Italian Infrastructure Day€¦ · forecast A2A EBITDA EVOLUTION 2012-2015 (€B) 2012A EBITDA 1,068 €M, 38€M higher than forecast 4. This information was prepared by A2A and

A2A Company Presentation

Milan, 5 September 2013

Italian Infrastructure Day

This information was prepared by A2A and it is not to be relied on by any 3rd party without A2A’s prior written consent. 2

Agenda

• Business Plan 2012-2015: deleveraging and cost cutting for a sustainable growth

• Last release (H1’13)

• Focus on Infrastructure: operations and projects

• Company back-up

DISCLAIMER - This document has been prepared by A2A solely for investors and analysts. This document does not constitute an offer or invitation to purchase or subscribe any shares or other securities andneither it nor any part of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. Some information contained herein and other material discussed at the meetingsmay include forward-looking information based on A2A’s current beliefs and expectations. These statements are based on current plans, estimates, projections, and projects and therefore you should not placeundue reliance on them. Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from thosecontained in any forward-looking statement. Such factors include, but are not limited to: changes in global economic business, changes in the price of certain commodities including electricity, gas and coal, thecompetitive market and regulatory factors. Moreover, forward-looking statements are current only at the date they are made.


Roadmap for strategy implementationThe 2013-15 Business Plan presented in November 2012

• Balance sheet optimization and deleveraging

• Waste project

• Edipower integration

• Operating efficiency and capital discipline

• Boost industrial growth through the financial stability achieved via consolidation

• Invest on key priority areas:

― Waste industrial plants

― Cogeneration and district heating systems

― Repowering of power production plants

BUSINESS PLAN2013-2015

CONSOLIDATION

MEDIUM/LONG TERM

GROWTH

1.

2.

3.

4.

This information was prepared by A2A and it is not to be relied on by any 3rd party without A2A’s prior written consent.

Evolution of A2A EBITDA and NFPExpected evolution during the period 2012-2015

Note: Coriance not included in 2011 and 2012 results

2011

924

2012F Edipowerconsolidation

adjustment

75

Efficiency

70

Organicgrowth

135

2015E

1,310

1,030

Net impact of Edipower full year consolidation (in 2012 only 7 months) plus Iren exit

+280 €M

0

2

4

6

NFP

2012F

4.4

4.6

Disposals

-0.5

Capex

1.2

Operating

Cash Flow

-2.3

Dividends

0.3

NFP

2015

3.2

Average net cash generated~370 €M per year

A2A GROUP NET FINANCIAL POSITION 2012-2015 (€B)

-1.4 €BAssumption of 60% payout on Group net ordinary income

2012A NFPlower than

forecast

A2A EBITDA EVOLUTION 2012-2015 (€B)

2012A EBITDA 1,068 €M, 38€M

higher than forecast

4


Roadmap for strategy implementationProgress in the business plan implementation (1/2)

1. 2.Waste project

Balance sheet optimizationand deleveraging

4.

Operating efficiencyand capital discipline

Edipowerintegration

3.Efficiency plan contributing~70 €M to Group EBITDA


1. Balance sheet optimizationand deleveraging

• 31/12/12 NFP lower than forecast• Balance sheet optimization:

– Bond 750 M€ November 2012– Committed lines 600 M€ February 2013 – Bond 500 M€ July 2013

• Deleveraging:– Deal Chi.Na.Co.: 38 M€ (with capital

gain)– Debt reduction due to Edipower

transaction 44,8 M€ (with capital gain)

2. Waste project• Establishment of A2A Ambiente• Completion by the end of 2013

3. Edipowerintegration

• Approved the project of non-proportional demerger of Edipower

• Complete exit of the Iren Group from Edipower shareholding on the 1/11/13

• Acceleration of corporate and technical staff integration in 2013

4. Operating efficiencyand capital discipline

• Launched the project AXE 80, with a strong internal reach

• Identified and started the saving initiatives in line with the plan targets

Target Activities performed Progress

0% 100%

0% 100%

0% 100%

0% 100%

Roadmap for strategy implementationProgress in the business plan implementation (2/2)


Balance sheet optimization and deleveraging

7

1.

*Including 500 €M New Bond, Reimb. Bond 2016� 238,409 €M, Reimb. Bond 2014� 200,9 €M; ** Including expiring Bond 2013� 500 € M

• 2012A Net Financial Position 200 M€ lower than forecast

• further NFP reduction by 298 M€ from ordinary business in H1 2013

• Chi.na.co deal: sale of non core assets (4 small hydropower plants) for 38.1 M€ with the following effects:

�� NFP: -38.1 M€ � Net Capital Gain: ~ 23 M€ � EV/EBITDA 2012: 12.1x

• NFP reduction by 44.8 €M from the non-proportional demerger of Edipower

DEBT MATURITY OPTIMIZATION – MAIN STEPS

In-depth following

Nov-12

750 €M 7-year bond

targeted to institutional

investors - 4.5% coupon

Feb-13

New 5-year revolving credit line of 600 €M.

Following the transaction, the overall available

credit lines amount to 1,640 €M

DELEVERAGING – MAIN EVENTS

500 €M 7.5-y bond targeted

to institutional investors -

4.375% coupon, (the lowest

ever achieved by A2A)

Jul-13 Jul-13

Tender Offer for the

partial purchase of

A2A 500 €M Notes

due 2014 and 1 €B

Notes due 2016

*

**

Avg

Debt

Matu

rity

(years

)


Waste projectA2A Ambiente creation and new business structure

2.

Already in place some internal working groups in order to ensure the integration benefits in the short term

• Full implementation of thenew company with a strongspecialization by businesssegment

• Launch of integration process of IT systems

• Definition of the business model aimed at exploiting companies specialties maintaining vertical integration

• Optimization of waste cyclein order to maximize margins and plant saturation

• Commercial efficiency strengthening also thanks to a team for commercial coordination

• Fixed costs synergies both in “staff” and “line” organizational structures

• Unification and optimization of procurement / sourcing activities

Expected benefits

Activities underway

8


Edipower integration3.

9

EDIPOWER – CAPACITY AVAILABLE FOR DISPATCHING (GW) EXPECTED BENEFITS

• A2A will manage the entire Edipower generation portfolio

• Improved generation mix (hydro share increased by more than 10%)

• Faster integration and synergies

• Sharing of cross-sector expertise (e.g. coal/biomass co-combustion projects) between A2A and Edipower

• The deal will generate a capital gain in Edipower (and in A2A consolidated Income Statement) for an amount of approximately 64.2 €M and a NFP reduction of 44.8 €M - net of an adjustment based on the actual values at the closing date

CCGT HYDRO

0

1

2

3

4

5

As is

A2A

Iren

3.89

To be

A2A

3.10

0.0

0.2

0.4

0.6

0.8

As is

A2A

Iren

0.61

To be

A2A

0.52+11%

CURRENT SHAREHOLDING STRUCTURESHAREHOLDING STRUCTURE POST DEMERGER –

10 OCTOBER 2013

DOLOMITIENERGIA/

SEL

FINANCIALSHAREHOLDERS1

56% 21% 13.5% 9.5%

TurbigoTusciano

DOLOMITI ENERGIA/

SEL

71% 17%

FINANCIALSHAREHOLDERS2

12%

100%

1) Mediobanca 4%, Fondazione CRT 3%, Banca Popolare di Milano 2% 2) Mediobanca 5%, Fondazione CRT 4%, Banca Popolare di Milano 3%


0

20

40

60

€80M

2013

20

2014

40

2015

70

10

OPERATING EFFICIENCY PLAN BREAKDOWN BY BUSINESS AREA (2015)

EFFICIENCY PLAN YEARLYEVOLUTION (2013-2015)

Comprehensive efficiency plan contributing ~70 €M to Group EBITDA by 2015 already started

Operating efficiency and capital disciplineThe AXE Project

4.

Waste 30%

Edipower35%

Corporate and other business

35%

Objectives already achieved in the AXE perimeter during H1’13

• Framework agreement signed by A2A and the National Trade Unions:

1. Cassa Integrazione Guadagni Ordinaria (CIGO) on a rotational basison the thermoelectric plants of the Group that, besides the normalsavings related to temporary layoffs, has led to additional savings due to thelower gas commitment and minor maintenance external costs

2. Mobilità-lay-off in order to minimize the resources in excess afterEdipower integration

• Optimization of Group plant maintenance in order to reduceexternal and materials costs

• Overall reduction of performed overtime of about 20% comparedto H1 2012

• Reduction of external consultants, e.g. legal advice

• Plan for the rationalization of support costs, e.g. prints, telecoms,internet connections

Benefits of efficiency planstart to positively impacton 2013 results


A2A's stock price evolutionRating and main price sensitive events

09/11/12 Moody's downgrade

to Baa3

The downgrade reflects:• Capex included in the

industrial plan• Risk profile and

exposure to power generation activities

• Short-term credit weak positioning

• Funding costs• Debt maturityIn-depth in the next page

23/11/12A2A bonds issuance:• amount of 750 €M• duration 7 years• claims for 4.5 B€

14/03/132012 results presentation:• EBITDA + 15.6%• EBIT + 68.1%• Dividends 80 €M

22/04/13Subscription of new

revolving lines for 600 €M with 5 years

duration

07/05/131stQ 2013 results

presentation with an EBITDA increase of

+25.7%

08/05/13S&P confirmed rating at BBB

The confirmation of the rating reflects:• "…The company's debt reduction

program and the effective financial strategy aimed at providing in advance adequate funds to debt repayments …"

• "…The A2A's strong and stable business profile characterized by a high level of diversification and integration and supported by a significant presence in the regulated business …"

STOCK PRICE VALUE EVOLUTION: + 74 %

Stock value at 08/11/12: 0.3781 €

11

08/11/12A2A presents the Business Plan 2013-15

28/06/13Payment of the dividend of € 0.026 per ordinary share

02/07/13500 €M Bond issue on the European market

31/07/13Approved the Half year financial report at 30 June 2013

Stock value at 23/08/13:

0.6880 €


Agenda




• Company back-up


H1 2013 – Main financial highlights

(*) H1 2012 revised according to IAS 19


EBITDAH1 2012

EBITDAH1 2013

∆ vs 2012

ENERGY 167 299 132

WASTE 140 155 15

COGENERATION AND

DISTRICT HEATING 44 57 13

NETWORKS 134 131 -3

OTHER SERVICES & CORPORATE

-1 -10 -9

TOTAL EBITDA PRE REDUNDANCY ADJ.

484 632 148

COSTS OF REDUNDANCY

SCHEMES -22 -22

TOTAL EBITDA 484 610 126

KEY POINTS

14

H1 2013 vs H1 2012 - EBITDA breakdown

EBITDA BREAKDOWN

H1 2012

H1 2013*

Energy

47%

Cogeneration

and District Heating

9%

Networks

20%

Waste

24%

Energy

34%

Cogeneration


9%

Networks

28%

Waste

29%

€M

Non current items

Expiry of Cip6 revenues (WTE plants)

Lower margins on int’l projects

Non current items

(*) Ebitda without costs of redundancy schemes

Positive industrial portfolio performance

Trading portfolio margin

Higher EPCG margin

Higher sales

Heating services margins

- Energy -6- Networks -10- Other services and Corporate -6

Results in line


H1 2013 - From EBITDA to Net Income

€M data H12012 H12013 Change Key points

EBITDA 484 610 +126

D&A, Write Downs and Provisions

-204 -280 -76

Associates and JV +16 +7 -9

Financial charges -44 -95 -51

Fair value derivatives -40 +7 +47

TAXES -94 -94

NET INCOME

+13

125

-

133

-

-13

+8

MINORITIES -6 -19 -13

EBIT 280 330 +50

15

Others - -3 -3

EBT 212 246 +34

IFRS 5

• Edipower consolidation (-72)

• H1 2012 Edipower badwill and otherfinancial income (-29)

• Bond-fair value option (expiring in October 2013) +17

• Other derivates fair value (+29)

• H1 2012 Edipower valuation (-12)

• H1 2013 Epcg Group

H1 2012 e-Utile capital gains +8 and Coriance net result +4

H1 2013 Epcg minorities income (-18)


� In April signed a 5-year revolvingcredit line of 600 €M with mainrelationship banks and replaced undrawncommitted lines expiring in the following24 months

� In June signed a 10-year term loan of95 €M with Cassa Depositi e Prestiti

20%

30%

50%60%

40%

16

H12013 A2A Group debt structure

H1 2013 GROSS DEBT - 4.7 €B

DEBT BREAKDOWN BY SOURCES DEBT BREAKDOWN BY INTEREST

LoansBonds Variable Fixed Hedged

Note: EPCG not included

Q2 2013 KEY FACTS

AVERAGE MATURITY

AVERAGE RATE

4.1 yrs

~4.0%

LIQUIDITY POSITION

2.4 €B liquidity position, of which:

� 0.6 €B cash

� 1.8 €B undrawn committed lines andloans

FURTHER DEVELOPMENTS

In July issued 500 €M 7yr-long bond, andpartial repurchase of ~440 €M ofoutstanding notes due 2014 and 2016:

� proforma average maturity ~5.1 yrs


H12013 - Quarterly operating data

(1) In 2013, the Edipower production includes 77% of production of the plants managed in tollingregime and 100% of production of the S. Filippo del Mela, Turbigo (groups 1-2-3) and Brindisithermoelectric plants and some hydroelectric and photovoltaic plants. Until May 2012, the

Edipower production includes 20% of production of the plants managed in tolling regime

(2) Sleeve

(3) Withdrawals from stock and internal consumption

(4) Partenope Ambiente not included

(5) The figure includes heat production of Nord Brescia, Canavese and Novate cogeneration plantsand other minor cogeneration and thermal plants located in Milan, Brescia and Bergamo areas

(6) The figure refers to heat production of WTE and Cassano plants


Agenda




− Cogeneration and District Heating

− Gas distribution networks

• Company back-up


Acea

774

Hera

254

Iren

181

Acegas

98

A2A

69

Enel

247

A2A

11

ACEA

9

19

Infrastructure operations – Market Positioning

Snam

7,808

F2i

5,716

Hera

2,202

A2A

2,010

#Rankingin Italy

#2

#4

#5

Marginal business for A2A - the best path for business deconsolidation is under investigation

High visibility business - with concessions granted to A2A until 2030

ELECTRICITY NETWORKS

Electricity distributed (TWh)

WATER

Water distributed (Mcm)

GAS NETWORKS

Gas Distributed (Mcm)

Further details in the chapter

RATIONALIZATION

Infrastructure EBITDA represents 28% of 2012 EBITDA

A2A

86

Iren

77

Hera

18

AGSM

13

#1

DISTRICT HEATING

Heated volumes (Mcm)

DEVELOPMENT


Infrastructure: cogeneration and district heatingShort term business development project: Milan area

EXPECTED A2A SALES GROWTH IN THE BUSINESS PLAN TIMEFRAME (TWh)

CAPEX planned during 2013-2015 ~ 100 €M - in large part for:

• power increase of cogeneration plants

• development of Milan and Bergamo network

A2A - 1st player in Italy by volumes, will increase

its sales by 6.5% per year during the three

years 2013-15 focusing on Milan

0

1

2

3

2012

2.3

2013B

2.5

2014P

2.6

2015P

2.8

72 93EBITDA

(€M)

Brescia

Bergamo

Milan

Varese

20


Agenda




− Cogeneration and District Heating

− Gas distribution networks

• Company back-up


Infrastructure: Gas distribution networksAnalysis of current concessions portfolio

22

* the index of attractiveness includes qualitative assessments related to contiguity of territories, geographical conformation, multi-service offer and contendibility; the concentration index refers to the coverage of the resident population in the served municipalities compared to the population on a provincial basis

• The consolidation of A2A presence in the three strategic ATEMs is approximately equivalentto maintaining both the marginality and the number of managed account

• The cash-in/cash-out generated by this operation will be almost zero

• Consolidating in the strategic areas, A2A, due to a more local and homogeneous territorialcontext, will take advantage of many efficiency synergies

ATEM'S ATTRACTIVENESS / CONCENTRATION MATRIX*, 2010

ATEM interesting for A2A in a development perspective

- currently under study the best strategy regarding these

areas

Strategic ATEM - whose consolidation is a key

priority for A2A. These are the largest in terms of

Ebitda contribution

Non-strategic ATEM - which A2A wants to dispose

3 ATEMs10 ATEMs

14 ATEMs

ATEM: Area Territoriale Minima, i.e. Minimum Territorial Area


(*) “X-Factor”, not including the inflation rate.

(#) from Del. AEEG ARG/GAS 159/08 and subsequent integrations/variations: Featured data refer to “major distributors” (# of managed PoD > 300.000).

(§) Del. 436/2012/R/Gas.

(**) DCO 341/2012/R/Gas, 56/2013/R/Gas, 257/2013/R/Gas and 359/2013/R/Gas

Revenues in line with the distribution tariffs determined by AEEG:� 1st regulatory period (2001-2003): 3% price cap(*) - 8.8% ROI� 2nd regulatory period (2004-2008): from 5% to 4,4% price cap(*) - 7.5% ROI

� 3rd regulatory period (2009-2012, extended through 2013) (#)(§§§§) :− price cap(*) progressively decreasing, from 3.0% in 2010 to 2.4% in 2013(§) (distribution); from

3.4% in 2010 to 2.8% in 2013(§) (metering)− ROI: gas Distribution: up to 2012, 7.6%; in 2013(§) 7.7%; Metering: 8.0%

On-going consultation on 4th regulatory period (**)

Main issues:− Regulatory period extention (from 4 to 6 years)− Valuation of operative costs, capital expenditure and RAB – VIR difference− Tariff structure and territorial basis for its application (macro-areas or Atems)− ROI level and incentives

Tariffs

� On 12 November 2011 the main outlines of gas distribution reform have been completed

� The D. Lgs. n. 93/11 provides that the tenders for the assignment of the gas distributionservices have to be carried out only for ATEMs (Aree Territoriali Minime), which are clusters ofmunicipalities (177 in the whole national territory) established by the Ministry for EconomicDevelopment

� The D.L. 69/13 deferred the deadlines of the first groups of tenders and introduced mechanismsaimed to quicken all the tenders

� The first tenders are expected to start in early 2014 and the last ones will probably take place in2018

� Each concession will be granted for 12 years

Tenders

Infrastructure: Gas distribution networksRegulatory framework


Agenda




• Company back-up

− A2A company overview

− Annual results


0

2,000

4,000

6,000

8,000

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

6,480

4,328

3,613

1,078

103626129

1,068 4,696

662 630695

Turnover

Ebitda

25

A2A SHAREHOLDING STRUCTURE MAJOR LISTED UTILITIES (2012; €M)

Turnover EBITDA

• Leading multi-utility in Italy, with a turnover of ~ 6.5 €B and an EBITDA of over 1 €B

• Born from the merger of AEM, ASM and Amsa with a history of over 100 years

• Jointly controlled by Brescia and Milan municipalities

• Loyal customer base mainly in Northern Italy and plants throughout the whole country

• At December 31, 2012:

− Share capital: 3,132,905,277 shares with a par value of 0.52 euro each

− Market cap: 1,370 €M

− Treasury shares: 26,917,609, equal to 0.86% of the share capital

A2A Group: shareholding structure and ranking in Italy’s utility market


Group EBITDA spread among 4 business areasLess than 50% 2012 Industrial Ebitda is due to energy sector

NETWORKS

Water

Electricity networks

Gas networks

22%

WASTE

Collection

Treatment

24%

COGENERATION& DISTRICT HEATING

Cogenerationplants

Networks

6%

ENERGY

Fuel sourcing

Powergener.

Whole-sale &

Trading

48%% TOT.2012

EBITDA*

PORTFOLIO MANAGEMENT

DisposalHeat/Electr.sale

Heat/Electricitysale

Electricity/Gassale

(*) Industrial Ebitda, excluding regulatory impacts and corporate and other services ebitda

Diversified energy-related business portfolio…


Agenda




• Company back-up

− A2A company overview

− Annual results


+144

28

2012 - Main financial highlights

NET SALES

EBITDA

€M

EBIT

NET INCOME

OF WHICH NET CASH GENERATION

2011*

6,480

1,068

501

260

6,130

924

298

-423

2012 Change Change %

+15.6%

+350

+203

+5.7%

+68.1%

2011* 2012 Change

-+683

NET CAPITAL EMPLOYED

EQUITY

7,614

3,593

+455

+104

OF WHICH EDIPOWER ACQUISITION IMPACT

TOTAL NFP 4,021 +351

8,069

4,372

3,697

-732

+1,083

(*) Coriance reclassified according to IFRS5

NFP/EBITDA 4.4x 4.1x

•+959 €M first consolidationof Edipower NFP

•+124 €M share of Edipoweracquisition


EBITDA2011

EBITDA2012

∆ vs 2011

ENERGY 336 541 205

WASTE 287 267 -20

COGENERATION AND

DISTRICT HEATING 67 69 2

NETWORKS 259 252 -7

OTHER SERVICES & CORPORATE

-25 -7 18

TOTAL INDUSTRIAL EBITDA

924 1,122 198

REGULATORY IMPACTS -54 -54

TOTAL EBITDA 924 1,068 144

KEY POINTS

29

2012 vs 2011 - EBITDA breakdown

EBITDA BREAKDOWN

2011

2012*

Energy

48%

Cogeneration


6%

Networks

22%

Waste

24%

Energy

36%

Cogeneration


7%

Networks

27%

Waste

30%

€M

Increase of customers(+13% heated volumes)

Lower electricity revenues

Expiry of Cip6 revenues (WTE plants)

Bergamo WTE plant halt for extraordinary maintenance

Non current items

Gas revenues

Non current items

Cost savings

(*) Industrial Ebitda

Edipower consolidation (7 months)

Higher coal plant profitability

Higher marketing margins

Gas supply strategy

Epcg higher idraulicity

More details on slide 32


2012 - Yearly operating data

(1) As of June 2012, Edipower electricity production included in A2A portfolio is equal to 77% (20% previously) (2) Sleeve

(3) Withdrawals from stock and internal consumption

(4) Partenope Ambiente not included

(5) Coriance figures not included

(6) The figure includes heat production of Nord Brescia, Canavese and Novate cogeneration plants and other minor cogeneration and thermal plants located in Milan, Brescia and Bergamo areas

(7) The figure refers to heat production of WTE and Cassano plants


NFP

31/12/2011

-4,021

Net profit

+D&A

+668

Change

in

assets/liabilities

+253

Shareholdings

disposal

+219

Capex

-360

Dividends

-40

Other

-8 -3,289

First

Edipower

cons.

-959-124 -4,372

NFP

31/12/2012

Share of

Edipower

acquisition

NFP

31/12/2012

31

2012 - Net debt and cash flow

A2A GROUP NET FINANCIAL POSITION EVOLUTION 2011-2012 (€M)

-1,083 €M

2012 net cash generated: +732 €M

NFP/EBITDA

4.4x 4.1x

-351 €M

2012 GROSS DEBT - 4.8 €B

AVERAGE MATURITY AVERAGE RATE4.6 yrs ~3.5%

Italian Infrastructure Day€¦ · forecast A2A EBITDA EVOLUTION 2012-2015 (€B) 2012A EBITDA 1,068 €M, 38€M higher than forecast 4. This information was prepared by A2A and

Documents