Iren — Earnings Release 2017

May 11, 2017

1Q 2017: Positive start to the year driven by energy sectors.

Income statement				Ebitda Bridge
m€	1Q '16	1Q '17	Δ	Δ%
Revenues	886	1,047	161	18.1%	239	17	4	5	265
Ebitda	239	265	26	10.8%
Ebit	154	174	20	13.1%
Net profit	73	101	28	38.0%	EBITDA 1Q '16	Scenario and Organic Growth	Synergies	Consolid.	EBITDA 1Q '17

• Revenues +18.1%: growth in revenues linked mainly to higher commodities price (PUN +45.1%).
• Ebitda +10.8%: approximately 65% of the increase is attributable to organic growth and scenario. Synergies in line with business plan target and increase in scope of consolidation deriving from the transactions completed in 2016 (mainly Atena and SAP).
• Ebit +13.1%: reflecting good operating results which more than offset higher D&A, linked to the change in scope of consolidation.
• Net profit +38.0%: In addition to the increase in EBIT, lower financial charges and lower taxes (lower IRES percentage effect)

GENERATION AND DH – improved flexibility allowed for further exploitation of extraordinary positive scenario conditions.

• The consistent increase in the profitability of the sector is the outcome of the efficiency and effectiveness improvement process carried out in the last two years.
• Generation sector's further growth due to the exploitation of the extraordinary positive scenario (higher spark-spreads and improved ancillary service margins) thanks to IREN's generation fleet flexibility.
• Hydroelectric sector's lower production more than offset by higher PUN.
• Heat sector: higher volumes mainly linked to increase in volumes heated (no positive effect from climate trend effect).

Outlook: The exceptional positive energy scenario reported in the last six months is unlikely to recur during the year.

	m€	1Q '16	1Q '17	Δ	Δ%
Revenues		236	341	105	44%
Ebitda		80	100	20	24%
Ebit		51	68	17	32%
Gross Capex		7	6	-1	-12%

ELECTRICITY PRODUCTION (GWh)

MARKET – gas storage management offset the negative price scenario

The electricity procurement cost trend worsened more than expected (PUN +45%) in particular in the first two months of the year, preventing the exploitation of hedging opportunities, unlike 2016. This element was more than offset by:

• Active client management and client-base growth: +70% electricity volumes sold to end Clients. 1.6m Clients (+87k additional Clients in the last 12 months)
• The strong results in gas sector, thanks to use of stored gas, bought during 2016 summer season at favorable price.

Outlook: The negative electricity downtrend will persist in the coming months, while in the gas sector we expect a worse scenario mainly in the last quarter.

	m€	1Q '16	1Q '17	Δ	Δ%
Revenues		747	810	63	8%
Ebitda		53	54	1	2%
	Electricity	16	3	-13	-82%
	Gas&Heat	37	51	14	38%
Ebit		43	43	0	1%
Gross Capex		4	4	0	-6%

NETWORKS – improved efficiency drove the growth.

• Energy networks: Achieved synergies, in line with expectations, more than offset higher price in passive "white certificates".
• Water networks: The slight increase in EBITDA is linked mainly to the change in perimeter (Atena and SAP) which more than offset a number of minor extraordinary negative items.

Outlook: The IRETI set-up will drive the exploitation of further synergies. In addition, further contribution from Atena is expected.

m€	1Q '16	1Q '17	Δ	Δ%
Revenues	192	195	3	2%
Ebitda	72	74	2	3%
Electricity	16	18	2	9%
Gas	18	18	0	-1%
Water	38	39	1	2%
Ebit	43	41	-2	-6%
Gross Capex	25	29	4	19%

WASTE – better performance both in waste collection and treatment/disposal

• Waste collection: Higher efficiency in waste collection systems along with synergies drove the growth in the collection field.
• Treatment and disposal: Higher saturation of the WTE plants and positive impact of the growth in PUN price.
• Special waste volumes treated +18%

Outlook: Further saturation of the WTE plants, thanks also to the expected absence of extraordinary maintenance initiatives, which instead negatively impacted 4Q 2016 results. Strong push on the adoption of modern "pay-as-youthrow" sorted waste collection systems and significant focus on special waste treatment.

m€	1Q '16	1Q '17	Δ	Δ%
Revenues	127	135	8	6%
Ebitda	31	38	7	22%
Ebit	15	24	9	57%
Gross Capex	3	4	1	17%

	1Q '16	1Q '17	Δ	Δ%
EBITDA	239,1	265,0	25,9	10,8%
D&A	-70,6	-76,4			• Higher D&A linked mainly to ATENA and SAP consolidation.
Provisions	-14,3	-14,2
EBIT	154,3	174,4	20,1	13.1%	• Lower financial charges thanks mainly to lower cost of debt.
Financial charges	-23,6 -21,5 -6,7 1,0				• Lower other financial costs due to the
Other financial costs					FV of derivatives and lower actualization charges.
Companies cons with e.m.and adj.	-0,4	4,9			• Higher non-recurring results in minor companies consolidated with equity
EBT	123,6	158,8	35,2	28.4%	methods
Taxes	-45,9	-50,9			• Lower tax-rate (approximately 32%)
Minorities	-4,8	-7,2			thanks to structural decrease in IRES (from 27.5% to 24.0%).
Group net profit	72,9	100,7	27,8	38,0%

Cash-flow and NFP Bridge.

The robust operating cash-flow generated in the quarter led to a 35m€ net debt decrease in spite of the seasonal growth in NWC and the cash-out for consolidation (mainly SAP and GAIA).

Interest rate and debt structure.

• 89% of gross debt at fixed interest rate.
• Average long-term debt duration of about 4.9 years.
• Further slight reduction in cost of debt (3.3% vs. 3.4% in FY 2016)
• IREN's debt is formed of:
• 46% bonds
• 32% EIB loans
• 22% other loans

Closing remarks

• 2 years of continuous improvement in efficiency, effectiveness and agility has led to positive results in all the sectors, even without M&A transactions.
• A sound integrated management in the energy value chain and a clear accountabilities attribution contributed to maximize the return, in accordance with IREN's safe risk profile linked to its generation plants portfolio (the majority of which is connected with DH networks) and to its risk policy.
• Synergies achievement in the first quarter (4m€) in line with the business plan targets
• Further contributions from consolidation activities already closed in 2016.
• Net debt trend reduction confirmed (-36m€ in the period)

All these elements make the company confident in the achievement, at the end of 2017, of the business plan targets.

Annexes

	1Q '16	1Q '17	Δ%
Gas Demand (bcm)	24	26	9%
TTF €/000 scm	148	200	35%
PSV €/000 scm	169	217	29%
Energy Demand (Twh)	78	79	2%
PUN (€/Mwh)	39.6	57.4	45%
CO2 €/Ton	5.7	5.4	-5%
Green Cert. Hydro (€/Mwh)	100.1	107.3	7%

	1Q '17	FY '16
Net fixed assets	5,242	5,220
Net Working Capital	223	171
Funds	-567	-562
Other assets and liabilities	-86	-84
Net invested capital	4,812	4,745
Group Sharholders' equity	2,390	2,288
Net Financial Position	2,422	2,457
Total Funds	4,812	4,745

DISCLAIMER

The Manager in charge of drawing up the corporate accounting documents and the Chief Financial Officer of IREN S.p.A., Mr. Massimo Levrino, hereby declares, pursuant to paragraph 2 of article 154 bis of the Consolidated Finance Act (Legislative Decree No 58/1998), that the accounting information contained in this presentation is consistent with the accounting documents, records and books.

This document was prepared by IREN mainly for use during meetings with investors and financial analysts. This document does not constitute an offer to sell or a solicitation to buy or subscribe shares and neither this entire document or any portion of it may constitute a basis or provide a reference for any contract or commitment.

Some of the information contained in this document may contain projected data or estimates that are based on current expectations and on opinions developed by IREN and are based on current plans, estimates, projections and projects. Consequently, it is recommended that they be viewed as indicative only.

Projected data and estimates entail risks and uncertainties. There are a number of factors that could produce significant differences between projected results and actual results. In addition, results may be affected by trends that are often difficult to anticipate, are generally beyond IREN's control and could produce results and developments that are substantially different from those explicitly or implicitly described or computed in the abovementioned projected data and estimates. The non-exhaustive list that follows being provided merely by way of example, these risks include: significant changes in the global business scenario, fluctuations in the prices of certain commodities, changes in the market's competitive conditions and changes in the general regulatory framework.

Notice is also given that projected data are valid only on the date they are produced. Except for those cases in which the applicable statutes require otherwise, IREN assumes no obligation to provide updates of the abovementioned estimates and projected data.