Iren — Investor Presentation 2022

Nov 3, 2022

9M 2022 RESULTS

November 3rd, 2022

Key Highlights

EBITDA +4% yoy, driven by renewables and waste treatment plants

Gross Investments 1.8x yoy, in line with 10-year Business Plan growth path

Effectiveness in offsetting the several headwinds and the severe scenario volatility

Trade NWC optimized and under control

FY 2022 Guidance confirmed with particular commitment on credit ratios

KEY FINANCIALS

NETWORKS WASTE MARKET EBITDA -

REMARKS HIGHLIGHTS ESG ENERGY ANNEXES

Growth in a sustainable direction

ACHIEVEMENTS

Strong investments supporting EBITDA resilience

* 9M '21 affected by €32M of non-recurring tax income on the realignment of accounting and tax values and by €12M of pre-tax positive one-off effect linked to Unieco debt optimization; 9M '22 impacted by "Contributo di solidarietà" Decree (i.e. Windfall tax) for estimated €31M following the new guidelines issued by the Italian Fiscal Authority in June 2022 ** FY 2021

RAB expansion offset by WACC reduction and operational costs

• 7% RAB expansion led by water and electricity businesses
• Negative impact of WACC revision accounted for -10€M overall
• Higher operational costs in water and gas businesses, which will be recovered in tariffs in the coming years also thanks to inflation adjustments
• Districtization activities on water cycle continued, reaching 63%+ of the grid (vs. 58% in 9M '21)

NETWORKS NETWORKS

Waste treatment facilities continue to drive the BU's growth

• Higher prices and volumes in recovered material and waste intermediation
• Favourable contribution (+6€M) from biodigesters and biomethane production, started in H2 '21
• Collection affected by rising operational costs (mainly fuel), which will be recovered in the coming years partially counterbalanced by SEI Toscana consolidation (from July '22)

NETWORKS WASTE

REMARKS ESG ENERGY ANNEXES KEY FINANCIALS

NETWORKS WASTE MARKET EBITDA -

RES and Cogeneration assets offsetting drought impact

• Photovoltaic assets acquisition contributing for 44€M slightly reduced by DL Sostegni ter (-4€M)
• Hydro volumes down -39% (-396GWh), impacting also revenues from Green Certificates partially offset by higher MSD
• Capacity market (+51€M) along with an overall flat MSD (70€M)
• Lower thermoelectric margins due to a turbine failure and cooling water scarcity
• Margin normalization on heat (recovering last 2 years contraction) affected by seasonality
• Growth path confirmed in Iren Smart Solutions activities (energy efficiency)

NETWORKS ENERGY

KEY FINANCIALS

• Electricity margins' strong contraction led by higher than expected unhedged volumes (~20%) due to less effective natural hedging (absence of hydro production) in combination with lower churn and spikes in summer consumption. Opportunistic wholesale transaction to partially offset negative commodity margins
• The gas sector performance at -11€M, as already reported in H1 results
• Customer base stands at 2.215k clients (+212k clients vs end of 2021)
• Positive performance of Iren Plus thanks to higher sales volumes

KEY FINANCIALS

EBITDA to Group Net Profit reconciliation

(€M)
	9M '21	9M '22	Δ	Δ%
EBITDA	730,8	759,3	28,5	3,9%
D&A	-345,2	-390 2 ,
Provisions to bad debt	-44,6	-52 1 ,
Other provisions and write-downs	-6,2	7 3 ,
EBIT	334,8	324,3	-10,5	-3,1%
Financial charges	-48,2	-51 7 ,
Companies consolidated at equity method	4,7	5 9 ,
Others	22,3	1 4 ,
EBT	313,6	279,9	-33,7	-10,8%
Taxes	-51,5	-112 0 ,
Minorities	-21,6	-30 1 ,
Group net profit	240,5	137,8	-102,7	-42,7%
Group net profit adjusted*	200,0	168,0	-32,0	-15,8%

• Higher depreciation as a result of acquisitions and new industrial investments carried-out during the period
• Increase of provisions for bad debt linked to doubling of revenues; so far, no significant deterioration in past due receivables
• Release of legal provisions following claims' settlement (already accounted in H1)

Average cost of debt down to 1.6% vs 1.7% in 9M 2021

• 2021 Others item affected by Unieco debt optimization for 12€M (pre-tax)
• 31€M estimated full-year impact of "Contributo di solidarietà" decree (i.e. Windfall tax)
• Ordinary tax rate at 29.1% (vs. actual 40%)

* 9M '21 affected by €32M of non-recurring tax income on the realignment of accounting and tax values and by €12M of pre-tax positive one-off effect linked to Unieco debt optimization

KEY FINANCIALS

NETWORKS WASTE MARKET EBITDA - REMARKS ESG ENERGY ANNEXES

Net Financial Position Evolution (9M 2022 vs FY2021)

• Net capex increase in line with growth path outlined in the 10-year Business Plan
• M&A mainly includes photovoltaic acquisitions and the impact of SEI Toscana consolidation
• Gas storage increased by 290€M vs FY21 as a result of higher volumes (+14% vs. 9M '21) and prices
• Trade NWC increased only by 80€M; remaining variation (60€M) mostly linked to temporary regulation impact (i.e., elimination of system charges)

HIGHLIGHTS

Further actions put in place to counterbalance headwinds and to strengthen the capital structure

Active energy management

• Gas procurement at 80% of Iren annual needs (~2.4Bcm) already secured, of which 100% for final clients. 244Mmc of gas stored (+14% vs 9M 2021)
• Active WC management through optimized payment and collection terms

Inflation recovery

• Organic growth and synergies to contain impact of increased operating costs resulting from inflation
• In regulated businesses, inflation on capex and opex to be recovered within next few years. RAB to be revalued in 2023 and 2024, taking into account the higher deflator of investments

No exposure to margin calls on energy derivatives

• No significant exposure to margin calls
• In Q1 Iren sterilized all EEX positions; no further meaningful EEX activities thereafter
• All hedging positions currently on OTC benefiting from contracts with no cash collateral required

Solid liquidity and overall capital structure

• 990€M of available liquidity (cash and committed lines)
• 384€M of bond maturities by year-end (53€M in '23)
• 630€M of new green credit lines subscribed
• Additional uncommitted lines / hot money available to support energy activities and to further strengthen Iren liquidity position
• 5,0 years of average long-term debt duration and 1.6% average cost of debt

KEY FINANCIALS

NETWORKS WASTE MARKET EBITDA -

NET PROFIT NFP CLOSING REMARKS HIGHLIGHTS ESG ENERGY ANNEXES

Closing Remarks

Reinforced commitment towards investments supporting the energy transition Business plan targets achieved ahead of time on green transition (renewables) and local presence (inhabitants served in waste collection)

Continuous sound financial discipline and efficient working capital management

• Continuously volatile energy scenario leading to a very challenging Q4 ahead
• The stop on repricing activities is expected to be compensated in 2022 thanks to a stronger estimated margin contribution from the Energy and Waste BUs
• Strong commitment to preserve the NFP/EBITDA ratio: any EBITDA shortfall to be offset through corrective actions to contain leverage

FY 2022 GUIDANCE CONFIRMED

• Investments prioritization to favor EBITDA growth in the short term

KEY FINANCIALS

NETWORKS WASTE MARKET EBITDA -

NET PROFIT NFP CLOSING REMARKS ESG ENERGY ANNEXES

ANNEXES

Iren at a glance

7million INHABITANTS IN IREN'S 3 LEGACY REGIONS

14

FINANCIALS

KEY

NETWORKS WASTE MARKET EBITDA -

NET PROFIT NFP CLOSING REMARKS HIGHLIGHTS ESG ENERGY ANNEXES

9M 2022 Business units' results

NETWORKS
€M	9M '21	9M '22	Δ	Δ%
Revenues	690	832	142	20%
Ebitda	290	292	2	1%
Electricity	63	57	-6	-10%
Gas	69	60	-9	-13%
Water	158	175	17	11%
Ebit	146	142	-4	-3%
Gross Capex	185	222	37	20%

	ENERGY					MARKET
€M	9M '21	9M '22	Δ	Δ%
Revenues	1.214	3.394	2180	(*)
Ebitda	170	260	90	53%
Hydro&Renewables	61	78	17	28%
Thermo/Coge, DH	95	152	57	60%
Energy efficiency	14	30	16	(*)
Ebit	66	158	92	(*)
Gross Capex	107	105	-2	-2%

WASTE
€M	9M '21	9M '22	Δ	Δ%
Revenues	667	784	117	18%
Ebitda	164	197	33	20%
Collection	48	42	-6	-13%
Treatment & disposal	116	155	39	34%
Ebit	81	99	18	22%
Gross Capex	103	118	15	14%

€M	9M '21	9M '22	Δ	Δ%
Revenues	1.747	4.110	2.363	(*)
Ebitda	104	7	-97	-93%
Electricity	16	-74	-90	(*)
Gas&Heat	88	81	-7	-8%
Ebit	41	-76	-117	(*)
Gross Capex	44	61	17	39%

REMARKS HIGHLIGHTS ESG ENERGY ANNEXES KEY FINANCIALS

NETWORKS WASTE MARKET EBITDA -

(*) Variation greater than 100%

Financials

88% of gross debt at fixed interest rate

• Average long-term debt duration of about 5.0 years vs 5.7 years in 9M '21
• Reduction in the average cost of debt (1.6% vs. 1.7% in 9M '21)
• 68% of the Iren total debt is composed of green and assimilated instruments

- BBB	Outlook Positive
BBB	Outlook Stable

NETWORKS WASTE MARKET EBITDA -

Industrial KPIs

	9M '21	9M '22	Δ%
Electricity distributed (GWh)	2,733	2,787	+2%
Gas distributed (mcm)	895	785	-12%
Water distributed (mcm)	130	126	-3%
Waste collected (Kton)	1,242	1,341	+8%
Waste treated (Kton)	2,119	2,094	-1%
Renewable production (GWh)	1,020	785	-23%
Hydro production (GWh)	1,003	608	-39%
Solar production (GWh)	17	177	(*)
Total customers (k)	1,989	2,215	+9%
Electricity	1,036	1,182	+8%
Gas	953	1,033	+14%
			(*) Variation greater than 100%

Scenario

	9M '21	9M '22	Δ%
Gas Demand (bcm)	47.7	49.0	2.7%
PSV €/000 scm	30.1	130.7	(*)
Energy Demand (Twh)	239.0	240.9	0.8%
PUN (€/Mwh)	86.1	322.9	(*)
CO2 €/Ton	48.2	82.1	70.3%
Green Cert. Hydro (€/Mwh)	109.4	42.9	-60.8%
TEE (€/TEE)	260	257	-1.2%

(*) Variation greater than 100%

NETWORKS WASTE MARKET EBITDA - REMARKS HIGHLIGHTS ESG ENERGY ANNEXES

Disclaimer

The Manager in charge of drawing up the corporate accounting documents and the Chief Financial Officer of IREN S.p.A., Ms. Anna Tanganelli, 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.

NETWORKS WASTE MARKET EBITDA -