Acea S.p.a. · MIL:ACE
Acea — Investor Presentation (April 2019)
51 slides from Acea's investor presentation, Apr 2, 2019
Slide 1: Acea Group Business Plan 2019-2022
Acea Group Business Plan 2019-2022 Triennale Milan - April 2nd, 2019
Slide 2: Agenda
ACEA Group Agenda ACEA TODAY: Challenges of today and tomorrow MARKET SCENARIO AND TRENDS BUSINESS PLAN 2019-2022 STRATEGY AND TARGETS BUSINESS LINE HIGHLIGHTS STRATEGIC OPPORTUNITIES CLOSING REMARKS ? Q&A ANNEX MIL 190401 - Piano Industriale 201 ... 2
Slide 3: Reached 2018 targets with double digit growth
is speeding up… …reached 2018 targets with double digit growth vs 2017 EBITDA €933M +11% Guidance 3-5%, IIQ >5%, IIIQ >6% Net Income €271M +50% Capex €631M +99M NFP €2,568M NFP/EBITDA 2.8x
Slide 4: Acea Today: Leader in the multi-utility market
ACEA Group Acea Today Leader in the multi-utility market 2018 EBITDA Commercial & Water Trading 933M€ 1° Italian With 9 EBITDA 2018 Among with 6 TWh player millions the main of electricity sold in the water customers national players supply sector served in Lazio, in the energy Tuscany, Umbria marke
Slide 5: Main market trends in the multi-utility sector
ACEA Group Market Scenario and Trends Main market trends in the multi-utility sector Decarbonization Distributed • Production from renewables will Generation grow from 35% (2017) to 55% • High growth of self-consumption (2030), also pushed by «grid Digitalization based on PV and cogeneration parity»
Slide 6: Strong awareness of our ability to outperform again
Challenges of today and tomorrow for Strong awareness of our ability to outperform again Target 2020: €1.1B New Plan 19-22 EBITDA 2022: €1.3B Targets already outperformed Outperfomed 2018 Results EBITDA 2018: €933M 2019 target Committed with challenging targets 2019: €916M EBITDA Old Plan 18-22 2020
Slide 7: Pillars of the Business Plan 2018-22
ACEA Group Strategy and Targets Pillars of the Business Plan 2018-22 … Business Plan 2018-2022 Technology, Industrial Local focus & Operational Innovation and Growth Sustainability Efficiency Quality • Infrastructural • Sustainable • Research & • Capex discipline development development innovation a
Slide 8: Evolved into GRIDS
ACEA Group Strategy and Targets …evolved into… GRIDS INDUSTRIAL TECHNOLOGY, OPERATIONAL LOCAL FOCUS GROWTH INNOVATION AND EFFICIENCY QUALITY Grow Smart Innovate services Reshape Deliver GGrow RReshape I Innovate DDeliver SSmart ! MIL 190401 - Piano Industriale 201 ... 8
Slide 9: Strong and sustainable growth
ACEA Group Strategy and Targets Strong and sustainable growth pre-tax ROIC 2018 2020 2022 11.0% >10% >11% EBITDA growth with +8.0% CAGR NFP/EBITDA down to 2.9X €M Multiple New BP Old BP Net NFP Income CAPEX €4.0B RAB up ~30% by 2022 CAPEX old plan €3.1B €B €B Gori ATO2, ATO5 e Areti ATO2, ATO5 e Are
Slide 10: Outperformed previous business plan EBITDA targets
ACEA Group Strategy and Targets Outperformed previous business plan EBITDA targets CAGR 8.0% CAGR 7.7% CAGR 8.3% €M Cross-business line actions Performance improvement and cost efficiency + Generational turnover + Strengthening operations Water Energy Infrastr. Comm. & Trading Environment • Tariff i
Slide 11: EBITDA CAGR 3 p.p. higher than old business plan
ACEA Group Strategy and Targets EBITDA CAGR 3 p.p. higher than old business plan CAGR 5.9% €M Old BP New business plan EBITDA CAGR 3 p.p. higher than CAGR 8.8% previous business plan (assuming €M equal starting point) New BP MIL 190401 - Piano Industriale 201 ... 11
Slide 12: Additional €900M investments
ACEA Group Strategy and Targets Additional €900M investments Cumulative 2018-2022 Highlights €B €M (approx.) Gori consolidation and +250 additional investments (Peschiera/Marcio) PV growth with M&A and +200 greenfield developments Innovation, Resiliency +250 and modernization related investments Reg
Slide 13: Innovation and Industry 4.0
ACEA Group Strategy and Targets Innovation and Industry 4.0 Digital channels 60% of LV/MV development secondary cabins 600k Smart Meter enabled with (Power) remote-control 1 500k+ Smart Meter Reached 40% of (Water) long-term goals for automated secondary cabins 10MW UVAM Smart Tor di Valle Recruitin
Slide 14: Sustainability growth
ACEA Group Strategy and Targets Sustainability growth Additional €400M sustainability- CO2 Reduction >200 linked capex bring our Sustainability (Reduced losses, Purchase of kton effort to €1.7B overall Green Energy, Biogas Recovery) Recovering materials and energy in a Circular Economy perspective +
Slide 15: Growing dividends vs previous business plan
ACEA Group Strategy and Targets Growing dividends vs previous business plan Growing €800M of dividends 0.75 minimum dividends vs old throughout the plan, dividend per share business plan +€100M vs old from 2020 business plan Dividend per share €/share MIL 190401 - Piano Industriale 201 ... 15
Slide 16: Financial strategy
ACEA Group Strategy and Targets Financial strategy Highlights Net Financial Position €B NFP/EBITDA Working Capital Improved working 2,8 capital absorption x (~€30M/year) Rating 2.8x 2.8x 3.0x 2.9x BBB+ Baa2 Stable outlook Stable outlook NFP Debt Situation at 31/12/2018 • Average maturity ~5.8 yrs •
Slide 17: Water
Water Business Line Highlights
Slide 18: Development of a Smart Water Company
ACEA Group Water Business Line Key Actions Implementation of old BP strategic initiatives 500k+ smart water meter and projects Development for water network districtization of a Smart Focus on preservation of water, with development of a dedicated structure Water Rationalization of 35+ small purific
Slide 19: Water Business Line Key Financials
ACEA Group Water Business Line Key Financials CAGR 8.0% €M CAGR 10.1% CAGR 5.9% EBITDA Pescara Gas Including Gori on a yearly basis (+45M€) Old Plan ATO2, ATO5, Gori €B €B INVESTMENTS RAB MIL 190401 - Piano Industriale 201 ... 19
Slide 20: Business Line Highlights
Business Line Highlights
Slide 21: Main actor of the energy transition
ACEA Group Energy Infrastructure Key Actions Main actor of the 600k smart meters roll-out start energy transition 100+ M€ for Resiliency for electricity supply continuity vs Authority guidelines with projects enabling the 150MW PV between grid parity and decarbonization M&A on the secondary market o
Slide 22: Energy Infrastructure Key Financials
ACEA Group Energy Infrastructure Key Financials CAGR 5.1% €M CAGR 6.3% CAGR 3.9% EBITDA Old Plan Distribution €B €B Metering INVESTMENTS RAB MIL 190401 - Piano Industriale 201 ... 22
Slide 23: Commercial and Trading
Commercial and Trading Business Line Highlights
Slide 24: Growth of retail portfolio, improvement of service quality
ACEA Group Commercial and Trading Key Initiatives Growth of retail Strong commercial boost (3x vs. 2018) supported by a new offering model portfolio, Increase of share of pull commercial channels (e.g. Shop, Branch and Digital) up improvement of to 50% service quality Strengthening of digital channe
Slide 25: Commercial and Trading Key Financials
ACEA Group Commercial and Trading Key Financials CAGR 19.3% €M CAGR 8.2% CAGR 31.4% EBITDA Old Plan Power Mkt | Maggior Tutela CUSTOMER BASE €M Millions Power Mkt | Free INVESTMENTS Gas *Investments include Commissioning Capitalizations IFRS15 MIL 190401 - Piano Industriale 201 ... 25
Slide 26: Environment
Environment Business Line Highlights
Slide 27: Acceleration of plant development
ACEA Group Environment Key Actions Implementation of old BP strategic initiatives Doubling of treated waste (2.2 Mton Acceleration of target) with new plant development (e.g., organic fraction, liquid / sludge treatment, plant multi-material) development M&A and development in a Circular Economy per
Slide 28: Environment Key Financials
ACEA Group Environment Key Financials CAGR 3.9% €M CAGR -9.8% CAGR 19.6% EBITDA Old Pian €B Mton INVESTMENTS VOLUMES MIL 190401 - Piano Industriale 201 ... 28
Slide 29: Strategic Opportunities
Strategic Opportunities Potential Business Plan Upsides
Slide 30: Potential initiatives to be implemented
ACEA Group Strategic Opportunities Potential initiatives to be implemented EBITDA (€M) Investments (€M) Gas Growth in the gas distribution Distribution market with selected 5-20 35-110 acquisition and ATEM tenders ESCO acquisitions and Smart Energy cogeneration / trigeneration Efficiency pilots and
Slide 31: €0.2B potential upside 2022
ACEA Group Strategic Opportunities €0.2B potential upside 2022 Strategic Initiatives Full Potential EBITDA Target €B MIL 190401 - Piano Industriale 201 ... 31
Slide 32: Closing Remarks
ACEA Group Closing Remarks Old plan targets reached two years in advance Old plan targets reached two years in advance EBITDA CAGR of 8.8% vs 5,9% old BP (equal starting point) with new 2022 target set to €1.3B €4B investments (+ €0,9B vs old BP) with M&A growth RAB up to ~ €5B NFP/EBITDA ratio unde
Slide 33: Q&A Session
ACEA Group Acea Group Business Plan 2019-2022 Triennale Milan - 2nd April, 2019 Q&A Session MIL 190401 - Piano Industriale 201 ... 33
Slide 34: Appendix
ACEA Group APPENDIX
Slide 35: Key Assumptions
2019-2022 Business Plan ACEA Group Key Assumptions Assumptions 2019 2020 2021 2022 Exchange $/€ 1.17 1.18 1.18 1.18 Brent $/Bbl 76.71 71.67 68.61 67.41 PUN €/MWh 65.97 60.62 55.10 56.09 EU-ETS €/tons CO2 21.33 19.74 17.67 17.85 CIP6 €/MWh 237.20 • 35
Slide 36: 2018 Results
ACEA Group TITOLO 2018 Results CAPITOLO TITOLO PRESENTAZIONE / Luogo e data
Slide 37: 2018 financial highlights
2018 financial highlights ACEA Group Group beats targets for 2018 (€m) 2018 2017 % change (a) (b) (a/b) Consolidated revenue 3,028.5 2,797.0 +8.3% Organic growth of 7.7% to €905m EBITDA 933.2* 840.0 +11.1% EBIT 478.6 359.9 +33.0% Plan target achieved 12 months earlier than expected Group net profit
Slide 38: EBITDA by business segment and EBITDA bridge
EBITDA by business segment and EBITDA bridge ACEA Group EBITDA - Strong growth in regulated businesses 71 28 1 921 12 933 (€m) 840 (2) (17) 2017 EBITDA Water Energy Commercial & Environment Other* 2018 Gori (consolidated 2018 EBITDA Infrastructure Trading line-by-line in last two months of 2018) EBI
Slide 39: Water: EBITDA and quantitative data
EBITDA and quantitative data ACEA Group 2018 financial highlights STRONG EBITDA GROWTH KEY HIGHLIGHTS Water Acea ATO2: +€50m Tariff reviews completed in most companies ATO2: quality bonus €34m Increase in collections at ATO2 due to EBITDA main drivers Acea ATO5: +€4m optimised collection strateg
Slide 40: Energy Infrastructure: EBITDA and quantitative data
EBITDA and quantitative data ACEA Group 2018 financial highlights Energy KEY HIGHLIGHTS Infrastructure EBITDA GROWTH Distribution: +€29.8m Improved performance due to regulatory EBITDA main drivers impact Generation: +€7.7m increased hydroelectric and Over 500 km of MV/LV grid renewed thermoelec
Slide 41: Commercial and Trading: EBITDA and quantitative data
EBITDA and quantitative data ACEA Group 2018 financial highlights Commercial and Trading KEY HIGHLIGHTS EBITDA main drivers Fall in customer base in Enhanced Protection Reduced margin from Free market market and growth in Free market customers Stable margin from Enhanced Protection Reduced inbou
Slide 42: Environment: EBITDA and quantitative data
EBITDA and quantitative data ACEA Group 2018 financial highlights Environment EBITDA SLIGHTLY UP KEY HIGHLIGHTS EBITDA main drivers Acea Ambiente: +€2.1m Re-start of Aprilia and Sabaudia plants Work in progress on Monterotondo plant Iseco: +€0.3m Increased contribution from WTE due to increase
Slide 43: Overseas, Engineering & Services, Holding
EBITDA and quantitative data ACEA Group 2018 financial highlights Overseas Positive contribution from Aguas Engineering Increase in engineering. research de San Pedro and innovation activities for & Services Group companies 2018 2017 %change 2018 2017 %change (€m) (a) (b) (a/b) (€m) (a) (b) (a/b) EB
Slide 44: EBIT and Net profit
EBIT and Net profit ACEA Group EBIT (€m) (€m) 2018 2017 % change Increased depreciation linked to increased capex Depreciation 366.8 328.9 +11.5% (including IT assets with shorter useful lives) 478.6 Write-downs 75.1 90.4 -16.9% Reduced credit losses, in part due to write-downs of amounts due fr
Slide 45: Capex
Capex ACEA Group Strong capex growth, above all in regulated businesses CAPEX (€m) 29 5 2 631 58* 5 532 2017 Water Energy Commercial & Environment Other** 2018 Infrastructure Trading Capex 330 238 25 20 18 • Repair and widening • Upgrade and • Capitalisation of agents’ • Work on Terni and San of wat
Slide 46: Cash flow
Cash flow ACEA Group Significant improvement in working capital in Q4 2018 2018 2017 EBITDA 933 840 Excellent credit collection performance Change in working capital (37) (126) Measures designed to optimise working capital CAPEX (631) (532) FREE CASH FLOW 265 182 Q4 2018 registered following improve
Slide 47: Net debt
ACEA Group Net debt Ahead of guidance 31 Dec 2018 30 Sep 2018 31 Dec 2017 Change Change (€m) (a) (b) (c) (a-b) (a-c) Net debt 2,568.0 2,631.1 2,421.5 (63.1) 146.5 Medium/Long-term 3,341.4 3,359.9 2,706.6 (18.5) 634.8 Short-term (773.4) (728.8) (285.1) (44.6) (488.3) NET DEBT/ EQUITY NET DEBT/ EQUITY
Slide 48: Regulatory framework
ACEA Group Regulatory framework - Water TITOLO - Electricity distribution CAPITOLO TITOLO PRESENTAZIONE / Luogo e data
Slide 49: Water: regulation
ACEA Group Water: regulation ARERA RESOLUTION 664/2015 ARERA RESOLUTION 918/2017 – Biennial revision of tariff arrangements for integrated water services (2018-2019) REGULATORY PERIOD: FOUR YEARS 2016-2019 The duration of the regulatory period has been set at four years, with biennial revision 2
Slide 50: Electricity Distribution
Electricity Distribution ACEA Group ARERA RESOLUTION 654/2015 tariff general framework ARERA RESOLUTION 583/2015 WACC ARERA RESOLUTION 646/2015 Quality of electricity distribution and metering service and output based regulation ARERA RESOLUTION 639/2018 WACC update REGULATORY PERIOD: EIGHT YEARS 20
Slide 51: Disclaimer
ACEA Group Disclaimer THIS PRESENTATION CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS THAT REFLECT THE COMPANY’S MANAGEMENT’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND FINANCIAL AND OPERATIONAL PERFORMANCE OF THE COMPANY AND ITS SUBSIDIARIES. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON ACEA S.