ERG S p A : The Board of Directors of ERG S.p.A. approves the consolidated results for the first quarter of 2023

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Press Release

The Board of Directors of ERG S.p.A. approves the consolidated results

for the first quarter of 2023

Adjusted consolidated EBITDA (gross clawback)1: EUR 167 million, EUR 168 million in the first quarter of 2022

Adjusted profit (loss) from continuing operations (gross clawback)1: EUR 84 million, EUR 84 million in the first quarter of 2022

Guidance confirmed, EBITDA between EUR 500 and EUR 550 million

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Solid results in the first quarter - Results in line with the same period of 2022 thanks to the full contribution derived from the acquisitions made in the second half of 2022 and the gradual entry into operation of wind farms developed internally in Italy and abroad (526 MW), which offset a strong downward price scenario compared to 2022.

The RES Portfolio continues to grow - The 149 MWp solar power plant under construction in Spain was acquired and the Creag Riabhach wind farm in Scotland became operational, with an installed capacity of 92.4 MW.

• PPA - As part of the strategic objective of stabilisation EBITDA, 2.9 TWh of green energy secured through a PPA signed with EssilorLuxottica Furthermore, signed a volume increase of the pre-existing PPA with TIM in Italy, updating the eco- nomic terms. The solar plant acquired in Spain will be secured through a PPA with a leading corporate counterpart.
• Financial strategy - Fitch affirmed ERG S.p.A.'s Long-Term Issuer Default Rating (IDR) and senior unsecured rating at BBB- with a stable outlook, reflecting the solidity of the Group's business model and its renewable portfolio. New loans for a total of EUR 330 million to cover the 2023 maturities and the early repayment of project financing; the loans benefit for a 75% from forward interest rate hedges just over 0%.

1 In order to facilitate an understanding of the operating segments' performance, the operating results are shown with the exclusion of significant special income components of an extraordinary nature (special items): these results are indicated with the term "adjusted". A definition of the indicators and the reconciliation of the amounts involved are provided in the "Alternative Performance Indicators" section of this document. For the sake of clarity, in line with what was already stated during the 2022 financial year, in this document the adjusted results (gross clawback), unless otherwise indicated, are represented gross of the effects of the transitional measures (clawback measures), isolated as special items.

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• ESG - The success of the Group's ESG strategy is confirmed with the assignment by Sustainalytics of a 'Low Risk' Rating, which enhances the Group's risk profile, and the confirmation of its presence in the Bloomberg Gender Equality Index. ERG was included in the "Global 100 Most Sustainable Corporations in the World" of Corporate Knights, ranking first among the Italian companies.
• 2023 Guidance - EBITDA guidance for 2023 is confirmed in the range between EUR 500 and 550 million, net of clawbacks. Following the acquisition in Spain, investments are expected to rise in the range between EUR 500 and EUR 600 million (compared to the previous EUR 400-500), as a result of which debt is up and currently stands in the range of EUR 1,400 to EUR 1,500 million.

Genoa, 12 May 2023 - The Board of Directors of ERG S.p.A., in its meeting yesterday, approved the consolidated results for the first quarter of 2023.

Paolo Luigi Merli, Chief Executive Officer of ERG, commented:

"Amid a still volatile and uncertain environment, ERG is demonstrating its industrial and financial resilience and reports results in line with the previous year, notwithstanding a strong downward price scenario, thanks to the full contribution of new capacity, both as a result of acquisitions and organic development. ERG also remained committed to its path of technological and geographical diversification with the acquisition of the Garnacha solar power plant in Spain, the largest in terms of capacity in the Group's renewable portfolio. The path towards the strategic target of 85-90% of the Group's stabilised EBITDA also continues with the signing of two important PPAs in Italy with leading Corporate counterparties that allow us to optimise the risk profile in the management of the renewable portfolio. Our infrastructural model was also recognised by Fitch, which affirmed the BBB-investment-grade rating, highlighting the solidity of ERG's business model".

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REGULATORY MEASURES TO CURB ENERGY PRICE RISES (CLAWBACK MEASURE AND WINDFALL TAX)

During 2022, measures were introduced in Italy and abroad to contain the effects of price increases in the electricity sector, as already described in the Group Financial Statements at 31 December 2022.

The application of these measures resulted in refunds with a negative impact in the quarter of approximately EUR 7 million on EBITDA (EUR 5 million on the net profit from continuing operations).

For the sake of clarity, in line with what was already stated during the 2022 financial year, in this document the adjusted results are shown gross of these charges, isolated as special items (gross clawback) given the extraordinary and temporary nature of the relevant rules.

The table below summarises the different impacts of the aforementioned measures on EBITDA and net profit:

Year		1st quarter		1st quarter		Delta
2022	(EUR million)	2023		2022
537	EBITDA (GROSS CLAWBACK)	167	168	(0)
35	(-) clawback measures	7	3	3
7	Italy	1	-	1
7	France	2	-	2
2	Germany	-	-	-
19	East Europe	4	3	1
502	EBITDA (NET CLAWBACK)	161	165	(5)
216	NET PROFIT (LOSS) FROM CONTINUING OPERATIONS	84	84	(0)
(GROSS CLAWBACK)
83	(-) clawback measures (1)	5	17	(12)
61	Italy	0	14	(13)
5	France	2	-	2
2	Germany	-	-	-
16	East Europe	3	3	0
133	NET PROFIT (LOSS) FROM CONTINUING OPERATIONS (NET	78	67	11
CLAWBACK)

(1) The first quarter 2022 included windfall taxes measures recognised in income tax deriving from the Italian Decree Law of 21 March 2022 for EUR 14 million.

4	PROFIT FOR THE PERIOD

HIGHLIGHTS

Adjusted (2)		Reported (1)		Adjusted (2)
Year		1st quarter		1st quarter
2022	(EUR million)	2023	2022	2023	2022
	ADJUSTED MAIN INCOME STATEMENT
	FIGURES (2)
749	Revenue	213	215	220	215
537	EBITDA (gross clawback) (3)	164	166	167	168
502	EBITDA (net clawback) (4)	164	166	161	165
308	Operating profit (EBIT)	106	104	111	114
216	Net profit (loss) from continuing operations (gross	77	59	84	84
clawback) (3)
133	Net profit (loss) from continuing operations (net	77	59	78	67
clawback) (4)
236	Net profit	76	388	78	89
232	of which profit attributable to owners of the	76	388	78	89
parent
	ADJUSTED MAIN FINANCIAL FIGURES (2)
3.357	Net invested capital of continuing operations (5)	3,408	2,871	3,257	2,738
2.059	Equity	2,187	2,160	2,192	2,163
1.434	Net financial indebtedness of continuing operations (5)	1,363	1,027	1,206	890
212	of which non recourse Project Financing (6)	106	230	106	230
41%	Financial leverage	38%	32%	35%	29%
72%	EBITDA Margin %	77%	77%	76%	78%

1. Reported economic indicators are calculated on the basis of the Financial Statements and include special items and related theoretical taxes.
2. Adjusted economic indicators do not include special items and related applicable theoretical taxes.
3. The figure does not include the effects of the transitional measures (clawback) introduced during 2022 in various countries. The impact on EBITDA of refunds is estimated at EUR 7 million in the first quarter of 2023 (EUR 3 million in the first quarter of 2022), while on the Net profit from continuing operations it amounted to EUR 5 million in the first quarter of 2023 (EUR 17 million in the first quarter of 2022).
4. The figure includes the effects of the transitional measures (clawback) introduced in 2022 in various countries, the impacts of which are indicated in the previous note.
5. Adjusted net financial indebtedness of continuing operations and Adjusted net invested capital of continuing operations are presented net of the effects deriving from the application of IFRS 16.
6. Including cash and cash equivalents and excluding the fair value of the derivatives hedging interest rates.

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PROFIT FOR THE PERIOD

Year				1° trimestre
2022			2023		2022
	OPERATING DATA
2,944	Total installed capacity at the end of the period	MW	3,036	2,509
4,956	Total electricity output	GWh	1,780	1,538
1,440	Installed capacity at the end of the period - Italy	MW	1,440	1,234
2,312	Electricity output - Italy	GWh	784	706
600	Installed capacity at the end of the period - France	MW	600	581
1,076	Electricity output - France	GWh	396	322
327	Installed capacity at the end of the period - Germany	MW	327	327
556	Electricity output - Germany	GWh	203	207
219	Installed capacity at the end of the period - UK & Nordics	MW	311	70
226	Electricity output - UK & Nordics	GWh	132	66
92	Installed capacity at the end of the period - Spain	MW	92	92
171	Electricity output - Spain	GWh	35	27
266	Installed capacity at the end of the period - East Europe	MW	266	206
615	Electricity output - East Europe	GWh	230	209
946	Capital expenditure (7)	EUR million	66	146
573	Employees at the end of the period (8)	Units	589	564
	NET UNIT REVENUE (9)
134	Italy - Wind	EUR/MWh	116	124
346	Italy - Solar	EUR/MWh	339	333
98	France - Wind	EUR/MWh	99	86
96	France - Solar	EUR/MWh	94	100
172	Germany - Wind	EUR/MWh	152	146
150	UK & Nordics - Wind	EUR/MWh	83	195
126	Spain - Solar	EUR/MWh	143	168
169	East Europe - Wind	EUR/MWh	116	171

1. In property, plant and equipment and intangible assets. The figure for the first quarter of 2022 also included investments relating to Merger & Acquisition transactions amounting to EUR 96 million following the acquisition of two photovoltaic farms in Spain (92 MW).
2. The number of employees does not include the people dedicated to ensuring the operation of the CCGT cogeneration plant.
3. Net unit revenue (expressed gross of clawbacks) is expressed in EUR/MWh and is calculated by dividing the technology output by the revenue achieved on energy markets, inclusive of the impact of hedges, of any incentives due and the relative variable costs associated to generation/sale including, for example, the cost of fuel and imbalance costs.