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9M 2017 Consolidated Results
Milan, November 13th,2017
2
Highlights of the period
3
+ -Hydro volumes
CCGT performance, Volumes, Spot Market and Ancillary Services
LGH: standalone growth and FY consolidation
Non recurring YoY comparison
Organic growth in DH, Networks and Waste
EPCG put option exercise –deconsolidation as of July
9M 2017 HIGHLIGHTS
San Filippo del Mela «merchant» in Q3 2016
Feed in tariff/Green Certificates
With impact on 2017 9M economics
MoU with “Utilities of Northern Lombardy”
extended to December
Set up of A2A Rinnovabili and M&A – First step in PV Renewables
Ongoing developments ininvestments for waste treatment plants
Tender offer on 2019 and 2021 bonds + new year issuance With impact on
2017 4Q economics
4
9M 2016
281
9M 2017
319
FY 2016
3,136
9M 2017 Before
deconsolidationof EPCG &
Consolidation of REN
3,012
Change in perimeter
240
9M 2017
3,252
9M 2016
872
9M 2017
888
9M 2016
3,482
9M 2017
4,261
KEY FINANCIAL INDICATORS
REVENUES EBITDA
GROUP NET INCOME
NET FINANCIAL POSITION
€M
+22%
-30%
+2%
GROUP ORDINARY NET INCOME*
+14%
-124€M
* Excluding extraordinary items
9M 2017 HIGHLIGHTS
+116€M
5
Analysis of results
6
2016
872
-82
EPCGQ3
2016Ordinary
777
Generation&
Trading
-4
9
Waste
25
Networks&
DistrictHeating
43
SmartCity
-1
Corporate
8
EPCG1H
-23
834
54
2017
888
2016Non
recurringitems
-13
EnergyRetail
2017Ordinary
2017Non
recurringitems
+16
+57
9M CONSOLIDATED RESULTSGROUP EBITDA
€M
• Generation in line with 2016, much better than expected• Solid growth in all other BU’s• EPCG deconsolidated as of July 1°
7
2016
273
2016Non
recurringitems
-16
2016Ordinary
257
-28-9
6 113
-7
13
LGH
5
2017Ordinary
253 2
2017
255
Environ.Market
Plants'Hedging
andDispatching
TradingPortfolio
Other Fixedcosts
SFMEBITDA
GasMargin
2017Non
recurringitems
-18
-4
9M CONSOLIDATED RESULTSGENERATION & TRADING EBITDA
• Excellent CCGT performance on both MGP and MSD, in all quarters• Hydro: lower volumes. Strong market prices offset by hedging• San Filippo «Merchant» margin in Q3 2016 • Lower environmental markets margin• Strong results on Gas optimization
€M
8
2016
100
-7
2016Ordinary
93
PowerMarket
1
GasMarket
2
FixedCosts
-4
Other
0
LGH
10
2017Ordinary
102
12
2017
114
2016Non
recurringitems
2017Non
recurringitems
9M CONSOLIDATED RESULTSENERGY RETAIL EBITDA
+14
+9
• Free market customer base: +148K• Reduction in Unitary Margins mainly due to higher unbalancing costs
€M
9
2016
110
57
174
2016Non
recurringitems
-8
2016Ordinary
57
102
1166
Collection
-3
UrbanWaste
TreatmentPlants
5
OtherTreatment
Plants
4
InternationalProjects
1
LGH
18
2017Ordinary
107
54
23
191
2017Non
recurringitems
4
2017
110
54
24
195
15
11
5
5
2
5
2
• Positive treatment plants margins from higher prices and quantities
9M CONSOLIDATED RESULTSWASTE EBITDA
Collection +4.2€M
Treatment +13.8€M
+21
+25
€M
Other Treatment Plants
Collection
Urban Waste Treatment Plants
International Projects
10
2016
11
36
2
91
80
73
293
2016 Non
recurringitems
-51
2016Ordinary
11
38
2
91
79
21
242
ElectricityNetworks
2
GasNetworks
4
WaterCycle
8
DistrictHeating
14
Public Lighting
0
LGH
15
2017Ordinary
17
52
1129
83
93
285
2017Non
recurringitems
36
2017
19
82
1128
86
95
321
+28
+43
Gas NetworksElectricity NetworksWater Cycle Public Lighting Heating
• DH: Consul System FY consolidation and performance. White Certificates optimization• Water Cycle: tariff increase
9M CONSOLIDATED RESULTSNETWORKS AND DISTRICT HEATING EBITDA
LGH (Networks & Heating)
€M
11
2016
13
35
48
Q3 2016
-13
Generationand Retail
-23
Distribution
0
2017
12
-36
9M CONSOLIDATED RESULTSEPCG EBITDA
Delta 1H: -23€M
€M
1H
Q3 2016
12
9M 2017
EBITDA
888
D&A
-309
Risk
Provisions
-24
Non rec.
transact.
1 4
Net
FinancialExpenses
-88
-93
EBT
379
Taxes
-153
Net result
fromdiscontinuedoperations
1
Minorities
-1
9M 2017
NetIncome
226
Investments
carriedat equity
EPCG
write-downand
put option
discount
FROM EBITDA TO GROUP NET INCOME
9M CONSOLIDATED RESULTS
9M 2016 872 (308) 484 1 (17) 3234 (96)(40) (145)52
(1) -93€M, of which:• -60€M D&A (EPCG write-down)• -33€M Net Financial Expenses
-
(1)
€M
13
2016
14
3
63
130
52
16
233
2017
25
6
63
153
14
6
4271
Generation &Trading
Energy Retail
Waste
Networks and DistrictHeating
Corporate
A2A Smart City
EPCG
2016
22
27
86
98
233
2017
22
21
104
124
271
Maintenance
Development
Mandatory
M&A
BREAKDOWN BY ACTIVITY BREAKDOWN BY BUSINESS
+38 +38
CAPEX
9M CONSOLIDATED RESULTS
€M
14
9M 2017
EBITDA
888
Change
in NetWorkingCapital
-26
Change in
otherassets/
liabilities
-127
Use of
Funds
-21
Tax Paid
-104
Net
FinancialExpenses
-62
FFO
(1)
548
Capex
-271
Dividends
-153
Net
FreeCashFlow
124
Change
inperimeter
-240 -116
NFPvariation
NET FREE CASH FLOW
9M CONSOLIDATED RESULTS
(1) Funds from operations after working capital change
9M 2016 872 (68) 483 (233) -469 -345(56) (56)(93)(116) (126) 124
€M
15
Closing remarks
16
CONF. CALLJULY 31st, 2017
NEW GUIDANCE
1.165 1.185€M
GUIDANCE IMPROVED
~1.200
~60€M non recurring
~55€M non recurring
~30€M green certificates postponed to 2018
2017 EBITDA GUIDANCE
17
MARKET PRICES
PRODUCTION VOLUMES
MSD & CAPACITY
STABLE / BETTER
BETTER
SLIGHTLY LOWER
FAVOURABLE 2018 GENERATION OUTLOOK
Comparisons vs 2017E and 2018 (as implied in the 2017-2021 business plan)
18
Annexes
19
P&L
EBITDA
Ordinary D&A
Provisions
EBIT
Net Financial Expenses
Associates & JV
EBT
Taxes
Minorities
GROUP NET INCOME
9M 2016 9M 2017 %
REVENUES
CHANGE
Result from non recurr. transactions
Net result from discontinued operations
EPCG write-off
9M CONSOLIDATED RESULTS
872
(308)
(40)
524
(96)
4
484
(145)
(17)
323
3,482
52
1
-
888
(309)
(24)
495
(121)
4
379
(153)
(1)
4,261
1
226
1
(60)
+1.8%
-0.3%
+40%
-5.5%
-26.0%
-
-21.7%
-5.5%
+94.1%
+22.4%
-1
+16
-29
-25
-
-105
-8
+16
+779
-98.1%-51
-30.0%-97
--
+16
n.s.-60
€M
20
P&L
EBITDA
Ordinary D&A
Provisions
EBIT
Net Financial Expenses
EBT
Taxes
Minorities
GROUP NET INCOME
3Q 2016 3Q 2017 %
REVENUES
CHANGE
Net result from discontinued operations
3Q CONSOLIDATED RESULTS
258
(110)
(4)
144
(33)
111
(39)
(4)
69
1,159
1
239
(100)
(13)
126
(25)
101
(34)
+2
1,343
69
-
-7.4%
+9.1%
n.s.
-12.5%
+24.2%
-9.0%
+12.8%
n.s.
+15.9%
+10
-9
-18
+8
-10
+5
+6
+184
--
n.s.-1
-19
€M
21
258
-2243
-33
3 39
-1
6 2309 239
3Q 2016 3Q 2016Non
recurringitems
EPCG
-13
3Q 2016Ordinary
Generation&
Trading
EnergyRetail
Waste Networks&
DistrictHeating
SmartCity
Corporate 3Q 2017Ordinary
3Q 2017Non
recurringitems
3Q 2017
-19
-13
3Q CONSOLIDATED RESULTSGROUP EBITDA
€M
• Generation: margin reduction due to San Filippo running as «Merchant» in Q3 2016 and lower environmental markets, partially offset by good CCGT performance
• Networks & District Heating: Consul System consolidation (DH) and Water Cycletariff increase
22
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
30.09.2017 %
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
4,516 -11.9%
1,782 +4.5%
73 -8.7%
(84) -2.4%
321 -5.8%
(622)
(331) +9.3%
5,655 -7.8%
189 +18.8%
1,771 -19.8%
48 +29.7%
322 +15.8%
6,194 -3.4%
2,942 -10.2%
3,252 +3.7%
6,194 -3.4%
(1,686) +20.7%
+7.3%
217 n.s.
BALANCE SHEET
9M CONSOLIDATED RESULTS
€M
23
2017
38
38
2018
300
84
384
2019
567
88
655
2020
135
135
2021
430
85
515
2022
500
82
582
2023
300
81
381
2024
300
61
361
2025
300
61
361
2026
45
Beyond
2026
98
179
277
45
Bonds
Loans
GROSS DEBT MATURITIES AS OF 30/09/2017
9M CONSOLIDATED RESULTS
€M
• Incorporation of A2A Rinnovabili (100% A2A S.p.A.) and purchase of 17MW of photovoltaic plants
• Flexibilitation of CCGT Sermide power plant concluded and continuous improvement on all the other CCGT plants
• District Heating grid heat reduction pilot project financed by the EU H2020 project TEMPO
RELAUNCH
• 1st Plastic treatment plant (Cavaglià): civil works completed
• 2nd Plastic treatment plant (Muggiano): authorization obtained
• Electric primary station Benedetto Marcello fully operational
• Approval from the Local Authority of Aspem’s proposal about new higher water services tariff
REGENERATION
RESHAPE• Public Lighting: Garbagnate tender won
• Mincio Trasmissione’s asset sold to Terna
UPDATE 3R
Note: the projects are related to 3Q 2017
DISCIPLINE, DIALOGUE &
DIGITAL
• Two new District Heating Control Rooms implemented in Milan and Brescia
• N.106 schools in Brescia Municipality interconnected with A2A fiber-optic network and related services
• Agreement signed between LGH and Politecnico of Milan for the development of machine learning algorithm for customer satisfaction activities
• Work Force Management System (WFM) fully operational in BU Networks
• Started phase 3 of programme LiHS (Leadership in Health and Safety) and the development of a gamification app to promote the culture of safety
• Cross-service (gas, power) process integration: preliminary agreement signed by Labor Unions
• Started a pilot project on advanced water grid control and water smart meters in Brescia area
• Additional savings expected from En&A extension in LGH: detailed design of new initiatives for improvement has started
• Operational excellence program (Mistral) set up, first 35 key target processes identified; pilot initiatives and change management program launched
ADDITIONAL
UPDATE 3D
• A2A, ACSM-AGAM, ASPEM, AEVV and Lario Reti Holding – deadline of MoU extended to the end of 2017
• Final Agreement with International Player for Turn-Key supply of bio-drying technology on the Spanish market
Note: the projects are related to 3Q 2017
26
Operational annexes
27
9M 2016 9M 2017Δ vs 2016
Δ% vs 2016
Aug-Sep 2016 LGH
9M 2017 LGH
9M 2016 A2A+LGH
9M 2017 A2A+LGH
Δ vs 2016
Δ% vs 2016
A2A Group Thermal production GWh 5.753 8.205 2.452 43% 5.753 8.205 2.452 43%of which
CCGT production GWh 3.043 5.942 2.899 95% 3.043 5.942 2.899 95%
Coal production GWh 1.623 1.398 -225 -14% 1.623 1.398 -225 -14%
Oil production GWh 1.087 865 -222 -20% 1.087 865 -222 -20%
A2A Group Hydro production GWh 3.499 2.745 -755 -22% 18 91 3.518 2.835 -682 -19%
Wholesale electricity sales and Foreign Markets GWh 6.078 6.052 -26 0% 18 91 6.096 6.143 47 1%
Ipex sales GWh 6.371 6.862 492 8% 0 0 6.371 6.862 492 8%
Electricity sales GWh 6.043 5.649 -394 -7% 106 483 6.149 6.132 -17 0%
Gas sales Mmc 788 835 47 6% 15 222 804 1.057 253 32%
Electricity distributed GWh 8.210 8.360 150 2% 68 326 8.278 8.686 408 5%
Gas distributed Mmc 1.169 1.204 35 3% 42 397 1.210 1.601 391 32%
Water distributed Mmc 47 52 5 11% 47 52 5 11%
Heat volumes sales GWht 1.445 1.528 83 6% 7 149 1.452 1.677 225 16%
Cogeneration electricity sales GWh 114 121 6 6% 3 51 118 172 54 46%
Collected waste Kton 1.009 988 -21 -2% 44 201 1.053 1.189 136 13%
Waste disposal Kton 1.819 2.014 195 11% 127 534 1.946 2.548 602 31%
WTE and other plants electricity production GWh 1.217 1.199 -18 -1% 31 145 1.248 1.344 96 8%
WTE and other plants heat production GWht 796 819 24 3% 8 52 804 871 67 8%
EPCG Thermal production GWh 801 496 -305 -38% 801 496 -305 -38%
EPCG Hydro production GWh 1.327 488 -839 -63% 1.327 488 -839 -63%
EPCG electricity sales GWh 1.747 1.240 -507 -29% 1.747 1.240 -507 -29%
(1) Net of intermediated Ipex volumes
(1)
VOLUMES
9M CONSOLIDATED RESULTS
28
ENERGY SCENARIO
9M CONSOLIDATED RESULTS
(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
(6) data subject to update by Terna
Average data9M
20169M
2017D % vs
2016
Brent $/bbl 43,0 52,6 22%
CO2 - EU ETS cost €/Tonn 5,3 5,3 -1%
Green Certificates €/MWh 66,4 0,0 -100%
€/$ €/$ 1,1 1,1 0%
Brent € €/bbl 38,5 47,4 23%
PSV(1) €/MWh 14,6 18,8 29%
AEEGSI Gas Tariff (2) c€/mc 15,4 18,3 19%
Coal € (API2) €/Tonn 45,9 73,2 59%
PUN baseload(3) €/MWh 38,3 51,3 34%
PUN peak(3) €/MWh 42,3 57,5 36%
PUN off-peak(3) €/MWh 36,2 47,8 32%
CCGT gas cost(4) €/MWh 35,1 44,3 26%
Spark Spread CCGT_PSV vs Baseload €/MWh 3,2 7,0 n.a.
Spark Spread CCGT_PSV vs Peakload €/MWh 7,2 13,2 83%
Spark Spread CCGT_PSV vs Off-Peak €/MWh 1,0 3,5 n.a.
Clean Spark Spread vs Baseload €/MWh 1,2 5,0 n.a.
Clean Spark Spread vs Peakload €/MWh 5,2 11,2 n.a.
Clean Dark Spread vs Baseload(5) €/MWh 6,3 9,1 44%
29
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 itnor 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 meetingsmay 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 shouldnot 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 materiallyfrom 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 includingelectricity, gas and coal, the competitive market and regulatory factors. Moreover, forward-looking statements are current only at the date on which they are made.