Iren — Investor Presentation 2015

Jun 17, 2015

Business Plan @2020

Milan 17 June 2015

IREN@2020

SMART COMMUNITY

Close collaboration with the Local Communities to promote shared growth in the territories

INTEGRATION

Constant integration, business specialization and focus on the Client

INNOVATION, IT & OUR PEOPLE

Cross-process innovation and significant investments in developing internal skills

EFFICIENCY

Creation of value for all the Stakeholders

IREN@2015

SUSTAINABILITY

Leader in sustainable development thanks to one of the most «environmentalfriendly» plant-portfolios

GROWTH THROUGH EFFICIENCY AND INNOVATION

MARKET SCENARIO IREN'S ACTION PLAN

Upstream overcapacity & higher competition in market activities

New regulatory framework

Upcoming tender season and government support for the consolidation process

Supportive financial market

Development of the distinctive characteristics of Iren's plant (Hydro, DH) and Client-base

Significant growth in regulated activities (Waste and Water) and new governance pushing full integration and the achievement of synergies

Leader in the consolidation process in reference territories, with the possibility of exploiting significant opportunities

Focus on combining growth with capital strengthening and dividend sustainability

EXCELLENT IREN POSITIONING IN A CHALLENGING BUT FAVOURABLE SCENARIO

In the next 6 years IREN will pursue a new path, starting a revolution inside the Group which will enable it to reach its 2020 objectives

A more streamlined Company

Focused on innovation

Top-level service provider

Leader in the consolidation process in reference areas

More flexible, integrated, client-oriented

75 million Euro of synergies in the next 6 years

Operating structure focused on SBUs

Extensive preretirement plan focusing on rationalization and the acquisition of young talented employees

Efficiency improvement Group rationalization

Stronger in our territories to create value synergies

Realistic growth expectations based on prudent assumptions regarding both the energy scenario and regulation

Capex for development of around 600 million euros

Development in our reference areas through consolidation

Organic growth mainly in regulated activities

*Adjusted

CLIENTS

Simplification, customer participation and enhancement of customer experience to strengthen one of Iren's most valuable asset: its Clients +370,000 Clients

through consolidation and development

Consolidation in Iren's reference areas and development mainly in metropolitan areas

High added value services to increase loyalty.

Growth through both external and internal lines Strengthening internal sources (90% of the electricity sold will be generated by the Group)

INNOVATION

More focused on the future to meet the new needs of sustainable development

~ 450 million Euro invested in innovative capex

Widening the range of services offered thanks to new technology (led lighting, smart metering)

Energy efficiency and innovative solutions for final Clients (Public Administration, business, retail) focused on: Led in public and domestic lighting, efficient conditioning control, home automation, energy auditing, Chp, distributed generation 25% of Iren's total

New integrated ITC solutions supporting more effective processes

Environmental sustainability is a guiding factor in Iren's strategy for the future

• High visibility in cash flow generation thanks to the significant percentage (~75%) of regulated and quasi-regulated activities on the Group EBITDA
• Growth in all business units in spite of the expiry of Green Certificates worth more than 60 million euros affecting the hydroelectric sector (and, to a lesser extent, the Cogen-DH sector)

More selective and sustainable capex to strengthen development

~1.8 billion Euro capex in the next 6 years

Improvement in waste treatment plantportfolio, DH networks and client base

Improving financial ratios thanks to projects with higher and predictable returns

Significant increase in RAB

1,830m€

Operating cash-flow is 70% higher than the cumulated capex, thanks mainly to improvement in business performances Tight control of NWC leading to a 100m€ decrease in spite of a significant growth in revenues Positive free cashflow generation NFP 2014 Capex NWC Dividends and others Operating Consolidation cash flow NFP 2020 2,286 1,970 530 525 (3,100) (100) 1,830 Consolidation mainly linked to TRM <3.0x Debt EBITDA ratio by 2018 m€

• Only 68% of expiring debt is going to be refinanced mainly because of debt reduction of debt Refinancing needs Refinancing needs Cumulative expiring debt ~1,900 1,300 Average cost of Debt 2014 2020 3.8% 3.6% m€
• Slight reduction in cost

Mix optimization between fixed and variable interest rate

16

ECONOMIC AND FINANCIAL INDICATORS

NFP and NFP/EBITDAratio

GENERATION AND DH: HIGHLIGHTS FOCUS ON BUSINESS

• Recovery in scenario partially offsets GCs expiry: ~20 million€ in the DH sector in 2015 and ~45 million€ in the Hydroelectric sector in 2019
• Significant Increase in volumes heated (+19mmc) allowing the Group to fully utilize its heat production sources (Cogen plants / WTEs)
• More than 80% of the electricity generated by the Group derives from eco-compatible sources (hydroelectric and cogeneration)

m€	2014	2018	2020
Revenues	827	1,030	1,090
EBITDA	199	230	230
Cagr. '14-'20		2.5%
Cumulated Capex		460

MARKET AND ENERGY EFFICIENCY: HIGHLIGHTS FOCUS ON BUSINESS

• Client development plan: + 200.000 in gas and 170.000 in electricity through organic and external growth. It will lead to higher volumes sold to final customers and lower volumes sold in IPEX
• Approximately 90% of total electricity sources will come, in 2020, from internal production.
• Energy efficiency and innovative solutions for final customers (public administration, business, retail) focused on: Led lightening, efficient conditioning control, home automation, energy auditing, Chp and distributed generation.

m€	2014	2018	2020
Revenues	2,388	2,460	2,710
EBITDA	89	110	115
Cagr. '14-'20		4.4%
Cumulated Capex		190

NETWORKS (ELECTRICITY AND GAS): HIGHLIGHTS FOCUS ON BUSINESS

• The expected reduction in Wacc offset by the achievement of significant operating synergies
• Significant increase in gas POD thanks to the growth in the Parma area, following the tender expected in 2017
• Substantial stability in electricity POD
• Updating of the distribution networks, electronic meters installation plan and smart grid

m€	2014	2018	2020
Revenues	341	330	340
EBITDA	152	155	160
Cagr. '14-'20		0.9%
Cumulated Capex		440

• Considerable growth in margins due to significant operating synergies deriving from process improvement and corporate rationalization
• Stable regulatory framework with an expected reduction in Wacc.

m€	2014	2018	2020
Revenues	464	480	490
EBITDA	150	170	175
Cagr. '14-'20		2.6%
Cumulated Capex		480

• Full consolidation of Amiat and TRM
• Significant increase in special waste collection and trading
• Development of sorted waste treatment plants, in particular in plastic/paper sorting and organic waste following a further increase in sorted waste collection

m€	2014	2018	2020
Revenues	238	620	670
EBITDA	48	165	180
Cagr. '14-'20		24.7%
Cumulated Capex		180

FOCUS ON BUSINESS

TRM consolidation will complete IREN's business portfolio in Turin and consolidate its presence in reference areas.

• Fitting - The plant is a perfect strategic and industrial fit in IREN's business portfolio
• Development - The WTE will soon be connected to the DH Network (the sector in which IREN is ranked 1°in Italy)
• Value Chain - IREN already manages the upstream waste cycle in Turin. TRM will complete the whole value chain

TRM KPIs

• Waste disposal designed capacity: ~500,000 tons/year
• Electricity production: 350 GWh per year
• Thermal energy production: theoretically 170 GWh per year
• EBITDA 2014 = 45m€ (average 55m€/y)
• NFP 2014 = 250m€

M&A OPERATIONS UNDER ASSESSMENT AND NOT INCLUDED IN THE BUSINESS PLAN OBJECTIVES

IREN will take advantage of the upcoming consolidation season pursuing a dual strategy

Playing a leading role as an aggregation pole in its reference areas

Strengthening its business portfolio, focusing on regulated activities

FOCUS ON BUSINESS

Strengthening its position as a LEADING OPERATOR IN ITS REFERENCE AREAS through consolidations and investments mainly in regulated activities

A STRONG AND EFFECTIVE BUSINESS PLAN:

• Based on realistic assumptions and actions mainly under company control
• Upside potential from M&A operations not included in the current targets

Iren will become a MORE STREAMLINED

COMPANY with new processes and skills supporting growth thanks to a management oriented towards change and a project for generational turnover

VALUE GENERATION AND A WIDE VISIBILITY IN DIVIDENDS:

• 50% average PAYOUT during business plan period
• DPS floor at 5.2€/c. 10% growth expected starting from 2018

IREN implements a culture of innovation and develops new opportunities aiming at the day-byday growth of the company for itself and all the stakeholders.

IREN intends to be a perfectly integrated group, with an organizational structure able to anticipate the changing needs in Society, the Regulatory System and the Market.

IREN pursues and promotes the continuous revision of all company processes aiming at improving efficiency and attaining synergies for the achievement of quality, efficiency and growth objects.

IREN is a catalyst in the territorial consolidation process, for the development of innovation and the efficiency of services, in order to meet the new needs of clients and citizens and to extract maximum value from its assets.

ANNEXES

OLT SHAREHOLDING STRUCTURE

• Nonetheless IREN has taken a prudent approach:
• Expecting no contribution from merchant activity before 2017
• Including no positive contribution from the OLT to the bottom line of the income statement during the business plan period

Average Capex per year = ~300m€ Average development capex per

year = ~100m€

Stronger investment cycle in the first for years

1,830

	2014	2018	2020
Brent (\$/bbl)	99.0	64.5	84.4
Exchange ratio (\$/€)	1.3	1.2	1.2
Brent (€/bbl)	74.4	55.1	70.7
PUN (€/MWh)	52.1	57.0	58.2
Clean spark spread – PSV (€/MWh)	-2.1	3.3	4.0
Hydro Green Certificates (€/MWh)	97.4	94.4	93.5
ETS (€/Ton)	6.0	8.0	9.0

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.