Acea — Investor Presentation 2016

Nov 28, 2016

2015 Results 2016-2020 Business Plan

November 2016

Agenda

2016-2020 Business Plan highlights

Acea today

WATER

Leading operator in Italy ~ 42% of Group EBITDA

Lazio, Tuscany, Umbria and Campania

• Water sold: 527 million m3
• Customers: nearly 9 million
• Engineering, procurement, construction and management of integrated water services, laboratory analysis
• Water Management services in Latin American countries

One of the main Italian energy retailers

~ 15% of Group EBITDA

• Electricity sold: over 9.4TWh
• Customers: ~ 1.4 million
• 7 hydroelectric power plants (122 MW)
• 3 thermo/cogen plants (243 MW).

Number 6 Italian operator ~ 8% of Group EBITDA Umbria, Lazio and Tuscany Waste treated: ~ 770,000 Tons

Electricity produced (WTE): 265 GWh

One of the leading operators in Italy

• ~ 35% of Group EBITDA
• Electricity distributed: ~ 11 TWh in the city of Rome
• Public lighting and floodlighting managed: over 217,000 lighting points
• Energy efficiency projects.

2015 data

Well-positioned to capture opportunities in all business areas

Source: CONSOB (November 2016) and Companies' data

Acea's Ownership Structure EBITDA from Regulated activities

Strategic Pillars

ACEA Group

Maintaining our strategic pillars…..

Balanced risk profile

• 74% of EBITDA from regulated businesses at the end of the Plan
• 80% of investment in regulated businesses

Efficiencies and innovation

• ~94 €m of efficiencies relates to Acea 2.0 (billing, WFM, insourcing)
• Corporate rationalisation
• Operational efficiency

Organic growth

• Focus on regulated businesses
• New regulatory framework for electricity distribution and water
• Upgrade/development of WTE and composting plants

Financial strength

• Improving financial ratios: Net Debt/Ebitda 2020 2.5x
• Working capital optimization

…. increasing shareholder returns: Dividend Per Share CAGR: 3%-6%

Further opportunities not included in the Plan targets

• Acquisitions of water companies in existing areas of operation
• Consolidation in core areas
• Acquisitions in Latin America

Acea 2.0 – digital and technological transformation

New corporate culture open to change

Acea is revolutionising the way it goes about its business, making sizeable investments in digital technologies

CUSTOMERS

~831 PLANTS

~140,000 KM of NETWORKS

ACEA 2.0 Programme: an ambitious strategic initiative, and a crucial stage in the Group's growth process.

Faced with the arduous task of ensuring the integrity, univocity and quality of data handled, ACEA has chosen SAP solutions (world leader in the sphere of management systems for Utilities).

~7,000 EMPLOYEES

The drivers of technological innovation

Real time Use in mobility

NEW OPERATING MODEL

Total uniformity

RE-ENGINEERING OF PROCESSES

Acea 2.0

ACEA Group

2016-2020 Business Plan Acea Group

Key highlights

ACEA Group

CONSOLIDATED TRACK RECORD OF EXCEEDING PREVIOUSLY ANNOUNCED TARGETS

	2015	2020 Plan
EBITDA (€m)	732	890	EBITDA CAGR 2015-2020: +4.0%
NET PROFIT before non-controlling interests (€m)	182	276
NET DEBT (€m)	2,010	2,252	2020 Pre-tax ROIC: ~12%
NET DEBT/EBITDA	2.7x	2.5x	DPS CAGR 2015-2020: 3%-6%
INVESTED CAPITAL (€m)	3,606	4,244	PAYOUT RATIO: 50%-60%

All Acea employees are committed to the successful execution of the Group's Strategic Plan

2016-2020 Business Plan

EBITDA: growth by business area

EBITDA trend €m

Holding

• Roll-in Acea 2.0
• Insourcing of activities
• Redundancy plan
• Corporate rationalisation
• Optimisation of real estate

Environment

• Completion of San Vittore plant
• Revamping of WTE in Lazio region
• Growth in composting market

Energy

• Introduction of Acea 2.0
• Customers: consolidation of customer base in 2017 and growth in 2020

Water

• Revised WACC
• Bonus for quality
• Acea 2.0-WFM

Grids

• Revised WACC
• Introducton of Acea 2.0- WFM
• Renewal of Public Lighting contract
• Growth in Public Lighting (Campania)

2016-2020 Business Plan Acceleration of efficiencies identified

Total efficiencies over the period of the Plan: €94m from 2020: ~ €40m on a recurring basis

ACEA Group

Capex optimization

Debt Structure

Long-term debt life and a solid liquidity position

Thanks to the above transactions :

Extension of the average term to maturity of the debt: 7.8 years

Reduction of the average cost of the debt: 2.97%

ACEA Group

2016-2020 Business Plan Environment

2016-2020 Business Plan Strategies, opportunities and risks

• Number 3 operator in Italy in 2020
• Completion of previously approved initiatives:
• Revamping line 1 of San Vittore WTE plant in Lazio
• Construction of new composting plant with anaerobic digestion
• Expansion of Orvieto landfill
• Development of composting and sludge conditioning plants
• Consolidation in regions where present, with potential for synergies with other areas of business

('000 tons)	2015	2020
WTE	354	553
Mechanical treatment	-	355
Landfill	94	133
Composting/anaerobic digestion	7	310
Chemical conditioning of sludge for use in agriculture	29	196
Sludge management	224	241
Liquid waste	-	295
Total	708*	2,083

Opportunities Risks

Regulatory:

• Completion of management of waste cycle in Lazio region Competitors:
• Number 6 operator in Italy in Environment sector by volume of waste treated, with 2.4% share of Italian market
• Leading Italian operator of composting plants

Growth:

• Insourcing of sludge treatment at Group level
• Average IRR for acquisitions / new constructions approx. 14%

Plants:

Delays in investment in construction or revamping of plants

Regulatory:

Changes to regulatory framework and authorisation process

Environmental:

• Environmental risks
• Local relations (administrative challenges, protest groups)

Targets and Results

2016-2020 Business Plan Energy

2016-2020 Business Plan Strategies, opportunities and risks

Retail

• Moderate growth of customer base, with focus on existing areas of operation
• Improved service quality
• Acea 2.0: new billing and CRM system
• Efficiency of processes and overheads, including via insourcing Production
• Plants modernisation: Castel Madama and Mandela
• Devolopment of energy efficiency initiatives

Opportunities

Risks

Regulatory:

Complete revision of RCV (Remuneration commercialisation retail)

Systems:

Improved billing performance

Regulatory:

Failure to revise RCV

Competitors:

Increase in churn rate

Systems:

Migration of data and ''go-live'' of new billing system

Targets and Results

2016-2020 Business Plan Water

2016-2020 Business Plan Strategies, opportunities and risks

• New Regulation: cycle 2016-2019 (quality award)
• Acea 2.0 project: radical transformation, standardisation and integration of all IT systems, obtaining operating cost and process efficiencies

• Overseas growth (Latin America)

• ATO2-Roma (expiry 2032)

• ATO5 Frosinone (exp. 2032)
• Other ATOs:
• ATO3 Firenze (exp. 2021)
• ATO6 Siena-Grosseto (exp. 2026)
• ATO2 Pisa (exp. 2021)
• ATO1 Perugia (exp. 2027)
• ATO3 Sarnese V. (exp. 2032)

Opportunities Risks

Regulatory:

• Recognition of FoNI component (to finance new investment)
• Introduction of a component linked to quality factor

Systems:

Improved billing performance

External growth:

Acquisition opportunities

Systems:

Roll out new IT platform

2016-2020 Business Plan

Regulatory Opportunities

Introduction of a component linked to quality factor

The new MTI-2 tariff method also provides incentive mechanisms for the improvement of the contractual and technical quality of the service, by introducing two different mechanisms of awards/penalties.

1. The first one involves an award for performance improvements compared to the minimum standards defined by the national Authority. This mechanism is defined with the local Authority and the maximum amount of the premium is a function of the operator's efficiency in comparison to the national average.

In fact the premium is higher, the more the operator is efficient compared to the national average operating cost per customer served, set by the national Authority at 109 € per customer. The award is not subject to the tariff increase limit.

Relating to ATO2, for 2016 a quality award of maximun €30m has been approved. Acea foresees a quality award for 2016 equal to ~ €18m (not included in Business Plan targets)

ATO2 - Quality Awards (€m)	2017-2020 Total	Annual impact from 2019 on
Maximun Value	104	35
Impact included in BP targets	62	24
ATO 5
No awards, operating cost for customer served is higher than national avarage

1. The second mechanism, which is valid throughout the entire Country, is supplied by a specific tariff component, mandatory for all operators, to be allocated to a specific fund for the quality. During the first activation this mechanism promotes, rewarding the best practices, the growth of the contractual quality levels with respect to the parameters defined by the resolution on the contractual quality (655/2015/R/idr). Not included in Business Plan targets

Recognition of FoNI component

FoNI component (€m)	2016	2017	2018	2019	2020
ATO2	21	23	19	9	6
ATO5	7	5	2	2	2

On 27 July 2016, the Mayors' Conference for the ATO2 concession area approved the tariff determinations for the period 2016-2019. The determinations establish that the tariff increases to be applied in 2016 are to be spread out over time, in return for recognition of a financial charge as compensation for the deferral.

Targets and Results

Net Debt (€m)

RAB: ATO2 Lazio Centrale

RAB: Companies consolidated using equity method

and ATO5 Frosinone

Acea Group: 2016-2020 Business Plan ²³

2016-2020 Business Plan Grids

2016-2020 Business Plan Strategies, opportunities and risks

• New Regulation: tariff cycle 2016-2023
• Acea2.0 project: improvement of service quality, cost efficiencies
• Modernisation of distribution network
• Modernisation of public lighting network (''Roma LED'')

Opportunities Risks

Regulatory:

Recognition of t-1 depreciation in tariffs

Growth:

• Acquisition of minor grids
• IP LED technology in other municipalities

Systems:

Improved billing performance

Regulatory:

• Impact of new regulatory cycle
• Quality and service continuity

Systems:

Migration of data and go-live of new billing system

Targets and Results

2015 Plan 2020

Grids

2016-2020 Business Plan

Corporate

Targets and results

• Further simplify the corporate structure
• Facilitate synergies through Project Acea 2.0
• Greater operational efficiency insourcing

2016-2020 Capex: €54m

2020 EBITDA: ~€3m

A solid base for the future Additional initiatives not included in Business Plan

ACQUISITIONS SUBJECT TO BoD DECISIONS

PROCESS SUBJECT TO LOCAL AUTHORITIES' AND PUBLIC SHAREHOLDERS' DECISIONS

* Consolidated using the equity method

Recent acquisitions

Initiatives already identified, but not included in the targets in Business Plan 2016-2020

Business Plan: Key Takeaways

2020 Pre-tax ROIC: 15.9% ACEA GROUP

2016-2020 CAPEX: €2.4bn

2020 EBITDA: €890m

CAGR EBITDA: +4.0%

DPS CAGR: 3%-6%

2020 NET DEBT: €2,252m

Environment

2020 EBITDA: €91m 2016-2020 CAPEX: €262m

Energy 2020 EBITDA: €138m 2016-2020 CAPEX: €159m 2020 Pre-tax ROIC: 13.9%

Water 2020 EBITDA: €380m 2016-2020 CAPEX: €1,042m 2020 Pre-tax ROIC: 11.5%

Grids 2020 EBITDA: €277m 2016-2020 CAPEX: €878m 2020 Pre-tax ROIC: 9.3%

Conclusions

Continued efforts in operating efficiency

Stable and predictable regulatory framework

Significant investment ensuring the Company's future growth

Strong financial position

Attractive shareholder returns as main strategic priority

Acea Group: 2016-2020 Business Plan ³² ACEA Group

Appendix

Appendix

9M 2016 Results - 3Q 2016 Results

1H 2016 Results

2015 Results

Water regulatory framework

Electricity Distribution regulatory framework

Main assumptions and sensitivity analysis

Environmental Sustainability

9M 2016 Financial highlights

(€m)	9M 2015	9M 2016	% change
Consolidated revenues	2,167.7	2,047.5	-5.5%
EBITDA	530.9	646.1	+21.7%	Impact of accounting for Resolution 654/2015:
EBIT	284.8	378.1	+32.8%	€76.5m
Profit/(loss) before tax	216.9	317.0	+46.2%
Group net profit/(loss)	136.6	200.9	47.1%	Impact of accounting for Resolution 654/2015:
Tax rate	34.6%	34.5%		€51.5m
Capex	284.8	346.8	+21.8%

(€m)	30 Sept 2015 (a)	31 Dec 2015 (b)	30 Sep. 2016 (c)	Change (c-a)	Change (c-b)
NET DEBT	2,130.8	2,010.1	2,138.7	7.9	128.6
Shareholders' Equity	1,553.8	1,596.1	1,682.1	128.3	86.0
Invested Capital	3,684.6	3,606.2	3,820.8	136.2	214.6

9M 2016 EBITDA

Number of employees	9M 2015	9M 2016
Acea Spa	640	624
Environment	220	248
Energy	539	556
Water	2,215	2,155
Network	1,348	1,309
Total*	4,962	4,892

* Figures does not include ~ 3,000 employees related to companies consolidated using the equity method

EBITDA €m

EBITDA 9M 2016

SAO: +€1.2m

(€m)	9M 2015	9M 2016	% change	Key quantitative data	9M 2015	9M 2016
EBITDA	40.4	42.1	+4.2%	Treatment and disposal (/000s of tonnes)	570	607
Capex	14.9	30.3	+103.4	WTE electricity sold (GWh)	196	196

Energy Electricity sales margin increase +€19.1m

EBITDA main drivers Electricity production margin decrease (fall in energy prices and volumes decrease) -€1.7m

(€m)	9M 2015	9M 2016	% change	Key quantitative data	9M 2015	9M 2016
EBITDA Production	77.7 25.8	95.1 24.1	+22.4% -6.6%	Total electricity production (GWh) - Of which photovoltaic production	380 12	308 9
Sales	51.9	71.0	+36.8%	Total electricity sold (GWh) Enhanced Protection Market Free Market	7,200 2,283 4,917	6,271 2,036 4,235
Capex	14.6	38.7	165.1	(Mm3) Total gas sold	88	77

Acea ATO2: +€34.8m (quality award €9m)

Overseas water operations: -€2.5m

(€m)	9M 2015	9M 2016	% change	Key quantitative data	9M 2015	9M 2016
EBITDA	225.5	257.3	+14.1%	Total volume of water sold (Mm3)	316	309
Of which: Profit/(loss) on investments consolidated under IFRS11	20.8	20.8	-
Capex	128.3	150.4	+17.2%

On 27 July 2016, the Mayors' Conference for the ATO2 concession area approved the tariff determinations for the period 2016-2019. The determinations establish that the tariff increases to be applied in 2016 are to be spread out over time, in return for recognition of a market financial charge as compensation for the deferral.

EBITDA main drivers

• Grids Recognition of the positive component linked to the regulatory change introduced by AEEGSI Resolution 654/2015: +€76.5m
• Public Lighting: -€3.4m

Areti margin decrease (new tariff cycle 2016-2023): -€11.2m

(€m)	9M 2015	9M 2016	% change	Key quantitative data	9M 2015	9M 2016
EBITDA	187.7	249.6	+33.0%	Total electricity distributed (GWh)	7,959	7,594
Capex	102.4	120.6	+17.8%
Corporate		Impact of accounting 654/2015: €76.5m	for Resolution
(€m)	9M 2015	2016	9M	% change
EBITDA	(0.4)	2.0		n/m
Capex	24.6	6.9		n/m

9M 2016 EBIT and Net Profit

9M 2016 Cash flow

CASH FLOW ANALYSIS (€m)	9M 2015	2015	9M 2016
EBITDA	531	732	646
Change in net working capital	(59)	98	(134)
Investment	(287)	(423)	(349)
Free Cash Flow	185	407	164
Net finance income/(costs)	(67)	(90)	(61)
Income tax expense	(75)	(115)	(109)
Dividends	(96)	(96)	(107)
Other	11	(27)	(15)
Total Cash Flow	(42)	79	(128)

* Before impairment losses on receivables

9M 2016 Net Debt

12 October 2016	Acea announced the launch of a tender offer for the partial buyback of bonds maturing in 2018 and 2020, amounting to a total of €300,000,000.
19 October 2016	Acea completed the placing of 10-years fixed rate bond totalling €500m (as part of €1.5bn EMTN): oversubscription ~2x; gross annual coupon 1%; issue price 98.377%; minimum denomination €100,000. Listed on the market regulated by the Luxembourg Stock Exchange.
24 October 2016	Acea announced that it had received valid tenders for bonds with a total value of €346,836,000.

Thanks to the above transactions :

Extension of the average term to maturity of the debt: 7.8 years

Reduction of the average cost of the debt: 2.97%

3Q 2016 Financial highlights

Efficiency
Innovation acea
Balanced risk profile

(€m)	3Q 2015	3Q 2016	% change
Consolidated revenues	726.5	660.8	-9.0%
EBITDA	177.6	202.3	+13.9%
EBIT	82.2	104.0	+26.5%
Profit/(loss) before tax	60.0	84.6	+41.0%
Group net profit/(loss)	37.3	51.4	+37.8%

Environment EBITDA main drivers
(€m)	3Q 2015	3Q 2016	% change
EBITDA	13.3	12.9	-3.0%

(€m)	3Q	3Q	%
	2015	2016	change
EBITDA	78.8	92.7	+17.6%

(€m)	3Q	3Q	%
	2015	2016	change
EBITDA	21.7	25.4	+17.1%

(€m)	3Q	3Q	%
	2015	2016	change
EBITDA	64.4	68.9	+7.0%

1H 2016 Results

1H 2016 Financial highlights

(€m)	1H 2015	1H 2016	% change
Consolidated revenues	1,441.1	1,386.7	-3.8%
EBITDA	353.3	443.7	+25.6%
EBIT	202.7	274.1	+35.2%	Impact of accounting €63.3m	for Resolution	654/2015:
Profit/(loss) before tax	156.8	232.3	+48.2%
Net Profit/(Loss)	103.6	154.3	+48.9%
Minority Interest	4.3	4.8	+11.6%
Group net profit/(loss)	99.3	149.5	+50.6%	Impact of accounting €41.0m	for Resolution	654/2015:
Capex	167.5	220.8	+31.8%
(€m)	30 June 2015 (a)	31 Dec 2015 (b)	30 June 2016 (c)	Change (c-a)	Change (c-b)
NET DEBT	2,128.9	2,010.1	2,131.9	3.0	121.8
Shareholders' Equity	1,518.6	1,596.1	1,631.4	112.8	35.3
Invested Capital	3,647.5	3,606.2	3,763.3	115.8	157.1

2015 Results

2015 Financial highlights

	(€m)	2014		2015	Change %
	Revenue	3,038.3		2,917.3	-4.0%
	EBITDA	717.7		732.0	+2.0%	 Increased	depreciation	and
	EBIT	390.4		386.5	-1.0%	growth	amortisation (capex intangible	growth: assets resulting
	Profit/(loss) before tax	289.8		296.4	+2.3%		from the entry in operation information technology)	of
	Taxes*	120.9		114.9	-5.0%	 Reduced (improved	bad debt collections)	provisions
	Net profit/(loss)	168.9		181.5	+7.5%	 Increased	provisions
	Minority interest	6.4		6.5	+1.6%
	Group net profit/(loss)	162.5		175.0	+7.7%
	Dividend per share (€)	0.45		0.50	+11.1%
	Capex		318.5	428.9	+34.7%		84% of capex regards businesses, with positive impact on development of RAB	regulated
	(€m)	31 Dec 2014 (a)		30 Sept 2015 (b)	31 Dec 2015 (c)	Change (c/a)	Change (c/b)
NET DEBT		2,089.1		2,130.8	2,010.1	-3.8%	-5.7%
	Shareholders' Equity	1,502.4		1,553.8	1,596.1	+6.2%	+2.7%
Invested	Capital	3,591.5		3,684.6	3,606.2	+0.4%	-2.1%

*Tax expense reflects the negative impact of the reassessment of deferred taxation:

- recognition, in 2014, of a charge of €17.1m due to abolition of "Robin Hood Tax";

- recognition, in 2015, of a charge of €19.9m due to reduction in IRES rate from 2017 (2016 Stability Law).

(€m)	2014	2015	% change	Key quantitative data	2014	2015
EBITDA	54.5	57.4	+5.3%	Treatment and disposal ('000s of tonnes)	774	765
Capex	13.3	25.9	+94.7%	WTE electricity sold (GWh)	249	265

Electricity production: +€0.4m Fall in energy prices and reduced volumes Consolidation of photovoltaic business

Electricity sales: -€4.1m

Recognition of non-recurring item

Increased margin from enhanced protection market due to revised retail price Reduced margin from free market (lower volumes)

(€m)	2014	2015	% change	Key quantitative data	2014	2015
EBITDA	111.6	107.9	-3.3%	Total Electricity production (GWh)	513	470
Production	33.8	34.2	+1.2%	Total Electricity sold (GWh)	10,887	9,419
Sales	77.8	73.7	-5.3%	Enhanced Protection Market	3,000	2,951
				Free Market	7,887	6,468
Capex	19.7	30.6	+55.3%	Total Gas sold (Mmc)	103	126

Efficiency Acea ATO2: tariff increase +€16.7m

Growth at companies consolidated using the equity method +€9.6m

Overseas water operations: +€0.4m

Recognition, in 2014, of non-recurring items by Acea Ato2 for adjustments

(€m)	2014	2015	% change	Key quantitative data	2014	2015
EBITDA	292.2	310.8	+6.4%	Total volume of water sold	540	527
of which: Profit/(Loss) on investments consolidated under IFRS 11	19.0	28.6	+50.5%	(Mmc)
Capex	148.9	204.4	+37.3%

• Operational efficiency and new technologies
• Acea Distribuzione margin increase
• Pubblic Lighting margin increase
• Deconsolidation of photovoltaic business

(€m)	2014	2015	% change	Key quantitative data	2014	2015
EBITDA	253.3	255.7	+0.9%	Total Electricity distributed	10,294	10,557
Capex	122.4	156.2	+27.6%	(GWh)

(€m)	2014	2015	% change
EBITDA	6.1	0.2	n.s.
Capex	14.2	11.8	-16.9%

Regulatory framework

Water regulatory framework

RESOLUTION 664/2015 "Approval of the Water Tariff Regime for the second regulatory period MTI-2" 28 December 2015

On 28 December of last year, the AEEGSI approved its Final Resolution (664/2015), setting out the Water Tariff Regime for the second regulatory period (2016-2019).

The applicable regulations are broadly based on a matrix chart with 6 different quadrants relating to: the ratio of required capex to the value of existing infrastructure; eventual changes in the operator's objectives or operations (consolidation, significant improvements in service quality); the value of the operator's opex per inhabitant served compared with the estimated average opex for the sector as a whole in 2014.

Key points in the Resolution are set out below:

• The duration of the regulatory period has been set at four years, with biennial revision of the RAB and of controllable opex. The cost of debt and tax expense may be reviewed every two years in the event of "significant changes".
• There is further support for the consolidation process, allowing for tariffs to be standardised in the event of a combination of operators holding concessions for different areas.
• A system of quality performance rewards and penalties has been introduced. The reward component is excluded from any tariff caps.
• Application of a tariff multiplier has been confirmed.
• The "sharing" mechanism has been confirmed, based on a matrix that penalises the least efficient operators.
• The mechanism for allowing for a portion of late payment costs has been defined (80% of the costs effectively incurred by operators), taking into account the varying impact of this problem throughout the country (North: 2.1% of turnover; Central: 3.8% of turnover; South: 7.1% of turnover) and providing incentives for the adoption of efficient credit management solutions.
• The "ψ" parameter, on which determination of the component intended to pre-finance the cost of new investment (FNI), may be selected within a range of 0.4-0.8.
• The distinction between non-controllable and controllable opex has been retained. Costs linked to the integration of operations and/or significant improvements in service quality are also allowed for.
• The cost of debt has been set at 2.8% (compared with 2% for the electricity sector).
• The ERP (Equity Risk Premium) is 4% (compared with 5.5% for the electricity sector).
• The real RF (Risk Free) rate is 0.5%, determined on the basis of yields on 10-year euro area government bonds with ratings of at least "AA" (in line with the electricity sector).
• The WRP (Water Risk Premium) is 1.5% (compared with a CRP Country Risk Premium of 1% used in the electricity sector).
• The 1% time-lag for capex has been confirmed.

Based on the provisions in the Resolution, the WACC for the Water sector is 5.34% (compared with 6.1% for the regulatory period 2014-2015 and 6.4% for the period 2012-2013).

Electricity Distribution regulatory framework

RESOLUTION 654/2015 and 583/2015

"Tariff regulation for the supply of electricity transmission, distribution and metering services in the regulatory period 2016-2023" (December, 2015)

"Rate of return on capital invested in infrastructure services in the electricity and gas sectors: criteria for determination and revision" (December, 2015)

The Regulator has extended the duration of the regulatory period to eight years, dividing it into two sub-periods, each lasting four years. In the second sub-period (2020-2023), a Totex-based approach will be introduced.

Key points in the Resolution are set out below:

• Opex based on 2014 figures.
• Equal allocation of productivity improvements (sharing) among users and operators (50%-50%).
• Greater selectivity applied to capex, with particular attention paid to service quality.
• A reduction in the time-lag from 2 to 1 year.
• Confirmation of the determination of net working capital with reference to parameters based on net fixed assets, applying a lower percentage than the one applied in previous regulatory periods.

GAS GRIDS

The WACC is fixed for two years (2016-2017) for the transmission service and for three years (2016-2018) for gas distribution and storage:

Gas transmission: 5.4% (compared with the previous 6.3%);

Gas distribution: 6.1% (compared with the previous 6.9%);

Storage: 6.5% (compared with the previous 6.0%).

ELECTRICITY GRIDS

The WACC is fixed for three years (2016-2018) for the electricity transmission and distribution

Electricity transmission: 5.3% (compared with the previous 6.3%)

Electricity distribution: 5.6% (compared with the previous 6.4%)

Main assumptions

Main assumptions

Main assumptions		2015	2016 Plan	2017 Plan	2018 Plan	2019 Plan	2020 Plan
Exchange	\$/€	1.110	1.119	1.031	1.082	1.180	1.220
Brent	\$/Bbl	52.4	53.6	61.8	66.9	69.0	75.0
PUN	€/MWh	52.3	47.7	45.8	46.8	47.6	48.6
Green certificates	€/MWh	100.1	102.0	104.7	103.9	103.3	102.5
EU-ETS	€/tons of CO2	7.7	10.8	10.3	12.2	13.3	14.5
CIP6	€/MWh	224.6	217.9	225.6	227.0	224.4	226.8

Sensitivity analysis on key drivers

Sensitivity to oil prices (dollar per barrel impact in €m on Group EBITDA) GROUP EBITDA +1\$/Barrel 0.14€m

Acea Group Presentation

ACEA – SUSTAINABILITY

Acea is assessed by leading analysts, rating Agencies and ESG asset managers:

• Oekom Research
• Vigeo
• KeplerCheuvreux
• Forum Ethibel
• Kempen SNS

GOVERNANCE

• Acea has more women on its Board of Directors than any other listed company (44%)
• Acea SpA's Chairwoman has the authority to oversee activities and corporate processes relating to aspects of environmental impact and social sustainability
• The Sustainability Report is published with the Annual Report
• The Sustainability Plan for 2016-2020 is being prepared
• Acea's Ethics Committee consisting of 3 Directors and 2 external members – promotes and oversees application of the

Group's Code of Ethics, art. 7 of which focuses on Sustainability

SOCIAL

• Acea has financed and supported around 800 projects presented by members of the public and associations from Rome's district councils
• The ELENA (Experimenting Flexible Labour Tools for Enterprises by Engaging Men And Women) project is part of the European REC (Rights, Equality and Citizenship) programme, which aims to trial flexible forms of labour designed to improve the work-life balance
• Long-standing relationships with suppliers in order to establish lasting partnerships

ENVIRONMENTAL

• Satellite monitoring used to protect drinking water sources
• 78% of the electricity generated is produced from renewable sources (613 GWh out of 783 GWh)
• Low carbon footprint for the water distribution system (0.41 kg of CO2/m3)
• Composting as a means of promoting a circular economy
• AReti has a major Italian presence in smart grids and LED lighting
• RoMA (Resilience enhancement of Metropolitan Areas) project – advanced models for services and the management and experimentation of new forms of interaction between citizens and the public sector in critical situations

Acea is engaged on CSR also through its COP (Communication on Progress) promoted by Global Compact Network. From 2014 the Acea COP qualifies for Advanced level - only 12 Italian Companies.

The last Acea ranking (99 B) represents a high level of transparency in the communication of practices adopted to combat climate change and the ability to limit the carbon footprint of processes. In the Utilities sector, in which seven enterprises are represented, Acea achieved the third best evaluation, behind Enel and Snam.

Organization	Answer: Public/ Not Public Score	Final
Utilities
A2A	Public	96C
ACEA SpA	Public	99B
Enel Green Power SpA SA		N/A
ENEL SpA	Public	100B
Hera	Public	98B
Iren SpA	Public	97C
Snam S.P.A	Public	100B
Terna	Public	96C

Acea signs up to the UN's Global Compact from 2007, committing to integrate the ten principles regarding human rights and labour, environmental protection and efforts to combat corruption into its strategic vision and organisational culture and to support the UN's wider Sustainable Development Goals. Through its Communications on Progress (COPs), Acea informs stakeholders about the activities carried out and the results achieved. From 2014, Acea's COPs have been classified as Advanced, in that they go beyond the basic requirements. There are 1,735 companies in the world out of 20,540 classified as Advanced, including 12 in Italy.

The Carbon Disclosure Project (CDP), the organisation that assesses corporate disclosure regarding climate change and water, has ranked Acea as 99B, indicating a high degree of transparency in its communication of the measures adopted to combat climate change and its ability to limit greenhouse gas emissions. Acea is the third best performer among Italian utilities after Enel and Snam.

Acea Group: 2016-2020 Business Plan ⁶¹ Acea Group Presentation ACEA Group

Coming soon: next challenges concerning Sustainability

2016 Corporate Governance Code for Listed Companies and application of corporate social responsibility principles

2017

EU Directive 95/2014 as regards disclosure of non-financial and diversity information

Acea is ready to comply with upcoming disclosure obligations and grasp the opportunities arising from the strategic management of aspects of ESG in its operations, to ensure the sustainable creation of shared value

Disclaimer

THIS PRESENTATION CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS THAT REFLECT THE COMPANY'S MANAGEMENT'S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND FINANCIAL AND OPERATIONAL PERFORMANCE OF THE COMPANY AND ITS SUBSIDIARIES.

THESE FORWARD-LOOKING STATEMENTS ARE BASED ON ACEA S.P.A.'S CURRENT EXPECTATIONS AND PROJECTIONS ABOUT FUTURE EVENTS. BECAUSE THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO RISKS AND UNCERTAINTIES, ACTUAL FUTURE RESULTS OR PERFORMANCE MAY MATERIALLY DIFFER FROM THOSE EXPRESSED THEREIN OR IMPLIED THEREBY DUE TO ANY NUMBER OF DIFFERENT FACTORS, MANY OF WHICH ARE BEYOND THE ABILITY OF ACEA S.P.A. TO CONTROL OR ESTIMATE PRECISELY, INCLUDING CHANGES IN THE REGULATORY FRAMEWORK, FUTURE MARKET DEVELOPMENTS, FLUCTUATIONS IN THE PRICE AND AVAILABILITY OF FUEL AND OTHER RISKS.

YOU ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN, WHICH ARE MADE ONLY AS OF THE DATE OF THIS PRESENTATION. ACEA S.P.A. DOES NOT UNDERTAKE ANY OBLIGATION TO PUBLICLY RELEASE ANY UPDATES OR REVISIONS TO ANY FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE OF THIS PRESENTATION.

THIS PRESENTATION DOES NOT CONSTITUTE A RECOMMENDATION REGARDING THE SECURITIES OF THE COMPANY.

***

PURSUANT TO ART. 154-BIS, PAR. 2, OF THE LEGISLATIVE DECREE N. 58 OF FEBRUARY 24, 1998, THE EXECUTIVE IN CHARGE OF PREPARING THE CORPORATE ACCOUNTING DOCUMENTS AT ACEA, DEMETRIO MAURO – CFO OF THE COMPANY - DECLARES THAT THE ACCOUNTING INFORMATION CONTAINED HEREIN CORRESPOND TO DOCUMENT RESULTS, BOOKS AND ACCOUNTING RECORDS.