September 2017 A2A STRATEGIC PLAN › a2a › 2017... · 1st Italian independent ESCo acquired (Consul System) SMART CITY A2A Smart City company: set-up completed and first pilot

A2A STRATEGIC PLAN• 2016 RESULTS & BUSINESS PLAN UPDATE

• H1 2017 RESULTS

September 2017

2

2016 CONSOLIDATED RESULTS

2014-16, HOW WE DID IT

STRATEGIC PLAN2017-2021

H1 2017 RESULTS

This document gathers the most relevant slides of the followingpresentations:

• A2A STRATEGIC PLAN - 2016 RESULTS & BUSINESS PLAN UPDATE• A2A H1 2017 CONSOLIDATED RESULTS

The full presentations, together with the conference calls mp3 files, are available on A2A website at the following link: https://www.a2a.eu/en/investors/presentations-conference

https://www.a2a.eu/en/investors/presentations-conference

3

* Excluding extraordinary items equal to 205 €M in 2015 and 153 €M in 2016

2.8x 2.5xNFP / EBITDA

2015

73

2016

224

5,093

EBITDAREVENUES

GROUP NET INCOME

GROUP ORDINARY NET INCOME *

NET FINANCIAL POSITION

2015

4,921

2016

5,093

2015

1,048

2016

1,231

+3%+17%

+151

2015

278

2016

377

+36%

2015

2,897

2016 Adjusted

2,667

LGH priceand NFP at closing

469

2016

3,136

-230

+239

FY 2016 vs. FY 2015 Results

2016 Consolidated Results

2014-16, how we did it

Strategic plan 2017-2021

Financials

H1 2017 Results

€M

San Filippo del Mela “Merchant”

+

Retail Regulated Components

LGH acquisition

Fixed Costs reduction

Non-recurring items

Positive CCGT Ebitda

Energy Scenario

San Filippo del Mela

“Must Run”

Trading portfolio

Gas and Electricityallowed revenues

-

4

2015

1,048

-26

2015Ordinary

1,022

Waste

25 30

Networksand

DistrictHeating

-5

19

SmartCity

1 11

2016Ordinary

1,103

128

2016

1,231

2015Non-recurring

ItemsEnergyRetail Generation & trading

EPCGand other

2016Non-recurring

Items

+81

+183€M


Group EBITDA




Financials

H1 2017 Results

5

+153 +36%

46

145

-38





Financials

H1 2017 Results

From Group Net Income to Group Net Ordinary Income

Group Net Income

Reported

Impairmentof assets andshareholdings

Monfalconewrite-offNet effect

Edipower non-proportionaldemerger

Group Net Ordinary

Income 2015

Group Net Ordinary

Income 2016

€M

From Group EBITDA to Group Net Income

2016 EBITDA D&A

Write-offOf Assets

RiskProvisions

Non-recurr.transactions

Net Financial Expenses

EBT NetIncome

TaxesNet result

fromdiscontinuedoperations

MinoritiesEquity

1,231

- 434

- 256- 85

56

- 4

- 154

354

- 117 -15

2242

1,048 - 404 - 350 - 79 - 1 - 4 - 134 76 - 133 130 73-2015 A

6

BREAKDOWN BY NATURE BREAKDOWN BY BUSINESS

2015

57

133

154

344

2016

48

46

159

171

424

Maintenance

Development

Mandatory

M&A*

2015

59

52

64

129

344

2016

102

61

36

167

424

4

2 27

7

8

6 27

17

Generation &trading

Energy retail

Waste

Districtheating

Networks

Corporate

Smart city

Epcg

+80 +80

€M

*M&A Capex related to LGH not included


CAPEX




Financials

H1 2017 Results

7

(1) Funds from operations after change in working capital

€M


Net Free Cash Flow




Financials

H1 2017 Results

8

* From the appointment of the new Board of Directors, 17/06/2014, to 28/3/2017

VISION/STRATEGY

Achievements on key R3D points:

RESTRUCTURECost reduction, company simplification, flexibilization, capacity optimization

RELAUNCH

Consistent industrial growthSelective external growth

RESHAPE

Public lighting, smart city, energy efficiency

RESULTS

3 years of growing results exceeding plan

12 quarters with continuous debt reduction

Dividend (+50%) and stock price growth (+61%)*

82 €M savings vs. 2014 cost base

RESULTS AND STRATEGIC

GOALS DELIVERED





Financials

H1 2017 Results

9

DISCIPLINE DIALOGUE DIGITAL

3Rs & 3Ds 2014-2016 achievements

GENERATION & TRADING

• 20 €M cost savings inCCGT plants in 2 years

• Market/seasonal opportunities

• Leadership in ancillary services

• Chivasso already best in class, other plants under way

• A2A Energiefuture, thermal plant re-conversion

• A2A gencogas, single vehicle for A2A CCGTs

RESHAPERELAUNCHRESTRUCTURE

ENVIRONMENT+8% waste treated (2,800 ktons in 2016)+26% inhabitants served (3.4 M in 2016)

ENERGY RETAIL+117% free market customers (694,000 POD in 2016)

NETWORKS & HEAT+13% District Heating network expansion in Milan(299 km in 2016)

Selective external growth9 deals completed in 2 years• industrial partnership (51%) signed with LGH

• +50% of DPS increase in three years

• FFO/Debt, key rating indicator, improved up to 24%

• Implementation of Enterprise Risk Management structure

• 15 Lean Thinking pilot projects

• A2A's first sustainability plan& integrated report

• 4 multi-stakeholder forum and territorial sustainability reports

• People and organization: Smart working, Organizational Compass Project, Futura2a, ABC Project, Melograno, ...

• New digital platform for customer base • Digitalization of networks processes

(WFM, IDMS, …)• Digitalization of CCGT Chivasso plant• New solar thermodynamic plant at San

Filippo del Mela site

PUBLIC LIGHTING+125% LED relamping (196k lighting points in 2016)

ENERGY EFFICIENCY1st Italian independent ESCo acquired (Consul System)

SMART CITYA2A Smart City company: set-up completed and first pilot projects

E-MOBILITY1st Italian Fast Charge public network (90k recharges in 2016)

completed

10

STRATEGIC PLAN2017-2021

11

STRATEGY UPDATE

REGENERATION RESHAPE

Active role in the energymarket transformation

Flexible fleet to serveshortening EU markets

Re-alignmentwith EU Winter Package

Development by adjacencies

Buying options in smart city

and green economy

From pilot projectsto market solutions

RELAUNCH

Growth in environment, smart networks

and energy services

Focus on low-riskbusinesses

FOCUS TRANSFORM ACCELERATE

12

ASSETDEVELOPMENT

Additional investments (+600 €M vs. previous plan) in core, growing, low-risk businesses

REGULATED

BUSINESS

WASTE

TREATMENT

DEVELOPMENT

COST REDUCTION

EFFICIENCY

AND

OPTIMIZATION

En&A project on track and launch of a new operational excellence program

MARKETGROWTH

Consistent growth in retail, waste collection and DH

ORGANIC

DEVELOPMENT

M&A AND

SYNERGIES

Prudent M&A targets

Conservative targeted synergies

Relaunch



Strategic plan 2017-2021RelaunchRe-generationReshape

Financials

H1 2017 Results

13

(1) Including M&A and gas distribution tenders

0

20

40

60

80

100%

+50% CAPEX per year vs. average 2014-2016(1)

Almost 90% CAPEX in regulated/quasi-regulated markets

~70% of net invested capital in 2021 related to Regulated/ Quasi-Regulated assets

€M

Regulatedbusiness

Higher Capex inregulated/quasi-regulated


Relaunch

Re-generation

Reshape

Asset Development

Market Growth

Cost reduction

40% CAPEXin sustainability

14

Increase in Gas and Electricity distribution RAB

Gas and Electricity distribution tariffs stable over the period 2017–2021

Water distribution tariffs increase by 8.5% YoY according to Regulatory Framework 2016-2019

€B

Regulatedbusiness

RAB increase


Relaunch

Re-generation

Reshape

Asset Development

Market Growth

Cost reduction

EE & GAS RAB2017

EE & GAS RAB2021

2.01.8

15

Limited volume risk, mostly internal waste flows integration

Focus on A2A industrial sites in Northern Italy

* LGH, Rieco, Bedizzole full year contribution; public tenders excluded

860Ktons/year

waste materialrecycling

Ktonstreated

Waste treatment development


Relaunch

Re-generation

Reshape

Asset Development

Market Growth

Cost reduction

2014 2015TARGET

2015ACTUAL

2016TARGET

2016ACTUAL

FULLYEAR

CONSOLI-DATION*

NEW PLANTS 2021

2,594 2,626 2,558 2,634 2,800

687

500 155 4,249

Authorized/ authorizations

in progress

Authorizations to be

requested

ACHIEVABLE TARGETACHIEVED

EXISTINGPLANTS

UPGRADE

107

16

Note: Includes LGH

2021 target consistent with 2014-16 average organic growth

67% avg.sorted

collection

Minhabitants

Organic development

Waste collection


Relaunch

Re-generation

Reshape

Market Growth

Cost reduction2014 2015

TARGET2015

ACTUAL2016

TARGET2016

ACTUAL2021BP

2.70 2.81 2.80 2.90

3.38

3.94

~ +100Kinhab./year~ +300K

inhab./year


17

Growth planned in core geographical areas

Free market customer base in 2019 4x vs. 2014

Note: Includes LGH* Free market**Electricity mass market

Organic development

Energy and gas retail


Relaunch

Re-generation

Reshape

Market Growth

Cost reduction2014 2015

TARGET2015

ACTUAL2016

TARGET2016

ACTUAL2021

TARGET

320419 444

577694

1,438

~ +180KPOD/year

90% EE customerswith green

energy sold**

POD*‘000


~ +150KPOD/year

18

>60% of M&A contribution to business plan already completed

Only new M&A deals in advanced stage included

M&A and synergiesM&A


Relaunch

Re-generation

Reshape

Market Growth

Cost reduction

Note: LGH not included

2016 EBITDAOF ALREADY

CLOSED DEALS

ALREADYCLOSED

DEALS FULLPOTENTIAL

NEW M&A DEALSUNDER

NEGOTIATION

SYNERGIES TOTALINCREMENTAL

EBITDA

2

4

15

10 31SYNERGIES

ENERGY EFFICIENCY

NETWORKS

WASTE


EBITDA€M

19

EBITDA synergies 12 €M (~16% of 2016 LGH EBITDA)

Further savings under assessment

€M

M&A and synergiesLGH synergies


Relaunch

Re-generation

Reshape

Market Growth

Cost reduction

EBITDASAVINGS

FINANCIALSAVINGS

CAPEXSAVINGS

TOTALSAVINGS@2020

12

72 21

20

EBITDA€M

Lean and 6 sigma initiatives, Business Process Modeling

Change management

Creation of an internal competence center devoted to continuous performance improvement

Plan impacts not included in the business plan (additional projects)

2017 NEW OPERATIONALEXCELLENCE

PROGRAM

EN&A2015-2021

Operating efficiencycontinuous journey

Cost reduction

Market Growth

12

2016 2021

82+108

LGH

A2A178

12

190


Relaunch

Re-generation

Reshape

21

Traditional thermal plant reconversions

Organic and inorganic growth in RES and in new market opportunities

VA

LU

E F

RO

M

DIV

ER

SIFIC

ATIO

N

5-year SFM plant must-run

Hydro and baseload stable production

MEDIUM

TERM

STABILITY

ACTIVE

MANAGEMENT

OF CCGT

GROWING

OPTIONS

RES/DERs NEW

SOURCES OF

GROWTH

Re-generation




Financials

H1 2017 Results

Short-term market opportunities

Additional medium-term market space from European trends

Capacity market and generation margins upside

Possible moderate addressable demand increase

22

'13

532

'14

500

'15

469

'16

494

Avg.13-16

499

Avg.17-21

459

33 -401 -30 -5Delta vs. avg.

7% -8%0% -6% -1%Delta % vs. avg.

Thermal

Hydro incentives

Hydro market

PLANTS CONTRIBUTION MARGIN

DELTA vs. 13-16 AVG.

Historical‘13- ‘16 volatility maximum

+/-7%

Natural hedging between hydro

and thermal

€M

33

33

Value from diversification


Relaunch

Re-generation

Reshape

Value from diversification

Medium-term stability

Active mgmt of CCGT

RES/DERs sources of growth

23

14 15 16 17 18 19 20 21

49

2,9

14 15 16 17 18 19 20 21

14 15 16 17 18 19 20 21

55

Conservative scenario assumptions, lower than previous plan

14 15 16 17 18 19 20 21

12,2

Clean spark spread

Clean dark spread

PUN Baseload

PUN Peak Load

16-20 BP

17-21 BP

€/MWh



Relaunch

Re-generation

Reshape


Active mgmt of CCGT


2.9

12.2

24

Pl. 1

63%

Pl. 2

57%

Pl. 3

45%

Pl. 4

42%

Pl. 5

42%

Pl. 6

32%

A2A

25%

Pl. 7

17%

3.10.8 3.1 0.81.1 2.20.80.8GW

Slow growth in market demand

-30 baseload GW in Europe by ’21*

New RES not covering entire additional net demand

A2A CCGTs positioned to catch market opportunities

GROWING MARKET SPACEFOR A2A CCGTs

CAPACITY MARKET REVIEWEDCONSERVATIVELY

* A2A elaboration based on GER, FRA, SPA, UK, SWI, BEL, AUT nuke/coal phase-out plans

** MGP load factor of Northern zone CCGTs in peak hours (2016)

K€/MW

LF %**

Active management of CCGT growing options

Capacity market and growing market space


Relaunch

Re-generation

Reshape

Active mgmt of CCGT


2 YEARSAGOFCST

23.5

15.713.3

1 YEARSAGOFCST

TODAY’SFCST

START-UP 2017 2018 2018

Average on A2A total

generation portfolio

Capacity auctions expected to set premium in a 18-20 k€ range

25

0.8

2.3

2.0

1.9

0.5

1.0

2021

0.8

3.6

1.9

0.5

1.0

Today

8.47.6

Must-run

Baseload

RES

Flexible CCGT

Standard CCGT

Demothballed (TSOrequest)

Mothballing

Shut down/sold

Must run, baseload and hydro stable

~4 GW CCGTs running, 90% of which planned to be flexible

A2ACAPACITY

GW

Active management of CCGT growing options

A2A installed capacity evolution


Relaunch

Re-generation

Reshape

Active mgmt of CCGT


26

THERMAL PLANTS RE-

CONVERSION

Evolution into “integrated renewable poles”

Projects design in SFM, BR and Monfalcone

Solutions for environment/renewable synergies

Exploration of potential inorganic growth in PV/Wind

Potential new greenfield/brownfield developments

New developments as additional projects

DEVELOPMENT ON A2A SITES

RESPV development in Group industrial sites (SEU/SSP)

Hydro developments in Calabria

MARKET DEVELOPMENT

RESM&A and

GREENFIELD/BROWNFIELD

Storage systems development

Demand Response Management System

Innovative distributed energy services

DISTRIBUTED ENERGY

RESOURCES

RES/DERs newsources of growth


Relaunch

Re-generation

Reshape


27

SMART CITY

Strong pipeline of business development agreements

A2A SMART

CITY

MOBILITY

SOLUTIONS

Catching the key trends in the mobility evolution: green, shared and connected

ENERGYEFFICIENCY

Higher targets also thanks to selective M&A deals already ongoing

PUBLIC

LIGHTING

ESCo PROJECTS New M&A deals in pipeline

Reshape




Financials

H1 2017 Results

28

E.E. Certificates (TEE)

LED relamping almost completed

Growth achieved with a mix of organic growth and selective M&A

Energy Efficiency

Analysis of M&A opportunities

in complementary segments

Palazzo della LoggiaBrescia

RE

GU

LA

TE

D/

QU

AS

I-R

EG

ULA

TE

DFR

EE

MA

RK

ET

Lighting pointsDistrict cooling plantsLed public lighting

and ESCo projects


Relaunch

Re-generation

Reshape

Energy Efficiency

~2x

209

418

2016 2021

196

OTHERLED

Consultancy TEEEnergy consumption analysis

Industrial Design & installationMonitoringCombined Heat & PowerEPC

Horizon 2020 projects, Demand Side Management & Demand Response Metering

29

DISCIPLINE DIALOGUE DIGITAL

Operational excellenceproject adoption

Further deleveraging, withhigher Capex and DPS

Dividend target of 7.5 €cent in 2019 confirmed

Extension of multi-stakeholder forum and territorial sustainability reports

Sustainability targetin management MBO

People: ageing policy, welfare, managerial development,

talent management, employer branding

Further Business Unitsprocess digitalization

New HR ERP

Strong fiber development

New IT and digital services to municipality

Strong investments in automation

30

30 actions by 2020

Piano Industriale 2015-2019

Piano di Sostenibilità

2014

GOALS and TARGETS 2030

ACTION and ENABLING DRIVERS - 2020

2030 10/17 goals

The sustainability policy and the 2030 commitments

SDG vs.

VALUE CHAIN

CIRCULAR ECONOMY

DECARBONIZATIONSMART GRID AND

SERVICESPEOPLE

INNOVATION

OUR

2030PATH

FROM TO




People & Sustainability

Financials

H1 2017 Results

A2A 2030 sustainabilitypolicy

Develop a sustainable waste management

approach for the entire life cycle

Contribute to the achievement of the

national and European objectives to reduce

GHG emissions

Increase the reliability of grids and services by increasing

the investments in technological innovation

Actively contributing to community welfare and

improved working conditions

31

CIRCULAR ECONOMY

DECARBONIZATION

SMART GRID AND SERVICES

PEOPLEINNOVATION

2016 results2020 goals

99.0%

67.0%

80.0%

56.2%

84%

98.86%Urban waste sent for recycling or energy recovery

Separated waste collection in the communities served

Impact of the recovery capacity of the material in the Group's plants on the urban waste collected

392.5

-234

1,260

Carbon intensity in electricitygeneration (gCO2/kWh)

CO2 avoided thanks to the extension of the district heating network (ktonnes/year)

Green electricity sold (GWh)

417

769

- 161

The CSI Total in “multi-client of reference” surveys (CERVED DataBank) with a value never below90%

customers with online A2A Energia services400,000

Million euro invested in the Smart City area10

268,818

1.9

92.4%

regional workshops with 30 actionsto be implemented

inspections/year at the roadwork sites of the A2A Group

Target employees involved in SmartWorking projects

15

4,000

20%

2 workshop (11 actions)

1,406

5%

A2A 2020 sustainabilityplan goals




People & Sustainability

Financials

H1 2017 Results

2020 goalalready achieved

32

1,103

Waste

31 15

Networks&

DistrictHeating

46

-88

SmartCity

2

-3

2017Ordinary

1,10629

20172016Ordinary

Energyretail

Generation& Trading

EPCG &other

Non RecurringItems

1,135*

1,120 – 1,150

~300

~0 – 100

EBITDA

2017F

NET INCOME

CAPEX

CASH FLOW

~550 – 600

1,120 – 1,150

~ +3%

€M

EBITDA

2016 – 2017




Financials

H1 2017 Results 1,165 – 1,185EBITDA

NEW 2017 OUTLOOK, REVISED UPWARDAFTER Q1’17 RESULTS

AND CONFIRMED AFTER H1’17

CASH FLOW ~100

* Central value of the range 1,120 €M – 1,150 €M considered as the reference value for EBITDA 2017. The range was revised upward to 1,165 €M – 1,185 €M after H1’17 Results presentation (for further information go to slide 64): one-offs amount to 60 €M.

33

1,135*

1,3801,380

66

422

263

141

268

78 51 3434 6

31 12

97

457

341

192

301

22%

13%

2017 WASTE ENERGYRETAIL

NETWORKSAND

DISTRICTHEATING


SMART CITY

EPCG OTHER 2021 2021REGULATED /FREE MKT MIX

REGULATED

QUASI REGULATED

MERCHANT LOW VOLATILITY

MERCHANT HIGH VOLATILITY

OTHER

EPCG

NETWORKS


WASTE

ENERGY RETAIL

SMART CITY

BYBU

BYMIX

+245

- 34- 22

8

14

* New central value of the range, excluding one-offs, is equal to 1,115 €M.

** Moreover, put option on EPCG was exercised last July.

€M

EBITDA

2017 – 2021

30%

35%2016 Consolidated Results



Financials

H1 2017 Results

**

**

34

317*

245

- 48

24

41

- 80- 29

470

EBITDA D&A PROVISIONS NETFINANCIALEXPENSES

TAXES MINORITIES2017GROUP

NET INCOME

2021GROUP

NET INCOME

+153

€M

Net Income

2017 – 2021




Financials

H1 2017 Results

* This number does not take into account the changes in EBITDA guidance and the exercise of put option on EPCG - more info on slide 63.

35

M&A

DEVELOPMENT

MAINTENANCE

MANDATORY

2017 - 2021TOTAL CAPEX

2,750

3%

57%

36%

5%


2,750

9%

47%

25%

8%

6%

1%

2%

GEN.& TRADING

RETAIL

WASTE

DISTRICTHEATING

NETWORKS

CORPORATEEPCG*

1% SMART CITY


2,750

12%

34%

1%

53%

MERCHANT

MERCHANT LOW VOLATILITY

QUASI REGULATED

REGULATED

€M

CAPEX

2017 – 2021




Financials

H1 2017 Results

* Please note, put option on EPCG was exercised last July.

36

NFP2016

3.1

Ebitda

-6.3

Change inNWC

& other asset/liab.

0.3

Use ofFunds

0.2

Tax

1.0

NetFinancialExpenses

0.5

CAPEX

2.8

Dividends& Other

0.9

NFP2021

2.5

2.5x 1.8x

* Cash flow waterfall does not take into account the effects of the put option exercised on EPCG – more info on slides 34, 63

** Inclusive of net write-offs (256 €M). By excluding net write-offs, Return on Investments is equal to 11%

-0.6

€B

~7,1%** RETURN ON INVESTMENTS ~12%

Cash flow generation

2017 – 2021




Financials

H1 2017 Results

*

37

(1) FFO = Ebitda – provisions for bad debt - net interest expense - current tax expense + dividends receivedDebt = gross financial debt net of surplus cash + employee benefits + liabilities for landfills

DPS and FFO/Debt

2017 – 2021

2013 2014 2015 2016 … 2019 2021

A2A DIVIDEND PER SHARE (€c)

3.3 3.6 4.1 4.92 ~ 7.5

Min60%

pay-outratio

FFO / DEBT 1 17% 18% ~21% ~24% > 25% > 25%

CO

NF

IRM

ED

CO

NF

IRM

ED

~ +50%2016 Consolidated Results



Financials

H1 2017 Results

38

(1) Electrical connection from road level to user’s individual apartment

LOCAL AGGREGATIONS

HEAT TRANSPORTATION BACKBONE CASSANO-MILANO

POTENTIAL DEVELOPMENT ABROAD

DISTRIBUTED ENERGYRESOURCES (DER)

PLANT RECONVERSIONS

GAS NETWORKS: FURTHER GROWTH THROUGH GAS TENDER

OPERATIONAL EXCELLENCE

REHABILITATION OF“COLONNE MONTANTI” (1)

EPCG EXIT OPTION

FEASIBILITY

Exercised in July 2017

EBITDA IMPACT

10-20

50-75

10-20

50-60

5-8

5-20

5-10

tbd

PROJECT LIST

135-210

Additional projects

€M




Financials

H1 2017 Results

MoU with “Utilities of Lombardy” signed in April 2017

«Mistral» projectlaunched in July2017

39

Waste, Retail and Networks to lead the growth

More options for generation and a more conservative energy scenario

Resilience of net income growth to commodity prices

Dividend target of 7.5 €cent in 2019 confirmed

Positive free cash flow generation with increasing Capex and dividends

Key takeaways

2017 – 2021

NO LONGERA GEN.CO.

Growth mainly driven by non-generation

businesses

Higher option value from generation assets and

Winter Package

Strong CAPEX increase in regulated/

quasi-regulated markets

Annual investments 50% higher than past three years’ average

Further optimization from operational excellence

Local aggregations, M&A, RES/DER

and other projects to strengthen A2A

positioning and to mitigate risk

Updated Project Pot

BOOST IN BUSINESSES WITH PROVEN TRACK RECORD

ROOM FORUPSIDES

OUR FUTURE IS SUSTAINABLE, GREEN, OPEN, SMART

A2A: what kind of company going forward?

40

40

ANNEXES

FY 2016 vs. FY 2015

2017B-2021 STRATEGIC PLAN

41

41

*P&L includes 5 months (August-December2016) of LGH consolidation

FY 2016 vs FY 2015 RESULTS CONSOLIDATED RESULTS: P&L*

€M

FY 2015 FY 2016 CHANGE %

42

42

€M

FY 2016 vs FY 2015 RESULTS CONSOLIDATED RESULTS: BALANCE SHEET

Intangible Assets

Shareholdings and Other Non Current Financial Assets

Other Non Current Assets/Liabilities

Deferred Tax Assets and Liabilities

Provisions for Risks, Charges and Liabilities for landfills

Employee Benefits

NET FIXED CAPITAL

Inventories

Trade receivables and other current Assets

FY 2015FY 2016 Restated %

Tangible Assets 5,129

Current tax Assets/Liabilities

WORKING CAPITAL AND OTHER CURRENT ASSETS/LIABILITIES

TOTAL CAPITAL EMPLOYED

Equity

Net Financial Position

TOTAL SOURCES

1,704

80

(82)

341

(671)

(365)

6,136

159

2,210

37

278

6,415

3,279

3,136

6,415

Trade payables and other current Liabilities (2,128)

Non current Assets /Liabilities held for sale 1

5,067 1.2%

1,348 26.4%

80 0.0%

(66) 24.2%

308 10.7%

(576)

(332) 9.9%

5,829 5.3%

184 -13.6%

1,652 33.8%

28 32.1%

180 54.4%

6,156 4.2%

3,259 +0.6%

2,897 +8.2%

6,156 +4.2%

(1,684) 26.4%

16.5%

147 n.s.

43

43

(1) FY2015 Hydro production includes 269 GWh related to Asta Cellina(2) Net of intermediated Ipex volumes

(1)

(2)

FY 2016 vs FY 2015 RESULTS VOLUMES

44

44

UM 2015 2016 2017 2018 2019 2020 2021

Exchange rate €/$ €/$ 1.11 1.11 1.06 1.08 1.11 1.13 1.16

ICE Brent €/bbl 48.4 40.7 54.5 56.5 57.7 61.1 60.3

Coal API 2 €/tonn 51.2 54.0 65.0 60.2 56.8 55.8 54.3

CO2 (EUA ETS) €/tonn 7.7 5.4 5.3 5.6 6.4 7.2 8.0

AEEGSI Gas Tariff (Pfor) €c/mc 22.9 15.6 19.6 18.0 17.3 17.2 17.7

PSV €/MWh 22.0 15.6 19.8 18.5 18.4 18.3 18.2

TTF €/MWh 19.8 14.0 18.1 16.8 16.2 16.1 16.5

PUN Base Load €/MWh 52.3 42.7 46.9 47.6 48.2 49.2 49.2

PUN Peak Load €/MWh 58.7 48.2 50.9 53.6 54.2 55.2 55.2

CCGT Gas Cost (PSV) €/MWh 49.8 37.6 46.8 43.9 43.7 43.5 43.3

Peak Spark Spread €/MWh 8.9 10.5 4.1 9.7 10.5 11.7 11.9

Spark Spread (PSV) €/MWh 2.5 5.1 0.1 3.7 4.5 5.7 5.9

Clean Spark Spread (PSV) €/MWh -0.4 3.1 -1.8 1.6 2.1 3.0 2.9

Dark Spread €/MWh 23.3 12.5 13.1 15.8 17.9 19.3 20.0

White Certificates €/Toe 104.2 145.5 130.0 150.0 150.0 150.0 150.0

2017B-2021 STRATEGIC PLANSCENARIO AND MAIN ASSUMPTIONS

45

45

2016Ordinary

231

2017

262

Urban wastetreatment

72

Other treatmentand collection

7

2021

341

* 2016 excluding one-off equal to 9€M and including LGH consolidated only for 5 months ** 2017 excluding one-off equal to 1€M

2016Ordinary

231

2017

262

Collection

5

Existing treatmentplants

(price and efficiency)

24

Volumesof new

treatment plants

61

Costs(mainly Labour)

-11

2021

341

*

**

*

**

CAGR +6.8%

CAGR +8.1%

Breakdown by BU sub-segment

Breakdown by growth driver

2017B-2021 STRATEGIC PLANBU ENVIRONMENT

Urban wastetreatment

Other treatmentand collection

CollectionExisting treatment plants (price and

efficiency)

Costs(mainly labour)

Volumesof new

treatment plants

46

46

Existing treatment

plants

• Limited volume increase, cost efficiencies and better flow management

• Full exploitation of 2016 acquisition

• About +0.5% p.a. of price increases due to Italian lack of availability oflandfills

New treatment

plants

Business Plan assumptionsDriver

• ~0.7 ktons of growing capacity on new sites, mainly related to organic andplastic treatment

• Administrative authorization on 500/700 ktons in progress

• Plant roll-outs spread through plan timespan

• Most of economic benefits from internal waste flows integration

2017B-2021 STRATEGIC PLANBU ENVIRONMENT – Drivers & Assumptions

47

47

2016Ordinary

120

2017

135

PowerMarket

44

GasMarket

33

Fixedcosts

-27

ValueAdded

Services

7

2021

192

*2016 excluding one-off equal to 24€M and including LGH consolidated only for 5 months** 2017 excluding one-off equal to 6€M

***

CAGR+9.9%

CAGR+9.2%

***Breakdown by BU

sub-segment


2017B-2021 STRATEGIC PLANBU RETAIL

Regulatedmarket

48

48

Customer Base

• Free market customer base +150K avg p.a.(1) leveraging upon:

• Gradual territory expansion

• SME segment development (new dedicated sales force)

• Brand equity

• Proven track record (average past 2 yrs growth +120K. Incl. M&A: +180K)

• No growth from M&A in the plan

Unitary Margin • Expected to reduce ~3% avg p.a. on growing competition(2)

Fixed costs

• Cost-to-Acquire, per unit, planned to grow ~5% avg p.a. on growing competition

• Steady Cost-to-Serve, per unit, thanks to strong focus on operating performance

Business Plan AssumptionsDriver

(1) Assuming current regulatory and market structure continuity(2) Mass market unitary margin – Residential and small business customers – excluding regulated components

2017B-2021 STRATEGIC PLANBU RETAIL – Drivers & assumptions

49

49

2016Ordinary

117

124

33

69

354

2017Ordinary

126

126

40

90

17

399

EE

-4

GAS

22

IWC

22

DH

10

PL

8

2021P

148

122

62

100

25

457

..

11

BU NETWORKS & HEATING

2016Ordinary

285

69

354

2017Ordinary

309

90

399

Tariffs(Gas/El./Water)

10

Gas tender

30

PublicLighting

8

CommercialDevelopment

9

EnergyEfficiency

3

Scenario

-2

2021 P

357

100

457

Networks

District Heating

*

CAGR +6.6%

CAGR +5.2%

* 2016 excluding one-off equal to 43€M and including LGH consolidated only for 5 months ** 2017 excluding one-off equal to 23€M

**

HeatingNetworks

*

**



2017B-2021 STRATEGIC PLAN

50

50

Gas tenders

Public Lighting

• #PoD: +180k (+12%)

• RAB: +200€M

• #ATEMs: 10-15 (target @ 2021)

• Capex: +320€M

• Lighting points 2x (over 400K)

• New Tenders

• 1 M&A transaction (H2 2017)

Commercial development

• DH development mainly in eastern Milan area (saturation of Silla 2 WTE plant thermal capacity)

• New connections: 44 MW/Yr (vs. 60 MW/Yr average past 3 yrs)

Energy Efficiency

• Full potential exploitation of 2016 acquisition

• Synergies between A2A technical skills and Consul System market leadership in “white certificate” origination


2017B-2021 STRATEGIC PLANBU NETWORKS & HEATING – Drivers & Assumptions

51

51* 2016 excluding one-off equal to 52€M and including LGH consolidated only for 5 months ** 2017 excluding one-off equal to 5€M

*

**

*

CAGR -3%

CAGR +2.8%

**

Ordinary



2017B-2021 STRATEGIC PLANBU GENERATION & TRADING

52

52

Hydro & Coal

• Production in line with 10-year average

• PUN baseload 2021: 49 €/MWh

• Achieved price vs. PUN BL same as historical average (6 €/MWh)

• Higher Dark Spread to 12 €/MWh

CCGT plants

• 2 TWh Increase in MGP production due to:

‒ Expected increase of “thermal” demand of ~10 TWh, to be supplied by CCGT

‒ Best positioned CCGT :

‒ Located in the North

‒ With spare capacity

Capacity & AncillaryMarkets

• MSD in line with average historical margins

• Capacity market reduced to 13 €K/MW due to elimination of flexibility segment by EU


SFM• Contractualized as “must run” up to 2021

2017B-2021 STRATEGIC PLANBU GENERATION & TRADING– Drivers & Assumptions

53

53

H1 2017CONSOLIDATED

RESULTS

54

54

1H 2016

614

1H 2017

649

1H 2016

2,323

1H 2017

2,918

FY 2016

3,136

1H 2017

3,047

1H 2016

254

1H 2017

157

1H 2016

212

1H 2017

252

REVENUES EBITDA

GROUP NET INCOMENET FINANCIAL

POSITION

€M

+26%

-38%

+6%

GROUP ORDINARY NET INCOME*

+19% -89€M

* Excluding extraordinary items

1H 2017 HIGHLIGHTS AND KEY FINANCIAL INDICATORS

+ -

Hydro volumesCCGT performance,

MGP and MSD

LGH: standalone growthand FY consolidation

Non recurringYoY comparison

Organic growth in DH, Networks and Waste

EPCG put option exercise effects

1st Plastic Treatment Plantin construction

ASVT and Patavina Techacquisitions

MoU with “Utilitiesof Lombardy”

extended to September

Project Mistral on operating excellence

Kicked off

With impact on

2017 1H economics

2nd Plastic TreatmentPlant construction

authorisation granted

55

55

2016

614

-80

2016Ordinary

53429 6

2234 0 2

-23

604

45

2017

649

2016Non

RecurringItems/

redundancyschemes

Gener&

Trading

EnergyRetail

Waste Networks&

DistrictHeating

SmartCity

Corporate EPCG 2017Ordinary

2017Non

RecurringItems/

redundancyschemes

€M+35

+70

1H CONSOLIDATED RESULTSGROUP EBITDA

56

56

2016

170

2016Non

RecurringItems

-14

2016Ordinary

156

-17

27 4 2 3

-9

13

LGH

4

2017Ordinary

185 1

2017

186

Environ.Market

Plants'Hedging

andDispatching

TradingPortfolio

Other Fixedcosts

SFMEBITDA

GasMargin

2017Non

RecurringItems

+16

+29

1H CONSOLIDATED RESULTSGENERATION & TRADING EBITDA

€M

• CCGT performance more than offsetting low hydro production• Excellent results on Gas optimization• Lower environmental markets margin

57

57

2016

73

-7

2016Ordinary

66

PowerMarket

-3

GasMarket

2

FixedCosts

-2

Other

0

LGH

9

2017Ordinary

725

2017

77

2016Non

RecurringItems

2017Non

RecurringItems

+4

+6

• Free market customer base more than 100K• Reduction in Unitary Margins mainly due to higher

unbalancing costs (price effect)

1H CONSOLIDATED RESULTSENERGY RETAIL EBITDA

€M

58

58

2016

36

80

119

2016Non

RecurringItems

-8

2016Ordinary

36

72

111

Collection

-3

UrbanWaste

TreatmentPlants

5

OtherTreatment

Plants

3

InternationalProjects

0

LGH

17

2017Ordinary

17

77

33

1334

2017

18

80

33

137

21

21

1

5

2017Non

RecurringItems

1

5

+18

Other Treatment Plants

Collection

Urban Waste Treatment Plants

+22

• Positive treatment plants margins thanks to higherprices and quantities

1H CONSOLIDATED RESULTSWASTE EBITDA

International Projects

€M

Collection +2.9€M

Treatment +14.7€M

59

59

2016

53

60

66

42

6

227

2016

Ordinary

52

60

14

44

6

176

Electricity

Networks

2

Gas

Networks

4

Water

Cycle

3

District

Heating

10

Public

Lighting

1

LGH

14

2017

Ordinary

17

56

62

14

54

7

210

2017

16

58

64

15

85

7

245

2016

NonRecurring

Items

51

2017

NonRecurring

Items

35

+18

+34

Gas Networks

ElectricityNetworks

Water Cycle Public Lighting Heating

• DH benefitting from higher gas prices, commercial developmentand temperature effect

• Positive white certificates margin

1H CONSOLIDATED RESULTSNETWORKS AND DISTRICT HEATING EBITDA

€M

LGH (Networks & Heating)

60

60

2016

13

22

35

Generation and Retail

-23

Distribution

0

2017

13

-1

12

-23

Energy

DistributionLow hydro production (-55%): higher import (at

very high prices)

1H CONSOLIDATED RESULTSEPCG EBITDA

€M

61

61

1H 2017

EBITDA

649

Change

in NetWorkingCapital

-33

Change in

otherassets/

liabilities

-139

Use of

Funds

-10

Tax Paid

-1

Net

FinancialExpenses

-53

FFO

(1)

413

Capex

-171

Dividends

-153

Free

CashFlow

89

Share

Buyback

0 89

Net FreeCash

Flow

1H 2017EBITDA

649

D&A

-209

RiskProvisions

-11

Non rec.transact.

1 4

NetFinancialExpenses

-61

-95

EBT

278

Taxes

-119

Net resultfrom

discontinuedoperations

1

Minorities

-3

1H 2017Net

Income

157

Investmentscarriedat equity

EPCGwrite-down

andput option

discount

FROM EBITDA TO GROUP NET INCOME AND TO FREE CASH FLOW

1H CONSOLIDATED RESULTS

€M

(1) -95€M, of which:• -60€M D&A (EPCG write-down)• -35€M Net Financial Expenses

(1)

(2) Funds from operations afterworking capital change

(2)

62

62

BREAKDOWN BY ACTIVITY BREAKDOWN BY BUSINESS

+41 +41

CAPEX


€M

2016

8

28

78

1

10

130

2017

11

42

98

9

4

4171

2

3

3 Generation &Trading

Energy Retail

Waste

Networks and DistrictHeating

Corporate

A2A Smart City

EPCG

2016

61

58

11

130

2017

67

78

13

13

171

Maintenance

Development

Mandatory

M&A

63

63

-30

EPCG Expected 2H EBITDA

Delta EBITDA

-1

Fair Value Adj. of theinvestment in EPCG to the

Put Option NPV

-95

A2A Shareof EPCG

2H expected Net Income

Delta Group Net Income

EPCG Positive NFP as of 30/06/17

-206

Delta Net Financial Position

EFFECT OF THE DECONSOLIDATION OF EPCG ON FY 2017 FORECAST

In H1 17 accounts, the new valuation of EPCG ledto a total write-down of 95 €M, of which:

• 60 €M, as the adjustment of the assetvalue to the PUT Option value (250 €M);

• 35 €M, as effect of the discounting of theseven equivalent annual cash ininstalments (starting from May 2018)

64

64

H1 CONSOLIDATED RESULTSEBITDA GUIDANCE

CONF. CALLMAY 10, 2017

2H EPCGDECONSOLIDATION

EFFECT -30€M

HIGHER FULL YEAR NON

RECURRING ~+25€M

1.170 1.190

1.140 1.160

1.165 1.185

€M

€M

€M

FREE CASH FLOW ~100€M

GUIDANCE CONFIRMED

65

65

EBITDA

Ordinary D&A

Provisions

EBIT

Net Financial Expenses

Associates & JV

EBT

Taxes

Minorities

GROUP NET INCOME

1H 2016 1H 2017 %

+5.7%

-5.6%

+69.4%

-2.9%

-52.4%

-

-25.5%

-12.3%

n.s.

REVENUES +25.6%

CHANGE

-11

+25

-11

-33

-

-95

-13

+10

+595

649

(209)

(11)

369

(96)

4

278

(119)

(3)

614

(198)

(36)

380

(63)

4

373

(106)

(13)

254

2,9182,323

Result from non recurr. transactions n.s.-51152

-38.2%-97157

Net result from discontinued operations n.s.+11-

+35

EPCG write-off n.s.-60(60)-

1H CONSOLIDATED RESULTS – P&L

€M

H1’17 ANNEXESH1’17 ANNEXES

66

66

Intangible Assets

Shareholdings and Other Non Current Financial Assets

Other Non Current Assets/Liabilities

Deferred Tax Assets and Liabilities

Provisions for Risks, Charges and Liabilities for landfills

Employee Benefits

NET FIXED CAPITAL

Inventories

Trade receivables and other current Assets

31.12.2016Restated

30.06.2017 %

Tangible Assets 5,129

Current tax Assets/Liabilities

WORKING CAPITAL AND OTHER CURRENT ASSETS/LIABILITIES

TOTAL CAPITAL EMPLOYED

Equity

Net Financial Position

TOTAL SOURCES

1,704

80

(82)

341

(671)

(365)

6,136

159

2,210

37

278

6,415

3,279

3,136

6,415

Trade payables and other current Liabilities (2,128)

Non current Assets /Liabilities held for sale 1

4,979 -2.9%

1,709 0.3%

76 -5.0%

(76) -7.3%

297 -12.9%

(636)

(348) -4.7%

6,001 -2.2%

168 5.7%

1,878 -15.0%

(30) n.s.

356 +28.1%

6,358 -0.9%

3,311 +1.0%

3,047 -2.8%

6,358 -0.9%

(1,660) -22.0%

-5.2%

1 n.s.

BALANCE SHEET


€M


67

67

BondsLoans

GROSS DEBT MATURITIES AS OF 30/06/2017


€M

2017

50

50

2018

300

96

396

2019

567

99

666

2020

145

145

2021

430

95

525

2022

500

91

591

2023

300

86

386

2024

300

64

364

2025

300

65

365

2026

47

Beyond

2026

98

180

278

47


68

68

RELAUNCH

• 1st Plastic treatment plant (Cavaglià): construction phase started

• 2nd Plastic treatment plant (Muggiano): construction authorisationgranted

• 1st FORSU plant: VIA presented

• More than 100,000 new mass-market contracts

• Increase to 90% of Lumenergia share capital (now fully consolidated)

• LGH:

‒ waste collection for 160k inhabitants in 49 municipalities in Cremona area

‒ start-up of subsidiary rationalization

REGENERATION

RESHAPE

• Public Lighting: Lainate tender won

• Acquisition of Patavina Technologies to develop IoT solutions

• A2A Smart City technological partner in “Oltre la Strada”, an urban regeneration program

• Launch of Milan E-HUB with 74 charges points expandable up to 132 electrical setup to serve Unareti EV fleet

• energy production +3% vs. Q2 2016: CCGT more than offsetting lower hydraulicity

UPDATE 3RH1’17 ANNEXESH1’17 ANNEXES

69

69

DISCIPLINE, DIALOGUE &

DIGITAL

• Lean Project underway, operational efficiencies already achieved; LGH started the lean roll-out in Q2

• 860 managers participated in ABC management development project focus on Listening, Needs and Change

• New external lighting concept at Vittoriale

• 2 new territorial sustainability reports presented (Milan and Bergamo)

• Winner of TopLegal Corporate Counsel Awards 2017 for Corporate Social Responsibility

• Company sustainability commitment strengthened: A2A Ambienteawarded ISO 50001: 2011 – Energy Management System certification for its WTE plants in Brescia, Milan and Corteolona

• A2A Energia project to identify digital championships, to improve digital relationships with customers

• Roll out of Work Force Management in Unareti and A2A Ciclo Idrico

• Start up of Maximo Refoundation project – new operation&maintenancesystem for networks: adoption of mobile technologies to maximize efficiency

ADDITIONAL• A2A, ACSM-AGAM, ASPEM, AEVV and Lario Reti Holding – deadline of

MoU extended to the end of September

UPDATE 3DH1’17 ANNEXESH1’17 ANNEXES

70

70

(1) Net of intermediated Ipex volumes

(1)

VOLUMES

1H CONSOLIDATED RESULTSH1’17 ANNEXESH1’17 ANNEXES

71

71

ENERGY SCENARIO


(1) Gas at virtual trading point

(2) Pfor 162/14 Oct 2014-Mar 2016.

(3) hourly average for each month

(4) based on gas at virtual trading point with 51% efficiency; includes transport costs

(5) 35% efficiency - includes cost spread on API2 and transport cost

Average data1H

20161H

2017D % vs

2016

Brent $/bbl 41,0 52,8 29%

CO2 - EU ETS cost €/Tonn 5,7 5,0 -13%

Green Certificates €/MWh 99,6 0,0 -100%

€/$ €/$ 1,1 1,1 -3%

Brent € €/bbl 36,7 48,9 33%

PSV(1) €/MWh 14,6 19,3 32%

AEEGSI Gas Tariff (2) c€/mc 16,0 19,1 19%

Coal € (API2) €/Tonn 42,0 72,9 74%

PUN baseload(3) €/MWh 37,0 51,2 38%

PUN peak(3) €/MWh 40,9 57,4 40%

PUN off-peak(3) €/MWh 34,9 47,7 37%

CCGT gas cost(4) €/MWh 35,3 45,5 29%

Spark Spread CCGT_PSV vs Baseload €/MWh 1,7 5,6 n.a.

Spark Spread CCGT_PSV vs Peakload €/MWh 5,6 11,8 n.a.

Spark Spread CCGT_PSV vs Off-Peak €/MWh -0,4 2,2 n.a.

Clean Spark Spread vs Baseload €/MWh -0,4 3,8 n.a.

Clean Spark Spread vs Peakload €/MWh 3,4 9,9 n.a.

Clean Dark Spread vs Baseload(5) €/MWh 6,2 9,3 50%


72

72

A2A Investor Relations Team

Mail: [email protected]

Phone: +39 02 7720 3974

http://www.a2a.eu/en/investor/

CONTACTS AND IR PRODUCTS

a2a2017Investor Guidebook

InvestorDatabook(excel file)

Concise and thorough insight in the A2A Group in the form of a longpresentation divided into three main parts: Our World, Our Results and OurResponsibilities. The selected contents are all publicly available information,which you may find spread across a large number of Company documents

• Historical economic, financial and operational company data as of 2008 –on annual and quarterly basis

• Economic, financial and operational data useful for building A2A earningsmodel – 2015 FY reported and 2016-20 BP forecast

• Tables of the Investor Guidebook mainly relevant to a quantitative analysis

Periodic update for investors and analysts

on the significant steps of A2A Business Plan

– such as relevant investments, new

projects, achievements, contracts,

agreements.

https://www.a2a.eu/en/investors/documen

ts#BPN

Brief and synthetic document that shows the highlights and the strengths ofA2A business model

Moreover A2A publishes the following documents in the Investor Library Section on A2A website:• Documents prepared by the Market Analysis, Modeling and Pricing Unit of A2A

- Overview of the Italian Energy Market (yearly basis)- Notes on energy and environmental markets (quarterly basis)

• Documents prepared by Divisional Managers of A2A- A2A Environment BU- A2A Networks & Heat BU- Main Regulatory Issues for Investors

Newsletter

Publications

The publications are available at the following link: http://www.a2a.eu/en/investor/guidebook/

a2a2017Company Profile

This document has been prepared by A2A solely for investors and analysts. This document does not constitute an offer or invitation to purchase or subscribe any shares or other securities and neither it nor any part of it shall

form the basis of or be relied upon in connection with any contract or commitment whatsoever. Some information contained herein and other material discussed at the meetings may include forward-looking information based

on A2A’s current beliefs and expectations. These statements are based on current plans, estimates, projections, and projects and therefore you should not place undue reliance on them. Forward-looking statements involve

inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factors include, but are not limited

to changes in global economic business, changes in the price of certain commodities including electricity, gas and coal, the competitive market and regulatory factors. Moreover, forward-looking statements are current only at

the date on which they are made.

https://www.a2a.eu/en/investors/documents

https://www.a2a.eu/en/investors/documents

http://www.a2a.eu/en/investor/guidebook/