Iren — Investor Presentation 2019

May 13, 2019

1Q 2019 Headwinds in market division offset by growth in all the other business units

m€	1Q '18	1Q '19	Δ	Δ%
Revenues	1,066	1,278	212	19.9%
Ebitda	269	274	5	1.9%
Ebit	177	172	-5	-3.1%
Net profit	103	100	-3	-3.2%
Tech. Capex	68	86	18	26.5%

• Revenues +19.9%: thanks to higher revenues in electricity production and the inclusion in the scope of consolidation of ACAM, San Germano and SET.
• Ebitda +1.9%: the favorable generation scenario and all the strategic pillars have contributed positively to the growth: in detail, consolidation for 7m€, organic growth for 6m€ and synergies for 3m€.
• Ebit -3.1%: higher D&A related to capital-intensive investments and consolidation process.
• Net profit -3.2%: reflecting the Ebit reduction.
• Tech. Capex +26.5%: further acceleration in investments thanks to a strong cash flow generation.

page 2

C A S H F L O W & N F P

D E B T S T R U C T U R E

C L O S I N G R E M A R K S

A N N E X E S

2019 1Q RESULTS

NETWORKS Organic growth and consolidation continue to be the main drivers

• Increase in Capex (+12%): the positive trend in capex continues mainly for water networks, in line with the growth prospects outlined in the business plan.

OUTLOOK: the organic growth trend reported in 1Q 2019 is expected to continue during the year.

	m€	1Q '18	1Q '19	Δ	Δ%	E B I T D A
	Revenues	198	233	35	17%
	Ebitda	79	85	6	6%	N E T W O R K S
	Electricity	17	18	1	4%	W A S T E
	Gas	19	20	1	6%
	Water	43	47	4	8%	E N E R G Y
	Ebit	44	46	2	3%
	Gross Capex	45	50	5	12%	M A R K E T
ELECTRICITY CAPEX (M€)			RAB (M€) +4%			E B I T C A S H F L O W & N F P
		2,125 455		2,212 459	Electricity	D E B T S T R U C T U R E
6	7	670		689	Gas Water	C L O S I N G R E M A R K S
		1,000		1,064		A N N E X E S
1Q '18	1Q '19	FY '18		1Q '19	2019 1Q RESULTS	page 3

WASTE Growth led by the disposal plants saturation

• The Ebitda growth is affected by different positive elements:
  • Higher volumes disposed in our plants led to an increase in electricity sold. REI contribution is up, mainly due to the lack of availability of landfill in the first quarter 2018.
  • Positive contribution from ACAM and S. Germano in the waste management volumes and in operating results.
• Increase in waste management (+30%) compared to 1Q 2018 (+8% with the same perimeter). Sorted waste collection equal to 65.5%, +1.3% compared to FY2018.

OUTLOOK: the development of door-to-door collection and the disposal plants saturation will be the main elements driving the sector's performance, which should be slightly better than 2018.

m€		1Q '19	Δ	Δ%	E B I T D A
	138	175	37	27%
	36	41	5	15%	N E T W O R K S
	18	19	1	6%	W A S T E
	4	7	3	80%	E N E R G Y
		1Q '18

M A R K E T

E B I T

C A S H F L O W & N F P

D E B T S T R U C T U R E

C L O S I N G R E M A R K S

A N N E X E S

ENERGY Strong results in a normalized generation market with positive spark spreads

• Generation sector is impacted by higher volumes of electricity production compared to last year and a negative thermal impact (5m€). Some non-recurrent positive elements partially offset the absence of 14m€ relating to white certificate sales reported in 1Q 2018.
  • Hydro sector: growth led by a slightly increase in PUN price and higher volumes.
  • Thermo/Coge sector: the recovery in volumes and in spark spread, have made it possible to counterbalance the reduction in MSD market.
  • District heating: increase in heat spark spread partially offset by lower volumes due to mild temperatures.

OUTLOOK: the results are expected to be in line with last year, net of WCs' sales, in spite of the green certificates' expiry and normalized hydro volumes. DH VOLUMES HEATED (mcm)

m€	1Q '18	1Q '19	Δ	Δ%	E B I T D A
Revenues	362	468	106	29%
Ebitda	103	115	12	13%	N E T W O R K S
Hydro&Renewables	14	20	6	43%
Thermo/Coge, DH	89	95	6	7%	W A S T E
Ebit	72	85	13	18%	E N E R G Y
Gross Capex	6	10	4	67%

M A R K E T

E B I T

MARKET Lower margins reported in 1Q which will be recovered during the year

• The negative results are due to a reduction in sale margins, a negative thermal impact and the absence of positive balances (8m€) reported in 1Q 2018 equally split in the two sectors. The lower profitability in both sectors is led by a negative scenario impact.
• Gas sale sector is also affected by a thermal impact, which led to a reduction in volumes with a negative impact of ~5m€.
• +15K clients compared to FY2018 (now at ~1,8m) thanks to an active commercial policy and to the offer of high value added services.

OUTLOOK: 2019 results are expected to be in line with 2018 recurrent results, thanks to a repricing policy and a recovery in margins in 4Q 2019.

1Q '18 1Q '19

m€	1Q '18	1Q '19	Δ	Δ%	E B I T D A
Revenues	791	955	164	21%
Ebitda	50	33	-17	-34%	N E T W O R K S
Electricity	5	1	-4	-80%
Gas&Heat	45	32	-13	-29%	W A S T E
Ebit	42	23	-19	-45%	E N E R G Y
Gross Capex	7	10	3	36%
					M A R K E T

E B I T

1Q 2019 From EBITDA to Net Profit

	1Q '18	1Q '19	Δ	Δ%		E B I T D A
EBITDA	269.2	274.2	5.0	1.9%
D&A	-86.7	-97.7			• Increase in D&A related to higher capex, consolidation process (ACAM and San	N E T W O R K S
Provisions to bad debt	-5.2	-4.7			Germano) and IFRS 16 application	W A S T E
EBIT	177.3	171.8	-5.5	-3.1%
						E N E R G Y
Financial charges	-17.1	-16.7			• Lower cost of debt.
Other financial charges	-1.6	-3.1			• Increase in other financial charges partially due to IFRS 16	M A R K E T
Companies cons with e.m.	-0.6	-0.1				E B I T
Participations adjustment	-	-				C A S H F L O W
EBT	158.0	151.9	-6.1	-3.9%		& N F P
					• Tax-rate (30%) thanks to structural	D E B T S T R U C T U R E
Taxes	-48.2	-45.4			stabilization in IRES (ordinary tax rate 30%).
Minorities	-6.6	-6.6				C L O S I N G R E M A R K S
Group net profit	103.2	99.9	-3.3	-3.2%		A N N E X E S

1Q 2019 Cash-flow and NFP Bridge

• Slight increase in net financial position equal to 2.9% led by the higher capex, the cash out for the consolidation of San Germano and Busseto, derivatives and the application of IFRS 16.
• Derivatives: negative impact on debt caused by rates and commodities derivatives.

D E B T S T R U C T U R E

C L O S I N G R E M A R K S

A N N E X E S

1Q 2019 Interest rate and debt structure

• 90% of gross debt at fixed interest rate and 10% of gross debt at variable interest rate.
• Average long-term debt duration of about 5.2 years (5.6 years in 1Q 2018).
• Reduction in the average cost of debt (2.6% vs. 2.9% in 1Q 2018).
• IREN's debt is formed of:
  • 63% bonds
  • 25% EIB loans
  • 12% other loans

Our diversified business model, based on an integrated energy supply chain, has been allowing us to deal successfully with a very volatile energy scenario. Furthermore, the investments made in recent years enabled to sustain the organic growth reported in this quarter.

We confirm the business plan targets mainly driven by the organic growth achieved from the capital-intensive investments sustained by the strong operative cash flow.

Launch of the first tranche of the treasury share buyback program of 20 million euros.

GUIDANCE ON FY 2019

In light of the FY 2018 results we confirm our FY 2019 guidance: Ebitda: 880/890m€ NFP/Ebitda: ~2.9x Capex: ~570m€

A N N E X E S

Scenario

	1Q '18	1Q '19	Δ%
Gas Demand (bcm)	26.0	25.5	-1.8%
TTF €/000 scm	223	195	-12.7%
PSV €/000 scm	231	220	-4.7%
Energy Demand (Twh)	81.1	80.3	-1.0%
PUN (€/Mwh)	54.3	59.4	9.4%
CO2 €/Ton	10.3	22.2	115.8%
Green Cert. Hydro (€/Mwh)	99.0	92.1	-7.0%
TEE (€/TEE)	250	259.9	3.9%

s a e n n e x

Balance Sheet

	FY '18	1Q '19
Net fixed assets	5,786	5,939
Net Working Capital	132	147
Funds	-621	-638
Other assets and liabilities	-282	-278
Net invested capital	5,015	5,170
Group Shareholders' equity	2,562	2,645
Net Financial Position	2,453	2,525
Total Funds	5,015	5,170

s a e n n e x

page 13

2019 1Q RESULTS

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.

s

e

x

a

n

n

e