A2A, results at september 30, 2021

A2A, RESULTS AT SEPTEMBER 30, 2021

Confirmed strong growth in margins and investments

Important awards for sustainability actions, A2A commitment to green finance

continues

Financial results

• Revenues at 6,456 million euro: +34% on the first nine months of 2020.
• EBITDA as at 959 million euro, up by 137 million euro (+17%) on the first nine months of 2020 (822 million euro) thanks to significant organic growth and M&A transactions
• Net profit at 394 million euro, +81% compared to last year (218 million euro in the first nine months of 2020).
• Capex amounted to 640 million euro, +55% compared to the same period of the previous year.
• Net Financial Position of 3,782 million euro, up 310 million euro compared to December 31, 2020 Net of changes in the scope of consolidation and the impact of the new ESMA guidelines (totalling 441 million euro), the NFP improved by 131 million euro to 3,341 million euro.

Ecological transition

• +14% the installed capacity from renewable sources (hydroelectric, photovoltaic and wind), equal to 2,235 MW, compared to the corresponding period of 2020.
• A 26% decrease in the Group Emission Factor to 316g CO2/kWh compared to 2017, the Science Based Targets Initiative baseline year.

Sustainability

• Significant achievements for the sustainability strategy:

1. A2A was recognised as the company with the best sustainability report in the "Energy&Utilities" category, in first place in the "ESG Reporting Awards 2021" ranking by ESG Investing Global Markets Media Ltd (a UK-based financial media company) and came in second place in the "Best Climate -RelatedReporting" category for reporting on climate change.

• 1. A2A has entered in the new MIB ESG index of Borsa Italiana, dedicated to listed blue-chips with the best practices at ESG level, in line with the principles of the UN Global Compact.
• The Group's commitment to green finance continues: following the issue of the Sustainability-Linked Bond for 500 million euro, on October 25, A2A successfully placed a Green

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Bond for 500 million euro with a duration of 12 years, which will finance Green Projects aligned to the EU Taxonomy, in particular with reference to the "climate change mitigation" objective.

A2A S.p.A. Board of Directors has examined and approved the quarterly Financial

Information as at 30 September 2021

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Milan, 11 November 2021 - At today's meeting of the Board of Directors of A2A S.p.A., chaired by Marco Patuano, the Board examined and approved the quarterly financial information as at 30 September 2021.

In the first 9 months of 2021, we continued with our significant industrial and economic growth driven by sustainability and green transition. We have recorded an increase in all our financial indicators and a record level of investments for the period; we have further speeded up on our installed capacity from renewable sources and reduced the Group's emission factor" - commented Renato Mazzoncini, Chief Executive Officer of A2A - "Our commitment remains focused on the energy transition and the circular economy in order to guarantee an important contribution to the achievement of the decarbonisation objectives and to build the infrastructures necessary to bridge the gap between the plants in certain areas. Strategic assets that will allow our country to remain protected from market turbulence and the consequent increase in the cost of energy, to the benefit of citizens".

In the period under review A2A recorded excellent results, with economic and financial indicators showing significant growth, thanks to the contribution of all the Group's Business Units and to the M&A transactions completed in the previous and current year.

The period results should be viewed against the backdrop of a complex scenario that included a recovery in demand for goods and services, particularly energy consumption, caused by the easing of the measures implemented to contain the pandemic, and strong pressure on the energy market due to a combination of factors: climatic factors, low levels of domestic energy supply, volumes of renewable energy production at their lowest levels since the beginning of the year - particularly in the hydroelectric area - which fuelled an upward pressure on energy prices, which then strengthened steadily during the reporting period.

In the first nine months of 2021, in fact, the PUN (Single National Price) increased by +141.8% compared with the same period in 2020, reaching an all-time high of 158.6 €/MWh in September. The increase in the PUN reflects a similar escalation in the prices of natural gas at the PSV (virtual exchange point) and of CO2. The average cost of gas at the PSV, in fact, was 30.1 € /MWh, up 234.5% on the same period of last year. CO2 quotations stood at an average price of 48.3 €/tonne in the first nine months of 2021 (23.8€/tonne in the same period of the previous year, +102%).

A2A has continued to pursue a prudent commodity price hedging policy, aimed at containing risk and volatility over the medium-term. The high level of hedging (more than 70% of expected production in 2021), which began as early as 2020, therefore limited the benefit potentially obtainable from the significant - and unexpected - increase in energy prices.

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The extraordinary price dynamics combined with the growth in demand, the excellent performance of all Business Units and the contribution of the newly acquired companies, ensured good results for the first nine months of 2021:

• strong increase in turnover (+34%);
• growth in operating margins (+137 million euro, or +17%), in line with the results achieved in the first half of the year.

Capex amounted to 640 million euro, a 55% increase on the same period of the previous year. In particular, a strong boost was given to development investments aimed at recovering energy and materials, upgrading distribution networks, water and sewage networks, purification plants, photovoltaic plants and digitalisation of the Group (approximately 390 million euro, +73% compared to the first nine months of 2020).

M&A transactions, fully in line with the 2021-2030 Business Plan based on energy transition and circular economy, mainly concerned the field of bioenergy (acquisition of Agripower, a company managing and developing biogas power generation plants) and the increase of installed power from renewable sources (acquisition of 17 photovoltaic plants from Octopus for a total installed capacity of 173MW). At September 30, total installed capacity from renewable sources (hydroelectric, photovoltaic and wind) was 2,235 MW, an increase of 14% compared to the corresponding period in 2020.

The following are the main economic indicators:

Millions of euro	9M 2021	9M 2020		Δ%
Revenues	6,456	4,805	+1,651	+34.4%
Gross Operating Margin -	959	822	+137	+16.7%
EBITDA
Net Operating Income - EBIT	454	400	+54	+13.5%
Net profit	394	218	+176	+80.7%

In the first nine months of 2021, Revenues amounted to 6,456 million euro, up by 34.4% compared to the same period of the previous year.

More than 50% of the increase was attributable to higher prices and to an increase in volumes sold and brokered in the wholesale energy markets, particularly for electric power. Revenues in the retail market were also up thanks to higher unit prices and higher quantities sold to customers in the gas and electricity free market.

Finally, new companies acquired in the last quarter of 2020 (AEB group and Flabrum) and in 2021 (Octopus and Agripower) contributed around 13% to the positive change.

EBITDA equalled 959 million euro, an increase of 137 million euro compared to the first nine months of 2020 (+16.7%).

Net of non-recurring items (+13 million in the first nine months of 2021; +4 million euro in the same period of 2020), EBITDA increased by 128 million euro. Excluding also the incremental contribution deriving from the consolidation of AEB and the other companies acquired (approximately 50 million euro), organic growth amounted to 78 million euro (+10%)

EBIT, amounting to 454 million euro, was up by 54 million euro compared to the first nine months of 2020 (400 million euro). The change was due to the following:

• increase in EBITDA, as described above (+137 million euro);

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• increase in depreciation and amortisation (88 million euro) mainly related to investments made by all BUs in the period October 2020 - September 2021 and the amortisation/depreciation of the assets of the companies acquired described previously;
• decrease of 5 million euro in additions to provisions, net of reversals of excess provisions for risks and receivables.

Group Net profit in the first nine months of 2021 amounted to 394 million euro, up by 81% compared to the corresponding period of 2020.

This positive change of 176 million euro was due, in addition to the increase in the Net Operating Result:

• lower taxes recognised this year compared with the previous year, for a total of 131 million euro, resulting from the following factors:
  o a decrease of 145 million euro. As already recorded in the half-yearly report, in application of Decree Law 104/2020, A2A has realigned for certain Group companies the differences between the higher statutory value and lower tax value of tangible and intangible assets: the net economic effects on the year of this operation amounted to 145 million euro, determined by the payment of a substitute tax of approximately 23 million euro and the concomitant benefit of the one-off reversal of deferred tax liabilities recognised in the financial statements on the statutory/tax differences in value, amounting to 168 million euro.
  o 14 million euro in higher taxes as a result of improved earnings before taxes.
• decrease of 15 million euro in net financial expense, due mainly to the improved conditions in the capital markets when refinancing maturing bonds;
• increase of 27 million euro in the minority interest, partially due to the consolidation of AEB Group.

Excluding non recurring items affecting the current year (reversal of deferred tax liabilities net of substitute tax and minority interests' profit on the realignment of AEB and ACSM AGAM's assets), the Group's share of net ordinary income for the first nine months of the year amounted to 256 million euro, representing an organic increase of 38 million euro (+17%) compared with the same period of the previous year.

Consolidated Net Financial Position at September 30, 2021 amounted to 3,782 million euro (3,472 million euro as at December 31, 2020). Excluding changes in scope in the first nine months of 2021 and the application of the new ESMA (European Securities and Markets Authority) guidelines - totalling 441 million euro) - NFP amounted to 3,341 million euro, recording cash absorption of 131 million euro, after total capex of 640 million euro and dividends for 248 million euro.

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A2A Group - Results by Business Unit

The following table shows the composition of the Gross Operating Margin by Business Unit:

Please note that, starting from this quarter but effective 01.01.2021, following an organisational change, the Public Lighting segment, previously included in the Market Business Unit, is consistently represented in the Networks Business Unit: in order to ensure full comparability, the values concerning the Market Business Unit and the Networks Business Unit have therefore been pro-forma.

Millions of euro	09.30.2021	09.30.2020	Change	Change %
Generation & Trading	203	174	29	16.7%
Market	161	140	21	15.0%
Waste	238	209	29	13.9%
Networks	367	314	53	16.9%
Corporate	-10	-15	5	-33.3%
Total	959	822	137	16.7%

Generation and Trading

In the first nine months of 2021, the Generation and Trading Business Unit contributed to fulfil the sales demand of the A2A Group through production by the plants it owns amounting to 13.6 TWh (12.5 TWh at September 30, 2020).

Thermoelectric production amounted to 10 TWh (9.2 TWh in the corresponding period of the previous year), up 9.2%, due to a rise in output by CCGT plants following the increase in demand for contestable energy.

Production from renewable sources amounting to 3.7 TWh recorded an increase of 9%, more than half of which was due to the contribution of photovoltaic and wind power plants following the new photovoltaic (+173 MW) and wind power (8.2 MW) capacity acquired by the Group. In the first nine months, hydroelectric production increased by 5% to 3.4TWh, but was down in the third quarter compared with the same period last year.

Revenues amounted to 3,991 million euro, up by 1,297 million euro (+48.1%) compared to the same period of the previous year. The change was caused by an extraordinary increase in the prices of electricity and natural gas and by higher volumes sold and brokered, in particular on the electricity market.

EBITDA amounted to 203 million euro, an increase of 29 million euro compared to the same period of the previous year. Net of non-recurring items in the two periods considered (+7 million euro in 2021 and +9 million in 2020), the Ordinary EBITDA increased by 31 million euro.

The change was mainly due to the following:

• the energy scenario net of existing hedges;
• growth in hydroelectric production, particularly in the first 6 months of 2021;
• contribution of newly acquired photovoltaic and wind power plants;
• performance achieved in the ancillary services market (MSD), amounting to 152 million euro (+35 million euro compared to the first nine months of 2020).

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