a2a 2017 investor guidebook - amazon s3€¦ · 2017 investor guidebook december 2017. this...

a2a2017

Investor Guidebook

December 2017

This information was prepared by A2A and it is not to be relied on by any 3rd party without A2A’s prior written consent.

DISCLAIMER - This document has been prepared by A2A solely for investors and analysts. This document does not constitute an offer or invitation to purchase or subscribe any shares or other securities and neither it nor anypart of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. Some information contained herein and other material discussed at the meetings may include forward-lookinginformation based on A2A’s current beliefs and expectations. These statements are based on current plans, estimates, projections, and projects and therefore you should not place undue reliance on them. Forward-lookingstatements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factorsinclude, but are not limited to: changes in global economic business, changes in the price of certain commodities including electricity, gas and coal, the competitive market and regulatory factors. Moreover, forward-lookingstatements are current only at the date they are made.

This symbol marks the pages where Exceldownloads are availableAnnual and quarterly Historical series available in the Investor Databook: https://www.a2a.eu/en/investors/publications-services/investor-guidebook-kit or in dedicatedsections.

This symbol marks the pages which may besubject to updates during the year

Reference to more in-depth, updates and documents available in A2A website@

Resources:

Databook in excel: this file is part of the

Guidebook kit and contains annual and quarterlyeconomic, financial and operational Company data as of2008 and all the tables published in this document.

Our Worldp. 4 - 16

Our Resultsp. 17 - 32

Our Responsibilitiesp. 33 - 44

Welcome to A2A Investor Guidebook,prepared for investors and financialanalysts to get a thorough insight into theA2A Group.In order to get the most out of it we haveprovided the Resources section aside, whichrefers to additional material available in thecompany website: www.a2a.eu. You willfind further such references in the Indexpages.

We would like to get your feedback andsuggestions to improve this product.Please write to: [email protected]

A2A Investor Relations Team

The Guidebook starts with the Company Profile at page 3…

2

https://www.a2a.eu/en/investors/publications-services/investor-guidebook-kit

https://www.a2a.eu/en/investors/publications-services/investor-guidebook-kit

http://www.a2a.eu/

mailto:[email protected]


Our Responsibilities

• A high weight of green componentscharacterizes A2A asset portfolio. Large scalerenewable production (hydroelectric, WTE), highefficiency production (cogeneration with lowerCO2 emissions) and innovative technologies toincrease energy savings (LED lighting). A2A mayalso leverage on a large and loyal customer baseas a natural hedge for its energy portfolio.

• These mark the Company commitment tosustainability, further strengthened in 2016.

• The shift to a traditional governance model,occurred in June 2014, facilitates decisionmaking and emphasizes the central role of theBoard of Directors

• Milan and Brescia cities are the majorshareholders with a joint control

Company Profile

A2A - THE LEADING ITALIAN MULTIUTILITY

Business Units: top strengthsEnvironment

n. 1 for electricity produced by WTE plantsEnergy Retail

market leader for quality and customersatisfaction

Networks and District Heatingincumbent in its 3 key gas areasfirst domestic operator in DH

Generation & Trading∼2 GW hydro installed capacity in Italy

Our World

• A2A is active in environment, energy retail,networks and district heating, generation andtrading – a business diversification which spansfrom regulated to market exposure thusconsiderably lowering its economic risk profile

• Born in 2008 from the merger of AEM, ASM andAMSA, A2A operates throughout Italy,predominantly in Lombardy. The activities inMontenegro were deconsolidated as of July 2017

• The business units of the company have a firstclass asset base - both plants and networks. Longterm concessions increase visibility

• A2A business model is very flexible. It allows foroptimizations both in the business units andacross them

• The current strategy has been set out in the2017-2021 Strategic Plan. The main lines of thePlan are the following:

- Relaunch: growth in environment, smartnetwork and energy services

- Regeneration: active role in the energy markettransformation

- Reshape: buying options in smart city and greeneconomy

- Discipline in operations and capital structure- Dialogue & engagement with key stakeholders- Digital & technological transformation

EBITDA expected to grow to around 1.3€ bn in2021, cumulated CAPEX of the period equal toaround 2.5 € bn.

Our Results

• Positive 2016 results were achieved: Ebitda upby almost 18%, strong growth in Net Profit.Investments were up by 23%

• With respect to these external dynamics, theGroup reacted by continuing with the initiativesto improve operational efficiency, which helpedto sustain the profitability

• Debt optimization continued posting satisfactoryresults also in 2016

• A dividend of 0.0492 euros per share, up by20%, was submitted to AGM approval

• A2A medium-term financial strategy is aimed atlengthening the average debt maturity,maintaining an adequate financial flexibility andlowering the cost of debt to support theCompany rating

• A2A adopts a prudent energy risk policy, part ofits Enterprise Risk Management model, whosepurpose is to further develop and integrate riskmanagement activities into the business process

3

(1) 2016 figures restated after the completion of the Purchase Price Allocation (PPA) process on LGH Group assets.(2) Group net income adjusted for the impact of extraordinary items: 2016 = 377 €M; 2015 = 278 €M; 2014 = 175€M; 2013 = 156€M

http://www.a2a.eu/en/investor/overview/strategic_plan_2016.html


INDEX

Our World Our Results Our Responsibilities

@

A2A Group- The A2A Group 5

- A2A Business Portfolio 6

- A2A Geographical Presence 7

Assets and Activities- A2A Asset Portfolio 8

- A2A Concessions Portfolio 10

Benchmarking

- Market position in terms of businesses and EBITDA 11

Main regulatory framework

- Networks - regulatory framework 12

- Networks - gas distribution tenders 13

Major Transactions- Acquisitions & disposals - track record 14

Strategic Plan 2017-2021- 2017-2021 Strategic Plan in a nutshell 15

- 2017-2021 Strategic Plan - Main targets 16

4

More in-depth, updates and documents available in the following website sections:A2A Group: https://www.a2a.eu/en/group/mission-valuesAssets and Activities: https://www.a2a.eu/en/group/our-plants and https://www.a2a.eu/en/servicesMajor Transactions: https://www.a2a.eu/en/investors/strategyStrategic Plan: https://www.a2a.eu/en/investors/presentations-conference

https://www.a2a.eu/en/group/mission-values

https://www.a2a.eu/en/group/our-plants

https://www.a2a.eu/en/services

https://www.a2a.eu/en/investors/strategy

https://www.a2a.eu/en/investors/presentations-conference


THE A2A GROUP

Our WorldA2A Group

(1) Stakes held through Linea Group Holding S.p.A.

Networks and Heat

Other Companies

Areas of activity

Back to Index

Generation & Trading

Energy Retail

Environment

EPCG

5


A2A BUSINESS PORTFOLIO

Our WorldA2A GroupBack to Index

Ordinary EBITDA equal to 1,103 €M

(1) Equal to 1,132 €M, calculated as Reported EBITDA (1,231 €M) net of non recurring items (128 €M) and EBITDA from “Corporate” (-29 €M)(2) Infrastructure activities: electricity and gas networks, heating distribution and integrated water cycle. Energy efficiency activities: heat generation, recovery and sales, public lighting and other energy efficiency

services.

Sources: A2A Strategic Plan, 2016 Results & Business Plan Update; Company Annual Reports

2016EBITDA(1)

6

GENERATION & TRADING

Fuel sourcing

Powergeneration

Whole-sale &Trading

352 €M 31%

ENERGY RETAIL

Electricity and Gas sales

free market regulated

market

ENVIRONMENT

120 €M 11%

Industrial Waste Treatment

Collection and street sweeping

Urban Waste Treatment

Material Recovery

Electricity and Heat production

EPCG(Montenegro)

Power generation

Electricity networks

69 €M 6%

NETWORKS & HEAT(2)

Integrated Water Cycle

Electricity networks

Gas networks

HeatDistribution

Cogeneration, heat recovery and

sales

Energy Efficiency Services

Public Lighting

SMART CITY

Telephony and Internet access

Data transmission

Video-surveillance

6 €M 1%

NETWORKS HEAT

69 €M 6%285 €M 25%231 €M 20%

SIGNIFICANT SYNERGIES ACROSS THE BUSINESS UNITS

Put option on EPCG was exercisedin July 2017

Deconsolidationas of H2 2017

Mostly Quasi-Regulated Merchant Low Volatility RegulatedMerchant High-Volatility

with Regulated itemsQuasi-RegulatedRisk

Profile


A2A GEOGRAPHICAL PRESENCE (AS OF H2 2017)

Our WorldA2A GroupBack to Index

7

G

G

GG

G

G

PL

G

DHE G

W

G W

E G

E

DHG

G DH

DH

DH

DH

DH G

G

PL

PLPL

C

C

C

C

C

C

C

C

C

C

Italy Lombardy

Legenda

EnvironmentWaste collectionTreatment plantsBiogas/Biomass plantsWaste-to-Energy

Generation & TradingHydroelectricCCGT CoalFuel OilSolar

E

GW

PL

C

DH

Technological partnerships abroad on waste treatment plants (UK, Spain and Greece)

NetworksElectricityGasWaterPublic Lighting

HeatCogen. & thermal plantsThermal solar plantsDistrict Heating


A2A ASSET PORTFOLIO

Our WorldAssets and activities

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8

(1) Management-only. The treatment capacity is not included in the total because A2A revenues are mainlybased on electricity sales.

(2) 2016 figures include LGH and refer to 31/12. 2015 figures are average values

ENVIRONMENT PORTFOLIO

NETWORKS PORTFOLIO

ENERGY RETAIL PORTFOLIO(2)


A2A ASSET PORTFOLIO


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9

(1) net of:• the shutdown of Brindisi coal plant,

groups n.3 and 4 of San Filippo del Melafuel oil plant and group n.1 of CassanoCCGT plant (thermoelectric plants)

• the deed for the non-proportional partialdemerger of Edipower (Udinehydroelectric plants except from Ampezzoand Somplago)

(2) - San Filippo del Mela fuel oil plant hasbeen contracted by Terna in asymmetricregulation mechanism for the 2017-2021period;- Monfalcone coal plant phase out willoccur in March 2025 - Expiry date for theAIA authorization (AutorizzazioneIntegrata Ambientale)

(3) Incentivized capacity under feed-in tariffscheme: more than 400 MW until 2018;around 200 MW in 2019-2027 period

(4) Almost entirely incentivized under ContoEnergia mechanism until 2030-2032

GENERATION & TRADINGELECTRICITY GENERATION PORTFOLIO

COGENERATION & DISTRICT HEATING PORTFOLIO


A2A CONCESSIONS PORTFOLIO


(1) Extension of the temporary continuation regime until 12/31/2017 pursuant to RegionalCouncil Decrees

(2) Except from Boscaccia and Premadio II (total capacity of ~80 MW) expiring in 2037 and 2043respectively

Back to Index

10

GENERATION – Hydroelectric PlantsENVIRONMENT

DISTRICT HEATING

NETWORKS


A2A MARKET POSITION IN TERMS OF BUSINESSES AND EBITDA

A2A is well positioned in its main businesses, leader in district heating and in waste-to-energy activities

Our WorldBenchmarking

Sources: AEEGSI Annual Report, companies data, internal analysis.

2016 EBITDA

(source: FY 2016 companies’ presentations)

A2A: the highest EBITDAamong local utilities

Local

utilities

11

Back to Index

(1) 2016 figures do not include LGH


NETWORKS - REGULATORY SCENARIO

ELECTRICITY

5th Tariff regulatory period: 2016-2023 (8 years)• Tariff not linked to change in unit volumes consumption• Shift from input-based to output-based model as of 2016 and Totex mechanism (optimisation

of opex and capex) as of 2020• WACC: in 2016-2018, 5.6% (distribution, metering); additional remuneration related to

innovative projects and energy efficiency improvement• Gradual approach to the extension of asset life• Price cap: 1.9% (distribution), 1% (metering). The potential extra-efficiencies achieved in the

3rd and 4th regulatory periods are to be shared 50-50 with the consumer by 2019• Interim reviews: some WACC parameters (3 years) - see box

GAS

4th Tariff Regulatory period: 2014-2019 (6 years)• Tariff not linked to change in unit volumes consumption• WACC: in 2016-18, 6.1% (distribution), 6.6% (metering)• WACC is applied either to RAB or to VIRAEEGSI

(1) - for new ATEM’s entrants (so-called"asymmetric regulation")

• Price cap: up to 2016 1.7% for distribution and 0% for metering. Price cap reduced to 0% in thefirst 2 years of ATEM’s

• Interim reviews: price cap (3 years) and some WACC parameters - see box

WATER

Regulatory Body: the Energy Authority (AEEGSI)

NETWORKS - REGULATORY FRAMEWORK

Our WorldRegulatory Framework

In December 2015 AEEGSI defined the WACCremuneration for the regulated energynetworks, effective from 1 January 2016. Thecommon parameters are set for gas andelectricity, excluding those specific of eachsector, such as beta and D/E.

• WACC is real pre-tax allowed return.• WACC regulatory period lasts 6 years (2016-

2021)• The interim review is fixed every 3 years for:

Risk Free Rate; Country Risk Premium(2);Inflation used to calculate “F” factor; Gearing(value more in line with those used by otherEuropean regulators), Tax Rate according tothe annual Stability Law

ELECTRICITY GAS WACC reform

(1) VIRAEEGS: Asset residual value («valore industrialeresiduo») - as recognised by AEEGSI for tariffs purposeand calculated in compliance with the guidelines setby the Ministerial Decree 226/11 and with theResolution 19/2016 - DIUC, is equal to the capitalexpenditure necessary to rebuild anew the assets,depreciated due to use and obsolescence (on thebasis of regulatory asset useful lifes).

(2) only if there is a more than 20% deviation in theaverage spread between 10-year government bondsof Italy and Germany vs the previous period

(3) The figure is calculated as the sum of cost of equity,cost of debt, gearing, recognized financial costs ("OF")and fiscal costs ("Ofisc")

12

2nd Regulatory period: 2016-2019 (4 years)• Allowed revenues based on full recovery cost subject to efficiency and capped in terms of tariff

growth• Regulatory matrix with six different tariff schemes, linked to the need for new investments, the

evolution of underlying costs due to consolidation or improvement in quality of service and Opex percapita

• Fixed annual maximum tariff increases - ranging from 5.5% to 9%, different for each of the six tariffschemes assigned at Local Authority Level (EGA)

• Overall return equal to 5.3%(3), with an additional 1% extra return for investments made from 2014• Introduction an X-factor equal to 0.5% to promote higher efficiency on internal Opex• Interim review: RAB and variable costs (2 years); assumptions on financial costs and taxation can be

modified every 2 years if there are "significant changes"

Back to Index

This information was prepared by A2A and it is not to be relied on by any 3rd party without A2A’s prior written consent. 13

NETWORKS – GAS DISTRIBUTION TENDERS

• Tenders for the assignment of the gas distribution services have to be carried out only for ATEMs (Aree Territoriali Minime, i.e., Minimal Local Areas), which are clusters of municipalities(175 in the whole national territory) established by the Ministry for Economic Development

• The first tenders started in 2016 and the last ones are expected to close in 2019. Consequently the first service management contracts for ATEM will be active as of the second half of 2017• Each concession will be granted for 12 years

Our WorldRegulatory FrameworkBack to Index

(1) According to DL n.210/2015 converted into Law n.21/2016. In case the municipalities do not respect procedures to start gas auctions, Regional governments would take substitute powerPublic tenders deadline could be delayedSources: A2A internal elaboration based on Utilitalia data


ACQUISITIONS & DISPOSALS - TRACK RECORD

Our WorldMajor Transactions

Back to Index

14


2017-2021 STRATEGIC PLAN IN A NUTSHELL

Our WorldStrategic PlanBack to Index

Strategic Plan Guidelines

15

RELAUNCHGrowth in environment,

smart networks and energy services

Focus on low-riskbusinesses

Active role in the energymarket transformation

Flexible fleet to serveshortening EU markets

Re-alignmentwith EU Winter Package

Development by adjacencies

REGENERATION RESHAPEBuying options

in smart cityand green economy

From pilot projectsto market solutions

FOCUS TRANSFORM

Waste, Retail and Networks to lead the growth

More options for generation and a more conservative energy scenario

Resilience of net income growth to commodity prices

Dividend target of 7.5 €cent in 2019 confirmed

Positive free cash flow generation with increasing Capex and dividends

Key takeaways 2017-2021 NO LONGERA GEN.CO.

Growth mainly driven by non-generation

businesses

Higher option value from generation

assets and Winter Package

Strong CAPEX increase in regulated/

quasi-regulated markets

Annual investments 50% higher than past three

years’ average

Further optimization from operational

excellence

Local aggregations, M&A, RES/DER

and other projects to strengthen A2A

positioning and to mitigate risk

Updated Project Pot

BOOST IN BUSINESSES

WITH PROVEN TRACK RECORD

ROOM FORUPSIDES

OUR FUTURE IS SUSTAINABLE, GREEN, OPEN, SMART

ACCELERATE

DISCIPLINE DIALOGUE DIGITALOperational excellence

project adoption

Further deleveraging, withhigher Capex and DPS

Dividend target of 7.5 €cent in 2019 confirmed

Extension of multi-stakeholder forum and territorial sustainability reports

Sustainability targetin management MBO

People: ageing policy, welfare, managerial development, talent

management, employer branding

Further Business Unitsprocess digitalization

New HR ERP

Strong fiber development

New IT and digital services to municipality

Strong investments in automation

A2A: what kind of company going forward?


Other 2021 targets:

• Net Income 470 €M • Net Financial Position 2.5 €Bn

(1.8x NFP/EBITDA)

2017-2021 STRATEGIC PLAN - MAIN TARGETS

Our WorldStrategic PlanBack to Index

16

1,135*

1,380

66

422

263

141

268

78 51 3434 6

31** 12

97**

457

341

192

301

22%

13%

2017 WASTE ENERGYRETAIL

NETWORKSAND

DISTRICTHEATING


SMART CITY

EPCG OTHER 2021 2021REGULATED /FREE MKT MIX

REGULATED

QUASI REGULATED

MERCHANT LOW VOLATILITY

MERCHANT HIGH VOLATILITY

OTHER

EPCG

NETWORKS


WASTE

ENERGY RETAIL

SMART CITY

BYBU

BYMIX

+245

- 34- 22

8

14

€M

30%

35%

M&A

DEVELOPMENT

MAINTENANCE

MANDATORY

2017 - 2021TOTAL CAPEX

2,750

3%

57%

36%

5%


2,750

9%

47%

25%

8%

6%

1%

2%

GEN.& TRADING

RETAIL

WASTE

DISTRICTHEATING

NETWORKS

CORPORATE

EPCG**

1% SMART CITY


2,750

12%

34%

1%

53%

MERCHANT

MERCHANT LOW VOLATILITY

QUASI REGULATED

REGULATED

€M

2017-2021EBITDA

2017-2021CAPEX

@More in-depths and documentsavailable on A2A website.Strategic Plan: https://www.a2a.eu/en/investors/presentations-conference

*New 2017 Guidance after 9M’17:

• Reported EBITDA revised upward to ~1,200 €M

• Ordinary EBITDA, excluding 55 €M one-offs, is equal to ~1,145 €M

• Free cash flow at ~100 €M

(**) Put option on EPCG was exercised in July 2017.




INDEX

Our Results Our ResponsibilitiesOur World

@

Consolidated Results- Consolidated Income Statement 18- Capital Employed and Sources of Financing 19- Consolidated Balance Sheet 20- Consolidated Net Financial Position 21- 2016 Quarterly Accounts 22

Operating Results- Environment 23- Energy Retail 24- Networks and Heat 25- Generation & Trading 26- Other services and Corporate 28

Debt- Financial Strategy 29- Group Debt Structure 30- Bonds and EMTN Programme 31

Risk Management- A2A Group Risk Management 32

17

More in-depth, updates and documents available in the following website sections• Operating and Consolidated results: https://www.a2a.eu/en/investors/financial-reports• Debt: https://www.a2a.eu/en/investors/debt• Risk Management: https://www.a2a.eu/en/investors/strategy

https://www.a2a.eu/en/investors/financial-reports

https://www.a2a.eu/en/investors/debt

https://www.a2a.eu/en/investors/strategy


Our ResultsConsolidated Results

CONSOLIDATED INCOME STATEMENT

Note: Group net income adjusted for the impact ofextraordinary items: 2016 = 377 €M; 2015 = 278 €M;2014 = 175 €M; 2013 = 156 €M; 2012 = 116 €M;

Back to Index

18

Mandate for the legal audit of the accounts for theyears from 2016 to 2024The AGM called On 11 June 2015 the AGM conferred themandate for the legal audit of the accounts for the yearsfrom 2016 to 2024 to Reconta Ernst & Young S.p.A..

(1) 2016 figures restated after the completion of the Purchase Price Allocation (PPA) process on LGH Group assets, except from «provisions» and «asset writedowns» items


Scope of consolidationThe consolidated Annual Financial Report at 31/12/2016 includes the figures ofthe parent A2A S.p.A. and those of the subsidiaries over which A2A S.p.A. exerciseseither direct or indirect control, even if the holding is less than 50%. In addition,companies in which the parent exercises joint control with other entities (jointventures) and those over which it has a significant influence are consolidatedusing the equity method.Changes in the scope of consolidation• Following the purchase by Aprica S.p.A. on 20/04/2016, of the 64% of the

investment in LA BI.CO DUE S.r.l., a company active in urban waste services inthe Province of Brescia, the latter was fully consolidated at 31/12/2016. Inaccordance with the provisions of IFRS 3, at 31/12/2016, the Group completedthe Purchase Price Allocation process, allocating to the portfolio of clients thedifference between the amount transferred, measured in accordance with IFRS3, and the net fair value attributed to assets acquired and liabilities undertaken.

• On 20/07/2016 A2A Ambiente S.p.A. finalized the acquisition of 100% of RI.ECO-RESMAL, Group active in the collection, sorting and recovery of waste in thehinterland of Milan; the latter has been consolidated with the line-by-linemethod and the Annual Report at 31/12/2016 reflects the Purchase priceallocation activities, following which the difference between the price paid andtransferred, valued in accordance with IFRS 3, and the net fair value attributedto the assets acquired and liabilities undertaken of RI.ECO-RESMAL wasallocated entirely to the portfolio of clients of the acquired perimeter on thedate of first consolidation.

• Following the purchase by A2A S.p.A., which was finalized on 05/08/2016, of51% of the investment in the Lombardy multi-utility LGH, at 31/12/2016, thelatter was fully consolidated. Based on the provisions of IFRS 3, in the AnnualReport at 31/12/2016, the transaction was accounted for by fully allocating thedifference between the price paid and fraction of Equity of LGH on the date offirst consolidation to the item Goodwill pending the completion of PurchasePrice Allocation.

• On 20/10/2016, the acquisition was finalized of 75% of the share capital ofConsul System S.p.A., the main independent Italian ESCo (Energy ServiceCompany), with the aim of creating operational synergies and developing newproducts and services; as a result of this transaction, the Group obtained controlof the company and therefore at December 31, the latter has been fullyconsolidated. At 31/12/2016, the Purchase price allocation activity was notcompleted as required by IFRS 3 and in the Annual Report, the differencebetween the price paid and fraction of Equity of Consul System S.p.A. wasentirely attributed to Goodwill.

• Lastly, the shareholding held by A2A Ambiente S.p.A. in Bellisolina S.r.l.,previously fully consolidated, was reclassified to the item “Non-current assetsheld for sale”, in anticipation of its sale, which was finalized in late January2017.


CAPITAL EMPLOYED AND SOURCES OF FINANCING

(1) 2016 figures restated after the completion of the Purchase Price Allocation (PPA) process on LGH Group assets.

(2) Net of balances included in net financial position

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19



CONSOLIDATED BALANCE SHEET

(1) 2016 figures restated after the completion of the Purchase Price Allocation (PPA) process on LGH Group assets.(2) Book value equal to the Value of the Put Option exercised by A2A in July 2017. Net Present Value equal to 215 €M

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20

At 31 December 2016 A2A S.p.A. reserves available for distribution to shareholders amounted to 214,940,217 euro, of which to fiscal moderate suspension equal to euro 124,783,022.


Business outlook for operations – update after 9M 2017 results (November 2017)During the first 9 months of 2017 important results were achieved for each of the objectives set in the 2017-2021 Strategic Plan presented at the beginning of April 2017. In September 2017 an initialacquisition of 18 solar energy production plants was made (for a total of 17MW of installed capacity) – which was followed by another one in October, for a further 18MW. The Group is currently assessingfurther potential acquisitions in this sector. As of July 1, 2017, EPCG ceased being fully consolidated in order to be consolidated at equity. The excellent results recorded in the first 9 months of 2017 and theextension of favourable conditions in the energy markets of reference – expected to continue also in the fourth quarter based on the current forward curves – allow to be optimistic about the full yearfinancial results. In particular, it is considered reasonable to expect the Group EBITDA to reach approximately 1,200 €M, higher than stated in the previous guidance, mainly thanks to the excellentperformance expected in the Generation and Trading BU. With reference to the Group Net Financial Position, it should be noted that the result expected for the end of 2017 will be positively influenced bythe generation of Free Cash flow expected from ordinary activities (around 100 €M), though it will suffer from the effects, set to rise, deriving from the exclusion of EPCG from the full consolidationperimeter - already highlighted in the previous guidance document (equal to a positive net financial position of 206 €M at June 30, 2017) - and from the first consolidation of the NFP of the acquiredcompanies in the renewable energy sector (34 €M at September 30, 2017), in addition to the transaction made in October (around 40 €M) and those that will potentially be completed by end of 2017.


CONSOLIDATED NET FINANCIAL POSITION

(1) The net result is stated excluding gains on the disposal of shareholdings; (2) Net of balances with contra-entry in equity

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21

Business outlook for operations (April 2017)The year 2017 started with market conditions(energy scenario, average temperatures) generallysatisfactory in spite of the scarce water resources,both in Italy and in Montenegro. On April 3, theGroup presented its 2017-2021 Business Plan that,despite the continuity of strategic direction withprevious plans, has introduced important changes,most notably the acceleration of investments inthe Environment and Networks Business Unitsaimed at transforming A2A into a multi utilityoriented more to the provision of services to localcommunities and less to conventional electricitygeneration. The execution of the Strategic Planwill be the main commitment of the company,expected during the year also upon renewal of theBoard of Directors and company TopManagement, whose expectations regarding theeconomic-financial performance for the year aregood: EBITDA is expected to range between 1.12and 1.15 €Bn (down from 2016, year howeverfavoured by more than 120 €M of non-recurringincome) ensuring a net profit in line with or higherthan as reported in 2016.



2016 QUARTERLY ACCOUNTSBack to Index

22

(1) 2016 figures restated after the completion of the Purchase Price Allocation (PPA) process on LGH Group assets.


Our ResultsOperating Results

DescriptionThe Environment Sector comprises the activities relating to the entire waste management cycle. These activities are briefly described below:• Collection and street sweeping: street cleaning and the collection of waste for transportation to its destination;• Treatment: an activity that is carried out in dedicated centers to recover or convert the waste in order to make it suitable for the recovery

of materials;• Disposal: this involves the final disposal of urban and special waste in combustion plants or landfills, where possible recovering energy

through waste to energy or the use of biogas.

ENVIRONMENTOPERATING REVIEW

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23

(1) Investments in 2016 do not include the price paid for the acquisition of the investments in RI.ECO, RESMAL and LA BI.CO DUE for approximately 23 million euro.(2) Quantities at the plant entranceOther notes – LGH: it is noted that the figure of FTE refers to the average of the reporting year, while labour costs are related only to the five months of consolidation (from August 2016).



DescriptionThe activities of the Commercial Business Unit Sales are aimed at the retail sale of electricity and natural gas to customers in the free marketand sale to customers served under protection scheme.

ENERGY RETAILOPERATING REVIEW

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24


DescriptionThe activities of the Networks and Heat Business Unit mainly consists of the technical and operational management of networks for thedistribution of electricity, the transport and distribution of natural gas and the management of the entire integrated water cycle (water captation,aqueduct management, water distribution, sewerage network management, purification). It is also aimed at the sale of heat and electricityproduced by cogeneration plants (mostly owned by the Group), through district heating networks and ensures the operation and maintenance ofcogeneration plants and district heating networks. Also included are activities relating to the management service of third-party heating plants(heat management services), public lighting, traffic regulation systems, the management of votive lights and systems design services.


NETWORKS AND HEATOPERATING REVIEW

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25

(1) Investments in 2016 do not include the price paid for the acquisition of the shareholdings in Consul System S.p.A. for approximately 15 million euro.

(2) Figures include the production of Lamarmora, Famagosta, Tecnocity and other plants(3) Figures include heat production of WTE plants and Cassano thermoelectric plantOther notes – LGH: it is noted that the figure of FTE refers to the average of the reporting year, while labour costs are related only to the five months of consolidation (from August 2016).



DescriptionThe activities of the Generation and Trading Business Unit are related to themanagement of the generation plant portfolio (total installed capacity of8.8GW) of the Group.• The “Generation” sector has the specific goal of maximizing plant

availability and efficiency, minimizing operating and maintenance (O&M)costs.

• The “Trading” sector has the task of maximizing the profit from themanagement of the energy portfolio through the purchase and sale ofelectricity, fuel (gaseous and nongaseous) and environmental certificateson domestic and foreign wholesale markets. The Trading Business Unitalso includes the activity of trading on domestic and foreign markets ofall energy commodities (gas, electricity, environmental certificates).

GENERATION & TRADINGOPERATING REVIEW

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26


(1) Equal to the ratio between reserve and requirement. Percentage calculated by using higher reservebetween winter and summer periods. For 2016 the ratio is calculated using requirement and reserve atthe requirement peak (12 July 2016).

(2) The yearly figures refer to the thermal year(3) Italian National Price of the electricity(4) CCGT Gas Cost based on gas at virtual trading point (PSV) with 51% efficiency (previously 53%). The

figures include transport costs.(5) GC - average system cost until 2015, Feed-in tariff value as of 2016(6) Spark spread net of environmental costs (GC + CO2)(7) Dark spread net of environmental costs (GC + CO2). The environmental costs for a coal plant are equal

to: 1.4 €/MWh (2012); 8.52 €/MWh (2013); 8.1 €/MWh (2014); 7.5 €/MWh (2015); 5.3 €/MWh (2016).Coal plants efficiency is equal to 35%. The figures include logistics costs.

GENERATION & TRADINGSCENARIO


Prices and marginsOffer and Demand

Note: the electricity installed capacity figures refer to a gross capacitySources: Terna, Snam and ISTAT

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27



DescriptionThe following is a brief description of the activities carried outby this sector:• Corporate: guidance, strategic direction, coordination and

control of industrial operations, as well as services tosupport the business and operating activities (i.e.administrative and accounting services, legal services,procurement, personnel management, informationtechnology, communications etc.) whose costs, net ofamounts recovered from accrual to individual business unitsbased on services rendered, remain the responsibility of theCorporate;

• Other services: activities relating to video-surveillance, datatransmission, telephony and internet access services.

OTHER SERVICES AND CORPORATEOPERATING REVIEW

Note on accounting standardsThe annual report of the A2A Group at December 31, 2016 has been prepared in accordance with the International Financial Reporting Standards (IAS/IFRS) issued by the International AccountingStandard Board (IASB) and approved by the European Union.Given the fact that the reporting standars has been undergoing many changes, figures reported in the past may differ from the ones you find here - which reflect the latest version of IAS/IFRS. You findmore detailed explanations in the published reports.

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(1) Including A2A Smart City (EBITDA equal to 6 €M)Other notes: LGH: it is noted that the figure of FTE refers to the average of the reporting year, while labour costs are related only to the five months of consolidation (from August 2016).


FINANCIAL STRATEGY

Our ResultsDebt

FLEXIBILITY• provide the Company with the right instruments to take potential

market opportunities, in a prompt and efficient way

DIVERSIFICATION• optimize financial sources and assess/select at any time the most

economical and/or best available

LIQUIDITY• maintain an adequate liquidity cushion in terms of cash and

available committed lines to cover planned cash outlays and absorb low-probability events

RISK MANAGEMENT• manage in a proactive way the interest risk with the main purpose

to mitigate the effects of market volatility

1.

2.

3.

4.

A2A financial strategy is focused on debt and cost reduction, while maintaining a high average debt duration and adequate financial flexibility

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29


GROUP DEBT STRUCTURE

• Total gross debt: 3.8 €Bn• Average cost of debt: ∼3.5%• Average maturity: 5.4 yrs• 1.1 €Bn liquidity position, of which:

- 0.4 €Bn cash- 0.7 €Bn undrawn committed lines and loans

STATISTICS RELATIVE TO DEBT AT 31/12/2016

Our ResultsDebt

DEBT BREAKDOWN

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CURRENT CORPORATE CREDIT RATING

Standard & Poor’s

BBB/A-2

Outlook Stable

Moody’s

Baa3

Outlook Stable

30


BONDS AND EMTN PROGRAMME

(1) Date from which interest is paid; (2) Last date on which interest accrues; (3) The current bond rating – where applicable, is different from the issue rating and is equal to the M/L term rating assigned to the Company by S&P and Moody’s.

Our ResultsDebt

• On 19 September 2012 the Management Board of A2A approved the adoption of a Bond Issue Programme (Euro Medium Term Note Programme) for amaximum amount of 2 billion euro, listed on the Luxembourg Stock Exchange

• On 6 November 2014 the Board of Directors of A2A approved and authorised the update of the Programme and the increase of the total amount of notes whichmay be issued thereunder to 4 billion euro. The Board authorized the issue of notes up to an aggregate amount of Euro 1 billion, by December 31, 2016

• On 10 November 2016 the Board of Directors of A2A approved a framework resolution for the issue of notes to be issued under the EMTN Programme in one ormore series or tranches, in one or more times, up to an aggregate amount of Euro 1 billion, by December 31, 2019

• The adoption of the EMTN is part of the A2A Group’s medium-term financial strategy, which is aimed at lengthening the average life of the Company’soutstanding debt and at maintaining an adequate financial flexibility in order to efficiently manage the future debt maturities, to support the Company’s rating

• The bonds to be issued on the basis of the Programme are placed to institutional investors• Euro Bonds 2027, 2025, 2022, 2021 and 2019 and Private Placements 2023 and 2024 were issued under the EMTN Programme

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31


A2A GROUP RISK MANAGEMENT

Our ResultsRisk Management

The risk management model – process and activitesThe A2A Group has a risk assessment and reporting process which is based on the Enterprise Risk Management method(1) and on the best risk management practice, incompliance with the Corporate Governance Code as updated by Consob in 2014. The model, operative since 2010 and far from being a static reference, is subject to periodicrevision consistent with the evolution of the Group and the context in which it operates. The methodology adopted is characterized by the following steps:

1. Regular identification and the updating of the risks to which the Group is exposed2. Risk assessment process carried out through the involvement of all Group structures, risk owners and risk controllers, which includes:

• update of risk scenarios (specific events in which risk can materialize) related to activities• risk scoring , based on the probability of occurrence and the impact on the life of the Group (quali-quantitative measurement)• establishment of the relative controls and mitigation plans

3. Definition of risk priorities and risk reporting submitted to the top management for approval4. Balance sheet disclosure

ObjectivesThe methodology adopted is modular and leverages on the fine-tuning of the experience gained and methods of analysis used: on the one hand, it aims to develop the riskassessment further with specific reference to the consolidation of the mitigation process and on the other to develop and integrate risk management activities in businessprocesses. This evolution is carried out consistent with the gradual increase in the awareness of management and the business structures about risk management issues,achieved among other things through the use of specific training support provided by Group Risk Management.

(1) This method followsthe framework set by theCommittee of SponsoringOrganizations of theTreadway Commission(CoSO report)

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INDEX

Our Results Our ResponsibilitiesOur World

@

Sustainability

- A2A Commitment to Sustainability 34

- A2A Sustainability plan goals 35

- Main Statistics and Performances 36

Research and Innovation

- Research and innovation projects 37

Corporate Governance

- Traditional Governance Model 39

- Governance Model – Board Members 40

Investors

- A2A shareholding structure 41

- Stock Exchange – A2A is one of the Blue Chips 42

- Dividends 43

- Shareholder information 44

33

More in-depth, updates and documents available in the following website sections• Sustainability: http://www.a2a.eu/en/sustainability/• Corporate Governance: https://www.a2a.eu/en/governance/• Investors: http://www.a2a.eu/en/investors/shares

https://www.a2a.eu/en/investors/publications-services/financial-calendar

http://www.a2a.eu/en/sustainability/

https://www.a2a.eu/en/governance/

http://www.a2a.eu/en/investors/shares

https://www.a2a.eu/en/investors/publications-services/financial-calendar


A2A COMMITMENT TO SUSTAINABILITY TOSTRENGTHEN

Our ResponsibilitiesSustainability

34

Targets• Quantitative and

measurable KPIs• Medium to Long Term

Governance and Tools• Sustainability Policy • Integrated Report: A2A 2016 Integrated Report has been prepared in accordance with the Sustainability Reporting Guidelines of Global Reporting Initiative (GRI)

version G4, level «in accordance-core». The Report considers six forms of capital (Human, Financial, Relational, Intellectual, Manufacturing and Natural), in accordance with the International Integrated Reporting Council (IIRC) framework. The 2016 Integrated Report was approved by A2A AGM held in May 2017.

• Territory and Sustainability Committee: the Committee has the task to assist with information, advice and proposals the Board of Directors, the Chairman and CEO of the Group in defining guidelines, orientations and initiatives

• Code of Ethics• Organisation, Management and Control Model (according to 231/01 Law)• Policy for Quality, Environment and Safety and Systems for the Management of Quality, Environment and Safety

Sustainability in practice• Stakeholder Engagement: 240 engagement initiatives in 2016, with external

and internal stakeholders. The forumAscolto programme, the multistakeholderfeedback initiative launched by A2A in 2015 aimed at understanding the needsof the communities where it operates, continued in 2016

• Materiality Evaluation: A2A Group materiality matrix was updated• Sustainability Issues for Risk Management: Climate Change impacts• Investments for Sustainability: some examples Reconversion of the San Filippo del Mela plant in Sicily: world’s first “STEM”

thermodynamic solar plant Extraordinary maintenance of the Silla2 waste-to-energy plant: 15% increase in

thermal production Start-up of the new Giussago bioreactor Reduction of Heavy Fuel Oil (HFO) deposits Smart Metering project for smart gas meters Replacement of the lighting points with L.E.D technology almost completed in

Milan, Brescia, Bergamo and Cassano D’Adda Energy efficiency interventions on the integrated water cycle of Brescia Completion of the first stage of development of the 3 inter-connected macro

operating systems in Milan district heating networkA2A is a voluntary member of Global Compact, the UN initiative for the promotionof a culture of corporate citizenshipFor more, visit us @ http://www.a2a.eu/en/sustainability

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Piano Industriale 2015-2019

GOALS and TARGETS - 2030

ACTION and ENABLING DRIVERS - 2020

30 actions by 2020

GOALS and TARGETS 2030

ACTION and ENABLING DRIVERS - 2020

The sustainability policy and the 2030 commitments

SDG vs.

VALUE CHAIN

CIRCULAR ECONOMY

DECARBONIZATION SMART GRID AND SERVICES

PEOPLEINNOVATION

Develop a sustainable waste

management approach for the entire life cycle

Contribute to the achievement of the

national and European objectives

to reduce GHG emissions

Increase the reliability of grids and services by increasing

the investments in technological innovation

Actively contributing to community welfare and

improved working conditions

OUR2030PATH2030

10/17 goals

http://www.a2a.eu/en/sustainability


A2A SUSTAINABILITY PLAN GOALS

Our ResponsibilitiesSustainability

35

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CIRCULAR ECONOMY

DECARBONIZATION

SMART GRID AND SERVICES

PEOPLEINNOVATION

2016 results2020 goals

99.0%

67.0%

80.0%

56.2%

84%

98.86%Urban waste sent for recycling or energy recovery

Separated waste collection in the communities served

Impact of the recovery capacity of the material in the Group's plants on the urban waste collected

392.5

-234

1,260

Carbon intensity in electricitygeneration (gCO2/kWh)

CO2 avoided thanks to the extension of the district heating network (ktonnes/year)

Green electricity sold (GWh)

417

769

-161

The CSI Total in “multi-client of reference” surveys (CERVED DataBank) with a value never below

90%

customers with online A2A Energia services400,000

Million euro invested in the Smart City area10

268,818

1.9

92.4%

regional workshops with 30 actions to be implemented

inspections/year at the roadwork sites of the A2A Group

Target employees involved in SmartWorking projects

15

4,000

20%

2 workshop (11 actions)

1,406

5%

2020 goalalready achieved


(4) 2014 and 2015 figures have been modified due to a change in the calculation methodFrequency Rate = n° accidents x 1,000,000 : hours workedSeverity Index = n° days of absence x 1,000 : hours workedOccurence Rate = n° accidents x 1,000 : workers

MAIN STATISTICS AND PERFORMANCES

Our ResponsibilitiesSustainabilityBack to Index

* Restated figures

(1) 2014 Milan figures and Group total Index have been restated(update of temporary data). Municipality of Como is included asof this year.

(2) Other municipalities in the Provinces of Bergamo, Brescia,Mantua, Milan and Varese. The index of collection calculated asweighted average

(3) Source: ISPRA

Note on consolidation of sustainabilitystatistics: EPCG, Consul System S.p.A.,LA BI.CO DUE S.r.l., the RI.ECO-RESMAL S.r.l. group and the LineaGroup Holding S.p.A. group areexcluded; Edipower data included asof 2013


RESEARCH AND INNOVATION PROJECTSFOCUS ON SMART GRIDS AND SMART CITIES

Our ResponsibilitiesResearch & Innovation

Smart Domo Grid

• Smart Domo Grid is a smart grid solution with demand/response functions that can allow for the interaction of the electricity gridwith the devices controlling household appliances and energy storage devices, taking A2A directly into the future of the “SmartCity”. In Brescia, the experimentation involved 21 families with new appliances, tools and training for their use

• The Smart Domo Grid project was co-financed by the Ministry of Economic Development, with A2A as project leader partneringthe Department of Energy of Milan “Politecnico” University and Whirlpool.

IDE4L (Ideal Grid for All)

• The Ide4l project is focused on the function of electricity networks, dealing with the matter of grid operative management withthe aim of improving quality of service, it integrates and manages the network of energy obtained from renewable sources. Theproject covers extremely technically complex areas: Congestion management, Distributed Energy Resource (DER) – DistributedGeneration (DG) integration, Power Quality and DER. Co-financed by the EU

• Projects for AEEGSI Resolution no. ARG/elt 39/10 are being completed as A2A has obtained the AEEGSI’s approval to carry out twopilot projects: the first regards a primary cabin in Milan (Lambrate) and the second a primary cabin in Brescia (Gavardo) withdifferent characteristics in the underlying network. Both set out to overcome the present limitations of the interface protection ofgenerators connected to the medium-voltage grid, to introduce innovative voltage regulation functionalities and, potentially, tocarry out local dispatch, only reporting summarized data to Terna of the production put into the MV grid.

• Co-financed by AEEGSI

Pilot projects promoted by the Energy Authority

• WFM (Workforce Management) focuses on the integration of the management of physical assets with the mapping system, alsousing GPS technology for the localization of facilities and operational teams available in the area, equipped with mobile devicesfor more effective and efficient management of operations.

• IDMS (Integrated Distribution Management System) is a significant step forward in the electricity grid management during theconduction and planning stages. Its primary objectives also include the interoperability between the multi-service room in Bresciaand the electrical control room in Milan, ultimately ensuring prompt disaster recovery between the two in the event ofunavailability of one of the two sites. IDMS will also oversee the management of the public lighting network (LED lighting) and thesupervision and control system, with the aim of reducing energy consumption.

WFM & IDMS network

managementsystems

S.C.U.O.L.A. (Smart Campus as Urban Open Labs)

• New Energy Manager System optimizing energy consumption in presence of renewable energy production and storage andinnovative smart electric veichles’ charger integration

• Energy demand/response function between final users and DSO;• Energy buildings real-time data collection for statistic analysis and final user awareness• Prototype of hybrid photovoltaic panel producing electricity and heat (testing energy storage integration)• Co-financed by Regione Lombardia. Project and technological partners: Politecnico of Milan, University of Brescia, ADB, Italdata,

GFM Net, Coster, CPL Concordia, SIEL, CEL, LU-VE

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Networks & Heat

Corporate


Our ResponsibilitiesResearch & Innovation

B.S.L. (Brescia Smart Living)

• Design and development of an innovative smart city architecture: new telecommunication hybrid network for Internet of Things;data collection from smart meters and smart sensors indoor and outdoor; smart lighting; smart gas meter with innovative features;Integrated home energy management services; platforms providing info and services at city, district, end user level; services forsecurity and safety of operators, for monitoring and support fragile people.

• Co-financed by the Ministry of Education, Universities and Research. Academic Partners: Enea, University of Brescia. IndustrialPartners: ST Microelectronics, Beretta, Cavagna, TeamWeare, FGE, Iperelle, Cauto

E-Moving project – Electric Car

• Development and field test of a public and private electric vehicles charging infrastructure mainly in Milan and Brescia Chargingservices for final user and support to car sharing that use electrical vehicles (provided by Renault)

• Charging points actually activated : 100 public, 150 private. About 600 final users involved• In May 2016 A2A, in collaboration with Nissan, opened in Milan the widest Italian Fast Charge Network: 12 poles able to charge up to

50 kW DC (Chademo/Combo) and 22 kW AC

• Digital and data driven program to overcome some of the key environmental challenges facing Cities: carbon emissions frombuildings and transport and air quality. The objectives are 1) actively engage citizens in the development of mechanisms ofparticipation 2) co-design solutions for the retrofit of buildings 3) the integrated management of energy systems, 4) electric mobility5) the new services linked to smart lighting. IT platforms will be developed to gather information from the field and turn them intoservices to citizens.

• Co-funded by H2020 program. Total budget around € 28M. 34 Partners led by The Greater London Authority. A2A participates in withUnareti and A2A Smart City. Core cities: Milan, London and Lisbon. Follower cities: Bordeaux, Burgas and Warsaw.

Sharing Cities

Home to the charging of electric quadricycles, video surveillance services, Wi-Fi, info points and LED lighting. A2A has sponsored andsupported the installation of these new infrastructures within the city of Milan also to promote private electric mobility and car-sharing.

Digital Islands

E-Waste

• The specific objective of the project was the optimization of recycling of WEEE (Waste Electrical and Electronic Equipment) andincrease of the amount of rare earth and precious metals from the waste collected. The project involved the re-definition of logisticscycles of recovery and use and improvement of existing plants combined with the definition of new treatment technologies.

• Partnership between A2A Ambiente/Amsa and the companies Tecnochimica S.r.l., RE.MEDIA, Stena Technoworld S.r.l., S.E.VAL. S.r.l.,Gaser San Giuliano S.r.l., the research bodies of Politecnico di Milano and Cefriel, in collaboration with the Municipality of Milan andthe Municipality of San Donato Milanese.

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Corporate

Corporate & Smart City

Environment

RESEARCH AND INNOVATION PROJECTSFOCUS ON SMART GRIDS AND SMART CITIES


Our ResponsibilitiesCorporate Governance

TRADITIONAL GOVERNANCE MODEL (AS OF 13 JUNE 2014)

Current Board in charge until 2020 AGM

Current Board in charge until 2020 AGM

The 2017 AGM established the following annual remuneration:• for each member of the Board of Directors (80 €k);• for the Chairman of the Board of Statutory Auditors (130 €k) and for the Effective Statutory Auditors (80 €k).The Board of Directors decided remuneration for the top positions:• a fixed remuneration for the Chairman, the Deputy Chairman and the CEO for their responsibilities;• a variable short-term remuneration for the CEO related to the achievement of the objectives assigned. Further details are shown in the Report on Remuneration

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39

BOD SENIORITY DIVERSITY

http://www.a2a.eu/gruppo/export/sites/default/a2a/en/governance/shareholders_meetings/documents_2016/annual_report_remuneration_.pdf


GOVERNANCE MODEL – BOARD MEMBERS

Board of StatutoryAuditors

Effective auditors(3)

Giacinto Sarubbi(Chairman)

Maurizio Leonardo LombardiChiara Segala

Substitute AuditorsSonia Ferrero Stefano Morri

(1) As per Code of Self-Discipline by Borsa Italiana. All directors except from the Chairman and the Chief Executive Officer are independent as per Article 148 of the Consolidated Financial Act (T.U.F.); (2) The three Committees are pursuant to theguidelines defined by the “Corporate Governance Code” by Borsa Italiana; (3) All members are independent as per Code of Self-Discipline by Borsa Italiana.

Our ResponsibilitiesCorporate Governance

BOD - AGE DIVERSITY BOD - GENDER DIVERSITY BOD – SKILL DIVERSITY

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A2A SHAREHOLDING STRUCTURE AT DECEMBER 31, 2016

Institutional investors: 33.8% of share capital

Geographic breakdown of the institutional investors:

• UK 25.2%

• Luxembourg 18.1%

• USA 17.5%

• Italy 17.1%

• France 7.2%

• Germany 2.5%

A2A SHAREHOLDING STRUCTURE

- Share capital: 3,132,905,277 shares with a par value of 0.52 euro each

- Market cap: 3,853 €M

- Treasury shares: 23,721,421, equal to 0.76% of the share capital

All shares are voting shares, although - as laid down in art. 9 of by-laws -no individual shareholder other than the Municipality of Milan and theMunicipality of Brescia may hold an equity interest exceeding 5% of theshare capital. Should such ceiling be exceeded, the voting right attached tothe shares held in excess of 5% of the share capital may not be exercised.

3-year new Shareholding Pact between Brescia and Milan Municipalitieswas signed on 1 February 2017. The Pact regards 42% of A2A sharecapital.

Retail investors: 12.9% of the share capital

Geographic breakdown:

• Italy 99.8%

• Foreign: 0.2%

57.8% of retail investors are in Lombardy, the region where historically A2A hasbeen more active. Investors from the provinces of Milan and Brescia ownrespectively 26.3% and 12.9% of the total retail shareholding.

The above-mentioned information derives from an internal analysis based on the shareholders register data - updated at 22 June 2016 (i.e., dividend payment date) and classified by the provider.

Number of shareholders: about 82,500

Our ResponsibilitiesInvestorsBack to Index

41

0.8%

3.1%

25.0%

25.0%

46.1%

100.0%46.1%

53.9%

Free Float

Municipality of Milan

Municipality of Brescia

Norges Bank

A2A S.p.A. (treasury shares)

46.1%Total


60

65

70

75

80

85

90

95

100

105

110

A2A FTSE MIB EURO STOXX UTILITIES

0

20.000.000

40.000.000

60.000.000

80.000.000

0,70

0,80

0,90

1,00

1,10

1,20

1,30

1,40

Vo

lum

es

€/s

har

e

Volumes (right-hand scale) Price

Our ResponsibilitiesInvestors

STOCK EXCHANGE - A2A IS ONE OF THE BLUE CHIPS

A2A vs FTSE MIB and EURO STOXX UTILITIESA2A in 2016

(Prices 30 December 2015 = 100)

A2A 2016 figures (Borsa Italiana)

Market capitalisation at December 31, 2016: € 3,853 m

Average capitalisation: € 3,685 m

Average volumes: 11,140,269

Average price: 1.176 €/share

Maximum price: 1.287 €/share

Minimum price: 0.956 €/share

Number of shares: 3,132,905,277

A2A stock is also traded on the following platforms: Chi-X, BATS, Turquoise,Equiduct, Sigma-X, Aquis, BOAT OTC, LSE Europe OTC, BATS Chi-X OTC

Moreover, A2A has been included in the EthibelExcellence Investment Register and in the EthibelPioneer Investment Register.

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Our ResponsibilitiesInvestors

DIVIDENDS

Dividend PolicyThe 2017- 2021 Strategic Plan confirms a dividend policy based on sustainable growth (DPS at around 7.5 euro cents in 2019 and a minimum 60% pay-out ratio in the following years).Dividend taxationDividends no longer attract any tax credit and, depending on who the recipient is, they may be subject to withholding tax at source or, in part,contribute towards taxable income.

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(1) Dividend Yield calculated on annual average share price (2) Pay-out calculated on ordinary income (net of non-recurrent items)

With reference to year 2016, the Shareholders' Meeting approved the distribution of an ordinary dividend of 0.0492 euros for each ordinary share in circulation (corresponding to paid dividends of approximately 153 million euros), up by around 20% compared to the previous year, entirely taken from 2016 A2A S.p.A. net income.


Purchase and disposal of treasury shares: main pointsThe 2017 Shareholders’ General Meeting authorized the Board of Directorsto conduct treasury share purchase and disposal transactions to the extentto which such authority has not been exercised after 2016 AGM:• the maximum number of treasury shares that can be held is 313,290,527,

which is equal to one-tenth of the shares making up the share capital,considering the shares already owned by A2A S.p.A. and by itssubsidiaries;

• treasury share purchases and disposals will be conducted to pursue, in theinterest of the Company and in respect of the principle of equal treatmentof shareholders and of current applicable regulations, objectives such astransactions related to business projects consistent with the strategiesthat the Company intends to pursue, in relation to which the opportunityfor share exchanges may be manifested;

• The authorization to purchase and dispose of the shares will have a termof validity of 18 months starting on the date of the Meeting resolution

• A2A treasury shares were equal to 0.7572% of the share capital at 31December 2016

SHAREHOLDER INFORMATIONShareholders’ meetingsAs laid down in A2A by-laws, the company holds one compulsory Shareholders’ General Meeting peryear. The Annual General Meeting is called by the Board of Directors within 120 days (or 180 daysunder certain circumstances) of the end of the fiscal year. With reference to the procedures for theAGM call, please refer to A2A By-laws and Corporate Governance section of the company website(i.e., Shareholders’ Meetings). This section also contains all relevant documents for the AGM.

American Depositary ReceiptsA2A American Depositary Receipts (ADRs) are traded on the US Over The Counter market (OTC)under the symbol AEMMY. Three unsponsored ADR programs were launched by Deutsche Bank(2008), BNY Mellon (2008) and Citibank (2014) respectively. In all cases, one ADR represents five A2Aordinary shares. Further details are available at websites www.adr.com and www.sec.gov.

A2A Investor Relations policy• Main goal: promote and support the correct knowledge and valuation of the A2A stock by the

financial community, through a communication which is active, transparent, well-timed, constant,correct and not discriminatory

• Core activities:- hold regular meetings (one-to-one and group meetings) with the financial community in Italy and

abroad- arrange conference calls with the management at the time of the release of the Group results- organize International roadshows with the top management for the presentation of important

strategic developments• Blackout period: during the 15 days before the release of the financial resultsThe IR department is not in charge neither of comments about A2A performance in the StockExchange, nor of financial advice about the investment in A2A.

Additional InformationAdditional information about A2A is available at www.a2a.eu. Share price information, previousAnnual Reports and Interim Accounts, press releases and other relevant information can be found inthe Investor Relations section of that site. Comments and suggestions are welcome (email:[email protected]).

DocumentationAnnual Reports, Quarterly and Interim Reports, Sustainability Reports, Corporate Governance Reportand Report on remuneration are available on our website (www.a2a.eu ). They may also be obtained,on request, from the Company Secretary at the company’s registered office or through e-mail [email protected] .

Our ResponsibilitiesInvestorsBack to Index

44

A dividend relating to the financial year 2016 may be payable from 24 May 2017,with ex-dividend date 22 May 2017 (record date 23 May 2017)

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