a2a2016
CompanyProfile
October 2016
This information was prepared by A2A and it is not to be relied on by any 3rd party without A2A’s prior written consent.
Our Results• Positive 2015 results were achieved despite the
asset write-downs sustained and resulting fromboth the continuing economic crisis in theItalian thermoelectric sector
• With respect to these external dynamics, theGroup reacted by continuing with the initiativesto improve operational efficiency, which helpedto sustain the profitability
• Debt reduction continued posting verysatisfactory results also in 2015
• A dividend of 0.041 euros per share, up by 13%,was submitted to AGM approval
• A2A medium-term financial strategy is aimed atlengthening the average debt maturity,maintaining an adequate financial flexibility andlowering the cost of debt to support theCompany rating
• A2A adopts a prudent energy risk policy, part ofits Enterprise Risk Management model, whosepurpose is to further develop and integrate riskmanagement activities into the business process
Our World• A2A is active in energy (electricity and gas),
cogeneration and district heating, waste anddistribution networks – a businessdiversification which spans from regulated tomarket exposure thus considerably lowering itseconomic risk profile
• Born in 2008 from the merger of AEM, ASMand AMSA, A2A operates throughout Italy,predominantly in Lombardy
• The business units of the company have a firstclass asset base - both plants and networks.Long term concessions increase visibility
• A2A business model is very flexible. It allowsfor optimizations both in the business units andacross them
• At international level A2A mainly operates inMontenegro through EPCG (electricity)
• The current strategy has been set out in the2016-2020 Strategic Plan. The main lines of thePlan are the following:
- Restructure: substantial reduction inthermoelectric power generation exposure
- Relaunch: growth acceleration in waste, energyretail, smart network systems and water
- Reshape: building options in energy efficiency,smart city and “energy community” services
- Discipline in operations and capital structure- Dialogue & engagement with key stakeholders- Digital & technological transformation
- Additional benefits from local aggregations
Our Responsibilities• A high weight of green component
characterizes A2A asset portfolio. Large scalerenewable production (hydroelectric, WTE),high efficiency production (cogeneration withlower CO2 emissions) and innovativetechnologies to increase energy savings (LEDlighting). A2A may also leverage on a large andloyal customer base as a natural hedge for itsenergy portfolio.
• These mark the Company commitment tosustainability, further strengthened in 2015at governance level. Sustainability representsa yet untapped source of value for investors
• The shift to a traditional governance model,occurred in June 2014, facilitates decisionmaking and emphasizes the central role of theBoard of Directors
• Milan and Brescia cities are the majorshareholders with a joint control
A2A - THE LEADING ITALIAN MULTI-UTILITY
Waste
n. 1 for electricity produced by WTE plants
Networks
incumbent in its 3 key gas areas
EPCG
∼0.7 GW hydro installed capacity (76% of total)
Generation&Trading
∼2 GW hydro installed capacity in Italy
Energy Retail
market leader for quality and customersatisfaction
Cogeneration and District Heating
first domestic operator
Business units: top strengths
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This information was prepared by A2A and it is not to be relied on by any 3rd party without A2A’s prior written consent.
A2A AT A GLANCE
Local
utilities
Market capitalisation atDecember 31, 2015: € 3,929 m
A2A in 2015
Italian utilities 2015 EBITDA
A2A shareholding structure(2)
CURRENT CORPORATE CREDIT RATING
Standard & Poor’s
BBB/A-2 Outlook Stable
Moody’s
Baa3 Outlook Stable
Financial Highlights
(1) Group net income adjusted for the impact of extraordinary items: 2015 = 278€M; 2014 = 175€M; 2013 = 156€M;2012 = 116 €M
(2) At December 31, 2015. Real time updates available at: http://www.a2a.eu/en/investor/overview/shareholding_upd.html
A2A is the Blue Chipof the local utilities
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This information was prepared by A2A and it is not to be relied on by any 3rd party without A2A’s prior written consent.
A2A: GEOGRAPHIC PRESENCE AND ACTIVITIES
ITALY AND MONTENEGRO: plants
UK SPAIN GREECEMONTENEGRO
Technological Partnerships: waste
Italy• Electricity distribution, water integrated cycle and
public lighting: Northern Italy
• Gas distribution: across Italy (especially Northern)Montenegro• Electricity distribution
BUSINESS PORTFOLIO: diversified and integrated
ITALY AND MONTENEGRO: networks
(1) Declared EBITDA equal to 1,044 €M, excluding costs of redundancy schemes (-1 €M), non recurring items (26 €M) and EBITDA from “Other Services & Corporate” (-21 €M)
Sources: A2A Strategic Plan 2015 Results & Business Plan Update; Company Annual Reports
Ordinary EBITDA equal to 1.023 €M
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This information was prepared by A2A and it is not to be relied on by any 3rd party without A2A’s prior written consent.
A2A: ASSET PORTFOLIO & STRENGTHS
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This information was prepared by A2A and it is not to be relied on by any 3rd party without A2A’s prior written consent.
A2A 2016-2020 STRATEGIC PLAN IN A NUTSHELL
Strategic Plan confirmed and reinforced
Energy markets scenario significantly worsened
Net negative regulatory impact
Additional cost reduction
Acceleration on local aggregation
Incremental regulated Capex; wider M&A pipeline
New initiatives (not in plan) identified
A WORSECONTEXT
MANAGEMENTINITIATIVES
STRATEGICFRAMEWORK
Stronger management initiatives to tacklenegative external factors
STRATEGICPLAN
2015 - 2019
NEWSTRATEGIC
PLAN2016 - 2020
LOCALAGGREGATIONS
TERMINALYEAR EBITDA
€ 1.35 B(2019)
€ 1.30 B(2020)
Additional EBITDA(2020) > €100M
TERMINALYEARNET DEBT
€ 2.5 B(2019)
€ 2.4 B(2020)
Solid investmentgrade to bemaintained
DIVIDENDPOLICY(€c/share)
3.6 in 2015,growing to
~ 7.5 by 2019
4.1 in 2015,growing to
~ 7.5 by 2019
EPS accretive
Stability and resilience of industrial portfolio and furthervalue generation from local aggregations
RESTRUCTURE
Substantial reduction in thermoelectricpower generation exposure
RELAUNCHGrowth acceleration in environment,smart networks and energy services
RESHAPEBuying options in smart city
and green economy
DISCIPLINEDiscipline in operations
and capital
DIALOGUEDialogue & engagement
with key stakeholders
DIGITALDigital & technological
transformation
STRATEGIC PLAN GUIDELINES
KEY FINANCIAL HIGHLIGHTS
INVESTMENTSFOR
GROWTH
~ € 2.2B cumulated Capex
EBITDA by 2020 € 1.3B (CAGR 4.5%)
- € 0.5B debt reduction in 5 years
Thermal capacity reduction (- 40%)
Strong growth in core skills markets
Regulated / Quasi-regulated EBITDA(1) by 2020 ~60%
DPS 2015 + 13%; stable dividend expected in 2016
DPS bound to grow
Solid investment grade capital structure to be maintained
DIVIDENDPOLICY
AND CAPITALSTRUCTURE
BUSINESS-MIXREBALANCE
(1) Regulated activities: Networks, EPCG Electricity distribution, incentivized energy production; Quasi regulated activities: Urban Waste Collection & Treatment, District Heating, Public Lighting
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