A2A STRATEGIC PLAN • 2017 RESULTS & BUSINESS PLAN UPDATE • 9M 2018 RESULTS November 2018
2017 RESULTS WHERE WE START FROM 2018-22 STRATEGIC PLAN FINANCIALS CLOSING REMARKS 9M 2018 RESULTS
FY 2017 VS. FY 2016 RESULTS FY 2017 vs. FY 2016 REVENUES EBITDA ORDINARY EBITDA € M HYDRO VOLUMES CCGT PERFORMANCE -2% +16% +10% FEED IN TARIFF/GREEN ORGANIC GROWTH IN CERTIFICATES NETWORKS & DH AND IN SAN FILIPPO DEL MELA ENERGY RETAIL "MERCHANT” IN Q3 2016 GAS MARGIN NON-RECURRING YOY LGH: STANDALONE AND COMPARISON FY CONSOLIDATION EPCG PUT OPTION EFFECTS AND DECONSOLIDATION SINCE JULY 2017 GROUP NET INCOME GROUP ORDINARY NET INCOME NET FINANCIAL POSITION +90 € M +10% -226 € M +26% 3 2017 RESULTS | WHERE WE START FROM | 2018-22 STRATEGIC PLAN | FINANCIALS | CLOSING REMARKS | 9M 2018 RESULTS
NET FREE CASH FLOW € M 2016 1,231 10 -93 -67 -168 -133 780 -376 -126 278 -517 -239 (1) Funds from operations after working capital change; (2) EPCG CAPEX included (4 € M); (3) 2017: 206 € M EPCG deconsolidation; 110 € M M&A; 2016: M&A price and NFP at closing 4 2017 RESULTS | WHERE WE START FROM | 2018-22 STRATEGIC PLAN | FINANCIALS | CLOSING REMARKS | 9M 2018 RESULTS
2017 RESULTS WHERE WE START FROM 2018-22 STRATEGIC PLAN Presented on March 20th, 2018 FINANCIALS CLOSING REMARKS 9M 2018 RESULTS
DELIVERED STRATEGIC VALUE SINCE 2014 RELAUNCH REGENERATION RESHAPE Consistent industrial growth Active role in the energy Public lighting, smart city, Selective external growth market transformation energy efficiency • + 560 K customers • CCGT fleet active • First-mover (EE and Gas free market customer base) management: in consolidating energy + 800 Kt waste treated 4x production vs. 2014 efficiency sector + 200 € M of RAB • Stable profitability • +60% A2A Smart City • ~130 € M of operating ( volatility <10% ) EBITDA efficiency • Created PV platform • 120 K LED installed • 14 M&A deals ( +35 MW ) (+135%) + 105 € M EBITDA • Pilot projects on innovative • Largest territory aggregations solutions (UVAP, drones…) ( +1 in pipeline ) 2017 vs. 2014 data 6 2017 RESULTS | WHERE WE START FROM | 2018-22 STRATEGIC PLAN | FINANCIALS | CLOSING REMARKS | 9M 2018 RESULTS
DELIVERED FINANCIAL VALUE € M +187 % + 18% EBITDA + 52% ROI Merchant High Volatility Merchant Low Higher and more Growing, stable Volatility Quasi Regulated stable margin return >10% Regulated € c/ share DPS NFP/EBITDA + 61% - 18% Dividends growing Capital structure steadily reinforced € M +168 CAPEX + 60% Investing more with quality Industrial targets achieved Financial targets overdelivered 7 2017 RESULTS | WHERE WE START FROM | 2018-22 STRATEGIC PLAN | FINANCIALS | CLOSING REMARKS | 9M 2018 RESULTS
MAIN INDUSTRIAL TRENDS CIRCULAR ECONOMY ENERGY TRANSITION SMART SOLUTIONS • La • Decarbonization • Energy efficiency Land ndfills ph phase se ou out • Acceleration in sor • Energy de • Sm orted col ollection democracy Smart services to citizen and • Wast • Re ste system ba balance Reduction of PV and wind LCO LCOE digitalization (IoT) • Green mob and mate terial recovery obility -23 Mtoe -97 GW M % GW -17 Mtoe toe Mt -47% Primary Nuclear Final Coal LANDFILL DISPOSAL INSTALLED CAPACITY IN GER, FRA, SPA, UK, SWI ENERGY CONSUMPTIONS EU 28 Sources: Ispra (2010 and 2016), A2A estimates (2025) Source: A2A estimates Source: European Environment Agency Scarcity of natural resources and new technologies drive a deep industry transition, paving the way to a smarter planet 8 2017 RESULTS | WHERE WE START FROM | 2018-22 STRATEGIC PLAN | FINANCIALS | CLOSING REMARKS | 9M 2018 RESULTS Strategic framework | Transformation | Excellence | Community | Sustainability
NEW STRATEGIC FRAMEWORK a2a T a2a E a2a C T E C Transformation Excellence Community business strengthening agile organization, attract and empower people & change leader in operational engage external ecosystem excellence 2018 2022 2018 2022 2018 2022 Sustainability Inspiring principle of enterprise development 9 2017 RESULTS | WHERE WE START FROM | 2018-22 STRATEGIC PLAN | FINANCIALS | CLOSING REMARKS | 9M 2018 RESULTS Strategic framework | Transformation | Excellence | Community | Sustainability
GENERATION A2A KEY ACTIONS • Further expansion of RES • ~1 GREENER RES pl platform ~170 MW of of ne new RES RES (M&A + green-field) • Conventional plants reconversi • Project de sion development for Brindisi, S. S. Filippo PORTFOLIO and Mon onfalcone • +8 +800 MW dispatched CCGTs vs. 2017 • Le LEADERSHIP Leadersh ship consolidation in flexible CCG CGT plants, • CCGT results ba optimizing risk/return ratio thanks to Capacity market balanced mix mix of ma market IN GAS-FIRED (MGP/MSD) and Capacity • Improvement of gas s sou ourcing GENERATION • LN LNG G op opportuniti ties, better sho hort/long term mix • Match of growing ne • Evaluation of new pe ADEQUACY need for pe peak capacity peak pl plants s (e.g. OCGT) • Exploration of inn • Projects on UV nnovative flexibility ty services UVAM, UV UVAP, sto torage , … & FLEXIBILITY PROVIDER MGP (Mercato del Giorno Prima) = day ahead market; MSD (Mercato dei Servizi di Dispacciamento) = ancillary services market; UVAP (unità virtuali abilitate di produzione) = aggregated production unit for ancillary services market; UVAM (unità virtuali abilitate miste) = joint unit for ancillary services market (production and consumption) Flexible and greener energy 10 2017 RESULTS | WHERE WE START FROM | 2018-22 STRATEGIC PLAN | FINANCIALS | CLOSING REMARKS | 9M 2018 RESULTS Strategic framework rk | Transformation | Excellence | Community | Sustainability
GENERATION FOCUS ON RES A2A NEW RES CAPACITY RAT RATIONALES FOR NEW RES RES GROW ROWTH: • Depending on market Align generation mi mix with global trends opportunities and MW regulatory evolution • Accelerate de deca carbonization ~20-25 MW per year • Achieve ind ndustrial synergies: - Inte ntegrated di dispatching - Ope perating effici cienci cies Potential switch in - Overhead cos ost re redu ducti tion internal vs. external growth mix - Service ce qu quality improvement 3 rd party plants • Platform to position A2A in the new scenario: Pl ~35 MW dispatched per year - Repowering utility-scale plants Re M&A - Develop pi pipeline of gree reen-field Green-field - Exploit synergies with B2B/ B/B2C • Focu ocus on on PV PV, , open to opp opportu tunities in wind 500+ € M total investments in RES Potential further developments according to emerging opportunities 11 2017 RESULTS | WHERE WE START FROM | 2018-22 STRATEGIC PLAN | FINANCIALS | CLOSING REMARKS | 9M 2018 RESULTS Strategic framework rk | Transformation | Excellence | Community | Sustainability
GENERATION 2022 ASSUMPTIONS & TARGETS ACTUAL BP €/ MWh PUN base load +51 • Medium-term stab ability € M Clean spark spread PUN & SPREAD • Stead ady load ad fac actor or in a 20% range % (lower than market average) • Balan anced d mix of MGP and MSD CCGT LOAD FACTOR % • ~25% 5% regul gulated ed margins Traditional thermal CCGT merchant • ~45% 5% RES Green merchant Capacity+Incentives • Stable margins PLANTS CONTRIBUTION MARGIN • Possible upsides in "regulated" components • CCGT fleet competitive in MSD 12 2017 RESULTS | WHERE WE START FROM | 2018-22 STRATEGIC PLAN | FINANCIALS | CLOSING REMARKS | 9M 2018 RESULTS Strategic framework rk | Transformation | Excellence | Community | Sustainability
MARKET A2A KEY ACTIONS • Outs • New CRM CUSTOMER tsta tanding client service, with new multi-channel RM customer experience • Growth in all custo stomer segments, FOCUS • Preservation of exce xcellent op operations also including large clients • VA VAS in safety, comfort, t, ener nergy-saving • Energy adv dvisor for SMEs and large enterprise • Digitalizati tion to enhance service/acquisition • New services: flexibility, DER • New projects in flexibility and BOOST ERs and sto torage nd DER ERs • New EPCs in ener • 3x nergy efficiency services x EPC contracts IN NEW • Organic growth in Pub • +150 k ublic Li Lighting k lights managed SERVICES • Expansion of electric mo • +5 mobility business +500 ne new charging sta tati tions for EVs • Inn • Further fiber MEDIUM- nnovation & & Digital to develop new services ber netw network development • Un (+2,000 km) Unlocking IoT oT opportunities LONG TERM • Pilot projects on IoT oT CHALLENGE More solutions to involve customers 13 2017 RESULTS | WHERE WE START FROM | 2018-22 STRATEGIC PLAN | FINANCIALS | CLOSING REMARKS | 9M 2018 RESULTS Strategic framework rk | Transformation | Excellence | Community | Sustainability
MARKET 2022 ASSUMPTIONS & TARGETS ‘000 POD • Growth from Ma Mass ss Market Ma et liber beral alizat ation € M +67 • Stabl ble cus ustom omer base se FREE MARKET – EE&GAS (EOP) ‘000 • Expansion in new territories es • Organ anic gr growt wth LIGTHING POINTS # ANTICIPATE THE • Secur MARKET CURVE ure key territories OF EVS • Focus on key location PENETRATION ons CHARGING STATIONS FOR EVS • Benefit from market liberalization • Roll-out of A2A Energy Solutions 14 2017 RESULTS | WHERE WE START FROM | 2018-22 STRATEGIC PLAN | FINANCIALS | CLOSING REMARKS | 9M 2018 RESULTS Strategic framework rk | Transformation | Excellence | Community | Sustainability
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