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Hera Group - Consolidate Half-Year Financial Report as at 30 June 2017

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Hera Group - Consolidate Half-Year Financial Report as at 30 June 2017

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Hera Group - Consolidate Half-Year Financial Report as at 30 June 2017

  1. 1. Consolidate half-year financial report as at 30 june 2017
  2. 2. CONSOLIDATED  INTERIM  FINANCIAL  REPORT  AT  30  JUNE  2017  –  TABLE  OF  CONTENTS  INTRODUCTION Governance and control bodies 001 Corporate structure 002 Mission 004 CHAPTER 1 – DIRECTORS’ REPORT 1.01 Overview of Group management performance and definition of alternative performance measures 005 1.01.01 Operating and financial results 008 1.01.02 Analysis of the Group’s financial structure and investments 013 1.01.03 Analysis of Net Cash (Net Debt) 016 1.02 Analysis by business area 017 1.02.01 Gas 018 1.02.02 Electricity 022 1.02.03 Integrated water cycle 025 1.02.04 Waste management 029 1.02.05 Other services 034 1.03 Significant events occurred during the half-year 037 1.04 Share performance and investor relations 039 1.05 Reference scenario and Group strategy 042 1.06 Macroeconomic context and focus on the oil, gas and electricity sector 044 1.07 Regulatory framework and regulated revenues 045 1.08 Procurement policies and trading 052 1.09 Commercial policy and customer care 054 1.10 Financial policy and ratings 055 1.11 Technological innovation and project development 060 1.12 Quality, safety and environment 063 1.13 Information systems 064 1.14 Personnel structure, industrial relations, development and staff training 065
  3. 3. CHAPTER 2 - ABBREVIATED CONSOLIDATED HALF-YEAR STATEMENTS 2.01 Financial statements formats 070 2.01.01 Income statement 070 2.01.02 Statement of comprehensive income 071 2.01.03 Statement of financial position 072 2.01.04 Cash flow statement 074 2.01.05 Statement of changes in net equity 075 2.02 Explanatory notes 076 2.02.01 Accounting policies and evaluation principles 076 2.02.02 Scope of consolidation 080 2.02.03 Changes in international accounting standards 085 2.02.04 Commentary notes to the financial statement formats 088 2.02.05 Reporting by operational sector 115 2.03 Net financial debt 117 2.03.01 Net financial debt 117 2.03.02 Net financial debt as per Consob communication DEM/6064293 of 2006 118 2.04 Financial statements formats - Consob 15519 / 2006 119 2.04.01 Income statement as per Consob 15519 / 2006 119 2.04.02 Statement of financial position as per Consob 15519 / 2006 120 2.04.03 Cash flow statement as per Consob 15519 / 2006 121 2.04.04 List of related parties 122 2.04.05 Commentary notes to relations with of related parties 123 2.05 Equity investments: list of consolidated companies 126 2.06 Declaration of consolidated financial statement pursuant to article 154 of decree n° 58/98 128 2.07 Report by the independent auditor 129
  4. 4. introduction
  5. 5. Hera Group Consolidate Half-Year Financial Report as at 30 June 2017 Approved by the Hera Spa BoD on 26 July 2017                                                                                                                                                 1    GOVERNANCE AND CONTROL BODIES       Chairman Tomaso Tommasi di Vignano CEO Stefano Venier Vice-chairman Giovanni Basile Director Francesca Fiore Director Giorgia Gagliardi Director Massimo Giusti Director Sara Lorenzon Director Aldo Luciano Director Stefano Manara Director Danilo Manfredi Director Erwin P.W. Rauhe Director Duccio Regoli Director Federica Seganti Director Marina Vignola Director Giovanni Xilo Chairman Myriam Amato Standing Auditor Antonio Gaiani Standing Auditor Marianna Girolomini Chairman Giovanni Basile Member Sara Lorenzon Member Erwin P.W. Rauhe Member Duccio Regoli Chairman Giovanni Basile Member Francesca Fiore Member Massimo Giusti Member Stefano Manara Chairman Tomaso Tommasi di Vignano Vice-chairman Giovanni Basile Member Stefano Venier Member Federica Seganti Chairman Massimo Giusti Member Mario Viviani Member Filippo Maria Bocchi Deloitte & Touche S.p.A. Independent auditing firm Board of Directors Board of Statutory Auditors Control and Risk Committee Remuneration Committee Executive Committee Ethics Committee
  6. 6. Approved by t   Parent comp Hera Spa: effective operations management   Herambiente leading the environment sector  Hera Comm: 2.3 million energy customers   the Hera Spa Bo COR   The proc was chan princ com Mult by p coor resp Hera Spa, spin- acro esta Indu custo Hera 2.3 natio Hera deals ener ratio Over pany t  e: tal oD on 26 July 20 RPORATE structure of ess that beg first created nges and un cipally in the panies Hera iservizi Spa parent compa rdination and onsible for c ambiente Sp , was establ -off, ensurin ss the na blished the striali (Hasi omer base. aComm Srl, million cust onal energy m a Trading S s with tradin rgy commod nale on inter r the years, 017                      E STRUCT the Hera Gr gan in 2002 d. The Group nbundling its e waste ma a Spa, Hera and AcegasA any Hera Sp d financial m onsolidating pa, 75% of w ished in 200 ng coordinat tion. Heram e company i Srl), targ 100% contro tomers, repr markets. Srl, 100% co ng and proc dities, follow rnational mar the Group’s Hera Grou                            TURE roup (the Gr after the inc p has since s activities i anagement, ambiente Sp ApsAmga S pa, an indus management their operat which is own 09 as a was ted plant m mbiente Sp Herambien eted at an rolled by Her resents the ontrolled by curement of wing a flexi rkets. external exp dozen produ conve achie holdin Marc Spa a in the maint merge maint areas geogr oppor up Consolidate H                             roup) develo corporation o evolved, ad into separat energy and pa, Hera Co pa. The top strial holding t for all Gro ing activities ed by Hera ste-disposal anagement pa in turn nte Servizi n industrial ra Spa, with Group on Hera Spa, f wholesale ble supply pansion has n other mu uce synergie ey know-ho ved by mer ng company. he Multiser are multi-utili e Marche a tained their ed into the tain a well-ro s, with a raphical p rtunities for e Half-Year Finan                             ped out of a of the 11 co dapting over e companie water secto mm Srl, He of its corpora company in up companie . resulted in ulti-utility co es, exploit w, these o gers through rvizi Spa ity companie and Trivenet own corpora Group. The ooted and st twofold o proximity a expansion. ncial Report as a                             a complex ra ompanies ou time to mee es. The Gro ors and con era Trading ate structure n charge of es, in additi the integrati ompanies. I scale econ operations h incorporat and Acega es operating to regions, ate structure aim behind stable presen objective: g and seizin at 30 June 2017                   2  ationalisation ut of which it et legislative up operates nsists of the Srl, Marche e is occupied governance, ion to being on of over a n order to nomies and have been tion into the asApsAmga respectively which have e after being this was to nce in these guaranteeing ng further 7 n t e s e e d , g a o d n e a y e g o e g r
  7. 7. Hera Group Consolidate Half-Year Financial Report as at 30 June 2017 Approved by the Hera Spa BoD on 26 July 2017                                                                                                                                                 3    * In addition to the 30% held by AcegasApsAmga Spa. ** In addition to the 5% held by Herambiente. Sviluppo Ambiente Toscana Srl in turn holds 40% of Q.tHermo Srl. The companies partially owned by AcegasApsAmga Spa are: Black Sea Company for Compressed Gas Ltd, Centro Idrico di Novoledo Srl, Adria Link Srl, EnergiaBase Trieste Srl, La Dolomiti Ambiente Spa, Estenergy Spa, Sinergie Spa and Aresgas AD. During 2017, shares held in SIGAS Doo by AcegasApsAmga are expected to be divested. The companies partially owned by Aliplast are: Alimpet Srl, Alipackaging Srl, Cerplast Srl, Umbroplast Srl, Variplast Srl, Aliplast France Recyclage Sarl, Aliplast Iberia SL and Aliplast Polska SPOO.     Hera Spa Herambiente S.p.A. AcegasApsAmga Spa Marche Multiservizi Spa Hera Comm Srl Hera Trading Srl 75% 100% 49,59% 100% 100% *HestAmbiente Fea Srl Herambiente Servizi Industriali Srl Enomondo Srl Asa Scpa Feronia Srl Waste Recycling Spa 70% 51% 100% 50% 51% 70% 100% So.Sel. Spa Gran Sasso Srl SGR Servizi Spa Hera Comm Marche Srl Amga Energia & Servizi Srl Amga Calore & Impianti Srl 26% 100% 29,61% 57,38% 100% 100% Other companies INRETE Distribuzione Energia Spa **Sviluppo Ambiente Toscana Aimag Spa Medea Spa Set Spa Acantho Spa Calenia Energia Spa Hera Luce Srl100% 95% 25% 100% 39% 77,36% 15% 100% Uniflotte Srl 97% Galsi Spa 11,77% Tamarete Energia Srl 40% Energo Doo 34% Hera Servizi Energia Srl 57,89% S2A Scarl 23,81% Ghirlandina Solare Srl 33% Aloe Spa 10% HERAtech Srl 100% Aliplast Spa 40%
  8. 8. Hera Group Consolidate Half-Year Financial Report as at 30 June 2017 Approved by the Hera Spa BoD on 26 July 2017                                                                                                                                                 4    MISSION   “Hera aims at being the best multi‐utility in Italy for its customers, workforce and shareholders. It  intends to achieve this through further development of an original corporate model capable of  innovating and of forging strong links with the areas in which it operates by respecting the local  environment”.     “For  Hera,  being  the  best  is  a  way  of  creating  pride  and  trust  for:  customers,  who  receive,  thanks  to  Hera’s  constant  responsiveness  to  their  needs,  quality  services  that  satisfy  their  expectations;  the  women  and  men  who  work  at  Hera,  whose  skills,  engagement  and  passion  are  the  foundation  of  the  company’s  success;  shareholders,  confident  that  the  economic  value of the company will continue to be generated in full respect  of  the  principles  of  social  responsibility;  the  reference  area,  because  economic,  social  and  environmental  richness  represent  the promise of a sustainable future; and suppliers, key elements in  the value chain and partners for growth”.                   
  9. 9. Hera Group Consolidate Half-Year Financial Report as at 30 June 2017   Approved by the Hera Spa BoD on 26 July 2017                                                                                                                                              5    1.01 OVERVIEW OF GROUP MANAGEMENT PERFORMANCE AND DEFINITION OF ALTERNATIVE PERFORMANCE MEASURES (*) The amount of 2016 Revenues has been corrected (with no effect on results) due to the reclassification of system charges. For details, see paragraph “1.01.01 Operating and financial results”.       The Hera Group uses Alternative Performance Measures (APM) to more effectively convey information about the profitability of the businesses in which it operates as well as its equity and financial situation. In accordance with the guidelines published 5 October 2015 by the European Securities and Markets Authority (ESMA/2015/1415) and in keeping with the provisions of Consob communication no. 92543 of 3 December 2015, the content of and the criteria used in defining the APMs used in this financial statement are explained below.   Ebitda is a measure of operating performance and is calculated by adding together “Operating income” and “Depreciation, amortization and write-downs.” This measure is used as a financial target in internal documents (business plans) and external presentations (to analysts and investors), and is a useful measure in evaluating the operating performance of the Group (as a whole, and at the level of each Business Unit), also allowing for a comparison between operating profits of the reporting period with those of previous periods. In this way it is possible to analyse trends and compare the efficiency achieved in different periods. Operating APMs and investments (€/mln) Jun 2017 Jun 2016 Abs. change % Change Revenues (*) 2,754.0 2,502.8 +251.2 +10.0% EBITDA 505.9 470.1 +35.8 +7.6% EBITDA/Revenues ratio (*) 18.4% 18.8% -0.4 p.p. Operating profit 262.2 257.4 +4.8 +1.9% Operating profit/Revenues ratio (*) 9.5% 10.3% -0.8 p.p. Net profit 148.0 128.2 +19.8 +15.5% Net profit/revenues ratio (*) 5.4% 5.1% +0.3 p.p. Net investments 151.8 152.2 -0.4 -0.3% Financial APMs (€/mln) Jun 2017 Dec 2016 Abs. change % Change Property,plant and equipment 5,652.6 5,564.5 +88.1 +1.6% Net working capital 88.6 99.9 -11.3 -11.3% Provisions (552.5) (543.4) -9.1 -1.7% Net invested capital 5,188.7 5,121.0 +67.7 +1.3% Net financial debt (2,611.7) (2,558.9) -52.8 -2.1% Operating APMs and investments Financial APMs Definition of Alternative Performance Measures (APM) Operating APMs and investments
  10. 10. Hera Group Consolidate Half-Year Financial Report as at 30 June 2017   Approved by the Hera Spa BoD on 26 July 2017                                                                                                                                              6    Ebitda on revenues, operating profit on revenues and net income on revenues is used as a financial target in internal documents (business plans) and external presentations (to analysts and investors), and measures the Group’s operating performance by representing a proportion, in terms of percentage, of Ebitda, operating profit and net profit divided by the value of revenues. Net investments are the sum of investments in tangible fixed assets, intangible assets and equity investments net of capital grants. This measure is used as a financial target in internal documents (business plans) and external presentations (to analysts and investors), and is useful in evaluating spending capacity for the Group’s investments in maintenance and development (as a whole and at the level of each business unit), also allowing for a comparison with previous periods, making it possible to analyse trends. Net fixed assets are calculated as the sum of: tangible fixed assets; intangible assets and goodwill; equity investments; deferred tax assets and liabilities. This measure is used as a financial target in internal documents (business plans) and external presentations (to analysts and investors), and is a useful measure for evaluating the Group’s net assets as a whole, also allowing for a comparison with previous periods. In this way it is possible to analyse trends and compare the efficiency achieved in different periods. Net working capital is made up of the sum of: inventories; trade receivables and payables; current tax receivables and payables; other assets and other current liabilities; the current portion of assets and liabilities for financial derivatives on commodities. This measure is used as a financial target in internal documents (business plans) and external presentations (to analysts and investors), and is useful in evaluating the Group’s ability to generate cash flow through operating activities over a period of 12 months, including comparisons with previous periods. In this way it is possible to analyse trends and compare the efficiency achieved in different periods. Provisions includes the sum of the items “employee severance indemnities and other benefits” and “provisions for risks and charges”. This measure is used as a financial target in internal documents (business plans) and external presentations (to analysts and investors), and is a useful measure in evaluating the Group’s ability to cope with possible future liabilities, also allowing for a comparison with previous periods. In this way it is possible to analyse trends and compare the efficiency achieved in different periods. Net invested capital is determined by calculating the sum of “net fixed assets”, “net working capital” and “provisions”. This measure is used as a financial target in internal documents (business plans) and external presentations (to analysts and investors), and is a useful measure in evaluating all of the Group’s current and non-current operating assets and liabilities, as specified above. Net financial debt is a measure of the company’s financial structure determined in accordance with Consob communication 15519/2006, adding the value of non-current financial assets. This measure is therefore calculated by adding together the following items: current and non-current financial assets; cash and cash equivalents; current and non-current financial liabilities; current and non-current assets and liabilities for derivative financial instruments on interest and exchange rates. This measure is used as a financial target in internal documents (business plans) and external presentations (to analysts and Financial APMs
  11. 11. Hera Group Consolidate Half-Year Financial Report as at 30 June 2017   Approved by the Hera Spa BoD on 26 July 2017                                                                                                                                              7    investors), and is a useful measure in evaluating the Group's financial debt, also allowing for a comparison with prior periods. In this way it is possible to analyse trends and compare the efficiency achieved in different periods. Sources of financing are obtained by adding “net financial debt” and “net equity”. This measure is used as a financial target in internal documents (business plans) and external presentations (to analysts and investors) and represents the breakdown of sources of financing, distinguishing between the company’s own equity and that of third parties; it is a measure of the Group’s financial autonomy and solidity. Net debt to Ebitda ratio, expressed as a multiple of Ebitda, is used as a financial target in internal documents (business plans) and external presentations (to analysts and investors) and represents a measure of the operating management’s ability to pay back its net debt. Funds from operations is calculated as Ebitda minus doubtful accounts, interest expenses, income taxes and use of reserves and severance pay. This measure is used as a financial target in internal documents (business plans) and external presentations (to analysts and investors) and represents a measure of the operating activities’ ability to generate cash flow. Roi, or return on net invested capital, is defined as the ratio between net operating earnings and net invested capital, and is expressed as a percentage. This measure is used as a financial target in internal documents (business plans) and external presentations (to analysts and investors) and it is intended to measure the ability to produce wealth through operating management, thus remunerating equity and capital pertaining to third parties. Roe, return on equity, is defined as the ratio between net profits and net equity, and is expressed as a percentage. This measure is used as a financial target in internal documents (business plans) and external presentations (to analysts and investors) and is intended to measure the profitability obtained by investors, recompensing risk. Cash flow is defined as operating cash flow, net of dividends paid. Operating cash flow is calculated as Ebitda plus changes in net working capital, net of increases in doubtful accounts, the use of reserves and severance pay, operating and financial investments, financial income and expenses and income taxes. This measure is used as a financial target in internal documents (business plans) and external presentations (to analysts and investors) and is intended to measure a company’s capacity to generate cash flow and therefore its ability to finance itself. Operating- financial APMs
  12. 12. Hera Group Consolidate Half-Year Financial Report as at 30 June 2017   Approved by the Hera Spa BoD on 26 July 2017                                                                                                                                              8    1.01.01 OPERATING AND FINANCIAL RESULTS All of the Hera Group’s indicators for the first half of 2017 showed growth. In particular, Ebitda rose by 7.6%, operating profits by 1.9% and net profits by 15.5%. These significant results, achieved thanks to the Group’s consolidated multi-business strategy, are to be considered within an increasingly challenging context defined by regulatory and competitive factors, within which Hera proved its balance and agility, combining the two strategic levers of internal and external growth. The main corporate and business operations having an effect on the first half of 2017 are described below.  In September 2016 Hera Comm Srl was awarded the Friuli Venezia-Giulia and Emilia Romagna portion of the last resort gas supply service (FUI) for the period between 1 October 2016 and 30 September 2018, along with 5 portions of the default service in gas distribution between 1 October 2016 and 30 September 2018.  As of 1 November 2016 the company Gran Sasso Srl, which is involved in free market electricity and gas sales in the L’Aquila, Pescara and Chieti areas, became part of the Group’s consolidated scope.  In November 2016, in the national tender held by the Single Purchaser for 2017- 18 safeguarded services, Hera Comm Srl was awarded six portions in eleven regions of Italy.  On 1 February 2017 Waste Recycling Spa acquired the “plants” corporate branch of the Pisa company Teseco Srl, a leading figure in industrial waste treatment and recovery.  In January 2017 Herambiente Spa signed a binding deal with Aligroup Srl for the acquisition of the Aliplast Group, a leading operator in the segment of plastic waste collection and recycling with subsequent regeneration, using an integrated process that transforms all waste into products ready to be reused. The operation came to a conclusion on 3 April 2017 following the fulfilment of the condition precedent, i.e. the approval of the Italian antitrust authority. As of the 2017 half- year report, each company of the Aliplast Group is entirely consolidated and contributes to the results of the Hera Group with effects involving operations and equity backdated to 1 January 2017. In order to respect sector regulations concerning unbundling, with effective date 1 July 2016 Hera Spa conferred its corporate branch dealing with electricity and gas distribution to Inrete Distribuzione Energia Spa. On 1 January 2017 Heratech Srl, a company that manages works requested by customers (new connections, technical opinions, urbanisation, etc.), became operational for all network services managed by the Group. It furthermore deals with planning and implementing plants and networks and other highly specialised technical activities, for both the Group and third parties. The company is 100% controlled by Hera Spa Constant growth in all indicators
  13. 13. Hera Group Consolidate Half-Year Financial Report as at 30 June 2017   Approved by the Hera Spa BoD on 26 July 2017                                                                                                                                              9    This consolidated income statement reflects the application of accounting principle Ifric12 “Service concession arrangements”. The effect of applying this principle, which leaves the results unchanged, is that investments made in goods granted under concession, only including network services, are acknowledged in the income statement. It should also be noted that as of this half-year report dated 30 June 2017 the Group has recorded system charges incurred for the period in question concerning electricity and gas services in the income statement among “service costs” when involving charges received from third-party distributors, and among “revenues” when involving the corresponding amounts included in bills for end customers, for an amount of € 347.7 million. Previously, these tariff components had been recorded in debt and credit receivables among the other “current assets/liabilities”. This being said, the Group has reformulated the income statement for the first six months of 2016, as well as the balance sheet at 31 December 2016, with the same criterion described above, in order for the two periods to be correctly compared. In particular, as regards the income statement for the first six months of 2016, this re-statement led to an increase of € 350.1 million in “revenues” and “service costs”. In this regard, see also paragraph 2.02.01 of the explanatory notes. The following table shows the operating results for the first six months of 2016 and 2017: Income statement (€/mln) Jun 2017 %Inc. Jun 2016 as adjusted %Inc. Abs. change %Change Revenue 2,754.0 2,502.8 +251.2 +10.0% Other operating revenue 202.3 7.3% 162.0 6.5% +40.3 +24.9% Raw materials (1,178.4) -42.8% (998.0) -39.9% +180.4 +18.1% Service costs (981.7) -35.6% (920.4) -36.8% +61.3 +6.7% Other operating costs (25.8) -0.9% (20.8) -0.8% +5.0 +24.1% Personnel costs (282.5) -10.3% (266.7) -10.7% +15.8 +5.9% Capitalised costs 17.9 0.6% 11.2 0.4% +6.7 +59.7% EBITDA 505.9 18.4% 470.1 18.8% +35.8 +7.6% Amort. & Prov. (243.7) -8.9% (212.7) -8.5% +31.0 +14.6% EBIT 262.2 9.5% 257.4 10.3% +4.8 +1.9% Financial operations (45.9) -1.7% (58.0) -2.3% -12.1 -20.9% Pre-tax profit 216.3 7.9% 199.4 8.0% +16.9 +8.5% Taxes (68.3) -2.5% (71.2) -2.8% -2.9 -4.1% Net profit of the period 148.0 5.4% 128.2 5.1% +19.8 +15.5% Attributable to: Shareholders of the Parent Company 141.0 5.1% 121.0 4.8% +20.0 +16.5% Non-controlling interests 7.0 0.3% 7.2 0.3% -0.2 -2.6% Constant and increasing growth
  14. 14.   Approved by t   € 2.8 billion revenues the Hera Spa Bo In th came millio € 2,5 of 20 entra cont and millio in the in re millio in tra mate highe redu elect The sale on c were proc Othe € 40 envir “reve millio lastly Cost 2016 Alipla in th due highe Othe Alipla € 50 oper highe colle area Pers to € retrib most corp only n in oD on 26 July 20 e first half of e to € 2,754. on or roughly 502.8 million 016. 2017 be ance of the A ributed with Gran Sasso on. Not includ e scope of co venues settle on, mainly du ading, amoun erial in electr er regulated ction and the tricity networ remaining re of green cer costs), and lo e recorded i eeds, comin er operating .3 million or ronmental an enues” to “ot on, higher re y, a higher co ts for raw an 6; this rise, n ast Group an e remainder to greater a er volumes o er operating ast Group a .0 million ove rating expens er costs for ection for the a of sorted wa sonnel costs 282.5 millio bution forese t significant orate branch partially offs 017                      f 2017, reven .0 million, up y 10.0% over in the same enefited from Aliplast Grou roughly € 54 Srl, with € 6 ding these c onsolidation, ed at € 190.8 ue to greater nting to roug ricity for € 70 revenues in e lower reven rk for roughly eduction in r rtificates last ower revenu in a differen g to € 17 mil revenues g 24.9%. This nd energy ef ther operatin evenues for e ontribution fo nd other mate ot including nd Gran Sas r of the portf activity in tra of gas sold a costs, not and Gran Sa erall (€ 45.3 ses). Mentio implementa e higher volu aste. rose by € 15 on at the sa een by the na involve the w h of Teseco set by a lowe Hera Grou                            nues p € 251.2 r the e period m the p, which 4 million, 6.4 hanges , growth 8 r activity hly € 128 mi 0 million, high water servic nues for less y € 14 million revenues, co t year amoun ues for envir nt way, recla llion. rew compar s growth is m fficiency cert ng revenues” energy efficie or sorted was erials rose b the change sso Srl, amo folio of envir ading, an inc and a higher c including the asso Srl, am million in hig on must also tion of work umes treated 5.8 million o ame date in ational labou waste area Srl, coming er average pr up Consolidate H                             llion, higher her volumes ces for rough ser volumes n. oming to € 4 nting to roug ronmental an assified from red to the sa mainly due to tificates amo ”, and highe ency certifica ste. by € 180.4 m in scope of o ounting to rou ronmental ce crease in the cost per unit e change in mounting to r gher costs fo go to the ro ks for third p d and for the or 5.9%, goin n 2017. This ur contract an with the ent g to € 8.4 m resence. (*) The 2016 Half-Year Finan                             revenues for of gas sold f hly € 20 millio sold and tran 41 million, re ghly € 24 mill nd energy ef m revenues ame period o the aforem ounting to rou r Ifric12 rev ates amounti illion or 18.1 operations du ughly € 29.3 ertificates for e price of ra of energy ef scope due roughly € 16 or services an oughly € 17.0 parties, highe developmen ng from € 26 s increase is nd to change rance of the illion overall data reflects the r charges describ ncial Report as a                             r the price of for € 28 millio on, offsetting nsported out efers to the lion (with an fficiency cer to other re of the previ mentioned res ughly € 17.0 venues comi ing to € 10.0 % compared ue to the ent 3 million, and r roughly € 2 aw material i fficiency cert e to the entr 6.4 million, in nd € 4.7 mill 0 in higher I er costs of d nt of new pr 66.7 million in s mainly du es in scope, e Aliplast Gr l. These incr reclassification of bed above at 30 June 2017                10  f raw on and g the tside the effect of the equal effect rtificates that evenues and ous year by statement of million from ng to € 12.0 0 million and, d to 30 June trance of the d the change 24 million, is in electricity, tificates. rance of the ncreased by ion in higher fric12 costs, disposal and ojects in the n June 2016 ue to higher of which the oup and the reases were f system 7 e t t d y f m 0 , e e e s , e y r , d e 6 r e e e
  15. 15.   Approved by t   Ebitda at € 5 million (+7.6 Ebit at € 262 million (+1.9 the Hera Spa Bo Capi € 6.7 belo birth Ebitd show millio This ascr show but than sales porti defa were For f Amo millio due com rose safeg Ebit 2017 € 25 perio The the e € 45 millio perio rates oper inde Pre-t the € 505.9 6%) .2 %) oD on 26 July 20 italised costs 7 million or 5 nging to Gro of Inrete Dis da settled a wing an in on or 7.6% growth in ibed to the wn by all ar the energy ks to highe s business ons of the ult markets e seen in the further detail ortisation and on in June 20 to new inve panies of the , in particula guarded cus reached € 7, up € 4.8 m 7.4 million od in 2016. results of fin end of the firs .9 million, on or 20.9% od in 2016. T s obtained a rations set mnities from tax profits gr € 216.3 recor 017                      s at June 201 59.7%, for g oup compani stribuzione E at € 505.9 ncrease of over June n Ebitda c good perfo reas of the areas in pa er earnings due to th safeguarde s. Positive integrated w s, see the an d provisions 016 to € 243 estments in e Aliplast Gr r in the sales stomers. 262.2 millio million or 1.9% seen in t nancial mana st half of 201 improving compared to The good pe among othe in place du safeguarded rew by € 16.9 rded in the fi Hera Grou                            17 rose com greater works es, including Energia Spa a million, € 35.8 e 2016. can be rmance Group, articular in the he new ed and results water cycle a nalyses of ea rose overall 3.7 million at regulated bu roup and the s company H n in June % over the the same agement at 17 came to by € 12.1 o the same rformances w r things tha uring 2016. d customers 9 million, goi rst half of 20 up Consolidate H                             pared to the s on plants a g the differen and Heratec and the waste ach single bu l by € 31.0 m the same da usinesses an e sales comp Hera Comm S were due to anks to the Higher earn also had a p ing from the 017. Half-Year Finan                             same period and projects nt corporate h Srl. e area as we usiness area million or 14. ate in 2017. nd the chan panies. Prov Srl, owing to lower averag effects of th nings involv positive impa € 199.4 milli ncial Report as a                             d in the prev s implemente breakdown f ell. a. .6%, going f Amortisation nge in scope visions for do o the tenders ge debt and he liability m ing recovery act on the res ion seen in J at 30 June 2017                11  vious year by ed on goods following the from € 212.7 ns increased e due to the oubtful debts awarded for efficiency in management y of default sults. June 2016 to 7 y s e 7 d e s r n t t o
  16. 16.   Approved by t     Earnings po minorities at € 141.0 millio (+16.5%) the Hera Spa Bo Inco rate of th rate, com cons obta deve Net first Grou millio incre st t on oD on 26 July 20 me taxes pe of 31.6%, w he previous y that went fro ing to € 4.5 solidated fisc ining all ben elopment, the profits rose half of 2016 up net profit on, with ease over Ju 017                      rtaining to th ith a clear im year. The re om 27.5% in million that cal scope of nefits recogn e increase in by 15.5%, e to € 148.0 m ts reached € a € 20.0 ne 2016. Hera Grou                            he first half o mprovement easons for th n previous ye ensued from operations. nised by law n deductions equivalent to million in the s € 141.0 million up Consolidate H                             of 2017 amou compared to his decrease ears to 24% a m the oppor Note further w, in particu for amortisa € 19.8 millio same period Half-Year Finan                             unted to € 68 o the 35.7% e are mainly as of 2017, i rtunities gras rmore the co ular the tax tions and the on, going fro in 2017. ncial Report as a                             8.3 million, d seen in the tied to a fa n addition to sped throug ontinuous co credit for re e patent box om € 128.2 m at 30 June 2017                12  efining a tax same period ll in the Ires o lower taxes h a broader mmitment to esearch and . million in the 7 x d s s r o d e
  17. 17. N c € N t m h G m i   Approved by t   Net invested capital comes € 5.2 billion Net investmen otalling € 151 million in the half-year Group’s magnitude ncreases the Hera Spa Bo 1.01 INV   The finan At 3 capit 2016 is en the Grou Spa. work whic millio In t inves millio in c millio (FoN meth serv Grou € 17 com inves Net i 2017 Inves finan Net n Net w (Prov Net in Equit Net d Long Net Total s to nts 1.8 first oD on 26 July 20 1.02 ANAL ESTMENTS table below ncing for the 30 June 2 tal increased 6 by € 67.7 m ntirely due t shareholdin up by the com . Efficiency king capital w ch fell by a on. the first ha stments am on, benefiting capital gran on for the N NI), as provi hod for th ice. Includin up’s overall 0.6 million, pared to Ju stments esse investments, 7, with a redu sted capital and cing (€/mln) non-current asse working capital visions) nvested capital ty debt g-term borrowings cash/short term b sources of fina 017                      LYSIS OF S w shows cha period ended 2017, net i d over 31 De million. This o the acquis ng in the mpany Hera in manag was also con n additional alf of 2017 mounted to g from € 18 nts, of whic ew investme ded for by e integrate g capital gr investments up € 13.4 ne 2016 ag entially in line , in fact, wen uction of € 0. d sources of ets s borrowings ancing Hera Grou                            THE GR anges in the d 30 June 20 nvested ecember change sition of Aliplast mbiente ing net nfirmed, l € 11.3 7, Group € 151.8 .8 million ch € 2.6 ents fund the tariff ed water rants, the came to 4 million ainst net e with the pr nt from € 152 .4 million. 30 Jun 17 5,652.6 88.6 (552.5) 5,188.7 (2,577.0) (2,611.7) (2,723.3) 111.6 (5,188.7) up Consolidate H                             ROUP’S F e Group’s n 017. revious year, 2.2 million in % Inc. 31 108.9% 5 1.7% -10.6% ( 100.0% 5 49.7% (2 50.3% (2 52.5% (2 -2.2% -100.0% (5 5.2 Dec 15 N Half-Year Finan                             INANCIAL net invested as an effect June 2016 t Dec 16 % 5,564.5 108 99.9 2. (543.4) -10 5,121.0 100 2,562.1) 50 2,558.9) 50 2,757.5) 53 198.6 -3 5,121.0) 100 5.1 Jun 16 Net invested ncial Report as a                             STRUCT capital and t of higher ca to € 151.8 m Inc. Abs. cha 8.7% +88.1 .0% (11.3 0.6% (9.1) 0.0% +67.7 0.0% (14.9 0.0% (52.8 3.8% +34.2 3.9% (87.0) 0.0% (67.7 5.1 Dec 16 capital (€/bln at 30 June 2017                13  URE AND d sources of apital grants. illion in June ange % Change 1 +1.6% 3) (11.3%) ) (1.7%) 7 +1.3% 9) (0.6%) 8) (2.1%) 2 +1.2% ) (43.8%) 7) +1.3% 5.2 Jun 17 n) 7 f . e e
  18. 18. Hera Group Consolidate Half-Year Financial Report as at 30 June 2017   Approved by the Hera Spa BoD on 26 July 2017                                                                                                                                              14    The following table shows a subdivision by sector, with separate mention of capital grants: Operating investments came to € 170.1 million, growing by 8.2% over the first half of 2016, and it mainly involved interventions on plants, networks and infrastructures, in addition to regulatory upgrading involving above all gas distribution, with a large-scale substitution of metres, and the depuration and sewerage areas. Remarks on investments in each single area are included in the analysis by business area.     At Group headquarters, investments concerned interventions on corporate buildings, IT systems and the vehicle fleet, as well as laboratories and remote-control structures. Overall, investments in structures increased by € 1.0 million compared to the previous year, mainly in IT systems.   In 2017, provisions amounted to € 552.5 million, up over December 2016 thanks to period provisions that were higher than outflows for usage. Equity increased by € 14,9 million, going from € 2,562.1 million at 31 December 2016 to € 2,577.0 million at 30 June 2017, first and foremost owing to the contribution coming from period results of € 148.0 million, which entirely financed dividend payments totalling € 140.4 million. Total investments (€/mln) Jun 2017 Jun 2016 Abs. change % Change Gas area 39.2 40.3 -1.1 -2.7% Electricity area 10.5 11.2 -0.7 -6.2% Water cycle area 68.2 61.1 +7.1 +11.6% Waste management area 20.9 17.5 +3.4 +19.4% Other services area 8.7 5.5 +3.2 +58.2% Headquarters 22.6 21.6 +1.0 +4.6% Total operating investments 170.1 157.2 +12.9 +8.2% Total financial investments 0.5 0.0 +0.5 +100.0% Total gross investments 170.6 157.2 +13.4 +8.5% Capital contributions 18.8 5.0 +13.8 +276.0% of which FoNI (New Investment Fund) 2.7 3.0 -0.3 -10.0% Total net investments 151.8 152.2 -0.4 -0.3% Provisions come to € 552.5 million Equity at € 2.6 billion At Group headquarters, investments in corporate buildings, IT systems and the vehicle fleet Strong commitment continues in operating investments in plants and infrastructures
  19. 19. Hera Group Consolidate Half-Year Financial Report as at 30 June 2017   Approved by the Hera Spa BoD on 26 July 2017                                                                                                                                              15    RECONCILIATION BETWEEN SEPARATE AND CONSOLIDATED FINANCIAL STATEMENTS Net profit Equity Balances as per Parent's Company's separate financial statements 165.9 2,301.3 Excess of equity over the carrying amounts of Investments in consolidated companies (17.7) (9.7) Consolidation adjustments : - Measurement with the equity method of investments reported at cost in the separate financial statement (2.8) 43.0 - Difference between purchase price and book value of corresponding po (4.9) 122.1 - Elimination of intercompany transactions 0.5 (23.2) Total 141.0 2,433.5 Restoration of third-party assets 7.0 143.5 Balances as per consolidated financial statements 148.0 2,577.0 Reconciliation between separate and consolidated financial statements
  20. 20. Hera Group Consolidate Half-Year Financial Report as at 30 June 2017   Approved by the Hera Spa BoD on 26 July 2017                                                                                                                                              16    1.01.03 ANALYSIS OF NET CASH (NET DEBT) Borrowings show an average term to maturity of 8 years, with 68% maturing after over 5 years. The amount of current financial debt, € 247.5 million, is mainly made up roughly € 55.8 million in bank loans reaching maturity, roughly € 49.6 million in accrued interest, roughly € 58.2 million in the use of current credit lines, and financial debt for the acquisition of Aliplast Spa coming to roughly € 53.1 million. The amount concerning non-current bank debt and bonds is largely made up of bonds issued on the European market and listed on the Luxembourg Stock Exchange (77% of the total), with repayment at maturity. Net financial debt increased by € 52.8 million, going from € 2,558.9 million at 31 December 2016 to € 2,611.7 million at 30 June 2017. Cash flows generated by management in the first half-year, totalling € 188.8 million, amply contributed to financing the acquisition of the Aliplast Group (roughly € 100 million) in addition to dividend payments amounting to over € 140 million. (€/mln) 30 Jun 17 31 Dec 16 a Cash and cash equivalents 324.0 351.5 b Other current financial receivables 35.1 29.4 Current bank debt (107.9) (72.1) Current portion of bank debt (57.5) (71.7) Other current financial liabilities (80.1) (36.2) Finance lease payments maturing within 12 months (2.0) (2.3) c Current financial debt (247.5) (182.3) d=a+b+c Net current financial debt 111.6 198.6 Non-current bank debt and other sources of financing (2,828.1) (2,847.8) Other non-current financial liabilities (4.3) (5.0) Finance lease payments maturing after 12 months (14.9) (14.9) e Non-current financial debt (2,847.3) (2,867.7) f=d+e Net debt - Consob communication n° 15519 of 28/07/2006 (2,735.7) (2,669.1) g Non-current financial receivables 124.0 110.2 h=f+g Net financial debt (2,611.7) (2,558.9) 2.7 2.6 2.6 2.6 Dec 15 Jun 16 Dec 16 Giu 2017 Net debt (€/bln) A solid financial position Net debt comes to € 2.61 billion
  21. 21. Hera Group Consolidate Half-Year Financial Report as at 30 June 2017   Approved by the Hera Spa BoD on 26 July 2017                                                                                                                                              17    1.02 ANALYSIS BY BUSINESS AREA An analysis of the results achieved by management in the various business areas in which the Group operates is provided below, including: the gas area, which covers services in natural gas and LPG distribution and sales, district heating and heat management; the electricity area, which covers services in electricity production, distribution and sales; the integrated water cycle area, which covers aqueduct, purification and sewerage services; the waste management area, which covers services in waste collection, treatment, recovery and disposal; the other services area, which covers services in public lighting and telecommunications, as well as other minor services. After the second half of 2016, the Hera Group revised the arrangement of its own multi-business portfolio in order to improve and simplify financial reporting on its industrial structures: the industrial cogeneration business has been transferred from the electricity area to the gas area, bringing it together with heat management, which furthermore respects the Group’s organizational outlook. For a correct comparison with the current representation, the respective 2016 data has been reclassified. The Group’s income statements include corporate headquarter costs and reflect intercompany transactions accounted for at arm’s length. The following analyses of the single business areas take into account all increased revenues and costs, having no impact on Ebitda, related to the application of Ifric 12, as shown in the Group’s consolidated income statement. The business areas affected by Ifric 12 are: natural gas distribution services, electricity distribution services, all integrated water cycle services and public lighting services. The new organisational and corporate configuration ensuing from the creation of Inrete Distribuzione Energia Spa and Heratech Srl has led to a different representation of personnel costs and operating costs within the various business areas, while remaining globally unchanged.  34% 18.1% 22% 24% 2.0% EBITDA June 2017 Gas Electricity Water Waste management Other services Contribution coming from the Group’s various areas towards overall Ebitda shows a balanced mix, in line with its multi-business strategy
  22. 22. 1 c   Approved by t   Gas: an incre in Ebitda Contribution Group Ebitda drops Gas area Ebi grows by 4.0 1.4 million ga customers the Hera Spa Bo 1.02 The the p obta defa 2018 and unde the c The (*)Not indus in Ebi The due place distr The supp Sass custo from to ro (€/ml Area Group Perce ease to a tda 0% as oD on 26 July 20 .01 GAS gas area, at previous yea ined thanks ult gas distri 8 and one po 30 Septemb erlying cost o consolidated following tab te that the data trial cogeneratio itda, or 0.6%. number of g to both ma e and the ibution and l wider cust ported by th so Srl, which omers. The the new po oughly 25,000 n) EBITDA p EBITDA entage weight 017                      t the end of t ar as regard to the com bution servic ortion of the l ber 2018. Co of amortisati first-half rep ble shows the a pertaining to on business. Th gas custome arketing act portions of last resort ga tomer base he acquisitio h brought rou e contributi rtions award 0 customers. Hera Grou                            the first half ds both Ebit mpany Hera ce for the pe last resort ga ompared to ion related t port. e changes oc June 2016 ha he effect on the rs rose by 3 tions set in default gas as awarded. e was also on of Gran ughly 16,300 on coming ded amounts . up Consolidate H                             of 2017, sho tda and volu Comm Srl riod between as service fo the first half to investmen ccurred in te as been correct 2016 data of th 3.5% over the Jun 2017 171.8 505.9 34.0% Half-Year Finan                             owed growth umes sold. T being award n 1 October r the period b f of 2016, th nts made in rms of Ebitd ted to account he first reclassifi e same perio Jun as adju 1 4 3 ncial Report as a                             over the sam This result w ded five por 2016 and 30 between 1 O he revenue c the referenc a: for the reclass ication amounts od in 2016. T 2016 usted Abs. cha 165.2 470.1 + 35.1% -1.1 at 30 June 2017                18  me period of was partially rtions of the 0 September October 2016 covering the ce period for sification of the s to € 3.2 million This trend is ange %Change +6.6 +4.0% +35.8 +7.6% 1 p.p. 7 f y e r 6 e r e n s e % %
  23. 23. G o   Approved by t   15.0% increa volumes sol Gas: growth overall Ebitda Gas revenue reach € 937 million the Hera Spa Bo Volu 30 J to g whic (10.1 volum show June broa cont Sass 10.2 furth amo the t of 20 oper The Note indus the in million perso € 34.6 Reve show tradi reve roug price € 4.5 incre the natu chan cont roug the acqu Inco (€/m Reve Oper Pers Capi EBIT ase in ld in a es .9 oD on 26 July 20 mes of gas une 2016 to growth in tr ch came to 2 1% of total mes sold to wed a 5.4% e 2016, t ader custome ribution com so Srl, amou million ermore tha unt of portio tender for de 017 to increa rations, the in following tab that pro forma d trial cogeneratio ncome statemen n in Ebitda, con onnel costs. Th 6 million. enues went f wing € 103.2 ng busin nues from t hly € 49 mi e of raw mate 5 million, w ease in the c TTF; the ral gas s nges in the ributed with hly € 8.5 mi default serv uisition of Gra me statement ln) enues rating costs sonnel costs italised costs TDA 017                      sold rose by 2,257.7 mill rading volum 228.7 million volumes). final custom % increase o hanks to er base and ming from G unting to rou m3 . N at the la ons awarde fault and las ase by rough ncrease in vo ble summaris data has been p on business from nt, as for 2017. nsisting of € 6.4 e second recla from € 834.7 million or 12 nesses: in trading amou llion and th erials in gas hich include cost of natur higher volu sold, not scope of op roughly € 13 llion in new vice awarded an Sasso Sr t Jun 93 (71 (57 5 17 Hera Grou                            y 294.7 millio lion m3 at th mes, n m3 The mers over the d the Gran ughly Note arger ed in st resort gas hly 21.1 milli olumes came ses operating prepared for Jun m the electricity . The effect on 4 million in rev assification incr 7 million at 3 2.4% in grow ncreased unting to he higher sales for ed a 5% ral gas at umes of including perations, 3 million; portions of d; and the rl, amounting 2017 % 7.9 4.4) -76 7.3) -6 5.6 0 1.8 18 up Consolidate H                             on m3 or 15.0 e same date services allo ion m3 . Not e to 2.8%. g results for t ne 2016 in orde y area to the ga the 2016 data venues, € 2.9 m reases revenue 30 June 2016 wth. The main g to roughly € % Inc. Jun 2016 adjuste 8 6.2% (60 6.1% (6 0.6% 8.3% 1 (*) The 2016 Half-Year Finan                             0%, going fro e in 2017. Th owed the volu including the the gas area r to account for s area, and the a of the first rec million in operat s and operatin 6 to € 937.9 n reasons fo € 6.6 million. 6 as ed % In 34.7 06.1) -72.6 67.5) -8.1 4.1 0.5 65.2 19.8 6 data reflects the ncial Report as a                             om 1,963.0 his change is umes sold in ese changes a: r both the reclas insertion of sys classification am ting costs and ng costs to the million at 30 or this lie in th . nc. Abs. chang +103 % +108 % -10 % +1 % +6 e reclassifications at 30 June 2017                19  million m3 at s mainly due the first half s in scope of ssification of the stem charges in mounts to € 3.2 € 0.4 million in same degree, 0 June 2017, he sales and ge % Change 3.2 +12.4% 8.3 +17.9% 0.2 -15.1% .5 +36.7% 6.6 +4.0% described above 7 t e f f e n 2 n , , d e % % % % %
  24. 24. € N i €   Approved by t       Gas Ebirta: € 171.8 millio Net investme n the Gas Ar € 39.2 million the Hera Spa Bo Furth due prev Last millio The costs thus volum cost Ebitd 4.0% the millio earn amo scop In th the G same to a purs reso mete invol G6), main Requ first seen cont econ Inves distr inclu the f heat conn on nts rea: oD on 26 July 20 hermore, con to the highe iously mentio ly, note the h on, and highe increase in s, which wen showing a mes sold, a per unit of e da increased %, going from first half o on in 2017 ings in trad unts of gas pe of the defa he first half o Gas Area ca e period in 2 ctivities in r uant to res lution 631/1 er substitu lved lower-c and le ntenance on uests for new half of 2017 n in the prev inued to nomic situatio stments fel ict heating a uding € 2.1 m first half of 2 t manageme nections a sli 017                      ntributions fro r value per u oned revenu higher reven er revenues revenues ha nt from € 673 total increa higher price energy efficie d by € 6.6 m m € 165.2 m of 2016 to 7, thanks to ding activities sold and th ault service. of 2017, inve ame to € 39.2 2016. In gas regulatory u solution 554 3) for a lar ution, whic class devic sser non-r networks an w connection were similar vious year a reflect the on. l by € 2.8 and heat ma million in distr 016 on the B ent, especia ght drop was Hera Grou                            om energy e unit, as did re ues covering ues in the di for Ifric12 w ad a virtually 3.6 million ov ase of € 98. e of raw mate ency certifica million or million in € 171.8 o higher s, larger he wider estments in 2 million, sh distribution, pgrading 4/15 (ex- rge-scale ch also es (G4- recurring nd plants. ns in the r to those and thus overall million in anagement, rict heating m Bologna Bar lly in the c s seen comp up Consolidate H                             efficiency cer evenues from amortisation strict heating works and su y proportiona verall at 30 J 1 million. Th erials, a larg tes. owing a € 1 a € 1.6 milli mainly due to rca and Forlì ompany Sin pared to the p (*) The 201 (*)The 2016 cogeneration Half-Year Finan                             rtificates rose m the gas dis n costs. g service, am bcontracting al effect on o June 2016 to his rise was ger amount o .1 million de on increase o the higher Campus pla nergie Spa. previous yea 6 data reflects the abo 6 data reflects the business from the ncial Report as a                             e by roughly stribution se mounting to r . operating an o € 771.7 mil s mainly due of trading an ecrease com was seen, m amount of w ants, and € 0 In new dis ar. e reclassifications ove reclassification o e electricity area t at 30 June 2017                20  € 10 million, rvice, for the roughly € 2.4 nd personnel lion in 2017, e to greater d the higher pared to the mainly owing work done in 0.7 million in trict heating s described f the industrial to the gas area. 7 , e 4 l , r r e g n n g
  25. 25. Hera Group Consolidate Half-Year Financial Report as at 30 June 2017   Approved by the Hera Spa BoD on 26 July 2017                                                                                                                                              21    Details of operating investments in the Gas Area are as follows: The 2016 data has been corrected to reflect the reclassification of the industrial cogeneration business from the electricity area to the gas area, for a total of € 0.5 million.  Gas (€/mln) Jun 2017 Jun 2016 as adjusted Abs. change % Change Networks and plants 31.5 29.9 +1.6 +5.4% RH/Heat management 7.6 10.4 -2.8 -26.9% Total Gas Gross 39.2 40.3 -1.1 -2.7% Capital contributions 0.0 0.0 +0.0 +0.0% Total Gas Net 39.2 40.3 -1.1 -2.7%
  26. 26. Ele inc Co Gr +2 Ebit Elec grow 931 elec cus   Approved by t   ectricity: crease in Ebi ontribution to roup Ebitda: 2.5% tda in the ctricity area ws by 25.2% thousand ctricity stomers the Hera Spa Bo 1.02 Ebitd as a Sale tend acro prod The (*)Not indus in Ebi The due came seen reinf broa 2016 com cont custo (€/m Area Grou Perc tda o oD on 26 July 20 .02 ELECTR da pertaining contribution es activities w ers by the S ss eleven of uction activit following tab te that the data trial cogeneratio itda, or 0.6%. number of e to growth on e to 15.9% n in recen forcement o adened cust 6 with the pany Gran ributed with omers. mln) a EBITDA up EBITDA centage weigh 017                      RICITY g to the elect to overall G widened the Single Purcha f Italy’s regio ties showed ble shows the a pertaining to on business. Th electricity cu n the free ma , confirming t years ow of marketing tomer base e acquisitio n Sasso S roughly 3.5 ht Hera Grou                            tricity area g roup Ebitda. customer b aser for 201 ons, with a a good perfo e changes oc June 2016 ha he effect on the ustomers sho arket, which g the trend wing to a g and the gained in on of the Srl, which 5 thousand Jun 5 1 up Consolidate H                             grew over the base and He 7-18 safegu different mix ormance onc ccurred in te as been correct 2016 data of th owed an 8.8 2017 J as a 91.6 505.9 8.1%   Half-Year Finan                             e first half of ra Comm S arded servic x than in the ce again in as rms of Ebitd ted to account he first reclassifi % increase un 2016 adjusted Ab 73.1 470.1 15.6% ncial Report as a                             f 2016, both rl was award ces, winning e previous p sset manage a: for the reclass ication amounts (75.2 thousa bs. change +18.5 +35.8 +2.5 p.p. at 30 June 2017                22  in itself and ded national six portions eriod; lastly, ement. sification of the s to € 3.2 million and), mainly %Change +25.2 +7.6% 7 d l s , e n y e % %  
  27. 27. Vo lin pr El gr R e €   Approved by t   olumes sold ne with the revious year lectricity: Ebi rows by 25.2% Revenues from lectricity: 1,147.6 millio the Hera Spa Bo Volu GWh decr on th conta volum custo diffe who ener custo The   Note indus effect reven increa Reve € 1,1 reas rise natio prev reve in sa roug prod Reve com those by € serv Inco (€/m Reve Ope Pers Cap EBIT in itda % m on oD on 26 July 20 mes of elec h in 2017, s rease of 0.8 he free mark aining the mes sold omers, mai rent mix of p proved to rgy than omers. following tab that pro forma d trial cogeneratio t on the 2016 da nues, € 2.9 mill ases revenues a enues rose 147.6 million ons for this in the pric onwide price ious year, w nues amoun ales, € 79 m hly € 14 uction in th enues for ing to rough e for extra- € 9 million. ices dropped ome statemen mln) enues rating costs sonnel costs italised costs TDA 017                      ctricity sold w howing an o %. Volumes ket grew by drop see to safegu nly owing portions awa o consume the pre ble summaris data has been p on business and ata of the first re lion in operatin and operating co by 14.0%, n in 2017. T s growth inc ce of energ e), up 33% which led to nting to € 70 million in trad million in hermoelectric volumes s hly € 3.5 mi -network tra Revenues fo d, owing to lo nt Ju 1, (1, ( Hera Grou                            went from 4 overall s sold 5.2%, en in arded to a arded, less evious ses operating prepared for Jun d the insertion o eclassification a ng costs and € osts to the sam going from The main clude: a gy (Pun, over the o higher 0 million ding and energy c plants. sold fell, llion, as did ansportation, or regulated ower revenue un 2017 % ,147.6 ,039.0) -90 (22.5) -2 5.5 0 91.6 8 up Consolidate H                             ,843.6 GWh g results for t ne 2016 in orde of system charg mounts to € 3.2 0.4 million in p me degree, € 315 € 1,006.8 d , d es covering a Inc. Jun 201 adju 1,0 0.5% (91 .0% (2 0.5% 8.0% (*) The 20 Half-Year Finan                             in the first the area: r to account for ges in the incom 2 million in Ebitd personnel costs 5.5 million. million in th amortisation 6 as usted % Inc. 006.8 11.2) -90.5% 26.4) -2.6% 3.9 0.4% 73.1 7.3% 016 data reflects t ab ncial Report as a                             half of 2016 r both the reclas me statement, a da, consisting of s. The second he first half costs. Abs. change +140. +127. -3. +1. +18. the reclassification bove at 30 June 2017                23  6 to 4,805.9 ssification of the s for 2017. The f € 6.4 million in reclassification of 2016 to e % Change 8 +14.0% 8 +14.0% 9 -14.8% 6 +40.9% 5 +25.2% ns described 7 9 e e n n o e % % % % %
  28. 28. E a N in A m   Approved by t   Electricity Eb at € 91.6 milli Net investmen n the Electric Area: € 10.5 million the Hera Spa Bo The pers millio to an At th Ebitd 25.2 June same highe mark custo earn     In th € 0.7 Inter recu distr Imola Com prev main the exte the I of 20 As re this to th Deta The 2 electr Eletr (€/m Netw Tota Cap Tota bitda ion nts city oD on 26 July 20 increase in onnel costs, on in 2017, t n increase in he end of th da rose by %, going fro e 2016 to € e period in er earnings ket and omers, as ings in elect he Electricity 7 million com rventions ma rring mainte ibution netw a, Trieste an mpared to the ious yea ntenance fell most part nsive interve mola Cogen 016. egards reque area, a sligh e first half of ails of operat 2016 data has b ricity are to the g ricity mln) works and pla al Electricty G ital contributio al Electricity N 017                      revenues w , which went thus showing the cost of m he first half y € 18.5 m om 73.1 milli € 91.6 millio n 2017, th in sales on to safe well as ricity product Area, invest mpared to the ainly concern nance on pla works in the nd Gorizia are e same perio ar, non-r by € 0.7 m due to th entions carrie n plant in the ests for new ht rise was s f the previous ing investme been corrected t gas are, for an o ants Gross ons Net Hera Grou                            was reflecte t from € 937 g a total grow materials. of 2017, million or ion at 30 n in the hanks to the free eguarded higher tion. tments in th e € 11.2 seen ned non- ants and Modena, eas. od in the recurring illion, for he more ed out on first half connections seen compar s year. ents in the El to reflect the rec overall amount o up Consolidate H                             d to an equ 7.6 million ov wth of € 123 e first half o n in the previ s in red ectricity Area classification of of € 0.5 million. Jun 2017 10.5 10.5 0.0 10.5 (*) The 2 (*) Th industria Half-Year Finan                             ual degree verall at 30 .9 million. Th f 2017 came ous year. a are as follo f the industrial c Jun 2016 11.2 11.2 0.0 11.2 2016 data reflects a he 2016 data refle al cogeneration bu to th ncial Report as a                             by rising op June 2016 his change is e to € 10.5 m ows: cogeneration bu Abs. change -0.7 -0.7 +0.0 -0.7 s the reclassificatio above ects the reclassific usiness from the e he gas area at 30 June 2017                24  perating and to € 1,061.5 s mainly due million, down usiness from the e % Change -6.2% -6.2% +0.0% -6.2% ons described cation of the electricity area 7 d 5 e n e e
  29. 29. W Eb 4. Co Eb W m   Approved by t       Integrated W Cycle: Ebitd in absolute t Water Cycle Ar bitda rises by 4% ontribution to bitda: -0.7% Water Cycle: 1 million custom the Hera Spa Bo 1.02 In the Ebitda the tar for 20 2016 t in the basis. standa standa this re The f The settle thou of 20 inter area parti area (€/ml Area Grou Perce Water a up terms rea y o .5 mers oD on 26 July 20 .03 INTEGR first half of 2 a, up 4.4%. A riff method d 016-2019 (re the revenue period cove Furthermor ards of cont ards such as esolution, me following tab number of ed at 1.5 m sand or +0.3 016. This is rnal growth as served cular in th a managed by Water Cycle Area; +22% Wat ln) a EBITDA p EBITDA entage weight 017                      RATED WAT 2017, the int As regards cu defined by th solution 664 covering the ered by the re, with res tractual qual s further req echanisms fo ble shows th f water cus million, rising 3% over the f s part of a t seen acro by the Gro e Emilia-Ro y Hera Spa. ter EBITDA J Hera Grou                            TER CYCLE tegrated wat urrent regula he Authority 4/2015) was e underlying consolidate solution 655 ity have bee quirements fo or recognising he changes o stomers by 5.0 first half trend of oss the oup, in omagna Jun 2017 Jun 2 11 50 22 up Consolidate H                             E ter cycle are ations, note t for electricity applied, an cost of amor d half-year 5/15, in forc en defined, or help desk g commercia ccurred in te 2017 Ju 11.3 05.9 2.0% Half-Year Finan                             a recorded € hat 2017 is t y and gas (h d that comp rtisation relat report, is re ce as of Ju including bo s, invoicing al quality hav erms of Ebitd n 2016 Abs 106.6 470.1 22.7% ncial Report as a                             € 4.7 million the second y hereinafter th pared to the ted to invest ecognized on uly 2016, th oth general and estimat ve been intro da: s. change +4.7 (25.9) +2.4 p.p. at 30 June 2017                25  of growth in year in which he Authority) e first half of ments made n an accrual he minimum and specific tes. Through duced. % Change +4.4% (5.5%) 7 n h ) f e l m c h
  30. 30. 14 m aq Inte cyc Eb R t W c m   Approved by t   46.7 million m managed in th queduct egrated wate cle: increase itda Revenues fro he Integrated Water Cycle come to € 406 million the Hera Spa Bo The The grow acro com man The activ to re distr The   Reve millio are v reve roug the t for th (Mti- the and qual appl Incom Reve Oper Pers Capi EBIT m 3 e er in m d 6.8 oD on 26 July 20 main quantit volumes dis wth over the f ss all areas pared to the aged in sew volumes dis vities of the a egulations tha ibuted. table below enues showe on in the first various reas nues from d hly € 20.4 m tariffs provide he three-yea -2); higher underlying c the recogn ity; higher ication of a me statement enues rating costs onnel costs talised costs DA 017                      tative indicat spensed thro figures seen s served and same period werage (roug pensed, follo areas in whic at call for reg synthesises ed an 8.7% t half of 2017 sons for this ispensing co million, as a r ed for by the ar period 201 revenues c cost of amo ition of com revenues accounting p (€/mln) Jun 40 (20 (9 2 11 Hera Grou                            tors of the ar ough the aq in June 201 d the higher d in 2017. F ghly 3.1%) a owing Aeegs ch the Group gulated reve the income s increase, go 7. There : higher oming to result of e Aeegsi 16-2019 covering rtisation mmercial for the principle n 2017 % In 06.8 - 08.2) -51.2 90.0) -22.1 2.6 0.6 11.3 27.4 up Consolidate H                             rea are as fol ueduct show 6: this can b r amount of urthermore, and purificati si resolution p operates an nues to be r statement fo oing from € 3 nc. Jun 20 374.1 2% (193.3 1% (75.2 % 1.1 4% 106.6 Half-Year Finan                             llows: wed a 3.7 m be traced to b rain seen i growth was on (roughly no. 664/2015 nd are subje ecognised in r the water a 374.1 million 16 % Inc. 1 - 3) -51.7% ) -20.1% 0.3% 6 28.5% ncial Report as a                             million m3 (ro both higher c in the first h also seen in 3.6%) over 5, are an ind ect to equalis ndependently area: in June 201 Abs. change +32.7 +14.9 +14.8 +1.5 +4.7 at 30 June 2017                26  oughly 2.6%) consumption half of 2016 n the amount June 2016. dicator of the sation thanks y of volumes 6 to € 406.8 e % Change +8.7% +7.7% +19.7% +139.2% +4.4% 7 ) n 6 t . e s s 8
  31. 31. Eb m Ne in W € 4   Approved by t     bitda at € 111 illion et investment the Integrate Water Cycle Ar 49.5 million the Hera Spa Bo Ifric1 subc Ope due purc Ebitd millio millio millio com millio dispe equa cost Net i € 6.6 by € capit area € 7.1 year The exte netw addit invol sewe Inves sewe Amo inter abdu sewe addit highe work Aceg Requ perio Capi com com .3 ts ed rea: oD on 26 July 20 12, amounti contracted wo rating and p to a higher hased, highe da showed on or 4.4%, on in June on in 2017, bination of on in high ensing, € 6. alisable cos of personne investments 6 million com € 13.8 millio tal grants, i a came to € 1 increase r. intervention nsions, re work and pl tion to reg lving above erage. stments we erage and € ong the mo rconnections uction condu erage, conti tion to redev er investmen k done in gasApsAmga uests for ne od of the prev ital grants a ponent prov pared to the 017                      ng to rough orks coming personnel co price of elec er costs for c a growth o going from e 2016 to resulting fr f roughly er revenue 0 million in ts and the el. in the Integr mpared to the on. Not in nvestments 68.2 million, over the p ns mainly in eclamations lant upgrad gulatory up all purificatio re made to 23.2 million re significan in the Mo uct in the Fer nued progre velopment o nts compare upgrading a Spa. ew water an vious year. mounting to ided for by t first half of 2 Hera Grou                            hly € 7.0 m to roughly € osts rose by ctricity for pl commissions of € 4.7 € 106.6 € 111.3 rom the € 20.4 es from n higher higher rated Water e previous ye cluding in this , with a revious nvolved and ing, in pgrades on and otalling € 27 in purificatio nt works, n odena area rrara area a ess in work of the sewer ed to the pre the Servola nd sewerage o € 18.8 milli tariff method 2016 by € 13 up Consolidate H                             million; highe € 7.0 million. € 29.7 millio lant function s and subcon Cycle Area a ear owing to 7.8 million i n. ote in parti water syste nd anti-earth s for the R rage network evious year d a purificatio e connection on included for the New 3.8 million. Half-Year Finan                             er revenues on or 11.1% ing, higher v ntracted work amounted to higher capita n the aque cular: in th em, a signi hquake upgra Rimini Seawa k in other ar depended a on plant, in ns dropped € 2.6 million w Investment ncial Report as a                             s for comm overall; this volumes or ks as well as o € 49.5 millio tal grants, wh educt, € 17. he aqueduct ificant upgra rading of wat ater Protect reas; in pur bove all on n the area compared t n pertaining ts Fund (FoN at 30 June 2017                27  issions and s increase is raw material for Ifric12. on, falling by hich were up 3 million in t, upgrading ading of an ter plants; in ion Plan, in ification, the the ongoing served by to the same to the tariff NI) and rose 7 d s l y p n g n n n e g y e f e
  32. 32. Hera Group Consolidate Half-Year Financial Report as at 30 June 2017   Approved by the Hera Spa BoD on 26 July 2017                                                                                                                                              28    Details of operating investments in the Integrated Water Cycle Area are as follows: Water Cycle Area (€/mln) Jun 2017 Jun 2016 Abs. change % Change Aqueduct 27.8 30.4 -2.6 -8.6% Purification 23.2 13.1 +10.1 +77.1% Sewage 17.3 17.6 -0.3 -1.7% Total Water Cycle Gross 68.2 61.1 +7.1 +11.6% Capital contributions 18.8 5.0 +13.8 +276.0% of which FoNI (New Investment Fund) 2.7 3.0 -0.3 -10.0% Total Water Cycle Net 49.5 56.1 -6.6 -11.8% A higher amount of capital grants, coming to € 13.8 million, caused a € 6.6 million decrease in net investments
  33. 33. W M E C w   Approved by t   Waste Management: bitda rises Commercial waste: +6.5% the Hera Spa Bo 1.02 At 30 its ow wast the A of th Thes its ow The Volu An a due at pla in tot Alipla Urba than over (€/m Area Grou Perc Quan Urban Comm Wast Plant Wast oD on 26 July 20 .04 WASTE 0 June 2017 wn Ebitda ris te managem Aliplast Grou he Pisa com se significant wn range of e following ta umes market analysis of th to a rise in c ant saturatio tal plants du ast Group. an waste sh ks to a high rall and offse mln) a EBITDA up EBITDA centage weigh ntitative data (th n waste mercial waste te marketed t by-products te treated by typ 017                      E MANAGEM the waste m sing by 4.1% ent area rein p, a national mpany Tesec t operations plants. ble shows th ted and treat he volumes commercial w on, intermedia e to the acqu owed an inc her amount t the lesser a ht housand of tonn pe Hera Grou                            MENT management % over the firs nforced its o l leader in pl co Srl, a lea allowed the he changes o ted by the G treated show waste coming ation channe uisition of the crease comp of sorted w amount of un es) Ju 1 1 2 1 3 up Consolidate H                             t area accou st six months organisationa astic recyclin der in indus Group to fu occurred in te roup in 2016 ws an 3.8% g to 6.5%, th el and new m e “plants” co pared to the waste and sh nsorted wast Jun 2017 121.3 505.9 24.0% un 2017 J 1,013.4 1,254.5 2,267.9 1,303.0 3,570.8 Half-Year Finan                             nted for 24.0 s of 2016. Ov al structure th ng, and the “ strial waste t rther widen erms of Ebitd 6 are as follow increase in hanks to com market develo rporate bran e same perio hore cleanin e, which fell 7 Jun 2016 A 3 116.5 9 470.1 % 24.8% Jun 2016 Ab 1,007.6 1,178.1 2,185.8 1,276.3 3,462.1 ncial Report as a                             0% of Group ver the first h hrough the a “plants” corpo treatment an its commerc da: ws: waste mark mmercial initia opment, and ch of Teseco od in the pre ng, which ro by 0.6%. Abs. change +4.8 +35.8 -0.8 p.p. bs. change % +5.8 +76.4 +82.1 +26.7 +108.7 at 30 June 2017                29  Ebitda, with half-year, the acquisition of orate branch nd recovery. cial offer and eted, mainly atives aimed an increase o Srl and the evious year, ose by 1.6% %Change +4.1% +7.6% % Change +0.6% +6.5% +3.8% +2.1% +3.1% 7 h e f h . d y d e e , %
  34. 34. Ris dis + w   Approved by t   se in waste sposed of 0.7% in sorte waste collectio the Hera Spa Bo The due Colle show from the f mon by H incre Marc and settle The spec impo selec chem Alipla plant Was incre the a Quan Land Was Sele Com Stab Othe Was ed on oD on 26 July 20 increase in to the acquis ection of s wed further 56.9% in Ju first half of 2 ths of 2017, Hera Spa, so eased by 0.5 che Multiser in the Tri ed at 0.9%. Hera Group cial waste t ortant of thes cting plants. mical-physica ast Group c ts. ste treatmen ease is due t authorisation ntitative data (t dfills te-to-energy p cting plant and posting and st bilisation and c er plants te treated by p 017                      by-products sition of the “ sorted urba r progress, une 2016 to 017. Over th , in the area orted waste %, in those s rvizi it rose veneto area p operates in reatment an se include: 1 The entry o al plants, one contributed w t grew by 3 to the greate ns obtained. thousand of ton lants d other tabilisation pla hemical-physi plant Hera Grou                            is mainly du “plants” corp an waste passing 57.6% in he first six as served collection served by by 1.7% a growth n the entire nd disposal 10 waste to of the corpor e inertisation with six sele 3.1% over t er availability Concerning nnes) ants cal plants up Consolidate H                             ue to the inc orate branch waste cycle and plastic energy plan rate branch n plant and a ecting plants he first half y of the Rav waste to en Jun 2017 414.3 653.5 218.9 192.8 613.6 1,477.6 3,570.8   Half-Year Finan                             crease in the h of Teseco S , with 94 pla c material r nts, 11 comp of Teseco S a storage pla s and three f of 2016. A venna and Tr nergy plants Jun 2016 370.5 687.4 258.8 211.3 721.4 1,212.7 3,462.1 ncial Report as a                             e total numb Srl. ants used fo regeneration posters/diges Srl contribute ant, while the material tra As regards remonti plan s, the reduct Abs. change +43.8 -33.9 -39.9 -18.5 -107.8 +264.9 +108.7 at 30 June 2017                30  ber of plants, or urban and . The most sters and 15 ed with three e entry of the ansformation landfills, the nts, following ion in waste e % Change +11.8% -4.9% -15.4% -8.8% -14.9% +21.8% +3.1% 7 , d t 5 e e n e g e e  
  35. 35. W ris   Approved by t   Waste: Ebitda ses Waste managemen revenues: € 546.4 mill the Hera Spa Bo treat of a susp ascr The to a chain repre the A The Reve 2017 millio June same the c due Grou € 54 gree roug costs over deve show com parti the l for a offse Ope € 28 of o millio millio prev the i for d Inco (€/m Reve Oper Pers Capi EBIT nt ion oD on 26 July 20 ted compare few plants pensions and ibed to a ch quantitative change in th n of “Other esentation (m Aliplast Grou table below enues for th 7 rose by on, going fro e 2016 to € e period of changes in s to the en up, which .5 million, a en certificat hly € 24 m s), the waste r the previou elopment of wed a positiv ing to rough cular those ower revenu a few plants a et by the incr rating costs 8.4 million in perations ow on, and the p on, the wast ious year. Th ncrease in c eveloping ne me statement ln) enues rating costs onnel costs italised costs TDA 017                      d to the sam s, included w d planned m ange in the decrease in he classificat plants” ben mentioned ab p and the “p summarises he first seme 11.2%, or om € 491.4 m 546.4 million 2017. Not in scope of ope try of the contributed and lower sa tes amount million (pass e manageme us year. Thi market activ ve trend in th hly € 5 millio following the ues from elec and for the le rease in ener for the first n June 2016 wing to the previously m e managem his change is osts tied to m ew projects i t Jun 54 (32 (10 2 12 Hera Grou                            me period in 2 within “Othe maintenance. classificatio the chain of tion of a few nefited from bove) of a fe plants” corpor s the operatin ester of € 55.0 million in n in the ncluding erations Aliplast d with ales for ting to sing to ent area sho is change is vities, chang he first half o n due to the e developme ctricity produ esser produc rgy prices (in t half of 201 to € 325.5 m entry of the mentioned eff ent area saw s due to the maintenance n the area of 2017 % 6.4 5.5) -59 2.5) -18 .9 0 1.3 22 up Consolidate H                             2016 is due t er plants”, a . The lower n of a few p f inertisation plants in the a greater d ew plants in rate branch o ng results of owed a rough s due to hig ges in the m of 2017, and e tariffary ad ent of sorted uction mainly ction of energ nvolving ince 7 rose by 1 million in 201 e Aliplast Gr fect of green w costs risin higher costs e works on a f sorted wast Inc. Jun 2 49 9.6% (28 8.8% (8 0.5% 2.2% 11 Half-Year Finan                             to both a cha and a differe quantity of plants in the and chemic e “Other plan egree of int this category of Teseco Sr the area: hly € 25 milli gher volume market price d higher reve djustments re d waste serv due to the l gy in some W ntives and th 2.9%, or € 7. Not includ roup, which n certificates, ng by roughly s caused by t few disposa te. 2016 % Inc 91.4 88.4) -58.7% 88.0) -17.9% 1.5 0.3% 16.5 23.7% ncial Report as a                             ange in the c ent schedul selection pl “Other plant cal-physical p nts” category termediation y and the ac rl. on increase es treated th of special w enues for ur esolved by t vices. Furthe oss of energ WTE plants, o he market). 37.1 million, ding the chan contributed , coming to y € 22.0 mill the rise in wa al plants and c. Abs. chang +55 % +37 % +14 % +1 % +4 at 30 June 2017                31  classification ing of plant ants can be ts” category. plants is due y. Lastly, the , a different cquisitions of in revenues hanks to the waste, which ban hygiene he ATOs, in ermore, note gy incentives only partially , going from nge in scope with € 39.3 roughly € 24 ion over the aste treated, higher costs e % Change .0 +11.2% .1 +12.9% .5 +16.5% .4 +95.7% .8 +4.1% 7 n t e . e e t f s e h e n e s y m e 3 4 e , s % % % % %
  36. 36. N in m €   Approved by t   Waste managemen Ebitda at € 121.3 mill Net investmen n waste management: € 20.9 million the Hera Spa Bo Ebitd June same a gro term to th withi Hera highe dispo for s effec in en       Net man main amo millio The show com inter com biom The by th landf ener Galli In th main and Inves year drop Herg of th colle The due Recy gath invol them nt ion nts oD on 26 July 20 da went from e 2016 to € e period of owth of € 4.8 s, or 4.1%. he entry of n the scope a Group, w er volumes osal busines special was cts allowed th nergy manag investmen agement a ntenance a unted to € 2 on comp chain of wed an inc ing to € 1.9 rventions o poster for methane proje decrease in he works car fill, not offse rgy recovery era and Cord he chain of W nly due to wo lesser maint stments in t r. The chain pped by € 0.9 go Ambiente he Hera Gro ecting equipm € 5.3 million to the acq ycling, which er and elabo lved in the p m into relati 017                      m € 116.5 m 121.3 million 2017, thus s 8 million in a This change the Aliplast of operation with € 7.6 marketed ss and highe ste. These he drop in re gement to be nts in th rea concer and upgrad 20.9 million, pared to composters rease in in million, mai on the S activities tie ect. investments rried out in th et by the act system) an denons plan WTE plants, orks including enance inter the Special W of ecologic 9 million, ow , the innovat oup's Enviro ment in the a n increase se uisition of t h is impleme orate informa performance on with pro Hera Grou                            million in n in the showing absolute e is due t Group ns of the million, in the er prices positive evenues e offset. he waste ned plant ding and , up € 3.4 2016. s/digesters nvestments inly due to Sant’Agata ed to the s in landfills, he first half o tivities initiate d Loria land ts. a € 1.2 mil g the modific rventions for Waste Plant cal islands a wing to the im tive informati onmental Se rea served b een in the ch the Aliplast enting the p ation from va of the vario oduction act up Consolidate H                             which came of 2016 in cr ed on the T dfills, in addit lion increase cation of the the other W t chain were and collectio mplementatio ion system th ervices activ by Marche M hain of Sele Group, in a roject I-Was arious types ous devices tivities, in o Half-Year Finan                             e to € 3.7 mil reating the 9 re Monti (tan tion to repro e over the p steam gene TE plants. e basically in on equipmen on in 2016 in hat manages vities, and t ultiservizi. ction and Re addition to ste, a manag of sensors t and of the t order to enh ncial Report as a                             llion, is main 9th sector of t nk reclamati ogramming w previous yea erator in the n line with t nt saw inves n the Trivene s in an integr to lower inv ecovery Plan the activitie gement platf that collect a treatment pla hance the e at 30 June 2017                32  nly explained the Ravenna ion and new works on the ar was seen, Pozzilli plant the previous stments that eto region of rated way all vestments in nts is mainly es of Waste form able to analytic data ants, putting efficiency of 7 d a w e , t s t f l n y e o a g f
  37. 37. Hera Group Consolidate Half-Year Financial Report as at 30 June 2017   Approved by the Hera Spa BoD on 26 July 2017                                                                                                                                              33    management, technical and energy processes, introducing IoT extensively into the company. Details of operating investments in the waste management area are as follows: Waste Management (€/mln) Jun 2017 Jun 2016 Abs. change % Change Composting/Digestors 3.3 1.4 +1.9 +135.7% Landfills 4.2 7.9 -3.7 -46.8% WTE 3.5 2.3 +1.2 +52.2% RS Plants 0.7 0.8 -0.1 -12.5% Ecological areas and gathering equipment 2.1 3.0 -0.9 -30.0% Transshipment, selection and other plants 7.2 1.9 +5.3 +278.9% Total Waste Management Gross 20.9 17.5 +3.4 +19.4% Capital contributions 0.0 0.0 +0.0 +0.0% Total Waste Management Net 20.9 17.5 +3.4 +19.4%
  38. 38.   Approved by t   Other services: Ebitda rises Increased contribution Group Ebitd Other Services Are Ebitda increases 509.6 thousand lighting poin the Hera Spa Bo 1.02 The inclu In th prev millio The The An a point mon The prov point thou the (€/m Area Grou Perc Qua Publ Ligh Muni s n to a ea nts oD on 26 July 20 .05 OTHER other servic uding public l e first half of ious year: Eb on in the sam changes occ following tab analysis of th ts and an a ths of 2017, most signific inces of Bre ts; in Lazio r sand lighting year only p mln) a EBITDA up EBITDA centage weigh ntative data lic lighting ting points (th icipalities serv 017                      SERVICES ces area br ighting, telec f 2017, the re bitda in fact w me period of curred in Ebi ble shows th he data rega additional 14 , acquired ro cant of these escia, Berga oughly 4 tho g points mai partially offse ht ousands) ved Hera Grou                            S rings togethe communicati esults of the went from € 2017. tda are as fo he area’s ma arding public 4 municipalit oughly 34 th e were: in Lo mo and Cre ousand lightin inly in the pr et the loss Jun 20 50 2. Jun 201 509.6 162.0 up Consolidate H                             er all minor ons and cem other service 8.7 million in ollows: ain indicators c lighting sh ies served. ousand light mbardy, roug emona; in Ab ng points; an rovince of P of roughly 017 Jun 2 9.9 05.9 4 .0% 7 Jun 2 519 148 Half-Year Finan                             r services m metery servic es area incre n the first six s as regards ows a fall o The Hera G ting points in ghly 4 thousa bruzzo rough nd in the Triv ordenone. T 44 thousand 2016 Abs. c 8.7 470.1 1.8% + 2016 Abs 9.7 ( 8.0 ncial Report as a                             managed by ces. eased by 14. x months of 2 s public lighti of 10.1 thous Group, over n 21 new m and lighting hly 13 thous veneto region The increase d lighting p change % +1.2 +35.8 0.2 p.p. . change (10.1) +14.0 at 30 June 2017                34  the Group, .0% over the 2016 to € 9.9 ing services: sand lighting the first six unicipalities. points in the sand lighting n, roughly 13 es seen over oints and 7 %Change +14.0% +7.6% % Change (1.9%) +9.5% 7 , e 9 : g x . e g 3 r 7
  39. 39. Ne € 8   Approved by t     Other Servic revenues rise Revenues fo Other Servic reach € 63.3 Ebitda grow € 1.2 million et investment 8.7 million the Hera Spa Bo mun roug The Rev June from in Ju half- cont busin reve publ millio perfo the r from ceme Aceg Ebitd com owin lighti perfo highe serv       Inves Area millio 2016     Inco (€/m Reve Oper Pers Capi EBIT es: e r es ws by n ts: oD on 26 July 20 icipalities m hly 29 thous operating re venues in the e 2016 by € € 59.3 milli une 2017. Th year is du ribution com nesses that nues from ic lighting gr on, thanks ormance of H remainder of telecom etery serv gasApsAmga da showed a pared to th ng to highe ing, broug ormance of er earnings ices. stments in a came to € on compare 6.     me statement ln) enues rating costs sonnel costs italised costs TDA 017                      anaged, of sand lighting sults of the a e area were € 4.0 million on to € 63.3 his growth in ue to a ming from make up th the busin rew by rough s to the Hera Luce S f the increas mmunications vices mana a Spa. a € 1.2 millio he first half er earnings ght by th Hera Luce in telecomm the Other € 8.7 million, d to the fir t Jun 63 (44 (10 1 9 Hera Grou                            which the m points in the area are as f up over n, going 3 million the first positive all the he area: ness of hly € 1.1 good Srl, while se came s and aged by on growth of 2016, in public he good e Srl, and unications Services , up € 3.2 rst half of 2017 % 3.3 4.4) -70 0.2) -16 .2 1 9.9 15 up Consolidate H                             most signific e municipality follows: % Inc. Jun 2 0.2% (4 6.1% 1.9% 5.6% Half-Year Finan                             cant decreas y of Rimini. 2016 % In 59.3 41.6) -70.2 (9.7) -16.3 0.7 1.2 8.7 14.6 ncial Report as a                             se concerns nc. Abs. chang +4 % +2 % +0 % +0 % +1 at 30 June 2017                35  the loss of ge % Change 4.0 +6.7% 2.8 +6.7% 0.5 +5.2% 0.5 +73.2% 1.2 +14.0% 7 f e % % % % %
  40. 40. Hera Group Consolidate Half-Year Financial Report as at 30 June 2017   Approved by the Hera Spa BoD on 26 July 2017                                                                                                                                              36    In telecommunications, € 5.0 million of investments were made in networks and TLC and IDC (Internet Data Center) services, with a € 0.5 million increase over 2016. In the public lighting service, investments went to maintaining, enhancing and modernising lampposts, and amounted to € 3.7 million, increasing by € 2.7 million compared to the first half of the previous year. This increase concerned the areas served by both Hera Luce Srl and AcegasApsAmga Spa. Details of operating investments in the other services area are as follows: Other Services (€/mln) Jun 2017 Jun 2016 Abs. change % Change TLC 5.0 4.5 +0.5 +11.1% Public Lighting and Street Lights 3.7 1.0 +2.7 +270.0% Total Other Services Gross 8.7 5.5 +3.2 +58.2% Capital contributions 0.0 0.0 +0.0 +0.0% Total Other Services Net 8.7 5.5 +3.2 +58.2%
  41. 41. Hera Group Consolidate Half-Year Financial Report as at 30 June 2017   Approved by the Hera Spa BoD on 26 July 2017                                                                                                                                              37    1.03 SIGNIFICANT EVENTS OCCURRED DURING THE HALF-YEAR January Herambiente Spa-Aligroup Srl On 11 January 2017 Herambiente Spa and Aligroup Srl, a company belonging to the Aligroup Group and a leader in the sector of regenerated polymer, flexible PE film and rigid PET film production, signed a framework agreement concerning the acquisition of the entire share capital of Aliplast Spa, a company involved in managing the integrated plastic cycle. The first tranche of the operation, subject to the approval granted by the Italian Antitrust authority (Autorità garante della concorrenza e del mercato, Agcm), was completed on 3 April 2017, when Herambiente Spa acquired 40% of Aliplast Spa’s share capital. Herambiente Spa is also expected to acquire, within March 2018 and June 2022, two further tranches of the share capital coming, respectively, to 40% and 20%, subsequent to which it will become the single shareholder of Aliplast Spa. Waste Recycling Spa-Teseco Srl On 30 January 2017, Waste Recycling Spa acquired from Teseco Srl the corporate branch Business Unit Impianti, operating in the sector of waste treatment via the Pisa multifunctional platform. February Biogas 2015 Srl Effective as of 1 February 2017, the merger by incorporation of Biogas 2015 Srl, a company operating in the waste treatment sector, into Herambiente Spa, which already held the entire share capital, was completed. March Adriatica Acque Srl On 29 March 2017, Hera Comm Srl transferred its holding in Adriatica Acque Srl, a company operating in the sector of office drinking water, including sales of coolers/dispensers, corresponding to 22.32% of the share capital. April Tri-Generazione Scarl Effective as of 5 April 2017, the company Tri-Generazione Scarl, which operates in the sector of trigeneration plant management and maintenance and is 70% controlled by Sinergie Spa, in turn entirely held by AcegasApsAmga Spa, changed its legal status from Srl to Scarl. May Gran Sasso Srl Effective as of 1 May 2017, the share capital of Gran Sasso Srl, a company operating in the sector of gas and electricity purchasing and sales, was increased from € 148,000 to € 162,810, by way of a conferral by Enerpeligna of its own corporate branch involving gas. As of the same date, Enerpeligna transferred its holding pertaining to the abovementioned share capital increase to Hera Comm Srl, with the latter maintaining the entire holding of the company.
  42. 42. Hera Group Consolidate Half-Year Financial Report as at 30 June 2017   Approved by the Hera Spa BoD on 26 July 2017                                                                                                                                              38    Liquidation of Esil Scarl 23 May 2017 saw the liquidation of the holding in Esil Scarl, a company operating in public lighting and traffic light management services, corresponding to 100% of the share capital. June Alipackaging Srl – Cerplast Srl – Umbroplast Srl – Variplast Srl On 27 June 2017, Aliplast Spa, already a shareholder in Alipackaging Srl, Cerplast Srl, Umbroplast Srl and Variplast Srl, holding 80%, 60%, 90% and 80% of the respective share capital, purchased the shares held by the remaining minority shareholders, thus becoming sole shareholder of the abovementioned companies. Significant events following the reporting period July Aresgas EAD On 3 July 2017, AcegasApsAmga Spa, which already owned 99.98% of the company Aresgas AD, involved in natural gas distribution and sales in Bulgaria, purchased the remaining 0.02% of the share capital, thus becoming the company’s sole shareholder. Verducci Servizi Srl On 6 July 2017 the acquisition of 100% of the share capital of Verducci Servizi Srl, a company operating in the gas sales sector with roughly circa 3,500 customers served in the areas of Pescara, L’Aquila and Rieti, by Hera Comm Marche Srl, came to a conclusion.
  43. 43. Hera Group Consolidate Half-Year Financial Report as at 30 June 2017   Approved by the Hera Spa BoD on 26 July 2017                                                                                                                                              39    1.04 SHARE PERFORMANCE AND INVESTOR RELATIONS Financial markets showed generally increasing quotations in the first half of 2017, bolstered by a gradual improvement in prospects for economic growth and a fall in political risk in Europe following the defeat of populist movements in the Dutch and French elections. European markets furthermore benefited from the ECB’s decision to extend its bond purchasing program (quantitative easing) until December 2017, albeit at a slower pace, corresponding to € 60 billion per month as of April. Just like other European stock exchanges, Borsa Italiana recorded a positive performance in the period in question, with an overall increase of +8.6%. Small and medium sized companies led the upturn at Piazza Affari (+20.6% for the Ftse Mid Cap and +22.7% for the Ftse Small Cap) thanks to a significant inflow of capital coming from PIRs (Individual Savings Plans), a type of investment introduced by the most recent national budget, which allows for tax relief when some resources are delivered to companies not included in the stock exchange’s main index. In this context, Hera shares amply outperformed the Italian stock exchange index and the Group’s own sector, closing the half-year at an official price of € 2.689 per share, up +22.9%, and reaching a capitalisation of € 4.0 billion. This trend was sustained among other things by the new business plan to 2020, published in mid-January, and the growing annual and first-quarter financial results, published in late March and mid-May respectively. * excluding Hera from the category of local utilities Hera; +22.9% FTSE All Share; +8.6% Local Utilities*, +15.7% -5.0% +0.0% +5.0% +10.0% +15.0% +20.0% +25.0% +30.0% +35.0% +40.0% 30/12/2016 06/01/2017 13/01/2017 20/01/2017 27/01/2017 03/02/2017 10/02/2017 17/02/2017 24/02/2017 03/03/2017 10/03/2017 17/03/2017 24/03/2017 31/03/2017 07/04/2017 14/04/2017 21/04/2017 28/04/2017 05/05/2017 12/05/2017 19/05/2017 26/05/2017 02/06/2017 09/06/2017 16/06/2017 23/06/2017 30/06/2017 Price of Hera stock at the end of 1H 2017: € 2.689. Hera outperforms the market and its own sector  Growth in financial markets over the first half of 2017

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