121108 presentazione 9m 2012 e bp 13-15 confcall analisti · 01/10/13-30/09/15 01/10/15-30/09/17...

A2A Group 9M 2012 results & 2013-2015Business Plan

Milan, November 8th 2012

Conference Call

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

• A2A 9M 2012 results

• Business Plan 2012-2015 and strategic guidelines

• Focus on business areas

- Energy

- Waste

- Cogeneration and District Heating

- Networks

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

- First consolidation of Edipower NFP +959

- Share of Edipoweracquisition +124

3

9M2012 - Main financial highlights

NET SALES

EBITDA

€M

EBIT

NET INCOME

NFP NET OF EDIPOWER ACQUISITION IMPACT

9M2011

4,917

776

405

169

4,305

648

270

114

9M2012 Change Change %

+19.7%

+612

+128

+135

+14.2%

+50.0%

2011 9M2012

4,021

Change

+48.2%+55

NET CAPITAL EMPLOYED

EQUITY

7,614

3,593

+612

+53

* Coriance reclassified according to IFRS5

EDIPOWER ACQUISITION IMPACT

ON NFP

TOTAL NFP 4,021 +559

8,226

4,580

3,646

3,497 -524

- 1,083 +1,083

*

*


EBITDA

9M2011

EBITDA

9M2012∆ vs 2011

ENERGY 223 332 109

COGENERATION AND

DISTRICT HEATING27 36 9

WASTE 216 206 -10

NETWORKS 199 205 6

OTHER SERVICES

& CORPORATE-16 -3 13

CONSOLIDATION

ADJUSTMENTS-1 0 1

TOTAL 648 776 128

KEY POINTS

4

9M2012 vs 9M2011 - EBITDA breakdown

EBITDA BREAKDOWN

9M2011

9M2012

Energy

43%

Cogeneration

and District Heating

5%

Networks

26%

Waste

26%

Energy

33%

Cogeneration

and District Heating

4%

Networks

30%

Waste

33%

Edipower consolidation starting from June 2012Higher margin of Monfalcone plantNon current items (Cassano power plant insurance reimbursement)

Increase of customers(+12% heated volumes)Non current items (environmentalmarkets)

Expiry of Cip6 revenues of WTE plantsBergamo WTE planned stoppage for extraordinary maintenanceHigher margins on Italian and int’lprojects

Positive regulatory impact on gas and water revenues

Non current items

€M


7

-24

12

5 0

5

9M2012 vs 9M2011 – EPCG: EBITDA analysis

€M

∆∆∆∆ Q1

Q2 main drivers:

-8% 1,055 864 -18%HYDROELECTRIC

PRODUCTION (GWh) 1,009 930THERMOELECTRIC

PRODUCTION (GWh)

9M2011 9M2012 ∆ % 9M2011 9M2012 ∆ %

-7

9M 2011 9M 2012∆∆∆∆ Q2 ∆∆∆∆ Q3

• Lower hydroelectric production (-429GWh)

• Positive performance of Hydroelectric production (+271 GWh)

• Thermoelectric plant halt for extraordinary maintenance in Q2 (-221 GWh)

• Tariff evolution (new regulatory period starting from August 2012)

• Hydroelectric and Thermoelectric production in line with Q3 2011

• Higher costs for plants maintenance and services

Q3 main drivers:Q1 main drivers:


9M2012 - From EBITDA to Net Income (1/2)

9M2011 9M2012 Change Key points

EBITDA 648 776 +128

D&A, write downs and provisions

-378 -371 +7

Associates and JV and others

+21 +16 -5

EBT 178 254 +76

Others -5 +5

Financial charges -130 -126

Fair value derivatives

+22 -41

-

+4

-63

€M

Edipower consolidation/ new regulation of hydro plants concessions

Bond fair value: -42 Other derivatives: -21

This information was prepared by A2A and it is not to be relied on by any 3rd party without A2A’s prior written consent.7

9M2012 - From EBITDA to Net Income (2/2)

EBT

TAXES

178

-94

254

-125

+76

IFRS 5

NET INCOME

-3

114

43

169

-31

+46

+55

MINORITIES +33 -3 -36

In 9M2011 higher benefit from deferred tax assets for Robin Hood Tax

9M2012 Coriance: +33e-Utile capital gain: +8

9M2011 TdE result: -45 Metroweb capital gain: +36

9M2011 9M2012 Change Key points

€M


NFP31/12/2011

-4,021

Net profit+D&A

+437

Changein

assets/liabilities

+202

Shareholdingsdisposal

+159

Capex

-232

Dividends

-40 -2 -3,497

-959

Share ofEdipower

acquisition

-124

NFP30/09/2012

-4,580

Netsubsidiarydividend

NFP30/09/2012

FirstEdipower

consolidation

8

9M2012 - Net debt and cash flow

-559

€M

+524

-1,083


A2A Group debt structure: situation at 30/9/2012

45%

Bond

Loans

CommittedLines

Uncommitted

DEBT BREAKDOWN BY INTEREST

DEBT MATURITY

<30/09/2013

01/10/13-30/09/15

01/10/15-30/09/17

>01/10/2017

15% 9%

33%

43%

Fixed

Variable

Swap

2%

TOTAL DEBT: 4,724 €M - AVG. MATURITY: 4.0 YEARS – UNDRAWN LINES*: 1,325 €M – 9M2012 AVG. RATE 3.42%

1%

CORPORATE CREDIT RATING

DEBT BREAKDOWN BY SOURCES

BBB/A-2

Outlook Negative

Baa2 under review

Note: EPCG not included

* of which 1,285 €M committed lines, 40 €M IEB loan

41%

14%

45%

35% after hedging of Edipower debt

(November)

EMTN PROGRAM 2,000 M€

11%

45%

44%


A2A Group debt structure: debt maturity profile

CURRENT DEBT MATURITYPROFILE (as of 30/9/2012)

DEBT MATURITY PROFILE (30/9/2012pro-forma with new 7-years 500 €M bond)

0

1,000

2,000

3,000

4,000

5,000

2012

10

57

67

2013

500

120

426

1,046

2014

180

500

730

2015

244

>2015

1,489

1,098

2,637

Total

2,098

2,090

536

4,724

1% 22% 15% 5% 56% 100%1% 22% 15% 5% 56% 100%

50

50

%%

Committed

& other

Bond

Loans

Available back-up lines €M 1,285

Average maturity 4.0 years

Available back-up lines €M 1,785*

Average maturity 4.6 years

(*) not included new revolving facilities

Debt duration, flexibility and diversification of sourcesFUNDINGSTRATEGY

• Plan for a new bond issue being considered: ~500 €M by the end of 2012 (5-7 years)

• Renewal of available committed credit facilities (minimum target 1,000 €M)

0

1,000

2,000

3,000

4,000

5,000

2012

57

10

67

2013

500

120621

2014

180

500

680

2015

244

244

>2015

1,598

1,489

3,112

Total

2,598

2,090

4,724

1% 13% 14% 5% 66% 100%1% 13% 14% 5% 66% 100%

1

25 36

%%


Agenda




- Energy

- Waste


- Networks


Roadmap for strategy implementation

• 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.


A2A GROUP NET INVESTED CAPITAL (€M)

3261

230

4736

7996

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

Jun 2008 Sep 2012

Peripherals CIN "industriale"

7,997 8,226Of which:

- 2.5 €B Edipower

- 0.8 €B Endesaassets

"Industrial" NIC

Balance sheet optimization and deleveraging - Track record

2008-2012 TRACK RECORD

From financial stake to industrial assets

• Asset swap of the financial stake in Endesa Italia (20%) into power generation plants

• Swap of financial stake in TdE/Edison (17% diluted share) gaining control of Edipower

Disposals

• Sale of 5% financial stake in Alpiq(305 €M)

• Sale of Coriance (160 €M)

• Sale of Bergamo water cycle company (25 €M)

• Sale of other non-core assets (140 €M)

1.


Business Plan 2013-2015Balance sheet optimization and deleveraging – Actions

• Disposal of minority stakes in subsidiaries

• Disposal of non-core assets

• Deconsolidation of Integrated Water Cycle business

1.

Expected impact on Group NFP:

~500 €M

One-offs aimed at NFP quick reduction, maintainingindustrial control on core business activities


Waste project – Current business structure

R&D, engineering, building and sale of treatment and disposal plants

Electricity production from biogas

Selection, MBT(1) and organic fraction

separation, composting, other

treatments

Waste collection and

cleaning Residualand

ashesWTE (2)

Landfill

PLANT ENGINEERING AND BUILDING

WASTE TREATMENT AND DISPOSALCOLLECTION

AND CLEANING

(1) MBT: Mechanical Biological Treatment, (2) Waste to Energy, (3) Partenope Ambiente is in charge of plant management only

(3)

2.


Business Plan 2013-2015Waste project – Launch of A2A Ambiente

POST-DEAL COMPANY STRUCTURE

Key: C = Collection; S = Street sweeping; T = Transport; D = Disposal; Tr = Treatment; R = Recovery

WASTE COLLECTION AND STREET

CLEANING DISTRICT COMPANIES

TREATMENT/DISPOSAL ACTIVITIES AND ASSETS

• 5 WTEs owned (1.4 Mton disposed) + 1 WTE managed (Acerra)

• 16 treatment plants (1 Mton treated)

• 7 landfills (2 Mcm residual capacity)

• 1.5 TWh electricity and 0.9 TWh heat produced

• Collection: 2.3 millions inhabitants served and 1.2 Mton collected

Concessions:

Creation of the largest waste company in Italy with potential integration synergies from waste flow optimization, cost reduction

and plant management

KEY NUMBERS

City C S T D Tr R Expiry

Milano X X X X 31/12/2021

Brescia X X X X X X 31/12/2050

Bergamo X X X X X X 31/12/2023

Varese X X 31/12/2034

2.

100%


0

200

400

600

800

€1,000M

A2A

825

AMA

746

Hera

740

Biancamano

271

Iren

217

Linea

211

287 139 194 32 42 62EBITDA (M€)

35% 19% 26% 12% 19% 29%EBITDA %

Waste 2011 turnover

Business Plan 2013-2015Waste project – A2A Ambiente positioning

MAIN BENEFITSA2A AMBIENTE’s POSITIONING

• Creation of the most important waste management company in Italy

• Formal separation between regulated and free-market businesses

• Optimized waste stream planning and management to maximize margins and plant utilization, also through improved mutual back-up scheme of plants during planned and unplanned stoppages

• Stronger commercial efficiency and effectiveness through a consistent marketing approach

• Integration synergies on fixed costs, both "staff" (i.e. engineering, human resources, ...) and "line" activities

A2A Ambiente will be the first Italian company in waste business both by revenues and profits, with untapped potential benefits from the integration

17

2.


Edipower integration – Current generation portfolio

Hydro ~2 GW

Thermal ~10 GW

WTE 0.2 GWe; 0.3 GWt

Cogeneration 0.2 GWe; 1.1 GWt

A2A GROUP POWER GENERATIONPORTFOLIO IN ITALY

A2A COMPETITIVE ADVANTAGES

• Diversified and well-balanced generation mix, in order to exploit market opportunities and mitigate overall risk

• CCGT investment cycle completed - all plants are new or recently revamped , with limited maintenance Capexneeded

• Highly flexible plant portfolio:

― 70% of hydro flexible reservoir/basin vs. run-of-river

― CCGT plants with an average of 39% of technical minimum load

• Relevant market share in Northern Zone (e.g. 34% CCGT share)

3.


Business Plan 2013-2015Edipower integration – Expected benefits

PLANT DISPATCHING OPTIMIZATION

Thermal:• Cassano• Ponti sul Mincio• Monfalcone• GissiHydro:• Valtellina• Calabria

Thermal:• Brindisi• Chivasso• Piacenza• San Filippo • SermideHydro:• Mese• Udine

• Previous tolling inefficiencies overcome through new dispatching model assigning A2A a more relevant role

• Instant improvementsachieved in Group's generation portfolio management56%� up to 77%*

A2A GENERATION ASSETS –CURRENT COMPANY STRUCTURE

EDIPOWER CONSOLIDATION:PERFORMANCE OPTIMIZATION OPPORTUNITIES

COST SYNERGIES

• Relevant opportunities to improve cost base efficiency through integration with A2A functions:

- corporate central costs and staff structures

- power plant O&M

3.

* Assuming Iren’s exit from Edipower shareholding structure in exchange for Turbigo and Tusciano plants

Dispatching optimization already in place (potential further improvement in 2013)

Start of integration plan with A2A on staff and overhead costs


0

500

1,000

1,500

2,000

Jun-Aug 2011

Other players

Edipower

883

Jun-Aug 2012

Other players

Edipower

1,879

18% 36%Edipowershare (%)

0

20

40

60

80

100

Jun-Sep 2011

EdipowerHydroPrice

North

Base

Price

North

Peak

Price

74.770.4

78.0

Jun-Sep 2012

EdipowerHydroPrice

North

Base

Price

North

Peak

Price

85.978.7

85.8

4.3 7.2Edipower price vs. BLNorth (€/MWh)

-3.4 0.1Edipower price vs. PeakNorth (€/MWh)

EXAMPLE OF DISPATCHING OPTIMIZATION(ALREADY IN PLACE)

Hydro Plants: Hydro Edipower avg. achieved price vs. Northern Zone price (base & peak)

CCGT Plants: Edipower CCGT share in“MSD-up market” (Northern Zone)

Optimization of plant dispatching in considerably difficult market, increase of share in secondary services market (MSD) and maximization of hydro production during high-price hours

GWh €/MWh

Note: Edipower volumes accounted at 100%

Edipower integration – Dispatching optimization

+2.9

+3.5

3.


Business Plan 2013-2015Operating efficiency and capital discipline – Cost cutting

OPERATING EFFICIENCY PLAN BREAKDOWN BY BUSINESS AREA (2015)

Waste 30%

Corporate andother

businesses 35%

Edipower 35%

Comprehensive efficiency plan contributing ~70 €M to Group

EBITDA by 2015 already started

Edipower consolidation and generation business integration- Improve sourcing efficiency- Integrate staff activities- Share best practices

EDIPOWER

Stand-alone efficiency projects- Re-engineer business processes- Improve workforce management and

productivity

CORPORATE & OTHER

WASTE

Launch of the largest Italian company and business rationalization- Obtain scale benefits- Integrate cross activities- Optimize waste flows and plants planning

4.


Business Plan 2013-2015Operating efficiency and capital discipline – Capex & NWC

0

100

200

300

400

500

2013

360

2014

380

2015

460

58%

42%Maintenance

Development

2013-2015 CAPEX EVOLUTION (€M)

2013-2015 CAPEX BREAKDOWN BY BUSINESS AREA/TYPE (€M)

• Higher hurdle rate for new Capex (300-400 bps over internal WACC)

• Maintenance Capexoptimization

• Further working capital optimization, e.g. credit management initiatives

8%

30%

15%

27%

20%

Energy

Waste

DistrictHeating

Networks

Corporate

KEY POINTS

Total Capex1.2 €B

4.


0

2

4

6

NFP2012F

4.6

Disposals

-0.5

Capex

1.2

OperatingCash Flow

-2.3

Dividends

0.3

NFP2015

3.2

Business plan 2013-2015Impact on Net Financial Position

Average net cash generated

~370 €M per yearNFP/

EBITDA

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

Note: 2012 NFP/EBITDA ratio calculated assuming 31/12/2012 NFP in line with 9M 2012 NFP and without including the first 5 months of Edipower SpA results

2.5x4.4x

-1.4 €B

Assumption of 60% payout on Group net ordinary income


924

2012F

1,03075

Efficiency

70

135

2015E

1,310

2011 Edipowerconsolidationadjustment

Organicgrowth

Business plan 2013-2015EBITDA evolution

WASTE+12 €M

• CIP6 expiry (-49 €M)

• Growing margins for new investment initiatives

ENERGY+146 €M

• Generation margin recovery with A2A’s greater role in dispatching service markets

• Growth in energy retail and environmental services (new green certificate projects)

• EPCG margin recovery to 2010 levels

• End of CO2 free allowances as of 2013

DISTRICT HEATING+21 €M

• Further increase in DH sales, especially in Milan and Bergamo areas

NETWORKS+19 €M

• Organic growth in Italy

• EPCG improvement

• Integrated Water Cycle deconsolidation

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

EBITDA EVOLUTION 2012-2015 (€M)

Note: Coriance not included in 2011 and 2012 results

+280 €M

CORPORATE+ 8 €M

• Operating efficiencies


652

284

93

287

-6

1,310

25

Business plan 2013-2015 �� Medium/long term evolutionEBITDA breakdown and key future developments

ENERGY

DISTRICT HEATING

WASTE

NETWORKS

OTHER SERVICES & CORPORATE

TOTAL

€M 2015E2012F

2012F Energy proforma including Edipower contribution for the full year2012F and 2015 Waste proforma excluding the effect of CIP6 expiry

(1)

(1)

-75

+49 +1

(2)

(2)

MEDIUM/LONG TERM PLANNED DEVELOPMENTS

• Two new disposal facilities(WTEs, ~600 and ~200-250 kton/year) and other small/medium size waste treatment plants

• District heating network in the Milan metropolitan area

• Heat supply from A2A Cassanoplant (30km east of Milan) converted to cogeneration

• Favorable legislation on White Certificates expected (pre-condition to invest)

• Reduction of current low-efficiency installed coal-fired capacity to 300 MW of coal plants with biomass co-firing ("green coal")

• Total Capex~400 €M

• Full potential EBITDA (2020) ~70 €M/year

DESCRIPTIONPRELIMINARY

VALUESINCLUDED IN 2013-15 PLAN

Capex ~30 €M


• Full potential EBITDA (2019) ~150 €M

Capex ~160 €M


• Full potential EBITDA (2025) ~75 €M

Capex ~100 €M

506

225

72

268

-14

1,030

FULL YEAR EDIPOWER CONSOLIDATION

WASTE NON RECURRING ITEMS


Agenda




- Energy

- Waste


- Networks


Energy2012-2015 EBITDA bridge

Energy EBITDA growing through cost efficiency programs and A2A industrial portfolio competitive advantage exploitation

ENERGY EBITDA EVOLUTION (€M)

Retailmargins

Thermal

Hydro

2012

Italy

430

506

Cost

efficiency

25

Thermal

Italy

48

Hydro &

others

33

EPCG

40

2015E

652

EPCG

(Energy) 1

Edipowerconsolidation 75

CCGT margins increase, partially offset by other thermal plant reduction (coal environmental costs and San Fillippo del Mela)

pro-forma


EnergyCCGTs context and expected evolution

CURRENT SITUATION

• Huge CCGT investments in the last 15 years increased total installed capacity

• Demand reduction due to adverse economic context

• Strong development in subsidized renewables (PV, wind)

• Production overcapacity

• Margin reduction

EXPECTED MARKET EVOLUTION

• Slow recovery in demand (+0.9% CAGR 2012-2015) expected

• Increased weight of renewables on total production (14% in 2015 vs. 7% in 2011)

• Grid higher need for balancing services

• Slow recovery in load factors

• Increased margin from ancillary services

KEY SUCCESS FACTORS

• High-efficiency plants

• Flexible plants (low minimum load)

• No contractual constraints (take-or-pay gas contracts)

• No demand constraints ("heat lead")

• High generation market share

Significant competitive advantages of A2A CCGT portfolio will allow to catch new opportunities improving its economic performances


CAPACITY PAYMENTIN A2A BUSINESS PLAN (€/MW/y)

0

1,000

2,000

3,000

0

1,000

2,000

3,000

2007

2,600

2008

2,100

2009

1,800

2010

1,300

2011

1,400

2012

1,300

2013

1,300

2014

2,400

2015

2,400

EnergyCapacity payment: a potential back-up solution from regulation

0

6,000

12,000

18,000

Analyst

consensus on CP

1,000

Renewable

Resources2012

10,000

Renewable

ResourcesE2020

12,500-15,000

24,200CapacityPayment(€/MW/y)

COSTS FOR ITALIAN ENERGY SYSTEM:CAPACITY PAYMENT VS.

INCENTIVES FOR RENEWABLES (€M)

• Capacity payment in A2A plan is very conservative: 2,400 €/MW by 2014, assuming that market dynamics will lead thermal plants to acceptable profitability levels

• If not, regulation should introduce a higher CP to support generation sources which are key for both energy supply and load balancing services (flexible thermal plants and especially CCGTs)

• Analysts consensus for a higher CP estimate. This would, however, generate an additional cost for the Italian energy system lower than 1/10 of the impact of green energy incentives

Source: capacity payment market consensus (Goldman Sachs, Cheuvreux, Exane); green energy incentive costs "Strategia Energetica Nazionale: Sintesi degli elementi chiave del documento di consultazione pubblica", October 2012


EnergyHydro concessions new regulation

Tusciano (Edipower);

2029

Udine (Edipower);2029

Valtellina

* The concession has been extended by the Decreto della Giunta Regionale n. 1205 of 29 December 2010 of Regione Lombardia, which declared the “Transitory continuation of the concession”, until a new concession is awarded

• The new "Development decree" (August 2012) set the criteria for the tenders of all large water concessions and the value of the compensation due to the outgoing concessionaire in exchange for the assets.

• The new winner of the concession shall pay to the outgoing concessionaire a compensation for its assets, as follows:

―"dry" assets: market value of tangible assets

―"wet" assets (dams, etc.): revalued historical cost taking into account both the ordinary deterioration and any public contribution received for the construction

• If A2A loses any public tender for the renewal of a concession, it would receive a relevant compensation for both "wet" and "dry" assets

Mese(Edipower);2029

A2A HYDRO PLANTS ANDCONCESSIONS EXPIRY DATE

MAIN CONSIDERATIONS ON ITALIANREGULATORY SCENARIO EVOLUTION

The new regulation introduces a stronger protection for A2A invested

capital in hydroelectric assets

Calabria;2029

Piva and Perucica(EPCG)

Terna cableunder construction

Valtellinaplants

MW Expiry date

Braulio 20 28/07/2013

Premadio 1 75 28/07/2013Premadio 2-3 155 31/12/2043

San Giacomo 10 31/12/2043

Grosio 420 15/11/2016

Lovero 50 31/12/2010*

Stazzona 30 31/12/2010*

Grosotto 10 31/12/2010*


62

-3

14

70

2010A 2011A 2012F 2015

El. Networks

Energy

Corporate

EnergyEPCG: focus on industrial recovery

PLJEVLJA

PIVA

PERUCICA

Plant name TypeCapacity

(MW)

Production

(GWh; avg.)

PLJEVLJA Thermal 218 1,400

PIVA Hydro 360 800

PERUCICA Hydro 307 900

Other (7) Mini-hydro 7 10

Total 892 3,110

• Integrated electricity Company (production, distribution, sale)

• Only producer of electric energy in Montenegro

• Distribution networks total length: ~19,000 km

• Served clients: ~350,000

EPCG COMPANY OVERVIEW

INSTALLED CAPACITY

EBITDA EVOLUTION ENERGY+NETWORKS (€M)

+56 €M

+8 €M

Note: EPCG results partially contribute also to Networks business area

Main drivers for 2012-2015 growth

• Hydroelectric production at average historical level ('11-'12 below avg.)

• Regulatory framework: tariff increase

• Electricity loss reduction

• Operating efficiency increase


EnergyA2A: high service quality for a loyal customer base

* Not included 3,5 TWh/y of energy-intensive customers

PDR Number ('000)

1.079

1,160

Volumes (Mcm)

210

600

500

240

1,550

11

6

64

830

130

1,010

0.5

1.6

5.6

1.4

9.1

3.0

6.1

9.1

PODnumber ('000)

25

25

Quantities*(TWh)

POINTS OF SUPPLY / VOLUMESBY SEGMENT (2011)

EE

GAS

KEY POINTS FOR A2A DEVELOPMENT

80

90

100

A2AEnergia

93.9

ENELServizio

Elettrico

89.6

Sorgenia

85.4

ENI

84.2

ENELEnergia

84.1

E.ON

83.4

Edison

83.4

GDFSuez

82.8

National avg.86.8

Example: Call center Customer Satisfaction Index AEEG (ICS)

A2A BEST PERFORMER IN

CUSTOMER RELATIONSHIP

0

1

2

3

4%

A2A

Energia

0.13%

Hera

0.40%

ENEL

0.62%

Edison

Energia

3.40%

Example: "Complaints" ratio: complaints divided by # of contracts

• Consolidate A2A customer base, a "natural hedging" for energy portfolio, leveraging on outstanding customer service

• Focus on lifetime customer value and optimize working capital


Agenda




- Energy

- Waste


- Networks


WasteEBITDA evolution and new developments

KEY POINTSA2A WASTE EBITDA EVOLUTION (€M)

• Low risk EBITDA in waste: ~80% from regulated concessions or long-term agreements

• Short-term plan (3 years) focused on:

- Offset CIP6 incentives expiry

- Improve operating efficiency (A2A Ambienteconsolidation)

- Start new development projects (2-3 WTE/treatment plants) with full potential by 2018-2020

• New developments will strongly sustain Waste economic results

• Medium/long-term projects:

- Further development Capex for new waste treatment plants (2016-2017) ~410 €M

- When all plants fully on stream EBITDA increase of ~150 €M

0

100

200

300

400

500

2012F

49

225

274

20

"Organic"growth

39

284

1

285

Fullpotential

Efficiency 2015

CIP6 incentives expired by 2015


WasteStrong gap in treatment and disposal assets in Italy

2010 breakdown of urban solid waste disposal in EU

LANDFILL RELEVANCE REDUCED THROUGH:

1. Reduction of waste production

2. Increase of differentiated waste collection

3. Increase of waste-generated energy

Source: Eurostat News release - 48/2012 - 27 March 2012

Nearly 50% of Italian waste currently landfilled, well above Europe’s most advanced countries (Germany, France, ...)

0

25

50

75

100%

EU

27

Germ

any

Neth

erlands

Austr

ia

Sw

eden

Belg

ium

Denm

ark

Luxem

bourg

Fra

nce

Fin

land

United

Kin

gdom

Ita

ly

Irela

nd

Slo

venia

Spain

Port

ugal

Czech

Republic

Hungary

Pola

nd

Esto

nia

Cypru

s

Slo

vakia

Gre

ece

Malta

Latv

ia

Lithuania

Rom

ania

Bulg

aria

Landfilled

Waste-to-energy

Recycled

Composted


Brescia

800

Acerra

700

Milano

500

Parona

273

Granarolo

dell'Emilia

204

Trezzo

sull'Adda

173

Trieste

154

Dalmine

154

WasteWTE plants ranking in Italy

Managing Italy’s 3 biggest plants, A2A is best poised to exploit market current lack of plants

MAIN ITALIAN WASTE-TO-ENERGY PLANTS (tons/year)


Agenda




- Energy

- Waste


- Networks


0

1

2

3

2012F

2.3

2013B

2.5

2014P

2.6

2015P

2.8

72 93EBITDA(€M)

Brescia

Bergamo

Milan

Varese

38

73

66

18

12

62

A2A* Iren Hera AGSM Egea Acea

DISTRICT HEATING RANKING –VOLUMES IN ITALY (Mcm)

A2A, 1st player in Italy by volumes, will increase its sales 6.5% per year focusing on Milan and Bergamo

Cogeneration and District HeatingItalian market ranking and expected sales growth

EXPECTED A2A SALES GROWTH (TWh)

Sales CAGR '12-'15: 6.5%


WASTE-TO-ENERGY and BIOMASS DISTRICT HEATING

NETWORKS

GAS-FIRED HIGH EFFICIENCY COGENERATION PLANTS

THERMAL RENEWABLE PLANTS (e.g. HEAT PUMPS)

1. High efficiency cogeneration and district heating are the most widely used system in Europe to achieve energy efficiency targets

2. Environmental benefits: reduction of pollutant emissions in metropolitan areas (PM10, NOx, Sox, …)

3. Boost for local investments

TH

ER

MA

L

REN

EW

AB

LES

EN

ER

GY

EFFIC

IEN

CY

Cogeneration and District HeatingA smart grid for environmental sustainability

39


Cogeneration and District HeatingMilan metropolitan area development (1/2)

• A2A is planning a major infrastructure

project for Milan, through the

construction of a district heating “ring”

connected to the heat transportation

infrastructures of A2A's Cassano d'Adda

cogeneration plant.

• With this project A2A:

― will triple the amount of heat

distributed in Milan, from the

current 900 GWh to 2.6 TWh

distributed in 2017

― will help achieve substantial

savings equal to 25% of regional

targets set by Burden Sharing

― will improve the life and health

conditions in the Milan area with

significant reduction of pollutant

emissions (NOx; Sox; CO2; PM10)

A2A DEVELOPMENT PROJECT IN THE METROPOLITAN AREA OF MILAN

EUROPEAN BENCHMARKS

• In Europe relevant district heating systems are already in place

• Copenhagen, Rotterdam and other European cities focus on district heating infrastructures to solve energy and environmental problems

• These projects are based on extensive infrastructure network projects to reduce air pollution in metropolitan areas

Example: Copenhagen (7.3 TWh of distributed heat; 50 km of network)

40


Cogeneration and District HeatingMilan metropolitan area development (2/2)

41

0

1

2

3

2012F Target

2015

Full

potential

MILAN DH VOLUMES EVOLUTION (TWh) PRODUCTION SOURCES BREAKDOWN

26%

7%

20%

44%

2%

A2A Cassano

plant

A2A WTE

Other A2A

cogeneration

plants

Other A2A

heat plants

Third

parties

3x volumes in Milan when plants fully on stream vs. 2012

70% production from WTEs or high efficiency cogeneration

~500 €M Capex for a long term project that willcontribute ~75 €M in additional EBITDA


Agenda




- Energy

- Waste


- Networks


NetworksElectricity distribution performance and regulatory framework

A2A ELECTRICITY NETWORKS IN ITALY –EBITDA EVOLUTION (€M)

CONCESSIONS AND REGULATORY FRAMEWORK

CONCESSIONS: Electricity distribution concessions will expire in 2030

REGULATORY FRAMEWORK

• 4th regulatory period (2012-2015):

― ROI: 7.6% in distribution and metering service, increased to 8.6% for investments made after 2011

― 2.8% Price Cap(**) in distribution, 7.1% in metering

― Previous "Corporate specific equalization" (PSA) now included in allowed revenues

(*) Del. ARG/ELT 199/11

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

0

50

100

150

200

2012F

132

2015

141

TOTAL 2013-2015 Capex (ITALY): ~147 €M


A2A GAS NETWORKS - EBITDA EVOLUTION (€M)

NetworksGas distribution performance and regulatory framework

CONCESSIONS AND REGULATORY FRAMEWORK

0

50

100

150

200

2012F

110

2015

116

TOTAL 2013-2015 Capex: ~162 €M

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

(#) from Del. AEEG ARG/GAS 159/08 as amended: Featured data refer to “major distributors” (# of managed PoD > 300,000).

(§) in gas distribution, 2013 data refer to “consultation document” DCO 341/12 AEEG. AEEG’s proposal is to extend the present regulatory period to 2013 .

• Gas distribution reform completed: bids are expected to start in late 2013/spring 2014

• A2A main guidelines:

― Consolidation in Lombardy

― Defense of highly strategic concessions

― Limited cash-out

― Achievement of internal operating efficiencies in order to increase competitiveness in new bids

• Regulatory framework: 3rd regulatory period (2009-2012)(#)(§)

― 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%

― Continuity of the regulatory framework assumed also in the new business plan

121108 presentazione 9m 2012 e bp 13-15 confcall analisti · 01/10/13-30/09/15 01/10/15-30/09/17...

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