Q1 2017 Results Analyst Presentation

Q1 2017 Consolidated Results

Milan, May 10th,2017

2

Highlights of the period

3

Q1: HIGHLIGHTS OF THE PERIOD

+ -

Hydroelectric volumes in Italyand EPCG

CCGT MGP & MSD Results

LGH FY consolidationand performance

Organic growth in all BU’s

ASVT acquisition

TIM-A2A Agreement foroptic fiber network in Milan

Authorization to increase treatmentcapacity

of the Filago WtE up to 25kt/y

KeyFinancialHighlights

MoU with local utilitiesof Northern Lombardy

4

Q1 2016

158

Q1 2017

180

Q1 2016

116

Q1 2017

180

FY 2016

3,136

Q1 2017

3,027

KEY FINANCIAL INDICATORS

REVENUES EBITDA

NET FINANCIALPOSITION

€M

+31% +28%

GROUPNET INCOME

+14%

GROUP ORDINARYNET INCOME

+55%

Q1 2016

314

Q1 2017

403

Q1 2016

1,287

Q1 2017

1,686

-109€M

Q1: HIGHLIGHTS OF THE PERIOD

5

Analysis of results

6

2016

314

-12

2016Ordinary

302

6413

1218

-10

399 4

2017

403

2016Non

recurringitems

Gener&

Trading

EnergyRetail

Waste Networks&

DistrictHeating

EPCG 2017Ordinary

2017Non

recurringitems

Q1 CONSOLIDATED RESULTSGROUP EBITDA

+89

+97

€M

7

2016

95

2016Non

Recurr.Items

-10

2016Ordinary

856

53 1

-3

1

-10

14

LGH

2

2017Ordinary

149 1

2017

150

Environ.Market

Plants'Hedging

andDispatching

TradingPortfolio

Other Fixedcosts

SFMEBITDA

GasMargin

2017Non

Recurr.Items

+55

+64

• CCGT performance more than offsetting low hydro production• Excellent results on Gas optimization

Q1 CONSOLIDATED RESULTSGENERATION & TRADING EBITDA

€M

2016

33

-2

2016Ordinary

31

PowerMarket

0

GasMarket

4

FixedCosts

-1

Other

1

LGH

9

2017Ordinary

44 0

2017

44

2016 NonRecurr.Items

2017 NonRecurr.Items

+11

+13

• Free market customer base +60K• Unitary Margins steady

Q1 CONSOLIDATED RESULTSENERGY RETAIL EBITDA

€M

9

2016Ordinary

17

41

59

Collection

3

UrbanWaste

TreatmentPlants

0

Other TreatmentPlants

1

LGH

8

2017Ordinary

41

20

8

71

2017 NonRecurring

Items

0

2017

41

20

8

71

12 2

+12

Other Treatment Plants

Collection

Urban Waste Treatment Plants

+12

• All KPI’s – quantities, prices, cost cutting – positive

Q1 CONSOLIDATED RESULTSWASTE EBITDA

International Projects

€M

10

2016

32

23

9

3

45

112

2016 Nonrecurring

items

0

2016Ordinary

32

23

9

3

45

112

WaterCycle

1

ElectricityNetworks

-1

GasNetworks

3

PublicLighting

1

DistrictHeating

4

LGH

10

2017Ordinary

31

26

10

4

49

10

130 3

2017

33

26

10

4

50

10

133

2017 Nonrecurring

items

+21

+18

Gas NetworksElectricity NetworksWater Cycle Public Lighting Heating

DH benefitting from higher gas prices and commercial development

Q1 CONSOLIDATED RESULTSNETWORKS AND DISTRICT HEATING EBITDA

€M

11

2016

8

12

20

Generation and Retail

-10

Distribution

0

2017

8

2

10

-10

Energy

DistributionLow hydro production (-42%): higher import (at

very high prices)

Q1 CONSOLIDATED RESULTSEPCG EBITDA

€M

12

Q1 2017EBITDA

403

D&A

-105

RiskProvisions

-13

Non rec.transactions

1

Investmentscarried at

equity

2

Net FinancialExpenses

-26

EBT

262

Taxes

-78

Net resultfrom

discontinuedoperations

2

Minorities

-6

Q1 2017Net

Income

180

FROM EBITDA TO GROUP NET INCOME

Q1 2016 314 -96 218 - -8 1582 -32-22 -5252

Q1 CONSOLIDATED RESULTS

€M

13

BREAKDOWN BY ACTIVITY BREAKDOWN BY BUSINESS

20163

11

33

51

2017

4

12

41

62

0

2

2

1

31

Generation &Trading

Energy Retail

Waste

Networks and DistrictHeating

Corporate

Foreign

2016

6

21

24

51

2017

7

5

24

26

62

Maintenance

Development

Mandatory

M&A

+11 +11

CAPEX


€M

14

Q1 2017EBITDA

403

Changein Net

WorkingCapital

-249

Change inotherassets/

liabilities

67

Use ofFunds

-4

Tax Paid

-1

NetFinancialExpenses

-45

FFO(1)

171

Capex

-62

ShareBuyback

0 109

Net FreeCashFlow

(1) Funds from operations after working capital change

314 -134 111 -54 -37 20Q1 2016 -4 -47--18

NET FREE CASH FLOW


€M

15

Closing remarks

16

Value fromdiversification in

Generation

Activemanagement of CCGT

optionality

Market growth

CCGT performance on MGP Vs. low hydro

Strong MSD performance

• Free market customer: +60k• Waste KPIs in line with plan• One M&A deal completed (ASVT)

2017 OUTLOOK REVISED UPWARD

FY EBITDA 1,170 – 1,190 €M

STRATEGIC PLAN GUIDELINES REINFORCED


17

Annexes

18

EBITDA

D&A

Provisions

EBIT

Net FinancialExpenses

Associates & JV

EBT

Taxes

Minorities

GROUP NETINCOME

Q1 2016 Q1 2017 %

+28.3%

+9.4%

-40.9%

+45.4%

-18.8%

-

+20.2%

+50.0%

-25.0%

REVENUES +31.0%

CHANGE

-9

+9

+89

+6

-

+44

-26

+2

+399

403

(105)

(13)

285

(26)

2

262

(78)

(6)

314

(96)

(22)

196

(32)

2

218

(52)

(8)

158

1,6861,287

Result from nonrecurr. transactions n.a.-51152

+13.9%+22180

Net result fromdiscontinued operations n.a.+22-

+89

P&L


€M

19

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

FY 2016 Q1 2017 %

Tangible Assets 5,080

Current tax Assets/Liabilities

WORKING CAPITAL AND OTHER CURRENTASSETS/LIABILITIES

TOTAL CAPITAL EMPLOYED

Equity

Net Financial Position

TOTAL SOURCES

1,724

80

(85)

363

(668)

(365)

6,129

159

2,209

37

277

6,407

3,271

3,136

6,407

Trade payables and other current Liabilities (2,128)

Non current Assets /Liabilities held for sale 1

5,026 -1.1%

1,756 +1.9%

75 -6.3%

(79) -7.1%

357 -1.7%

(666)

(359) -1.6%

6,110 -0.3%

118 -25.8%

2,126 -3.8%

(33) n.a.

379 +36.8%

6,489 +1.3%

3,462 +5.8%

3,027 -3.5%

6,489 +1.3%

(1,832) -13.9%

-0.3%

- n.a.

BALANCE SHEET


€M

20

2016

19

32

28

20

112

-1

0

-1

1 0 1 0

LGH

18

2017*

20

27

31

6

20

18

130 08

2017

22

34

30

6

20

18

138

6

2

5

Gen. &Trading

EnergyRetail

Waste

Networks& DH

EPCG A2ASmartCity Corporate

5

3

Costscovered

byrevenues

Changein perimeter

5

3LGH

Gen. &Trading

EnergyRetail

Networks

& DH

Waste

EPCG

A2ASmartCity

Corporate

(*) 2017 net of change in perimeter and costs covered by revenues

+26

+18

EXTERNAL COSTS


Excluding LGH: in line

€M

21

Q1 2016

11,927

Change inperimeter

-73

11,854

Netreduction

-162

LGH

1,224

Q1 2017excluding

change in perim.

12,916417

Q1 2017

13,333

Q1 2016excluding

change in perim.

Change inperimeter

Q12016

164

-1 -1

162

-1

2

-2

LGH

16.5

Q1 2017exclud.

changein perimeter

178 05

Q12017

183

Change in

perimeter

Red.schemes

Q1 2016exclud.

changein perimeter

Othercosts

Costeffect

FTEeffect

Red.schemes

Change inperimeter

FTE(1)

LABOURCOSTS (€M)

+1,406

(1) A2A Group’s Full Time Equivalent

+19

+16

LABOUR COSTS


22

2017

207

207

2018

104

299

403

2019

104

568

672

2020

100

100

2021

101

430

531

2022

98

500

598

2023

92

300

392

2024

70

300

370

2025

63

300

363

2026

45

Beyond2026

179

98

277

45

Bonds

Loans

GROSS DEBT MATURITIES AS OF 31/03/2017


€M

23

RELAUNCH

• Acquisition of a controlling stake of ASVT

• Start up of A2A Illuminazione Pubblica Srl

• Submission of the bid for gas Atem Milano 1

• ~60,000 increase of mass-market contracts in the first quarter of2017

• Successfully completed the first five years of loyalty program “Chiara2a”with the subscription of over 280,000 supplies

• Authorization to increase treatment capacity of the Filago WtE up to 10 t/h(+25kt/y)

• Conclusion of the procurement process and contract award for theexecution of civil works for the plastic recovery plant in Cavaglià

• LGH: Waste flows optimization in order to maximize the exploitation ofinternal assets. Unified coordination of the commercial area and logistic

• LGH: Unified coordination of the procurement area

• New separate collection system in Brescia: extension in another zone

REGENERATION

RESHAPE

• Supply of 50 electric vehicles in Unareti

• Agreement TIM-A2A to deploy the fiber optic network in Milan

• “Save grape project”, a smart-agriculture IoT project powered by LGHand A2A Smart City

• LGH: Start-up of a solar district heating plant in Lodi

• Positive EBITDA from CCGT in Q1 2017

• “Demothballing” of 400 MW Chivasso CCGT

UPDATE 3R

24

DISCIPLINE,DIALOGUE &

DIGITAL

Discipline:

- All En&A projects on track, new detailed plan defined in order toachieve 2017 goals

- In January signing of a key agreement with the Unions, aimed atharmonizing the collective regulations and strengthening the companyidentity

- Lean Project ongoing in several functional units, many operationalefficiencies already achieved; full roll-out across the Group including LGHstarting in 2017 is being considered

- Management development “ABC Listening Need Change”: a new projectdedicated to all the employees

Dialogue:

- 1 new multistakeholder forum (Milano) and launch of the platformwww.forumascoltoa2a.eu

- Banco dell’Energia: the first phase of the call for projects selection (for themost needy families) ended

- Top Utility award 2017 to A2A, for territorial communication

Digital:

- Customer base migration (~40,000 POD) from the former AspemEnergia’s IT systems into A2A Energia’s cost efficient ones

- Unareti and Ld Reti WFM digitalization

UPDATE 3D

ADDITIONALPROJECTS

A2A has signed a memorandum of understanding with ACSM AGAM,ASPEM, AEVV and Lario Reti Holding to study a business and corporatepartnership route

25

Operational annexes

26(1) Net of intermediated Ipex volumes

(1)

Q1 2016 Q1 2017Δ vs 2016

Δ% vs 2016

Q1 2017LGH

Q1 2017A2A+LGH

Δ vs 2016

Δ% vs 2016

A2A Group Thermal production GWh 2.711 3.363 652 24% 3.363 652 24%of which

CCGT production GWh 1.229 2.272 1.043 85% 2.272 1.043 85%

Coal production GWh 608 518 -90 -15% 518 -90 -15%

Oil production GWh 626 186 -440 -70% 186 -440 -70%

EPCG production GWh 248 387 139 56% 387 139 56%

A2A Group Hydro production GWh 1.510 1.057 -453 -30% 18 1.074 -435 -29%of which

A2A production GWh 942 730 -212 -23% 18 747 -195 -21%

EPCG production GWh 568 327 -241 -42% 327 -241 -42%

Wholesale electricity sales and Foreign Markets GWh 1.453 1.898 444 31% 18 1.915 462 32%

Ipex sales GWh 2.719 2.087 -632 -23% - 2.087 -632 -23%

Electricity sales GWh 2.084 1.889 -195 -9% 166 2.056 -29 -1%

Electricity sales to EPCG customers GWh 669 650 -19 -3% 650 -19 -3%

Gas sales Mmc 509 546 36 7% 174 720 211 41%

Electricity distributed GWh 2.766 2.801 36 1% 111 2.912 146 5%

Gas distributed Mmc 850 874 25 3% 273 1.147 297 35%

Water distributed Mmc 16 16 0 2% 16 0 2%

Heat volumes sales GWht 1.148 1.200 52 5% 125 1.325 177 15%

Cogeneration electricity sales GWh 100 104 4 4% 40 144 44 44%

Collected waste Kton 316 325 9 3% 47 372 56 18%

Waste disposal Kton 614 706 92 15% 176 883 269 44%

WTE and other plants electricity production GWh 427 398 -29 -7% 54 452 26 6%

WTE and other plants heat production GWht 520 512 -7 -1% 27 539 20 4%

VOLUMES


27

(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 data Q1 2016 Q1 2017D % vs

2016

Brent $/bbl 35,1 54,7 56%

CO2 - EU ETS cost €/Tonn 5,7 5,2 -9%

Green Certificates €/MWh 99,4 0,0 -100%

€/$ €/$ 1,1 1,1 -3%

Brent € €/bbl 31,8 51,4 61%

PSV(1) €/MWh 14,5 20,4 41%

AEEGSI Gas Tariff (2) c€/mc 19,0 19,2 1%

Coal € (API2) €/Tonn 41,1 76,4 86%

PUN baseload(3) €/MWh 39,6 57,4 45%

PUN peak(3) €/MWh 45,4 66,4 46%

PUN off-peak(3) €/MWh 36,4 52,4 44%

CCGT gas cost(4) €/MWh 35,7 48,9 37%

Spark Spread CCGT_PSV vs Baseload €/MWh 3,8 8,6 n.a.

Spark Spread CCGT_PSV vs Peakload €/MWh 9,7 17,5 81%

Spark Spread CCGT_PSV vs Off-Peak €/MWh 0,6 3,6 n.a.

Clean Spark Spread vs Baseload €/MWh 1,7 6,6 n.a.

Clean Spark Spread vs Peakload €/MWh 7,6 15,6 n.a.

Clean Dark Spread vs Baseload(5) €/MWh 9,1 13,9 52%

Italian electricity demand(6) TWh 78,5 79,0 1%

Gas demand Bmc 23,6 25,6 9%

ENERGY SCENARIO


28

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.

Documents

Q1 2017 Results Analyst Presentation