Acea — Investor Presentation 2017

Jul 28, 2017

H1 2017 Results and Strategic Guidelines 2018-2022

Rome, 28 July 2017

Operating segments

Group • Sludge management • Waste treatment, recovery, recycling and disposal • Electricity Distribution • Public Lighting • Electricity Generation • "Industrial" Energy Efficiency • Energy Management • Sale of Electricity and Gas • Energy Efficiency for household customers • Laboratory testing • Internal engineering & consultancy • Expansion outside of Italy • IntegratedWater Service in Italy ENERGY INFRASTRUCTURE WATER OVERSEAS ENVIRONMENT COMMERCIAL AND TRADING ENGINEERING AND SERVICES

ACEA Group's position

* Approx. €896m including impact of accounting for electricity distribution (€111m)

Gruppo ACEA

H1 2017 Results

H1 2017 financial highlights

(€m)	H1 2016	H1 2017	% change	H1 2016 adjusted*	H1 2017 adjusted*	% change
	a	b	b/a	c	d	d/c
Consolidated revenue	1,386.7	1,372.5	-1.0%	1,323.4	1,372.5	+3.7%
EBITDA	443.7	414.1	-6.7%	380.4	414.1	+8.9%
EBIT	274.1	194.9	-28.9%	210.8	213.9	+1.5%
Profit/(Loss) before tax	232.3	164.4	-29.2%	169.0	183.4	+8.5%
Group net profit/(loss) (before non- controlling interests)	154.3	110.3	-28.5%	111.6	124.3	+11.4%
Group net profit/(loss) (after non- controlling interests)	149.5	103.5	-30.8%	106.9	117.5	+9.9%
Capex	220.8	252.2	+14.2%

* The adjusted results do not include:

for H1 2017, the negative impact resulting from:

• restored ownership of a property that houses a car park for company vehicles (€9.5m);

• the provision for the reduction in the amount due to Areti from GALA (€9.5m).

for H1 2016, the positive impact (amounting to €63.3m before tax) of elimination of the regulatory lag.

(€m)	30 June 2016 (a)	31 Dec 2016 (b)	30 June 2017 (c)	% change (c/a)	% change (c/b)
Net Debt	2,131.9	2,126.9	2,401.4	+12.6%	+12.9%
Net Debt** Adjusted	2,131.9	2,126.9	2,377.4	+11.5%	+11.8%
Equity	1,631.4	1,757.9	1,744.1	+6.9%	-0.8%
Invested Capital	3,763.3	3,884.8	4,145.5	+10.2%	+6.7%

** Adjusted net debt for 2017 does not include the impact of the reduced amount due from GALA.

EBITDA

changes compared with H1 2016

			(ex Severn Trent)
Date	1 Jan 2017	8 Feb 2017	23 Feb 2017	Q4 2016	2016	1 April 2017
Transaction	Acquisition 51.0%	Acquisition 19.2%	Acquisition 100%	Acquisition 29.7%	Changes in BoD composition	Sale to Gori 69.8%
% interest at 30 June 2017	51.0%	48.0%	100%	60.7%		-
Method of consolidation	Line-by-line	Equity	Line-by-line	Line-by-line	Equity	Equity
EBITDA H1 2017	(0.2)	0.5	1.2	5.4	-	(0.1)	6.8
Net Debt	(0.8)	-	1.4	(11.2)	-	-	(10.6)

EBITDA and Key quantitative data H1 2017 financial highlights

(€m)	H1 2016	H1 2017	% change	Key quantitative data	H1 2016	H1 2017
EBITDA	159.0	173.3	+9.0%	Total volume of water sold	211	211
of which: Profit/(Loss) on investments consolidated under IFRS 11	14.9	10.6	-28.9%	(Mm3)
Capex	99.6	121.9	+22.4%
(average)	H1 2016	H1 2017	Change
Number of employees	1,819	1,774	-45

ACEA Group

EBITDA and Key quantitative data H1 2017 financial highlights

Energy Infrastructure EBITDA main drivers

Generation +€4.4m

Distribution (-€43.8m due to Regulatory Accounting in H1 2016)

Public Lighting (+€1.1m)

(€m)	H1 2016	H1 2016	H1 2017	% change (c/a)	% change (c/b)	Key quantitative data	H1 2016	H1 2017
EBITDA Generation	(a) 198.2 17.5	Adjusted* (b) 134.9	(c) 159.9 21.9	-19.3% +25.1%	+18.5%	(GWh) Total electricity distributed	4,945	4,842
Distribution Public Lighting	179.6 1.1	116.3	135.8 2.2	-24.4% +100.0%	+16.8%	(GWh) Total electricity produced	214	234
Capex	96.1		105.2	+9.5%
(average)		H1 2016	H1 2017		Change
Number	of employees	1,395	1,362		-33

* After adjusting for the positive impact of elimination of the regulatory lag (€63.3m)

ACEA Group EBITDA and Key quantitative data H1 2017 financial highlights

Recognition, in Q2 2016, of additional revenue of approximately €10m linked to impact of the contract, entered into in March 2016, for the commercialisation of smart meters.

Sales activity : margin decrease

(€m)	H1 2016	H1 2017	% change	Key quantitative data	H1 2016	H1 2017
				Total Electricity sold (GWh)	4,205	3,408
				Enhanced Protection Market	1,364	1,316
EBITDA	52.3	40.6	-22.4%	Free Market	2,841	2,092
Capex	11.3	7.9	-30.1%	(Mm3) Total Gas sold	66	57
(average)	H1	H1	Change
	2016	2017
Number of employees	474	476	2

ACEA Group EBITDA and Key quantitative data H1 2017 financial highlights

• • Greater quantity of electricity sold by the San Vittore plant
• Acque Industriali (change in scope of consolidation): +€0.5m

(€m)	H1 2016	H1 2017	% change	Dati quantitativi	H1 2016	H1 2017
EBITDA	29.2	31.3	+7.2%	Treatment and disposal* ('000s of tonnes)	411	549
Capex	8.0	8.5	+6.3%	(GWh) WTE electricity produced	141	175
(average)	H1 2016	H1 2017	Change
Number of employees	230	350	120

EBITDA and Key quantitative data H1 2017 financial highlights

Overseas Aguas de San Pedro: +€5.4m

EBITDA main drivers

(€m)	H1 2016	H1 2017	% change
EBITDA	0.8	6.7	n/s
Capex	0.2	2.5	n/s
(average)	H1 2016	H1 2017	Change
Number of employees	275	590	315

Engineering

and Services EBITDA main drivers Revenue growth driven by increased activity

ACEA Group

(€m)	H1 2016	H1 2017	% change
EBITDA	4.7	8.0	+70.2%
Capex	0.7	0.4	-42.9%
(average)	H1 2016	H1 2017	Change
Number of employees	172	261	89

Holding

(€m)	H1 2016	H1 2017	% change
EBITDA	(0.4)	(5.8)	n/s
Capex	4.7	5.9	+25.5%
(average)	H1 2016	H1 2017	Change
Number of employees	630	583	-47

EBIT and Net profit

EBIT (€m) NET PROFIT (€m)

Cash flow ACEA Group

CASH FLOW ANALYSIS (€m)	H1 2016	H1 2017
EBITDA	444	414
Change in net working capital	(144)	(257)
Investment	(221)	(252)
Free Cash Flow	79	(95)
Net finance income/(costs)	(42)	(31)
Income tax expense	(78)	(54)
Dividends	(107)	(132)
Other	25	38
Total Cash Flow	(123)	(274)
Net Debt at beginning of period	2,010	2,127
Net Debt at end of period	2,132	2,401

Net Debt

(€m)	30 June 2016 (a)	31 Dec 2016 (b)	30 June 2017 (c)	Change (c-a)	Change (c-b)
NET DEBT	2,131.9	2,126.9	2,401.4	269.5	274.5
Medium/Long-term	2,637.4	2,769.4	2,831.8	194.4	62.4
Short-term	(505.5)	(642.5)	(430.4)	75.1	212.1
Adjusted NET DEBT*	2,131.9	2,126.9	2,377.4	245.5	250.5

NET DEBT/ EQUITY	NET DEBT/ EQUITY
31 Dec 2016	30 June 2017
1.2x	1.4x

* Adjusted net debt for 2017 does not include the impact of the reduced amount due from GALA.

Gruppo ACEA

Strategic Guidelines 2018-2022

Pillars of the new Business Plan

• Infrastructure development
• Customer-oriented and service-based approach
• Sustainable development
• Dialogue and collaboration
• Research & innovation applied to industrial processes
• Improved customer experience

• Group-wide Innovation Strategy

• Capex discipline

• Operational improvements
• Supply chain optimisation
• Balanced organisational model

Key principles across all segments

Capex Discipline	• Maximisation of synergies • Resource optimisation • Supply chain excellence
Focus on Business	• of the Holding Company Strategic role • Stronger Operations • of resources/activities Balancing
Innovation Strategy	• Global business-oriented Innovation Strategy • to support the business Big Data and IoT • Leading role in the Italian market

Strategic guidelines

Operating segments

Consolidate leadership, focusing on quality of service and dialogue with local communities

ENERGY INFRASTRUCTURE

Develop role of DSO, ensuring adequacy, security and flexibility

WATER COMMERCIAL AND TRADING

Customer-oriented growth and development applying a service-based approach

OVERSEAS

Leverage the Group's infrastructure and industrial know-how and expertise

ENVIRONMENT

Reinforce position in keeping with circular economy objectives

ENGINEERING AND SERVICES

Consolidate Internal Business Partner role through know-how & innovation

Balance between back-office and operational staff, strengthening operations and Talent Management

Cost efficiencies and focus on business-oriented initiatives

Optimised cost of debt and working capital management

Organic growth

Infrastructure development to manage water emergency and network upgrade to ensure sustainable use of this resource

Extraordinary plan to repair aging distribution network

Development and refurbishment of treatment plants and clean-up of discharge systems

Removal of obsolete meters and installation of smart meters

Basket of "extraordinary initiatives"

• Consolidation in areas where Group is already present
• Tuscany

• Lazio

• ...

• Umbria

Strengthening and enhancing security of supply through one-off

projects:

• Water purification
• Doubling size of infrastructure

• Identification of new sources

• ...

Energy Infrastructure segment

Organic growth

• Upgrade of LV network and installation of new meters (2G)

• Enablement of new services using Roma Capitale's smart grid (development of Major Smart Project)

Basket of "extraordinary initiatives"

Entry strategy for energy

efficiency and development of pilot projects for captive market (e.g. Water, Grids, etc.)

Development of distributed generation in local areas and development of flexibility services (Virtual Power Plant)

Entry into Gas Distribution market and other infrastructure businesses outside local area (e.g. Public Lighting)

Tactical assessment of M&A opportunities for renewable plants (e.g. Biomass)

Commercial and Trading segment

Organic growth

• Growth of retail customer base and new value proposition for business customers

Basket of "extraordinary initiatives"

Leading role in consolidation in electricity market, including M&A activity

• Performance improvement to cut costs to serve and boost efficiency of processes

• Development of value added services (VAS) as part of a cross-selling strategy (e.g. energy efficiency, info-energy services)

Environment segment

Organic growth

"Systemic" consolidation of waste treatment

• Development of composting plants for captive processing of sludge and sorted waste (expected to increase)

• Growth of presence in treatment of multi-material waste, taking advantage of opportunities linked to:
• trends and goals of the circular economy
• related needs in local areas

Basket of "extraordinary initiatives"

Development and testing of innovative technologies for recovering materials

Assessment of new strategic opportunities

• Consolidation of "waste management" presence in central Italy
• Stronger presence in special waste management
• Development of biomass plants in collaboration with Energy Infrastructure business

Engineering and Services segment

Organic growth

• High-quality technical/specialist services for other operating segments:
• Design, project management, safety
• Specialist services (e.g. studies, consultancy, etc.)

• Laboratory testing

• Development of advanced operating systems for plant controls and modelling (IoT, Big Data, etc.)

• For routine operations (preventive/predictive maintenance)
• For identifying development needs and planning investment

Basket of "extraordinary initiatives"

Sale of specialist and engineering services in the market (capped at 20% of turnover due to restrictions linked to "joint undertakings")

Closing remarks

To "grow" and benefit from a changing scenario DYNAMISM

LOCAL FOCUS

To maintain close ties with local communities and achieve synergic and sustainable growth of the business

INNOVATION AND QUALITY

To apply best practices in every aspect of what we do

OPERATIONAL EXCELLENCE

Intelligent and optimal use of resources by simplifying processes

Acea Group H1 2017 Results and Strategic Guidelines 2018-2022

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.