Interim report on operations March 31, 2011

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(1)via Lamarmora 230 - 25124 Brescia www.a2a.eu. Interim report on operations March 31, 2011. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. INTERIM REPORT ON OPERATIONS – MARCH 31, 2011. CopertinA TRIMESTRALE09_A2A_COPERTINE 14/06/11 19.28 Pagina 1.

(2) Interim report on operations – March 31, 2011. Contents. 0.1 Performance indicators and corporate information 5. The A2A Group at March 31, 2011. 6. Financial Highlights. 8. A2A S.p.A. on the Stock Exchange. 11. Corporate bodies. 13. Significant events during the period. 15. Summary of results, assets and liabilities and financial position of the. 1 A2A Group 22. Significant events after March 31, 2011. 24. Consolidated balance sheet. 26. Consolidated income statement. 28. Consolidated statement of comprehensive income. 29. Consolidated cash flow statement. 30. Consolidated statement of changes in equity. 0.3 Notes to the Interim report on operations 33. General information on A2A S.p.A.. 34. Interim report on operations. 35. Financial statements. 36. Basis of preparation. 37. Changes in international accounting standards. 40. Scope of consolidation. 41. Consolidation policies and procedures. 47. Seasonal nature of the business. 48. A2A Group – Areas of activity. 49. Geographical areas of activity. 50. Results sector by sector. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. 0.2 Consolidated financial statements.

(3) Interim report on operations – March 31, 2011 Contents. 52. Notes to the balance sheet. 69. Net debt. 70. Notes to the income statement. 78. Earnings per share. 79. Significant non-recurring, atypical or unusual transactions. 80. Guarantees and commitments with third parties. 82. Other information. 0.4 Attachments to the Interim report on operations 104. 1. List of companies included in the consolidated financial statements. 106. 2. List of shareholdings carried according to equity method. 108. 3. List of companies included in the consolidated financial statements of the Ecodeco Group. 110. 4. List of companies included in the consolidated financial statements of the Coriance Group. 2 112. 5. List of financial assets available for sale. 115. Results sector by sector. 117. Macroeconomic scenario. 119. Performance of the energy market. 121. Energy Sector. 132. Heat and Services Sector. 135. Environment Sector. 140. Networks Sector. 151. Other Services and Corporate Sector. 153. Outlook for operations. 154. Risks and uncertainties. 0.6 Certification by the Manager in charge of preparing accounting documents 172. Statement of the Manager in charge of preparing accounting documents persuant Art. 154 bis, 2 of D.Lgs. 58/1998. This is a translation of the Italian original “Resoconto Intermedio di gestione al 31 marzo 2011” 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 on the website www.a2a.eu. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. 0.5 Interim report on operations.

(4) WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc.

(5) WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. 0.1. Performance indicators and corporate information.

(6) Interim report on operations – March 31, 2011. The A2A Group at March 31, 2011 A2A Spa. 100.00%. 100.00%. 100.00%. 100.00%. 100.00%. 100.00%. 100.00%. Delmi (3). A2A Trading. A2A Energia. A2A Calore & Servizi. Amsa. A2A Reti Elettriche. A2A Reti Gas. Selene. 50.00%. 70.00%. 33.33%. 98.08%. 100.00%. 100.00%. 100.00%. 100.00%. Transalpina di Energia. A2A Alfa. Lumenergia. A2A Coriance. Ecodeco. A2A Ciclo Idrico. A2A Servizi alla distribuzione. A2A Logistica. 61.28%. 50.00%. 100.00%. 100.00%. 99.97%. 99.98%. 91.60%. 100.00%. Edison (1). Premiumgas. A2A Montenegro. Coriance. Aprica. BAS-SII. Retragas. Mincio Trasmissione. 20.00%. 70.00%. 43.70%. 90.00%. 80.00%. 67.00%. 74.50%. 49.00%. Edipower. Plurigas. EPCG. Varese Risorse (4). Montichiari ambiente. Seasm. Camuna Energia. e-Utile. 100.00%. 94.95%. 39.49%. 60.00%. 100.00%. 90.00%. 48.86%. 21.94%. Aspem Energia. Abruzzoenergia. Rudnik Uglja ad Pljevlja. Proaris. Partenope Ambiente. Aspem (4). ASVT (2). ACSM-AGAM. 50.00%. 50.00%. 23.53%. Ergosud. Asm Novara (3). Metroweb. 50.00%. 7.9%. Metamer. Dolomiti Energia. Activity areas Energy Heat & Services Environment Networks Other Companies. (1) The 61.28% refers to ordinary shares held in Transalpina di Energia (TdE). The actual stake in share capital is 60%. Note that Edison holds 50% of shares in Edipower. (2) 0.38% of these are held via A2A Reti Gas. (3) There are call and put options on a further stake in the company's share capital. (4) There are put options on a further stake in the company's share capital. This table shows the A2A Group's most significant shareholdings. You are referred to attachments 1. 2. 3. 4 and 5 for full details of all shareholdings.. 5. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. 51.00%.

(7) Interim report on operations – March 31, 2011. Financial Highlights (1). Gross operating income Net income. 6. Income statement figures. 1,745 million euro 278 million euro 85 million euro. 01 01 2011 03 31 2011. 01 01 2010 03 31 2010. Revenues. 1,745. 1,662. Operating expenses. Millions of euro. (1,321). (1,267). Labour costs. (146). (129). Gross operating income. 278. 266. Depreciation, amortization provisions and write-downs. (131). (118). Net operating income. 147. 148. Financial balance. (22). (35). Other non-operating income. –. –. Other non-operating expenses. (1). –. Income before tax. 124. 113. Income taxes. (40). (36). Net result from non-current assets sold or held for sale Minorities interests Net income for the period pertaining to the Group Gross operating income/Revenues. Balance sheet figures. 3. 3. (2). (9). 85. 71. 15.9%. 16.0%. 03 31 2011. 12 31 2010. Millions of euro Net capital employed. 8,685. 8,738. Total equity attributable to the Group and minorities. 4,943. 4,845. Consolidated net financial position. (3,742). (3,893). Consolidated net financial position / Equity attributable to the Group and minorities. 0.76. 0.80. Consolidated net financial position / Market cap. 1.04. 1.03. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. Revenues.

(8) Interim report on operations – March 31, 2011 Financial Highlights. Millions of euro Net cash from operating activities. 01 01 2011 03 31 2011. 01 01 2010 03 31 2010. 207. 336. Net cash used in investing activities. (45). (47). Free cash flow. 162. 289. 03 31 2011. 12 31 2010. Share capital (euro). 1,629,110,744. 1,629,110,744. Number of ordinary shares (par value euro 0.52). 3,132,905,277. 3,132,905,277. Number of treasury shares (par value euro 0.52). 26,917,609. 26,917,609. Key indicators. 03 31 2011. 03 31 2010. 1.367 %. 0.964%. 105.19. 77.30. Key figures of A2A S.p.A.. Avarange 6-month Euribor Average price of Brent crude (USD/bbl) Average exchange rate €/USD (*) Average price of Brent crude (€/bbl) (*) Source: Italian Foreign Exchange Office.. (1) The figures serve as performance indicators as required by CESRN/05/178/B. 7. 1.37. 1.38. 76.88. 55.88. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. Financial data.

(9) Interim report on operations – March 31, 2011. A2A S.p.A. on the Stock Exchange. A2A in figures Capitalization at March 31, 2011 (millions of euro). 10,162,566. Average price in the first quarter of 2011 (*). 1.107. Maximum Price in the first quarter of 2011 (*). 1.163. Minimum price in the first quarter of 2011 (*) Number of shares. 1.001 3,132,905,277. (*) euro per share Source: Bloomberg. Main indices on which the A2A share is listed FTSE MIB DJ STOXX DJ EUROSTOXX DJ Italy WisdomTree S&P Developed Ex-US. Ethical indices FTSE4GOOD Global and Europe FTSE ECPI Benchmark Axia Csr and Ethical ECPI Ethical Index Global. Euro and EMU Solactive Climate Change Source: Bloomberg. A2A ranked as a leading business in the Carbon Disclosure Project 2010. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. 8. 3,581. Average volumes in the first quarter of 2011.

(10) Interim report on operations – March 31, 2011 A2A S.p.A. on the Stock Exchange. Shareholders (*). Municipality of Milan 27.5%. Market 37.5%. 9 Carlo Tassara 2.5% Alpiq Holding AG 5%. Municipality of Brescia 27.5%. (*) Quota greater than 2% (updated at March 31, 2011) Source: CONSOB. Rating Current. Short-time rating Outlook Medium/long-term rating. BBB+ A–2 Negative A3. Moody’s Outlook Sources: rating agencies. Negative. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. Medium/long-term rating Standard & Poor’s.

(11) Interim report on operations – March 31, 2011 A2A S.p.A. on the Stock Exchange. A2A in the first quarter of 2011 60,000,000. 1.3. 50,000,000. 1.2. 30,000,000. 1. Volumes. €/Share. 40,000,000. 1.1. 20,000,000. 0.9. 10,000,000. 0. 0.8 Ja n-1 1. ma r-1 1. feb -11. Volume. Price. 10. A2A vs FTSE MIB 1.40 FTSE MIB INDEX. 1.30 €/Share. 1.20 1.10 1.00 0.90 0.80 feb-11 A2A. Source: Bloomberg. mar-11 (right-hand axis). WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. Jan-11.

(12) Interim report on operations – March 31, 2011. Corporate bodies. SUPERVISORY BOARD CHAIRMAN Graziano Tarantini DEPUTY CHAIRMAN Rosario Bifulco. MANAGEMENT BOARD CHAIRMAN Giuliano Zuccoli DEPUTY CHAIRMAN Vittorio Cinquini DIRECTORS Franco Baiguera Mario Cocchi Francesco Randazzo Renato Ravanelli Paolo Rossetti Giuseppe Sala. 11. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. DIRECTORS Adriano Bandera Giambattista Brivio Bruno Caparini Gianni Castelli Alberto Cavalli Stefano Grassani Enrico Mattinzoli Marco Miccinesi Massimo Perona Norberto Rosini Giorgio Maria Filiberto Sommariva Franco Tamburini Antonio Matteo Taormina.

(13) Interim report on operations – March 31, 2011 Corporate bodies. GENERAL MANAGERS CORPORATE AND MARKET AREA Renato Ravanelli TECHNICAL-OPERATIONS AREA Paolo Rossetti. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. 12.

(14) Interim report on operations – March 31, 2011. Significant events during the period. One A2A Group sales company since January 2011 From January 1, 2011, ASMEA S.p.A., Bas-Omniservizi S.r.l. and A2A Servizi al Cliente S.r.l. were merged by incorporation into A2A Energia S.p.A. The only sales company to emerge focuses on the sale of electricity, gas and associated commercial services (call centre, help desks and billing). In particular, a key operator on the Italian energy market was established, with around 2 million clients (large industry, SMEs, apartment buildings and domestic customers) primarily. 13. in the metropolitan area of Milan and in the Italian provinces of Brescia and Bergamo. This is a further step in the process to rationalize and introduce efficiencies in order to make the group even more competitive in the liberalized market. Clients in the Italian region of Lombardy can continue to enjoy services of a high standard supplied locally, a formula that has to date proved to be a winning combination for the Group, as the excellent results that emerged from customer satisfaction surveys proved, not to. A2A Ciclo Idrico S.p.A. founded on January 1, 2011 The transfer of the "water cycle" group of assets from the parent company A2A S.p.A and the spin-off of "direct responsibility for end clients in the water business unit in the province of Brescia" from A2A Energia S.p.A.(formerly Asm Energia e Ambiente S.r.l.) to A2A Ciclo Idrico S.p.A., both took effect from January 1, 2011. More specifically, the company performs the following activities, listed below by way of example: • research, production, supply, collection, supply, distribution and sale of water for primary, industrial and agricultural uses; • collection and treatment of waste water; • use and recovery of energy from the integrated water cycle;. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. mention the specific rankings drawn up by the Italian Authority for Electricity and Gas..

(15) Interim report on operations – March 31, 2011 Significant events during the period. • management, maintenance and development of water and sewage networks, and of water capture, purification and conversion to drinking water.. A2A one of Italy's top companies in the Carbon Disclosure Project A2A has been ranked among Italy's top “Carbon Performance Leader 2010” companies by the Carbon Disclosure Project, the body representing more than 500 institutional investors which has been studying for more than 10 years what international corporations are doing to tackle the greenhouse effect.. A2A Group company Ecodeco S.r.l. has new CEO On March 11, 2011, the Board of Directors of Ecodeco, a company in the A2A Group Environment sector, appointed Enrico Friz as the new company CEO. The intention of this change of executive management is to consolidate the company's development in the A2A Group's Environment sector, the aim being to optimize organisational and process synergies and to strengthen the range of environmental services offered.. A2A S.p.A., Delmi S.p.A. and EDF S.A. communication regarding shareholders' agreements concerning Edison S.p.A and Transalpina di Energia S.r.l. (TdE) On March 15, 2011, as a result of meetings held to discuss a new industrial project concerning the Edison group and the shareholder structure of TdE, an agreement was reached between A2A S.p.A., Delmi S.p.A and EDF S.A. to change the shareholders' agreements for Edison S.p.A. and Transalpina di Energia S.r.l. whereby the term for cancellation of said agreements has been extended to 15 September 2011. If the aforementioned termination is not sent by either of the parties by 15 September, the agreements will be renewed for a further period of three years. This amendment also included the nomination of the Boards of Directors of Edison S.p.A. and Transalpina di Energia S.r.l. for a 12-month period, to be appointed by the Shareholders' Meetings approving the respective financial statements.. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. 14.

(16) Interim report on operations – March 31, 2011. Summary of results, assets and liabilities and financial position of A2A Group. Results The main asset and liability figures for the A2A Group at March 31, 2011 are presented below, along with figures for the same quarter last year:. Revenues. 01 01 2011 03 31 2011. 01 01 2010 03 31 2010. Changes. 1,745. 1,662. 83 15. of which: – Revenues from the sale of goods and services – Other operating income Operating expenses Labour costs. 1,725. 1,641. 20. 21. 84 (1). (1,321). (1,267). (54). (146). (129). (17). Gross operating income. 278. 266. 12. Depreciation and amortization. (108). (100). (8). Provisions and write-downs. (23). (18). (5). Net operating income. 147. 148. (1). Financial expenses, net. (12). (55). 43. Share of results of companies at equity. (10). 20. (30). Other non-operating expenses. (1). –. (1). Income before tax. 124. 113. 11. Income taxes. (40). (36). (4). Income from current operations, net of tax. 84. 77. 7. Net result from non-current assets sold or held for sale. 3. 3. –. Minority interests. (2). (9). 7. Net income for the period pertaining to the Group. 85. 71. 14. (*) At March 31, 2011, the Montenegro-based subsidiary EPCG was consolidated line-by-line, unlike in the first quarter 2010 when it was carried at equity.. In the period being reported, Group revenues reached a total of 1,745 million euro, 86 million euro of which came from EPCG Group. Revenues from sales and services totaled 1,725 million euro (86 million euro from the EPCG Group) whilst other income of 20 million euro was reported.. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. Millions of euro.

(17) Interim report on operations – March 31, 2011 Summary of results, assets and liabilities and financial position of A2A Group. The key figures that contributed to generating these revenues are listed below: 03 31 2011. 03 31 2010. Electricity sold to wholesale and retail customers (GWh). 5,625. 4,654. Electricity sold on the Power Exchange (GWh). 3,799. 4,307. Electricity sold on foreign markets (GWh). 3,145. 2,098. Electricity sold (GWh) - EPCG. 1,397. Gas sold to wholesale and retail customers (Mcm). 1,494. 1,708. Heat sold (GWht). 1,439. 1,411. Electricity distributed (GWh). 2,908. 2,851. Electricity distributed (GWh) - EPCG Gas distributed (Mmc) Water distributed (Mcm) Purified water (Mcm) Waste disposed of (Kton). 1,103 965. 1,034. 15. 16. 10. 10. 670. 699. In particular, sales came mainly from the output of plants managed by the Group: 16 Thermoelectric production (GWh). 03 31 2011. 03 31 2010. 2,431. 2,713. Thermoelectric production (GWh) - EPCG. 379. Hydroelectric production (GWh). 715. Hydroelectric production (GWh) - EPCG Heat production (GWht). 860. 739 1,188. 1,183. Electricity cogeneration (GWh). 362. 335. Electricity produced by waste to energy and biogas plants (GWh). 316. 312. The gross operating spread was 278 million euro, an increase of 12 million euro compared with. Deducting the contribution of the EPCG Montenegro Group, the gross operating spread is 253 million euro, which is reasonably in line with figures reported in the first quarter of 2010.. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. the same period last year..

(18) Interim report on operations – March 31, 2011 Summary of results, assets and liabilities and financial position of A2A Group. The table below shows how business developed in each area: Millions of euro. 03 31 2011. 03 31 2010 (*). Energy Sector. 94. 93. - electricity - gas. 60 34. 61 32. Heat and Services Sector. 48. 46. Environment Sector. 76. 79. Networks Sector. 65. 57. Other Services and Corporate Sector Total. (5) 278. (9) 266. (*) The EBITDA by sector was reclassified in order to incorporate the effects of the organizational restructuring of the Group.. The profit margin reported for the Energy sector was in line with the same period in the previous year. In the electrical sector, the buoyant performance of the trading portfolio combined with the 22 millions euro generated through the production and sale of electrical energy in Montenegro offset the drop in the profit margin for the industrial portfolio.. 17. In particular, hydroelectric production was less consistent compared to the first quarter of 2010. The dip in profit margins for thermoelectric plants can be accounted for by the less used made of Group plants and the fact that the San Filippo del Mela power station was no longer part of the scope of the Tolling Agreement with Edipower. These events were partly offset by grown in unitary profit margins from combined cycle gas turbine power generation and the contribution of the Scandale plant in the Italian region of Calabria (800MW CCGT, 50% controlled with EON Italia), which entered commercial operation in June 2010 (Unit 1) and. The gas sector posted a gross operating spread of 34 million euro which was more or less consistent with the first quarter of 2010 (32 millions euro at March 31, 2010). The reduction in volumes of gas sold to end users and the decrease (starting from the last quarter of the previous financial year) in the value of the QE portion of revenues (covering the cost of raw materials) applied to protected electricity customers, were more than offset by the positive effect of the renegotiation of some supply agreements, which took effect from the fourth quarter of 2010, and by more favorable performance driven by the varying time leads in the indexation policies for revenue curves and for the unit cost of gas. The gross operating spread for the Heat and Services sector was 48 million euro, a 2 million euro rise on the figure reported at March 31, 2010. This result can mainly be attributed to new district heating services connected which more than offset the drop in overall volumes sold as. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. October 2010 (Unit 2)..

(19) Interim report on operations – March 31, 2011 Summary of results, assets and liabilities and financial position of A2A Group. a result of the milder temperatures registered in the first quarter of the year. The gross operating spread for the Environment sector (76 million euro), which was a slight drop on the figure for the first quarter 2010, was affected by the temporary stop of the wasteto-energy plant in Acerra for extraordinary maintenance of a fuel line. The Networks sector achieved significant growth in performance in the first quarter of 2011, posting a gross operating spread of 65 million euro (up 8 million euro). This rise in the profit margin was driven substantially by the electrical energy sector following the specific alignment of power cost equalization income for regulatory period III (20082011), not applied in the first quarter of 2010, as well the fewer expenses booked for other equalization schemes (in particular, the rate equalization measures). The distribution of electricity in Montenegro also generated 3 million euro of revenues to the sector. Amortization, depreciation, write-downs and provisions totaled 131 million euro (118 million euro at March 31, 2010). The rise can be primarily accounted for by the line-by-line consolidation of EPCG, as the latter reported 9 million euro for amortization and depreciation and a further 6 million euro for risk provisions. As a result of these events, earnings after interest and tax were 147 million euro, more or less consistent with the figure reported at March 31, 2010 (148 millions of euro). Net expenses from financial activities amounted to 12 million of euro (55 million of euro at March 31, 2010). The significantly smaller figure reported this quarter can be attributed to the drop in medium-term debt (down by 506 millions of euro compared to the first quarter 2010) and the positive trend in the fair values of derivative hedging agreements in the face of a slight increase in the cost of debt due to changes in market rates. The profit reported for consolidated companies carried at equity shows a negative balance of 10 million euro (an increase of 20 millions of euro on the figure for March 31, 2010). The 30 million euro drop is due primarily to the consolidated results of Transalpina di Energia, who posted a negative balance of 12 millions of euro after reporting a positive 14 millions of euro at March 31, 2010. We would like to remind you that the subsidiary EPCG added a positive figure of 7 millions of euro to this heading in the first quarter of 2010 when it was carried at equity for the purposes of consolidation. Other non-operating costs equaled 1 million of euro at March 31, 2011 and relate to the consolidation of the EPCG Group; no figure was posted in the first quarter 2010.. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. 18.

(20) Interim report on operations – March 31, 2011 Summary of results, assets and liabilities and financial position of A2A Group. Tax expense for the period being reported was 40 million of euro (36 million euro at March 31, 2010). The net result from non-current assets sold or held for sale was 3 million euro, no change from the figure posted at March 31, 2010, and primarily reflecting capital gains generated by the sale of equity in CESI, as well as profit reported for the period by BAS-SII S.p.A. and Metroweb S.p.A. Group net income for the reporting period, less income pertaining to non-controlling interests, was 85 million euro (71 millions of euro at March 31, 2010).. Balance sheet and financial position Consolidated “invested capital” amounted to 8,685 euro at March 31, 2011, and was covered by net equity of 4,973 euro (1,350 million euro of which pertains to non-controlling interests) and net debt of 3,742 million euro. In particular, “Working Capital” of 755 million euro was posted, more or less the same as at. 19. December 31, 2010. “Net capital equipment”, including “Assets/Liabilities held for sale” totaled 7,930 million euro (down 45 million euro). The “Net Financial Position” of 3,742 million euro at March 31, 2011, was an improvement of 151 million euro compared with the figure reported at December 31, 2010, thanks to the cash. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. flow generated by operations..

(21) Interim report on operations – March 31, 2011 Summary of results, assets and liabilities and financial position of A2A Group. Millions of euro. 03 31 2011. 12 31 2010. changes. CAPITAL EMPLOYED Net fixed capital. 7,868. 7,911. (43). - Tangible assets. 4,814. 4,872. (58). - Intangible assets. 1,550. 1,552. (2). - Investments and other non-current financial assets (*). 2,423. 2,423. –. - Other non-current assets/liabilities (*). (129). (137). 8. (50). (63). 13. - Provisions for risks, charges and liabilities for landfills. (466). (460). (6). - Employee benefits. (274). (276). 2. of which with counterentry in equity. (102). (118). Working capital. 755. 763. (8). - Inventories. 128. 239. (111). - Deferred tax assets and liabilities. 2,642. 2,416. 226. - Trade payables and other current liabilities (*). (1,927). (1,854). (73) (50). (88). (38). of which with counterentry in equity. - Current tax assets/tax liabilities. 10. 3. Assets/liabilities held for sale (*). 62. 64. of which with counterentry in equity TOTAL CAPITAL EMPLOYED. (2). –. –. 8,685. 8,738. 4,943. 4,845. 98. 3,622. 3,635. (13). (53). SOURCES OF FUNDS Equity Total financial position beyond one year Total financial position within one year Total net financial position of which with counterentry in equity TOTAL SOURCES (*) Excluding balances included in the net financial position.. 120. 258. (138). 3,742. 3,893. (151). (30) 8,685. (41) 8,738. (53). WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. 20. - Trade receivables and other current assets (*).

(22) Interim report on operations – March 31, 2011 Summary of results, assets and liabilities and financial position of A2A Group. Millions of euro. 01 01 2011 03 31 2011. Net financial position at the beginning of the period Net income for the period (including minorities) Depreciation and amortization Write-downs and disposals of tangible and intangible fixed assets Result from companies at equity Changes in assets and liabilities (*) Cash flow from operating activities. (3,893). 01 01 2010 03 31 2010 (**) (4,644). 87. 80. 108. 100. 1. 8. 10. (20). 1. 168. 207. 336. Cash flow from investing activities. (45). (47). Free cash flow. 162. 289. Changes in financial assets/liabilities with counterentry in equity CLOSING NET FINANCIAL POSITION AT THE END OF THE PERIOD. (11). (5). (3,742). (4,360). (*) Net of balances with counterentry in equity. (**) The balances at March 31, 2010 have been reclassified to recognize the effect of applying IFRIC 12.. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. 21.

(23) Interim report on operations – March 31, 2011. Significant events after March 31, 2011. Support for the celebrations of 150 years of Italian Unification. As part of the many events celebrating 150 years of Italian Unification, A2A and group company Partenope Ambiente, are helping to set up an exhibition dedicated to Margaret of Savoy, the first queen of Italy. The aim of the exhibition, which covers three different areas, is to retrace the history of the relationship between Margaret and Naples through documents, paintings, scenography and multimedia supports. The event also provides an opportunity to spotlight Campania's historical and artistic heritage by opening rooms in Naples Royal Palace to the public. The exhibition opened on April 1, 2011 and will run until July 17, 2011.. The A2A S.p.A. Supervisory Board approved the results of financial year 2010. Chaired by lawyer Graziano Tarantini, the Supervisory Board met on April 27, 2011 and approved the separate financial statements and consolidated annual report of the A2A Group at December 31, 2010. The Supervisory Board accepted the Management Board's proposal to ask the Shareholder's Meeting to distribute dividends of 0.060 euro per ordinary share, to be paid on June 23, 2011. The Supervisory Board also accepted the Management Board's proposal to ask the Shareholder's Meeting to distribute an additional, non-recurring dividend of 0.036 euro per ordinary share, to be paid on November 24, 2011. The separate financial statements and the consolidated annual report of the A2A Group as at December 31, 2010 and as approved by the Supervisory Board on April 27, 2011, have been available in our head office, at Borsa Italiana S.p.A., and at www.a2a.eu since April 29, 2011, along with further documentation as required by law.. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. 22.

(24) WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. 0.2. Consolidated financial statements.

(25) Interim report on operations – March 31, 2011. Consolidated balance sheet (1-2) Assets. Millions of euro. Note. 03 31 2011. 12 31 2010. 03 31 2010. Tangible assets. 1. 4,814. 4,872. 4,093. Intangible assets. 2. 1,550. 1,552. 1,480. Shareholdings carried according to equity method. 3. 2,410. 2,411. 3,144. Other non-current financial assets. 3. 42. 40. 47. Deferred tax assets. 4. 432. 430. 457. Other non-current assets. 5. 88. 113. 74. 9,336. 9,418. 9,295. NON-CURRENT ASSETS. Total non-current assets CURRENT ASSETS Inventories. 6. 128. 239. 109. Trade receivables. 7. 2,269. 2,141. 1,935. Other current assets. 8. 373. 275. 396. Current financial assets. 9. 38. 56. 6. Current tax assets. 10. 15. 18. 54. Cash and cash equivalents. 11. 246. 132. 110. 3,069. 2,861. 2,610. 81. 82. 439. 12,486. 12,361. 12,344. Total current assets NON-CURRENT ASSETS HELD FOR SALE TOTAL ASSETS (1). 12. Significant non-recurring events and transactions in the consolidated financial statements are indicated in Note 41, as required by Consob Communication DEM/6064293 of July 28, 2006.. (2). The values reported at March 31, 2011 for tangible and intangible assets and other non-current financial assets were reclassified solely for the purposes of comparison to reflect the adoption of IFRIC 12.. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. 24.

(26) Interim report on operations – March 31, 2011 Consolidated balance sheet. Equity and liabilities. Millions of euro. Note. 03 31 2011. 12 31 2010. 03 31 2010. Share capital. 13. 1,629. 1,629. 1,629. (Treasury shares). 14. (61). (61). (61). Reserves. 15. 1,940. 1,625. 2,120. Net profit for the year. 16. –. 308. –. Net profit for the period. 16. 85. –. 71. 3,593. 3,501. 3,759. EQUITY. Equity pertaining to the Group Minority interests. 17. Total equity. 1,350. 1,344. 914. 4,943. 4,845. 4,673. 25. LIABILITIES. Non-current financial liabilities. 18. 3,706. 3,736. 4,141. Deferred tax liabilities. 19. 482. 493. 467. Employee benefits. 20. 274. 276. 275. Provisions for risks, charges and liabilities for landfills. 21. 466. 460. 423. Other non-current liabilities. 22. Total non-current liabilities. 162. 177. 145. 5,090. 5,142. 5,451. 1,315. 1,450. 1,117. Current liabilities Trade payables. 23. Other current liabilities. 23. 612. 404. 698. Current financial liabilities. 24. 406. 448. 372. Tax liabilities. 25. 103. 56. 24. Total current liabilities. 2,436. 2,358. 2,211. Total liabilities. 7,526. 7,500. 7,662. 17. 16. 9. 12,486. 12,361. 12,344. LIABILITIES DIRECTLY ASSOCIATED WITH NON-CURRENT ASSETS HELD FOR SALE TOTAL EQUITY AND LIABILITIES. 26. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. Non-current liabilities.

(27) Interim report on operations – March 31, 2011. Consolidated income statement (1-2). Millions of euro. Note. 01 01 2011 03 31 2011. 01 01 2010 03 31 2010. 01 01 2010 12 31 2010. 1,725. 1,641. 5,923. 20. 21. 118. 1,745. 1,662. 6,041. 1,252. 1,199. 4,129. 69. 68. 318 4,447. Revenues Revenues from the sale of goods and services Other operating income Total revenues. 28. Operating expenses Expenses for raw materials and services Other operating expenses Total operating expenses. 29. 1,321. 1,267. Labour costs. 30. 146. 129. 554. Gross operating income - EBITDA. 31. 278. 266. 1,040. Depreciation, amortization, provisions and write-downs. 32. 131. 118. 542. Net operating income - EBIT. 33. 147. 148. 498. Financial balance Financial income. 26. 3. 58. Financial expenses. 38. 58. 190. Portion of income and charges when shareholdings are carried at equity. (10). 20. (231). (22). (35). (363). –. –. –. (1). –. (1). Total financial balance. 34. Other non-operating income Other non-operating expenses Profit before tax (1). (2). 35. 124. 113. 134. Significant non-recurring events and transactions in the consolidated financial statements are indicated in Note 41, as required by Consob Communication DEM/6064293 of July 28, 2006. The comparative figures for the period January-March 2010 for operating revenues and costs, depreciations, amortizations and the financial balance have been reclassified to reflect the IFRIC 12 adoption and the IFRS 5 application.. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. 26.

(28) Interim report on operations – March 31, 2011 Consolidated income statement. Millions of euro. Note. 01 01 2011 03 31 2011. 01 01 2010 03 31 2010. Income taxes. 36. 40. 36. 158. 84. 77. (24). 3. 3. 220. Net profit. 87. 80. 196. Minorities. (2). (9). 112. 85. 71. 308. Net result from non-current assets held for sale. Group net profit (loss) for the year/period. 37. 38. 27. Earnings per share (in euro): – basic. 0.0275. 0.0228. 0.0993. – basic, from operating activities. 0.0265. 0.0224. 0.0286. – diluted. 0.0275. 0.0228. 0.0993. – diluted, from operating activities. 0.0265. 0.0224. 0.0286. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. Profit of current operations, net of tax. 01 01 2010 12 31 2010.

(29) Interim report on operations – March 31, 2011. Consolidated statement of comprehensive income. Millions of euro. 03 31 2011. 03 31 2010. Net income/(loss) for the period (A). 87. 80. Effective part of gains/(losses) on cash flow hedges. (4). (1). Gains/(losses) on the re-measurement of financial assets available for sale. –. (4). Tax effect of other gains/(losses). 1. 1. (3). (4). Total other gains/(losses) net of the tax effect of companies consolidated on a line-by-line basis Other gains/(losses) of companies valued at equity net of the tax effect (C). 10. 4. Total gain/(loss) (A) + (B) + (C). 94. 80. 87. 69. 7. 11. Total gain/(loss) attributable to: Shareholders of the parent company Minority interests. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. 28.

(30) Interim report on operations – March 31, 2011. Consolidated cash flow statement. Millions of euro. CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD/YEAR Contributions related to EPCG CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD/YEAR. 03 31 2011. 12 31 2010. 03 31 2010 (***). 132. 25. 25. –. 95. –. 132. 120. 25. Operating activities Net profit for the period/year (**). 87. (26). 80. Tangible assets depreciation. 87. 342. 79. Intangible assets amortization. 21. 85. 21. 1. 23. 8 (20). Tangible and Intangible asset write-downs Results from affiliates. 10. 231. Shareholdings write-downs. –. 5. –. Changes in working capital (*). 1. 183. 168. 207. 843. 336. Investments in tangible assets. (29). (247). (39). Investments in intangible assets and goodwill. (20). (85). (14). Investments in shareholdings and securities (*). –. (14). (2). Investments and fixed assets sale. 4. 347. –. Dividends received from affiliates and other shareholdings. –. 59. 8. Cash flow from operating activities. 29. Cash flow from investment activities. (45). 60. (47). FREE CASH FLOW. 162. 903. 289. Financing activities Change in financial assets (*) Change in financial liabilities (*) Dividends paid by the parent company Dividends paid by the subsidiaries to third parties. 33. (94). (27). (81). (552). (177). –. (217). –. (28) (891). – –. Cash flows from financing activities. (48). CHANGE IN CASH AND CASH EQUIVALENTS. 114. 12. 85. CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD/YEAR. 246. 132. 110. (*) Cleared of balances in return of shareholders’ equity and other balance sheet items. (**) Net profit for the year 2010 has been exposed net of net of gains on sale of shareholdings. (***) The figures at March 31, 2010 have been reclassified only for comparison purposes to reflect the IFRIC 12 adoption.. (204). WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. Investment activities.

(31) Interim report on operations – March 31, 2011. Consolidated statement of changes in equity. Description Millions of euro. Net equity at December 12, 2009. Share capital. Treasury Shares. Cash Flow Hedge. Note 13. Note 14. Note 15. 1,629. (61). (3). Changes in the first quarter of 2010 2009 profit allocation IAS 32 and 39 reserves (*). 1. Put option on Delmi S.p.A. shares Put option on Abruzzoenergia S.p.A. shares Other changes Group and minorities net profit for the period Net equity at March 31, 2010. 1,629. (61). (2). Changes from April 1, 2009 to December 31, 2010 Distribution of dividends IAS 32 and 39 reserves (*). 33. Put option on Delmi S.p.A. shares Put option on Abruzzoenergia S.p.A shares EPCG Group consolidation Other changes Group and minorities net profit for the period Net equity at December 31, 2010. 1,629. (61). 31. Changes in the first quarter 2011 2010 profit allocation IAS 32 and 39 reserves (*). 3. Put option on Delmi S.p.A. shares Group and minorities net profit for the period Net equity at March 31, 2011 (*) These form part of the statement of comprehensive income.. 1,629. (61). 34. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. 30.

(32) Interim report on operations – March 31, 2011 Consolidated statement of changes in equity. Other reserves and retained earnings Note 15. Note 16. 350. 1,695. 80. 80. Group Shareholders’ net profit equity for the of the period/year Group. Minority Total Net interests Shareholders’ equity. Note 17 3,690. 905. 31. (80). (3). (2) (2). 2. (2). (2) 1. 2. 347. 1,775. 2. (3). 71. 9. 80. 71. 3,759. 914. 4,673. (217). (1). (217). (28). (245). (314). 8. (306). 27. 27. 3. 3. 27 (2). 1. 3. 3. 572. 575. 3. 3. 1. 4. 1,594. 308. 237. 237. 308. 3,501. 1,344. 1,906. (121). 3. 4. 116 4,845. (308). 4. –. 1. 71. (347). –. 4,595. 4. 7 4. 85. 85. 2. 87. 85. 3,593. 1,350. 4,943. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. Net result from non current assets available for sale Note 15.

(33) WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. 0.3. Notes to the interim report on operations.

(34) Interim report on operations – March 31, 2011. General information on A2A S.p.A.. A2A S.p.A. is a company incorporated under Italian law. A2A S.p.A. and its subsidiaries (“Group”) operate both in Italy and abroad, especially following acquisitions in France and Montenegro in recent years. The A2A Group mainly operates in the following sectors: • production, sale and distribution of electricity; • sale and distribution of gas;. 33. • production, distribution and sale of heat via district heating networks; • waste management (from collection and street-sweeping to disposal) and the construction and management of integrated waste disposal plants and systems, also making them available for other operators;. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. • integrated water cycle management..

(35) Interim report on operations – March 31, 2011. Interim report on operations. The interim report on operations of the A2A Group (hereafter referred to as the “Interim report”) at March 31, 2011 has been drafted in millions of euro, which is also the currency of the economies in which the Group operates. The A2A Group interim report at March 31, 2011 has been prepared: • in compliance with Decree 58/1998 (art. 154 ter) and subsequent amendments, and with the Issuers' Regulations published by Consob; • in accordance with the International Financial Reporting Standards (IFRS) issued by the ’International Accounting Standard Board (IASB) and approved by the European Union. This report has been prepared applying the same standards as were adopted for the Consolidated financial statements at December 31, 2010. In addition, from January 1, 2011 the Group adopted for the first time the standards and interpretations explained in detail in the paragraph entitled “Changes in accounting policies". This interim report at March 31, 2011 has not been subject to audit, but was approved by the Management Board on May 12, 2011 who also authorized its publication. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. 34.

(36) Interim report on operations – March 31, 2011. Financial statements. For the balance sheet, the Company has adopted a format which separates current and noncurrent assets and liabilities, as required by paras. 60 et seq. of "IAS 1 Revised”. The income statement is presented by nature, a format that is considered more representative than the so-called "presentation by destination". This format is also adopted by the Company's principal competitors and is in line with international practice. The results of normal operations are shown in the income statement separately from income or costs deriving from non-recurring transactions that form part of the business’s normal operations,. 35. such as gains or losses on the sale of shareholdings and other non-recurring income or charges; this makes it easier to measure the effective results of normal operating activities. The cash flow statement is prepared according to the indirect method, as allowed by IAS 7. The statement of changes in equity has been prepared in accordance with “IAS 1 Revised”. The financial statements presented herein are the same as those used to prepare the. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. Consolidated financial statements at December 31, 2010..

(37) Interim report on operations – March 31, 2011. Basis of preparation. The interim report at March 31, 2011 has been prepared on a historical cost basis, with the exception of those items which, in accordance with IFRS, can or have to be measured at fair value, as explained in the accounting policies. The consolidation principles, accounting policies, measurement methods and estimates used in drawing up this interim report are the same as those use to prepare the Consolidated annual financial statements at December 31, 2010.. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. 36.

(38) Interim report on operations – March 31, 2011. Changes in international accounting standards. The accounting standards applied in the first quarter of 2011 are the same as those used in the previous year, with the exception of the variations discussed in the following paragraph "Accounting standards, amendments and interpretations approved by the European Union and taking effect during the reporting period and applied as appropriate”. The following sections entitled "Accounting standards, amendments and interpretations already approved by the European Union, not adopted by the Group during the Reporting Period but applicable after March 31, 2011” and “Accounting standards, amendments and. 37. interpretations still to be approved by the European Union" list all variations to be adopted in future reporting periods, with an indication of the expected effect, as far is estimable, on the interim accounts of the A2A Group.. Accounting standards, amendments and interpretations approved by the European Union and taking effect during the current reporting period where applicable. January 1, 2011, modifies the definition of related parties and extends the minimum disclosure requirements. This principle requires additional information to be provided on current relations, transactions and balances with related parties, including commitments, disclosed in both the consolidated and separate financial statements of a parent company, a partner in a joint venture or an investor, to be provided in compliance with IAS 27 "Consolidated and separate financial statements". This standard also applies to individual financial statements. • IFRS 3 “Business combinations”: with the prospective introduction of this revision from July 1, 2010, the requirement for non-controlling interests to either be reported at fair value or at the proportionate share of net assets of the acquiree on the acquisition date applies only to the non-controlling interest that give the holder access to part of the net assets in the event of liquidation. All other non-controlling interests must be reported at. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. • IAS 24 Revised "Related Party Disclosures": approved on July 19, 2010 and applicable from.

(39) Interim report on operations – March 31, 2011 Changes in international accounting standards. the fair value on the date of acquisition, unless other assessment criteria apply under other IFRS. This revision also clarifies that the requirement to measure shareholdings or shares in the acquirer replacing share-based payments in the acquired company in accordance with IFRS2 on the date of acquisition (market based measure) also applies to share-based payments in the acquired company that are not replaced. • IFRS 7 “Financial instruments: disclosures”: effective from January , 1, 2011, this revision draws attention to the interaction between quantitative disclosures and other qualitative ones required by the standard to provide information about the nature and extent of risks arising from financial instruments. This approach should help all those using the financial statements to understand the information presented and build a general picture of the nature and extent of risks arising from financial instruments. Finally, the requirement to provide information on financial assets that have expired but which have been renegotiated or written-down, and the on fair value of the underlying collateral has been eliminated. In October 2010, another revision to the afore-mentioned standard was introduced, concerning the transfer of financial assets. This amendment allows all those using the financial statements to gain a better insight into transactions involving the sale of financial assets (such as securitization for example), as well the potential effect of risks which the entity that sold the asset may still be exposed to. Under this revision, additional information must be provided on any substantial transfers of assets carried out at the end of the reporting period. • IAS 1 “Presentation of Financial Statements": the amendment applies from January 1, 2011 and establishes that an entity may present the detailed analysis of the overall income statement either in the statement of changes to net equity or in the explanatory notes to the financial statements. Earlier adoption of this amendment is permitted. • IAS 34 “Interim financial reporting”: with effect from January 1, 2011, this revision requires that explanatory notes describing significant events in interim financial statements must describe any changes to the significant events reported in the last annual report, with emphasis in particular on financial instruments and their fair value.. Accounting standards, amendments and interpretations already approved by the European Union but not adopted in this reporting period. In future reporting periods the following principles and interpretations already approved by the European Union and published in the official EU gazette will be applied: • IFRS 1 "First-time adoption of International Financial Reporting Standards": the amendment is applicable from January 1, 2011 and clarifies that whenever an entity. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. 38.

(40) Interim report on operations – March 31, 2011 Changes in international accounting standards. changes its accounting practice or exercises exemptions under IFRS 1 following the publication of interim financial statements in accordance with IAS 34 before the publication of the first full financial statements, i.e. prepared in accordance with International Financial Reporting Standards, it must provide justifiable grounds for these changes and update the reconciliation between the previous accounting standards and the IFRS. The requirements of IAS 8 "Accounting policies, changes in accounting estimates and errors" do not apply in the afore-mentioned circumstances. Earlier adoption of this amendment is permitted. • IFRIC 13 “Customer loyalty programs”: this amendment, applicable from January 1, 2011, requires that a business entity can estimate the fair value of credit points, referring to the fair value of the awards for which they can be redeemed.. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. 39.

(41) Interim report on operations – March 31, 2011. Scope of consolidation. The interim report of the A2A Group at March 31, 2011 includes the figures of the parent company A2A S.p.A. and those of its subsidiaries in which A2A S.p.A., directly or indirectly, holds a majority of the voting rights that can be exercised at ordinary shareholders' meetings. Also carried at equity are companies in which the parent company holds joint control with other shareholders (joint ventures) and those over which it exercises a considerable influence. 40. Changes in the scope of consolidation This consolidated interim management report presents the line-by-line consolidation of the income statement and balance sheet figures at March 31, 2011 of EPCG, a Montenegro-based company acquired in 2009 and accounting for 56.3% of net profit and third party equity. Your attention is drawn to the fact that this company was also included in the scope of consolidation of A2A S.p.A during the last reporting period although the equity method was applied at that time. In the reporting period ended March 31, 2011, it was considered a controlling interest in the company and the power to determine the financial and operational policies to be applied.. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. subsidiary and therefore consolidated line-by-line insomuch as the parent A2A S.p.A holds the.

(42) Interim report on operations – March 31, 2011. Consolidation policies and procedures. Consolidation Policies Subsidiaries The scope of consolidation of the A2A Group comprises the parent company A2A S.p.A. and the companies over which it exercises direct or indirect control. Subsidiaries are consolidated from the date on which the Group effectively acquires control and are deconsolidated from the date on which control is transferred to a company outside of the Group.. 41. Associates and Joint Ventures Shareholdings in associates, in other words those in which the A2A Group has a significant interest and is able to exercise a considerable influence, and those over which A2A has joint control together with other shareholders (joint venture), are valued according to the equity method. Gains and losses pertaining to the Group are recognized in the interim report from. In the event that the loss pertaining to the Group exceeds the book value of the shareholding, this value is cancelled and any excess loss is provided for to the extent that the Group has legal or implicit obligations towards the associate to cover its losses or, in any case, to make payments on its behalf.. Potential voting rights If the A2A Group holds call options to buy shares or other instruments representing capital that are convertible into ordinary shares, or other instruments that have the potential, if exercised or converted, to give the Group voting rights or reduce the voting rights of third parties ("potential voting rights"), such potential voting rights have to be taken into consideration when assessing whether or not the Group has the power to govern or influence the other company's financial and operating policies.. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. the date on which the significant influence or joint control commenced..

(43) Interim report on operations – March 31, 2011 Consolidation policies and procedures. Consolidation procedures General procedure The financial statements of the subsidiaries, associates and joint ventures consolidated by the A2A Group are prepared at the end of each reporting period using the same accounting policies as the parent company. Any items valued on alternative bases are adjusted during the consolidation process to bring them into line with Group accounting policies. All intercompany balances and transactions, including any unrealized profits deriving from transactions between Group companies, are eliminated completely. Unrealized gains and losses deriving from transactions with associates and joint ventures are eliminated in proportion to the Group's equity interest. Unrealized losses are eliminated, unless they represent a loss in the value of assets that have been sold. In preparing the interim report, the assets, liabilities, costs and revenues of the companies being consolidated are included in their entirety on a line-by-line basis, showing the portion of equity and net income for the period pertaining to minority interests separately in the balance sheet and income statement. The book value of the shareholding in each of the subsidiaries is eliminated against the corresponding share of each subsidiary's net equity, including any adjustments to fair value at the date of acquisition; any differences arising are handled in accordance with IFRS 3. Transactions with minority shareholders which do not entail the loss of control in consolidated companies are treated according to the so-called "economic entity view".. Consolidation procedure for assets and liabilities held for sale (IFRS 5) Only in the case of particularly large figures and exclusively in connection with non-current assets and liabilities available for sale, in accordance with the requirements of IFRS 5, the related intercompany financial receivables and payables are not eliminated, so as to show clearly the financial impact in the event of their disposal.. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. 42.

(44) Interim report on operations – March 31, 2011 Consolidation policies and procedures. Effects on consolidation procedures of certain contracts concerning shares/quotas of Group companies a) Option contracts between A2A S.p.A. and Società Elettrica Altoatesina SEL S.p.A. for part of their shareholding in Delmi S.p.A. A2A S.p.A. has signed option contracts with Società Elettrica Altoatesina SEL S.p.A. (SEL) in relation to part of the shares in Delmi S.p.A. that it holds. Under these option contracts between A2A S.p.A. and SEL S.p.A., the latter has the right to sell to A2A S.p.A. and A2A S.p.A. has the right to purchase from SEL S.p.A. two lots of Delmi S.p.A. shares, representing 50% and 35% respectively of SEL S.p.A.'s shareholding in Delmi S.p.A. (currently 10% of Delmi S.p.A. share capital). The strike price of these options will be calculated for each lot based on various formulas that take into account SEL S.p.A.'s initial investment and/or the value of Edison S.p.A's shares at the time the options are exercised, depending in the case of SEL S.p.A.'s put options, among other things, on whether SEL S.p.A.– at the time of exercising the option - has or has not become the owner of some of Edison S.p.A.'s hydroelectric power plants located in the Province of. 43. Bolzano. If exercised, SEL S.p.A. put options and A2A S.p.A. call options on SEL S.p.A., can be implemented in stages. A2A S.p.A and SEL S.p.A. renegotiated the expiry dates of these options, postponing them beyond the initial deadline. In part, this deferral was due to the fact that the parties could not agree on whether the conditions for the exercise of one of SEL S.p.A.'s put options had been satisfied or not. As a result, the options are still outstanding and the new expiry date is 2015.. estimated outlay. Changes in the current value of this liability caused by the passing of time are considered financial expenses and booked to the Income Statement. There is still some uncertainty in international accounting standards as to how to treat the difference between the present value of the strike price of the put options and the book value of the minority interests. In the absence of an interpretation of this question by the IFRIC, the Group has decided to show the difference as a reduction of equity pertaining to the Group (if positive) or as an increase in equity pertaining to the Group (if negative) as an alternative to adjusting goodwill.. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. In line with paragraph 23 of IAS 32, the Group has booked to liabilities the present value of the.

(45) Interim report on operations – March 31, 2011 Consolidation policies and procedures. This is in line with previous decisions taken by the Group. Accordingly, any changes in the liability that do not depend on time result in adjustments to Group equity. If the options expire without them being exercised, the liability will be reclassified to equity, reinstating the minority interests. The interim report at March 31, 2011 shows a liability to third parties for the possible exercise of the put options on the shares of Delmi S.p.A. of 89 million of euro (93 million of euro at December 31, 2010), a reduction in minority interests of 157 million of euro (unchanged with respect to December 31, 2010), a positive change in equity pertaining to the Group of 96 million of euro (92 million of euro at December 31, 2010) and a financial charge of 1 million of euro (5 million of euro at December 31, 2010). The share of Delmi S.p.A.’s result remains 51% as the above options do not currently give A2A S.p.A. access to the economic benefits associated with the shares under option.. b) Call option on the purchase of 1% of the share capital of ASM Novara S.p.A. A2A S.p.A. owns 50% of the shares of ASM Novara S.p.A., a company with share capital of one million euro set up with other shareholders in order to build and manage a district heating network in Novara. As a result of the shareholder agreement between the shareholders of ASM Novara S.p.A., A2A S.p.A. has a call option to buy 1% of the share capital of ASM Novara S.p.A. Similarly the other shareholders, who hold the remaining 50%, have a put option to sell 1% of the share capital to A2A S.p.A. Exercising one of these options would give A2A S.p.A. control over ASM Novara S.p.A. Any of the parties can exercise their options within three years of satisfaction of certain conditions relating to the construction of the district heating network in Novara: by March 31, 2011 these conditions had still not been fulfilled. IAS 27, paragraph 14, establishes that when assessing whether an entity has the power to govern the financial and operating policies of another entity, it has to take account of the “potential voting rights” that would derive from exercising the options, providing they are currently exercisable. Such potential voting rights should then be added to the existing voting rights in order to calculate the total interest held in the share capital, which in turn establishes the method of consolidation to be applied to the affiliate concerned. Potential voting rights that are not currently exercisable are understood as being, for example, those that cannot be exercised until a future date or until some future event takes place.. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. 44.

(46) Interim report on operations – March 31, 2011 Consolidation policies and procedures. Hence, the potential voting right that A2A S.p.A. holds in ASM Novara S.p.A., as explained above, is not currently exercisable, so the shareholding in ASM Novara S.p.A. is consolidated according to the equity method. When options are exercised, A2A SpA will measure the stake in ASM Novara S.p.A. in accordance with consolidation procedures for shareholdings.. c) Option granted to the Municipality of Varese for the sale of 10% of Aspem S.p.A. and 9.8% of Varese Risorse S.p.A. A2A S.p.A. holds 90% of the shares of Aspem S.p.A., a company that provides local public services in the city of Varese and in other towns in the province of Varese. Under the shareholder agreement between A2A S.p.A. and the Municipality of Varese, the latter has the right, but not the obligation, to sell (put option) to A2A S.p.A. 9.8% of the share capital of Aspem S.p.A. and 10% of the share capital of Varese Risorse S.p.A. (90% controlled by Aspem S.p.A). The two shareholdings have to be bought together within the same context. The Municipality of Varese can exercise its option after the expiry date of the period of nontransferability of the shares in Aspem S.p.A. and Varese Risorse S.p.A., which lasts for three. 45. years from the date of signing the shareholder agreement: at March 31, 2011, this period was still ongoing, These transactions have been valued according to the purchase value for Aspem S.p.A. and according to the enterprise value of Varese Risorse S.p.A. In line with paragraph 23 of IAS 32, the Group has booked to liabilities with associated counter entry under net equity, the present value of the estimated outlay which it will not be able to avoid if it exercises this option. The interim report at March 31, 2011 shows a liability to the Municipality of Varese, for the 4 million euro, with a corresponding reduction in the equity pertaining to minority interests.. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. possible exercise of the put option on the shares of Aspem S.p.A. and Varese Risorse S.p.A., of.

(47) Interim report on operations – March 31, 2011 Consolidation policies and procedures. Key figures at March 31, 2011 and at March 31, 2010 for joint ventures (consolidated at equity) Key figures at March 31, 2011 Millions of euro. Edipower. Transalpina di Energia. Società Gruppo Ecodeco 50% (*). 20%. 50%. Sales revenues. 52. 1,554. Gross operating income - EBITDA. 21. 92. (0.2). 40.4%. 5.9%. (7.4%). 13. 84. 0.2. INCOME STATEMENT. % of net sales Depreciation, amortization and write-downs. 2.7. Net operating income - EBIT. 8. 8. (0.4). Result of the period. 4. (12). (0.5). BALANCE SHEET 797. 8,535. 12. Equity. 426. 1,759. 0.9. Net debt. (221). 2,652. (3.4). (*) Bellisolina S.r.l., Bergamo Pulita S.r.l., Biotecnica S.r.l. and SED S.r.l.. Key figures at March 31, 2011 Millions of euro. Edipower. Transalpina di Energia. Metamer. 50%. Società Gruppo Ecodeco 50% (*). 20%. 50. 1,438. 3. 5. 50%. INCOME STATEMENT Sales revenues Gross operating income - EBITDA % of net sales. 18. 160. 1. –. 36.0%. 11.1%. –. –. Depreciation, amortization and write-downs. 13. 94. –. –. Operating income. 5. 66. –. –. Result of the period. 1. 14. –. –. 821. 8,896. 13. 11. BALANCE SHEET Total assets Equity. 409. 2,002. 1. 2. Net debt. (246). (2,630). (5). 4. (*) Bellisolina S.r.l., Bergamo Pulita S.r.l., Biotecnica S.r.l. and SED S.r.l.. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. 46. Total assets.

(48) Interim report on operations – March 31, 2011. Seasonal nature of the business. Note that given the nature of the Group's core activities, interim results may be affected by the climate during the period. In this regard, reference should be made to the comments on the results by individual sector given below.. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. 47.

(49) Interim report on operations – March 31, 2011. A2A Group – Areas of activity. The A2A Group operates in the production, sale and distribution of gas and electricity, district heating, environmental services and the integrated water cycle. These activities in turn form part of the following sectors: • Energy Sector; • Heat and Services Sector; • Environment Sector; • Networks Sector; • Other Services and Corporate Sector.. Sectors of the A2A Group Thermoelectric and hydroelectric plants. Cogeneration plants. Collection and street sweeping. Electricity networks. Other services. Energy Management. District heating networks. Treatment. Gas Networks. Corporate sector. Sale of electricity and gas. Heat and other services. Disposal of waste with energy recovery. Water cycle. Sectors of the A2A Group Energy Heat & Services Environment Networks Other Services and Corporate. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. 48.

(50) Interim report on operations – March 31, 2011. Geographical areas of activity. Hydroelectric plants Thermoelectric plants Cogeneration plants Waste disposal plants Technological partnerships. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. 49.

(51) Interim report on operations – March 31, 2011. Results sector by sector. millions of euro. Revenues. Energy. Heat & Services. 01 01 11 03 31 11. 01 01 10 03 31 10. 01 01 11 03 31 11. 01 01 10 03 31 10. 1,404. 1,336. 166. 159. –of which inter-sector. 69. 57. 15. 13. EBITDA. 94. 93. 48. 46. 6.7%. 7.0%. 28.9%. 28.9%. % of Revenues Depreciation, amortization. provisions and write-downs Earnings after interest and tax % of Revenues. (56). (48). (13). (15). 38. 45. 35. 31. 2.7%. 3.4%. 21.1%. 19.5%. 4. 7. 13. 11. 50 Expenses/Income (net) from financial management Non-operating expenses/income Before tax earnings Income tax payable Net profit Net result from non-current assets held for sale Income pertaining to non-controlling interests Group net income for the reporting period Gross investments (1). See "capital expenditure" in the schedules in notes 1 and 2 on tangible and intangible assets in the consolidated financial statements.. millions of euro. Energy. Heat & Services. 03 31 11. 12 31 10. 03 31 11. 12 31 10. 2,261. 2,290. 467. 465. 59. 60. 117. 118. Trade receivables and current financial assets. 2,176. 2,478. 224. 190. Trade payables and current financial liabilities. 1,567. 2,075. 152. 163. Tangible assets Intangible assets. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. (1).

(52) Interim report on operations – March 31, 2011 Results sector by sector. Networks. Environment. Other Services and Corporate. Eliminations. 01 01 11 03 31 11. 01 01 10 03 31 10. 01 01 11 03 31 11. 01 01 10 03 31 10. 01 01 11 03 31 11. 01 01 10 03 31 10. 165. 143. 210. 200. 57. 51. (257). (227). 110. 100. 10. 10. 53. 47. (257). 65. 57. 76. 79. (5). (7). 39.4%. 39.9%. 36.2%. 39.5%. (8.8%). (13.7%). (7). (32). (30). (26). (22). 01 01 11 03 31 11. Group Total. 01 01 10 03 31 10. 01 01 11 03 31 11. 01 01 10 03 31 10. 1,745. 1,662. (227). –. –. –. (2). 278. 266. 15.9%. 16.0%. (6). 3. 3. 3. 1. 33. 27. 50. 57. (12). (13). 20.0%. 18.9%. 23.8%. 28.5%. (21.1%). (25.5%). (131). (118). 147. 148. 8.4%. 8.9% 51. (22). (35). 25. 25. Networks. 3. 8. Environment. 4. 2. Other Services and Corporate. –. –. Eliminations 03 31 11. –. 124. 113. (40). (36). 84. 77. 3. 3. (2). (9). 85. 71. 49. 53. Group Total. 03 31 11. 12 31 10. 03 31 11. 12 31 10. 03 31 11. 12 31 10. 12 31 10. 03 31 11. 12 31 10. 1,472. 1,481. 510. 525. 225. 222. (121). 1,347. 1,357. 38. 39. 72. 72. (83). (111). 4,814. 4,872. (94). 1,550. 1,552. 318. 339. 337. 255. 100. 128. (848). (1,193). 2,307. 2,197. 286. 298. 178. 184. 379. 363. (841). (1,185). 1,721. 1,898. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. (1).

(53) Interim report on operations – March 31, 2011. Notes to the balance sheet. Changes in the scope of consolidation since December 31, 2010 The scope of consolidation at March 31, 2011 changed from the one used at the end of the previous reporting period.. ASSETS 52. Non-current assets 1) Tangible assets Balance at 12 31 2010. Changes of the period Investiments, additions. Other changes. Land. 247. Buildings. 825. 1. 2. 3,223. 18. 11. Plant and machinery Industrial and commercial equipment. 39. Other tangible assets. 64. Landfills. 14. Writedowns. Depreciation. Total change. (6). (3). 822. (57). (29). 3,194. (2). (1). 38. 247. (1). 1 1. (6). (5). 59. 2. (1). 1. 15. (13). (13). 342. (7). 76. Assets held under concession (freely transferable). 355. 1. (1). Construction in progress and advances. 83. 7. (14). Leasehold improvements. 10. 1. Leased assets. 12. Total. Sales and disposals. Balance at 03 31 2011. 4,872. 29. 1. (1). Historical cost. 7,540. 29. 1. (2). Accumulated depreciation. (2,668). 1. 11. (2). (2). 10. (87). (58). 4,814. 28. 7,568. (87). (86). (2,754). of which:. 1. “Tangible assets” amount to 4,814 million euro (4,872 million euro at December 31, 2010), a decrease of 58 million euro since December 31, 2010.. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. Millions of euro.

(54) Interim report on operations – March 31, 2011 Notes to the balance sheet. The following changes were seen during the period: • Increase of 29 million euro due to capital expenditure. • Increase of 1 million euro due to alienation, net of relative depreciation. • Reduction of 87 million euro, attributable to depreciation for the period. • Decrease of 1 million euro for other variations.. A breakdown of capital expenditure is provided below: • An increase of 4 million euro was reported for the energy sector, which included: 2. million euro for work on the Monfalcone power stations and Calabria plant; 1 million euro for work on the Cassano d’Adda, Ponti sul Mincio, Braulio, Stazzona, Lovero, Grosio and Premadio power stations; 1 million euro for work on the Gissi plant. • Investment in the heat sector amounted to a total of 9 million euro and mainly. involved the development of the district heating networks in the Milan, Brescia, Bergamo and Varese areas totaling 8 million euro, and extraordinary maintenance and development on the plants in the area for 1 million euro. • Investment in the environmental sector, totaling 3 million euro, involved development. and maintenance work on waste processing and disposal plants as well as the. 53. acquisition of waste collection equipment and vehicles. • Investments in the networks sector totaled 12 million euro and focused primarily on. the development and maintenance of electricity distribution systems, the extension and reconstruction of medium and low-voltage network, the installation of new electronic meters and the upgrading of primary plants. • Investments in the services sector amounted to 1 million euro.. “Tangible assets” include “leased assets” totaling 10 million euro, recognized in accordance with IAS 17 (revised). The residual principal due to leasing companies at WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. March 31, 2011 amounts to 32 million euro..

(55) Interim report on operations – March 31, 2011 Notes to the balance sheet. 2) Intangible assets Millions of euro. Balance at 12 31 2010. Changes of the period Investiments Additions. Other changes. 22. 2. 802. Assets in process of formation. 21. Other intangible assets. 32. Industrial patents and intellectual property rights Concessions, licences, trademarks and similar rights. Goodwill Total. Sales and Disposals. Writedowns. Balance at 03 31 2011. Amortization. Total changes. 2. (3). 1. 23. 16. 5. (16). 5. 807. 2. (8). (6). 15. (2). (2). 30. (21). (2). 1,550. 675 1,552. 675 20. (1). "Intangible assets” amounted to 1,550 million euro at March 31, 2011 (1,552 million euro at December 31, 2010) which was a decrease of 2 million euro compared to the figure reported at year end. Note that with the application of IFRIC 12 from the start of financial year 2010, intangible assets also include the value of third party assets held in concession for the distribution of gas, the integrated water cycle and public lighting networks. The following changes were seen during the period: • Increase of 20 million euro due to capital expenditure. • Reduction of 21 million euro, attributable to amortization charged for the period. • Decrease of 1 million euro for other variations.. In particular, capital expenditure included: • “Industrial patents and intellectual property rights” totaling 2 million euro refer. primarily to CRM software, the new credit risk management system, and to the integration of A2A Group company IT systems. • "Concessions, licenses, trademarks and similar rights" amounting to 16 million euro,. refer to: - Development and maintenance work on gas distribution plants in order to connect new users, and to replace medium and high pressure underground pipes for a total of 10 million euro. - Work on the water transportation and distribution network as well as sewerage and treatment plants, totaling 3 million euro. - Work done by the Coriance Group equaling 3 million euro. • “Assets under construction”, totaling 2 million euro and concerning mainly the. development of new IT projects.. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. 54.

(56) Interim report on operations – March 31, 2011 Notes to the balance sheet. "Other intangible assets" includes the value of Customer Lists, which refer to the customer portfolios acquired by Group companies. These values are amortized in relation to the benefits expected in future years. In particular, the figure of 28 million euro reported in the financial statements more or less reflects the value reported in previous years by subsidiaries for the acquisition of customers that were part of the business assets bought from ENEL in 2003 (relating to a portion of networks and customers in the city and province of Brescia), the value of customers acquired in the gas sector, and the value attributed to the customer portfolio of the Aspem Group subsidiary Aspem Energia S.r.l.. Goodwill Millions of euro. Balance at 12 31 2010. Goodwill. 675. Total. 675. Changes of the period. Balance at 03 31 2011. Additions. Other changes. Writedowns. Total changes. -. -. -. -. 675. 55. 675. No year-on-year variation was seen. Goodwill at March 31, 2011 consisted of: Cash Generating Unit - Millions of euro Electricity networks. 271. Ecodeco. 228. Gas Networks Gas Heat Italy Heat France EPCG Total goodwill at March 31, 2011. 5 38 7 21 11 94 675. There were no impairment indicators during the reporting period. Goodwill is however impairment tested at least once a year.. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. Aprica.

(57) Interim report on operations – March 31, 2011 Notes to the balance sheet. 3) Shareholdings and other non-current financial assets Millions of euro. Balance at 12 31 2010. Changes of the period. Balance at 03 31 2011. of which included in equity 12 31 2010. 03 31 2011. 2,410. -. -. Shareholdings carried according to equity method. 2,411. Other non-current financial assets. 40. 2. 42. 28. 29. Total shareholdings and other non-current financial assets. 2,451. 1. 2,452. 28. 29. (1). The value of shareholdings carried at equity decreased by 1 million euro since December 31, 2010. Details of movements are shown in the table below: Shareholdings carried according to equity method - Millions of euro. Total. Balance at December 31, 2010. 2,411. Changes of the period: - acquisitions and capital increases - valuations at equity. 1. - dividends received from shareholdings carried at equity - sales - other changes - reclassifications Total changes of the reporting period Balance at March 31, 2011. (2) (1) 2,410. 1 million euro of these changes was caused by the valuation at equity of subsidiaries, in particular Transalpina di Energia S.r.l., Edipower S.p.A. and PremiumGas S.p.A., 2 million euro by the reclassification of the shareholding in Servizi Valdisotto S.p.A. to financial assets available for sale, and also the reclassification of the shareholding in Coges S.p.A. to non-current assets held for sale. A balance of 42 million euro was reported for "Other non-current financial assets" at March 31, 2011, which is 2 million euro more than the previous year mainly due to the reclassification of Servizi Valdisotto S.p.A. and Asm Sondrio S.p.A. which were merged to form the new energy company Valtellina e Valchiavenna S.p.A.. WorldReginfo - 5778d78e-b993-4daf-bc92-63fa3f9763cc. 56.