A2A Company Presentation August 2012 · 2017. 2. 7. · total nfp 4,021 4,860 +839 €m data. ... gas 82 94 12 65 29 cogeneration and district heating 70 85 15 82 3 waste 262 287

A2A Company Presentation

August, 2012

• Results• Assets & Strategy

This information was prepared by A2A and it is not to be relied on by any 3rd party without A2A’s prior written consent. 2

Index

This document has been prepared by A2A solely for the use at investor and analyst meetings. This document does not constitute an offer or invitation to purchase or subscribe any shares 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 they are made.

Last results released (H1’12)

Company back-up:

→ annual results

→ assets & strategy

Appendix

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

- Edipower NFP +959

- Share of Edipower

acquisition +125

3

H12012 - Main financial highlights

NET SALES

EBITDA

EBIT

NET INCOME

OLD PERIMETER

NFP

H12011

3,290

484

280

116

3,011

465

219

120

H12012 Change Change %

+4.1%

279

+19

+61

+9.3%

+27.9%

3,776

2011 H1 2012

4,021

Change

-245

-3.3%-4

NET CAPITAL

EMPLOYED

EQUITY

7,614

3,593

8,478

3,618

+864

+25

Coriance reclassified according to IFRS5

EDIPOWER ACQUISITION IMPACT

ON NFP - 1,084 +1,084

TOTAL NFP 4,021 4,860 +839

€M data


EBITDA

H12011

EBITDA

H12012∆ vs 2011

ENERGY 150 171 21

COGENERATION AND

DISTRICT HEATING 36 44 8

WASTE 152 140 -12

NETWORKS 124 127 3

OTHER SERVICES

& CORPORATE-12 -1 11

TOTAL (EPCG not

included)450 481 31

EPCG 15 3 -12

TOTAL 465 484 19

KEY POINTS

Analyzed as follows

4

H12012 vs H12011 - EBITDA breakdown

EBITDA BREAKDOWN

H12011

H12012

Energy

34%

Cogeneration

and District Heating

9%

Networks

28%

Waste

29%

Energy

34%

Cogeneration and

District Heating

8%

Networks

27%

Waste

31%

Higher margins of Hydro and Coal plants

Steady margins of CCGT plants

Margins on electricity and gas end-users

in line

Lower trading portfolio margins

Increase in the number of customers

(+8% heated volumes)

Environmental markets

Expiry of Cip6 subsidies of WTE plants

Bergamo WTE plant halt for extraordinary

maintenance

Higher margins on Italian and int’l projects

Positive regulatory impact on gas and

water revenues

Cost saving

Non-current items

€M data KEY POINTS


H1 2012 - Operating highlights

ENERGY (Italy) EPCG (Montenegro) DISTRICT HEATING AND COGENERATION(5)

WASTE NETWORKS

(1) From 1st June 2012, 77% of Edipower production included

(previously, 20%)

(2) Intermediated Ipex volumes and sleeve

(3) Withdrawals from stock and internal consumption

(4) H1'11 volumes adjusted for Coriance disposal

(5) Coriance figures not included

(6) The figure includes heat production of Nord Brescia, Canavese and Novate cogeneration plants

and other minor cogeneration and thermal plants located in Milan, Brescia and Bergamo areas

(7) The figure refers to heat production of WTE plants and Cassano plant

(8) Partenope Ambiente not included


H1 2012 - Energy and Regulatory Scenarios

ELECTRICITY – TREND OF HOURLY PUNELECTRICITY SCENARIO

NETWORKS - REGULATORY SCENARIO

* “X-Factor” does not include inflation rate

Source : AEEG

ELECTRICITY

• Regulatory period: 2012-2015

• New tariff not linked to change in unit

volumes consumption

• WACC: 7.6% (distribution, metering) – under

review in 2013

• WACC: +1% for new investments

• Price cap*: 2.8% (distribution),

7.1%(metering)

GAS

• Regulatory period: 2009-2012 (Consultation in

progress for next regulatory period)

• Tariff not linked to change in unit volumes

consumption

• WACC: 7.6% (distribution), 8.0% (metering)

• Price cap*: 3.2% (distribution), 3.6%(metering)

• Newly acquired by AEEG – Consultation in

progress for tariffs

• Currently:

- 7% return on invested capital- Efficiency factor

WATER

Regulatory Body: the Energy Authority (AEEG)

* based on Gas Release 2007 adjusted on the basis of market gas contracts renegotiations (i.e. 3.8 €cent/cm in H12011,

5.5 €cent/cm in H12012)

Ratio between average hourly PUN and PUN baseload


H12011

15

15

Thermoelectric

production

Other

2

H12012

3

Hydroelectric

production

-5

7

H12012 vs H12011 – EPCG: EBITDA analysis

€M

Plant halt for

extraordinary

maintenance in Q2

Positive performance in

Q2 (+271 GWh vs Q2

2011)

∆ Q1 = -24 €M ∆ Q2 = +12 €M

-17% 672 471 -30%HYDROELECTRIC

PRODUCTION (GWh)907 749

THERMOELECTRIC

PRODUCTION (GWh)

H12011 H12012 ∆ % H12011 H12012 ∆ %

-12

• Lower hydroelectric production

• Higher import needs• Increase in thermoelectric

production


H1 2012 - From EBITDA to Net Income

€M data H12011 H12012 Change Key points

EBITDA 465 484 +19

D&A, Write Downs and Provisions -246 -204 +42

Associates and JV and others +16 +16 -

EBT 165 200 +35

Others -4 +4

Financial charges -91 -78 +13

Fair value derivatives +25 -18 -43

D&A +14

Fund release +12; Bad debt provision +16

Bond fair value -19

Other derivatives -24

TAXES -73 -91

IFRS 5

NET INCOME

+12

120

+13

116

-18

+1

-4

MINORITIES +16 -6 -22

ROBIN HOOD TAX EFFECT:

Rate increase from 6.5% to 10.5% and

change in perimeter, as of September 2011

H12012 e-Utile Capital gain +8; H12011 TdE

Result -30 and Metroweb capital gain +36

-


1%

13%

45%

41%

Bonds

Loans

Committed

Lines

Uncommitted

Lines & other

9

DEBT MATURITY DEBT BREAKDOWN BY INTEREST

30/06/2017 15% 10%

35%

40%

Fixed

Variable

Swap

3%2%

TOTAL DEBT: 5,093 €M - AVG. MATURITY: 4.1 YEARS – UNDRAWN LINES*: 2,205 €M – H12012 AVG. RATE 3.31%

1%

9

COMPANY’S CREDIT RATING DEBT BREAKDOWN

BBB/A-2

Outlook Negative

Baa2 under review

Note: EPCG not included* of which 2,165 €M committed lines, 40 €M BEI loan

H12012 - Group Financial structure Total debt - Maturity

50%

14%

36%


Index


Company back-up:

→ annual results


Appendix


2011 Highlights

(1) 2008 financial highlights haven't been restated according to IFRIC 12

(2) Adjusted for the impact of extraordinary items (2011: Metroweb capital gain and net write-

downs relative to the Edison/Edipower shareholding reorganization; 2010: Alpiq capital gain;

2009: the so-called "Fiscal Moratorium")

(3) of which 0.060 euro for ordinary dividend and 0.036 euro for additional not recurrent

dividend

Focus: 2011 non recurring and extraordinary items


2011 - EBITDA breakdown

€M data EBITDA

2010

EBITDA

2011∆ vs 2010

EBITDA

Bdg 2011

∆ vs Bdg

2011

ELECTRICITY 321 252 -69 252 0

GAS 82 94 12 65 29

COGENERATION AND

DISTRICT HEATING 70 85 15 82 3

WASTE 262 287 25 253 34

NETWORKS 276 253 -23 260 -7

OTHER SERVICES

& CORPORATE-31 -26 5 -35 9

CONSOLIDATION

ADJUSTMENTS-2 2 0

TOTAL (EPCG not

included)978 945 -33 877 68

EPCG 62 -3 -65 59 -62

TOTAL 1,040 942 -98 936 6

€M data EBITDA BREAKDOWN

2010

2011

Energy

36%

Cogeneration


9%

Networks

26%

Waste

29%

Energy

40%

Cogeneration


7%

Networks

27%

Waste

26%


Energy Scenario

� Blue figures refer to the factors which more directly impacted the results of the Group

(1) Italian National Price of the electricity

(2) CCGT Gas Cost based on Gas Release 2007

(3) Load factor of CCGT plants not subject to dispatching constraints


Business Units - Operating data: Energy

(1) The Scandale plant came into operation during 2010 year; Note: 2009, 2008 and 2007 data reclassified

� 2011 electricity results were negativelyaffected by1. lower margins in the sales of electricity2. lower contribution of the value of

environmental certificates

� 2011 gas results:1. benefited from the efficient purchasing

policy2. were negatively impacted by tariff

indexation and lower volumes


Business Units - Operating data: Heat and Services

(1) The figure includes heat production of Nord Brescia, Canavese

and Novate cogeneration plants and other minor

cogeneration and thermal plants located in Milan, Brescia and

Bergamo areas

(2) This figure refers to heat production of WTE plants and

Cassano plant

Note: 2009, 2008 and 2007 data reclassified

� 2011 results benefited from thecommercial development and thepositive trend of the plantsmanagement


� 2011 electricity distribution resultswere lower than 2010 because:

1) 2010 had benefited from the record ofadjustments relative to the “companyspecific equalization”

2) the Networks Sector of the EPCGGroup was negatively affected by thereduction of the distribution tariffsdecided by the local regulatoryAuthority in April 2011

16

Business Units - Operating data: Environment and Networks

(1) Partenope Ambiente not included

(2) Related to main municipalities (Milan, Brescia, Bergamo,

Varese)

(3) The 2010 and 2009 figures have been reclassified to

reflect the BAS SII deconsolidation and its allocation in

"Non-current assets held for sale"

Note: 2009, 2008 and 2007 data reclassified

� 2011 results benefited from thegood performance of the waste toenergy plants and the increasedrevenues from the sale ofelectricity produced by theseplants


Group Financial structure

Statistics relative to Debt at 31 December, 2011

• Total gross debt: 4.4 € bn

• Average cost of debt: 3.3%

• Average maturity: 4 years

• Undrawn credit lines: 1.83 € bn, of which 1,785 €M committed,

45 €M BEI loan

� 2011 showed an increase of the debt by 128 million – 120 of which due to an increase in tax receivables to beabsorbed in the year in progress.


Index


Company back-up:

→ annual results


Appendix


A2A “LOCAL” PARTNERS

DELMI

MUNICIPALITY OF BERGAMO

(1.7%)

MUNICIPALITY OF MILAN

(27.5%)

MUNICIPALITY OF BRESCIA

(27.5%)

MARKET & OTHER SHAREHOLDERS

(∼38%)

SHAREHOLDERS

STRATEGIC PARTNERSHIPS

20%

70%

21.9%

90%

PROARIS

CAMUNA ENERGIA

50%

48.9%

7.9%

60%

74.5%

33.3%

Share capital: 3,132,905,277 shares (par value = 0,52 €/share)

Treasury shares: 26,917,609 shares

43.7%

ASM NOVARA

• A2A originates from the merger among AEM, ASM and Amsa, three companies that date back to over 100 years ago

• 1st Local Utility in Italy by revenues, margins and market cap

• A2A is an energy-focused player with a deeply rooted customer base in Northern Italy and a solid asset base across the country. A2A selectivelygrows its international presence in Montenegro (power production and distribution), France (cogeneration and district heating), UK, Greece &

Spain (waste treatment plant development) and Europe (energy trading)

A2A Group in a snapshot

MUNICIPALITY OF VARESE

(0.7%)

On basis of the final

contracts relating to the

shareholding

reorganisation of

Edison and Edipower,

signed on February

15th, 2012. More

details in the Appendix


Total 2011 EBITDA 942 €M spread among 4 major business areas

A2A Group in a snapshot: presence in diversified and complementary business areas

COGENERATION& DISTRICT HEATING

Cogenerationplants

Networks

85 M€ 9%

WASTE

Collection

Treatment

287 M€ 29%

NETWORKS(EPCG included)

Water

Electricity networks

Gas networks

259 M€ 26%

Note: 2011 results represented do not include -25 M€ negative Ebitda from “Other services & Corporate”

ENERGY (EPCG included)

Fuel sourcing

Powergener.

Whole-sale &Trading

336 M€ 36%

PORTFOLIO MANAGEMENT

DisposalHeat/Electr.sale

Heat/Electricitysale

Electricity/Gassale

2011EBITDA


BALANCED BUSINESS MIX

FLEXIBLE AND

ENVIRONMENT-FRIENDLY

POWER PRODUCTION

MULTI-UTILITY IN

NORTHERN ITALY

• High diversification between deregulated and regulated businesses• Capital employed spread among different business areas with a sound

risk/return model

• Balanced exposure to external factors (GDP, weather conditions, etc.)

• Primary role in “environmentally sustainable” energy production and services

• Cost-based competitive advantage vs. market peers• Power plants characterized by low emission rates

• Long-lasting presence in Northern Italy, richest area of the country, with a multi-business approach

• Strong customer loyalty• Primary player in all “local” businesses managed

A2A Group in a snapshot: key competitive advantages


Balanced business mix - Exposure to exogenous risk factors

Labour and

maintenance of the

power production

plants

Labour and

maintenance of (waste

treatment plants and

collection)

Labour and maintenance

of the production plants

Accounted for in tariff

formulas

Accounted for in tariff

formulas

District

Heating

Gas

Power

Gas

Networks

Water

Electricity

Networks

Business areas with diversified risks/opportunitiesMost impacted

No impact

Strong relevance of

concession

durations and

remuneration

criteria

GDP WEATHER COMMODITIES

Power demand

strongly affected

by GDP growth

Hydro production

impacted by

snow/rain falls

Margins deriving

from residential

customers

Results strongly

affected by winter

cold temperatures

Industrial waste

volumes affected

by macroeconomic

downturn

WTE revenues and

margins linked to

commodity price

level

Concessions and

rules impacting

regulated

segments

New tariffs

decoupled from

volumes

Revenues and

margins depending

on volumes

COMPETITION

Competition

increases in each

step of the value

chain

Increasing

competition in free

market

FIXED COST INFLATIONREGULATION

Sources and

uses prices

indexed at

commodities

price partially

“off-set”

Waste


A2A generation mix

• A2A power plants’ flexibility higher than market average (hydro vs. other

renewables and CCGT vs. conventional thermal); moreover, most hydro capacity is

reservoir (i.e. storage proxy)

• Capability to effectively face future market swings due to growing renewables shareof overall production and increasing peak-load consumptions

• WTE and cogeneration production with lower CO2 emissions

KEY A2A COMPETITIVE ADVANTAGES

(*) please, see the appendix for details

Note: 1) cogeneration includes plants connected to DH networks

A2A generation mix (100% of Edipower capacity included*)

Thermal 9.9 GW

- CCGT: 7.0 GW (71%)

- Fuel oil: 1.9 GW (19%)

- Coal: 1.0 GW (10%)

A2A PLANTS IN ITALY

� With the acquisition of

43.7% of Elektroprivreda

Crne Gore (EPCG) A2A has

become a strategic

industrial partner of the

largest electricity player in

the Republic of

Montenegro

� EPCG operates in electricity

generation (3 main plants

and 7 “small hydro”),

distribution (~20,000 km),

and sale of electricity

(320,000 users)

INSTALLED CAPACITY (MW)

75%

25%

A2A

Edipower

Hydro 2.0 GW

Cogeneration 0.2 GW

WTE 0.2 GW

Photovoltaic 0.003 GW


A2A District Heating & Cogeneration – Assets base

ITALY

• Thermal installed capacity: 1,558 MWt- cogeneration and thermal plants: 1,077 MW

- third-parties thermal plants(*): 481 MW

Heat pump

Coal

Biomass

Oil

Electricity

Commercial

Residential

Industrial

Thermal

Storage

Distr. Infr.

Centralized

Heating and

Cooling Plant

Natural

Gas

BUSINESS MODEL

(*) The figure includes the thermal capacity of Cassano plant and WTE plants (Milan, Brescia, Bergamo)

• District heating network: ~912 Km


PLANTS• Waste to energy plants: 5

(property plants)

- electricity capacity: 205 MW- thermal capacity: 275 MWt- treatment capacity: 1,565 Kton/y

A2A Waste – Assets base

• Acerra waste to energy plant

(management only):

- electricity capacity: 107.5 MW- treatment capacity: 600 Kton/y

• Mechanical biological treatment

plants: 5

• Landfills in operation: 8, of which 5

with biogas plants (plus 3 in other

sites)

• Other waste treatment facilities:

12, of which 1 management only

ITALIAN OPERATIONS

(1) MBT: Mechanical Biological Treatment


Green Activities

A2A business model includes a significant mix of green activities, which represent a growing reality. A2A green activities are focused on electricity production

from renewable sources and energy saving through the development of cogeneration and network efficiency. The purpose is to further optimize A2A asset

portfolio through green operations with high industrial content. Below a summary table with supporting rationale.

(*) EUA (European Allowance Unit), CER (Certified Emission Reduction) and ERU (Emission Reduction Unit) traded also on international markets


Remuneration Committee

• assists the Supervisory Board:- in the definition of the compensation of the

Management Board and the Supervisory

Board members invested with special

offices

- in giving advice about incentivation andloyalty schemes of the Management Board

members, managers of the Group,

employees and groups of employees

Internal Control Committee

• Its roles are set by the legislative framework,the Code of Conduct of the listed companies, the

company By-Laws as well as company

regulations and/or Supervisory Board

deliberations

• provides assistance in the internal controlsystem evaluation, with particular regard to the

control of risk , the information and accounting

system and the Internal Audit. In particular the

Committee supports the Supervisory Board in

the control and auditing activities set by the

legislative framework and by the company by-

Laws

• assists the Supervisory Board in the approval ofthe Annual Report, the Consolidated Financial

statement, the half-yearly financial report and

every interim report transmitted by the

Management Board

Community Committee

• assists the Supervisory Board in the definition ofthe guidelines for cultural and charitable

activities, in managing relations with the AEM

and ASM foundations, in promoting the image of

the company and the Group

• evaluates the impact of A2A’s business on thecommunities in which it operates and makes

proposals concerning corporate social and

environmental responsibility

Appointments Committee

• assists the Supervisory Boards in theappointment of the managing and control

bodies, as written in the company by-Laws

Corporate Governance


A2A in Europe

TRADING ACTIVITIES

POWER

Italy

- Import/Export- Load balancing Terna- IPEX Spot GME- MTE GME- IDEX Future Borsa Italiana

France

- Import/Export- Load balancing RTE- EPEX Spot Day-Ahead- EPEX Spot Continuous trading- EEX Future

Switzerland

- Import/Export- Load Balancing SwissGrid- EPEX Spot Day-Ahead

Germany

- Import/Export - Load balancing RWE, EnBW- EPEX Spot Day-Ahead- EPEX Spot Continuous trading- EEX Future

Austria

- Import/Export- Load balancing APG- EPEX Spot Day-Ahead

Slovenia

- Import/Export- Load balancing with BORZEN

(expected by the end of 2012)

- BSP South Pool Spot Day-Ahead (expected by the end of 2012)

Greece

- Import/Export- Load balancing HTSO- DESMIE Day-Ahead

Montenegro

- via EPCG

GAS

Italy

- OTC trading (PSV)- P-Gas platform - PB-Gas platform France

- Powernext Spot- Powernext Futures- OTC trading (PEG Nord and PEG Sud)Netherlands

- Endex Futures- TTF OTC tradingGermany

- NCG OTC trading (expected 2012)- EEX Futures (expected 2013)Austria

- CEGH OTC trading (CEGH - Baumgarten)- ImportSwitzerland

- Import

ENVIRONMENTAL MARKETS

Italy

- GME

France

- Bluenext

Germany

- EXX

UK

- ICE-ECX

USA

- Green Exchange


Index


Company back-up:

→ annual results


Appendix


What next: Edipower

Shareholding reorganisation of Edison and Edipower / Swap deal

• Following, the main points of the deal (on the basis of the agreement dated May 5th, 2012)

1. acquisition of the whole of Edipower by the Italian shareholders of Edison: they will buy 50% stake from Edison at Euro 683.7 million and 20% stake from Alpiq at Euro 200 million. In the

end, 70% of Edipower will be held by Delmi, 20% by A2A and 10% by Iren. The total purchase price equals Euro 883.7 million

2. exit from Edison by the Italian shareholders: EdF will acquire a 50% stake in TdE from Delmi at Euro 783.7 million, implying Euro 0.89 per Edison share (assuming TdE net financial debt of

Euro 1.26 billion), consequently controlling 80.7% of the share capital of Edison

3. mandatory tender offer as a result of the change of control in Edison: on the back of CONSOB opinion, EdF will launch a PTO on Edison. Delmi undertook to pay to EDF a maximum amount of

Euro 25.1 million for the expenses connected to the PTO if higher than what expected when the agreement was first signed at the end of 2011

4. signing of a supply gas contract: Edison and Edipower would enter a contract whereby Edison would supply gas to Edipower at market terms(1), which would cover a minimum of 50% of

Edipower’s needs for the next six years (total volume estimated at about 1 billion scm of gas)

• On May 14th, 2012 a banking syndicate composed of 9 banks undertook to conclude a Euro 1,250 million funding contract with Delmi. The aim of this contract is to allow Delmi to buy

Edipower and to repay the shareholder loan taken out by Edipower. The funding should be closed by the end of May

• On May 24th, 2012, execution date of the deal, A2A, Iren and the other shareholders of Delmi entered into agreements relating to the governance and functioning of Delmi and Edipower, as

well as the possible minority shareholders exit

(1) Gas price will be monthly defined on the basis of a formula indexed to prices of gas oil, fuel oil and mainly brent

Sources: A2A, Edison, EdF press releases, Consob Communication n. 12027130 (04/04/2012), Antitrust approval (30/04/2012)

Edipower shareholders post-deal

(through Delmi):

- A2A 56.2%- Iren 21%- SEL 6.7%- Dolomiti Energia 6.7%- Financial Investors 9.4%

(Mediobanca 4%, Fondazione

CRT 3.4%, Banca Popolare di

Milano 2%)

Financial

investors

Dolomiti

EnergiaSEL

Edipower post-deal shareholding structure


Italian power generation: ranking and A2A positioning

(*) The figures don’t include the generation capacity dispatched by GSE

2011 installed capacity (GW)*

A2A: second player in the Italian power generation sector thanks to

full Edipower consolidation

Documents

A2A Company Presentation August 2012 · 2017. 2. 7. · total nfp 4,021 4,860 +839 €m data. ... gas 82 94 12 65 29 cogeneration and district heating 70 85 15 82 3 waste 262 287