Monica Girardi: Good evening, ladies and gentlemen. I’m Monica Girardi, Head of Group Investor Relations. Welcome to the Nine Months 2019 Results Presentation, which will be hosted by our CFO, Alberto de Paoli. In this presentation, we will provide some highlights of the period and Alberto will take you through the operational and financial performance. Following the presentation, we will have the usual Q&A session, open to those connected both on the call and on the web.

I would ask you to focus only on the performance of the period and to reserve strategic questions for our Capital Market Day scheduled on November 26. Before we start, let me remind you that media is listening to both the presentation and the Q&A session. Thank you. And now let me hand over to Alberto. Alberto

de Paoli: Thank you, Monica.

Good afternoon, ladies and gentlemen. Let me start with the highlight of the period on Page one. In the first nine months of 2019, the Group net income increased by a solid 14% supported by the ongoing delivery of our strategic pillars. Ordinary EBITDA is up by 11%, driven by networks and conventional generation thanks to nuclear margins and efficiencies. Development CapEx growing by 24% drove the increase in investments which reached €6.6 billion overall.

Efficiencies exceeded €200 million in the period on track to reach our full-year target. On Group simplification, Enel Americas capital increase was successfully completed. We are now executing a Second Share Swap contract which will enable us to increase our stake to around 62%. During the period, we have stepped up on our sustainable strategy. We have completed the sale of Reftinskaya coal power plant in Russia.

Following recent and relevant changes in market condition, we have impaired our coal asset globally. Our CO2 emissions target in 2030 has been certified by the Science Based Target initiative has aligned to the Paris agreement. And we have innovated a sustainable finance field by launching the first ever corporate FEG link bond both in U.S. dollars and Euros to support our sustainable strategy with proper funding. And now we move to Slide number 2 on industrial growth.

As said, overall CapEx in the first nine months was 19% higher than last year and equal to €6.6 billion. Asset development represented around 60% of total investment and came in at €3.9 billion increasing 24% year-on-year. Two-third of this development CapEx was allocated to Enel Green Power to our renewable development mainly in North America, Latin America and Iberia, and one-third to networks in digitization and smart meters. From a geographical perspective, gross CapEx was deployed mainly in Italy, Latin America, and Iberia. As of today, 100% of 2019 and 2020 asset development CapEx is addressed providing high visibility on industrial targets for the time period.

Now, moving to Slide number 3 and switching to operating efficiencies. OpEx have remained roughly stable despite the full consolidation of Enel Distribuzione Sao Paulo. The effect on our cost base of inflation is the development of our activity. We recorded efficiencies for around €210 million mainly in conventional generation, networks, and retail and we are on track to reach our target of €1.2 billion cumulative OpEx savings in the 2019, 2021 period. On Slide number 4, we would like to highlight some important strategic decisions we have made regarding our asset base.

In 2019, we have seen drastic changes in market conditions, which heavily affected the competitiveness of the coal plants. As a result, our coal production has decreased by 32% year-on-year with marginality associated drop substantially between 2018 and 2019. During the first half call, we have announced the decision to exit coal generation in Chile and the sale of Reftinskaya coal plant in Russia, which is now becoming effective. During the third quarter of 2019, the board of directors of Endesa ruled in favor of the interruption of production associated with 2.5 gigawatts coal fired plants in the Iberian Peninsula. In Italy, on top of the changes in market conditions commented, the exclusion of coal from the capacity market resulted into impairments mainly affecting three plants for a total of 3.3 gigawatts.

In total, the impairments affected coal power plants for a capacity of around 10 gigawatts. Worth reminding that ordinary figures hence dividends will not be impacted. Enel aims at decarbonizing quickly its asset base to tackle climate change promptly and effectively. In September this year, the Science Based Target initiative certified our target to reduce by 70%, the direct CO2 emission in 2030 compared to 2017. This goal is consistent with well below two degrees scenario in line with the Paris Agreement.

And on the impacts -- the growth impacts of the impairment, we -- in the first nine months, we have therefore booked a total of €4.2 billion impairment cost, out of which €3.2 billion are associated with assets, €800 million with dismantling provisions, and €200 million with inventories. The financial impact on reported net profit is set to be €2.6 million. Moving now on Page number 5 and as you can see from the chart that we are the first corporates to have issued general purpose SDG-linked bonds, both in U.S. dollars and Euros with the aim to support our sustainable strategy. These bonds are linked to the achievement of two sustainable development goals, SDG 7 and SDG 13.

We believe that a sustainable strategy and the scale up of sustainable finance will eventually improve our credit metrics and therefore positively affect our cost of debt. Thanks to investors and rating agencies factoring in sustainability in their Risk Assessment. In four tranches, we raised around €4 billion with an average maturity of seven years and the weighted average coupon of 0.4% in Euro terms. The value of sustainability indeed has been reflected in the demand which covered roughly four times the amount offered and in the pricing of the issuance allowing us to obtain a discount versus a plain vanilla bond of around 15% across the weighted average cost of the transaction. Let’s now have a look to the financial of the period on Slide number 7.

As said, ordinary EBITDA was up by 11% to €13.3 billion. Ordinary Group net income stood at €3.3 billion 14% higher versus last year. FFO reached €8 billion, up 10% mainly driven by higher EBITDA. IFRS 16 accounting effects and FX weight for 54% of the increase in the Group net debt. The remaining portion is mainly associated with the acceleration in investments.

On the next slide, we focus on the main global business lines drivers. Ordinary EBITDA, as said, is up €1.3 billion. This outstanding result were achieved mainly thanks to our existing asset base, which contributed for around €800 million out of the €1.3 billion mentioned. This €800 million of asset management increase was mainly due to higher electricity prices in Latin America, Iberia, and Italy, and negative impact for lower volumes for around €200 million. Fully contribution of Fortaleza, the Brazilian plant that was out last year for several problems of the contract for gas and now is fully operational and it sits around €100 million of increase, around €340 million from positive tariff adjustments in Latin America, particularly in Brazil and Argentina.

Efficiencies mainly in conventional generation and networks, big consolidation of Enel Distribuzione, Sao Paulo. Then FX weighted negatively on our asset base for around €120 million basically due to the Argentinean Peso devaluation and then we had a debt associated with the disposal of our asset in Mexico made last year. The contribution of asset development that is roughly €300 million was indeed relatively low in line with the first half due to the shift of renewable capacity addition toward the last quarter. As I will detail later in the presentation customer contribution is attributable mainly to the positive performance of the retail free market. Let's move to Page 9.

In this slide, you can see the performance summary of our businesses. And notwithstanding as said, an unusual contribution from Enel Green Power year-on-year for reasons that I am going to detail in the next slide, network and conventional generation contributed to the growth of the EBITDA. Now moving then on Page 10 on the renewable Enel Green Power analysis. As you can see from the chart, we reported an ordinary EBITDA of €3.3 billion broadly flat year-on-year. The performance was mainly impacted by the following dynamics.

First, lower production volumes, due to lower resource availability that had a negative impact of around €250 million in Italy and Spain. Then we had another €150 million negative impact from asset rotation. A positive contribution of the early termination of PPA in Chile already commented in the first half and higher prices that impacted for around €320 million mainly in Italy, Latin America, and Iberia. EBITDA contribution from new renewable capacity during the first nine months of the year was almost nil, as if the deployment has not been linear, as I will show you in the next slide. Now move on Page 11, as you can see from the chart, today the renewable capacity has increased by around 700 megawatts in the first nine months.

But year-end, we expect to install additional 2.4 gigawatts of capacity. As already commented during the first half results call in order to comply with the target to scale up the renewable development to four gigawatts from 2020, we focused our activity on the opening of new sites and fine-tuning on the whole development processes, which explains the peculiar phasing of installed capacity during 2019. We will reach more than 3,000 megawatts of new installed capacity at the end of 2019 that will fully contribute for around €320 million to the 2020 EBITDA growth targets. Moving now to Page 12 on infrastructure and network. EBITDA came at €6.1 billion, €600 million increase, or 10% versus 2018 reflecting our well-balanced geographical mix.

Around €230 million of the overall increase are due to the outstanding performance of Enel Distribuzione Sao Paulo where we accounted €70 million of efficiencies and €70 million of regulatory improvement, the perimeter impact associated was €95 million. The remaining €304 million were driven by investments in digitization and improved service quality that contributed for around €140 million. Regulatory changes for around €250 million, out of which around €100 million associated with new regulatory frameworks in Rio, Goias, and Argentina and the rest to the recognition of the Activo Regulatario in Argentina. Then we had higher connection fees for €45 million made in Italy and CPI affects a deeper inflation, which negatively for around €120 million. On Retail and I'm on page 13, ordinary EBITDA came in at €2.4 billion or plus 5% versus last year.

In particular, EBITDA associated with the free market increased by around €100 million or 5% year-on-year, mainly driven by a 10% increase in power unitary margins in Italy and Spain where we added around 900,000 new customers in the period. Volumes declined by around 1% as a consequence of a specific commercial strategy, targeting B2C clients and small to medium enterprises. EBITDA associated with the regulated market proved broadly stable at €470 million on a different combined effects. One, the ongoing migration towards the free market in Italy and Spain that affected the regulated market; and second, the positive contribution from Latin America mainly due to the consolidation of Enel Sao Paulo in effect of the active regulatorio Argentina. Efficiencies of around €50 million have been achieved mainly in Italy, both in the free and in the regulated market.

Moving to conventional generation on Page 14, ordinary EBITDA increased by 66% and came in at €1.4 billion. The remarkable €500 million increase in the first nine months of 2019 is mainly attributable to the performance of the nuclear fleet for €250 million driven by the higher volumes, and better prices, coupled with a temporary suspension of the generation tax. Efficiency for €110 million mainly linked to operational and maintenance cost reduction in coal plants as a reaction to the volume and margin contraction, the full contribution of Fortaleza and the effective hedging strategy implemented in Latin America. And now that we have gone through business drivers, we can move to the financial management section. Ordinary Group net income and I'm on Page 15, ordinary Group net income came in at €3.3 billion, €410 million higher than last year or plus 14%.

Many thanks to the increase in ordinary EBITDA which more than offset increase in D&A other financial expenses, income taxes, and minorities. In particular, D&A increased by around €130 million, 80% of this increase is related to the implementation of new accounting principles IFRS 16 and the consolidation of Enel Distribuzione Sao Paulo. The remaining portion is related to the higher investment plan we have been implementing. The increase in financial expenses is solely due to other financial expenses, while the cost of debt in the period declined by around 20 basis points. Other financial expenses grew by around €120 million following the consolidation of Sao Paulo and the higher authorization on termination benefits and pension fund in Iberia.

Results from equity investments stood at minus 73, mainly due to the North America JV unwinding already commented in the first half. Taxes increased by around €80 million mainly due to €270 million for higher EBITDA that has been totally offset by positive impacts related to fiscal incentives on intellectual property in Italy, the recognition of deferred tax asset in Argentina and Chile, the fiscal reform in Colombia with the nominal tax rate moved from 37 to 33 and higher taxes in 2018 deriving from the sale of BSO in Mexico. During the first nine months of 2018, we also booked some positive one-off items such as the recognition of the deferred tax asset associated with Trisan hub in Italy. Net one-off the normalized tax rate stands at 29% in line with the guidance. Minorities increased by 23%, thanks to the performances recorded in Latin America.

Moving now to cash flow on Slide 16. FFO stands at €8 billion, €700 million higher than last year or 10%, supported by ordinary EBITDA growth. In detail, the cash generation evolution comes from higher EBITDA after provisions for around €1.4 billion or plus 13%. A negative €400 million networking capital versus previous year that is mainly due to the recognition of regulatory adjustment in Argentina already recorded in the first half and the temporary effects associated with the increase in CO2 inventory that we have already commented in the last analyst presentation and that will be reabsorbed in the last quarter. Compared to the first half results, working capital dynamics showed an improvement of around €600 million quarter-on-quarter.

Our focus on working capital optimization, together, with the seasonality profile of CapEx dynamics, and the above mentioned reabsorption of the CO2 eventually will allow us to recover the €1 billion negative working capital during the next quarter. Higher taxes paid are due mainly to advanced settlement tax payments dynamic. And free cash flow stood at €1.4 billion confirming the capacity of the Group to cover the investment growth with the operating cash generation. Before the closing remarks, let’s now take a look on the net debt on Slide 17. Net debt stood at €46.5 billion.

Changes are driven by positive free cash flow of €1.4 billion as commented and dividends paid for €3.9 up by €500 million or plus 15%, neutral active portfolio management on the periods, and €1.5 billion negative FX impact from revaluation of local currencies against the Euro. The impact on that from currencies is a mere accounting impact being almost entirely neutralized on the reimbursement value thanks to our hedging derivatives. We expect net debt to decline by year-end. Thanks to further improvement in FFO and considering active portfolio management activities that we have cashed in during the month of October such as the disposal of Reftinskaya. Our gross debt increased by around €4 billion versus the start of 2019 mainly really to double mentioned dynamics on net debt evolution.

And now, some closing remarks. So we had a strong performance in the nine months process solidity of our integrated business model, solid cash flow generation fully covers the acceleration in investments, and we continue to fuel our growth ambition in the medium and long-term, our decarbonization strategy is accelerating as through by strategic decisions on coal assets globally. And now our new target of CO2 emission in 2030. The operating growth, the continuous effort on efficiencies, and the simplification on the corporate structure, puts us in the ideal condition to exceed the EBITDA target and to reach €4.8 billion net income. Thank you for your attention.

And let's now open to the Q&A session. A -

Monica Girardi: Okay. We are now ready for Q&A. The first question comes from the line of Harry Wyburd from Bank of America Merrill Lynch. Harry, your line is open.

Harry Wyburd: Hi, good evening everyone. Three questions for me please. So the first one is on the capacity payment. So you won I think about 10 gigawatts worth of contracts at the end of last week. So I wonder if you could update us on how that outturns versus your expectation, and whether you could give us any kind of guidance in EBITDA terms on what impact that might have going forward? And then the second one is on the 2.4 gigawatts of renewables that are due to commission in the fourth quarter.

You mentioned that they were going to generate about €320 million of EBITDA in 2020, if I heard correctly. But I wonder how much of that had you originally included in your budget for 2019? Because clearly it seems like these projects are commissioned a little bit later than you'd expected. So how much behind budget are you due to late commissionings? Just gives us a flavor for how much you've kind of made up on an underlying basis to hit or even exceed your EBITDA guidance for this year or the original EBITDA guidance? And then the third one on the coal impairment, could you give us some color on the timing of cash flows here? So the tax saving on the €4 billion of impairment could be pretty significant. So when would that tax cash saving hit? And then, also when do you expect the dismantling cash flows to occur? I think you booked an extra €0.8 billion of dismantling provisions, but I presume they were pre-existing dismantling provisions there as well. If you could give us some idea of the phasing of the cash flow impacts from the coal impairments? Thank you.

Alberto

de Paoli: Hello, Harry. So on the first question on the capacity payments. Yes, we've got this 10 gigawatts contract at the price of €33,000 per megawatt. And this is for 2022 only. So now -- so for the -- because it is -- we have been awarded in this first standard only on existing capacity.

So this is the calculation is easy, is roughly €320 million is clear that, first of all, we are getting in this is year before 2022, we are getting roughly €45 million, €50 million of the mechanism that is in place now. So it is clear that focusing on 2022 we have -- we will have a higher level of regulated revenues coming from this auction. The tenders for 2023 and onwards will have to be called, say, we think end of this month. And so, we will have the visibility for new plants and so for 2023 auction, because for the new plants, you will get 15 years of payments, while for the existing capacity you will get one-year only and then you have to redo the tenders. So all-in-all, when we will show the new plan? It is clear that so 2022 will be waiting for this result and then we will expect the outcome of the tenders for 2023 and onwards to understand what we could be, so the level of this revenue stream for the year ahead.

Related to the second question on the impact 2020, well, when we start -- so when we -- so if you ask me what was the impact of the previous plan we were already aware of the fact that we will -- we would have this say stop in 2019 stop, meaning that we will increase the most in the last quarter because it was already set. The fact that we had to scale up our processes and scale up the number of sites that opens in 2019 to be ready to comply with our target, which we have already shown in the previous plan. So it's clear that in the target, we had already a very limited impact in 2019. And on the other side, we had the full impact in 2020 of the 2019 building because if you also -- if you build all the plants on 31 of December, you have the full impact in 2020. But on the other side, what we have assumed and we are assuming for the next plan is in 2020, our profile will be more energized.

So we will think let's say 50% of the development in the first half because it's difficult, but not so the 10% that we had in 2019. And for the dismantling cash flow, it will be paid after the closing of the plants remember that. So, now we are -- little bit in -- try to understand what is the following events, because today we have impaired the asset. Now, we have a closure plan that we will show in the Capital Markets Day and there is a path that we want to follow remember that we have to get all the approvals then to properly and effectively shut down the plant. This is something that is starting now.

And so the solution would be different. So there is in some countries in which at the end you will take this plant, not ready, not dismantled but ready in the second step to enter the market if some gas shock or other things could happen. So is something that’s now that we have taken the decision to shut down and to impair the asset is on the table of all the countries in which we have plants. And so the final outcome will come from the discussion that we will have with -- we did the various governments in the country. The tax effect of the impairment was around €200 million on cash flow and so we will cash in three years from the impairments.

Monica Girardi: Okay. Next question comes from the line of Javier Suarez from Mediobanca. Javier, your line is open.

Javier Suarez: Hi, thank you. Thank you for taking my questions.

I have three as well. The first one is on the guidance for 2019. Well you have been -- if you can explain why the adjusted EBITDA has been increased the single factor I guess that there are several factors that you can elaborate on the reasons for that -- for that increase on the guidance now and also why that is not impacting the net income. So the net income has remained stable where the EBITDA target has been increased, if there is any specific reason for that? Also in terms of guidance, if you can -- you had mentioned during your presentation that this would be a lower debt by the year-end, you can confirm the numbers that you said during the first half presentation that €44 billion number of net debt by the year-end that is the first question. The second question is on the effort that the company has been doing on efficiencies.

The company has mentioned €200 million that is exactly the same number that we have during the first half of the year. So, if there is any specific reason why if efficiencies has not accelerated during the third quarter of the year and we are still -- we should still expecting €400 million of efficiencies by the year-end? And then the third and final question is on Latin America. See the latest conference call with a company management there has been some changes particularly on the social situation in Chile and a political situation in Argentina. You can share with us some views particularly on any conversation with the new Argentina government or you can share with us some views on the new legislation with the tariff stabilization system that has been approved in Chile? Many thanks. Alberto

de Paoli: Okay, Javier.

I will start with the last question and then I’ll go to the numbers. Situation in Chile and Argentina, well let's start from Chile. So, as already commented in the Chilean call, so we do think that now so the government is moving the right way to stabilize the country. The government is taking a lot of actions on the several aspects of where the protest was faced and has already taken action on our specific field where we think that at the end, the measures are well designed. It will impact --will have a limited impact on the sector, while having a big impact on people, so being tariff unchanged for a certain number of years.

Because of Chile -- because Chile is the long-term PPA is already signed, and they have a very, very long visibility on prices and because the long visibility of contracts already signed is suggesting, is saying that prices, the average, the blended prices will go down. It's clear that proper policy to offer today discounts that will happen in years on people that are asking not to have an increase in tariff, is I think, well designed. And I think that if the government will move with this steps, so it can solve the situation in Chile and we are to backing this actions and while you will see also in our business plan -- in our Capital Market Day, you will see that so they are poised for Chile of this Group will be strong to support this path. In Argentina, well now it’s early to say what would be a clear policy is clear that Argentina has been already impacted by FX inflation. So it is clear that the overall business perspective have changed.

But on the other side, so the first interaction, we -- so we can home with an idea that some changes will happen but that this changes will not so against appropriate business development in the country. So also here, so we have already offered our contribution to try to design and to implement changes that on the other side will support an increase in quality and increase in investments in the country. And we are so quite optimistic on the fact that this could be implemented. And on guidance. Yes, we have this increase in EBITDA and not an increase in net income.

This because, then, we have a lot of up and down in this 2019 because we have, we said we got roughly €250 million of impact on volumes but we had impact on prices on the other side. We had delay in renewables, but we have some one-offs like the Anglo-American one-off that covers this gap. So all in all if you leave all this up and down unchanged on the target of €17.4 million, we can say that from €17.4 million it was the original target to €17.8 million. The big difference of the €400 million are mainly related to things that don't have an equal impact on net income. I would say the first is IFRS 16 for €200 million and that the impact on net income of this increasing EBITDA is zero.

Then we have wrapped the General Electric Joint Venture unwinding and you know that this kind of effect is increasing EBITDA, but not increasing the net income because you have a deduction in net income, is more or less 70% of the overall impact on EBITDA. And then we have so the Resolution 15 in Italy for €100 million. This is an accounting effect that you have you increase EBITDA but you deduct the whole amount on the D&A. And so you got zero impact on net income, while you have the whole impact on cash because this is a debt motion. That's why so €17.8 million are not translating to an increase in net income.

On the other side when we -- on the debt side, so the targets, the guidance that we have today is not €44 million. The guidance we gave for the full-year is now €45.9 million or €46 million. So, this is €2 billion higher than the target we gave in March. So to redefine what is the steps from the original target €14.8 million to €46 million or €45.9 million. These are the steps.

So, first of all, we have an impact of roughly €2 billion of FX impact because now we are assuming the final figure of 1.11 and this gives us €2 billion of increasing debt. Remember that this increase is not a real increase in debt, because our dollar debt is fully hedged. So this is only in accounting impact. This is our €2 billion. Then we have €1.4 billion that is the impact on IFRS 16 and this is another accounting effect.

And then we have €700 million impact of a delay of a disposal that was assumed at the end of this year and probably will be moved at the first half of 2020. With the exception of the accounting impact, and this delay in one disposal, the debt is fully in line with our targets. The third question is on efficiencies. And, so -- yes, so normally the efficiency plan will get the maximum impact at the end of the year is because of some of the closing effect that each year we have. So we have an acceleration of -- not acceleration but, at the end, the vast majority of action will come at the end of the year because has been implemented at the beginning of the year.

This is something that every time will happen. So, you will see the last quarter efficiencies that will be higher than so not higher than the €200 million of the first three quarters but so a big proportion of the entire target of the year.

Monica Girardi: Okay. Next question comes from the line of Anna Maria Scaglia from Morgan Stanley. Anna Maria, your line is open.

Anna

Maria Scaglia: Hi, good evening. Three questions if I may. The first one is related to CapEx, can you give us an indication of what you expect CapEx to be at year-end? And also maybe if you can provide a view of how much is related to assets that will enter integration in 2020? The second question is regarding D&A. And in particular, what could be the impact of the write-offs on D&A going forward? I mean, next year and or the coming years and as is doing the write-down this year, I guess the D&A should be lower next year already I’d happy to have your view? And the last one is within use of our Open Fiber over the last few weeks, I was wondering if you can provide an update there or is there any news or it’s [indiscernible] press or whatever? Thank you. Alberto

de Paoli: So Anna Maria, I will take first the last question on Open Fiber.

So an update on Open Fiber is -- so we have set no updates in Open Fiber. Open Fiber is doing well on its operating model and so is deploying the network, it is going to close a good year also in terms of economics and this is it. So we know that -- so there are rumors of processes in place to try to buy the company, these processes are not seeing us involved in any kind of involvement in these processes. So, for us today could say are only rumors and there is nothing more than these that I can say. And for the CapEx indication, we drive to roughly €9.9 billion.

And when you ask, much really to asset in operation in 2020, I would say if I understand correctly, so, these €9.9 billion, so we have roughly €6 billion in asset development and for the 2019 and roughly €2.3 billion in asset management and €1.7 billion related to customers. So it's clear that more or less to assets in operation of what we call the asset management, we don't see major changes on average on for the next year in this asset class. The vast majority of changes, if changes will arise are related to the asset development class. And when it comes to D&A impact, so the D&A impacts are coming from 2020 will be roughly €120 million each year. Okay, this is the D&A impact on -- of the write-off, is roughly on average is €120 million each year.

Monica Girardi: Okay. Next question comes from the line of Enrico Bartoli from MainFirst. Enrico, your line is open.

Enrico Bartoli: Hi, good evening. Thanks for taking my question; I have three of them as well.

The first one is regarding the net loss business in Italy. The resulting three quarters, if I’m right, was even higher than last year, when you had a one-off of €150 million related to the Resolution 50. So I wonder if there are any one-offs there. And if you can give us some guidance on what you expect in terms of EBITDA from this business for the full-year. The second question is regarding still on Italy, if you can update us on the discussions regarding your expectations regarding the liberalization of the retail clients so that should happen next year.

And the last one is related again to that. First of all, you mentioned the issue of bond for very favorable conditions related to ESG bonds, you expect any additional issues of this kind and the interest from your cost of debt? And the other one if you have any impact on your debt from the recent devaluation of the Latino American accounts due to the political evolution there? Thank you very much. Alberto

de Paoli: Okay. So Enrico, first of all, on Italy on liberalization of retail clients. Well, I would say that so discussion are now starting a little bit, and so will say restarting around the way to liberalize.

I think we are at the very first stage. So now an open public discussion has been held by the regulator to gather what are the position of all the parties. So it's a very beginning of this process. Today we don't have any other way to try to understand how and when the liberalization will be, so we'll stay stick today with the date of July 2020 for the full liberalization is clear that starting from now, six months or not, so such a big period to discuss and then to decide how and when to open the market. For distribution in Italy, we don't have any other one-off and so the guidance will stay around €3.8 billion.

Issue bonds. So we -- two main important points are so first of all that from now on, our debt, our new issuance will be made on the full sustainable prospect. After this €4 billion, we don't have any maturities so in the foreseeable future so that we can only understand our sense to do some, so issuance to get some other advantages. But I think in for 2019, we will not add any other issuance. Impact on cost of debt, I will ask you to wait a couple of weeks to discover it how this strategy and the future strategy will do, will affect our cost of debt.

And I'll say that so we are not seeing any relevant impact on debt from lot of currencies devaluation. It’s clear that the overall currency devaluation, if you take into consideration also the Euro, Dollar worth €2 billion I said before in 2019. That so if you look is €2 billion and you look at our hedging levels of our debt is €2 billion are a pure accounting number but because at the end of the period so for the cost of the final debt, we will not have any impact on the FX volatility

Monica Girardi: Okay, thank you, Enrico. Next question comes from the line of Javier Garrido from JPMorgan. Javier, your line is open.

Javier Garrido: Thanks, Monica. Most of my questions have been addressed. So I just would like to get some firstly to check if I understood correctly that the 3.3 gigawatts that have been impaired in Italy at all coal or is there any other capacity there. And secondly, you just mentioned €3.8 billion of EBITDA guidance in Italian networks would you mean to strip out what is recurring and what is non-recurring? Thank you. Alberto

de Paoli: So for the 3.3 gigawatts impaired, Javier, in Italy yes, they are all coal.

And the €3.8 guidance so if we have roughly €150 million related to the liberalization in Quanta that is not recurrent because it will end not this year, not the next year but so, near in the future will be ended. So out of these the other part is fully recurrent.

Monica Girardi: Thank you, Javier. Next question comes from the line of Stefano Bezzato from Credit Suisse. Stefano, your line is open.

Stefano Bezzato: Yes, hi, good evening. Two questions from me. Going back on the impairment on the coal assets in Italy, 3.3 gigawatt, the total capacity if I’m correct is around six. Can you explain how to reconcile the difference and the second question, if you're planning any asset rotation deal by the end of the year? Thank you. Alberto

de Paoli: Thanks, Stefano.

I think that your first question is -- so I don't know on the overall impairment we made, so I tried to explain what we did. So we have impacted in our impairment of selling so in Chile, Russia, Iberia, and Italy roughly 10 gigawatts of capacity. So we didn't impair certain number of assets in gigawatts related to different condition of this plant mainly because we have -- that the number of -- the megawatt not impacted say around in Italy, 3,000 megawatts, and then we have another 115 megawatts in Chile that are not impacted for different economical condition. In Italy and Spain because these plants are fully regulated. So our essential plant in Italy or our Highlands plant in Spain is a different regulation.

And because in Chile one of the plant is so the agreement of the shutdown of this last plant is in 2014. And so this is not forcing us to include the other assets in Chile, where so the agreement was to shut down the plant early in the year and so triggering an impairment. As I said, we don't have any asset rotation did by year-end. We have to -- we have already cashed in the first and second step of Reftinskaya coal plant we have sold in Russia. We do think that other minor deal could come but we are -- so now we can understand see if it's would be exactly within 31 of December or 1st of January but we have other minus asset rotation is in place.

While the asset rotation of the selling that we add in the targets, and I said, we have moved at the first half of the next year surely will not come within the year.

Monica Girardi: Okay, thank you, Stefano. Next question comes from the line of Elchin Mammadov from Bloomberg. Elchin, your line is open.

Elchin Mammadov: Hi there, I have three questions, please.

The first one is on sustainable bond. What is the spread over non-green bond base, is it that 25 bps penalty that you mentioned or is it higher? The other question is on capacity additions we have seen that these were back loaded for 2019. Should we expect more equal distribution for 2020, 2021 in terms of new capacity additions in renewables or not? And finally, on Spain, I mean we've seen the new elections and possible corporate tax increase, is it some areas we should be worried about in your view or not. I'm not sure whether you can comment on that, but I thought I’d ask. Thank you.

Alberto

de Paoli: Well, hello Elchin, I would say on SDG bond a couple points. So we have a spread over non-green bonds of the 25 basis point. And the second is, so at the end if you take the U.S. bond what we were saying is that getting this discount of 20 basis points versus so a brown bond for five years, this means 100 basis points of discount. So the mechanism is that after two years, if we don't achieve our target, the step-up is 25 basis points.

So, all in all, having issued at 100 basis point discount over five years, the step-up is 75. So you're getting always discount minimum discount 25 that could be 100 if we achieve the target of the SDG bond. For capacity additions in renewables, yes, take into account that never in the life of Green Power, we can say that we can achieve a linear development. So saying having 50% of capacity, a new capacity in place in June but so a distribution like this year, and that is roughly 90% or 70% in the last quarter is unusual. So more or less the normal distribution of renewables is roughly 40% first half, 60% second half.

Well, so every time that we have new elections, so every time there is a discussion about around an increase in corporate tax, really, so I think it's too early today to that the government has to be formed and the coalition so is unknown today to talk about a corporate tax increase. It's clear that so Spain, so coming to our sector is involved in a deep big change in terms of energy transition. This change will ask for huge amount of investments in all the sector or the energy sector in the distribution of renewables and everything, it’s clear that increasing corporate tax in a field of big investments needed would be something that so the new government will take into consideration for the new policies.

Monica Girardi: Okay, thank you, Elchin. Next question comes from the line of Antonella Bianchessi from Citigroup.

Antonella, your line is open.

Antonella Bianchessi: Yes, hello, thank you. Just two questions on the ForEx impact on your net debt. Can you tell us when this will be really absorbed but when we will see the accounting effect with a positive impact on the net debt.

Monica Girardi: Antonella?

Antonella Bianchessi: The second question is related to the renewable numbers for the U.S.

Are you still comfortable with the guidance for EBITDA distribution on a full-year basis? Another question is on store distribution in that you're displaying but the upgrading the guidance from 3.7 to 3.8 is actually due to IFRS or there is something out in this spot? And then also on the financial charges you were targeting €2.2 billion for the full-year reaching now a little bit off, do you expect to benefit from the refinancing of the debt in Brazil in Q4 or will you see the benefit only in 2020? And last on the assets consolidated method income, there is a negative, can you explain where it’s coming from? And it was also in the H1 but continue to remain negative and if this would be reversed in the [indiscernible]. Thank you, that’s it.

Monica Girardi: Antonella, sorry your line was pretty bad. We are not sure to have catched your first question. Can you just repeat that please?

Antonella Bianchessi: Yes, the first question is on the timing of the total of the negative impact of the ForEx in the past.

When we will see the hedging coming through and before the [indiscernible] that the benefit of this €2 billion?
Alberto

de Paoli: Okay. So Antonella so first of all time reversal negative impact of affecting the debt, so as said it will not be reversed in the debt because the debt is already hedged 100% at the strike price. So everything that is so negative or positive today is negative will not affect the debt at the reimbursement time. So this is the way which we account the debt but on the dollar roughly 90% of debt in dollar is fully hedged at the timing which we do the hedge. To give you an example so we have the last issuance and we have fully hedged the issuance and we fully hedged the issuance with CSS that is also sustainable, and it’s the first hedge -- sustainable hedging that we had combined with the sustainable bond.

And this is, I think, the answer to what when you got something related to FX impact is something that happens only in the accounting field not in the real financial field. And second is renewable target. Yes, so if you think we are comfortable, yes. So more or less the guidance is around €4.5 million and €4.6 million it’s clear that now is raining, so the guidance of renewables depends a lot on the last quarter rains and wind, so we have this range of €4.5 million, €4.6 million. And the distribution in Italy say so the difference is for the IFRS impact.

And on the financing charges in €2.2 billion now we have €2.2 billion is now €2.3 billion because of the IFRS 16 is also here, we have an impact because you know that the operating leasing now will be accounted as financial comp. So the €2.2 billion with IFRS 16 is €2.3 billion and so we don’t expect any impact on refinancing in Q4 because what we are doing in the issuance is something that is needing for our needs in 2020. And so but we don’t have any cost of carry in taking the money now because we got this money at almost zero cost. And for the equity consolidated asset and so you can remember we had this €120 million of upside in the EBITDA because we both from the joint venture we had with General Electric at better prices. So we got this impact on EBITDA level but because we both on the 50%, because of the joint venture from which we bought this asset was 50% ours.

So we got the impact of a bad sell in the EBIT line. So you have to look at these two things together to get the final impact of this good deal at the net income level.

Monica Girardi: Okay, thank you, Antonella. Next question comes from the line of Emanuele Oggioni from Banca Akros. Emanuele, your line is open.

Emanuele Oggioni: Thank you, Monica. Everyone thank you for taking my questions as well. The first one is on the capacity market and on the second auction; my question is that if you are planning to add any capacity for 2023 in the second auction such as gas peakers or other efficiency plant et cetera? The second question is on Chile, which is the current situation for your day-by-day operation and also with regard the tariff [indiscernible] make any sense in Chile, could you give us your current estimate on the networking capital impact on your figures starting next year on a constant ForEx basis? And third one is on the -- you give us a net debt guidance for this year. And I wonder what is your action embedded in this guidance on -- with regard to networking capital? Thank you. Alberto

de Paoli: Emanuele, first of all to let me take the secret about what we are going to offer in 2023 because it's an auction you understand if I say something, so I can help my competitors in this auction.

So I think the auction is due at the end of November, something could be disclosed in the Capital Market Day and something could be disclosed soon after. So on a current situation on day-by-day operations in Chile first of all you know we are out of our office. So this is a bit difficult, so we are facing now because so we are now, so our colleagues has spread to different offices around the burnt one. And this is sort of the most difficult that we are facing now in Chile. And this is something that is difficult also for the day-by-day operation, so we have a lot of issues that so we are doing well in managing the situation.

On the other side on the impact on the networking capital. So I would say that it will depend a lot on -- so what will be the level of FX in the different years of in which we will have this tariff freeze. My first cut of calculation is giving us an impact on the networking capital roughly $500 million. Then on the net debt guidance, so we are driving to zero, I would say that to a range between 0 to minus €200 million will depend on the timing of the last quarter investment in other minor aspects.

Monica Girardi: Thank you, Emanuele.

Next question comes from the line of Alberto Gandolfi from Goldman Sachs. Alberto, your line is open.

Alberto Gandolfi: Thank you. Just a couple questions on my side, please. The first one is that that you were talking about more than €100 million of EBITDA per gigawatt added for this year.

And would it be fair to assume that as the share of solar grows for full-year wherever it's not nurtured, a good rule of thumb is one gigawatt, €100 million of EBITDA. So when you move to four gigawatt a year, are we going to expect above €400 million of EBITDA which is probably nothing more than a 6% reduction term on the investment at the EBIT level. And the second question is on the capacity market, can you please share with us your expectations of what’s going to happen to the MSD Ancillary Services in 2022 and onwards, so how much of the €320 million in EBITDA increase in the capacity market could be shaved off by a reduction perhaps in Ancillary Services? Thank you so much. Alberto

de Paoli: So first of all, so what we are, we have out on so what we call EBITDA on CapEx and so more or less today, so we have a range of so one gigawatts, one megawatt for €1 million. We have out roughly 12%.

So say because of solar is a bit less on the CapEx per megawatt and on EBITDA it’s €100 million is good calculations, it’s a good rule of thumb to define what is the EBITDA addition coming from the solar development. So, what is going to happen to Ancillary Services, say God knows because the problem is that you have a lot of party movement to try to understand what is going to happen in the long-term. On one side, the shut down coal will impact differently so the way in which the coal plant will be shut down. The second is that a huge amount of renewable, storage demand response is needed to comply with the shutting down of coal and obviously; the reserve margin will be different in different cases. Having said that, so we had already in the previous plan an idea on what would be the impact related to a decrease in the service market.

I do think that you can take an overall 30%, 20%, 30% reduction in Ancillary Service coming from the outcome of these tenders, tenders that have been awarded for 2022 at the maximum price. So, this is -- so all-in-all what you have to take into consideration in the calculation that for sure 2022 is giving us a profile that will be more based on regulated revenues versus what we have today.

Monica Girardi: Thank you, Alberto. Next question comes from the line of Lueder Schumacher from SocGen. Lueder, your line is open.

Lueder Schumacher: Hi, good evening. Three very quick questions from my side, please. The first one is on Argentina. You mentioned that the government was very keen for you to commit to CapEx, which is not surprising I guess. Are you still committed to only invest any money earned in Argentina in Argentina? Also it's kind of ring fenced or would you be prepared to commit more CapEx if it does apiece the new government? And the second one is on Italian retail, I mean, a question about the timeline for full liberalization but it will be moved comes up on every quarterly result call and every time you tell us that nothing is happening.

We're getting closer and closer to the deadline. What's your best guess as to when the government will finally move or do you think we go all the way to July before something is happening there? And last one sort of following-up, I guess from Antonella’s question on the FX hedges and you said that fully hedged, is it of the timeline of the bond, you are issuing dollars. So in other words, you’re issuing dollars and then immediately swap everything back into Euros. Alberto

de Paoli: Okay. So for the first question Argentina, we say, so we got the impression for the first talks that the government is sort of looking not to stop the foreign companies to invest in the country.

It's clear that now there are talks and now facts will happen so in 2020 and onwards, so it's clear that we are very keen and commit ourselves to do more CapEx because so the line we followed also during the last government was to work with the government to ease into mainly to restore a regulatory framework that would allow us to invest more. But we invest in the last three years exactly what we generated in the country. So it's clear that the line is not going to change in the next month mainly because now we have to understand clearly what the policies of this new government will be in practice. On Italian Retail, so well it's true that every time we met we say this is the year in which the market will be fully liberalized and then it has been postponed. It's clear that it is not an easy decision because it's not affecting a huge amount of energy produced and sold but is affecting a huge number of people because we are talking about 18 million of customers and people.

So, it’s a very delicate political decision. And we understand that a little stability is needed to put in the right light the discussion and to take the proper decisions. And for the third question, so we at the time in which we issue bonds or other kind of lines, so we do immediately the edge of the issuance. So the cash flow hedge is effective from time zero. So we do the two things in parallel.

Lueder Schumacher: And that's over the lifetime of the bonds?
Alberto

de Paoli: Yes.

Monica Girardi: Thank you, Lueder. Next question comes from the line of Tancrede Fulop from Morningstar. Tancrede, your line is open.

Tancrede Fulop: Good evening.

I have just one left on my side. I just wanted to know how would you offset the lost volume from your coal plants to serve your customers especially in Italy, and also if you could confirm that the coal plants were [indiscernible] in 2019? Thank you.

Monica Girardi: Can you just repeat quickly your question because your line is little bit disturbed.

Tancrede Fulop: Okay, got it. Yes, just one question.

How would you affect the lost volume from your coal plants to serve your customers, especially in Italy and also if you could confirm the profitability contribution from the coal plants that you will close?
Alberto

de Paoli: Well, so first of all on volumes, remember that this has been and is eased already today a very low variable part of our production and as we presented last year, so if you Italy and Spain together and so the gross margin of our production in 2018 was €5 billion only 10% is related to the thermal generation and I’m not saying the thermal generation are, we have gas and coal. So, this is the very point is not so big the impact in margins of such a big reduction in production. And, as I said already in 2019, I said that we have already got €100 million of cost cutting related to the low utilization of coal plants. So the first offsetting of this low margin is on cost cutting. And for the profitability of the plants that we will close, so we have on one side, as I said, more or less, so today on the impairment side, we are improving.

So we are reducing the D&A of the next year, so roughly €120 million because of the impairment. We will suffer some reduction in EBITDA because of the lower volume of the lower margin. And today so contribution to profitability of the plant that we are going shut down. If you ask me what is the contribution in 2019, the contribution is negative. And that's why so we are driving this impairment.

Monica Girardi: Okay, all of the questions that were registered have been answered. So we are now closing our nine months call. As always, the IR department is at your disposal, in case you need any clarifications. Thanks for participating and we truly hope to see you in two weeks’ time. Thank you.