Iren — Investor Presentation 2016

May 12, 2016

ORGANIC GROWTH Organic growth of approximately 12m€, confirming the positive trend reported in the last quarters

SYNERGIES 7m€ of synergies already achieved thanks mainly to the effectiveness of the streamlining process

CONSOLIDATION Coverage of the entire value chain in the waste collection and disposal process in the Turin province thanks to the acquisition of a controlling stake in TRM (January 2016)

FINANCIAL OPTIMIZATION Net of TRM consolidation the NFP would have been 50m€ less than what was reported at the end of 2015

1Q 2016: Growing profitability in spite of a warm winter.

• Revenues -3.6%: due mainly to a sharp fall in commodity prices
• Ebitda +13.1%: benefitting both from organic growth (mainly in energy businesses and net of climate effect) and synergies (approx. 20m€). The contribution from the change in the consolidation perimeter amounts to 13m€ principally coming from TRM
• Ebit +15.8%: thanks to the gross operating margin's increase which more than offset D&A growth linked to TRM
• Net profit +24.5%: The significant growth comes after a +71% reported at the end of 2015 confirming the positive impact of the operating results down to the bottom line. The slight increase in financial charges derives from TRM consolidation

GENERATION AND DH – Significant increase in margins

• Strong increase in EBITDA in spite of a reduction in revenues thanks mainly to a quick drop in gas prices compared to the PUN decreasing trend.
• Generation sector gained from higher spark-spreads, both in cogeneration and in thermoelectric production combined with an improved contribution from MSD market and a slight increase in production.
• Hydroelectric sector negatively impacted by both the fall in electricity price and a slightly lower production.
• DH sector's decrease in volumes linked to the warm winter season (-2% day-degrees) in spite of an additional 2mcm of volumes heated.
• EBIT performances (+30%) reflects the positive operating results plus the release of a number of provisions.

	m€	1Q '15	1Q '16	Δ	Δ%
Revenues		267	236	-31	-11%
Ebitda		70	80	10	15%
Ebit		39	51	12	32%
Gross Capex		4	7	3	76%

MARKET – Procurement/sale optimization offset climate effect.

• The significant growth in margins is linked to a sound procurement strategy both in gas and electricity together with effective hedging and pricing actions. In addition, positive effects come from regulatory changes both in regulated and free markets. These elements offset the decrease in gas volumes sold to end clients due mainly to a warmer winter season.
• The new marketing strategies launched in the second part of 2015 and involving innovative offers allowed the Group to gain approximately 10K energy clients in the first three months of the year, keeping the churn rate as one of the lowest of the sector.
• Higher volumes sold to Business clients (+24%) underpinned the renewed interest of the company in this sector.

	m€	1Q '15	1Q '16	Δ	Δ%
Revenues		812	747	-65	-8%
Ebitda		49	53	4	8%
	Electricity	6	16	10	154%
	Gas&Heat	43	37	-6	-14%
Ebit		39	43	4	9%
Gross Capex		3	5	2	41%

NETWORKS – Negative impact from wacc reduction offset by synergies

• Electricity networks: The decrease in EBITDA is mainly linked to 1Q 2015 extraordinary positive equalization, absent in the 1Q 2016.
• Gas networks: Synergies offset the reduction in Wacc, keeping operating results stable.
• Water networks: The change in consolidation perimeter (SAP concessions), and synergies more than offset the reduction in remunerations on invested capital.

m€	1Q '15	1Q '16	Δ	Δ%
Revenues	197	192	-5	-3%
Ebitda	73	72	-1	-1%
Electricity	20	16	-4	-18%
Gas	17	18	1	1%
Water	36	38	2	5%
Ebit	47	44	-3	-8%
Gross Capex	29	25	-4	-15%
El. distr. (GWh)	999	1,062
Gas distr. (mcm)	575	548
Volume sold (mcm)	34.9	40.2

From January 2016, IRETI entered into full operation.

WASTE – TRM consolidation drove the growth

The strong increase in the BU's margins is linked principally to the contribution of TRM (>10m€) was partially offset by a decrease of the contribution from electricity sold (lower prices).

	m€	1Q '15	1Q '16	Δ	Δ%
Revenues		116	127	11	10%
Ebitda		20	31	11	56%
Ebit		11	15	4	44%
Gross Capex		3	3	0	2%

WTEs - Energy and Heat prod. (GWh)

1Q '15 1Q '16

	1Q '15	1Q '16	Δ	Δ%
EBITDA	211.4	239.1	27.7	13.1%
D&A	-65.7	-70.6			 Higher D&A linked mainly to TRM
Provisions	-12.5	-14.3			consolidation
EBIT	133.2	154.3	21.1	15.8%
Financial charges for loans	-21.1	-23.6
Other financial charges	-7.3	-6.7			• Higher FC due to TRM consolidation
Companies cons with e.m.and adj.	-2.9	-0.4
EBT	101.9	123.6	21.7	21.4%
Taxes	-39.0	-45.9			• Higher tax linked to the increase in EBT (1Q 2016 tax-rate approximately 38%)
Minorities	-4.2	-4.8
Group net profit	58.6	72.9	14.3	24.5%

Cash-flow and NFP Bridge.

• NFP increase is completely ascribable to the change in the consolidation perimeter (TRM consolidation). Net of this the Net Debt would have experienced a further -50m€ decrease in respect to what was reported at the end of 2015.
• Seasonal NWC growth

Interest rate and debt structure.

18% of gross debt at variable interest rate.

Average long-term debt duration of about 5.1 years.

Expected slight increase in cost of debt (3.6%) due to TRM consolidation.

Annexes

Market Scenario.

	1Q '15	1Q '16	Δ%
Brent USD/bbl	54.0	33.9	-37%
€/USD	1.1	1.1	-2%
Brent €/bbl	47.9	30.8	-36%
Gas Demand (bcm)	23.6	23.6	=
PSV €/000 scm	257	215	-34%
Energy Demand (Twh)	78.1	77.6	-1.0%
PUN (€/Mwh)	51.9	39.6	-24%
CO2 €/Ton	7.0	5.7	-19%
Green Cert. Hydro (€/Mwh)	97.9	100.1	+2%

• A sharp decrease in gas price has been followed by a 24% drop in PUN

	1Q '16	FY '15
Net fixed assets	5,063	4,648
Net Working Capital	214	154
Funds	-538	-526
Other assets and liabilities	-65	-46
Net invested capital	4,674	4,231
Group Sharholders' equity	2,123	2,062
Net Financial Position	2,551	2,169
Total Funds	4,674	4,231

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.