Management report

Capital expenditures

The adjusted figure for capital expenditures by the ERG Group in 2013 was EUR 165 million (EUR 126 million in 2012), including EUR 156 million for tangible fixed assets (EUR 120 million in 2012) and EUR 9 million for intangible fixed assets (EUR 6 million in 2012).
The breakdown of adjusted capital expenditures by business segment is shown in the following table:

(Eur million) Year 2013 Year 2012
Renewable energy sources (1) 97 39
Power & Gas 26 35
Refining & Marketing (2) 41 51
Corporate 2 1
TOTAL 165 126

(1)  Renewable Energy Sources adjusted capital expenditures include ERG's share of the capital expenditures made by LUKERG Renew since July 2012
(2)  Refining & Marketing adjusted capital expenditures include ERG's share of the capital expenditures made by TotalErg S.p.A. whereas, from August 2012 onwards, they no longer include ERG's share of the capital expenditures made in ISAB S.r.l.

Adjusted capital expenditures do not include the prices for acquisitions in the wind power sector, i.e. EUR 63 million referred to Assets and EUR 10 million referred to the Operation & Maintenance company, as well as the capital expenditures pertaining to 20% of ISAB S.r.l. (EUR 21 million). 

Renewable energy sources

In March, work started on the construction of a wind farm in Basilicata, in Palazzo San Gervasio (PZ), with planned capacity of 34 MW; construction of the wind farm was completed in December, ahead of schedule, and the wind farm has been fully operational since the start of
Work also started in March for the construction of a wind farm in Romania, in the Tulcea region, with total capacity of 82 MW (ERG share: 41 MW) and estimated electricity output, when fully operational, of over 200 GWh per year; the project was acquired at the end of 2012 by the
LUKERG Renew joint venture from Inergia S.p.A. (Santarelli Group). For this project, too, construction work proceeded very speedily and it was substantially completed in December, ahead of the initial schedule, with fully operational status reached in early 2014.
In 2013, Renew's installed capacity further increased, thanks in part to the acquisition, through LUKERG Renew, of a further 84 MW (ERG share: 42 MW) already operational in Romania (70 MW) and Bulgaria (14 MW). The outlays for these capital expenditures, with a total forecast Enterprise Value of approximately EUR 63 million (ERG share) are not included among the amounts shown in the table of capital expenditures in the period, as they involve purchases of equity investments carried out by the LUKERG Renew joint venture.

Power & Gas:

in 2013, at the ISAB Energy plant, work was completed on the project for the construction of the flare exhaust gas cleaning system, in accordance with the environmental prescriptions set out in the Integrated Environmental Authorisation (AIA).
Moreover, at the ERG Power plant, work to upgrade and revamp one of the steam generating units (unit SA1 N1) was completed. These initiatives, completed in the third quarter of 2013, will enable the whole plant to operate more flexibly and efficiently, and to comply with the
new emission restrictions prescribed in the AIA for ERG Power.
Lastly, focused capital expenditures continued both in ISAB Energy and in ERG Power, to boost the operating efficiency and reliability of the systems; the planned investments for Health, Safety and Environment also continued.

Refining & Marketing:

With regards, instead, to Integrated Downstream, during 2013, capital expenditures of approximately EUR 41 million were made, almost entirely related to 51% of TotalErg.
Most of the capital expenditures (approximately 71%) involved the Network, mainly for development activities (renovations, new leased outlets, enhancement and automation of existing sales outlets, etc.) and the activities for the transformation of the Rome logistical facility (approximately 13%). A significant portion was also destined to Health, Safety and Environment maintenance and improvements.
With regard, instead, to Coastal Refining, the data shown in the table for the first nine months of 2013 no longer include the capital expenditures made by ISAB as a result of the reduction of the share from 40% to 20%.

ERG S.p.A. - Genova

Paolo Merli

Head of Corporate Finance & Investor Relations

0039 010 2401376

ERG S.p.A. - Genova

Matteo Bagnara

Investor Relations

0039 010 2401423

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