a2a strategic plan 2016 results & business plan update · 2016 5,093 2015 1,048 2016 1,231 +3%...
TRANSCRIPT
A2A STRATEGIC PLAN 2016 RESULTS & BUSINESS PLAN UPDATE
April 3rd 2017
2
2016 CONSOLIDATED
RESULTS
2014-16, HOW WE DID IT
STRATEGIC PLAN
2017-2021
PEOPLE &
SUSTAINABILITY
FINANCIALS
3
2016
CONSOLIDATED
RESULTS
4
San Filippo del Mela “Merchant”
FY 2016 vs. FY 2015 Results
2016 Consolidated Results
2014-16, how we did it
Strategic plan 2017-2021
People & Sustainability
Financials
+ -
Retail Regulated Components
LGH acquisition Energy Scenario
San Filippo del Mela “Must Run”
Trading portfolio
Gas and Electricity allowed revenues
Fixed Costs reduction
Non-recurring items
Positive CCGT Ebitda
5
* Excluding extraordinary items equal to 205 €M in 2015 and 153 €M in 2016
2.8x 2.5x NFP / EBITDA
2015
73
2016
224
5,093
EBITDA REVENUES
GROUP NET INCOME
GROUP ORDINARY NET INCOME *
NET FINANCIAL POSITION
2015
4,921
2016
5,093
2015
1,048
2016
1,231
+3% +17%
+151
2015
278
2016
377
+36%
2015
2,897
2016 Adjusted
2,667
LGH price
and NFP at closing
469
2016
3,136
-230
+239
FY 2016 vs. FY 2015 Results
2016 Consolidated Results
2014-16, how we did it
Strategic plan 2017-2021
People & Sustainability
Financials
€M
6
2015
1,048
-26
2015
Ordinary
1,022
Waste
25 30
Networksand
DistrictHeating
-5
19
SmartCity
1 11
2016
Ordinary
1,103
128
2016
1,231
2015Non-recurring
ItemsEnergyRetail Generation & trading
EPCGand other
2016Non-recurring
Items
+81
+183 €M
FY 2016 vs. FY 2015 Results
Group EBITDA
2016 Consolidated Results
2014-16, how we did it
Strategic plan 2017-2021
People & Sustainability
Financials
7
1,048 - 404 - 350 - 79 - 1 - 4 - 134 76 - 133 130 73
2015 A
-
€M
FY 2016 vs. FY 2015 Results
From Group EBITDA to Group Net Income
2016 Consolidated Results
2014-16, how we did it
Strategic plan 2017-2021
People & Sustainability
Financials
8
+153 +36%
€M
FY 2016 vs. FY 2015 Results
From Group Net Income to Group Net Ordinary Income
2016 Consolidated Results
2014-16, how we did it
Strategic plan 2017-2021
People & Sustainability
Financials
9
BREAKDOWN BY NATURE BREAKDOWN BY BUSINESS
2015
57
133
154
344
2016
48
46
159
171
424
Maintenance
Development
Mandatory
M&A*
2015
59
52
64
129
344
2016
102
61
36
167
424
4
2 27
7
8
6 27
17
Generation &trading
Energy retail
Waste
Districtheating
Networks
Corporate
Smart city
Epcg
+80 +80
€M
*M&A Capex related to LGH not included
FY 2016 vs. FY 2015 Results
CAPEX
2016 Consolidated Results
2014-16, how we did it
Strategic plan 2017-2021
People & Sustainability
Financials
10
(1) Funds from operations after change in working capital
€M
FY 2016 vs. FY 2015 Results
Net Free Cash Flow
2016 Consolidated Results
2014-16, how we did it
Strategic plan 2017-2021
People & Sustainability
Financials
11
2014-16,
HOW WE DID IT
12
* From the appointment of the new Board of Directors, 17/06/2014, to 28/3/2017
VISION/STRATEGY
Achievements on key R3D points:
RESTRUCTURE Cost reduction, company simplification, flexibilization, capacity optimization
RELAUNCH
Consistent industrial growth Selective external growth
RESHAPE
Public lighting, smart city, energy efficiency
RESULTS
3 years of growing results exceeding plan
12 quarters with continuous debt reduction
Dividend (+50%) and stock price growth (+61%)*
82 €M savings vs. 2014 cost base
RESULTS AND STRATEGIC
GOALS DELIVERED
2014-2016, how we did it
2016 Consolidated Results
2014-16, how we did it
Strategic plan 2017-2021
People & Sustainability
Financials
13
3M
305 337
314
6M
551 562 614
9M
783 814
872
12M
1,024 1,048
1,231
1,010
1,036
2014 2015 2016 TARGET
EBITDA €M
3 years of growing results exceeding plan
2016 Consolidated Results
2014-16, how we did it
Strategic plan 2017-2021
People & Sustainability
Financials
14
*Pro forma: 2.93 A2A 2016B + 0.47 LGH
A2A LGH TARGET
3.72
3.57
3.47
3.36
3.31
3.24
3.14
2.90
2.88
2.83
2.77
2.67
3.24
3.14 3.16
3.40*
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2014 2015 2016
…WITH HIGHER CAPEX AND STRONGER
DIVIDENDS
NFP €B
12 consecutive quarters of debt reduction…
2016 Consolidated Results
2014-16, how we did it
Strategic plan 2017-2021
People & Sustainability
Financials
15
+1.6 €B of market cap
+61%
3.30 3.63 4.10 4.92
DIVIDEND €c/share ~ +50%
Stock trend (100 = 17/06/14*)
Strong Total Shareholder Return
2016 Consolidated Results
2014-16, how we did it
Strategic plan 2017-2021
People & Sustainability
Financials
* Date of appointment of current top management
A2A
FTSE Italia All-Share Utilities +6%
FTSE MIB -7%
EURO STOXX Utilities -11%
16
47 82
2016 2015
50% of 2020 target already
achieved
400+ internal resources involved
200+ projects with analytical targets
Process optimization and design-to-cost
Strong cost savings
(En&A)
2016 Consolidated Results
2014-16, how we did it
Strategic plan 2017-2021
People & Sustainability
Financials
COST SAVINGS
€M
17
RESTRUCTURE
RELAUNCH
RESHAPE
18
CCGT FIXED COSTS
SIMPLE
CCGT EBITDA
CCGT FLEXIBILITY
2014
74
2016
59 54
Target
Actual
-28%
20 €M cost savings in CCGT plants in 2 years
A2A Energiefuture, thermal plant re-conversion
A2A gencogas, single vehicle for A2A CCGTs
Chivasso already best in class, other plants under way
Market/seasonal opportunities
Leadership in ancillary services
€M
€M
+164
MW/ min
2014
26
2016
5050
Target
Actual
+92%
Load gradient
Restructure
2016 Consolidated Results
2014-16, how we did it
Strategic plan 2017-2021
People & Sustainability
Financials
19
+8% waste treated
2014
2,594
2016
2,800
WASTE TREATED
MILAN DH NETWORKS
2014
264
2016
299
+13% DH network in Milan
ENERGY/GAS CUSTOMERS
2014
320
2016
694
+117% free market customers
WASTE COLLECTION
2014
2.7
2016
3.4
+26% inhabitants served
Ktons
‘000 POD
M inhab
Km
Relaunch Consistent industrial growth
2016 Consolidated Results
2014-16, how we did it
Strategic plan 2017-2021
People & Sustainability
Financials
20
Waste
5
Energy
Efficiency
2
RES
1
LGH
1
Total
9
NEW LOCAL AGGREGATION PARADIGM INTRODUCED
August 2016 Industrial partnership (51%)
signed with LGH: “Multi-utility of the territories”
9 DEALS COMPLETED IN 2 YEARS
Relaunch Selective external growth
2016 Consolidated Results
2014-16, how we did it
Strategic plan 2017-2021
People & Sustainability
Financials Aligned to Industrial Plan guidelines
Fully integrated along the value chain
21
PUBLIC LIGHTING
ENERGY EFFICIENCY
E-MOBILITY
SMART CITY
87
2016
196
2014
+125% LED relamping
1st Italian independent ESCo acquired
Set-up completed and first pilot projects
1st Italian Fast Charge public network
75%
recharges
‘000 LED
‘000
Reshape
2016 Consolidated Results
2014-16, how we did it
Strategic plan 2017-2021
People & Sustainability
Financials
22
DISCIPLINE
DIALOGUE
DIGITAL
23
DISCIPLINE DIALOGUE DIGITAL
+50% of DPS increase in three years
FFO/Debt, key rating indicator, improved up to 24%
Implementation of Enterprise Risk Management structure
15 Lean Thinking pilot projects
A2A's first sustainability plan & integrated report
4 multi-stakeholder forum and territorial sustainability reports
People and organization: Smart working, Organizational
Compass Project, Futura2a, ABC Project, Melograno, ...
New digital platform for customer base
Digitalization of networks processes
(WFM, IDMS, …)
Digitalization of CCGT Chivasso plant
New solar thermodynamic plant at San Filippo del Mela site
2014 2016
24
STRATEGIC PLAN
2017-2021
25
RESTRUCTURE RELAUNCH RESHAPE
Restructure of thermoelectric
power generation portfolio
Growth in environment, smart networks
and energy services
Buying options in smart city
and green economy
26
From "traditional" generator to active service provider
Efficient fleet to exploit market peaks
Contribution to market adequacy with A2A capacity
Growth in environment, smart networks
and energy services
Buying options in smart city
and green economy
RESTRUCTURE RELAUNCH RESHAPE
27
From "traditional" generator to active service provider
Efficient fleet to exploit market peaks
Contribution to market adequacy with A2A capacity
Growth in environment, smart networks
and energy services
Buying options in smart city
and green economy
RESTRUCTURE RELAUNCH RESHAPE
28
STRATEGY UPDATE
REGENERATION RESHAPE
Active role in the energy market transformation
Flexible fleet to serve shortening EU markets
Re-alignment with EU Winter Package
Development by adjacencies
Buying options in smart city
and green economy
From pilot projects to market solutions
RELAUNCH
Growth in environment, smart networks
and energy services
Focus on low-risk businesses
FOCUS TRANSFORM ACCELERATE
29
ASSET DEVELOPMENT
Additional investments (+600 €M vs. previous plan) in core, growing, low-risk businesses
REGULATED
BUSINESS
WASTE
TREATMENT
DEVELOPMENT
COST REDUCTION
EFFICIENCY
AND
OPTIMIZATION
En&A project on track and launch of a new operational excellence program
MARKET GROWTH
Consistent growth in retail, waste collection and DH
ORGANIC
DEVELOPMENT
M&A AND
SYNERGIES
Prudent M&A targets
Conservative targeted synergies
Relaunch
2016 Consolidated Results
2014-16, how we did it
Strategic plan 2017-2021 Relaunch Re-generation Reshape
People & Sustainability
Financials
30
(1) Including M&A and gas distribution tenders
0
20
40
60
80
100%
+50% CAPEX per year vs. average 2014-2016(1)
Almost 90% CAPEX in regulated/quasi-regulated markets
~70% of net invested capital in 2021 related to Regulated/ Quasi-Regulated assets
€M
Regulated business
Higher Capex in regulated/quasi-regulated
Strategic plan 2017-2021
Relaunch
Re-generation
Reshape
Asset Development
Market Growth
Cost reduction
40% CAPEX in sustainability
31
Increase in Gas and Electricity distribution RAB
Gas and Electricity distribution tariffs stable over the period 2017–2021
Water distribution tariffs increase by 8.5% YoY according to Regulatory Framework 2016-2019
€B
Regulated business
RAB increase
Strategic plan 2017-2021
Relaunch
Re-generation
Reshape
Asset Development
Market Growth
Cost reduction
EE & GAS RAB 2017
EE & GAS RAB 2021
2.0 1.8
32
Limited volume risk, mostly internal waste flows integration
Focus on A2A industrial sites in Northern Italy
* LGH, Rieco, Bedizzole full year contribution; public tenders excluded
860 Ktons/year
waste material recycling
Ktons treated
Waste treatment development
Strategic plan 2017-2021
Relaunch
Re-generation
Reshape
Asset Development
Market Growth
Cost reduction
2014 2015 TARGET
2015 ACTUAL
2016 TARGET
2016 ACTUAL
FULL YEAR
CONSOLI- DATION*
NEW PLANTS 2021
2,594 2,626 2,558 2,634 2,800
687
500 155 4,249
Authorized/ authorizations
in progress
Authorizations to be
requested
ACHIEVABLE TARGET ACHIEVED
EXISTING PLANTS
UPGRADE
107
33
Note: Includes LGH
2021 target consistent with 2014-16 average organic growth
67% avg. sorted
collection
M inhabitants
Organic development
Waste collection
Strategic plan 2017-2021
Relaunch
Re-generation
Reshape
Market Growth
Cost reduction 2014 2015
TARGET 2015
ACTUAL 2016
TARGET 2016
ACTUAL 2021 BP
2.70 2.81 2.80 2.90
3.38
3.94
~ +100K inhab./year ~ +300K
inhab./year
ACHIEVABLE TARGET ACHIEVED
34
Growth planned in core geographical areas
Free market customer base in 2019 4x vs. 2014
Note: Includes LGH * Free market **Electricity mass market
Organic development
Energy and gas retail
Strategic plan 2017-2021
Relaunch
Re-generation
Reshape
Market Growth
Cost reduction 2014 2015
TARGET 2015
ACTUAL 2016
TARGET 2016
ACTUAL 2021
TARGET
320 419 444
577 694
1,438
~ +180K POD/year
90% EE customers with green
energy sold**
POD* ‘000
ACHIEVABLE TARGET ACHIEVED
~ +150K POD/year
35
>60% of M&A contribution to business plan already completed
Only new M&A deals in advanced stage included
M&A and synergies M&A
Strategic plan 2017-2021
Relaunch
Re-generation
Reshape
Market Growth
Cost reduction
Note: LGH not included
2016 EBITDA OF ALREADY
CLOSED DEALS
ALREADY CLOSED
DEALS FULL POTENTIAL
NEW M&A DEALS UNDER
NEGOTIATION
SYNERGIES TOTAL INCREMENTAL
EBITDA
2
4
15
10 31 SYNERGIES
ENERGY EFFICIENCY
NETWORKS
WASTE
ACHIEVABLE TARGET ACHIEVED
EBITDA €M
36
EBITDA synergies 12 €M (~16% of 2016 LGH EBITDA)
Further savings under assessment
€M
M&A and synergies LGH synergies
Strategic plan 2017-2021
Relaunch
Re-generation
Reshape
Market Growth
Cost reduction
EBITDA SAVINGS
FINANCIAL SAVINGS
CAPEX SAVINGS
TOTAL SAVINGS @2020
12
7 2 21
37
EBITDA €M
Lean and 6 sigma initiatives, Business Process Modeling
Change management
Creation of an internal competence center devoted to continuous performance improvement
Plan impacts not included in the business plan (additional projects)
2017 NEW OPERATIONAL EXCELLENCE
PROGRAM
EN&A 2015-2021
Operating efficiency continuous journey
Cost reduction
Market Growth
12
2016 2021
82 +108
LGH
A2A 178
12
190
Strategic plan 2017-2021
Relaunch
Re-generation
Reshape
38
Traditional thermal plant reconversions
Organic and inorganic growth in RES and in new market opportunities
VA
LU
E F
RO
M
DIV
ER
SIFIC
ATIO
N
5-year SFM plant must-run
Hydro and baseload stable production
MEDIUM
TERM
STABILITY
ACTIVE
MANAGEMENT
OF CCGT
GROWING
OPTIONS
RES/DERs NEW
SOURCES OF
GROWTH
Re-generation
2016 Consolidated Results
2014-16, how we did it
Strategic plan 2017-2021 Relaunch Re-generation Reshape
People & Sustainability
Financials
Short-term market opportunities
Additional medium-term market space from European trends
Capacity market and generation margins upside
Possible moderate addressable demand increase
39
'13
532
'14
500
'15
469
'16
494
Avg.13-16
499
Avg.17-21
459
33 -401 -30 -5Delta vs. avg.
7% -8%0% -6% -1%Delta % vs. avg.
Thermal
Hydro incentives
Hydro market
PLANTS CONTRIBUTION MARGIN
DELTA vs. 13-16 AVG.
Historical ‘13- ‘16 volatility maximum
+/-7%
Natural hedging between hydro
and thermal
€M
33
33
Value from diversification
Strategic plan 2017-2021
Relaunch
Re-generation
Reshape
Value from diversification
Medium-term stability
Active mgmt of CCGT
RES/DERs sources of growth
40
14 15 16 17 18 19 20 21
49
2,9
14 15 16 17 18 19 20 21
14 15 16 17 18 19 20 21
55
Conservative scenario assumptions, lower than previous plan
14 15 16 17 18 19 20 21
12,2
Clean spark spread
Clean dark spread
PUN Baseload
PUN Peak Load
16-20 BP
17-21 BP
€/ MWh
Medium-term stability
Strategic plan 2017-2021
Relaunch
Re-generation
Reshape
Medium-term stability
Active mgmt of CCGT
RES/DERs sources of growth
2.9
12.2
41
Pl. 1
63%
Pl. 2
57%
Pl. 3
45%
Pl. 4
42%
Pl. 5
42%
Pl. 6
32%
A2A
25%
Pl. 7
17%
3.10.8 3.1 0.81.1 2.20.80.8GW
Slow growth in market demand
-30 baseload GW in Europe by ’21*
New RES not covering entire additional net demand
A2A CCGTs positioned to catch market opportunities
GROWING MARKET SPACE FOR A2A CCGTs
CAPACITY MARKET REVIEWED CONSERVATIVELY
* A2A elaboration based on GER, FRA, SPA, UK, SWI, BEL, AUT nuke/coal phase-out plans
** MGP load factor of Northern zone CCGTs in peak hours (2016)
K€/MW
LF %**
Active management of CCGT growing options
Capacity market and growing market space
Strategic plan 2017-2021
Relaunch
Re-generation
Reshape
Active mgmt of CCGT
RES/DERs sources of growth
2 YEARS AGO FCST
23.5
15.7 13.3
1 YEARS AGO FCST
TODAY’S FCST
START-UP 2017 2018 2018
Average on A2A total
generation portfolio
Capacity auctions expected to set premium in a 18-20 k€ range
42
0.8
2.3
2.0
1.9
0.5
1.0
2021
0.8
3.6
1.9
0.5
1.0
Today
8.47.6
Must-run
Baseload
RES
Flexible CCGT
Standard CCGT
Demothballed (TSO
request)
Mothballing
Shut down/sold
Must run, baseload and hydro stable
~4 GW CCGTs running, 90% of which planned to be flexible
A2A CAPACITY
GW
Active management of CCGT growing options
A2A installed capacity evolution
Strategic plan 2017-2021
Relaunch
Re-generation
Reshape
Active mgmt of CCGT
RES/DERs sources of growth
43
THERMAL PLANTS RE-
CONVERSION
Evolution into “integrated renewable poles”
Projects design in SFM, BR and Monfalcone
Solutions for environment/renewable synergies
Exploration of potential inorganic growth in PV/Wind
Potential new greenfield/brownfield developments
New developments as additional projects
DEVELOPMENT ON A2A SITES
RES PV development in Group industrial sites (SEU/SSP)
Hydro developments in Calabria
MARKET DEVELOPMENT
RES M&A and
GREENFIELD/BROWNFIELD
Storage systems development
Demand Response Management System
Innovative distributed energy services
DISTRIBUTED ENERGY
RESOURCES
RES/DERs new sources of growth
Strategic plan 2017-2021
Relaunch
Re-generation
Reshape
RES/DERs sources of growth
44
SMART CITY
Strong pipeline of business development agreements
A2A SMART
CITY
MOBILITY
SOLUTIONS
Catching the key trends in the mobility evolution: green, shared and connected
ENERGY EFFICIENCY
Higher targets also thanks to selective M&A deals already ongoing
PUBLIC
LIGHTING
ESCo PROJECTS New M&A deals in pipeline
Reshape
2016 Consolidated Results
2014-16, how we did it
Strategic plan 2017-2021 Relaunch Re-generation Reshape
People & Sustainability
Financials
45
New business development initiatives ongoing, both B2B and with public administration
# agreements
A2A smart city
Smart services growth
Strategic plan 2017-2021
Relaunch
Re-generation
Reshape
Smart City
Energy Efficiency
8
17
19 44
TOTAL OPPORTU- NITIES
IN PROGRESS
SIGNED
INCLUDED IN PLAN
46
GATEWAY LORA
A2A smart city
Sharing Cities project
Strategic plan 2017-2021
Relaunch
Re-generation
Reshape
Smart City
Energy Efficiency
NOISE SENSORS
SENSORS FOR
POLLUTION MONITORING
TRAKING OF
BICYCLES
SOS PUSH
TO TALK
WATER MANAGEMENT
SENSORS
OUTDOOR SENSORS FOR TEMPERATURE
OUTDOOR SENSORS FOR ATMOSPHERIC
PRESSURE
INFO FROM
OTHER DATA SUPPLIERS
WI-FI
Data transportation
Enabler of new services optimization
47
ENERGY
BIOMETHANE
Fast and quick charging stations to make Lombardy the best Italian city for electric vehicles
Becoming a key player in the forthcoming EV market
90,000 400,000
240 t 1.000 t
Lacchiarella, Bedizzole + another 2 plants in Northern Italy
Over 20 MSm3 year of bio-methane by 2020 as green fuel for transportation
#charges
PARKING SPACES
Traffic congestion reduction thanks to delivery platform, sensors and vertical solutions
Design and management of parking technology based on broad data and integrated with 3rd-party applications
kWh
MSm3
#
Mobility solutions
Building profitable mobility solutions
Strategic plan 2017-2021
Relaunch
Re-generation
Reshape
Smart City
Energy Efficiency
48
E.E. Certificates (TEE)
LED relamping almost completed
Growth achieved with a mix of organic growth and selective M&A
Energy Efficiency
Analysis of M&A opportunities
in complementary segments
Palazzo della Loggia Brescia
RE
GU
LA
TE
D
/Q
UA
SI-R
EG
ULA
TE
D
FR
EE
MA
RK
ET
Lighting points District cooling plants Led public lighting
and ESCo projects
Strategic plan 2017-2021
Relaunch
Re-generation
Reshape
Energy Efficiency
~2x
209
418
2016 2021
196
OTHER LED
Consultancy TEE Energy consumption analysis
Industrial Design & installation Monitoring Combined Heat & Power EPC
Horizon 2020 projects, Demand Side Management & Demand Response Metering
49
DISCIPLINE DIALOGUE DIGITAL
Operational excellence project adoption
Further deleveraging, with higher Capex and DPS
Dividend target of 7.5 €cent in 2019 confirmed
Extension of multi-stakeholder forum and territorial sustainability reports
Sustainability target in management MBO
People: ageing policy, welfare, managerial development,
talent management, employer branding
Further Business Units process digitalization
New HR ERP
Strong fiber development
New IT and digital services to municipality
Strong investments in automation
50
PEOPLE &
SUSTAINABILITY
51
30 actions by 2020
Piano Industriale 2015-2019
Piano di Sostenibilità
2014
GOALS and TARGETS 2030
ACTION and ENABLING DRIVERS - 2020
2030 10/17 goals
The sustainability policy and the 2030 commitments
SDG vs.
VALUE CHAIN
CIRCULAR ECONOMY
DECARBONIZATION SMART GRID AND
SERVICES PEOPLE
INNOVATION
OUR
2030 PATH
FROM TO
2016 Consolidated Results
2014-16, how we did it
Strategic plan 2017-2021
People & Sustainability
Financials
A2A 2030 sustainability policy
Develop a sustainable waste management
approach for the entire life cycle
Contribute to the achievement of the
national and European objectives to reduce
GHG emissions
Increase the reliability of grids and services by increasing
the investments in technological innovation
Actively contributing to community welfare and
improved working conditions
52
CIRCULAR ECONOMY
DECARBONIZATION
SMART GRID AND SERVICES
PEOPLE INNOVATION
2016 results 2020 goals
99.0%
67.0%
80.0%
56.2%
84%
98.86% Urban waste sent for recycling or energy recovery
Separated waste collection in the communities served
Impact of the recovery capacity of the material in the Group's plants on the urban waste collected
392.5
-234
1,260
Carbon intensity in electricity generation (gCO2/kWh)
CO2 avoided thanks to the extension of the district heating network (ktonnes/year)
Green electricity sold (GWh)
417
769
- 161
The CSI Total in “multi-client of reference” surveys (CERVED DataBank) with a value never below 90%
customers with online A2A Energia services 400,000
Million euro invested in the Smart City area 10
268,818
1.9
92.4%
regional workshops with 30 actions to be implemented
inspections/year at the roadwork sites of the A2A Group
Target employees involved in Smart Working projects
15
4,000
20%
2 workshop (11 actions)
1,406
5%
A2A 2020 sustainability plan goals
2016 Consolidated Results
2014-16, how we did it
Strategic plan 2017-2021
People & Sustainability
Financials
2020 goal already achieved
53
Employability Project
Labs of technical skills (hydro, networks, procurement), high-school/work experience
Talent management, employer branding
ABC Managerial Development, Melograno Project, Smart Working, HCM IT Platform, WE HR change management
Lean-Kaizen and operational
excellence projects
Welfare platform, working spaces
redesign
People strategy
Ageing management
1 2
3
4 5
6
Skills model
Talent management
Company Welfare
Continuous improvement
Cultural changes
and diversity
A2A people ready to face cultural and technical challenges of tomorrow
People Strategy drivers & projects
2016 Consolidated Results
2014-16, how we did it
Strategic plan 2017-2021
People & Sustainability
Financials
54
Who are the promoters?
A2A, with Fondazione AEM and ASM and in cooperation with Fondazione Cariplo
What is it?
It’s a non-profit organization created to support people and families with social fragilities
How does it work?
Through non-profit organizations selected by Banco dell’energia through tender process
Who are the donors ?
Employees, A2A’s household and business customers, companies, citizens, etc.
A project of social innovation born with a participatory approach
A2A is committed to doubling the amount donated by its household customers.
Fondazione Cariplo will double all the money received. Target: 2 million euros in 2017
Banco dell’Energia
2016 Consolidated Results
2014-16, how we did it
Strategic plan 2017-2021
People & Sustainability
Financials
55
FINANCIALS
56
1,120 – 1,150
~300
~0 – 100
EBITDA
2017F
NET INCOME
CAPEX
CASH FLOW
~550 – 600
1,120 – 1,150
* Central value of the range 1,120 €M – 1,150 €M considered as the reference value for EBITDA 2017
~ +3%
€M
EBITDA
2016 – 2017
2016 Consolidated Results
2014-16, how we did it
Strategic plan 2017-2021
People & Sustainability
Financials
57
1,135*
1,380 1,380
66
422
263
141
268
78 51 34
34 6 31 12
97
457
341
192
301
22%
13%
2017 WASTE ENERGY
RETAIL
NETWORKS
AND
DISTRICT
HEATING
GENERATION
& TRADING
SMART CITY
EPCG OTHER 2021 2021 REGULATED /
FREE MKT MIX
REGULATED
QUASI REGULATED
MERCHANT LOW VOLATILITY
MERCHANT HIGH VOLATILITY
OTHER
EPCG
NETWORKS
GENERATION & TRADING
WASTE
ENERGY RETAIL
SMART CITY
BY
BU
BY
MIX
+245
- 34 - 22
8
14
* Central value of the range 1,120 €M – 1,150 €M considered as the reference value for EBITDA 2017
€M
2016 Consolidated Results
2014-16, how we did it
Strategic plan 2017-2021
People & Sustainability
Financials
EBITDA
2017 – 2021
30%
35%
58
317
245
- 48
24
41
- 80 - 29
470
EBITDA D&A PROVISIONS NET FINANCIAL EXPENSES
TAXES
MINORITIES 2017
GROUP NET
INCOME
2021 GROUP
NET INCOME
+153
€M
2016 Consolidated Results
2014-16, how we did it
Strategic plan 2017-2021
People & Sustainability
Financials
Net Income
2017 – 2021
59
M&A
DEVELOPMENT
MAINTENANCE
MANDATORY
2017 - 2021 TOTAL CAPEX
2,750
3%
57%
36%
5%
2017 - 2021 TOTAL CAPEX
2,750
9%
47%
25%
8%
6%
1%
2%
GEN.
& TRADING
RETAIL
WASTE
DISTRICT
HEATING
NETWORKS
CORPORATE EPCG
1% SMART CITY
2017 - 2021 TOTAL CAPEX
2,750
12%
34%
1%
53%
MERCHANT
MERCHANT LOW
VOLATILITY
QUASI
REGULATED
REGULATED
€M
2016 Consolidated Results
2014-16, how we did it
Strategic plan 2017-2021
People & Sustainability
Financials
CAPEX
2017 – 2021
60
NFP
2016
3.1
Ebitda
-6.3
Change in
NWC& other asset/liab.
0.3
Use of
Funds
0.2
Tax
1.0
Net
FinancialExpenses
0.5
CAPEX
2.8
Dividends
& Other
0.9
NFP
2021
2.5
2.5x 1.8x
*Inclusive of net write-offs (256 €M). By excluding net write-offs, Return on Investments is equal to 11%
-0.6
€B
~7,1%* RETURN ON INVESTMENTS ~12%
2016 Consolidated Results
2014-16, how we did it
Strategic plan 2017-2021
People & Sustainability
Financials
Cash flow generation
2017 – 2021
61
(1) FFO = Ebitda – provisions for bad debt - net interest expense - current tax expense + dividends received Debt = gross financial debt net of surplus cash + employee benefits + liabilities for landfills
2016 Consolidated Results
2014-16, how we did it
Strategic plan 2017-2021
People & Sustainability
Financials
DPS and FFO/Debt
2017 – 2021
2013 2014 2015 2016 … 2019 2021
A2A
DIVIDEND
PER
SHARE
(€c)
3.3 3.6 4.1 4.92 ~ 7.5
Min 60%
pay-out ratio
FFO /
DEBT 1 17% 18% ~21% ~24% > 25% > 25%
CO
NF
IRM
ED
C
ON
FIR
ME
D
~ +50%
62
(1) Electrical connection from road level to user’s individual apartment
LOCAL AGGREGATIONS
HEAT TRANSPORTATION BACKBONE CASSANO-MILANO
POTENTIAL DEVELOPMENT ABROAD
DISTRIBUTED ENERGY RESOURCES (DER)
PLANT RECONVERSIONS
GAS NETWORKS: FURTHER GROWTH THROUGH GAS TENDER
OPERATIONAL EXCELLENCE
REHABILITATION OF “COLONNE MONTANTI” (1)
EPCG EXIT OPTION
FEASIBILITY
tbd
EBITDA
IMPACT
10-20
50-75
10-20
50-60
5-8
5-20
5-10
tbd
PROJECT LIST
135- 210
EBITDA EXIT PRICE
2016 Consolidated Results
2014-16, how we did it
Strategic plan 2017-2021
People & Sustainability
Financials
Additional projects
€M
63
WRAP UP
64
Waste, Retail and Networks to lead the growth More options for generation and a more conservative energy scenario Resilience of net income growth to commodity prices Dividend target of 7.5 €cent in 2019 confirmed Positive free cash flow generation with increasing Capex and dividends
Key takeaways
2017 – 2021
65
NO LONGER A GEN.CO.
Growth mainly driven by non-generation
businesses
Higher option value from generation assets
and Winter Package
Strong CAPEX increase in regulated/
quasi-regulated markets
Annual investments 50% higher than past three
years’ average
Further optimization from operational
excellence
Local aggregations, M&A, RES/DER
and other projects to strengthen A2A
positioning and to mitigate risk
Updated Project Pot
BOOST IN BUSINESSES WITH PROVEN TRACK RECORD
ROOM FOR UPSIDES
OUR FUTURE IS SUSTAINABLE, GREEN, OPEN, SMART
A2A: what kind of company going forward?
66 66
Word Cloud 2017 – 2021
67
Q&A
68
68
ANNEXES
FY 2016 vs. FY 2015
2017B-2021 STRATEGIC PLAN
69
69
Other Treatment Plants
Collection
Urban Waste Treatment Plants
International Projects
LGH
FY 2016 vs FY 2015 RESULTS BU WASTE
2015
36
132
69
210
2015 NonRecurring
Items/Redundancy
Schemes
-4
2015Ordinary
36
129
68
206 6-4
Internationalprojects
-2
LGH
11
2016Ordinary
12
143
74
231
2016 NonRecurring
Items/Redundancy
Schemes
2016
1112
151
75
240
Collection UrbanWaste
TreatmentPlants
14
OtherTreatment
Plants
9
+25 €M
+30
70
70
+42
+30
€M
FY 2016 vs FY 2015 RESULTS BU RETAIL
71
71
+56
+19
* Includes San Filippo del Mela merchant
€M
FY 2016 vs FY 2015 RESULTS BU GENERATION & TRADING
72
72
+44
-5
2015
12826
70
198
202
-271
2015 NonRecurring
Items
12926
69
198
205
-268
WaterCycle
2
ElectricityNetworks
-19
GasNetworks
-5
PublicLighting
-2
DistrictHeating
-11
Fix Costs
18
EBITDALGH
12
2016Ordinary
-250
186
193
7124
118
12
2016
-258
185
195
122
24
117
12
2015Ordinary
2016 NonRecurring
Items
35443
397353 6 359 354
43
397353 6 359
Gas Networks Contribution Margin
Electricity Networks Contribution Margin
Water Cycle Contribution Margin
Public Lighting Contribution Margin
Fixed Costs Heating Contribution Margin
Fixed Costs
€M
FY 2016 vs FY 2015 RESULTS BU NETWORKS AND DISTRICT HEATING
73
73
+1
€M
FY 2016 vs FY 2015 RESULTS BU SMART CITY
74
74
+16
2015
1
19
33
53
Generation and Retail
5
Distribution
11
2016
1
30
38
69
Energy
Other
Distribution
€M
FY 2016 vs FY 2015 RESULTS BU EPCG
75
75 *P&L includes 5 months (August-December 2016) of LGH consolidation
€M
FY 2016 vs FY 2015 RESULTS CONSOLIDATED RESULTS: P&L*
76
76
Intangible Assets
Shareholdings and Other Non Current Financial Assets
Other Non Current Assets/Liabilities
Deferred Tax Assets and Liabilities
Provisions for Risks, Charges and Liabilities for landfills
Employee Benefits
NET FIXED CAPITAL
Inventories
Trade receivables and other current Assets
FY 2015 FY 2016 %
Tangible Assets 5,067
Current tax Assets/Liabilities
WORKING CAPITAL
TOTAL CAPITAL EMPLOYED
Equity
Net Financial Position
TOTAL SOURCES
1,348
80
(66)
308
(576)
(332)
5,829
184
1,652
28
180
6,156
3,259
2,897
6,156
Trade payables and other current Liabilities (1,684)
Non current Assets /Liabilities held for sale 147
5,080 +0.3%
1,724 +27.9%
80 -
(85) +28.8%
363 +17.9%
(668)
(365) +9.9%
6,129 +5.1%
159 -13.6%
2,209 +33.7%
37 +32.1%
277 +53.9%
6,407 +4.1%
3,271 +0.4%
3,136 +8.2%
6,407 +4.1%
(2,128) +26.4%
+16.0%
1 n.a.
€M
FY 2016 vs FY 2015 RESULTS CONSOLIDATED RESULTS: BALANCE SHEET
77
77
-
-24
*Ordinary fixed costs, excluding change in perimeter and cost covered by revenues
€M
FY 2016 vs FY 2015 RESULTS CONSOLIDATED RESULTS: EXTERNAL COSTS
78
78
FTE(1)
LABOUR COSTS (€M)
(1) A2A Group’s Full Time Equivalent
2015 FY
12,230
Change in
perimeter
-306
2015 FY
excludingchange in perim.
11,923
Net
reduction
-132
2016 FY
excludingchange in perim.
11,791
1,539
2016 FY
13,330
Change inperimeter
2015 FY
657
-12 -5
640 2
-3 -4
2016 FYexclud.change
in perimeter
635 1141
2016 FY
687
Change inperimeter
Red.schemes
2015 FYexclud.change
in perimeter
Othercosts
FTEeffect
Costeffect
Red.schemes
Change inperimeter
+1,100
+30
-5
€M
€M
FY 2016 vs FY 2015 RESULTS CONSOLIDATED RESULTS: LABOUR COST
79
79
2017
309
309
2018
299
105
404
2019
568
105
673
2020
100
100
2021
430
101
531
2022
500
99
599
2023
300
92
392
2024
70
70
2025
300
62
362
2026
45
Beyond2026
98
179
277
45
Bonds
Loans
€M
FY 2016 vs FY 2015 RESULTS GROSS DEBT MATURITIES AS OF DECEMBER 31st, 2016
80
80
Average data 2015 FY 2016 FYD % vs
2015
Brent $/bbl 53,7 45,1 -16%
CO2 - EU ETS cost €/Tonn 7,7 5,4 -30%
Green Certificates €/MWh 98,3 49,8 -49%
€/$ €/$ 1,1 1,1 0%
Brent € €/bbl 48,4 40,8 -16%
PSV(1) €/MWh 22,0 15,6 -29%
AEEGSI Gas Tariff (2) c€/mc 22,9 15,6 -32%
Coal € (API2) €/Tonn 51,2 54,2 6%
PUN baseload(3) €/MWh 52,3 42,7 -18%
PUN peak(3) €/MWh 58,7 48,2 -18%
PUN off-peak(3) €/MWh 48,7 39,8 -18%
CCGT gas cost(4) €/MWh 49,8 37,6 -24%
Spark Spread CCGT_PSV vs Baseload €/MWh 2,5 5,1 n.a.
Spark Spread CCGT_PSV vs Peakload €/MWh 8,9 10,5 18%
Spark Spread CCGT_PSV vs Off-Peak €/MWh -1,1 2,1 n.a.
Clean Spark Spread vs Baseload €/MWh -0,4 3,1 n.a.
Clean Spark Spread vs Peakload €/MWh 6,0 8,5 42%
Clean Dark Spread vs Baseload(5) €/MWh 15,8 7,2 -54%
Italian electricity demand(6) TWh 316,9 310,3 -2%
Gas demand Bmc 66,9 70,4 5%
(1) Gas at virtual trading point
(2) Pfor 162/14 Oct 2014-Mar 2016.
(3) hourly average for each month
(4) based on gas at virtual trading point with 51% efficiency; includes transport costs
(5) 35% efficiency - includes cost spread on API2 and transport cost
(6) data subject to update by Terna
FY 2016 vs FY 2015 RESULTS ENERGY SCENARIO
81
81
(1) FY2015 Hydro production includes 269 GWh related to Asta Cellina (2) Net of intermediated Ipex volumes
(1)
(2)
FY 2016 vs FY 2015 RESULTS VOLUMES
82
82
ANNEXES
FY 2016 vs. FY 2015
2017B-2021 STRATEGIC PLAN
83
83
UM 2015 2016 2017 2018 2019 2020 2021
Exchange rate €/$ €/$ 1.11 1.11 1.06 1.08 1.11 1.13 1.16
ICE Brent €/bbl 48.4 40.7 54.5 56.5 57.7 61.1 60.3
Coal API 2 €/tonn 51.2 54.0 65.0 60.2 56.8 55.8 54.3
CO2 (EUA ETS) €/tonn 7.7 5.4 5.3 5.6 6.4 7.2 8.0
AEEGSI Gas Tariff (Pfor) €c/mc 22.9 15.6 19.6 18.0 17.3 17.2 17.7
PSV €/MWh 22.0 15.6 19.8 18.5 18.4 18.3 18.2
TTF €/MWh 19.8 14.0 18.1 16.8 16.2 16.1 16.5
PUN Base Load €/MWh 52.3 42.7 46.9 47.6 48.2 49.2 49.2
PUN Peak Load €/MWh 58.7 48.2 50.9 53.6 54.2 55.2 55.2
CCGT Gas Cost (PSV) €/MWh 49.8 37.6 46.8 43.9 43.7 43.5 43.3
Peak Spark Spread €/MWh 8.9 10.5 4.1 9.7 10.5 11.7 11.9
Spark Spread (PSV) €/MWh 2.5 5.1 0.1 3.7 4.5 5.7 5.9
Clean Spark Spread (PSV) €/MWh -0.4 3.1 -1.8 1.6 2.1 3.0 2.9
Dark Spread €/MWh 23.3 12.5 13.1 15.8 17.9 19.3 20.0
White Certificates €/Toe 104.2 145.5 130.0 150.0 150.0 150.0 150.0
2017B-2021 STRATEGIC PLAN SCENARIO AND MAIN ASSUMPTIONS
84
84
2016
Ordinary
231
2017
262
Urban waste
treatment
72
Other treatment
and collection
7
2021
341
2016
Ordinary
231
2017
262
Collection
5
Existing treatment
plants(price and efficiency)
24
Volumes
of newtreatment plants
61
Costs
(mainly Labour)
-11
2021
341
*
* 2016 excluding one-off equal to 9€M and including LGH consolidated only for 5 months ** 2017 excluding one-off equal to 1€M
CAGR +6.8%
**
*
**
CAGR +8.1%
Breakdown by BU sub-segment
Breakdown by growth driver
2017B-2021 STRATEGIC PLAN BU WASTE
85
85
Existing treatment
plants
• Limited volume increase, cost efficiencies and better flow management
• Full exploitation of 2016 acquisition
• About +0.5% p.a. of price increases due to Italian lack of availability of landfills
New treatment
plants
Business Plan assumptions
Driver
• ~0.7 ktons of growing capacity on new sites, mainly related to organic and plastic treatment
• Administrative authorization on 500/700 ktons in progress
• Plant roll-outs spread through plan timespan
• Most of economic benefits from internal waste flows integration
2017B-2021 STRATEGIC PLAN BU WASTE – Drivers & Assumptions
86
86
2016
Ordinary
120
2017
135
Power
Market
44
Gas
Market
33
Fixed
costs
-27
Value
AddedServices
7
2021
192
*2016 excluding one-off equal to 24€M and including LGH consolidated only for 5 months ** 2017 excluding one-off equal to 6€M
*
**
CAGR +9.9%
CAGR +9.2%
* ** Breakdown by BU
sub-segment
Breakdown by growth driver
2017B-2021 STRATEGIC PLAN BU RETAIL
Regulated market
87
87
Customer Base
• Free market customer base +150K avg p.a.(1) leveraging upon:
• Gradual territory expansion
• SME segment development (new dedicated sales force)
• Brand equity
• Proven track record (average past 2 yrs growth +120K. Incl. M&A: +180K)
• No growth from M&A in the plan
Unitary Margin • Expected to reduce ~3% avg p.a. on growing competition(2)
Fixed costs
• Cost-to-Acquire, per unit, planned to grow ~5% avg p.a. on growing competition
• Steady Cost-to-Serve, per unit, thanks to strong focus on operating performance
Business Plan Assumptions Driver
(1) Assuming current regulatory and market structure continuity (2) Mass market unitary margin – Residential and small business customers – excluding regulated components
2017B-2021 STRATEGIC PLAN BU RETAIL – Drivers & assumptions
88
88
2016Ordinary
285
69
354
2017Ordinary
309
90
399
Tariffs(Gas/El./Water)
10
Gas tender
30
PublicLighting
8
CommercialDevelopment
9
EnergyEfficiency
3
Scenario
-2
2021 P
357
100
457
Networks
District Heating
2016
Ordinary
117
124
33
69
354
2017
Ordinary
126
126
40
90
17
399
EE
-4
GAS
22
IWC
22
DH
10
PL
8
2021P
148
122
62
100
25
457
..
11
*
CAGR +6.6%
CAGR +5.2%
* 2016 excluding one-off equal to 43€M and including LGH consolidated only for 5 months ** 2017 excluding one-off equal to 23€M
**
Heating Networks
*
**
Breakdown by BU sub-segment
Breakdown by growth driver
2017B-2021 STRATEGIC PLAN BU NETWORKS & HEATING
89
89
Gas tenders
Public Lighting
• #PoD: +180k (+12%)
• RAB: +200€M
• #ATEMs: 10-15 (target @ 2021)
• Capex: +320€M
• Lighting points 2x (over 400K)
• New Tenders
• 1 M&A transaction (H2 2017)
Commercial development
• DH development mainly in eastern Milan area (saturation of Silla 2 WTE plant thermal capacity)
• New connections: 44 MW/Yr (vs. 60 MW/Yr average past 3 yrs)
Energy Efficiency
• Full potential exploitation of 2016 acquisition
• Synergies between A2A technical skills and Consul System market leadership in “white certificate” origination
Business Plan Assumptions Driver
2017B-2021 STRATEGIC PLAN BU NETWORKS & HEATING – Drivers & Assumptions
90
90 * 2016 excluding one-off equal to 52€M and including LGH consolidated only for 5 months
** 2017 excluding one-off equal to 5€M
*
**
*
CAGR -3%
CAGR +2.8%
**
Ordinary
Breakdown by BU sub-segment
Breakdown by growth driver
2017B-2021 STRATEGIC PLAN BU GENERATION & TRADING
€M
91
91
Hydro & Coal
• Production in line with 10-year average
• PUN baseload 2021: 49 €/MWh
• Achieved price vs. PUN BL same as historical average (6 €/MWh)
• Higher Dark Spread to 12 €/MWh
CCGT plants
• 2 TWh Increase in MGP production due to:
‒ Expected increase of “thermal” demand of ~10 TWh, to be supplied by CCGT
‒ Best positioned CCGT :
‒ Located in the North
‒ With spare capacity
Capacity & Ancillary Markets
• MSD in line with average historical margins
• Capacity market reduced to 13 €K/MW due to elimination of flexibility segment by EU
Business Plan Assumptions Driver
SFM • Contractualized as “must run” until to 2021
2017B-2021 STRATEGIC PLAN BU GENERATION & TRADING– Drivers & Assumptions
92
92
2016
38
30
69
2017
41
24
1
66
Generation and Retail
23
Distribution
8
2021
64
32
1
97
CAGR: 7,7%
CAGR: 10%
Energy
Other
Distribution
Breakdown by BU sub-segment
Breakdown by growth driver
€M
2017B-2021 STRATEGIC PLAN BU EPCG
93
93
Tariffs
Cost saving
• 2018-2019 annual increase of 2.7% approved by the local authority. 2020 onward in line
• Voluntary Staff leave program (>200 hdc)
• Savings on current expenses (mainly maintenance materials and services – about 2 €M savings in the period 2013-2016)
Scenario
• Higher feed-in tariff
• Lower cost of coal
Business Plan Assumptions Driver
2017B-2021 STRATEGIC PLAN BU EPCG – Drivers & Assumptions
94
A2A Investor Relations Team
Mail: [email protected]
Phone: +39 02 7720 3974
http://www.a2a.eu/en/investor/
Contacts
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 and neither 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 meetings may 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 place undue 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 those contained 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, the competitive market and regulatory factors. Moreover, forward-looking statements are
current only at the date on which they are made.
Monthly update service for investors and analysts on the significant steps
of A2A Business Plan – such as relevant investments, new projects,
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If you wish to subscribe to the service, please visit A2A website at the
following link https://www.a2a.eu/en/investors/documents#BPN