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ERG provides a company overview and agenda for their January 2019 document. They discuss their successful industrial transformation from oil to renewables, with over €3.6 billion in oil-linked disposals and €4.3 billion in renewable investments between 2008-2018. Their strategy for 2018-2022 focuses on co-development and greenfield projects abroad, and repowering and reblading in Italy. They provide updates on recent developments including acquisitions boosting their UK wind pipeline to 163MW and greenfield projects securing over 247MW across multiple countries. M&A will also support growth in key geographies.

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COMPANY OVERVIEW JANUARY 2019
DISCLAIMER This document contains certain forward-looking information that is subject to a number of factors that may influence the accuracy of the statements and the projections upon which the statements are based. There can be non assurance that the projections or forecasts will ultimately prove to be accurate; accordingly, the Company makes no representation or warranty as to the accuracy of such information or the likelihood that the Company will perform as projected. 2
AGENDA  A successful industrial Transformation  2018-2022 Strategy & Recent Developments:  Abroad: focus on Co-Dev & Greenfield  Italy: focus on Repowering & Reblading  Focus on M&A  2018-2022 Business Plan Targets  3Q 2018 Results  Key Figures  Key Financials  2018 Guidance  Appendix  Management Profiles 3
A SUCCESSFUL INDUSTRIAL TRANSFORMATION
5 OUR HISTORY
2008-2018: INDUSTRIAL REPOSITIONING 6 2008-2017 EBITDA and Net Income Evolution (€ mn)2008-2017 EBITDA and Net Income Evolution (€ mn) Net Income Wind HydroThermoelectric R&M Corporate 2008 2012 Today • ISAB Refinery 100% controlled • 7% Retail market share • ERG Renew ≃0.2GW • EBITDA ≃€20mn • Electricity produced by ISAB Energy/CTE • Presence in gas logistics/trading projects and retail power • 20% in ISAB, with put option to fully exit • Rome Refinery closure; transformation into a logistic hub ongoing • TotalERG + EOS: 12% combined market share • ERG Renew ≃0.6GW • 3rd wind player in Italy • EBITDA ≃€130mn • 1GW installed capacity: 480MW CCGT and 528MW CIP6 • Best-in-class profitability • Fully exit from Refining • Fully exit from TotalERG • ≃1.8GW Wind installed capacity • 1st wind player in Italy, • Amongst first 10 EU wind players • 480MW high yield CCGT • Best-in-class profitability WindWind ThermoelectricThermoelectric HydroHydro SolarSolar • 527MW hydro integrated plant • 90MW solar installed capacity 540 92 305 284 458 569 343 350 455 472 (80) (20) (49) 12 38 60 96 107 142 84 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
7 ERG INDUSTRIAL TRANSFORMATION Renewable diversification financed through oil-linked disposals and strong cash generation TE, EOS and other Oil ISAB EnergyISAB Refinery €1,050mn Dividends paid in the period(2) Cogenerative CCGTOrganic Wind Hydro Acquisition M&A Wind Solar Acquisition Disposals (Cash-in)Disposals (Cash-in) Investments(1) (EV)Investments(1) (EV) Total Disposals: ≃€3,600mn 600 1,031 101 244 485 473 392 273 (3) Total Investments: ≃€4,300mn 48 928 278 120 980 28 1,147 72 343 336 (3) (1) It refers to M&A and organic growth CAPEX (2) It includes dividends to be paid in May 2018 (ca. €171mn with ordinary DPS at €0.75/sh and extraordinary DPS at €0.4) (3) 2018 includes TotalErg Disposal whose closing took place on January 10, 2018 with a partial cash-in of €85mn in 2017, and ForVEI acquisition (EV €337mn) whose closing took place on January 12, 2018
8 INVESTED CAPITAL FULLY ROTATED TO RENEWABLES Capital employedCapital employed From Oil to Renewables SunWaterNatural Gas WindOil 2008 (€2.2bn) 2014 (€2.1bn) 30/9/2018 (€3.2bn)
9 EU LEADING RENEWABLE IPP Offices O&M Warehouse Wind Farm Wind Pipeline Sun Water Natural Gas Wind 54 MW 70 MW 82 MW216 MW 307 MW 480 MW 527 MW 1,093 MW 100% 141MW(2)1,822MW 527MW 480MW CCGT 100% 100% Hydroelectric Plant CCGT Solar Plant (1) It refers to Romania, Bulgaria and Poland (2) It includes 51.4MW of Andromeda, whose acquisition will be closed by 1Q 2019. 60% 17% 12% 11%(1) 141(2) MW
10 ERG STRICT CORPORATE GOVERNANCE MODEL • A strict financial discipline on investments (organic and M&A) through: - Strategic Committee (EVP, CEO, CFO, 3 Board Members) - Investment Committee (CEO, CFO, Management Team) • Strong risk management policy: - new risk policy to ensure the hedging policy of the generation portfolio • Full Alignment of interests between Top Management and shareholders through: - a launch of a new LTI compensation scheme subject to EGM approval fully based on shares Leaders Meeting Human Capital Committee Sustainability Committee Investment Committee Risk Committee Management Committee Control and Risk Committee Nominations and Remuneration Committee Strategic Committee Shareholders’ Meeting Board of Directors Board of Statutory Auditors
11 SHAREHOLDING STRUCTURE ERG FTSE Italia All Share Index TSR ERG = +155% +55% -45% ERG performance vs FTSE Italia All Share (2008 to date)ERG performance vs FTSE Italia All Share (2008 to date) (1) ERG owns 0.965% of own Shares (1) 63% San Quirico/ Polcevera 36% Free Float
BEST IN CLASS TECHNICAL EXPERTISE 12 Progressive O&M internalization (MW)Progressive O&M internalization (MW) Wind farm availability factor (%)Wind farm availability factor (%) Significant O&M costs reduction in Italy (down 25% on average) Constantly delivering excellent performance of wind assets 820 928 1,086 1,094 1,249 1,093 76 80 Abroad 1,093 ≃150 ≃110 ≃1,350 Germany France Italy O&M operations cost reduction (%)O&M operations cost reduction (%) +30% -18% 0% ERG O&M cost re-based on Bloomberg Index ERG O&M cost //
2018-2022 STRATEGY & RECENT DEVELOPMENTS
14 ERG 2018-2022 STRATEGIC OPTIONS Wind Solar O&M and TCM Co-development & Greenfield M&A Focus on technical operating efficiency Water Natural GasWind O&M and TCM Presence: 7 countries Installed capacity: 2.8GW Technologies: 4 Country/Business attractiveness for ERGCountry/Business attractiveness for ERGERG Group current geographical presenceERG Group current geographical presence Geographical presence Geographical presence Business/ Technology Business/ Technology Business/TechnologyBusiness/Technology Reference Geographies Sun Repowering& Reblading Wind
15 ERG 2018-2022 CAPACITY EVOLUTION STRONG EXECUTION IN 2018 +250MW +260MW M&A: Repowering: Greenfield & Co Dev: +350MW Growth in installed capacity (MW)Growth in installed capacity (MW) ≃3,600 +≃850MW // 2,774 (1) Closing to take place by 1Q 2019 +≃850MW +50% on existing Wind and Solar installed capacity 2,970 // Wind: 55MW Vent D’Est 16MW Vaa2 13MW Le Melier (EPURON) 8MW Torfou (EPURON) 18MW Solar: 141MW ForVei 90MW Andromeda(1) 51MW 141 55 M&A Greenfield & CoDev
ABROAD FOCUS ON CO-DEV & GREENFIELD
A SOLID PIPELINE TO SUSTAIN GROWTH 17 Pipeline creates the basis for a sustainable long term growth Pipeline with high success rate Gross Pipeline under scrutiny >1,300 ≃350 >800 17% Undergoing Secured Pipeline included in BP 2018-22 Co-Dev Greenfield MW Secured: • France - Vent D’Est 16MW - Vaa2 13MW • Germany - Linda 22MW • UK - Evishagaran 35MW - Sandy Knowe 49MW 70% ≃40% 30% ≃350 Greenfield & Co-dev CAPEX: €444mn
BOOSTED GROWTH IN UK 18 Deal descriptionDeal description On August 2, 2018 ERG acquired 100% of Creag Riabhach Wind Farm • 79.2MW authorized project in Scotland • Construction to start in 2020 • Entry into operation by March 2022 • Expected production: 250GWh, more than 3,000 heq per year • Total Capex: 89mn GBP (€98mn) Strategic rationaleStrategic rationale • Boosting ERG growth strategy in UK • Secured pipeline in UK to increase from 84MW to 163MW • The project will enable to accelerate the path towards the 2018-2022 BP targets Evishagaran Wind Pipeline Sandy Knowe Creag Riabhach
GREENFIELD DEVELOPMENT WELL ON TRACK 19 Pipeline included in BP 2018-22Pipeline included in BP 2018-22 Pipeline as of todayPipeline as of today ≃350 Pipeline included in BP 2018-22 ≃40% Pipeline as of today ≃70% ≃350 Secured: 135MW • France - Vent D’Est(1) 16MW - Vaa2(2) 13MW • Germany - Linda 22MW • UK - Evishagaran 35MW - Sandy Knowe 49MW Secured: 247MW • France - Vent D’Est(1) 16MW - Vaa2(1) 13MW - Vaa2 ext. 7MW - Le Melier(1) 8MW - Torfou(1) 18MW • Germany - Linda(2) 22MW • UK - Evishagaran 35MW - Sandy Knowe 49MW - Creag Riabhach 79MW Undergoing Secured Under construction 2213 (1) In exercise (2) Under construction
ITALY FOCUS ON REPOWERING & REBLADING
Criteria to include MW in BP for Repowering: • end of incentives • technology below 1MW • quite comfortable success rates • low double digit returns REPOWERING & REBLADING 21 2017 Total in BP 2018-2022 2018 2019 2020 214 343 Repowering & Reblading as a way to exploit asset base with new technologies and extend its technical life Flexible investment plan potentially upgradable MW ending incentives in the Plan periodMW ending incentives in the Plan period 153 1,092MW Italy ≃500MW eligible for RPW/RBL +300MW eligible for Reblading in 18 months 153 153 All eligible for repowering 153MW RPW 64MW RBL Criteria to include MW in BP for Reblading: • Incentives beyond BP • technology fitting to V47 technology • quite comfortable success rates • low double digit returns
REPOWERING IN A NUTSHELL 22 MWMW Post-Repowering Pre-Repowering 153(1) +260 ≃410 277 4X Production (GWh)Production (GWh) ≃1,000 183 ≃1/2 N. of WTGN. of WTG ≃100 (1) Repowering on 6 wind farms 2018-2022 CAPEX: €402mn
REBLADING IN A NUTSHELL 23 •2018-2022 CAPEX for Reblading: €16mn •Reblading ready in 14/18 months •Mainly based on V47 WTGs as technology already secured •MWs benefiting of incentives ending beyond BP MWMW Post-Repowering Pre-Repowering 64 64 98 Production (GWh)Production (GWh) 98 138 +16% N. of WTGN. of WTG ≃160
REPOWERING & REBLADING IN PROGRESS 24 • 4 projects entered into the permitting phase • 1 project to apply for authorization by 3Q 2018 • Engineering in course for 1 project, to start permitting by year end Construction Authorization process Engineering for Authorization MW for RPW in BP 2018-22 64 MW for RPW as of 03/08/2018 MW for RPW at end BP 2018-22 153 153 ≃410 18 135 50 360 RepoweringRepowering RebladingReblading MW for RBL in BP 2018-22 MW for RBL as of 03/08/2018 64 29 13 • 1 project under construction • 2 projects in the permitting phase • 1 project in the engineering phase 22
FOCUS ON M&A
M&A TO SUPPORT ERG GROWTH IN KEY COUNTRIES 26 M&A StrategyM&A Strategy Business/TechnologyBusiness/Technology Reference Geographies +100MW +150MW(1) • Opportunistic approach to consolidate leading positions in the core countries • Short term growth approach to support greenfield Value creation leveraging on strong M&A track record (1) It includes ForVEI acquisition in Italy (89MW) for an EV of €337mn Total invested capital: €2.7bn Total invested capital: €2.7bn Wind Italy Solar Hydro MW through M&A over the last 5 years MW through M&A over the last 5 years 636 590 206 137 986 1,022 297 376 Total MW: ≃1,600 MW PER YEAR: >300 Invested capital per year: >500mn M&A CAPEX: €687mn(1) // //
27 BOOSTED GROWTH IN FRANCE Deal descriptionDeal description On April 6, 2018 ERG reached an agreement with IMPAX Energy Holding Cooperatief for the acquisition of: • Melier wind farm: 8MW COD November 2016 (estimated annual production = 23GWh) • Torfou(1) wind farm: 18MW under construction COD expected by 2018 (estimated annual production=48GWh) • Pipeline of about 750MW made up as follows: - Wave I: 101MW at an advanced stage of development, expected on stream in 2H 2021 - Wave II: 143MW at an intermediate stage of development, on stream in 2H 2022 - Wave III: 500MW early stage, beyond BP period • Included in the transaction a team of 12 people with a proven track record in greenfield projects • EV at €57mn, of which €17mn of PF, plus €5mn earn out related to the pipeline Strategic rationalesStrategic rationales • Boosting ERG growth strategy in France with installed capacity to reach 300MW at Closing • Internalization of a team of proven experience in the Sector and its know-how • The pipeline will enable to pursue organic growth as envisaged in ERG’s 2018-2022 BP Offices O&M Warehouse Operating In permitting Wave I Le Melier: 8MW Torfou: 17.6MW Wave I Wave I Wave I Wave II Wave I Wave II Wave II Wave II Wave II (1) In operation as of end of 2018.
28 ERG PURSUES GROWTH IN THE SOLAR BUSINESS Key transaction terms:Key transaction terms: Strategic rationalesStrategic rationales • On January 11, 2019 ERG signed an agreement with Soles Montalto GmbH to acquire 78.5% of Perseo, owner of 100% of Andromeda PV S.r.l. • EV: €221mn • Equity: €96mn • Closing by 1Q 2019 • Andromeda owns 2 solar plants with an installed capacity of 51.4MW • Assets in operation since 4Q 2010, located in Montalto di Castro (Lazio) • Equipped with SunPower technology and monoaxial tracker • 2017 production of 95.9GWh • 100% of capacity is entitled to receive incentives «Conto Energia II» until 2030 • 2017 EBITDA of €31mn Andromeda description:Andromeda description: • Very high quality assets • ERG to become one of the five leading solar operator in Italy • Achievement of BP targets ahead of schedule • Optimisation of Energy management portfolio • Pursuing technological diversification strategy 21 3 4 5 7 10 24 15 ERG solar installed Capacity: 141MWERG solar installed Capacity: 141MW Conto Energia IV Conto Energia III Conto Energia II PositioningPositioning Installed solar capacity in Italy (MW) Source: last available public information at 31.12.2018 2.1% 2.0% 1.1% 0.8% 0.7% 0.7% 0.7% 0.6% 0.6% 0.5% 141 51
2018-2022 BUSINESS PLAN - TARGETS
INSTALLED CAPACITY EVOLUTION 30 Wind Italy Sun Water Natural Gas Wind abroad A solid growth path leveraging on greenfield, repowering and M&A 32% 28% 40% Unsecured Secured RPW Total Growth: ≃850 M&A Solar 2018E2017 2022ERepoweringGreenfield & Co-Dev M&A Wind & Solar Greenfield & Co-Dev ≃3,600 ≃2,9002,774(1) ≃260 17% 19% 39% 24% 17% 18% 38% 24% 3% 13% 15% 37% 31% 4% 89 ≃29 ≃320 ≃160 Total Growth: ≃850 (1) 2017 Capacity net of Brockaghboy wind farm in UK (47.5MW)
A BIGGER & DIVERSIFIED ELECTRICITY PORTFOLIO 31 Wind Capacity ≃2,500MW Sun Capacity ≃150MW Water Capacity 527MW Natural Gas Capacity 480MW Annual Production ≃5.4TWh Annual Production ≃0.2TWh Annual Production ≃1.5TWh Annual Production ≃2.9TWh Total 2022 Expected Production: ≃10TWh Total Energy Portfolio including hedging & other sales: ≃15TWh
2018-2022 EBITDA EVOLUTION 32 EBITDA growth based on industrial efficiency and strong rise in renewable asset base CorporateWaterWindSun Natural Gas 472 (8) (80) 5 26 147 (5) ≃560 2017 2018E Sigillo GCs End of incentives Scenario Others Hydro volumes Growth 472 (8) (20) (25) 25 36 (5) ≃475 Greenfield & Co Dev Repowering & Reblading M&A Wind 2017 2022E Sigillo GCs End of incentives(1) Scenario Others Hydro volumes Growth (1) It includes wind incentives phasing out and white certificates termination as of 2020 ≃ 560 ≃475472 // // ≃500 2017 2018E 2020E 2022E
CAPEX EVOLUTION 33 A massive and flexible investment plan for growth ≃450 94 ≃310 ≃340 ≃340 ≃240 Total Growth: ≃€1.55bn 2018-2022 Capex ≃€1.68bn Total M&A: ≃€0.69bn Greenfield & Co Dev Maintenance(1) M&A Solar Repowering & Reblading M&A Wind ForVEI Acquisition M&A Wind & Solar (1) It includes CAPEX for Mini Hydro for €13mn
ERG 2018-2022: FINANCIAL STRATEGY 34 From an Asset based financing to a Corporate/Debt Capital Market based financing … 2018-2022 Financial Strategy… 2018-2022 Financial Strategy2015-2017 achievements2015-2017 achievements New Funding Asset Base = €290mn Liability Management = €670mn DCM Debut – Private Placement = €100mn ERG Hydro Acquisition Loan = €700mn1 2 3 4 Liability Management Project Finance for incentivized assets Corporate Loan / Bond Issue1 2 3 2015 2016 NFP/EBITDA Gross KD 4.1x 3.4x 4.0% 3.4% 2017 2018E 2022E 2.6x 2.7x 2.1x 3.3% 2.9%3.2% ≃1,200 ≃1,2601,233 1,448 1,557 Corporate Liquidity Project Financing Bond Bond Issue/Corporate≃1,340 2020E 2.7x 3.6% //// NFP
EFFECTIVE LIABILITY MANAGEMENT Fitch assigned BBB- Investment Grade Rating with Stable Outlook ResultsResultsActionsActions Refinancing of ERG Eolica Adriatica PF for €98mn Corporate loan refinancing for €150mn Early settlement of the lease agreements for solar assets and replacement with corporate loan for €70mn Repricing of PFs for €190mn, mainly for solar assets1 2 3 4 €4.5mn reduction of net financial costs per year 1 year extension of debt duration Net KD reduction of 1% as of 2H 20181 2 3 35 Optimising of funding opportunities on the capital market4Launched an EMTN Programme for a maximum amount of €1bn 5
STRONG CASH GENERATION 36 (1) CAPEX includes Greenfield & co Development and Repowering (2) Disposals include: 2018 proceeds related to TotalErg Disposal (€180mn) and Brockaghboy wind farm disposal (ca. €108mn) (3) It includes net working capital, taxes and net financial costs (4) FCF Yield: EBITDA after working capital, taxes and net financial costs, deducted maintenance CAPEX, on market cap (share price at €16.4) Average annual FCF Yield(4) at 16% in the plan period NFP 2017 CAPEX(1) NFP 2022Dividends Deleverage(3) ≃990 ≃(290) ≃(2,040) ≃1,2001,233 Acquisitions ≃690 Disposals(2) 2018-2022 CAPEX: ≃1,680 Maintenance Greenfield & Repowering ≃620
Sustainable thinking sustainable acting - CDP reporting - Integration of HSE certifications according to ONE Company Model - Consolidating relations with communities - Technological development 2018-2022 CSR DRIVERS 37 Tackling climate change - Avoided CO2: 15mtons - Avoided TEP: 5m TEP - Carbon Index: down 14% - Continous efforts on extracting value from our technology - Enhancing our integrated generation portfolio - New leadership model - Human Capital Coverage - Skills development People enhancing
KPI IN THE PLAN PERIOD 38 Capacity installedCapacity installed EBITDAEBITDA CAPEXCAPEX DebtDebt DividendsDividends • New ordinary DPS at €0.75/share • Extraordinary dividend of €0.4/share to be paid in May 2018 • Net Debt from €1.23bn to €1.2bn. Cash generation about €2bn • NFP/EBITDA: <3X •+≃700MW Wind •+≃150MW Solar 2,774MW ≃3,600MW +≃18% 62% 6% 22% 10% 65% 16% 19% €472mn Total Growth: €1.55bn • Total Capex: ≃€1.68bn ≃€560mn 64% 17% 19% 68% 13% 15% 4% 62%38% 54% 46% 1,767MW 2,486MW •+≃450MW Abroad •+ ≃70% Abroad Capacity Water Natural Gas Sun Wind Abroad Italy 20172017 2022E2022E Water Natural Gas Sun Wind GreenfieldMaintenance Repowering & Reblading ForVEI Acquisition M&A Total:Total: Wind:Wind:
3Q 2018 RESULTS
HIGHLIGHTS: KEY FIGURES 40 Good results thanks to ERG generation mix Adjusted EBITDA (€ mn)Adjusted EBITDA (€ mn) NFP (€ mn)NFP (€ mn) Adjusted Net Profit (€ mn)Adjusted Net Profit (€ mn) 381 356 17 92 3Q 2018 1,389(2) 3Q 2018 CCGT Wind Corporate EBITDA Margin Solar Hydro Restated(1) 3Q 2017 1,233 Leverage Derivatives NFP excl. Derivatives (1) It excludes TE contribution for €10.1mn in 3Q 2017 and €25mn in 9M 2017 (2) It includes Vendor Loan to api for €37mn 30/09/201831/12/2017 9M 2018 Restated(1) 9M 2017 16 88 9M 2018 10598 Restated(1) 9M 2017 Restated(1) 3Q 2017
ADJUSTED P&L 41 Note: figures based on NO GAAP measures 9M2018 Restated 9M2017 Euro millions 3Q 2018 Restated 3Q 2017 381 356 Adjusted EBITDA 105 98 (203) (188) Amortization and depreciation (67) (62) 178 168 Adjusted EBIT 38 36 (53) (49) Net financial income (expenses) (15) (15) 0 0 Net income (loss) from equity investments 0 0 125 119 Adjusted Results before taxes 22 21 (33) (31) Income taxes (6) (5) 92 88 Adjusted Results for the period 17 16 (0) 0 Minority interests (0) 0 92 88 Adjusted Net Profit 17 16 26% 26% Tax Rate 26% 24%
3Q 2018 CASH FLOW STATEMENT 42 Leverage 1,466 Net Debt 30/06/2018 Net working capital Net Debt 30/09/2018 Adj. EBITDA CAPEX Financial charges Others (105) (36) 15 43% 45% 37 12 1,389
CAPEX:  Guidance range confirmed at €520-540mn 2018 GUIDANCE 43 Adj. EBITDA:  Guidance range confirmed at €490-500mn 381 490-500 2018 FCST NFP:  Guidance confirmed at €1.35bn 9M 2018 2018 FCST 484 9M 2018 2018 FCST 1,389(1) ≃1,350 9M 2018 Guidance range Guidance Actual (1) It includes Vendor Loan to api for €37mn 520-540
APPENDIX
ERG CHANGE MANAGEMENT APPROACH FLEXIBLE MINDSET 45 Min. Business diversification Max. Business diversification Level of centralization Pure Holding Industrial Holding with subsidiaries Integrated Group "Fast Steering" Model Diversified Business 2 or more Business 2 or more diversified Business 2 or more synergic Business Single Business Switch to "IPP green" multi- country 22 From "oil-company" to multi-energy Group 11 33 • Organizational changes always consistent with business model (from "Multi Energy" to "IPP green") • Synergies between staff & lines • Flexible mindset to cope with a changing business environment ERG today "Light" Model
46 GEN & MARKET AFC & PROC HC & ICT PA & C BD CORP & LEG AFF Energy Management Market (Com.al) Regulatory Operations / Asset Mgmt Maintenance E&C Procurement Business Development Energy Risk Management Finance M&A Institutional Relations Human Capital & ICT Legal Risk Management BusinessleversCorporatelevers 6 3 1 2 1 1 ERG Spa ERG Power Generation Spa No Overlapping levers : A LEAN ORGANIZATION WHERE LEVERS MATCH ACCOUNTABILITY
REGULATORY AND COMPETITIVE GAME CHANGERS 47 FROM INCENTIVES TO AUCTIONS • Competitive pressure and higher merchant risk • Only partially mitigated by the possibility to introduce PPAs Europe: Map of auctions Auctions or tender in use prior to 1Q 2016 Auctions or tender policy introduced between 1Q 2016 and 2Q 2017 Auctions or tender policy in planning No auctions 2017 2020 2025 2030 2035 2040 0 30 60 90 120 150 $/MWh - real LCOE of new gas, onshore wind, and solar Onshore Wind SolarGas Source: Bloomberg New Energy Finance, 5/12/2017 WIND & SOLAR COMPETITIVE VS. TRADITIONAL SOURCES • Competition amongst technologies based on costs, efficiency & dispatching strategy Renewables evolution: from an infrastructural sector to a competitive industry
LCOE AS A KEY LEVER TO COMPETE 48 CAPEX Financing Performance OPEX Hurdle Rate Wind Availability Key drivers affecting LCOE ≃4-7% 20-35% 95-98% LCOE (€MWh) Average cross countries Ger/Fr/UK LCOE (€MWh) Average cross countries Ger/Fr/UK Broad range of LCOEs requiring specific valuation by project and type of players Broad range of LCOEs requiring specific valuation by project and type of players Worst case: • Highest CAPEX/OPEX • Highest hurdle rate • Lowest FLH per year • Lowest availability Optimization drivers differ by project/player Best case: • Lowest CAPEX/OPEX • Lowest hurdle rate • Highest FLH per year • Highest availability LOW HIGH Source: ETRI, EWEA, Irena, BCG analysis O&M Leases Tax Others Wind turbine Foundation & electrical BOP Substitution, Grid con. & EPC Goodwill 1.2-2.0 47-60 M€/MW k€/MW 45-50% 10-15% 10% 25% 45% 20% 20% 16%
MOVING GREENFIELD TO REDUCE LCOE 49 Drivers Fund / Financial player Utility (Operator) Utility (Greenfield) Top Performer CAPEX High Avg Low Low Goodwill (increasing inves.) YES YES NO NO OPEX High Low Low Low Hurdle rate Low High High High Wind Avg Avg Avg High Availability Low High High High LCOE Average cross countries Ger/Fra/UK HIGH LOW Today
MANAGEMENT PROFILES
PAOLO MERLI - CFO 51 Born in Milan on 24th June 1971, he graduated in Electrical Engineering from the University of Pavia in March 1996. After doing his national service at the Italian Red Cross, in June 1998 he was awarded an MBA in Finance from the Eni "Scuola Superiore Enrico Mattei". He joined the ERG Group in September 2006 where he is currently Chief Financial Officer: reporting directly to the CEO, he is in charge of the Group Administration, Finance, Merger & Acquisitions, Procurement, Planning, Control & Reporting, Group Risk Management & Corporate Finance, Investor Relations. He is a Board Director of ERG Power Generation S.p.A., beside being member of the Strategic Committee and of other internal committees such as Management Committee, Investment Committee, Risk Committee and Human Capital Committee. As from 2014 he is the Manager Responsible for preparing the Company’s financial reports. Other positions held in the past: From October 2015 to January 2018 he was a member of the Board of Directors of TotalErg S.p.A. He previously worked for around 7 years as a financial analyst covering the European Energy and Motorways sectors at Intermonte, a leading brokerage firm owned by the Monte dei Paschi Banking Group. At Intermonte he was also a "specialist" in ERG stock when ERG joined the STAR segment. From 1998 to 2000 he worked in the sales department at Snam S.p.A. (current Gas & Power division of Eni Group). Outside of work, his biggest passion is sport, particularly cycling (racing and mountain biking) and skiing (alpine and cross-country). He is married, with two children.
EMANUELA DELUCCHI – HEAD OF IR 52 Born in Genoa on 18th December 1975, she graduated in Economics from the University of Genoa in March 1999. She joined the ERG Group in February 2008 where she is currently Head of IR, reporting directly to the CFO. Other positions held in the past: From February 2008 to January 2011 she was Head of IR and Planning & Control at ERG Renew. She previously worked for 3 years as a financial analyst covering the Italian Utilities & Motorways sectors at Intermonte, a leading brokerage firm owned by the Monte dei Paschi Banking Group. Prior to that she was a financial analyst covering European Utilities & Motorways sector at Lehman Brothers. She is married, with three children.

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Company overview

  • 1.
  • 2.
    DISCLAIMER This document containscertain forward-looking information that is subject to a number of factors that may influence the accuracy of the statements and the projections upon which the statements are based. There can be non assurance that the projections or forecasts will ultimately prove to be accurate; accordingly, the Company makes no representation or warranty as to the accuracy of such information or the likelihood that the Company will perform as projected. 2
  • 3.
    AGENDA  A successfulindustrial Transformation  2018-2022 Strategy & Recent Developments:  Abroad: focus on Co-Dev & Greenfield  Italy: focus on Repowering & Reblading  Focus on M&A  2018-2022 Business Plan Targets  3Q 2018 Results  Key Figures  Key Financials  2018 Guidance  Appendix  Management Profiles 3
  • 4.
  • 5.
  • 6.
    2008-2018: INDUSTRIAL REPOSITIONING 6 2008-2017EBITDA and Net Income Evolution (€ mn)2008-2017 EBITDA and Net Income Evolution (€ mn) Net Income Wind HydroThermoelectric R&M Corporate 2008 2012 Today • ISAB Refinery 100% controlled • 7% Retail market share • ERG Renew ≃0.2GW • EBITDA ≃€20mn • Electricity produced by ISAB Energy/CTE • Presence in gas logistics/trading projects and retail power • 20% in ISAB, with put option to fully exit • Rome Refinery closure; transformation into a logistic hub ongoing • TotalERG + EOS: 12% combined market share • ERG Renew ≃0.6GW • 3rd wind player in Italy • EBITDA ≃€130mn • 1GW installed capacity: 480MW CCGT and 528MW CIP6 • Best-in-class profitability • Fully exit from Refining • Fully exit from TotalERG • ≃1.8GW Wind installed capacity • 1st wind player in Italy, • Amongst first 10 EU wind players • 480MW high yield CCGT • Best-in-class profitability WindWind ThermoelectricThermoelectric HydroHydro SolarSolar • 527MW hydro integrated plant • 90MW solar installed capacity 540 92 305 284 458 569 343 350 455 472 (80) (20) (49) 12 38 60 96 107 142 84 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
  • 7.
    7 ERG INDUSTRIAL TRANSFORMATION Renewablediversification financed through oil-linked disposals and strong cash generation TE, EOS and other Oil ISAB EnergyISAB Refinery €1,050mn Dividends paid in the period(2) Cogenerative CCGTOrganic Wind Hydro Acquisition M&A Wind Solar Acquisition Disposals (Cash-in)Disposals (Cash-in) Investments(1) (EV)Investments(1) (EV) Total Disposals: ≃€3,600mn 600 1,031 101 244 485 473 392 273 (3) Total Investments: ≃€4,300mn 48 928 278 120 980 28 1,147 72 343 336 (3) (1) It refers to M&A and organic growth CAPEX (2) It includes dividends to be paid in May 2018 (ca. €171mn with ordinary DPS at €0.75/sh and extraordinary DPS at €0.4) (3) 2018 includes TotalErg Disposal whose closing took place on January 10, 2018 with a partial cash-in of €85mn in 2017, and ForVEI acquisition (EV €337mn) whose closing took place on January 12, 2018
  • 8.
    8 INVESTED CAPITAL FULLYROTATED TO RENEWABLES Capital employedCapital employed From Oil to Renewables SunWaterNatural Gas WindOil 2008 (€2.2bn) 2014 (€2.1bn) 30/9/2018 (€3.2bn)
  • 9.
    9 EU LEADING RENEWABLEIPP Offices O&M Warehouse Wind Farm Wind Pipeline Sun Water Natural Gas Wind 54 MW 70 MW 82 MW216 MW 307 MW 480 MW 527 MW 1,093 MW 100% 141MW(2)1,822MW 527MW 480MW CCGT 100% 100% Hydroelectric Plant CCGT Solar Plant (1) It refers to Romania, Bulgaria and Poland (2) It includes 51.4MW of Andromeda, whose acquisition will be closed by 1Q 2019. 60% 17% 12% 11%(1) 141(2) MW
  • 10.
    10 ERG STRICT CORPORATEGOVERNANCE MODEL • A strict financial discipline on investments (organic and M&A) through: - Strategic Committee (EVP, CEO, CFO, 3 Board Members) - Investment Committee (CEO, CFO, Management Team) • Strong risk management policy: - new risk policy to ensure the hedging policy of the generation portfolio • Full Alignment of interests between Top Management and shareholders through: - a launch of a new LTI compensation scheme subject to EGM approval fully based on shares Leaders Meeting Human Capital Committee Sustainability Committee Investment Committee Risk Committee Management Committee Control and Risk Committee Nominations and Remuneration Committee Strategic Committee Shareholders’ Meeting Board of Directors Board of Statutory Auditors
  • 11.
    11 SHAREHOLDING STRUCTURE ERG FTSEItalia All Share Index TSR ERG = +155% +55% -45% ERG performance vs FTSE Italia All Share (2008 to date)ERG performance vs FTSE Italia All Share (2008 to date) (1) ERG owns 0.965% of own Shares (1) 63% San Quirico/ Polcevera 36% Free Float
  • 12.
    BEST IN CLASSTECHNICAL EXPERTISE 12 Progressive O&M internalization (MW)Progressive O&M internalization (MW) Wind farm availability factor (%)Wind farm availability factor (%) Significant O&M costs reduction in Italy (down 25% on average) Constantly delivering excellent performance of wind assets 820 928 1,086 1,094 1,249 1,093 76 80 Abroad 1,093 ≃150 ≃110 ≃1,350 Germany France Italy O&M operations cost reduction (%)O&M operations cost reduction (%) +30% -18% 0% ERG O&M cost re-based on Bloomberg Index ERG O&M cost //
  • 13.
    2018-2022 STRATEGY &RECENT DEVELOPMENTS
  • 14.
    14 ERG 2018-2022 STRATEGICOPTIONS Wind Solar O&M and TCM Co-development & Greenfield M&A Focus on technical operating efficiency Water Natural GasWind O&M and TCM Presence: 7 countries Installed capacity: 2.8GW Technologies: 4 Country/Business attractiveness for ERGCountry/Business attractiveness for ERGERG Group current geographical presenceERG Group current geographical presence Geographical presence Geographical presence Business/ Technology Business/ Technology Business/TechnologyBusiness/Technology Reference Geographies Sun Repowering& Reblading Wind
  • 15.
    15 ERG 2018-2022 CAPACITYEVOLUTION STRONG EXECUTION IN 2018 +250MW +260MW M&A: Repowering: Greenfield & Co Dev: +350MW Growth in installed capacity (MW)Growth in installed capacity (MW) ≃3,600 +≃850MW // 2,774 (1) Closing to take place by 1Q 2019 +≃850MW +50% on existing Wind and Solar installed capacity 2,970 // Wind: 55MW Vent D’Est 16MW Vaa2 13MW Le Melier (EPURON) 8MW Torfou (EPURON) 18MW Solar: 141MW ForVei 90MW Andromeda(1) 51MW 141 55 M&A Greenfield & CoDev
  • 16.
  • 17.
    A SOLID PIPELINETO SUSTAIN GROWTH 17 Pipeline creates the basis for a sustainable long term growth Pipeline with high success rate Gross Pipeline under scrutiny >1,300 ≃350 >800 17% Undergoing Secured Pipeline included in BP 2018-22 Co-Dev Greenfield MW Secured: • France - Vent D’Est 16MW - Vaa2 13MW • Germany - Linda 22MW • UK - Evishagaran 35MW - Sandy Knowe 49MW 70% ≃40% 30% ≃350 Greenfield & Co-dev CAPEX: €444mn
  • 18.
    BOOSTED GROWTH INUK 18 Deal descriptionDeal description On August 2, 2018 ERG acquired 100% of Creag Riabhach Wind Farm • 79.2MW authorized project in Scotland • Construction to start in 2020 • Entry into operation by March 2022 • Expected production: 250GWh, more than 3,000 heq per year • Total Capex: 89mn GBP (€98mn) Strategic rationaleStrategic rationale • Boosting ERG growth strategy in UK • Secured pipeline in UK to increase from 84MW to 163MW • The project will enable to accelerate the path towards the 2018-2022 BP targets Evishagaran Wind Pipeline Sandy Knowe Creag Riabhach
  • 19.
    GREENFIELD DEVELOPMENT WELLON TRACK 19 Pipeline included in BP 2018-22Pipeline included in BP 2018-22 Pipeline as of todayPipeline as of today ≃350 Pipeline included in BP 2018-22 ≃40% Pipeline as of today ≃70% ≃350 Secured: 135MW • France - Vent D’Est(1) 16MW - Vaa2(2) 13MW • Germany - Linda 22MW • UK - Evishagaran 35MW - Sandy Knowe 49MW Secured: 247MW • France - Vent D’Est(1) 16MW - Vaa2(1) 13MW - Vaa2 ext. 7MW - Le Melier(1) 8MW - Torfou(1) 18MW • Germany - Linda(2) 22MW • UK - Evishagaran 35MW - Sandy Knowe 49MW - Creag Riabhach 79MW Undergoing Secured Under construction 2213 (1) In exercise (2) Under construction
  • 20.
  • 21.
    Criteria to includeMW in BP for Repowering: • end of incentives • technology below 1MW • quite comfortable success rates • low double digit returns REPOWERING & REBLADING 21 2017 Total in BP 2018-2022 2018 2019 2020 214 343 Repowering & Reblading as a way to exploit asset base with new technologies and extend its technical life Flexible investment plan potentially upgradable MW ending incentives in the Plan periodMW ending incentives in the Plan period 153 1,092MW Italy ≃500MW eligible for RPW/RBL +300MW eligible for Reblading in 18 months 153 153 All eligible for repowering 153MW RPW 64MW RBL Criteria to include MW in BP for Reblading: • Incentives beyond BP • technology fitting to V47 technology • quite comfortable success rates • low double digit returns
  • 22.
    REPOWERING IN ANUTSHELL 22 MWMW Post-Repowering Pre-Repowering 153(1) +260 ≃410 277 4X Production (GWh)Production (GWh) ≃1,000 183 ≃1/2 N. of WTGN. of WTG ≃100 (1) Repowering on 6 wind farms 2018-2022 CAPEX: €402mn
  • 23.
    REBLADING IN ANUTSHELL 23 •2018-2022 CAPEX for Reblading: €16mn •Reblading ready in 14/18 months •Mainly based on V47 WTGs as technology already secured •MWs benefiting of incentives ending beyond BP MWMW Post-Repowering Pre-Repowering 64 64 98 Production (GWh)Production (GWh) 98 138 +16% N. of WTGN. of WTG ≃160
  • 24.
    REPOWERING & REBLADINGIN PROGRESS 24 • 4 projects entered into the permitting phase • 1 project to apply for authorization by 3Q 2018 • Engineering in course for 1 project, to start permitting by year end Construction Authorization process Engineering for Authorization MW for RPW in BP 2018-22 64 MW for RPW as of 03/08/2018 MW for RPW at end BP 2018-22 153 153 ≃410 18 135 50 360 RepoweringRepowering RebladingReblading MW for RBL in BP 2018-22 MW for RBL as of 03/08/2018 64 29 13 • 1 project under construction • 2 projects in the permitting phase • 1 project in the engineering phase 22
  • 25.
  • 26.
    M&A TO SUPPORTERG GROWTH IN KEY COUNTRIES 26 M&A StrategyM&A Strategy Business/TechnologyBusiness/Technology Reference Geographies +100MW +150MW(1) • Opportunistic approach to consolidate leading positions in the core countries • Short term growth approach to support greenfield Value creation leveraging on strong M&A track record (1) It includes ForVEI acquisition in Italy (89MW) for an EV of €337mn Total invested capital: €2.7bn Total invested capital: €2.7bn Wind Italy Solar Hydro MW through M&A over the last 5 years MW through M&A over the last 5 years 636 590 206 137 986 1,022 297 376 Total MW: ≃1,600 MW PER YEAR: >300 Invested capital per year: >500mn M&A CAPEX: €687mn(1) // //
  • 27.
    27 BOOSTED GROWTH INFRANCE Deal descriptionDeal description On April 6, 2018 ERG reached an agreement with IMPAX Energy Holding Cooperatief for the acquisition of: • Melier wind farm: 8MW COD November 2016 (estimated annual production = 23GWh) • Torfou(1) wind farm: 18MW under construction COD expected by 2018 (estimated annual production=48GWh) • Pipeline of about 750MW made up as follows: - Wave I: 101MW at an advanced stage of development, expected on stream in 2H 2021 - Wave II: 143MW at an intermediate stage of development, on stream in 2H 2022 - Wave III: 500MW early stage, beyond BP period • Included in the transaction a team of 12 people with a proven track record in greenfield projects • EV at €57mn, of which €17mn of PF, plus €5mn earn out related to the pipeline Strategic rationalesStrategic rationales • Boosting ERG growth strategy in France with installed capacity to reach 300MW at Closing • Internalization of a team of proven experience in the Sector and its know-how • The pipeline will enable to pursue organic growth as envisaged in ERG’s 2018-2022 BP Offices O&M Warehouse Operating In permitting Wave I Le Melier: 8MW Torfou: 17.6MW Wave I Wave I Wave I Wave II Wave I Wave II Wave II Wave II Wave II (1) In operation as of end of 2018.
  • 28.
    28 ERG PURSUES GROWTHIN THE SOLAR BUSINESS Key transaction terms:Key transaction terms: Strategic rationalesStrategic rationales • On January 11, 2019 ERG signed an agreement with Soles Montalto GmbH to acquire 78.5% of Perseo, owner of 100% of Andromeda PV S.r.l. • EV: €221mn • Equity: €96mn • Closing by 1Q 2019 • Andromeda owns 2 solar plants with an installed capacity of 51.4MW • Assets in operation since 4Q 2010, located in Montalto di Castro (Lazio) • Equipped with SunPower technology and monoaxial tracker • 2017 production of 95.9GWh • 100% of capacity is entitled to receive incentives «Conto Energia II» until 2030 • 2017 EBITDA of €31mn Andromeda description:Andromeda description: • Very high quality assets • ERG to become one of the five leading solar operator in Italy • Achievement of BP targets ahead of schedule • Optimisation of Energy management portfolio • Pursuing technological diversification strategy 21 3 4 5 7 10 24 15 ERG solar installed Capacity: 141MWERG solar installed Capacity: 141MW Conto Energia IV Conto Energia III Conto Energia II PositioningPositioning Installed solar capacity in Italy (MW) Source: last available public information at 31.12.2018 2.1% 2.0% 1.1% 0.8% 0.7% 0.7% 0.7% 0.6% 0.6% 0.5% 141 51
  • 29.
  • 30.
    INSTALLED CAPACITY EVOLUTION 30 WindItaly Sun Water Natural Gas Wind abroad A solid growth path leveraging on greenfield, repowering and M&A 32% 28% 40% Unsecured Secured RPW Total Growth: ≃850 M&A Solar 2018E2017 2022ERepoweringGreenfield & Co-Dev M&A Wind & Solar Greenfield & Co-Dev ≃3,600 ≃2,9002,774(1) ≃260 17% 19% 39% 24% 17% 18% 38% 24% 3% 13% 15% 37% 31% 4% 89 ≃29 ≃320 ≃160 Total Growth: ≃850 (1) 2017 Capacity net of Brockaghboy wind farm in UK (47.5MW)
  • 31.
    A BIGGER &DIVERSIFIED ELECTRICITY PORTFOLIO 31 Wind Capacity ≃2,500MW Sun Capacity ≃150MW Water Capacity 527MW Natural Gas Capacity 480MW Annual Production ≃5.4TWh Annual Production ≃0.2TWh Annual Production ≃1.5TWh Annual Production ≃2.9TWh Total 2022 Expected Production: ≃10TWh Total Energy Portfolio including hedging & other sales: ≃15TWh
  • 32.
    2018-2022 EBITDA EVOLUTION 32 EBITDAgrowth based on industrial efficiency and strong rise in renewable asset base CorporateWaterWindSun Natural Gas 472 (8) (80) 5 26 147 (5) ≃560 2017 2018E Sigillo GCs End of incentives Scenario Others Hydro volumes Growth 472 (8) (20) (25) 25 36 (5) ≃475 Greenfield & Co Dev Repowering & Reblading M&A Wind 2017 2022E Sigillo GCs End of incentives(1) Scenario Others Hydro volumes Growth (1) It includes wind incentives phasing out and white certificates termination as of 2020 ≃ 560 ≃475472 // // ≃500 2017 2018E 2020E 2022E
  • 33.
    CAPEX EVOLUTION 33 A massiveand flexible investment plan for growth ≃450 94 ≃310 ≃340 ≃340 ≃240 Total Growth: ≃€1.55bn 2018-2022 Capex ≃€1.68bn Total M&A: ≃€0.69bn Greenfield & Co Dev Maintenance(1) M&A Solar Repowering & Reblading M&A Wind ForVEI Acquisition M&A Wind & Solar (1) It includes CAPEX for Mini Hydro for €13mn
  • 34.
    ERG 2018-2022: FINANCIALSTRATEGY 34 From an Asset based financing to a Corporate/Debt Capital Market based financing … 2018-2022 Financial Strategy… 2018-2022 Financial Strategy2015-2017 achievements2015-2017 achievements New Funding Asset Base = €290mn Liability Management = €670mn DCM Debut – Private Placement = €100mn ERG Hydro Acquisition Loan = €700mn1 2 3 4 Liability Management Project Finance for incentivized assets Corporate Loan / Bond Issue1 2 3 2015 2016 NFP/EBITDA Gross KD 4.1x 3.4x 4.0% 3.4% 2017 2018E 2022E 2.6x 2.7x 2.1x 3.3% 2.9%3.2% ≃1,200 ≃1,2601,233 1,448 1,557 Corporate Liquidity Project Financing Bond Bond Issue/Corporate≃1,340 2020E 2.7x 3.6% //// NFP
  • 35.
    EFFECTIVE LIABILITY MANAGEMENT Fitchassigned BBB- Investment Grade Rating with Stable Outlook ResultsResultsActionsActions Refinancing of ERG Eolica Adriatica PF for €98mn Corporate loan refinancing for €150mn Early settlement of the lease agreements for solar assets and replacement with corporate loan for €70mn Repricing of PFs for €190mn, mainly for solar assets1 2 3 4 €4.5mn reduction of net financial costs per year 1 year extension of debt duration Net KD reduction of 1% as of 2H 20181 2 3 35 Optimising of funding opportunities on the capital market4Launched an EMTN Programme for a maximum amount of €1bn 5
  • 36.
    STRONG CASH GENERATION 36 (1)CAPEX includes Greenfield & co Development and Repowering (2) Disposals include: 2018 proceeds related to TotalErg Disposal (€180mn) and Brockaghboy wind farm disposal (ca. €108mn) (3) It includes net working capital, taxes and net financial costs (4) FCF Yield: EBITDA after working capital, taxes and net financial costs, deducted maintenance CAPEX, on market cap (share price at €16.4) Average annual FCF Yield(4) at 16% in the plan period NFP 2017 CAPEX(1) NFP 2022Dividends Deleverage(3) ≃990 ≃(290) ≃(2,040) ≃1,2001,233 Acquisitions ≃690 Disposals(2) 2018-2022 CAPEX: ≃1,680 Maintenance Greenfield & Repowering ≃620
  • 37.
    Sustainable thinking sustainable acting -CDP reporting - Integration of HSE certifications according to ONE Company Model - Consolidating relations with communities - Technological development 2018-2022 CSR DRIVERS 37 Tackling climate change - Avoided CO2: 15mtons - Avoided TEP: 5m TEP - Carbon Index: down 14% - Continous efforts on extracting value from our technology - Enhancing our integrated generation portfolio - New leadership model - Human Capital Coverage - Skills development People enhancing
  • 38.
    KPI IN THEPLAN PERIOD 38 Capacity installedCapacity installed EBITDAEBITDA CAPEXCAPEX DebtDebt DividendsDividends • New ordinary DPS at €0.75/share • Extraordinary dividend of €0.4/share to be paid in May 2018 • Net Debt from €1.23bn to €1.2bn. Cash generation about €2bn • NFP/EBITDA: <3X •+≃700MW Wind •+≃150MW Solar 2,774MW ≃3,600MW +≃18% 62% 6% 22% 10% 65% 16% 19% €472mn Total Growth: €1.55bn • Total Capex: ≃€1.68bn ≃€560mn 64% 17% 19% 68% 13% 15% 4% 62%38% 54% 46% 1,767MW 2,486MW •+≃450MW Abroad •+ ≃70% Abroad Capacity Water Natural Gas Sun Wind Abroad Italy 20172017 2022E2022E Water Natural Gas Sun Wind GreenfieldMaintenance Repowering & Reblading ForVEI Acquisition M&A Total:Total: Wind:Wind:
  • 39.
  • 40.
    HIGHLIGHTS: KEY FIGURES 40 Goodresults thanks to ERG generation mix Adjusted EBITDA (€ mn)Adjusted EBITDA (€ mn) NFP (€ mn)NFP (€ mn) Adjusted Net Profit (€ mn)Adjusted Net Profit (€ mn) 381 356 17 92 3Q 2018 1,389(2) 3Q 2018 CCGT Wind Corporate EBITDA Margin Solar Hydro Restated(1) 3Q 2017 1,233 Leverage Derivatives NFP excl. Derivatives (1) It excludes TE contribution for €10.1mn in 3Q 2017 and €25mn in 9M 2017 (2) It includes Vendor Loan to api for €37mn 30/09/201831/12/2017 9M 2018 Restated(1) 9M 2017 16 88 9M 2018 10598 Restated(1) 9M 2017 Restated(1) 3Q 2017
  • 41.
    ADJUSTED P&L 41 Note: figuresbased on NO GAAP measures 9M2018 Restated 9M2017 Euro millions 3Q 2018 Restated 3Q 2017 381 356 Adjusted EBITDA 105 98 (203) (188) Amortization and depreciation (67) (62) 178 168 Adjusted EBIT 38 36 (53) (49) Net financial income (expenses) (15) (15) 0 0 Net income (loss) from equity investments 0 0 125 119 Adjusted Results before taxes 22 21 (33) (31) Income taxes (6) (5) 92 88 Adjusted Results for the period 17 16 (0) 0 Minority interests (0) 0 92 88 Adjusted Net Profit 17 16 26% 26% Tax Rate 26% 24%
  • 42.
    3Q 2018 CASHFLOW STATEMENT 42 Leverage 1,466 Net Debt 30/06/2018 Net working capital Net Debt 30/09/2018 Adj. EBITDA CAPEX Financial charges Others (105) (36) 15 43% 45% 37 12 1,389
  • 43.
    CAPEX:  Guidance rangeconfirmed at €520-540mn 2018 GUIDANCE 43 Adj. EBITDA:  Guidance range confirmed at €490-500mn 381 490-500 2018 FCST NFP:  Guidance confirmed at €1.35bn 9M 2018 2018 FCST 484 9M 2018 2018 FCST 1,389(1) ≃1,350 9M 2018 Guidance range Guidance Actual (1) It includes Vendor Loan to api for €37mn 520-540
  • 44.
  • 45.
    ERG CHANGE MANAGEMENTAPPROACH FLEXIBLE MINDSET 45 Min. Business diversification Max. Business diversification Level of centralization Pure Holding Industrial Holding with subsidiaries Integrated Group "Fast Steering" Model Diversified Business 2 or more Business 2 or more diversified Business 2 or more synergic Business Single Business Switch to "IPP green" multi- country 22 From "oil-company" to multi-energy Group 11 33 • Organizational changes always consistent with business model (from "Multi Energy" to "IPP green") • Synergies between staff & lines • Flexible mindset to cope with a changing business environment ERG today "Light" Model
  • 46.
    46 GEN & MARKETAFC & PROC HC & ICT PA & C BD CORP & LEG AFF Energy Management Market (Com.al) Regulatory Operations / Asset Mgmt Maintenance E&C Procurement Business Development Energy Risk Management Finance M&A Institutional Relations Human Capital & ICT Legal Risk Management BusinessleversCorporatelevers 6 3 1 2 1 1 ERG Spa ERG Power Generation Spa No Overlapping levers : A LEAN ORGANIZATION WHERE LEVERS MATCH ACCOUNTABILITY
  • 47.
    REGULATORY AND COMPETITIVEGAME CHANGERS 47 FROM INCENTIVES TO AUCTIONS • Competitive pressure and higher merchant risk • Only partially mitigated by the possibility to introduce PPAs Europe: Map of auctions Auctions or tender in use prior to 1Q 2016 Auctions or tender policy introduced between 1Q 2016 and 2Q 2017 Auctions or tender policy in planning No auctions 2017 2020 2025 2030 2035 2040 0 30 60 90 120 150 $/MWh - real LCOE of new gas, onshore wind, and solar Onshore Wind SolarGas Source: Bloomberg New Energy Finance, 5/12/2017 WIND & SOLAR COMPETITIVE VS. TRADITIONAL SOURCES • Competition amongst technologies based on costs, efficiency & dispatching strategy Renewables evolution: from an infrastructural sector to a competitive industry
  • 48.
    LCOE AS AKEY LEVER TO COMPETE 48 CAPEX Financing Performance OPEX Hurdle Rate Wind Availability Key drivers affecting LCOE ≃4-7% 20-35% 95-98% LCOE (€MWh) Average cross countries Ger/Fr/UK LCOE (€MWh) Average cross countries Ger/Fr/UK Broad range of LCOEs requiring specific valuation by project and type of players Broad range of LCOEs requiring specific valuation by project and type of players Worst case: • Highest CAPEX/OPEX • Highest hurdle rate • Lowest FLH per year • Lowest availability Optimization drivers differ by project/player Best case: • Lowest CAPEX/OPEX • Lowest hurdle rate • Highest FLH per year • Highest availability LOW HIGH Source: ETRI, EWEA, Irena, BCG analysis O&M Leases Tax Others Wind turbine Foundation & electrical BOP Substitution, Grid con. & EPC Goodwill 1.2-2.0 47-60 M€/MW k€/MW 45-50% 10-15% 10% 25% 45% 20% 20% 16%
  • 49.
    MOVING GREENFIELD TOREDUCE LCOE 49 Drivers Fund / Financial player Utility (Operator) Utility (Greenfield) Top Performer CAPEX High Avg Low Low Goodwill (increasing inves.) YES YES NO NO OPEX High Low Low Low Hurdle rate Low High High High Wind Avg Avg Avg High Availability Low High High High LCOE Average cross countries Ger/Fra/UK HIGH LOW Today
  • 50.
  • 51.
    PAOLO MERLI -CFO 51 Born in Milan on 24th June 1971, he graduated in Electrical Engineering from the University of Pavia in March 1996. After doing his national service at the Italian Red Cross, in June 1998 he was awarded an MBA in Finance from the Eni "Scuola Superiore Enrico Mattei". He joined the ERG Group in September 2006 where he is currently Chief Financial Officer: reporting directly to the CEO, he is in charge of the Group Administration, Finance, Merger & Acquisitions, Procurement, Planning, Control & Reporting, Group Risk Management & Corporate Finance, Investor Relations. He is a Board Director of ERG Power Generation S.p.A., beside being member of the Strategic Committee and of other internal committees such as Management Committee, Investment Committee, Risk Committee and Human Capital Committee. As from 2014 he is the Manager Responsible for preparing the Company’s financial reports. Other positions held in the past: From October 2015 to January 2018 he was a member of the Board of Directors of TotalErg S.p.A. He previously worked for around 7 years as a financial analyst covering the European Energy and Motorways sectors at Intermonte, a leading brokerage firm owned by the Monte dei Paschi Banking Group. At Intermonte he was also a "specialist" in ERG stock when ERG joined the STAR segment. From 1998 to 2000 he worked in the sales department at Snam S.p.A. (current Gas & Power division of Eni Group). Outside of work, his biggest passion is sport, particularly cycling (racing and mountain biking) and skiing (alpine and cross-country). He is married, with two children.
  • 52.
    EMANUELA DELUCCHI –HEAD OF IR 52 Born in Genoa on 18th December 1975, she graduated in Economics from the University of Genoa in March 1999. She joined the ERG Group in February 2008 where she is currently Head of IR, reporting directly to the CFO. Other positions held in the past: From February 2008 to January 2011 she was Head of IR and Planning & Control at ERG Renew. She previously worked for 3 years as a financial analyst covering the Italian Utilities & Motorways sectors at Intermonte, a leading brokerage firm owned by the Monte dei Paschi Banking Group. Prior to that she was a financial analyst covering European Utilities & Motorways sector at Lehman Brothers. She is married, with three children.