A2A S p A : , results as at march 31, 2021

A2A, RESULTS AS AT MARCH 31, 2021

Margins and investments grow

Further boost to sustainable development thanks to renewables and circular economy

• Revenues at 2,174 million euro: +27% compared to the first quarter of 2020
• EBITDA comes to 399 million euro (331 million euro as at March 31, 2020) thanks to significant organic growth and M&A transactions (+21%)
• Net profit at 136 million euro, up 21% compared to the first quarter of 2020
• Capex amounted to 155 million euro, +26% compared to the same period of the previous year
• Net Financial Position stands at 3,472 million euro, unchanged with respect to December 31, 2020. Excluding perimeter changes, the NFP amounted to 3,186 million euro
• Improvement in Sustainability indicators compared to the first quarter of 2020:
• • +14% of waste recovered as material or energy
  • +14% installed capacity from renewable sources

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

Information as at March 31, 2021

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Milan, May 13, 2021 - At today's meeting, chaired by Marco Patuano, the Board of Directors of A2A S.p.A. examined and approved the quarterly financial information as at March 31, 2021.

"We are very pleased with the results of this first quarter. Revenues, EBITDA and net income recorded double-digit growth, confirming the founding elements of the new ten-year Business Plan: an extremely positive European scenario in the circular economy and energy transition sectors, the value of our assets in the network, waste and energy sectors and, last but not least, the value of the A2A Group's important know-how and our human capital, which is interpreting the new Plan with skill and passion" commented Renato Mazzoncini, Chief Executive Officer of A2A. "We have also increased investments by 26%; a particularly significant increase coming from a record 2020 (+18% on 2019) and which allowed us to conclude strategic operations in line with the Plan announced in January. With the recent acquisition of a portfolio of 17 photovoltaic plants of 173 megawatts, we have consolidated our second position among operators in the renewable energy sector and are among the leaders in solar energy in Italy. With these foundations, we want to continue to provide our contribution to the creation of innovative infrastructures, strategic for the sustainable development of the Country".

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The results for the first quarter of the year were achieved through the contribution of all Group's Business Units.

In the reporting period, A2A operated against a backdrop of a recovery in consumption and an upward trend in energy prices, within a framework of gradually overcoming the related anomalies associated with the COVID emergency. Thanks to sustained organic growth and M&A transactions completed in the previous year, the results achieved far exceeded those of the first quarter of 2020, which was only partially affected by the highly negative impacts related to the energy scenario and the pandemic, both characterizing the rest of 2020.

As far as energy consumption is concerned, the net electricity demand in Italy in the first three months of 2021 was 78,634 GWh, up +2.2% compared to the first quarter of the previous year, however still down compared to the corresponding period of 2019 (-2.1%). In addition, natural gas consumption for the period totalled 25,245 Mcm, or 5.7% more than in the first quarter of 2020.

In relation to price dynamics of energy goods, in the first three months of 2021 the PUN (Single National Price) increased by 49.6% compared to the first quarter of 2020, reaching 59.2 €/MWh as a result of the rise in gas and CO2 costs. The average price of gas to the PSV in the period under review amounted to 18.7 €/MWh, up 65.3% compared to the same period of the previous year. CO2 quotations stood at an average price of 37.5 €/tonne in Q1 2021 (22.9 €/tonne in Q1 2020, +64%).

Growing price and quantity dynamics, the excellent performance of all the Group's Business Units, the contribution of the consolidation of AEB, the launch of the 2021 - 2030 Strategic Plan approved in January 2021, resulted in:

• substantial increase in revenues (+27%);
• significant growth in Gross Operating Margin(+21%);
• acceleration of capex, with an increase of 26% compared to the same period of 2020, with development interventions mainly aimed at the recovery of energy and materials, the strengthening of distribution networks, in particular electricity, purification plants, photovoltaic plants and the digitalisation of the Group. The investments made, together with the acquisition in March 2021 of 17 new photovoltaic plants, are consistent with A2A's strategic sustainable business model, based on circular economy, decarbonisation, enabling electrification of consumption and digitalisation.

The following are the main indicators:

Millions of euro	Q1 2021	Q1 2020		Δ%
Revenues	2,174	1,707	+467	+27.4%
Gross Operating Margin -	399	331	+68	+20.5%
EBITDA
Net Operating Income - EBIT	237	196	+41	+20.9%
Net profit	136	112	+24	+21.4%

In the first three months of 2021, the Revenues of the A2A Group amounted to 2,174 million euro, up 27.4% compared to the first quarter of the previous year.

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The increase occurred in the electric power and natural gas wholesale markets due to both higher prices and higher volumes sold and brokered. Revenues in the electricity retail market were also up thanks to higher unit prices and higher quantities sold to customers in the free market.

The positive contribution of the AEB group, consolidated on a line-by-line basis from November 2020, should also be noted.

EBITDA equalled 399 million euro, an increase of 68 million euro compared to the first three months of 2020 (+20.5%).

Net of non-recurring items (no impact in the first three months of 2021; -1 million euro in the corresponding period of 2020), the ordinary EBITDA increased by 69 million euro. Excluding the contribution deriving from the consolidation of AEB (19 million euro), growth amounted to 50 million euro (+15.2%)

EBIT, amounting to 237 million euro, was up by 41 million euro compared to the first three months of

2020 (196 million euro). The change was due to the following:

• increase in EBITDA, as described above (+68 million euro);
• increase in depreciation and amortisation (25 million euro) mainly related to investments made in the period April 2020 - March 2021, the 1G electricity meter replacement plan and the consolidation of AEB assets;
• increase of 2 million euro in net provisions due to higher releases of excess provisions for risks and bad debt made in the first quarter of the previous year.

The Group Net Profit in the first three months of 2021 amounted to 136 million euro, up 21.4% compared to the corresponding period of 2020.

This change was due, in addition to the increase of the Net Operating Result, to the following:

• decrease of 5 million euro in net financial expense, due mainly to the improved conditions in the capital markets when refinancing maturing bonds;
• increase of 9 million euro in minority interest;
• higher taxes for 14 million euro.

Consolidated Net Financial Position as at March 31, 2021 amounted to 3,472 million euro, unchanged compared to December 31, 2020. Excluding changes in scope in the first three months of 2021, NFP amounted to 3,186 million euro, recording cash absorption of 286 million euro, after total capex of 155 million euro.

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A2A Group - Results by Business Unit

The following table shows the composition of the EBITDA by Business Unit:

Millions of euro	03/31/2021	03/31/2020	Change	Change %
Generation and Trading	90	58	32	55.2%
Market	70	63	7	11.1%
Waste	86	77	9	11.7%
Networks	157	139	18	12.9%
Corporate	-4	-6	2	-33.3%
Total	399	331	68	20.5%

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Generation and Trading Business Unit

In the first three 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 4.5 TWh (3.8 TWh at March 31, 2020).

Thermoelectric production increased to 3.5 TWh (3 TWh in the corresponding period of the previous year), up 17%, reflecting a rise in output by combined-cycle facilities that follows an increase in energy demand.

Production from renewable sources, which amounted to 1.1 TWh, was up 24%, due mainly to the contribution of the reservoirs of hydroelectric plants in the North.

As far as new renewable sources are concerned, the acquisition in March 2021 of 17 photovoltaic plants with a nominal capacity of 173 MW should be noted, in addition to the 111 MW already held by A2A and the 8.2 MW of wind power capacity acquired at the end of 2020. This expansion of the green portfolio will enable the Group to significantly increase the weight of renewables on its total production.

The revenues amounted to 1,282 million euro, up 366 million euro compared to the same period of the previous year. The change was caused by a significant increase in the prices of electricity and natural gas and by higher volumes sold and brokered in both markets.

EBITDA amounted to 90 million euro, an increase of 32 million euro compared to the same period of the previous year. Net of the non-recurring items in the two periods considered (+1 million euro in 2021 and +2 million in 2020), the Ordinary Gross Operating Margin increased by 33 million euro.

The change was mainly due to the following:

• growth of the PUN;
• higher production volumes from both hydroelectric and combined-cycle thermoelectric power plants;
• excellent performance achieved in the ancillary services market (MSD), amounting to 40 million euro (+ 8 million euro compared to 2020).

In the reporting period, the Capex of the Generation and Trading Business Unit amounted to around 10 million euro (8 million euro in the first three months of 2020).

Market Business Unit

In the first three months of 2021, the Market Business Unit recorded 4.4 TWh of electricity sales, up 16% compared to the same period of the previous year. The increase recorded is attributable to the higher quantities sold to large customers in the free market, the greater contribution of the safeguarded market and the sales of the AEB group, consolidated since November 2020.

Gas sales, equal to 1,035 Mcm, increased by 11% compared to the first three months of 2020 thanks to the consolidation of AEB.

There was also an increase in the number of mass-market free market customers, both in the electricity and gas segments (about 40 thousand more than at the end of 2020).

Revenues amounted to 858 million euro (771 million euro as at March 31, 2020), up 11.3% following the consolidation of the AEB Group and the increase in unit prices and quantities sold of electricity. EBITDA equalled 70 million euro (63 million euro in the first three months of 2020).

Net of non-recurring items (no impact in 2021 and +1 million euro in 2020), Ordinary EBITDA grew by 8 million euro compared to the same period of the previous year, mainly attributable to the contribution of the consolidation of AEB in the retail sector.

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In the first quarter of 2021, the Capex of the Business Unit came to around 14 million euro (9 million at March 31, 2020).

Waste Business Unit

In the period considered, the quantity of waste collected, equal to 0.5 million tonnes, increased by 12% following the contribution of AEB consolidation.

Waste disposed of, net of inter-company disposals, amounted to 0.9 million tonnes, an increase of 6.5%, with a greater weight of waste destined for material recovery (significant growth in paper and bulky items) and energy (greater quantities treated in waste-to-energy plants). On the other hand, the quantities brokered and disposed of to third-party plants and waste treated but not sent for recovery fell.

The quantities of electricity and heat produced by waste-to-energy plants increased by 2% and 6% respectively.

During the first three months of 2021, the Waste Business Unit recorded revenues of 301 million euro, up 9.4% compared to the corresponding period of the previous year (275 million euro at March 31, 2020) mainly due to higher revenues from material recovery (in particular paper sales), and from electricity sales and to the contribution of the companies acquired in the previous year (Agritre operating since March 2020 and AEB consolidated since November 2020).

EBITDA amounted to 86 million euro, up by 9 million euro compared to the same period of the previous year (+12%).

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The change was mainly due to the following:

• positive trend in prices for the sale of electricity and for waste conferral, in particular the one similar to urban waste;
• increase in revenues from paper sales, mainly due to higher prices following the strong appreciation of this recycled product due to the high demand recorded in the European market starting from the first lockdown;
• incremental contribution of the biomass-fuelled generation plant (Agritre) operating since March 2020.

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Capex in the first three months of 2021 amounted to 33 million euro (31 million euro at March 31, 2020).

Networks Business Unit

In the first quarter of 2021, the RAB related to electricity distribution and the RAB related to gas distribution were up 11% and 10%, respectively, compared to the same period in 2020. This increase is due to the greater capex and, in particular for the gas sector, to the consolidation of AEB Group from November 1, 2020.

The share of RAB for water services increased by 8% as a result of the capex made.

The Business Unit's heat sales amounted to 1.5 TWh (1.4TWh in Q1 2020): this increase (+10%) was mainly due to the acquisition of new customers and the contribution of the AEB Group's sales.

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