+212%
total return on stock
compared to original
listing in 2003
1,241
million euro
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.

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 2016
2017 2018
Revenues 5,131.3 5,612.1 6,118.9
Other operating and non-operating revenues 430.2 524.8 492.0
Grants received from public institutions -35.1 -38.8 -40.3
Use of raw and other (net of changes to raw materials inventories and stocks) -2,176.8 -2,606.8 -2,984.1
Costs for reclassified services -1,799.6 -1,861.4 -1,955.1
Bad debt provisions -85.1 -103.4 -89.3
Accruals to provisions for contingencies and other provisions -28.5 -50.6 -46.4
Other reclassified operating costs -50.7 -52.9 -28.5
Capitalised costs 27.8 43.0 43.2
Gross value added 1,413.5 1,466.0 1,525.9
Portion of profit (loss) pertaining to associated companies and joint ventures 13.8 14.7 14.9
Gross overall value added 1,427.3 1,480.7 1,540.8

 

The values of the consumption of raw materials and consumables, costs for services and other operating costs are indicated net of the costs considered as stakeholder remuneration.

Gross overall value added generated for stakeholders in 2018 came to Euro 1,540.8 million, an increase of Euro 60.1 million on the previous year (+4.1%).

Distribution of value added to stakeholders
in millions of Euro 2016 2017 2018
Workforce 524.1 36.7% 551.6 37.3% 551.4 35.8%
Shareholders 147.1 10.3% 156.9 10.6% 163.6 10.6%
Company 419.3 29.4% 479.6 32.4% 518.3 33.6%
Financial institutions/Banks 131.2 9.2% 116.2 7.8% 106.6 6.9%
Public Administration 202.8 14.2% 173.9 11.7% 198.2 12.9%
Local community 2.8 0.2% 2.5 0.2% 2.7 0.2%
Gross overall value added 1,427.3 100% 1,480.7 100% 1,540.8 100%

 

The portion of value added intended for the workforce. Personnel costs fell by Euro 0.2 million, down slightly with respect to last year. The remuneration increases envisaged by the national collective agreement were offset by minor resources following the changes in scope and by the reduction in the average presence of employees.

The portion allocated to the shareholders of Hera Spa and the minority shareholders of the subsidiaries rose by Euro 6.7 million (+4.3%) and equates to 10.6% of the total, similar to last year. Of this portion, Euro 148.9 million was allocated as dividends distributed to Hera Spa shareholders (up 5.2% compared to 2017, following the increase in the dividend from 9.5 Euro cents per share to 10), and Euro 14.7 million was allocated as the portion of earnings pertaining to the minority shareholders of the subsidiaries of Hera Spa.

A portion totalling 33.6% of the value added generated in 2018 was re-invested in the company. This portion increased with respect to 2017 (+8.1%) and includes the net profit for the year not allocated to shareholders (Euro 133.0 million, up Euro 23.1 million compared to 2017) and amortisation/depreciation of investments made (Euro 385.3 million, up Euro 15.6 million compared to 2017); the increase is due to new investments in the regulated distribution activities and the change in scope of the sales companies Blu Ranton Srl and Sangroservizi Srl.

The portion of value added allocated to financial institutions in 2018 came to Euro 106.6 million (6.9% of the total, -8.3% compared to 2017). This share comprises Euro 203.5 million in financial charges (Euro 221.2 million in 2017), and Euro 96.9 million in financial income (Euro 105.0 million in 2017).

The portion distributed to Public Administration amounted to Euro 198.2 million, 12.9% of the total (+14% compared to 2017 mainly due to the increase in taxes and duties and the reduction in public grants received, only partly offset by the decrease in payments made to the Public Administration authorities).

Duties and taxes amounted to Euro 143.2 million (9.3% of the total value added distributed) up 29% compared with last year. Of the taxes and duties, Euro 99.1 million was allocated to the Government (Euro 76.1 million in 2017), Euro 32.3 million to the Regional authorities and Euro 11.8 million to the Provincial and Municipal authorities. Business taxation rose from Euro 92.6 million in 2017 to Euro 121.8 million in 2018.

The plants and installations used by the company are in part owned by shareholding municipalities, and rental payments are made for their use; the portion for Public Administration also includes environmental compensations paid to the municipalities regarding the waste treatment plants. In 2018, total payments for use of the assets of shareholder municipalities and environmental compensations came to Euro 90.4 million. There was also Euro 4.9 million relating to the running costs of the national (Aeegsi and Agcm) and local authorities. Public grants received in 2018 amounted to Euro 40.2 million, Euro 32.7 million of which allocated as operating grants and Euro 7.5 million as plant grants; this item, as already indicated, includes the former green certificates feed in premium contributions for a total of Euro 27.7 million. This amount was subtracted from the portion allocated to the Public Administration.

Lastly, Euro 2.7 million was allocated to donations (Euro 0.3 million) and sponsorships (Euro 2.4 million); details on these items can be found in the “Innovation and contribution to development” section (under “Economic development and social inclusion”).