Slide 1: Drawing the future: Business plan to 2019
Drawing the future Business plan to 2019
Slide 2: Index
Index Hera Business plan up to 2019 Annex Strategy framework 05 2014 ADJ. and Assumptions 23 Growth Drivers 06 Ebit breakdown by ASA 24 Internal Growth 07 Financial strategy 25 External Growth 09 Sustainability KPIs 26 Hera key strengths 10 Disclaimer 27 Business strategic framework 12 Ebitda by ASA
Slide 3: Our ambitions: strategic framework
Our ambitions Goals Strategic framework Continue growth Scenario through consolidation Multi-utility Platform Scenario’s change Operational excellence Low interest rates Economic recovery Pursue Efficiency Leverage innovation Low inflation Sector’s change Enhance efficiency Consolidation “momentum”
Slide 4: Growing with our two Pillars model
Growing with our “two Pillars” model Ebitda 5Y growth (M€) Internal growth: +118M€ External growth: +126M€ +112 1,030 +21 +14 +97 868 841 (30) (25) (27) 2014 One offs 2014 Adj. Org. G. Synergy Incentives Wacc Gas Mergers E2019 on Renew. review Tenders Proven track record, low risk, higher visibility
Slide 5: Internal growth levers: Efficiency, Synergies and Org. growth
“Internal growth” levers: Efficiency, Synergies and Org. growth Resource&Process efficiency Property RAB dev. (M€) (B€) +72 3.0 17 2.9 9 8 15 Resource efficiency 23 Asset Base RAB '14 '19 +72m€ Special Waste exp. HR Optmiz Maint Procur Cost to Total (Mton) ation enance ament serve Effic. 3,2 Process
Slide 6: Internal growth highlights the value creation of Hera
“Internal growth” highlights the value creation of Hera as for ‘14 perimeter ROl & value creation EPS growth and ROE (c€, %) (%) 6,8% 7,2% +0.7 ROI 8.5% 5,3% 12.4 8.1% 5,0% 10.0 Value creation 6.5% Value creationReg. WACC 5.7% 2014* E2019 Reg. Ke '14 ROE '14* Reg. Ke E'19 ROE E'19 2014* E2019 EPS EP
Slide 7: External growth potential to deploy Hera's model
External growth potential to deploy Hera’s model Mergers Tenders Acquisitions of multi-utilities Gas distib. Waste collection Energy supply Waste treat. . Market ~ 700 220 ̴ 400 ̴ 250 ~ 600 fragmentation Enabler • Government incentives • Compulsory at national level • Increased • Competition • Munic
Slide 8: Solid premises to deploy Hera's accretive model
Solid premises to deploy Hera’s accretive model with “visible targets” Business plan external growth Ebitda targets (M€) Potential Business plan Merger value creation: Synergies MERGER 11 Targets +112M€ Ebitda (Ebitda increase M€, years post merger) in ref. territory 4 Targets 177 ATEMs at 13 ATEMs
Slide 9: M&A targets rely on a solid 12-year track record
M&A targets rely on a solid-12 year track record Annual average Ebitda contribution from M&A (M€) +22.8 +22.4 12Y Track record Next 5y Visible targets, aiming at even better ones GRUPPOHERA 11
Slide 10: Building up value leveraging upon our strengths
Building up value leveraging upon our strengths Effective Competitive Know how organization commercial offers Efficiency Growth Economies Strategy Large retail of scale customer base Excellence Innovation Strong governance Plant building & Modern IT platform & financial strength mgmt expertise Chang
Slide 11: Above 1 Billion Ebitda growth comes from core businesses
Above 1 Billion Ebitda growth comes from core businesses Ebitda by strategic area (M€) 1,030 +60 +26 +9 868 31 45% 841 +94 22 214 (27) 22 188 188 E2019 47% 302 2014 242 242 55% 53% 483 416 389 2014 Rep. Adj. 2014 Adj. Networks Waste Energy Other E2019 Regulated activities Free market competition Mai
Slide 12: Sensitivity analysis on key drivers
Sensitivity analysis on key drivers Sensitivity to oil prices Sensitivity to GDP (dollar per barrel impact in M€, % impact on Group Ebitda) (plus or minus 1%, impact in M€, % impact on Group Ebitda) GROUP EBITDA GROUP EBITDA 1$/Barrel 0.05M€ 1% 4.00M€ (0.01%) (0.5%) Sensitivity to Gas prices Sensiti
Slide 13: Authority rationale to review regulatory WACC
Wacc review reflects macroscenario positive changes Wacc review by activity Authority WACC review Reg. Concession ‘15 Reg. WACC ‘16 Reg. period length Returns review Returns Water ‘16-’17 ~2024 6.1%* (0.7%) 5.3%* ̴ (25 M€) impact Gas distribution ‘16-’18 2016-2019 6.9% (0.8%) 6.1% Electricity distri
Slide 14: NETWORKS: low risk cash generator
NETWORKS: low risk cash generator Ebitda growth drivers 5Y Capex plan: 55% of 2014 property RAB (M€) (M€) 1,611 483 +53 73 +42 +14 416 +10 306 389 (25) 68 (27) 1.166 2015 2016 2017 2018 2019 '14 Rep. Adj. '14 Adj. Syn. Org. G. Wacc Tender M&A E'19 Maintenance Developm. Tenders M&A PDR/Employee RAB e
Slide 15: WASTE: a further expansion of presence at national level
WASTE: a further expansion of presence at national level Ebitda growth drivers Cumulated Capital expenditures (M€) (M€) +62 +23 302 457 33 239 242 +5 104 (30) 320 2013 2014 Synergies Org. Incentives M&A E2019 2015 2016 2017 2018 2019 growth Maint. Developm. M&A Expected demand increase for S.W. trea
Slide 16: ENERGY: keeping low risk profile
ENERGY: keeping low risk profile ENERGY Ebitda growth factors Gas Ebitda growth factors (M€) (M€) +22 136 124 +20 214 +6 188 +22 (16) (16) 2014 Mkt Mkt External G. E2019 2014 Mkt Mkt External G. E2019 Competition Expansion competition Expansion Electricity Ebitda growth factors Business / Retail ele
Slide 17: The 3R approach to sustainability
The 3R approach to sustainability 65% sorted collection Food, Bio- Bio-methane gas Waste recovery 94% 3R Technical vehicles, Furniture, Furniture, Pharmaceuticals REDUCE Energy efficiency, Landfill diversion, Operation process re- re-engineering Exploring innovative sustainability paths GRUPPOHERA 1
Slide 18: The capital expenditures
The capital expenditures Capex breakdown by driver Regulated/liberalised (M€) (%) Liberalised +418 2.222 172 22% +1,632 78% 332 Regulated Maint. Developm. Tenders/ M&A Capex '15-'19 Capex breakdown by business Cum. capex and cash flows before dividends (M€) (M€) +2.954 +75 2.222 +79 2.222 +457 +1,61
Slide 19: Financial highlights
Financial highlights EPS growth Return on invested capital & value creation (cumulated increase % ) (%) E’19 ROE: 7.2% +30% +0.85% 8.2% 8.1% +22,4% (0.75%) +16,7% Past 5Y Next 5Y 2014* Wacc review Value E2019 Plan Ires cut creation Debt/Ebitda decrease enhance flexibility FFO/Net Debt and current ra
Slide 20: Closing remarks
Closing remarks Targeting a further constant growth in line with track records compensating re- basement of regulated returns maintaining our peculiar low risk profile. Scenario improvement underpins better “visibility” on targets of the internal growth and the external growth, the 2 proven “pillars
Slide 21: Annex
ANNEX For further information please contact the Investor Relation team ir@gruppohera.it
Slide 22: 2014 Adjustments and Business Plan assumptions
2014 Adjustments and Business Plan assumptions FY2014 Ebitda Adjustments 867,8 (9.9) 840,9 (6.3) • Tariff • Tariff Adjustement (10.7) Adjustement • Specific • White Certificates equalization revaluation • White Certificates revaluation Ebitda Reported Water Gas distribution EE distribution Ebitda Ad
Slide 23: Consolidated Group Ebit target
Consolidated Group Ebit target Ebit by strategic area (M€) Ebit 2014* Ebit E2019 6 15 109 139 180 204 414 M€ 498 M€ 120 140 Networks Energy Waste * Adjusted for positive one offs: 27 m€ GRUPPOHERA 24
Slide 24: Financial strategy
Financial strategy Refinancing needs to 2019 Pursuing balanced interest nature (M€) (M€) 3,460.0 2.333,7 33% Rates 545,7 67% 283,5 68,1 49,4 179,6 2015 2016 2017 2018 2019 Post plan Total Variable Fixed Hera Group financial strategy • Maintain financial liabilities homogeneous with investment time h
Slide 25: Sustainable development
Sustainable development Electricity production - renewable CO2 emission avoided (GWhe) (Ton) 536 549 557 2014 E2016 E2019 7 7 8 434 437 432 2 2 2 23 22 23 60 68 81 11 11 11 (269.519) 2014 E2016 E2019 (281.524) (285.126) Solar Biogas Digesters Hydro WTE Depuration Thermal energy production - renewabl
Slide 26: Disclaimer
Disclaimer This presentation contains forward-looking statements regarding future events (which impact the Hera Group’s future results) that are based on current expectations, estimates and opinions of management. These forward-looking statements are subject to risks, uncertainties and events that a