A2A Company Presentation Jan'15 - Amazon S3 · A2A Company Presentation January 2015. This information was prepared by A2A and it is not to be relied on by any 3rd party without A2A’s

A2A CompanyPresentation

January 2015

This information was prepared by A2A and it is not to be relied on by any 3rd party without A2A’s prior written consent.

Agenda

• Company profile

• Last release (9M’14)

• Focus on Infrastructure

DISCLAIMER - 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 anypart 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-lookinginformation 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-lookingstatements 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 factorsinclude, 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-lookingstatements are current only at the date they are made.

2


A2A in a snapshot: balanced business mix with critical mass

COGENERATION &DISTRICT HEATING

WASTE

NETWORKS

ENERGY

EPCG

• 2nd in terms of renewable installed capacity (~2 GW)• 4th in terms of overall electricity production (~14 TWh)• 3rd in terms of gas portfolio (more than 2.4 Bcm)

• 1st in terms of heated volumes (~89 Mcm)

• 3rd in terms of waste collection (~1.2 Mton)• 1st in terms of WTE plants (the 3 largest in Italy)

• incumbent in Montenegro with 75% of renewablecapacity

• 2nd in terms of distributed electricity (11 TWh)• incumbent in 3 large gas distribution ATEMs, of which

Milan is the largest

• One of the most diversifieddomestic utilities in terms ofbusiness mix

• With leading positions inmost segments

• Committed to Sustainability

EnergyE = ElectricityG = Gas

Cogeneration &District Heating

Waste

Networks

Foreign activities

Listed Italian Local utilities - 2013 EBITDA

21.9% owned by A2A

3


COGENERATION& DISTRICT HEATING

Cogenerationplants

Networks

89 M€ 8%

WASTE

Collection

Treatment

255 M€ 22%

NETWORKS(EPCG included)

Water

Electricity networks

Gas networks

268 M€ 23%

ENERGY(EPCG included)

Fuel sourcing

Powergeneration

Whole-sale &Trading

540 M€ 47%

PORTFOLIO MANAGEMENT

DisposalHeat/Electricitysale

Electricity/Gassale

Heat/Electricitysale

(1) Adjusted EBITDA, excluding costs of redundancy schemes (-25 €M), regulatory impacts (+24 €M) and EBITDA from “Other services & Corporate” (-18 €M)

Sources: AEEG and Company Annual Reports

A2A business portfolio

2013EBITDA(1)

About 50% of Group EBITDA from regulated activities/concessions orlong-term contracts and 30% from infrastructure operations

• Flexible business model which allows for optimizations both in the business units and across them

4


A2A asset portfolio

ITALY

UK

SPAIN GREECE

MONTENEGRO

FOREIGNACTIVITIES

5


A2A key strengthsC

OG

EN

ER

ATIO

N&

DIS

TR

IC

TH

EA

TIN

GW

AS

TE

NE

TW

OR

KS

EN

ER

GY

• Diversified and balanced generation mix

• More than 40% domestic renewable production in 2013

• Almost 90% of hydro flexible reservoir/basin vs. run-of-river

• High energy management skills and relevant market share in the Northern Zone

• Strong and balanced customer base ~ 2 m contracts

• Efficient customer care

• Presence in the 3 largest cities in Lombardy

• Long term contract schemes

• Strong ties with waste and energy

• Strong environmental benefits at local level

• High barrier to entry

• District cooling option

• Full integration along the value chain

• Strong ties with cogeneration

• Proven abilities to develop activities outside local footprint:successful management of Acerra plant

• Cross sector presence: electricity, gas, water and public lighting

• High service quality

• Good continuity of electricity and gas distribution services

• Focus on new technologies (e.g., smart grids)

EN

ER

GY

Lower risk from flexiblehydro and loyal customerbase

Upcoming rationalization

Potential from plantreconversion

# 1 in Italy for heatedvolumes

Best positioned to benefitfrom expected growth inan overall stable andpredictable business

One of the very few fullyintegrated operators

Significant, unexploitedand attractive growthpotential

Pioneer in led publiclighting network

Well positioned onforthcoming gas auctions

6


Major achievements in the last six months

7

• Investments: start-up of the glass selection and treatment plant of Asti; authorization for repowermentof Filago wte; authorization for waste treatment at Castenedolo plant; district heating networkexpansion in Milan and Bergamo (completion of west and east feeders in Milan – 7 km, and 0.7 km in thecentral area); started the construction of a new solar thermal plant for districh heating in the city ofVarese; new boilers installed at Lamarmora (240 MW); new gas meters; EPCG: new electricity meters

• Activities: record volumes on ancillary services market; green certificates record production; greenelectricity agreement signed with Telecom Italia for the next two years; completion of one of the largestcollection programs across Europe for organic sorting in Milan and start of a similar program in Como

• Clients/contracts: wider offer system for the different segments of energy clients; strong increase in thenumber of energy clients (85,000+, 118% up yoy); renewal of energy supply contracts to associations;gas supply contract to the two Milan airports; new collection concessions awarded in the Milan andBrescia areas, plus Expo; new conventions for waste services to associations; new contracts for wastetreatment and disposal (e.g., Asm Voghera, Corepla, Acea, Liguria emergency); new agreements withthird parties to buy waste heat deriving from industrial processes (Ori Martin, Edison)

Re-organization

Efficiency/Cost Cutting

Innovation andResearch/

Pilot Projects

Development

• Generation O&M: ‘Best Practice’ project for costs; maintenance agreements: renegotations• Increased quality of service (energy: -15% complaints)• Significant emissions reduction targets achieved in the Acerra Waste-to-Energy plant• EPCG: reduction of network losses• EPCG: improved credit collection

• Lean organization: few reports and layers• New Business Unit: Generation and Trading• Full integration of Edipower• Strengthening of the sales force

• All the public lighting of the city of Milan will be ensured by innovative LED technology• A similar project will be developed in the city of Brescia in the next few months• Pilot project for waste fuel: successful conclusion of application at Brindisi and San Filippo plants• Investment in the integrated water cycle of Brescia to further improve the quality of water distributed (e.g.,Chrome VI)

• Electric car: agreement with Repower; installation of new recharge units• FuturA2A: support and develop innovation in young resources


A2A strategic options

COGENERATION& DISTRICT

HEATING

WASTE

NETWORKS

ENERGY

EPCG

COST CUTTING

Generation Energy mgmt Retail

Commercial strategySources Networks

Collection Treatment & Disposal Industrial waste

Electricity distribution Gas distribution Integrated water service

Trading & commercial

Headcount Other fixed costsExternal costs

NetworksGeneration

ITALY

LOMBARDY

NORTHERNITALY

ITALY/ABROAD

• CCGT Restructuring• Plants reconversion

through integration withwaste business

• Energy Efficiency highvalue servicesdevelopment

• Public lighting expansion• Smart grid/ smart city

• Bidding for upcoming tenders(at least consolidation ofcurrent dimension)

• Potential integrationthrough M&A

• Increase inproductivity

• New cost cutting internal program (AXE 2.0)• "Best practices" cross fertilization among plants in

order to achieve best level of efficiency

• Third party sourcesconnection to DH network

• CCGT Cassano

• Milan and Bergamodevelopment

• Growth in higher marginsegments (i.e. SME),territories (Northern Italy)and energy efficiency

• Portfoliooptimization

• Environmental mkts

• Growth through M&A (bothcollection and treatment,focus on remediation)

• Boost in geographicalconsolidation/expansion

MONTENEGRO& BALKANS

• Existing plantsoptimization

• Potential new renewableplants

• Efficiency improvement • SME Market• Exploit interconnection

IT/MNE

• Lombardy WTE systemoptimization

• Recycling plants development• Plants development in

southern Italy

• Real estate optimization

GEOGRAPHICALAREAS

Lessconventionalenergy…

…moreenvironment/new energymarket player

8


Research and innovation projects

• E-Moving project - Among the testing being promoted by theAEEGSI.

Promoted by A2A

Electric car

• Smart Domo Grid: smart grid solution withdemand/response functionality

Co-financed by the Ministry of Economic Development and ledby A2A with the Polytechnic University of Milan and Whirlpool

• IDE4L (Ideal Grid for All) mainly focuses on electricalfunctionalities

Co-financed by the EU within the 7th Framework Program

• Work Force Management (WFM) system• Distribution Management System (DMS)Both developed by A2A

• Completing the district heating offer with a district coolingservice

Pilot project developed by A2A

Network managementInnovative primary substations

Smart house

District Cooling

Most of A2A R&D budget is dedicated to green projects

• Two smart grid pilot projects in Milan and Brescia

Approved by AEEGSI, pursuant to Resolution ARG/elt 39/10

Grid automation and distributed generation

Inertization of fly ash, using Biosilica, a secondary hand-raw material - produced from rice husk ash.Presented by the University of Brescia and developed at theBrescia WTE plant

ECOERGITE® – Fuel from waste

Ecoergite ® - patent by A2A Ambiente – is a very advancedform of refuse-derived fuel produced by a waste treatment plant.It can be used as a fuel for coal thermoeletric plants togetherwith coal (co-combustion) and for cement plants.

COSMOS-RICE project

9


Strong commitment to Sustainability

• Customers

A2A Energia 1st in domestic

customer satisfaction among Italian

utilities based on an Italian Databank

survey

A2A Energia supports the self-

regulation protocol to protect

customers from unfair commercial

practices

• Suppliers 60% of verified suppliers have at least

one quality, environment or safety

certification

• Community Over 5.1 million euro to support the

community through sponsorships,

donations and grants to Group

Foundations

• Employees

59% Increase in training hours vs. 2012

(22 hours per person)

-5.5% in the frequency of injury in the

workplace vs. 2012

Environmental(2013 data)

Governance

Shift from dual to traditionalcorporate governance model inJune 2014:

from two boards composed of 23 members to

• Board of Directors - 12 members, whichinvested Chairman and CEO with broadexecutive powers

• Board of Statutory Advisors – 3 effectivemembers

This detailed framework clearly definesresponsibilities, facilitates effective andtimely decision making, provides for abalance of powers, and emphasizesthe central role of the Board ofDirectors

Top management compensationreduced by over 50% compared toold system

Group saving higher than 65%

• Green performance 42% of renewable production

Increases in separate waste collection of

6.2% in Milan and 6.8% in Bergamo

compared to 2012

Less than 1% of urban waste collected

disposed of in landfills

+30% in the number of water parameters

analyzed in the integrated water cycle

compared to 2012

• Emission performance

3.1 million tons of CO2 avoided by way of the

technologies used by A2A

-4% from 2012 the average factor of CO2

emissions for the Group, equal to 385 g/kWh

-27% in dioxides emitted by Group plant

(one hundredth of a gram) compared to 2012

• Energy efficiency

+4% from 2012 in volumes served by urban

district heating networks, now at 89.2 Mcm

Social(2013 data)

New Business Plan will identify ESG KPIs through external impact valuation

10


A2A 2013 Operating and financial highlights

(1) Group net income adjusted for the impact of extraordinary items: 2013 = 156€M; 2012 =116 €M; 2011 = 165 € M; 2010 = 243 €M

11


A2A 2013 Volumes

* without Intermediated Ipex volumes

As of June 2012 Edipower production includes 77% of production of the plants managed in tolling regime and 100% of production of the S. Filippo del Mela, Turbigo(groups 1-2-3) and Brindisi thermoelectric plants and some hydroelectric and photovoltaic plants.As of November 2013 Tusciano and Turbigo productions are not included, while the quantities of the remaining Edipower plants are 100% of productionAs of January to May 2012, Edipower production includes 20% of production of the plants managed in tolling regime

12


Agenda

• Company profile



13

This information was prepared by A2A and it is not to be relied on by any 3rd party without A2A’s prior written consent. 14

Agenda

Main messages

9M 2014 Main financial highlights

Segment analysis

From EBITDA to net income

Net debt and cash flow

Major business achievements in the last few months


Main messages

• Positive contribution to 2014 results from Q3:

Stable Q3 Ebitda reduces 9M contraction

9M Net Profit now in line with 2013

Further significant debt reduction

• Negatives still outweigh positives at business level:

Negatives: electricity prices; thermal generation volumes; EPCG hydro slump;waste incentive expiry; reduction of heat volumes

Positives: strong domestic hydro production; trading and environmentalmarkets; gas portfolio optimization; networks resiliency; ongoing cost cutting

• Positives boost net profit:

Lower D&A after generation assets impairments in 2013

Lower provisions from more favorable risk profile

Lower debt service due to ongoing financial optimization

9M 2014 – MAIN MESSAGES

15


-56

NET SALES

EBITDA

€M

EBIT

9M 2013

3,632

783

419

4,080

839

407

9M 2014 Change Change %

-6.7%

-448

+12

-11.0%

+2.9%

2013 9M 2014 Change

NET CAPITALEMPLOYED

EQUITY

7,222

3,348

-348

+60

TOTAL NFP 3,874 -408

6,874

3,466

3,408

NET INCOME 159159 --

9M 2014 - Main financial highlights

KEY FACTS

Detailed afterwards

• Climate effects

• Negative marketprice/volume trend

• Positive OperatingEfficiency

• Expiry of CIP 6 revenues

1

2

3

n

16


Climate effects

MILANDAILY DEGREES

Dail

yD

eg

rees

YTD ∆ vs 2013: -28,1%

EPCG HYDRAULICITY

HYDRAULICITY

∆ 9M ‘13 VS AVG 10 YRS

EPCGHYDRO PRODUCTION

GWh

+724


-84

BRESCIADAILY DEGREES

Dail

yD

eg

rees

YTD ∆ vs 2013: -31,8%

A2A HYDRAULICITY

HYDRAULICITY


A2AHYDRO PRODUCTION

GWh

~+500


~+1,450

Previous Year Current Year

NegativeClimateeffects

PositiveClimateeffects

1

17


Average data 9M 2013 9M 2014 Δ Δ % Q3 2013 Q3 2014 Δ Δ %

PUN baseload(1) €/MWh 62.2 49.8 -12.5 -20.0% 65.5 50.4 -15.1 -23.0%

PUN peak(1) €/MWh 68.6 55.3 -13.3 -19.4% 68.5 53.5 -15.0 -21.9%

PUN off-peak(1) €/MWh 58.7 46.7 -12.0 -20.4% 63.9 48.7 -15.2 -23.7%

Clean Spark spread vs Peakload(2) €/MWh 2.8 3.1 0.3 9.7% 2.3 5.0 2.7 n.s.

Clean Spark spread vs Baseload(2) €/MWh -3.6 -2.4 1.1 31.7% -0.7 1.8 2.4 n.s.

Clean Dark Spread vs Baseload (3) €/MWh 21.7 11.3 -10.4 -48.1% 25.6 11.3 -14.3 -55.9%

CCGT load factor(4)

- North zone % 17.3 12.9 -4.4 -25.5% 18.6 14.5 -4.2 -22.4%

- South zone % 17.1 14.1 -3.0 -17.7% 23.8 18.4 -5.4 -22.7%

Coal load factor

- North zone % 59.6 49.2 -10.4 -17.4% 49.7 46.1 -3.6 -7.1%

Italian electricity demand(5) TWh 239.0 231.8 -7.2 -3.0% 80.9 78.1 -2.8 -3.5%

Market price/volume trend

(1) hourly average; (2) 53% efficiency – spread between energy prices and gas cost at virtual trading point (transport cost included); (3) 35% efficiency – spread between energy pricesand API2 coal cost (transport cost included); (4) load factor related to CCGT merchant plants; (5) data subject to update by Terna

Strong decrease in PUN

PRICES

2

MARGINS

QUANTITIES

PRICES

MARGINS

QUANTITIES

Ongoing Dark Spread reduction

Gas plant margins still at low levels

Continuing decrease in Electricitydemand, impacting thermal Load Factors

SOME CRITICAL FACTORS… …PARTIALLY OFFSET BY HIGHER HYDRO PRODUCTION

9M 2013TWh 9M 2014

9M Q3

ITALIANHYDRO

PRODUCTION42.0 +10%

9M 2014 ENERGY SCENARIO

∆ % Q3 2013 Q3 2014 ∆ %

46.2 14.0 +14.2%15.9

18


9M 2013

426

Change inperimeter

-13

Net savings

-17

9M 2014

396

9M 2013

514

Other costs

-14

Change inperimeter

-1

Net savings

-4

9M 2014

495

9M 2013

12,609

Change inperimeter

-30

Net reduction

-245

9M 2014

12,334

9M 2014 OPERATING EFFICIENCY

FTE(1)

LABOURCOSTS (€M)

OTHERFIXED

COSTS (€M)

• Waste new tenders+103 FTE

• Tusciano andTurbigo plantsdisposal -133 FTE

• A2A -167 FTE

• EPCG -78 FTE

• Of which costs ofredundancyschemes -13

• Waste new tenders+4.6

• Tusciano andTurbigo plantsdisposal -5.9

• FTE reduction -8.7

• Contract renewals +7.0

• Mix effect -2.4

-30

-19

-275

Operating Efficiency3

More than 20 €Mnet savings in 9M2014 compared to9M 2013, in linewith H1 savingslevel despite ~6€Mincrease in non-compressiblecosts registered inQ3

(1) A2A Group’s Full Time Equivalent

• Tusciano andTurbigo plantsdisposal

• Of which thermoelectricplants O&M -14

19


EBITDA9M 2013

EBITDA9M 2014

∆ vs 2013

ELECTRICITY 296 283 -13

GAS 56 76 20

ENERGY 352 359 7

WASTE 190 165 -25

COGENERATION AND

DISTRICT HEATING51 34 -17

NETWORKS 195 208 13

OTHER SERVICES AND

CORPORATE-15 -15 0

EPCG 65 42 -23

TOTAL ADJUSTED EBITDA 838 793 -45

Costs of redundancy schemes -23 -10 13

AEEGSI OPINION 535/12 24 -24

TOTAL EBITDA 839 783 -56

Lower hydraulicity (-26)

Higher Electricity allowed revenues (+20, of which +8

related to current year and +12 related to previous years)

Lower Gas allowed revenues (-5)

KEY POINTS

Gas portfolio optimization

Higher environmental markets margin (+6)

Network and customer development (+2)

Lower sales due to climate effect (-20)

Non current items (-5)

Exipiry of Cip6 revenues - Brescia WTE plant (-24)

Higher environmental markets (+46)

Trading portfolio margin (+4)

Industrial portfolio margin (-63)

€M

9M 2014 vs 9M 2013 - EBITDA breakdown

(1) (2)

(1) of which 95€M Electricity Networks, 85€M Gas Networks, 10€M IWC

(2) of which 114€M Electricity Networks, 80€M Gas Networks, 12€M IWC

(3) of which 54€M Energy, 8€M Electricity Networks

(4) of which 28€M Energy, 13€M Electricity Networks

(3) (4)

Note: 9M 2014 costs of redundancy schemes entirely related to Energy segment 20


9M 2014 - From EBITDA to net income (1/2)

9M2013 9M2014Δ vs 9M

2013Key points

EBITDA 839 783 -56

D&A, provisionsand write-downs

-432 -364 +68

Financial charges -167 -134 +33

Associates,JV and others

8 -1

EBIT 407 419

Result from non-recurring transactions 17 11

7

+12

-6

€M

Depreciation (+17)

• Bad debt provision (+23)

• Provision for risks (+28)

Derivatives FV 25 -5 -30 Decrease in interest rates

Acsm-Agam (-2)

Others (+1)

Net financial charges (+32)

Derivatives realized (+1)

9M 2014 Dolomiti Energia vs Edipowershare swap (+12)

9M 2013 Small hydroelectric plantscapital gain (-23)

21


9M 2014 - From EBITDA to net income (2/2)

9M2013 9M2014Δ vs 9M

2013Key points

EBT 290 298 +8

MINORITIES -13 -12 +1

TAXES -118 -127 -9

€M

NET INCOME 159 159 -

IFRS 5 - - -

Epcg

Deferred tax assets - Irap redefinition (-4)

22


NFP31/12/2013

-3,874

Netprofit+D&A

+503

Changein

Assets/

Liabilities

+212

Capex

-205

Dividends

-102

NFP30/09/2014

-3,466

9M 2014 - Net debt and cash flow

23

A2A GROUP NET FINANCIAL POSITION EVOLUTION 2013-9M2014 (€M)

+408 €M

• Networks 77€M

• Cogeneration andDistrict Heating 44€M

• Waste 32€M

• Energy 28€M

• EPCG 18€M

• Corporate 6€M


31/12/12

4,372

31/3/13

4,238

30/6/13

4,074

30/9/13

4,048

31/12/13

3,874

31/3/14

3,721

30/6/14

3,572

30/9/14

3,466

-135-164

-26-174

-153

ExtraordinaryOperations Metroweb disposal (61€M) Small Hydro disposal (38€M) Enel/A2A lawsuit settlement (90€M)

Continued Deleveraging

2012-2014 NFP EVOLUTION (€M)

-906

-149-106

24


26%

74%

29%

14%

57%47%

22%

22%

2%3%

4%

9M 2014 - A2A Group debt structure

9M 2014 GROSS DEBT - 3.9 €B

DEBT BREAKDOWN

BY SOURCES

DEBT BREAKDOWN

BY INTEREST

Note: EPCG not included; gross debt financial data and breakdown, excluding accounting adjustments(*) Average forward rate, based on interest rate curves as of 30/9/2014

LIQUIDITY POSITION

AVERAGE RATE* (%) ~4.0% ~3.8%

FY 2013 9M 2014

AVERAGE MATURITY (yrs) 6.0 5.7

LoansBond VariableFixed Hedged

DEBT BREAKDOWN

BY MATURITY

Within 2015

2018

2016

2019

2017

Beyond 2019

2.0 €B liquidity position, of which:

0.5 €B cash

1.5 €B undrawn loans and longer-than-12-months revolving committed lines with averagematurity of 2.6 years

CORPORATE CREDIT RATINGS

Moody's: Baa3, Stable Outlook

Standard & Poor’s: BBB/A-2, NegativeOutlook

25


Major business achievements in the last few months

• Hydro developments capex eligible for Green Certificates on stream in Somplago (Udine)

• At the end of June, green electricity agreement signed with Telecom Italia for the next two years

COGENERATION& DISTRICT

HEATING

WASTE

NETWORKS

ENERGY

• New collection concessions awarded in 2014 and other concessions confirmed in Milan area

• Completion of one of the largest collection programs across Europe for organic sorting in Milan

• Start-up of the glass selection and treatment plant of Asti in July 2014

• Patent of a new product made from waste: “Ecoergite”

• Significant emissions reduction targets achieved in the Acerra Waste-to-Energy plant

• Further network expansion in Milan and Bergamo. Completion of west feeder (5 km) in Milan

• New agreements recently signed with third parties to buy “waste heat” deriving from industrial processes(e.g. steel factories)

• Started at the end of October the construction of a new solar thermal plant for District Heating in the cityof Varese

• By August 2015, all the public lighting of the city of Milan will be ensured by innovative LEDtechnology

• A similar project will be developed in the city of Brescia in the next few months

• Investment in the integrated water cycle of Brescia to further improve the quality of water distributed (e.g.,Chrome VI)

EPCG

• Account receivables collection close to 98% (from 93.8%)

• HPPs: Perućica efficiency increased and recovery of nominal capacity; first part of Piva modernization

• Distribution losses reduced to 16% (from 17.6%)

• 165,000 smart meters installed

26


Q3 2013

229

Energy

4

-12

4 3

-1

EPCG

5

Q3 2014

232

Waste Cogeneration

andDistrict Heating

Networks Corporate

Focus on Q3 performance

9M 2013

229

610

839

H1

-59

Q3

3

9M 2014

232

551

783

H1

Q3

+3

-56

9M EBITDA ANALYSIS (€M)

Q3 EBITDA ANALYSIS (€M)

• 9M 2014 Ebitda equal to 783 €M,56 €M lower than the same period ofthe previous year, of which:

-59 €M recorded in H1, reflectinglower margins due to negativeclimate effects, unfavourableEnergy markets scenario and expiryof CIP6 revenues

+3 €M recorded in Q3

• Environmentalmarkets +14

• Gas portfoliooptimization +10

• Electricity Industrialportfolio -18

• Trading portfolio -2

• Expiry of CIP6revenues -7

• Industrialperformance -5,mainly due toAcerra WTEplant halt

• Of whichEnvironmentalmarkets +2

• Electricity Networks +6

• Gas Networks -3

• Positive contribution from corebusiness activities in Q3, offsettingthe same negative dynamics alreadyrecorded in H1 related to Wasteincentive expiry, negative Energymarket price and volume trend

Higherhydraulicity

27


9M 2014 - Energy Scenario

(1) Gas at virtual trading point(2) QE 263/12 Jan 2013-Mar 2013; QE 124/13 Apr 2013-Oct 2013; Pfor 196/13 Oct 2013-Sep 2014(3) hourly average(4) based on gas at virtual trading point with 53% efficiency (transport cost included)(5) 35% efficiency – spread between energy prices and API2 coal cost (transport cost included)(6) load factor related to CCGT merchant plants(7) data subject to update by Terna

Average data H1 2013 H1 2014 Δ Δ % Q3 2013 Q3 2014 Δ Δ % 9M 2013 9M 2014 Δ Δ %

Brent $/bbl 108.0 108.8 0.8 0.8% 109.7 103.4 -6.2 -5.7% 108.5 107.0 -1.5 -1.4%

CO2 - EU ETS cost €/Tonn 4.3 5.7 1.3 30.4% 4.7 6.1 1.5 31.4% 4.4 5.8 1.4 30.9%

Green Certificates €/MWh 80.5 91.9 11.4 14.1% 84.5 96.7 12.2 14.4% 81.9 93.5 11.6 14.2%

€/$ €/$ 1.310 1.370 0.1 4.6% 1.320 1.330 0.0 0.8% 1.320 1.360 0.0 3.0%

Brent € €/bbl 82.2 79.4 -2.8 -3.4% 82.8 78.0 -4.8 -5.8% 82.4 78.9 -3.5 -4.2%

PSV(1) €/MWh 27.7 23.2 -4.6 -16.5% 27.7 20.5 -7.2 -26.0% 27.7 22.3 -5.5 -19.7%

AEEGSI Gas Tariff(2) c€/mc 36.4 27.9 -8.6 -23.5% 34.4 21.3 -13.1 -38.1% 35.7 25.7 -10.1 -28.2%

Coal € (API2) €/Tonn 63.3 55.9 -7.4 -11.6% 57.8 56.9 -1.0 -1.7% 61.5 56.2 -5.2 -8.5%

PUN baseload(3) €/MWh 60.6 49.5 -11.1 -18.4% 65.5 50.4 -15.1 -23.0% 62.2 49.8 -12.5 -20.0%

PUN peak(3) €/MWh 68.7 56.3 -12.4 -18.1% 68.5 53.5 -15.0 -21.9% 68.6 55.3 -13.3 -19.4%

PUN off-peak(3) €/MWh 56.1 45.7 -10.4 -18.5% 63.9 48.7 -15.2 -23.7% 58.7 46.7 -12.0 -20.4%

CCGT gas cost(4) €/MWh 59.9 49.6 -10.4 -17.3% 60.2 44.0 -16.2 -26.8% 60.0 47.7 -12.3 -20.5%

Clean Spark spread vs Peakload €/MWh 3.0 2.3 -0.8 -24.8% 2.3 5.0 2.7 n.s. 2.8 3.1 0.3 9.7%

Clean Spark spread vs Baseload €/MWh -5.0 -4.5 0.5 9.6% -0.7 1.8 2.4 n.s. -3.6 -2.4 1.1 31.7%

Clean Dark Spread vs Baseload(5) €/MWh 18.9 11.3 -7.6 -40.1% 25.6 11.3 -14.3 -55.9% 21.7 11.3 -10.4 -48.1%

CCGT load factor(6)

- North zone % 16.7 12.1 -4.6 -27.5% 18.6 14.5 -4.2 -22.4% 17.3 12.9 -4.4 -25.5%

- South zone % 13.8 11.9 -1.9 -13.8% 23.8 18.4 -5.4 -22.7% 17.1 14.1 -3.0 -17.7%

Coal load factor

- North zone % 64.6 50.8 -13.8 -21.4% 49.7 46.1 -3.6 -7.1% 59.6 49.2 -10.4 -17.4%

- South zone % 43.5 56.1 12.6 29.0% 58.4 53.9 -4.5 -7.8% 48.5 55.3 6.8 14.0%

Italian electricity demand(7) TWh 158.1 153.7 -4.4 -2.8% 80.9 78.1 -3 -3.5% 239.0 231.8 -7.2 -3.0%

Gas demand bcm 37.0 32.3 -4.7 -12.7% 11.1 10.8 -0.3 -2.4% 48.0 43.2 -4.8 -10.1%

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*

* without Intermediated Ipex volumes

In 2013 Edipower production includes 77% of production of the plants managed in tolling regime and 100% of production of the S. Filippo del Mela, Turbigo (groups 1-2-3) and Brindisithermoelectric plants and some hydroelectric and photovoltaic plants.In 2014 Tusciano and Turbigo productions are not included, while the quantities of the remaining Edipower plants are 100% of production.

9M 2014 - A2A Volumes

H1 2013 H1 2014 D D% 3Q 2013 3Q 2014 D D% 9M 2013 9M 2014 D D%

A2A Group Thermal production GWh 4,040 3,247 793- -20% 2,380 1,577 803- -34% 6,420 4,824 -1,596 -25%

of which

CCGT production GWh 1,950 1,181 770- -39% 986 462 524- -53% 2,936 1,642 -1,294 -44%

Coal production GWh 1,136 835 301- -26% 581 397 184- -32% 1,717 1,232 -485 -28%

Oil production GWh 431 641 210 49% 417 326 91- -22% 848 967 119 14%

EPCG production GWh 522 590 68 13% 397 393 4- -1% 919 983 64 7%

A2A Group Hydro production GWh 4,172 3,915 258- -6% 1,471 2,012 541 37% 5,643 5,927 284 5%of which

A2A and Edipower production GWh 2,412 3,044 632 26% 1,262 1,723 461 37% 3,674 4,767 1,093 30%

EPCG production GWh 1,760 870 890- -51% 209 289 80 38% 1,969 1,160 -810 -41%

Eligibles and wholesale electric ity sales GWh 14,728 19,282 4,555 31% 9,295 9,011 284- -3% 24,022 28,293 4,271 18%

Captive customers electricity sales GWh 1,381 1,206 174- -13% 626 526 100- -16% 2,007 1,732 -275 -14%

Ipex sales GWh 3,097 4,198 1,101 36% 1,994 1,053 941- -47% 5,091 5,251 160 3%

Electricity sales to EPCG customers GWh 1,226 1,336 110 9% 728 690 38- -5% 1,955 2,026 72 4%

Gas sales Mmc 1,294 1,457 162 13% 354 612 258 73% 1,648 2,068 420 25%

Heat volumes sales GWht 1,471 1,149 322- -22% 97 100 3 3% 1,568 1,249 -319 -20%

Cogeneration electricity sales GWh 191 153 38- -20% 5 4 2- -30% 196 157 -39 -20%

Cogeneration plants heat production GWht 813 579 234- -29% 52 69 17 33% 865 648 -217 -25%

Collected waste Kton 460 465 5 1% 201 211 10 5% 661 676 15 2%

Waste disposal Kton 1,284 1,276 8- -1% 591 615 24 4% 1,875 1,891 16 1%

WTE electricity production GWh 557 557 0 0% 274 274 1- 0% 831 830 -1 0%

WTE heat production GWht 646 564 82- -13% 92 103 11 11% 738 667 -71 -10%

Electricity distributed GWh 5,533 5,405 128- -2% 2,769 2,661 107- -4% 8,301 8,066 -235 -3%

EPCG Electric ity distributed GWh 1,274 1,207 67- -5% 623 603 20- -3% 1,897 1,810 -87 -5%

Gas distributed Mmc 1,227 1,020 207- -17% 138 119 19- -14% 1,365 1,139 -226 -17%

Water distributed Mmc 32 30 2- -6% 16 16 1- -3% 48 45 -3 -5%


Agenda

• Company profile



30


Infrastructure operations – Domestic Market Positioning

# Ranking

#5

#4listedutility

ELECTRICITY NETWORKSElectricity distributed (TWh)

WATERWater distributed (Mcm)

GAS NETWORKSGas Distributed (Mcm)

Infrastructure EBITDA represents around 30% of 2013 EBITDA

#1

DISTRICT HEATINGHeated volumes (Mcm)

EBITDA 2013:125 €M

EBITDA 2013:111 €M

EBITDA 2013:86 €M EBITDA 2013:

11 €M

#2

Sources: AEEGSI (electricity and gas networks), annual reports and other company information (district heating and water)

31


Networks

CONCESSIONS

Power Networks Gas Networks Water

32


Part of the heatgenerated by theGroup comes fromthe WTE plantsin Brescia, Milanand Bergamo(which account foran overall installedthermal capacityof approximately305MWt)

Cogeneration and District Heating

CONCESSIONSBUSINESS MODEL

Canavese

MI

BG

BS

VA

Famagosta

Tecnocity

NovateMilanese

Goltara

Lamarmora

Carnovali

VareseVia Rossi

Lombardy

33


Networks – gas distribution tenders

• Tenders for the assignment of the gas distribution services have to be carried out only for ATEMs (Aree Territoriali Minime), whichare clusters of municipalities (177 in the whole national territory) established by the Ministry for Economic Development

• The first tenders are expected to start in 2015 and the last ones will probably take place in 2018• Each concession will be granted for 12 years

A2A POTENTIAL TARGET ATEMS - MARKET SHARES AND TENDER DEADLINES

Sources: A2A internal elaboration based on MSE and Federutility data

34


(*) real pre-tax; (**) “X-Factor” does not include inflation rate

ELECTRICITY

4th Regulatory period: 2012-2015 (4 years)

• New tariff not linked to change in unit volumes consumption

• WACC*: in 2014-2015, 6.4% (distribution, metering); +1% for new investments

• Price cap**: 2.8% (distribution), 7.1%(metering)

• Parameters under interim reviews: risk free rate (2 years)

• 5th regulatory period: consultation in progress, to be finalized by November

GAS

4th Regulatory period: 2014-2019 (6 years)

• Tariff not linked to volumes

• WACC*: 6.9% (distribution), 7.2% (metering)

• Price cap**: up to 2016 1.7% for distribution and 0% for metering

• Parameters under interim reviews: risk free rate (2 years), price cap (3 years)

• Tariff in ATEMs with reduced price cap (0% for two years)

1st Regulatory period: 2012-2015 (4 years)

2014-2015 - Final tariff method (MTI):- allowed revenues based on full recovery cost as at 2012- overall return equal to 6.8%*, with an additional 1% extra return for

investments made from 2012- additional tariff component in case of relevant capex- inflation recognized to operating costs is set every year (2.1% in 2014)- working capital is covered by a specific component on unpaid bills

WATER

Regulatory Body: the Energy Authority (AEEGSI)

Networks – Tariffs

REGULATORY SCENARIO

35


Energy efficiency - regulatory framework

White Certificates represent the main tool to achieve climate and energy objectives

Energy efficiency represents

- a source of growth for district heating – supported by incentives

- a source of optimization for networks (electricity and gas)

36


Contacts:

A2A Investor Relations Team

Mail: [email protected]

Phone: +39 02 77203974

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

mailto:[email protected]



Documents

A2A Company Presentation Jan'15 - Amazon S3 · A2A Company Presentation January 2015. This information was prepared by A2A and it is not to be relied on by any 3rd party without A2A’s