Iren — Investor Presentation 2017

Nov 14, 2017

9M 2017: Double digit growth in all the operating KPIs.

KPIs				Ebitda Bridge
m€	9M '16*	9M '17	Δ	Δ%	559	36	14	13	622
Revenues	2,228	2,614	386	17.3%
Ebitda	559	622	63	11.3%
Ebit	281	341	60	21.4%
Net profit	126	180	53	42.3%	EBITDA 9M '16	Scenario and	Synergies	Consolid.	EBITDA 9M '17
Tech. Capex	157	200	43	27.8%		Organic Growth

• Revenues +17.3%: Growth in revenues linked mainly to higher commodities prices (PUN +38.5%).
• Ebitda +11.3%: 80% of the total growth is attributable to synergies and organic growth while 13m€ derive from the transactions completed in 2016 (mainly Atena, SAP and REI).
• Ebit +21.4%: reflects the good operating results which more than offset higher D&A, linked to the change in scope of consolidation.
• Net profit +42.3%: Good operating results reflected in the bottom line, including lower financial charges and lower taxes (lower IRES percentage effect).
• Tech. Capex +27.8%: Strong increase in particular in network-based business, in line with expectations.

GENERATION AND DH – Positive results confirmed.

• Strong growth in operating performance thanks to the capacity of the Group to exploit its balanced generation fleet and the scenario conditions.
• Generation sector confirms and slightly improve the increase in profitability thanks to higher spark-spreads and margins from ancillary services.
• Hydroelectric sector's 5% lower production (due mainly to run-of-the-river plants) was more than offset by higher PUN.
• Heat sector: higher volumes mainly linked to the increase in volumes heated (+4mcm).

Outlook: Q4 results will be linked to the electricity scenario (extraordinarily positive in 2016) and to climate trend.

ELECTRICITY PRODUCTION (GWh)

MARKET – Negative scenario still affecting the electricity sector.

The higher than expected growth in PUN (+38%) halved the electricity sector margin, confirming the trend already reported in the first half of the year. This element was partially offset by:

• Active client management and client-base growth: +31% electricity volumes sold to end Clients.
• Strong results in gas sector thanks to use of stored gas bought during 2016 summer season at favorable price.

Outlook: Electricity scenario stabilization and slightly worse gas market conditions are expected in the last part of the year.

	m€	9M '16	9M '17	Δ	Δ%
Revenues		1,467	1,689	222	15%
Ebitda		97	85	-12	-13%
	Electricity	44	20	-24	-55%
	Gas&Heat	53	65	12	23%
Ebit		53	47	-6	-12%
Gross Capex		12	15	3	22%

NETWORKS – synergies, consolidation and balances for previous years drove the growth

• Energy networks: Achieved synergies, in line with expectations, more than offset higher costs for "white certificates".
• Water networks: Strong increase in EBITDA is linked mainly to the change in scope of consolidation (Atena and SAP), higher allowed revenues and balances from previous years (approximately 10m€).

Outlook: Q4 ordinary growth drivers will be substantially the same reported in the first nine months of the year.

m€	9M '16	9M '17	Δ	Δ%
Revenues	591	668	77	13%
Ebitda	220	242	22	10%
Electricity	51	53	2	4%
Gas	56	60	4	7%
Water	113	129	16	14%
Ebit	125	142	17	14%
Gross Capex	97	120	23	24%

WASTE – Further improvement in organic growth.

			m€	9M '16	9M '17	Δ	Δ%
 Higher margins persistent high	coming from WTE (higher saturation and drove the significant growth in the sector.	Revenues		382	408	26	7%
 REI, the new	landfill in Collegno (Turin) for special waste	Ebitda		96	116	20	21%
came on stream in May. Year-end expected contribution equals	total to 4-5 million euros	Ebit		45	62	17	37%
		Gross Capex		13	13	0	3%

Outlook: WTE plants capacity are and will be substantially saturated in 2017.

	9M '16*	9M '17	Δ	Δ%
EBITDA	558.9	622.2	63.3	11.3%
D&A	-220.8	-233.5			• Higher D&A linked mainly to ATENA and SAP consolidation.
Provisions	-57.6	-48.0			• Provision in line with expectations (2016 3Q was impacted by a negative one-off)
EBIT	280.6 340.6		60.0	21.4%	• Lower financial charges thanks mainly to lower cost of debt.
Financial charges	-69.7	-62.4			• Lower other financial costs due to the FV of derivatives and lower actualization
Other financial costs	-8.8 2.6				charges.
Companies cons with e.m.and adj.	16.0	13.0			• Lower non-recurring adjustment in equity investments consolidated with equity methods (Salerno Energia Vendite)
EBT	218.1	293.9	75.8	34.7%	vs. 9M 2016 (TRM).
Taxes	-77.3	-92.6			• Lower tax-rate (approximately 32%) thanks to structural decrease in IRES.
Minorities	-14.6	-21.7			• Higher minorities due to better results in
Group net profit	126.2	179.6	53.4	42.3%	our subsidiary (TRM, IREN Acqua etc.)

Cash-flow and NFP Bridge.

Continuous debt reduction (-79m€ in the first nine months of the year) thanks to the robust operating cash-flow generation.

Interest rate and debt structure.

• 85% of gross debt at fixed interest rate.
• Average long-term debt duration of about 4.8 years (5.8 years including the Green Bond and the liability management operations).
• Slight reduction in cost of debt (3.2% vs. 3.4% in 9M 2016)
• IREN's debt is formed of:
• 44% bonds*
• 32% EIB loans
• 24% other loans

Annexes

	9M '16	9M '17	Δ%
Gas Demand (bcm)	48	52	8%
TTF €/000 scm	139	176	26%
PSV €/000 scm	159	198	24%
Energy Demand (Twh)	232	234	1%
PUN (€/Mwh)	37.0	51.3	38.0%
CO2 €/Ton	5.7	5.3	-7%
Green Cert. Hydro (€/Mwh)	100.1	107.3	7%

	9M '17	FY '16*
Net fixed assets	5,245	5,233
Net Working Capital	213	171
Funds	-548	-562
Other assets and liabilities	-110	-88
Net invested capital	4,800	4,754
Group Sharholders' equity	2,422	2,297
Net Financial Position	2,378	2,457
Total Funds	4,800	4,754

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.