Acea — Investor Presentation 2016

Mar 14, 2016

2015 Results 2016-2020 Business Plan

Rome, 14 March 2016 ''The future is now''

Agenda

2015 Results

³ Acea Group: 2016-2020 Business Plan Acea Group 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%	amortisation growth	(capex intangible assets	growth; 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 provisions collections)
	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%
							84% of capex regards	regulated
	Capex		318.5	428.9	+34.7%		businesses, with positive impact on development of RAB
	(€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%

⁴ Acea Group: 2016-2020 Business Plan - 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). ACEA Group

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

Invested Capital 3,591.5 3,684.6 3,606.2 +0.4% -2.1%

Acea Group 2015 Results

2015 EBITDA

Acea Group 2015 Results 5 ACEA Group

2015 Results: financial highlights

(€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	(79.0)	(120.7)
Medium/Long-term	3,006.4	2,656.0	2,657.0	(349.4)	1.0
Short-term	(917.3)	(525.2)	(646.9)	270.4	(121.7)

NET DEBT/ SHAREHOLDER'S EQUITY 31 Dec 2014	NET DEBT/ SHAREHOLDER'S EQUITY 31 Dec 2015	NET DEBT /EBITDA 31 Dec 2014	NET DEBT/EBITDA 31 Dec 2015
1.4x	1.3x	2.9x	2.7x

CAPEX (€m)

Status of receivables Highlights from results 2013-2015

ACEA Group

The process of improving the receivable management, begun in 2014, is currently in progress, but has brought significant results as of 31 December 2015.

Status of receivables

Principal improvements already completed and implemented, such as to enable a significant increase in Group's ability to generate cash, an objective partially met in 2015

	Initiatives COMPLETED	Date	Initiatives LAUNCHED (Ongoing)	Go-live/Status
• • • PROCESSES	Efficiencies in billing process Introduction of online Credit Checks for customers for Mass Market, Small & Large Business Complete Re-engineering of Water segment processes	Oct 2014 Jan 2015 Sep 2015	Review of debt collection strategies • for existing and former customers • Complete re-engineering of electricity sales and distribution processes • Clean-up of customer database to support new billing systems Digital Transformation & Self-care •	Apr 2016 Jul 2016 Jul 2016 Jul 2016
• • GOVERNANCE	Start Monitoring performance of receivables Centralisation at holding co. of management of credit checks and debt collection from former customers of Energy segment	Apr 2014 Jan 2015	Reorganisation of Group's receivables • management to obtain further efficiencies and synergies New control & treasury models •	Mar 2016 Apr 2016
• • IT SYSTEMS	Launch of Project ACEA 2puntozero to change applications map Go-live of new billing system at Acea Ato2	Apr 2014 Sep 2015	Addition of data from info providers for • customer profiling in relation to credit risk • Launch of new billing systems for Enhanced Protection Market and Distribution • Launch of new application for collection of debts from former customers Completion of new applications map •	Jul 2016 Jul 2016 Jul 2016 Jun 2017

Acea Group 2015 Results ACEA Group 8

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

ACEA Group

Well-positioned to capture opportunities in all business areas

Source: CONSOB (March 2016)

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

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).

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
INVESTED CAPITAL (€bn)	3,606	4,244	DPS CAGR 2015-2020: 3%-6%

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

¹⁵ Acea Group: 2016-2020 Business Plan

Business Plan 2016-2020

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

Renewal and maintenance of grids, plants and IT systems and development of projects already authorised in Environment segment

20% 37% Grids 43% Water New Plan 2016-2020 Unregulated Regulated Capex €2.4m 80% Old Plan 2015-2019

Debt Structure

Long-term debt life and a solid liquidity position

(€m)	31 Dec 2014 (a)	30 Sept 2015	31 Dec 2015 (b)	Change (b-a)
Medium/Long-term	3,006.4	2,656.0	2,657.0	(349.4)
Short-term	(917.3)	(525.2)	(646.9)	270.4
Net Debt	2,089.1	2,130.8	2,010.1	(79.0)

SOLID FINANCIAL STRUCTURE TO SERVE YIELD AND GROWTH

Dividend Policy: consistent and sustainable

Payout ratio of 50%-60% DPS CAGR 3%-6%

2015-2020 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

Regolatori:

• 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

Ebitda (€m)

CAGR +9.8%

2015-2019 Business Plan Energy

2015-2020 Business Plan Strategies, opportunities and risks

Energy

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)

Competitors:

Customer loyalty

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

2015-2019 Business Plan Water

2015-2020 Business Plan Strategies, opportunities and risks

• 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 • New Regulation: cycle 2016-2019 • Acea 2.0 project: radical transformation, standardisation and integration of all IT systems, obtaining operating cost and process efficiencies (WFM and new billing system started on 28 Sept 2015) • 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)

Water

2015-2020 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.

ATO2 - Commercial 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
Acea Group: 2016-2020 Business Plan	ATO5	7	5	2	2	2

Targets and Results

²⁹ Acea Group: 2016-2020 Business Plan

2015-2019 Business Plan Grids

2015-2020 Business Plan Strategies, opportunities and risks

Grids

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

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

Capex (€m)

156 763 878 2015 Old Plan 2015-2019 New Plan 2016-2020

RAB Net Debt (€m)

2015-2019 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

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

Appendix

Appendix 2015 Results Water regulatory framework Electricity Distribution regulatory framework Main assumptions and sensitivity analysis Environmental Sustainability

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	bad debt (improved 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%

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

Acea Group 2015 Results

⁴⁰ Acea Group: 2016-2020 Business Plan - recognition, in 2015, of a charge of €19.9m due to reduction in IRES rate from 2017 (2016 Stability Law).

EBITDA

Total number of employees	2014	2015
Acea Spa	661	636
Environment	221	227
Energy	522	549
Water °	1,954	1,983
Network	1,335	1,315
Total	4,693	4,710

° Figures do not include:

• 2014 Overseas water operations: 412

• 2015 Overseas water operations: 268

EBITDA €m

+ €14m +2.0%

Aria's plants: increase in volume of electricity sold +€3.8m

Aquaser: +€1.7m

Kyklos: shutdown of plant -€2.2m

(€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

Acea ATO2: tariff increase +€16.7m

Efficiency

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%

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%

EBIT and Net Profit

Cash flow

CASH FLOW ANALYSIS (€m)	2014	1Q15	1H15	9M15	2015
EBITDA	718	177	353	531	732
Change in net working capital	76	(98)	(23)	(32)	113
Investment	(317)	(72)	(168)	(287)	(423)
Change in net fixed assets	(21)	(5)	(17)	(21)	(51)
Free Cash Flow 1	455	2	145	191	371
Net finance income/(costs)	(101)	(24)	(45)	(67)	(91)
Income tax expense	(121)	(27)	(53)	(75)	(115)
Free Cash Flow 2	233	(49)	47	49	165
Dividends and other (Equity)	(74)	(2)	(86)	(90)	(87)
Profit/(loss) from investments	1	0	(1)	(1)	1
Change in Net Debt	160	(51)	(40)	(42)	79

2015 Results: financial highlights

(€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	(79.0)	(120.7)
Medium/Long-term	3,006.4	2,656.0	2,657.0	(349.4)	1.0
Short-term	(917.3)	(525.2)	(646.9)	270.4	(121.7)

NET DEBT/ SHAREHOLDER'S EQUITY 31 Dec 2014	NET DEBT/ SHAREHOLDER'S EQUITY 31 Dec 2015		NET DEBT/EBITDA 31 Dec 2015
1.4x	1.3x	2.9x	2.7x

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		2015	2016 Piano	2017 Piano	2018 Piano	2019 Piano	2020 Piano
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

ACEA – SUSTAINABILITY

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

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

GOVERNANCE

• ACEA is the number one Italian listed company for gender diversity on its board of directors majority of women (5 out of 9). All board committees are assigned to women.
• The Sustainability Report is approved annually by the BoD and published together with the annual financial statements.
• Currently the 2016-2020 Sustainability plan is being drafted.

SOCIAL

• Stakeholder engagement and creation of shared value: The stakeholders of the municipality of Rome presented about 800 projects to be financed and developed with the contribution of Acea.
• Long-term relations with suppliers: towards building a durable partnership.

ENVIRONMENTAL

• Satellite monitoring to safeguard drinking water sources;
• 78% renewable power generation (613 GWh out of 783 GWh);
• Very low carbon footprint in water distribution system (ex 0.41 kg CO2/m3)
• Composting activities moving towards a circular economy;

• Acea Distribuzione Italian Leader in smart grids.

• Governance Acea has set up an Ethics Committee – consisting of 3 directors and 2 external members – with responsibility for promoting and applying the Group's Code of Ethics. A whistleblowing system is also in place, in line with national and international best practices, for reporting any violations of the Code.

• Social The Acea per Roma project, launched in 2015, has seen Acea provide €450,000 in funding for 55 urban regeneration projects, selected from among around 800 proposals submitted by members of the public from all the municipalities; given the success of this initiative, Acea plans to repeat it in 2016. In 2015, Acea awarded the first Single Contracts for maintenance of the water network (in Lazio) and electricity grid, involving large amounts and long-term contracts, thereby establishing highly evolved partnerships with its suppliers. With the implementation of Project Acea2.0, designed to modernise IT systems in order to support the businesses and a new managerial approach, Acea aims, among other things, to significantly improve the quality of the services provided and its customer relations over the medium term.
• Environment and Innovation Environmental and technological development initiatives include: safeguards for drinking water sources; the production of renewable energy; low carbon emissions in the water distribution system; LED technology in public lighting, composting; smart grids, within a smart city context.

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.

⁵⁵ Acea Acea Group: 2016 Group Presentation -2020 Business Plan 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 WHIT 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 DIFFER MATERIALLY FROM THOSE EXPRESSED IN OR IMPLIED BY THESE STATEMENTS 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 ENVIRONMENT, 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 UNIFIED FINANCIAL ACT 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.