Iren — Investor Presentation 2020

May 12, 2020

12th May 2020

1Q 2020 Results in line with previous year despite a difficult scenario

m€	1Q '19	1Q '20	Δ	Δ%
Revenues	1.278	1.077	-201	-15,7%
Ebitda	274	274	0	0,1%
Ebit	172	146	-26	-15,3%
Group net profit	100	84	-16	-16,2%
Tech. Capex	85	130	45	52,0%

• Revenues -15.7%: decrease in the energy value chain revenues caused by lower volumes and prices.
• Ebitda 0.1%: margins normalization in market sector and the growth in networks and waste offset the lower prices and volumes in the energy business unit which was also affected by the absence of positive elements reported in 2019.
• Ebit -15.3%: higher depreciations related to investments and extraordinary provisions to bad debt related to COVID emergency.
• Net profit -16.2%: reflecting the Ebit downtrend despite an improved financial management.
• Tech. Capex +52.0%: acceleration in capex, also related to digital project, to sustain future organic growth and synergies.

Growth driven by investments NETWORKS

EBITDA BRIDGE

• • RAB growth combined with synergies led the 5% Ebitda increase.
• • The positive investments trend in water and electricity distribution continues, in line with the business plan assumptions leading to increase allowed revenues.
• Negative impact from regulation due to lower costs recognized in tariffs, mainly in water and gas sector.

OUTLOOK

EBITDA 2020 will be in slightly reduction compare to last year result, which benefited from water balances and other for 18m€.

3

1Q 2020 RESULTS

WASTE Collection activities supported the growth

• • Higher efficiency of collection activities.
• • Saturation of WTE plants, through the reorganization of flows.
• • Increase in waste management (3%) compared to 1Q 2019. Sorted waste collection equal to 68.2%, +0.9 bps vs FY2019.
• Lower PUN price affected the electricity sold.

ENERGY

+ Higher hydro volumes

• • Positive results in the ancillary services market (18m€, +100% vs last year)
• 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.
• Negative non-recurrent elements for 15m€.

MARKET Margins normalization thanks to commercial policy and hedging activities

• • Higher electricity retail volumes
• • Positive repricing commercial policy and hedging activities in electricity and gas sectors which led to a margin normalization
• • Customer base at 1.842m clients (+27k vs FY2019 of which 21k of SanremoLuce acquisition)
• Lower electricity volumes mainly in SMEs and Business segment
• Lower gas volumes to end clients due to the winter mild temperature

	1Q '19	1Q '20	Δ	Δ%
EBITDA	274.2	274.4	0.2	0.1%
D&A and others	-97.8	-106.9
Provisions to bad debt	-4.7	-22.0
EBIT	171.7	145.5	-26.2	-15.3%
Financial charges	-16.7	-15.2
Other financial	-3.1	-3.2
Companies cons with e.m.	-0.1	-0.2
Participations adjustment	0.0	-0.1
EBT	151.8	126.8	-25.0	-16.5%
Taxes	-45.3	-37.4
Minorities	-6.6	-5.6
Group net profit	99.9	83.8	-16.1	-16.2%

• Increase in depreciations related to capital intensive investments
• Higher provisions to bad debt mainly related to COVID emergency
• Lower financial charges mainly thanks to lower cost of debt despite the increase in gross debt

Stable tax-rate at 29.5%

• Slight increase in net financial position equal to 3.8% led by the worsening of the working capital and the capex growth according to business plan assumption.

• Derivatives: negative impact on debt caused by rates and commodities derivatives.

• 96% of gross debt at fixed interest rate and 4% of gross debt at variable interest rate.

• Average long-term debt duration of about 5.6 years vs 5.2 years in 1Q 2019.
• Reduction in the average cost of debt (2.2% vs. 2.6% in 1Q 2019).
• Sound liquidity after OLT disposal.

1Q 2020 Financials

• 200m€ of undrawn committed long term credit lines (120m€ BEI loans and 80m€ CEB loans).
• 500m€ uncommitted lines.

• Iren is the only Italian local multiutility to have issued 3 Green Bonds for a total size of 1.5b€.

• In light of the 1Q results, we confirm the effectiveness of our growth path, organic and external in our reference areas, in an energy scenario downturn also impacted by heat volumes reduction.

• Further scenario weakness led by the COVID emergency, is expected in the next 9 months affecting mainly the energy business unit, due to the downward trend in energy prices.
• We've revised our estimates related to COVID emergency under the assumption that the emergency situation will be over by the end of June but with negative impacts lasting over the second half of the year at least. We expect the Covid emergency to have the following side effects compared with our last business plan estimates:
• Ebitda impact for 25/30m€;
• Net working capital increase for around 80m€
• Credit losses for around 25m€
• We confirm our investments' plan for 2020 relying on the effectiveness of our medium/long terms targets.

GUIDANCE ON FY 2020
Ebitda: 880/890m€
NFP/Ebitda: 3.4/3.5x
Capex: ̴650m€

E B I T D A N E T W O R K S W A S T E E N E R G Y M A R K E T P & L C A S H F L O W & N F P F I N A N C I A L S C L O S I N G R E M A R K S A N N E X E S

1Q 2020 Business units' results

NETWORKS
m€	1Q '19	1Q '20	Δ	Δ%
Revenues	233	244	11	5%
Ebitda	85	89	4	5%
Electricity	18	19	1	6%
Gas	20	20	0	0%
Water	47	50	3	7%
Ebit	46	40	-6	-11%
Gross Capex	50	56	6	12%

m€	1Q '19	1Q '20	Δ	Δ%
Revenues	468	348	-120	-26%
Ebitda	116	87	-29	-25%
Hydro&Renewables	20	13	-7	-35%
Thermo/Coge, DH	94	73	-21	-22%
Energy efficiency	2	1	-1	-50%
Ebit	85	52	-33	-38%
Gross Capex	10	38	28	n.s.

WASTE
m€	1Q '19	1Q '20	Δ	Δ%
Revenues	175	179	4	2%
Ebitda	41	43	2	5%
Collection	13	15	2	15%
Treatment & disposal	28	28	0	0%
Ebit	19	19	0	0%
Gross Capex	7	16	9	n.s

	ENERGY
1Q '19	1Q '20	Δ	Δ%

	1Q '19	1Q '20	Δ%
Gas Demand (bcm)	25.5	23.9	-6.5%
TTF €/000 scm	195	103	-47.1%
PSV €/000 scm	220	120	-45.5%
Energy Demand (Twh)	80.3	77.0	-4.2%
PUN (€/Mwh)	59.4	39.6	-33.4%
CO2 €/Ton	22.2	22.8	2.6%
Green Cert. Hydro (€/Mwh)	92.1	99.1	7.5%
TEE (€/TEE)	259.9	265.0	2.0%

	FY '19	1Q '20
Net fixed assets	6,096	6,142
Net Working Capital	166	326
Funds	-625	-649
Other assets and liabilities	-280	-279
Net invested capital	5,357	5,540
Group Shareholders' equity	2,651	2,733
Net Financial Position	2,706	2,807
Total Funds	5,357	5,540

E B I T D A N E T W O R K S W A S T E E N E R G Y M A R K E T P & L C A S H F L O W & N F P F I N A N C I A L S C L O S I N G R E M A R K S A N N E X E S

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.