Nine Months 2018 A2A SpA Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Stefano Gamberini - Equita SIM S.p.A., Research Division - Analyst : Three questions, if I may. First of all, regarding the hedging on next year. [Some strong] during the previous conference call, you said that 60% was hedged at 54% -- EUR 54 per megawatt hour. Now you are speaking about 37% at a higher price. So why, and if you can elaborate a little bit about what we can expect next year on this item. The second question regarding the EUR 500 million of investment in renewables. If I'm not wrong, this year, we will invest more or less EUR 150 million. Do you expect to improve it, increase this investment for the coming years also considering the strong free cash flow that you are generating? The third question regarding just compared to July, the 70 -- EUR 100 million of higher free cash flow are recurring or because at that time, the guidance was EUR 100 million improvement of free cash flow. So is this something recurring or the improvement is a one-off related to this sale of the put options on EPCG. And very last question regarding this EUR 26 million of green certificates in 2018. Are part of these in the one-off components? Because I noticed that in the energy solution, you have more or less a EUR 60 million one-off in the 9 months. Luca Camerano Sorry, EUR 26 million in green certificates. I need a supplemental question to understand better your question on the third -- and your third and -- or fourth question, Stefano. Can you explain a little bit better what you mean by recurring -- not recurring free cash flow? Because I didn't quite capture your question. And maybe going back a little bit on this EUR 26 million because I didn't hear you well. Stefano? Hello?

Question: Stefano Gamberini - Equita SIM S.p.A., Research Division - Analyst : I understood that it was EUR 26 million white certificate in... Luca Camerano Yes, yes, white. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 13, 2018 / 2:00PM, A2.MI - Nine Months 2018 A2A SpA Earnings Call

Question: Stefano Gamberini - Equita SIM S.p.A., Research Division - Analyst : Yes. Just a quick follow-up, if I may. When you said reasonably positive scenario for '19, if I understood correctly, we have, on the positive side, the hedging that could be positive. Could you elaborate a little bit on the other items, the MSD and the capacity market? Finally, also, on the gas margins, do you expect a year '19 weak as '18 or better? Luca Camerano Okay, okay. On the capacity, of course, that will be -- we will discuss this when we go out -- when we come up with a plan. Clearly, we are moving eventually in the second half of the year. The data for the tender is to be initiated. So that's our forecast for the [capacity] (technical difficulty) that's again the sum of the 2 as we are basically the same situation we are living for 2018, so MSD and capacity in the region of EUR 170 million. So again, what happened in 2018, unfortunately, we didn't have capacity as we were expecting, but we had a stronger MSD, as we already commented REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 13, 2018 / 2:00PM, A2.MI - Nine Months 2018 A2A SpA Earnings Call with you going forward. I cannot -- of course, we cannot provide you a view on MSD because as you know, the MSD is purely assumption of the demand and offer in the market going forward. So it's very difficult to do that.

Question: Stefano Gamberini - Equita SIM S.p.A., Research Division - Analyst : Okay.