ERG — Investor Presentation 2015

Dec 16, 2015

DISCLAIMER

This document contains certain forward-looking information that is subject to a number of factors that may influence the accuracy of the statements and the projections upon which the statements are based. There can be non assurance that the projections or forecasts will ultimately prove to be accurate; accordingly, the Company makes no representation or warranty as to the accuracy of such information or the likelihood that the Company will perform as projected.

Alessandro Garrone (EVP): - Strategic Repositioning, Achievements & Governance Luca Bettonte (CEO): - 2015-2018 Business Plan

• Closing Remarks

STRATEGIC REPOSITIONING, ACHIEVEMENTS & GOVERNANCE

ALESSANDRO GARRONE

EXECUTIVE VICE PRESIDENT

OUR STRATEGIC LONG-TERM VIEW DRIVEN BY RENEWABLES

Strategic Repositioning, Achievements and Governance

✓ Worldwide wind installed capacity: from 282GW in 2012 to 2,033GW in 2040(2), more than 7x ✓ Europe to post a significant growth: from 110GW to 400GW(2), almost 4x

EU 2030 Targets:

✓ 27% of Renewables

✓ 40% reductions of emissions

Source: World Energy Outlook, IEA November 2015 Source: New Energy Outlook 2015, Bloomberg

(1) Levelized Cost of Electricity: generation cost including initial investment, return on investment and OPEX (2) Sources: New Energy Outlook 2015, Bloomberg

BUSINESS PORTFOLIO REPOSITIONED TOWARDS RENEWABLES

✓ Proceeds from disposal of oil-linked assets fully re-invested into "green"

Strategic Repositioning, Achievements and Governance

(1) Cash-in net of minorities buyback from GDF

Strategic Repositioning, Achievements and Governance

✓Built-up a solid platform of renewable assets in Europe

CSR ACHIEVEMENTS

Strategic Repositioning, Achievements and Governance

CO2 avoided in the 2008-2016 period

Turnaround to a green portfolio

Portfolio turnaround implied a generalized improvement of all the environmental CSR indicators:

• 100% of ERG Group certified according to International standard in the Environmental/Safety areas
• Strongly reduced NOx and SO2 emissions following exit from Refining
• CCGT is a high yield cogenerative plant

(1) Estimate based on the current asset base

A STRICT GOVERNANCE

Strategic Repositioning, Achievements and Governance

(1) Only 5 Independent referring to both the Finance Consolidation Act and the Self-Discipline Code set out by the Italian Stock Exchange (2) Only 2 Independent referring to both the Finance Consolidation Act and the Self-Discipline Code set out by the Italian Stock Exchange

• Maintaining over time a strict financial discipline on investments (organic and M&A) through:
• Strategic Committee (EVP, CEO, 3 Board Members)
• Investment Committee (CEO, Management team)
• A new BoD in place as of April 24, 2015, with 7(1) Independent Board Members out of 12 (25% women)
• Nominations and Remuneration Committee composed by 3 Independent members(2)
• Increasing focus on risk management:
• Internal Control and Risk Committee composed by 3 Independent members(2)
• Strengthening Risk Committee towards Energy Management
• BoD approved a LTI compensation scheme for Top Management, 40% based on TSR (reference price based on last 6 months average price)

2015-2018 BUSINESS PLAN

CEO

LUCA BETTONTE

2015: FURTHER SIGNIFICANT TRANSFORMATION

11

A year of large investments to expand and diversify the asset base through:

2015-2018 Business Plan

• Hydro: +527MW. Invested €950mn (closed on November, 30)
• Wind: +370MW. Invested ≃€500mn(1)

YE 2014: 1,821MW installed

Technological and geographical diversification

(1) This invested amount includes M&A in France and Germany (for 269MW and €369mn EV) and LUKERG asset split (for 20MW and €27mn EV)

ERG TODAY: A BIGGER AND DIVERSIFIED PORTFOLIO

• (3) Current pipeline for about 300MW under development in UK, France and Poland 2015-2018 Business Plan

ERG TODAY: COMPETITIVE POSITIONING

Source: last available public information related to 2014

Source: estimates based on 2014 Annual Reports

Wind

Installed wind capacity in Europe (GW)

Source: last available public information related to 2014

(1) Comparison not on a like-for-like, as ERG Renew figure is updated as at year-end 2015

(2) ERG forecast for hydro production in the plan period equals to 1.4TWh/y

Asset quality as a key objective for our portfolio

ERG TODAY: BUSINESS MODEL

New Group Organisation

ERG TODAY: A NEW GENERATION PORTFOLIO

2015-2018 Business Plan

Total Production: ≃7.5TWh, +45% vs 2014 pro-forma(1)

(1) 2014 pro-forma production: 5.2TWh

STRATEGIC GUIDELINES

(Intermittant): Wind

• Shifting to a new growth business model: ORGANIC vs. M&A
• 2016: consolidation of new assets and operations
• Organic growth abroad of >200MW

2015-2018 Business Plan

Hydro (Programmable):

• Consolidation of Hydro Terni integrated hydroelectric system

• Extracting value from asset management and synergies

Energy Management:

• Portfolio diversification and better risk control through a single PAR • Opportunities to enlarge the portfolio by including the foreign generation

CCGT (Programmable):

• Integration of CSO (28 professionals in technical services) abroad • Completion of O&M internalization across operations in Italy

• Potential development of technical services to third parties

O&M and technical services:

• Continuous improvement of ERG Power CCGT plant efficiency

• Return to exploit CCGT generating flexibility and modulation

• Targeting additional ≃200MW of high quality organic capacity, in some selected

• EU countries: France, Germany, Poland and UK
• Geographical diversification as for MW installed from 37% (2015) to 44% (2018)

WIND: STRATEGY

• Completion of O&M internalization of Italian wind farms (about 1,094MW) • Gradual insourcing of technical activities to exploit further synergies (CSO integration) • Opportunity to internalize O&M abroad, starting from France and Germany

• Asset management of abroad portfolio through local teams
• Potential development of technical services to third parties under assessment

2015-2018 Business Plan

A business model oriented to organic growth and operational efficiency

• Consolidation of newly acquired/built assets and CSO (28 professionals in France

• and Germany, about 800MW under management)
• Setting a new business model: organic growth vs. M&A
• Building up of a sizeable pipeline

2016: a year of Consolidation

Further international Growth

A focus on operating Efficiency

WIND: BUSINESS MODEL FROM M&A TO ORGANIC

2015-2018 Business Plan

✓ New business model launched in 2H 2015 ✓ >1GW scouted resulting in roughly 300MW under development at different stages

WIND: COUNTRY SELECTION KEY DRIVERS

2015-2018 Business Plan

France, UK, Germany and Poland core countries for Wind development

(1) Additional GW vs 2014 Actual

(2) Targed 2020 based on average data from EWEA (European Wind Energy Association), EU Commission and NREAP (National Renewable Energy Action Plan)

WIND: INSTALLED CAPACITY EVOLUTION

• (1) It includes 4WTGs of Ginestra wind farm released by the Legal Autorities
• (2) Next GCs phasing out will take place not before 2022-2023
• (3) Percentage change refers to total average Capacity

2015-2018 Business Plan

• 2016: benefitting from a larger asset base and focusing on consolidation

• 2017-2018: organic growth

WIND: BOOSTING O&M INSOURCING

2015-2018 Business Plan

✓ Efficiency and O&M insourcing drive to further cost reduction in Italy ✓ Under assessment a potential O&M insourcing abroad

2012A 2013A 2014A 2015 FCST

WIND: KEY FIGURES

Hydro

• • Consolidation of Hydro assets

• Focus on assets and people integration

• 100 professionals with strong expertise in hydro plants operations and energy management - Extracting value from asset management of Hydro integrated system

PROGRAMMABLE: STRATEGY

CCGT

• Maximising CCGT profitability thanks to plant efficiency and flexibility • CCGT as a flexible tool for the enlarged Energy Management portfolio

• • High yield cogenerative plant

Energy Management

• Value creation through dispatching of a mixed and balanced generation portfolio • Increase in size and diversification of electricity portfolio under

• management: Thermal, Wind and Hydro

2015-2018 Business Plan

HYDRO - A WELL INTEGRATED ASSET

• Integrated system: 16 plants, 38 unit productions, 7 dams and 3 reservoirs
• 527MW installed capacity
• 2014 production: 1.8TWh

A solid technological diversification CONDOTTA FORZATA DI POZZO/GALLERIA

FOCUS ON ENERGY MANAGEMENT

Adding value through enlargement of electricity portfolio

• Energy Management based on a larger and diversified portfolio
• Development of a portfolio for electricity sales and modulation
• Integrated Energy Portfolio Management leads to a significant reduction of PAR

2015-2018 Business Plan

Portfolio 2015: 5.5TWh

(1) It includes Wind production abroad

PROGRAMMABLE: KEY FIGURES

2015-2018 Business Plan

✓ Reduced CCGT profitability following the interconnection ✓ Increasing Hydro contribution from synergies and pricing scenario

2015-2018 Business Plan

(1) ERG stake is 51%. Participation consolidated on an equity basis

2015-2018 GROUP EBITDA EVOLUTION

Solid EBITDA with a different breakdown

2015-2018 Business Plan

^{≃440 ≃450}

41 (60)

40

31

Hydro Worse

Wind

Wind organic

(1) 2015 FCST EBITDA includes €10mn from Hydro Terni consolidation as of 1.12.2015 (2) Assumption of entry into operations of Sorgente-Rizziconi interconnection at the end of June 2016 and phasing out of GCs in Wind Italy

90

Wind organic investments for roughly €400mn in 2016-2018

OPTIMISATION OF FINANCIAL STRUCTURE

928

2015-2018 Business Plan

Re-leverage

2015-2018 NFP(1) EVOLUTION

(1) Assuming dividend distribution flat in the plan period at €0.5/share per year

(2) Based on average NFP

De-leverage and further financial optimisation

2015-2018 Business Plan

CLOSING REMARKS

CEO

LUCA BETTONTE

KPI EVOLUTION IN THE PLAN PERIOD

Dividends

• • From 1,821MW to ≃2,950MW, +13% CAGR
• • Wind: from 1,341MW to ≃1,950MW, +10% CAGR
• • Abroad capacity from 254MW to ≈850MW, +35% CAGR
• • From €343mn to ≃€450mn, +7% CAGR
• • EBITDA 2018 at ≃€450mn, 65% Wind and 35% programmable
• CAPEX Cumulated amount of ≃€1.9bn out of which €1.35bn M&A and ≃€0.6bn organic growth

• Sustainable dividend policy with a floor at €0.5/share

Closing Remarks

• • Re-leverage in 2015: from €409mn to ≃€1,900mn

• De-leverage in 2016-2018: from ≃€1,900mn to ≃€1,300mn (NFP/EBITDA <3x)

ERG STRENGTHS

Closing Remarks

• Technological and geographical diversification

• • Wind: 1.7GW installed @ 2015 to almost 2GW @ 2018
• Load factor at premium vs Industry average
• Insourced O&M and high operating efficiency
• • CCGT: high yield cogenerative flexible plant
• • Hydro: 527MW integrated system

Asset Quality

• • De-leverage in 2016-2018: ≃€1,200mn operating cash flow ahead of:
• €400mn of organic investments in 2016-2018
• €210mn of dividends in the period 2016-2018
• Integrated asset portfolio with low performance volatility and PAR

High Free Cash Flow Generation

• • Vision to anticipate trend from Oil run for cashing to Renewables run for growing
• • Execution: >€7bn transactions in 2008-2015
• • Flexibility to adapt to the new core business

Management Team

A story of vision, execution and de-leverage

(1) Free Cash Flow Yield calculated as FCF before dividends on Net Invested Capital, lower in 2017-2018 (vs 2016) reflecting higher CAPEX

WHAT'S NEXT?

• • 19th Century: Age of Carbon
• • 20th Century: Age of Oil ERG founded in 1938 as an Oil Company
• • 21st Century: Age of Green Economy ERG repositioning towards Renewables

The World is going towards Renewables

• • Technical and O&M services, in light of:
• - EU wind asset base getting older
• - large presence of financial operators

• Storage technology for electricity: making intermittant as programmable

• Energy Management: to capture full potential of the entire value chain

ERG ready for the new challenge

Renewable trend is going to create more and more the opportunity for:

Closing Remarks

Source: World Energy Outlook, IEA November 2015