Iren — Investor Presentation 2020

Aug 4, 2020

IREN RESULTS

1H 2020

4th August 2020

1H 2020 Signs of resilience in a downturn scenario

m€	1H '19	1H '20	Δ	Δ%
Revenues	2,238	1,826	-412	-18.4%
Ebitda	478	473	-5	-1.0%
Ebit	258	232	-26	-10.0%
Group net profit	151	133	-18	-11.9%
Tech. Capex	197	254	57	29.0%

• Revenues -18.4%: decrease mainly in the energy value chain revenues caused by lower volumes and prices
• Ebitda -1.0%: Resilient results in a difficult scenario affected by Covid impacts of 10 m€, negative impact from regulation of 5m€, a negative net impact of one-offs on Energy of 20m€ and finally downwards trend in energy prices. In such a tough environment, we underline the resilience of the integrated energy value chain
• Ebit -10.0%: higher provisions to bad debt due to the emergency and higher depreciations partially offset by a release of a provision fund
• Net profit -11.9%: reflecting the Ebit downtrend
• Tech. Capex +29.0%: strong capex plan. The increase is mainly explained by Turbigo repowering

NETWORKS WASTE MARKET P&L CASHFLOW & REMARKS EBITDA ENERGY ANNEXES

NFP FINANCIALS CLOSING

RAB rise and synergies as main growth drivers NETWORKS

• • RAB growth combined with synergies led the 4% Ebitda increase
• +Investments in line with last year, despite the light slowdown caused by the lockdown
• Negative impact from regulation due to lower costs recognized in tariffs, mainly in water and gas sector

WASTE Negative impact caused by PUN and volumes

• +Higher margins on collection activities
• +Positive contribution of San Germano for 2 million euros
• +Saturation of WTE plants, through the reorganization of flows
• Decrease in waste managed (-4%) compared to 1H 2019 mainly on landfill, led by Covid emergency
• Lower PUN price affected the electricity sold

ENERGY Generation resilience and lower heat margins

• +Positive results in the ancillary services market (50m€ vs 28m€ in 2019)
• Lower coge and thermo volumes
• Lower heat distributed due to mild temperature
• Drop in PUN, in electricity clean spark spread and in heat spark spread

MARKET Margins normalization and increase of clients

• +Positive repricing commercial policy and hedging activities in both sectors which led to recover and overhit the standard value of supply unit margins
• +Customer base at 1.863m clients (+47k vs FY2019 of which 21k of SanremoLuce acquisition)
• Lower electricity volumes mainly in SMEs and Business segment, primarily for Covid impact
• Lower gas volumes to end clients due to the winter mild

Cash-flow and NFP 1H 2020

• The increase in net financial position, equal to 7.9%, led by the worsening of the working capital and the capex growth. NWC increase of 50m€ due to provision for bad debts related to Covid
• 10% increase in dividend policy, in line with our business plan assumption

NFP FINANCIALS CLOSING

*Last bond issue not included

• 96% of gross debt at fixed interest rate and 4% of gross debt at variable interest rate
• Average long-term debt duration (including the last bond issue) of about 6 years vs 5.3 years in 1H 2019 Reduction in the average cost of debt (2.2% vs. 2.5% in 1H 2019)
• 62% of the Iren total debt is composed by green and assimilated instruments (44% Green Bond, 17% EIB loans)
• Iren is the only Italian local multiutility to have issued 3 Green Bonds for a total size of 1.5b€

1H 2020 Unieco's Waste Management Division at a glance

STRATEGIC DRIVERS

• Primary operator at national level in the treatment and valorization or disposal of special waste
• Widening of areas served by our activities
• Consolidation in our reference areas (Emilia Romagna and Piedmont)
• Acquisition of a strategic positioning in the waste management in Tuscany
• Growth options in the special waste segment leveraging on strong commercial expertise

2018 ECONOMICS

• Consolidated companies: no. 19
• Associated companies: no. 12
• Ebitda adj.: 17m€
• PFN adj.: 88m€

INDUSTRIAL DATA Consolidated companies

• 15 treatment and disposal plants
• 172 kton of urban waste managed
• 25 kton of sorted waste managed
• 33 kton of special waste managed
• 355 kton of special waste intermediated

Associated companies

• 24 Treatment and disposal plants
• ~400 kton of waste managed
• 550 kton of urban waste collected
• 900k inhabitants served by collection

1H 2020 Closing remarks

MAIN 1H 2020 TAKEAWAYS

• High resilience of the energy integrated value chain
• Negative Covid impact on Ebitda: 10m€
• M&A activism confirmed
• Investment plan confirmed
• Keep running in a though environment

COVID IMPACTS ON FY 2020

The visibility achieved after the 1H leads to update the Covid impacts on FY 2020:

• Ebitda impact for 15m€ (lower than the previous prudent estimate of 25/30m€)
• Net working capital increase for around 80m€ (confirmed)
• Credit losses for around 25m€ (confirmed)

In light of the previous elements, we raise our guidance on FY 2020:

GUIDANCE ON FY 2020

• Ebitda: 905-915m€ (of which 5/7m€ from M&A)
• NFP/Ebitda: ̴3.5x (of which 0.2x from M&A)
• Capex: ̴650m€

UNIECO

Annexes

1H 2020 Business units' results

NETWORKS
m€	1H '19	1H '20	Δ	Δ%
Revenues	482	490	8	2%
Ebitda	172	179	7	4%
Electricity	36	37	1	3%
Gas	41	41	0	0%
Water	95	101	6	7%
Ebit	90	81	-9	-10%
Gross Capex	114	115	1	1%

	ENERGY
m€	1H '19	1H '20	Δ	Δ%
Revenues	785	551	-234	-30%
Ebitda	166	127	-39	-24%
Hydro&Renewables	41	31	-10	-24%
Thermo/Coge, DH	120	92	-28	-23%
Energy efficiency	5	4	-1	-13%
Ebit	102	73	-29	-28%
Gross Capex	22	66	44	n.s.

WASTE
m€	1H '19	1H '20	Δ	Δ%
Revenues	353	350	-3	-1%
Ebitda	84	80	-4	-4%
Collection	25	32	7	31%
Treatment & disposal	59	48	-11	-19%
Ebit	37	32	-5	-13%
Gross Capex	22	28	6	26%

m€	1H '19	1H '20	Δ	Δ%
Revenues	1.512	1.073	-439	-29%
Ebitda	55	86	31	57%
Electricity	9	31	22	n.s.
Gas&Heat	46	55	9	20%
Ebit	29	45	16	54%
Gross Capex	21	23	2	7%

14

1H 2020

CASHFLOW & EBITDA NETWORKS WASTE ENERGY MARKET P&L NFP	FINANCIALS	UNIECO	CLOSING REMARKS	ANNEXES
-----------------------------------------------------------------------------	------------	--------	--------------------	---------

	1H '19	1H '20	Δ%
Gas Demand (bcm)	40.1	35.8	-10.8%
TTF €/000 scm	166	80	-52.1%
PSV €/000 scm	198	97	-51.1%
Energy Demand (Twh)	157.3	143.5	-8.8%
PUN (€/Mwh)	55.1	32.2	-41.5%
CO2 €/Ton	23.8	22.0	-7.7%
Green Cert. Hydro (€/Mwh)	92.1	99.1	+7.5%
TEE (€/TEE)	260.0	265.0	+1.9%

Scenario

1H 2020 Balance sheet

	FY '19*	1H '20
Net fixed assets	6,101	6,133
Net Working Capital	166	284
Funds	-625	-577
Other assets and liabilities	-284	-287
Net invested capital	5,358	5,553
Group Shareholders' equity	2,652	2,634
Net Financial Position	2,706	2,919
Total Funds	5,358	5,553
	* Restated

NETWORKS WASTE MARKET P&L CASHFLOW &