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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. Value added is, from this angle, 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 (Sustainability Report Study Group) (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.
The GRI G3.1 guidelines also include among the indicators the economic value generated and distributed to stakeholders. This indicator, equating to Euro 4,100.4 million in 2011 varies from the amount of value added indicated in this paragraph mainly because it also considers the distribution of economic value to suppliers, of which the portion intended for the purchase of raw material (methane gas and electricity intended for sale) amounting to Euro 2,274.7 million.

 
Production of value added
(in millions of €)200920102011
Revenues4,201.33,666.94,105.7
Other operating income234.7210.4210.2
Grants received from public institutions-3.1-4.27.0
Use of raw materials and consumables (net of changes in inventories of raw materials and stock)-2,777.6-2,140.5-2,440.1
Service costs-675.5-724.0-789.0
Bad debt provisions-26.4-37.1-49.7
Accruals to provisions for contingencies and other provisions-25.0-30.6-26.9
Other operating costs-18.7-18.4-16.1
Capitalised costs63.981.949.2
Gross value added973.51,004.61,036.3
Portion of profit (loss) pertaining to associated companies3.95.96.3
Gross overall value added977.41,010.41,042.6

Gross overall value added generated for stakeholders in 2011 came to Euro 1,042.6 million, an increase of Euro 32 million on the previous year (+3.2%) and of Euro 65.2 million on 2009 (+6.7%).

 
Distribution of value added to stakeholders
(in millions of €)200920102011
Workforce352.036.0%361.935.8%370.035.4%
Shareholders103.110.6%125.212.4%122.611.8%
Company206.421.1%241.123.9%238.122.8%
Financial institutions/Banks105.010.7%115.611.4%119.511.5%
Public Administration208.821.4%164.816.3%190.418.3%
Local community2.10.2%1.80.2%2.00.2%
Gross overall value added977.4100.0%1,010.4100.0%1,042.6100.0%

The portion of value added intended for the workforce increased by Euro 8.1 million (+2%) with respect to 2010. Compared to the total value added produced, this portion represents 35.4%, and consists of wages and salaries (including employer social security contributions and provision for employee leaving indemnities).
The portion allocated to the shareholders of Hera S.p.A. (stable with respect to 2010) and the minority shareholders of the subsidiaries fell by Euro 2.6 million (-2%) and is equal to 11.8% of the total. Of this portion, Euro 100.4 million was allocated as dividends distributed to Hera S.p.A. shareholders, and Euro 22.2 million was allocated as dividends for minority shareholders of the subsidiaries of Hera S.p.A. (this portion came to Euro 24.8 million in 2010).
A portion totalling 22.8% of the value added generated in 2011 was re-invested in the company. This portion, essentially stable with respect to 2010, includes the net profit for the year not allocated to shareholders (Euro 4.3 million) and amortisation of investments made by the company (Euro 233.8 million).
The portion of value added allocated to financial institutions in 2011 came to Euro 119.5 million (11.5% of the total, +3% compared to 2010). This share comprises Euro 212.0 million in financial charges, and Euro 92.5 million in financial income.

 
Distribution of value added to stakeholders (2011)

The portion distributed to Public Administration amounted to Euro 190.5 million, 18.3% of the total (+16% compared to 2010). Duties and taxes amounted to Euro 115.0 million (11% of the total value added distributed, 43% more compared to 2010). Of the taxes and duties, Euro 69.3 million was allocated to the State (Euro 44.8 million in 2010 due to the non-recurring positive effects totalling Euro 25.6 million relating to the freeing up, by means of substitute tax, of the additional values recorded in the financial statements as a result of extraordinary transactions carried out in 2009), Euro 40.6 million to the Regional authorities and Euro 4.8 million to the Municipal authorities. Income taxes rose from Euro 63.6 million to Euro 94.5 million due to the matters illustrated previously and the additional taxes recorded following the increase in the IRES Robin surtax by 4 percentage points, as well as the increase in IRAP of 0.30% for the concessionary companies set up as a result of the 2011 measures. With regard to 2009, the portion distributed to Public Administration includes the return of the so-called "state aid" received at the end of the 1990's by Italian companies in the utilities sector, declared illegal at EU level by European Commission Decision 2003/193 of 5 June 2002. Decree Law no. 10/2007, converted into Law no. 46/2007, regulated the methods for returning these amounts. For Hera, the amount due to the Revenue Office totalled about Euro 27.6 million (of this, Euro 12.3 million is accounted for under financial charges).
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 2011, total payments for use of the assets of shareholder municipalities and environmental compensations came to Euro 82.5 million.
Grants received amounted to Euro 7 million, Euro 3.1 million of which allocated as plant grants, Euro 2.8 million as operating grants and Euro 1.1 as others grants. This amount was subtracted from the portion allocated to the public administration.
Lastly, Euro 2 million was allocated to donations (Euro 0.1 million) and sponsorships (Euro 1.9 million); details on these items can be found in the "Local communities" section.

 
Value added distributed to local areas (million €)

In 2011, value added distributed to stakeholders in the local areas amounted to Euro 815.1 million (+1.3% compared to 2010).
It comprises:

  • employee salaries (46% of the total);
  • dividends to local Hera S.p.A. shareholders (9%);
  • duties, taxes and fees to local authorities (16%);
  • charitable donations and sponsorships (0.2%);
  • resources re-invested in the company (29%).

If value added for local suppliers is also considered (which represents 65.5% of total supplies and that can be estimated at Euro 839.3 million), the total wealth distributed to local areas in 2011 can be estimated at Euro 1,654.4 million.
The minority shareholders of the subsidiaries have not been taken into consideration in the calculation of the value added distributed to the local areas.