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2020 financial statement unveiled: investments supported local areas and stakeholders in tackling the pandemic emergency and focusing on circular economy projects

Revenues exceeding 344 million euros, net profit for the year of 18.56 million euros and EBITDA of 86.14 million euros. CAP Group, the public company that manages the integrated water service in the Metropolitan City of Milan, Italy's leading in-house water company in terms of assets and one of the largest in terms of inhabitants served, presents its 2020 consolidated financial statements: in the year of the pandemic, investments in infrastructure serving the territory exceeded 105 million euros, equal to 45% of tariff revenues. The strategy adopted in 2019, through a Sustainability Plan, broken down into three guiding principles "Sensitive, Resilient, Innovative", enabled the water utility to counter the impact of the economic, social and health crisis triggered by the pandemic in 2020 by taking timely measures to support the community and stakeholders. It also made it possible to relaunch an important process, a true "Green New Deal" for the Metropolitan City of Milan, under the banner of new strategic investments that consolidate CAP as a big player in the development of the circular economy in Lombardy, capable of integrating sustainable water and waste management to encourage the decarbonisation process at the heart of the green revolution and the ecological transition called for by the NRRP.

The draft consolidated financial statements were approved on Thursday 22 April by the Board of Directors of CAP Holding S.p.A., together with the Consolidated Non-Financial Statement pursuant to Legislative Decree no. 254/2016. In detail, total revenues in 2020 amounted to 344,735,249 euros, almost entirely from the water service, while the operating balance was 18,568,952 euros. The difference between the value and cost of production in 2020 was 30,503,221 euros. EBITDA amounted to 86,140,537 euros. Investments in technical fixed assets amounted to 105,331,819 euros.

More than a year after the start of the pandemic, the final balance of the 2020 financial year has shown that the CAP Group has a strong capacity to react, with outstanding technical and operational performance in terms of the level of investments made and compliance with the quality objectives set by the Authority (ATO), with the economic and financial situation indicators remaining substantially stable.

The utility promptly activated income support measures in order to guarantee the work and employment stability of all its workers. It also provided support for its employees through a significant increase in remote working (87.5%), to which the company is allocating part of the 34 million euros earmarked for digitisation projects.

To support all managed municipalities and public hospitals in the Metropolitan City of Milan area, CAP allocated 10 million euros, of which 1.8 million is for public hospitals and 8.2 million for municipalities. It also adopted effective support measures for suppliers by advancing payments, providing free insurance for advance payments, and authorising work progress even in breach of contracts. It helped citizens and businesses by postponing utility bill deadlines and introducing the possibility to pay in instalments. Tender procedures were also simplified to facilitate access, through a series of bureaucratic reliefs and the use of the Skype platform, drones and 3D technology.

34 million euros were invested in projects dedicated to the circular economy in 2020. Biogas and biomethane production activities with low environmental impact were launched in San Giuliano Milanese, Robecco sul Naviglio, Bareggio, Canegrate, Rozzano and Pero, using organic waste, known as FORSU in Italian, from the agro-food industry in the Milanese hinterland. The origins lie in the Memorandum of Understanding signed at the end of 2019 by the Metropolitan City of Milan, the authorising body for the plants, and the CAP Group which, according to a study carried out by Kyoto Club, using the anaerobic biodigesters already present in the treatment plants, can convert 107 tonnes of organic waste into clean energy, supplying up to 39,000 vehicles, company vehicles and public transport: 2.5 times the number of methane-fuelled cars in circulation in the Metropolitan City of Milan.

This led to partnerships in 2020 with Danone and with the ThinkAbout platform, which operates in the field of food waste reduction,and makes food products available at the end of the cycle, which would otherwise become waste: in the Sesto San Giovanni treatment plant they become biogas and then thermal energy. The same thing is happening today in Robecco sul Naviglio, with food waste from Milano Ristorazione canteens. Also in Robecco, CAP has created another application with a view to recovering waste materials: since July 2020, every day about 10 tonnes of sand extracted from the treatment process are recovered, to be reused as raw materials in the company's worksites, avoiding disposal in landfills and the use of new sand mined from quarries.

Sustainable plant management requires a careful and continuous process of technological innovation and digitalisation. In Pero in 2020, the CAP Group installed "electronic detectives" in its network, adopting technology developed by the company Kando: sensors applied near the sewers that can identify the origin of toxic substances and detect any illegal dumping. In addition, 90% of the water treated by the CAP Group is continuously monitored so that it can be reused for irrigation purposes thanks to a company remote control system, equipped with an artificial intelligence system that records big data and communicates with the 40 treatment plants in the area.

The study "The water sector in the crosshairs of ESG finance" and the CAP Group's sustainability plan

In 2019, the CAP Group decided to integrate sustainability into its business by defining the Sustainability Plan, an industrial strategy based on the analysis of the company's strengths and weaknesses and the identification of risks and opportunities, and identifying the main challenges of sustainable industry on the basis of the main social, economic and environmental trends in a long-term horizon, 2033.

In order to recover as quickly as possible from the global crisis, the role of public companies like CAP is to revive the economy by boosting investment, based on the assumption that economic recovery and sustainability are not opposing factors, but complementary. ESG (Environment, Social, Governance) factors represent assets for the business economy in order to face today's challenges and to grow the local area in which it operates, and are increasingly strategic requirements for the world of finance. 

The study “The water sector in the crosshairs of ESG finance. Utilities and public infrastructures as opportunities", promoted by the CAP Group and developed in collaboration with the ETicaNews research department, aims to promote dialogue between actors involved in sustainable finance (both investors operating on the equity side and lenders operating on the debt market) and the public utilities of the integrated water service, which can now increasingly be considered as potential subjects to be financed both in terms of strictly water-related investments and investments aimed at promoting the circular economy and the transition towards more sustainable business models, particularly in the current context. 

The study focuses on three main areas: "Public infrastructures for the circular economy", "public utilities as opportunities" and finally "the outlook and commitment of finance". In the current scenario of infrastructure investments, also marked by the spending boost from the National Recovery and Resilience Plan approved by the Government, the connection between finance and real economy, favoured by ESG, can certainly play a key role in fostering the flow of capital towards companies working in the design, management and maintenance of sustainable water infrastructures. This influx of capital has become increasingly accessible thanks to innovative debt instruments such as water impact bonds, sustainability linked bonds and EGC linked loans. The final results will then be prepared in a position paper to be presented in the second half of 2021.