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Drawing the future
BusinessBusinessBusinessBusiness planplanplanplan to 2019to 2019to 2019to 2019
Hera Business plan up to 2019
Strategy framework
Growth Drivers
Internal Growth
External Growth
Hera key strengths
Business strategic framework
Ebitda by ASA
Sensitivity analysis
WACC review
Networks
Waste
Energy
Sustainability
Capex plan
Financials
Closing remarks
05
06
07
09
10
12
13
14
15
16
17
18
19
20
21
22
Annex
2014 ADJ. and Assumptions
Ebit breakdown by ASA
Financial strategy
Sustainability KPIs
Disclaimer
23
24
25
26
27
Index
Our ambitions
Harvest from the past, blossom for the future, exploit market momentum
05GRUPPOHERA
Consolidation “momentum”
Economic recovery
Low inflation
Regulated tenders & tariff review
Increased competition
Scenario’s change
Continue growth
through consolidation
…to create value
Goals
Scenario
Strategic framework
Pursue Efficiency
Risk protection
Expand markets
Multi-utility Platform
Low interest rates
Sector’s change
Industry’s change
Lower uncertainties A consistent strategy…
Volatile commodities
Operational excellence
Leverage innovation
Enhance efficiency
868 841
1,030
(27)
+97
+21
(30)
(25)
+14
+112
2014 One offs 2014 Adj. Org. G. Synergy Incentives
on Renew.
Wacc
review
Gas
Tenders
Mergers E2019
Growing with our “two Pillars” model
06GRUPPOHERA
Ebitda 5Y growth
(M€)
Proven track record, low risk, higher visibility
Internal growth: +118M€ External growth: +126M€
10% of Operating Efficiencies and of Synergies relates to Innovation
“Internal growth” levers: Efficiency, Synergies and Org. growth
Elect. customers exp.
(M unit)
0.8
1.0
'14 '19
Process efficiency
Synergies
Asset Base RAB
+93m€
Market development
Resource efficiency
+118m€
Internal
Growth
23
+72
15
8
9
17
HR Optmiz
ation
Maint
enance
Procur
ament
Cost to
serve
Total
Effic.
15
36+21
Achieved Plan Total
2.9
3.0
'14 '19
Property RAB dev.
(B€)
Special Waste exp.
(Mton)
GRUPPOHERA
2,1
3,2
'14 '19
Resource&Process efficiency
(M€)
+25m€
+21m€
07
Synergies achieved and expected
(M€)
+72m€
“Internal growth” highlights the value creation of Hera as for ‘14 perimeter
08GRUPPOHERA
* Adjusted for positive one offs: 27 m€
1.814
+2.723
2015 2016 2017 2018 2019
Capex and operating cash flows
(M€, cumulated)
8.1%
8.5%
6.5%
5.7%
2014* E2019
ROl & value creation
(%)
Ebitda per Employee
(K€ per capita)
Value creation and cash generation potentials of “Hera” model
Value creation
EPS growth and ROE
(c€, %)
Reg. WACC
Value creation
10.0
12.4
2014* E2019
EPS EPS inc. for IRES cut
+0.7
5,3%
6,8%
5,0%
7,2%
Reg. Ke
'14
ROE
'14*
Reg. Ke
E'19
ROE
E'19
100
110
'14 '15 '16 '17 '18 '19
+2.0% CAGR
Cash Flows Capex
ROI
External growth potential to deploy Hera’s model
Market momentum offers several opportunities for external growth
09GRUPPOHERA
Mergers
of multi-utilities
Market
fragmentation
~ 700 220 ̴ 400
Enabler • Government incentives
• Municipal financial constraints
• Gas tenders
• Larger waste collect. concessions
• Compulsory at national level
• No further delays expected
• Territorial rationalization opportunity
• Increased
competition
• Competition
pressure on
Small- sized
Enabler
expected • “Madia” law • None • Tenders on
provincial basis
• Increased competition
Potential
Targets in Ref.
territory
• 11 companies
• 13 Ref. ATEMs
• Ebitda 14 M€
(additional)
Selection
criteria
• Neighbourhood, same mix, sound
• >20m€ Ebitda
• Non dilutive multiples
• Full integration of operations
• Reference
ATEM
• In 10-12
Reference
provinces
• National scope
• Non dilutive multiples
• Full integration of operations
Tenders
Gas distib. Waste collection
Acquisitions
Energy supply Waste treat..
̴ 250 ~ 600
• Ebitda ~40 M€ in tot
• ~ 580K customer in tot
Potential Business plan
MERGER
in ref. territory
11 Targets +112M€ Ebitda
4 Targets
TENDERS
177 ATEMs at
national level
13 ATEMs only in
reference territory
+14m€ Ebitda
ACQUISIT.
Large number
of potential
targets
High fragmented
markets and
increasing
competitive
pressure on
smal/mid sized
companies
NONE
(only those already
executed)
Solid premises to deploy Hera’s accretive model with “visible targets”
10GRUPPOHERA
Business plan external growth Ebitda targets
(M€)
Merger value creation: Synergies
(Ebitda increase M€, years post merger)
Historical avg. of synergies:+20% Ebitda
of target companies merged in 5Y
+22M€
Potential
1st
2nd
3rd
4th5th
Value creation from expected M&A goes “ON TOP”
M&A targets rely on a solid-12 year track record
Visible targets, aiming at even better ones
11GRUPPOHERA
12Y Track record Next 5y
+22.8 +22.4
Annual average Ebitda contribution from M&A
(M€)
Building up value leveraging upon our strengths
Changing environment: a threat for the many, an opportunity for us
12GRUPPOHERA
Effective
organization
Economies
of scale
Competitive
commercial
offers
Large retail
customer base
Modern IT platformPlant building &
mgmt expertise
Strong governance
& financial strength
Know how
Excellence
Efficiency Growth
Innovation
Strategy
53%
47%
Above 1 Billion Ebitda growth comes from core businesses
Ebitda by strategic area
(M€)
13GRUPPOHERA
416 389
483
242
(27)
242
+94
+60
302
188 188
+26
21422
22
+9
31
2014 Rep. Adj. 2014 Adj. Networks Waste Energy Other E2019
868
1,030
2014 55%
45%
E2019
Regulated activities Free market competition
Maintaining a solid and balanced growth
841
Sensitivity analysis on key drivers
Sensitivity to GDP
(plus or minus 1%, impact in M€, % impact on Group Ebitda)
Sensitivity to Gas prices
(plus or minus 1 Eurocent per cubic meter, impact in M€, % impact on Group Ebitda)Sensitivity to PUN prices
(plus or minus 1€/MWh, impact in M€, % impact on Group Ebitda)
14GRUPPOHERA
Sensitivity to oil prices
(dollar per barrel impact in M€, % impact on Group Ebitda)
A low exposure to macro variables built up by risk adverse strategies
GROUP EBITDA
1$/Barrel 0.05M€
(0.01%)
GROUP EBITDA
1% 4.00M€
(0.5%)
GROUP EBITDA
1€/MWh 0.50M€
(0.06%)
GROUP EBITDA
1c€/M3 1.00M€
(0.12%)
44,8%
40,2% 38,4%
2013 2014 E 2015
Wacc review reflects macroscenario positive changes
15GRUPPOHERA
Italian Tax rate reduction
(Robin tax and Irap reductions)
4,1% 4.0% 3,8%
2013 2014 E2015
Lower Average cost of debt
(lower free risk impact on debt costs)
Higher visibility, negligible effect on earning
Authorityrationaltoreview
regulatoryWACC
Compensating
impact on real
post tax earnings
* Return pre-IRAP
Wacc review by activity
Reg.
period
Concession
length
‘15 Reg.
Returns
WACC
review
‘16 Reg.
Returns
Water ‘16-’17 ~2024 6.1%* (0.7%) 5.3%*
Gas distribution ‘16-’18 2016-2019 6.9% (0.8%) 6.1%
Electricity distribution ‘16-’18 ~2030 6.4% (0.8%) 5.6%
̴ (25 M€)
impact
AuthorityWACCreview
2,89
3.31
0,29
+0.13
0.42
+0.12
+0.30
2014 Water Energy distr. 3rd parties E2019^
NETWORKS: low risk cash generator
Developing our “safety box”
Ebitda growth drivers
(M€)
GRUPPOHERA
416
389
483
(27)
+10
+42
(25)
+14
+53
'14 Rep. Adj. '14 Adj. Syn. Org. G. Wacc Tender M&A E'19
PDR/Employee
(K unit)
1,611
1.166
68
306
73
2015 2016 2017 2018 2019
Maintenance Developm. Tenders M&A
5Y Capex plan: 55% of 2014 property RAB
(M€)
2014 E2019 Ch.%
PDR 5.8m 6.2m +6.54
Employees 2,282 2,250 (1.4%)
2.547
2.750
2014 E2019
RAB evolution in next 5Y
(B€)
16
3.2
3.7
^ Excluding RAB from M&A included in Business Plan targets
crisis
WASTE: a further expansion of presence at national level
Ebitda growth drivers
(M€)
239
302
242 +5
+62
(30)
+23
2013 2014 Synergies Org.
growth
Incentives M&A E2019
17
1,0
1,5
1,8 1,8 1,7 1,6
2,1
3,2
'02 '04 '06 '08 '10 '12 '14 '16 '18 '19
Back to track records growth and full load factors
Expected demand increase for S.W. treatment
(Mton)
Back to double digit growth rates
Achieved expansion in strategic areas/assets through M&A
320
104
33
2015 2016 2017 2018 2019
Maint. Developm. M&A
Cumulated Capital expenditures
(M€)
457
Friuli
Veneto
Emilia -Romagna
Marche
Trentino
Lombardy
Piedmont
Liguria
Tuscany
Umbria
Geonova
Waste Recycling
Ebitda: ̴ 5 M€
Yearly W. disposed: 150 Kton
Treat. Capacity: 1.5 Mton
Potential syn.: ̴ 0.5 M€
Ebitda: ̴ 6/7 m€
Yearly W. treated: 370 Kton
Potential syn.: ̴ 1 M€
GRUPPOHERA
ENERGY: keeping low risk profile
Offsetting pressure on margins
ENERGY Ebitda growth factors
(M€)
18GRUPPOHERA
0,7
0,8
0,1
0,1
2014 E2019
Retail Business
Business / Retail electricity customers
(M Unit)
0.8
1.0
188
214
(16)
+22
+20
2014 Mkt
Competition
Mkt
Expansion
External G. E2019
124
136
(16)
+6
+22
2014 Mkt
competition
Mkt
Expansion
External G. E2019
Electricity Ebitda growth factors
(M€)
Gas Ebitda growth factors
(M€)
64
78
(0)
+16
(2)
2014 Mkt
Competition
Mkt
Expansion
External G. E2019
The 3R approach to sustainability
3R
Food,Food,Food,Food,
TechnicalTechnicalTechnicalTechnical vehicles,vehicles,vehicles,vehicles,
FurnitureFurnitureFurnitureFurniture,,,,
PharmaceuticalsPharmaceuticalsPharmaceuticalsPharmaceuticals
19GRUPPOHERA
Exploring innovative sustainability paths
REDUCEREDUCEREDUCEREDUCE
65%65%65%65% sortedsortedsortedsorted collectioncollectioncollectioncollection
BioBioBioBio----methanemethanemethanemethane gasgasgasgas
WasteWasteWasteWaste recoveryrecoveryrecoveryrecovery 94%94%94%94%
Energy efficiency,Energy efficiency,Energy efficiency,Energy efficiency,
Landfill diversion,Landfill diversion,Landfill diversion,Landfill diversion,
Operation process reOperation process reOperation process reOperation process re----engineeringengineeringengineeringengineering
The capital expenditures
20GRUPPOHERA
Fully funding Group expansion
78%
22%
Liberalised
Regulated
Capex breakdown by driver
(M€)
Regulated/liberalised
(%)
332
2.222
+1,632 172
+418
Maint. Developm. Tenders/ M&A Capex '15-'19
Capex breakdown by business
(M€)
2.222
+1,611
+457
+79
+75
Networks Waste Energy Other Capex
2.222
+2.954
2015 2016 2017 2018 2019
Cum. capex and cash flows before dividends
(M€)
Cash Flows Capex
20.3%
E2015 E2019
3,16x 3,11x 3,06x 3,01x 2,96x 2,91x
2014* E2019
8.1%
8.2%
(0.75%)
+0.85%
2014* Wacc review Value
creation
E2019
Financial flexibility
Financial highlights
Return on invested capital & value creation
(%)
Debt/Ebitda decrease enhance flexibility
(x)
More fire power to fund M&A opportunities guaranteeing dividend flows
21GRUPPOHERA
E’19 ROE: 7.2%
FFO/Net Debt and current ratings
(%)
Baa1/stable
BBB/Stable
EPS growth
(cumulated increase % )
+16,7%
+22,4%
Past 5Y Next 5Y
Plan Ires cut
*Adjusted 2014 figures
+30%
Closing remarks
2 1
Targeting a further constant growth in line with track records compensating re-
basement of regulated returns maintaining our peculiar low risk profile.
Scenario improvement underpins better “visibility” on targets of the internal
growth and the external growth, the 2 proven “pillars” of our growth model.
First year of Business plan (2015) highlights a solid growth in both “pillars”.
Cash generation assuring enhanced financial solidity, full coverage of Capex plan
and of the Mergers embedded in the plan, leaving room for further external
growth.
Dividend policy remains consistent: a floor of 9 Euro cent per share.
A plan that in a nut shell confirms …
22GRUPPOHERA
GROWTH, LOW RISK, ENHANCED VALUE
ANNEX
For further information please contact
the Investor Relation team
ir@gruppohera.it
23
2014 E2016 E2019
Brent (Dollar/Barrel) 99.5 63.0 90.0
Exchange ratio €/$ 1.33 1.13 1.20
PUN (€/MWh) 52.1 52.5 67.6
Inflation (5Y moving average) 0.2% 1.0% 1.0%
Italian GDP trend (%CAGR) 1.1%
Green certificate – biomass plants (€/MWh) 97.4 80.3 80.3
Green certificate – other plants (€/MWh) 97.4 97.3 81.7
White certificates (€/TEP) 106.6 108.5 109.5
CO2 certificates (€/ton) 4.2 7.0 8.0
Tax rate (%) 40.2% 37.5% 37.5%
Cost of Debt (%) 4.0% 3.8% 3.7%
FY2014 Ebitda Adjustments
Business Plan assumptions
GRUPPOHERA
867,8
840,9(9.9)
(6.3)
(10.7)
Ebitda Reported Water Gas distribution EE distribution Ebitda Adjusted
• Tariff
Adjustement
• Tariff Adjustement
• White Certificates
revaluation
• Specific
equalization
• White Certificates
revaluation
2014 Adjustments and Business Plan assumptions
24GRUPPOHERA
Ebit by strategic area
(M€)
Networks
Energy
Waste
109
120
180
6
139
140
204
15
414 M€ 498 M€
Ebit 2014* Ebit E2019
* Adjusted for positive one offs: 27 m€
Consolidated Group Ebit target
25GRUPPOHERA
Refinancing needs to 2019
(M€)
Pursuing balanced interest nature
(M€)
33%
67%
Variable Fixed
Rates
179,6
283,5 68,1 49,4
545,7
2.333,7
3,460.0
2015 2016 2017 2018 2019 Post plan Total
• Maintain financial liabilities homogeneous with investment time horizons
• Non speculative financing
• Optimize mix variable/fixed to stabilize related cash flows
Hera Group financial strategy
Financial strategy
26GRUPPOHERA
Electricity production - renewable
(GWhe)
CO2 emission avoided
(Ton)
Thermal energy production - renewable
(GWht)
Low emission vehicles
(%)
18,5%
21,0% 21,2%
2014 E2016 E2019
11 11 11
60 68 81
23 23 222 2 2
434 437 432
7 7 8
536 549 557
2014 E2016 E2019
Solar Biogas Digesters Hydro WTE Depuration
(269.519)
(281.524) (285.126)
2014 E2016 E2019
59
83 83
79
78 78
4
6 6142
167 167
2014 E2016 E2019
WTE Geotherm Biogas
Sustainable development
This presentation contains forward-looking statements regarding future events (which impact the Hera
Group’s future results) that are based on current expectations, estimates and opinions of management.
These forward-looking statements are subject to risks, uncertainties and events that are unpredictable
and depend on circumstances that might change in future.
As a result, any expectation on Group results and estimates set out in this presentation may differ
significantly depending on changes in the unpredictable circumstances on which they are based.
Therefore, any forward -looking statement made by or on behalf of the Hera Group refer on the date
they are made.
The Hera Group shall not undertake to update forward-looking statements to reflect any changes in the
Group’s expectations or in the events, conditions or circumstances on which any such statements are
based.
Nevertheless, the Hera Group has a “profit warning policy” , in accordance with Italian laws, that shall
notify the market (under “price-sensitive” communication rules) regarding any “sensible change” that
might occur in Group expectations on future results.
Disclaimer
27GRUPPOHERA

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Analyst presentation: business plan to 2019

  • 1. Drawing the future BusinessBusinessBusinessBusiness planplanplanplan to 2019to 2019to 2019to 2019
  • 2. Hera Business plan up to 2019 Strategy framework Growth Drivers Internal Growth External Growth Hera key strengths Business strategic framework Ebitda by ASA Sensitivity analysis WACC review Networks Waste Energy Sustainability Capex plan Financials Closing remarks 05 06 07 09 10 12 13 14 15 16 17 18 19 20 21 22 Annex 2014 ADJ. and Assumptions Ebit breakdown by ASA Financial strategy Sustainability KPIs Disclaimer 23 24 25 26 27 Index
  • 3. Our ambitions Harvest from the past, blossom for the future, exploit market momentum 05GRUPPOHERA Consolidation “momentum” Economic recovery Low inflation Regulated tenders & tariff review Increased competition Scenario’s change Continue growth through consolidation …to create value Goals Scenario Strategic framework Pursue Efficiency Risk protection Expand markets Multi-utility Platform Low interest rates Sector’s change Industry’s change Lower uncertainties A consistent strategy… Volatile commodities Operational excellence Leverage innovation Enhance efficiency
  • 4. 868 841 1,030 (27) +97 +21 (30) (25) +14 +112 2014 One offs 2014 Adj. Org. G. Synergy Incentives on Renew. Wacc review Gas Tenders Mergers E2019 Growing with our “two Pillars” model 06GRUPPOHERA Ebitda 5Y growth (M€) Proven track record, low risk, higher visibility Internal growth: +118M€ External growth: +126M€
  • 5. 10% of Operating Efficiencies and of Synergies relates to Innovation “Internal growth” levers: Efficiency, Synergies and Org. growth Elect. customers exp. (M unit) 0.8 1.0 '14 '19 Process efficiency Synergies Asset Base RAB +93m€ Market development Resource efficiency +118m€ Internal Growth 23 +72 15 8 9 17 HR Optmiz ation Maint enance Procur ament Cost to serve Total Effic. 15 36+21 Achieved Plan Total 2.9 3.0 '14 '19 Property RAB dev. (B€) Special Waste exp. (Mton) GRUPPOHERA 2,1 3,2 '14 '19 Resource&Process efficiency (M€) +25m€ +21m€ 07 Synergies achieved and expected (M€) +72m€
  • 6. “Internal growth” highlights the value creation of Hera as for ‘14 perimeter 08GRUPPOHERA * Adjusted for positive one offs: 27 m€ 1.814 +2.723 2015 2016 2017 2018 2019 Capex and operating cash flows (M€, cumulated) 8.1% 8.5% 6.5% 5.7% 2014* E2019 ROl & value creation (%) Ebitda per Employee (K€ per capita) Value creation and cash generation potentials of “Hera” model Value creation EPS growth and ROE (c€, %) Reg. WACC Value creation 10.0 12.4 2014* E2019 EPS EPS inc. for IRES cut +0.7 5,3% 6,8% 5,0% 7,2% Reg. Ke '14 ROE '14* Reg. Ke E'19 ROE E'19 100 110 '14 '15 '16 '17 '18 '19 +2.0% CAGR Cash Flows Capex ROI
  • 7. External growth potential to deploy Hera’s model Market momentum offers several opportunities for external growth 09GRUPPOHERA Mergers of multi-utilities Market fragmentation ~ 700 220 ̴ 400 Enabler • Government incentives • Municipal financial constraints • Gas tenders • Larger waste collect. concessions • Compulsory at national level • No further delays expected • Territorial rationalization opportunity • Increased competition • Competition pressure on Small- sized Enabler expected • “Madia” law • None • Tenders on provincial basis • Increased competition Potential Targets in Ref. territory • 11 companies • 13 Ref. ATEMs • Ebitda 14 M€ (additional) Selection criteria • Neighbourhood, same mix, sound • >20m€ Ebitda • Non dilutive multiples • Full integration of operations • Reference ATEM • In 10-12 Reference provinces • National scope • Non dilutive multiples • Full integration of operations Tenders Gas distib. Waste collection Acquisitions Energy supply Waste treat.. ̴ 250 ~ 600 • Ebitda ~40 M€ in tot • ~ 580K customer in tot
  • 8. Potential Business plan MERGER in ref. territory 11 Targets +112M€ Ebitda 4 Targets TENDERS 177 ATEMs at national level 13 ATEMs only in reference territory +14m€ Ebitda ACQUISIT. Large number of potential targets High fragmented markets and increasing competitive pressure on smal/mid sized companies NONE (only those already executed) Solid premises to deploy Hera’s accretive model with “visible targets” 10GRUPPOHERA Business plan external growth Ebitda targets (M€) Merger value creation: Synergies (Ebitda increase M€, years post merger) Historical avg. of synergies:+20% Ebitda of target companies merged in 5Y +22M€ Potential 1st 2nd 3rd 4th5th Value creation from expected M&A goes “ON TOP”
  • 9. M&A targets rely on a solid-12 year track record Visible targets, aiming at even better ones 11GRUPPOHERA 12Y Track record Next 5y +22.8 +22.4 Annual average Ebitda contribution from M&A (M€)
  • 10. Building up value leveraging upon our strengths Changing environment: a threat for the many, an opportunity for us 12GRUPPOHERA Effective organization Economies of scale Competitive commercial offers Large retail customer base Modern IT platformPlant building & mgmt expertise Strong governance & financial strength Know how Excellence Efficiency Growth Innovation Strategy
  • 11. 53% 47% Above 1 Billion Ebitda growth comes from core businesses Ebitda by strategic area (M€) 13GRUPPOHERA 416 389 483 242 (27) 242 +94 +60 302 188 188 +26 21422 22 +9 31 2014 Rep. Adj. 2014 Adj. Networks Waste Energy Other E2019 868 1,030 2014 55% 45% E2019 Regulated activities Free market competition Maintaining a solid and balanced growth 841
  • 12. Sensitivity analysis on key drivers Sensitivity to GDP (plus or minus 1%, impact in M€, % impact on Group Ebitda) Sensitivity to Gas prices (plus or minus 1 Eurocent per cubic meter, impact in M€, % impact on Group Ebitda)Sensitivity to PUN prices (plus or minus 1€/MWh, impact in M€, % impact on Group Ebitda) 14GRUPPOHERA Sensitivity to oil prices (dollar per barrel impact in M€, % impact on Group Ebitda) A low exposure to macro variables built up by risk adverse strategies GROUP EBITDA 1$/Barrel 0.05M€ (0.01%) GROUP EBITDA 1% 4.00M€ (0.5%) GROUP EBITDA 1€/MWh 0.50M€ (0.06%) GROUP EBITDA 1c€/M3 1.00M€ (0.12%)
  • 13. 44,8% 40,2% 38,4% 2013 2014 E 2015 Wacc review reflects macroscenario positive changes 15GRUPPOHERA Italian Tax rate reduction (Robin tax and Irap reductions) 4,1% 4.0% 3,8% 2013 2014 E2015 Lower Average cost of debt (lower free risk impact on debt costs) Higher visibility, negligible effect on earning Authorityrationaltoreview regulatoryWACC Compensating impact on real post tax earnings * Return pre-IRAP Wacc review by activity Reg. period Concession length ‘15 Reg. Returns WACC review ‘16 Reg. Returns Water ‘16-’17 ~2024 6.1%* (0.7%) 5.3%* Gas distribution ‘16-’18 2016-2019 6.9% (0.8%) 6.1% Electricity distribution ‘16-’18 ~2030 6.4% (0.8%) 5.6% ̴ (25 M€) impact AuthorityWACCreview
  • 14. 2,89 3.31 0,29 +0.13 0.42 +0.12 +0.30 2014 Water Energy distr. 3rd parties E2019^ NETWORKS: low risk cash generator Developing our “safety box” Ebitda growth drivers (M€) GRUPPOHERA 416 389 483 (27) +10 +42 (25) +14 +53 '14 Rep. Adj. '14 Adj. Syn. Org. G. Wacc Tender M&A E'19 PDR/Employee (K unit) 1,611 1.166 68 306 73 2015 2016 2017 2018 2019 Maintenance Developm. Tenders M&A 5Y Capex plan: 55% of 2014 property RAB (M€) 2014 E2019 Ch.% PDR 5.8m 6.2m +6.54 Employees 2,282 2,250 (1.4%) 2.547 2.750 2014 E2019 RAB evolution in next 5Y (B€) 16 3.2 3.7 ^ Excluding RAB from M&A included in Business Plan targets
  • 15. crisis WASTE: a further expansion of presence at national level Ebitda growth drivers (M€) 239 302 242 +5 +62 (30) +23 2013 2014 Synergies Org. growth Incentives M&A E2019 17 1,0 1,5 1,8 1,8 1,7 1,6 2,1 3,2 '02 '04 '06 '08 '10 '12 '14 '16 '18 '19 Back to track records growth and full load factors Expected demand increase for S.W. treatment (Mton) Back to double digit growth rates Achieved expansion in strategic areas/assets through M&A 320 104 33 2015 2016 2017 2018 2019 Maint. Developm. M&A Cumulated Capital expenditures (M€) 457 Friuli Veneto Emilia -Romagna Marche Trentino Lombardy Piedmont Liguria Tuscany Umbria Geonova Waste Recycling Ebitda: ̴ 5 M€ Yearly W. disposed: 150 Kton Treat. Capacity: 1.5 Mton Potential syn.: ̴ 0.5 M€ Ebitda: ̴ 6/7 m€ Yearly W. treated: 370 Kton Potential syn.: ̴ 1 M€ GRUPPOHERA
  • 16. ENERGY: keeping low risk profile Offsetting pressure on margins ENERGY Ebitda growth factors (M€) 18GRUPPOHERA 0,7 0,8 0,1 0,1 2014 E2019 Retail Business Business / Retail electricity customers (M Unit) 0.8 1.0 188 214 (16) +22 +20 2014 Mkt Competition Mkt Expansion External G. E2019 124 136 (16) +6 +22 2014 Mkt competition Mkt Expansion External G. E2019 Electricity Ebitda growth factors (M€) Gas Ebitda growth factors (M€) 64 78 (0) +16 (2) 2014 Mkt Competition Mkt Expansion External G. E2019
  • 17. The 3R approach to sustainability 3R Food,Food,Food,Food, TechnicalTechnicalTechnicalTechnical vehicles,vehicles,vehicles,vehicles, FurnitureFurnitureFurnitureFurniture,,,, PharmaceuticalsPharmaceuticalsPharmaceuticalsPharmaceuticals 19GRUPPOHERA Exploring innovative sustainability paths REDUCEREDUCEREDUCEREDUCE 65%65%65%65% sortedsortedsortedsorted collectioncollectioncollectioncollection BioBioBioBio----methanemethanemethanemethane gasgasgasgas WasteWasteWasteWaste recoveryrecoveryrecoveryrecovery 94%94%94%94% Energy efficiency,Energy efficiency,Energy efficiency,Energy efficiency, Landfill diversion,Landfill diversion,Landfill diversion,Landfill diversion, Operation process reOperation process reOperation process reOperation process re----engineeringengineeringengineeringengineering
  • 18. The capital expenditures 20GRUPPOHERA Fully funding Group expansion 78% 22% Liberalised Regulated Capex breakdown by driver (M€) Regulated/liberalised (%) 332 2.222 +1,632 172 +418 Maint. Developm. Tenders/ M&A Capex '15-'19 Capex breakdown by business (M€) 2.222 +1,611 +457 +79 +75 Networks Waste Energy Other Capex 2.222 +2.954 2015 2016 2017 2018 2019 Cum. capex and cash flows before dividends (M€) Cash Flows Capex
  • 19. 20.3% E2015 E2019 3,16x 3,11x 3,06x 3,01x 2,96x 2,91x 2014* E2019 8.1% 8.2% (0.75%) +0.85% 2014* Wacc review Value creation E2019 Financial flexibility Financial highlights Return on invested capital & value creation (%) Debt/Ebitda decrease enhance flexibility (x) More fire power to fund M&A opportunities guaranteeing dividend flows 21GRUPPOHERA E’19 ROE: 7.2% FFO/Net Debt and current ratings (%) Baa1/stable BBB/Stable EPS growth (cumulated increase % ) +16,7% +22,4% Past 5Y Next 5Y Plan Ires cut *Adjusted 2014 figures +30%
  • 20. Closing remarks 2 1 Targeting a further constant growth in line with track records compensating re- basement of regulated returns maintaining our peculiar low risk profile. Scenario improvement underpins better “visibility” on targets of the internal growth and the external growth, the 2 proven “pillars” of our growth model. First year of Business plan (2015) highlights a solid growth in both “pillars”. Cash generation assuring enhanced financial solidity, full coverage of Capex plan and of the Mergers embedded in the plan, leaving room for further external growth. Dividend policy remains consistent: a floor of 9 Euro cent per share. A plan that in a nut shell confirms … 22GRUPPOHERA GROWTH, LOW RISK, ENHANCED VALUE
  • 21. ANNEX For further information please contact the Investor Relation team ir@gruppohera.it
  • 22. 23 2014 E2016 E2019 Brent (Dollar/Barrel) 99.5 63.0 90.0 Exchange ratio €/$ 1.33 1.13 1.20 PUN (€/MWh) 52.1 52.5 67.6 Inflation (5Y moving average) 0.2% 1.0% 1.0% Italian GDP trend (%CAGR) 1.1% Green certificate – biomass plants (€/MWh) 97.4 80.3 80.3 Green certificate – other plants (€/MWh) 97.4 97.3 81.7 White certificates (€/TEP) 106.6 108.5 109.5 CO2 certificates (€/ton) 4.2 7.0 8.0 Tax rate (%) 40.2% 37.5% 37.5% Cost of Debt (%) 4.0% 3.8% 3.7% FY2014 Ebitda Adjustments Business Plan assumptions GRUPPOHERA 867,8 840,9(9.9) (6.3) (10.7) Ebitda Reported Water Gas distribution EE distribution Ebitda Adjusted • Tariff Adjustement • Tariff Adjustement • White Certificates revaluation • Specific equalization • White Certificates revaluation 2014 Adjustments and Business Plan assumptions
  • 23. 24GRUPPOHERA Ebit by strategic area (M€) Networks Energy Waste 109 120 180 6 139 140 204 15 414 M€ 498 M€ Ebit 2014* Ebit E2019 * Adjusted for positive one offs: 27 m€ Consolidated Group Ebit target
  • 24. 25GRUPPOHERA Refinancing needs to 2019 (M€) Pursuing balanced interest nature (M€) 33% 67% Variable Fixed Rates 179,6 283,5 68,1 49,4 545,7 2.333,7 3,460.0 2015 2016 2017 2018 2019 Post plan Total • Maintain financial liabilities homogeneous with investment time horizons • Non speculative financing • Optimize mix variable/fixed to stabilize related cash flows Hera Group financial strategy Financial strategy
  • 25. 26GRUPPOHERA Electricity production - renewable (GWhe) CO2 emission avoided (Ton) Thermal energy production - renewable (GWht) Low emission vehicles (%) 18,5% 21,0% 21,2% 2014 E2016 E2019 11 11 11 60 68 81 23 23 222 2 2 434 437 432 7 7 8 536 549 557 2014 E2016 E2019 Solar Biogas Digesters Hydro WTE Depuration (269.519) (281.524) (285.126) 2014 E2016 E2019 59 83 83 79 78 78 4 6 6142 167 167 2014 E2016 E2019 WTE Geotherm Biogas Sustainable development
  • 26. This presentation contains forward-looking statements regarding future events (which impact the Hera Group’s future results) that are based on current expectations, estimates and opinions of management. These forward-looking statements are subject to risks, uncertainties and events that are unpredictable and depend on circumstances that might change in future. As a result, any expectation on Group results and estimates set out in this presentation may differ significantly depending on changes in the unpredictable circumstances on which they are based. Therefore, any forward -looking statement made by or on behalf of the Hera Group refer on the date they are made. The Hera Group shall not undertake to update forward-looking statements to reflect any changes in the Group’s expectations or in the events, conditions or circumstances on which any such statements are based. Nevertheless, the Hera Group has a “profit warning policy” , in accordance with Italian laws, that shall notify the market (under “price-sensitive” communication rules) regarding any “sensible change” that might occur in Group expectations on future results. Disclaimer 27GRUPPOHERA