Mundys (formerly: Atlantia SpA)

Regulatory Filings • Jul 13, 2017

Atlantia SpA

Determination of the value per share of Abertis Infraestructuras SA to be contributed in kind in the framework of a capital increase pursuant to the article 2343-ter, paragraph 2, sub-paragraph b) of the Italian Civil Code

July 12th 2017

This report has been translated into English from the Italian original solely for the convenience of international readers. In the event of a discrepancy, the Italian version prevails.

PricewaterhouseCoopers Advisory SpA

Sede legale: Milano 20149 Via Monte Rosa 91 Tel. 02667201 Fax 0266720501 Cap. Soc. Euro 7.700.000,00 i.v. - C.F. e P.IVA e Iscrizione al Reg. Imp.Milano n° 03230150967 – Altri Uffici: Bari 70122 Via Abate Gimma 72 Tel. 0805640311 Fax 0805640349 - Bologna 40126 Via Angelo Finelli 8 Tel. 0516186211 – Cagliari 09125 Viale Diaz 29 Tel. 0706848774 - Firenze 50121 Viale Gramsci 15 Tel. 0552482811 Fax 0552482899 - Genova 16121 Piazza Piccapietra 9 Tel. 01029041 - Napoli 80121 Via dei Mille 16 Tel. 08136181 - Padova 35138 Via Vicenza 4 Tel. 049873431 Fax 0498734399 - Palermo 90141 Via Marchese Ugo 60 Tel. 0916256313 Fax 0917829221 – Parma 43121 Viale Tanara 20/A Tel. 0521275911 Fax 0521 781844 - Roma 00154 Largo Fochetti 28 Tel. 06570831 Fax 06570832536 - Torino 10122 Corso Palestro 10 Tel. 0115773211 Fax 0115773299 – Trento 38121 Viale della Costituzione 33 Tel. 0461237004 Fax 0461239077 - Treviso 31100 Viale Felissent 90 Tel. 0422315711 Fax 0422315798 – Trieste 34125 Via Cesare Battisti 18 Tel. 0403480781 Fax 040364737 – Verona 37135 Via Francia 21/C Tel. 0458263001

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Index
1 . Introduction	3
1.1 Scope and terms of the engagement	3
1.2 Regulatory framework	4
1.3 Reference date	4
1.4 Sources of information	4
1.5 Assumptions and limitations	5
1.6 Activities performed	6
1.7 Restrictions to the use of the Report	6
2 . Abertis Group's Profile	7
2.1 Introduction	7
2.2 Business overview	7
3 . Historical financial performance	10
3.1 Introduction	10
3.2 Income Statement	10
3.3 Balance Sheet	11
3.4 Results of the first quarter 2017	12
4 . Methodological approach	14
4.1 Introduction	14
4.2 Discounted Cash Flow	14
4.3 Earnings-based method	15
4.4 Assets method	16
4.5 Combined method	16
4.6 Multiples	17
4.7 Share price method	18
5 . Analyses performed	19
5.1 Selection of the valuation approaches	19
5.2 Application of the Share price method	19
5.3 Application of the Earnings-based method	21
6 . Conclusions	24

1 . Introduction

1.1 Scope and terms of the engagement

Atlantia SpA ("Atlantia") is the holding company of Atlantia Group, international player in the business of toll-roads and airport infrastructures, managing about 5.000 highway kilometers in Italy, Brazil, Chile, India and Poland and the airports of Fiumicino and Ciampino in Italy, as well as the airports of Nice, Cannes-Mandelieu and Saint-Tropez in France.

On 15 May 2017, Atlantia announced a voluntary public tender offer on the entirety of the 990.381.308 shares of the listed Spanish company Abertis Infraestructuras SA ("Abertis", the "Company" or the "Group" ), governed in accordance with Real Decreto n. 1066/2007 ("Public Offer").

The Public Offer considers a cash payment of Euro 16,5 per share, with the opportunity, for every shareholder of Abertis to opt, in whole or in part, for a "Partial Alternative in Shares". This alternative consists of a payment made with Atlantia's newly issued shares, which have special characteristics ("Special Shares"), on the basis of an exchange ratio of 0,697, determined on the basis of Atlantia's share price of Euro 23,67.

For the purposes of the Partial Alternative in Shares, it is currently being considered a potential paid and divisible capital increase ("Capital Increase"), to be executed in one or more tranches, without pre-emption rights (article 2441, paragraph 4, sub-paragraph 1, Italian Civil Code). The value of the Capital Increase cannot exceed Euro 3.794.537.700, issuing a maximum of 160.310.000 shares with a nominal value of Euro 1,0.

The purpose of the Capital Increase is to issue Atlantia's Special Shares, which will be offered, in whole or in part, as an alternative to the cash payment. Thus, the subscription to the Public Offer, for Abertis' shareholders that choose the Partial Alternative in Shares, implies the contribution in-kind of Abertis' ordinary shares in exchange of the subscription of the Capital Increase.

The Capital Increase is part of an operation finalized to acquire, through the Public Offer, a controlling share of Abertis ("Acquisition"), thus creating a global leader in the infrastructure business, characterized by a stable and independent leadership, consequently strengthening the financial-economical profile of the entity resulting from the Public Offer.

Atlantia's Board of Directors, pursuant to the article 2343-ter, paragraph 2, sub-paragraph b) of the Italian Civil Code, mandated PricewaterhouseCoopers Advisory SpA ("PwC") to determine the unitary value of Abertis shares to be contributed in-kind in the framework of the Capital Increase. In such context, our professional assistance ("Services") is aimed at issuing a report ("Report") describing the activities performed and results gained.

Our engagement has been exclusively based on public information and meetings held with Atlantia's management ("Management").

We have shown a draft of the Report to the Management, who has provided written confirmation that no significant element essential to our work has been withheld.

1.2 Regulatory framework

According to article 2343-ter of the Italian Civil Code, the value attributed to an asset in a contribution shall not be higher than the value deriving from a valuation performed by an independent expert with an adequate professional standing to be prepared in accordance with generally accepted standards and principles as of a date preceding the contribution of no more than six months. The contributing party shall disclose the documentation that shows the value of the contribution.

The purpose of the report prepared by the independent expert is to guarantee that the capital of the company entitled to receive the contribution is not subjected to any alteration, resulting in a possible damage for creditors, deriving from an overvaluation of the contribution. This Report, therefore, has the objective to determine, according to conservative standards, the unitary value of the contributed shares.

On the basis of the purposes of this Report, prepared according to article 2343-ter of the Italian Civil Code, and considering the goals of the Law, the aforementioned conservativeness, referable to the value determination of the assets to be contributed according to the methodologies applied, appears to be motivated.

1.3 Reference date

The reference date of the analysis is April 13th 2017, the last trading day before the rumours about the Acquisition were made public by media and press releases were published by Abertis and Atlantia. In any case, we have taken into account the significant events brought to our attention and occurred after such date until the delivery of our final Report.

1.4 Sources of information

In the context of this Report, the main public information utilized for our analyses are the following:

• presentation of the economic results as at March 31st 2017 of the Company, published on Abertis website;
• Annual Reports pertaining the financial years 2014, 2015 and 2016, published on the Company website;

• consolidated financial statements relating to the financial years 2014, 2015 and 2016, published on the Abertis website;

• Explanatory Report of the Board of Directors of Atlantia, concerning the Capital Increase;

• brokers' reports and analysts estimates related to Abertis;
• publicly available information from Financial Data Providers.

The Report contains also information obtained or derived from a variety of sources, as indicated within the Report.

1.5 Assumptions and limitations

Our analysis has been developed on the basis of the following assumptions and limitations:

• the performance of the Services may not be considered as an involvement in the management and activity of Atlantia nor in the decision related to the convenience and feasibility of the aforementioned Acquisition;
• this Report has been prepared for and only for Altantia in accordance with the terms of our engagement letter dated June 1st 2017 and for no other purpose. We do not accept or assume any liability or duty of care for any other purpose or to any other person to whom this Report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing;
• by its very nature, valuation work cannot be represented by a pure application of methods and formulas, but it is the result of a complex process of analysis and estimation that in many cases are subjective;
• during our work, some sensitivity analyses have been performed with reference to certain valuation parameters utilized. Such sensitivities cannot represent the application of valuation methodologies, but only a theoretical exercise in order to examine the potential impacts regarding certain valuation parameters;
• the analyses over the Company have been developed on a stand-alone and goingconcern basis, without taking into account any potential synergy arising from the Acquisition;
• Abertis has been analyzed without taking into account any future non-recurring or extraordinary events, considering the current situation and the publicly available estimates;

• the analyses have been based on financial and economic information publicly available;

• the analyses have been based also on the assumption that the Company will achieve the results reflected in the financial analysts' projections and brokers' reports ("Prospective Information"). Being the Prospective Information based on assumptions of future events and actions of the Company, they are characterized by subjectivity and uncertainty and, in particular, by the risk that predicted events and actions by which they are originated may not occur or occur in different measure and timing from those predicted, while unexpected events or actions may occur. Therefore, the differences between predicted and actual results may be material;

• the Services do not not include an audit conducted in accordance with generally accepted auditing standards, nor an examination of internal controls nor other reviews. Therefore we do not express any opinion or any other form of assurance on the financial statements of Atlantia and Abertis or on any other financial information, including prospective financial information, or on operating or internal controls of the companies;
• our work does not include the provision of legal and tax advices and therefore we do not assume any liability concerning legal and tax issues or contractual interpretation referable to the Acquisition.

1.6 Activities performed

Within the framework of our engagement, among others, the following activities have been performed:

• analysis of Abertis' historical and prospective financial results;
• selection of the valuation methodologies that appear suitable considering the scope of the engagement, the characteristics of Abertis and its operations, as well as the available information;
• application of the valuation methodologies, taking into consideration the analyses required to properly define the valuation parameters;
• identification of the unitary value attributable to the shares of the Company.

1.7 Restrictions to the use of the Report

The Report and its content shall not be utilized for purposes other than those described in the Paragraph 1.1, in accordance with the terms of our engagement letter.

2 . Abertis Group's Profile

2.1 Introduction

Abertis was the result of the merger between two Spanish entities operating in the toll-roads business, Acesa Infraestructuras Group and Aumar Group, which took place in April 2003.

Since its creation, the Group has always pursued a strategy based on internal and external growth, frequently through acquisitions of concessions in other countries such as France, Chile and Brazil.

Thus, the Company became one of the main infrastructure players worldwide in the tollroads business. Although Abertis Group's operations are still focused on toll-roads, the Group has also expanded in the telecommunications business.

The Group has its headquarters in Barcelona and is listed on the Madrid, Barcelona, Bilbao and Valencia Stock Exchange.

On the basis of the most recent information reported in the Abertis' website, the major shareholder of the Company is the Fundación Bancaria Caja de Ahorros y Pensiones de Barcelona (22,25%), while the rest of the shares are free floating.

2.2 Business overview

As stated previously, Abertis is a multinational group that operates mainly in the toll-roads business. It manages 33 toll-roads concessions representing over 8.000 kilometers and provides related services.

Besides, the Company is active in the telecommunications business through the equity stakes held in the companies Hispasat and Cellnex.

The Group is active in 14 different countries, thus covering 4 different continents: Europe, Central and South America, as well as Asia.

In 2016 over 70% of the revenues of the Group has been generated outside Spain: main markets are represented by Chile, France and Brazil.

The graph in the following page shows the organizational structure of the Group and highlights the main concessions held in the different countries.

Source: Company website

Toll-roads

The toll-roads business represents about 95% of the 2016 revenues of the Group.

Abertis is one of the main operators in the toll-roads business worldwide, with a significant presence both in Europe and in Latin America.

Europe

The Group represents the first operator in Spain and one of the leading players in France, managing over 1.700 and 2.000 kilometers respectively.

Thanks to the acquisition of A4 Holding SpA in 2016, Abertis entered the Italian market with a relevant role, managing over 200 kilometers of one of the busiest toll-roads in Italy.

Latin America

The Group is one of the main operators in Brazil, managing over 3.200 kilometers through several concession companies.

Abertis is also active in Chile where, through its subsidiaries, manages over 750 kilometers of toll-roads.

Additionally, the Group manages over 300 kilometers in Argentina, Puerto Rico and Colombia.

Telecommunications

Hispasat, a subsidiary of the Group, is a satellite operator and distributes over 1.200 TV and radio channels mainly in Spain, Portugal and Latin America, contributing to about 5% of the Group revenues in 2016.

Cellnex, in which Abertis owns a 34% equity stake, operates in the wireless telecommunications and radio-broadcasting infrastructures business. The company owns over 16.000 towers and is one of the main players in the European market.

3 . Historical financial performance

3.1 Introduction

In the following pages the historical reclassified income statements and balance sheets of the Company have been reported for illustrative purposes. The aforementioned data cover the 2010/2016 period and are derived from the Consolidated Financial Statements.

3.2 Income Statement

The table reported below illustrates the consolidated income statements for the period under analysis.

Million of Euro		FY 2010	FY 2011	FY 2012	FY 2013	FY 2014	FY 2015	FY 2016
Revenues		3.810	3.815	3.646	4.403	4.292	4.212	4.762
	YoY Change	n.a.	0%	(4%)	21%	(3%)	(2%)	13%
Other Operating Income		90	85	57	156	850	645	837
Provisions		(8)	(12)	(8)	(4)	(16)	(7)	9
Operating Expenses		(1.324)	(1.223)	(1.127)	(1.486)	(2.126)	(2.118)	(2.368)
EBITDA		2.567	2.666	2.567	3.068	3.000	2.732	3.240
	% on revenues	67%	70%	70%	70%	70%	65%	68%
Depreciation & Amortization		(923)	(935)	(970)	(1.137)	(1.250)	(1.176)	(1.295)
EBIT		1.644	1.731	1.598	1.931	1.750	1.557	1.946
	% on revenues	43%	45%	44%	44%	41%	37%	41%
Interest expenses		(560)	(550)	(639)	(800)	(705)	(814)	(798)
Other investment income (loss)		190	169	14	78	35	(48)	(7)
Other non operating income (loss)		(181)	(111)	(316)	52	(51)	(294)	125
Pretax Income Adjusted		1.093	1.239	657	1.262	1.028	401	1.266
	% on revenues	29%	32%	18%	29%	24%	10%	27%
Extraordinary gain (losses)		(160)	(214)	705	(237)	14	(1.622)	49
Pretax Income		933	1.025	1.362	1.024	1.042	(1.221)	1.315
	% on revenues	24%	27%	37%	23%	24%	(29%)	28%
Taxation		(223)	(250)	(184)	(326)	(356)	2	(304)
Income from Continuing Operations		710	775	1.177	698	686	(1.219)	1.011
Discountinued operations		34	19	(94)	49	119	2.721	0
Net income		743	795	1.083	747	805	1.502	1.011
Minority interest		(82)	(74)	(59)	(130)	(150)	378	(216)
Net income attributable to shareholders of the Parent		662	720	1.024	617	655	1.880	796
	% on revenues	17%	19%	28%	14%	15%	45%	17%

Source: Consolidated financial statements and Financial Data Provider

The revenues show an increase of about 13% from 2015 to 2016, highlighting a positive trend after the decline of the past two years.

Partially, the growth of the revenues is driven by acquisitions performed in Chile, Spain and Italy. Considering like-for-like revenues deriving from core activities, the growth reaches about 6% in comparison with the previous year, based on an increase of the traffic recorded in Spain, France and Chile, as well as investments carried out in the recent years.

In the last period considered, Ebitda grows of about 20%, reaching the historical level of about 70% of the revenues. Like-for-like Ebitda increases of about 9% from 2015 to 2016. Such growth is partially driven by new initiatives aimed at gaining operational efficiency, put in place in previous years. Given that the Group operates in the infrastructure industry, its cost structure is substantially rigid. Consequently, every increase in revenue contributes to a better coverage of the fixed costs and thus its marginality is improved.

Regarding the telecommunications business, 2016 revenues amounting to Euro 226 m show an increase of about 6% compared to 2015, while the Ebitda is approximately Euro 175 m, with a corresponding Ebitda margin of nearly 78%.

The Group was also able to obtain more favorable conditions in relation to its financial debt, diminishing the interest charges and extending the overall maturity of its debt, thus optimizing its financial structure.

3.3 Balance Sheet

The table reported below includes the reclassified balance sheet for the period under analysis.

Million of Euro	FY 2010	FY 2011	FY 2012	FY 2013	FY 2014	FY 2015	FY 2016
Cash, Cash Equivalents & STI	482	391	2.382	3.043	2.242	2.222	2.529
Other ST Assets	1.596	955	1.423	1.632	1.721	1.403	1.869
Total Current Assets	2.078	1.346	3.805	4.675	3.963	3.625	4.398
Property, Plant & Equip, Net	1.881	1.742	1.798	1.877	1.976	1.375	1.603
Intangible assets	16.948	15.480	19.292	16.809	17.585	16.208	20.903
Other non-current assets	4.386	4.181	4.192	4.408	4.216	4.531	4.281
Total Non-current Assets	23.214	21.403	25.282	23.094	23.777	22.114	26.788
Total Assets	25.292	22.749	29.087	27.769	27.740	25.739	31.186
Equity before minority interest	4.020	3.064	3.840	3.518	3.148	3.261	3.576
Minority interest	1.433	1.351	3.121	3.044	2.845	2.088	3.324
Equity	5.453	4.416	6.961	6.562	5.993	5.349	6.901
Payables & Accruals	852	726	932	812	879	897	1.087
ST Debt	1.128	1.083	1.372	1.747	1.668	1.784	1.955
Other ST Liabilities	313	196	620	517	649	457	685
Total Current Liabilities	2.293	2.005	2.925	3.077	3.196	3.138	3.727
LT Debt	14.248	13.462	15.491	14.582	14.726	13.324	15.693
Other LT Liabilities	3.298	2.866	3.711	3.549	3.825	3.929	4.865
Total Noncurrent Liabilities	17.545	16.328	19.201	18.130	18.552	17.253	20.558
Total Liabilities	19.839	18.333	22.126	21.208	21.748	20.390	24.285
Total Assets & Liabilities	25.292	22.749	29.087	27.769	27.740	25.739	31.186

Fixed assets show an increase in 2016, mainly driven by the acquisition of some satellites by Hispasat.

The growth of intangible assets is a result of the acquisitions finalized in Chile and in Italy, as well as the investments made in 2016 by its subsidiaries Sanef and Arteris, respectively in France and Brazil, aimed at expanding the network of managed highways.

Net working capital has historically reached quite moderate levels. Other long term assets and liabilities essentially compensate each other, thus contributing in a limited amount to the net invested capital.

The minority interests appear to be growing, also as a result of the most recent acquisitions. Such transactions impacted the dynamics of the net financial position of the year as well.

3.4 Results of the first quarter 2017

The following table shows the consolidated income statement related to the first quarter results of 2017, with the comparative data of the first quarter of 2016.

Million of Euro		1Q 2016	1Q 2017
Revenues		1.082	1.281
	YoY Change	n.a.	18%
Operating Expenses		(368)	(474)
EBITDA		714	807
	% on revenues	66%	63%
EBIT		415	438
	% on revenues	38%	34%
Pretax Income GAAP		496	251
	% on revenues	46%	20%
Net income		385	130
	% on revenues	36%	10%

Source: Consolidated financial statements and Financial Data Provider

Revenues growth is the result of both an increase of the tolls, in some cases greater than the inflation rate of the correspondent country, and of a growth of traffic, especially in France and Spain. Without taking into account, among others, the effects of the acquisition of A4 Holding, which took place in the second half of the previous year, the growth of the revenues like-for-like is in the region of 5%.

As a result of both the new acquisitions and the termination of certain incentives for the Spanish concessions, the operating costs have increased proportionally more than the revenues, leading to a reduction of the Ebitda margin, despite of an increase of its absolute value. Nevertheless, in a like-for-like perspective, a reduction of the operating costs of about 2% took place.

Regarding the telecommunication activities, revenues amount to about Euro 57 m, with an implied growth of about 1% compared to the same quarter of 2016. Thanks to operational efficiencies, Ebitda increase exceeded 3%, reaching a level of Euro 47 m.

The following table shows the balance sheet of Abertis referred to the first quarter of 2017, with the comparative data relating to 31st December 2016.

Million of Euro	FY 2016	Q1 2017
Fixed assets	22.506	22.682
Net working capital	97	(414)
Long term assets and liabilities	(584)	(1.044)
Net invested capital	22.020	21.224
Net equity	6.901	6.229
Net financial position	15.119	14.995
Sources of funds	22.020	21.224

Source: Consolidated financial statements and Financial Data Provider

The data show no significant difference between the first quarter of 2017 and the end of 2016 at the net invested capital level. Nevertheless, it is to note that the Group acquired some activities in India and minorities in certain French subsidiaries.

The net financial position remains substantially unchanged: both the positive cash flows generated by the core business throughout the first quarter of 2017 and the collection of tax credits connected to Cellnex IPO helps to offset the negative effects deriving from the outflows to finance the acquisitions.

4 . Methodological approach

4.1 Introduction

The valuation methodologies used to determine the value of a company may be summarized as follows:

• methods based on the expected financial return of the investment, i.e. the cash flows it is expected to produce in the future, from the reference date until its final liquidation (Discounted cash flow method);
• methods based on the earnings the investment is expected to produce in the future (Earnings-based method);
• methods based on the current "net asset value" (Assets-based methods);
• methods that combine the main elements of the Earnings-based and Assets-based methods (Combined method);
• methods based on the analysis of comparable companies and comparable transactions (Multiples methods)
• methods based on the share prices, in case of listed companies.

The following paragraphs report a brief description of the methodologies mentioned above.

4.2 Discounted Cash Flow

According to the discounted cash flows method, the value of a company is equal to the present value of the following components:

• the sum of net operating cash flows generated in each year of the explicit forecast period;
• the terminal value, understood as the cash flows the company will be able to generate beyond the explicit forecast period.

The unlevered approach relies on the operating cash flows to obtain the economic value of the operating invested capital ("Enterprise Value"): the cash flows taken into consideration are the operating Free Cash Flow (FCF), which are discounted using the WACC ("Weighted Average Cost of Capital").

To obtain the economic value of the company ("Equity Value"), the resulting value has to be adjusted with reference to the market value of the net financial position at the valuation date, as well as all other surplus assets and/or liabilities (if any) not inherent to the operating activity.

Weighted Average Cost of Capital (WACC)

Weighted Average Cost of Capital (WACC) is a weighted average of the cost of equity capital and the cost of debt, net of tax shield on interest expenses.

The opportunity cost of equity capital (Ke) represents the expected return, under normal conditions, of the industry in which the firm to be valued operates and it is calculated using the Capital Asset Pricing Model.

According to this methodology, the determination of cost of equity capital considers: the risk-free rate equal to the yield of a long-term investment, such as government bonds; the market risk premium, which measures the return required by a risk-averse investor in order to invest in the equity market; Beta coefficient, which measures the specific risk of the company under analysis.

Cost of debt (Kd) is the rate at which the company may borrow money, usually determined considering the market long term interest rate plus a specific spread for the company. The obtained gross cost of debt is subsequently netted by the relative tax shield on interest expenses.

4.3 Earnings-based method

According to the earnings based method, the company value derives from the expected earnings that the company will be able to generate. The expected earnings are determined with a capitalization formula. This means that the equity value is assumed as constituted by the sum of the present values of the future earnings of the company.

Regarding the determination of the Terminal Value, the rate used to capitalize the normalized expected earning is the cost of equity capital (Ke), net of the long term growth rate. For more details on the determination of the discount rate, please refer to the paragraph titled "Discounted cash flow" of the current chapter.

4.4 Assets method

Simple assets method

The simple assets method is based on expressing the current values of the single assets and liabilities of the company.

This method takes as a basis the net equity shown in the reference accounts, including the profit for the year but excluding amounts that will be distributed to shareholders.

The above net equity is subsequently adjusted:

• to comply with correct accounting principles;
• to take into account any differences between the current value and the book value of single assets.

Adjusted assets method

The adjusted assets Method is based on the assumption that intangible assets, such as technology, workforce skills, brands, products portfolio as well as customers relationship, frequently represent a critical factor in the determination of the economic value of a company.

The aforementioned intangible assets often represent overlapping features, therefore a comprehensive examination may be necessary. The basic requirement to attribute a value to these intangible assets is the capability of the company to generate income.

The net equity, amended as per the simple assets method, is then adjusted to take into account the value attributed to each identified intangible asset.

4.5 Combined method

The main feature of the Combined method is the attempt to determine a result which considers both the Assets-based method and the Earnings-based method, taking into account the assets features, as well as the expected future income, which are the key elements of the economic value determination.

This method is appropriate for identifying, through a separate appraisal, the goodwill/badwill and is also well-known on an international level.

This method, in its assed side version, is based on the theory referable to the Economic Value Added (EVA) and is built on the assumption that the identified goodwill essentially matches the EVA.

4.6 Multiples

Market multiples

The market multiples method is based on the analysis of the stock market performance of comparable listed companies and the subsequent application of the multiples deriving from this analysis to the corresponding financial figures of the company to be valued.

Multiples are calculated as ratios between the market capitalization of comparable listed companies and the relative earnings, asset and financial values deemed to be significant.

This method comprises the following steps:

• Identification of comparable companies The selection of an adequate sample of comparable companies represents one of the main steps of this method. The comparability of the results is strictly linked to the similarity of the sample. In selecting the comparable companies, different factors, such as reference sector, operating risk, company size, geographical diversification, profitability, financial data reliability and the relative trading volume on stock markets are usually considered.
• Determination of the reference timeframe An average value within a set timeframe is usually preferred to a precise value in order to neutralize extraordinary events, short-term fluctuations and speculative market tensions. At the same time, it has the purpose of reflecting information available to the market.
• Identification of the most relevant multiples There are several ratios that can be used for application, according to the market multiples method. The choice of the most appropriate multiples is done on the basis of the characteristics of the industry and of the sample to be examined.
• Application of multiples to the examined companies The multiples obtained from the analysis of the sample of peers are applied to the corresponding earnings, assets or financial items of the company to be valued.

Transaction multiples

The Transaction Multiples method is based on the so-called "Deal Multiples", reflecting the prices paid in transactions involving the purchase of equity stakes in comparable companies.

Those transactions might reflect the possible value of benefits deriving from:

• synergies resulting from the transaction;
• the possible acquisition of control, dominant influence or significant shareholdings;
• the strategic value of the transaction for the parties involved.

Multiples are calculated as ratios between the values arising from the comparable identified transactions and the relative earnings, asset and financial values deemed to be significant.

This method comprises the following steps:

• identification of comparable transactions;
• determination of the multiples on the basis of available information;
• calculation of the average multiples based on the selected transactions;
• application of multiples on the corresponding financial indicators of the subject company.

4.7 Share price method

The share price method is based on the assumption that the value of a company can be considered equal to the value emerging from its stock price trend, in case a company is listed on the market.

According to this methodology, the share price of liquid companies listed in efficient markets represent a reliable indication of the value of a company, as it substantially reflects all the available public information relating to the company. The prices level represents the result of systematic arbitrage activities performed by the market operators, thus reflecting their view on future earnings, financial stability, risk and prospective growth of the company under analysis.

In such context, share prices are considered relevant if the reference markets are characterized by a high level of efficiency, the liquidity of the securities is high and the reference timeframe may neutralize the effects of possible extraordinary events, which generate fluctuations in the short term or speculative tensions.

Given that, it is necessary to take into account that share prices usually represent the value attributable to minority stakes, rather than controlling stakes.

5 . Analyses performed

5.1 Selection of the valuation approaches

The selection of the most suitable approaches to be adopted in the determination of the value for Abertis' shares has been made taking into account the purposes of the engagement, the specific characteristics of the Company and its business, as well as the available information.

As already pointed out, our work has only been based on publicly available information. In order to develop our analyses, we have taken into account the historical financial performance of the Group, the estimates included in the broker' reports related to the future results of Abertis, as well as the share prices of the Company. On the basis of such information, we have selected two different methodologies.

In particular, we have identified the Share price method as the main method, considering that stock market dynamics tend to reflect all the public information available, and the Earnings-based method as a control method.

The following paragraphs describe the application of the two different valuation methodologies.

5.2 Application of the Share price method

In order to apply the Share prices method, the valuation process has been developed on the basis of the following key phases:

• analysis of Abertis' share prices in the six months prior to April 13th 2017, as starting from this date rumours regarding the Acquisition may have started to affect the Company's stock exchange performance;
• computation of simple averages, based on daily official closing prices of Abertis, referring to different time horizons;
• considering the characteristics of the Acquisition, analysis of premia observed in similar transactions involving listed companies in the same industry of Abertis;
• application of such premia to the simple averages of the share prices previously calculated, in order to take into account that such stock market prices are related to minority stakes.

The chart below illustrates the official closing price of Abertis between January and July 2017.

The table below illustrates the official closing price of Abertis as at April 13th 2017, as well as the simple averages determined on the basis of different time horizons, in order to offset the existence of potential short-term fluctuations that commonly affect the financial markets.

	Eur per share
6 months average	13,3
3 months average	13,8
1 month average	14,7
1 week average	15,2
Closing 13/04/17	15,3
Source: Pw C Analysis and Financial Data
	Provider

The following table shows the control premia observed in comparable transactions regarding listed companies operating in the same industry of Abertis. Such premia have been taken into consideration referring to different time ranges, consistently with the previous analysis over the share prices of the Company.

	1 week premium	1 month premium	3 months premium	6 months premium
Average	25,4%	26,6%	27,7%	28,5%
Median	25,5%	26,1%	27,7%	29,5%
Smoothed average	25,3%	26,3%	28,2%	29,2%
			Source: Pw C Analysis and Financial Data Provider

The application of such premia illustrated to the abovementioned averages of Abertis share prices leads to a value per share at least equal to Euro 16,5.

5.3 Application of the Earnings-based method

As a control method, we have applied the levered version of the Earnings-based method.

The valuation process has been structured through the following:

• analysis of the projections for the key financial indicators of Abertis, relying on the most recent brokers' reports, as well on the actual results for the first quarter 2017;
• estimation of the discount rate referable to the future Group's earnings, which, consistently with the levered approach, is equal to the cost of equity (KeL);
• definition of the Terminal Value, considering the estimates included in the brokers' reports;
• determination of the Equity Value.

The prospective Group results have been defined on the basis of broker reports' consensus estimates, referring to the 2017-2019 period, as a significant number of financial analysts cover such time range, while the subsequent years are covered by a limited number of operators.

		Estimates				Number of analysts
	2016	2017	2018	2019	2017	2018	2019
Income statement data
Revenue YoY Change	4.762 n.a.	5.628 18%	5.889 5%	6.015 2%	22	22	20
EBITDA % on revenues	3.240 68%	3.655 65%	3.879 66%	4.049 67%	21	21	18
EBIT % on revenues	1.946 41%	2.225 40%	2.408 41%	2.569 43%	21	21	18
Pretax Income % on revenues	1.315 28%	1.443 26%	1.628 28%	1.815 30%	20	20	18
Net income % on revenues	796 17%	924 16%	1.064 18%	1.195 20%	18	18	16
Adjusted net income % on revenues	793 17%	909 16%	1.062 18%	1.187 20%	19	20	18
Balance sheet data
Capex	1.132	1.752	1.035	908	15	15	14
Net Debt	15.119	15.979	15.316	14.615	20 Source: Financial Data Provider	20	19

The calculation of the discount rate KeL has been performed through the following steps:

• identification of listed comparable companies;
• collection of valuation parameters from third parties, exclusively Financial Data Providers.

The KeL has been calculated using the Capital Asset Pricing Model, a methodology widely accepted by the best practice.

In particular, the key parameters used in the calculations are:

• Risk Free Rate: determined on the basis of the 10 years government bonds of Spain, France, Brazil and Chile, the main markets where Abertis operates (c.3%);
• Market Risk Premium: defined taking into consideration the specific characteristics of the abovementioned markets and analyses on market returns (c.6%);
• Beta Levered: determined on the basis of the betas and the capital structures of comparable companies active in the toll roads business, such as EcoRodovias Infrestrutura e Logistica SA, CCR SA, Società Iniziative Autostradali e Servizi SpA, Vinci SA, Atlantia SpA and Abertis SA (0,75).

On the basis of the aforementioned parameters, the KeL is equal to 7,4%.

As regards 2017, 9 months have been considered. Reference earnings are determined as the difference between the annual projections of the analysts and the actual result for the first quarter. It has to be noted that March 31st 2017 represents a date next to the reference date used in the analyses over the share prices of Abertis.

Million of Euro	Estimates 2017	Estimates 2018	Estimates 2019
Estimated normalized Group Earnings	909	1.062	1.187
Earnings 1Q 2017	(130)	-	-
Reference Earnings	779	1.062	1.187
Ke levered	7,4%
Period	0,38	1,25	2,25
Discount factor	0,97	0,92	0,85
Discounted Earnings	759	971	1.012
Sum of discounted Earnings	2.742

Source: Pw C analysis

With respect to the Terminal Value calculation, consistently with the current Group's structure, we have considered the estimates provided by the brokers reports for the 2017/2019 period, projected for a limited number of years as described below.

The long term growth of the expected Group earnings beyond 2019 has been assumed equal to 2,5%, taking into account the forecasted inflation in both the European and LATAM countries where Abertis operates, as well as a positive business growth over a limited time horizon, which has been defined on the basis of the residual useful life of the Group concessions in 2017, as disclosed by the management of Abertis.

Million of Euro	TV
Long term growth rate	2,5%
Average concessions' RUL as at 2017	22
Undiscounted Terminal Value	14.658
Terminal Value	12.493

Source: Pw C analysis

Adding the sum of the discounted earnings to the Terminal Value, we reach the Equity Value of the Company, as reported in the following table.

Million of Euro	Equity value
Sum of discounted Earnings	2.742
Terminal Value	12.493
Equity value	15.235

Source: Pw C analysis

Taking into account the number of Abertis shares, excluding treasury shares, also the Earnings-based method, in its levered version, leads to a value per share at least equal to Euro 16,5.

6 . Conclusions

On the basis of our work, described in the Report, we consider that the unitary value of Abertis' shares to be contributed in kind in the framework of the Capital Increase is at least equal to Euro 16,5, being the unitary value determined by the Board of Directors of Atlantia in such context.

Our conclusions must be read and interpreted for the purposes for which the Report was prepared, also taking into account the assumptions and limitations described therein.

PricewaterhouseCoopers Advisory SpA

Unsigned Courtesy Translation Unsigned Courtesy Translation

Fabrizio Cigliese Riccardo Maria Togni

(Partner) (Partner)