Slide 1: Acea Group Business Plan 2019-2022
Under review Acea Group Business Plan 2019-2022 April 2020
Slide 2: Agenda
ACEA Group Agenda ACEA TODAY: Challenges of today and tomorrow BUSINESS PLAN 2019-2022 STRATEGY AND TARGETS BUSINESS LINE HIGHLIGHTS STRATEGIC OPPORTUNITIES CLOSING REMARKS ANNEX MIL 190401 - Piano Industriale 201 ... 2
Slide 3: Acea Today: Leader in the multi-utility market
Acea Today ACEA Group Leader in the multi-utility market 2019 EBITDA Commercial & Water Trading €1,042M 1° Italian With 9 EBITDA Among With more 2019 player millions the main than 6 TWh in the water customers national players of electricity sold supply sector served in Lazio, in the energy Tuscany,
Slide 4: 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 5: Strong and sustainable growth
ACEA Group Strategy and Targets - Strong and sustainable growth pre-tax 2018 2020 2022 2020 GUIDANCE ROIC 11.0% >10% >11% EBITDA 2019 €1,042M EBITDA 2020 +6%/+8% CAPEX broadly in line with 2019 and the Business Plan NET DEBT: €3.45B – €3.55B EBITDA growth with +8.0% CAGR NFP/EBITDA down to 2.9X €M 1
Slide 6: 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 7: 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 R
Slide 8: 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 9: 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 2019* dividend business plan Dividend per share 0.78 €/share * The Board of Directors will pro
Slide 10: Financial strategy
ACEA Group Strategy and Targets 16 May 2019 - Placing of Euro 500 million bond under Financial strategy the EMTN Programm, 9 years, fixed rate 1.75%. July 2019 – EMTN programme ceiling increased to €4bn 29 January 2020 - Placing of Euro 500 million bond under the EMTN Programm, 9 years, fixed rate 0
Slide 11: Water
Water Business Line Highlights
Slide 12: Development of a Smart Water Company
ACEA Group Water Business Line Key Actions 500k+ smart water meter and projects for water network districtization Focus on preservation of water, with development of a dedicated structure Development Rationalization of 35+ small purification facilities of a Smart 90% investments on Technical Quality
Slide 13: 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 ... 13
Slide 14: Business Line Highlights
Business Line Highlights
Slide 15: Main actor of the energy transition
ACEA Group Energy Infrastructure Key Actions 600k smart meters roll-out start 100+ M€ for Resiliency for electricity supply continuity vs Authority guidelines Main actor of the 150MW PV between grid parity and M&A on energy transition the secondary market with projects Remote control extension on 60
Slide 16: 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 ... 16
Slide 17: Commercial and Trading
Commercial and Trading Business Line Highlights
Slide 18: Growth of retail portfolio, improvement of service quality
ACEA Group Commercial and Trading Key Initiatives Strong commercial boost (3x vs. 2018) supported by a new offering model Growth of retail Increase of share of pull commercial channels (e.g. portfolio, Shop, Branch and Digital) up to 50% improvement of Strengthening of digital channels (10% on total
Slide 19: 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 ... 19
Slide 20: Environment
Environment Business Line Highlights
Slide 21: Acceleration of plant development
ACEA Group Environment Implementation of old BP strategic initiatives Key Actions Doubling of treated waste (2.2 Mton target) with new plant development (e.g., organic fraction, liquid/sludge treatment, multi-material) M&A and development in a Circular Economy Acceleration of perspective focused on
Slide 22: 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 ... 22
Slide 23: Strategic Opportunities
Strategic Opportunities Potential Business Plan Upsides
Slide 24: 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 25: €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 ... 25
Slide 26: Closing Remarks: Old plan targets reached two years in advance
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 27: Appendix
ACEA Group APPENDIX
Slide 28: 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 2019 Results 28
Slide 29: 2019 Results
ACEA Group TITOLO 2019 Results CAPITOLO TITOLO PRESENTAZIONE / Luogo e data
Slide 30: Performance and delivery
Acea Group Performance and delivery Growth, consistency, reliability, sustainability CONSTANT GROWTH SINCE THE NEW BOARD OF DIRECTORS TOOK OFFICE (27 APRIL 2017) 2019: SHARE PRICE AT ALL-TIME HIGH, AS ACEA OUTPERFORMS THE MARKET (FTSE ITALIA ALL SHARE +27.2%) 2019 FROM 27 APRIL 2017 TO 31 DECEMBER 2
Slide 31: Delivery: Business Plan and acquisitions
Acea Group Delivery Business Plan and acquisitions NEW BUSINESS PLAN 2019-2022 APPROVED ON 2 APRIL 2019, BRINGING FORWARD TARGETS ANNOUNCED TO THE MARKET IN NOVEMBER 2017 BY MORE THAN TWELVE MONTHS EBITDA (€m) PLAN 2019-2022 1,042 933 972 840 916 Targets in existing Plan: • EBITDA in 2022: €1,270m (
Slide 32: 2019 financial highlights
2019 financial highlights ACEA Group (€m) 2019 2018 % change (a) (b) (a/b) Consolidated revenue 3,186.1 3,028.5 +5.2% EBITDA +12%: well ahead of guidance EBITDA 1,042.3 933.2 +11.7% • Initial guidance : +5%/+6% • Guidance provided in H1 2019: ≥ +7% EBIT 518.1 478.6 +8.3% • Guidance provided in 9M 20
Slide 33: EBITDA
EBITDA ACEA Group EBITDA 2019 Water 48% EBITDA from regulated 81% Energy Infrastructure 37% businesses Commercial & Trading 7% EBITDA from non- 19% Environment 5% regulated businesses Overseas 2% Engineering & Services 1% EBITDA (€m) Contribution to EBITDA from 1,042.3 consolidation of Gori, Acquedo
Slide 34: EBITDA and quantitative data: Water
EBITDA and quantitative data ACEA Group 2019 financial highlights Water Including gas distribution business (€m) 2019 2018 % change KEY HIGHLIGHTS (a) (b) (a/b) October 2019: line-by-line consolidation of Acquedotto del Fiora EBITDA 505.0 433.0 +16.6% March 2019: acquisition of Pescara Distribuz
Slide 35: EBITDA and quantitative data: Energy Infrastructure
EBITDA and quantitative data ACEA Group 2019 financial highlights Energy Infrastructure (€m) 2019 2018 % change KEY HIGHLIGHTS (a) (b) (a/b) Acquisition of new photovoltaic plants EBITDA 392.0 360.7 +8.7% with total capacity of 28MWp - Distribution 345.4 317.1 +8.9% EBITDA GROWTH - Generation 44.6
Slide 36: EBITDA and quantitative data: Commercial & Trading
EBITDA and quantitative data ACEA Group 2019 financial highlights Commercial & Trading KEY HIGHLIGHTS Improvement in sales channels with resulting increase in number of free market customers for electricity (+20.5%) and gas (+11.0%) Improvement in collections (€m) 2019 2018 % change (a) (b) (a/b
Slide 37: EBITDA and quantitative data: Environment
EBITDA and quantitative data ACEA Group 2019 financial highlights Environment KEY HIGHLIGHTS July 2019: acquisition of Demap (plastics (€m) 2019 2018 % change treatment) (a) (b) (a/b) October 2019: acquisition of Berg (liquid waste treatment) EBITDA 52.0 65.6 -20.7% October 2019: Monterotondo
Slide 38: EBIT and net profit
EBIT and net profit ACEA Group EBIT (€m) NET PROFIT (€m) 478.6 518.1 271.0 283.7 Non-recurring components (€m): Non-recurring components (€m): Release of provisions by Gori -44.2 Overvaluation of cancellation of TWS gain -8.9 +10% Antitrust fine -16.2 Antitrust fine +16.2 adjusted Release
Slide 39: Capex
Capex ACEA Group Strong capex growth across all areas of business, with focus on regulated activities Investment in 81% regulated businesses Investment in non- 19% regulated businesses Capex (€m) +25.7% 17.9 31.9 0.4 11.9 792.8 50.4 49.5 630.8 2018 Water Energy Commercial & Environment Overseas Othe
Slide 40: Cash flow
Cash flow ACEA Group Continued improvement in working capital 2019 2018 EBITDA 1,042 933 Change in working capital (16) (35) Capex (793) (631) Excellent performance of collections with regard to Acea Energia FREE CASH FLOW 233 267 Net finance income/(costs) (90) (83) Working capital demands due
Slide 41: Net debt
ACEA Group Net debt Below lower end of guidance Net debt 64 IFRS 16 31 Dec 2019 30 Sept 2019 31 Dec 2018 Change Change (€m) 3,062.8 (a) (b) (c) (a-b) (a-c) 83 M&A 2,568.0 Net debt 3,062.8 2,960.3 2,568.0 102.5 494.8 90 Consolidation of AdF Medium/long-term 3,523.3 3,467.5 3,341.4 55.8 181.9 2,826 Ad
Slide 42: 9M 2019 Results
ACEA Group TITOLO 9M 2019 Results CAPITOLO TITOLO PRESENTAZIONE / Luogo e data
Slide 43: 9M 2019 financial highlights
9M 2019 financial highlights ACEA Group 9M 2019 9M 2018 % change EBITDA GUIDANCE RAISED FOR 2019 (€m) (a) (b) (a/b) Initial guidance: +5%/+6% Consolidated revenue 2,346.2 2,173.9 +7.9% Guidance provided in H1 2019: ≥ +7% EBITDA 2018 EBITDA 769.4* 685.2 +12.3% €933m Updated guidance: ≥ +10% EBIT 402.
Slide 44: H1 2019 Results
ACEA Group TITOLO H1 2019 Results CAPITOLO TITOLO PRESENTAZIONE / Luogo e data
Slide 45: H1 2019 financial highlights
H1 2019 financial highlights ACEA Group H1 2019 H1 2018 % change EBITDA GUIDANCE RAISED FOR 2019 (€m) (a) (b) (a/b) Consolidated revenue 1,553.1 1,454.3 +6.8% Initial guidance : +5%/+6% EBITDA 2018 EBITDA 502.6* 449.9 +11.7% €933m Updated guidance: ≥+7% EBIT 260.2 250.7 +3.8% +6.9% versus H1 2018 Gr
Slide 46: Q1 2019 Results
ACEA Group TITOLO Q1 2019 Results CAPITOLO TITOLO PRESENTAZIONE / Luogo e data
Slide 47: Q1 2019 financial highlights
Q1 2019 financial highlights ACEA Group Q1 2019 Q1 2018 % change (€m) (a) (b) (a/b) Consolidated revenue 823.3 745.5 +10.4% EBITDA guidance 2019: +5/6% EBITDA 247.9* 229.2 +8.2% versus 2018 (€933m) EBIT 132.8 127.4 +4.2% +10.2% versus Group net profit 75.5** 77.4 -2.5% Q1 2018 after income relating
Slide 48: Regulatory framework
ACEA Group Regulatory framework - Water TITOLO - Electricity distribution CAPITOLO - Environment TITOLO PRESENTAZIONE / Luogo e data
Slide 49: Water: regulation
ACEA Group Water: regulation TARIFF REGIME FOR THE THIRD REGULATORY PERIOD (2020-2023) Delibera ARERA 580/2019 WACC: 5.24% (previously 5.3%) WACC on fixed assets in progress: 3.92% Increase in inflation rate (from 1.5% to 1.7%) The limits on annual growth of the tariff multiplier linked to c
Slide 50: Electricity Distribution: regulation
Electricity Distribution: regulation ACEA Group ARERA RESOLUTION: - 568/2019 tariffs for electricity distribution (TIT) and metering (TIME) revised for the sub-period 2020-2023 - 646/2015 "Quality of electricity distribution and metering services and output-based regulation" (TIQE) amended and suppl
Slide 51: Environment: regulation
ACEA Group Environment: regulation ARERA RESOLUTION 443/2019 Regulatory period 2018-2021, structured in line with the previous tariff regulation (Presidential Decree 158/99), with the introduction of certain elements such as sharing arrangements for revenue from the sale of material and energy der
Slide 52: 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.