2016).  This share comprises Euro 221.2 million in financial charges, and Euro 105.0 million in financial income.

Distribution of value added to stakeholders (2017)

The portion distributed to Public Administration amounted to Euro 173.9 million, 11.7% of the total (-14.3% compared to 2016 mainly due to the reduction of the income taxes by Euro 26.7 million less).

Duties and taxes amounted to Euro 110.9 million (7.4% of the total value added distributed) and decreased 19.2% with respect to 2016.

Of the taxes and duties, Euro 76.1 million was allocated to the Government (Euro 97.6 million in 2016), Euro 28.0 million to the Regional authorities and Euro 6.8 million to the Provincial and Municipal authorities. Business taxation fell from Euro 119.3 million in 2016 to Euro 92.6 million in 2017.

The plants and installations used by the company are in part owned by shareholding municipalities, and rental payments are made for their use. Environmental compensations are also paid to the municipalities regarding the waste treatment plants. In 2017, total payments for use of the assets of shareholder municipalities and environmental compensations came to Euro 97.3 million, down Euro 0.9 million compared to the previous year.

There was also Euro 4.5 million relating to the running costs of the national (Aeegsi and Agcm) and local authorities.

Grants received in 2017 amounted to Euro 38.8 million, Euro 0.9 million of which allocated as operating grants and Euro 37.9 million as plant grants; this item, as already indicated, includes the former green certificates feed in premium contributions for a total of Euro 26.8 million. This amount was subtracted from the portion allocated to the Public Administration.

Lastly, Euro 2.5 million was allocated to donations (Euro 0.4 million) and sponsorships (Euro 2.1 million); details on these items can be found in the “Environment and future generations” section.