Slide 1: 2015 Results and 2016-2020 Business Plan
2015 Results 2016-2020 Business Plan Rome, 14 March 2016 ’’The future is now’’
Slide 2: Agenda
Agenda 2015 Results 2016-2020 Business Plan highlights Business Plan: Key Takeaways Closing remarks 2 Acea Group: 2015-2019 Business Plan
Slide 3: 2015 Results
2015 Results Acea Acea Group Group:2015 Results Business Plan 2016-2020 3
Slide 4: 2015 Financial highlights
2015 Financial highlights (€m) 2014 2015 Change % Revenue 3,038.3 2,917.3 -4.0% EBITDA 717.7 732.0 +2.0% Increased depreciation and amortisation (capex growth; EBIT 390.4 386.5 -1.0% growth intangible assets resulting from the entry in operation of Profit/(loss) before tax 289.8 296.4 +2.3% inform
Slide 5: 2015 EBITDA
2015 EBITDA Energy: -3.3% Water: +6.4% Main drivers 717.7 (€m) 732.0 Main drivers Efficiency. Electricity production: +€0.4m. Acea Ato2: tariff increase +16.7€m. Fall in energy prices and reduced volumes. Growth at companies consolidated using Consolidation of photovoltaic activity. equity method: +
Slide 6: 2015 Results: financial highlights
2015 Results: financial highlights 31 Dec 2014 30 Sept 2015 31 Dec 2015 Change Change (€m) (a) (b) (c-a) (c-b) (c) NET DEBT 2,089.1 2,130.8 2,010.1 (79.0) (120.7) Medium/Long-term 3,006.4 2,656.0 2,657.0 (349.4) 1.0 Short-term (917.3) (525.2) (646.9) 270.4 (121.7) NET DEBT/ NET DEBT/ SHAREHOLDER’S E
Slide 7: Status of receivables
Status of receivables Highlights from results 2013-2015 The process of improving the receivable management, begun in 2014, is currently in progress, but has brought significant results as of 31 December 2015. ACEA Group receivables 2015 vs 2013 Receivables Trade receivables Coverage ratio Exposure t
Slide 8: Status of receivables
Status of receivables Principal improvements already completed and implemented, such as to enable a significant increase in Group’s ability to generate cash, an objective partially met in 2015 Initiatives Initiatives LAUNCHED COMPLETED Date (Ongoing) Go-live/Status • Review of debt collection strate
Slide 9: 2016-2020 Business Plan highlights
2016-2020 Business Plan highlights Acea Group 14 Environment 20 Energy 23 Water 26 Grids 30 Corporate 33 9
Slide 10: Acea today
Acea today WATER ENERGY Leading operator in Italy One of the main Italian energy retailers ~ 42% of Group EBITDA Lazio, Tuscany, Umbria and Campania ~ 15% of Group EBITDA Water sold: 527 million m3 Electricity sold: over 9.4TWh Customers: nearly 9 million Customers: ~ 1.4 million Engineeri
Slide 11: Strategic Pillars
Strategic Pillars Maintaining our strategic pillars….. Balanced risk profile Organic growth 74% of EBITDA from regulated Focus on regulated businesses businesses at the end of the Plan New regulatory framework for 80% of investment in regulated electricity distribution and water businesses
Slide 12: Acea 2.0 – digital and technological transformation
Acea 2.0 – digital and technological transformation New corporate culture open to change Acea is revolutionising the way it goes about its business, making sizeable investments in digital technologies ~8,000,000 ~831 ~140,000 KM ~7,000 CUSTOMERS PLANTS OF NETWORKS EMPLOYEES ACEA 2.0 Programme: an am
Slide 13: Acea 2.0 Operation
Acea 2.0 Customers WEB Call Center Walk-in office App Social ACEA ATO2 TARGET SAP CRM INTEGRATED Processes REAL-TIME Operation Metering and Billing WorkForce Management SAP WFM SAP IS-U • Other Water Companies • ACEA Distribuzione • ACEA Public Lighting Operation • ACEA Energia Acea Group: 201
Slide 14: 2016-2020 Business Plan Acea Group
2016-2020 Business Plan Acea Group Acea Group: 2016-2020 Business Plan 14
Slide 15: Key highlights
Key highlights CONSOLIDATED TRACK RECORD OF EXCEEDING PREVIOUSLY ANNOUNCED TARGETS 2020 2015 Plan EBITDA (€m) 732 890 EBITDA CAGR 2015-2020: +4.0% NET PROFIT before non-controlling interests (€m) 182 276 NET DEBT (€m) 2,010 2,252 2020 Pre-tax ROIC: ~12% NET DEBT/EBITDA 2.7x 2.5x 3,606 4,244 DPS CAGR
Slide 16: EBITDA growth by business area
2016-2020 Business Plan EBITDA growth by business area €m CAGR: +4.0% Holding Roll-in Acea 2.0 Insourcing of activities 21 Redundancy plan 69 3 Corporate rationalisation 91 Optimisation of real estate 277 138 57 30 2020 Ebitda Environment 890 Completion of San Vittore plant 108 34 256
Slide 17: Acceleration of efficiencies identified
2016-2020 Business Plan Acceleration of efficiencies identified -100% Energy Launch of Acea2.0: Redesign of ~ €6m complaints process 5.5 Process costs 0 in €m 2015 2020 -18% Grids € per POD Digitalisation of network Efficiency-sensitive ~ €11m 25.6 Work Force Management 21.1 costs Single Ten
Slide 18: Capex optimization
Capex optimization Renewal and maintenance of grids, plants and IT systems and development of projects already authorised in Environment segment New Plan 2016-2020 €2.4bn Capex €2.4bn 43% Water 80% 428.9 20% 37% 156.2 Grids Unregulated Regulated 204.4 30.6 25.9 11.8 Old Plan 2015-2019 2015 2016 Plan
Slide 19: Debt Structure
Debt Structure Long-term debt life and a solid liquidity position Debt structure Rating (maturity and interest rates at 31 Dec 2015) > 72% Fixed rate 3% 29% 28% > Average overall cost 97% 71% BBB- BBB+ Baa2 72% 3.3% Stable Outlook Stable Outlook Stable Outlook > Average term to 2016-2017 Floating Ra
Slide 20: Environment
2016-2020 Business Plan Environment Acea Group: 2016-2020 Business Plan 20
Slide 21: Environment: Strategies, opportunities and risks
2016-2020 Business Plan Strategies, opportunities and risks (‘000 tons) 2015 2020 • Number 3 operator in Italy in 2020 WTE 354 553 • Completion of previously approved initiatives: Mechanical treatment - 355 Revamping line 1 of San Vittore WTE plant in Lazio Landfill 94 133 Construction of new co
Slide 22: Targets and Results
Targets and Results CAGR +9.8% 2020 pre-tax ROIC 15.9% Ebitda (€m) 11 91 113 13 91 57 23 14 57 Old Plan 114 (27) 2015 Cessation CIP6 Like for like Development Acea Acquisitions Plan 2020 2015 Plan 2019 Plan 2020 incentives basis of exiting plants Greenfield 2020 Invested Capital €360m Capex (€m) Vol
Slide 23: Energy
2016-2020 Business Plan Energy Acea Group: 2016-2020 Business Plan 23
Slide 24: Energy: Strategies, opportunities and risks
2016-2020 Business Plan Strategies, opportunities and risks Retail • Moderate growth of customer base, with focus on existing areas of operation • Improved service quality • Acea 2.0: new billing and CRM system • Efficiency of processes and overheads, including via insourcing Production • Plants mod
Slide 25: Targets and Results
Targets and Results CAGR +5.0% 2020 pre-tax ROIC 13.9% Ebitda (€m) 10 6 138 3 3 138 108 8 127 108 Old Plan 123 2015 Like for like Energy RCV - Tariff Customers and Acea 2.0 Plan 2020 2015 Plan 2019 Plan 2020 Production efficiency margins 2020 Invested Capital €491m Capex (€m) Number of customers (‘0
Slide 26: Water
2016-2020 Business Plan Water Acea Group: 2016-2020 Business Plan 26
Slide 27: Water: Strategies, opportunities and risks
2016-2020 Business Plan Strategies, opportunities and risks • New Regulation: cycle 2016-2019 • Acea 2.0 project: radical transformation, standardisation and integration of all IT systems, obtaining operating cost and process efficiencies (WFM and new billing system started on 28 Sept 2015) • Overse
Slide 28: Regulatory Opportunities: quality factor component
2016-2020 Business Plan Regulatory Opportunities Introduction of a component linked to quality factor The new MTI-2 tariff method also provides incentive mechanisms for the improvement of the contractual and technical quality of the service, by introducing two different mechanisms of awards/penaltie
Slide 29: Targets and Results
Targets and Results CAGR +4.1% 2020 pre-tax ROIC 11.5% Ebitda (€m) 15 8 380 22 24 380 311 370 311 Old Plan 357 2015 Tariff effect Quality factor Acea 2.0 Overseas Plan 2020 2015 Plan 2019 Plan 2020 development 5% 7% EBITDA from Regulated Business EBIDA from Deregulated Business 93% 95% Capex (€m) RA
Slide 30: Grids
2016-2020 Business Plan Grids Acea Group: 2016-2020 Business Plan 30
Slide 31: Grids: Strategies, opportunities and risks
2016-2020 Business Plan Strategies, opportunities and risks • New Regulation: tariff cycle 2016-2023 • Acea2.0 project: improvement of service quality, cost efficiencies (WFM to go live in 2016) • Modernisation of distribution network • Modernisation of public lighting network (’’Roma LED’’) • Expan
Slide 32: Targets and Results
Targets and Results CAGR +1.6% 2020 pre-tax ROIC 9.3% Ebitda (€m) 11 277 269 277 256 14 256 (3) (1) Old Plan 270 2015 Organic growth Public lighting Tariff effect Acea 2.0 Plan 2020 2015 Plan 2019 Plan 2020 3% EBITDA from Regulated 2% Business EBIDA from Deregulated Business 97% 98% Capex (€m) RAB N
Slide 33: Corporate
2016-2020 Business Plan Corporate Acea Group: 2016-2020 Business Plan 33
Slide 34: Targets and results
Targets and results • Further simplify the corporate structure 2016-2020 Capex: €54m • Facilitate synergies through Project Acea 2.0 • Greater operational efficiency - insourcing 2020 EBITDA: ~€3m Acea Group: 2016-2020 Business Plan Corporate 34
Slide 35: A solid base for the future
A solid base for the future Additional initiatives not included in Business Plan MARKET GROWTH OPPORTUNITIES CONSOLIDATION INITIATIVES 3 previously set targets Taking full control of subsidiaries Additional Potential Additional Potential initiatives impact initiatives impact Acquisition of investmen
Slide 36: Business Plan: Key Takeaways
Business Plan: Key Takeaways Environment 2020 EBITDA: €91m 2016-2020 CAPEX: €262m 2020 Pre-tax ROIC: 15.9% ACEA GROUP 2016-2020 CAPEX: €2.4bn Energy 2020 EBITDA: €138m 2020 EBITDA: €890m 2016-2020 CAPEX: €159m 2020 Pre-tax ROIC: 13.9% CAGR EBITDA: +4.0% DPS CAGR: 3%-6% Water 2020 EBITDA: €380m 2020
Slide 37: Conclusions
Conclusions Continued efforts in operating efficiency Stable and predictable regulatory framework Significant investment ensuring the Company’s future growth Strong financial position Attractive shareholder returns as main strategic priority Acea Group: 2016-2020 Business Plan ACEA Group 37
Slide 38: Appendix
Appendix 38 38 Acea Group: 2016-2020 Business Plan
Slide 39: Appendix
Appendix 2015 Results Water regulatory framework Electricity Distribution regulatory framework Main assumptions and sensitivity analysis Environmental Sustainability Acea Acea Group Group:Presentation 2016-2020 Business Plan 39
Slide 40: 2015 Financial highlights
2015 Financial highlights (€m) 2014 2015 Change % Revenue 3,038.3 2,917.3 -4.0% EBITDA 717.7 732.0 +2.0% Increased depreciation and amortisation (capex growth: EBIT 390.4 386.5 -1.0% growth intangible assets resulting from the entry in operation of Profit/(loss) before tax 289.8 296.4 +2.3% inform
Slide 41: EBITDA
EBITDA Total number of 2014 2015 employees EBITDA 2015 Acea Spa 661 636 8% Environment 221 227 35% 23% 15% EBITDA from Energy 522 549 Regulated Environment Businesses Water ° 1,954 1,983 Energy Network 1,335 1,315 Water EBITDA from Deregulated Grids 42% 77% Total 4,693 4,710 Businesses ° Figures do
Slide 42: Environment: EBITDA and Key quantitative data
EBITDA and Key quantitative data Aria’s plants: increase in volume of electricity sold +€3.8m Aquaser: +€1.7m Environment Kyklos: shutdown of plant -€2.2m EBITDA main drivers (€m) 2014 2015 % change Key quantitative data 2014 2015 Treatment and disposal EBITDA 54.5 57.4 +5.3% 774 765 (‘000s of tonne
Slide 43: Energy: EBITDA and Key quantitative data
EBITDA and Key quantitative data Electricity production: +€0.4m Fall in energy prices and reduced volumes Consolidation of photovoltaic business Energy Electricity sales: -€4.1m EBITDA main drivers Recognition of non-recurring item Increased margin from enhanced protection market due to revised reta
Slide 44: Water: EBITDA and Key quantitative data
EBITDA and Key quantitative data Efficiency Acea ATO2: tariff increase +€16.7m Growth at companies consolidated using the equity method +€9.6m Water EBITDA main drivers Overseas water operations: +€0.4m Recognition, in 2014, of non-recurring items by Acea Ato2 for adjustments (€m) 2014 2015 % change
Slide 45: Grids and Corporate: EBITDA and Key quantitative data
EBITDA and Key quantitative data Operational efficiency and new technologies Grids Acea Distribuzione margin increase EBITDA main drivers Pubblic Lighting margin increase Deconsolidation of photovoltaic business (€m) 2014 2015 % change Key quantitative data 2014 2015 EBITDA 253.3 255.7 +0.9% Total E
Slide 46: EBIT and Net Profit
EBIT and Net Profit EBIT €m NET PROFIT €m TAX RATE 38.7% -€3.9m (-1.0%) +€12.5m (+7.7%) Elimination of one-off hike in IRES corporation tax (‘‘Robin Hood Tax’’) 390.4 386.5 Deductibility for the purposes of IRAP of the cost of staff hired on permanent contracts 162.5 175.0 Recalculation of deferred
Slide 47: Cash flow
Cash flow CASH FLOW ANALYSIS (€m) 2014 1Q15 1H15 9M15 2015 EBITDA 718 177 353 531 732 Change in net working capital 76 (98) (23) (32) 113 Investment (317) (72) (168) (287) (423) Change in net fixed assets (21) (5) (17) (21) (51) Free Cash Flow 1 455 2 145 191 371 Net finance income/(costs) (101) (24
Slide 48: 2015 Results: financial highlights
2015 Results: financial highlights 31 Dec 2014 30 Sept 2015 31 Dec 2015 Change Change (€m) (a) (b) (c-a) (c-b) (c) NET DEBT 2,089.1 2,130.8 2,010.1 (79.0) (120.7) Medium/Long-term 3,006.4 2,656.0 2,657.0 (349.4) 1.0 Short-term (917.3) (525.2) (646.9) 270.4 (121.7) NET DEBT/ NET DEBT/ NET DEBT /EBITD
Slide 49: Water regulatory framework
Water regulatory framework RESOLUTION 664/2015 “Approval of the Water Tariff Regime for the second regulatory period MTI-2” 28 December 2015 On 28 December of last year, the AEEGSI approved its Final Resolution (664/2015), setting out the Water Tariff Regime for the second regulatory period (2016-20
Slide 50: Electricity Distribution regulatory framework
Electricity Distribution regulatory framework RESOLUTION 654/2015 and 583/2015 “Tariff regulation for the supply of electricity transmission, distribution and metering services in the regulatory period 2016-2023” (December, 2015) “Rate of return on capital invested in infrastructure services in the
Slide 51: Main assumptions
Main assumptions 2015 2016 2017 2018 2019 2020 Main assumptions Plan Plan Plan Plan Plan Exchange $/€ 1.110 1.119 1.031 1.082 1.180 1.220 Brent $/Bbl 52.4 53.6 61.8 66.9 69.0 75.0 PUN €/MWh 52.3 47.7 45.8 46.8 47.6 48.6 Green certificates €/MWh 100.1 102.0 104.7 103.9 103.3 102.5 EU-ETS €/tons of CO
Slide 52: Sensitivity analysis on key drivers
Sensitivity analysis on key drivers Sensitivity to oil prices (dollar per barrel impact in €m on Group EBITDA) GROUP EBITDA +1$/Barrel 0.14€m Sensitivity to PUN prices (impact in €m on Group EBITDA) GROUP EBITDA +1€/MWh 0.7€m Acea Group: 2016-2020 Business Plan ACEA Group 52
Slide 53: Environmental sustainability
Environmental sustainability Benchmark, Index, Assessment: positive evaluations of Acea’s sustainability performances ACEA – SUSTAINABILITY Acea is assessed by leading analysts, rating Agencies and ESG asset managers: • Oekom Research • Vigeo • KeplerCheuvreux • Forum Ethibel • Kempen SNS Acea Group
Slide 54: Environmental sustainability
Environmental sustainability GOVERNANCE ACEA is the number one Italian listed company for gender Governance – Acea has set up an Ethics Committee diversity on its board of directors majority of women (5 – consisting of 3 directors and 2 external members – out of 9). All board committees are as
Slide 55: Environmental sustainability
Environmental sustainability Acea signs up to the UN’s Global Compact from 2007, committing to integrate the ten principles regarding human rights and labour, Acea is engaged on CSR also through its COP (Communication environmental protection and efforts to combat on Progress) promoted by Global Com
Slide 56: Environmental sustainability
Environmental sustainability Coming soon: next challenges concerning Sustainability 2016 Corporate Governance Code for Listed Companies and application of corporate social responsibility principles 2017 EU Directive 95/2014 as regards disclosure of non-financial and diversity information Acea is rea
Slide 57: Disclaimer
Disclaimer THIS PRESENTATION CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS THAT REFLECT THE COMPANY’S MANAGEMENT’S CURRENT VIEWS WHIT RESPECT TO FUTURE EVENTS AND FINANCIAL AND OPERATIONAL PERFORMANCE OF THE COMPANY AND ITS SUBSIDIARIES. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON ACEA S.P.A.’S CURR
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