A2A S p A : Report on Operations at 31 december 2021

2021

Report on Operation

Report on

Operations

2021

these Financial Statements are available at the website

Contents

Letter to Shareholders and Stakeholders 2021 4

Corporate boards 7

1	Key figures of the A2A Group
1.1	Business Units	10
1.2	Geographical areas of activity	12
1.3	Group structure	14
1.4	Financial highlights at December 31, 2021	15
1.5	Shareholdings	18
1.6	A2A S.p.A. on the Stock Exchange	19
1.7	Alternative Performance Indicators (APM)	22
2	Sustainability responsible management
2.1	Sustainability responsible management	30
3	Scenario and Market
3.1	Macroeconomic scenario	36
3.2	Energy market trends	39
4	Evolution of the regulation and impacts on the Business Units
of the A2A Group
4.1	Generation and Trading Business Unit	45
4.2	Market Business Unit	49
4.3	Waste Business Unit	55
4.4	Smart Infrastructures Business Unit	62
5	Consolidated results and report on operations
5.1	Summary of results, assets and liabilities and financial position	82
5.2	Significant events during the year	91
5.3	Significant events after December 31, 2021	99
5.4	Outlook for operations	100
5.5	Proposal for the allocation of net profit for the year ended December 31, 2021
and the distribution of a dividend	101
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A2A Report on Operations 2021

6	Analysis of main sectors of activities
6.1	Summary of results sector by sector	104
6.2	Results sector by sector	108
6.3	Generation and Trading Business Unit	110
6.4	Market Business Unit	113
6.5	Waste Business Unit	116
6.6	Smart Infrastructures Business Unit	119
6.7	Corporate	123
7	Risks and uncertainties
7.1	Risks and uncertainties	126
8	Other information
8.1	Other information	138

This is a translation of the Italian original "Relazione sulla Gestione 2021" and has been prepared solely for the convenience of international readers. In the event of any ambiguity the Italian text will prevail. The Italian original is available at the website.

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Letter to Shareholders and Stakeholders 2021

Letter to Shareholders and Stakeholders 2021

Shareholders, Stakeholders,

The year 2021 was characterized by repeated pandemic waves that, however, thanks to an extensive and effective vaccination campaign, did not prevent the return to a situation of almost normality. In a context of economic recovery and turbulence in the commodities market, A2A created value for all its stakeholders and confirmed its capacity for industrial and economic growth, as witnessed by the excellent results achieved in terms of operating margins, the record number of investments made during the year and the strengthening of its presence in Italy.

The activities carried out during 2021 fully fit into the two growth pillars outlined in the recently updated 2021-2030 Strategic Plan: circular economy and energy transition. In fact, 2021 saw us engaged in important agreements and acquisitions related to the bioenergy field (acquisition of Agripower, a company managing and developing biogas power generation plants), industrial waste treatment (acquisition of TecnoA, leading company in central-southern Italy in this sector) and the increase in installed power from renewable sources (acquisition of 17 photovoltaic plants from Octopus for installed capacity of 173 MW).

These developments have been accompanied by major investments to increase the resilience of the electricity grid and make it more reliable even in the event of extreme weather events and to contribute to the increasing electrification of consumption. A strong push was also given to investments aimed at recovering energy and materials, upgrading the water and sewage networks and digitalizing the Group. In total, acquisitions and new investments amounted to around 1.8 billion euro, around double the amount budgeted for 2020.

The economic results for 2021 were satisfactory and up compared to both 2020 and 2019, a year characterized by the absence of the effects of the Pandemic: EBITDA stood at 1,428 million euro (+19% compared to 2020), thanks to both solid industrial growth of the Business Units and the contribution of new acquisitions, and Net Income reached 504 million euro (+38% compared to the previous year).

The economic-financial performance is solid: the Consolidated Net Financial Position at December 31, 2021 amounted to 4,113 million euro (3,472 million euro as at December 31, 2020). Excluding changes in scope that took place throughout 2021, NFP came to 3,366 million euro, recording cash generation of 106 million euro, after total investments for 1,074 million euro and dividends for 248 million euro.

The international tensions of these days have re-proposed the need for the country to obtain strategic assets to enable us to better defend ourselves from market turbulence and the consequent increase in the cost of energy, to the benefit of all citizens. A2A, in continuing along the path outlined in the 2021-2030 Strategic Plan updated in January 2022, proves to be a necessary player in these processes of national transformation, developing infrastructures that can contribute to making our country energy independent and achieving the sustainability objectives set by Europe.

2021 was the year in which the Group accelerated on sustainable finance: in May 2021, we adopted a new Sustainable Finance Framework which, for the first time in Italy, combines two different approaches - Green/Use of Proceeds and KPI-Linked - and we issued financial instruments thanks to which the A2A sustainable debt quota

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