Acea S.p.A. · MIL:ACE
Acea — Italian Conference – JP Morgan 2020
64 slides from Acea's conference presentation, Oct 2, 2020
Slide 1: Acea Group Italian Conference – JP Morgan
Acea Group Italian Conference – JP Morgan 2 October 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
Strategy and Targets ACEA Group 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
Strategy and Targets - Strong and sustainable growth ACEA Group pre-tax 2018 2020 2022 2020 GUIDANCE ROIC 11.0% >10% >11% 2019 EBITDA €1,042M 2020 EBITDA > 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 1,27
Slide 6: Outperformed previous business plan EBITDA targets
Strategy and Targets ACEA Group 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
Strategy and Targets ACEA Group Additional €900M investments Cumulative 2018-2022 Highlights €B €M (approx.) Water Gori consolidation and Energy Infrastructure Comm. & Trading +250 additional investments Environment (Peschiera/Marcio) Other 4.0 * 0.9 (23%) +200 PV growth with M&A and greenfield deve
Slide 8: Sustainability growth
Strategy and Targets ACEA Group Sustainability growth Standard Ethics has upgraded the outlook for Acea from ‘‘Stable’’ to Additional €400M sustainability- ‘‘Positive’’. (July 2020). Acea is a member of the SE European linked capex bring our Sustainability Multi-Utilities Index. effort to €1.7B
Slide 9: Growing dividends vs previous business plan
Strategy and Targets ACEA Group Growing dividends vs previous business plan Growing €800M of dividends €0.75 minimum dividends vs old throughout the plan, dividend per share from business plan +€100M vs old 2019 business plan Dividend per share 0.78 €/share MIL 190401 - Piano Industriale 201 ... 9
Slide 10: Financial strategy
Strategy and Targets ACEA Group 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
Water Business Line ACEA Group 500k+ smart water meter and projects for Key Actions 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: Key Financials
Water Business Line ACEA Group 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
Energy Infrastructure ACEA Group Key Actions 600k smart meters roll-out start 100+ M€ for Resiliency for electricity supply Main actor of the continuity vs Authority guidelines energy transition 150MW PV between grid parity and M&A on the secondary market with projects Remote control extension on 60
Slide 16: Energy Infrastructure: Key Financials
Energy Infrastructure ACEA Group 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 and service quality
Commercial and Trading ACEA Group 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
Commercial and Trading ACEA Group 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 Key Actions BP strategic initiatives Doubling of treated waste (2.2 Mton target) with new plant development (e.g., organic fraction, liquid/sludge treatment, multi-material) Acceleration of plant M&A and development in a Circular Economy development aimed
Slide 22: Environment: Key Financials
Environment ACEA Group 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
Strategic Opportunities ACEA Group 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
Strategic Opportunities ACEA Group €0.2B potential upside 2022 Strategic Initiatives Full Potential EBITDA Target €B 0,2 1,5 1.3 2022 Upside 2022 Target Full Potential MIL 190401 - Piano Industriale 201 ... 25
Slide 26: Old plan targets reached two years in advance
Closing Remarks ACEA Group 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: 2019-2022 Business Plan 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: H1 2020 Results
ACEA Group TITOLO H1 2020 Results CAPITOLO TITOLO PRESENTAZIONE / Luogo e data
Slide 30: H1 2020 financial highlights
ACEA Group H1 2020 financial highlights H1 2020 H1 2019 % change EXCELLENT PERFORMANCE OF REGULATED (€m) (a) (b) (a/b) BUSINESSES (Water, Electricity Distribution) Consolidated revenue 1,622.0 1,553.1 +4.4% ABILITY TO RECOVER OF NON-REGULATED ACTIVITIES MOST EXPOSED TO THE CRISIS EBITDA 568.7 50
Slide 31: EBITDA
EBITDA ACEA Group Contribution to EBITDA of consolidation of AdF, EBITDA H1 2020 Consorcio Agua Azul and new acquisitions Water 54% (€m) H1 2020 H1 2019 Energy Infrastructure 36% AdF 30.6 ^^2.6 Commercial & Trading 5% Consorcio Agua Azul 5.0 ^^0.6 Environment 5% Pescara Distribuzione Gas 1.1 0.5 Ove
Slide 32: EBITDA and quantitative data: Water
EBITDA and quantitative data ACEA Group H1 2020 financial highlights Water Including gas distribution KEY HIGHLIGHTS (€m) H1 2020 H1 2019 % change Agreement for Acquisition of 51% of ‘‘Alto (a) (b) (a/b) Sangro Distribuzione Gas’’ EBITDA 305.4 244.0 +25.2% Acea ATO2 200.8 176.8 +13.6% EBITDA GROWT
Slide 33: EBITDA and quantitative data: Energy Infrastructure
EBITDA and quantitative data ACEA Group H1 2020 financial highlights Energy Infrastructure KEY HIGHLIGHTS Acquisition of new photovoltaic plants on the (€m) H1 2020 H1 2019 % change secondary market, increasing total capacity to ~45 (a) (b) (a/b) MWp EBITDA 206.1 193.3 +6.6% 40 MWp on primary ma
Slide 34: EBITDA and quantitative data: Commercial & Trading
EBITDA and quantitative data ACEA Group H1 2020 financial highlights Commercial & Trading KEY HIGHLIGHTS Increased customer base on free market Ability to recover from an emergency situation, offsetting impact of enhanced protection market regulation and reduced consumption of business (€m) H1 2
Slide 35: EBITDA and quantitative data: Environment
EBITDA and quantitative data ACEA Group H1 2020 financial highlights Environment KEY HIGHLIGHTS H1 2020 (€m) H1 2020 H1 2019 % change Acquisition of 60% of Ferrocart/Cavallari/ (a) (b) (a/b) Multigreen (waste storage, treatment and sorting) EBITDA 26.2 33.5 -21.8% of which: Demap 2.0 - n/s EBITDA
Slide 36: EBIT and net profit
EBIT and net profit ACEA Group EBIT (€m) NET PROFIT (€m) 277.4 260.2 143.0* 143.8** H1 2019 H1 2020 H1 2019 H1 2020 TAX RATE 30.0% 30.5% * Net profit H1 2019: Recognition of non-recurring item (€1.5m) relating to Agua Azul Bogotà Presence of CIP6 incentives (Environment segment), ended 1 August
Slide 37: Capex
Capex ACEA Group Growth in capex on regulated activities continues Investment in regulated 88% businesses Investment in non- 12% regulated businesses Capex: +20.1% 60.9 7.9 4.7 410.6 342.0 (1.1) (1.1) (2.7) H1 2019 Water Energy Commercial & Environment Overseas Other* H1 2020 Infrastructure Trading
Slide 38: Cash flow
Cash flow ACEA Group Continued focus on reducing working capital H1 2020 H1 2019 EBITDA 569 503 Change in working capital (210) (96) Capex The increase in net working capital in H1 2020 (411) (342) is primarily due: FREE CASH FLOW (52) 65 • seasonal effects Net finance income/(costs) (43) (43) Chang
Slide 39: Net debt
ACEA Group Net debt 30 June 2020 31 Dec 2019 30 June 2019 Change Change (€m) (a) (b) (c) (a-b) (a-c) Net debt 3,527.5 3,062.8 2,842.5 464.7 685.0 Medium/long-term 4,095.8 3,523.3 3,431.1 572.5 664.7 Short-term (568.3) (460.5) (588.6) (107.8) 20.3 NET DEBT/ EBITDA LTM 29 January 2020 – Issue of bonds
Slide 40: Q1 2020 Results
ACEA Group TITOLO Q1 2020 Results CAPITOLO TITOLO PRESENTAZIONE / Luogo e data
Slide 41: Q1 2020 financial highlights
Acea Group Q1 2020 financial highlights Contribution to EBITDA of consolidation of Acquedotto del Fiora and new acquisitions (€m) Q1 2020 Q1 2019 % change (€m) Q1 2020 Q1 2019 (a) (b) (a/b) Acquedotto del Fiora 15.1 1.4° Consolidated revenue 833.5 823.3 +1.2% Pescara Distribuzione Gas 0.5 - EBITDA 2
Slide 42: EBITDA
EBITDA Acea Group EBITDA Q1 2020 Water 53% Energy Infrastructure 37% 85% EBITDA from regulated Commercial & Trading 6% businesses Environment 4% 15% 2% EBITDA from non- Overseas regulated businesses Engineering & Services 1% Corporate -3% EBITDA (€m) 5.9 0.7 3.4* 276.4 23.7^ 247.9 (4.4) (0.8) Q1 201
Slide 43: EBIT and net profit
EBIT and net profit Acea Group EBIT (€m) NET PROFIT (€m) 132.8 136.8 75.5* 70.6** Q1 2019 Q1 2020 Q1 2019 Q1 2020 TAX RATE 29.6% 30.0% * Net profit Q1 2019: Recognition of non-recurring item (€1.5m) relating to Agua Azul Bogotà Presence of CIP6 incentives (Environment segment), ended 1 August 20
Slide 44: Capex
Capex Acea Group Capex growth continues across all areas of business, with focus on regulated activities Investment in regulated 87% businesses Investment in non- 13% regulated businesses Capex: +25.7% 30.9 2.5 2.9 0.8 2.4 190.0 151.2 (0.7) Q1 2019 Water Energy Commercial & Environment Overseas Othe
Slide 45: Cash flow
Cash flow Acea Group Continued focus on reducing working capital Q1 2020 Q1 2019 EBITDA 276 248 Change in working capital (146) (88) Capex (190) (151) Net working capital requirements in Q1 2020 FREE CASH FLOW (60) 9 due to: Net finance income/(costs) (22) (20) Seasonal effects (also present in
Slide 46: Net debt
Acea Group Net debt 31 Mar 2020 31 Dec 2019 31 Mar 2019 Change Change (€m) (a) (b) (c) (a-b) (a-c) Net debt 3,184.4 3,062.8 2,675.7 121.6 508.7 Medium/long-term 4,026.5 3,523.3 2,979.6 503.2 1,046.9 Short-term (842.1) (460.5) (303.9) (381.6) (538.2) NET DEBT/ EBITDA LTM NET DEBT/ EQUITY 31 MARCH 202
Slide 47: 2019 Results
ACEA Group TITOLO 2019 Results CAPITOLO TITOLO PRESENTAZIONE / Luogo e data
Slide 48: 2019 financial highlights
ACEA Group 2019 financial highlights (€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 49: 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 50: 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 51: 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 52: 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 53: 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 54: 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 55: 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 +25.7% 17.9 31.9 0.4 11.9 792.8 50.4 49.5 630.8 2018 Water Energy Commercial & Environment Overseas Other* 20
Slide 56: 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 57: Net debt
ACEA Group Net debt Below lower end of guidance Net debt 64 IFRS16 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 Adj
Slide 58: Regulatory framework
ACEA Group Regulatory framework - Water TITOLO - Electricity distribution CAPITOLO - Environment TITOLO PRESENTAZIONE / Luogo e data
Slide 59: 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 60: Water: regulation
ACEA Group Water: regulation ARERA RESOLUTION 235/2020 «Adoption of urgent measures for the integrated water service, in response to the Covid-19 emergency» Deferral of deadlines for meeting tariff and technical quality requirements. Recognition in allowed costs of 0.6% of turnover to cover late
Slide 61: 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 62: Electricity Distribution: regulation
Electricity Distribution: regulation ACEA Group ARERA RESOLUTION 248/2020 “Urgent measures linked to the Covid-19 pandemic: procedure for recovering amounts not paid to distributors by electricity transmission and natural gas distribution users and general system costs not already paid to the CSEA a
Slide 63: 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 64: 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.