June 2018
EBITDAHigher and more
stable margin
CAPEXInvesting more
with quality
DPSDividends
growing steadily
+ 18% + 60%+ 61%
NFP/EBITDACapital structure
reinforced
- 18%
ROIGrowing, stable
return >10%
+ 52%
2017 vs. 2014 - Delivered Industrial and Financial Value
A2A
&
LGH
M&A - Largest territory aggregation
2018 CompanyProfile
+ other 13 acquisitions
0
500
1,000
1,500
2,000
2,500
€M
15,555
2,022
1,604
The market has rewarded A2A Strategy2017 EBITDA - A2A a highly diversified utility
A2A shareholding structure(1)
CREDIT RATING
Standard & Poor’s
BBB/A-2
Outlook Stable
Moody’s
Baa2
Outlook Stable
Financial Highlights – Growth oriented multi-utility
2
A2A - THE LEADING ITALIAN LOCAL UTILITY
60
80
100
120
140
160
180
200
A2A
FTSE MIB
EUROSTOXXUTILITIES
FTSE ITALIAALL-SHAREUTILITIES
17 June 2014 = 100 (first appointment of current top management)
(1) At December 31, 2017. Recent updates available at the following link.
Shareholding Pact on 42%
Source: A2A analysis on Company data
1,211985
840 820776
472
84 39 22
(1) Ordinary EBITDA Equal to 1,164 €M, calculated as Reported EBITDA (1,211 €M) net of non recurring items (64 €M), EBITDA from “Corporate” (-29 €M), EBITDAfrom EPCG (12 €M). Put option on EPCG stake was exercised by A2A in July 2017
(2) New perimeter of the old Energy Retail BU, including also Energy Efficiency, Public Lighting, Smart City and E-Mobility.
Sources: A2A Strategic Plan, 2017 Results & Business Plan Update; Company Annual Reports
2017 OrdinaryEBITDA (1)
3
GENERATION & TRADING
Fuel sourcing
Power generation (Thermoelectric and RES)
Whole-sale & Trading
353 €M 30%
MARKET(2)
Electricity andgas sales
free market regulated market
WASTE
173€M 15%
Industrial Waste Treatment
Collection and street sweeping
Urban Waste Treatment
Material Recovery
Electricity and Heat production
NETWORKS
Integrated Water Cycle
Electricity distribution
Gas distribution
HeatDistribution
Cogeneration, heat recovery and
sales
Public Lighting
NETWORKS HEAT
78 €M 7%309 €M 26%251 €M 22%
New Energy Solutions (Energy Efficiency,
E-mobility and Smart City)
Flexible and greener
energy
More solutionsto involve customers
Value from endto beginning
Smarter and more reliable
A2A unique business portfolio with a well balanced volatility/growth mix
Maximization of cross-BU synergies
GENERATIONMARKET
WASTE
NETWORKS
EBITDA Growth ’17-’22E
Vo
latility
1st energy producer from WTE plants
2 GW hydro installed capacityIncumbent in the
key areas 1st domestic operatorLeader for quality and customer satisfaction
A2A - THE LEADING ITALIAN MULTI-UTILITY
4
G
G
GG
G
G
PL
G
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W
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E G
E
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G DH
DH
DH
DH
DH G
G
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C
C
C
C
C
C
C
C
C
C
Italy Lombardy
WasteWaste collectionTreatment plantsBiogas/Biomass plantsWaste-to-Energy
GenerationHydroelectricCCGT CoalFuel OilSolar
E
GW
PL
C
DH
Technological partnerships abroad on waste treatment plants (UK, Spain and Greece)
NetworksElectricityGasWaterPublic LightingCogen. & thermal plantsThermal solar plantsDistrict Heating
A2A operates throughout Italy, predominantly in Lombardy
A2A GEOGRAPHICAL PRESENCE
A2A: ASSET PORTFOLIO
5
First class asset base - plants and networks Long term concessions increase visibility
A2A: NEW STRATEGIC FRAMEWORK AND KEY ACTIONS
6
Strategic VIEWaligned to medium-long term trends
(looking forward 2030)
MAININDUSTRIAL TRENDS
Landfills phase out
Acceleration in sorted collection
Waste system balance and material recovery
Decarbonization
Energy Democracy
Reduction of PV and windLCOE
Energy Efficiency
Smart Services
Green mobility
CIRCULAR ECONOMY
SMART SOLUTION
ENERGY TRANSITION
• Multi-business operation synergies (e.g. smart meters deployment, gas/ee integration in Unareti)
• Adoption of automated and digital solutions for asset and workforce management
MARKET
GENERATION WASTE
NETWORKS
• Further expansion of RES platform
• Conventional plants reconversion
• Leadership consolidation in flexible CCGT plants, optimizing risk/return ratio thanks to Capacity market
• Improvement of gas sourcing
• Match of growing need for peak capacity
• Exploration of innovative flexibility services
GREENERPORTFOLIO
LEADERSHIPIN GAS-FIREDGENERATION
ADEQUACY & FLEXIBILITY
PROVIDER
FROM WASTE TO COMMODITY
END-TO-END PARTNER FOR
URBAN SERVICES
CONTINUOUS TECHNICAL
INNOVATION
• Become leader in recycling, selling high-quality secondary raw materials
• New WTE capacity to maintain safety of the Italian waste treatment system
• Enlarging geographic presence, leveraging on value chain integration
• Smart and innovative solutions for our territories
• Maintain plants at best available technologyfor environment sustainability
• Improve circularity with innovation
CUSTOMER FOCUS
• Outstanding client service, with new multi-channel customer experience
• Preservation of excellent operations
• VAS in safety, comfort, energy-saving
• Energy advisor for SMEs and large enterprise
• Digitalization to enhance service/acquisition
BOOSTIN NEW
SERVICES
• New services: flexibility, DERs and storage
• New EPCs in energy efficiency services
• Organic growth in Public Lighting
• Expansion of electric mobility business
M/L TERM CHALLENGE
• Innovation & Digital to develop new services
• Unlocking IoT opportunities
CROSS-BUSINESS SYNERGIES
SMART GRID AND QUALITY
IMPROVEMENT
GASTENDERS
• Achieve smart and resilient networks
• Improve energy efficiency of DH networks
• Develop water cycle performance
• Selective growth in high-priority ATEMs
• Focus on geographical consolidation
a2a T
2018 2022
TTransformation
a2a E
2018 2022
EExcellence
a2a C
2018 2022
CCommunity
Sustainability Inspiring principle of enterprise development
business strengthening& change
agile organization, leader in operational excellence
attract and empower people engage external ecosystem
Further information on A2A strategy is availableon the Group website at the following links:
Strategy Section
New Strategic Plan 2018-2022
7
A2A: STRATEGIC PLAN IN A NUTSHELL
2018 Guidance
5.822%
2017
6.722%
2018
~7.522% 2019
min +5% yearlymin 24%
2020
2022
A2A DIVIDEND PER SHARE (€c)FFO/NET DEBT
Better dividends visibility
with stronger capital structure
Dividend Policy
KEY FINANCIAL HIGHLIGHTS – 2017 to 2022
-29 -14
353
-592
9559
15
348
173 265
251
346
387
445
CAGR +4.1%
€M
Generation Market Waste Networks Other2017 Recurring
2022
+256 €M
1,135
1,391
EBITDA 2017-2022
EBITDA 1,150 – 1,180 €Mplus 20-30 non recurring
Net Income 360 – 390 €M
CAPEX 600+ €M(2)
Net Free Cash Flow(3) 0 – 100 €M
32%
30%
16%
22%
1,391
2022
Merchant High Volatility
Merchant Low Volatility
Quasi Regulated
Regulated
(2) Incl. ~60 €M M&A;(3) Excluding change in perimeter
2017
2022
Ordinary EBITDA
1.1 € Bn
~1.4 € Bn
Ordinary Net Income
293 €M
482 €M
Net Debt
3.2 € Bn
~3.0 € Bn
CAPEX 2018-2022: ~2.8 €Bn(plus 0.5 €Bn of RES development)
ROI stable >11%
NFP / EBITDA
2.7 x
~2.2 x
Excellence - Agile organization
MISTRAL
En&A
2015 2016 2017 2018 2019 2020 2021 2022
~60-70 €M net additional EBITDA fully consolidated
Almost complete coverage of Lombardy
Open to new aggregation opportunities
Additional Projects – Aggregations
Northern Lombardy Multiutility
47
82
130153
175201
219 227
€M
Key Levers: Digitalization & technological innovation
En&A project: 65% of target savings already achieved
Strong confidence to deliver higher quality results
Potential for upsides including local aggregations
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A2A SUSTAINABILITY EMBEDDED IN STRATEGIC PLAN
GENERATION MARKET WASTE NETWORKS
60+ core goals built on our sustainability pillars
SMART GRID AND SERVICESCIRCULAR ECONOMY DECARBONIZATION PEOPLE INNOVATION
ONLINE MEMBERS OF A2A ENERGIA COMMUNITY
K
SMART WORKING% on total employees applicable
MATERIAL RECOVERY RATE IN A2A PLANTS ON TOTAL WASTE COLLECTED
CO2 /kWh CARBON INTENSITY
g/kWh
• The shift to a traditional governance model, occurred in June 2014, facilitates decision making and emphasizes the central role of the Board of Directors
• 100% executives with sustainability MBOs (weight increased from 5% to 10% for the CEO/Managing Director)
• A2A adopts a prudent energy risk policy, part of its ERM model, whose purpose is to further develop and integrate risk management into the business process
% sorted collection
New recycling plants
Project on reduction/ reuse/recycle
Water network losses
Depurated waste water
Digital users
# LED lighting points
EV charging stations
Contact centre quality
Smart bins Smart meter
Service interruption
Smart grid
GOVERNANCE
CO2 emissions reduction Energy efficiency projects
Green energy sold to Mass Market
Low-impact vehicles DH users
Dispersed heat recovery and DH non-fossil sources
Smart city projects
Banco dell’Energia step 2
Roadwork siteinspections
Reduction of the accident rate
Environmental education
CIRCULAR ECONOMY
DECARBONIZATION
SMART GRID AND SERVICES
PEOPLE INNOVATION
E
S
G
Integration of Sustainability Plan and Financial BP @2022 in line with 2030 sustainability goals