A2A ENERGY RETAIL BU
Andrea Cavallini - Head of A2A Energy Retail Business Unit
September 2017
2
A2A Energy Retail BU Meeting participants
1. Andrea Cavallini – Head of A2A Retail Business Unit
2. Gabriela Vittorio – A2A Energia Customer Service Manager
3. Paolo Bellotti – A2A Energia Marketing and Sales Manager
3
A2A Energy Retail BU A2A Energia – Company organisational structure
SALES PLANNING& CONTRACT
MANAGEMENT
CHAIRMAN AND CEO
CORPORATECUSTOMERS
Back Office and Third
Parties
Contact Center
Metering and Billing
Credit Management and
Collection
Customer SatisfactionPlanning and Marketing
Research
Marketing
Mass Market Sales
Large Customers and
Resellers Sales
Customer
Experience & Digital
Condominiums and Heat
Services
MARKETINGAND SALES
CUSTOMERSERVICE
A. Cavallini
G. VittorioP. Bellotti
4
A2A Energy Retail BU A2A Group at a glance – The leading Italian Multi-Utility
G
G
G G
GG Legenda
EnvironmentWaste collectionTreatment plantsBiogas/Biomass plantsWaste-to-Energy
Generation & Trading HydroelectricCCGT CoalFuel OilSolar
PL
G
DHEG
W
GW
E G
EDHG
G DH
DH
DH
DH
DH G
G
PL
PLPL
C
C
C
CC
C
C
C
CC
A2A Footprint
Financial Highlights
(1) 2016 figures restated after the completion of the Purchase Price Allocation (PPA) process on LGH Group assets.
(2) Group net income adjusted for the impact of extraordinary items: 377 €M in 2016; 278€M in 2015; 175€M in 2014; 156€M in 2013
GENERATION & TRADING
352 €M 31%
ENERGY RETAIL
ENVIRONMENT
120 €M 11%
EPCG(Montenegro)
69 €M 6%
NETWORKS & HEATSMART CITY
6 €M 1%
NETWORKS HEAT
69 €M 6%285 €M 25%231 €M 20%
NetworksElectricityGasWaterPublic Lighting
HeatCogen. & thermal plantsThermal solar plantsDistrict Heating
C EGWPL
DH
2016EBITDA(3)
A2A shareholding structure at 30 June 2017
Lombardy
Italy
(3) Equal to 1,132 €M, calculated as Reported EBITDA (1,231 €M) net of non recurring items (128 €M) and EBITDA from “Corporate” (-29 €M)
50.8% 49.2%
49.2%
0.8%
25.0%
25.0%
0% 20% 40% 60% 80% 100%
Total
Market
Treasury Shares
Municipality of Milan
Municipality of Brescia
EPCG deconsolidated as of H22017 (Put option on EPCG wasexercised in July 2017)
Energy Retail:
strong presence in Lombardy
A2A Energy Retail BUHighlights
A2A ENERGY RETAIL BU
100%
90.3%
50%
From July 2017 A2A has increased its stake in
LumEnergia to 90.3% from previous 33.3% after the exercise of a call option.
LumEnergia operates electricity (8,000 clients) and gas (1,000 clients)
supply activity in the area between Lake Iseo and Lake
Garda & has an EBITDA <€1m.
Retail sale of power and natural gas to customers in the free market and served under the protection scheme
BUSINESS UNIT OVERVIEW KEY NUMBERS
(2)
(1) Aspem Energia was merged into A2A Energia at the end of 2016
(2) Holding held by Linea Group Holding S.p.a.
120 €M ordinary EBITDA in 2016
Over 8.0 TWh of Power sales
of which 2.0 Twh on the Regulated market
Gas Sales at ~1.4 Bcm
of which 0.6 Bcm on the Regulated market
More than 1 Million of customers in
the Power market
1.3 Million of customers in the
Gas market
Commercial development:
~+120k net customers acquired on the
Free market in 2016 excluding externalgrowth
(1)
5
A2A Energy Retail BUCustomer Base
FREE MARKET
REGULATED MARKET
POWER GAS
~340k customersin all sectors (Large Customers, Small Businesses, SME, Condominiums,
Residential)
~700k customers(Residential and
Small Businesses)
~360k customersin all sectors (Large Customers, Small Businesses, SME, Condominiums,
Residential)
~950k customers(mainly Residential)
Market
Segment
• Increasing customer base
• Customers growth boththrough direct channels(Key Account Manager, Call Center, Contact Center) and indirect channels (Reseller, Agents, Telesellers), depending on customertargets
• Decreasing customerbase due to switch to Free Market
6
A2A Energy Retail BUA2A market positioning in 2016 – Volumes sold
A2A is among the top
players in the energy
retail sector in Italy
Source: AEEGSI Annual Report, March 2017
# Operators = 393
# Operators = 542 # Operators = 131
7
8
A2A Energy Retail BUStrategy and Track record
MISSION AND VALUES
PROFITABILTYCASH FLOW
GENERATION• FAIRNESS AND TRANSPARENCY
• EXCELLENCE IN SERVICE
-50
0
50
100
150
200
250
2011 2012 2013 2014 2015 2016
BASE INDEX FOR YEAR 2011 = 100
REVENUES EBITDA EBITDA RECURR. NFP
COMMERCIAL STRATEGY
OPERATING PERFORMANCE
RETENTION
CHURN RATE
SUSTAINABLE
COST TO ACQUIRE
• RISK/RETURN PROFILE OPTIMIZATION
• FOCUS ON MMK
• FREE MARKET DEVELOPMENT
• NEW SERVICES OFFERING
• EFFICIENT COST-TO SERVE
• EFFECTIVE WORKING CAPITAL MANAGEMENT
1.
2.
3.
Figures related to A2A Energia
First player in terms of customersatisfaction for the 5th consecutive year
9
A2A Energy Retail BUCustomer Service excellence1.
90.8 91.492.4
88.5 88.5
90.3
2014 2015 2016
A2A Energia Standard di Mercato
73.5
74.6
72.5
73.7
74.8
72.6
72.8
73.4
72.3
INDICE DISODDISFAZIONE
Soddisfazionecomplessiva
Soddisfazionerispetto alleaspettative
Market Average
CUSTOMER SATISFACTION INDEX
MONITOR ENERGIA E GAS CERVED 2016
FREE MARKET CUSTOMER SATISFACTION SURVEY
DOXA 2017
Benchmark 67-72
Satisfaction Index
Overall satisfaction
Satisfaction vs expectations
∆ 17/16
+0,5
+0,4
+1,3
+0,7
+0,5
+1,2
+0,5
+0,2
+1,6
TOTAL RESIDENTIAL BUSINESS
Above sector’s benchmark, with improvingresults compared to 2016
Figures related to A2A Energia
10
A2A Energy Retail BUPower and Gas sales evolution by market/segment2.
Commercial Strategy focused on margins and creditworthiness rather than volumes/revenues increase, resulting in a redefinition of the sales mix in Power and Gas Markets both:
- in terms of markets: higher incidence of Free Market vs Regulated Market
- in terms of segments: focus on Mass Market customers (MMK), with lower incidence of Large customers on total sales portfolio
2011
9.7
2.8
12.5
2016
6.3
2.0
8.3
FREE vs REGULATED
SALES
Customer Base ~1.1 mn
78%
22%
76%
24%
~1.0 mn
FREE MMK vs LARGE
CUSTOMERS SALES
POWER (TWh) GAS (Bcm)
2011
0.6
1.0
1.6
2016
0.8
0.6
1.4
2011
0.7
9.0
9.7
2016
1.3
5.0
6.3
2011
0.1
0.5
0.6
2016
0.3
0.5
0.8
Customer Base ~1.3 mn~1.2 mn
Free
Regulated
Free
Regulated
43%
57%
63%
37%
Free MMK
Free Large customers
Free MMK
Free Large customers
7%
93%21%
79% 83%
17%
62%
38%
11
FREE MASS MARKET CUSTOMER BASE EVOLUTION (‘000 POD)
+130K Free MMK POD/PDR
following LGH partnership
2014FY
149
173
322
Q115
165
193
358
H115
179
210
389
9M15
192
224
416
2015FY
208
236
444
Q116
222
250
473
H116
235
258
493
9M16
330
322
652
2016FY
356
338
694
Q117
382
371
753
H117
397
405
802
2019
~1,200
Gas Free mktPDR ('000)
Power Free mktPOD ('000)
A2A Energy Retail BUFree Market Customer Base development
‘000POD
2.
>2X Free Market Customer Base
already achieved in 2016FY vs 2014FY
~4X Free Market Customer Base target in 2019
(incl. external growth), exceeding 3X previous target
~15% ~30% ~50%~20%
% Free Market on
total customer
12
A2A Energy Retail BUPower and Gas Regulated vs Free Mass Market
Regulated
customer
Free MMK
customer
Regulated component(RCV/PCV)
Raw material margin
POWER MARKET BREAKDOWN
POWER CONTRIBUTION MARGIN PER CLIENT
Avg POD
number ('000)
Volumes
(GWh)
Contribution
margin (€M)
Contribution
margin per POD(€/POD)
Regulated
Free MMK
See details below
Regulated
customer
Free MMK
customer
Regulated component(QVD)
Raw material margin
GAS MARKET BREAKDOWN
GAS CONTRIBUTION MARGIN PER CLIENT
Avg PDR
number ('000)
Volumes
(Mmc)
Contribution
margin (€M)
Contribution
margin per PDR(€/PDR)
Regulated
Free MMK
See details below
2.
Figures related to A2A Energia
13
A2A Energy Retail BUValue Added Services
ENERGY
PROVIDER
ENERGY
ADVISOR
KIT LED
CALDAIA2A
CLIMA2A
From:
To:
NEW OFFERINGS:
Maintenanceservices
IoT solutions
Dec 2015
Sept 2016
May 2017
2018
RELAMPING
Jul 2016
E-MOBILITY
Dec 2017
Residential Customers
Small Businesses and Condominiums
LOGO Technologic partner
2.
CAS@CCOGLIENTE
Feb. 2016 CONDOMINIUMS SERVICES
Apr 2016
ENERGY AUDITS
Jan 2016
14
A2A Energy Retail BUWorking Capital optimization3.
2012-2016 PAST DUE RECEIVABLES
2012-2016 DSO(1) EVOLUTION
2012-2016 NFP EVOLUTION
-40
-20
0
20
40
60
80
100
120
QI QII QIII QIV
BASE INDEX FOR YEAR 2012 = 100
2012 2013 2014 2015 2016
0
20
40
60
80
100
120
QI QII QIII QIV
BASE INDEX FOR YEAR 2012 = 100
2012 2013 2014 2015 2016
40
60
80
100
120
140
QI QII QIII QIV
BASE INDEX FOR YEAR 2012 = 100
2012 2013 2014 2015 2016
Figures related to A2A Energia
(1) Days Sales Outstanding
15
A2A Energy Retail BU2017-2021 BU Strategic Plan drivers and assumptions
Customer Base
Unitary Margin
CtA & CtS
Business Plan assumptionsDriver
• 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
• Expected to reduce ~3% avg p.a. on growing competition(2)
• Further competitive pressure following Power Market full liberalization from 2H 2019
• 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
(1) Assuming current regulatory and market structure continuity
(2) Mass market unitary margin – Residential and small business customers – excluding regulated components
16
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.